Investment advice

[sauerkraut]

quote:Originally posted by iplaw

quote:Originally posted by cannon_fodder

Per sauerkraut's comments:

1) If you want to get into real estate remember that it is a business. There is insurance, taxes, people you have to deal with, things to get fixed, etc.  The easiest way would be to get into a REIT (which are all in the tank atm) or other company that deals with property.

I've seen too many people think a rent house would be free money with no work.

2) Bank accounts are stable.  HOWEVER, in the long the markets make 7% and a bank account makes 2%.   5% extra per year compounding equates to a ton of money.

BUT, don't put money in the market you might need in the near term.  Assume it could all be lost and/or you won't be able to touch it for 10 year.  In the long run, the numbers say investing is a better choice.

I think this echos Cramers comments the other day that were grossly taken to the extreme.  Any sane person knows that if you aren't planning on being in the market for AT LEAST 5 years, the stock market is NOT the place to put your money.

His statement was common sense, but people extrapolated far beyond what he meant.

That's correct if things stayed normal. I'm now farther behind than I was in 1998. I got 10 years in the market with nothing to show for it. I'd have made more money if I kept it  in a passbook savings account. My 401K is a Putman Voyager account and that never did good, today I can't even look at it, since 09-11-01 that account never recovered. My planner kept saying to just leave it alone. This current mess is global and the market is all over the place, up and down 400 points in one day.

[mspivey]

Buy low and sell high.

This is from a guy who, for many years, invested his money in race cars. I followed that advice, but in the inverse order.

[rwarn17588]

quote:Originally posted by sauerkraut

That's correct if things stayed normal. I'm now farther behind than I was in 1998. I got 10 years in the market with nothing to show for it. I'd have made more money if I kept it  in a passbook savings account. My 401K is a Putman Voyager account and that never did good, today I can't even look at it, since 09-11-01 that account never recovered. My planner kept saying to just leave it alone. This current mess is global and the market is all over the place, up and down 400 points in one day.
[/quote]

A big part of your problem is your fund. I'm not sure which Putnam Voyager fund you have, but Morningstar has them with either one-star or two-star ratings -- the lowest ones available.

Sounds like you need to ditch your planner, and pronto. Anyone who's handing out one- and two-star funds doesn't deserve to be in the business. Lord knows there are plenty of better funds out there. At least get funds that hit the market average.

[TheArtist]

Thanks for all the pointers. By the time I got midway into Cannons post my eyes glazed over and my brain started locking up. By the time I got to the end of the posts... well I think I am more confused and afraid of doing the wrong thing now than before lol.

Called the old man and talked to him for a bit while I was headed to work. I gather that he is pretty good about this kind of thing. He and my brother got the mathematical, structured thinking, mechanical putting things together, side of the gene pool while I got the scatterbrained, creative, daydreamer genes lol.  Asked him how he was doing in the market. Said they had gotten out about a year ago but are now steadily buying back in, just putting in a chunk every week. Told him that I was thinking of investing and he said they would be
in town in a few weeks and he would think of something and bring some stuff for me to pick through? I gather that perhaps he just picks stocks and buys them on his own or something. Again, my brain started locking up. Soooo, now that I have asked I guess I will probably try to to what he suggests, It would be rude not to and we just dont want to go there lol. Or do two things, part in whatever he suggests and also some in a general fund of some sort. I just dont want to do anything where I will have to pay attention or do to much thinking lol. Will take away from my daydreaming/creative time. []

[GG]

Whatever you do, don't listen to sauerkraut's advice.  

He has no idea what he's talking about.   He get's all his knowledge of the world from Michael Savage.  

[Wilbur]

quote:Originally posted by TheArtist

Thanks for all the pointers. By the time I got midway into Cannons post my eyes glazed over and my brain started locking up. By the time I got to the end of the posts... well I think I am more confused and afraid of doing the wrong thing now than before lol.

Called the old man and talked to him for a bit while I was headed to work. I gather that he is pretty good about this kind of thing. He and my brother got the mathematical, structured thinking, mechanical putting things together, side of the gene pool while I got the scatterbrained, creative, daydreamer genes lol.  Asked him how he was doing in the market. Said they had gotten out about a year ago but are now steadily buying back in, just putting in a chunk every week. Told him that I was thinking of investing and he said they would be
in town in a few weeks and he would think of something and bring some stuff for me to pick through? I gather that perhaps he just picks stocks and buys them on his own or something. Again, my brain started locking up. Soooo, now that I have asked I guess I will probably try to to what he suggests, It would be rude not to and we just dont want to go there lol. Or do two things, part in whatever he suggests and also some in a general fund of some sort. I just dont want to do anything where I will have to pay attention or do to much thinking lol. Will take away from my daydreaming/creative time. []

It really isn't that difficult.  Follow a couple simple rules:

1.  Buy mutual funds, not individual stocks.  A mutual fund is made up of several different stocks that a manager picks based on the philosophy of the fund.  This immediately keeps you diversified so you don't have all your money in one stock/company.  Some mutual funds are made up of just a couple stocks, some are made up of several hundred stocks.

2.  Don't get into mutual funds that require a 'load'.  A load is a fee based on the amount of your transaction.  A 'front load' means you pay a fee based on the amount of your purchase.  A 'back load' means you pay a fee based on the amount of your sell.  There are plenty of companies who don't charge loads.  The load is simply a commission paid to the broker/company.

3.  Buy mutual funds with low expenses.  ALL mutual funds charge annual expenses, with the average being around 1.25%.  You never see these expenses come from you because it is simply reflected in the price.  Vanguard mutual funds are well known for the lowest expenses.

4.  Buy index funds at first.  An index fund simply mirrors a certain industry/area/location.  i.e. a 500 index fund mirrors the S&P 500.  A mid-cap index mirrors the mid-cap market.  A bond market index mirrors a portion of the bond market, .........  Index funds also typically have the lowest annual fees because there is no trick to picking certain stocks.  The index determines the companies the funds buys, so you don't need a ton of money to pay a manager.  After you get more experience/comfortable with investing, you can get more narrowly focused with other mutual funds.

5.  Investing is long term.  None of us have lost a single penny unless you have sold stocks/mutual funds recently, which would have been really stupid.  Remember, buy low sell high.  Unfortunately, too many people see the market doing great and think 'I need in on this' and buy high.  Then, when the market tanks, they panic and sell low.  

6.  Dollar cost average.  In other words, after your initial investment, put yourself on a schedule of regular investing, say, so much $$ per month.  This way, when the market it high, you buy fewer shares and when the market is low, you buy more shares.  This is called dollar cost averaging.  Most companies will allow you to do as little as $25 per month after your initial investment.  The company will withdraw a certain amount from your checking/savings account on any day of the month you specify.

7.  Learn how to invest.  I really like Money magazine.  They put things in easy to understand terms and give all kinds of investment advise..  $10 a year... you can't go wrong.

8.  Also read "The Only Investment Guide "You'll Ever Need".  Long before you ever invest a penny in the stock market or mutual funds, he provides advise on saving/spending money.  A quick easy read.

Morningstar, Vanguard, Fidelity and lots of others have great websites for learning and advise.

[TheArtist]

Thanks a lot Wilbur, I like how you put all of that. Though "money/financial stuff"  isnt something I have really been interested in, I suppose its not going to kill me to buckle down and learn something new on that front. An artist that knows about money and investing?...They may take away my membership card [] lol.

I like the "dollar cost averaging" idea. My sense of things is that the rapid fall may subside soon, then will go back up a bit, but then most of next year it will likely see a slow slide back down even further, then in 2010 the economy will start trucking along again. So from now till the beginning of 2010 will be "buying time".

[GG]

quote:Originally posted by Wilbur

quote:Originally posted by TheArtist

Thanks for all the pointers. By the time I got midway into Cannons post my eyes glazed over and my brain started locking up. By the time I got to the end of the posts... well I think I am more confused and afraid of doing the wrong thing now than before lol.

Called the old man and talked to him for a bit while I was headed to work. I gather that he is pretty good about this kind of thing. He and my brother got the mathematical, structured thinking, mechanical putting things together, side of the gene pool while I got the scatterbrained, creative, daydreamer genes lol.  Asked him how he was doing in the market. Said they had gotten out about a year ago but are now steadily buying back in, just putting in a chunk every week. Told him that I was thinking of investing and he said they would be
in town in a few weeks and he would think of something and bring some stuff for me to pick through? I gather that perhaps he just picks stocks and buys them on his own or something. Again, my brain started locking up. Soooo, now that I have asked I guess I will probably try to to what he suggests, It would be rude not to and we just dont want to go there lol. Or do two things, part in whatever he suggests and also some in a general fund of some sort. I just dont want to do anything where I will have to pay attention or do to much thinking lol. Will take away from my daydreaming/creative time. []

It really isn't that difficult.  Follow a couple simple rules:

1.  Buy mutual funds, not individual stocks.  A mutual fund is made up of several different stocks that a manager picks based on the philosophy of the fund.  This immediately keeps you diversified so you don't have all your money in one stock/company.  Some mutual funds are made up of just a couple stocks, some are made up of several hundred stocks.

2.  Don't get into mutual funds that require a 'load'.  A load is a fee based on the amount of your transaction.  A 'front load' means you pay a fee based on the amount of your purchase.  A 'back load' means you pay a fee based on the amount of your sell.  There are plenty of companies who don't charge loads.  The load is simply a commission paid to the broker/company.

3.  Buy mutual funds with low expenses.  ALL mutual funds charge annual expenses, with the average being around 1.25%.  You never see these expenses come from you because it is simply reflected in the price.  Vanguard mutual funds are well known for the lowest expenses.

4.  Buy index funds at first.  An index fund simply mirrors a certain industry/area/location.  i.e. a 500 index fund mirrors the S&P 500.  A mid-cap index mirrors the mid-cap market.  A bond market index mirrors a portion of the bond market, .........  Index funds also typically have the lowest annual fees because there is no trick to picking certain stocks.  The index determines the companies the funds buys, so you don't need a ton of money to pay a manager.  After you get more experience/comfortable with investing, you can get more narrowly focused with other mutual funds.

5.  Investing is long term.  None of us have lost a single penny unless you have sold stocks/mutual funds recently, which would have been really stupid.  Remember, buy low sell high.  Unfortunately, too many people see the market doing great and think 'I need in on this' and buy high.  Then, when the market tanks, they panic and sell low.  

6.  Dollar cost average.  In other words, after your initial investment, put yourself on a schedule of regular investing, say, so much $$ per month.  This way, when the market it high, you buy fewer shares and when the market is low, you buy more shares.  This is called dollar cost averaging.  Most companies will allow you to do as little as $25 per month after your initial investment.  The company will withdraw a certain amount from your checking/savings account on any day of the month you specify.

7.  Learn how to invest.  I really like Money magazine.  They put things in easy to understand terms and give all kinds of investment advise..  $10 a year... you can't go wrong.

8.  Also read "The Only Investment Guide "You'll Ever Need".  Long before you ever invest a penny in the stock market or mutual funds, he provides advise on saving/spending money.  A quick easy read.

Morningstar, Vanguard, Fidelity and lots of others have great websites for learning and advise.

You provided some good well thought out information.

[Wilbur]

quote:Originally posted by TheArtist



I like the "dollar cost averaging" idea. My sense of things is that the rapid fall may subside soon, then will go back up a bit, but then most of next year it will likely see a slow slide back down even further, then in 2010 the economy will start trucking along again. So from now till the beginning of 2010 will be "buying time".

Don't try to 'time' the market.  Most people who do fail horribly.  Even the 'experts' on Wall Street don't know how to time the market.  If you actually know when to buy and when to sell, you are in the wrong business.

Again, consistent long term investing is what proves to be the best approach.

[sauerkraut]

quote:Originally posted by Wilbur

quote:Originally posted by TheArtist



I like the "dollar cost averaging" idea. My sense of things is that the rapid fall may subside soon, then will go back up a bit, but then most of next year it will likely see a slow slide back down even further, then in 2010 the economy will start trucking along again. So from now till the beginning of 2010 will be "buying time".

Don't try to 'time' the market.  Most people who do fail horribly.  Even the 'experts' on Wall Street don't know how to time the market.  If you actually know when to buy and when to sell, you are in the wrong business.

Again, consistent long term investing is what proves to be the best approach.

Market timing was a big thing in the 1990's. I question about what they mean by "long term" I had my funds over 10 years and they are still way down (it's only a paper loss unless I sell them). However, like my investment guy always said the long range stock market arrow is always up, His chart went from the 1920's to 1997 and I bought my funds in may of '98. In all those years the market always went up with a few dips.[B)]

[rwarn17588]

quote:Originally posted by sauerkraut

quote:Originally posted by Wilbur

quote:Originally posted by TheArtist



I like the "dollar cost averaging" idea. My sense of things is that the rapid fall may subside soon, then will go back up a bit, but then most of next year it will likely see a slow slide back down even further, then in 2010 the economy will start trucking along again. So from now till the beginning of 2010 will be "buying time".

Don't try to 'time' the market.  Most people who do fail horribly.  Even the 'experts' on Wall Street don't know how to time the market.  If you actually know when to buy and when to sell, you are in the wrong business.

Again, consistent long term investing is what proves to be the best approach.

Market timing was a big thing in the 1990's. I question about what they mean by "long term" I had my funds over 10 years and they are still way down (it's only a paper loss unless I sell them).

It's because your funds stink. It's not because long-term investing isn't viable.

A bad fund will be as bad in the long term as it is in the short term.

[sauerkraut]

quote:Originally posted by rwarn17588

quote:Originally posted by sauerkraut

quote:Originally posted by Wilbur

quote:Originally posted by TheArtist



I like the "dollar cost averaging" idea. My sense of things is that the rapid fall may subside soon, then will go back up a bit, but then most of next year it will likely see a slow slide back down even further, then in 2010 the economy will start trucking along again. So from now till the beginning of 2010 will be "buying time".

Don't try to 'time' the market.  Most people who do fail horribly.  Even the 'experts' on Wall Street don't know how to time the market.  If you actually know when to buy and when to sell, you are in the wrong business.

Again, consistent long term investing is what proves to be the best approach.

Market timing was a big thing in the 1990's. I question about what they mean by "long term" I had my funds over 10 years and they are still way down (it's only a paper loss unless I sell them).

It's because your funds stink. It's not because long-term investing isn't viable.

A bad fund will be as bad in the long term as it is in the short term.

You could be right about that. The funds did real good at first. Then after 09-11-01 I only had 2-3 percent growth. I have MSF funds and a Putman Voyager ROTH IRA account. The ROTH was $20.00 a share when I bought them and today it's around $15.00 a share. I'm no investment expert that is what my investment guy is supposed to do. My best fund is the Mass. invester trust fund. They were "B" funds when I bought them with no up front load (unless you take money out of them before the 6-year time peroid is up)  but now they are all "A" funds since 6+ years have passed so the loads are all gone and the funds have no fees. No load funds are the best way to go. [B)]

[Randaok]

There is also a Self Directed IRA for Heath Care Investment in real estate where you place the property in the account and your medical, dental and eye care is tax free as long as the funds are coming from the returns on the real estate held in that account. It is also a tax free inheritance for you children when you pass it forward. I use Mark Kohler out of CA. for this service.  markjkohler.com/