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Old 01-04-06, 01:53 AM   #1
yendor28
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off topic - money

Hey,

Anyone know about investing etc.

I just finished uni and am now working. Typical things are get a house etc.

Can anyone share their wisdom, knowledge and experiences.

*unique for you guys as obviously you all save money on cars

I am also car free!
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Old 01-04-06, 03:13 AM   #2
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First thing you do is stash away six months living expenses. Keep it liquid. That's about as interesting as watching a tree grow, but it's a step most people are never able to accomplish.
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Old 01-04-06, 06:12 AM   #3
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- great idea about six month's living expenses... one should always have an emergency reserve... we maintain 12 month's expenses in a certificate of deposit 'ladder'... over a period of a couple years, monthly CDs were acquired, which are then 'rotated' out for better returns... interest is compounded back into each CD, with the result that a year's worth of expenses are on tap, with a CD available each month if needed...

my thoughts (take 'em for what they're worth):

1. maintain good credit: this means paying bills on time, not bouncing checks, etc. ... you will need good credit (a good FICO score) if you want a lower interest rate on your mortgage

2. don't get sucked into credit card hell: don't make *bad* credit purchases... this means, don't buy clothes, gas, food, etc. on a credit card and then not pay off the entire balance of the card at the end of the grace period... use a credit card for emergencies... whatever you do, don't carry a balance! only have one credit card, and if you don't have the discipline to not use it, take the credit card and freeze it in a solid block of ice in your freezer - that way you won't carry it and be tempted to use it... btw, a *good* credit purchase is a mortgage - but NOT an interest-only mortgage (unless you are absolutely sure you're going to refinance into a conventional soon afterwards)...

3. start investing early, even if it means small amounts every month... if you start in your 20s, you'll be ready for retirement a lot sooner... many folks can only make maximum investments during peak earning years (40s-50s), but if you start early you'll make your goals sooner... set aside the money yourself, or have it deducted automatically from an account - you'll adjust your lifestyle and won't miss the money after a cycle or so...

4. set a plan, then diversify (asset allocate) your investments... buy into no-loads, and go for growth investments while young... your allocations (between stocks, bonds, cash, etc.) will change as you age and according to your needs... having children will change the equation somewhat, but you should invest for yourself first! don't put all your eggs into one basket (one reason i have little pity for WorldCom or Enron investors)... i'd recommend Vanguard for mutual funds... don't use a broker (they're parasites)... avoid insurance instruments such as annuities unless you have special needs or know what you're doing... many investment 'advisors' will steer you to specific products or instruments - avoid them unless you have specific needs...

5. the best investments are good health and education... since you're into biking, stay into biking (something i wish i had done over the last 15 years, but better late than never?)... if you're interested in investing, read all you can and form your own opinions... you may not create a portfolio that 'shoots the lights out' with double-digit returns, but you will get better returns on your willingness for risk (besides asset allocation, investing requires certain amounts of risk - the government is not going to protect you - YOU protect yourself by being a smart investor!)

- i basically retired at 41, but have kept active professionally... i was self-employed for the last nine years (Linux has been very good to me!)... and i just fully retired this year at 50, so i'm a bit ahead of the curve (having a working spouse helps)...

- i love being able to ride my bike whenever i want!
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Old 01-04-06, 06:24 AM   #4
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Invest overseas. That European Growth Fund is fantastic!

Start with about 10K if you can. That way, you can really see the difference. But if you have less, sock away as much as you can.

Go with the MONY Group. They have fantastic financial advisers.

Invest in Shimano- they really are a great company and they make lots of stuff folks need, not just bike components.

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Old 01-04-06, 06:40 AM   #5
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Join a stock club. My invovlement in one finally made sense of the investing world for me. Plus I made some jingle.
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Old 01-04-06, 07:33 AM   #6
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The value of compound interest
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Old 01-04-06, 07:47 AM   #7
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Real estate.
Historically the highest return of any investment.
Dont beleive the 'bubble' hype. There is no 'bubble'...
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Old 01-04-06, 07:48 AM   #8
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Originally Posted by Alekhine
+1
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Old 01-04-06, 10:01 AM   #9
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motley fool (fool.com) has some great articles and forums on saving/investing/good debt, bad debt, etc

they're written well and geared towards normal (non-financial industry folks)

i read it a lot
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Old 01-04-06, 11:24 AM   #10
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Originally Posted by -=£em in Pa=-
Real estate.
Historically the highest return of any investment.
Dont beleive the 'bubble' hype. There is no 'bubble'...

If you have to feed it or paint it, It ain't an investment.
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Old 01-04-06, 11:28 AM   #11
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Quote:
Originally Posted by lauren
See, me wanting to get 20 to 30 acres out in the sticks isn't just about my asocial tendencies. With urban spral, if I pick it carefully I can sell to a developer for a ton in 20 to 30 and move out to the sticks again.

Zactly, no painting required
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Old 01-04-06, 11:56 AM   #12
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Quote:
Originally Posted by lauren
See, me wanting to get 20 to 30 acres out in the sticks isn't just about my asocial tendencies. With urban spral, if I pick it carefully I can sell to a developer for a ton in 20 to 30 and move out to the sticks again.
Watch The End of Suburbia first.
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Old 01-04-06, 12:42 PM   #13
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As others have noted, save up an emergency fund. About 6 months' worth of cash in "risk-free" investments (CDs, savings accounts, money market accounts, etc), depending on your life circumstances. Save persistently. See The Motley Fool and Vanguard for great info. When I graduated from college, I learned a lot from the Motley Fool, and though I have strong disagreements with some of their advice and analysis, their background info is very good. Vanguard's background articles are a must read for me.

Save early, and save diligently. If you bump up your long-term savings from 5% to 10%, you've just doubled your future money. And you cut out a minimal percentage of your spending now. (You have to buy the $90 widget instead of the slightly nicer $95 one.)

Believe in indexing. If you don't know what that is, find out. Your chances of being a better investor than the people who do it full time are slim to none. Your chances of coming out ahead of everyone else's average returns is 100% if you simply index the universe of investments against which you measure your returns.
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Old 01-04-06, 12:52 PM   #14
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Quote:
Originally Posted by -=£em in Pa=-
Real estate.
Historically the highest return of any investment.
Dont beleive the 'bubble' hype. There is no 'bubble'...
Real estate can be a good investment. However, real estate also has many drawbacks. You generally end up with a relatively undiversified portfolio that is relatively illiquid. To generate income, you have work to do. It is difficult to save up on autopilot, adding a fixed amount each month.

I believe for most people, real estate exposure via REITs or a REIT index fund makes much better sense. Then you can buy and sell in arbitrary portions at any time, your portfolio can span multiple real estate sectors and geographical regions (even with a very small investment), and your real estate investment is professionally managed.
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Old 01-04-06, 01:45 PM   #15
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Quote:
Originally Posted by jschen
Real estate can be a good investment. However, real estate also has many drawbacks. You generally end up with a relatively undiversified portfolio that is relatively illiquid. To generate income, you have work to do. It is difficult to save up on autopilot, adding a fixed amount each month.

I believe for most people, real estate exposure via REITs or a REIT index fund makes much better sense. Then you can buy and sell in arbitrary portions at any time, your portfolio can span multiple real estate sectors and geographical regions (even with a very small investment), and your real estate investment is professionally managed.
Yep, real-estate is just one type of investment, one should have many others. While real-estate overall is consistent, barely keeping above inflation, it's consistently mediocre (remember that consistency is not the same as performance). In many areas, mid-west and Texas, real-estate has been stagnant for decades, actually losing to inflation (you're better off keeping cash in the bank at 0-interest). Those who bought real-estate in the '80s will tell you it took them 15-years to break-even (probably much like those buying today).

One should also invest in insurance (more if you're older), tax-free bonds, funds/REITs, high & low-risk equities, options, commodities and futures. That's true diversification and will let you roll through the dips and bubbles.

Professional management is one of the secrets on how those with money keep the money and make more. The really good managers will charge 20-50% of your portfolio yearly, but they'll also get you +100% returns as well. Imagine if you bought some of Warren Buffet's shares 20-years ago. The guys buying real-estate will be up 200-400%, Buffett's up over 2500%!

When talking about money-strategies, implicit in everyone's suggestion is the results. Their advice will give you the results THEY have gotten. If they really knew how to make millions in investments and retire by 35, they would've done it by now...

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Old 01-04-06, 02:30 PM   #16
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don't get sucked into credit card hell
+100

Credit cards are convient, but it's that convience that makes them financially dangerous, ie way too easy to overspend yourself into oblivion. Plus some punk getting ahold of your credit card # and charging you into the poorhouse overnight can really hurt.
For roughly the same convience with a far greater security net, prepaid debit cards are the ticket. I keep a $50 debit card in my fanny bag for emergency 'mad money'. A punk jacking that don't get much, it's only worth $50 minus what I spent from it.

Another tip: Be an aggressive bargian hound. You may not have a car and the oil cartel sucking away your hard earned mula, but that's no excuse to spend it like water. Cheap ain't always better, that's true, but I'de rather get the biggest bang for my buck than buy junk that'll wind up in a landfill in a month or less. Avoid bling and shop for raw function and durability. DIY geekness will save you $$$ too.
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Old 01-04-06, 03:11 PM   #17
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Avoid bling and shop for raw function and durability. DIY geekness will save you $$$ too.
- this is why Sheldon B. is my hero!

:-)
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Old 01-04-06, 03:25 PM   #18
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Mutual funds are the best way for normal people to start investing. PLUGGITYPLUGPLUG.

Last edited by bvancouv; 01-04-06 at 03:28 PM. Reason: I could get in trouble
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Old 01-04-06, 03:31 PM   #19
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my 2-cents. i am sure there are alot of smart people on here who know what they are talking about.(i am not bashing on anyone)but i think you are much better off going and talking to a financial consultant.

regular bank accounts are not giving anything, a while ago all you needed to do is put some money in an account and the interest would make it grow. mutual funds are deffinatly a way to go, i am not up on current mutual funds. again, a consultant will be able to tell you what is hot now.

good luck, and i hope you make some money in whatever you decide to do.
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Old 01-04-06, 03:32 PM   #20
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Quote:
Originally Posted by lauren
when the oil supply runs out I will have already sold my acreage, and we will have alternative fuels. You can keep your government healthcare too.
Don't worry, I will. What was that all about?
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Old 01-04-06, 03:34 PM   #21
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save money like you pay bills. think of it as a mandatory thing to do. if you got a 401(k) at work, bump it up to the maximum you can comfortably afford. i've been working at my job for 4.5 years now and my 401(k) is right at about $40,000. it's money that i never see and don't really think about, but i know it's growing and pretty quickly too.
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Old 01-04-06, 03:44 PM   #22
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Quote:
Originally Posted by zx108
i think you are much better off going and talking to a financial consultant.
Depending on your situation, this may be a great idea. But you may want to hold off a bit until you get a better idea what your financial picture is like now that you're out of school. For now, perhaps talk to someone you know and trust and who understands the financial world intimately to assess your situation and put together a game plan.

Quote:
Originally Posted by zx108
a consultant will be able to tell you what is hot now.
Run away from such consultants. Your goal should be to put together a solid long-term plan, perhaps requiring review every few years as your life situation evolves. Your goal should not be to catch the hot trends. Planners/consultants who try to help you catch the hot trend usually don't have a good clue about trying to understand your situation and tailor their advice to the situation. They're simply hawking something. If terms such as "budget", "goals", "risk tolerance", "asset allocation", and "plan" don't come up, run. Find someone else.
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Old 01-04-06, 03:52 PM   #23
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Originally Posted by jschen
Run away from such consultants. Your goal should be to put together a solid long-term plan, perhaps requiring review every few years as your life situation evolves. Your goal should not be to catch the hot trends. Planners/consultants who try to help you catch the hot trend usually don't have a good clue about trying to understand your situation and tailor their advice to the situation. They're simply hawking something. If terms such as "budget", "goals", "risk tolerance", "asset allocation", and "plan" don't come up, run. Find someone else.
you made a very good point. i would like to add something. if you know someone that is in finance, and knows what they are doing. have them come with you, so you dont get involved with a bad dude.
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Old 01-04-06, 04:23 PM   #24
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Quote:
Originally Posted by yendor28
Hey,

Anyone know about investing etc.

I just finished uni

"Uni"? I've only heard that abbreviation used by Europeans.

You didn't mention educational debts - do you have any? Deciding on investing vs debt reduction involves some complex evaluating. In general it is better to pay down debt first, but sometimes it makes sense to put money in tax-sheltered vehicles even if you have debts. There are also different rules from country to country on whether home mortgages can be tax-deductable, and on how much money can go into a tax-sheltered retirement fund.
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Old 01-04-06, 04:28 PM   #25
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you made a very good point. i would like to add something. if you know someone that is in finance, and knows what they are doing. have them come with you, so you dont get involved with a bad dude.
+1

My job brings me into contact with a lot of financial advisors, and the stories I could tell you about some of these guys would blow your wig back. There are certainly some good ones out there, but a large portion of them couldn't advise

For the novice investor, look for an advisor that charges a fixed percentage of your assets, typically 1-2%; this aligns their wealth with yours- if your wealth grows, so too does their compensation. On the flip-side are advisors who charge you commisions on every transaction. This is great for people who just need an advisor to make their trades for them, but for people who really need guidance this is a no-no. It can lead to churning, where advisors buy and sell investments for no reason other than to rake in transaction fees.

Ask your advisor for the 'time-weighted' performance of their book of business over a reasonable period, say ten years. Time-weighted means it nets out the effects of clients' withdrawals, which can be a significant source of distortion. An advisor should be able to tell you something about how their accounts have performed on average.

Look for designations like CFP (Certefied Financial Planner) and CPA (accountant). CPAs are especially important for people with complex estate planning issues.

If someone you know has had a good experience with an advisor, ask for a referral- it can be hard to find a good advisor on your own.

Try to learn some basic stuff before going to talk to an advisor. Investing websites like motley fool and morningstar.com are good resources.

OK, that's enough non-bike talk.
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