T Nation

Money...For Dummies


Let’s talk about investing. I don’t have a flying clue who to even talk to to find out just basic information about investing. I am also not looking for hyper-technical jargon.

Are there any experts here?

I wouldn’t say I’m an expert Prof, but I have a property portfolio, a share portfolio and I trade options and shares for a living.

Glad to chip in - Did you have anything specific in mind?

[quote]Duke wrote:
I wouldn’t say I’m an expert Prof, but I have a property portfolio, a share portfolio and I trade options and shares for a living.

Glad to chip in - Did you have anything specific in mind?[/quote]

I don’t even know enough to know what questions to ask. I just want to not waste money.

A few thoughts:

  1. I would not play the stock market unless you know a really good broker.

  2. If you do decide to invest in stocks, don’t go for the “home run” or you will go broke. if you can make more than what bonds pay out (typically 4-5%), I would be very happy with that.

  3. Commodities are even more volatile so stay away from that.

  4. Although very popular, stay away from mutual funds! Here is a list of all the fees and expenses from Wikipedia: Management fees, Non-management expenses, 12b-1/Non-12b-1 service fees, Investor fees and expenses, Brokerage commissions.

  5. GICs and Saving Bonds are among the safest investments you will find. They don’t pay out alot of money 4-5% but still alot more than what your bank is offering with a “Savings Account”. And with the way the U.S. economy has being doing lately (bad), a guaranteed 4-5% sounds pretty good.

Invest in GOLD, foreign currency, and Asian stocks. Stay away from the U.S. stock market, mutual funds, and anything dollar dominated in general. Our economy is about to crash spectacularly and the less you have invested in it, the better.

Do you want to be wealthy, if so, how wealthy and in what time frame?

I can list a bunch of general things to save money if you’d prefer?

Do you own, or have equity in, your own home?

Do you want to retire in X number of years?

Give me a guide and I’ll work from there mate

The only thing that I’d feel qualified to suggest would be, if you have an accountant, ask him to recommend a financial adviser. Quite often, the two will work hand in hand to maximize your gains and work wonders at reducing the taxes that you owe. They have a vested interest - the more that you make, the more that they make.

My parents had gone, in a few years (less than five), from thinking they’d have to live a fairly frugal life when they retired to being able to pay for (in cash) their water-front home, boat, new car, all the new toys, etc. They were probably around your age when they began investing (through work) and it makes me wonder how well they’d have done had they have found the resources they did back then (they are both 60 now).

Incidentally, they both worked at a University and their combined income was around $85K a year so it is more than attainable.

Great thread topic. It’s nice to see a young man that cares about being responsible and taking care of himself down the road instead of just blowing it all on the latest trend.

[quote]hit the gym wrote:

  1. Although very popular, stay away from mutual funds! Here is a list of all the fees and expenses from Wikipedia: Management fees, Non-management expenses, 12b-1/Non-12b-1 service fees, Investor fees and expenses, Brokerage commissions.[/quote]

I will echo this. A little joke between a few friends of mine (that have very successfully invested)…never buy mutual funds, they got their name because they mutually take all of your money.

General Wealth comments -

1.Get more forms of income
a. Job
b. Trading shares, options, futures
c. Build a business
d. Buy and hold income/growth investments
e. Create a business you don’t work in

2.get paid for the value that you add
a. See what others are doing and model them

3.Spend less than you earn
a. Budget
b. Save 10% into a wealth account

4.increase your wealth
a. minimise your tax
b. invest with diversity
c. use gearing/ leverage
d. use compounding returns

5.Protect your wealth
a. Insurance
b. Use options

6.Enjoy your wealth
a. Lifestyle is everything
b. Share your wealth

7.have a seven year plan
a. Written goals
b. Invest in yourself, if you don’t, nobody else will

This post was flagged by the community and is temporarily hidden.

sharebuilder.com, well I guess it is ing now, but still resolves to sharebuilder.com
They allow you periodic investments with a nominal cost and they reinvest the dividends for free.

Talk with a financial planner.
Imagine a pyramid, with allocation percentage decreasing as you go up. On the bottom, the base, you can go with either cap growth or dividends, there are schools of thought on both. the next level, while decreasing, is the other. The top can be wild assed swing for the fences stuff. The return will often outperform the others, sometimes drastically less. Some planners will go with bonds too.
Just a few times per year at the most.they will re balance.

All depends on your goals. 10-15 years of 10-15 percent of your income going to investment with compounded return can create a lifetime of income.

[quote]Duke wrote:
Do you want to be wealthy, if so, how wealthy and in what time frame?

I can list a bunch of general things to save money if you’d prefer?

Do you own, or have equity in, your own home?

Do you want to retire in X number of years?

Give me a guide and I’ll work from there mate[/quote]

I’d rather not give specifics. I would, however, like to retire by the age of 55 if that is possible.

I would appreciate any general info you could give.

This is a book that I read about a year ago.

The Lazy Person’s Guide to Investing
A Book for Procrastinators, the Financially Challenged, and Everyone Who Worries About Dealing with Their Money

by Paul B. Farrell

It’s mostly mutual fund investment strategies with a great many shout outs to Vanguard Mutual funds. Each chapter is a different financial guru’s personal strategy and/or money philosophy. Each strategy is measured from the early 90’s to 2006/2007 and the results are compared to stock performance thru both the bull and bear markets. A couple chapters deal with 401k’s, using a company 401k and how to establish your own 401k. IRA’s are also discussed in depth. A few stock purchase strategies are thrown in for good measure to round out all the investment options.

The target audience are those, like me, who are content checking stock performance once a month, or once every six months. I’m no schlub when it comes to financial planning, but I have no desire to worry myself bald watching the market fluctuate up and down. I have confidence that my investments will grow steadily and are arranged to protect me from wild swings in the market.

[quote]AlteredState wrote:
Well in the UK, one of the ways to ‘get rich’ or at least bulk up your assets is to become a landlord, specifically a student landlord, though it doen’t have to be students.

Students are just easier to manage and demand a much lower standard of accomodation.

Also, they would be shit scared of someone like you, so they would not want to trash the place or skip rent :wink:

Put down say 20% deposit on a low-cost house or two, near or on a bus/tram route, close-ish to the local university, and preferably close to each other. Furnish it with second hand stuff. Charge the appropriate rent. Use rent to pay off mortgage. Own property completely in 10-20 years.

All you have to do is collect the rent each month, sort out any problems with fixtures and fittings as and when they come up and not much else.

Mind you, that’s how it is here, the USA might be more tightly regulated.[/quote]

So, become a slum lord?
… I like it…

All I know about investing with the bank is to have your money in an account which grows at a higher percentage than the rate of inflation.

Prof X,

I was a personal financial advisor for the USAF for several years. I taught investing, homebuying in the USA & homebuying in the UK, along with a lot of other financial management classes.

I’m about to return to that field (Monday). I’m sure the Dept of Defense will send me to some amazing classes again soon.

Stocks, bonds, and mutual funds seem a bit risky to me (but they always have). Just my opinion there.

I used to tell people to invest in what they KNOW. A lot of people buy stocks, but don’t understand them. As a result, they don’t “watch” the progress of their investment. They can lose a lot of money that way, and not even know it (because they can’t be bothered to open the envelopes that contain their balance).

So - I’d suggest: think about your interests. Think about what you’re willing to Learn about. If you like land (bare land, or developed land) - well, there’s no new land being built. If you like houses/property and you’re willing to keep up with renters, then that does appear to have good tax advantages. (Land doesn’t have tax advantages that I know of. But your home has good tax write offs. Rental units aren’t quite as good for tax-write offs.)

I don’t know if you’re in your own practice (or a partner) but hopefully you have a 401k that you can invest in pre-tax. GOOD way to lower your yearly taxable income. IRAs are a good investment. Helps with taxes, again.

Sorry to sound so vague, Prof. But those are some ideas. First & foremost: depends on what you’re interested in.

Renee

[quote]Professor X wrote:
Duke wrote:
Do you want to be wealthy, if so, how wealthy and in what time frame?

I can list a bunch of general things to save money if you’d prefer?

Do you own, or have equity in, your own home?

Do you want to retire in X number of years?

Give me a guide and I’ll work from there mate

I’d rather not give specifics. I would, however, like to retire by the age of 55 if that is possible.

I would appreciate any general info you could give. [/quote]

Are you a USAA member?

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To quote Tony Soprano: “Buy land. God ain’t making any more of it.”

I’m reading Joel Greenblatt’s “The Little Book That Beats the Market” right now, and I would highly recommend you start there. Very easy read with a wealth of information.

[quote]rainjack wrote:
Professor X wrote:
Duke wrote:
Do you want to be wealthy, if so, how wealthy and in what time frame?

I can list a bunch of general things to save money if you’d prefer?

Do you own, or have equity in, your own home?

Do you want to retire in X number of years?

Give me a guide and I’ll work from there mate

I’d rather not give specifics. I would, however, like to retire by the age of 55 if that is possible.

I would appreciate any general info you could give.

Are you a USAA member? [/quote]

Yep. It is THE best insurance company in the world. I am thankful I joined the military for that alone.

[quote]Professor X wrote:
rainjack wrote:
Professor X wrote:
Duke wrote:
Do you want to be wealthy, if so, how wealthy and in what time frame?

I can list a bunch of general things to save money if you’d prefer?

Do you own, or have equity in, your own home?

Do you want to retire in X number of years?

Give me a guide and I’ll work from there mate

I’d rather not give specifics. I would, however, like to retire by the age of 55 if that is possible.

I would appreciate any general info you could give.

Are you a USAA member?

Yep. It is THE best insurance company in the world. I am thankful I joined the military for that alone.[/quote]

I am as well, and I have all of my investments/savings with them. I recently opened up a brokerage/asset management account as well. It allows me to make about 4% on my cash balance with free checking and debit card, and I can also buy and sell stocks and/or mutual funds through that account.

Go to their website, and if you can’t already log in, set up your user account, and get some financial advice from them. They are as good with your money as they are with your insurance. At least that has been my experience with them.