I use a credit card for everything. I don't carry a balance. It's paid off every month. I only use credit cards that give back something.
I used to have a GM card while I worked at Bose. We got the supplier discount plus any incentives plus the GM points I used to get my vehicles at a pretty damn good deal.
Now I use an Alaska Airlines card for everything except for gas. Gas I use a US Airways card, with those two cards I can transfer miles to just about any airline.
I'm flying to the Dominican Republic in January and used my miles only cost me $100.
If your going to use a card get some sort of benefit that you know you'll use.

Okay -- SUMMER is OVER on WALL STREET....


Now that the kids are back in school and wall street is back to work -- it will be INTERESTING to see what happens to the market.

First peak up 111. Looks like Wall Street is glad to see the kids back in school........win win for me too! :D

So... My sister and brother in law came over to our Sun Valley dump after doing a hot rod show in Walla Walla. Cute little town that has re-invented itself as a "wine" and dine area.


She says to me -- "why do I have 10K in cash in my 401 and what should I do with it - is it good to have some cash available?"


The reason for this post is because --- once again --- it shows me how "detached" people seem to be from these kinds of accounts! It's just wrong, wrong, wrong, to be so ambivalent (uncaring) about this most important source of retirement funds!


So we open her account --- and the cash pile is from dividends that have been piling up --- RATHER THAN --- being re-invested! OMG -- She's missed 10K in buying -- and who knows how many quarters of payments that could have been buying more shares which pay more dividends which buy more shares! Just shoot me! This is MY sister! If anyone should know this stuff it's her!

Okay -- so it took a minute or two to find the correct check box (she uses Fidelity) to have all the dividends re-invested from now on.

NEXT UP was the question --- "isn't it good to have some cash available?"



NO NO NO NO NO NO! This is a retirement account -- not a checking account! There is nothing available to someone that isn't the proper retirement age. PERIOD. So then why have cash sitting around not earning anything - dividends or growth or anything. They pay you NOTHING for cash in a 401 type account. UGH!


Okay --- rant over.....

Ouch. thats a hefty little "learning curve" fee. :(

Have to say, I'm so happy (lucky?) I was shown this thread over here (from Mike/SolarGuy, hope your doin ok buddy).

I was dabbling in the market with my ROTH IRA with a lot of similar values/concepts displayed here, but not with a great deal of understanding. This thread and the help (whether it be questions or answers) from each of you have been a huge plus.

I'm happy to report after a year and a half of my "investing 102" strategy, and about 7 months after finally getting the balls to totally re-do my entire 401k account based on methods learned here, that I'm sitting on a +10% portfolio, PLUS all my dividends. With 30+ years to go, i've got a lot of hills to climb up and down, but, I'm confident I'll make it to retirement a little better off than most my peers due to the help here.

Thanks Guys!

:thankyou:

Good job and congrats, Albert!

Best thing to happen to me, from this message board is, this investing thread it really open my eyes, many thanks thanks to Greg Weld, I consider him a good friend.

Did I tell you guys that I get 10% commission upon each of your retirement date??


HAHAHAHAHAHA



I'm really glad Trey started this thread.... and I'm seriously happy to impart some of what I've learned over the years..... But no matter who says what --- you need to thank yourselves for DOING AND MAKING CHOICES... and not just doing lip service.

It's funny how we'll research a car part to the ends of the earth -- and then be so haphazard about retirement - which is probably going to last 25 to 30 years AFTER we quit working!

Agreed ^^^^, agreed ^^^, agreed^^, and once again, thank you Mr Weld, cause ya dont have to give a sh.....

I've learned a bunch through this, i've listened to investment talk radio, CNBC and the like, talk radio, and different "financial" planners overr the years and it was all justt over my head, till we can splain it in simple terms.......

You guys have all heard me say "priced for perfection".... With that in mind -- just look at Apple (AAPL).... their business is FINE... their profits are FINE... their stock? Down 35% in one year. OUCH. The reason -- people aren't impressed with their latest offerings... and when a stock is priced for perfection - it gets KILLED by stuff like this. You always need to be aware of this phenomena.

The hard part is to know when that is happening. For me - it's just a pure judgement call. Kinda like I've reminded people "when the grocery clerk is telling you about the money they made on "X" --- RUN! Well --- stocks are like that... when the TV is talking about the stock -- and the guy on the corner -- and the gas station guy.... RUN (SELL!).

It's fun as hell if you bought low -- and ride the wave to the crest... but most of us never are that clever. We don't discover the stock until it's near the crest... and that's when you get your ass handed to you. So just LIVE AND LEARN is all I'm sayin'. It's always so tempting to jump in because something is "hot".

I've learned to walk away from "hot" (flipping houses anyone?).... because I figure I'm just joe average and by the time I've figured out it's hot - it's too late - the smart money has already come and gone.

Lol... yeah.. i had a feeling when i personally was bored with their progress earlier this year.. and i watched it tumble.

I was smart tho, quite a few years ago (kinda). My AAPL stock I bought is currently up 225%. Not bad huh? it was up almost twice that earlier this year. Did i sell? Nah. I wasnt that smart. I only invested $25 in it originally. It was my first stock i bought when i first opened my account a number of years ago. It's no worth a whopping $90, which is +225%. But, its going to cost me $10 to sell it. Thus, taking a large chunk of my "gain" and then having to deal with taxes on it. So I didnt bother. Its not enough for the hassle. lol.

And i was "kinda" smart cuz i bought it. BUT i didnt have enough money to be "really smart" and buy a bunch of it. lol

Today, my friends, is not one of those days to be on the sidelines! :popcorn2: :popcorn2: :headspin: :headspin: :excited: :excited: :G-Dub: :G-Dub:

up 2% TODAY!

WOohoo! I'm about +1.5% on my Investing 102 stocks. :D


Question.. Anyone else here a numbers/spreadsheet whore like me? LOL. I have a spreadsheet (Google docs, actually) that i keep a tab on EACH of my stocks. the Original Purchase, later purchases, all the dividend payouts, etc. Well, ive been keeping track of each of them since i started this whole thing. I keep track every couple months of my "total return", "yield on cost" etc (since it was a manual and bit more tedious project). BUT, I ran into a feature today where i can pull in Google Finance Stock bits from "live" from the web. So using this, I've made a "Summary View" tab where it auto calculates my current stock +/- for the day, my TOTAL RETURN, by Yield On Cost and also the Current Yield of the stock, etc. Totally cool!

So now I can see realtime (well, 20 minute delay from the market) my vitals and my total return (which, i may add, is GREAT!).

Its the "=GoogleFinance" function. :)

You guys don't even want to know what my gain was today in DOLLAR terms....
HAHAHAHAHA



The take-away for investing 102 --- you just never can afford to be out of the market -- or trying to "game" the market. Your biggest gains will be made on very few days during the entire year... and if you happen to be out on those days -- you can't catch up.

This is what I've learned over the years doing this -- just stick to your good companies --- invest regularly -- and don't be in and out. Sometimes that SUCKS.... but long term you'll be way way ahead and that is the goal.


Note too -- McDonalds gave us a 5% raise on the dividend today.

The market sure loves the Fed................ :lol:

No --- the Market LOVES low interest rates....


Oldest market saying is one worth learning:


When interest rates rise the stock market dies


Give me 7% tax free muni rates and I'll be out of the market in a heartbeat! But as long as you can't make any returns with interest bearing investments you HAVE to be long the stock market. Not to mention that the low rates help companies make profits. When they start having to pay out more for borrowing (overhead) -- and inflation starts creeping in -- WATCH OUT....


But for now --- let's drink the tea!

So the Fed and QE are keeping the interest rates low. The market was down this morning in advance of the Fed meeting, and as soon as they said no tapering it's off to the races. Every time there's talk of cutting back by the Fed the market seems to stumble a bit, and as soon as they squash that talk it takes off again. I don't think the market is as related to the economy as it once was.

Well -- the FED is between a rock and a hard place. They've driven into the corner so deep that lifting is going to cause issues. Interest rates are artificially low -- so the minute they "lift" (back off buying bonds) interest rates are going to rise and they'll rise quickly. So much is based off these low rates -- that anything UP from here will seem like a shock. Obviously -- home mortgage rates at 5% should be seen as a gift from heaven --- but when people get used to 3.5% --- 5% will be shockingly high. It takes time for businesses and people to adjust. They will --- and they can --- but it doesn't lessen the shock value.

The market is related to the economy --- but more so to individual businesses and their profits and GOING FORWARD what they have to say. Now everyone that has a brain can figure out that if interest rates rise --- that will come straight out of the bottom line... no different than a house payment that rises... and wall street is all about profits. It will take time for businesses to adjust to higher costs --- and then the suppliers will raise prices because they have higher costs --- and then the next guy and the next guy --- and we WILL have an inflation problem.

When I was in the importing biz in NYC --- during the late 70's and early 80's --- we couldn't raise prices as fast as our costs rose... and we ended up with "surcharges" for freight costs etc. It was cheap to rubber stamp a surcharge on an invoice vs reprinting the price list monthly! Everyone was doing it. I can tell you that is a very toxic business environment.... and it's what all the economists have been warning about.

This is why you've seen anything that is interest rate sensitive - getting hammered. I warned about this months ago! I sold all my bond portfolio (for a nice gain) well in advance --- and sure enough --- muni bonds have been getting hammered in face value as the "thought" the FED might ease (buy less bonds than the current 85 BILLION per month).

We have a free market --- except that we've had one player creating all the rules! The minute the rule maker stops making up the rules -- we'll go back to a free market... and the problem with that is nobody wants that to happen -- even though they really don't want the FED loading up the balance sheet with debt so it's a real double edged sword.

Think about it this way --- real simple..... everyone was grousing about the cost of cars SOARING on Barrett Jackass..... 150K for "clone" cars. REMEMBER? It was crazy --- but people also LOVED it because it made them feel good about their "investment" (in their own car). So it was fun -- and people bitched because they were being priced out of the market -- but it also meant they could sell their average '69 Camaro for 75K so they were happy too. THEN THE REAL MARKET CAME BACK - and suddenly the 75K they could have gotten was back to normal and they would be lucky to get 40.... Now they hate the world and everything in it.... yet it also brought down the stupid money prices being paid --- so really --- it's almost an even exchange. What people want is to borrow for a house at 3% and earn interest at the bank of 6% --- but it just doesn't work that way does it.

I finally decided to wade in with some individual stocks. I bought first thing this morning so my timing was alright. ha ha I took your advice and bought 4 big cap stocks. I'm playing with chump change at this point but I'll keep learning, buying, to give my portfolio another branch.

Oh great! Tomorrow we'll be down 300 points.....


The key to INVESTING --- is patience.... and understanding... "timing" makes it fun because it makes you feel better.... but over the years it's just not very important. You've heard me preach enough -- just buy good stuff -- that pay dividends - re-invest the dividends (if you're not living off them like I do) and kick back. Not really much different than buying a nice house in a good neighborhood and letting the renter pay the mortgage for you. Sure - they'll be poo days - like when the renter calls and says "X" is leaking --- or the bad tenant that moves out in the middle of the night.... The market has those same poo times... but eventually things go your way.

As you know - I have real estate holdings - residential and commercial... stocks... mortgage backed paper.... So I'm all for being diversified. :relax:

Yes sir, definitely a long term play for me. Just another way to put my money to work vs. sit in my bank account with mold growing on it. What motivated me is investing 15% of my gross income every year. I needed another avenue on top of the traditional retirement accounts. I do like the fact that stocks are liquid. Retirement accounts are off limits and real estate is far from liquid. I am following Dave Ramsey's baby steps as I'm one of his ELP's and have enjoyed his books. http://www.daveramsey.com/new/baby-steps/ It's a solid foundation to become financially independent.

I still have aspirations to pick up a few more properties but the market is changing and the timing isn't right to pick up number 3. It's looking like 6-12months. I'll keep saving and start whacking down the principal on my primary and investment properties.

This is one step that most miss in retirement planning... and it's a super important step! It's not just how much you have for retirement -- it's about how much you NEED to retire... and if all you have to do is buy groceries and pay the light bill -- then you don't need much.

Now -- couple "lowering the needs" --- and RAISING the cash flow (paid off rental income property) and now you can go racin'! And take the misses to Hawaii... and that's what we're shootin' for!!



Healthy lifestyle --- and financial health!

I've been adding enough principal to the payments on the investments to pay them off in 18 or less. (All funded by the tenant:hapdance: ) I've also been adding a small amount to the primary for quite some time. I want to step it up and have it free and clear by 50 or sooner.

That's my goal, not to owe anybody a dime. I'm definitely the tortoise and don't have the cojones to play the stock market vs. free and clear property. I'll have plenty to play with in the market when I don't have debts. :thumbsup:

I get that..... but just use this "visualization" to help you get your head around the differences. BTW -- I've used my earnings/profits from STOCKS to invest/diversify into real estate not the other way around. Just say'n'.



http://i919.photobucket.com/albums/a...os/file-43.jpg

Boo... The "little man on Wall Street" seen your buy yesterday. and i think i even heard him yell out this morning "bring the market down boys! I dont think this guys got the guts to stick it out!"

:poke: :poke:

Having trouble making any sense of that graph. Land bought for $100 in 1928 would be worth a whole big enchilada today. I've seen land in Vegas bought for 5k in the 70's that is worth over $500,000.

I can't defend the chart ---- I just googled "Real estate vs stocks" and that's what came up. I know that stocks have always been ahead of both real estate and bonds.... Housing is usually quoted as a 4% annualized gain -- Stocks usually are around 9% ---- and those differences over time are just gigantic.


Either way --- as long as a guy is salting away dough that is earning him money ---- I'm good with it!

Apple (aapl)
 

So as usual --- here's the way the market works.


The minute I posted about Apple (AAPL) being in suck territory year to date.... it's been up every day since. :tiptoe: :D


Adrienne (23 years old) is in line somewhere at an Apple store in Minneapolis as we speak... our family has 4 iPhones and 2 of them are available for upgrading... so you know we're ordering 2 "RIGHT NOW" --- > Mom and Adrienne! Dad can go suck wind. :smiley_smack:

I think the chart represents the average of the asset class as a whole. If you cherry pick one example of a piece of real estate that you know had a higher return, there are also examples of stocks that have had much higher returns than indicated on the chart.

A few years back I had done some research on long terms returns for stocks vs. real estate. The data that I found at that time indicated real estate and stocks have had pretty similar returns over the long term, with real estate having a slight edge. The figures I remember were close to 9% to 10% per year.

Interesting DISCUSSION
 

REASONS WHY STOCKS ARE BETTER THAN REAL ESTATE

1) Higher rate of return. Stocks have historically returned ~8% a year compared to 2-4% for real estate over the past 60 years. You can also go on margin to boost your returns, however, I don’t recommend this strategy given your brokerage account will force you to liquidate holdings to come up with cash when things go the other way. Your bank can’t force you to come up with cash or move out so long as you are paying your mortgage.

2) Much more liquid. If you don’t like a stock or need immediate cash, you can easily sell your stock holdings. If you need to cash out of real estate you could potentially take out a home equity line of credit, but it’s costly and takes at least a month.

3) Lower transaction costs. Online transaction costs are under $10 a trade no matter how much you have to buy or sell. The real estate industry is still an oligopoly which still fixes commissions at a ridiculously high level of 5-6%. You would think Zillow or Trulia would lower transaction costs, but unfortunately they’ve done very little to help lower expenses. They are in cahoots with the National Association of Realtors. This is part of the reason why I don’t trust Zillow.

4) Less work. Real estate takes constant managing due to maintenance, conflicts with neighbors, and tenant rotation. Stocks can literally be left alone forever and pay out dividends to investors. Without maintenance you’re able to focus your attention elsewhere such as spending time with family, your business, or traveling the world. You can easily pay a mutual fund manager 0.5% a year to pick stocks for you or hire a financial advisor at 1% a year.

5) More variety. Unless you are super rich, you can’t own properties in Honolulu, San Francisco, Rio, Amsterdam and all the other great cities of the world. With stocks you can not only invest in different countries, you can also invest in various sectors. A well diversified stock portfolio could very well be less volatile than a property portfolio.

6) Invest in what you use. One of the most fun aspects about the stock market is that you can invest in what you use. Let’s say you are a huge fan of Apple products, McDonald’s cheeseburgers, and Lululemon yoga pants. You can simply buy AAPL, MCD, and LULU. It’s a great feeling to not only use the products you invest in, but make money off your investments.

7) Tax benefits. Long term capital gains and dividend income are taxed at lower rates than the top three W2 income rates (28%, 33%, 35%). If you can build your financial nut large enough so that the majority of your income comes from dividends, you could lower your marginal tax rate by as much as 20% or so, depending on the current legislation.

and now REAL ESTATE
 

REASONS WHY REAL ESTATE IS BETTER THAN STOCKS

1) You are more in control. Every physical real estate investment you make puts you in charge as CEO. As CEO, you are able to make improvements, cut costs (refinance your mortgage), raise rents, and market accordingly. Of course you are still at the mercy of the economic cycle, but overall you have much more leeway in making wealth optimizing decisions. When you invest in a public or private company, you are a minority investor who puts his or her faith in management. Sometimes managers commit fraud or blow their companies to smithereens. Nobody cares more about your investment than you.

2) Leverage with other people’s money. Leverage in a rising market is a wonderful thing. Even if real estate only tracks inflation over the long run, a 3% increase on a 20% downpayment is a 15% return. In five years you will have more than doubled your equity at this rate. Leverage also kills on the way down, but real estate is very difficult to trade so you will most likely stay put unless things get really dire.

3) Tax advantageous. Not only can you deduct the interest on up to $1.1 million in mortgage indebtedness on your primary home, you can also sell your primary home for tax free profits up to $250,000 for singles and $500,000 for married couples if you live in the home for the last two of a five year period. If you are in the 28% or higher tax bracket, it behooves you to own property. All expenses associated with managing your rental properties are also deductible towards your income. Income limits do apply however, so make sure you don’t make much more than ~$166,000 a year total.

4) Tangible asset. Real estate is something you can see, feel, and utilize. Stocks aren’t event pieces of paper anymore, but ticker symbols and numbers. When the world comes to an end, you can seek shelter in your property. Real estate is one of the three pillars for survival, the other two being food and shelter.

5) Easier to analyze and quantify If you can calculate realistic expenses and rental income that’s all you really need when it comes down to valuing a piece of property. If you can borrow at 4% and rent out for a 6% yield, you’ve likely found yourself a winner. Real estate is immediately arbitrageable if you have the financial means to invest. There’s not only the cash flow component but the underlying equity component that helps investors build wealth. Stocks require you to trust what the company reports. There are countless ways for companies to massage their numbers to make things look better than they really are e.g. adjusting accounts receivables, adding one off gains, and using various amortization or depreciation strategies to name a few.

6) Less visible volatility. Your house value could be tanking and you would never know it since there isn’t a daily ticker symbol. During bad times, the utility of your home really helps soften the blow as you enjoy your home and create great memories. During the 2008-2009 downturn, I still got to enjoy my vacation property in Lake Tahoe 15-20 days a year even though values were plunging. Meanwhile, looking at the TV or computer screen just made me mad. When your investment is less volatile, it’s much easier to stay the course and not sell at the bottom.

7) A source of pride. Making money for money’s sake is a pretty empty feeling. Every time I drive by my rental properties I feel proud to have made the purchases years ago. I know that my money is working as hard as possible so I don’t have to. Real estate is a constant reminder that taking calculated risks over time pays off. There is an indescribable feeling nobody tells you once you’ve closed on your property. Even though the bank probably owns most of it in the beginning, you literally feel like the King or Queen of your castle. When you die, you can pass on your pride to your children or closest companions to let them create their own memories.

8) More insulated. Real estate is local. If you’ve made a good decision to buy in an economically strong region, you will be more insulated from the national economy or the global economy. Spain blowing up is likely not going to affect the rent you can charge. Look at prices in superstar cities such as Manhattan, Hong Kong, Singapore, London, Paris, and San Francisco. They fall the least, recover the soonest and gain the most. Of course, industries in your area could suddenly disappear and leave you broken as well.

9) The government is on your side. Not only do you get generous mortgage interest tax deductions and tax free profits, you get bailouts if you can’t pay your mortgage. The government also aggressively went after banks to force them to extend loan modifications to bad and good creditors. I even got a free loan mod recently to my surprise. Programs such as HARP 1.0 and HARP 2.0 are allowing folks without hefty downpayments to get in on the action. There are plenty of non-recourse states such as California and Nevada which don’t go after your other assets if you decide to stop paying your mortgage and squat for months. When was the last time the government bailed individual investors out of their stock investments?

So just do like I do --- Invest in both if you possibly can.


IMHO --- Stocks will "allow you" to invest in real estate... because you can make gains and be more liquid in "the market"... and real estate is illiquid and can actually need to be subsidized up front for 2 to 5 years.

I invested seven figures in a new apartment complex last year --- I will see ZERO return until next year some time due to us upgrading all of the units etc. SO the cash flow that would be going to pay out to investors - is being used to improve our investment in order to contribute a higher ROI (Return on Investment) down the road. But in the meantime -- I've lost the income on a million bucks -- AND -- it's totally illiquid for a number of years.

The key to this entire thread however -- is to do SOMETHING!

My point is the chart is inaccurate. The median home price in America is $212,000.

Now, if you calculate $100 over 80 years with compound interest at 9%. It's right at $100,000.

Where I think they meant to go with the chart is that same $100 invested in real estate wouldn't have grown at the same rate. Not even close.

In my opinion the median home price in 1928 vs. today would be a better example. Then you have to factor in costs over the years and it gets tricky. Is it an investment covering it's own cost for the most part or primary residence. etc...

The average home price in 1930 was $7800.

With the $7,800 and $212,000 in mind, there is no doubt the $100 in the stock market is superior.

Just for fun let's factor a free and clear property after say 30 years that generates income for 50 years. At only $500 a month for rent over 50 years, that's $300,000. Then you add the appreciation of $204,200 for a total of $504,200.

To put the nail in the coffin, if you would've invested the same $7,800 in the stock market in 1928, you would have over $7,000,000 today.

Case closed....:lol:

I've never read anything that ever created a case for real estate being a better investment NUMBERS WISE than the stock market over time....


Having said that --- I'm a firm believer in investment in INCOME producing real estate... the first part of REAL estate is that it's REAL. It's a good investment over time and while there are offsetting arguments -- none of them really hold up. If you buy an INCOME producing property -- it will pay off handsomely down the road. PERIOD.


STOCKS are easier. PERIOD. You can't (now days anyway --- LOL) buy a house with $1000... and you can buy stocks all day long every time you have $200 or $1000 to invest. They're liquid. The produce instant income (dividends)... and require very little "effort". Thus -- for most people it's just simply the best way for them to invest.

Once the investments -- or perhaps you inherit -- or win the lottery for 50 grand --- then a person would be wise to invest in some sort of real estate.

Personally I like LLC's --- where I don't have to do anything except collect the income.... but LLC investing requires minimum net worth (because of the illiquidity!).... and shares are generally 50K per share etc. So that alone requires a higher nut to crack.

Just wanted to personally thank Todd for investing in the stock market and killing us all in the process!! HAHAHAHAHAHAHAHAHA



Welcome to learning about the little man on Wall Street Todd!!

You have over-looked the primary benefit of investing in real estate: Leverage. If I use your numbers of $7,800 in 1930 and assume a 20% down payment, the initial investment is $1,560. If the current value is $212,000, your return would be 6.3% annualized. The dow index in 1930 was 198 and as of today is 15,484. That equates to a return of 5.6% per year. The return on the real estate assumes that on average you break even on your rental income less expenses over 80 years. I would argue that on average over an 80 year holding period you would have a substantial positive cash flow, especially after the mortgage was paid off in 30 years. I also realize there would be dividends from the stock investment as well. It is really tough to make like comparisons with all of the variables that come into play, but my point is that the returns from both investments are pretty close.

Who can live to see an investment 80 years? isn't that too long of a period to compare?? shouldn't a 50 year span be a better comparison?

I have a question?

Trying to figure out what is better. I understand buy in company's you
like and shop at buy lets use this as an example.

Lets use a $6000 dollar figure and you like all 3 but can only pick 1.

60 shares of MCD vs 150 shares of Coke vs 77 shares of HD .
The yearly dividends of MCD $194, KO $168 and $120 for HD.

Looks like the Coke would win out because of the more shares? cheaper so the dividends buy more shares.But HD
killed them on total return? How do you choose?

What is the biggest factor in narrowing down a stock?

Thanks John

Good questions John.... and here's my question for you. Why would you only have to buy ONE company? All three are great long term investments so why wouldn't you just buy $2000 of each one?


And here's the answer to your question.... Nobody can tell you which one you should buy. Which one (if you can't do all three) would you like to own?

That is also why you DIVERSIFY.... you want to own a bunch of different companies... in different sectors... i.e. industrial - financial - retail - etc.