Investing 102

[GregWeld]

Originally Posted by ErikLS2

I get that same fear Greg. I can't stop hearing ads on TV and radio from brokers wanting to sell you gold. Was just at my dentist's office and he wouldn't stop talking about buying silver right now. I think if you were going to buy it, buy it in coins or whatever you can hold in your hand. I wouldn't feel safe buying some piece of paper that said I owned gold or silver

Real estate (rental property) can also be a good hedge against inflation, provided you buy it before there's any real inflation taking place, like right now. Plus, unlike with gold or silver, it pays you while you wait, you get a tax deduction by depreciation and it's a fixed asset that can't easily go away (provided you pay your property taxes and insurance). You can even make money on the money you borrowed to buy it if you do it right. It can be hard to sell though but if you keep it in good condition when the inevitable boom happens, it shouldn't be too hard to get out of. Last one I sold at pretty much the peak in '06 was under contract in 3 days and I made a killing. The best thing about investing I think is that if you own something that's just experienced a big upturn, there are plenty of knuckleheads waiting in line to buy it before it goes up more.

I'm in the real estate market to buy a house for my son as well as my sister and brother in law... I'll "rent" to them - take the depreciation... and "gift" equity to them over time (26K max gift per year - so 4 years out - they have 100K equity). I'll then sell my share to them if they want to buy... otherwise I still own a rental. On a 700K house I'll put 400K down - finance 300K... I'll pay cash for the house for my sister (I set a 325K max - it's a different market - different amount of 'help')... give them a below market rent and the equity 'gifting'. I plan to amend our estate planning to gift them the house should we pass before they are able to purchase.

Housing is a bargain right now and so is the cost of money. We just missed one in the Portland area that had a separate shop! Dang! I was on the road and they couldn't pull the trigger fast enough... But houses are like buses... there will be another one coming along in 15 minutes or so.

[toy71camaro]

so.. diving into my 401k now... all mutual fund stuff... and I'm getting confused the deeper i look.. lol...

So, I'll just take one fund here, for sake of understanding...

I look at my "Royce Opportunity" fund. It shows i have aprox a $2500 "Balance" and I have aprox 120 "units" with a Unit Value of 20.251. But when i click on the fund, it brings up the fund details page. Says the ticker is RYPNX.
Ok, all ok so far...

I go to Schwab, lets "dive into this fund"... I pull up RYPNX, it shows its $12.12 a share.. wait, i thought it was 20.251? I take my 120 units multipied by $12.12 and i got barely half of what my 401k balance sheet says.

Then... second thing...

I look at that ticker on schwab, shows a 0.00% dividend yield.. ok, No dividend. fine. Then it has a "Long Term Capital Gain" of $0.1887. With a Distribution total of $0.1887 as of 12/08/11. So, was that $0.1887/share given to me? or, something else?

Not sure this is "Investing 102".. but... i figured you guys might know the answers. lol

[pw2006]

Originally Posted by toy71camaro

so.. diving into my 401k now... all mutual fund stuff... and I'm getting confused the deeper i look.. lol...

So, I'll just take one fund here, for sake of understanding...

I look at my "Royce Opportunity" fund. It shows i have aprox a $2500 "Balance" and I have aprox 120 "units" with a Unit Value of 20.251. But when i click on the fund, it brings up the fund details page. Says the ticker is RYPNX.
Ok, all ok so far...

I go to Schwab, lets "dive into this fund"... I pull up RYPNX, it shows its $12.12 a share.. wait, i thought it was 20.251? I take my 120 units multipied by $12.12 and i got barely half of what my 401k balance sheet says.

Then... second thing...

I look at that ticker on schwab, shows a 0.00% dividend yield.. ok, No dividend. fine. Then it has a "Long Term Capital Gain" of $0.1887. With a Distribution total of $0.1887 as of 12/08/11. So, was that $0.1887/share given to me? or, something else?

Not sure this is "Investing 102".. but... i figured you guys might know the answers. lol

If you go to Royce's home page, it shows the $12.12 NAV.
http://www.roycefunds.com/Funds/Open/rof/default.asp

If you go here:
http://www.marketwatch.com/investing/fund/rypnx
You can see that they have beat the S&P 500 in the YTD/3/5/10 year categories.

Not sure why your account is showing different numbers... I would follow up with your 401k admin.

[GregWeld]

Originally Posted by toy71camaro

so.. diving into my 401k now... all mutual fund stuff... and I'm getting confused the deeper i look.. lol...

So, I'll just take one fund here, for sake of understanding...

I look at my "Royce Opportunity" fund. It shows i have aprox a $2500 "Balance" and I have aprox 120 "units" with a Unit Value of 20.251. But when i click on the fund, it brings up the fund details page. Says the ticker is RYPNX.
Ok, all ok so far...

I go to Schwab, lets "dive into this fund"... I pull up RYPNX, it shows its $12.12 a share.. wait, i thought it was 20.251? I take my 120 units multipied by $12.12 and i got barely half of what my 401k balance sheet says.

Then... second thing...

I look at that ticker on schwab, shows a 0.00% dividend yield.. ok, No dividend. fine. Then it has a "Long Term Capital Gain" of $0.1887. With a Distribution total of $0.1887 as of 12/08/11. So, was that $0.1887/share given to me? or, something else?

Not sure this is "Investing 102".. but... i figured you guys might know the answers. lol

Here's something I'm going to use for a little "lesson"... This graphic shows the NAV.... NET ASSET VALUE of the fund by year. Please note that if you were contributing the SAME dollar amount paycheck to paycheck - you would have BOUGHT a lot more shares when the fund had a LOW NAV... and you'd have bought FEWER shares when the NAV was high.... and this averaging in can really help your performance in the long run.

If someone would have told you in 2008 to buy twice as many shares of something that had gotten killed --- you'd be saying "NO WAY JOSE".... but of course the mutual fund is doing it for you... so in this case a mutual fund can be beneficial.

This particular fund has a decent performance. So many do not.


Year-End NAVs
Year NAV
2011 $10.32
2010 $12.08
2009 $9.03
2008 $5.57
2007 $11.02
2006 $13.04
2005 $12.29
2004 $13.31
2003 $12.14
2002 $7.37

[GregWeld]

Originally Posted by toy71camaro

so.. diving into my 401k now... all mutual fund stuff... and I'm getting confused the deeper i look.. lol...

So, I'll just take one fund here, for sake of understanding...

I look at my "Royce Opportunity" fund. It shows i have aprox a $2500 "Balance" and I have aprox 120 "units" with a Unit Value of 20.251. But when i click on the fund, it brings up the fund details page. Says the ticker is RYPNX.
Ok, all ok so far...

I go to Schwab, lets "dive into this fund"... I pull up RYPNX, it shows its $12.12 a share.. wait, i thought it was 20.251? I take my 120 units multipied by $12.12 and i got barely half of what my 401k balance sheet says.

Then... second thing...

I look at that ticker on schwab, shows a 0.00% dividend yield.. ok, No dividend. fine. Then it has a "Long Term Capital Gain" of $0.1887. With a Distribution total of $0.1887 as of 12/08/11. So, was that $0.1887/share given to me? or, something else?

Not sure this is "Investing 102".. but... i figured you guys might know the answers. lol

So what you may be seeing is a "balance" that is both cash and units purchased... and perhaps they only invest your cash hoard quarterly... as it builds up. Just guessing here.

The MUTUAL FUND collects the DIVIDENDS from the companies they own --- they can choose to pay out a LONG TERM CAPITAL GAIN if they have any as they buy and sell the shares that make up the fund. Sometimes you get a real nice LTCG and sometimes not so much. What you really want out of these is the long term growth that you get from shares purchased on a regular basis... and of course... hopefully the fund performs as well. Sadly -- this fund has a pretty steep (percentage wise) fee in excess of 1%. While that doesn't seem like a lot -- it adds up over time -- because it's 1% of YOUR invested dough from day one --- and every year thereafter... but they are what they are. And saving this way is better than "not".

[WSSix]

Well, as of 3/14/12 I officially own Whole Foods, Coca Cola Company, Southern Company, and Occidental Petroleum. I basically bought $4000 worth of each stock with money I had in my Star Fund with Vanguard. Everything is still under the umbrella of Roth so I pay no taxes on any of the gains. As of closing today, my balance is up $26 between the four stocks. However, Oxy and Southern Company are down. Whole Foods and Coke had large enough gains that I made money,

I'm still poking around on Vanguard's website so I can learn to fully utilize it. Now, what to do with my tax return money, hmmmmmmm?

[GregWeld]

Originally Posted by WSSix

Well, as of 3/14/12 I officially own Whole Foods, Coca Cola Company, Southern Company, and Occidental Petroleum. I basically bought $4000 worth of each stock with money I had in my Star Fund with Vanguard. Everything is still under the umbrella of Roth so I pay no taxes on any of the gains. As of closing today, my balance is up $26 between the four stocks. However, Oxy and Southern Company are down. Whole Foods and Coke had large enough gains that I made money,

I'm still poking around on Vanguard's website so I can learn to fully utilize it. Now, what to do with my tax return money, hmmmmmmm?

[GregWeld]

I have referred to "noise" in several of my posts.... and what I mean by that is if you watch CNBC every day -- you get bombarded by various expert opinions. One says this is going to the moon - the next guy says the world is coming to an end. THAT is what makes a "market" - one guy is selling - the other, buying.

If you listened to this "noise" - you'd soon go crazy. Like most "opinions" there is some fact... some information that is worth consideration. But if you acted on this "noise" you'd be in and out of stocks about every 15 seconds. This is why I urge you to AVOID the noise.... listen - learn - think - but don't react. Many of the facts on these shows are for TRADERS and professionals that are trying to milk every last drop of "return" on their money. If the average guy listens and reacts - my guess is - you'd be flat broke in less than 6 months.

With this in mind - The reason for todays post (I'm a bonafide posting whore) I read this article on Seeking Alpha. If you only read the part on Coca Cola and McDonalds.... it will sum up the "noise" I refer to.


http://seekingalpha.com/article/4385...g_income&ifp=0


So here's my take away on articles like this....

There is ZERO supporting numbers to stake the authors "buy" recommendation on Coke... other than it's a nice company with good dividend and is a solid business. Remember that this is an INTERNATIONAL play - in the food biz. Now let's go to his "I wouldn't touch this with a 10 foot pole" argument for McDonalds... All manor of numbers - pointing to food costs rising - G&A (general and administrative costs) expense rising... Europe declining etc.

REALLY?? So none of those above factors affect Coke? Only McDonalds.... Both international companies in the food biz. One is a buy the other a sell.

I read this stuff... but I don't put much stock (pun) into the authors argument. I hold a bunch of both and wouldn't sell them even if we slipped into a depression. This guy is just the very definition of the noise I refer to.

[GregWeld]

Okay --- Last post for a few days. I'll be at Bondurant doing their Grand Prix school... and that's more fun than posting here!


I'm posting a link to a Seeking Alpha article on MLP's (Master Limited Partnerships)... *********** I misspoke on the TAX explanation.... as I scanned and posted too quickly. That's what happens on only a half cup of coffee some mornings!


Personally I have large stakes in Kinder Morgan (KMP) and Enbridge Energy Partners (EEP)... and just received their 1099's.

http://seekingalpha.com/article/4405...g_income&ifp=0

[GregWeld]

Please use the thread to go back and read my UPDATED post on MLP's.

I misspoke about the contents of the linked article.


Sorry!