I know this is like asking "what's the best oil" ... but I'd like to hear some inputs on what people believe are investments with the most return with the lowest risk factor, mostly in the current economic environment. From what I've read above, it sounds like low fee mutual funds might be an example. Are there any mutual funds that are tax free?
Investing Strategies. What is your move?
- Thread starter PimTac
- Start date
IMO, the best risk/reward strategy is conservative growth; I have a Schwab product "Thomas Brothers Balanced Income"; this is a classic 40/60% Fixed Income/Equity fund. There is a 60/40% Conservative strategy for the more conservative investor.
"ThomasPartners believes that a meaningful and increasing portfolio dividend income stream can provide a predictable source of income with the potential for income growth, without sacrificing the portfolio's total return potential over time."
Thomas Partners
Generally speaking, income is taxable. I have a CA Municipal Bond Fund that is double tax free (Federal and CA). The return is low but the risk is very low. I use this as a hedge against market downturn, not to mention the tax benefit. I don't mind paying taxes, but I sure don't wanna pay more than I have to. Paying taxes means you are making money, right?
Please note, this investmant product is not for everyone as the return is low...
GW&K Muni
The best advice is to get started and stay with it. My father told me, "If you die young your problems are over. But if you live, you better be ready."
Good luck.
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Despite any warnings, my plan is to stay the course, various index funds. I finally hit 25% savings rate last year, not planning to change that for at least a few years.
Fidelity sent me a flier for their youth investing program. I need to find out the negatives, but I am thinking of signing my kids up for it, and getting them to start putting in money now, as teenagers. I think the idea (for Fidelity that is) is to encourage teens to get into trading, but all I would want my kids to do is pick an index fund or two, leave it that. At least until they are of age.
Edit: only real change I am thinking of for this year is how to get money invested outside of retirement options. For more flexibility in the years prior to retirement, just in case.
Fidelity sent me a flier for their youth investing program. I need to find out the negatives, but I am thinking of signing my kids up for it, and getting them to start putting in money now, as teenagers. I think the idea (for Fidelity that is) is to encourage teens to get into trading, but all I would want my kids to do is pick an index fund or two, leave it that. At least until they are of age.
Edit: only real change I am thinking of for this year is how to get money invested outside of retirement options. For more flexibility in the years prior to retirement, just in case.
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Not changing a thing really. 3 funds portfolio- S&P500, international, bonds. Gonna keep working, keep living well within our means (times of inflation solidify how necessary that is; to bad more people don’t do it) and keep enjoying life. The great resignation has been good for me. My value is going up everyday. We’re increasing savings though as inflation is eating up the value of cash reserves.
Your question is too simplistic. There are a lot of variables in investing including economy changes, events that change perspectives and the so called black swan events like war for example. In other words, investing is a constantly moving plate.
There are mutual funds and ETFs that invest in a broad market index that are very low cost. Charles Schwab has a ETF that is extremely cheap. SCHB. The expense ratio is 0.03%. That is practically nothing.
I'm assuming you are talking about this account from Fidelity - Youth Account. My $.02 is it less about getting them to trade today but Fidelity is trying to lock in the account for the future. They turn 18 and transition to an account with Fidelity, then in your mid 20s they become the kids go to for their brokerage, need to roll a 401k to an IRA, well I already have an account with Fidelity so I might as well use them.
You probably know but there is also a debit card aspect so it functions as the traditional savings/checking that you can go open at a local bank. You do lose that old school going to the bank to deposit your graduation gift feel.
I don't mean the above to sound like a shot at Fidelity FWIW, my <2 year old has a custodial account with Fidelity.
Yep, that is the one. Right now the flier I have says they'll give a free $50 for signing up. I've been trying to impress on the kids the rule of 72: 72 divided by growth rate gives time to double money. The money they put in today (age 15 or so), given 50 years and a nominal 9% average rate of growth (for the market), is like a multiplier of 64. Maybe if I start them now, and by the time they are out of college and have seen their initial investment all but double, maybe it'll kick off a lifelong habit. One could hope.
I figure as much, it's about getting a customer in the door earlier in life, locking them in. I think I need to find out what it costs to have an account with Fidelity, that way if they aren't contributing in say their 20's (maybe they get a job and use some other provider), what will it cost to keep Fidelity or what will it cost to move.
Right now my son can't use direct deposit (McD's). So every month or so I have to prod him to go to the bank, otherwise he'd just let the checks pile up on his dresser. Kids...
I think you need to learn how to use Morningstar or any of the other tools out there on various sites like Fidelity or Schwab etc. I wouldn't really worry too much about taxes unless you're some kind of multimillionaire. It's better to get 10%+ return and pay taxes than to get 3-5% and not pay taxes. The risk factors also aren't always properly calculated. Remember, I trusted Fidelity to run my account at one point and it was supposed to be lower risk and higher return, I ended with lower returns and they didn't outperform funds I was in that had higher risks. I guess higher risks also translates into higher returns. There was also a downturn during their management and they also underperformed during that period.
Having a lot of cash is not a good idea these days. Inflation is over 15%. The Fed will be raising rates here soon. When and how much is the big question. As for banks, I choose banks that you don’t have to pay to keep your money in.
I would not be surprised to see a 50 basis point hike in March but we will have to wait and see.
One of the good an early life lessons I got from my parents was opening a passbook savings account when I was little and a ROTH IRA at 14 so I completely get it. I have the same intent with the custodial account I have set up, hopefully one day $X growing to $Y will be a good life lesson for a then teenager in my case.FWIW (and obviously do a double check) the account should be cost free, IIRC parents might need to have a relationship with Fidelity to have the kids account (guess that is another good sales tactic as it may make a parent inclined to transfer assets). Also FWIW, looks like there is a promo for new accounts if you need to/opt to open one too. With Robinhood and others eating into that small investor market a lot of these places have dropped or eliminated fees substantially, at least for the basic transactions, and seems Fidelity in particular is figuring out how to expand that product base, allowing for fractional share purchases, selling the low/no expense ratio in house funds, etc. Since trading fees went to $0 on stocks, ETFs, etc. with them I have not paid a fee (not unique to them, same at many brokerage houses).
Re the direct deposit- on the plus side sounds at least he's not running to cash and spend the paychecks that's half the battle right?
I do like Fidelity for convenience. In addition to free trading, no cost accounts, etc. once your accounts reach a certain level, they will assign you an Account Executive. These guys can provide invaluable assistance and they are free.
Did I say free? The first thing I learned in engineering school was "There are no free lunches." The cost of these AEs is they will try and sell services (like managed accounts where you pay a fee) and products (like annuities). Just say no. Like Wolf, I did try the managed account for a short while and found it wasn't a good fit.
As to running to the bank to deposit checks, I haven't done that in years. Smart phone deposit to Wells Fargo checking until I discovered they had undisclosed low limits and they wouldn't raise them even after a phone call. Now all my deposits go to Fidelity via the phone.
Did I say free? The first thing I learned in engineering school was "There are no free lunches." The cost of these AEs is they will try and sell services (like managed accounts where you pay a fee) and products (like annuities). Just say no. Like Wolf, I did try the managed account for a short while and found it wasn't a good fit.
As to running to the bank to deposit checks, I haven't done that in years. Smart phone deposit to Wells Fargo checking until I discovered they had undisclosed low limits and they wouldn't raise them even after a phone call. Now all my deposits go to Fidelity via the phone.
I use Fidelity basically to rejuggle the account once in a while and you do get better service once you hit a certain level. Usually I don't wait on the phone too long to get to someone as they always want to know who you are before you get transferred. Used to be nice to go to their office, sit down and have them do everything for you after you go through their recommendations.
Never worry about paying taxes.
The corollary is, worry about not paying taxes.
Paying a ton of taxes is a great problem to have!
Are you serious about having a mattress of cash ?
Agree, inflation "off the charts" but we must remember the whole world was closed down for business of over a year. If one really thinks about that its uncharted territory and I honestly would expect this.
Its going to take time to rehire employees, get production and shipping caught up after being shut down for a year, this is the whole world and much of the world is not out of the virus mentality yet. Actually, I think we would be in HUGE trouble if we didnt have run away inflation, to me it would mean there still is no demand for products and workers. Thank god there is!
Housing market I follow with a passion, mostly, having moved 10 of millions of dollars in real estate.
The home price escalation will slowly start to ebb and if nailed to a time table I would say real estate prices will start declining within one year maybe 2 but I doubt that long, we just need a nice healthy push up in the interest rates I think we are going to see that this year..there will continue to be unprecedented demand for building supplies, its an interesting time for sure.
Im only guessing at timelines, uncharted world wide event, people have been unable to move, so there is a back log of about 2 years to catch up on and get into the present. That is going to take time.
I am THRILLED to see interest rates skyrocket! Well sort of, I do own property but not moving anytime soon so ok to take a hit. Anyway, I MUCH rather have high mortgage rates slowing down the housing market to the point of home prices falling. I much rather buy a house with a high interest rate and lower house price, interest rate can always be refinanced down the road. House price can not. The payment will ALWAYS be the same to the buyer, the housing market is priced to what the buyer can afford. Simple stuff.
AS far as ShadowStats.com I skimmed over it, didnt read anything though. There is a website for everything now, its just another website, where everyday and every hour of the year posts information that sound convincing but the bottom line these websites never say anything is great today! They are doomsday sites, Im sure this site never posted anything good since the day it went live. I mean we all do have to live and the life we live here in the USA is all voted for by the people. So I will leave that at this. I could care less how high inflation is, care less if its the highest measured, it means nothing, the world was shut down, it has to start up again, the people willing to pay the highest prices will have their products and the ones that will not pay, will have to wait a year or two. Interest rates are way to low but as a country we demand easy living at the price of ruining it for the youth whom are going to pay down the mountains of debt we are leaving them.
Unrelated to your post but to the main OP. Not talked about a lot in forums as investments is real estate.
If one starts buying real estate at a young age its a secure way to having income in your retirement years, it doesn't all have to be tied to Wallstreet 401k or Roth plan and to be diversified is a good thing. Its doesnt have to be a lot either, start with something, anything and manage it.
As I posted about me holding tight in regard to the OP with my stock market investments, I always overlook a real estate investment I have because I forget its there. ALL THE TIME! *LOL*
At a young age I purchased a commercial/residential building, paid it off in less than 10 years many decades go, like clock work, every month, for decades now the rent check for the building comes in the mail. Of course its worth a lot more now but I guess I will just collect the rent for the rest of my life and let my family decide what to do with it when I am gone. Makes no sense to sell, my return on equity is pretty healthy for a constant failure proof return and also fair to the tenants. Heck, I haven't even been to the building in decades. Real estate as an investment is overlooked by the mainstream. Just because I haven't been to the building I am aware of the building if that makes any sense.
Ok, one last thing, I have to say it, some people treat the equities market like a casino, you will always hear the good stories but you will not hear the bad. Sometimes its luck, sometimes its not but the huge millionaire born almost everyday in the stock market are a tiny percentage.
What really is overlooked by a lot of people, they think they have gains in something, some stock that took off for the moon! That is great but one must remember, those are unrealized gains until its sold. The true test is how much profit these people have made over a decade and more, just like a mutual fund would be looked at. Its easy to have a stellar year.
I tried, never succeeded at hitting it rich buy the stock market, I learned over time, for me personally, my best investing is less speculation and good solid returns on big companies that I like with mostly a proven track record. Though in my real estate holding and Im in a good place but I guess like everyone, sure, I would like a bit more.
) SO I still speculate a little bit but I just might be too skeptical to get lucky in the Stockmarket casino. Im still watching for the day TESLA stock gets sliced in half or way more. Who knows .. I sure dont. I do know people who bought it last Mov arent happy right now. ) I am not touching either one, but I look at GM at 7 times earnings and Tesla at 175 times earnings and I just scratch my head! !!!! I never been much of a automobile investor but to me, more so now, cars are easy to produce and EV's will be able to be produced liked flat screen TVs are today. Electric motor, no transmission, 4 wheels, a battery and your ready to go!!
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I followed a similar (I think) approach with my TIAA. The "cake and eat it too" outcome for me. I sometimes second guess myself, but have recently accepted that there are many paths to a reasonable outcome and everyone is very different.
I wonder if the concept of fiduciary is overplayed, as even a comment above stated that Fidelity advisors will attempt to steer you in a direction that is better for their company. I know TIAA does that. My coworker has been paying a private manager over 1% fees the past 15+ years. He claims that a fiduciary makes more money when you make more money, so your best interest is his best interest. Hmmmmm.
Anyway, for the young here, listen to the basic rules of thumb in this thread as a minimum. In hindsight, I wish I would have been a bit more risky in early age and started a Roth sooner.
alarmguy,
Elon is similar to PT Barnum and many people are crazy about Tesla‘s technology and innovation….. which no doubt is very impressive. The big 3 fell behind on EV that has attractive styling and could attract buyers. Chevy Volt was ugly had very poor sales. My employer had the Volt as a choice for company car and very few managers wanted a Volt.
I‘m sure if they offered a Tesla as a company car there would be a 5 year waiting list to get one, myself included.
I bought a few Tesla shares 2 years ago. Teslas are out of my budget but maybe one day I will have one in my garage.
Elon is similar to PT Barnum and many people are crazy about Tesla‘s technology and innovation….. which no doubt is very impressive. The big 3 fell behind on EV that has attractive styling and could attract buyers. Chevy Volt was ugly had very poor sales. My employer had the Volt as a choice for company car and very few managers wanted a Volt.
I‘m sure if they offered a Tesla as a company car there would be a 5 year waiting list to get one, myself included.
I bought a few Tesla shares 2 years ago. Teslas are out of my budget but maybe one day I will have one in my garage.
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