Stock Investing

[MWil23]

15 hours ago, bigbadbuff said:

Don’t know enough about the market and how much/what stocks to buy. Suggestions?

 

8 hours ago, Counselor said:

Yep I opened a Roth IRA

Pretty much this.

Granted, I decided to just go the "aggressive mutual funds" route thanks to @ramssuperbowl99 and have seen a 14.68% return over the last 2 years, but that's also because I have a state pension (teacher/coach) as my primary retirement fund, multiple life insurance policies, and I wanted this to essentially be a "backup" retirement plan/catch all fund that I can pull from at any point without penalty for things such as weddings (I have multiple daughters), college, or "rainy day", while understanding that while I hope not to touch it for any of those reasons until I hit 60, I at least have the flexibility to do so if I want to.

[ramssuperbowl99]

8 hours ago, Counselor said:

Yep I opened a Roth IRA

Well done man.

[Shockwave]

On 10/1/2020 at 6:51 PM, Shockwave said:

DKNG helping me put my kids through college 😁

Whomp whomp

I did offload half my shares around $60. But that public offering at $52 really killed my mojo. Guess my $59 covered calls will expire worthless though

[ramssuperbowl99]

8 hours ago, MWil23 said:

On 10/6/2020 at 2:57 PM, bigbadbuff said:

Don’t know enough about the market and how much/what stocks to buy. Suggestions?

 

17 hours ago, Counselor said:

Yep I opened a Roth IRA

Pretty much this.

Granted, I decided to just go the "aggressive mutual funds" route thanks to @ramssuperbowl99 and have seen a 14.68% return over the last 2 years, but that's also because I have a state pension (teacher/coach) as my primary retirement fund, multiple life insurance policies, and I wanted this to essentially be a "backup" retirement plan/catch all fund that I can pull from at any point without penalty for things such as weddings (I have multiple daughters), college, or "rainy day", while understanding that while I hope not to touch it for any of those reasons until I hit 60, I at least have the flexibility to do so if I want to.

Yep, there's 2 things to think about:

1. What is the best tax advantaged account I should deposit my money into (401k, roth IRA, regular IRA, pension, regular brokerage account, HSA, 529, etc.). The only relevant factors here are the tax rate advantage you get and the restrictions. A traditional IRA deposit can be deducted from income taxes (below an income threshold) and only the withdrawal is taxed, whereas a roth IRA pays taxes up front for a tax free withdrawal. But you can purchase the same types of funds in a tIRA or rothIRA.
2. What are the types of investments I should buy with the money I deposited? That could be stocks, mutual funds (collections of re-packaged stocks), bonds, lands, precious metals, guns, or Magic cards. Most people use mutual funds, so focusing on that, there are 2 broad types: actively managed or indexed funds. Actively managed funds have financial analysts picking the stocks that go in the fund, which adds tons of overhead and makes the funds much more expensive. Historically, indexed funds, which represent an entire segment of the market (e.g. the S&P 500) have similar performance as actively managed funds but since there doesn't need to be ton of financial analysts monitoring what stocks are included, the overhead is effectively zero. Bonds are also typically included to reduce volatility, especially as you get closer to retirement.

Personally, i use a 95:5 ratio of mutual funds:stocks, and use a 3-fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio. For people who are early in their career and want to set their retirement and forget it, that's what I'd recommend.

Edited October 7, 2020 by ramssuperbowl99

[MWil23]

2 minutes ago, ramssuperbowl99 said:

Yep, there's 2 things to think about:

1. What is the best tax advantaged account I should deposit my money into (401k, roth IRA, regular IRA, pension, regular brokerage account, HSA, 529, etc.). The only relevant factors here are the tax rate advantage you get and the restrictions. A traditional IRA deposit can be deducted from income taxes (below an income threshold) and only the withdrawal is taxed, whereas a roth IRA pays taxes up front for a tax free withdrawal. But you can purchase the same types of funds in a tIRA or rothIRA.
2. What are the types of investments I should buy with the money I deposited? That could be stocks, mutual funds (collections of re-packaged stocks), bonds, lands, precious metals, guns, or Magic cards. Most people use mutual funds, so focusing on that, there are 2 broad types: actively managed or indexed funds. Actively managed funds have financial analysts picking the stocks that go in the fund, which adds tons of overhead and makes the funds much more expensive. Historically, indexed funds, which represent an entire segment of the market (e.g. the S&P 500) have similar performance as actively managed funds but since there doesn't need to be ton of financial analysts monitoring what stocks are included, the overhead is effectively zero.

Personally, i use a 95:5 ratio of mutual funds:stocks, and use a 3-fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio. For people who are early in there career and want to set their retirement and forget it, that's what I'd recommend.

95/5

[MacReady]

@bigbadbuff, get Stash. 

First, my qualifications:

I knew nothing about stocks or bonds or investments or anything 4 years ago.  I still know nothing, but my knowing nothing has still resulted in making a lot of money.  I always recommend Stash as a good way to kind of learn, but also suggest other investment methods where you should put most of your risk while learning in baby steps on Stash.

Second, why my advice is better than others:

I am a proponent of learning and self-accountability.  Yes, you should absolutely put most of your money into the hands of professionals who can make you more money than you can.  You should absolutely pick a firm and trust trained professionals with your money.  HOWEVER... It is very fun and rewarding when you can say you scoped something out, learned about it, took your own gambles and those gambles paid off.  You will have losses, but you will also have gains.  Thankfully, you can have losses/gains at 10, 20, 50, 100 dollars a pop while your 500, 1,000, 2,000 chunks of investment will be in the safer hands of professionals. 

This is why I like Stash. 

It's the simplest one to use, and it also has a lot of ETFs so you don't really need to know which stocks to buy. 

Here's an explanation of an ETF:

https://www.nerdwallet.com/article/investing/what-is-an-etf

Stash has an ETF called Delicious Dividends that I really like. 

They also let you generalize your investments how you want them, but without you having to know which stocks to buy.  For example, they have an Aggressive Mix ETF, Conservative Mix, Moderate Mix, Long-Term Mix.  Or, you can go by type/theme.  They have an Internet Titans ETF, they have a small business ETF, a gold/platinum/palladium/silver ETF...

They also have individual stocks available on there, just not as much as others do.  They keep adding different stock options, too. 

I know I just did a big thing on Stash, but generally my advice would be this:

1. Get a Roth IRA as others here have suggested.  If your company happens to match your Roth IRA contributions, put at LEAST as much as your company will match into it.  I don't care if you have to eat Ramen Noodles 10 times a week to afford it.  If your company matches 5% of your contribution, that's like getting a 5% raise.  If you have to wipe your butt with leaves for a month to afford it, ALWAYS get every penny your company matches in any company-run investment.  401k, Roth IRA, whatever.  Second, don't look at it.  You get paperwork for it, file it away without looking at it.  You have an option to look at it online, don't look at it. 

2. If you don't know much, put most of your money into a firm like Schwab or TD Ameritrade or one like that where you can have more qualified people handling your larger investments.  This way won't be as fun, but you're in better hands this way while you learn how to do it yourself.

3. Start with some of the free/negligible fee investment sites.  Put a little bit in at a time.  Take some risks.  Learn from your gains, learn from your losses.  This is another reason why I love Stash.  While you're putting the hundreds and thousands into different funds, you can be playing with your 10s and 20s on an app.  Stash lets you buy fractional shares, fractional ETFs.  So if you really want to get in on the Tesla fun but don't have hundreds of dollars lying around, you can buy 10 dollars worth of a Tesla share, 10 dollars worth of an Apple share, whatever.  You can even set up weekly deposits of 10 dollars or more. 

4. I'm a personal fan of chasing dividends.  I'm obsessed with the idea of dividends.  I've dumped thousands into Stash's Delicious Dividends ETF.  I also have it set up to automatically reinvest all dividend payouts right back into the stock/ETF they came from. 

 

[MacReady]

Also, my most important investment advice is don't have kids. 

[MWil23]

There are a few things that we did before going the investment route (aside from my/my wife's retirement):

1. Paid off student loans ($60,000)

2. Moved into a house (and refinanced into a 15 year mortgage when I got a 2.62% rate, which is absolutely incredible). Granted, some would argue the benefit of a 30 year and then taking the difference and investing that instead, earning a lot more over the course of time, but we are a bit more conservative and would rather have a tangible investment "just in case", and then reallocate those funds into paying for our kids' college tuitions in cash after paying off our mortgage here in 14+ years, or investing in a rental property or two, etc. I'm relatively handy and already am a landlord, so it's not that big of a deal for me personally...what I'm trying to say is, play to your strengths.

3. Got our emergency savings to the "6 month mark"

4. From here, we basically started investing, both of us in our early 30's. We hit those other goals/benchmarks, so there's no point in continuing to dump money into a savings account that won't really get you a return. Every year at the end, we roll the earnings over into the same fund, because compound interest is just...it's the best.

[MacReady]

5 minutes ago, MWil23 said:

3. Got our emergency savings to the "6 month mark"

4. From here, we basically started investing, both of us in our early 30's. We hit those other goals/benchmarks, so there's no point in continuing to dump money into a savings account that won't really get you a return. Every year at the end, we roll the earnings over into the same fund, because compound interest is just...it's the best.

This is what I struggle with the most.  I keep way, way, way, way, way, way too much in savings.  I have a year's salary in my savings account for no reason whatsoever. 

[MWil23]

14 minutes ago, Outpost31 said:

This is what I struggle with the most.  I keep way, way, way, way, way, way too much in savings.  I have a year's salary in my savings account for no reason whatsoever. 

You know, it took my wife and I a solid year to get to the point of where we were able to fork that over, so when we invested, we cut a healthy check to jumpstart it. We had all the home projects we were going to do completely finished (we sold our house not long thereafter, LOL), we had that 15 year mortgage, we had that job security...and we didn't have any extraneous payments coming up.

At that point, it's better to let our money work for us.

If you don't know what to do with it, I'd make extra payments on your house, allocate it to a huge project (addition, patio, porch, etc.), and if you've already done those things, then I'd just roll it into investments.

Admittedly, this is why I prefer the mutual fund route vs. an IRA/Roth IRA (see: My retirement is already taken care of) because if I ever NEED it, I can pull it at any time without penalty/consequence.

JMHO

[LETSGOBROWNIES]

4 hours ago, Outpost31 said:

This is what I struggle with the most.  I keep way, way, way, way, way, way too much in savings.  I have a year's salary in my savings account for no reason whatsoever. 

Go with something lower risk, like index funds.  They’re going grow but the risk of losing money is minimal (and that’s only if you need the money shortly after investing).

If you need all of your cash immediately, you’ve got bigger issues that ROI or short term losses.

[Shanedorf]

10 hours ago, Outpost31 said:

I have a year's salary in my savings account for no reason whatsoever. 

since its just sitting there...wait for the inevitable dip -
Then jump on an index fund and profit. Even better...set up the index fund now, so when dip-day comes, you can pounce.
You can't win playing the dips game over and over, but for your initial deposit -  you can really make it work to your advantage. If you don't wanna wait, then just set up a monthly transfer from savings -> index fund, until your savings is at the level you want

[LETSGOBROWNIES]

11 hours ago, Shanedorf said:

since its just sitting there...wait for the inevitable dip -
Then jump on an index fund and profit. Even better...set up the index fund now, so when dip-day comes, you can pounce.
You can't win playing the dips game over and over, but for your initial deposit -  you can really make it work to your advantage. If you don't wanna wait, then just set up a monthly transfer from savings -> index fund, until your savings is at the level you want

Obligatory “it’s not about timing the market it’s about time in the market” post.

[skywindO2]

22 hours ago, Outpost31 said:

This is what I struggle with the most.  I keep way, way, way, way, way, way too much in savings.  I have a year's salary in my savings account for no reason whatsoever. 

At the very least, you should move it to a higher yield savings account that pays more interest. I think all of the popular online options are down right now from their usual rates, but still likely better than any thing a local bank is going to offer. 

[bigbadbuff]

I'm 26, about to be 27 in a month, so I haven't built to up too much of a savings yet, I graduated from school two years ago, getting married in a month as well. I have been putting money in a 401k since I started selling cars last year, and just opened up a Roth IRA a few months ago. Once I get married and am able to hop on my soon to be wife's health insurance policy that will save me roughly $300 a month that will go directly into a ROTH