OT: Investing - Stocks/Mutual Funds/Bonds/Crypto

[Serge28]

One of the biggest mistakes I see is not taking advantage of your company's 401k match ( if they have one). While this varies, typically a company will match 50% of what you put in up to 6%. So they'll put in 3% if you put in 6% or higher. That's free money. Take it.

I've been eligible for 401K matching since last September and haven't taken advantage of it because of credit card debt. Makes more sense to pay off 20+% interest cards that are eating up my income first.

[MickeyDavis]

Definitely

[MartyConlonOnTheRun]

Get disability insurance if you don't have it. Get term life insurance if you need it (i.e. people dependent on your income), because that will only get more expensive. Don't buy permanent life insurance, ever. No, really. Never. Refinance your student loans. Try to scare up 5.5k to fund a Roth IRA.

I'm curious as to why you say that. I work at a firm where permanent products (ULs and Indexed ULs) are our bread-and-butter so to speak. Heck, we're doing a $50 million Universal Life policy for an NBA starter right now.

I've audited firms that sell ULs and there is a reason it's there bread and butter.

I think Mid is too harsh for two reasons:
1. There are no absolutes. Just like it's good advice 90% of the time to hit up the match there are reasons why you shouldn't in specific circumstances.
2. The product makes it easy and safe for elderly and low knowledge investors. Some return is 99% of the time better than sitting in a bank or spent on shopping. It's similar to how people view a house as a good investment.

But overall I agree with Mid, that it's usually a bad return due to the fees. I tell my friends to be careful with the presentations since I've heard of them using 'historic' figures but are outdated in our current outlook. The ULs are clouded by a reputation of high fees and salesman ship. Instead of basing your investments on a combination of fear and fantasy charts, you are usually better off taking the term life you really need for the safety of the family financials and investing the rest you save on premiums and fees.

Every bodies situation is different but usually the real numbers show this is a smarter investment

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[MickeyDavis]

Like every financial product you need to do your homework. There are no absolutes in terms of "always good" or "always bad" investments.

[JustinCredible]

I have no idea about stocks. Just waiting for Kurty to take me under his wing and make me rich like him.

Lol, just start a company and blow that **** up. In reality that’s where most of my net worth lies and where I get any money to invest in other things. So there you go guys, take some money and build a company. I invested $500 to start. My two business partners did the same. We had $1500. Pretty crazy looking back. Best investment I ever made. Although it was mostly just investing in myself if you think about it.

Yup, this is mostly all I do. I have a 401k from my previous years working for someone else and my wife still contributes to a 401k. Other than that, I've been all-in just investing in myself. I have two companies that are profitable (one that is very profitable). My next step is likely to start taking some of those profits and investing in real estate.

I really enjoy and am fascinated by the stock market and bitcoin and pretty much all investing. However, I don't enjoy investing my money in things I have zero control over.

My advice is don't diversify if you want to become rich. Diversify once you are rich.

[feldm093]

I'm just starting out in the world of investing having finished undergrad in 2016 and starting the first "real" job a few months later.

The issue I'm coming up against is understanding where to even begin. I've got pretty onerous student loan payments to be made every month which soak up a good chunk of my income, and I contribute double-digit percentage to my company 401k while also trying to build up a little nest-egg of savings.

Should I be looking to continue to lean out non-essentially expenses even more than I've already got them and then put that extra money into another investing vehicle?

I'll be curious to read along as the discussion evolves. Definitely want to get a big jump-start on saving and would like to make the right early decisions.

The answer to the bolded part is yes 90% of the time when looking at it from a financial standpoint. Do I need nice gym membership? No. My kitchen is outdated by 30 years, should i upgrade it? No. The older (only 29) I get the more I try to live without the luxuries and down size. You have to live your life, but just recognize you are trading money you could invest for simple luxuries now.

If you are starting out, here is a good overview on how you should invest your money. It is pretty conservative since it focuses on paying down debt, versus essentially using it as a loan to invest (when you decide against not paying it down). IMHO, you should already be past step 6 before you look into any investing that requires you to research (thus probably more risk). If you are doing that, you are pointing in close to $30k a year between 401k/Company Match/IRA/HSA Just ride the low-cost index wave and max out for 20-25 years and you will have more than enough to retire.
WHAT
0. Establish an emergency fund to your satisfaction
1. Contribute to your 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
3. Max HSA
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
5. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA, swap #4 and #5)
6. Fund a mega backdoor Roth if applicable.
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
8. Invest in a taxable account with any extra.

I sincerely appreciate the advice. The difficulty is scrounging up the cash to continue investing and building up my assets, and putting in ~$30K annually is not a possibility with my income.

I'll continue to read along as we go. Cryptocurrencies are interesting but seem beyond my level at the moment.

My follow-ups: What do you mean regarding point #2 and the "guaranteed return"? I'm confused on the logic that a loan with an X% rate serves as an asset rather than a liability. And should I look to contributing past my company's match level for the 401K? Or take whatever percentage beyond that and toss it in a Roth IRA or something of the like?

[midranger]

The debt is definitely a liability. One that is costing you 5% more of your future money each year. By "return" we mean not costing you 5% more liability rather than gaining 5% more asset.

[feldm093]

The debt is definitely a liability. One that is costing you 5% more of your future money each year. By "return" we mean not costing you 5% more liability rather than gaining 5% more asset.

Makes a lot more sense thinking of it in that regard. Thank you for clearing it up.

[midranger]

Perm life insurace is good in a couple situations.

1. You have a need for a large cash inheritance because of large illiquid assets being passed on, i.e. Lots of property or a business. This allows your family to pay the estate tax without selling off some of the assets.

2. You a super rich and don't need risk or better returns. 2.5% of a billion dollars is still a lot of money, and then it passes along tax free. I think the estate tax kicks in at 5.5 million for singles and 11 million for married. So most people won't have worry about it.

3. Key man protection in a business.

Not sure why else you'd want it, but it's sold like the panacea of investing. If you want to pay your entire first year's premium to your salesman's commission and be negative on an investment for at least a decade while tying up your money until you die for a garaunteed 2.5% return, go for it.

It's a terrible product for most everyone though.

[paulpressey25]

Until the recent bull run in stocks, the dividend that Northwestern Mutual Life paid on certain policies is/was actually quite good. Beat the market a lot of years. (Note, I do not sell insurance nor work for NML)

But the bulk of life insurance should arguably be in cheap term policies. Buy them in your 20's when they are very cheap.

[Profound23]

One of the biggest mistakes I see is not taking advantage of your company's 401k match ( if they have one). While this varies, typically a company will match 50% of what you put in up to 6%. So they'll put in 3% if you put in 6% or higher. That's free money. Take it.

I've been eligible for 401K matching since last September and haven't taken advantage of it because of credit card debt. Makes more sense to pay off 20+% interest cards that are eating up my income first.

Depends, I went through this with my wife for years. I would worry about getting debt paid off instead of investing.

She would then, accrue more debt the second we were "debt free" on frivolous things and it was a viscous cycle. I wanted to invest in Netflix really early and she kept telling me to pay off the credit card first. So I did. I planned to invest in Netflix (when it was around 30) with our taxes one year and she asked me to pay off the credit. I figured it made sense because as you said, the interest rate is high. Well I paid it off only for her to use it again and in the meantime missed out on the 600%+ investment of Netflix.

Finally, I just started investing and paying down the debt slowly. If you are determined to get the credit card paid off and keep it paid off your logic makes sense. If you are only going to pay it off in order to find other reasons to use it, at least invest a little.

[MickeyDavis]

I get paying down debt. But if you can put 6% into a 401K and get a 3% match you're making 50% right off the bat. Of course if putting 6% (or whatever you need to get the match) away prevents you from paying down your debt at all don't do it.

[Mags FTW]

If you’ve got the available funds. I would try and buy some real estate near the FoxxConn site.

[sidney lanier]

Interesting piece in the NY Times on the trust factor and bitcoin. I think the author is right -- as trust in traditional institutions erodes, trust in technology-based systems is increasing.

I'll know I've made the transition to techno-trust when I can aim my car at a brick wall and trust the collision avoidance thing to stop it.

[RedMosquito76]

Until the recent bull run in stocks, the dividend that Northwestern Mutual Life paid on certain policies is/was actually quite good. Beat the market a lot of years. (Note, I do not sell insurance nor work for NML).

New York Life also had a good one that was on par with NML. Those two were the best, there were a few large mutual companies that had a decent product, but the overall value quickly declined after NYL & NML. I agree that whole life isn't for everyone, but it does have a place. NYL markets theirs as a way for those of means to have a source of tax free income in retirement.

Full disclosure - I do sell a small amount of life insurance on the side as an independent. Vast majority is term, the rest is straight whole life. Never UL or IUL.

[HaroldinGMinor]

One of the biggest mistakes I see is not taking advantage of your company's 401k match ( if they have one). While this varies, typically a company will match 50% of what you put in up to 6%. So they'll put in 3% if you put in 6% or higher. That's free money. Take it.

I've been eligible for 401K matching since last September and haven't taken advantage of it because of credit card debt. Makes more sense to pay off 20+% interest cards that are eating up my income first.

You should look into a loan with Sofi. Don't know your situation but can probably cut that interest rate in half.

[MartyConlonOnTheRun]

I'm just starting out in the world of investing having finished undergrad in 2016 and starting the first "real" job a few months later.

The issue I'm coming up against is understanding where to even begin. I've got pretty onerous student loan payments to be made every month which soak up a good chunk of my income, and I contribute double-digit percentage to my company 401k while also trying to build up a little nest-egg of savings.

Should I be looking to continue to lean out non-essentially expenses even more than I've already got them and then put that extra money into another investing vehicle?

I'll be curious to read along as the discussion evolves. Definitely want to get a big jump-start on saving and would like to make the right early decisions.

The answer to the bolded part is yes 90% of the time when looking at it from a financial standpoint. Do I need nice gym membership? No. My kitchen is outdated by 30 years, should i upgrade it? No. The older (only 29) I get the more I try to live without the luxuries and down size. You have to live your life, but just recognize you are trading money you could invest for simple luxuries now.

If you are starting out, here is a good overview on how you should invest your money. It is pretty conservative since it focuses on paying down debt, versus essentially using it as a loan to invest (when you decide against not paying it down). IMHO, you should already be past step 6 before you look into any investing that requires you to research (thus probably more risk). If you are doing that, you are pointing in close to $30k a year between 401k/Company Match/IRA/HSA Just ride the low-cost index wave and max out for 20-25 years and you will have more than enough to retire.
WHAT
0. Establish an emergency fund to your satisfaction
1. Contribute to your 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
3. Max HSA
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
5. Max 401k (if 401k fees are lower than available in an IRA, or if you need the 401k deduction to be eligible for a tIRA, swap #4 and #5)
6. Fund a mega backdoor Roth if applicable.
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
8. Invest in a taxable account with any extra.

I sincerely appreciate the advice. The difficulty is scrounging up the cash to continue investing and building up my assets, and putting in ~$30K annually is not a possibility with my income.

I'll continue to read along as we go. Cryptocurrencies are interesting but seem beyond my level at the moment.

My follow-ups: What do you mean regarding point #2 and the "guaranteed return"? I'm confused on the logic that a loan with an X% rate serves as an asset rather than a liability. And should I look to contributing past my company's match level for the 401K? Or take whatever percentage beyond that and toss it in a Roth IRA or something of the like?

I didn't mean everyone should put in 30k or that's the expectation. I just think you should keep it simple on tax advantaged account until you move on to other stuff.

My advice is to take the match first, then pay off high loans, then add more to the hsa and then the rest into the 401k.

The thought of looking at the loan rate is this: you have 10k cash from a gift or inheritance. Should you pay off debt or invest. Well if you pay off the high-% debt you are basically getting the 'return' of not paying interest. It's guaranteed. With investing you probably get more but depends on the market. I paid off my 6.55% student loans but didn't attempt to pay the 1.9% car loan because the money was better in my retirement account.

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[Jazzy13]

Put 7K into bitcoin and etherium only a few months ago and it tripled.
Used 2K bitcoin profit and bought some ripple at 74 cents per coin.
Looking to take another 2K bitcoin profit and buying more ripple and litecoin.

[Profound23]

Put 7K into bitcoin and etherium only a few months ago and it tripled.
Used 2K bitcoin profit and bought some ripple at 74 cents per coin.
Looking to take another 2K bitcoin profit and buying more ripple and litecoin.

The thing people don't realize is many of this coins were once worth one thousandth (and less) of a dollar. If you research and find the right ones, just invest a 100 and it goes from 0.001 to 0.30 you just turned 100 into 30,000. Sure, maybe you lose it but you just lost 100$ which is probably how much you spend on a Friday night out with your friends.

Nobody is saying mortgage your house and turn your 401k into 100% bitcoin, but do small amounts and give yourself a chance.

Chamath Palihapitiya (part owner of the Warriors) says if nothing else use it as a backup plan. For every 100 you invest into 401k or IRA, invest 99 instead and 1.00 into bitcoin. If bitcoin bombs, it probably means your 401k did well and you are alright but if the stocks in your 401k struggle the bitcoin might be able to recoup that money 10-fold...or more.

[bizarro]

a year's worth of electricity on one build? $5k to build? i think you better check your numbers.

about 1/2 that, might get 0.5 bitcoin a year, but that coin might be worth 30-50k in 12 months
8 x 1070 gtx rig costsbaround 4k, 1500-1600 electricity in a year maybe
$20-25/day not counting value increases.

you should be getting a better return than $25 on 8 1070s, and that should cost about $10-$12 a month at 0.09 kw/h

This is a conversation that interests me immensely. I am game to take it private.

Basic deets: I am now learning and keenly interested in creating my own mini ‘mining’ (i prefer harvesting myself) set-up. From my early explorations, Bitmain clearly has cornered the market in exposure and popularity BUT they are months out in terms of availability - particularly for something like their L3+. I have sincere questions about power usage and reward as the crypto problems become harder and harder. I hear from computer savvy friends that the basic gaming graphic cards cam no longer handle the load of current crypto problems. I am new to this side of things so i am still exploring.

Anyhow, my main curiosity is:

(1) are Bitmain’s machines worth the wait OR the distinct inflated overpay on Amazon/Ebay?

(2) Are some of the newcomers worth the investment - i.e. Dragonmint?

(3) Is a home build actually still worthwhile and/or sensible and affordable (i pay $0.06 a 0.075/kwh here in Portland)? My intuition says a small-scale homebuild would be the best avenue in an ideal and DIY world BUT it’s been hard to gauge this pragmatically w little recent amd updated info in this realm.

Curious to hear your response.

EDIT: also, I’ve done some calculations throughout the past several months w the pre-fab miners and it seems like anything from $300-$1500/mo is the range of expectation after expenses.