2010 Investment returns

[MaxPowers]

i've shied away from stocks and funds in the past. can i ask you guys a few questions?

1-how often are you moving your money around? are these largely things you've held for years, are are you re-allocating every month?

2-what kind of knowledge base do you consider necessary? is there a cliffs notes of sorts for funds/stocks, or is this something you are constantly staying abreast of(the performance of products)?

thanks.

If you are referring to stock investing in general, your best bet is to find great companies, invest in them, and hold. Diversify with a couple companies in a industry, and also several industries. Or you can get whats called an ETF and grab hold of a whole sector. Vanguard has good ones. For me, I put my IRA on cruise control with a target retirement fund until I can learn more and access my risk level myself, which I feel I am ready to do.
I like Investing for Beginners for basic information. I spent/spend many hours reading through there. Also read stock investing for dummies. Starting to read The Intelligent Investor.
I am sure these other guys can give you more information, I know they have helped me over the years.

[disneysteve]

i've shied away from stocks and funds in the past. can i ask you guys a few questions?

1-how often are you moving your money around? are these largely things you've held for years, are are you re-allocating every month?

2-what kind of knowledge base do you consider necessary? is there a cliffs notes of sorts for funds/stocks, or is this something you are constantly staying abreast of(the performance of products)?

thanks.

I can't help but notice that this question comes from the same person who, in another thread, is talking about buying gold.

We opened our first mutual fund account in 1992 right after we got married. We no longer add to that account but still hold it. Since then, we've added Roths, 401k, 403b and a couple of other assorted accounts. We add to the 401k and Roths regularly as well as to one taxable account.

As for individual stocks, we have a few that we've owned for anywhere from 20 years to less than a month. I don't do much trading at all but I occasionally get the urge to speculate a little, hence the purchase last month.

What knowledge is needed? A lot less than many people think. Open an account with one of the big 3 (Vanguard, Fidelity, T. Rowe Price) and start funding a Target Date fund or broad market index fund and feed that account every month. Or sign up for your company's 401k and fund it every paycheck. I think many people suffer from paralysis of analysis. They are so overwhelmed by the choices that they do nothing and that's a big mistake. Yes, you can analyze every tiny detail of every fund but that isn't necessary to do well over time.

[rj.phila]

I can't help but notice that this question comes from the same person who, in another thread, is talking about buying gold.

haha, yup-same guy! if you knew me, it would probably seem more sensible than the seeming "contradiction". (also, there's a big difference to me though btw buying 10k of a physical asset to put in a safe, and allocating 100k of investment or retirement funds.) besides, why put ALL your eggs in one basket? 90% seems sufficient. anyway.....

a little background(apologies if this counts as hijacking thread, disregard if so).

-have a fidelity account, both IRA and "core account" currently in cd's
-max my SEP IRA every year; alloted 70% in cd's, 30% in a mma
-self employed, no 401k or any of that
-full disclosure: 15 years ago i worked at a bank. the finanial advisor at the bank convinced me to put 1500 in a roth IRA, allocated in a mutual fund. it has consistently lost money EVERY YEAR. its now worth about 400. this experience soured me to mutual funds. a fair amount of my money is in cd's bought in the early-mid aughts, when rates were 5-6%. in short, when MF returns would get quoted as "~6-8%, with a chance of losing principal", that vs. cd's was just a no-brainer for me. set it and forget it.

i still have a massive bias against stocks, mf's, anything with risk of principal(exacerbated or "confirmed" by the dow's plunge a few years ago). im not looking to jump with both feet, more gather some insight into the knowledge base of people different than i(im always open to change). and isnt that the beauty of an online forum like this? that we can gleam insight into other peoples perspectives?

thanks guys.

[disneysteve]

buying 10k of a physical asset to put in a safe

Keep in mind that what sits in your safe is not, in any way, working for you. It is earning no interest and generating no income. No compounding is occurring. It is just sitting there with the hope that someday when you pull it out and sell it, it will be worth more than when you bought it. Considering the sky high price of gold today, that is extremely unlikely.

-full disclosure: 15 years ago i worked at a bank. the finanial advisor at the bank convinced me to put 1500 in a roth IRA, allocated in a mutual fund. it has consistently lost money EVERY YEAR. its now worth about 400.

That makes sense and certainly explains your reluctance to invest. A mistake like that early on clouds your view going forward. But now that you are older and wiser, learn from that lesson and do things right from now on. What did you do wrong then? You let a salesperson talk you into an investment that you didn't fully understand and weren't comfortable getting into. Considering that it was a bank salesperson who did that, I'm positive that what he sold you was a load mutual fund with super high expenses. He wasn't concerned about your best interests. He was only concerned about the commission he earned from bringing in your account. The other mistake was not tracking it closely and hanging on as it fell from $1,500 to $400. If you still own it, you could roll it over and get it out of there. You might not be able to go with Vanguard or Fidelity due to the small amount but you could roll it to a low cost brokerage like Scottrade. That doesn't mean you'd have to invest in stocks - you could still go with a money market or CD - but at least it would be safer than where it is.

What is important to learn from this experience is that there are good investments and bad investments out there. Many of us - probably most of us - invest in the good ones and avoid the bad ones. Unfortunately, you got snagged by one of the bad ones as your first investing experience.

Yes, CDs and money markets are "safe" but understand that earning 1%/year, you are losing ground to inflation with each passing year. It is unlikely that you will build sufficient wealth to retire comfortably and at a reasonable age without including growth investments in your portfolio - but you need to do it right.

[97guns]

Keep in mind that what sits in your safe is not, in any way, working for you. It is earning no interest and generating no income. No compounding is occurring. It is just sitting there with the hope that someday when you pull it out and sell it, it will be worth more than when you bought it. Considering the sky high price of gold today, that is extremely unlikely.

gold guy here again from the "other thread"

sure metals wont be making you any passive income that is why you have some other interests that create that passive income.

why do you feel it is "highly unlikely" , do you watch what the dollar has been doing, are you aware of europes troubles, do you understand how fragile our economy really is - is your city in a deficeit, do you realize our banking system is on the verge of collapes, did you know china is hoarding all commodoties including precious and base metals and slowly getting out of US treasuries or are you actually one of the sheeple that have every asset they own on paper?

we can not even supply our own steel for production, the steel for the SF bay bridge was brought in from china, china owns us.

[disneysteve]

97guns, let's just agree to disagree on this. We hold extremely different world views.

[littleroc02us]

i've shied away from stocks and funds in the past. can i ask you guys a few questions?

1-how often are you moving your money around? are these largely things you've held for years, are are you re-allocating every month?

2-what kind of knowledge base do you consider necessary? is there a cliffs notes of sorts for funds/stocks, or is this something you are constantly staying abreast of(the performance of products)?

thanks.

I haven't moved anything yet, I just keep contributing and maxing out my roth each year. The way I picked my index fund was by looking at it's track record since it's inception. I will be moving 15k to the Wellington fund soon just because of it's past performance. The key to investing for me is to keep adding more money and let it sit.

[littleroc02us]

gold guy here again from the "other thread"

sure metals wont be making you any passive income that is why you have some other interests that create that passive income.

why do you feel it is "highly unlikely"

Here is why most of us don't believe Gold is a good investment if I may speak for others. Just look at it's history and that it is at an all time high.. It will crash someday and for those who are holding it what value will it have then? Check this website for the history of Gold prices:

Gold Price History

[rj.phila]

Keep in mind that what sits in your safe is not, in any way, working for you. It is earning no interest and generating no income. No compounding is occurring. It is just sitting there with the hope that someday when you pull it out and sell it, it will be worth more than when you bought it. Considering the sky high price of gold today, that is extremely unlikely.

Yes, CDs and money markets are "safe" but understand that earning 1%/year, you are losing ground to inflation with each passing year. It is unlikely that you will build sufficient wealth to retire comfortably and at a reasonable age without including growth investments in your portfolio - but you need to do it right.

thanks, steve.

yes, gold in a safe is not "working" for me. i would never put a quantity of money i actually expected to generate returns in gold and put it in a safe. no concern there on my end. totally fine with it. it's a very small portion of my "portfolio". i consider it a very cheap(relative to the big picture for me) insurance policy.

right now my CD's are all btw 5-6%(mid-aughts rates of course). AFAIC, they are kicking ass. that all STARTS to change in the window of 2012-2014. but i currently have more funds that i could be allocating elsewhere. obviously,

[rj.phila]

Keep in mind that what sits in your safe is not, in any way, working for you. It is earning no interest and generating no income. No compounding is occurring. It is just sitting there with the hope that someday when you pull it out and sell it, it will be worth more than when you bought it. Considering the sky high price of gold today, that is extremely unlikely.

Yes, CDs and money markets are "safe" but understand that earning 1%/year, you are losing ground to inflation with each passing year. It is unlikely that you will build sufficient wealth to retire comfortably and at a reasonable age without including growth investments in your portfolio - but you need to do it right.

thanks, steve.

yes, gold in a safe is not "working" for me. i would never put a quantity of money i actually expected to generate returns in gold and put it in a safe. no concern there on my end. totally fine with it. it's a very small portion of my "portfolio". i consider it a very cheap(relative to the big picture for me) insurance policy.

right now my CD's are all btw 5-6% (mid-aughts rates of course). AFAIC, they are kicking ass. that all STARTS to change in the window of 2012-2014, when they start maturing. so i need to think about what im going to do then. but i also currently have more liquid funds that i could be allocating elsewhere. obviously, my past experience has tainted my perspective; this is why i'm asking. i'm still pretty far from being comfortable with putting money into a company/stock/fund that i dont fully understand, as well as one i dont have a vested interest in its success beyond its ability to generate returns, but it's foolish of me to not start exploring the idea, really.

[97guns]

Here is why most of us don't believe Gold is a good investment if I may speak for others. Just look at it's history and that it is at an all time high.. It will crash someday and for those who are holding it what value will it have then? Check this website for the history of Gold prices:

Gold Price History

bubble de-bunking
YouTube - Gold is not in a bubble!

[KTP]

Well, gold and silver were down 3% today, so I am not giving you a full can of dog food when you come trade your ounce of gold. We will have to divide it up somehow...perhaps I will withhold a tablespoon or so.

[littleroc02us]

bubble de-bunking
YouTube - Gold is not in a bubble!

I'll base my thinking more on history not a theory.

[littleroc02us]

bubble de-bunking
YouTube - Gold is not in a bubble!

Gold hasn't been used for currency exchange since the Roman times...

[littleroc02us]

Also, for an example when Katrina hit, the people of New Orleans didn't use gold to buy things, they swapped items such as water, clothing and blankets....(Dave Ramsey) Gold was useless.