The Investment Thread

[FVBrewerFan]

Oh cry me a river. If they're not investing, it's likely their own fault. And they would be suffering even worse without a booming stock market.

[owbc]

Oh cry me a river. If they're not investing, it's likely their own fault. And they would be suffering even worse without a booming stock market.

 

You're completely out of touch. I work a government job and our org has seen a 10% cut this year. Lost headcount. Extra work for everyone. We haven't seen a penny of any of these stimulus bills. The majority of this country is paycheck-to-paycheck.

 

This country would be better off as a whole if the stock market was doing worse and that wealth was going to small businesses and hourly workers.

[FVBrewerFan]

Oh cry me a river. If they're not investing, it's likely their own fault. And they would be suffering even worse without a booming stock market.

 

You're completely out of touch. I work a government job and our org has seen a 10% cut this year. Lost headcount. Extra work for everyone. We haven't seen a penny of any of these stimulus bills. The majority of this country is paycheck-to-paycheck.

 

This country would be better off as a whole if the stock market was doing worse and that wealth was going to small businesses and hourly workers.

 

Well, no. If the stock market was doing worse, that would mean even more layoffs. How would the wealth magically "go to small business and hourly workers?" Majority of the country is living paycheck to paycheck, yes, with freedom comes the freedom to make bad choices. Also, if you have a government job, will you be getting a pension? Where do you think that comes from??? That's right, the stock market.

[CheezWizHed]

Ok, time to stop and turn back to investing strategies.

[thebruce44]

Our house is finally selling today. I should get a large amount of cash from the deal and will hopefully need that again in a year or two as another down payment. I so want to throw some of it into the market or Bitcoin, but I know better. It is going to suck to watch housing increase in value while I make a .01% return in a savings account.

[igor67]

I certainly understand how an individual level investing makes sense, but when one looks at wealth accumulation as a pure Darwinian steel cage match the game seems rather less impressive. Let's take my current yearly pension contribution of $4200. Now let's assume for the moment that I'm a crazy active investor who researches everything and manages to get a 10% return and no fees. I've made for the year an impressive $420 dollars. On the other hand I could make more than that with a 1% raise on my actual salary. When the question comes what is the best thing to do with that extra income specifically of course the answer is to invest it (hence the individual benefit), but when you start applying that same analysis on the high side of the equation you also realize that the working class, I saved my way to 1-2 million net worth, individual is still losing ground over time to someone sitting on a few billion. This also leads to significant inefficiency over time in the usefulness of investment capital. Instead of lots of investors placing bets on which ideas are good ones it becomes more and more concentrated with fewer people making meaningful decisions on which business ideas to invest in, which to anyone familiar with the math understands leads to more missed opportunities, aka less innovation.

[FVBrewerFan]

Our house is finally selling today. I should get a large amount of cash from the deal and will hopefully need that again in a year or two as another down payment. I so want to throw some of it into the market or Bitcoin, but I know better. It is going to suck to watch housing increase in value while I make a .01% return in a savings account.

 

A year or two is too long to have that money sitting on the sidelines. Bitcoin or anything volatile? No. But there's plenty of "safe" stocks that will yield 2-3% in dividends, and if the stocks go up even a little you'll get a total return of 5-7%. Even if you're not comfortable with an individual stock, get an ETF that maximizes dividends.

[CheezWizHed]

Our house is finally selling today. I should get a large amount of cash from the deal and will hopefully need that again in a year or two as another down payment. I so want to throw some of it into the market or Bitcoin, but I know better. It is going to suck to watch housing increase in value while I make a .01% return in a savings account.

 

A year or two is too long to have that money sitting on the sidelines. Bitcoin or anything volatile? No. But there's plenty of "safe" stocks that will yield 2-3% in dividends, and if the stocks go up even a little you'll get a total return of 5-7%. Even if you're not comfortable with an individual stock, get an ETF that maximizes dividends.

 

I basically keep my emergency funds in a money market that regularly get 2-3% for no risk. Unlike CDs, I can take out the money as needed. Check out: https://fundsus.dws.com/us/en-us/products/money-market-funds.html

[FVBrewerFan]

I certainly understand how an individual level investing makes sense, but when one looks at wealth accumulation as a pure Darwinian steel cage match the game seems rather less impressive. Let's take my current yearly pension contribution of $4200. Now let's assume for the moment that I'm a crazy active investor who researches everything and manages to get a 10% return and no fees. I've made for the year an impressive $420 dollars. On the other hand I could make more than that with a 1% raise on my actual salary. When the question comes what is the best thing to do with that extra income specifically of course the answer is to invest it (hence the individual benefit), but when you start applying that same analysis on the high side of the equation you also realize that the working class, I saved my way to 1-2 million net worth, individual is still losing ground over time to someone sitting on a few billion. This also leads to significant inefficiency over time in the usefulness of investment capital. Instead of lots of investors placing bets on which ideas are good ones it becomes more and more concentrated with fewer people making meaningful decisions on which business ideas to invest in, which to anyone familiar with the math understands leads to more missed opportunities, aka less innovation.

 

I don't see the evidence of less innovation? Most innovation doesn't require intensive capital. Also, the venture capital world world is as much about competition as it is dollars, I've seen it first hand. These people are absolutely not afraid to take risks on innovation, they want their name attached to the next big thing. I'm not seeing where opportunities are being missed.

[thebruce44]

Our house is finally selling today. I should get a large amount of cash from the deal and will hopefully need that again in a year or two as another down payment. I so want to throw some of it into the market or Bitcoin, but I know better. It is going to suck to watch housing increase in value while I make a .01% return in a savings account.

 

A year or two is too long to have that money sitting on the sidelines. Bitcoin or anything volatile? No. But there's plenty of "safe" stocks that will yield 2-3% in dividends, and if the stocks go up even a little you'll get a total return of 5-7%. Even if you're not comfortable with an individual stock, get an ETF that maximizes dividends.

 

I basically keep my emergency funds in a money market that regularly get 2-3% for no risk. Unlike CDs, I can take out the money as needed. Check out: https://fundsus.dws.com/us/en-us/products/money-market-funds.html

 

I'm not seeing a money market account on there that is 2-3%. I have been unable to find anything over 0.75%. Obviously if I can make 2-3% with no risk that would be ideal.

[CheezWizHed]

Let me double check when I get home. I know it was with DWS, but I don't remember the fund name. Hopefully, I linked the wrong spot and not overstating the return. I know it will fluctuate with the market, but doesn't ever lose value.

[nate82]

Our house is finally selling today. I should get a large amount of cash from the deal and will hopefully need that again in a year or two as another down payment. I so want to throw some of it into the market or Bitcoin, but I know better. It is going to suck to watch housing increase in value while I make a .01% return in a savings account.

 

There are other savings options out there that pay better they are just not insured like a bank's. Credit unions tend to have better rates. I have a savings account with Affirm and I have an APY of .65 it was 1.0 for about 10 months this year.

 

There are others that are giving out good APY just have to find them. The only drawback is it takes up to 2-3 days to withdraw sometimes.

[igor67]

There are any number of examples for the link between numbers of investors and risk and efficiency (which are 2 somewhat distinct things). One of the more defining monopoly behaviors is to suppress competition by buying out the competitors and just letting their idea die. The entire math behind free markets assumes infinite individuals (large numbers generally behave similar enough to infinite for this to work). What's true for supply and demand is also true for investing the wisdom of the crowd works better in the long run than any individual. So the smaller number of people you have making the decisions the more the individuals deviations from the best choice will accumulate as inefficiencies. Scientists have expressed concern about analogous behavior with grant agencies for years with them often favoring funding safer experiments and not risky ones. DARPA is rather famous for running counter to this trend. On the private side the tendency for various investment firms or management styles to favor sales departments (and the shiny immediate returns) vs. long term R&D is another one.

[Baldkin]

Over 87% of stocks are owned by the top 10% of wealth in the country.

 

https://www.cnbc.com/2020/08/27/wealth-gap-grows-as-rising-corporate-profits-boost-stock-holdings-controlled-by-richest-households.html

 

While an oft-quoted Gallup Poll indicated that 55% of households own stock in 2020, it is the very wealthy who control almost all of this asset. A separate Federal Reserve report indicates the top 10% of households by net worth control 87.2% of the equities in this country at the end of the first quarter. While the top 1% have always controlled 70% to 80% of stock market value since record-keeping began in 1989, this is the highest level of ownership ever, other than the fourth quarter of 2019, when it was 88.1%.

 

Who owns stocks: Households by net worth

 

Top 1% 51.8%

Top 90-99% 35.4%

50%-99% 12.1%

Bottom 50% 0.7%

(Q1 2020)

 

Source: Federal Reserve

[CheezWizHed]

Let me double check when I get home. I know it was with DWS, but I don't remember the fund name. Hopefully, I linked the wrong spot and not overstating the return. I know it will fluctuate with the market, but doesn't ever lose value.

 

Well drat, my memory was bad. Looks like I'm getting 0.5% instead of 2-3%. But I don't have a ton of money there... I use it as my liquid savings account instead of the 0.001% you get from a bank, so I suppose I'm doing better anyway.

[nate82]

Let me double check when I get home. I know it was with DWS, but I don't remember the fund name. Hopefully, I linked the wrong spot and not overstating the return. I know it will fluctuate with the market, but doesn't ever lose value.

 

Well drat, my memory was bad. Looks like I'm getting 0.5% instead of 2-3%. But I don't have a ton of money there... I use it as my liquid savings account instead of the 0.001% you get from a bank, so I suppose I'm doing better anyway.

 

Affirm looks like they have the best rate at 0.65%

https://www.affirm.com/savings

 

The next best I could find is axos bank at 0.61% and then Marcus and AMEX at 0.50%

 

https://www.axosbank.com/high-yield-savings-account?utm_campaign=01652_hysav_consumerdeposits_axos_rakuten_hys_baseline&utm_medium=affiliate&utm_source=rakuten&utm_content=49&utm_term=LinkOffers&siteID=x_S254V_QB8-kOov5yIVnkHH.oxTqexNMw&ranMID=44016&ranEAID=x%2FS254V%2FQB8&ranSiteID=x_S254V_QB8-kOov5yIVnkHH.oxTqexNMw

https://www.marcus.com/us/en/savings/osa-mobile?prd=os&chl=ag&schl=agb&cid=6283453br20461840941608690540lid;dc_lat=;dc_rdid=;tag_for_child_directed_treatment=;tfua=placement=262777576&dclid=CjgKEAiAz4b_BRC_4vOJrPX5qAoSJAABll_UwaL6jsQiidtY5acp8UXyUNp8EZgLwOQnh09eHhEykvD_BwE

https://www.americanexpress.com/en-us/banking/online-savings/high-yield-savings/?irgwc=1&extlink=ps2020%3Daffiliate

 

These rates can change and they are not fixed rates FYI.

[thebruce44]

I just had the same conversation with my mother in law who claimed you can always get a safe 3-4%. It just doesn't exist right now and I am not going to spend a ton of time trying to eek out an additional .05%, which equates to $100 over the course of a year.

 

Sadly, I will just plan to park that money and will probably have to buy back into the housing market sooner than later. I'm in LA, so things are still increasing roughly 10% year over year.

[nodakfan17]

I just finished Your Money or Your Life, which is a popular personal finance book from the early 90s that emphasizes financial independence can be achieved at an early age through savings and simple living. The authors recommend investing solely in US Treasuries, which were paying a guaranteed 8% at the time.

[CheezWizHed]

I was just looking at my HSA investment account today, where I have a 5-10 year investment risk profile. So they put me in a mutual fund from Vanguard that has historically (over 10 years) gained 2 percent. Since they are Bonds, the risk is very minimal.

 

This is one bond index fund. There are others to investigate:

https://investor.vanguard.com/mutual-funds/profile/VBITX

 

Hope that helps.

[GAME05]

Really trying to dip my feet into learning how to analyze a company, analyze against their competition, and then figuring out their intrinsic value. Pages and pages of notes so far and haven't even yet found the formulas for the many different valuation methods out there. Pretty overwhelming so far, but I'm sure things will make more sense as the months move on. Found one site which offers company valuations on different models, but $50/mo isn't worth it for a small-time investor.

 

But recognizing that I'm doing more speculation than investing, which is fine for play money but not so much when it will effect your retirement.

 

Right now starting to look into O, a REIT with a good dividend; and A2 Milk.

[Brewers Numbers]

Over 87% of stocks are owned by the top 10% of wealth in the country.

 

https://www.cnbc.com/2020/08/27/wealth-gap-grows-as-rising-corporate-profits-boost-stock-holdings-controlled-by-richest-households.html

 

While an oft-quoted Gallup Poll indicated that 55% of households own stock in 2020, it is the very wealthy who control almost all of this asset. A separate Federal Reserve report indicates the top 10% of households by net worth control 87.2% of the equities in this country at the end of the first quarter. While the top 1% have always controlled 70% to 80% of stock market value since record-keeping began in 1989, this is the highest level of ownership ever, other than the fourth quarter of 2019, when it was 88.1%.

 

Who owns stocks: Households by net worth

 

Top 1% 51.8%

Top 90-99% 35.4%

50%-99% 12.1%

Bottom 50% 0.7%

(Q1 2020)

 

Source: Federal Reserve

This seems like they didn't include 401ks and IRAs.

[nodakfan17]

I wouldn’t be shocked if those numbers DID include 401(k)s and IRAs. Google says the average 401(k) balance is ~$92,000, but the median 401(k) balance is only ~$22,000.

[sveumrules]

Yeah, pretty sure those figures do include 401(k)s & IRA accounts. Around half the population doesn't even have that, which skews things pretty considerably.

 

You're essentially looking at 40% of the population versus the top 10%.

 

I'm not too concerned though, a couple two tree drops should trickle down eventually.

[GAME05]

That's really surprising. Even when I was making $26k as an editor, I still had a 401k. Are there that many people simply declining the option, or is it just an extremely small number of jobs which offer retirement benefits? I mean, 18% of the workforce is employed by local/state/federal government. Even accepting that many are part-time, I still have a hard time with only 12% of median earners being invested.

[sveumrules]

Was kind of surprising to me too, but found it cited in multiple sources...

 

https://www.reuters.com/article/us-usa-trump-speech-stocks-analysis/trump-touts-stock-markets-record-run-but-who-benefits-idUSKBN1ZZ19A

 

"Roughly half of Americans own some stocks through a brokerage account or a pension or retirement fund...What’s more, nearly 90% of families who own stock do so through a tax-deferred retirement account, meaning they can’t access the money until they reach retirement age, unless they pay a penalty."

 

https://wallethacks.com/stock-ownership-in-america/

 

"When you look at the entire population of the United States, less than 53% of families own stock. They can own it through a taxable brokerage account or a retirement account, but only 52.6% own any stock whatsoever."

 

https://www.forbes.com/sites/teresaghilarducci/2020/08/31/most-americans-dont-have-a-real-stake-in-the-stock-market/

 

"Of those earning below the median household income, the typical household owns essentially zero financial assets, and of those who do, most don’t have significant balances."