All the discussion about "oil and related".... most of them in the dumper... there are a couple that aren't, but basically this "group" is horrendous...

This is EXACTLY why I love and would remind you all - to keep a decent portion of your investments in the steady eddies. Build your base around them. Once you have your good base - then you stretch your wings and grab a couple high fliers. While they're never the hot darlings - or the water cooler bragging rights... they - for the most part - pay decent percentage of dividends and, while they don't go up quickly - they don't go south quickly either. Do they go up and down -- sure! But they generally do so with the market.

Man, soo true. My gut wants me to keep "putting in" oil, but "catching the falling knife" is the analogy that keeps coming too mind....

Since i don't know much (at all) about tech, what about an ETF for tech stocks? and opinions? and is ETF the right "term"...?

ETF is "Exchange Traded Fund" -- so any ETF is basically a basket of stocks that represent whatever the ETF purports to represent. There's a zillion ETF's representing just about every and any segment you'd want to buy "blindly". I say blindly - because just like Mutual Funds - these ETF's own so many names in the funds that you're results get pretty diluted. I don't do ETF's.... I'd rather just look around and pick one or two good names and invested in them.

Tech to me is a wide cross of "things" to invest in... there's software names - hardware names - hybrids.... and then - while it's "tech" what is it really? Names like FaceBook? Is it "tech" or what?

For me - I'd stick to the biggest of the big. Apple - Microsoft - FaceBook - Alphabet (Google) - NetFlix etc. The reason for that is personal -- I can't keep up with all that is happening in the space that is "tech". I'm too dumb to spot the up and comers -- and it's such a broad field with just way too much information.

Speaking of Tech -- is Amazon "tech" or is it "retail"?? I lump this in the hybrid class --- because it's some of both. It's another one I'd own if I didn't rely so heavily on dividends. Personally I buy EVERYTHING from Amazon that I can.... but I don't own the stock.


If you want an ETF --- you could start poking around here --- because there's so many and they're all different!! OMG!! You want an internet ETF - bingo! You want a social media ETF - oh sure - got it! LOL


http://etfdb.com/etfdb-category/technology-equities/

I think that some of you reading this own Chipotle...and we've discussed the store here several times. I read this next story this morning and laughed out load at first...then started to think about it and how things like this I guess are possible and it is just another indication of no matter how well things may be thought out or are going, something can come completely out of left field and screw up ones investing plans...

http://www.naturalnews.com/052405_Ch...terrorism.html


ANALYSIS: Chipotle is a victim of corporate sabotage... biotech industry food terrorists are planting e.coli in retaliation for restaurant's anti-GMO menu

Too funny!




The key to investing and staying invested - is not to own too large of a position in anything - because things DO and WILL happened from time to time that come from out of nowhere. This is why diversity is always preached - and not to get too piggish.... and all the other little "wisdom" sayings are created over the years. Just when you think you have it all figured out.... BAM! You feel like a fly under a fly swatter. LOL

Hey guys, I found this forum a while back because I want to learn as much as possible about making cars handle (I'm realizing there's more to life than a straight line.) And this forum rocks, especially this thread.

That being said, without reading all 500+ pages of this post (I've read the first 7 or 8 and the most recent 3 pages or so), I have a few questions.

I'm 25 years old and just purchased my first home. I've got a 15 year mortgage on it (3.25% interest), but I've got enough money left over every month to put extra toward the principle, and get it paid off in 6 years or so. Would it be a better idea to take that chunk of money every month, and invest it in a bunch of "steady eddies" to put my money to work for me, instead of just giving it to the bank?

First off, for being 25 years old with a mortgage like that on your first house...I gotta give you props. Nice work!

In a general sense, I'd rather pay off debt first before investing as debt is like an anchor tied around your leg. But Mortgage debt (especially a nice note like you have) is the best kind of debt to have if you have to have any.

Do you have any other consumer debt that needs to be paid off? Student loans, car loans, credit card balances? If so, I'd work on paying those down first and foremost.

If not...how long do you plan on staying in the house you are in now? Long term or starter home? Paying that principle down quicker will make it easier to build equity to parlay forward toward your next home.

That said, it's never too early to start saving for retirement and putting money into an investment account and getting started on a couple Steady Eddies is a great way to start. Just be prepared to put that money to work for a long time, don't look to be using it as an ATM a couple years down the road.

The way I look at it if you have tax deferred savings, yes, otherwise no. Tax deferred, like 401k and IRA allow your money to grow without incurring taxes on the gains every year. Taxes eat into your gains. If the stock value increases you do not have tax liability until you sell. Dividends, on the other hand, are income. And, in the beginning, it is taxed like regular income. Long term gains are taxed at the capital gains rate. My brokerage account keeps track of it for me and sends me the appropriate tax documents. The taxes can get complicated, but suffice it to say it reduces your overall gains.

Long story short, I am currently paying into my 401k 1st, debt 2nd, and then when the debt is down I will put money into the brokerage account again. Reason is the taxes on the gains of the brokerage account for "steady eddie" type investments make the return not worth it compared to the cost of the debt.

If you have goals that require you to zero your debt before you move on, then at the very least add into your 401k (if you have one) at least as much as the employer matches (if this applies to you). I take issue with turning away "free" money if your employer has such a program. Assuming you are not self employed - which in that case I am mostly envious of your position.

My preference is balance. A 15 year note is a strong attack on your mortgage debt. I'd like to see you start putting money into a Roth IRA and then playing around with some good performing individual stocks.

The key to wealth: Invest your money and spend what's left, not the OPPOSITE. Put your investments on autopilot. That means auto withdrawal from you checking account. You can do that with individual stocks by allocating X amount of money a month into your trade account to invest. Have a real balance sheet. Take you monthly net income and expenses and analyze them. Where can you wittle down your expenses?

With all that said, don't forget to have fun along the way. Sometimes we need to put our nose to the grind stone, but without some fun, it will eventually fizzle out.

Good luck!

Like the others have said, that interest rate on a 15 yr mortgage is killing it already, if you don't have any credit card debt DON'T get any and start a Roth IRA, I have accounts at both Schwab and Fidelity and both offer outstanding service. If you do have credit card debt, pay that off first and then don't acquire any more.

Another way to look at paying down your mortgage is whatever extra you pay on it you are effectively earning 3.25% interest on that money. If you aren't paying the interest it's the same as earning it really. At your age you should be taking enough risk that long term you can do much better than that.

Personally, I do want to be mortgage free within 5 years regardless of interest rates. Many have large mortgage debts with substantial monthly interest that far outweighs the size of their investment portfolio. (This is the typical American) Once that large debt is gone, you can really get serious about investing. I like to invest 15% of my gross income every month. Once my mortgage debt is gone, I can increase that number dramatically. It also provides more freedom for a career change or more time off with your family. Those are two major driving forces for me to get debt free.

We all have our unique set of values and circumstances. The key is to have the vision and plan that goes with it.

Merry Christmas fellas...

Merry Christmas, and thanks for the quick responses guys. To answer some of your questions, the mortgage is my only debt, I have no credit card debt or car payment. (I paid 3k for my DD back in '08, and it gets me to work just as well as a new car, lol.) I plan on living in this house for life as well. I do have a Roth IRA already, but I've been slacking on putting money in it on a consistent basis. Vegas you make a good point about career flexibility. The way I look at that, is if the sh*t hits the fan at work, and I end up having to move out of town to find work, it's better to have my place paid off, rather than having to scramble to sell,and subsequently taking a loss.

Long story short, I'll start putting a good chunk into my Roth every month, and maybe shoot for 8 or 9 years to pay the house off rather than 6.

All "investments" and life style choices are individual - and there is no real right or wrong way. Better to say that there are MANY ways to do things and all can be right. Depends on the goals and where people are at in life etc.

At 25 - with a very low % mortgage.... I'd look at your house just like I'd look at any other investment..... in other words - don't put all your eggs in one basket. #1 - you have a short term mortgage. #2 - You're young. #3 - You have a great rate in a rising interest rate environment.

So - there are other considerations to be taken into account here. Your income tax rate. Your job stability. Your life situation stability.

Your mortgage interest is tax deductible --- therefore your real rate of interest is actually LESS than the face value.... because it's helping you avoid taxes. That's a good thing.

Your job stability at your age is a critical piece - because you don't want to end up with huge "equity" in your house - and be short of cash and investments should something change and you need to live for awhile without a steady income. So I would consider stashing some CASH savings first. Whatever that looks like for you. Maybe 6 or more MONTHS of living expenses, including our normal house payment and utility bills and that sort of thing. That way - come hell or high water - you'd have at least 6 months to find another job - or sell your home to relocate etc. I'd suggest that you're in a sweet spot right now - but 7 years from now - who knows what can change!


Once you have your emergency cash stash..... which gives you peace of mind and protects you from downside events out of your control.... THEN you should start to save for investments. Keep reading the thread so that you know what kind of investments you'd like to get into = how they work - and all the other things we write about here. Yes there's 500 pages --- keep plugging away at them while you're saving your emergency fund. I know that at 25 there is nothing "emergency" in your life.... but trust me -- just do it. You'll see why in a minute.

Let's say it takes you a little over a year to get the emergency cash built up to where you're happy with it. Now you start working on saving another 5 grand to buy some investments.... in the meantime you're now another 2 years into your 15 year mortgage.... You begin to buy in to some investments - and when you have 10 grand into your investments --- NOW you can invest your emergency funds -- because you'll no longer need them. You'd have plenty of reserves for an emergency... and you'll have fewer years left on your mortgage. Now you're earning dividends on your investments and you're still getting your tax deduction. All is good. Keep it up. You'll be retired early and loving life.

Great point about the emergency fund of 6 months expenses, I totally spaced that one. My points were all assuming we don't lose the home mortgage interest deduction which some are talking about. I doubt we'll see it go away but if it does it will change things a bit.

Having "downside cash" is the most overlooked savings - and probably the absolute most important one. **** happens these days. Plants get bought and closed - economic risks abound with our government(s) - Markets can, and do, implode suddenly! Take the '08 market drubbing.... it came when we were all on a housing high.... suddenly almost overnight there were financial businesses closing - GM went broke - the dang government almost went broke. None of this was the fault of our own conservative investments!!! Many of us were doing everything right! But here you are - caught up in it. So having a few months of reserves so that you aren't forced to sell stuff at a loss.... or if you manage to survive intact... you might be able to take advantage of some real bargains with that cash! Mostly - it allows freedom of choice and peace of mind and costs very little compared to what it can 'save'.

So I went to see The Big Short last night, highly recommend it, whether you really understand the financial crisis or not. And if you don't you will after seeing it. Also Google "bespoke tranche opportunity". The big bank a-holes are at it again it appears!

come on bubble pop!!!

I never short anything.... that's for big money boys with big money to loose and inside info or in depth info.

As soon as you think you are 100% certain of the direction of a company - you get swatted like a fly. Better to invest in companies you feel are growing and doing fine. It's not as exciting... but we're investing not gambling. Gambling is best done in Las Vegas.

Always a good read in this thread.

It's been a while since I've checked in so I figured I'd post an update. My Real Esate (rental) plans changed this year. The house we bought for our primary residence a few years back had appreciated enough to sell, cash out and pay off our rental plus have some extra to invest. It wasn't a decision made overnight but our long term, very good renter put in their notice so the timing was perfect.

The sell of the house took a little longer than expected and we had many sleepless nights. We ended up getting asking price(minus $5K in closing) even though we had lots of competition in our price range. The 45 day escrow ending up being about 65 with delay after delay. Finally, we closed and got funded.

We moved back into the rental house which is now paid off. We had lived in this house for 10 years previously. We always considered it to be our "Forever Home" so it was an easy transition. I am pretty excited to have my shop back too. It's got a 800 sq ft shop with 11' ceilings and A/C.

Old pic
http://i41.photobucket.com/albums/e2...r/103_1001.jpg


On paper, this financial move is only about a $400 swing in our favor. Which will dwindle considering no longer having the mortgage & rental writeoffs. Although, I think my stress level will be much less without the rental.

I know there is still a chance of going through this whole process again in the future. When the time comes we'll be confident in our ability to make it happen after learning so much this first time around. If the housing bubble pops again we'll be ready to pounce.

:thumbsup: congrats

Great move!!!!


Now - let me ask you what you're going to do with the monthly payment you used to make - because in the long run - that decision will be the important one. In the sense of whether or not you just end up buying "stuff" (car payment etc) or you practice good finances and save most of it and invest it in "something".

I used to discuss "write offs" with my old accountant. His view was - If you make a dollar and you pay Uncle Sam 40 cents you still get to keep 60 cents.... If you spend a dollar to save 40 cents... which way will get you ahead?

Great point.....spending will never get you ahead.

I won't lie, we've already splurged on a new couch and I plan to put some new LED lights up in the shop. After that though we will take money out of each pay check and set it aside. I don't want to get analysis paralysis but I plan to take my time and research and finally take a dive into dividend stock shopping.

OMG! I've had that same conversation with so many people and it is amazing to me how many people just don't get it.

Fact...the only things that are really "write offs" are expenses that you never get back.

Even the depreciation write off typically doesn't work out because if you ever sell the depreciated asset, you have to reclaim every dollar that you had written off as regular income.

In markets like we are having or have been having the last few months.... you'll all discover the "comfort" from collecting dividends while you wait for the dust to settle.

These are the times when - if you're automatically reinvesting the dividend - that you actually want. WHY? Because those dividends are buying more shares... and that's how you get the snowball rolling!! Be happy! It will pay off. Trust me.

a lot of good info here

All the cash that is being pulled out of world markets -- will earn nothing (given the historically low interest rates) -- and will want to find a home (employees being put back to work). I know that I have over 4MM in cash in the account I use for discussion here. I won't try to catch a falling knife... I won't load the boat the minute I think we're headed higher... I'm patient. But that money is waiting to be put back to work.

Yields are RISING as stock prices go lower. I'm loving it.

I finally got to the 100 page mark in this thread, and I didn't want to comment until I finished them all. But I got into a "discussion" last night on facebook that may be of interest to investing 102, or at least got me thinking about the effect on stock prices. The discussion was about people wanting to raise the minimum wage to $15 an hour (currently something like $8 here in Michigan). Since McDonald's has been mentioned a few times here, but it could apply to any retail/food company, I figured I'd ask, how do you guys think it would effect stock prices and dividend payouts? I would imagine dividend payouts would drop, at least initially, due to increasing costs, and therefore less profits. Not to mention the effects of every other sector that pays above minimum wage that may or may not give their employees a similar % increase in pay, and how much "disposable income" people in these sectors would then be willing to invest. If this becomes too political, feel free to delete it, the last thing I want to do is derail this thread. I just find it to be an interesting topic.

Food for thought. An article excerpt summarizing the market in 2015, from Liz Ann Sonders @ Schwab:

It's a carazy market out there!

That's a very interesting question and has many many variables and sides to it. I don't know that anyone can say "this" will happen... or that something else will play out. I don't think we have any historical basis for such a large pay increase.

It's a good question -- and I don't really see a "political" discussion developing around it. It really is appropriate because it's a BUSINESS question - and it's also a FUNDAMENTAL change question.

Yeah, will be watching for a while to see where this goes, waiting for stocks on my wish list to hit a good entry point....

Personally I think if you're invested in good companies with, and this is key, GOOD management, it won't affect them much. Well managed companies weather storms like this all the time and will find a way to adapt and continue to run their businesses profitably. McDonalds, who I don't like, is putting in kiosks to order food from. My guess is those kiosks work for a bit less than the current minimum wage we have now.

I would just remind everyone that this is the case if shares are actually bought at the lower prices. If you buy at a higher share price and it goes down, your yield doesn't go up. There are a lot of good 4% yields out there now right now.

I'm really thinking I shouldn't have posted away about my recent short term successes, might have jinxed myself. But, I do have some cash set aside for things like what is happening now, just sitting back and waiting it out for now. It's a little more than unnerving though that these first 4 days have never happened in history before though.

Yield is ALWAYS based on COST. The yield doesn't fluctuate (unless the dividend is cut -- or unless the divided is raised) on your cost basis.

There's many posts in here about calculating your yield.


NOW --- HERE'S the big reminder for the year!!!


Remember the saying "BUY LOW -- SELL HIGH" ?? I believe that buying LOW is the most important aspect of investing. Obviously - we never know if we are buying low at the time. This is purely a judgement call based on where you are mind set wise. Can you stomach the drops in prices AFTER you've bought? Are you able to buy MORE later if the price stays down or goes lower....

For the AVERAGE INVESTOR -- that is buying a relatively small number of shares at a time... I wouldn't worry about trying to figure out exactly when the market is low... Rather, I'd just buy at regular intervals and it should average out over time. The key is to be invested - and to stay invested.

I'm in a bit of a quandary here... I have 11 holdings (12 if you count cash). Each of my 11 are currently valued at around 5% of my total except for 3 which are 2.5-3% of my total. As you can imagine, those 3 are oil related stocks.

So while looking to step in the market a bit more today, and balance the portfolio out...numbers say to pick up more of those 3 stocks. :D

Should I pay more attention to balancing my holdings back out...or add to those stocks that haven't got as beat up as the others? I still like and am holding XOM, ETP and KMI, I'm just not as enamored with them to keep on adding to them as much as I have already done during this slide.

I'm leaning toward adding 1% to the other 8 winners instead.

Lance's post reminded me of a question that I have been wanting to ask. If Lance owns 11 stocks with each being 5% of his total wouldn't that be 55% total?

If I have $20,000 in the market and own 10 stocks with each having $2,000 value per stock my percentage is 10% per stock. How do I get down to 5% per stock without adding more stocks to get to 20 total stocks at 5% each =100%.

I hope this makes sense.

Thanks, Jarrod

You forgot to add in my 12th holding... Cash... :D

jarrod, thats a good question, one that i'm interested in hearing the answer of, certain "common sense" things, i lack....

It always seems like you're speaking directly to me. I moved funds to my just opened Roth IRA this week. I've been watching every single one of my stock picks go down each day this week so I've been hesitant to pull the trigger. These are going to be long term holdings and I chose them specifically with that intent so I just need to sack up and jump in.

To get your stocks to 5% your either going to have to increase
Your cash or buy more stocks in different company's.

John

Jarrod ---- The 5% per investment is a "goal" -- this goal is very hard to obtain until you're at about $100,000 total invested. At that point - 20 stocks with about $5,000 gets you there.

Now --- Everyone needs to remember that this investment goal can include more than just stocks -- because what it's really trying to say to people is that you don't want to have too much RISK in any one thing that could possibly do real damage to your investments. If one 5% investment went to ZERO -- it's really not a huge loss -- versus if you had 35% in one thing... so it's really nothing more than a guiding point.