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

[HaroldinGMinor]

Hopefully everyone's been in mutual funds. It's fine to take a small risk here and there, but you're going to win over time with most of your money invested in relatively safe mutual funds.

Not sure what you're definition of a "safe" mutual fund is, but index funds are the way to go for most folks.

Index funds are a type of mutual fund. Those are usually good, but for a lot of those index funds, there are 3 times funds - that go up or down 3X the index. Those are suckers' bets, because the up and down multipliers make the actual increases smaller than 3 times. TZA and TNA are examples. I learned the hard way to stay away from them, because I wasn't smart enough to think the math through.

Right. If you just get an S&P Index fund you are sitting pretty.

[soxperry]

Hopefully everyone's been in mutual funds. It's fine to take a small risk here and there, but you're going to win over time with most of your money invested in relatively safe mutual funds.

Ill get right on that after my wife and i get done clearing her 120k in student loans...

Very easy for me to type, & obviously much harder for you to do, but you really should try to Pay Yourself First. Good luck. And hug that nurse for me (they're worth their weight in GOLD!).

Thanks man.

[GBBucks]

Disagree entirely on ETF's that track indexes being the way to go.

Funds that track indexes and generally, most passive funds, show no discretion regarding the most important part of investing: PRICE and Valuation.

To earnings. To cash flow. To Book value. Whatever metric you think is important.

People that are price agnostic have suffered greatly throughout the history of stock markets. Even worse so when we consider inflation and the loss of purchasing power of their dollar over time.

There are many wrong times to get into the market. Look at this chart and you'll be able to find an incredible amount of years in which it would have taken you 10, 20, even 30 years to make back your initial investment, adjusted for inflation or not. Diversification and price sensitivity is the way to go. Incurring losses is the easiest way to lose the power of compounding returns. I don't think the world is ever going to get rid of economic and market cycles.

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

[MartyConlonOnTheRun]

Hopefully everyone's been in mutual funds. It's fine to take a small risk here and there, but you're going to win over time with most of your money invested in relatively safe mutual funds.

Ill get right on that after my wife and i get done clearing her 120k in student loans...

This is the investing thread, so he was talking to people investing so I don't think he has to put a disclaimer on his statement. If you are investing, his points stands... If you are doing anything else besides tax-advantaged index funds with that much student loans, you are probably doing it wrong.

That said, even with student loans you should be minimum putting into your 401k (if available) to get the company match and putting that money into index funds. The 100% match kicks the crap out of your 3-6% student loans. After that, it depends on your income, risk tolerance, and job stability on whether you still want to pay yourself first. My wife and I were in the same boat, but I wished I would've focused on the long-term math more than the feeling the burden of crushing debt.

[MickeyDavis]

I understand wanting to pay off debt first. It's a comfort thing, many don't like any debt. I hate debt myself. Mortgage I have and sometimes car loan and that's it. And I drive my cars as long as I can, I hate those payments.

As said above though you absolutely have to do enough in your 401K to get the company match if there is one. My company only gives me 50% up to the first 6% I put in. But getting a 50% return on my first 6% 401K deposits is a no brainer. I max out my 401K and Roth every year but I still love that 3% free money.

[midranger]

Disagree entirely on ETF's that track indexes being the way to go.

Funds that track indexes and generally, most passive funds, show no discretion regarding the most important part of investing: PRICE and Valuation.

To earnings. To cash flow. To Book value. Whatever metric you think is important.

People that are price agnostic have suffered greatly throughout the history of stock markets. Even worse so when we consider inflation and the loss of purchasing power of their dollar over time.

There are many wrong times to get into the market. Look at this chart and you'll be able to find an incredible amount of years in which it would have taken you 10, 20, even 30 years to make back your initial investment, adjusted for inflation or not. Diversification and price sensitivity is the way to go. Incurring losses is the easiest way to lose the power of compounding returns. I don't think the world is ever going to get rid of economic and market cycles.

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

If you are better at evaluating individual stocks (based on any criteria: price, earnings, valuation, whatever) Over the long haul than the index, you should be on Wall Street managing a multi billion dollar mutual fund.

Chances are, you are not.

[Ruzious]

Disagree entirely on ETF's that track indexes being the way to go.

Funds that track indexes and generally, most passive funds, show no discretion regarding the most important part of investing: PRICE and Valuation.

To earnings. To cash flow. To Book value. Whatever metric you think is important.

People that are price agnostic have suffered greatly throughout the history of stock markets. Even worse so when we consider inflation and the loss of purchasing power of their dollar over time.

There are many wrong times to get into the market. Look at this chart and you'll be able to find an incredible amount of years in which it would have taken you 10, 20, even 30 years to make back your initial investment, adjusted for inflation or not. Diversification and price sensitivity is the way to go. Incurring losses is the easiest way to lose the power of compounding returns. I don't think the world is ever going to get rid of economic and market cycles.

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

The worst thing an average investor can is try to time the market.

[MartyConlonOnTheRun]

Disagree entirely on ETF's that track indexes being the way to go.

Funds that track indexes and generally, most passive funds, show no discretion regarding the most important part of investing: PRICE and Valuation.

To earnings. To cash flow. To Book value. Whatever metric you think is important.

People that are price agnostic have suffered greatly throughout the history of stock markets. Even worse so when we consider inflation and the loss of purchasing power of their dollar over time.

There are many wrong times to get into the market. Look at this chart and you'll be able to find an incredible amount of years in which it would have taken you 10, 20, even 30 years to make back your initial investment, adjusted for inflation or not. Diversification and price sensitivity is the way to go. Incurring losses is the easiest way to lose the power of compounding returns. I don't think the world is ever going to get rid of economic and market cycles.

https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

The worst thing an average investor can is try to time the market.

1. You probably will guess wrong more than you are right since market tends to go up
2. It makes it more complicated causing inaction. It's better to guess wrong and be in the market than guess right and miss out on a long-period of time.
https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

People over think investments. I can set you up with a 401k/Vanguard IRA in 1 hour and you should pick the simplest funds with automatic contributions. But yet people think stocks are some complicated thing that you have to 'do more research' on before pulling the trigger.

[midranger]

Yup. Just set an automatic contribution monthly. You’ll buy at lows. You’ll buy at highs. It’ll even out. But you’ll maximize time in market.

[HaroldinGMinor]

I mean, yeah you can develop a strategy and beat the S&P. But that takes 1) a strategy 2) the will to stick to it during bad times 3) tolerance for risk that most people don't have. Just averaging the same return as the S&P is a fine strategy to have particularly since index funds have such tiny fees. A lot of it has to do with your investing timeline too. If you are in it for the long haul you can ride out market drops with no problem as the market always bounces back. That's a big advantage individual investors have over the institutional guys - we don't have to impress anyone with annual returns.

[midranger]

It almost doesn’t matter your timeline. Active management fails Much more often than it succeeds.

https://www.google.com/amp/s/www.cnbc.com/amp/2019/03/15/active-fund-managers-trail-the-sp-500-for-the-ninth-year-in-a-row-in-triumph-for-indexing.html

The odds get worse the longer the timeline, but even over 1 year, 2/3 of active funds fail. Add the extra fees and....

And that’s the best finance minds on Wall Street with institutional resources working full time with billions of dollars at stake. If you think you’re doing it alone.... you probably aren’t.

[Kerb Hohl]

Along similar lines, does anyone use a financial planner for anything?

I am basically along the lines of you guys. Just throwing the majority of my $ via 401k, Roth, eventually maybe other avenues into general stock market funds.

My wife's parents and wife are trying to suggest we should talk to one. They have one and like it but I don't know if they have the same outlook that I do that most of this is a waste of time/money. Do financial planners invest your money? Because if so, I'm well aware that they're just burning a % in commission fees while they make the same amount (sometimes less) as a return on your investment.

[midranger]

Fee only, fiduciary.

Not fee based. Not % assets under management. Not a Northwestern Mutual insurance salesman.

Pay 1-2 thousand dollars to get good advice and things setup. Continue with the plan. Pay 1-2 thousand more if and when things change and the plan needs revision (windfall, job change, kids, etc...)

I can recommend one if you want.

[Kerb Hohl]

Fee only, fiduciary.

Not fee based. Not % assets under management. Not a Northwestern Mutual insurance salesman.

I can recommend one if you want.

So you're saying it's a fine/good idea to talk to work with someone that you just pay a fee to discuss your finances?

I just don't want to get into something where I pay someone 2% off of my ROI to invest the money in the exact same ways I probably would.

[midranger]

Fee only, fiduciary.

Not fee based. Not % assets under management. Not a Northwestern Mutual insurance salesman.

I can recommend one if you want.

So you're saying it's a fine/good idea to talk to work with someone that you just pay a fee to discuss your finances?

I just don't want to get into something where I pay someone 2% off of my ROI to invest the money in the exact same ways I probably would.

Bingo. It’s basically an hourly arrangement like an attorney. Good, tailored advice with worth something. Even if it’s just to reassure you that you’re doing the right stuff and not missing anything.

It’s probably not worth 2% of your assets every. Single. Year.

[Kerb Hohl]

Right...the 2% thing was a made up number but from what I understand if they are investing your money that is probably the sort of fee they assess.

Thanks for the offer of referral, though. If we do so, I will likely just go with who my inlaws are using/suggesting as this is the reason for me asking.

[midranger]

Make sure you understand the fee structure upfront. Also make sure they are held to a fiduciary standard. If the guy mentions whole life, leave. Too many insurance salesmen masquerading as financial planners in this town.

[soxperry]

Hopefully everyone's been in mutual funds. It's fine to take a small risk here and there, but you're going to win over time with most of your money invested in relatively safe mutual funds.

Ill get right on that after my wife and i get done clearing her 120k in student loans...

This is the investing thread, so he was talking to people investing so I don't think he has to put a disclaimer on his statement. If you are investing, his points stands... If you are doing anything else besides tax-advantaged index funds with that much student loans, you are probably doing it wrong.

That said, even with student loans you should be minimum putting into your 401k (if available) to get the company match and putting that money into index funds. The 100% match kicks the crap out of your 3-6% student loans. After that, it depends on your income, risk tolerance, and job stability on whether you still want to pay yourself first. My wife and I were in the same boat, but I wished I would've focused on the long-term math more than the feeling the burden of crushing debt.

Oh, i know, i was just looking for an excuse to vent..

My company doesnt do a match, they just put in x amount based on the hours we work per pay period up to 80 hours. So its usually the same number every check unless i take vacation. So for that reason ive opted to just get the debt taken care of. Our issue right now is to make the money that we do im working 65+ hour weeks and she is travel nursing. So we are just trying to wipe this out so we can relax a little. Youve definitely given me something to think about though.

[Stannis]

What do you guys think of articles like this?, basically saying Dividend Stocks (particularly BDCs) are going to be the new Bonds?:

https://seekingalpha.com/article/4322926-dividend-stocks-are-new-bonds-for-retirement-portfolios

I started investing about 6 months ago and am in mostly stocks. I'm starting to add some bond ETFs (VGIT, VGLT, VCIT, VCLT).

I'm trying to get to a 90/10 stock-bond ratio. I'm 28

I'm trying to ready about BDCs, but don't really understand them. I could do an ETF, but their expense ratios are pretty high.

[MickeyDavis]

Dividends are often overlooked. The article makes a good point in using them within a Roth IRA since you'll never pay taxes on them. I have some money in Vanguard Dividend Growth both in my Roth and a regular IRA. I don't currently have any individual dividend paying stocks. Trying to find the right mix is always a challenge. Some people tweak their investments all the time, always chasing what's "hot". Not good. I keep close tabs on all my stuff but I rarely make changes other than re-balancing twice a year.

Target date funds are good too. For example that Vanguard 2055 fund is 90% stocks and 10% bonds right now. Stocks are divided 54-36 domestic/international and bonds are divided 7-3 domestic international.