Investing 102

[CRCRFT78]

I would just like to keep business, pleasure & retirement seperate. I have no intentions of trying to get rich quick but I would like to someday be able to play with some money without feeling guilty for blowing it on car parts.

Of all the forums I've frequented over the years, this single thread right here has to be that needle in the haystack. I'm very glad it has grown and educated us to the point that we've all had an awakening of sorts. If this was the last and only thread on earth to read, I would have it memorized word for word.

[GregWeld]

It's been a very fun thread for me and REWARDING seeing everyone "get it"... Hopefully it improves a whole lot of peoples retirement as well as their current lifestyles!

Money isn't everything - but it beats the hell out of whatever is in second place!

:woot:


BTW -- Whomever said money can't buy happiness, was an idiot or broke - or both.:rofl:

[Bucketlist2012]

It's been a very fun thread for me and REWARDING seeing everyone "get it"... Hopefully it improves a whole lot of peoples retirement as well as their current lifestyles!

Money isn't everything - but it beats the hell out of whatever is in second place!

:woot:


BTW -- Whomever said money can't buy happiness, was an idiot or broke - or both.:rofl:

As I have said before, thanks to all of you and especially Greg for taking the time to give his opinions on investing.

Most people never, ever take the time to help people, and I feel it is a "paying it forward" action...I try to do it with people in my life and most don't listen, and want a "magic Potion"..Then they are angry that I don't have a get rich scheme...Mine took 30 years..

Again thanks to all of you posting your thought and Ideas, especially Greg..

[pw2006]

It's been a very fun thread for me and REWARDING seeing everyone "get it"... Hopefully it improves a whole lot of peoples retirement as well as their current lifestyles!

Money isn't everything - but it beats the hell out of whatever is in second place!

:woot:


BTW -- Whomever said money can't buy happiness, was an idiot or broke - or both.:rofl:

Greg- Your post reminded me of HBO's 24/7 special for the Mayweather v. Cotto fight. :rofl: They were interviewing Mayweather in episode 3 when he piped off...

"Like I always say, money don't make me. I make money. When someone say 'I'm not materialistic,' you gotta realize, somebody broke made that up. Somebody who don't want to strive for sh** made that up. You know, beauty is only skin deep. An ugly person made that up. I tell you this: I'm a well groomed individual and I like money."

[Bucketlist2012]

You guys are quite funny..:hail: :rofl:

My Wife and I are always striving for the next level...It keeps you motivated and hungry, and excited about life..

Sitting on your arse and waiting for things to happen , is going to be along wait for some people...

I enjoy what I have, but I want so much more, and I will make it happen...

It is my Manifesting of my Destiny.. Not waiting for a knock on my door from the Rich fairy..That knock will never come.

I am pretty handsome, but not pretty rich, but I ain't done yet...:cheers:

[RECOVERY ROOM]

I would just like to keep business, pleasure & retirement seperate. I have no intentions of trying to get rich quick but I would like to someday be able to play with some money without feeling guilty for blowing it on car parts.

Of all the forums I've frequented over the years, this single thread right here has to be that needle in the haystack. I'm very glad it has grown and educated us to the point that we've all had an awakening of sorts. If this was the last and only thread on earth to read, I would have it memorized word for word.

I agree with this 100% Thanks guys for helping us out with info, Not many places you can go to have this going on.

[GregWeld]

I got 400 of the 2000 shares I put in for the COTP.


In a few minutes we'll see what happens next. My guess is -- not as much as everyone thinks. That's usually the way things go -- the opposite of expectations.

[SLO_Z28]

I'm surprised you're buying Facebook. A 50X PE just doesn't do it for me. There seems to be better places to put your money.

[GregWeld]

James -- Apparently you don't read all the posts. I explained the FB IPO purchase reasoning earlier... It's just "because I can". It's a gamble. A VERY VERY VERY teeny tiny gamble. One that is just "fun" to see what happens.

I'm not trying to get rich quick. :lol:

[GregWeld]

I'm surprised you're buying Facebook. A 50X PE just doesn't do it for me. There seems to be better places to put your money.



BTW ---- There is a LOT more to investing than P/E.... One criteria limiting factor won't get you very far as an investor.

[toy71camaro]

I got 400 of the 2000 shares I put in for the COTP.


In a few minutes we'll see what happens next. My guess is -- not as much as everyone thinks. That's usually the way things go -- the opposite of expectations.

Sweet! sure hope it goes UP UP UP for ya!!!

Im staying far and away from that one. LOL.

[GregWeld]

Sweet! sure hope it goes UP UP UP for ya!!!

Im staying far and away from that one. LOL.


Ya know -- this stuff -- and I've done A LOT of 'em -- is pure gambling. You'll have just as much luck playing craps in Vegas. If you can afford to blow money playing craps... fine. If that's money you need for REAL INVESTING... then SMART people will stay away and put money into Coke or McDonalds.

[Bucketlist2012]

I will be sitting the facebook one out..

I have a portion of my portfolio in Higher risk assets, but they are one's that I understand, and I have a reason for gambling on them, and so far, I am right.

I have never been on Facebook, and I never will. I don't understand it, and if I don't understand it, I am not buying it.

I told my Wife the other day about some of our assets, and I told her that it is " Calculated Gambling". But I explain to her why we are in the higher risk assets..

People will make money, and people will lose money on Facebook , and again, since I don't understand it, I just cannot throw my money at it.. But that is just My opinion.

I need to understand everything my employees are doing.. :thumbsup:

[XLexusTech]

Ya know -- this stuff -- and I've done A LOT of 'em -- is pure gambling. You'll have just as much luck playing craps in Vegas. If you can afford to blow money playing craps... fine. If that's money you need for REAL INVESTING... then SMART people will stay away and put money into Coke or McDonalds.

Agreed, picked up more of each MCD and KO, plus a few other choice Drips leading up to this... I don't gamble in casinos, in fact I don't see why anyone does... losing money a gaming is PAINFUL!...
I also agree 100% with the thinking, invest in products and companies you know and the products you use. When my 90 YO mother Friend-ed me on FB, I knew it was time to pony up... Hope I am right but even if I am wrong I am OK with it because I went for it with Money I could afford to lose..


Good luck to everyone!

[toy71camaro]

Hmmm....

With the market down like it is... Im now debating if I purchase more stock of what I have, while its on sale (CVX -10.5%, MCD -4.9%) or continue on to buy two new ones i had planned for soon (T, KO or KMB)...

Decisions, decisions...



By the way, Sorry Greg about the FB IPO. It didnt shoot to the moon like "they all said it would"... lol. But, at least it didnt go belly up either. ;)

[GregWeld]

Hmmm....

With the market down like it is... Im now debating if I purchase more stock of what I have, while its on sale (CVX -10.5%, MCD -4.9%) or continue on to buy two new ones i had planned for soon (T, KO or KMB)...

Decisions, decisions...



By the way, Sorry Greg about the FB IPO. It didnt shoot to the moon like "they all said it would"... lol. But, at least it didnt go belly up either. ;)


CVX down 10% would be okay -- I wouldn't average down on MCD it's not down enough.

Buying any time the market is down is good. You'll never catch the bottom - and will almost ALWAYS kick yourself for buying when you did. As far as I'm concerned -- there's almost never a right time to have bought UNTIL a couple years go by and you're up 25% and then you're thinking you're pretty dang smart to have paid such a high price.

[Bucketlist2012]

I heard a rumor that when Facebook started to slide, shares were bought by Insiders to keep it from falling off the charts..

But I guess that time will tell..

I hear it was the Banks , ect.., buying the Stock mid-day to avoid ending the day below the opening price...

Fizzle....For Shizzle...

[John510]

Greg oh mighty Greg. Should I buy Facebook stock?

[XLexusTech]

I heard a rumor that when Facebook started to slide, shares were bought by Insiders to keep it from falling off the charts..

But I guess that time will tell..

I hear it was the Banks , ect.., buying the Stock mid-day to avoid ending the day below the opening price...

Fizzle....For Shizzle...

Yes but hedge funds i believe, not insiders.

[GregWeld]

Actually it would be the UNDERWRITERS that would step up to buy to bolster the market.


John ---- Facebook (or any IPO) is a GAMBLE... buy at your own risk. Very few IPO's are successful -- the few that are, make up for the many that aren't. Which is why people get excited - because they THINK they're buying the next Microsoft or Google...

The lock up period expires in 90 days -- and another lock up period after that at 180 days which will TRIPLE the amount of shares possibly coming to market. There's plenty of time to see what happens between now and then.

:cheers:

[Vince@Meanstreets]

Remember Facebook stock is to generate money for Facebook not a great 1 day bang investment stock but I said the same thing with Chipotle. Time will tell.

[Vince@Meanstreets]

Greg oh mighty Greg. Should I buy Facebook stock?

wait till it drops next month.

[GregWeld]

Remember Facebook stock is to generate money for Facebook not a great 1 day bang investment stock but I said the same thing with Chipotle. Time will tell.


Chipotle Mexican Grill (CMG) was a stock, that for me, was similar to Apple.... Every time I went by one - there was a line out the door.
So I bought it (around $85 a share) and when I'd just about DOUBLED my money - I sold it. DUMB ME. I should have held it and added to the position in 08/09.

There is another shining example (go back a few posts to see why I reference it here) of ----- if you only paid attention to the P/E multiple ----- you'd have lost out on what has turned out to be a terrific money maker.

[Bucketlist2012]

As usual , Greg is right..

It was the underwriters..

I was just doing more research..

I am not interested in Facebook, but I am interested in how they play the game..

I smelled something fishy, and I was just trying to determine the fishermen..

I think the people's information being sold, is the key to Facebook, and for me, that is why I am not on Facebook, and why I do not own it..

[John510]

Remember Facebook stock is to generate money for Facebook not a great 1 day bang investment stock but I said the same thing with Chipotle. Time will tell.

Ill go out and get some steak tacos for lunch today. The Chipotle near me in Dublin has been here for 2 years and the line is still super long.

[GregWeld]

I got 400 of the 2000 shares I put in for the COTP.


In a few minutes we'll see what happens next. My guess is -- not as much as everyone thinks. That's usually the way things go -- the opposite of expectations.



Just wanted to point out that my gut feeling was pretty correct. :woot:

[GregWeld]

In the interest of full disclosure --- I sold ALL 1000 shares of Faceybook this morning.

This thing is a ROCK....

Since it doesn't pay a dividend and seems to be falling like the rock I thought it might be. I'm out. I'm headed to a nice trip and don't want to return to see this thing in the teens.

[GregWeld]

To put this "sale" into perspective....

Last week I sold 60,000 shares of Banco Santander (STD) at a $71,000 loss.
While the stock paid an extremely nice dividend... the risk seems to be growing for europe rather than them getting their act together and while STD might be fine... when you're hearing about runs on banks etc. that becomes troubling when you have the kind of investment size that I carry per name. At some point it pays to take a hit and see where the train stops, rather than stand in front of it, and get hit head on.

[Bucketlist2012]

In the interest of full disclosure --- I sold ALL 1000 shares of Faceybook this morning.

This thing is a ROCK....

Since it doesn't pay a dividend and seems to be falling like the rock I thought it might be. I'm out. I'm headed to a nice trip and don't want to return to see this thing in the teens.

LMAO I was going to post that it reminded me of a Chevy Commercial, "like a rock", but you beat me to it..

And Europe is in Trouble...What they say at the meeting at Camp David, and what they Actually do when they get home, are two different things..

France will print and what will Germany do ?

I see more printing and spending, but that only postpones the train wreck.

So I have been, and will be riding the spending train, but for how long ? Probably through the election in November..The powers that be do not want to let the train wreck in the U.S. until after November.

My Wife wants to move to a even Nicer Home, and I am postponing it until after November..

I need to keep my Cash/Dead Presidents at the ready...

Hold on, it is going to get bumpy at the very least, and may get Ugly in Europe, and in the U.S.

But that is my .02 cents.

[GregWeld]

Yeah --- I wasn't interested in the damn thing to start with... but when the broker called and offered IPO price I thought - sure... WTF why not. Dumb of me = I know better than that.

Today I spent dead presidents on adding a 1000 shares of Con Ed (ED) - and 1000 Kimberly Clark (KMB) - and a tranche (50K) of GM Convertible Preferred paying 6.25%

Much more my speed....

[toy71camaro]

Ah... Bummer on the ole faceybook... but I'm not all that surprised after reading a handful of articles on SA about them the past two weeks.... But the media made it into a frenzy and got everyone excited for a bursting bubble. heh.

Anyhow... I saved my $ from twofacedbook and set my order for $1k of T, $500 of CVX (while its on sale for ~10% off) and $500 for KO.

Now trying to debate whether or not to take a $150 loss on the last couple of ETF's i have, so I can get the 3rd item on my "buy" list.. which was $1k KMB. :)

$150 loss at the low dollar values I'm doing, is quite a hit. LOL.

I already got your ED. It's up ~1% for me. lol

[GregWeld]

Ah... Bummer on the ole faceybook... but I'm not all that surprised after reading a handful of articles on SA about them the past two weeks.... But the media made it into a frenzy and got everyone excited for a bursting bubble. heh.

Anyhow... I saved my $ from twofacedbook and set my order for $1k of T, $500 of CVX (while its on sale for ~10% off) and $500 for KO.

Now trying to debate whether or not to take a $150 loss on the last couple of ETF's i have, so I can get the 3rd item on my "buy" list.. which was $1k KMB. :)

$150 loss at the low dollar values I'm doing, is quite a hit. LOL.

I already got your ED. It's up ~1% for me. lol



Loss sales are always a struggle. The minute you sell - the shares will go up. :lol:

The way I TRY to look at it is whether or not the NEW investment will more than make up for the loss in a short amount of time - either in dividend - or growth or both. Then it doesn't feel so bad.

That's just employee retraining. Sometimes it costs money to train then.

[toy71camaro]

Loss sales are always a struggle. The minute you sell - the shares will go up. :lol:

The way I TRY to look at it is whether or not the NEW investment will more than make up for the loss in a short amount of time - either in dividend - or growth or both. Then it doesn't feel so bad.

That's just employee retraining. Sometimes it costs money to train then.

yeah.. they are all 3 up today a litle over 1%, but down ~10 overall.. i think i'll just can em, and get what i WANT. lol


EDIT: Sold the 3.. and picked up just enough to make the 3 full purchases i wanted:

$1k KMB
$1k KO
$1k T
and then $550 left over to add to my CVX while its on sale. (originally bought $1k of that too, a couple months back).

[Bucketlist2012]

Yeah --- I wasn't interested in the damn thing to start with... but when the broker called and offered IPO price I thought - sure... WTF why not. Dumb of me = I know better than that.

Today I spent dead presidents on adding a 1000 shares of Con Ed (ED) - and 1000 Kimberly Clark (KMB) - and a tranche (50K) of GM Convertible Preferred paying 6.25%

Much more my speed....

Greg

1. You said Face Plant was gambling

2. You did not recommend it.

3. You got it at a Deal that most people could not get.

So no worries there..

It is the "crowd" or frenzy buyer that got hammered, as they should have..

Today is a great day on what I have going, but one day does not make Investing..

So it should be Interesting the next several months, that is for sure...

A lot of people that do face book were asking me, why wasn't I buying any of it..When I asked them why, they did not have any answer other than a lot of people use face book...I said, a lot of people eat Mc Donalds, and buy Gasoline, and Smoke cigarettes and drink alcohol...Now that I understand...:lateral:

[GregWeld]

Greg

1. You said Face Plant was gambling

2. You did not recommend it.

3. You got it at a Deal that most people could not get.

So no worries there..

It is the "crowd" or frenzy buyer that got hammered, as they should have..

Today is a great day on what I have going, but one day does not make Investing..

So it should be Interesting the next several months, that is for sure...

A lot of people that do face book were asking me, why wasn't I buying any of it..When I asked them why, they did not have any answer other than a lot of people use face book...I said, a lot of people eat Mc Donalds, and buy Gasoline, and Smoke cigarettes and drink alcohol...Now that I understand...:lateral:



ALL TRUE!



Gambling = put your money on the table and HOPE you win.... but there is no underlying reason why you should win other than you just want to.

[96z28ss]

I have a few shares of CHKR, Its my biggest loss so far. Its up today. However it may not get back to where I bought it. I was thinking of selling it and getting some Kimberly Clark KMB.

[GregWeld]

I have a few shares of CHKR, Its my biggest loss so far. Its up today. However it may not get back to where I bought it. I was thinking of selling it and getting some Kimberly Clark KMB.



No.... hold it. They pay a huge dividend which will help you catch up... and once they get past the CEO debacle it should snap back.

[BC69]

Greg - I respect everything you got going on with this thread, but the FB and Gambling thing is unfair! What is really is, is investing 106 at work.

Since it doesn't pay a dividend and seems to be falling like the rock I thought it might be. I'm out. I'm headed to a nice trip and don't want to return to see this thing in the teens.

Facebook is a GREAT company! But the valuation is why the stock is moving down. If you applied the same peer multiples of earnings, operating income, or revenue to Apple, Apple would be a trillion dollar company. So it didn't take much analysis at all to realize it was over valued. But it also doesn't have another company remotely like to compare too. Myspace at its prime in 2005 was bough by News Corp for $500MM, so if thats the one marker, its not a good sign. The smart money (and you did it too!) was in and out the same day. The really smart money was in pre-IPO and out at IPO (The venture capital, the underwriters, Goldman, Microsoft, management). The mom's and pop's are now just going to have to enjoy the ride.

Second: Growth stocks do not pay dividends and should not. When a company pays a dividend it is a signal to the market that the yield the investor will get from the dividend is higher than what the company thinks they can get by reinvesting it into the business. FB profit grows at 100% a year, so clearly they can use the money better than an investor can. Apple, while still growing had $100bn in cash and no smart acquisition targets so it decided to give that back. A sign that the company is maturing.

I know this is 102, but if we are being fair - picking a dividend stock is just as much of a gamble as picking a growth stock. (I know! I know! I am going to get flack for that!) When this gets to 103,104,105,106 and beyond if when you can learn some basics to help figure out the best move.

Also, I say all of this, and come off defensive because for young people just starting out it is very commonly advised to have growth stocks as the largest portion of your portfolio. You have time on your side and can afford the risk. Its for older investors that the shift to dividends and bonds becomes heavier. So I don't only the word of the dividend being preached haha!

[Bucketlist2012]

For me I just don't see face book as a great company...

Zuckerburg is a brilliant entrepenuer, and programmer, but he has never run a company..

Some of his buys lately have been on a whim.. And other than users, where is it's real value..

It is an information seller.. If it weren't for the underwriters, Morgan Stanley,etc.., it would be at 15 dollars..

But again, people have the free will to buy and sell what they want to..

I see no value in this company at this price, and at this time..

Dividend stocks are about products...They are only a part of the mix, but they sell TANGIBLE goods..And some that people cannot live without...

I don't see that as gambling due to the fact that people MUST buy toliet paper, soaps, Food, gasoline, and they will ALWAYS buy cigarettes, and alcohol, ect...

But then again, that is why we post, to share ideas, not to shoot each other down...I am just giving My opinion.:thumbsup:

P.S. I am 52 and living off my Portfolio/Income, so my view is from that angle...Not from a younger Investor...Even though 52 is young....well youngish...haha

[WSSix]

So it's time for a little update. Yeah, it's not been very long since I bought my first shares of Coke(KO), Southern Company(SO), Whole Foods(WFM), and Occidental Petroleum(OXY) but I just bought some Kinder Morgan(KMP) so I figured I'd update. I decided to go ahead and transfer another chunk of money out of the mutual fund into a specific stock. I chose KMP for every reason Greg mentioned, that's it. I now have 38 shares of that company.

As for how the rest have been doing, well, not terrible, lol. I've already gotten a dividend payment from Coke and Whole Foods. About $36 between the two and it was of course reinvested. Coke, Whole Foods, and Southern Company have all gone up since I purchased them. Oxy has tanked. I'm down 20% from purchase price. I haven't a clue why. Maybe I bought at a historical high or something. All I know is they're busy as hell up here and the wells I'm blowing holes in have the good stuff flowing back to the surface. So hopefully they will rebound. I'm in this for the long run and not worried but Oxy alone has me in the red overall. I'll see how things are doing in another year and go from there. Or maybe I'll buy even more as the price comes down. Not really sure at this point.

I realize I now have two oil and gas companies out of five total in my portfolio even though they are in different areas entirely within the oil and gas industry. KMP is simply too good to pass up. I had to add them. I will not be buying another O&G unless I sell one first.

My thoughts are that I should add more companies instead of more money to the existing companies I already own. Spread my eggs around if you will. I should have more money to buy stocks with by the end of summer. Maybe during the August lull. I was thinking I would add Johnson and Johnson or P&G to the portfolio. How does that sound? Or should I see what my current stocks are doing then and maybe put the money into one of them instead? I'm leaning towards adding another company at this point.

Well, there's my little update. I said I'd post my results and there you have them.

[toy71camaro]

Good update!

Id say, as for OXY, it seems that most the O&G companies are down. CVX was down 10% for me (and put me in the red overall too). So i feel its just the whole sector right now. In fact, i added another batch of shares while it was on sale @ aprox a 9% discount. So that put me at about a 6% "down" overall on CVX after.

I would also think expanding your sectors/diversify would be a wise choice. Dont leave out the ever popular "sin" stocks (Cigs/Alcohol), as they seem to be fairly well, telecom, consumer staples, health, etc.

Personally, my "investing 102" stocks are:
CVX
KO
KMB
T
ED
MO
MCD
NLY
and since I couldnt decide on a health one, i already had a bit of PFE, I grabbed the same amount or so of NVS. As they both seem to be the "best of the breed" in their sector.

All (except MCD, NVS, and PFE) were purchased with the same initial investment amount, so i am spread pretty much across the board evenly (MDC is 1/3 less than the rest, as i really bought that before i ran into investing 102, but was already starting down the dividend path on my own.)

[Bucketlist2012]

A lot has been down lately, so don't worry.

I knew May and the next few months are historically bad, but I don't "sell in May, and go away", I ride it out and collect dividends.

If it makes you feel any better, I am down a bunch recently, but I expected to be down.

I expect things to turn around and yes energy has been hammered lately, but in 6 months ? It should be back where it was..

So stay diversified and keep dollar cost averaging in..

When it is down, I just work on other projects , ect.. and I don't worry..

And I do not sell...If anything, I am buying on sale..

[GregWeld]

Greg - I respect everything you got going on with this thread, but the FB and Gambling thing is unfair! What is really is, is investing 106 at work.



Facebook is a GREAT company! But the valuation is why the stock is moving down. If you applied the same peer multiples of earnings, operating income, or revenue to Apple, Apple would be a trillion dollar company. So it didn't take much analysis at all to realize it was over valued. But it also doesn't have another company remotely like to compare too. Myspace at its prime in 2005 was bough by News Corp for $500MM, so if thats the one marker, its not a good sign. The smart money (and you did it too!) was in and out the same day. The really smart money was in pre-IPO and out at IPO (The venture capital, the underwriters, Goldman, Microsoft, management). The mom's and pop's are now just going to have to enjoy the ride.

Second: Growth stocks do not pay dividends and should not. When a company pays a dividend it is a signal to the market that the yield the investor will get from the dividend is higher than what the company thinks they can get by reinvesting it into the business. FB profit grows at 100% a year, so clearly they can use the money better than an investor can. Apple, while still growing had $100bn in cash and no smart acquisition targets so it decided to give that back. A sign that the company is maturing.

I know this is 102, but if we are being fair - picking a dividend stock is just as much of a gamble as picking a growth stock. (I know! I know! I am going to get flack for that!) When this gets to 103,104,105,106 and beyond if when you can learn some basics to help figure out the best move.

Also, I say all of this, and come off defensive because for young people just starting out it is very commonly advised to have growth stocks as the largest portion of your portfolio. You have time on your side and can afford the risk. Its for older investors that the shift to dividends and bonds becomes heavier. So I don't only the word of the dividend being preached haha!



Somewhere in all your research you missed the TOTAL RETURN portion of investing. Growth --- Growth and Dividend --- or just plain old gambling... it's always the TOTAL RETURN number over a longer period (5 to 10) that I seek. NOT just a dividend.

[GregWeld]

Greg - I respect everything you got going on with this thread,

Forgot to say -- THANK YOU! And I completely understand your sentiment.

As you know -- there is so much more to investing and making money etc... but for this thread - which seems to be more 401/IRA... long term retirement savings etc (at least from the 100's of PM's and emails I've gotten) so I've tried to skew my information towards that line.

If I started to tell people about every nuance of everything that I'm invested in - We'd have to start a whole new forum! :lol:

I figure -- that over time - there will be more and more info shared as people get the baby steps and begin to have some success etc. That's the way my friends have evolved... over time they begin to get it and want to branch out.

[Bucketlist2012]

Forgot to say -- THANK YOU! And I completely understand your sentiment.

As you know -- there is so much more to investing and making money etc... but for this thread - which seems to be more 401/IRA... long term retirement savings etc (at least from the 100's of PM's and emails I've gotten) so I've tried to skew my information towards that line.

If I started to tell people about every nuance of everything that I'm invested in - We'd have to start a whole new forum! :lol:

I figure -- that over time - there will be more and more info shared as people get the baby steps and begin to have some success etc. That's the way my friends have evolved... over time they begin to get it and want to branch out.

Monaco Greg...Your new business should be charging for PM's..haha..

And yes, LONG term returns are the key.. I have too many family members looking for the quick fix...You wanna quick fix ? Buy a lotto ticket.

I explain that the formula is at 7% , it takes 10 years to double your money, or at 10% , it takes 7 years to double your money.

Also they need 11 times their yearly earnings to retire.. So 50K a year, you need at LEAST 550K invested to retire..

I have between 15 to 17 times mine because I am anal and want to start with more, plus my life style is not that high, less than 100K per year, but give me time, I am always working on a better lifestyle without risking my nest eggs..

So, I ain't done yet.

And if you want to keep the Principal, you can spend 4000 to maybe 7000 dollars a year per 100K..

They don't want to hear that...they want the ATM, or the Drive -thru burger, or the high speed internet Investment strategy..

They get all lemon faced and pouty lipped...WTF...This is long term Investing..To them, long term is tomorrow..

[GregWeld]

To them, long term is tomorrow..



To most --- they bought it -- so it should go straight up from then on. :rofl:


People want instant gratification... and what they fail to see is that OVER TIME... getting a dividend or interest payment INSTEAD of paying one... is the real power of money.


Growth stocks are good -- I own them in different degrees in different accounts... But like owning an apartment house... the apartment house pays me when things are so not hot otherwise... and the people that live there are paying my mortgage too! So while sometimes the apartments are worth lots more -- it's when they AREN'T that I like the pay me strategy. Nothing beats a check coming in once in awhile...

The younger you are - the more powerful that becomes. The older you are the nicer to live by! :unibrow:

[Z10ROD]

have any of u guy's seen this newamerica16.com ? and have an opinion ?:_paranoid

[JKnight]

why do I feel like there's going to be a virus or trojan waiting for me at that URL....

[camcojb]

have any of u guy's seen this newamerica16.com ? and have an opinion ?:_paranoid

why do I feel like there's going to be a virus or trojan waiting for me at that URL....

they play the ad for that link on satellite channels a lot. It's about a guy predicting a major event this year, supposedly predicted some other collapses. The bottom line, he's trying to sell you something at the end I believe.

[JKnight]

Yeah.....I'll just have to live life not knowing then. Now where did I leave that Mayan calendar...

[XLexusTech]

Good update!


Personally, my "investing 102" stocks are:
CVX
KO
KMB
T
ED
MO
MCD
NLY

All (except MCD, NVS, and PFE) were purchased with the same initial investment amount, so i am spread pretty much across the board evenly (MDC is 1/3 less than the rest, as i really bought that before i ran into investing 102, but was already starting down the dividend path on my own.)
My list.
ADX
AYN
COKE
JNJ
KO
MCD
MUI
NBH
VOD
XOM

[glassman]

Great info guys!

Agree with 99%

Had a "gut" on Facebook...

The "Peter Lynch" school of thought still holds true. Newbs, find a book, published I believe in 1987 called "one up on Wall Street". His investment advice is very much of the "Chipolte" model we've seen, if there is a quality product, it will most likely do well...

I am late to the game here, just found this site from this thread linked on pro-....., great stuff.

Mike

[glassman]

Should also mention, since you cant tell by my sig, am very much a "car" guy. Have a 70 SS/RS Cam, couple of bikes and a pretty bada...boat i've rebuilt twice.

Being frugal has got me this far, not cheap, frugal. Recognizing good deals in an area of interest helps from the hobby side. Got my Camaro "totaled" 22 years ago and just finished the first phase (built a few other cars on the way and built a business and raised three very good kids) and got the car for "free" back then. Got the boat for 750$ back in '90. Both are worth quite a bit today, but I enjoy the "elbow grease" with some of my toys. Not all toys loose money, but I dont see them as an investment either...

Mike

[GregWeld]

Good for you MIKE ! And WELCOME to LAT-G! :thumbsup:

[Flash68]

Not all toys loose money, but I dont see them as an investment either...

Mike

That's a great statement Mike and welcome. :thumbsup:

[GregWeld]

Ah.......... the true beauty of dividend investing.... you can travel and never look at or read about what the market is doing... Just go about your life blissfully carrying all the bags of crap for your wife...:D

[GregWeld]

Here's an interesting take on Facebook (FB) === and is the reason I originally stated that I would NOT buy the shares. I did buy some on the IPO @ 38 - but promptly sold them for a loss once it was clear the IPO was an epic fail...

I've always said this kind of stuff is nothing but a fad. I can't own fads because I can't understand them nor can I predict their future/failure. Failure doesn't mean ZERO -- it just means that longer term they're irrelevant based on what everyone THOUGHT they'd be.


http://www.latimes.com/business/la-fi-facebook-teens-20120531,0,5676320.story

[XLexusTech]

Here's an interesting take on Facebook (FB) === and is the reason I originally stated that I would NOT buy the shares. I did buy some on the IPO @ 38 - but promptly sold them for a loss once it was clear the IPO was an epic fail...

I've always said this kind of stuff is nothing but a fad. I can't own fads because I can't understand them nor can I predict their future/failure. Failure doesn't mean ZERO -- it just means that longer term they're irrelevant based on what everyone THOUGHT they'd be.


http://www.latimes.com/business/la-fi-facebook-teens-20120531,0,5676320.story

I am still faithful it will pan out. I have 150 shares @ 38. Long on FB. would be happy to make a few bucks and at least feel like i learned something.

One other basic investing strategy is to look for tax advantages. Do you have any thoughts on how to leverage tax exempt investments? I look for tax free Munis but that all i know about.

[GregWeld]

I am still faithful it will pan out. I have 150 shares @ 38. Long on FB. would be happy to make a few bucks and at least feel like i learned something.

One other basic investing strategy is to look for tax advantages. Do you have any thoughts on how to leverage tax exempt investments? I look for tax free Munis but that all i know about.

Be careful with tax frees -- there are many more "rules" than meet the eye... so be sure to check to see if they are both Federal and STATE / CITY etc tax free - and this will depend on your own tax laws where you live.

There is not much reason to invest in tax frees unless you are in the income bracket that "needs" that. There are calculations that need to be made to to see what rate you need to return tax free vs the rates for taxable etc... so this is something that needs a bit more than just a casual 'dabble' in info.

:cheers:

[ErikLS2]

FB has a forward looking P/E ratio of around 53. For newbies that means the current share price is 53 times the forward looking earnings per share. For comparison, Apple's forward looking P/E is around 11 and Google's is about 13. This means Apple and Google stock are much cheaper than FB. FB stock would have to sell in the $6 range to have the same ratio as Apple and the $7 range to match Google. Just thought this was interesting but these are just numbers, doesn't take into account the psychology of the market.

[XLexusTech]

Watched the market all week.. yesterday was a 52 week low I believe... anyone buying? thinking thier may be some bargains around..?

[GregWeld]

Watched the market all week.. yesterday was a 52 week low I believe... anyone buying? thinking thier may be some bargains around..?


I'd tend to wait a bit -- the market ALWAYS goes down in the summer months.... and even worse now maybe with the Euro issues.

You never have to rush to catch a falling knife.

Many times it pays to wait just a bit more.... until you have some clarity.

If you do decide to buy - nibble.


Ciao!

:cheers:

[XLexusTech]

I'd tend to wait a bit -- the market ALWAYS goes down in the summer months.... and even worse now maybe with the Euro issues.

You never have to rush to catch a falling knife.

Many times it pays to wait just a bit more.... until you have some clarity.

If you do decide to buy - nibble.


Ciao!

:cheers:

Awesome advice as usual :thumbsup: :hail: :cheers:

[glassman]

"you never have to rush to catch a falling knife", now thats great quote, the first time i've heard that, but won't be the last!

[Woody]

Watched the market all week.. yesterday was a 52 week low I believe... anyone buying? thinking thier may be some bargains around..?

I have been buying some small new posiions and making small additions to the positions i aready had. I try to keep adding to my positions when there are corrections like this. i usually look back a year later and say I wish I bought more. i had set prices that i wanted to buy at and several stocks hit those prices recently. I have new prices now for those stocks and will buy more if those prices are hit.

[67pro-street]

Little update since i last posted on here. I got a little busy with life and work and just now had a chance to buy some stocks. I started off with 5k which i felt comfortable investing right now and bought:

STD (Banco Santander): they pay great dividends and the price is very low right now. Plus since i am only 26 i can ride this out longterm to see where it takes me. I have a feeling that overtime as European contries work out their debt crisis this stock will rebound...hopefully! i tried to have dividends reinvested but they said i cant for this stock. I will just have to reinvest manually...

KMP (Kinder Morgan Partners): Since i work for bp up here in washington i am very familiar with this company and their operating philosophy and so i feel comfortable keeping this company as my long-term investment, with dividends reinvested.

PM (Philips Morse): not a smoker but its a strong well established company and i agree with Greg's take on it...

BREW (Craft Brewing Alliance): Small cap company that has shown great growth over the past 3 years or so. This is a long term gamble (if there is such a thing??). I guess i am looking at this through rose colored glasses hoping it will follow suit with Samuel Adams...That and i remember this smart investor on this site who said to invest in companies you trust and buy products from. And i must say i do love my Red Hook :cheers:

Long term i plan to put another 5k in by the end of the year and buy 4-6 different stocks. This is a brokerage account. I already have a 401k through the company and at the end of the year when tax time comes and i can determine what the max amount i can put into a Roth IRA is, i will open one of those accounts and put the max amount for the 2012 year (again i will invest in different companies from what i currently have to diversify).

Thoughts/suggestions/critiques are always welcome.

[GregWeld]

All good buys Aman!


Banco Santander (STD) could turn out to be the buy of the decade if europe can get their act together. This is a world class bank and is finding itself in the "baby and the bathwater" with all european banks getting hammered.

Keep up the good work!

[GregWeld]

Just a reminder to "newbs" --- like today when everything opens "green" --- and then you see you have "A" stock that is red.... Why? What is wrong?

Remember to check to see if the stock is going "ex-dividend"... meaning that as of today it pays a dividend out so typically will trade down around par to the dividend payment (per share).

Kimberly Clark (KMB) is one of those today (I own so saw this "red" number on a green day) thus the reminder... and just to use this example because newbs might forget about checking this kind of thing. I always use the oddities in a market to look into "why" so that I'm not blindsided by some news that I might have missed.

:cheers: :thumbsup:

[GregWeld]

Just for fun ---- any of you own SNAP-ON?? (SNA)


It's worth a good look if you need a steady eddie name.

[67pro-street]

Thanks Greg! I started reading this book called The Elements of Investing last night. It is a short read that anyone can easily finish in a few days, but i like the way it is written. The authors wrote it in a manner much like this investing 102 thread where someone who has minimal knowledge of the stock market can pick it up and understand what sound investing is all about. The book is oriented towards investing long term into index funds as opposed to buying individual stocks...but even if you aren't that kind of investor i would suggest it to everyone as there is a lot of good information in there that is easy to read and understand. Also, its a fairly current book written after the '08 crisis so the stuff they talk about is relative to our current market...

So speaking of which, Greg i am sure you are invested into index funds as well. What would your thoughts be on a guy like myself using my Roth IRA to invest into index funds and my brokerage account to invest into individual stocks. At least for the next 3-5 years as i am just getting started out? I want to be diversified but at the same time i am worried about trying to get too diversified too quickly to the point where i have spread my money out too thin amongst different investments and in doing so i never really take advantage of the market swings...or would you say there is no such thing as doing that as long as i am in it for the long term and not trying to make a quick buck??

[67pro-street]

Another thing i am looking into is refinancing my home mortgage. With rates as low as 3% i did some math and figured out that if i can refinance @ 3% for 15 year fixed, i would be paying damn near the same monthly mortgage as my current monthly payments are on my 30 year fixed loan. Of course, prices are changing daily and i need to time it properly to lock my rate in a good percentage, but i just thought i would throw it out there since a home is also a long term investment and any money i can save on interest is money i can put into the market and hopefully get a higher return than 3%.

Which I guess this brings me to another point, and i apologize i know i can get long winded sometimes, but what is everyone's opinion on refinancing with another 30 year mortgage where maybe i am paying 300-500 dollars less per month than if i went with the 15 year refinance. My thought is to pay the min. payment for 30 years and take that 300-500 dollar savings and use it for investing. Not only does keeping my home loan help with tax returns, but i also know that i have a fixed 3% loss on interest for the next thirty years (i am just going to use 3% as an example even though that might not be the rate i lock into...). From what i have gathered so far, the stock market will generally have a ~7% RoR. so even though i am "losing" money by paying interest on my home loan that has been dragged out for 30 years, i know right now that the interest rate will always be 3% for the life of the loan. So if i take the money i save per month by having a 30 year loan as opposed to the 15 year loan and invest it, i can reasonably expect a higher growth than 3% on my investments AND i can afford to invest more money now, rather than later because my monthly mortgage payment decreased. So essentially, if what i am trying to say makes any sense at all then i would be making ~4% on my money ([7% RoR on stock market] - [3% interest payment on homeloan] = 4%) and i am doing so 15 years earlier than i would be if i went with a 15 year loan, right?? (i am ignoring salary increases or other forms of income when i say this...).

Once again, i apologize if this doesnt make sense and for being so long winded. Sometimes it is really hard to type what you are thinking in your head...

[GregWeld]

Aman --- good post.


#1 --- ETF's.... I'm not a fan of this style of investing for the main reason is that they are "dumb" like Mutual Funds are. They seek to just diversify an investment in a group/basket of stocks and sadly the bad to midland stocks drag down the overall investment in the good names they hold. While they can pay dividends they are usually super low % wise... so that leaves you with mostly the "growth" component. It's for that reason that I don't use them. They will simply follow that market - you'll never beat the market - and you don't get paid to sit on your hands.



So the ETF "versions" I use are for Corporate Bonds - and Junk Bonds (one and the same really except for the quality of the underlying issue quality/credit worthiness) such as HYG and JNK and PFF.... those are the trading symbols for the three I use the most (in fact have a couple mil in these). I use these to park cash and get a fairly high return - but I would warn that these are not for the buy it and fugidaboudit investor. They'll get crushed if the interest rates move! So you have to be nimble.


#2 -- I've suggested in the past that if you have 5K to invest - that you might only choose TWO stocks... and 10K you might choose 5 names etc.... and when you get to 100K you should have 20 names....and even if you have a million you can still stick to 20 or 25 names. This is given that you're simply invested in the best of breed and want the dividends long term etc. So to answer your question --- diversity without the corresponding level of investment just won't get ya done.... so don't diversify just to diversify - but rather WORK TOWARDS THAT GOAL.... so with 5K buy two - save for your next investment and buy name number 3 and so on.

Hope this answers your question?


:thumbsup:

[ErikLS2]

Another thing i am looking into is refinancing my home mortgage. With rates as low as 3% i did some math and figured out that if i can refinance @ 3% for 15 year fixed, i would be paying damn near the same monthly mortgage as my current monthly payments are on my 30 year fixed loan. Of course, prices are changing daily and i need to time it properly to lock my rate in a good percentage, but i just thought i would throw it out there since a home is also a long term investment and any money i can save on interest is money i can put into the market and hopefully get a higher return than 3%.

Which I guess this brings me to another point, and i apologize i know i can get long winded sometimes, but what is everyone's opinion on refinancing with another 30 year mortgage where maybe i am paying 300-500 dollars less per month than if i went with the 15 year refinance. My thought is to pay the min. payment for 30 years and take that 300-500 dollar savings and use it for investing. Not only does keeping my home loan help with tax returns, but i also know that i have a fixed 3% loss on interest for the next thirty years (i am just going to use 3% as an example even though that might not be the rate i lock into...). From what i have gathered so far, the stock market will generally have a ~7% RoR. so even though i am "losing" money by paying interest on my home loan that has been dragged out for 30 years, i know right now that the interest rate will always be 3% for the life of the loan. So if i take the money i save per month by having a 30 year loan as opposed to the 15 year loan and invest it, i can reasonably expect a higher growth than 3% on my investments AND i can afford to invest more money now, rather than later because my monthly mortgage payment decreased. So essentially, if what i am trying to say makes any sense at all then i would be making ~4% on my money ([7% RoR on stock market] - [3% interest payment on homeloan] = 4%) and i am doing so 15 years earlier than i would be if i went with a 15 year loan, right?? (i am ignoring salary increases or other forms of income when i say this...).

Once again, i apologize if this doesnt make sense and for being so long winded. Sometimes it is really hard to type what you are thinking in your head...

My free advice, so take it for what it's worth, is to always get a 15 year loan if you can. Chances are you wont be in the house even that long and on a 15year much more of your payment goes to principal reduction so you're really just paying yourself that money assuming the house doesn't go down in value.

I wouldn't make your decision based on tax deductibility alone either. Doing something just to get the tax deduction isn't a good reason for doing it. If it's a good financial decision and it's tax deductible, then just look at that as a bonus. Don't bank on that interest always being tax deductible either, the gov't needs cash right now and they'll find it somewhere.

You already have the correct mindset though of maximizing the amount of return on your money so just do what feels right to you and you'll be fine. A lot of people just try to focus on the lowest payment and longest term they can get on borrowed money and borrowing as much as they can get.

[GregWeld]

I would advise the opposite of Eric... I'd take the 30 year note - and then if you want to you can add principle payments each month or once or twice a year.

The real math needs to be worked out with your real interest rate as the taxable net is what's important.

Having said the above it also depends on how old you are. It's absolutely ridiculous for someone that is 45 or 50 years old to owe on a 30 year mortgage! The whole key to RETIREMENT is to have your expenses low! A house payment is the biggest debt burden people have... You can live quite effectively if you don't have a house payment when you're 70!

I have a 30 year mortgage (with 23 years left of the 30) I'm 59.... but I also do not have to have a mortgage - I do it for tax purposes and I DOUBLE the payment each month just because it bugs me to owe anything.

So if you're a good money manager - and are truly diligent about paying extra on the principle - it's better to "have to" pay less per month - but only as long as you stick to your guns and pay down that principle.... thus effectively saving you the interest along the way.

[Vegas69]

You'll never regret having a mortgage free place to live. Timing the stock market at retirment age may be a different story.

[GregWeld]

You'll never regret having a mortgage free place to live. Timing the stock market at retirment age may be a different story.

Sorry -- that's just a giant misconception. The day you retire -- you don't just curl up in a ball and die... Or have to put all your money in a CD....

If you retire at 65 and have a life expectancy of early 90's.... you've got 25 more years that your retirement investments will still be working for you... with both growth and income. Dividends increase - a fixed rate mortgage does not.

He can still pay off his house as early as he is able...

The problem is most people cut their payment with a re-fi but then go out and piss the money away rather than investing it... so it really depends more about how anyone handles their finances.

[ironworks]

Ok So I maybe I'm missing it, but correct me if I'm wrong, but doesn't having a tax write off that you don't need anymore if you have 15 year note instead of a 30 year term mean your just wasting money for a write off?

Example

1000 bucks per month interest that your not paying taxes on at the end of the year.

But had you of just paid the taxes on that money by paying off your note early, won't that put 720 bucks per month in your pocket instead of a banker pocket for that lower payment but longer term? That is saying your paying 28% to the IRS. Seems to me that a just having write off is great, but sometimes it might be better to pay the government a little bit of money instead of the banker alot of money.

Follow Me? or should I just back out into the shop?

Heck if you want a write off, go buy a 2nd home and rent it out.

[GregWeld]

Ok So I maybe I'm missing it, but correct me if I'm wrong, but doesn't having a tax write off that you don't need anymore if you have 15 year note instead of a 30 year term mean your just wasting money for a write off?

Example

1000 bucks per month interest that your not paying taxes on at the end of the year.

But had you of just paid the taxes on that money by paying off your note early, won't that put 720 bucks per month in your pocket instead of a banker pocket for that lower payment but longer term? That is saying your paying 28% to the IRS. Seems to me that a just having write off is great, but sometimes it might be better to pay the government a little bit of money instead of the banker alot of money.

Follow Me? or should I just back out into the shop?

Heck if you want a write off, go buy a 2nd home and rent it out.



Yeah -- you should probably just stick to bending metal.

The WRITE off.... can reduce your TAXABLE INCOME.... so the proper math might look more like...

A guy makes 100K taxable income

He pays 25K in interest

His net taxable income (without anything else) would be 75K.

Now not only is this guy saving the taxes on the 25K but he's also reduced his amount of taxable income which may have put him in a lower % tax bracket as well!

It's all very complicated -- and is something that needs to be worked out per individual and with a qualified accountant that can crunch the actual numbers.


+++++++++++++


So here's the other thing that people forget about when buying a house.

The ROI should actually be calculated on the amount of money you put down... so let's say a guy puts down 25K on a 100K house.... and 10 years later he sells for 150K... did he make 50 on 100 or did he make 50 on the 25 he actually "invested".

Of course that is oversimplification... because the numbers just aren't that simple and if you ask me -- NOBODY ever made any money buying a house that they LIVE in... because when you take into account the payments and the upkeep and the taxes etc -- they've spent way more than they "made"... but it SOUNDS GOOD! :lol:

The way to make money on real estate is to buy something and rent it out... 'cause it doesn't work out on you primary living space. But everyone has to live somewhere and the key is to have it free and clear as soon as you possibly can.

The catch is -- investing in the stocks or other forms of investments -- will far exceed the amount you save by paying off early. You have to take into account the COMPOUNDING of interest on interest over time.... and a paid off house doesn't return anything to you after it's paid off.... it just saves you some money each month. But the money isn't WORKING... if that makes any sense.

[GregWeld]

The other factor in this whole scenario is INFLATION.... and over a 15 or 30 life of a mortgage -- a fixed rate mortgage.... you'd be paying that fixed rate with money you'd be making 20 years from now... so it should be a far lower % of your income as it stays the same and your income increases.

But really --- we're all just doing a "what if" and this needs to be worked out in real math with an accountant.

My last house I paid all cash.... just over 2MM.... That money at 5% would EARN 100K per year TAX FREE.... and if you factor in the deduction - my real rate of interest might have been 2% by using the deduction to offset earned income... so in fact I should have had a mortgage and I'd have been making money on that borrowed money. My accountant finally convinced me I was being an idiot just for the privilege of saying "it's all mine".

In my case -- I can borrow cash on cash -- with a super low interest rate and what I pay out is half what I actually make on the amount. Again - this all needs to be worked out in detail with an accountant and an individuals income.

[ironworks]

Yeah -- you should probably just stick to bending metal.

The WRITE off.... can reduce your TAXABLE INCOME.... so the proper math might look more like...

A guy makes 100K taxable income

He pays 25K in interest

His net taxable income (without anything else) would be 75K.

Now not only is this guy saving the taxes on the 25K but he's also reduced his amount of taxable income which may have put him in a lower % tax bracket as well!

It's all very complicated -- and is something that needs to be worked out per individual and with a qualified accountant that can crunch the actual numbers.




Yeah, that's what I'm saying, but wouldn't he have more money in his pocket at the end of the year if he did not pay the interest? ( 15 year term instead of 30 year term ) The higher taxes on the money you could have spent on interest (TAX FREE) have to surely be less then the interest paid. So what if it puts you in a higher tax bracket. Your not paying all that interest either.

I understand it all depends on each persons own position, but I think the more money that ends up in your pocket the better.

Back to the shop.

[GregWeld]

I forgot to do a little more math on the deduction question as posed by Rodger (Ironworks).


If the guy was making 100K -- and NO interest deduction -- and for our purposes we'll put him in the 28% bracket... so he has a tax due bill of 28K....

But had he had at 25K interest deduction -- he has a 75K income - but may only be at 22% now... so owes 17.5K tax due.... there's a 10K "savings" in taxes...

But he's paying 2K per month on a house payment... but now if you subtract the 10k savings -- he's only paying 14K (per year) or about 1200 a month...

This all becomes even "more" at larger income levels... so it all 'depends'.

[GregWeld]

Yeah, that's what I'm saying, but wouldn't he have more money in his pocket at the end of the year if he did not pay the interest? ( 15 year term instead of 30 year term ) The higher taxes on the money you could have spent on interest (TAX FREE) have to surely be less then the interest paid. So what if it puts you in a higher tax bracket. Your not paying all that interest either.

I understand it all depends on each persons own position, but I think the more money that ends up in your pocket the better.

Back to the shop.


Yes -- a guy would probably have more money NET in his pocket if he had no payment... but most people have to live somewhere.... and that has a 'cost' attached to it. If you're house is paid for - but that cash is tied up and so is not earning you anything either.

Obviously the best scenario is to have no payment and no taxable income and have enough to live on... but for about 99% of the population that just isn't how it works out. :lol:

I keep a mortgage to offset some income that I have that puts me in a higher bracket... and the invested cash earns more than I pay out... but that is NOT the normal situation.

[Bucketlist2012]

Yes -- a guy would probably have more money NET in his pocket if he had no payment... but most people have to live somewhere.... and that has a 'cost' attached to it. If you're house is paid for - but that cash is tied up and so is not earning your anything either.

Obviously the best scenario is to have no payment and no taxable income and have enough to live on... but for about 99% of the population that just isn't how it works out. :lol:

I keep a mortgage to offset some income that I have that puts me in a higher bracket... and the invested cash earns more than I pay out... but that is NOT the normal situation.

I agree. I could pay off the house, but at 4% interest, why ? I make more being invested..

I am also the 30 year loan type of guy...I don't need a paid off house and less investments. But that is a personal choice.

Plus the write off, and inflation, and I am paying 3%... I can make that throwing darts to pick my stocks..

Also a side note..We just got back from the Ahwahnee Hotel in Yosemite...

That is how I like to camp....Presidential suite...

[ErikLS2]

This can get complicate real quick and Greg makes some good points. Another thing you have to consider is what your return is on the principal part of your payment as this money is essentially a re-investment in the house, kind of like a company buying back it's own stock. If the house was bought right, meaning probably relatively recently, then there's a chance it might see some decent appreciation in the next few years in which case the higher principal payment of a 15 year note might pay off. But, like Greg said, you can accomplish this by adding to your payment each month too if you have a 30 yr. In the end though I think it's good advice to not look at your house as an investment and looking back a few years from now any loan you get these days at these rates will be a killer deal.

The only thing we know for sure is what we don't know. We don't know what's going to be tax deductible in coming years. We don't know what the value of houses or stocks are going to be in the future. We don't know anything at all about the future for sure really or if there will even be one.

What we do know is this is one helluva good discussion. :lateral:

[GregWeld]

Here's a very interesting informative article I stumbled on regarding what the SUPER RICH pay in taxes... and some interesting % numbers that just might surprise you... and it's not the % on the super rich that surprised me!

http://www.cnbc.com/id/47704712

[takid455]

A thought on the long term mortgage. I have always been tought to pay off debt a quick as possible so you dont pay interest. While interest is tax deductible, its still more interest than tax savings.

You would have less principle invested in house or property if paid off sooner than later.

Ex
house = 300k
interest say 6% (taxes, fees included)
you would pay almost 600k at the end of 30yrs

Guess is your other investments are yielding greater than the loan interest, that would be a reason to hold off on quick payment.

[Woody]

The others have made some good points, but I I thought I would add a few other things to think about. First of all this is not an easy question to answer and is very dependent on the individual. The first thing to consider is that you can generally get a lower rate with a 15-year than a 30-year and the amount of interest saved is rather large between getting a lower rate and borrowing the money for a shorter time period. For example, if you have a $300,000 loan at 4.0% for 30-years vs. a $300,000 loan at 3.375% for 15 years, the amount of intestest savings is $132,879. However, you are paying (investing) an additional $694 per month to get that savings of $132,879. The question you need to ask is can you invest $694 per month over the next 15 years and end up with more than $132,879.

The answer is it depends on what you invest the money in and how the investment performs. By selecting the 15-year loan, you are essentially selecting a "safe" guaranteed return. As long as you make the payment, you are guaranteed that return. If you instead take the 30-year loan and invest in the stock market you are selecting a higher risk investment with greater return potential, but no guaranteed return. While you can argue that the stock market has had a long-term average return of x% (7% 8%,9%), there is no guarantee you are going to get that return in the future. You are taking on more risk to potentially get a higher return. So the question becomes what is your risk tolerance. Do you want the guaranteed return or are you willing to take on more risk for the potential of a higher return, but also with the potential for a lower return.

[Vegas69]

I see what you're saying Greg. I'm basically dong exactly what you recommend investing X amount in the market every month with a 30 year. I pay a little extra every month on the house as well.

One variable that hasn't been mentioned is interest rates. I'm 35 and when I'm your age, are interest rates going to be 4% on a 30 year fixed? I seriously doubt it. Since we are talking history here, 30 years ago rates were 20%. To me, that's a major game changer in this discussion and a variable that can't be ignored. At that point, I guess the decision can be made to cash out the stocks and pay off the house. However, that would be a major tax burden.

My game plan is to secure 4-5 single family homes at these low prices/rates in the next 2-3 years max. Cash flow them and have 4-5 free and clears in 15-20 years for residual income and continue to invest X amount into the market in meantime. I can play the primary mortgage by ear.

[Bucketlist2012]

^^^^^^

Exactly what Todd says..

Anyone who thinks that interest rates will be this low forever, better re think their strategy..

I paid credit card rates for a home loan once.. Never again..

I have a 4% loan now, and I am about to purchase another life changing property for 3.5%.

This is historically low, and down the road , this will put you in a position to be comfortable in a fixed loan when the Sh-t hits the fan..

Once you have the low rate home loan, you can then concentrate on Investing..

But we must live somewhere, so why not lock in historically low rates...

[GregWeld]

Todd -- good discussion...

So here's the thing I think most folks "miss" when we're discussing a primary residence....

This is NOT an investment. It's simply OVERHEAD... it's your home. It generates no real return because in order to do so - you'd have to sell (cash out) and if your home has risen in price -- so has everything else. We don't live in a vacuum so the same inflationary % is generally on EVERYTHING including whatever new place you buy.. so that is TRADING DOLLARS.

Now -- if you choose to downsize when you're older... and take out some equity fine... but you'd have had far more equity if you'd invested. Far more as in triple or double... and if truth be really discussed... had you invested wisely and gotten just the normal historical return - you won't NEED to downsize.

I don't care where anyone gets their facts from -- HISTORICALLY the stock market has outproduced real returns on real estate.

A quickly done search and cut and paste:


....over the long run stocks win easily. A new study by Jack Clark Francis, a finance and economics professor at Baruch College in New York City, and Yale's Roger G. Ibbotson compared the annual returns of real estate from 1978 to 2004 compared with those of 15 different "paper" investments, including stocks, bonds, commodities futures, mortgage securities and real estate investment trusts (REITs).

The results? Housing delivered a solid but unimpressive annualized return of 8.6%. Commercial property did better at 9.5%. The S&P, however, delivered a crushing 13.4%.

Other studies argue that real estate's returns are much worse. Yale finance and economics professor Robert Shiller, author of Irrational Exuberance, who looked back to 1890, contends that only twice has real estate produced truly outstanding returns: after World War II, when returning troops were starting their families, and from 1998 to 2005, a period he thinks is a bubble.

Housing's rate of return, he argues, has to trend back to the mean of about 3% a year - barely above the inflation rate. If that's starting to happen now, he says, we could be facing many years of losses.


Here's my point in all of this.... A house is just a home - it's NOT an investment in the true sense. We like to talk ourselves into thinking that it is - but in reality it's not. The fact that we might sell at a higher face value than we paid -- doesn't really crunch the actual numbers.

So let's separate INVESTING which returns real cash you can SPEND and a cost/overhead expense cash eater.

Having a plan and sticking to it --- get a LOW COST FIXED mortgage not a variable... then DO NOT EVER use your home as a cash machine. GET THE SOB PAID OFF. Once you do that - you reduce your overhead expense and put real cash back into your pocket.

BUT at the same time people need to invest - regardless of how you make that happen that needs to have TIME and we've done that exercise numerous times in this thread.... so the same discussion we're having about saving interest expense and the amount of savings between a 15 and a 30 year mortgage. That's the very same math that needs to be applied to your dividend and interest compounding on your investments. Investments GENERATE cash... and they should also incorporate GROWTH for a real TOTAL RETURN. It's the TOTAL RETURN that people under appreciate and I'll take 100% T/R over a savings of 2 or 3% in a tax savings argument. Most are overlooking the T/R of a good investment for the short term monthly savings of a house payment. I think that's why Americans are broke. The only "investment" they think they have is their house... and sadly... it's why they're greeters at Wal-Mart when they're 70+ years old. :cheers:

[GregWeld]

^^^^^^

Exactly what Todd says..

Anyone who thinks that interest rates will be this low forever, better re think their strategy..

I paid credit card rates for a home loan once.. Never again..

I have a 4% loan now, and I am about to purchase another life changing property for 3.5%.

This is historically low, and down the road , this will put you in a position to be comfortable in a fixed loan when the Sh-t hits the fan..

Once you have the low rate home loan, you can then concentrate on Investing..

But we must live somewhere, so why not lock in historically low rates...



TOTALLY AGREE WITH THIS STATEMENT!!


BUY LOW - FINANCE EVEN LOWER. FIXED RATE ONLY.


THEN GET THE HOUSE ='s AN ATM thoughts OUT OF YOUR HEAD!

[Bucketlist2012]

TOTALLY AGREE WITH THIS STATEMENT!!


BUY LOW - FINANCE EVEN LOWER. FIXED RATE ONLY.


THEN GET THE HOUSE ='s AN ATM thoughts OUT OF YOUR HEAD!

Amen Greg..

Fixed rate, House is HOME and not an ATM , and buy low..:thumbsup:


The prices are rock bottom, and the rates are rock bottom...When do you EVER see BOTH of these happening together ?

Maybe never again....The time is now...

Just to get a HOME at these prices would be killer, or just to get the LOAN rate at 3%, would be life changing, but BOTH ????? OMG... 10 years from now, you will be KING....:hail: :hail: It truly will change your life..

Being smart and lucky, are the tickets to success..

[glassman]

Sooooo true.....so many people did this the last ten years or so. No friggen common sense, like houses are really go up 30% a year forever....

[GregWeld]

So I was looking at McDonalds (MCD) this morning... and I did my usual look back at the chart and dividend etc.

The reason I'm writing about it this morning is because of our recent housing discussion. Which brought up a couple of key points I was trying to get people to at least think about.

Since 2008 MCD has DOUBLED it's dividend from .38 per share to .70 per share... and while doing that it also grew in price by 68%


Since 1990 it has price growth of 971%


How's your house done since then??


Which one of these investments would help you retire? 100K invested in your house or 10K invested in 1990 in McDonalds?

In 1990 a share of MCD was 7.00 and paid .02 dividend... it has split 2 for 1 twice since then so for every one share you bought you now have 4....

10K / 7.00 = 1428 shares -- now after splits = 5700 shares paying .70 per quarter or annually $16K.... Monthly that is $1300


AND I'M NOT CALCULATING REINVESTED DIVIDENDS --- I'm just doing the bare minimum net math - and that you've taken the cash dividend and pissed it away -- OR maybe you used it to pay down your house each quarter? LOL


Figure the extra 100K in your home equity would have saved you maybe $400 or 500 a month now? I don't want to do all the math -- I'm just putting this out there for "thinking" purposes... not a detailed breakdown of which is better etc just LOOK at it is all I'm saying. One is an investment that is now real NET WORTH and CASH FLOW one is just where you live. My thinking is that $1300 a month now is looking pretty good.

Oh -- yeah -- and your 10K investment is now worth 500K


:cheers: :woot:

[Bucketlist2012]

Greg...

Great points...Especially on a down day for Mickey Dee's...Long term it has been great.

And to your point of Housing vs. Investing...

My recent test was Buying a HOME in 2009, and adding six figures to my Investments , the same year.

Since I bought the HOME at the bottom, it hasn't gone down, but it sure hasn't gone up.

The money that I added to my Portfolio ? Haha, It pays my house payment and more...

My Wife in 2009 wanted to throw more money at the Home to increase the equity..We had long talks on why we shouldn't.

Thankfully she agreed with me, but she still gets nervous but knows we did the right thing Investing the money.

Sure at times the market has been up, down, and sideways, but it has and will outperform my HOME value..

Also I don't think of my Home as an Investment for profit, but a place to live, and I won't ever be taking money out of it..I am 52 with 27 years left on my loan..just like I want it..

I had friends that were able to buy their home for cash because they were afraid of the Market....Now they want to cash re-fi out...The bank won't let them..

They bank with chase , and they have their Investments with chase..Fools..

And they cannot get money out to pay off student loans, ect...I told them in 2009 , to get the house loan and to invest more....

They told me that their home was a guaranteed return....Yet now they struggle to work to pay the mortgage...

My Dividends pay mine...

[WSSix]

Sweet! That helps me realize renting right now isn't so bad. Yeah, I'd really like to be able to buy a house and not just rent. However, I'm nowhere near settled so now is simply not the time for me to buy unfortunately. I am putting my money into some stocks though instead of just spending away. :D

[Flash68]

NOBODY ever made any money buying a house that they LIVE in... because when you take into account the payments and the upkeep and the taxes etc -- they've spent way more than they "made"... but it SOUNDS GOOD! :lol:



You're right for most people, but not me pal. I have killed it on both RE properties I owned and lived in. And before you say I got lucky on timing, the entry and exit was planned in both cases, with a little wiggle room built in. It is possible if you understand RE, which again is easier said than done. I've spent a lot of time and hundreds of hours over the past decade studying RE cycles, economics, etc (because I enjoy it) so to me that is an area I follow and understand at a higher level than say the stock market. The market is the market and can turn on a dime, but RE moves like a big ship and is easier to predict typically. Everyone has their niche I guess. I wish I lived in Todd's market and I'd do the same thing he's planning on doing.

My old saying is in partial agreement with yours... A primary residence is not meant to be an investment, but if you play it right and know what you're doing it sure can be a killer investment. :thumbsup: Oh and you get utility out of it too. (from my Econ days) :D



I agree. I could pay off the house, but at 4% interest, why ? I make more being invested..


Exactly. My 30 year @ 4% will never be paid off early... unless I hit the lottery and get Weld cash. :lol:




My game plan is to secure 4-5 single family homes at these low prices/rates in the next 2-3 years max. Cash flow them and have 4-5 free and clears in 15-20 years for residual income and continue to invest X amount into the market in meantime. I can play the primary mortgage by ear.

Love this plan. :thumbsup:

[96z28ss]

Well I sold 2 house in an up market. Both I lived in for over 2 years which is tax free profit. no capital gains tax.
I bought in 1998 for $130k in 2004 sold it for $305k, in 2005 bought a house for $234k sold it in 2007 for $325k.
2 things I did wrong were from 2004 to 2007 was to not invest the money I had made and invest it. It sat in a saving account. 2nd mistake, In 2007 I bought a house that I was planing to do the same thing and dump it in 2 years. Took most of all the profits and put it down on the house, to keep the mortgage payment low. Economy stuck it to me good. Got to stay in this house longer than I thought, or just move on and buy cheap, start over.

[Flash68]

Well I sold 2 house in an up market. Both I lived in for over 2 years which is tax free profit. no capital gains tax.
I bought in 1998 for $130k in 2004 sold it for $305k, in 2005 bought a house for $234k sold it in 2007 for $325k.
2 things I did wrong were from 2004 to 2007 was to not invest the money I had made and invest it. It sat in a saving account. 2nd mistake, In 2007 I bought a house that I was planing to do the same thing and dump it in 2 years. Took most of all the profits and put it down on the house, to keep the mortgage payment low. Economy stuck it to me good. Got to stay in this house longer than I thought, or just move on and buy cheap, start over.

You did just what millions of other people did, and at least you've hung on and been okay. Many did not make it as you know.

The minute people like the secretary down the street and the metal bender starting "flipping houses" for six figure profits, I knew it was time to sell and rent. I told my friends and neighbors to do the same in 2005 and 2006. They wished they had listened because at Bay Area prices, many got their asses handed to them. I've been happy renting for 5 years and am getting back in now. This one will be for 10-12 years I reckon. I am not mobile and young and single anymore.

Hopefully if I read more of GW's stock posts and do what he says I can build an Ironworks pool down the road. :D

[96z28ss]

You did just what millions of other people did, and at least you've hung on and been okay. Many did not make it as you know.

The minute people like the secretary down the street and the metal bender starting "flipping houses" for six figure profits, I knew it was time to sell and rent. I told my friends and neighbors to do the same in 2005 and 2006. They wished they had listened because at Bay Area prices, many got their asses handed to them. I've been happy renting for 5 years and am getting back in now. This one will be for 10-12 years I reckon. I am notL mobile and young and single anymore.

Hopefully if I read more of GW's stock posts and do what he says I can build an Ironworks pool down the road. :D

We not exactly millions of people bought homes they couldn't afford and with less than 10% down. I put down $140k. I just didn't invest my money correctly but I'm learning from the big guys here

[Bucketlist2012]

[QUOTE=Flash68;418769]You did just what millions of other people did, and at least you've hung on and been okay. Many did not make it as you know.

I've been happy renting for 5 years and am getting back in now.

FLASH..

Amen brother.. I am no Real Estate Guru, but even I knew what was coming.

I sold my luxury home in 2006 and rented for three years... I bought back in , February of 2009.

I changed my life forever.. I had enough to buy the Home and retire, all at once..

Many just missed ALL the signs..Frankly I don't know how they did. In the bay area is was easy to see the bubble..Homes just do not go up 20K a month...And when they crashed, they crashed 100K a month..

I hit the curve right at the bottom. my neighbor bought two month before me, and is over 100K underwater...The window was very narrow.

I always say, luck is the meeting of Preparation and opportunity..

Was I lucky ? I prepared for years for the moves that I made.

So to me too, investing Can be with your primary Home, but normally it is not..But 2008 was not normal at all..

[Bucketlist2012]

Exactly. My 30 year @ 4% will never be paid off early... unless I hit the lottery and get Weld cash. :lol:

FLASH.

Even if I was to get more cash, I would never pay off my home early..And now I am looking at a property that I may purchase at 3.6 %APR. Another Luxury home and sell the McMansion at a profit..

With these rates, We should keep the loan for the full term...

Congrats on your timing...Again, I too planned my exit and my entry..

Sure I wish that I put it all in the market in February of 2009, but I put in a couple hundred grand from the Luxury home sale, and then put down enough on the Home to make the payment doable without any stress..

I knew the home prices would stay low, but I did not see the rates staying low, and even going lower.. So I did not get it all right..If I had seen the future, I would have made even more moves to secure my wealth, but we never know what is going to happen..

But we can sure plan it well if we are smart, patient, and not greedy..Also I sold the Luxury home normally, and I bought an REO..Now I am low balling a Short Sale luxury home just to see if I get it...It would give me more instant equity, but it is a long shot...

[Flash68]

We not exactly millions of people bought homes they couldn't afford and with less than 10% down. I put down $140k. I just didn't invest my money correctly but I'm learning from the big guys here

That's a whole nuther different batch of tens of millions of people who did that. :lol:



I always say, luck is the meeting of Preparation and opportunity..

Was I lucky ? I prepared for years for the moves that I made.

So to me too, investing Can be with your primary Home, but normally it is not..But 2008 was not normal at all..

Right on Mike, you nailed it. :thumbsup:

[Vegas69]

I was lucky enough to unload a few at the right time myself. I also felt the dam was going to give way. I, like most, didn't think it would recede to the level it did. I figured I needed a place to live and I don't like moving that much. :unibrow: That decision cost me a cool 200k. My primary here was up to nearly 500k in 2006 and I sold it for 285k in 2010(25k more than I paid in 2003 not including improvements) to move into my current primary. I did have a 15 year note for most of the time so I was able to recover all the equity out of my back pocket and parlay it.

Looking back, I should have sold it when I made the choice to unload some investment properties. The old mentality that you need to own your home was faulty. You never lose on real estate right? Then you have the old adage that you don't default on a debt. I've seen so many people walk away or I've short sold their homes. Another reason to keep a 30 year note. If the **** hits the fan and you are forced to walk away, you aren't walking away from so much capital. I can honestly say I could walk away and not feel bad about it. I wouldn't like the consequences but sometimes it's a business decision.

[billscamaros]

[QUOTE=Bucketlist2012;418639]

..I am 52 with 27 years left on my loan..just like I want it....[/QUOTE


You've alluded that you are retired and apparently making this those payments from investment earnings. But I'm curious about the wisdom of being in this situation while working to make the payment. I'm 53 with roughly 23 years on my current 30 year mortgage, and I view it as having to work until age 76 if I want to keep the current house beyond retirement.

[GregWeld]

[QUOTE=Bucketlist2012;418639]

..I am 52 with 27 years left on my loan..just like I want it....[/QUOTE


You've alluded that you are retired and apparently making this those payments from investment earnings. But I'm curious about the wisdom of being in this situation while working to make the payment. I'm 53 with roughly 23 years on my current 30 year mortgage, and I view it as having to work until age 76 if I want to keep the current house beyond retirement.



I'm 59 years old this summer (August) and have 23 years left on a 30 year mortgage.... and I retired when I was 41....

The key is to keep your WIFE working 'til she's old and grey...

So I don't understand your question. :unibrow:

[GregWeld]

On a happier note -- those of you that own Banco Santander (STD) should see a nice pop in stock values with this news (which is what I've said all along - is that STD was suffering a decline in share price because it's painted with a broad brush of "spanish banks")....


Santander: EU Aid to Foster Completion of Bank-Sector Reforms
Published June 09, 2012
| Dow Jones Newswires
advertisement
Spain's Banco Santander SA (STD, SAN.MC), the country's largest lender by market value, said Saturday that Spain's plans to request up to EUR100 billion in aid from the European Union for its ailing banks should help complete the restructuring of the country's financial sector.
Santander said in a statement that the agreement by the Eurogroup enables Spain's state-backed Fund for Orderly Bank Restructuring to "obtain funds in very favorable conditions.
"These funds will go toward recapitalizing those institutions that cannot meet their capital needs with their own resources," the bank added.
The capital injections will eliminate uncertainty and contribute to the country's economic recovery, it said.
Santander and chief local rival Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC) are among the local banks that won't require external financial assistance to meet required capital needs, according to International Monetary Fund assessments.

[Vegas69]

Greg, I know a little about how you became wealthy but I'd really like to hear your story from ground zero. It's one thing to strike it rich, it's another to keep it.

[Bucketlist2012]

[QUOTE=Bucketlist2012;418639]

..I am 52 with 27 years left on my loan..just like I want it....[/QUOTE


You've alluded that you are retired and apparently making this those payments from investment earnings. But I'm curious about the wisdom of being in this situation while working to make the payment. I'm 53 with roughly 23 years on my current 30 year mortgage, and I view it as having to work until age 76 if I want to keep the current house beyond retirement.

Bill

Maybe someone else can chime in, but you may want to refinance at today's rates, with a 15 year loan...Some 15 year loans are 2.9 right now.. That would put you at 68, but you may be able to pay it down sooner, or have additional income that could retire you at 65..With a paid off house..

Hope that helps...Yo Greg, any ideas ?

Mike

[Flash68]

[QUOTE=billscamaros;418930]

Bill

Maybe someone else can chime in, but you may want to refinance at today's rates, with a 15 year loan...Some 15 year loans are 2.9 right now.. That would put you at 68, but you may be able to pay it down sooner, or have additional income that could retire you at 65..With a paid off house..

Hope that helps...Yo Greg, any ideas ?

Mike

That sounds like a great idea as long as he can swing the payment.

[billscamaros]

[QUOTE=billscamaros;418930]

Bill

Maybe someone else can chime in, but you may want to refinance at today's rates, with a 15 year loan...Some 15 year loans are 2.9 right now.. That would put you at 68, but you may be able to pay it down sooner, or have additional income that could retire you at 65..With a paid off house..

Hope that helps...Yo Greg, any ideas ?

Mike

Yes, I'll go to a shorter loan period, but not in this current house. It's a great place at this point where I still have kids at home. Upon retirement, I'll downsize to a house in a different part of the state, closer to my family. I've got that part planned out.

I do live in an area, though, where I still see people my age (and older) constantly moving up to bigger and nicer homes. My goal is to retire into a paid off mortgage. But several comments in this thread regarding not tying that money up prompted my question.

Greg .... my wife insists that she's only 29, so I've got that part covered!

[GregWeld]

Greg, I know a little about how you became wealthy but I'd really like to hear your story from ground zero. It's one thing to strike it rich, it's another to keep it.


That would take a book.... but I can tell you that really hitting pay dirt for us was more luck than smarts. I was a made a partner in a multi million dollar business in New York City in my mid 20's... Sold out in 1983 and moved back to the west coast... had enough money to live decently and start a new business as a wholesale distributor in the patio furniture industry and at the same time Gwen went to work @ Microsoft in 1984... when they had a whopping 600 employees and PRE IPO... My business went gangbusters and at the same time MSFT went nuts too. BUT and here's the big BUTT.... many of our friends that had MORE stock options than we had by 5 times... they've gone broke and many are back working! We stayed in our same house - and invested our windfall. One of those investments that was made more recently (7 or 8 years ago now) just rang the bell in an all cash transaction (it's public info) for 2.25 Billion.... and we owned 1% of all the outstanding shares... so once again it was luck. For us - this was icing on the cake and came late stage in the scheme of things. We went from a very comfortable early retirement to being able to do almost anything we want. Not private jet rich but set up pretty nicely and luckily at a stage of life that let's us do a few things we'd like to do.

Here's the real take away from what I've learned over the years.... and I'm talking about handling money and watching others mishandle it.

All of us - regardless of where we are in life - have the ability to spend more than we earn.

To this day I marvel at what others have... I look around and think "geezus - how do they do that?! They must be really rich!"

I've stated earlier that all our friends have second homes... we don't. They're all still working, we're not. They have "stuff" and expenses... we have cash that earns income. :unibrow:


Wealth is a variable statement that depends more on the desires of the person than the amount available in the bank.


My Mother in law lives in a great little house... 1/3rd the size of the family home which was sold after an early death of my Father in law. She's been retired since then (1983) and has about 350K invested + Social Security. She lives great and has traveled etc. Buys a new Honda Accord every 4 or 5 years and pays cash. There's the key -- owns the house - no payments - saves money even to this day (in other words she spends less than her income). She doesn't have that much income but doesn't need much either! She is wealthy compared to my parents that never had anything but had a Cadillac in the driveway and couldn't live unless I helped them every month AND I owned the home they lived in. (they're both deceased now)


INVESTING EARLY in life is the key to real success LATER in life.


If you want to live well for a long time - you need to either be really lucky (me) or be really diligent EARLY in your careers... and invest rather than piss away money. Whether that's buying a rental house... and every time you get more dough you buy another... and then parlay that into a fourplex... or you invest in a business of your own.... or you just work and pound every extra dime into the stock market...... ALL OF THESE STRATEGIES REQUIRE TIME TO PAY OFF.

You need to put yourself into a position in order to be "lucky" later. Even if this means you drive your old car for 4 years AFTER you finished paying it off... BUT you have to put that same payment in the bank every month so when the next car purchase is made -- you buy a late model USED car and pay cash and keep pounding the payment you would have been making in the bank.

Wealth - or being "comfortable" doesn't require great wealth. It requires great management of what is available and that might mean that there is some tradeoff in the "appearance" of wealth now for the real "wealth" that will come later.... when all those azzholes are still working as greeters at Wal-Mart when they're 73.... and you're sitting in your lawn chair at a car show in Santa Barbara.


I will tell you something else that I don't think can be understood but I'm going to try to put it into perspective and this is just purely a personal "how a guy lives" kind of statement.

The entire time I was in Italy -- in very world class hotels -- eating at the worlds best restaurants -- being driven around in a MBZ.... I said a 100 times to Gwen "I'd just as soon be in Willows eating Mexican food with my friends" -- and I MEANT IT.

So wealth - to me - is really more about getting to some level of life's little pleasures that you enjoy and that doesn't mean they have to be expensive or the best or the biggest - or the baddest in the universe. I'd live in a shoebox house in Wenatchee and have a used Yugo before I'd go back to work to keep what I have now. Because to me - the only thing I have of real value is my time and no amount of money can get me more of that. :thumbsup:

[Bucketlist2012]

Dang Greg...

Great advise.


I am still working on my Wife to understand your post fully. She came from nothing, no prom, no money, nothing...

I came from a fairly nice background. My Dad was a doctor, and we had Trawler's when I was growing up. I never knew the value of the dollar, and I suffered for that greatly..

But in the end, my parents lost everything due to mis management of money.

From that I learned a great lesson.. Never to repeat what my parents did.

Over my Life , I have been luckier than smart. Sure I sold a home years ago, only to have it go up 500K in the next few years, OUCH.. But I let it go and moved on.

Now 20 years later, I am not Rich, but doing OK. Also watching and capitalizing on the Bubble from 2006 to 2008 helped greatly..Remember that I had seen the bubble before and I was on the losing end.

That loss prepared me to see the bubble of 2006.. "The past does not equal the Future.."

So, I am working on the Wife to understand why I have put XXXXXX amount of Dollars into Investments that I will NOT touch. I call it my Generator of Electricity.. Without it , I have no power. Or Income..

I have so many friends that will not listen, and want it all now.. I give them tips, and Kiplinger's , ect... and they do the EXACT opposite.

If they live a long life, they are screwed...If I live a long life, I will be OK, and maybe more than OK if I do it right..

It takes years to achieve wealth, and wealth is a relative term. Two years ago at 50, I was given my last rites on my death Bed, and had my Attorney and his Notary writing my will in the Hospital..Now that is service...Costly but needed.

So Health to me is Wealth. And having all my basic needs covered. Sure I am working on the next level because I do want more, but I will NOT risk what I have to get there.

It isn't how much you make, it is what you keep.. And what you do with what you keep, that gets you to the good life..

[Vegas69]

Great stuff Greg. :cheers:

My twenties was filled with great income and more THINGS than anyone needs in a lifetime. I really think if the booming economy would've happened in my 30's I would've made some different decisions. I made many good ones but pissed away more money than I care to think about. :lol: Had one hell of a time so I have no regrets.

Now, in my mid thirties, I'm thinking exactly the opposite. I have clients that are exactly as your describe. 60-70 years old with two nickels to rub together. They have a distinct look of desperation in their eyes. Most of us have to work a lot harder to make a buck and to me that should really open your eyes. How long do you want to keep breaking your back to sustain your lifestyle? Make the changs now. The older you get, the harder financial independence will be before you're to old to give a damn.

I like your comment about percieved wealth. You can still have nice things if you buy used and right.

Your Mother in law is a prime example of why I said you many never regret paying off your home. She's got a fixed income and virtually no bills. Where's the risk? I bet she sleeps like a baby.

[GregWeld]

Great stuff Greg. :cheers:

My twenties was filled with great income and more THINGS than anyone needs in a lifetime. I really think if the booming economy would've happened in my 30's I would've made some different decisions. I made many good ones but pissed away more money than I care to think about. :lol: Had one hell of a time so I have no regrets.

Now, in my mid thirties, I'm thinking exactly the opposite. I have clients that are exactly as your describe. 60-70 years old with two nickels to rub together. They have a distinct look of desperation in their eyes. Most of us have to work a lot harder to make a buck and to me that should really open your eyes. How long do you want to keep breaking your back to sustain your lifestyle? Make the changs now. The older you get, the harder financial independence will be before you're to old to give a damn.

I like your comment about percieved wealth. You can still have nice things if you buy used and right.

Your Mother in law is a prime example of why I said you many never regret paying off your home. She's got a fixed income and virtually no bills. Where's the risk? I bet she sleeps like a baby.


I've preached many times -- about controlling the expenses -- then you don't need as much income if you don't have much outgo!!

Where most go awry is that they wait too long to start on their saving/investing. Then -- unless there's a super lucky event... they're just so far behind the curve they can never catch up.

Then there's the attitude that I run into all the time where people have just given up... or say to me... "well... I don't have 10 grand to invest". No - and they never will - because you don't save 10 grand at a whack -- you save $50 bucks a week and eventually you have $2 grand... and so on.

I've really come to the conclusion that it's MIND SET not income levels or even luck.

When I was in business --- I'd pitch a deal to a dealer here in Seattle and the guy would say to me --- well... if I could have 4 colors in that trailer load instead of 3 you have a deal. Okay then! Dude - let's rock and roll! Same deal pitched to a dealer in Portland - and the guy would stare down at his feet and say... Gee... I could never do anything like that.

Yep! You're right buddy - because you have a failure attitude! They have a plan to fail not a plan to succeed. I used to call Portland the "welfare attitude" -- they always let someone else taste all the success. Seattle dealers had the "can do" attitude -- they would rise to the challenge and tackle it head on. It's why I moved from Portland to Seattle in 1984... It was all about the attitude.

[Flash68]

Thanks for sharing Greg. Lots of real lessons in your stories.

[Spiffav8]

I've preached many times -- about controlling the expenses -- then you don't need as much income if you don't have much outgo!!

Where most go awry is that they wait too long to start on their saving/investing. Then -- unless there's a super lucky event... they're just so far behind the curve they can never catch up.

Then there's the attitude that I run into all the time where people have just given up... or say to me... "well... I don't have 10 grand to invest". No - and they never will - because you don't save 10 grand at a whack -- you save $50 bucks a week and eventually you have $2 grand... and so on.

I've really come to the conclusion that it's MIND SET not income levels or even luck.

When I was in business --- I'd pitch a deal to a dealer here in Seattle and the guy would say to me --- well... if I could have 4 colors in that trailer load instead of 3 you have a deal. Okay then! Dude - let's rock and roll! Same deal pitched to a dealer in Portland - and the guy would stare down at his feet and say... Gee... I could never do anything like that.

Yep! You're right buddy - because you have a failure attitude! They have a plan to fail not a plan to succeed. I used to call Portland the "welfare attitude" -- they always let someone else taste all the success. Seattle dealers had the "can do" attitude -- they would rise to the challenge and tackle it head on. It's why I moved from Portland to Seattle in 1984... It was all about the attitude.

A truer word has never been spoken.

[Bucketlist2012]

I always say....ATTITUDE is ALTITUDE..:thumbsup:


Bad attitude and you are with the Turkey's...On the ground

Great attitude and you fly with the Eagle's...High in the Sky.

A survivalist once said that if you put two people in the jungle and the expert has the bad attitude, and the rookie has the great attitude..The rookie will find a way to survive, and the whiner will die..

Also how you talk to yourself....If you say"WHY is this happening to me", you will find an answer to make you happy, but you WON'T succeed.

If you ask yourself, "HOW am I going to fix this or do this", you will also find the answer and you WILL succeed..

I have used these techniques since 1989.. And they work..

Also surround yourself with successful people. They leave clues to success and tales of their failures, and that will accelerate your learning curve..

[Bucketlist2012]

Thanks for sharing Greg. Lots of real lessons in your stories.

Amen, Thanks Greg...

You get me motivated even more than I am, and when I share my thoughts to you guys, it just makes me better at what I do.:cheers: :woot:

[GregWeld]

Thanks for sharing Greg. Lots of real lessons in your stories.

Well.... we're really just blabbing... no different than hanging out at the track or in the "shed"... but to me - it's all good discussion. And frankly - people don't have enough of these kinds of discussions.

:cheers:

[Flash68]

Well.... we're really just blabbing... no different than hanging out at the track or in the "shed"... but to me - it's all good discussion. And frankly - people don't have enough of these kinds of discussions.

:cheers:

Absolutely. A detour from car-related BS is a good thing sometimes. :woot:

[Bucketlist2012]

Absolutely. A detour from car-related BS is a good thing sometimes. :woot:

Also some guys may be reading and not posting, and they will learn things that are very important in Life..

It is called taking control of your life and your surroundings. I know I do, and I know you guys do..

But for those that don't , there is more to investing than just buying something.

It is a mind set..

Speaking of Cars...Now that I have the car built, I may want to freshen up my LT-1... No LS since it is a number's matching Car, but it is almost time for some wicked power...

I have 20K miles on it now, and in Dog years, that is 140K miles...It has been run hard...

[WSSix]

Pull the LT-1 out and build another motor so as not to damage the original motor. Or, put an LT1 in there and build it :D

More people need to discuss money. We would all be better off. Unfortunately, not only are we a materialistic society but we are also American. We wanted all yesterday. If we all do our part to help and control ourselves, maybe others will take notice as well and start following the lead we've set. I've given up on trying to outright convince people. All I can do is set the example and go from there. At least that's my attitude anyway.

[GregWeld]

Pull the LT-1 out and build another motor so as not to damage the original motor. Or, put an LT1 in there and build it :D

More people need to discuss money. We would all be better off. Unfortunately, not only are we a materialistic society but we are also American. We wanted all yesterday. If we all do our part to help and control ourselves, maybe others will take notice as well and start following the lead we've set. I've given up on trying to outright convince people. All I can do is set the example and go from there. At least that's my attitude anyway.



I don't know who said "money can't buy you happiness".... but they must have been broke because they sure as hell didn't know what they were talking about!

[out2kayak]

I just read about many Europeans shuffling out of the Euro and into properties in London (and the GBP).

So, if (and that's a big "if") Greece leaves the Euro and goes back to the Drachma, the currency is devalued (to meet the current government needs) and / or crashes, will you try to take advantage of the situation? What will you do?

I suspect there will be a fair amount of chaos when this happens.

Personally, I hope and pray for the very best for the present southern Euro-zone. It is a very difficult time, with 22% unemployment in Greece and 24.4% in Spain.

http://rt.com/business/news/greek-drachma-bloomberg-trades-769/

Thoughts?

[Vegas69]

I agree with the attitude comments 100% but it's not that easy. I always tell Kelli, when I feel good, attitude isn't a problem. Nothing puts a big hitch in my giddy up. I'm one of those guys that never gets a really good nights sleep for multiple reasons. I offset that with eating better and excercising. There are days when I'm junk. Tired as hell and absolutely no motivation. I know my boy Dave can relate with his health problems. The older I get, the more crucial diet and exercise have become. We all know people that live like complete slobs and seem to have endles energy. That's not me. Without health, the rest doesn't matter.

[Track Junky]

I agree with the attitude comments 100% but it's not that easy. I always tell Kelli, when I feel good, attitude isn't a problem. Nothing puts a big hitch in my giddy up. I'm one of those guys that never gets a really good nights sleep for multiple reasons. I offset that with eating better and excercising. There are days when I'm junk. Tired as hell and absolutely no motivation. I know my boy Dave can relate with his health problems. The older I get, the more crucial diet and exercise have become. We all know people that live like complete slobs and seem to have endles energy. That's not me. Without health, the rest doesn't matter.

I can relate......diet and excercise are extremely important as we get older and a good nights sleep probably tops the list. If I practiced as much as I preached I'd probably look like Shwarzenager.
Might be time for a Lat-G diet and excercise thread/sticky.....discussions on healthy meals and work out programs.......might help motivate?

[Bucketlist2012]

I agree with the attitude comments 100% but it's not that easy. I always tell Kelli, when I feel good, attitude isn't a problem. Nothing puts a big hitch in my giddy up. I'm one of those guys that never gets a really good nights sleep for multiple reasons. I offset that with eating better and excercising. There are days when I'm junk. Tired as hell and absolutely no motivation. I know my boy Dave can relate with his health problems. The older I get, the more crucial diet and exercise have become. We all know people that live like complete slobs and seem to have endles energy. That's not me. Without health, the rest doesn't matter.

Man did you say a mouthful of truth.. I was a man who was conquering the earth until 2 years ago when I had my Major Heart Infection that turned into a major brain lesion/seizure.. It has been a long road back.

Your words of Sleep Problems and your use of the word "junk", are the exact words I use to describe myself some days. In fact I was just thinking about my Diet 10 minutes ago when I got back outta bed. I would have sworn that I had written your post. WOW..

I still have the great attitude that I speak of, but I get EXACTLY what you are saying... The reason you have not seen me at an event to spank my car and send me home, is because of my feelings of "junk".. I am a newbie/old guy, and I know i would not win an event, but I don't come because I cannot plan to drive and hang out and then race, and then drive home..It is just too dangerous and not good for my health...

I have and am having more sleep tests, and I haven't worked in 2 years. Thank God that I have my investments. I planned to work until I was 57 or so, but it had to happen at 50..

Man, your post hit Home hard Todd... I hope you and I and others get through the exhaustion..

I am working on my Diet and the exercise is something I need to get back too soon. But being exhausted and trying to exercise may cause another seizure, so I gotta be careful.

Mike

[CRCRFT78]

Health is definately key. I stopped drinking 3 years ago just to stop, I didn't have a problem drinking or any health concerns, I just woke up one day and had enough. Now I watch my diet and feel good. Of course, like most, my sleep usually consists of 4 or 5 hours which isn't healthy IMO. Once I take care of the sleeping issues and my investments continue upward, the wealth shall follow.

[srh3trinity]

This thread is full of great info. I am sure I have missed some things here and there, but I am curious if anybody is familiar with or participates in Infinite Banking. It is a concept I am looking into as a piece of my investment strategy. Interested to see if anybody has any experience or thoughts.

[GregWeld]

This thread is full of great info. I am sure I have missed some things here and there, but I am curious if anybody is familiar with or participates in Infinite Banking. It is a concept I am looking into as a piece of my investment strategy. Interested to see if anybody has any experience or thoughts.



Don't bother with schemes and "tax advantaged" pitches... just save up excess cash and invest it properly and forget all the other stuff.

Anything that involves life insurance is a joke... just do it the right way and you'll be farther ahead.

[GregWeld]

Since I don't invest in Mutual Funds or have a 401K or IRA --- I wasn't aware that there were rules changes about FINALLY showing the actual costs for participants to be in these plans!


http://bottomline.msnbc.msn.com/_news/2012/06/11/12170259-what-the-moment-coming-for-401k-participants?lite

[Bucketlist2012]

Since I don't invest in Mutual Funds or have a 401K or IRA --- I wasn't aware that there were rules changes about FINALLY showing the actual costs for participants to be in these plans!


http://bottomline.msnbc.msn.com/_news/2012/06/11/12170259-what-the-moment-coming-for-401k-participants?lite

Good to know.

I only have 10% of my assets in a 401K, so it will be nice to know the mumbo jumbo fees..

90% of my assets (investable), are in Schwab.

[GregWeld]

I get several "on line" investing letters -- I glance at them and try to find any nugget of info that may be something of interest. This morning one was touting British Petroleum (BP) and their 5% dividend.

After a quick read - I went to Schwab to research this name.

Remember this is the very company that recently had the big Gulf spill -- so has some HUGE potential liabilities etc.... BUT sometimes you can catch a beaten up stock like this and make some money when it rebounds.... so the name was at least worth a quick look.

BUT -- Here is why I'm posting.... true the dividend is 5% - true it's been beaten down.... BUT MY FRIENDS -- DO NOT FORGET TO CHECK THAT TOTAL RETURN and this thing is a GIANT PIG..... It has a NEGATIVE T/R for one year - 3 year and 5 year!!! It's 5 year T/R is MINUS 29%

So this is just a reminder -- before you buy - DO THE WORK! And don't forget that what gets you way ahead of the game is a stock that pays you a dividend AND has growth too! If they don't -- move on.....

[Bucketlist2012]

I get several "on line" investing letters -- I glance at them and try to find any nugget of info that may be something of interest. This morning one was touting British Petroleum (BP) and their 5% dividend.

After a quick read - I went to Schwab to research this name.

Remember this is the very company that recently had the big Gulf spill -- so has some HUGE potential liabilities etc.... BUT sometimes you can catch a beaten up stock like this and make some money when it rebounds.... so the name was at least worth a quick look.

BUT -- Here is why I'm posting.... true the dividend is 5% - true it's been beaten down.... BUT MY FRIENDS -- DO NOT FORGET TO CHECK THAT TOTAL RETURN and this thing is a GIANT PIG..... It has a NEGATIVE T/R for one year - 3 year and 5 year!!! It's 5 year T/R is MINUS 29%

So this is just a reminder -- before you buy - DO THE WORK! And don't forget that what gets you way ahead of the game is a stock that pays you a dividend AND has growth too! If they don't -- move on.....

When BP dropped like a rock after the spill, I looked at it but passed on it.. From the outside , it looked like something that would rise back up. But like you said, once you peeled back the layers, it was not worth it.. :cheers:

[67pro-street]

awww c'mon guys. youre hurting my feelings now:mad:

(I work for bp up here in washington!)

[GregWeld]

awww c'mon guys. youre hurting my feelings now:mad:

(I work for bp up here in washington!)



They never spilled any oil -- not their fault -- and they never inhaled....


HAHAHAHAHAHAHAHA

[WSSix]

yeah, it was all Halliburton's fault. Oh wait.......:rofl: :D

I imagine BP will eventually rebound but it may be a number of years and they may have to go through some major changes first. I'm not willing to wait or gamble so no BP for me.

[67pro-street]

Between Kevin Costner lending his knowledge and attempting to plug the hole with multiple "junk shots" I don't what we could have done differently:rolleyes:

Honestly though my take on bp, and i must admit im a little biased, is that the only major unknown remaining with the gulf spill is what the EPA is going to fine for the spill. Since the government basically gives the EPA whatever they want whenever they want and never seems to question them, they can either fine bp to the point where it makes it a very hard and long road to recovery...or they can impose a reasonable fine based off what bp has already payed out to help fix the situation. I strongly feel that if the latter is done, then investors may have more confidence in the company and the stock price will rise. But, im not expert and my guess is as good as anybodys, its just my take!

[Bucketlist2012]

Between Kevin Costner lending his knowledge and attempting to plug the hole with multiple "junk shots" I don't what we could have done differently:rolleyes:

Honestly though my take on bp, and i must admit im a little biased, is that the only major unknown remaining with the gulf spill is what the EPA is going to fine for the spill. Since the government basically gives the EPA whatever they want whenever they want and never seems to question them, they can either fine bp to the point where it makes it a very hard and long road to recovery...or they can impose a reasonable fine based off what bp has already payed out to help fix the situation. I strongly feel that if the latter is done, then investors may have more confidence in the company and the stock price will rise. But, im not expert and my guess is as good as anybodys, its just my take!

Aman....

A lot went on behind the scenes and the blame game is hard to figure out..

You are still our Lat-G brother, no matter where you work.. :cheers:

Was it BP. Halliburton, or someone else at fault ? For me, it is impossible to say, so I will not throw stones at anyone...:thumbsup:

[67pro-street]

Good Point! I didnt write that post to try and start an argument on such a useful thread so I hope ppl wont take it as such...The kevin costner and junk shot thing was supposed to be sarcastic!

[WSSix]

Yeah and I work for Halliburton so I was just messing around. I doubt we will ever know what truly happened. Investment wise though, it's going to be interesting to see what ultimately becomes of BP. They are a very large company and the blow out in the gulf was a serious problem. Was it enough to sink the company or will people who stick it out and buy while it's low become the next Google investors that some how saw the light at the end of the tunnel and reaped ridiculous sums from their gamble? No clue and honestly, I don't care. I'm not invested with them nor will I ever be. I'm also not gambling.

[Bucketlist2012]

Well said boys...

Yes we will get back to investing..

As Greg says sometimes we post like we are sitting around and talking .

No big deal and nobody should take it as anything more than that..

On a side note, Dividends keep rolling in no matter what..

I have some small portions of my Portfolio that are high dividend plays to offset my safer investments.

Always good to see them come in.. No matter what the market is doing...:cheers: :lateral:

[67pro-street]

So i have a question for everyone. In this book i was reading they were talking about how not only is it important to have a diversified portfolio, but it is equally important to have both stocks with American based companies as well as with Internationally based companies. It makes sense since just about everything you look at is Made in China, or Made in Korea, Made in India, etc. However, my question is how does one go about researching international companies and trying to figure out which ones to invest in? Do you just look at american companies in certain sectors that you would invest in and then try to find their international counterpart??

[Bucketlist2012]

So i have a question for everyone. In this book i was reading they were talking about how not only is it important to have a diversified portfolio, but it is equally important to have both stocks with American based companies as well as with Internationally based companies. It makes sense since just about everything you look at is Made in China, or Made in Korea, Made in India, etc. However, my question is how does one go about researching international companies and trying to figure out which ones to invest in? Do you just look at american companies in certain sectors that you would invest in and then try to find their international counterpart??

For me, Investing is not only Diversified, But Global, Nimble, and Liquid.

For my research, I have used Schwab to check and then invest in certain things. I know some people do not like Mutual Funds, but I own Templeton and Oppenheimer Global funds. Their long term returns have done pretty well for me.

Also I do take small risks with Global High Dividend payers, but with only a small amount of money.

But I believe that part of Diversification is being Global..What percentage is a personal choice.

I believe that the US is the biggest player on the block, but that does not prevent me from buying outside the US.

Let us see what Greg and others have to say..:cheers:

[Woody]

So i have a question for everyone. In this book i was reading they were talking about how not only is it important to have a diversified portfolio, but it is equally important to have both stocks with American based companies as well as with Internationally based companies. It makes sense since just about everything you look at is Made in China, or Made in Korea, Made in India, etc. However, my question is how does one go about researching international companies and trying to figure out which ones to invest in? Do you just look at american companies in certain sectors that you would invest in and then try to find their international counterpart??

You do not necessarily have to purchase stock in foreign companies to get international exposure. There are many U.S. based companies that operate worldwide that will give you some international exposure. For example, Catepillar is one stock that is international and has recently been declining due to growth concerns in foreign markets.

If you are interested in purchasing individual stocks rather than a mutual fund as Bucketlist suggested, you could look at the holdings of "international" mutual funds and research some of the stocks in their holdings to see which ones you may want to invest in.

[toy71camaro]

You do not necessarily have to purchase stock in foreign companies to get international exposure. There are many U.S. based companies that operate worldwide that will give you some international exposure. For example, Catepillar is one stock that is international and has recently been declining due to growth concerns in foreign markets.

If you are interested in purchasing individual stocks rather than a mutual fund as Bucketlist suggested, you could look at the holdings of "international" mutual funds and research some of the stocks in their holdings to see which ones you may want to invest in.


thats kind of the take i have on it.. companies that sell internationally, not just within the US.

good idea about checking out some "international" mutual funds to find companies to start researching.

[CRCRFT78]

I think one of the major concerns with true international stocks is understanding the taxation of the stocks. Greg spoke on his dealings with Banco Santander and what he goes through with regards to dividends, taxes incurred and the reinvesting of the dividends. Hopefully he chimes in for a response to this.

[hifi875]

wth is banco santander doing. my google finance says its $73. has to be a error?

[toy71camaro]

wth is banco santander doing. my google finance says its $73. has to be a error?

I see it too.. shows $6.24 on Schwab tho. so google must be playin games. heh

[CRCRFT78]

If that share price is true, someone made a killing on Banco Santander. FML

[hifi875]

i figured as much.

[hifi875]

If that share price is true, someone made a killing on Banco Santander. FML

I knew something was up. it said i had a 1095% return. I was like WTF!!

[CRCRFT78]

Where's Greg when we need an exlanation.

[pw2006]

Hey there- It appears Banco Santander changed it's ticker symbol today from STD to SAN. :thumbsup:

[hifi875]

Yes it shows san now instead of std. But they still got theprice wrong!!

[CRCRFT78]

If that is true could it be the benfactor of some confusion on the part of investors not expecting a symbol change? Everywhere else I've checkd has a share price of +$6. Google finance seems to be the only ones showing a share price of +$72.

[pw2006]

Yeah, Banco Santander is a little confusing when it comes to the various ticker symbols they use around the world. It appears that CNBC and Nasqaq are quoting the stock correctly under the new ticker. But the NYSE (where Banco Santander is listed) is showing an incorrect daily change. Go figure.

Here is a pretty good article on the change:

http://buzz.money.cnn.com/2012/06/12/spanish-bank-to-lose-unfortunate-ticker-symbol/

[hifi875]

I'd be cashing out if it was $73

[GregWeld]

Guys.... I'm in Pomona at the LA Roadsters show. And then a week of cruising up California highway 1.... So don't look for any posts from me! I'm out spending my dividends....lol

[camcojb]

have a nice trip Greg. :thumbsup:

[GregWeld]

I never thought I'd live to see the day when a VOTE in Greece would/could/does affect MY investments. But that's the world we live in today. Go figure....

I hope they get it right.

But regardless of these types of macro events. Bond interest will still be collected and dividends will still keep rolling in... and that's what I want the "newbs" to be focused on. While these events do 'matter' they don't really matter in the long run (3/5/10 years).

In the meantime - The L A Roadsters Show here in Pomona has just been fantastic! The weather amazing! The people have been even better... The key is that you have to have a roadster... otherwise you park out in the back 40. :woot:

[westoz]

yeah, it was all Halliburton's fault. Oh wait.......:rofl: :D

I imagine BP will eventually rebound but it may be a number of years and they may have to go through some major changes first. I'm not willing to wait or gamble so no BP for me.

BP have and are going through major changes - something other oil and service companies will eventually catch up with. THe Macondo accident was a Major screw up by several companies, and was a tragedy much like the Piper Alfa.

BP is not British Petroleum and hasn't been for many many years, its just plan old BP - the issues started when BP acquired AMCO and AMACO (Both american companies, worst move that BP ever made) 48 odd % is American owned. It should also be noted that all the Managers, Engineers etc involved in the bad decisions resulting in the accident were also American, both BP Halliburton and Transocean.

I am not British I am just sick of it being blamed on them. Take a look at Chevron and how they hide their screw ups.

I bought BP shares after the incident and have made some good coin, have a look at their previous exploration and development success and its easy money.

Sorry for the rant, its just that I work in the Industry and some things get under my skin. Flame suit on :)

[GregWeld]

I only base my investing decisions on solid facts - historical performance of the STOCK -- not the company etc. Take the "I like this brand and not that brand" out of it and just look and compare the STOCK... in that light, BP sucks... irregardless of their latest debacle.

[GregWeld]

Hey Mike?! Did you get that new house/mansion you wanted??

[Bucketlist2012]

Hey Mike?! Did you get that new house/mansion you wanted??

Greg..

I pulled out of the offer...My Wife is not happy..

It is a short sale and when I went to see it, all I saw was dollar signs.. It is in bad shape...The realtor is using old photos to show it, of when it was in excellent shape.

It needs so much work, I just could not see putting an unknown amount of money into it.. I mean like 100K or more..I could have , but at my age, and with my Health, do I really want to ?.

The pictures they show on line are of it in perfect shape.. It is in distress..And I am not up for that much check writing..Something inside me said it was not a money maker, but a money taker..

And once you buy it, you are in for the whole ride...No thanks...

So, no happy Wife or happy Life right now, but I have to go with my gut feeling when it comes to money..My Wife runs on emotion, and I run on not going broke..

So it is a little tense around my house, but I know I did the right thing..Who am I out to impress ? Her family ? No way...I am protecting my wealth and not flaunting it...

My friend knows the property, and says it is a gross display of wealth, when it is in great shape. But it needs so much work, I cannot imagine what it would take to redo it to my standards...100K ? 150K ?

And to be honest, it seems like a house for someone with several million dollars or more in Net worth...Not a guy like me..

I put up the avatar for the last time. It does not look like this anymore..Imagine a property like that in total distress..50K gallon pool need re plastering, all the large palm trees dying. The interior needs work everywhere. exterior painting, the indoor fire sprinklers have leaks, All the landscaping is dead..The avatar picture is not what it looks like now....I gotta pass on this one...My gut tells me to, even if I crushed my Wife's dreams.

Mike..:cheers:

[Flash68]

Good for you Mike... scenario sounds familiar to my recent one of walking away from a headache inducing large house. :thumbsup:

[Bucketlist2012]

Good for you Mike... scenario sounds familiar to my recent one of walking away from a headache inducing large house. :thumbsup:

Thanks...The Wife is not happy, but the property was Gigantic, and even in great shape, it was too much property and house. In Bad shape, it was a nightmare. Sure a great party house, but I would be too stressed out.

She said it was a great Investment...I don't think it was...More of a Money Pit..

Plus we would have had to cash out some Investments to fix it up...That sounds foolish to do..Plus I would be taking on more debt.. Sounds like a double negative..

So, I will let things settle..She shed some tears, but better than me losing the grip I have on my Financial Life.. :cheers: :thumbsup:

[GregWeld]

Thanks...The Wife is not happy, but the property was Gigantic, and even in great shape, it was too much property and house. In Bad shape, it was a nightmare. Sure a great party house, but I would be too stressed out.

She said it was a great Investment...I don't think it was...More of a Money Pit..

Plus we would have had to cash out some Investments to fix it up...That sounds foolish to do..Plus I would be taking on more debt.. Sounds like a double negative..

So, I will let things settle..She shed some tears, but better than me losing the grip I have on my Financial Life.. :cheers: :thumbsup:


Good choices Mike --- too many people get caught up in the "I have to prove I can do it" and don't have the guts to back out of something when they see it's not right -- so kudos to you!

And you're right about the double negative! That's another thing people don't look at often enough!

I have three or four people I know that were living really large -- like they had unlimited money -- 12 million dollar house <gone now> -- another one that the dickheads wife thought she was rich and spent 7 million building a house they never could even move in before it was gone... another guy is now RENTING because he thought he was rich and living large... Once the capital is pissed away - these people just aren't that smart. They got lucky once and that was that...

Another guy - David Bingham (you can Google him) http://www.bizjournals.com/seattle/stories/2010/05/17/story1.html?page=all blew thru 200 million... they repo'd the 85 foot yacht - the Bentley - his kids 10 million dollar house and his mother in laws car! He THOUGHT he was brilliant so he bet the farm, and more, making mezzanine loans in the fast lane of big real estate... charging exorbitant fees and borrowing from the banks at low rates to lend even more... ALL GONE.... POOF!

[Bucketlist2012]

Greg.

First, thanks for asking about the house. You remembered and thought to ask about it, that means a lot.:thumbsup:

Second, yes I had to look my Wife in the eyes and make her cry..You know how tough that was, but I have to follow my Brain, and my Guts.

Had I caved into her desires, I know it would be the worst move of my Life..
I would have made her happy but I know it would have bankrupt us, or at least made us very uncomfortable Financially.. For what ? To show her family that we are big Players ? She wanted me to have a resort/Home that had everything.Watersports/Lake, Large Pool, Putting Greens, ect...

But if I thought it was Financially sound, I would have done it.. I am not rich. I am financially healthy, not wealthy..Not wealthy at all..

And I talk about having Investments, and only a Home loan . But this move would be the double negative...Pulling Invested money and taking on an additional 250K of mortgage... No thanks..

Thanks for chiming in, I knew i did the right thing, but hearing it from you and others ,just makes me know I am thinking straight..

The Wife is getting over it slowly, and it will all work itself out..Had I not pulled the offer, i would be one of the fools you mentioned..On a smaller scale, but a fool is a fool.Whether it is one million, or two hundred million...Broke is broke...And i don't plan to go that route.

Someone told me once that if you don't know better, then it is a mistake. But if you knew better and still did it, you are truly a fool..:lateral: :cheers:

EDIT: I read the Bingham piece.. I always told my Wife about Hard Money and Leveraging..That I would NEVER leverage our money to try to triple it.. The banks will always lend it, and someone will always need to borrow it, but that is NOT how to Invest, in my book...Too much can go wrong, and Poof....It is all gone...I am more a Simple man, and steady as she goes...Investing and no greedy speculation..

[SLO_Z28]

I kind of have to ask what area you're looking in? One of my best friends neighbors' has their house for sale, 1400sqft on 8 acres with a barn, and its in the only county that is completely smog exempt in ca (new and old cars) all for $150,000. http://www.trulia.com/property/3080560335-3812-Highway-12-N-a-Burson-CA-95225

Ive been looking up in that area, I get paid more to work there and I could buy 2 houses for what I pay for rent here in so-cal, there are a couple dozen nice homes in the $60,000-75,000 in that area too.

[Bucketlist2012]

I kind of have to ask what area you're looking in? One of my best friends neighbors' has their house for sale, 1400sqft on 8 acres with a barn, and its in the only county that is completely smog exempt in ca (new and old cars) all for $150,000. http://www.trulia.com/property/3080560335-3812-Highway-12-N-a-Burson-CA-95225

Ive been looking up in that area, I get paid more to work there and I could buy 2 houses for what I pay for rent here in so-cal, there are a couple dozen nice homes in the $60,000-75,000 in that area too.

It was in Redding of all places, near her Family.. A real high end gated community. The house was valued at over one million a few years ago.. I don't really want to move there and Like I said, it is in bad shape. The smaller houses in the neighborhood are really nice, and sell for 350,000 to 500,000, but they are in great shape. I could get this house for less than 300K, but I don't want it. It sits on 3 acres. To replace the landscaping would be 50,000 dollars.

I have a great home now in the bay area, with many custom features that I just had done.Hardwoods, granite, custom stairs.

My Wife just misses her family.
So there is the problem. I can live where I am at, and she wants to move, and move up again...

But it won't be happening , and my Wife is getting used to the idea finally..

She understands about over Leveraging...

[glassman]

I think you made a good decision.

Happy wife, happy life. Only to an extent imo. A good marriage is about compromise, we both give and we both take. 24 years and counting and we are mid 40's.

I think Dirty Harry said it best..."a man has got to know his limitations..."

And if you've got your health, you've got your wealth....thanx for all your input, this is a GREAT thread...

[Bucketlist2012]

I think you made a good decision.

Happy wife, happy life. Only to an extent imo. A good marriage is about compromise, we both give and we both take. 24 years and counting and we are mid 40's.

I think Dirty Harry said it best..."a man has got to know his limitations..."

And if you've got your health, you've got your wealth....thanx for all your input, this is a GREAT thread...

Thanks man. I know that Dirty Harry Line... And I believe I have made the right decision.

As far as my health, well that is another story, but I am working on it..That is another reason for not moving... Bad Health. Better to stay where I am at.

So, too many reasons not to do it.. So I had to say no.

And she is coming around after a few rough days. She knows my job is to protect our wealth first..And my Health/Life...

And yes this thread is great..I thank everyone who posts.I am always learning something.:cheers:

[67pro-street]

Found this article online and I thought it played pretty well with everything that has been discussed throughout this thread. Just thought I'd share in case anybody wants to read...

http://finance.fortune.cnn.com/2012/06/20/retirement-guide-brand-name-stocks/

[GregWeld]

Excellent article.

What the underlying message is saying is that you don't need to gamble on the get rich quick stocks everyone talks about... You can get quite rich INVESTING in great companies with long histories of good earnings and dividends. The key difference - you can bet the farm (and loose the farm) trying to be an instant millionaire - or you can grow your money over a long period and get there.

What I've tried to show people is that once you have a proper amount invested in the right stuff -- and it's spinning off income/returns.... THEN you can afford to take a flier once in awhile and maybe hit a double or triple in the fast lane. But you have to build that base first!


I'm going to put a half a million into another apartment complex LLC... These types of investments are illiquid... You have no control over your capital... You can't just make a call and pull your money out. The reason I can do these is because I don't/won't need the money for anything. The group I invest with and have invested with for many years thinks like I do. We go in - buy right - put 45 to 50% down - get fixed financing - and have a pool of capital established to immediately upgrade the properties - thus also increase rental rates. These spin off nice cash flow and depreciation (a nice tax benefit) - and the last one I did returned 117% on capital in 4 years (sold it).

It's the above types of investments why people say the rich get richer. It's true. But you have to have that base of good investments FIRST - because if not - and you put your money into a rental house - or some illiquid investment - you'll stand a chance of losing it because in a year or two or three you'll have an emergency and need the money - and someone will cash you out it, but only at a steep discount... But if you have other liquidity - stocks etc - then you have wiggle room.

So that's why people need to be diversified and liquid until they reach a point where they can branch out and take on other types of investments.

[toy71camaro]

That was a great article. I think i may send it to a few friends that need a little help with this sort of stuff. ;)

And yeah, as for the "get rich quick" stocks.. fuggettaboutit. Atleast, not for me. I've got way to far to go/catch up to risk any big losses. Slow and steady will win the race for me. Hopefully. ;)

On a side note, I've convinced our Owner and Accountant to look into letting us with 401ks to establish a PBA to allow us to invest our 401ks in individual stocks rather than mutual funds. They haven't made any moves yet. But just the fact their "Looking into it" helps.... Hopefully it goes through. (Small company, about 25 employees). I've held off (yet again) restructuring my 401k after hearing that. As i don't want to take any penalties to move it if it does go thru.

[Bucketlist2012]

Another great point from Mr. Weld..

If I was to use a few words for my strategy, it would be Diversified,Global,Nimble, and Liquid.

Only a 40% LTV Fixed Mortgage on my Home, is not Liquid. Everything else is. I put that much down to dial in a payment I am comfortable with.

I have not reached the point of buying additional properties yet. I would say I am two thirds liquid, in long term Investments.

That is why I did not Buy the other home. It would upset my balance, and put me in a leveraged position that I wasn't comfortable with.

What took decades to put together, could come unraveled in one year.

Slow and steady wins the race..Sure I gamble 15% of my Liquid money on high yield stuff, but the rest is pretty boring stuff.

That is why this thread is called Investing, and not Speculating.:cheers:

SIDE NOTE...The Property I was looking at, was a guy who had many properties and investments..Shopping malls, Car Dealerships, ect....Sadly, not anymore...So a lesson to be learned, from others...

[GregWeld]

That is why this thread is called Investing, and not Speculating.:cheers:



EXACTLY! :rofl:


You have no idea how many calls and emails I get asking about some speculative investment "idea" -- you know -- the old "can't loose" investment of a decade.

I PASS on all of 'em. If I want to gamble I'll go to some indian casino... Oh wait! I don't even do that!

[Bucketlist2012]

EXACTLY! :rofl:


You have no idea how many calls and emails I get asking about some speculative investment "idea" -- you know -- the old "can't loose" investment of a decade.

I PASS on all of 'em. If I want to gamble I'll go to some indian casino... Oh wait! I don't even do that!

Amen.. I truly think that even Investing is a form of gambling. Sure we study, learn, calculate numbers, but in the end, it is Investing/Gambling.

But leaving it in the bank is madness and a sure drain on your money..

So my only Risk is Investing, mostly boring, and a few high risk assets..

I am a Simple man, and that has made me money over many years. Quietly with no flash..

My buddies are into penny stocks, and timing the market. They got out in 2009, and never really got back in. Funny how they blew through a quarter million with only "stuff" to show for it...But I am the one not working..

Boring Rules !!!:lateral: :cheers:

[GregWeld]

I had friends over for dinner last night.... they have a 6 or 7 million dollar house here on Lake Washington... and a 2 million dollar house in Scottsdale... We have one house here - on the wrong side of the tracks... I have a 900K mortgage at 2.63%.... Gwen and I are retired... THEY are not and can't. I just got back from the Monaco Grand Prix... and a nice road trip to LA and up the California coast. I picked up the entire tab for three trucks and trailers - the rooms/houses/food etc... WE had a fantastic time. I picked up the tab because then I get to make the choices on rooms and food. I don't have to stay at "Mongos Beach Hut"....

My TOTAL monthly expense is around 5K.... that means that anything over that is purely discretionary spending. I'm living life to the fullest... my friends had to leave and get to bed because BOTH had to go to work in the morning. I wouldn't trade them for one minute. They think they're rich... I think their life sucks... They'll die owing... I'll die having done everything I ever wanted to do. :woot:

[Bucketlist2012]

That says it all. You are living the Dream..:D

I am Financially Healthy, and not Wealthy.. I had to retire due to health reasons at 50. My plan was 57 . But life had other plans for me.

But had I not prepared for years of being debt free and Invested, I would have lost it all the day I got Endocartitis and a Massive Seizure. Since I was on a path and a plan, all it did was put a dent in my Net worth and stopped my earning power..

So a lesson for those who are Investing and Planning..What if you have a catostrophic failure ? Are you ready ? Trusts/Wills, Portfolio ?

Your monthly nutt is quite low, Kudos to you..People would think your monthly nutt would be 20 grand or more...Well Done..:bow:

Oh and if I get healthy enough to get out to meet you guys, I need a few months straight of good days first, I would like to go on one of your adventures..I don't like camping at Mongo's motel...:lateral: :cheers:

[GregWeld]

On this trip - my brother in law and my sister trailered my Nomad and my other friends (Stan is 74) trailered their '32.... we tried to keep the hours behind the truck and trailer to a minimum and maximize the hours in the hot rods... worked out real well.

My sister - who doesn't have a pot to pee in - stated several times how much she was enjoying this little road trip..... to which I replied. Well then you know what? If you want to keep doing this stuff when you're retired... you'd better start thinking about the current "I wants" (she'd mentioned several times about buying a new car when she hasn't finished paying off the '06 300 they bought!) and start saving for your future. Every time she mentioned buying a new "F150" my blood pressure started to rise.... as I thought - yep - that's why you're broke...

[Bucketlist2012]

On this trip - my brother in law and my sister trailered my Nomad and my other friends (Stan is 74) trailered their '32.... we tried to keep the hours behind the truck and trailer to a minimum and maximize the hours in the hot rods... worked out real well.

My sister - who doesn't have a pot to pee in - stated several times how much she was enjoying this little road trip..... to which I replied. Well then you know what? If you want to keep doing this stuff when you're retired... you'd better start thinking about the current "I wants" (she'd mentioned several times about buying a new car when she hasn't finished paying off the '06 300 they bought!) and start saving for your future. Every time she mentioned buying a new "F150" my blood pressure started to rise.... as I thought - yep - that's why you're broke...

Amen.

My sister trades in cars like underwear.. She has student loans from milking the government, and every known gadget from apple..She is money stressed all the time. She talks of trading in her 2011 SUV for one with more bells and whistles :mad: Her house is paid for, but she borrowed to remodel it..She put well over what it is worth and went from doing good, to underwater ????

Then my sister in law, who pushed for me to buy the mansion, lost her home, went to Italy, and talks of going back. She had a great camera , but bought a new one for 5000 dollars.. Her Husband is 50 with a pregnant daughter at home, and 40K in a 401K...He will work until he collapses.

But yet they ask me for advise and won't take it...Because I cannot give them a 500% return on their money...Then they get Jealous ????

[GregWeld]

BTW --- This thread isn't about "me"..... I'm already set. What I'm trying to do is to get those that aren't - to start thinking about how they might go about getting there!

Are you willing to trade your retirement years "in style" for a new car you don't really need - but just "want" - now? Or that bigger house you don't really need? Or the expensive trip to Hawaii over the moderate trip to So Cal?

The more I hear people say "well... I can afford it".... because they have higher incomes... the more I question them and say -- OKAY.... do you still want to be able to live this way when you have no job (retired)? And how much money do you think that will take?

Right now -- it takes a million bucks invested to "net" about 40 grand a year in income... So if you're making 100K a year - you now need TWO MILLION in the bank!

I just had a discussion with the buddy that handles my bond portfolio... I have a years worth (due 2012) rolling over in the next 6 months...so we were discussing what kinds of return I can expect. Ya know what? We're going to roll this years into bonds due 2019 and MAYBE I'll get 3% tax free.... Do the math -- that's 30 grand a year net off ONE MILLION BUCKS invested. Sucks but that's what it is! If you want super safe instead of A rated bonds - you can drop to well under 2%!

Now... it won't stay that way forever... but in order to get my money back I MUST hold until maturity... so that's dead money until 2019 folks. Think about that! In my book - that's a long time! Next years bonds will roll into 2020's and so on. I hope rates don't go DOWN between now and then!

[Bucketlist2012]

Greg..

Exactly.. I am trying to get the Wife to understand that.

I can spend a certain amount for life, or buy "wants", and end up broke.

People don't realize how much money it takes to live on after they stop working.

Another formula is you need 15 times your yearly salary, Invested to make it work. If you plan to live on less.

I am working on having 18 times my old yearly salary to make it work..

Right now it is tough to make money. I would love to lock in a CD at 11%.

[SLO_Z28]

Youd be surprised how cheap you can live if motivated, all my bills combined are $1300/mo. Even my dad lives quite well off $1000/mo social security income.

Anyways on to some planning, I can retire at 59 with 90% of my pension for the rest of my life(government pension, costs 10% of my salary), should I buy a house now and amortize the hell out of the loan by paying double the payment on a 15 year loan then put the entirety of my house payment into a 457(b), or just make regular payments on the house and pay the excess into my 457 thus reducing my tax burden. Basically im asking is it better to pay down a debt at 3% and gain equity and defer investing for 7 years(how long it should take to pay off a house), or invest for the entirety of those 15 years at the 457 maximum? If I invest the full amount into the 457 I can lower my federal tax rate to 15% (I have a 48,000 salary that when reduced to 43,000 by the 457 contributions drops me to a 15% tax bracket from the 25% im at now), so I would guess that the tax deferral would be worth it?

[Bucketlist2012]

Youd be surprised how cheap you can live if motivated, all my bills combined are $1300/mo. Even my dad lives quite well off $1000/mo social security income.

Anyways on to some planning, I can retire at 59 with 90% of my pension for the rest of my life(government pension, costs 10% of my salary), should I buy a house now and amortize the hell out of the loan by paying double the payment on a 15 year loan then put the entirety of my house payment into a 457(b), or just make regular payments on the house and pay the excess into my 457 thus reducing my tax burden. Basically im asking is it better to pay down a debt at 3% and gain equity and defer investing for 7 years(how long it should take to pay off a house), or invest for the entirety of those 15 years at the 457 maximum? If I invest the full amount into the 457 I can lower my federal tax rate to 15% (I have a 48,000 salary that when reduced to 43,000 by the 457 contributions drops me to a 15% tax bracket from the 25% im at now), so I would guess that the tax deferral would be worth it?

Personally at 3%, I would not double down on the loan payment, and I would Invest that money.

That is without the tax reduction. With the tax reduction , I would for sure keep the loan and Invest the rest. That is an additional 10% for you in tax savings, and you should be able to get more than 3% on your Investments. IMHO.

Now we need our resident Math experts to chime in and share their thoughts..

[GregWeld]

With these low fixed rate loans available now - there should be absolutely no rush whatsoever to hurry to pay them off.... And what you really hope for is raging inflation so that your investments produce higher yields! If you're paying 3 and making 7 it's pretty no brainer to me.


Equity in a house really doesn't produce anything except peace of mind... because you have to live somewhere regardless. The only reason anyone wants a paid off house is to have it paid off at the same time you retire - to reduce monthly costs. But even that goes away if you have more than adequate income.

If you invest - and re-invest the dividends your investments should double every 7 to 10 years... and your payment will stay fixed... and over that same period your income should increase - making your fixed payment even cheaper.

So - save now - invest now.

:cheers:

[Lenie]

With these low fixed rate loans available now - there should be absolutely no rush whatsoever to hurry to pay them off.... And what you really hope for is raging inflation so that your investments produce higher yields! If you're paying 3 and making 7 it's pretty no brainer to me.


Equity in a house really doesn't produce anything except peace of mind... because you have to live somewhere regardless. The only reason anyone wants a paid off house is to have it paid off at the same time you retire - to reduce monthly costs. But even that goes away if you have more than adequate income.

If you invest - and re-invest the dividends your investments should double every 7 to 10 years... and your payment will stay fixed... and over that same period your income should increase - making your fixed payment even cheaper.

So - save now - invest now.

:cheers:

Great thread, would love to sit and pick your brain one afternoon over a coke.:D

[GregWeld]

Great thread, would love to sit and pick your brain one afternoon over a coke.:D



Bring it on buddy! You know where I live!:woot:

[GregWeld]

Annaly Capital (NLY) went "ex-dividend" today - so it's trading down roughly the amount you just got paid... it paid out .55 a share and is trading down .53 a share as I write. Do not attempt to adjust your TV -- this is totally normal. Stocks typically always trade down the amount they pay out... then "normally" they'll take a couple days to recover.

[Woody]

Youd be surprised how cheap you can live if motivated, all my bills combined are $1300/mo. Even my dad lives quite well off $1000/mo social security income.

Anyways on to some planning, I can retire at 59 with 90% of my pension for the rest of my life(government pension, costs 10% of my salary), should I buy a house now and amortize the hell out of the loan by paying double the payment on a 15 year loan then put the entirety of my house payment into a 457(b), or just make regular payments on the house and pay the excess into my 457 thus reducing my tax burden. Basically im asking is it better to pay down a debt at 3% and gain equity and defer investing for 7 years(how long it should take to pay off a house), or invest for the entirety of those 15 years at the 457 maximum? If I invest the full amount into the 457 I can lower my federal tax rate to 15% (I have a 48,000 salary that when reduced to 43,000 by the 457 contributions drops me to a 15% tax bracket from the 25% im at now), so I would guess that the tax deferral would be worth it?

You have to answer that question by analyzing risk vs. return. Paying off your loan early is a guaranteed no risk investment which produces a rate of return equal to the interest rate you are paying. You could also invest that money elsewhere such as the stock market in anticipation of getting a higher return (7% to 10%). If you invest in the stock market instead of paying the loan off early, you are taking on more risk in anticipation of a higher return. So it becomes a personal descision on whether you are willing to take on more risk to get a higher return. The risk is higher in the stock market because it is not a guaranteed return. The market may indeed go up 7% to 10% a year over the next 15 years, but there is a chance it will not go up at all, decline or even go up more than 7% to 10% a year.

You can also look at it and rate risk on a scale of 1 to 10 where 1 is a no risk investment with a low rate of return where 10 is a high risk that has the potential for high return, but also the change of loss. Paying off your loan would rate 1 or 2 whereas investing the money in the stock market maybe a 5? Where is your comfort level on the risk vs. return scale?

It is similar to asking should I invest in government bonds where I have a safe rate of return or invest in corporate bonds where the risk is higher, but the potential return is also higher. How safe do you want to be?

[67pro-street]

I am in the same situation with the housing loan vs. investments. I went to about 4 different lenders, local and online, and talked to them about possible home loan rates. Currently, I am 3 years into my 30 year fixed @ 4.375% which is a pretty good rate as it is. I was unsure if I should refinance with a 15 year, 20 year, or go back with a 30 year at a lower rate. In order to compare apples to apples, I had each lender give me a GFE (Good Faith Estimate). It is a standardized template that will help you compare apples to apples. If you dont get a GFE from each lender, then it will be hard to know what numbers you are really comparing against each other... So here is how it broke down for me:

Current @ 4.375%: $2300 (including escrow and PMI)
15 year @ 2.875%: $2700 (including escrow and PMI)
20 year @ 3.25%: $2400 (including escrow and PMI)
30 year @ 3.375%: $2000 (including escrow and PMI)

I could have swung the 15 year and cut the time it takes to pay my house off in half! BUT, That is a high monthly payment for me on top of electricity, water, garbage, groceries, etc and wouldnt leave me with much money at the end of the day to put into investments. So essentially, if i kept my current salary for the next 15 years I would have to hold off on investing for retirement for 15 years and basically lose that time for compound interest to help out my investments.

The 20 year came out to basically the same payment I have right now so I could live with the exact same habits I currently have (as far as spending goes!) AND cut 10 years off my home loan. It would have also allowed me to comfortably put in ~$300 bucks per month into an IRA on top of my company 401k contributions, and I could comfortably invest that money today...

With the 30 year I save ~$300 bucks a month from where I am at right now. So, this allowed me to now make my montly house payments AND invest $300 bucks per month with absolutely no change to my lifestyle. And, since I am currently able to make my house payment and swing $300 bucks per month into a Schwab account, if I take the 30 year then essentially I am able to keep my same lifestyle, make my monthly house payments AND put 600 bucks a month into additional savings for retirement (Schwab acct.)!! Thats $7200 bucks a year that I can invest, without changing my lifestyle at all. This is also assuming that I keep the same salary forever, which wont happen but its a worst case scenario.

In the end, I decided to refinance with a 30 year @ 3.375%. I would not have bothered refinancing unless I could save at least a percentage point. Reason being is that I am already 3 years into my 30 year loan so essentially I have 27 years left. By refinancing with another 30 year I am somewhat losing those 3 years of time. The other reason I wouldn't have refinanced unless I saved at least a percentage point goes hand in hand with the first reason. By the time I pay the closing costs, or have them rolled into my total loan value, not only am I losing that 3 years but I am also increasing the total loan amount by roughly 9k. If I were to just keep my current loan and make an additional 9k payment on my principal I could save a year or two of payments and interest which would have equaled the amount I save (this is assuming I was refinancing and saving less than a percentage point...).

All in all it took me a lot of chicken scratch on a paper pad, an excel spreadsheet with different amortization schedules on it, and a hell of a lot of back and forth and this and that before I decided on the 30 year. BUT, now I feel comfortable with my decision and feel like I can back up my reasoning. There are thousands of people out there who know more about money and future value of money vs. present value and all that stuff who would/will tell me I did the wrong thing. If I didnt spend all that time researching and somebody told me I did the wrong thing I would have started second guessing myself and thinking i eff'd up. So, spend some time, do some math, talk to your friends/family, and then choose a loan that you will feel comfortable with not only today, but also 10 years from now...thats my 1/8 of a cent:cheers:

[GregWeld]

With the 30 year I save ~$300 bucks a month from where I am at right now. So, this allowed me to now make my montly house payments AND invest $300 bucks per month with absolutely no change to my lifestyle. And, since I am currently able to make my house payment and swing $300 bucks per month into a Schwab account, if I take the 30 year then essentially I am able to keep my same lifestyle, make my monthly house payments AND put 600 bucks a month into additional savings for retirement (Schwab acct.)!! Thats $7200 bucks a year that I can invest, without changing my lifestyle at all. This is also assuming that I keep the same salary forever, which wont happen but its a worst case scenario.


Brilliant strategy!

When you do the time value of money... saving the MAXIMUM EARLY... is a key to long term returns compounded over time.

Will your investments always compound double every 7 to 10 years -- NO... but they only have to do that once or twice over your lifetime to make a SUBSTANTIAL difference!

But what will remain the same - your house payment and the fixed rate loan percentage. Where people screw up is in using their house as a piggy bank.

REINVEST the dividends and you're going to be a winner in the long run. You've got 30 years to retire - and then you'll live another 25 or 30 years... Your house will be paid for and your investments keep paying you. :cheers:

[GregWeld]

WOW.... this market is just whacked out! I like it -- but it's still just whacked.

You "newbs" are getting to see one crazy azz market that's for sure.

These market moves show you why you can't "time" the market -- and why it's so hard to "trade" the market... The days you think it should go up it goes down - the days you think there's nothing happening and the market is up 200 points.

It's days like today that show the "shorts" the door... and yet I think I'd have been betting with them (in other words - betting the market was going LOWER).

[GregWeld]

A very interesting look at investing.... and investing in big best of breed dividend payers.


http://seekingalpha.com/article/691741-the-good-news-about-failure-with-blue-chip-investing?source=email_investing_income&ifp=0

[GregWeld]

Today I took a look at some of the home builders... Which is a group I don't own and have never owned. I now know why! Wow what horrible charts. I thought perhaps now might be the time to look to see if there's some upside to them but AS USUAL I'm way late to that party. The smart money has already bid them up over the last couple years.

Lennar (LEN) has moved 200+% in the last TWO years! And now trades near its peak and pays a lousy half a percent dividend.

K B Homes (KBH) is one they talked about on CNBC this morning as having "not traded up with its peers" --- but it too is up this year 35% already and pays a stinky little dividend.

It's easy to look and say -- geez! They're going up big time and I'm losing out... and that MAY be true enough.. and yes... I think we're on the road to a housing recovery based on the bids for property my buddy just got on his 5 acres (6 bidders slugging it out!).

SO HERE'S MY TAKE: This is gambling... you're gambling that there is a SUSTAINED (2 to 5 years) housing turnaround.. and at this point if there is one LITTLE hiccup in the numbers - you're going to see these sell off big time... and the dividends aren't the kind that will make you comfortable waiting for 'em to come back. So while I might miss a nice double over the next couple years - I might also miss getting my azz handed to me.

Remember that in investing - you have CHOICES... and if you make a wrong choice -- you get a double negative for your effort. The double negative is that you loose on the bet - and since your bet is now tied up - something else is on the move up. So you lost and you lost the ability to catch the ride on the upside... that's a double negative in my book.

So here's my thought when choosing investments -- you look -- like at a pretty girl - it's okay to constantly be looking... but you don't need to risk your marriage going on a date. Yes - the upside is appealing - everyone loves to hit a big winner.... but the downside is just not worth "the risk". Europe hiccups - we hiccup - the tax law changes (vote OBAMA if you want to continue on a downward "entitlement" slide ala Europe) that might happen etc... and there's a lot of risk to a shaky recovery at this point. And since you don't get paid to wait - why bother.

[bdahlg68]

Greg - any thoughts on coal? They don't seem to have recovered well from 2008 yet. Also gambling, but thinking about picking some up some small positions in the likes of ACI or ARLP.

[GregWeld]

Greg - any thoughts on coal? They don't seem to have recovered well from 2008 yet. Also gambling, but thinking about picking some up some small positions in the likes of ACI or ARLP.

I don't know anything about coal - or commodities like that. I don't have investments in anything along those lines.

[preston]

Greg maybe you should invest in companies that run and maintain internet forum message boards. You're obviously a big believer in their products :)

[toy71camaro]

sure has been a crazy market...

on a good note tho.. I'm up 4% overall, with all my "Investing 102" strategy purchases i've made this year so far. Not bad i think!! Only 2 are "in the red" and one is only 1% in the red (CVX), other 6ish% (MCD), but that was bought before Investing 102 came along, when i was researching dividend investing on my own (starting to).

:cheers:

Although, technically, I'd want them ALL go to down for the next few years so i can build up more positions with the dividends they pay out.. but it is alot easier seeing your "picks" in the green vs the red. lol

[GregWeld]

Way to go Albert!

McDonalds will recover its former glory... and they're paying you to wait for it to do so... I was red in the name - after having huge gains in it - until this week when it went barely green... but I'm okay with the ups and downs of the market - those dividends are the true green!

The other day I was trying to show a buddy how to invest some new found money he's coming into... and I showed him a a "red" holding - it was down 4 or 5 grand... BUT then I showed him that they'd paid me 14 grand during the year. He got it!

I showed him that the gains nor losses are realized until you sell... and I don't plan to sell 98% of my holding any time soon.

On another note -- I have some (a years worth) bonds coming due between July and December.. so that money is "usually" rolled over into the next year out (in this case 2019 bonds) -- but my broker called and was trying to sell me on a couple and get this -- these were going to pay 2%!!! No growth in capital -- and 2% tax free.... until 2019! NO THANKS. I think he's fired. I can get 3% in McDonalds... and they'd have to be at the 30% income tax rate to get me down to 2% net...

[GregWeld]

Greg - any thoughts on coal? They don't seem to have recovered well from 2008 yet. Also gambling, but thinking about picking some up some small positions in the likes of ACI or ARLP.


Since you asked -- I looked into Coal... I now know why I'm not invested in that kind of energy...

Arch Coal (ACI) YTD - DOWN 52% - 1 year DOWN 73% - 5 year DOWN 89% - 10 year DOWN 39% And ----- drum roll --- the dividend is a whopping 1.74%

THEN I CHECKED OUT ALLIANCE RESOURCE PARTNERS (ARLP) -- now that's a stock a guy could invest in!

YTD - DOWN 19% - 1 year DOWN 21% - 5 year UP 33+% - 10 year UP 372%

And -- drum roll -- it pays a 7.31% dividend...

But since I don't know anything about that market - or why the Coal ETF (KOL) is so awful! Dreadful! BAD!.... I'd say I'm not looking to get into it. Just my own opinion. I just don't invest in stuff I don't know anything about.

[Vegas69]

What about Facebook?

[Bucketlist2012]

What about Facebook?

Todd. I still think there is a lock on shareholders selling..I think it will drop when some people bail out.

It is still a no buy for me, but again, I only buy what I understand, and facebook doesn't seem like a good investment to me..More of a gamble , but not for me.

Hopefully others will chime in about faceBook.

[GregWeld]

What about Facebook?


LOL.... Leave it to you to ask about FaceyBook...


My "problem" with Facebook is multi-pronged:


Eyeballs can bail on these types of "companies" faster than you can blink. And you don't find out info on that metric until you wake up one morning and the stock is down 20%

The company is run by a single person with little to no experience. Let's use the foot in mouth - stock avalanche - ala the idiot that runs NetFlix... BOOM! One stupid amateur statement and your money evaporates.

I've hammered and hammered over and over again the INVESTMENT vs gambling. With Facebook there is only one thing that a person can hang their hat on -- they HOPE it's going up from where they bought it. Period. They don't make money (profit) - they don't pay a dividend - the P/E is way out of whack... there just isn't anything a guy can say that states this is a good solid INVESTMENT. MySpace evaporated... 'cause Facebook won... what happens when something "new" comes along and bang... the only metric a guy was gambling on disappears?

To me - this is like CROCS (CROX)... they're faddish. IF - BIG IF - the company can move beyond and become mainstream you're golden... if not... you have a nice loss on your hands. They miss a quarter and you're down big. Crocs 52 weeks 'range' -- $14.20 to 32.47 -- I don't want to be the guy holding at 30ish and the stock is trading at 16.

The very fact that the IPO was a flop - and you have the lock up period yet to come off is another troubling factor. If the IPO ran 50% and climbed from there... then the lock up wouldn't bother me so much - because the rank and file might tend to only trim holdings while waiting for the price to climb. But now - if you were a holder - and you watched as the money slipped thru your fingers - would you tend to bail or hold? My guess is there's going to be plenty of new stock to come to market.

Let's use Microsoft as a prime example of how new stock to market affects the stock. The only thing that causes a stock to rise (or anything for that matter) is you have to have more people that want something than don't....Think houses - we went from everybody is buying one to nobody wants one and look at the result!

Paul Allen and Bill Gates dump NEW (Founders Stock) on the market monthly - in Bills case it's public knowledge - and he sells 200 to 500 HUNDRED MILLION PER MONTH... New never before been on the market shares... That just pounds the stock month after month... Now that it's been down for years - the grants that the employees got/get - they can't bail on 'em fast enough! So there's more shares "for sale". Thus you end up with a stock that's almost impossible to lift.

Once again = In investing you have OPTIONS... there are so many other GREAT investments out there that have growth rates of 100% over 5 or so years AND that pay income... That's where I put my money. They don't come with bragging rights.. but I smile all the way to the bank.:unibrow:

[Vegas69]

I wouldn't buy Facebook but I seem to remember someone without a Facebook account buying some shares. :unibrow:

[GregWeld]

I wouldn't buy Facebook but I seem to remember someone without a Facebook account buying some shares. :unibrow:

Only because I got them at IPO price of $38... and then PROMPTLY lost money selling the crap! :faint:

[Chad-1stGen]

If you are thinking about investing in coal or wondering why it's getting hammered then I have three words for you: cheap natural gas.

I don't know anything about coal or investing in coal. However, if you pay attention to all of the news on Fracking i would only invest in coal if fracking starts to get shutdown due to all the environmental concerns.

Otherwise fracking could end up being the nemesis of coal. I read the following line in a recent news article about natural gas

Eighty percent of future electricity generating capacity is expected to be from natural gas and many coal-fired plants may be shifted to gas. The market incentives are already there and jobs are flourishing.

Not only is natural gas cheap right now but it burns far cleaner than coal in power plants.

Just my .02

[GregWeld]

We've talked about Mutual Funds and 401's etc in the past -- and the fees they charge...


Here's an interesting look at them.



http://redtape.msnbc.msn.com/_news/2012/06/29/12465334-your-family-is-probably-losing-155k-from-401k-plan-and-why-new-rules-wont-help?lite

[glassman]

Thanx for the link Greg, good article. This info is great for guys like myself, i've always saved, but not the right way (in other words, have done the cardinal sin of investing and forgetting). Its not what we make, but what we keep.

My dad said it best i think, "nobody manages your money better than yourself" (i'm sure he was quoting somebody else..lol)

[GregWeld]

My dad said it best i think, "nobody manages your money better than yourself



That's the part that kills me the most I think... that people abdicate the one thing that is probably the most important to them. Money isn't everything - but it does pay for your essentials - your education - etc... yet people seem to not really want to pay attention to it. Trust me - it doesn't buy you happiness - but it sure as heck does everything else you ever need and want! Try living without it -- and you'll find out it's pretty danged important.

:cheers:

[Bucketlist2012]

Morning Gents.

I just thought I would throw this out there.

Some people never get started on Investing because they just don't know what to do, or they always have something that get's in the way..Then months and years go by, and they haven't done anything.

I will say that I get help. I meet with a "Fee only" Fiduciary to discuss things, at least once a year. From the NAPFA organization.

Sure you can do it by yourself, but for those that may want help,DO NOT go to the bank, or a Broker. They are there to sell you their products, and at a high fees that has fees on top of the fees..

As my money grew, I decided to get a sounding board, a Fiduciary, to discuss my Strategies...

There was a rap song once that said,"I keep my mind on my money, and my money on my mind"..That is what I do..

I am not saying you have to have help, but if you ever think you need it,NAPFA, may be your choice..There is also the Garrett Network, but I have never used them.

Remember , FEE ONLY, and FIDUCIARY...not fee based...

Just a thought for those that are stuck in a rut, or frozen and not doing anything. For those of you with a good working plan, you probably don't need the help.

Mike:cheers:

[GregWeld]

Here's an interesting article on the effects of OBAMACARE on your income...


I don't want to get into a political discussion... or even a healthcare discussion... but I will be voting for a change. I'm just not for socialized "anything". We only have europe to look to if we want to see what all this "free" stuff does for an economy.


http://online.wsj.com/article/SB10001424052702304830704577496580986417316.html?m od=WSJ_hp_mostpop_read

[Bucketlist2012]

Here's an interesting article on the affects of OBAMACARE on your income...


I don't want to get into a political discussion... or even a healthcare discussion... but I will be voting for a change. I'm just not for socialized "anything". We only have europe to look to if we want to see what all this "free" stuff does for an economy.


http://online.wsj.com/article/SB10001424052702304830704577496580986417316.html?m od=WSJ_hp_mostpop_read

Great article Greg...Another way to punish us, to fund other projects.

[GregWeld]

Great article Greg...Another way to punish us, to fund other projects.



We all have our "political beliefs".... and there is no right or wrong IMHO.... so political discussions can go on and on and end up with no answer. But --- one only has to drive thru California to see what happens when a government entity is forced (chooses?) to spend it's income on "entitlements" rather than infrastructure (roads and bridges etc), education, police and fire... which to me - is what government SHOULD be doing for the public. There are places in California that I just drove through - where I was certain I was in a third world country. The roads were crumbling.... and the houses and businesses along those roads were in even worse shape. To me this is a very strong statement that whatever they're doing - isn't working. Once someone goes on entitlements they don't go off and they're lives don't get better - they get worse... there is no income or productivity from that person - therefore the government collects less.... and spends more... and has less to spend on things that truly benefit the masses such as decent highways and keeping those clean and trimmed... etc etc.

WE -- three couples -- actually discussed where else we would go on our next trip to AVOID California. Next trip will take us thru Arizona and Utah. We'll be able to trailer at highway speeds and NOT beat the stuffing out of our equipment... and frankly.. we're hoping it's less depressing.

[GregWeld]

I want to share with you guys (and gals) WHY I don't believe in the FaceyBooks of the world as far as INVESTING goes.... It's because after having lived investments for some 30 odd years... it's been proven to me time after time - that it's just not necessary to 'gamble' when I can just invest... and while my investments might seem mundane... they seem to get the job done. I'm not bragging here -- to the contrary -- I'm trying to get the 'newbs' to understand and be able to separate the "exciting get rich" stuff from the just boring standard investments that DO make you rich over time. To have faith in INVESTING over gambling...

Let's look at one of my personal holdings, Philip Morse (PM).

For the Schwab account I use here (since it was "new money") it's the easiest to use for examples etc...

I bought 2500 shares of PM on 02/03/2011 @ $57.80

I added (remember to scale in and out!) 2000 more on 10/24/2011 @ $70.119

I bought 2000 more on 02/10/2012 (ONE WHOLE YEAR AFTER THE INTIAL INVESTMENT) @ $80.399

A month later -- I looked at my GAINS (paper) and decided I should lock some of that gain in -- because frankly -- NOBODY EVER WENT BROKE TAKING A GAIN.... (I laugh at this because it usually costs me money in the long run - as you sell stock that just keeps going up!)... So on 03/28/2012 I SOLD 1000 shares @ $86.671.... If you do the math - that was "free money". LOL

NOW THEN --- I'm still "chasing" yield -- and this is a good core holding and has a good yield...

So on 4/30/2012 I buy 500 shares @ $89.289

Then it drops a bit - and I buy 1000 shares on 05/21/2012 @ $84.144

You all will no doubt grab your calculators to see how I came out -- but that is not the reason for this post...

Here's the other factor -- I live off my dividends and interest... and while I locked in some LTCG -- (then promptly put it back in at higher prices!) -- the key here is to look at the ONE YEAR+ GROWTH OF MY ORIGINAL INVESTMENT @ $57.80 and TODAY it traded at $89.00 !!!!


I took a REALIZED GAIN of $57,803.58 (Long Term Capital Gain)

And my dividends of $13,595.00

Totals $71,398.58 (not bad for 15 months!)

All of this took ONE YEAR AND 3 MONTHS.... AND I STILL have a paper "GAIN" of $106,432.58 in the stock as I type this!

I ask you.... is this boring investing or is it gambling... and with this kind of growth of capital and getting paid to do that on top of the gain... does a guy really need to gamble?

[GregWeld]

Okay -- without all the details -- here's another BORING stock... AT&T...

By the way -- I'm not RECOMMENDING any of these names to anyone -- but in order to have a "discussion" you have to talk about something... so I'm once again using names that I own.


The thing about RETIREMENT is that you're going to have to plan on living a while AFTER you retire... hopefully 25 or 30 years. Think about that for a minute.... 25 years. Nobody ever does the actual math... but if you retire at 65 and want to live 'til you're 90... that's 25 years! Now days - people live that long easily! And think about the medical advances we've enjoyed in the last 25 years that have helped people live longer! 25 years ago - you had a heart attach - you died! Now - no biggie...

Okay -- so you have 15 years before you retire -- and you're going to live for 25 years AFTER you retire -- that's 40 YEARS! That's 40 years of INFLATION...


Had you bought/invested in boring old AT&T in 1986 (ONLY 26 years ago) -- you'd have 600+ % GROWTH in your CAPITAL -- and you'd have gotten a dividend to live on all this time. For 15 years it would have been reinvested buying more shares - then it would send you a check every quarter...

How boring is that? 605% growth.... That will keep you AHEAD of inflation... and keep you in a new fishing boat so you can actually enjoy your retirement! :woot:

[toy71camaro]

well i sure hope they continue on that growth pattern... LOL.

they're up 6% for me since I bought $1k worth last month. :thumbsup:

[GregWeld]

well i sure hope they continue on that growth pattern... LOL.

they're up 6% for me since I bought $1k worth last month. :thumbsup:


I buy and hold AT&T (T) for a "steady eddy" and because it pays a larger dividend than many stocks. Ditto this with Verizon (VZ) which I don't own but have from time to time (use these to park money if you're not sure where you want to put it - they don't go down much and don't go up much either).

AT&T etc are the kinds of stocks that you hold really long term because over time they will save your butt when things go south -- and you can count on 'em to not rattle your cage. Stocks like this aren't very exciting when things are going WELL... but they are very nice to own when things aren't and we will all go thru periods when the steady eddies are the only thing "working".


:cheers:

[96z28ss]

well i sure hope they continue on that growth pattern... LOL.

they're up 6% for me since I bought $1k worth last month. :thumbsup:

They are up 18% for me and that was just 3 months ago when I took my 401k and put it into a self directed IRA

[toy71camaro]

They are up 18% for me and that was just 3 months ago when I took my 401k and put it into a self directed IRA

damn!! nice!!

Im trying to get my work to allow us to do self directed 401ks, instead of mutual funds... we'll see.. its an "option" according to the 401k company, but my work has to sign up for it or something like that.

[XLexusTech]

Looking at the 401K options available to me by my employer, I believe I am getting a bit of the short end of the stick. Basically NONE of the funds available to me in my plan have a decent expense ratio. Even the "Index mirror" funds are over .1 thats $100 every 10K in Management fees ??? !!!! Total BS.... So my question is can I move money from my jobs plan to any kind of retirement account that I can manage myself? For example through Vanguard? Are their tax issues or penalties that make this a bad idea? I assume maybe only the money I contributed is eligible?

[toy71camaro]

Looking at the 401K options available to me by my employer, I believe I am getting a bit of the short end of the stick. Basically NONE of the funds available to me in my plan have a decent expense ratio. Even the "Index mirror" funds are over .1 thats $100 every 10K in Management fees ??? !!!! Total BS.... So my question is can I move money from my jobs plan to any kind of retirement account that I can manage myself? For example through Vanguard? Are their tax issues or penalties that make this a bad idea? I assume maybe only the money I contributed is eligible?


Look into setting up a Personal Brokerage Account through Vanguard. I've seen someone else on here talk about doing that. I'm trying to do the same thing at my work, but we use John Hancock Pensions, and the "company" needs to be setup to allow it (its an "option, JHP said, that my work must approve")... This will allow you to invest in whatever, just like a normal brokerage account. Worth it to check.

[GregWeld]

Even the "Index mirror" funds are over .1 thats $100 every 10K in Management fees ??? !!!! Total BS....



So here's a "bigger picture" thing to look at IMHO. The fees are "nothing" IF -- BIG IF -- the funds are making your money grow. That, after all, is what you're supposed to be paying the bozos to do!

I would take a harder look at your money growth - dividends, if any, etc and see if - while the fee is annoying - if they're making you a grand for every $100 you're paying them...

:cheers:

[GregWeld]

A couple "observations" in my Schwab account... when I look at a red letter day like today. I noticed a couple holdings are green. I'm the kind of guy that always looks for "what is different". So on a day when everything is green - I check up on the one or two that are red... and vice versa. I'm looking to make sure I haven't missed some important news event that would affect my holding.

Today -- Mickey D's is up... okay - nice but nothing happening there...

But I also noticed Annaly (NLY) and Blackrock Duration Income (BLW) are UP on a red day... again no particular news... BUT in looking at the chart - I click on the YEAR TO DATE charts of these two...and here's what I love:

BOTH have nice share price gains ON TOP OF outsized dividend payouts. NLY is up 6+% YTD and BLW is up 4% YTD. While that doesn't sound like much (and may or may not hold) those are nice returns if they were all by themselves -- add the dividend and bingo... I'm a happy man.

AGAIN -- This is NOT A RECOMMENDATION -- These are NOT -- read that right -- NOT buy and hold names. We have an adverse rise in interest rates etc - and these get CRUSHED in a stampede for the door. So if you're not watching, and reading the news, and paying attention -- DO NOT buy these kinds of shares. Stick to the MCD - KO - PM - JNJ - KMB - KMP type names.

[XLexusTech]

So here's a "bigger picture" thing to look at IMHO. The fees are "nothing" IF -- BIG IF -- the funds are making your money grow. That, after all, is what you're supposed to be paying the bozos to do!

I would take a harder look at your money growth - dividends, if any, etc and see if - while the fee is annoying - if they're making you a grand for every $100 you're paying them...

:cheers:

Not really.. speaking exclusivity if the INDEX funds I have... they are making more on fees than I am in growth.... total scam... total BS... the unnamed company managing my $$ has better options.. just not in my plan.. Coincidencely they are my Co. Customer... huuuummmm

[GregWeld]

You guys know what I love about dividend stocks??

Today the DOW was down 124 points and I finished the day in the GREEN.... Gotta love 'em!

:cheers:

[GregWeld]

Not really.. speaking exclusivity if the INDEX funds I have... they are making more on fees than I am in growth.... total scam... total BS... the unnamed company managing my $$ has better options.. just not in my plan.. Coincidencely they are my Co. Customer... huuuummmm




Ah ha -- you have a bit of a conundrum there....

[Vegas69]

What do you guys think about converting my SEP IRA over to a direct type and investing in property. My ROI analysis on a single family has me realizing 20-25% on my initial investment in the first year and it increases as principal reduction increases. Of course rental amount decline will offset to some extent in the future.

How does the current stock market level compare to highs in history? Is the market to high for the economy?

[GregWeld]

What do you guys think about converting my SEP IRA over to a direct type and investing in property. My ROI analysis on a single family has me realizing 20-25% on my initial investment in the first year and it increases as principal reduction increases. Of course rental amount decline will offset to some extent in the future.

How does the current stock market level compare to highs in history? Is the market to high for the economy?

#1 Todd -- talk with someone qualified to answer your question -- I'm almost positive that PROPERTY is not allowed in a SEP/IRA/401 investment vehicle.

I own part of an apartment building in GWEN'S IRA -- and only because it is a partnership and LLC... and it's been absolute HELL to have it in there. Most institutions won't hold "private paper".... and because it's not a qualified investment - we have to file income taxes on it every year - and the taxes have to be paid out of the IRA -- and try to get that done... it's just a total PITA. To the point that last tax filing season I had a discussion with my accountant about just "buying the investment outta there"! Turns out - that can't be done either... :rolleyes:


RE: Market question


There is no way anyone can answer a question like that... it's just GUESSING. And or "market timing" - which doesn't work. The market - like housing - just goes up over TIME.... You'll never get in at the right time. The minute you're in the little man in wall street takes everything you bought straight down. :D

[96z28ss]

I finished in the green today also, not by much but green is green.

[clill]

Here is what happens when Greg Weld is in charge of the fireworks.

http://www.youtube.com/watch?v=lrPCEubDZ9A&feature=youtube_gdata_player

[GregWeld]

Here is what happens when Greg Weld is in charge of the fireworks.

http://www.youtube.com/watch?v=lrPCEubDZ9A&feature=youtube_gdata_player



Could that be the reason I'm retired?!?!?! One big OOPS..... :lol:

[Vegas69]

#1 Todd -- talk with someone qualified to answer your question -- I'm almost positive that PROPERTY is not allowed in a SEP/IRA/401 investment vehicle.

I own part of an apartment building in GWEN'S IRA -- and only because it is a partnership and LLC... and it's been absolute HELL to have it in there. Most institutions won't hold "private paper".... and because it's not a qualified investment - we have to file income taxes on it every year - and the taxes have to be paid out of the IRA -- and try to get that done... it's just a total PITA. To the point that last tax filing season I had a discussion with my accountant about just "buying the investment outta there"! Turns out - that can't be done either... :rolleyes:


RE: Market question


There is no way anyone can answer a question like that... it's just GUESSING. And or "market timing" - which doesn't work. The market - like housing - just goes up over TIME.... You'll never get in at the right time. The minute you're in the little man in wall street takes everything you bought straight down. :D

One of my best buddies is my advisor so he'll set me straight on the logistics. He'll tell me to leave it in there regardless. My thought is to use the money in a venue where I'm extremely experienced vs. a mutual fund that isn't performing, hasn't been performing, and I'm not sold will ever perform. Times change, the market has went up and down since I started investing, it's been a safe investment, not a retirement plan. Where else am I going to get 25% on my money? The compound effect hasn't come into play yet.

My only concern is putting to many eggs in one basket. I just consider low prices and low rates a genuine opportunity. I'm contracting a propert in a GOOD area of Vegas for 109,500. I can rent it for $1050 a month. The mortgage(PITI) is $612 a month. Cash flow $400 a month, principal reduction, and depreciation. Down the road I can realize the residual or 1031. The only fault I can find is if the **** really hits the fan.

[skatinjay27]

I'm contracting a propert in a GOOD area of Vegas for 109,500. I can rent it for $1050 a month. where is it ?;)
the shack im in now has me paying very close to that(well above market value), and the landlord wont budge...
plus i was too stupid and careless before the economy tanked so im stuck being a renter for now.:(

[Vegas69]

It's in Silverado Ranch. I won't accept that boat anchor for payment.:D

[skatinjay27]

you read my mind!:P

aww, im stuck staying in the north by the shop.

[GregWeld]

One of my best buddies is my advisor so he'll set me straight on the logistics. He'll tell me to leave it in there regardless. My thought is to use the money in a venue where I'm extremely experienced vs. a mutual fund that isn't performing, hasn't been performing, and I'm not sold will ever perform. Times change, the market has went up and down since I started investing, it's been a safe investment, not a retirement plan. Where else am I going to get 25% on my money? The compound effect hasn't come into play yet.

My only concern is putting to many eggs in one basket. I just consider low prices and low rates a genuine opportunity. I'm contracting a propert in a GOOD area of Vegas for 109,500. I can rent it for $1050 a month. The mortgage(PITI) is $612 a month. Cash flow $400 a month, principal reduction, and depreciation. Down the road I can realize the residual or 1031. The only fault I can find is if the **** really hits the fan.



For you, Todd -- it might "pay" you to make a withdrawal of your SEP/IRA and just pay the taxes and penalty on it. I totally agree with you that with your knowledge and ability - you should be buying rentals.

You'll just have to come up with some extra "deductions" to cover the withdrawal to minimize the hit.:unibrow: No way around the 10% penalty - but that is nothing compared to the opportunity.

There are plenty of investor groups right now that are buying anything and everything they can steal. This is something you should maybe look into - where you're the managing partner and get 51% stake plus "fees" (5% annually) for finding - structuring - managing. The partners buy shares and it's their money that makes up the down stroke and fix up costs and fund the initial pot for repairs etc. Usually the ROI is 7% and their portion of the tax benefits of depreciation. You'd only be limited by how much skin you'd want to put in the game - and the guys I know that do this (we've been doing this since the early 80's - except it's large Class A apartment buildings not houses) won't invest with anyone that doesn't have significant skin in. But look at it this way -- instead of 30K down on one house -- if you have 10% in - you're partners would have 270K in -- so you could buy 10 houses instead of one.

If the shizzle hits the pan "that bad" we're all screwed regardless of the type of investments we have.

Property is an absolute steal right now. We'll likely never have the prices so low, and the financing at ridiculously low rates at the same time. Back the truck up and buy like a pig.

If interest rates weren't so low I'd finance the stuff for you... but the bank will give you cheaper money for a FAR longer term. I bought a building for my brother in law last year and gave him a 6% rate for 5 years with a balloon (that I'll just roll unless he wants out). But that is commercial property which carries higher rates. Rates are like 5.45% on a 3MM 30 year with a 80% LTV. I gave him a 100% plus the build out costs.... just like the old days!:willy: :lol:

[Vegas69]

That's a great idea that I'll put some serious though into. I'm limited to 5 single families due to financing restrictions anyway. That is, unless I find private financing at a higher rate. One way I may get around it is to have Kelli and I finance some separately.

I'll find out if there is any angle to gain access to SEP funds without a tax burden and post it here next week. My broker has a grasp on it as well so I'll pick his brain a little.

I can get my initial investment back in 5-7 years depending on vacancy, rental rate decline, and repairs. Then I'm still getting 20-25% return on my money based on todays rental rates. Even if it drops to 10-15%, hard to beat.

[Rybar]

RE: Market question


There is no way anyone can answer a question like that... it's just GUESSING. And or "market timing" - which doesn't work. The market - like housing - just goes up over TIME.... You'll never get in at the right time. The minute you're in the little man in wall street takes everything you bought straight down. :D

Thanks Greg, I was going to ask you this question.

Todd interesting points. I would be doing what you are thinking for sure but crack shacks in my area $800k are an average home is a million bucks! :_paranoid

[GregWeld]

God bless SIN stocks.... (think TERBACKY MO and PM etc:D )


Every time we have a down day... I look and the down ain't a 1/3rd of what I think it might be... so you look at your accounts to figure out why. It's the SIN stocks holding like a foundation under a house.

I used to use them to park money - but in the last 3 or 4 years I've just seen the light and now use them for income and growth. AND they've turned into the stocks that go green on a red letter day. Gotta love that!:cheers:

[realcoray]

My only concern is putting to many eggs in one basket. I just consider low prices and low rates a genuine opportunity. I'm contracting a propert in a GOOD area of Vegas for 109,500. I can rent it for $1050 a month. The mortgage(PITI) is $612 a month. Cash flow $400 a month, principal reduction, and depreciation. Down the road I can realize the residual or 1031. The only fault I can find is if the **** really hits the fan.

This is the biggest pitfall of real estate investing, cash flow is not a function of rent - PITI, because what happens when you have to replace a water heater, or a roof etc?

In reality a property like that will over a longer period of time cash flow probably 150-200$ a month. Now as you mention you get the benefit of principle and possible appreciation so it can definitely be double digit returns.

Most of the hard core RE investors, like say from biggerpockets.com, would advocate rent be 2% of the purchase & rehab price, so 1k rent on 50k house but that would mean investing out of state (the south mostly) for many of us, and then paying a property management place (thus taking 8-12%)

I found that when looking at the numbers that anything less than 1% is not worth it to consider, and you have to assume that expenses will be about 40-50% over the long term, and that does not include PITI.

Again though, the deal you mention would not be terrible, I don't have my spreadsheets at work but I'm closing a somewhat similar ratio deal in 3 weeks, a 132,500 house that I figure will rent for 1300+ quickly. I projected making about 250$ a month, with PITI of around 690$.

[GregWeld]

Don't forget the tax benefits of depreciation. They can be substantial and especially for the "self employed" person.

[GregWeld]

Well good morning gents....


Any of you hear about the COKE (KO) TWO FOR ONE STOCK SPLIT?? Splits July 27th and you should see the shares in your account early August...


Does this mean anything? Well.... yes and no.

A stock split all by itself just means that you'll now have twice as many shares at half the cost per share. So there is ZERO value change. BUT.... at some point it becomes what I call the "law of large numbers"... so a .10 share price move is now multiplied by the number of shares you have... and any dividends etc - should they decide to raise them also see that same affect.

:cheers: :woot:

[mdprovee]

Well good morning gents....


Any of you hear about the COKE (KO) TWO FOR ONE STOCK SPLIT?? Splits July 27th and you should see the shares in your account early August...


Does this mean anything? Well.... yes and no.

A stock split all by itself just means that you'll now have twice as many shares at half the cost per share. So there is ZERO value change. BUT.... at some point it becomes what I call the "law of large numbers"... so a .10 share price move is now multiplied by the number of shares you have... and any dividends etc - should they decide to raise them also see that same affect.

:cheers: :woot:

Since I do not have any Coke, would now be a time to start and grab some of the "law of large numbers"?

[Sieg]

KO looks tempting and I am a user. :D

Effective in 16 calendar days and it's currently at a historic high of $78.25........:question:

[GregWeld]

Okay -- responding to the two previous posts....


Scott -- Apparently you don't look at the charts -- the long term charts.... 5 and 10 years.

If you do - I'll ask you this question. At what point would you have chosen to get in - pick a point - and then would you have asked me the same question about a "historic high"?

Total Return

1 Year
+17.3%
3 Year
+74.3%
5 Year
+72.1%



Mike -- A stock like this is a long term buy and hold and there is NO WAY to time the market. When you buy - it will go down - but look at the above historical return.... and I'll ask you the same question I did Scott. At what point was the right time to get in, in the last 5 years? Would down $1 on a bad day be the right time? Would that affect your performance? :D

[Sieg]

I looked at this one and should have said "near" historic.
http://chart.finance.yahoo.com/z?s=KO&t=my&q=&l=&z=l&a=v&p=s&lang=en-US&region=US

Entry anytime between '62 and '95 or in '03 or '05 which is where it will be 7/27 :D

Buy it now check back in 5 years is my rational with this one. I doubt Coke will go the way of Kodak.