Help with investments.

[Drew99GT]

Originally Posted By: supton
Originally Posted By: Drew99GT

However, I honestly believe some active management is quintessential to preserving your money most importantly, and getting the best average return. Most people who've been index fund investing for the last decade are roughly break even, give or take.


When you say "break even" do you mean they have stayed even (same dollar figure in there as they put in) or that they kept up with inflation (so a few percent per year growth)?


Well, if you look at a chart of say, the Vanguard total stock market ETF, it isn't much higher than the peak in 2007. That is not a perfect measure of total return, as cost averaging, dividends etc. will give you a greater return, but the last decade hasn't exactly produced the greatest stock market returns for buy and hold. The latest bull market is reversing that however, but all it takes is another dot com or 2007 debacle to wipe out years of returns. I say, why risk that when prudent strategies can help avoid it?

 

[supton]

I missed all that, sorry...

My investment understanding revolves around what's in my wallet and a basic understanding of APR. I get 401k statements and the only thing I understand on it is the little graph showing an upward trend.

 

[Drew99GT]

Maybe others would want to chime in as well, but if you have specific questions about how to get started understanding investing, I'd be happy to answer any questions. I work in taxes and am fairly knowledgeable in the subject.

Once you get a good framework of understanding, it will allow you to obtain answers to questions you have yourself.

As far as strategy, like others have said, max out your 401K, and if you have the ability to save more, start either a Roth or traditional IRA. I prefer Roth's because gains grow tax free, and it gives you some access to the funds without penalty prior to retirements, so Roth's can serve a dual purpose as a catastrophe fund.

For all practical purposes, since most 401Ks are somewhat limited in choice and the fees are sometimes steep when re balancing, the target date funds are ideal. They rebalance themselves based on time, starting out more in stocks, and moving to bonds as you get older, until they move to very short duration bonds and money market funds as you move towards retirement.

 

[cashmoney]

Originally Posted By: supton
Originally Posted By: Drew99GT

However, I honestly believe some active management is quintessential to preserving your money most importantly, and getting the best average return. Most people who've been index fund investing for the last decade are roughly break even, give or take.


When you say "break even" do you mean they have stayed even (same dollar figure in there as they put in) or that they kept up with inflation (so a few percent per year growth)?


The key to long term investing success is to use the power of long term dollar cost averaging. People who do that are way better than breakeven in the long run.

 

[bvance554]

Originally Posted By: JHZR2
Originally Posted By: bvance554
Don't ask for investment advice on an internet forum. If you have a sum of money sitting around, seek out a professional. Or atleast ask for advice on an investment forum, not an oil forum.

There are some pretty darn smart and savvy folks on here who either actively invest or have the wisdom of many years to best explain the paths forward. None of this is rocket science or brain surgery. There is PLENTY of info out there for smart individuals to research and take in, and make decisions with, or at least to be smart consumers...


I know there are really smart amd savvy folks here. I'm not insulting anyone's financial savvy amd i agree its not rocket science. However, just as if i asked hey what kind of oil should i use for my new Briggs & Stratton i'll get 10 different good opinions and options. I agree with your suggestions, but thats because i've made the same choices. Just saying if i had a half million to invest and didn't know where to start, i wouldn't start here. Because if you don't know, how do you sort through the fact, opinion, and b-s?

 

[supton]

I dunno. I come here, and to other forums, and have to sort fact from fiction about, well, everything. At the very least one learns lots of terms, lots of opinions, and can at least attempt to figure out what the majority may or may not be doing.

 

[jimbrewer]

My sad experience: The more I read the less well I do. Avoid subscriptions to Forbes, Barrons Money, other than to learn the nuts and bolts of 401 (K) plans or DRIPS.

The things that worked were:

1. Being there. Nothing happens if you are on the sidelines. That also means that if you only get in when the blood is up you will do sub-par. The second part is the hard part.

2. Diversification. There's no harm in it, only good.

3. Keeping costs down. Paying a guy $500 to tell a 25 year old that he ought to be disproportionately invested in stocks when he only has $6,000 to invest is dumb. Later, it makes huge sense.

4. Hand-wringing is absolutely terrible. Not fatal, just bad. So yeah, you are better off in an oil forum than any investment forum, paradoxically.

OP could put the money in Vanguard STAR fund which is the functional equivalent of a pension fund. Probably too conservative for a 28 year old, but no big deal.


Again, I'm being a little facetious when I tell OP to through away the statements unopened. But only a little. He needs to check that the money hasn't been stolen. But that's about it. Less is more. Right or wrong, we live in a world where the deck is rigged toward capital, not labor. The most important thing is to Not Be Stupid.

 

[dja4260]

Thanks for the tips. I'm not about to run out and make rash decisions. I'm going to of course sit down and speak with a few financial advisers.

I figured since the medium age on this forum was well, older. I'd have a few first hand experiences.

 

[99Saturn]

JMO, but at 28 yo. you can afford to take a decent amount of risk, whether it is in individual stocks or a more risky fund(s). I'd look to small cap growth and large cap growth as you look at funds, same goes for individual stocks. Familiarizing yourself with the DOW 30 is a good place to start IMO and moving on to industries that you think are growth oriented.

Since you said you're going to be talking to advisers, I'd ask what they think your target return/year should be on average and than compare the funds 5 and 10 year average returns to the return they targeted for you.

At 28 yo. you can afford the risk that typically yields higher returns (my assumption here is you aren't banking on that 30K being 33K or 35K next year).

 

[supton]

What I find interesting is that my 401k has rebounded nicely. I no sooner had started when the market fluctuated; then it fluctuated again, and then finally the Great Recession occurred. Just prior to each I had thought of increasing my contribution, but hadn't--didn't want to throw away my money. What I don't get is that the graph for value almost looks like it recovered, as if the GR didn't occur. I wasn't expecting that, and it is motivating me to finally pop my 401k up to what I should have always been putting in.

What I haven't figured out is how to make "liquid" savings--not tied to retirement.

 

[cashmoney]

Originally Posted By: supton
What I find interesting is that my 401k has rebounded nicely. I no sooner had started when the market fluctuated; then it fluctuated again, and then finally the Great Recession occurred. Just prior to each I had thought of increasing my contribution, but hadn't--didn't want to throw away my money. What I don't get is that the graph for value almost looks like it recovered, as if the GR didn't occur. I wasn't expecting that, and it is motivating me to finally pop my 401k up to what I should have always been putting in.

What I haven't figured out is how to make "liquid" savings--not tied to retirement.


The only people that lose out during market crashes are the folks that stop investing when that happens (thereby missing low cost investing opportunity) and even worse the folks that panic and sell during a market crash - they really lose. It is really very simple - to get rich invest when all others are selling and sell when everyone else is buying. In reality it is hard to follow this discipline so best way for the average person is to invest a regular standard amount on a regular periodic basis - like once a month and never stop doing it no matter what the market is doing.

Folks who say they can time the market are fools or liars. And if investment advisers knew anything really valuable they would not need to be advisers instead they could use their supposed special knowledge to make themselves rich on their own investments instead of trying to make a living selling "expert advice" .

 

[jimbrewer]

Originally Posted By: dja4260
Thanks for the tips. I'm not about to run out and make rash decisions. I'm going to of course sit down and speak with a few financial advisers.

I figured since the medium age on this forum was well, older. I'd have a few first hand experiences.


Fee only advisors I hope. If the guy doesn't charge a fee, (and that's his sole compensation) you don't want to have anything to do with him. That's even worse than reading 'Money' magazine.

 

[cjcride]

Originally Posted By: Donald
Your best bet is index based mutual funds, Vanguard has some excellent ones.

An index fund is based upon an index such as the S&P 500 (many others) and pretty much re-adjusts the holdings nightly to mimic the index.

This is opposed to a manager based mutual fund where a highly paid manager picks the stocks. Good advice. Your last names not Trump is it?

In most cases the manager cannot pick better performing stocks than the index and the fees are higher because of the manager.

Forget about picking individual stocks. In the long term you will do better with an index fund.

Long term investing should be boring. Look at your holdings every 6 months, not daily.

As you age, move some into bonds.
Good advice with low cost.

 

[cjcride]

Can a moderator please delete my prior post. My reply somehow got inserted in the 3rd paragraph 2nd and 3rd sentence in the quote.

Thank You