Investing 102

[XLexusTech]

Looking four your thoughts on something I have a decent strategy mixing 401k post tax cash in mutual funds indexes "lazy portfolios"
Then individual stocks all the ones we talk about here kmp jnj apple all Drips...

Now here is the problem I have a big chunk of cash sitting in the bankng doing almost no work for me.

I am gun shy on investing it because just about everything I own is up... Since you need to buy low I am stuck between a rock and a hard place

What to do?

[protour73]

First of all............HAPPY NEW YEAR guys!! (and gals?)

OK Mr. Inspiration. Now it's 2014, I have a recent windfall sitting in the bank that fell in my lap, completely unexpected. Time to INVEST!!!

WHERE do I go? ETrade? Scott Trade? etc, How do I take the first step? I don't recall too much talk of taking the first step in this MASSIVE thread.

I don't have "a guy" to go to either, not sure I'd even trust a recommendation.

HELP!!

Originally Posted by GregWeld

Here's the deal --- and this IS INVESTING 102 --- so it's why I pull this stuff out and try to get people to open up their view of all things money....

Investments need to be looked at as competing for what COULD have been if the investment choice was "X" or "Y".... during the same period. Investing shouldn't be STAGNANT... money needs to be working and pulling the wagon ALL of the time. And only some minor analysis needs to be done to make sure a guy is seeing that thru. Buy and hold and forget is not a strategy that will win. Winning is critical. More critical than anything else you'll ever do... Money DOES buy happiness -- the guy that said it couldn't or wouldn't never had any.

[GregWeld]

Originally Posted by XLexusTech

Looking four your thoughts on something I have a decent strategy mixing 401k post tax cash in mutual funds indexes "lazy portfolios"
Then individual stocks all the ones we talk about here kmp jnj apple all Drips...

Now here is the problem I have a big chunk of cash sitting in the bankng doing almost no work for me.

I am gun shy on investing it because just about everything I own is up... Since you need to buy low I am stuck between a rock and a hard place

What to do?

I don't understand the thinking behind "it's all UP" so that must be a bad thing. Isn't that actually what is the most desirable??? We invest so our capital will appreciate. We WANT it to go up!

Some of you guys are still stuck in 50 cent land. Trying to buy "low"... and yet afraid if the stock you're looking at goes up from where you last looked at it. I don't know what your personal time horizon looks like until you retire -- but the longer you sit with money that's on vacation instead of hard at work.. you're on the wrong side of that 50 cents you're trying to save on the "buy".

When markets get a "BIG" pullback... the usual TV talking head is talking about a "bear market" pull back of 10%.... okay... 10% on a $60 stock is $6... Yet what we're looking for over 5 plus years is a Total Return of 50 to 100%.... in other words we're look at an investment that will double our money -- from $60 going to 100 or more. Makes the $6 "down 10%" look pretty small by comparison doesn't it?

This is why the nice safe confirmed way to invest is to "AVERAGE IN".... you put money in as you have an amount saved up that makes sense to invest... rather than saving up a big chunk and then trying to figure out what to do with it -- in the meantime losing out on the dividend (which clearly beat bank rates) and any growth. You're letting your fear of not buying "right" keep you from making any kind of return.

Let's take the TWITTER (TWTR) I just TRADED as a current example. I had decided to I wanted to buy 1000 shares of it. It's purely a growth stock - or maybe what they call a "momentum stock"... where it's just going up because of the pile on affect... whatever - I thought it was poised to go up.... so I bought 500 shares. The next week it had jumped up $4 a share! PERFECT!! That is EXACTLY what I wanted to see!! I quickly bought another 500 shares UP $4 a share. DUDE! I'm not afraid of that! That is what I want to see in a stock! That tells me more people want to own it than sell it. I then proceeded to buy ANOTHER 1000 shares (breaking my own set amount) when it jumped up another $10 a share. WTF!! It's acting way better than what I had hoped for.

Now -- the other side of that coin is --- IMHO it went too far too fast -- and I sold it for a nice $40,000 profit on my $100,000 purchase price. That's a pigs get fat hogs get slaughtered scenario... but that's a whole different post. My point is I was NOT afraid because the market was up... in fact - I'd bought even more!

Will the market be lower at some point if you bought today.... maybe. But we're not really worried about that because we're buying good stuff -- that pays a decent rate of return -- and we should have TIME on our side (this shouldn't be money you'll need next week or next year).

Waiting to "get in" is only a feel good temporary rush. But if you'd waited to get in the market last year -- you lost out on about a 30% gain. Again - making that 10% down move look pretty small in comparison.

If it makes you feel better -- then average in. Pick a date -- and get that money to work. Vacation is OVER.

[GregWeld]

Originally Posted by protour73

First of all............HAPPY NEW YEAR guys!! (and gals?)

OK Mr. Inspiration. Now it's 2014, I have a recent windfall sitting in the bank that fell in my lap, completely unexpected. Time to INVEST!!!

WHERE do I go? ETrade? Scott Trade? etc, How do I take the first step? I don't recall too much talk of taking the first step in this MASSIVE thread.

I don't have "a guy" to go to either, not sure I'd even trust a recommendation.

HELP!!

The brokerage of choice really doesn't matter --- they all have low commission structures now. So as long as it's a discount broker -- the ones you named or Schwab... To me it's more a mater of convenience. The one you drive by on your way to work -- or to the store -- or is easiest to get to and has quick easy parking. Because you'll be making deposits once in awhile. But anymore - you can do that all with their "app" on your phone... deposit checks etc by just taking a picture of the front and back and hitting a couple buttons. I can't tell you the last time I actually went to my bank or broker.

So -- Happy New Year to you it sounds like!


Depending on what your investable amount looks like -- and that's a personal thing for you to know - not us.... will get you an appointment with an "advisor" that will help you get all set up in your account --- Discount brokerages DO NOT sell you anything - nor will they pick stocks for you or trade for you. That's a full service rip off house... er... I meant to say... that's for people that are afraid to think or take personal responsibility for their futures. LOL

The advisor is there to help you navigate their website - or do transfers etc. Remember - these are very low cost organizations -- so they don't have people sitting around trying to make a $500 commission off your buy or sell.

Then - once again - this depends on the amount your talking about --- I'd check with the advisor about what you qualify for as far as IRA's go. A ROTH IRA has certain limits on income level... and normal IRA's have rules too... and you NEED TO UNDERSTAND THEM before you open that type of an account. They're both RETIREMENT ONLY accounts... maybe you want that and maybe you don't. I personally have a whopping 25K in my retirement account... since I've never (for the last 25 years or so) needed one.

Once you understand the type of account --- or accounts ---- you want to open - then you need to decide what percentage of the dough you want to keep "liquid" for an emergency fund -- what you want to tie up until retirement - or maybe you just want a normal account where you can pull money from if you need it. PM me or preferably email me - if you have some personal questions and I'll be happy to answer them. What I WILL NOT do is to tell you to do this or do that -- and I won't tell you what to buy or when to sell. I'll help you to understand fishing --- I won't catch you a fish or hold your pole. (that didn't come out right did it!)


Then I'd tell you to go to page ONE of this thread -- and just digest it a little bit every day. In the end -- it will answer a lot of your questions and you'll get a lot of good information out of it that will serve you well over your lifetime. Not saying that because the thread is about half me posting --- but the questions you have are no different than most everyone else. They've been answered about 10 times each along the way.

The WORST thing you could do is to NOT get started --- so get started. It's fun as hell - rewarding - and it's like horsepower -- you'll always want more.

[GregWeld]

Investors who stayed with stocks from October 2007, before the market crash, to September 2013, would have had a cumulative return, including dividends, of 21%. Haverland estimates that the return on cash over the same period was 3.6%.




In other words --- even if you'd have rode the market to the BOTTOM in '08 and '09 ---- you'd have come out the other side in great shape!

[protour73]

Depends on the "amount" of cash, I have frittered away any chance at making money WITH my money for that same amount of time at .001% in a useless savings account (because I was a chickensh*t). Well, enough is enough, changes are coming to our household finances for 2014......and I'm not getting any younger either!!!

Originally Posted by GregWeld

Investors who stayed with stocks from October 2007, before the market crash, to September 2013, would have had a cumulative return, including dividends, of 21%. Haverland estimates that the return on cash over the same period was 3.6%.

In other words --- even if you'd have rode the market to the BOTTOM in '08 and '09 ---- you'd have come out the other side in great shape!

[XLexusTech]

Originally Posted by GregWeld

I don't understand the thinking behind "it's all UP" so that must be a bad thing. Isn't that actually what is the most desirable??? We invest so our capital will appreciate. We WANT it to go up!

Some of you guys are still stuck in 50 cent land. Trying to buy "low"... and yet afraid if the stock you're looking at goes up from where you last looked at it. I don't know what your personal time horizon looks like until you retire -- but the longer you sit with money that's on vacation instead of hard at work.. you're on the wrong side of that 50 cents you're trying to save on the "buy".

When markets get a "BIG" pullback... the usual TV talking head is talking about a "bear market" pull back of 10%.... okay... 10% on a $60 stock is $6... Yet what we're looking for over 5 plus years is a Total Return of 50 to 100%.... in other words we're look at an investment that will double our money -- from $60 going to 100 or more. Makes the $6 "down 10%" look pretty small by comparison doesn't it?

This is why the nice safe confirmed way to invest is to "AVERAGE IN".... you put money in as you have an amount saved up that makes sense to invest... rather than saving up a big chunk and then trying to figure out what to do with it -- in the meantime losing out on the dividend (which clearly beat bank rates) and any growth. You're letting your fear of not buying "right" keep you from making any kind of return.

Let's take the TWITTER (TWTR) I just TRADED as a current example. I had decided to I wanted to buy 1000 shares of it. It's purely a growth stock - or maybe what they call a "momentum stock"... where it's just going up because of the pile on affect... whatever - I thought it was poised to go up.... so I bought 500 shares. The next week it had jumped up $4 a share! PERFECT!! That is EXACTLY what I wanted to see!! I quickly bought another 500 shares UP $4 a share. DUDE! I'm not afraid of that! That is what I want to see in a stock! That tells me more people want to own it than sell it. I then proceeded to buy ANOTHER 1000 shares (breaking my own set amount) when it jumped up another $10 a share. WTF!! It's acting way better than what I had hoped for.

Now -- the other side of that coin is --- IMHO it went too far too fast -- and I sold it for a nice $40,000 profit on my $100,000 purchase price. That's a pigs get fat hogs get slaughtered scenario... but that's a whole different post. My point is I was NOT afraid because the market was up... in fact - I'd bought even more!

Will the market be lower at some point if you bought today.... maybe. But we're not really worried about that because we're buying good stuff -- that pays a decent rate of return -- and we should have TIME on our side (this shouldn't be money you'll need next week or next year).

Waiting to "get in" is only a feel good temporary rush. But if you'd waited to get in the market last year -- you lost out on about a 30% gain. Again - making that 10% down move look pretty small in comparison.

If it makes you feel better -- then average in. Pick a date -- and get that money to work. Vacation is OVER.

More info I average in bi monthly with purchases 24 times a year in my vanguard mutual fund accounts... The big chunk is a result of some stock based compensation via my employer I cached out roughly 50 percent of the vested and have more vesting over the next year so I cashed out to reduce risk of having that money in one stock. So now I have a lump of cash to invest if I find good candidates

[GregWeld]

Originally Posted by protour73

Depends on the "amount" of cash, I have frittered away any chance at making money WITH my money for that same amount of time at .001% in a useless savings account (because I was a chickensh*t). Well, enough is enough, changes are coming to our household finances for 2014......and I'm not getting any younger either!!!

Hey --- If you'd have just followed the Great Siegymeister in 2013 --- you'd be 33% richer!


OMG.... so simple.

[GregWeld]

Originally Posted by XLexusTech

More info I average in bi monthly with purchases 24 times a year in my vanguard mutual fund accounts... The big chunk is a result of some stock based compensation via my employer I cached out roughly 50 percent of the vested and have more vesting over the next year so I cashed out to reduce risk of having that money in one stock. So now I have a lump of cash to invest if I find good candidates

I love stock options! It's free money!


Did I ever write about my 20 million dollar Grand Banks?? LOL ---- oh long story... or the 30 million dollar house I bought for 177 grand?


Goes back to my wife being a Director level at Microsoft beginning in 1984... and me being the safe one -- I wanted to pay cash for stuff... and the stock options were free money. Better to have a paid for house and boat than to have that stuff and watch the stock go in the tank... so I sold along the way. Well -- that made me miss out on the 10,000% gains those shares had. Mind you -- we had a couple million shares... so I didn't exactly go broke with that strategy either. LOL


Remember something about OPTIONS -- they're PURE INCOME -- and when you sell -- that amount is added to your income -- and you owe taxes on that - as well as the higher tax rate on all the other income in your household. So be certain to "account" for that hit. Best course of action there is to have them withhold max bracket rate --- and get a nice check back --- rather than owe huge and have to sell another batch to pay the taxes with - which adds to your income the following year and down that path you go. Trust me on this one.

[protour73]

Originally Posted by GregWeld

Hey --- If you'd have just followed the Great Siegymeister in 2013 --- you'd be 33% richer!


OMG.... so simple.

yes, yes, yes.... well let me tell you Greg, if you smack a rock hard enough, over and over, eventually it will crack!! (that's a metaphor, for my skull)