Stocks/shares investments - Page 7 - RPGWatch Forums
|
Your donations keep RPGWatch running!
RPGWatch Forums » General Forums » Off-Topic » Stocks/shares investments

Default Stocks/shares investments

February 20th, 2018, 18:49
Originally Posted by JDR13 View Post
Time to resurrect this thread.

I recently opened a trading account for the first time in many years. However, I haven't paid much attention to the market recently and have no idea where to begin.

I've got around 15k for purchasing to start with, and I also have 200 shares each of Ford (F) and General Electric (GE) that were gifted to me.

I wish I had the money back when Apple split because I would have purchased as much as that as I could have afforded. Same when Facebook IPO'd.

What's the best (unbiased) website for tips and suggestions?
So to go along with the theme of Index funds, rather than trying to predict stocks, here's something to consider:

https://medium.com/the-long-now-foun…t-3af05cf4a42d

Warren Buffet made a half a million dollar bet 10 years ago that just investing in simple low-fee, unmanaged index funds in the S&P 500, would beat hedge funds over those next 10 years. Keep in mind this was just before the 2008 financial melt down, making it even more impressive. The S&P 500 averaged 7.1%, while protege funds with fees only net 2.2%.

(He gave the money away to charity)

He says:

"Over the years, Iíve often been asked for investment advice, and in the process of answering Iíve learned a good deal about human behavior. My regular recommendation has been a low-cost S&P 500 index fund. To their credit, my friends who possess only modest means have usually followed my suggestion.

I believe, however, that none of the mega-rich individuals, institutions or pension funds has followed that same advice when Iíve given it to them. Instead, these investors politely thank me for my thoughts and depart to listen to the siren song of a high-fee manager or, in the case of many institutions, to seek out another breed of hyper-helper called a consultant."

People keep thinking they'll be the one to beat the market odds. Tell me, if you had 15k, and you were told that you had 2 choices:

1) You could put it away for 10 years, and you had a 9/10 chance of doubling it
2) You could put it away for 10 years, and you had a 1/10 chance making more than double

Which would you choose? Because number 1 is investing in simple index funds, and number 2 is just choosing individual stocks.

If you want the best unbiased website for financial advice, start with:

https://www.mrmoneymustache.com/

Read the get started articles, browse the forums then branch from there.
--
_______________
Love old text based RPGs? MUDs? Try Shadows of Kalendale:
https://www.rpgwatch.com/forums/showthread.php?t=14727
Caddy is offline

Caddy

Caddy's Avatar
Broken Screwdriver
Original Sin Donor

#121

Join Date: Feb 2009
Location: Calgary, Alberta
Posts: 2,157
Mentioned: 19 Post(s)
+1:

Default 

February 21st, 2018, 21:06
Originally Posted by Caddy View Post
So the theory is that first you want to max your 401k contributions, as your monthly salary will be theoretically lower when you retire (mortgage payed off, you only pull out what you live on, don't need extra income to put away for retirement because you're already retired, etc). You also should get a tax return for what you contribute, so you can further re-invest it for bigger compounded returns.
Unfortunately, I don't have a 401k at my current job. I used to have one at my old job, but I cashed it out back when the economy took a shit. Since I don't have a 401k, perhaps I should consider having both a Roth IRA and a traditional IRA?

I earn enough to be able to do max contributions on both and still have money to also invest in stocks and funds. Thing is, I'm just not sure if it's worth doing both vs investing more money elsewhere.

Originally Posted by Caddy View Post
If you want the best unbiased website for financial advice, start with:

https://www.mrmoneymustache.com/

Read the get started articles, browse the forums then branch from there.
Thanks! It looks like a great site. It also looks like I have a lot of catching up to do.
JDR13 is offline

JDR13

JDR13's Avatar
SasqWatch
Original Sin Donor

#122

Join Date: Oct 2006
Location: Florida, US
Posts: 27,037
Mentioned: 60 Post(s)
+1:

Default 

February 21st, 2018, 21:58
Originally Posted by JDR13 View Post
Unfortunately, I don't have a 401k at my current job. I used to have one at my old job, but I cashed it out back when the economy took a shit. Since I don't have a 401k, perhaps I should consider having both a Roth IRA and a traditional IRA?

I earn enough to be able to do max contributions on both and still have money to also invest in stocks and funds. Thing is, I'm just not sure if it's worth doing both vs investing more money elsewhere.
Every little bit counts over the long term. To give you an idea. If you put in just one lump sum into an account that averages 7% compounded annually and then leave it, it will double itself in 10 years. However lets say you invested 100k. If you lost just 1 percentage point, you'd lose almost 20k over those 10 years. This is why it's important to be in a tax sheltered account, and to have the lowest management fees.

You'll want to max out all your contributions in any tax sheltered account first. So yes, Roth and Traditional. Then whatever is left you can put into a non sheltered fund. Keep in mind that in the non-tax sheltered funds, you can eventually put those amounts in for the next years contribution amounts (if you have a lump sum and aren't already investing an annual revolving salary)

The ideal investment ratio, which when you read the site, will eventually go into the proper ratio of index funds and bonds, is usually as follows (for US peeps):

40% US Index funds
20% International Index funds
40% Bonds

Then re-balance them every year so the total reflect the same.

This has proven to provide solid 7% average returns over the long term (10 years or more).

Again i'll let the website do the talking, as it will go into detail why this is the case, and give you a foundation info so you can be more confident in what you're doing with your money.

You might want to also eventually open an investment account with Vanguard. as they have the cheapest management fees in the US, so i'm told.

EDIT: I should point out just in case (but you might already be aware) that IRA is just a tax designation for a fund. You can have a index/stock/bond investment fund that's designated as an IRA.
--
_______________
Love old text based RPGs? MUDs? Try Shadows of Kalendale:
https://www.rpgwatch.com/forums/showthread.php?t=14727
Last edited by Caddy; February 21st, 2018 at 22:12.
Caddy is offline

Caddy

Caddy's Avatar
Broken Screwdriver
Original Sin Donor

#123

Join Date: Feb 2009
Location: Calgary, Alberta
Posts: 2,157
Mentioned: 19 Post(s)
+1:

Default 

February 21st, 2018, 22:42
Originally Posted by Caddy View Post
The ideal investment ratio, which when you read the site, will eventually go into the proper ratio of index funds and bonds, is usually as follows (for US peeps):

40% US Index funds
20% International Index funds
40% Bonds
I'm a little surprised to see bonds being such a significant part of that suggested ratio. I was under the impression that bonds weren't that profitable anymore compared to other investments.

Originally Posted by Caddy View Post
You might want to also eventually open an investment account with Vanguard. as they have the cheapest management fees in the US, so i'm told.
I'm already in the process of opening an account with Merrill lynch. Since my father has been a client of theirs for 20+ years, I'm told that I'll be "grandfathered" in and have the same fees he's had instead of whatever the current fees are. I'm not sure how significant that is.
JDR13 is offline

JDR13

JDR13's Avatar
SasqWatch
Original Sin Donor

#124

Join Date: Oct 2006
Location: Florida, US
Posts: 27,037
Mentioned: 60 Post(s)

Default 

February 21st, 2018, 22:51
Yeah, greatest long term returns is stocks without a doubt.

However, you need to ride through the lows back up to the highs to get those returns.

You can't depend on the money being available since it could hit a low when you need it. Bond prices are less volatile.
Last edited by Thrasher; February 22nd, 2018 at 04:27.
Thrasher is offline

Thrasher

Thrasher's Avatar
Wheeee!

#125

Join Date: Aug 2008
Location: Studio City, CA
Posts: 15,501
Mentioned: 12 Post(s)
+1:

Default 

February 21st, 2018, 23:01
Most people I know say you should focus on more higher-risk investments when you're young and slowly move towards bonds as you get older to reduce the risk.
Pladio is offline

Pladio

Pladio's Avatar
Guardian of Nonsense
RPGWatch Donor
Original Sin Donor

#126

Join Date: Nov 2006
Location: Manchester, United Kingdom
Posts: 6,323
Mentioned: 23 Post(s)
Send a message via MSN to Pladio
+1:

Default 

February 21st, 2018, 23:52
Originally Posted by JDR13 View Post
I'm a little surprised to see bonds being such a significant part of that suggested ratio. I was under the impression that bonds weren't that profitable anymore compared to other investments.

I'm already in the process of opening an account with Merrill lynch. Since my father has been a client of theirs for 20+ years, I'm told that I'll be "grandfathered" in and have the same fees he's had instead of whatever the current fees are. I'm not sure how significant that is.
The bond ratio is to cushion the volatility (since bonds tend to, but not always, have the opposite effect of the index, and much less volatility). The general rule is usually match the percentage of bond ratio to your investments with your age (although it's not a hard rule). If you started out at age 20 with your investments for retirement, then you could have time on your side as a volatility cushion, and go almost all stocks. Then slowly change ratios as you age, since the volatility chances change, and you'd want to be as stable as possible close to your retirement.

You can take almost any 30 year period from the inception of the market and see that a a pure stock portfolio vs a stock/bond ratio portfolio doesn't have a large advantage, and even less so as the years decrease. The pure stock portfolio will really leave you stressed looking at the gains and losses, having more in common with a lightning strike.

As for investment accounts, if it's percentage based, then make sure it's well under 1% for total MER fees (ideally under 0.5%) otherwise there's no point and you're just throwing money away over the long term. At least until your total investments exceed 50k. Once you reach that much, you move over to ETFs (which are basically a stock comprised of an index fund) and you pay per trade. 50k being about the magical number where trade costs start being cheaper than percentage costs, as long as your keeping your contribution time periods to a minimum and re-balancing only once a year.
--
_______________
Love old text based RPGs? MUDs? Try Shadows of Kalendale:
https://www.rpgwatch.com/forums/showthread.php?t=14727
Caddy is offline

Caddy

Caddy's Avatar
Broken Screwdriver
Original Sin Donor

#127

Join Date: Feb 2009
Location: Calgary, Alberta
Posts: 2,157
Mentioned: 19 Post(s)
+1:

Default 

February 22nd, 2018, 01:58
Originally Posted by Caddy View Post
As for investment accounts, if it's percentage based, then make sure it's well under 1% for total MER fees (ideally under 0.5%) otherwise there's no point and you're just throwing money away over the long term. At least until your total investments exceed 50k. Once you reach that much, you move over to ETFs (which are basically a stock comprised of an index fund) and you pay per trade. 50k being about the magical number where trade costs start being cheaper than percentage costs, as long as your keeping your contribution time periods to a minimum and re-balancing only once a year.
That seems really low. I thought the average MER was around 1-2%, but maybe I'm confusing that with something else.

I thought my advisor said it was going to be 1% of total assets + no trading fees. I might be wrong about that though.
JDR13 is offline

JDR13

JDR13's Avatar
SasqWatch
Original Sin Donor

#128

Join Date: Oct 2006
Location: Florida, US
Posts: 27,037
Mentioned: 60 Post(s)

Default 

February 22nd, 2018, 03:01
Originally Posted by JDR13 View Post
That seems really low. I thought the average MER was around 1-2%, but maybe I'm confusing that with something else.

I thought my advisor said it was going to be 1% of total assets + no trading fees. I might be wrong about that though.
Yes, it should be really low. If it's not below 1%, then they're trying to sell it as an actively managed mutual fund.

With an index fund, there's nothing to manage. There's no one picking and choosing stocks and other assets like a regular mutual fund, because it's just a collection of the entire market index. The S&P 500 is the S&P 500 and it doesn't change to some other fund.

To give you an idea of how much a mutual fund should cost, Canada has the most expensive mutual funds in the world, coming in at around 3%. So if anyone every tries to sell you funds at 3% or more in the US for their regular (and not even preferred pricing), then it's a complete scam and they're stealing your money to gold plate their coffee cups. However I can open an investment account with Toronto Dominion bank right now in Canada and start trading at an average of about 0.5%. Even my employer's mutual funds are about 0.6% average at the moment. Keep in mind that all investment companies and banks will try anything they can to get you to buy the mutual funds first, because it makes them huge amounts more money. Most advisors will try to do the same because that's how they get payed. What they will fail to tell you, is that more than 90% of actively managed funds fail to beat the index over the long term.


TLDR: If you're not paying less than 1% for unmanaged index funds, you're paying too much.

EDIT, here is some examples:

Here's TD's regular index fund MERs (I know it's Canada, but it should be even cheaper in the US)

Vanguard US currently has a US Index fund MER of 0.04%!!! Even their higher priced index funds are between 0.15% and 0.35%.
--
_______________
Love old text based RPGs? MUDs? Try Shadows of Kalendale:
https://www.rpgwatch.com/forums/showthread.php?t=14727
Last edited by Caddy; February 22nd, 2018 at 03:16.
Caddy is offline

Caddy

Caddy's Avatar
Broken Screwdriver
Original Sin Donor

#129

Join Date: Feb 2009
Location: Calgary, Alberta
Posts: 2,157
Mentioned: 19 Post(s)
+1:

Default 

February 22nd, 2018, 08:03
Originally Posted by Caddy View Post
Vanguard US currently has a US Index fund MER of 0.04%!!! Even their higher priced index funds are between 0.15% and 0.35%.
That's incredibly cheap, but what should someone expect with a portfolio that has a mixture of funds and individual stocks? I guess that depends if it's being actively managed?

Any portfolio through an investment company is going to be actively managed though, right? I mean companies like Merrill Lynch, etc, as opposed to something like E*Trade.

I need to read up on index-based portfolios because I obviously don't fully understand how they work.
Last edited by JDR13; February 22nd, 2018 at 08:26.
JDR13 is offline

JDR13

JDR13's Avatar
SasqWatch
Original Sin Donor

#130

Join Date: Oct 2006
Location: Florida, US
Posts: 27,037
Mentioned: 60 Post(s)

Default 

February 22nd, 2018, 08:43
Originally Posted by JDR13 View Post
That's incredibly cheap, but what should someone expect with a portfolio that has a mixture of funds and individual stocks? I guess that depends if it's being actively managed?

Any portfolio through an investment company is going to be actively managed though, right? I mean companies like Merrill Lynch, etc, as opposed to something like E*Trade.

I need to read up on index-based portfolios because I obviously don't fully understand how they work.
Mutual Fund: A bunch of stocks that are "specially" selected and actively managed by "experts" expecting to beat the market.

Index fund: A collection of ALL stocks on the market combined into one fund.

With an index fund, nobody is selecting special stocks. There's nothing to actively manage. If you buy and index fund from Merrill Lynch or Vanguard, they're exactly the same collection of stocks.

Also, Canada vs USA Olympic women's hockey is tied in overtime right now. Who will win the gold?
--
_______________
Love old text based RPGs? MUDs? Try Shadows of Kalendale:
https://www.rpgwatch.com/forums/showthread.php?t=14727
Caddy is offline

Caddy

Caddy's Avatar
Broken Screwdriver
Original Sin Donor

#131

Join Date: Feb 2009
Location: Calgary, Alberta
Posts: 2,157
Mentioned: 19 Post(s)
+1:

Default 

February 22nd, 2018, 09:04
Ah ok.. I knew an index fund was a collection of stocks, but I didn't realize it was all of them.

Originally Posted by Caddy View Post
Also, Canada vs USA Olympic women's hockey is tied in overtime right now. Who will win the gold?
The US tied it up? I think momentum is on our side now.

*Edit* Wow… a shootout win and gold medal for the US! I predict Canada wins gold in the men's though.
Last edited by JDR13; February 22nd, 2018 at 09:15.
JDR13 is offline

JDR13

JDR13's Avatar
SasqWatch
Original Sin Donor

#132

Join Date: Oct 2006
Location: Florida, US
Posts: 27,037
Mentioned: 60 Post(s)
+1:

Default 

February 22nd, 2018, 09:18
Originally Posted by JDR13 View Post
Ah ok.. I knew an index fund was a collection of stocks, but I didn't realize it was all of them.



The US tied it up? I think momentum is on our side now.

*Edit* Wow… a shootout win and gold medal for the US! I predict Camada wins gold in the men's though.
Ya, US were really strong this time. Well deserved win.

And we will see about men's. Those Czechs play hard. I'm torn though, since i'm dual Czech/Canadian citizen
--
_______________
Love old text based RPGs? MUDs? Try Shadows of Kalendale:
https://www.rpgwatch.com/forums/showthread.php?t=14727
Caddy is offline

Caddy

Caddy's Avatar
Broken Screwdriver
Original Sin Donor

#133

Join Date: Feb 2009
Location: Calgary, Alberta
Posts: 2,157
Mentioned: 19 Post(s)

Default 

February 25th, 2018, 04:09
Invest in Warhorse studios. Vavra will provide our financial deliverance!
--
Rush in and die, dogsÖI was a man before I was a king.
BoboTheMighty is offline

BoboTheMighty

BoboTheMighty's Avatar
SasqWatch

#134

Join Date: Jun 2015
Location: Croatia
Posts: 3,900
Mentioned: 13 Post(s)

Default 

February 25th, 2018, 04:32
Originally Posted by JDR13 View Post
Ah ok.. I knew an index fund was a collection of stocks, but I didn't realize it was all of them.
There are a lot of different index funds, so what is in it depends on which one you are talking about. I believe the most common ones just match the S&P 500, but you can get ones that cover the entire stock market, the Russell 2000 (small cap), international stock market, bonds, and many more.
--
Steven Peeler
lead designer/programmer of Depths of Peril, Din's Curse, Drox Operative, Zombasite, & Din's Legacy
Soldak - Patreon
Steven Peeler is offline

Steven Peeler

Watcher

#135

Join Date: Jun 2007
Location: Dallas, TX
Posts: 89
Mentioned: 1 Post(s)
+1:

Default 

February 25th, 2018, 06:23
Originally Posted by Steven Peeler View Post
There are a lot of different index funds, so what is in it depends on which one you are talking about. I believe the most common ones just match the S&P 500, but you can get ones that cover the entire stock market, the Russell 2000 (small cap), international stock market, bonds, and many more.
Ya, I was trying to keep it simple

Basically an index fund is not trying to beat the market, but instead just match the market.
--
_______________
Love old text based RPGs? MUDs? Try Shadows of Kalendale:
https://www.rpgwatch.com/forums/showthread.php?t=14727
Caddy is offline

Caddy

Caddy's Avatar
Broken Screwdriver
Original Sin Donor

#136

Join Date: Feb 2009
Location: Calgary, Alberta
Posts: 2,157
Mentioned: 19 Post(s)
+1:

Default 

February 25th, 2018, 14:05
if the market crashes index funds go way down. Keep that in mind.
you is offline

you

Lazy_dog
RPGWatch Donor
Original Sin 2 Donor

#137

Join Date: Oct 2006
Location: usa - no longer boston
Posts: 7,746
Mentioned: 59 Post(s)

Default 

February 25th, 2018, 16:46
Do not invest anything you need to live!
Pladio is offline

Pladio

Pladio's Avatar
Guardian of Nonsense
RPGWatch Donor
Original Sin Donor

#138

Join Date: Nov 2006
Location: Manchester, United Kingdom
Posts: 6,323
Mentioned: 23 Post(s)
Send a message via MSN to Pladio

Default 

February 25th, 2018, 18:44
Originally Posted by you View Post
if the market crashes index funds go way down. Keep that in mind.
Market crashes are some of my favorite times to invest! Your dollar can buy much more shares for extremely low prices. Since the market always rebounds (and we are playing the long game here) your money is safe if you don't panic and just wait.

I've also heard the argument "what if the market doesn't ever rebound?". But if the US market doesn't rebound, which has it's hands in every major industry in all parts of the world, then that means we are in a nuclear apocalypse, and bottle caps are worth more than dollars anyways.

Here's an example of what would happen if you invested in the worst possible time just before every major market crash over the long term:

http://awealthofcommonsense.com/2014…-market-timer/

You would still come out on top.
--
_______________
Love old text based RPGs? MUDs? Try Shadows of Kalendale:
https://www.rpgwatch.com/forums/showthread.php?t=14727
Caddy is offline

Caddy

Caddy's Avatar
Broken Screwdriver
Original Sin Donor

#139

Join Date: Feb 2009
Location: Calgary, Alberta
Posts: 2,157
Mentioned: 19 Post(s)

Default 

February 25th, 2018, 21:23
that only works if you invest AFTER the crash. If he throws a bunch of money into index funds TODAY and then the crash occurs in 6 months… At least in the USA the index is inflated.

As for your article those are horrible returns. If he had turned 6K into 1million over 30+ years then it would have been almost ok (as a reference i had xxxx 20 years). However, for his total investment of 128K and given the length of the investments he had absolutely horrible returns.

However, if you are happy with those returns AND the overly trump inflated market still allows you those sort of returns then follow caddy advice. My concern is that (at least in USA) things have been warped with complete lack of oversight the past year and htere is the potential (not a given) of a massive crash in the next 6 to 18 months.

No clue how (or if) this will impact the global markets.


Originally Posted by Caddy View Post
Market crashes are some of my favorite times to invest! Your dollar can buy much more shares for extremely low prices. Since the market always rebounds (and we are playing the long game here) your money is safe if you don't panic and just wait.

I've also heard the argument "what if the market doesn't ever rebound?". But if the US market doesn't rebound, which has it's hands in every major industry in all parts of the world, then that means we are in a nuclear apocalypse, and bottle caps are worth more than dollars anyways.

Here's an example of what would happen if you invested in the worst possible time just before every major market crash over the long term:

http://awealthofcommonsense.com/2014…-market-timer/

You would still come out on top.
you is offline

you

Lazy_dog
RPGWatch Donor
Original Sin 2 Donor

#140

Join Date: Oct 2006
Location: usa - no longer boston
Posts: 7,746
Mentioned: 59 Post(s)
RPGWatch Forums » General Forums » Off-Topic » Stocks/shares investments
Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

All times are GMT +2. The time now is 03:04.
Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2020, vBulletin Solutions Inc.
vBulletin Security provided by DragonByte Security (Pro) - vBulletin Mods & Addons Copyright © 2020 DragonByte Technologies Ltd.
User Alert System provided by Advanced User Tagging (Lite) - vBulletin Mods & Addons Copyright © 2020 DragonByte Technologies Ltd.
Copyright by RPGWatch