Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[Buehler445]

Originally Posted by Shag

Thanks! I'm mid/late 40s, so kind of in a weird spot for risk. I've got a fairly large investment portfolio after years of 401k, ESPP, and RSUs, so I've got a nice nest egg going. Ideally, looking to retire as soon as reasonable, but realistically, that's likely at least 10yrs away.

CDs feel a little too conservative on that timeline, but maybe I'm not thinking about it properly. The market tear also makes me worried about a pullback, but I'd think a 10yr horizon should negate that long term. I was thinking maybe an index fund for the native diversification, but so many options on that front.

Then there's the AAPL, AMZN, MSFT, and NVDAs of the world - those always feel like good long term holds, but who knows, I'm not a great stock mind.

I'm about the same age, different mechanics but a lot of the same risk tolerance.

I'm looking to move some underperforming assets and cash to equities. What I'm looking at is about a 75/25 mix of VOO (S&P Index Fund) and VUG (Vanguard Growth Index Fund ETF). ETFs have a much lower load (costs, fees, etc.) and better diversification than I can achieve picking stocks. I keep a little brokerage account to periodically trade some stocks, but that's for entertainment only. I figure it's cheaper than a trip to the casino and maybe less downside, but I'd have to knock out some really low probability home runs to beat the ETFS on a small scale, and on a larger scale, I'd have to manage it MUCH more intensively than I'm good for and I'd have to some real work on risk that I may or may not be smart enough to do.

Presuming you're not going to need the money any time soon, and are looking to use it to fund your retirement.

1. Keep an emergency fund in a taxable brokerage account or high interest savings account (Mine is in Vanguard Settlement Account which is automatically VMFXX @ 5.43% currently). A lot of the personal finance stuff says save 6 months expenses in an emergency fund. I think that's sound and you won't be in real trouble if you follow that. From my perspective, I'm starting to save money for the next car trade. My objective is to not finance the next trade on the wifes car because it's unlikely the rate will be lower than 8% (That's the long terms S&P return), so I need to be a cash operator. Not sure I can get it done, but that's the goal.

tl;dr: Emergency fund in brokerage or high interest savings.

2. Contribute to your 401K up to the match maximum (do this always - match = 100% return).

3. Start a ROTH IRA and contribute up to the maximum (6,500 for you. If you're married start one for the wife too). In the retirement I have it in a target dated fund (VLXVX - rebalances automatically as I age and becomes more conservative). I haven't done any math to determine it's return vs VOO/VUG, but I'd feel good about either option here.

4. Do some looking and see if you're comfortable with the investments. What you need to look for is long term performance and load (fees, cost, commission).

If you're comfortable with them, max out your 401K. If you aren't start a Traditional 401K and one for the wife if applicable and max them out. Traditional IRAs carry the same tax benefits as a traditional 401K, it's just self directed. If you max out your 401K, it's usually easiest to increase your contributions and use your cash savings for the shortfall from your wages.

The cost efficiency of tax sheltered (retirement) accounts for retirement savings is difficult to match. Take as much advantage of tax shelters as you can. If you don't know the tax implications of Tradtional/ROTH IRA/401K, it's posted a million times in here. Even then, just ask, I don't mind rolling through it again.

5. After that, stick it in a taxed brokerage account and do what you're comfortable with. I'm looking at the VOO/VUG split above.

That's things from my perspective, I'm certainly not qualified to answer, and there are a lot of different viable strategies, but that's what makes the most sense to me.

[ChiefaRoo]

SPR. Buy it.

[Shag]

Originally Posted by Buehler445

I'm about the same age, different mechanics but a lot of the same risk tolerance.

I'm looking to move some underperforming assets and cash to equities. What I'm looking at is about a 75/25 mix of VOO (S&P Index Fund) and VUG (Vanguard Growth Index Fund ETF). ETFs have a much lower load (costs, fees, etc.) and better diversification than I can achieve picking stocks. I keep a little brokerage account to periodically trade some stocks, but that's for entertainment only. I figure it's cheaper than a trip to the casino and maybe less downside, but I'd have to knock out some really low probability home runs to beat the ETFS on a small scale, and on a larger scale, I'd have to manage it MUCH more intensively than I'm good for and I'd have to some real work on risk that I may or may not be smart enough to do.

Presuming you're not going to need the money any time soon, and are looking to use it to fund your retirement.

1. Keep an emergency fund in a taxable brokerage account or high interest savings account (Mine is in Vanguard Settlement Account which is automatically VMFXX @ 5.43% currently). A lot of the personal finance stuff says save 6 months expenses in an emergency fund. I think that's sound and you won't be in real trouble if you follow that. From my perspective, I'm starting to save money for the next car trade. My objective is to not finance the next trade on the wifes car because it's unlikely the rate will be lower than 8% (That's the long terms S&P return), so I need to be a cash operator. Not sure I can get it done, but that's the goal.

tl;dr: Emergency fund in brokerage or high interest savings.

2. Contribute to your 401K up to the match maximum (do this always - match = 100% return).

3. Start a ROTH IRA and contribute up to the maximum (6,500 for you. If you're married start one for the wife too). In the retirement I have it in a target dated fund (VLXVX - rebalances automatically as I age and becomes more conservative). I haven't done any math to determine it's return vs VOO/VUG, but I'd feel good about either option here.

4. Do some looking and see if you're comfortable with the investments. What you need to look for is long term performance and load (fees, cost, commission).

If you're comfortable with them, max out your 401K. If you aren't start a Traditional 401K and one for the wife if applicable and max them out. Traditional IRAs carry the same tax benefits as a traditional 401K, it's just self directed. If you max out your 401K, it's usually easiest to increase your contributions and use your cash savings for the shortfall from your wages.

The cost efficiency of tax sheltered (retirement) accounts for retirement savings is difficult to match. Take as much advantage of tax shelters as you can. If you don't know the tax implications of Tradtional/ROTH IRA/401K, it's posted a million times in here. Even then, just ask, I don't mind rolling through it again.

5. After that, stick it in a taxed brokerage account and do what you're comfortable with. I'm looking at the VOO/VUG split above.

That's things from my perspective, I'm certainly not qualified to answer, and there are a lot of different viable strategies, but that's what makes the most sense to me.

This is awesome, thanks! I'm single, so just trying to get myself to retirement, find a sugar mama, or both. Or buy a place in Tahoe, whichever comes first.

I max out my 401k every year, but that does bring up another option I've been considering - mega backdoor roth IRA. This is an option through my employer, and seems like an awesome loophole for tax-free growth to retirement. I think the max is like 66k/yr (including traditional 401k), and trying to figure out if it makes sense when I'm at my highest tax burden. Anyone doing this?

The VOO/VUG thing is kind of what I had in mind. I threw some money into VTI a couple years ago, which was supposed to be a nice growth ETF, but it's been entirely flat. I'll look into those two a bit.

[Buehler445]

Originally Posted by Shag

This is awesome, thanks! I'm single, so just trying to get myself to retirement, find a sugar mama, or both. Or buy a place in Tahoe, whichever comes first.

I max out my 401k every year, but that does bring up another option I've been considering - mega backdoor roth IRA. This is an option through my employer, and seems like an awesome loophole for tax-free growth to retirement. I think the max is like 66k/yr (including traditional 401k), and trying to figure out if it makes sense when I'm at my highest tax burden. Anyone doing this?

The VOO/VUG thing is kind of what I had in mind. I threw some money into VTI a couple years ago, which was supposed to be a nice growth ETF, but it's been entirely flat. I'll look into those two a bit.

Congrats on maxing out your 401K. That's ****ing awesome. Seriously.

If your company is offering a backdoor Roth, I'd probably do it. I haven't done one, but if a qualified plan is offering it, I'd be down. My comment about making sure you like your investments in your plan still stands. Seems like companies have gotten more progressive recently, but I don't know, I'm kind of out in the cold these days. If you're comfortable with the funds, I'd probably do it.

That being said, I'm like 1,000% more cash conscious than I was a couple years ago. Now that you can get 5+ for holding cash and borrowing money (probably) won't outperform the market, I'm holding a lot more cash than I have in years past. When I could get 2% money I didn't have a problem financing a car for instance. Now, if it's going to cost 8%, I'm not feeling it. So I'm keeping cash back for those kinds of purchases, where I did less before. 1. I'm incentivized to do so. (Cash is unlikely to outperform inflation, but 5% is much closer than 0%, especially when historic return of the S&P is 8% cash is much more attractive), 2. The cost of a little liquidity is substantially more expensive.

Accordingly, if you don't have a good bit of cash that's liquid, I'd leave some out, just for in case shit money. Once it goes into the tax shelter, it doesn't come back out.

VTI is a total market fund, so it has every stock on the market. I've considered it because it is as diversified as you get, but it has all the losers too. VOO (S&P) just has the biggest 500 companies, so there are less likely to be big losers (but it's not impossible, see GE, Philip Morris, etc).

Again, JMO. I'm certainly open to being a dumbass.

[lewdog]

Originally Posted by Buehler445

Congrats on maxing out your 401K. That's ****ing awesome. Seriously.

If your company is offering a backdoor Roth, I'd probably do it. I haven't done one, but if a qualified plan is offering it, I'd be down. My comment about making sure you like your investments in your plan still stands. Seems like companies have gotten more progressive recently, but I don't know, I'm kind of out in the cold these days. If you're comfortable with the funds, I'd probably do it.

That being said, I'm like 1,000% more cash conscious than I was a couple years ago. Now that you can get 5+ for holding cash and borrowing money (probably) won't outperform the market, I'm holding a lot more cash than I have in years past. When I could get 2% money I didn't have a problem financing a car for instance. Now, if it's going to cost 8%, I'm not feeling it. So I'm keeping cash back for those kinds of purchases, where I did less before. 1. I'm incentivized to do so. (Cash is unlikely to outperform inflation, but 5% is much closer than 0%, especially when historic return of the S&P is 8% cash is much more attractive), 2. The cost of a little liquidity is substantially more expensive.

Accordingly, if you don't have a good bit of cash that's liquid, I'd leave some out, just for in case shit money. Once it goes into the tax shelter, it doesn't come back out.

VTI is a total market fund, so it has every stock on the market. I've considered it because it is as diversified as you get, but it has all the losers too. VOO (S&P) just has the biggest 500 companies, so there are less likely to be big losers (but it's not impossible, see GE, Philip Morris, etc).

Again, JMO. I'm certainly open to being a dumbass.

I want you to stop putting yourself down in this thread. You have good financial sense and I want you to start owning it like the alpha that you are.

[lewdog]

Originally Posted by Shag

This is awesome, thanks! I'm single, so just trying to get myself to retirement, find a sugar mama, or both. Or buy a place in Tahoe, whichever comes first.

I max out my 401k every year, but that does bring up another option I've been considering - mega backdoor roth IRA. This is an option through my employer, and seems like an awesome loophole for tax-free growth to retirement. I think the max is like 66k/yr (including traditional 401k), and trying to figure out if it makes sense when I'm at my highest tax burden. Anyone doing this?

The VOO/VUG thing is kind of what I had in mind. I threw some money into VTI a couple years ago, which was supposed to be a nice growth ETF, but it's been entirely flat. I'll look into those two a bit.

If you are within 10 years of retirement, I don't think the backdoor Roth will make a lot of sense with the tax burden it creates. If you are younger and a ways from retirement, absolutely convert it now.

[Rain Man]

I'm not doing a backdoor Roth, but I'm planning to do some Roth conversions, and I discovered something weird.

I'm 60, and working part-time now. My wife has also been doing some part-time stuff. When you add in dividends and some other income, our marginal tax rate is not low enough to warrant doing conversions this year.

In another year or so, my income and tax bracket will tank as my wife and I completely stop working. It'll stay that way until I'm 69. At that point, my wife will be getting Social Security and our Required Minimum Distributions will kick in. Then my Social Security will kick in the following year. So our marginal tax rate will jump up to about the same level that it is now.

I've always had the impression that my tax bracket would decline in retirement, but it'll only decline for about 8 years. So I have to do a lot of tax maneuvering during those eight years because it's my best shot.

[Rain Man]

Originally Posted by Shag

Thanks! I'm mid/late 40s, so kind of in a weird spot for risk. I've got a fairly large investment portfolio after years of 401k, ESPP, and RSUs, so I've got a nice nest egg going. Ideally, looking to retire as soon as reasonable, but realistically, that's likely at least 10yrs away.

CDs feel a little too conservative on that timeline, but maybe I'm not thinking about it properly. The market tear also makes me worried about a pullback, but I'd think a 10yr horizon should negate that long term. I was thinking maybe an index fund for the native diversification, but so many options on that front.

Then there's the AAPL, AMZN, MSFT, and NVDAs of the world - those always feel like good long term holds, but who knows, I'm not a great stock mind.

Yeah, I would agree that you're a bit too young for the CD strategy. Stocks are your friend.

I've become pretty diversified, and for the most part the "Magnificent Seven" has driven a lot of my returns. I'm doing okay on other stocks, but if I hadn't been invested in the Magnificent Seven I'd be far to the lesser in my balances. At some point they have to slow down and the non-tech stocks should have a run, but it seems like mixing the two is a good tradeoff.

I've got probably 20 to 25 percent of my money in the Magnificent Seven, which I think is underweighted compared to the major indices. They've done great, but it's kind of scary to me to have too much in a few stocks so I'm slightly whittling them down now.

[EPodolak]

Originally Posted by Shag

This is awesome, thanks! I'm single, so just trying to get myself to retirement, find a sugar mama, or both. Or buy a place in Tahoe, whichever comes first.

I max out my 401k every year, but that does bring up another option I've been considering - mega backdoor roth IRA. This is an option through my employer, and seems like an awesome loophole for tax-free growth to retirement. I think the max is like 66k/yr (including traditional 401k), and trying to figure out if it makes sense when I'm at my highest tax burden. Anyone doing this?

The VOO/VUG thing is kind of what I had in mind. I threw some money into VTI a couple years ago, which was supposed to be a nice growth ETF, but it's been entirely flat. I'll look into those two a bit.

There are quite a few good Vanguard ETF options. VTI is the one I'm invested in. Remember if you've only been in it a couple of years your results will consist of one good investing year and one bad one. The market for just about every leading ETF will look flat for that short window. Both VTI and VOO have returned 14-15% average the past five years. Can't really go too far wrong with either.

[Shag]

Originally Posted by Buehler445

Congrats on maxing out your 401K. That's ****ing awesome. Seriously.

If your company is offering a backdoor Roth, I'd probably do it. I haven't done one, but if a qualified plan is offering it, I'd be down. My comment about making sure you like your investments in your plan still stands. Seems like companies have gotten more progressive recently, but I don't know, I'm kind of out in the cold these days. If you're comfortable with the funds, I'd probably do it.

That being said, I'm like 1,000% more cash conscious than I was a couple years ago. Now that you can get 5+ for holding cash and borrowing money (probably) won't outperform the market, I'm holding a lot more cash than I have in years past. When I could get 2% money I didn't have a problem financing a car for instance. Now, if it's going to cost 8%, I'm not feeling it. So I'm keeping cash back for those kinds of purchases, where I did less before. 1. I'm incentivized to do so. (Cash is unlikely to outperform inflation, but 5% is much closer than 0%, especially when historic return of the S&P is 8% cash is much more attractive), 2. The cost of a little liquidity is substantially more expensive.

Accordingly, if you don't have a good bit of cash that's liquid, I'd leave some out, just for in case shit money. Once it goes into the tax shelter, it doesn't come back out.

VTI is a total market fund, so it has every stock on the market. I've considered it because it is as diversified as you get, but it has all the losers too. VOO (S&P) just has the biggest 500 companies, so there are less likely to be big losers (but it's not impossible, see GE, Philip Morris, etc).

Again, JMO. I'm certainly open to being a dumbass.

I was raised pretty conservative financially, so stocking away for retirement has always been on my mind, been contributing to 401k since I was 21. Now that I'm getting closer, trying to figure out how to speed this thing up, lol. I'm pretty cash flush right now, so trying to fix that, but will definitely keep some liquid cash in a HYSA. Appreciate all the input!

Originally Posted by lewdog

If you are within 10 years of retirement, I don't think the backdoor Roth will make a lot of sense with the tax burden it creates. If you are younger and a ways from retirement, absolutely convert it now.

What am I missing on the tax burden of a MBDR? My understanding is that the money goes in post-tax, but the growth is untaxed at cashout. So, instead of putting money into the market today and being taxed on growth, that same money could go into a MBDR and come out tax-free. Am I wrong there?

[Shag]

Originally Posted by Rain Man

Yeah, I would agree that you're a bit too young for the CD strategy. Stocks are your friend.

I've become pretty diversified, and for the most part the "Magnificent Seven" has driven a lot of my returns. I'm doing okay on other stocks, but if I hadn't been invested in the Magnificent Seven I'd be far to the lesser in my balanced. At some point they have to slow down and the non-tech stocks should have a run, but it seems like mixing the two is a good tradeoff.

I've got probably 20 to 25 percent of my money in the Magnificent Seven, which I think is underweighted compared to the major indices. They've done great, but it's kind of scary to me to have too much in a few stocks so I'm slightly whittling them down now.

I should probably be more heavily invested in the M7, will probably throw some money that way, and mix in some ETFs. I've done pretty terribly in my brokerage "play" account, so individual stocks have become scarier, lol.

Originally Posted by EPodolak

There are quite a few good Vanguard ETF options. VTI is the one I'm invested in. Remember if you've only been in it a couple of years your results will consist of one good investing year and one bad one. The market for just about every leading ETF will look flat for that short window. Both VTI and VOO have returned 14-15% average the past five years. Can't really go too far wrong with either.

Good call out on that, with the market doing so well lately, I sometimes forget about the downturn recently.

[ChiliConCarnage]

Originally Posted by Hog's Gone Fishin

Fortunes will be made in 2024 if played right.


Crypto BULL RUN is REAL and just starting.

That'd be wonderful. I'd like to be fantastically wealthy. 2023 was surprisingly good. Let's keep that rolling!

Moved a bit of money over to my IRA account. I won't be able to max it until money frees up later this month.

[493rd]

I know a little about investing…just a little though. The market changed my life 18 years ago and it continues to pay me dividends today (no pun intended).

[Rain Man]

Time for my annual investing review, and it’s good news this year. If every year was like this, I would eventually buy my own island.

Total net worth up by 22.3 percent.
Total return on liquid investments up by 30.0 percent.

The difference between the two is that my house value decreased notably in 2023, according to Zillow estimates. Interest rates being high was not good for prices. But hey, it’s not like I’m planning to sell any time soon.

In terms of liquid investments, I’m not adjusting for purchases or sales. I’m just looking at totals that include those. I don’t make big moves at all, though. I’m pretty much a buy and hold with tiny adjustments.

The returns of my top ten holdings at the beginning of the year:
GOOG 57.1%
MSFT 57.8%
AMZN 77.0%
AAPL 54.4%
NVDA 246.0%
CVX -10.2%
IHI 3.1%
BX 74.5%
AMD 130.3%
FTANX 9.3%

At the beginning of the year, these ten holdings were 23.5 percent of my investment holdings. My returns were spectacular with 7 of the 10 going up more than 50 percent. Pretty freaking amazing.

I had some other big winners over the year, so my top ten at the end of the year changed a bit as some other stocks grew. I’m a little more concentrated now as my top ten are now 24.9 percent of my holdings. You’ll see a lot of “Magnificent Seven” on this list.

NVDA 246,0%
GOOG 57.1%
MSFT 57.8%
AMZN 77.0%
AAPL 54.4%
AMD 130.3%
BX 74.5%
PSX 34.9%
QCOM 37.1%
NVO 51.6%

In short, my three year-starting holdings that weren’t up 50 percent dropped off my top ten list, replaced by other holdings that had great years. CVX, IHI, and FTANX fell off the top ten, replaced by PSX, QCOM, and NVO. NVDA is a big story, shooting up to become my largest holding, while AMD moved up from #9 to #6.

However, I’ve been buying CDs like crazy, and collectively they now represent 19.2 percent of my holdings, up from about 5.6 percent last year. With an average annual return of 5.2 percent, they’re going to be my anti-anxiety strategy for the next few years. Even if they underperform the market the next few years, they’re above my needed rate of return, and if there’s a down market they’re going to prop it up quite well.

My top ten stocks in terms of returns totaled 11.2 percent of my holdings at the end of the year, and all were up more than 100 percent. At the beginning of the year, they were 6.5 percent. I let the winners ride, and it was awesome. ANF (Abercrombie & Fitch) has had an astounding run. I've owned it for a long time and I read a few years ago when the stock was down that they were making great long-term decisions that would have an impact eventually. They were right.

You’ll see two cruise lines on the list. I rode them all the way down in 2020, so I’m still down on CUK, but believe it or not, I’m back to my 2020 level on RCL.

TSLA has been a wild ride. I’m massively up on it from my purchase price, though I’m down from my peak a couple of years ago. I’m still up roughly 600 percent overall on TSLA.

I have to call out HCI, too – it’s a home insurance company that’s done well for me for years.

Most of these are above my dollar limit for buying more, so I’m just holding. A few still have room for buying more, and I’ve been adding tiny amounts to them.

ANF 273.8%
NVDA 246.0%
META 183.8%
RCL 165.8%
CRWD 147.2%
CUK 137.8%
AMD 130.3%
TSLA 129.9%
HCI 122.4%
PANW 113.0%

My bottom ten stocks in terms of returns totaled 1.8 percent of my holdings at the end of the year. At the beginning of the year, they were 4.4 percent. One thing I was pretty good at this year was not chasing losers.

I’ve given up on SILC and RMCF and am selling them off. FF is on thin ice, but I’m waiting since they had a huge one-time dividend last year that would get them to breakeven. It would be nice if something similiar will happen soon, but I'm losing hope.

I stayed too late at the MRNA & PFE party, so I’m just holding them. ALB is a past big winner that had a drawback due to some international stuff. If I was a gambler I might buy more MPW, but I’m not a gambler. It’s my biggest dollar disaster the past couple of years. It was a great low-risk stock until suddenly it became a high-risk stock.

SILC -57.5%
MPW -57.4%
MRNA -44.4%
PFE -43.8%
ALB -32.6%
FF -29.6%
YUMC -24.8%
IFF -23.4%
GIS -21.7%
RMCF -18.5%

[lewdog]

Great analysis, Rainman! You beat the index which is hard to do in an up year. Great ****ing job, you hit some big winners.

My total investment accounts were up 25% for the year, which sits right about at the index.