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Don't Save Like Tyrannosaurus Rex

Granted, Tyrannosaurus Rex is not your typical investor. But the lovably confused star of Ryan North's Dinosaur Comics can still fall prey to the same bad fiscal impulses as the tiny humans he occasionally squashes. In one recent installment, his friends try to help him set the sort of solid investing priorities that even non-prehistoric Fools should emulate. Alas, T-Rex's money skills are about what you'd expect from a giant lizard with a walnut-sized brain.

Save like a carnivore
Our reptilian hero starts off well enough. He's obtained $50 (perhaps he worked as an extra in the latest Jurassic Park sequel?), and he wants to put it in the bank. At least he's not spending it all right away, like most Americans.

At this point, God (yes, God) helpfully intervenes, advising T-Rex that this might be a bad decision, depending on what sort of savings account he has. As the Big Guy points out, many savings accounts offer rates of interest below that of inflation, meaning that T-Rex will actually be losing money if he stuffs that cash in the wrong savings account. Sadly, God doesn't tell T-Rex that with the right savings account, he could earn as much as 5% on his cash, handily outpacing inflation.

Bulls, bears, and dinosaurs
God, most likely thinking long term, instead counsels T-Rex to put his money in the stock market. With average annual returns of 10% over the long haul, the stock market is a great place for any cash T-Rex isn't planning to spend in the next five to seven years. Of course, that's assuming our scaly friend picks the right investments; his first choice, "a company that makes neckties for underachieving dogs," doesn't sound promising.

A no-brainer, no-load index fund or ETF like Vanguard Total Stock Market ETF (AMEX: VTI  ) might suit T-Rex to a T. It faithfully tracks the ups and downs of the market, requires no minimum purchase amount (perfect for that $50), and sports a 0.07% expense ratio.

And if he's the sort of dinosaur who prefers a more claws-on approach, T-Rex might consider starting with a solid large-cap blue-chip stock. McDonald's (NYSE: MCD  ) , with its dino-sized dividend, massive global footprint, and Earth-shaking earnings power, could be a good fit. So might Procter & Gamble (NYSE: PG  ) , whose consumer staples seem to remain in demand no matter what geological era we're in.

Sound advice from prehistoric predators
Fortunately, T-Rex's pal Utahraptor turns up, encouraging his large green friend to step back and take a look at the big picture. What does T-Rex want to do with his money?

Does he prefer the security offered by bonds or dividend payers? If so, BB&T (NYSE: BBT  ) might fit that bill, having paid a dividend every year since 1920. Its 4.81% current yield ranks among the S&P 500's highest. Or is T-Rex hunting for aggressive growth with stocks like Intuitive Surgical (Nasdaq: ISRG  ) ? The maker of surgeon-aiding robot arms has grown its sales nearly three times as quickly as its rivals (on average) over the past five years, according to Reuters, while maintaining fatter average net margins than its industry, its sector, or the S&P 500.

Actually, T-Rex's goals seem a little more, uh, modest. He just wants a bank account with a balance of $58,008, so that when he turns his statement upside-down, it will spell out ... well, guess. As we leave T-Rex, he's being named the champion for giving the day's worst answer to the "What do you want from your investments?" question, which seems only fair.

Money tips for Foolish mammals
You don't have to be eight tons of reptile to be confused about money. And if you are confused, don't think that means you must have a brain the size of a walnut. Picking the right way to save for your own personal needs -- whether you're socking money away for a new HDTV, a down payment on a house, your child's college fund, or your own retirement -- is a complicated and important choice. Thankfully, the Fool's here to help.

Each month, our Motley Fool Green Light newsletter offers fiscal advice that even a tyrant lizard would love. From savings strategies to investing insight, Foolish co-editors Robert Brokamp (our resident regent of retirement) and Dayana Yochim (our dollars-and-sense diva) can help you plan out a solid road map toward financial happiness. Don't wait for a voice from the heavens -- try Green Light free for 30 days. It's your best defense against financial extinction.


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Nathan Alderman
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Nathan Alderman is a longtime Fool who lives in Crozet, Va.

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