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December 11th, 2017, 13:25
Anyone here with some experience?

I've never been terribly engaged by the prospect of being rich - but sometimes I wonder about this - almost exclusively because it would seem to involve very, very little actual work.

I like the idea of very, very little actual work

I realise that it's not a "get rich quick" scheme in most cases - but any kind of return would seem to be worthwhile.
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December 11th, 2017, 13:47
Originally Posted by NewDArt View Post
Anyone here with some experience?

I've never been terribly engaged by the prospect of being rich - but sometimes I wonder about this - almost exclusively because it would seem to involve very, very little actual work.

I like the idea of very, very little actual work

I realise that it's not a "get rich quick" scheme in most cases - but any kind of return would seem to be worthwhile.
This is not correct, specially if you have little money to begin with

I don't have much experience and in fact I lost about £2000 10 years ago and never looked into it since then. However the way I see it it works two ways,

1. You can follow the market. Its safe and easy. My wife's(his accountant) boss does this. He has £2 million in number stocks in FTSE 100, I don't know the exact weighting he uses but he has more than 30 different stocks in his portfolio. He is being averaging 5% return over the last 5 years. This is LOT more than the 1% interest rate from bank saving account! After the initial decision as to what stocks goes into his portfolio, he doesn't do any "work" on it. Its free money but the key thing here is that, his portfolio is well diversified (30+ stocks). I think, in order to have this diversified portfolio, you need to the initial money to buy decent amount of number of different stocks! If you just have £1000 to play with you are not going to have the diversified portfolio.

2. You need to pick the right stock. This needs work! Maybe you are lucky and get tip from someone but then you might as well do the horses! You have to be following the market regularly and know which stock might do well. A friend of mine does this. He started with £15K and I think he has now doubled this after 10 years! Its pretty good return but he is always reading stuff and re doing his portfolio etc.
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December 11th, 2017, 13:53
Originally Posted by lostforever View Post
This is not correct, specially if you have little money to begin with

I don't have much experience and in fact I lost about £2000 10 years ago and never looked into it since then. However the way I see it it works two ways,

1. You can follow the market. Its safe and easy. My wife's(his accountant) boss does this. He has £2 million in number stocks in FTSE 100, I don't know the exact weighting he uses but he has more than 30 different stocks in his portfolio. He is being averaging 5% return over the last 5 years. This is LOT more than the 1% interest rate from bank saving account! After the initial decision as to what stocks goes into his portfolio, he doesn't do any "work" on it. Its free money but the key thing here is that, his portfolio is well diversified (30+ stocks). I think, in order to have this diversified portfolio, you need to the initial money to buy decent amount of number of different stocks! If you just have £1000 to play with you are not going to have the diversified portfolio.

2. You need to pick the right stock. This needs work! Maybe you are lucky and get tip from someone but then you might as well do the horses! You have to be following the market regularly and know which stock might do well. A friend of mine does this. He started with £15K and I think he has now doubled this after 10 years! Its pretty good return but he is always reading stuff and re doing his portfolio etc.
I'm considering letting my bank do the "work" - though I wouldn't expect much in return for that. Which is fine - I mean it's still likely to be significantly better than my regular savings account with limited risk.

As for the amount of work you're talking about - I guess we're talking about two different things. Of course it requires an investment of time to read and understand the market if you're going to be a player - but in terms of actual "hard work" it would seem quite doable. Then again, I don't consider reading and analysing hard work

But I'll have to see for myself.

I expect to have around ~$20K within 6 months - and I'm just considering my options.
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December 11th, 2017, 14:00
Originally Posted by NewDArt View Post
I'm considering letting my bank do the "work" - though I wouldn't expect much in return for that. Which is fine - I mean it's still likely to be significantly better than my regular savings account with limited risk.

As for the amount of work you're talking about - I guess we're talking about two different things. Of course it requires an investment of time to read and understand the market if you're going to be a player - but in terms of actual "hard work" it would seem quite doable. Then again, I don't consider reading and analysing hard work

But I'll have to see for myself.

I expect to have around ~$20K within 6 months - and I'm just considering my options.
Ah ic what you mean! But then, the time you sent reading and analyzing is not time spent on posting here or playing games

If you are going to let the bank manger do the work, then defiantly go for it since it will be better than bugger all interest from saving account!

I don't know about Denmark, but property is nice and safe investment here in UK. Just buy one using your money as deposit and rent it out. Normally here in UK, the rent is enough to cover the mortgage payment and cover any letting expenses. However, you might need to deal with some annoying tenants!
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December 11th, 2017, 14:03
Originally Posted by lostforever View Post
Ah ic what you mean! But then, the time you sent reading and analyzing is not time spent on posting here or playing games
Should be good for the Watch

If you are going to let the bank manger do the work, then defiantly go for it since it will be better than bugger all interest from saving account!
Yeah, that's my current thinking as well. It's just that I never cared about it before.

I don't know about Denmark, but property is nice and safe investment here in UK. Just buy one using your money as deposit and rent it out. Normally here in UK, the rent is enough to cover the mortgage payment and cover any letting expenses. However, you might need to deal with some annoying tenants!
Well, I'm not really very knowledgable about the actual reality of the market. Seems to me the market is always in flux - and it would seem to have been one of the major factors in the last financial crisis.

But, I'll do some research and ask around - and see if I can get comfortable enough to risk real money
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December 11th, 2017, 15:01
Its a tough game. I've been investing for about 40 years with some success but it takes a lot of time to understand companies and learn from your mistakes. I tend to avoid mutual funds though if you have no experience at all that might be a reasonable approach. Also I would be a bit careful. I'm not sure where you are located (usa, europe, …) but the market moves in waves. Right now it is heading up a bit too abruptly and sooner or later I would expect a bit of a downward trend. Here in the USA our idiot likes to tout the movement as indication of success and certainly the tax cuts will stimulate the market for 12 to 24 months but fundamentally things have not improved and there will be a 'payback'. Can't comment on other parts of the world though there are several exchange I wouldn't touch as they are prevalent with political corruption.
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December 11th, 2017, 15:03
I'm in Denmark.

As I understand it, the european market is not following that upward trend. At least not yet.

I don't expect to "master the market" - so I will likely try to find a compromise between risk and reward. I would never risk more than I can afford to lose, though.

That's not really my style.
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December 11th, 2017, 15:20
I retired at 44 (I'm 48 now). I'm single though so if I was married and with kids I would still be working but still using the stock market as a secondary income.

Basically, if you have money in the bank above your normal needs, it's losing value (bank interest is always lower than inflation). And then if you don't have much self-control, seeing 5 digits in the bank account always tempts you to use it… remodel the house, buy a $1K video card you don't really need, travel to the Azores, etc. Investing in the stock market on average makes the money grow.
My first attempt at the stock market was during the Internet bubble, invested $2k, lost $1.8k.
My second attempt came years later, I was much wiser, and allowed me to retire early, this is what I did:
- Spread the investment: Don't invest in one stock, things happen and you don't want to put all your eggs in one basket. Spread your investments in at least 4-5 companies.
- Set triggers. Triggers are things that automatically sell (or buy) when conditions happen. I set my triggers to automatically sell when a stock I purchased goes below or above 10% of the price I paid for it. That lower part protects me from stinkers, the higher part I set it because I believe in a stable market prices undulate up and down like waves, so I try to buy stocks that look like they're on the lower side of the wave and sell them when they're on the high side.
- A good product doesn't translate to a good investment. Let's say everybody in your country drinks "Baboom" beer, many people would say "hey, I'll invest in Baboom!"… that's not how the stock market works. Corporations have many products, many divisions. What I do is I set up what's called a 'profiler' where I set certain filters (like company market value, dividends, market expert recommendations, etc) then check the filtered results. Most of the stock I buy is of companies I've never heard of.

Needless to say, before you invest in the stock market, pay your credit card debts if you have any, estimate that you'll earn say 10% a year from whatever you invest (it's usually more but just saying a conservative number), but credit card interest rates can be like 15% or more so best use for the money is pay those debts first. On the other hand, low interest debts you have, leave those there. For example, when I moved to Atlanta, I sold my old apartment. I could have purchased my new home cash with the money from the sale of the apartment, instead I took a 4% mortgage for 15 years and added that money to my stocks account, it makes more money than the mortgage interest (not to mention the interest from the mortgage is tax deductible).

I'm not rich by any means, but estimating a 10% (conservative) return on investment, it allows me to get a good enough yearly income to retire.
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December 11th, 2017, 15:30
Originally Posted by wolfing View Post
I retired at 44 (I'm 48 now). I'm single though so if I was married and with kids I would still be working but still using the stock market as a secondary income.

Basically, if you have money in the bank above your normal needs, it's losing value (bank interest is always lower than inflation). And then if you don't have much self-control, seeing 5 digits in the bank account always tempts you to use it… remodel the house, buy a $1K video card you don't really need, travel to the Azores, etc. Investing in the stock market on average makes the money grow.
My first attempt at the stock market was during the Internet bubble, invested $2k, lost $1.8k.
My second attempt came years later, I was much wiser, and allowed me to retire early, this is what I did:
- Spread the investment: Don't invest in one stock, things happen and you don't want to put all your eggs in one basket. Spread your investments in at least 4-5 companies.
- Set triggers. Triggers are things that automatically sell (or buy) when conditions happen. I set my triggers to automatically sell when a stock I purchased goes below or above 10% of the price I paid for it. That lower part protects me from stinkers, the higher part I set it because I believe in a stable market prices undulate up and down like waves, so I try to buy stocks that look like they're on the lower side of the wave and sell them when they're on the high side.
- A good product doesn't translate to a good investment. Let's say everybody in your country drinks "Baboom" beer, many people would say "hey, I'll invest in Baboom!"… that's not how the stock market works. Corporations have many products, many divisions. What I do is I set up what's called a 'profiler' where I set certain filters (like company market value, dividends, market expert recommendations, etc) then check the filtered results. Most of the stock I buy is of companies I've never heard of.

Needless to say, before you invest in the stock market, pay your credit card debts if you have any, estimate that you'll earn say 10% a year from whatever you invest (it's usually more but just saying a conservative number), but credit card interest rates can be like 15% or more so best use for the money is pay those debts first. On the other hand, low interest debts you have, leave those there. For example, when I moved to Atlanta, I sold my old apartment. I could have purchased my new home cash with the money from the sale of the apartment, instead I took a 4% mortgage for 15 years and added that money to my stocks account, it makes more money than the mortgage interest (not to mention the interest from the mortgage is tax deductible).

I'm not rich by any means, but estimating a 10% (conservative) return on investment, it allows me to get a good enough yearly income to retire.
That's exactly the kind of information I was looking for. Sounds very wise and in tune with what I've heard from other people on the scene.

I would love to be able to live off the returns - but that would require a lot of money which I'm not likely to ever get.

Still, that would be ideal in the long term.

Anyway, thank you for your detailed answer!
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December 11th, 2017, 16:07
If you want to do as little work as possible, i would advise not to invest in individual stocks. You should put your money in low fee index funds such as funds that mirror the S&P. The S&P has garnered a return around 8-9 percent over it's lifetime.
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December 11th, 2017, 19:29
Originally Posted by NewDArt View Post
Should be good for the Watch



Yeah, that's my current thinking as well. It's just that I never cared about it before.



Well, I'm not really very knowledgable about the actual reality of the market. Seems to me the market is always in flux - and it would seem to have been one of the major factors in the last financial crisis.

But, I'll do some research and ask around - and see if I can get comfortable enough to risk real money
I would recommend setting up a fake portfolio for six months…
That should give you an idea if that's what you want to do.

Another option is to simply put money into a couple of funds that invest for you…
This can be done via some companies.

In the UK fidelity does this and that's what I have done.

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December 11th, 2017, 19:32
@wolfing said most of what I would say.
I can't stress getting debt paid off before investing enough. Blows my mind when I see indviduals or companies with debt out at 7-29.9% but then have an "investment portfolio" or excess cash in a savings or holding account.
If people really understood how much they are flushing down the drain on that debt…

I will add to wolfings idea. Have two streams.
One for fun things like individual stock and things that interest or intrigue or you want to take a chance on.
Second one for long term investment into growth mutual funds. Over the long run you will make money.

Don't Panic…
Especially with the long term investments.

I "lost" a huge percentage of my stock and mutual portfolio in 2008. However I didnt yank all the money out because I didn't "need" it to pay bills. In 2014 it gained everything back it lost and is now higher than 2008.
Had I cashed out in 2008, yes, would have lost a ton.

Don't make this your retirement plan or use money you can't afford to lose.
Its a calculated risk. Nobody knows what tomorrow holds.

If you do invest through a firm, find someone with a teachers mindset to explain what they are doing and why. You are a smart guy, someone should be able to explain it in a way that makes sense. If they can't to your satisfaction then move on. Nobody should be letting someone manage their funds unless they understand what its doing. There are a lot of managing scum out there. If they can't explain it or make time before investing with them, you arent going to get much out of them after they have your money.
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December 11th, 2017, 19:35
@Wisdom

Sound advice - thank you
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December 11th, 2017, 19:39
Oh, and with your "fun" stream.
Seriously just have fun. Don't use money you cant afford to lose. Invest in things that look like they make sense. Theres a lot of excitment in getting updates when your stock goes up in one day. Also a lot of "wtf nooooo" when it tanks in one day.
Like a good movie or book… you can get the emotion and drama but at the end of the day you still know life goes on when you close the book or the stock is finished.

(Agree with triggers on stock fund tho. If I have a "fun" account that hits a certain threshold I have a trigger that sells it, or a portion of it. Lets me capture gains while having fun and funds the dumb decisions I have made not to sell something. )
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December 11th, 2017, 19:45
Also, I'm not that smart.

For instance - let's say I have $10K in debt and $10K cash to invest.

If I pay that debt, how would I go about investing? Then I would have to save up money over a long period of time - which while it might be "cheaper" from that perspective, it doesn't leave a lot of potential for a return on investment for a long time.

Is the idea that I would instead invest minor amounts of money over time instead, or?

I thought the general notion was that, the more money you have for investments - the more you can expect to get in return through smart investments. Which should mean that I'd be able to pay off the debt eventually without missing a beat in terms of investments.

As for a "fun" account - I think that sounds good
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December 11th, 2017, 20:05
Originally Posted by lostforever View Post
I don't know about Denmark, but property is nice and safe investment here in UK. Just buy one using your money as deposit and rent it out. Normally here in UK, the rent is enough to cover the mortgage payment and cover any letting expenses. However, you might need to deal with some annoying tenants!
I don't recommend that if you're looking for an investment that's relatively hassle-free and especially if you don't have the money to purchase the property outright.

A rental property can be an absolute nightmare if you get a bad tenant, and you usually need more money than you first realized for repairs and whatever other unforseen costs that pop up.

Rentals can be very lucrative in the long run, but there's usually a lot of work and headaches involved in the beginning. I think they're a better investment for people who already have a decent amount of surplus money.
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December 11th, 2017, 20:19
I'm sure you can get someone to disagree with me based on their version of logic or sketch math, but here is my opinion.

Short of a mortgage, all personal debt should be paid off prior to investing.
This accomplishes two things. The interest you pay on the debt is the same as instant investment returns. Second, the freedom and mindset shift once you are out of debt is real and immediate. You owe nobody anything. All your money is.. your money!

Example - Vehicle loan over 5 years at 5% interest. You would have to find a stock that can give you minimum 5% just to break even on the debt interest.

As for your comment that you are not smart. I highly disagree.
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December 11th, 2017, 20:25
Originally Posted by Wisdom View Post
I'm sure you can get someone to disagree with me based on their version of logic or sketch math, but here is my opinion.

Short of a mortgage, all personal debt should be paid off prior to investing.
This accomplishes two things. The interest you pay on the debt is the same as instant investment returns. Second, the freedom and mindset shift once you are out of debt is real and immediate. You owe nobody anything. All your money is.. your money!

Example - Vehicle loan over 5 years at 5% interest. You would have to find a stock that can give you minimum 5% just to break even on the debt interest.

As for your comment that you are not smart. I highly disagree.
I understand the logic, but I think I would need to have enough money to both pay my debt AND invest afterwards - otherwise it's going to be a gain that actually holds me back - assuming I could do something with the money that would grant a bigger return.

I've been debt-free for many years - but I recently bought a new car as I got really, really sick of the issues with my old cars.

I could pay that debt pretty soon - but then I would be left with no cash to speak of, and it would be months and months before I could make proper investments.

Whatever I'm losing because of the interest is having a relatively small impact on my day-to-day economy. As long as I have a decent surplus of money - I really don't care about having debt that's not logically the cheapest position

I said not THAT smart

Really, being smart is about many, many things. I'm a moron in several ways - believe me.
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December 11th, 2017, 21:07
Originally Posted by NewDArt View Post
I understand the logic, but I think I would need to have enough money to both pay my debt AND invest afterwards - otherwise it's going to be a gain that actually holds me back - assuming I could do something with the money that would grant a bigger return.

I've been debt-free for many years - but I recently bought a new car as I got really, really sick of the issues with my old cars.

I could pay that debt pretty soon - but then I would be left with no cash to speak of, and it would be months and months before I could make proper investments.

Whatever I'm losing because of the interest is having a relatively small impact on my day-to-day economy. As long as I have a decent surplus of money - I really don't care about having debt that's not logically the cheapest position

I said not THAT smart

Really, being smart is about many, many things. I'm a moron in several ways - believe me.
As @DarNoor said, investing in individual stocks is usually a losing game. The best is to invest in actual index funds with low management fees. This is the what the stock market has looked like since it's inception:



As you can see, the stock market itself has always gone up, regardless of market crashes. Because of this, it's always provided a proper 7% increase on average over the long term. This is why it's statistically better to just put your money into an index fund, which basically invests in EVERY stock at once (most self made millionaires on a regular salary usually suggest a ratio of 40% bonds, and 60% stocks over 20+ years, and that 60% usually consists of half a US index fund, and half an international fund).

Interesting facts:

- Close to 90% of mutual funds fail to beat the market average of 7% over the long term. So any financial adviser that says "Well this fund will beat the market so invest in this one! And it's been beating the market for years!" is complete bullshit. Ask to see the record of him investing in that fund since its inception, which we won't be able too. Hindsight is 20/20.

- Most hedge fund managers of big corporations, usually just invest in index funds. They're not picking any super special stocks.

- It's VERY hard to beat the market. In order to profit well from it, you need to get very lucky, or you need to be better than everyone else at predicting the value of a company. And that's a full time job. A stock has most likely adjusted because of its worth when you hear a "hot stock tip". Even Warren Buffet recommend everyone just invest in index funds.

- Management fees are big things that people often overlook. For index funds you should be paying less than 1%. Note that just a 1% increase in management expense ratios can mean 5 to 6 digits of lost investment potential over a couple decades.

- Pay debts off first unless it's a low interest rate mortgage or line of credit (like 3%). If you're getting a 7% gain, but 15% debt, you're losing money. It makes no sense to invest until that debt is paid off (it will make sense if you do the math with compounding the interest). Even if you wait to invest, and pay the car loan off first, you will still make more money then if you tried to invest now partially while paying off your car loan slowly. @Wisdom touched on this.

- Register your investments in a gov. retirement account. I don't know that the international equivalent is, but in Canada it's an RRSP, and in the US it's a 401K. The is money that becomes a tax write-off at the end of the year, so you'll get big tax returns. Whatever returns you get, re-invest them back into your account for next year. This will compound your investments, getting you rich quicker.

- Find whatever way you can to put money into your investments in the beggining (but don't take out a loan). The more money you can put into your investments into the beginning, the faster it will grow.

EDIT:

If you have any questions, let me know. I've been helping people invest for a while now.

Also check out some good reading:

http://www.mrmoneymustache.com/

http://canadiancouchpotato.com/
https://www.milliondollarjourney.com/

The second and third are Canadian blogs, but the concepts are all the same.
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December 11th, 2017, 21:14
Originally Posted by Caddy View Post
As @DarNoor said, investing in individual stocks is usually a losing game. The best is to invest in actual index funds with low management fees. This is the what the stock market has looked like since it's inception:



As you can see, the stock market itself has always gone up, regardless of market crashes. Because of this, it's always provided a proper 7% increase on average over the long term. This is why it's statistically better to just put your money into an index fund, which basically invests in EVERY stock at once (most self made millionaires on a regular salary usually suggest a ratio of 40% bonds, and 60% stocks over 20+ years, and that 60% usually consists of half a US index fund, and half an international fund).

Interesting facts:

- Close to 90% of mutual funds fail to beat the market average of 7% over the long term. So any financial adviser that says "Well this fund will beat the market so invest in this one! And it's been beating the market for years!" is complete bullshit. Ask to see the record of him investing in that fund since its inception, which we won't be able too. Hindsight is 20/20.

- Most hedge fund managers of big corporations, usually just invest in index funds. They're not picking any super special stocks.

- It's VERY hard to beat the market. In order to profit well from it, you need to get very lucky, or you need to be better than everyone else at predicting the value of a company. And that's a full time job. A stock has most likely adjusted because of its worth when you hear a "hot stock tip". Even Warren Buffet recommend everyone just invest in index funds.

- Management fees are big things that people often overlook. For index funds you should be paying less than 1%. Note that just a 1% increase in management expense ratios can mean 5 to 6 digits of lost investment potential over a couple decades.

- Pay debts off first unless it's a low interest rate mortgage or line of credit (like 3%). If you're getting a 7% gain, but 15% debt, you're losing money. It makes no sense to invest until that debt is paid off (it will make sense if you do the math with compounding the interest). Even if you wait to invest, and pay the car loan off first, you will still make more money then if you tried to invest now partially while paying off your car loan slowly.

- Register your investments in a gov. retirement account. I don't know that the international equivalent is, but in Canada it's an RRSP, and in the US it's a 401K. The is money that becomes a tax write-off at the end of the year, so you'll get big tax returns. Whatever returns you get, re-invest them back into your account for next year. This will compound your investments, getting you rich quicker.

- Find whatever way you can to put money into your investments in the beggining (but don't take out a loan). The more money you can put into your investments into the beginning, the faster it will grow.
Another solid piece of insight.

I really appreciate it!
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