Money...For Dummies

Off Topic
21

[quote]rainjack wrote:
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.

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.
[/quote]

Thanks, I will.

…and thank you to everyone else who responded as well.

22

There are some really good books you can read to help you get started. Want a few refrences?

23

[quote]crod266 wrote:
There are some really good books you can read to help you get started. Want a few refrences?[/quote]

I’m not turning away knowledge here.

That’s why I started the thread. I am sure other people are clueless too.

24

It is all about risk.
Everyone is different regarding their aversion to risk.

25

Make a CAPs account and you can follow along with how your investments would have gone, had you made them.Its actually really fun and addictive. They also have a bunch of articles about long term investing.

26

Forgot to mention…That website ran an article on a company that I later invested in and double my money. Only $4000 but still, definatley worth looking around.

27

I am no expert by any means but I would like to share some resources that I have found to be respected and educational.

First, start with MorningStar’s Online classroom:

This was an invaluable introduction to investing basics. As you you read up on bonds, funds, and stocks keep in mind there is no one ‘right’ way to invest ie not just stocks or bonds but rather a mixture of everything. In fact, there are those that compellingly argue its a calculated portfolio of different assets where risk is mitigated and reward is maximized.

Once you have a grasp on the terminology read ALL the following. They will introduce the concept of value investing and develop a long run, ‘responsible’ unemotional investment strategy based in large part around portfolio management. This particular strategy makes sense to me but it is in no way the ‘only’ or ‘correct’ way to go about things. The books explore this better than I can summarize.

Books
A Random Walk Down Wallstreet - Burton Malkiel
The Four Pillars of Investing - William Bernstein
The Intelligent Asset Allocator - William Bernstein
The Intelligent Investor - Benjamin Graham

Also, check out the following website:
http://www.bogleheads.org/

They subscribe to the strategy mentioned above. They are the ‘squats and milk’ of all the websites I have found so far. That is to say they are straight forward, master the basics, and nothing fancy. Their community is active, informed, and time tested. Posts by Taylor Larimor are particularly insightful. There are also numerous physicians on their discussing their unique earning potential and investment strategies. EmgrDoc I believe is the one to look for.

If I could personally add anything of value into this discussion, it would be to be wary of any and every advice investment advice you find. Double check your sources and try to peer review what you can. There are VERY popular investment strategy authors that are in fact better book salesmen than investors. . .

I can provide more or be more specific if there is an interest.

28

[quote]Professor X wrote:
crod266 wrote:
There are some really good books you can read to help you get started. Want a few refrences?

I’m not turning away knowledge here.

That’s why I started the thread. I am sure other people are clueless too.[/quote]

How to retire rich by James O Shaughnessy

24 essential lessons for investment success

Rich Dad Poor Dad. Im not sure who this is by but read this one first.

those are two good books for investing and for stocks theres a couple also, if you wanted to learn about that two.

Monster stocks by John Boik

29

Thing about investing is, just about everyone has their secret tip or their ‘thing about investing’ knowledge, but of all the people talking about how to do it, or worse, how to do it better than someone else, very few(especially on internet forums) are actually actively making a living this way, or otherwise supplementing their income/securing their futures.

It is not unlike the 150 pound ‘bodybuilders’ on this site dolling out their expertise to more advanced lifters.

Personally, I have been successful investing, but what worked for me is unlikely to work for everyone, and I do not know if I could duplicate my success. Even if I could, I know it would not be ‘easy’.

I think, Prof X, as someone who has been successful with weight training, you are probably ahead of the curve from the average joe. You understand setting goals, and progressing through them to achieve an objective. Investing money is not too drastically different at this level. You have to know what you want, specifically, and what you are willing to do to get it, and I am sure you already know that, but just for the sake of anyone who is mystified by investing, it can be overwhelming to consider, but the more you can stay objectively focused on pursuing a goal, the better off you will likely be.

Listen to the most successful guys who have maintained their success. They won’t be able to tell you what to do, but just hearing what they have to say about it should be insightful.

30

Divided-generating blue-chippers are where it’s at, kids.

Set up one or more SDRIPs (self-dividend-reinvesting-program) in a few big, stable, well managed companies across most major sectors, give yourself a little extra for some speculative, fun stuff, and then sit back and watch Einstein’s statement about compound interest being mankind’s greatest invention come true.

Seriously, look into SDRIPs. Dividends are key.

31

[quote]NeelyDan wrote:
Divided-generating blue-chippers are where it’s at, kids.

Set up one or more SDRIPs (self-dividend-reinvesting-program) in a few big, stable, well managed companies across most major sectors, give yourself a little extra for some speculative, fun stuff, and then sit back and watch Einstein’s statement about compound interest being mankind’s greatest invention come true.

Seriously, look into SDRIPs. Dividends are key.[/quote]

I am following this method as well. I am not so much into Blue Chips as I am stable, established companies who have a long term track record of paying divi’s.

I have a small portfolio of 5 stocks that each pay over 7% based on my purchase price. I have 2 stocks that pay over 15%.

It’s hard - especially the past couple of weeks - to watch the stock prices plummet, but the saving grace is the dividend. It’s definitely not an aggressive strategy, but with things the way they are right now - I prefer low and slow.

My brokerage account allows me to automatically reinvest the dividends upon their receipt.

32

[quote]Malevolence wrote:
Thing about investing is, just about everyone has their secret tip or their ‘thing about investing’ knowledge, but of all the people talking about how to do it, or worse, how to do it better than someone else, very few(especially on internet forums) are actually actively making a living this way, or otherwise supplementing their income/securing their futures.

It is not unlike the 150 pound ‘bodybuilders’ on this site dolling out their expertise to more advanced lifters.

Personally, I have been successful investing, but what worked for me is unlikely to work for everyone, and I do not know if I could duplicate my success. Even if I could, I know it would not be ‘easy’.

I think, Prof X, as someone who has been successful with weight training, you are probably ahead of the curve from the average joe. You understand setting goals, and progressing through them to achieve an objective. Investing money is not too drastically different at this level. You have to know what you want, specifically, and what you are willing to do to get it, and I am sure you already know that, but just for the sake of anyone who is mystified by investing, it can be overwhelming to consider, but the more you can stay objectively focused on pursuing a goal, the better off you will likely be.

Listen to the most successful guys who have maintained their success. They won’t be able to tell you what to do, but just hearing what they have to say about it should be insightful.

[/quote]

All true and needs to be repeated.

Yes, there are the gurus that try to sell their insights as proprietary trading systems and those are the guys to watch out for. Thats why I recommended the Boglehead forums. I respect some of the posters there for financial advice in the same way I listen to Prof X. I may not weigh in at 240 or have millions but Im learning from the best sources I can find. In any case, its up to the individual to make an informed decision on what works best for them. One has to learn to identify and learn to use the basic tools and concepts before moving on.

Its easy to get lost in the whole mess. Investment strategies/vehicles range from TIPS, Roth vs 401k IRAs, stock picking, hedge funds, active vs. passing investing, market timing, dividend capturing, commodity speculating, whole life insurance for cash value, forex trading, futures, bond laddering ad naseum. There is no one best or correct way to invest. Each has the potential to be profitable or costly if used with the proper perspective and in the appropriate way. (tax advantages, asset protection etc)

33

[quote]Professor X wrote:

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]

I understand. I’m not sure of your current age though Prof so I’ll have a stab that you’ve got 20 years (ish) to retire.
Rather than tell you what works or doesn’t, if you don’t mind I’ll outline my story and see if it is of any help.

From standard wages 13 years ago, I visited 6 banks before finding one that would give me a loan to buy a house (don’t accept no from a bank - move onto the next one)

After building some equity in the first home, I borrowed against that equity to buy first investment property.

Couldn’t believe how easy that one was so 3 months later, I did it again, after borrowing $10k from my dad to make up another deposit.

3 years passed, house prices rose and we again borrowed against our equity to try and buy 5 units, banks said no but gave us enough to buy 2 units.

Continued this pattern for 10 years. Buying properties whenever the market had risen enough to give us a decent equity. Keeping in mind that the market needed to rise a lot at the start to give me equity, after I had 5 places, the market only needed to move a little bit in order to have enough to borrow again.

After 10 years, I had 12 properties worth over $3m and a debt of just under $2m (you can’t be scared of ‘good’ debt)
leaving me as a net millionaire.

I used the equity again, borrowed more and began share and option trading for income. Have been doing that now for the past 3 years and earning more from that than I was when working. I work from home. My work takes around 1/2 an hour a day. No overheads, minimal costs etc.

I am 44.

I don’t use financial advisors as I haven’t met one who does anything other than offer ‘market’ products or general knowledge (no offence intended). A very good property tax accountant (someone who actually owns their own property portfolio) is a must!

As my wealth grew, I became more and more involved in giving. I firmly believe that if you’re hanging onto your money very tightly, then you’re not able to hold any more. You need to let money flow through you. Stop the flow at your own risk.

I managed hardware stores, wasn’t overly clever and had nothing to begin with except for having enough guts to have a go and take a risk.

Here’s my biggest piece of advice. Get a VERY good understanding of the power of compound growth. DO NOT underestimate it. A good understanding of it is like being hit by lightning when it sinks in - you just know what you have to do.

My understanding of compound growth gave me the goal of acquiring so much capital, so much property, that the value of what I own grows significantly more than than the amount of money I spend each year. I simply can’t spend in 1 year as much as I earn, without working… purely from growth assets and income streams.

I hope that doesn’t sound like my head is up my arse, I’m just trying to emphasise the importance of the understanding of compound growth. If I knew how to post spreadsheets, I’d try to post one I made which shows this power at work.

Hope I haven’t bored anyone here with all this.

Please PM if you want more info, happy to share.

34

I didnt get too much out of Rich Dad/Poor Dad other than “invest your money” but maybe that was because I read it at such a young age (around 18 or so). But maybe thats all you need to do really :slight_smile:

Keep in mind the info below is all coming from a 24 year old, but I have absolutely no debt to my name, am finished with college, make about 75k a year working 3 days a week, have paid off 2 cars since I turned 18, and have 15K in the bank.

Heres what I’ve done so far:

1 - Live under your means most of the time, but indulge when the time is right.

2 - There is almost always a lower price for whatever you are going to buy. Look for it, but dont spend 12 hours saving 5 dollar, your time is also worth something.

3 - Stock away AT LEAST 10% of your money is savings.

4 - INGdirect.com has a great savings account and CD rates. They are no risk, but the payout is also fairly low… But hell, it pays way more than having your money sit in a Bank of America account while you plan on what to do with it.

5 - It may be necessary to bust your ass for a short while so you can coast a bit later. I busted my ass all the way through college (20+ units a semester, at least 1 job at all times). To use a BB analogy, after the bulking is done, you can switch to maintenance for a while.

6 - If you play your cards right, you can make money of credit cards. I’ve gotten four $100 dollar rewards checks since I got my credit card a while back by cashing in my cash back bonus rewards and I’ve never paid one red cent of interest.

35

This site has information over all aspects of real estate investing ranging from short sales, rehabs, landloarding and commercial. It is all free so check out there forums.

If you are going to buy stock now is the time because a lot of them are starting to bottom out. Don’t buy gold because that money has already been made because of the suckers that are buying it now.

Find something that is interesting to you and become and expert.

36

[quote]GhorigTheBeefy wrote:

This site has information over all aspects of real estate investing ranging from short sales, rehabs, landloarding and commercial. It is all free so check out there forums.

If you are going to buy stock now is the time because a lot of them are starting to bottom out. Don’t buy gold because that money has already been made because of the suckers that are buying it now.

Find something that is interesting to you and become and expert.[/quote]

I remember years ago my dad was trying to get me to buy a couple of ounces of gold (it was 400 at the time). He is a coin collector and seemed to know it was on the way up at the time… flash forward to now he probably has made 600 bucks an ounce or so and it doesnt look like its going to drop any time soon.

37

Invest in China and India but bitch and moan about outsourcing (AKA corporations doing the same thing as you).

Oh and X, a few things to notice in your quest:

Just like politics, nutrition, exercise, and religion,

Everyone is an expert, everyone knows best, everyone has a “better way to do it”.

But know that everyone is out for your money…

It is ridiculous how many “economists” there are on the internet. You’d wonder how in the shit America is doing so badly.

I recommend reading Dave Ramsey, and no one in this thread, to be honest. You don’t know if anyone here is a paycheck away from the streets, and you certainly don’t know if anyone here is lying about how well they “trade”. And are they going to give their secrets of “trading”? A sexy term for a futile, un-proveable hobby. The experts don’t post in forums. Just a rant of my own… soon as I started my first “real” job a few months back I immediately researched how to be as wealthy as possible as quickly as possible… and everyone knows how to do it it seems.

38

[quote]Duke wrote:
Professor X wrote:

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.

I understand. I’m not sure of your current age though Prof so I’ll have a stab that you’ve got 20 years (ish) to retire.
Rather than tell you what works or doesn’t, if you don’t mind I’ll outline my story and see if it is of any help.

From standard wages 13 years ago, I visited 6 banks before finding one that would give me a loan to buy a house (don’t accept no from a bank - move onto the next one)

After building some equity in the first home, I borrowed against that equity to buy first investment property.

Couldn’t believe how easy that one was so 3 months later, I did it again, after borrowing $10k from my dad to make up another deposit.

3 years passed, house prices rose and we again borrowed against our equity to try and buy 5 units, banks said no but gave us enough to buy 2 units.

Continued this pattern for 10 years. Buying properties whenever the market had risen enough to give us a decent equity. Keeping in mind that the market needed to rise a lot at the start to give me equity, after I had 5 places, the market only needed to move a little bit in order to have enough to borrow again.

After 10 years, I had 12 properties worth over $3m and a debt of just under $2m (you can’t be scared of ‘good’ debt)
leaving me as a net millionaire.

I used the equity again, borrowed more and began share and option trading for income. Have been doing that now for the past 3 years and earning more from that than I was when working. I work from home. My work takes around 1/2 an hour a day. No overheads, minimal costs etc.

I am 44.

I don’t use financial advisors as I haven’t met one who does anything other than offer ‘market’ products or general knowledge (no offence intended). A very good property tax accountant (someone who actually owns their own property portfolio) is a must!

As my wealth grew, I became more and more involved in giving. I firmly believe that if you’re hanging onto your money very tightly, then you’re not able to hold any more. You need to let money flow through you. Stop the flow at your own risk.

I managed hardware stores, wasn’t overly clever and had nothing to begin with except for having enough guts to have a go and take a risk.

Here’s my biggest piece of advice. Get a VERY good understanding of the power of compound growth. DO NOT underestimate it. A good understanding of it is like being hit by lightning when it sinks in - you just know what you have to do.

My understanding of compound growth gave me the goal of acquiring so much capital, so much property, that the value of what I own grows significantly more than than the amount of money I spend each year. I simply can’t spend in 1 year as much as I earn, without working… purely from growth assets and income streams.

I hope that doesn’t sound like my head is up my arse, I’m just trying to emphasise the importance of the understanding of compound growth. If I knew how to post spreadsheets, I’d try to post one I made which shows this power at work.

Hope I haven’t bored anyone here with all this.

Please PM if you want more info, happy to share.[/quote]

Investing in real estate. Very smart Duke and very interesting story.

39

[quote]Duke wrote:
Professor X wrote:

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.

I understand. I’m not sure of your current age though Prof so I’ll have a stab that you’ve got 20 years (ish) to retire.
Rather than tell you what works or doesn’t, if you don’t mind I’ll outline my story and see if it is of any help.

From standard wages 13 years ago, I visited 6 banks before finding one that would give me a loan to buy a house (don’t accept no from a bank - move onto the next one)

After building some equity in the first home, I borrowed against that equity to buy first investment property.

Couldn’t believe how easy that one was so 3 months later, I did it again, after borrowing $10k from my dad to make up another deposit.

3 years passed, house prices rose and we again borrowed against our equity to try and buy 5 units, banks said no but gave us enough to buy 2 units.

Continued this pattern for 10 years. Buying properties whenever the market had risen enough to give us a decent equity. Keeping in mind that the market needed to rise a lot at the start to give me equity, after I had 5 places, the market only needed to move a little bit in order to have enough to borrow again.

After 10 years, I had 12 properties worth over $3m and a debt of just under $2m (you can’t be scared of ‘good’ debt)
leaving me as a net millionaire.

I used the equity again, borrowed more and began share and option trading for income. Have been doing that now for the past 3 years and earning more from that than I was when working. I work from home. My work takes around 1/2 an hour a day. No overheads, minimal costs etc.

I am 44.

I don’t use financial advisors as I haven’t met one who does anything other than offer ‘market’ products or general knowledge (no offence intended). A very good property tax accountant (someone who actually owns their own property portfolio) is a must!

As my wealth grew, I became more and more involved in giving. I firmly believe that if you’re hanging onto your money very tightly, then you’re not able to hold any more. You need to let money flow through you. Stop the flow at your own risk.

I managed hardware stores, wasn’t overly clever and had nothing to begin with except for having enough guts to have a go and take a risk.

Here’s my biggest piece of advice. Get a VERY good understanding of the power of compound growth. DO NOT underestimate it. A good understanding of it is like being hit by lightning when it sinks in - you just know what you have to do.

My understanding of compound growth gave me the goal of acquiring so much capital, so much property, that the value of what I own grows significantly more than than the amount of money I spend each year. I simply can’t spend in 1 year as much as I earn, without working… purely from growth assets and income streams.

I hope that doesn’t sound like my head is up my arse, I’m just trying to emphasise the importance of the understanding of compound growth. If I knew how to post spreadsheets, I’d try to post one I made which shows this power at work.

Hope I haven’t bored anyone here with all this.

Please PM if you want more info, happy to share.[/quote]

This strategy worked well for you, but it is not without risk.

What would have happened to you if the real estate market went to shit, and after ten years the value of your properties was lower than your debt?

40

Since no one has mentioned it yet, I found the Millionaire Next Door to be very informative. It’s basically a study as to what is the average millionaire in America, how they got there and their advice.

[quote]Lonnie123 wrote:
I didnt get too much out of Rich Dad/Poor Dad other than “invest your money” but maybe that was because I read it at such a young age (around 18 or so). But maybe thats all you need to do really :slight_smile:
[/quote]

Maybe there are other reasons.