Long Term Investing

[David Seale]

So I guess I am starting to look out for my future and my retirement. What stocks or mutual funds do you recommend? How about some "new" or "up and coming" stocks? Or some stocks that we know are just going to go up over the next 40 years

My first investment tanked. So my confidence has been weakened.

I know next to nothing about investing. I dont know really where to start. Ive started reading a book. Bought an audio book by that mad money guy. But most of it still is pretty foreign to me.

[David Seale]

Oh, and is right now a good time to buy?

[Brooklyn]

I have a client that has his 401K invested in apple and its looking good.

[Diamondflip]

ever consider the FOREX market?

[Brooklyn]

Never really played with forex, but from what I've read and reveiws it seems like it would be worth doing your homework on.

[Pr3Lud3PLaYa]

I have a client that has his 401K invested in apple and its looking good.

it was a good one to buy into a while back. I doubt it will go much higher than the $200 mark but who knows. I kept up with it, recomputing my research on it over the last year and a half and I never thought it would go past the $180. Once it passed what I felt was it's true value, I stopped looking at it b/c I was not going to buy more. Even though I thought it was slightly overpriced, I got in a little over a year ago and now hold 0 shares of it. It has taken over a 15% drop already today, that sucks.

[s14jimmyI]

How much money do I need to start investing???

[tit$]

i REALLY suggest you be careful about taking advice on a specific stock to buy david. a stock broker should be about the only person you take that advice from.

[Brooklyn]

i REALLY suggest you be careful about taking advice on a specific stock to buy david. a stock broker should be about the only person you take that advice from.

wrd

[mekrew]

dont listen to brooklyn thats fo sho :2cooleek:

[darestie]

I just put some money into Tata motors (TTM). They are releasing a $2,500 car into the indian auto market. It's aim is to switch people off of motorcycles and mopeds. I think it has a lot of potential to become an even larger part of the global car market. They are also in negotiations to buy Land Rover and Jaguar from Ford. Just do you own research this is just a place to start.

[winc281]

bonds?? do you have a retirement acct set up?? or you can do something short time like a cd

[yungintl]

Roth IRA for long term hands down

[David Seale]

i remember reading about roth ira's... good stuff. should i start one of those AS WELL AS a 401k that my company offers?

[cabajaba]

I wouldn't start with stocks unless you have a lot of money to create a diversified portfolio consisting of about 12 to 15 stock and bonds.

Mutual funds are already diversified for you...so if you like apple then buy some Large Cap Mutual Funds cause they contain apple stock inside.

if you have loved ones you care about and need cash value growth. Consider Variable Universal Life that grows with Mutual funds and provides liquid Cash Value growth that can be used for emergencies and supplementing your retirement income.

[koalaznbear]

How much money do I need to start investing???



I'd really like some insight into this as well. I've gotten mixed signals from all sorts of online articles and online trading websites. Some say to start with a good 5,000 - 25,000 yet others say you can start with as little as 500. Mind you, I'm not just looking to invest in stocks; I'm looking to go stocks + mutual funds or money markets.

[tit$]

you can start investing with $1 dollar, it really doesn't matter.

just understand that if you invest one dollar and make 10%, now you've only got $1.10. if you invest $100k and make 10%, you've got $110k.

the less you invest the less you stand to make.

[koalaznbear]

That's really not the case though, is it? I mean, don't you have to set aside a certain amount for fees and monthly charges, depending on where (or who) you invest with?

I appreciate your fast response, by the way.

[tit$]

depends on what you're investing in - just like anything else, you can use a broker that charges fees or you can just go right at it.

regardless of the type of investment, you need to do your research. counting on other people with your money can be a very stupid thing.

[cabajaba]

I'd really like some insight into this as well. I've gotten mixed signals from all sorts of online articles and online trading websites. Some say to start with a good 5,000 - 25,000 yet others say you can start with as little as 500. Mind you, I'm not just looking to invest in stocks; I'm looking to go stocks + mutual funds or money markets.


as you mentioned it takes a combination of different products to obtain your objective. Its all a matter of picking which ones suit you best and how much to contribute to each one.

When I work with my clients I make sure they build up a fast cash pool equal to 3-6 months income.

The rest is spent on the investment of choice - it can also be a combo.

Example. 500 dollars a month.
pick the allocation between Money market, Roth, Individual Mutual Funds (outside of retirement).

it could be 150, 150, 200....whatever your objective is.

I wouldn't do stocks unless you have enough money to create a diversified portfolio of stocks and bonds 12-15 different ones.

You can get that diversification and potential growth through mutual funds.

[IgotThatWenis]

Roth IRA for long term hands down

i remember reading about roth ira's... good stuff. should i start one of those AS WELL AS a 401k that my company offers?

I was explained how this works in my corporate finance class. Since we're young and we have lot of time to invest. Our best bet is a ROTH IRA and instead of letting a company or firm manage your investment you should do it on your own. The way investment companies work is to guarantee you a 5-6% return on your investment, but the company is usually making 15%+ on your money and giving you a small percentage. Although the risk is higher when you invest, you also are able to get a good return and since you're young you can come back from a loss.

The difference between a traditional IRA and a ROTH IRA is the tax that is charged on them. In a traditional IRA you get a tax deduction on the amount of money you put in to the IRA, but when you're ready to retire and take the money out they hit you with a tax charge.

In a ROTH IRA, you get no tax refund for your investment in to the IRA at the end of the year, but when you retire, you're not taxed on what you take out. So in the end, you may have saved a couple of dollars with a traditional IRA, but you would save a lot more at the end when you're ready to retire. A ROTH IRA is where it's at.

I think the max that you can invest in a ROTH IRA is around 4k per year. If you have an emergency situation and you need to get the money out, you will be charged a penalty for taking the money before retirement, but if you need the money to buy a house or for a child or your education, I think they will not tax you.

Good luck with your investments:thumb:

[RACER X]

ROTHS are good wasy to invest for the future, but the reality is that it's easier and more consistant to invest in your co. 401k. sure it'd be nice to take 10% of your paycheck, then invest it, but stuff usually comes up and yu make excuses then you don't invest, but you'll 2x on your next check. it usually doesn't happen.

if it comes off your check and you never see it, you'll figure out how to live on the lower income. the investments are made every paycheck and you don't have an excuse not to invest.

[longnguyen714]

I've been thinking of where the next big hit would be, and i think it will be in water, i dont remotely have enough to buy water rights. Thats where im betting my money on. Its a resource that everyone needs, and can be somewhat controlled.

[cabajaba]

ROTHS are good wasy to invest for the future, but the reality is that it's easier and more consistant to invest in your co. 401k. sure it'd be nice to take 10% of your paycheck, then invest it, but stuff usually comes up and yu make excuses then you don't invest, but you'll 2x on your next check. it usually doesn't happen.

if it comes off your check and you never see it, you'll figure out how to live on the lower income. the investments are made every paycheck and you don't have an excuse not to invest.

One thing to take into account is Tax diversification. The typical problem I run into with my clients is that the only Retirement plan they have is the 401k which means that it is 100% Taxable. It would be better to scale down your contributions to capture only the match (100% return, free money) then anything else you would like to contribute.....create a ROTH. You contribute to Roth with after tax money and the growth grows tax deferred, when you reach 59.5 you can take money out 100% tax free

So you are retired and you can have 2 buckets of money as apposed to one big taxable bucket.

[azinwood]

One thing to take into account is Tax diversification. The typical problem I run into with my clients is that the only Retirement plan they have is the 401k which means that it is 100% Taxable. It would be better to scale down your contributions to capture only the match (100% return, free money) then anything else you would like to contribute.....create a ROTH. You contribute to Roth with after tax money and the growth grows tax deferred, when you reach 59.5 you can take money out 100% tax free

So you are retired and you can have 2 buckets of money as apposed to one big taxable bucket.
i agree, except that i believe you can only contribute to a roth if as a couple you make less than 150k.

between 401k and normal IRA, would it still be advisable to invest in both?

[cabajaba]

i agree, except that i believe you can only contribute to a roth if as a couple you make less than 150k.

between 401k and normal IRA, would it still be advisable to invest in both?

Very valid point. I guess my suggestion only works if you fall into the criteria of being eligible to contribute to a Roth.

The only other product (to my knowledge) that you can contribute too with after tax dollars and pull out completely tax free is the cash value inside of a life insurance

[RACER X]

i agree, except that i believe you can only contribute to a roth if as a couple you make less than 150k.

between 401k and normal IRA, would it still be advisable to invest in both?

yes, it is. the problem is that most people don't have the discipline to move the $ over the roth. and unless it's done auto. alot of people put off ROTHS, whereas 401s are usually payroll deduc.

[Flores]

not eligible for roth... so just a straight money market account, with all the tax pain for me :(, it's really a good deal, if you can get in to it in addition to a regular 401k.

On the plus side, I enjoy managing my money, so it's not THAT big a deal.

[Flores]

As for long term investing, it's just like buying into anything else. Do you research the kind of car or house your going to buy? When you invest your money in a company (or a mutual fund), be an informed buyer. The goal for long term investing should be to have your money being used by companies that are going to be stable, always make money, and not be subject to a lot of market fluctuations.

So, food production and distribution is usually a safe bet, as well as competently run real-estate management firms. But honestly, any firm that is paying a consistent dividend is a good, long term hold. The dividend is basically your payday, independent of market fluctuations. People that make money fast or go broke fast, are trading on supply and demand fluctuations for a specific stock, not on the fundamental long term soundness of a company. Obviously, one is more risky than the other.

If you REALLY get into managing your money, you start looking for newer firms that seem to have a good idea, and are going to blow up (Walmart, for example. if you had bought into their IPO with 10k, your walmart shares would be worth almost 5 million now). These are the riskiest types of investments to make, but they also can be the most rewarding.

It's like that in most things in life, the greater the risk, the greater the reward!

[cabajaba]

there are other alternatives to not pay taxes on your gains, such as Variable Annuities.

Its not 100% Taxable nor 100% Tax Free.

it uses the LIFO accounting concept - Last In First Out.
your principal is the first
your gains are after (last in)

therefore at distribution (aka after 59.5) you will pay taxes, but only on the gains that your investment made, not on the whole thing.

Might be a good idea for you Flores. Paying taxes and the impact of inflation on your money market gains, you might be barely breaking even.

We need to give uncle sam as litte as we can (legally of course)

[cabajaba]

yes, it is. the problem is that most people don't have the discipline to move the $ over the roth. and unless it's done auto. alot of people put off ROTHS, whereas 401s are usually payroll deduc.

Well said,

it is a lack of discipline, I set most up my accounts with automatic drafts.
ranging anywhere from 50 which is the minimum all the way up to $1150.

Quite a big range but it gets them to save with out thinking about it.

if our 401ks worked that we actually got paid our money and then you would have to go into your checkbook and write and check and mail it in....no one would have enough to retire on.

eliminating the need for discipline through auto drafts is very important.

[NisAznMonk]

yes, it is. the problem is that most people don't have the discipline to move the $ over the roth. and unless it's done auto. alot of people put off ROTHS, whereas 401s are usually payroll deduc.

I have my Chase investor deduct $200 out of my account every month and that goes into my Roth IRA. Now what happens after that is beyond me. :Ohnoez:

[Flores]

there are other alternatives to not pay taxes on your gains, such as Variable Annuities.

Its not 100% Taxable nor 100% Tax Free.

it uses the LIFO accounting concept - Last In First Out.
your principal is the first
your gains are after (last in)

therefore at distribution (aka after 59.5) you will pay taxes, but only on the gains that your investment made, not on the whole thing.

Might be a good idea for you Flores. Paying taxes and the impact of inflation on your money market gains, you might be barely breaking even.

We need to give uncle sam as litte as we can (legally of course)

Hmm, I have some reading to do, thanks for the tip! Is this some kind of product I have to buy, or can I manage myself?

[Flores]

Other investment vehicles, such as IRAs and employer-sponsored 401(k) plans, also may provide you with tax-deferred growth and other tax advantages. For most investors, it will be advantageous to make the maximum allowable contributions to IRAs and 401(k) plans before investing in a variable annuity.

In addition, if you are investing in a variable annuity through a tax-advantaged retirement plan (such as a 401(k) plan or IRA), you will get no additional tax advantage from the variable annuity. Under these circumstances, consider buying a variable annuity only if it makes sense because of the annuity's other features, such as lifetime income payments and death benefit protection. The tax rules that apply to variable annuities can be complicated – before investing, you may want to consult a tax adviser about the tax consequences to you of investing in a variable annuity.

[cabajaba]

that is basically saying that a

401k gives you tax deferred growth
an annuity gives you tax deferred growth

so don't buy a Variable annuity for its tax deferred growth, cause you get that already.

if you are gonna buy it its because you would like to diversify your taxes in retirement and because you like the safety features that are built into the variable annuity policy. like principal guarantee and built in death benefits etc.

[azinwood]

i agree with all of the above statements, especially autodraft!

i use autodraft for standard savings, IRA contributions, 529 acct for children, life insurance and of course its taken out of the paycheck for 401k.

[cabajaba]

i agree with all of the above statements, especially autodraft!

i use autodraft for standard savings, IRA contributions, 529 acct for children, life insurance and of course its taken out of the paycheck for 401k.

azinwood you are a model client.

good job! I need to find other people like you. It will make my job a lot easier.

[azinwood]

azinwood you are a model client.

good job! I need to find other people like you. It will make my job a lot easier.
lol...thanks!