I send out a monthly newsletter to about 3100 people for my real estate business. I compared the affordability of a home at 4% interest vs. 5%. Not a big difference at only $113 a month for a median priced home here in Las Vegas. Seemingly, not a big difference. Unless you invest that $113 in the market for 30 years at an average of 10% return. Then that small savings per month turns into $250,000. Sound like a good chance for a free and clear home at retirement which is a major game changer for most Americans.

It's the small choices over time that either make us or break us. If you have to start with putting pennies away, do it. The key is to start the disciplines and keep the sail trimmed in the right direction.

Came across the '5 Golden Rules of Investing Success'

Pretty sure I've read these all somewhere before? :thumbsup:

I think that's what kills savings for most Americans -- they don't "see" themselves saving any "real" money --- they just don't think that $50 or $100 a month is going to get them anywhere. What's more amazing to me is people that are clearly able to save $500 or $1,000 or more -- and they don't do it.

The funny part is - the more you've made during your lifetime/career... and the more you've spent on stuff.... the more you're probably going to like to live on in retirement. Yet they take no action whatsoever.

Most FEAR investing... yet what they should fear is their life after work stops if they haven't saved/invested for it.

I keep saying --- it really isn't rocket science. It's really just that PEOPLE want to buy something (an investment) and have it instantly make them rich. They're the ones that will remain poor. They'll lose faith - and lose interest.

Putting some away -- religiously... sticking with it - that's what works. Buying stuff you can believe in long term helps you stick with it -- getting dividends so you can actually see "free money" being added to your pile - that helps get you thru the down markets -- so that you'll still be invested when it turns around and heads back up. Simple to talk about -- hard to believe in... until you're in a couple years and see that by golly it really does work.

I'm not so sure it's fear as much as it is this materialistic carpe diem attitude so many people in this country have. I guess I'm referring to the younger people that have no clue how good and easy they have it in general. We live in a fantastic country. Combined with the I gotta have that attitude and no one seems to care about 30 years from now. Blissfully unaware I guess you could say.

I try to talk a number of the guys I work with that are hourly into getting involved in the company's 401k and ESPP. Even though they are hourly, with the significant hours we work, they make really good money. Much more per hour than what they are hired at, at least until things slow down, but almost none of them are interested in putting money away for retirement. I even put it in terms of how much more they could be making through the company match 401k if they just put away this small amount(put away 6% and the company gives you 9%). Yet, they aren't interested. They do have nice expensive cars and toys though! Me and the other salaried people for the most part get it and take advantage of it to the full extent we can.

As for investing, I've moved more money into my normal brokerage account. I hate seeing it sitting in my savings account at 0.95% so I'm putting another very small portion to work. I apparently got lucky with my purchase of VZ late last year and bought while it was a little lower. It's come back down some again so I thought I'd buy some more. Long term it should do just fine and it pays a good dividend. It's down because of the price wars between the carriers. This has also dragged down AT&T some as well. I think I'll purchase some of them too. Neither one is going anywhere anytime soon and they both pay a good dividend. Maybe I'll get lucky again and can buy while they are down. I think I might try the limit order thing this time around also. We'll see.

I have some much younger freinds in the oil/gas and car business make great money but can't get them to save a dime.

I think it comes down to how they were raised. If they were taught the skills as kids, they are more likely to save.

Me, I'm sure there were some lessons but those brain cells eluded me after high school and my twenties. I realized that life was coming on fast and I didn't want to be a common slave to society.

Only 5% of Americans can retire and live off their own resources. Meaning, their personal investments and cash flow not counting pensions or social security.

I've been studying psychology and they have proven that money makes no to a sliver of difference in happiness right above the poverty level. It comes down to WHY you are paving your financial independence. Is it to send your kid to college, travel the world with your wife, give it all away to the needy. That tie in is crucial to achieving wealth and gaining the joy that is often associated with wealth. Does having $750,000 liquid make you happier than $250,000?

I'm not sure about the how you are raised part, my brother and I were raised the same way and his financial skillz couldn't be any more different than mine.

He makes great money, always had...but recently lost his 4 rental houses and had to claim bankruptcy to get his cash flow in order. He has always spent more than he made, lived on credit and his death blow was re-financing his homes with adjustable rate loans over and over again basically using the equity in them as an ATM. Some short stints with no renters along with rising interest rates and the inability to refinance them when the housing industry tanked did him in.

I've been trying to tell him for years he was going about things the wrong way, he wouldn't listen to me though.

He grew up just as poor as I did and had to make his way in this world the hard way, just like me...not sure why or how my financial sense turned out so much different than his.

It was probably most attributable to the budgeting I was forced to do in my senior year of high school where in my COE class I was required to bring my paycheck stubs in and keep track of every penny I spent in a budget for the whole year. To this day I still track every penny I spend in Quicken. If you don't know exactly where it's going, how can you track and manage it as it goes away?

Oh hell yes it does.

Money may not bring you happiness, but it sure is more comfortable to cry in a Mercedes than on a bicycle. :D


I agree with you to a large extent, Todd. I definitely think how people manage their money, and even poverty itself, is more mental that physically having enough money. Attitude matters and if you're ingrained with a spend versus save approach as a kid then you'll more than likely be that way as an adult. I believe it's the same with manners and simple etiquette. Some people are willing to change and see the world around them differently. Others are too set in their ways it seems.

To answer your 750 versus 250 question, for me it wouldn't be much. I'm making really good money right now in my life. In 2010 as I approached graduating, I had big plans for the money I knew I'd be making. My TA was going to be loaded with DSE parts and have a crap ton of power. I'd have tools, a loaded crew cab Duramax, and be really finally living my dreams. I could honestly do and have all of that right now. I'd be no happier. I'd actually be worse off I think. Right now, I feel the money I'm making isn't worth what I've given up and missed out on in order to make it. I'm trying my best to save as much as possible yet balance my dreams and desires so that I can feel as if I am living, but also, so that in a few more years I can hopefully feel that everything I have given up and missed out on was worth it because of how much better I have set myself up for long term. I kind of wish I was going through this in my 20s and not my 30s. It would be a little less burdensome I believe. Give me a few more years and we'll see what I think then.

Not surprised... ha They are talking averages. Some are more driven by money than others. My point is that amassing a fortune is a weak source of sustainable inspiration for the majority. I know it's the case for me. I simply wouldn't work as hard as I do for net worth.

It's my opinion that excessive responsibility and debt are great sources of unhappiness in this country. When I have X in the bank, or buy this house, or have that car, I'll be happy. Just doesn't work that way for most.

Todd, totally agree. Stay outa debt. I told my kids, when you go to "use" the college funds (bout 68k per kid). I said, either college, property, or a biz. I deem all three equitable. But no trips to Tahiti or fancy cars!!!

I keep telling them, in the best way i know how, start young and stay outa debt!

BTw, they all choose college, stay tuned....

I've decided that i'm buying each of them a ROTH IRA for Christmas this year, $250 each for starters....

Woohoo.. For the first time since mid 2012 (bought a house in 2013), my emergency fund is done, and my ROTH IRA account has enough to make my first purchase.

Now on to figure out whats going on and what sector I need to be in to keep diversified. Then find me a good Dividend Champ. :)

Congrats!! I know that is a great feeling to accomplish.

I've been loving the recent runup in the market, but it is making it difficult to find spots to average buy ins.

Not pointing at you Lance --- but I've always wondered why people are afraid of the very thing they want ---- rising prices.


I've bought many a share(s) paying higher and higher prices -- and they've gone up from there. That's why I refer to the long term charts -- I want them to be going higher OVER TIME. If you're always waiting for something to go down -- you'll miss out on the ups.

I know Greg, but go for a walk in my shoes for a bit.

Been in the market for over 15 years, had good and bad times over the years but left a couple of years ago completely dissatisfied with the whole notion. Once I finally decided on a different path to choose when re-entering the market (thanks largely to this thread and the posters here) it was still pretty unnerving to go all in...all at once. My plan was to average in over time, a fifth a month for 5 months.

If you remember, back in late January, early February, you yourself were warning us to be prepared for a down market at the start or possibly all year in 2014.

Remember, I spent 3 years in cash...the little bit I'm giving up by not being all in from the get-go is NOTHING compared to what I gave up then. ;)

I've learned a ton in just the past few months, have found ways to keep myself educated on the companies I'm watching while keeping an eye out for new opportunities at the same time (seeking alpha is fantastic btw) and and still tip toeing my way in when I get the chance.

I'm still a week or so out from making my next advance in, and if I have to I'll buy in at current market prices...and still enjoy it. A dip would just be gravy for me.

I hear ya.. I personally think its a psychological battle. The old adage "what goes up must come down".. Translating into something like "i want to buy MCD, but its up 10% this year, its got to come back down. so i'll wait. Otherwise, as soon as i buy it, it will drop that 10% the next few weeks" lol

But, as you mentioned plenty of times in the past. You dont get paid to wait when the cash is sitting on the sidelines. At least if your IN, and it does go down, your getting paid to wait - at a discount none the less.

Well ----- there's the age old market timing approach of "SELL IN MAY AND GO AWAY".... So maybe for those waiting -- you could wait for a dip in May.


My belief is that wait - and for those that choose to reinvest the dividend - you miss another dividend - whereas if you're in - and pick up the dividend - and it buys some shares lower you're lucky and have gotten paid AND you buy some shares lower and your next dividend is larger which buys more and on and on and on.


Personally -- I'm not worried about what price I pay NOW because I plan to own the shares for YEARS not weeks... and when and if I get ready to sell them - they should be far higher than the price I paid today.

I currently have several holdings (remember the size of my holdings) that are underwater by 100K and more. I could care less.... they're paying me 20 or 25K per QUARTER.... and that alone will take care of the red numbers. That's what I really invested for in the first place. The other part doesn't really matter because I'm not selling them now. It's even less important if your time horizon is 10 years out...


Having said all that --- I certainly understand the psychology of wanting to buy lower.

I am keeping an eye on the ex-div dates of my holdings and will make sure not to miss any of those for sure.

BTW Greg, don't ever let up on what your are posting and preaching...

After thinking about what you said a bit today, I went ahead and made the purchases I was looking at making. No time like the present... :D

From what I'm seeing, Dividend Champion stocks don't really make big moves, they just kind of trod along...so it really doesn't make much sense waiting for dips to buy as the dips just aren't that big of a deal.

It really depends on the goals Lance... if the goals are to have total return over an extended period of time.... and if the goal is to own the best companies... and the goal is to get get paid every quarter... then buying down 50 cents or even 5%.... a guy can wait and miss an up 10% move - or miss a dividend payment.


I say just put the money in on a regular basis, i.e., the first of every month or the last Friday of every quarter or whatever. Just buy it - start collecting... don't freak out on down days or down periods. When ya get nervous - go back and look at the longer term charts.


Those payments they call dividends - that's why I can just go out and play and enjoy myself. 'Cause I don't really have to worry about what the market did "today" or this afternoon - or even this month. I TRUST my companies to keep plugging along and to send me my portion of the profits. :>)

In checking my accounts this morning - as I do EVERY morning.... I was reminded of the "should I buy now or wait for better prices" discussion was still fresh in my brain.

The account that I use for examples in this thread has 7.5MM in 9 names... and currently has a RED (negative) cost vs current value of 185K....


So PERFECT for this current topic right!?! I paid higher prices for the AVERAGE cost than where most of the names are trading. Kinder Morgan Partners (KMP) being the #1 underwater name... with a current (loss) of 211K on a investment of 1.82MM (22K shares). Some have green numbers but obviously not enough green to cover for the red! NORMAL investing. Over time these change and some of the "green" will come down or go red - and the red will change and go green or go more red.

Here's my point for the share this morning.


That account spins off 506K in dividend income. All the while (today) showing a "loss" of 185K in paper value. I don't care about the "loss" -- because it's not a loss until I make it a loss by selling. I'm not selling - so it's not a loss. And with that income - that loss is covered in less than 6 months of the income that is generated. The INCOME is my goal. If it was reinvested (as most all of you should be doing) then it would compound at better rates by automatically averaging down my costs. And the new shares that would be purchased at lower prices actually pay a dividend at a higher PERCENTAGE rate.

Now - that doesn't mean that I don't keep a keen (AWARE) eye on each name I own. Some of the names that are in that account are actually positive in other accounts I have. Confusing I know but I have multiple accounts - and as long as NONE of the investments in total are larger than 5% of what I have to invest... then it's okay to own them. Some of my accounts are inside trusts (for tax and death purposes). I'm laughing at this - because I wish all of you had such issues!

Anyway -- all I'm saying is -- think longer term - constantly review your holdings and WHY you hold them.... always question a loss.... why are they down? Is there an issue with the company? Is there an issue with the industry (let's compare BlackBerry (BBRY) vs the telecommunications industry) vs the companies performance? Etcetera....

If all is okay -- and you can't come up with a valid reason for selling at a loss... then sleep well. Don't fail to question... but don't freak out just because you're down 1% or .50 a share --- when they're sending you that much per quarter. But also don't hang on to a bleeder that you're worried about and can't explain to yourself WHY you own it.

Hey Greg, thanks for posting the example. Just curious about one thing, if you don't plan on selling anything in your accounts (unless something changes with a company) why do you check your accounts every morning? What exactly are you looking for specifically?

Reason I ask is I'm trying to train myself to not look at the unrealized gain\loss number in my accounts every day in an attempt to change my way of thinking. I've got my holdings set up in SA and get notices from them on any breaking stories about my holdings (and companies I'm considering holding) and dividend investing in general, but I haven't yet broke the habit of watching the moves, up and down in my personal portfolios.

Doing something every day for 30 years is a hard habit to break. Besides that - I love this stuff as much as I do hot rods.

Anyone see the 60 Minutes report tonight on the stock market? It's about how high frequency traders are beating nearly everyone to the punch and making a few pennies on most of the trades that take place each day. Some 30 year old kid from RBC discovered and has created a new "fair" exchange called IEX.

For those that care to read more detailed information on this subject -- here's a link to an article that explains what the 60 Minutes show was discussing.

http://www.cnbc.com/id/101537874



And here's my take on it --- this is only for TRADERS that are trying to game the system on a daily or hourly basis. They're trying to make PENNIES multiple times. I want to make DOLLARS for doing nothing - over a long period of time. I'll let them have their pennies.

I'm not trying to make it "nothing" but it's been going on for years. They're traders and that's how they try to make their living. I'm an investor... they're really really different strategies.

Microsoft
 

Interesting to me that Microsoft has hit a 14 YEAR high today... And this is interesting to Investing 102 only because nothing has changed at the company EXCEPT the CEO.

In fact - I would proffer that they currently have THE WORST operating system release since Vista.

So just an inside bit of info here --- my wife started working there as a Senior Director in 1984 (two years before they went public) -- when the company was quite small....

I used to work out (aerobics) with all of the senior people there... including Steve Ballmer... and I've been saying for YEARS that the man should have NEVER been appointed CEO. He's about as tech savvy as a 3 year old. His mouth far exceeds his talent or abilities -- and WALL STREET hates him. To back this up... go look at a long term chart of MSFT stock. One that shows a MOUNTAINOUS PEAK in December 1999/January 2000. The announcement that Ballmer would become CEO was made in December of 1999. From that point forward the stock began it's slide (forming that long downward slope of the other side of the mountain!).

The reason this is important for Investing 102.... is that we are always looking at OUR holdings for FUNDAMENTAL CHANGES. These changes can be GOOD or they can cost us money and thus - be bad. Something as simple as a change in the top management. Here's why this is a great example of a "fundamental change". The company has made a fortune during Ballmer's reign! Sales are gangbusters. Profits are stellar. The company "appears" to be well managed... These are all things we want in a company -- YET -- "the stock" has been completely disconnected from "the company".

Since Ballmer announced his "retirement"... which sometimes means an exec was finally pushed out the door... the stock has been on a stealth move upward. In full disclosure -- We own 10 shares. The same 10 shares that have been in the safe (we actually have the certificate) since 1994 which was Gwen's 10 year anniversary at the company (she spent 19 years there). As long as Ballmer was there - I wouldn't buy one single share. Frankly - I still wouldn't because I think their products stink - and I know about too much dysfunctional internal issues that bother me... and the dividend isn't worth the investment. However... if you were smart enough to buy on the announcement - you have a 40% gain. Stupid me! Hey - you can't own everything.... and you can't foresee everything... and that's not the reason for my post today.

The takeaway from this post is that as owners of a company (if you own the stock you're an owner of the company -- pretty fancy huh!).... be aware of FUNDAMENTAL CHANGES such as a top management change. That's not to say that a company announces the CFO is retiring (and he's 66 years old! He should be retiring!)... Or your company announces a large store closing... These are fundamental changes that should raise the hairs on the back of your neck if you own the shares.

Generally if WALL STREET likes the announced change -- they vote with their wallets and shares can get a nice pop! But beware Wall Street voting with their feet.... that's a sign to sell WITH the crowd and go find something else.

So true.

I bought my first shares of MSFT on April 28, 1998 for $93.25 a share and a $29.95 commission for a total of $1,894.95. Currently I have 300 shares at a cost average of $32.62 a share.

Split adjusted Microsoft (MSFT) had an all time high of about $60....


Remember that when a company splits it's stock - the price is also adjusted. So if a company was trading at $100 a share -- and splits TWO FOR ONE (2:1) -- you'd have twice as many shares but at HALF the price. The new shares would trade at $50. You'd still have the EXACT same amount of money invested. But you'd have twice as many shares.

Splits add NO VALUE... but have generally been perceived as a "good thing".

Beware REVERSE splits -- which is when a companies shares SUCK -- and in order to not be de-listed they do a reverse split and (for example) take 10 shares trading at $1 -- and make ONE (1) share trading for $10.

Monday and Tuesday (so far) should be good reminders of WHY it's so hard to try to time the market... and I've learned after many years that I NEVER EVER EVER get it right. EVER. Thus - I just buy when I have the funds and want to add to my portfolio.

The only 'TIME' in timing is TIME. Over time you will be rewarded. I'm timing the market... I buy and let TIME gloss over my mistakes. LOL

Well a few weeks ago I sold all my stocks in my IRA and bought some Bitcoin. I lost my shirt I should of just stayed to the basics of this thread.

April fools or for real?

If you remember - I recently posted about the "value" shown in an account (mine) vs it's intended purpose (dividend cash flow) and that --- here's the important part --- at some point a loser would become a winner (green) and a winner might suddenly be a loser (red)...


Today my FORD (F) stock is up .80 per share --- and with 20,000 shares --- that becomes a decent move. It was in the RED - but with it's 16K move today - went from loser to gainer. That holding is (today) in the green by 5K.


My point? I can't go around worrying about which name is red vs green day to day... they'll change - they are fluid - they all PAY ME regardless of their current green or red status. I just don't use that metric to stew over. I stew over the general economy - how that might affect ME long term.... I stew more over having MISSED a good opportunity because I was "afraid".... (as in - I should have bought a lot more property investments when they were giving them away).

HAHAHAHAHAHA good one!!!

Shave a little when the gains make the holding more than your 5% allowable investment. Or when you've bought a speculative name just for that purpose.

The problem with always selling your winners -- you're left with losers and you're paying taxes on the gains...

I'm not saying you shouldn't sell... just make sure you understand why you're selling... the tax implications... and do you have your eye on a name to put the gain back to work.

It's always hard to see a "TOTAL RETURN" number of 100% or 400%.... when looking at the numbers BEFORE investing.... and then selling when you have a 20% gain. You won't double or triple your money if you're always taking the gain. If you're not well diversified -- then yes -- take the gains and keep branching out.

April fools

Everyone has their own plan Mike! Glad you're working yours.

Remember that when I respond to a post -- I'm writing for EVERYONE that reads this. Not really responding directly to the poster as much as I am trying to use the info as a learning tool for everyone.

I own Ford --- and it's been an okay stock. I really bought it because I was pretty sure the autos had bottomed... and I think there was lots of rebound room there. Same with my purchase of Wells Fargo (WFC)... the banks had been killed and I figured they were done going down. You have to be EARLY to catch big moves - and sometimes "we" are too early and suffer along the way -- but as long as your theory holds up or comes to be correct then Viola!

Right now - WFC is my biggest gainer.

Cut and pasted this from an article about how LOUSY Amercians are about saving for their own retirement. You've all heard me say it before --- fees and expenses can and DO affect your savings over time. Whether it's 20 or 30% really doesn't matter --- those are HUGE numbers over time!






401(k): High costs, poor returns

By far the most common way employees save for retirement these days is through a workplace 401(k), which over the last three decades has supplanted pensions as the employer plan of choice. Here's the problem: As originally conceived, that's not what 401(k) plans were designed to do.

Created in 1978 as a minor part of a major tax law, 401(k) plans were intended to help well-paid corporate executives shelter income from taxation. Congress later decided to expand access to the plans to rank-and-file workers, and even then the idea was for such investments to merely supplement, not replace, ordinary pensions.

Critics point to a number of defects in 401(k) plans. The most serious, some experts say, is that they require individuals to manage their investments, exposing them to risks they lack the expertise to discern. That point was driven home during the financial crisis, when millions of people saw the value of their 401(k) holdings plunge.

"Employees are neither equipped nor trained to handle risk," Webb said.

Another strike is the high administrative, marketing, asset-management and other fees many financial firms charge for 401(k) plans. Hiltonsmith calculates that such fees diminish a person's nest egg by an average of about 30 percent. Webb comes up with a slightly lower figure, saying that relative to a low-cost index fund, an actively managed 401(k) reduces retirees' wealth by about 20 percent.

Notably, meanwhile, higher fees don't add up to better investment returns.

"If the fees on actively managed funds were buying better investment performance, then those fees might be money well spent," Webb said. "But evidence suggests that the average actively managed fund underperforms an index fund."

History shows the last 13 bear markets* lasted an average of 21 months, with an average 40% decline.
But no matter how long or strong these bear markets, the subsequent bull markets were almost always longer and stronger. On average, bull markets have returned 164% and lasted over 57 months--almost five years!




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Thanks! I am happy to hear that my employer is paying you well :lol: