The Investment Thread

[GAME05]

I don't expect I'll ever have that much tied up in IRAs because I'll be retiring at 54 and as soon as I do I'll be needing to buy a house/condo/apartment.

[homer]

I don't expect I'll ever have that much tied up in IRAs because I'll be retiring at 54 and as soon as I do I'll be needing to buy a house/condo/apartment.

 

Do you have a pension? Just curious.

[GAME05]

Yeah. Pension pays 2/3 of what I make now, plus an extra benefit which basically pays social security from when I retire until 65 years old. My only 401k right now is that I get 5% of my salary (as a bonus, not taken from) put into that. I'm in work-supplied housing right now, which is why I'll need a place to live after retirement.

[brewcrewdue80]

If you're paying down quicker, aren't you saving money because less is added via interest? More goes towards the bottom line, quicker?

 

But I dunno what a student loan looks like only a car loan. So theres that.

 

I do agree with Brew4u on investing in something you may have more knowledge about. I have a nurse friend who told me to invest in something I forgot (brain cancer) but the hospitals she worked at had switched on a product and company they got supplies from. For me it'd be something in the golf industry, a trend or something used new to it.

 

But trial and error. Whatever you do, will have ups and downs. So best advice is dont tie yourself in to one investment. Gotta give yourself something to recover with when the downs happen.

[nate82]

For stocks this is basically what I use. The Elliot Wave Theory is what I use when I am investing though I do use triggers for my sales once I lock in a gain that I am comfortable with. I also know some very successful traders who bring in about $75k-100k a year just doing this but they are on the market all day.

 

Apple is a pretty good stock in terms of the Wave Theory.

 

Apple is currently in wave 5.

 

I have lost some using this strategy but overall I have come ahead. I don't do long term investing that is what my 401k is for and my gold and silver investments. Everything that I do with my own money is all short-term and I think the longest I have owned a stock personally is for about 12 months and that was Amazon in 2015 which was a nice return on investment even if it was only 10 shares stupid car repairs.

[LouisEly]

I've always wanted to play the stock market a bit but I'm not even sure where I would start.

Warren Buffet and others have said repeatedly that the best option for the average investor is to find a low-fee S&P 500 fund and put your money there. Those are generally the most profitable companies - let them do your work for you. The time it would take for you to do the research versus the fact that there are always people who know more than you... odds are you won't win by trying to pick stocks.

 

The exception is if you know an industry really well and can spot an overreaction by the market. For example, when the market got scared of airlines reducing fares and overreacted to lower $/seat/mile predictions, American Airlines stock dropped to $33. That meant it had a P/E of around 2.5; the average P/E of a S&P 500 firm is around 13-15. Total overreaction, and I bought a bunch of AAL at $33 and now it is around $44 even after a significant pullback this week - it was around $47. A nice 33% gain over less than six months.

 

As for real estate, there is always an inefficency in the market. A ton of apartments - most being one or two bedroom - have been built in the last 3 years. There has been very little building of single family homes or duplexes with 3+ bedrooms in the last 8+ years; you just can't find them on the market. If you can find one you will have no problem renting it, and that will be the case for some time. I would not want to own older 2-bedroom apartments right now.

[brewcrewdue80]

Man the way the market is currently, That idea that Apple is in wave 5 which would mean moving down...That is just tough to believe. I may have stumbled in something like this in regards to my 401k and the dow movements. But man, Since Mid February last year, the Dow hasn't swung down 6percent from it's closing high at any point.

 

On Feb 11 it closed at 15,660.

Apr 20 closed 18,076 closed Jun 27 17,140.24 5.5%swing

to current high of 21,115

 

13months~ 34.8% gain from the Dow. Only 1 swing of 5% during that rise. I mean look at that. 5,450 pts. practically non-stop.

 

I thought I had gotten on to something as during my cancer time off I'd looked at the Dow Closing prices and found that on avg there were 3 times a year it swung 7% or more. Why does that matter or is important? Well Get a 5 year graph of the Dow, Your best Small-cap index, Mid-cap index, and Large-cap index. Do a layover the lines I bet don't swing much differently one way or the other. When the Dow tanked in 2008/09 Those funds tanked just as much. And when it returned, just as much. A few may have dropped or risen 5-8% more or less but everything that was a small,mid, or large fell just like the dow. Often the climbs would approach or exceed just slightly, the Dow's previous High.

 

For a couple years til mid-year last year 18,000 was the range it'd climb or barely jump over. But last year after that 18,076 close. The battle lasted 11weeks and July 8 We moved in to the keep above 18,000 mode vs below. And here we are 21,000.

 

I don't think in any of my research the Dow, gained 3,000pts on a previous high level without swinging down 7% or more briefly. There were single days where the Market moved over 1,000pts down and the next regained more than it had lost.

 

So I'm lost as to where this dow is heading. History(since 2000) shows it should have had 3 7% or more corrections since the last time it had such. We're 34% up without that. No pausing.

Trump's presidency didn't even bring one occasion. N. Korea's reved up Missile tests haven't created a pause. The Fed raising rates finally(Yellen's fears on the markets needing delays on such) no effects when they did. So just be mindful on shorting anything that just doesn't make sense. I think it was late last year when some article I read the Market's PE was super high than norm, well, it must be another level or even 2 above what that PE was at back when I read that article. At some point we should have a correction and usually that correction will be big when we are talking this kind of PE. So I think you can be a week late when the correction begins, and still make a big profit. Without putting so much risk in an insane market as we have today.

[DHonks]

Some things to note from this thread:

-new analysis debunks the myth that it's better to switch more conservatively as one gets older. In general, an equities-based strategy will yield better results

-20 somethings are actually saving more for retirement than any previous generation. It's misleading though, as it is because many companies are realizing the benefits of automatically enrolling their new hires in retirement plans. I wish it were because of financial responsibility, since I teach this in class, but it's not.

-real estate seems safe, until there's a bubble. I know people in AZ that were well over 100k underwater on their homes nearly a decade after the crisis.

-if you're under 50, don't plan on Social Security. Our politicians have screwed us over by continuing to pander to old people at the expense of the young. In 2033 we're going to be in serious trouble. I warn all my students that they cannot rely on Social Security in its current form. It is not viable, and our politicians are afraid to deal with it.

[RobDeer 45]

DHonks - great point on getting conservative close to retirement. I'm of the belief that when you retire, you hopefully have 20, 30, 40 more years to have your money working for you. It's smart to get a little more conservative, but you definitely don't want to put everything in to bonds when you retire.

[FVBrewerFan]

-20 somethings are actually saving more for retirement than any previous generation. It's misleading though, as it is because many companies are realizing the benefits of automatically enrolling their new hires in retirement plans. I wish it were because of financial responsibility, since I teach this in class, but it's not.

 

-if you're under 50, don't plan on Social Security. Our politicians have screwed us over by continuing to pander to old people at the expense of the young. In 2033 we're going to be in serious trouble. I warn all my students that they cannot rely on Social Security in its current form. It is not viable, and our politicians are afraid to deal with it.

 

I have been hearing "Social Security" will be gone all my life. That isn't going to happen. Look at the outrage whenever they even hint at changing anything. They can raise the age, they can tinker with means testing, but there will be SS.

 

As far as 20 somethings saving more than any previous generation, I don't believe that. Years ago, before 401k, it was commonplace for employers to offer pensions, and most people had full time jobs. The 20 something generation is underemployed, and they have to voluntarily sign up for 401k. So I can't believe that combination would equal saving more than a generation who all had pensions.

 

You never know how true these studies are, and then they always change. For example, just heard earlier this week that 50% of all Americans couldn't write a check for $500 if they had to.

[MrTPlush]

If you're paying down quicker, aren't you saving money because less is added via interest? More goes towards the bottom line, quicker?

 

But I dunno what a student loan looks like only a car loan. So theres that.

 

Same thing really if we are talking the typical repayment method of 10 years at a fixed monthly rate. Only difference would be the interest rate

 

The thought process is if you had extra money would it be better to pay off more of your loan or invest it? If your loan interest rate is 4%, but I could invest it and get a 7.5% return technically you would be better off financially investing and just paying the minimum on your student loan. In the end I would be gaining 3.5% on that extra money. Of course, in my opinion, this theory doesn't make a ton of sense to me unless you have some incredible loan amounts to pay back and you have a lot of extra money. Because if you only have $30k in loans or so you really aren't going to be gaining much. I would rather make my credit look nice and have the loans gone faster than make an extra grand or two.

[LouisEly]

-real estate seems safe, until there's a bubble. I know people in AZ that were well over 100k underwater on their homes nearly a decade after the crisis.

Another thing to keep in mind - you never make or lose money on anything until you sell it.

 

Doesn't matter if they are underwater as long as they can make the payments (or rent it to someone who can make the payments for you). Keep making the payments and reduce the principal, eventually it will be paid off. Many people who were underwater in 2009 are now above what they bought it for in 2006/2007 because the lack of home building from 2009-2013 has created a housing shortage.

 

But if you didn't know the real estate market was going to crash in 2007/2008, you weren't paying attention.

[DHonks]

-20 somethings are actually saving more for retirement than any previous generation. It's misleading though, as it is because many companies are realizing the benefits of automatically enrolling their new hires in retirement plans. I wish it were because of financial responsibility, since I teach this in class, but it's not.

 

-if you're under 50, don't plan on Social Security. Our politicians have screwed us over by continuing to pander to old people at the expense of the young. In 2033 we're going to be in serious trouble. I warn all my students that they cannot rely on Social Security in its current form. It is not viable, and our politicians are afraid to deal with it.

 

I have been hearing "Social Security" will be gone all my life. That isn't going to happen. Look at the outrage whenever they even hint at changing anything. They can raise the age, they can tinker with means testing, but there will be SS.

 

As far as 20 somethings saving more than any previous generation, I don't believe that. Years ago, before 401k, it was commonplace for employers to offer pensions, and most people had full time jobs. The 20 something generation is underemployed, and they have to voluntarily sign up for 401k. So I can't believe that combination would equal saving more than a generation who all had pensions.

 

You never know how true these studies are, and then they always change. For example, just heard earlier this week that 50% of all Americans couldn't write a check for $500 if they had to.

 

FVBrewerfan, Social Security will be here. It doesn't pay out very much on average now (a little over $1200/month on average), and it will only pay out less. Created in the 1930s, the Social Security Trust Fund ran a surplus until 2009. Beginning in 2010 (I believe in part due to the Obama temporary tax cut), the SSA began collecting less money annually than it was due to pay out. Therefore, the Trust Fund was tapped into. By 2033 the Trust Fund will be drained and tax collections will only cover 75% of expenditures. Therefore, massive changes will be needed, likely a combination of tax increases, benefit cuts, means testing, and increasing the eligibility age. Perhaps SSA will also stop some of it's long-term disability coverage. In 2033, the Social Security shortfall is projected at over $600B. Congress needs to do something about this. They should have done something about this years ago. That's why all people today need to be investing.

 

I love asking my students if they could save $5 every pay period, and they all raise their hands. Then point out that at normal growth rates, $5/pay period would amass $40k+ of wealth by retirement age. We can all do a better job of this.

[nate82]

Another investment idea is BitCoin.

 

https://bitcoin.org/en/

[Jimbo]

Housing as I have one duplex now and it isn't that difficult.

 

My dad was in the landlord business for thirty years until his stomach couldn't take it anymore. However, he is enjoying a comfortable retirement right now. His municipal bonds are spitting out semi-annual interest checks.

[Jimbo]

-if you're under 50, don't plan on Social Security. Our politicians have screwed us over by continuing to pander to old people at the expense of the young. In 2033 we're going to be in serious trouble. I warn all my students that they cannot rely on Social Security in its current form. It is not viable, and our politicians are afraid to deal with it.

 

I have been hearing "Social Security" will be gone all my life. That isn't going to happen. Look at the outrage whenever they even hint at changing anything. They can raise the age, they can tinker with means testing, but there will be SS.

 

 

FVBrewerfan, Social Security will be here. It doesn't pay out very much on average now (a little over $1200/month on average), and it will only pay out less. Created in the 1930s, the Social Security Trust Fund ran a surplus until 2009. Beginning in 2010 (I believe in part due to the Obama temporary tax cut), the SSA began collecting less money annually than it was due to pay out. Therefore, the Trust Fund was tapped into. By 2033 the Trust Fund will be drained and tax collections will only cover 75% of expenditures. Therefore, massive changes will be needed, likely a combination of tax increases, benefit cuts, means testing, and increasing the eligibility age. Perhaps SSA will also stop some of it's long-term disability coverage. In 2033, the Social Security shortfall is projected at over $600B. Congress needs to do something about this. They should have done something about this years ago. That's why all people today need to be investing.

 

I love asking my students if they could save $5 every pay period, and they all raise their hands. Then point out that at normal growth rates, $5/pay period would amass $40k+ of wealth by retirement age. We can all do a better job of this.

 

SS will always be around as long as the public demands it and seniors vote in disproportionate numbers.

 

A few years ago Paul Walker toured America sharing his economic ideas and his four point on SS is what DHonks mentioned.

[FVBrewerFan]

Exactly, that's all I'm saying. You hear "SS won't be around" all the time, and it just isn't true. It will be tinkered with as we've discussed, but it's not going away. And don't even get me started about the trust fund. That doesn't even exist, except in name. Just another slush fund they've been borrowing from forever, remember Al Gore talking about the "lock box" like 30 years ago. The four options for SS were mentioned above, but don't forget about the 5th option they've been doing forever. Just print more money and run up more debt.

[GAME05]

Normally I wouldn't touch bitcoin but I recently heard something about China opening up to the possibility of allowing internet currency.

 

http://finviz.com is a good stock screener.

 

http://www.ruleoneinvesting.com/podcast That's a link to the podcast I like the most. The idea is that he's a successful value investor (more long-term than short) hosting with his daughter, who plays the part of the novice investor and asks questions. It's good beginner stuff, though not insultingly simple at all.

 

I'd mentioned dataroma before, but here's a link: http://www.dataroma.com/m/home.php

 

http://www.berkshirehathaway.com/letters/letters.html These are also good reads. Warren Buffet writes an annual letter to his shareholders, which he makes public.

[superfly]

Bitcoin crashing this afternoon...SEC denied an ETF for it. I'd personally be careful playing around with "fake" (according to the governments) currencies until it becomes an authentic one.

[nate82]

Bitcoin crashing this afternoon...SEC denied an ETF for it. I'd personally be careful playing around with "fake" (according to the governments) currencies until it becomes an authentic one.

 

Well it isn't regulated but it is more secure than any paper currency.

[LouisEly]

I'm looking at buying a house that is around $550K. If I put 20% down ($110K) the loan is $440K which is a jumbo loan and the interest rate is around 4.375%. If I put down 25% (additional $27K down) it's just under the jumbo threshold and the interest rate is 4%; but if I pay for two points (additional $7K) the interest rate is 3.875%. The points are a lot less than putting down an extra 5%, but the extra 5% goes towards the principal whereas the points are a cost and the points require you to stay in the property for ~7 years to break even.

 

Not sure which is the better option.

[jerichoholicninja]

My investments are in gold, buried in various places around town. Or is it?

[nodakfan17]

Gold and silver can still get you nice returns just don't buy coins they are harder to sell ie. melt value is not worth it get bars instead and cut them up and sell when above market.

I didn't think gold or silver bars carried much of a premium above spot price? I thought small denomination coins were the easiest to unload?

[nodakfan17]

Housing as I have one duplex now and it isn't that difficult. Luckily, I purchased this property in the nice part of the town and have never spent a dime getting it rented out to quality tenants.

If I were to enter the rental game, I'd also start out with an above-average duplex to attract decent tenants and minimize headaches (both maintenance and personalities). I have two friends who bought older rental properties during the most recent financial crisis and couldn't wait to unload them after the market recovered a bit (boy, do they have some stories). I lack the patience for difficult maintenance / people, but I'm sure there's money to be made there for those with more discipline than myself. For me, it's low-fee, equity index funds in my 401(k) / IRA and Brewers Timeless Tickets (sarcasm).

[nate82]

Gold and silver can still get you nice returns just don't buy coins they are harder to sell ie. melt value is not worth it get bars instead and cut them up and sell when above market.

I didn't think gold or silver bars carried much of a premium above spot price? I thought small denomination coins were the easiest to unload?

 

Coins are good for coin collectors not much beyond that. Bars are easier to unload because they have the stamp on them and can be cut up into smaller pieces and melted. You can't really cut up a coin and if you do you are destroying some of its value coin collection.