Investing 101

[spencer rifle]

addition: spencer, in your post #7. I might add “teach your children well”. JMHO.

Which we did. All our kids had 529s that made their road much easier, mainly funded from pocket change and extra cash over 25 years. The oldest owns his own house debt-free, and has both IRA and Roth investments, as does the second oldest. The youngest still has a substantial 529 but may be done with schooling. He's formulating a plan to buy a house in a few years after he gets sailing out of his blood (if that ever happens).

We did periodic exercises when they were little where I'd take a month's worth of cash out of the bank and show them in real terms how our budget worked and where the money went. It might have been a better lesson if we had included taxes.

We have no debt of any kind, and an emergency fund in liquid government securities equal to 3/4 of year's income (earning 6.5% this year). Those should be a priority, along with some cash at home for when the ATMs go down or the power goes out.

 

[Mij]

Talk of finance was always taboo, in my family anyways. We need to change this. It's why I'm doing what I'm doing. I'm glad people are chiming in.

Sir: In context finance is only a micro fraction of “teach”.

 

[Nugget]

Have you seen the dating pool? Yikes.

I'm in my early 40s, and married to a great girl I met at my white collar job almost 20 years ago. We actually just talked about that recently. Between all the LGBT+++++ stuff, MeToo, work-from-home, "everything is date rape", social media, etc, we don't understand how a guy even goes about finding a decent girl anymore. Hell, half the girls anymore are dudes. I feel for ya.

Anyway, back on topic. I still stand by my earlier comments to keep it simple, and keep plowing money into cheap ETFs. The stock market has outperformed all other investments through two world wars, a Depression, multiple recessions, 9/11, Covid, and every other manner of calamity. You hit the nail on the head: either the market will continue to be the winner, or things will be so bad that it won't matter.

 

[Mij]

Which we did. All our kids had 529s that made their road much easier, mainly funded from pocket change and extra cash over 25 years. The oldest owns his own house debt-free, and has both IRA and Roth investments, as does the second oldest. The youngest still has a substantial 529 but may be done with schooling. He's formulating a plan to buy a house in a few years after he gets sailing out of his blood (if that ever happens).

We did periodic exercises when they were little where I'd take a month's worth of cash out of the bank and show them in real terms how our budget worked and where the money went. It might have been a better lesson if we had included taxes.

We have no debt of any kind, and an emergency fund in liquid government securities equal to 3/4 of year's income (earning 6.5% this year). Those should be a priority, along with some cash at home for when the ATMs go down or the power goes out.

Reading your posts, (today and past) I took it for granted in your case. Just wanted to immortalize it in print, may help somebody else. Head on a swivel.

 

[Magyars]

I am not, I have about $8K between a car and a card. I rent (I know). I have not bought a house because I'm not sure about Indiana long-term and other areas of the country are seemingly more geared towards the tech industry. If I could WFH for the FAANG's I'll stay, but I don't see that as a reality. My goal is golden handcuffs in tech and outside of finance study I'm heavy in full-stack and am very interested in ML. I'm also brushing up on some math to try to test out of it for a potential return for my MS in CS. My emergency fund equates to about 3 months of expenses (I know).

Go where the money is...find a tech rich environments...Northern Virginia is where I'm from, and the potential for high dollar jobs are thick.

 

[WebSnyper]

.. why would you 401k when you can do better? I'm not criticizing a 401k. I guess it's a good set it and forget it thing, but that is not the path I want to walk.

Any matching? Are you maxing out the match? Does your insurance include an HSA? Maxing that out? Got any other benefits that provide match or discounted company stock purchases, etc?

401 tax benefit and company match (depending on the employer program) are the main reasons for 401k vs other investments. Once you are taking full advantage of the match, and HSA, etc (you can usually invest some of your HSA $ as well), then definitely look for additional avenues.

 

[sixGuns]

I've thought about posting this thread for the better part of 6 months, but I held back. I'm glad I finally did. I've made some financial mistakes and I'm ok with that. Even the longest journey's start with the first step. I've got a new documents file that I'm saving all the tidbits in for reference to expand on. I like to back things up and I'm not a fan of the cloud, after all, it is just someone else's computer. Something about that irks me.

 

[sixGuns]

Any matching? Are you maxing out the match? Does your insurance include an HSA? Maxing that out? Got any other benefits that provide match or discounted company stock purchases, etc?

401 tax benefit and company match (depending on the employer program) are the main reasons for 401k vs other investments. Once you are taking full advantage of the match, and HSA, etc (you can usually invest some of your HSA $ as well), then definitely look for additional avenues.

They do, its partial, but I am maxed on the contribution. No HSA at the moment. I'm not naming names, but my current employer is underpaying me and we both know it. I eluded to it, but the "now" is more for the resume. They'd rather lose money in turnover than pay me it seems. That's been my experience with Ft Wayne.

 

[bwillits]

Money provides options and I don't want to be without them. I'm not old and I'm not young, but I have lost some of the most valuable commodity for investing. Time. Time in the market.

I'm looking to change that. The past few years have been a real eye-opener. I know that if you know how to make a guaranteed dollar the last thing you do is tell people because tomorrow it won't be guaranteed. Neverthless, I will ask... Where do (should) I start if I want to get serious about investing/learning and keeping more of my money? I am currently exploring Investopedia's Stock Market Game.

I will add this information if it is helpful in your recommendations:
I am very tech savvy. Not, "I know how to print a PDF." More, "I know computers have more RAM today, but why a double? An int will suffice."
I don't want recommendations of feelgood investment entertainment rich dad/poor dad type books/videos.

Thanks in advance!

I work in the industry and my job is to act as the middle man between advisors and the big investment banks. My biggest piece of advice is to go through an advisor. Their job is to help you acquire wealth and plan. There’s a lot to it.

 

[bwillits]

For novices, simple is usually best.

Step 1. Set up a high yield online savings account (i.e. Ally, Capital One, etc.) This is where you store your excess cash for investing and for your emergency fund. These online banks usually have nice CD rates as well, if you have enough extra cash sitting around.

Step 2. Pick a no fee broker (i.e TDA, Schwab, etrade, etc.), that lets you buy stocks and ETFs commission free, and set up a brokerage account. Pick out some low cost, broad-market or high dividend ETFs (SPY, IVV, DVY, etc), and buy shares as excess cash allows. Don't worry about timing the market, buying too early, etc. And definitely dont let your in-laws neighbors friends dog talk you into buying individual stocks.

As long as you invest for the long haul, keep putting money in regularly, and don't try to get too cute with exotic investments, you'll be fine. You may not strike it rich, but you'll be fine.

That's it. That's the list.

Some good advice. Smart investing is typically boring. Buy the index, stick with blue chips with strong dividends, don’t worry about market timing bc you have a huge time horizon.

 

[bwillits]

My father retired a few years ago and had worked for many years for Tokheim in Ft Wayne. I'm guessing he had some form of non-qualifying deferred comp. I guess he never thought they'd go out of business. If I ever want to get him riled up I just mention them. Apparently, when they went under, he lost quite a sum of money.

I just did the 401k stuff because that's all I ever hear. I understand that's qualified and untouchable by creditors when the company goes belly-up, but I would much rather be able to achieve better returns than a 401k. I mean... why would you 401k when you can do better? I'm not criticizing a 401k. I guess it's a good set it and forget it thing, but that is not the path I want to walk.

401k should just be the vehicle. You should have a good amount of investment options inside of it. Did you select a target date fund?

 

[sixGuns]

401k should just be the vehicle. You should have a good amount of investment options inside of it. Did you select a target date fund?

I did not, at the time I wasn't sure.

 

[Nugget]

I did not, at the time I wasn't sure.

In a 401k, it's almost as important to make sure the fund or funds you put your money into charge low annual fees, as it is to worry about WHAT the funds invest in. If you can put your money into a target fund, broad-market stock fund, value-based stock fund, or something similar that charges 0.15% or less annual fee, you'll likely do better in the long run than if you split your money into a bunch of exotic growth, tech, metals, real estate and other such funds that usually charge 1%+ fees.

 

[spencer rifle]

They'd rather lose money in turnover than pay me it seems. That's been my experience with Ft Wayne.

That's Fort Wayne. The prime directive is "cheap."
It can be complete crap, as long as it's cheap.

 

[sixGuns]

In a 401k, it's almost as important to make sure the fund or funds you put your money into charge low annual fees, as it is to worry about WHAT the funds invest in. If you can put your money into a target fund, broad-market stock fund, value-based stock fund, or something similar that charges 0.15% or less annual fee, you'll likely do better in the long run than if you split your money into a bunch of exotic growth, tech, metals, real estate and other such funds that usually charge 1%+ fees.

It was a fast meeting and the guy seemed shady, like he was upselling a used car warranty.

That's Fort Wayne. The prime directive is "cheap."
It can be complete crap, as long as it's cheap.

The fun part was the pay discussion. I'd said something like, "Something inline with industry standards and experience given cost of living in Indiana." I don't think they liked that. I needed the experience for the CV so I took less.

 

[Nugget]

It was a fast meeting and the guy seemed shady, like he was upselling a used car warranty.

Do you have the ability to check on and make changes to your 401k account online? If so, you should be able to find a summary of all of the investment options available to you (not just those you'recurrently invested in). If not, this info should be provided in the quarterly or annual statements mailed to you by the 401k provider. Such a list should include info such as fund name and objective, annual fee, recent returns, expected dividend yield, etc. A quick scan thru the list would allow you to pick out the funds with the lowest fees. If you have a list in electronic form, feel free to post it here and I'll gladly look over it with you.

 

[craigkim]

I realize it's akin to a casino and I am not looking to get rich quick. I am not trying to go bankrupt on derivatives or something similar either. I just realize there will be no safety nets, or what they are when it's my time will essentially be worth nothing. It's going to either be you have the funds or you do not and not having the funds means someone else makes decisions for you. The other day I saw a very old man pushing a mop bucket at Walmart. That scares me.

Some days I feel like that would be such a relaxing job.

 

[WanderingSol07]

I too dabbled in the market. But I pay a fiduciary to manage my retirement account. They do a good job, my retirement account grew significantly last year.

 

[sixGuns]

Do you have the ability to check on and make changes to your 401k account online? If so, you should be able to find a summary of all of the investment options available to you (not just those you'recurrently invested in). If not, this info should be provided in the quarterly or annual statements mailed to you by the 401k provider. Such a list should include info such as fund name and objective, annual fee, recent returns, expected dividend yield, etc. A quick scan thru the list would allow you to pick out the funds with the lowest fees. If you have a list in electronic form, feel free to post it here and I'll gladly look over it with you.

I'm not sure, but I don't think so, he said, "If you have questions just call," so many times I lost count.

Some days I feel like that would be such a relaxing job.

This guy looked like he could barely walk, he did not look like he was relaxed. There was another time where a landscaping crew was mulching our complex and there was an older man pushing a wheelbarrow full of mulch and another running a weedeater. They weren't as old as the Walmart guy, but I was like damn. I think about that stuff more than I should.

 

[MCgrease08]

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