You know I agree with those ideals if the self discipline exists. You just have to make sure the risk is worth the reward. I'm in no way saying it's a bad play if your head is in the right place. I've just seen the personal finances of to many people.

And in today's society we need instant gratification. The "McDonalds Effect" has taken over everything. We don't like waiting for anything. Combine that with credit cards and its no wonder so many people are drowning financially. But long as they look like they are well off.

I heard something awhile back, don't know if its true, but said something to the effect that if you are 100% debt free, and have $10 dollars in your pocket, you are actually richer than 80% of the people in the world. Don't know if that's true, but when you think about it, it probably is.

I just saw this video:

http://finance.yahoo.com/video/playl...144216321.html

Pretty interesting but it's everything I've already been trying to do. Live within my means, don't buy crap I don't need, have zero debt and some sort of investments. He's just doing the basics and making it work! :G-Dub:

What he's done is great and 180 degrees from the "normal" American. Kudos to him. I really don't think his assets are large enough to sustain retirement with inflation and a family. What about health care and college to name a couple majors. He should keep earning while he's young.

Personally, my desire is to live with more lifestyle. To have the freedom to travel, eat out, and pursue new desires. I do plan to have similar ideals with no debt and waste but much greater income.

I've lived the new cars, boats, motorcycles, etc... I'd rather cement lifestyle a this point in my life.

I was about to share that after his 'hair on fire' comment because I thought of Greg. lol

It's all about priorities, some people are happy doing the simple things in life, some want more. Nothing wrong with either. But the principle of saving more and spending less is lost on too many, myself included.

We aren't really taught money management in public school, and like Trey said, the marketing industry does their job well, so this is the case. We work all our life and hope we can survive on SS when we need to retire, all while beyond our means.

At 39yrs old I started turning that boat around late in life, but I'm getting there, paying off medical debt, a little left on one car loan and a student loan, then I'll be left with just my mortgage, which will be a great feeling. Next year I'll be debt free and ready to get serious with investing.

I still remember selling my dream Suburban, which we all loved as a family, a classic 91 GMC square body, near perfect shape. Some guy in Chicago had to have it. I made the choice to sell high, made some $ and paid off the last credit card. It was bittersweet, but I'm happy I did it in the end.

when all of us begin investing or saving, in the beginning there are always sacrifices. It sort of changes our frame of mind, to live within our means. Which is always "have" cause we live here in the land of opportunity, but it still takes sacrifice, work, discipline and hard work. Sha'll we have it any other way?

I certainly wouldn't... The pain of discipline weighs ounces, while the pain of regret weighs tons. While I've increased my income and decreased my outlay, I'm living more frugally. I've grown to enjoy the simple things in life. Having REAL financial goals and a REAL financial plan in WRITING is the key. Without tracking your money today, investing enough money every month, and projecting your required income at your desired retirement age, you are just a boat in the lake with no sail.

Philosopher out...:lol:

Just happened to run across this gem...

I can only add to this discussion about saving and not saving and the consequences.... by saying that I've been poor... and I've also lived a "normal" life of making car payments / VISA payments etc... and I've been fortunate to have done a few things right and been lucky at the same time.. leading to 20+ years of being relatively "rich". Rich to me is different than "wealthy". Wealthy is private jets - and 100 foot yachts.... Rich is just being able to not have to question what you want to do or which car you want to write a check for... having a second home... being able to live life pretty much free of financial worries.

I think if you asked 100 "rich" people how they got rich... 98 of them would tell you they earned it. All of them would NOT described themselves as "rich". More likely they'd say they are "well off"... or something similar. But here's my real point in the post.


You can not SPEND yourself to wealth.


So the choices you're all discussing.... need to be measured by pretty much a single point in time. RETIREMENT. And how you'd like to live for about a THIRD of your life. Living hand to mouth... or being able to really finally enjoy the fruits of your labor/education etc by being able to take a cruise once a year... or go to Hawaii.... or being able to pay for your daughters wedding.

A MODEST amount of "less" (if that's what you have to do) NOW will pay off in spades later with far MORE.... even if that more is relatively simple peace of mind.

To do all of this -- you not only need to save -- but you need to make your money work for you and grow. That takes some work -- some effort -- some risk -- but what it really takes is a plan.... which is what Todd is saying and he's 100% right.

I think that's what a lot of people feel. If they have a house, new cars, new TVs and new clothes, they feel wealthy. Yet they are poor! And I agree with you talking about retirement as well. If you spend the first half of your life doing the right things, then all the wealth and retirement will come.

One of the stories I always talk about is one of my Dad's best friends. Every time I talk to him, he talks about the importance of retirement. Well now he's 58ish and retired from the City Water Department. Makes more on retirement than when he was working. But what I don't like is that he has zero equity in his house, just bought a 200K diesel pusher motorhome along with a new Toyota truck to tow behind it.

So yes, he has retirement and is bringing in a full paycheck...but he's swimming in debt. I just think that's crazy. What if the retirement fund goes bankrupt in 10 years? He will have to go back to work. I would be very uneasy if it was me.

I just read through the last 10 pages after being away for awhile and its so refreshing to see the thoughts and insight from all of you. I have been neglecting my accounts, although they have been making money, due to a lack of funds. However, I just paid off my motorcycle and will apply that extra $300 towards my savings and investments. The comments about purchasing new cars and such makes me cringe. Having to make monthly payments on something I see as a luxury and not a necessity has changed my perspective on buying "new" from dealerships. As much as I would love a newer vehicle I believe that monthly payment is better spent towards accruing future income that will help improve my lifestyle and not the portrayal of a lifestyle I wish to have by riding around in something new.

I guess what I'm trying to say is that I am glad to have eliminated some debt and look forward to adding to my investment income. Like Todd mentioned when Greg questioned our lack of participation in this thread. For once I have decided not to disrupt the class and actually listen to what is being taught. Thank you to all that educate us in this thread.

And don't forget our collective blind spot - I've always paid cash for cars and haven't had debt in 20 years and save pretty good. But I've also spent well over $100k on my car project over the last 12 years and all I have to show for it is a project car that *might* fetch $20k if I'm lucky. Would I change that path if I could go back ? Yes, I would.

Still check this multiple times a day. Although I dont post much. Glad to see a few other names in here chatting it up. :)

I agree with the "good debt" as long as you understand it and use it to your advantage. Which, unfortunately, a lot of people dont understand it and it hurts them more than they realize.

Great discussion guys...

I doubled my retirement contribution today. :thumbsup: It's 11% of my NET income. The only reason it's not 15% is due to my goal to acquire 1 more property in the next 5-7 months. Once I have a tenant in that property, I plan to increase my investments and work on paying off my primary in under 15 years. Hoping no later than age 50 to have 3 free and clear rentals and primary residence. My long term goals include 2 more rentals for a total of 5 free and clear investment properties by 55. That should create 6k in monthly income based on today's numbers which will accommodate financial independence with no debt. At age 65, I can start drawing on my Roth, SEP, Life Insurance, and Social Security. I anticipate a 1031 exchange on my properties in that ball park to a new market or a commercial interest. Time will tell..... Kelli has a government pension and is investing around 15% of her gross income into a Roth IRA and Life Insurance product on top of her existing 403b. We are very diversified. The rentals and the pension reduce the dependency on timing the stock market at retirement age. The Roth/Life Insurance, allow us to pull on them in our high income years to decrease our tax bill.

One of the major lessons to be learned from that video I posted is the fact that it doesn't matter how much money you make. If you invest 15% of your gross income into investments and curb your spending, you can achieve financial independence at an early age. I can tell you for a fact after reviewing countless financial worksheets that it doesn't matter how much money someone makes, they'll spend more. Take control of your finances today, so you can live like a King later.

AWESOME! Great plan too.

Well..... looks like you believers in Faceybook (FB) might finally be getting it right. Big day for them yesterday. That might just be the inflection point where people come back to the stock.

+++++++++++++++++++++++++++++++++++++++


On another note:


Rodger Lee (Ironworks) was up here (Bellevue, WA) so he and I could take a three day rally driving school called DirtFish. That fact has nothing to do with investing except that we discussed the difference in cost of real estate between Bakersfield and Bellevue. He was taken back by the high cost of houses and land here. To which I said "here's what drives that market".... "we" have a huge number of very large companies that pay (on average) large salaries --- which drives the price of housing. THAT got me going down a list of who's in the great Pacific NorthWET.

BOEING
MICROSOFT
AMAZON
STARBUCKS
NORDSTROM
PACCAR (Kenworth and Peterbuilt trucks)
EXPEDIA
T-MOBILE
COSTCO --- probably the lowest average pay by far
NINTENDO
ALASKA AIRLINES
HOLLAND AMERICA LINES
ZILLOW
WEYERHAEUSER
PEMCO
DENDREON
ZYMOGENETICS

These are just the ones I could think of offhand.... and for the most part -- they're located in the greater Seattle area. That's a pretty powerful group of companies for a "smallish" town/state. And I'm certain I'm missing some names!

Now to another point.... there's about a half a gazillion companies up here (mostly tech but certainly not all) that began life here ---- and managed to go public and make a lot of people a lot of money.

Hi Greg, First this is a great thread with some good advise. I ran across it and have been reading for days. I have not read every post but enough to know I am ready to make some changes.
Im new to stocks and tired of my companies 401k plan that invest in mutual funds that I do not even know what companies they contain. I have done some investigating and I have the option of opening a self directed brokerage account within the plan that allows me to purchase stocks of my choice. I have been looking at various stocks and looking at the long term trends. The part I dont follow completly is how to tell the dividends they pay and the frequency. Can you explain more on this?
I would also like to understand more on order types. The options are Market, Limit, Stop, Stop Limit, Fill or Kill, etc. I know these are probably some basic questions but you always seem to have a way of putting things in laymens terms.
Im ready to redirect some of my investments and put them to work for me. Thanks in advance for your help.

#1 -- If you go to GOOGLE FINANCE.... and put in a search for an individual stock... it will pull up a chart and top left promently display the current "quoted" price and whether it's up or down... if you follow across the top of the chart to your right -- you will see a bunch of info as below




Range 83.16 - 84.75 ------ This is the DAYS trading range in price
52 week 74.76 - 92.99 ------ this is the 52 week trading range
Open 84.46 ----- where it opened for trading today
Vol / Avg. 1.16M/1.49M ------ how many shares change hands on average
Mkt cap 31.72B ---- The number of shares outstanding X's the price -- ='s companies total market value.
P/E 38.86 ----- This the current stock price divided by it's earnings per share over the last 12 months... a higher number is telling you that you're paying a lot for those earnings -- lower number means you're paying less. This is just a relative number and I place very little meaning on it.
Div/yield 1.32/6.34 --- this is where you see the ANNUAL dividend and the PERCENTAGE of the current price in "yield" (think "interest rate".
EPS 2.14 ---- EARNINGS PER SHARE (used to calculate the P/E ratio (above)
Shares 380.84M ---- how many shares there are issued
Beta 0.38 ----- think of this as volatility measurement against the "market" as a whole. Another relatively useless measurement IMHO
Inst. own 16% --- What percentage of the outstanding shares are "institutionally" owned. I like a higher number here -- which means that less "retail investors" own the stock (you are a retail investor). What I like about this number is that the "BIG MONEY" likes the stock. Other than that - it's useless.



DIVIDENDS are "generally" paid per quarter... but some stocks or ETF's (exchange traded funds - which are similar to mutual funds - but hold specific stocks or bonds) pay monthly.... some pay semi-annually.

Easiest way to see this for a stock you're interested in ---- go to the CHART in GOOGLE FINANCE -- for the name you're looking at -- and expand that chart to "1 yr" ---- or "5 year" ---- and you'd see a "block" with a D in it. If you hover on that block it will give you the date and payment info. Obviously if they pay 4 times per year -- then the dividend is paid quarterly.

Companies operate in FISCAL years - not calendar years.... so it depends on when they begin and end their year... so not all companies begin on Jan 1st and end on Dec 31st. In fact - I'd say most of them don't.... you have to look at the dates they pay on an individual basis name by name.


If you want to see what an ETF looks like --- Google Finance -- JNK or HYG. These are ETF's tied to a specific bond type (one is JUNK BONDS and one is just Corporate bonds). Bonds are what companies issue -- when they don't want to borrow from the bank. They can issue a bond and pay interest on it.. but not we're getting complicated. :lol:

A separate reply to the buying terms you asked about.




A "market order" is an order that says you'll just pay whatever the seller is asking for. Kinda like going to the store and just buying stuff --- you don't dicker for the price -- you just pay whatever the seller wants. MOST people use a market order... because unless you're buying lots and lots of shares -- it really doesn't make much difference if you pay a penny or two "more or less".


A "limit order" is what I prefer to use. I buy shares 5,000 or 10,000 or 20,000 at a time. A few pennies on orders like this adds up. So ------ when you place an order -- the question will come up (in a box) what type of order you want to place. If you place a LIMIT ORDER then you must fill in the MAXIUM price you are willing to pay per share. You can match to current ask -- or you might chose to "bid" a penny or 2 -- or even 10 cents less!

Now -- you can modify your limit order with "good for day" or "fill or kill".... so if you use good for day then your bid is "open" until the market closes.... and you might sit all day -- and then 10 seconds left in the trading session and some seller decides he's going to accept your offer and fill your order (maybe only partly or in whole).

The FILL OR KILL --- means you have a very short fuse and are willing to only accept a FULL order fulfillment and it must be filled RIGHT NOW no waiting for the end of the day crap.... and if not - you want the order killed.




The above is very basic..... so if you really want to dig into the nuances of trading (I do not recommend trading -- I like to INVEST).... you can find good detailed answers to just about any market info here:



http://www.investopedia.com

Nice little write-up Greg. Tutorials like this help to keep the spark lit and turn it into a flame again.

To follow up on the topic of "financing a depreciating asset" from a few days ago, I came across this really good financial blog tailored towards medical professionals. http://whitecoatinvestor.com/

Here is an excerpt that does a good job summarizing the issue.



Another good article. Cheap financing is just leading people to finance longer, borrowing money for the wrong reasons. 10 Year car loan anyone?


I know we already closed the loop on this, but it's more food for thought.

Thanks Greg for taking the time to answer my questions. I will probably have more once I get my feet wet.

We've probably never covered SHORTING stocks.... mainly because that's not an INVESTMENT tool.... it's a "trader" tool. Personally -- I never short stocks because I'm not that smart... and there's something fundamentally wrong (to me) to bet that a company is going to do poorly. I'd far prefer to try to buy great companies that I like -- and if the stock hiccups a bit -- buy even more... but we've covered that about half a gazillion pages worth!


SHORTING is borrowing the stock from the brokerage --- selling shares you do not have --- which gives you the cash to your account --- BUT!!! BIG BUTT --- you OWE the shares... so it's called a NAKED SHORT. Now --- if you SOLD the shares at $10 ----- and can buy them down the road for $8... and repay the shares you borrowed... you made a nice profit on the trade. BUT!!! Always the big butt --- if they go UP from where you sold... eventually you're going to have to pay them back... so you could end up buying the shares for $15 and losing your sorry little (or big) butt in the process.

Here's my thing about this. #1 I don't want to go around betting that company X is going to suck. I don't have time to investigate and do all the homework that takes.

#2 -- about the time you think something sucks -- so does everyone else -- and the PROS on Wall Street have all bet the farm shorting the name... Now all of a sudden -- everyone is short --- and something happens and they're all buying like crazy to cover their short position. Guess what happens when everyone is buying.... RIGHT! The shares go UP not down.

Now --- a naked short has unlimited loss potential. In other words there's no stopping the price going UP.... so you're wide open to "whatever". At least if you just outright buy a position ---- and it goes to ZERO for a loss -- you're loss is capped at 100% --- YES -- HUGE loss -- but it's still capped at what you paid.

Below is an article --- on a very smart guy --- that has bet ONE BILLION DOLLARS on a short... and so far he's 100% wrong and his loss can go far higher provided the stock continues to go up. OUCH!

http://www.forbes.com/sites/nathanva...percent-worse/



Now -- there's another way to do a short -- and that's called SHORTING AGAINST THE BOX....

If you OWN the shares already --- and decide to sell some or all of the position "short".... you at least have your short covered because you already own the shares to replace them (basically borrowing from yourself). That's a far better way to go if you decide to be a big shot shorter. LOL

Profit on FB today /.// Holy cow.. in the Green on FB.////:king:

What a ride.....:drowninga:




Now.... it's still priced for perfection. So you now have to hope that it's on a roll and can keep up the revenues and growth.


I'm not trying to talk anyone into -- or out of -- a holding. But I know that companies like this can be "been there done that" in an instant. When or if the "kids" decide something else is kooler. Poof! They move on like a Chevrolet heartbeat. That's the big challenge with investing in this kind of stuff.


In the meantime -- a guy can hit a home run.... So who knows!

Here's a website everyone should be using..... be wary of being "sold" on some stock or another on sites like this.... but many sites have great "tools" which a guy can use from time to time.


This will show you the POWER of DRIP (dividend reinvestment) investing... so if you put in a symbol --- and just choose a time frame (say --- 2003 start and 2013 ending - which is a 10 year period) --- and this will come up with TWO CHARTS.... one (the top) showing you DRIP investing..... the bottom will show you without reinvesting the dividend.

IF you are still 10+ years from retirement..... I'd suggest you check the box that says to reinvest the dividends!



http://www.dividendchannel.com/drip-returns-calculator/

That's quite a nifty little tool.

MO being one of my holdings, i just threw that in there from 2000 to now...

On 10k, with drip = $162k. W/o drip = $69k. Wow. Granted, it doesnt tell you how much cash you accumulated during that time. but still. (unless i missed it)

Good thing i Drip all mine already. :)

You wouldn't accumulate any cash -- because all the dividend payout would be used to purchase additional shares.

The key to that is it's an accelerating vehicle... the more shares bought... the more dividend collected...buying more shares... paying more dividend and on and on. That's why it works!

I mean with Drip turned off.. you'd have the dividend payments sitting on the sidelines collecting dust each quarter.

With drip turned on, yes, we're taking the quarterly div payment and buying more shares at the current rate (helping our dollar cost average)..

Now, I wrote that for the general public. I know you know what drip on/off is.. lol

Yeah..... pretty much....



DRIP investing is a great way to really kick a portfolio in the bee hind.... It will automatically purchase shares for you... so dollar cost averaging is working (buying more shares when the price is low and fewer shares when the price is high).. but it's really the COMPOUNDING affect that works the magic!

Bitcoin -- again....
 

It ceases to amaze me how many people are willing to look past the old "too good to be true" statement and hand their hard earned money over to some charlatan they've never met... all based on their own personal greed. Too greedy to think correctly and say "nah -- this sounds like a scam".




http://www.forbes.com/sites/jordanma...te-securities/

I think it stems partly from the belief by so many people that you have to be lucky or some how out smart the system to really make it in this world. Not only that but people's belief that having a lot of stuff means you're rich. Gone, for the most part, is the belief in hard work and saving.

I read most of these pages and come to the conclusion that the funds I have been contributing to for the last 8 years kind of suck.

Unfortunatly though my UPS/Teamster 401k plans all the plans are really safe. S&P 400, S&P 500, Russel 2000, etc. I contribute the FUND which has pre selected stocks/bonds in the fund. I'm not able to select one stock per say. I purchase UPS stock and a discount of 5% on the lowest quarter.I put 12% or 10k into the fund a year pre tax. I just started a Roth, not much in there. I'm thinking my 401k plan stinks with too many bonds.

Should I stop my current 401k plan with the teamsters and open another one that I can select better perfoming stocks"more control of where my money goes"? Could I still purchase these stocks pre tax to lower my income for tax purposes? Say I put $200/week into these stocks, say I pick 6 or 7 stocks I like. Are you guy's holding onto the for say 20 years or are you constantly buyiong selling. I don't know much about the market and wanted kind of set it and forget it approach or is that dumb.

Thanks guy's
John

A lot of that is going to rely on some "personal" data (income levels, tax levels, company match policy, etc etc). This is a question probably best left to an accountant/trusted financial adviser. Check into an "ELP" from Dave Ramsey. They're supposed to "teach" you the best path, not just sell you some other fund for their cut of the pie.

there are also financial advisers that work with you specifically to answer this sort of stuff rather than sell you retirement options. Check into a NAPFA or Garret Network fee only fiduciary. (i think i got that right. lol)

Don't stop the 401k. What brokerage is it thru? Fidelity has an option called Brokeragelink that will let you buy stocks. If. You are really limited than consider only enough to maximize the matching.

Thanks guys. My company doesn't match. My account
Is through Prudential

Thanks
John

No match? I guess that is because of the discount on the UPS stock? Hmmm....

Anyway, what you may want to check into is called one of the following:

brokerage window
self-directed" 401(k)
self-directed brokerage account

Fidelity and Schwab have them but your employer (the plan "sponsor") decides whether your plan offers a brokerage window, and what proportion of your contributions you can invest through it. Your employer can also determine the range of investments permissible through a brokerage window. Some might restrict you to mutual funds, while others might permit a broader range of choices.

Thanks Brian I will look into that.
The reason UPS doesn't match is probably because of my
Pension.

I had asked Vortech to discuss these options with his Personnel office. They will have all manor of info for him as well as someone that he could speak with directly to answer questions of this nature.

Now ---- Here's a better/bigger question EVERYONE should be asking themselves.

What investments can I make -- and what style of investor am I -- and how much EFFORT am I willing to put in NOW -- in order to retire "decently" later.

That's a far more fundamental question!

Regardless of your available options ---- and the minuscule tax differences (before or after tax contributions).... what really counts is where you can put your money to work NOW... and have it double and triple or more over the years.


My personal belief #1 --- Mutual Fund "investing" (the forget it style of investing) will prove to be sadly disappointing in total return. This style of investing is fine --- until you get to where you have 50 or 100 grand..... and even then I wouldn't recommend it.... because you're just not taking responsibility for how you intend to live down the road.


My personal belief #2 --- BONDS are no place for ANYONE to be invested in for a retirement account unless you have a couple million bucks! Then MAYBE you could have half a million in super safe bonds. But ask yourself something.... are BONDS really more safe than say --- Exxon or Home Depot or Wal Mart or some other big cap company?

Now -- if BOND interest rates (we're talking Tax free munis here) get to be 10% ---- I'd be a buyer... BUT NOBODY SHOULD BE IN TAX FREE ANYTHING IN A RETIREMENT ACCOUNT that is already tax free (ROTH) or tax deferred (IRA/401). Why would you accept a FAR FAR lower rate of return -- to garner tax free status -- on something that is either tax free or tax deferred in the first place? And the difference in compounded growth over 20 or 30 years is just unbelievable!


Here's just one real quick google search I came up with!


Over the long term, stocks do better. Since 1926, large stocks have returned an average of 9.8% per year; long-term government bonds have returned between 5% and 6%, according to investment researcher Ibbotson Associates.


Do the math on 100K -- at 9.8% compounded over 20 years vs 6% (the higher number even!) and see what you have to retire on....


Note the difference between 5% and 8% is DOUBLE!! Multiply these numbers by ten to get the amount on 100k!!! and it's astounding!


Initial
Amount Years Compounding Return



$10,000 25 5% 3 $33,860
$10,000 25 8% 6.85 $68,500
$10,000 25 10% 10.8 $108,350
$10,000 25 12% 17.00 $170,000
$10,000 25 15% 32.92 $329,200
$10,000 25 18% 62.67 $626,700

Thanks Greg.
Looks like have work to do.

Those numbers get me really excited.
At least you know you have somebody else watching this
thread.

John