Investing 102

[Vegas69]

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.

[sik68]

Came across the '5 Golden Rules of Investing Success'

Pretty sure I've read these all somewhere before?

[GregWeld]

Originally Posted by Vegas69

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.

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.

[GregWeld]

Originally Posted by sik68

Came across the '5 Golden Rules of Investing Success'

Pretty sure I've read these all somewhere before?

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.

[WSSix]

Originally Posted by GregWeld

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'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.

[gearheads78]

Originally Posted by WSSix

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. .

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.

[Vegas69]

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?

[SSLance]

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?

[GregWeld]

Originally Posted by Vegas69

Does having $750,000 liquid make you happier than $250,000?

Oh hell yes it does.

[WSSix]

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


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.