Why didn't you beat this into my head 25 years ago? :willy: :willy: :willy: :rofl: :thumbsup:

Thanks for taking your time to share your knowledge to benefit others willing to pay attention and apply themselves. If this thread doesn't have a positive impact on at least a few individuals futures I'll eat a Pilot Power. :D

Two separate posts here -- will respond to both in this one:

REAL ESTATE --

I own "shares" of an apartment house LLC -- I own 2/3rds of it - it is professionally managed - I do NOTHING but collect the interest payment every 6 months. Usually these LLC's will accept investments of around 50K per "unit" (share). Sometimes they'll sell a 1/2 a unit if they have two people that only want half each. It's a good way to be in real estate WITHOUT THE HASSLES.

Downside - totally illiquid... but many of these are "flipped" in about 10 years when the tax benefits run out. Just something to think about.


COLLEGE --

Start early enough - invest in big cap dividend payers -- in 20 years (starting at birth -- they'll spin off enough income to HELP pay the tuition and you'll probably end up with a nice college graduation "gift" in the form of still having some capital left after 4 or 5 years of school. AND OR - if they choose a different path -- you can use the money for something else.

Do the MATH FIRST -- if you have a 3 year old -- you have 15 years to pound some money away. If you can save $400 per month -- that's $4800 per year -- 15 years -- you'll have 72 GRAND IF YOU HAVE ZERO CAPITAL GROWTH (this scenario is almost impossible!) which should spin off about 6% dividends or $4300 a year... so then if you took $5000 grand a year from capital -- and a little "out of pocket" -- you're good to go for a state school. Private school?? You better hope you have real good DNA and he/she gets a full scholarship! Both my kids are "out of state" tuition -- and the living expenses on top of that - figure 35 to 40 grand per year - took Alex 5 years - and Adrienne is right behind him - he's out - she's in (they're 4 years apart).

Student loans are just for those folks that didn't SAVE now -- so they'll pay much much more LATER. I want to BE the bank not OWE the bank. But that's a personal issue! :willy: :D

Good info but you'll be far better off if you buy some good dividend paying stocks and choose to re-invest the dividend. That way you "SHOULD" have capital growth and collect the dividend.

A school "savings account" like this really needs the growth component to it to help you get there... bonds don't "grow" but are bought for SAFETY. You also don't need the tax free status of the bonds. That is just giving you a lower return and you need a higher return - COMPOUNDED - to also help you get there. So just using McDonalds stock as a well known example -- whatever you'd have put away 5 years ago -- would be MORE THAN DOUBLE what you put away.... already! Where as your bond would still be the exact same value (if you're holding to maturity). If you're not "comfortable" with all stocks - then do half and half....

Put the account in the childs name with you as joint owner -- that way the dividends are taxed at THEIR rate which can be ZERO.

Good call Greg! I will look into the joint accounts for the little ones, and the dividend plays are more interesting than my muni approach. Sorry, I'm a cpa and have ultra conservative tendancies. Can you send me more info on the mgmt co for your LLC? Our mgmt fees in Hawaii are outrageous, and I don't have a lot of time to deal with tenants. However, you LLC sounds intriguing!

Thanks for the info Greg! The stock route sounds more appealing to me. I'm a total newb at this. The only investments I have are in a 401k. My wife and I have been saving money since we got married and now is the time to invest instead of letting the money sit in a savings account.

No point in me sending you LLC info -- but they are on the internet.

http://www.suhrco.com/

I don't think they do anything in Hawaii!

But there are many, I'm sure, outfits in Hawaii that do this very same kind of deal. There you just need to look around and get references and have meetings with them to see if you do business the same way. I'm a "pride of ownership" guy - I want my buildings looking tip top - and I want them run with integrity.... Some of these outfits are all about ROI - and never put anything back into the building... they just milk it. That's not my style and I'm not doing business with anyone that runs stuff that way.

I also am BIG - in fact - HUGE on big money downs... and NO REFI's -- put 35 or 40% down -- and fixed financing. That's the steady eddy way to make money. SO all those things are important to me.

Well -- keep liquid! Cash is king -- so don't go "all in" and then be a forced seller when the market is against you. Don't get greedy on me!

The market historically has never been down THREE years in a row in any three year period - or some such rule.... but I'll guarantee the minute you get in -- there's a little guy on Wall Street that yells to his buddies -- "he's in! Take 'er down!". And they squeeze and squeeze til you quit. Then he hollers uncle and the market goes up. If you sell when it's down -- he yells to his buddies "he's out! Take 'er up!" and the market goes up the day after you've just sold. You only beat him by staying "long". You can only stay long by buying GREAT COMPANIES - and getting PAID TO WAIT (the Dividend!).

Forget the stock buying "tip" you get at the grocery store....

Buy companies like:

Phillip Morse
Altria
Con Edison
Coke
McDonalds
Johnson and Johnson
Kimberly Clark
Pepsi
AT&T
Verizon
Proctor and Gamble

If you want some more "yield" with HIGHER RISK you can sprinkle in a little:

Showing SYMBOLS here.

HYG --- High yield government bond fund
JNK --- Corporate junk bond fund
NLY --- Mortgages


These are all names you can actually tell someone what they do! You don't need to be brilliant... you just need to win by staying in the game.

very informational thread. I'am also in the real estate investment side of it. I purchase properties at trustee sales auction , fix and sell them but its not as simple as it sounds. most people think you got to auction buy a house, work on it the next day and put it out on the market in a few weeks, the way they show on TV.
sometimes it could be a long process and a bit of a gamble. it can be a real gamble because there are no (zero) warranties as to what you are buying. at auction you are pretty much buying the deed of trust from the bank and you really have to do some homework or can end up paying big bucks for a piece of paper.
example you go to auction because there is a said property going up for sale.
you show up, fight the rest of the bidders , you get the winning bid, pay for it in full there and then ( you have to show proof of funds in cashier checks in order to bid) they collect as soon as you get winning bid. so you think you bought your self a piece of the rock, but some time later you find out you have bought a 2nd deed of trust or 3rd with the 1st going on sale tomorrow which in turn will completely wipe yours out. so you get NADA but a huge headache.
on the other side of the coin do your homework and you can get some good deals at trustee sales auction. sometimes you can get about 30% to 40% profit from initial investment in about 6 months. so flipping can still get you some money its just not a walk in the park and a bit of a gamble in a lot of aspects.

Thanks again! I enjoy reading your posts. You have a way of putting things in a language I can understand. I spent about 3 hours lastnight doing research on investing and it was mostly very boring dry reading, unlike your posts.:thumbsup:

So.....what's the perferrred way to buy stock? Open up an online account and have at it, or best to go through an advisor that we can meet with face to face?
I think I got my wife on board with buying stock...we'll see:rofl:

I'm also curious what's your take on buying stock for someone with little or no experience. For instance, I've got a couple of shares of Apple, Nike, Caterpillar, Disney and Harley (all 10 shares or less). Nothing that will make me rich but I wanted to get my feet wet. Other than recognizing the names of the companies I couldn't really tell you why I picked them or if they were even good choices to begin with. What's your take on this Greg?

:thumbsup:

Thanks! I'm just a hot rod guy - but I like helping other people... and would truly like to see AMERICA save and invest more because money isn't everything... but it beats the hell out of whatever is in second place!

If you're researching - there are really only a few things you need to look at...

Do you understand what the company is/does?

Do they pay a small dividend that has been paid over a very long time - and they have had stock price appreciation to make up for the smaller dividend?

Do they pay a larger dividend - but the price is "steady" over a long period of time (more like a utility) - and has their dividend GROWN over time. i.e., 5 years ago they paid .38 per share and they're now paying .61 per share... that means they're EARNING MONEY and returning it to the share holders. Not wrong or right just a different way to get there.

If the stock price dropped in HALF -- would you buy more of it? Because you understand their business... and you trust the product or reason why you bought it. So it's "outside forces" that crushed the price -- not because they screwed up the company.

Well good for you -- you've at least got a start!

Okay -- stock by stock - you've got DIVERSITY - you have Apple (retail/tech) - you've got NIKE (retail) - Caterpillar (industrial) - Disney (entertainment) - Harley (manufacturer/retail/automotive).

I think Harley is too "faddish" for me to invest in... Sorry.

Don't buy anymore "retail" - you have enough exposure there. You really have 3 out of 5 that relies on some sort of CONSUMER buying at retail.

ALSO -- every one of these pays a dividend but they pay a very SMALL (under the rate of inflation) dividend... so on my screen they'd have to have a larger than normal stock price appreciation in order for me to buy them. So for your next investments try to pick a couple with higher dividends... AT&T -- VERIZON -- KINDER MORGAN PARTNERS - PHILLIP MORSE - ALTRIA... they all pay more than the rate of inflation AND have price growth...

I'm not an advisor nor in the business - I'm retired... and never was in this business. I just run my own money.

Discount brokers are perfect for the "small" (and large) investor. They have very small fees... so your profit isn't eaten up with buying/selling commissions. They have useful tools on line - they walk you through if you need help you can go to their office or call 'em... or email me...

All great and very appreciated info. Here's a new one... What are your thoughts on Roth IRA vs Whole Life Ins. vs the Dividend paying stocks model thats been outlined here. My only investment for my retirement so far is my 401k which I have maxed out at what my company will match. I'd like to start putting away some more for retirement and would like an unbiased opinion. The only opinion I have so far is the Life Ins company.

Thanks

Life insurance is a savings account for the beneficiary. :unibrow:

As an "INVESTMENT" it sucks bilge water.

A person should have enough life insurance to make sure their family doesn't suffer due to their loss. So if you have a 200K mortgage - and 50K more in debt - buy a 500K term life policy and that will insure the loved ones can live in the house debt free - pay off all other debts and have enough to bury your sorry ass. It's paid tax free - so it's a net net amount. Put the rest into savings/stocks/401K/RothIRA and hope you don't croak.

If you're a big earner - buy a $1,000,000 term life.... which will give the family enough to pay off debts and get started on a life without you. It's not an investment vehicle - it's an INSURANCE POLICY -- it's just there to help people get over the hump. As your investments grow and you age - reduce the face value unless you just like to pay insurance companies.

Thank you for the honest opinion Greg. I've been sitting on those few stocks for a year or so and the performance has been ok. I would like to get a little more involved in this as I feel I have a risk tolerance for this and would like to see some earnings. I hope you don't mind me emailing you with any questions I may have.

GREAT THREAD everyone. Definately a lot of good information, let's keep it going.

Hey -- Here's what I've been preaching! Look at a FIVE YEAR chart of NIKE --- Symbol NKE http://www.google.com/finance?q=NYSE%3ANKE

Expand this chart out 5 years... using the time choices in BLUE at top of the chart.

Check it out -- in 2007 the split 2 for 1 -- so if you owned 50 shares in December 2006 - you now have 100 shares! And they've increased the dividend payout along the way. They used to pay .19 per share per quarter and they're now paying almost double that! And the stock price has almost doubled in the same 5 year period!

So you have twice and many shares - paying twice as much dividend - and the price has doubled.

If you put the same $1,000 in the bank savings account 5 years ago -- you'd have about $1,010 now! WHOO HOO!

Thanks. This covers Term Life. What about Permanent Life Ins. policies?

Why do companies split their stock and is there anyway to know it's going to happen etc?


Also, I just noticed that Halliburton pays a dividend on their stock. Even though I've bought my stock through the ESPP, I should still get that dividend payment too, correct? I'm pretty sure I checked reinvest any dividends with my account but I'll have to look. I'm kind of excited since I've never known how to look up stock performance information before. Google Finance is pretty cool, lol.

I'm just not a big life insurance guy -- but I'm in a lot different boat. I've only ever used Term life.

Look at life insurance this way -- you give money to someone else -- they manage it and make money off of it - and then they gamble that you're going to keep paying them for a bazzillion years (most don't) and they might have to give you some money back.

So - it might be considered "forced savings" for those that can't save but will "pay the bill".... but no matter how you cut it - it IS NOT a good "investment".

Use it for what it's for - and INVEST in stuff that will make you money.

Just my opinion.

Well there -- see how you are! Next thing you'll be telling me what to buy!

Google finance or Yahoo finance -- both good for just poking around and looking at stuff. Glad you found it to be somewhat useful.


Companies split their stocks for a variety of reasons -- usually to keep the 'momentum' going in their stock (it creates excitement in the market) and - #1 - to keep their share price "affordable".... People can buy shares at $35 or 50 bucks -- they become "hesitant" when it gets up to $100....

They usually only split like this when the company is GROWING and doing well.

A sure sign a company SUCKS --- a REVERSE SPLIT.... when they take 10 shares and turn them into 1 (expressed as 1:10) !! Citigroup (C) did this awhile back.... because their share price had fallen to about a $1 a share -- at that price -- they get "de-listed". It didn't help. :lol:

We could talk about reasons for days - but basically it's (a stock split) a "reward" to the shareholders.... people love 'em!

Berkshire Hathaway (Brk.A) (Warren Buffett - heard of him?) has never split their shares - ONE share is $112,325.00 PER SHARE -- how many of those are you going to buy? :captain:

I like Buffet, I have owned his Brk.B shares for over 5 years. However, it doesn't have a dividend and it is about flat split adjusted since I have owned it. I sell out of the money puts and covered calls giving me a descent yeild. However, even with my options, I would have been much better off in MCD. How do we inverse hindsight?

Oh god -- if I had a dollar for every one I've MISSED... There's so many high fliers... a guy could have made an easy million on a ten thousand dollar investment!:faint:

Yeah -- I'm not a fan of Buffet - and if you think you have flat returns now - wait 'til you get up one morning and read he's passed away! POOF!

NO THANKS! I wish him all the best - but I ain't counting on it. Talk about gambling?!?!?

It's amazing -- when I look at stocks -- which I do CONSTANTLY -- how many big moves I've missed in names you'd never guess in a million years had the kinds of moves they've had. McDonalds is just one prime example that everyone understands and "never knew".... I hate the product - don't eat there unless on a single guy road trip - but it's a great investment. Ditto the Terbacky stocks (MO - PM - LO)... I don't smoke - hate the smell - think it's DEAD wrong... but I'll invest in them!

So given the choice between two stocks that both have done well over the years, would you recommend purchasing fewer shares of a more expensive stock or more shares of a less expensive stock? Does it even matter or is it personal preference?

Dollar amounts are what matters --- so if you're going to invest $10,000 -- then I'd pick FIVE stocks and put in $2500 per... or 10 stocks and do 1,000 each.

I wouldn't match shares.... you'll never get it right and it's too hard to track!

If you put in 10,000 and next year your account is at 12,000 you know you're okay -- one stock will have done great - a couple okay - and a couple not so hot. If you've picked good names... don't do a thing... because I'll bet you that the next year you're mix will have different results and the one that was just "okay" might have moved up the ladder and be "the hot one".... that is WHY YOU DIVERSIFY! I'll guarantee that you can't have all 1O stocks (or 5) all up and you'll never be able to tell me in advance which one is going to be the star. Just pick 'em - re-invest the dividend - add money when you can into new names (more diversity) and pay a modest amount of time listening to the news or read the business page.

OLD RULE TO GO BY...... When INTEREST RATES ARE HIGH --- STOCKS WILL DIE.... So there will be a period when the "flight to quality" will move out of stocks and into bonds and interest bearing instruments... but if you try to "time" that - you'll always be behind and lose money trying to chase the market. Just diversify - pay attention... and buy more when they're down cause you get more shares and that brings your average cost down - over time - your TOTAL YIELD will be a home run.

Greg, big thanks and kudos to you...all this money talk started out feeling taboo for lateral-g but that's gone now and I'm learning a lot. I'm not even tired of reading about how rich you are anymore! :lol:

I have actually stopped reading my fresh copy of "Building the Mule" because of this thread. Weld's "Building the Portfolio" anyone?? Now I know how I am going to play this year's SEP.

Oracle seems like another one that fits the GW profile no? Albeit on the moderate side for dividend returns, but their 10+ year is solid.

I got my calculator out and no matter how hard I try 2500 does not go into 10000 five times...and you want me to take investment advice from you. :lol:

Honestly Greg I hope to meet you some day. You seem like a good guy.

Reading this thread has made me decide that I can't keep all my eggs in my 401k and employer's plans, especially at age 45. I plan to take $10k after the first of the year and get going in stocks. One question though, how do you identify which stocks pay dividends?

Greg, now that we got the basics out of the way. I'd like you to address the proper allocation of one's resources (ie wife, kids & cars). This seems to be my greatest downfall in saving for the long term. Meaning I give the wife & kids too much, spend a little on cars and know I should be saving more! I know nothing about you, but anyone building a car like the 62 must have done well for themselve (And I assume has paid their dues & made sacrifices when younger). Thanks-Morris!

This thread is becoming addicting. I just wish my cash was updated as fast as this thread so I could take advantage of "Professor Weld's" financial advice.

Greg,
Thank you for taking the time to educate us. I really appreciate it! I know it's something you wouldn't have to do. Very educational. My favorite thread right now!

Wes

WoW!
alot of good advice here!

just to give another example, this is how I do things.
I own two houses the one I live in and the one I used to live in, I have the renters pay the mortgage and taxes and expenses on that one with thier rent.

outside of my mortages I save 20% of my income in invstment and savings of some sort. When I was single and when my wife and I were both working it was 30%
I lived in 300$ a month rentboxes and drove and old copcarbluesmobile for many years.

The only reason I bought a new car is becuase I got one tax free at invoice from Iraq...it won't happen again

I maxed out my 401k, (and I think everyone should) I like the HUGE boost it gets from the money coming out of my paycheck BEFORE it gets taxed....that garenteed growth right there!!! whatever your tax rate is you get an automatic growth boost the day it goes in the account..plus whatever the account makes....plus whatever your employer might put in.

I max out my IRA

I have all my money in my government TSP or my Schwab account which I have an IRA, individual investment account and a checking acount in. I use my investment account as my "savings"

Most of my investments are in index funds, no fees and they track the market....there are very few managers that beat the market and when they do its not year after year...and index funds don't have fees to pay which compounded turn out to be alot of money.

I have a couple high divedend stocks just for fun.

schwabb has some nice tools, one of which is an account analizer. you tell them your investment needs and it compares your needs to your account and tells you what they recommend you sell and buy...as in sell some large caps and buys some small caps because you said you could tolerate more risk than your account reflects. I use it.

anyway thats what I do.

I would suggest looking at what you can reasonably save, do a budget, actually look at what you spend money on and how much you need to spend and then look at what is left over and I would suggest setting up auto transfers to a savings or other account.

Most people if they make x, will spend x, or x+. Many people are focused on looking wealthy than actually being. Live below your means and save what you can then, putting it to work for you.

I know, it was kind of a joke. The next time my wife asked for something I could tell her "Greg said she couldn't have it". And when the kids don't want to leave the nest I can say "Greg says". I just hope I don't have to eat dog food & live out of my airstream when I'm older (no offense to anyone who full times it in an airstream or eats dog food).

IMHO
and I don't intend to offend anyone but, I may...so sorry
if you own a 69 camaro, 66 stang, or any hotrod, protouring, etc or a laptop...your either
a. are doing ok enough to have saved allot of money... or
b. need to reset your financial priorities.

I personally never bought myself a toy after the age of 20 until I had over a years paycheck in savings...
we are talking an Army Paycheck so I don't want to here how somebody doesnt make enough for how much they work to save.

the thing is , you put the money directly in from your paycheck so you wont ever see it, if it isnt there you cant tell anybody "no" it just wont be there...
20% of every paycheck is reasonable less than that you screwing yourself, your future your kids future.

I have lived with really poor people in cardboard boxes with goats and not a pot to piss in LITERALLY! and I have done it all over the world in about 8 countries, really poor people are everywhere, but even they save half a cup of rice for tomarrow.

There are allot of people..(often immigrants) that make nothing and still save way more than 20% of thier income, they don't have big screen tvs, half a dozen vintage hotrod cars, go out to eat all the time. smoke 4 bucks a pack cigerettes and drink expensive beer etc...at least until their pretty darn comfortable, and if more americans had this dicipline than this country wouldnt be in the shi# we are in...its not the banks fault, or even billions of $ war spending or a lack of liberal government social programs..its people living like rockstars when they should be living under thier means...

anyway, sorry for the longwinded rant no offense meant to anyone

Is it true you can't touch a Schwab account until your 59 1/2 without getting penalized?

Your IRA....or you get penalized...but I think there are exceptions for school and emergencies and the like but don't quote me on that..I'm not sure.

I have a self directed Schwab IRA from a former employer rollover, and you can withdraw 100% of it once a year tax and penalty free as long as you put 100% of what you withdraw back within 60 days. I did it last year to help fund a business venture.

With a Roth IRA, you can withdraw whatever you've put in at any time. You can not touch the earned interest or you will be penalized. This is before you're 59 1/2. After that you can start withdrawing and living on the money from the account.

So the rule I look at FOR ME.... if the dividend is "low" -- then the offsetting information has to be GROWTH... and you have to see growth of the dividend payout over time --- SO YES! Oracle meets that criteria. It wouldn't be on the top 20 for me - because there are so many (dozens and dozens) that pay more and have as good if not better growth over time. BUT all of this info needs to be tailored by each guy to fit himself. AND #1 is you have to be happy to hold the investment and buy more IF it goes down (which is the equivalent of stuff going on sale!)...

That's the problem with two thoughts going on -- trying to formulate those ideas and type - and watch tv at the same time! :willy: :willy: :lol:

I can only speak for SCHWAB where I have my accounts -- they have a "RESEARCH" tab... and in there they have screeners. You can select various parameters that you'd like to see in a stock ----- so ---- you can select size of company - and finally down to the dividend. Schwab uses less than or greater than signs for setting up these screens and they also have pre-selected screeners. I've used these many times when I'm trying to find homes for new money. I select the criteria -- then go and see if there are any names I know - then start drilling down on the other criteria I've set for myself --- increasing dividend payout - growth over time - etc.