Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[wutamess]

Originally Posted by lewdog

Your best best would be to start a Roth IRA for your child if they are of "age" to have some earned income. Here's the lose definition of earned income from the IRS.

It’s up to you (or the child) to document that she had income earned from work. The money can’t be an allowance or a gift. (You can find more about the IRS’s definition here). It’s up to the account custodian to document the service rendered, when it was done, and the payment. It also has to be a reasonable rate. You can’t pay $1,000 for a night of babysitting.

http://www.rothira.com/roth-iras-for-kids

She got close to $300 for her 13th. So I told her maybe we should invest it? She took the bait and said sure.

She's only 13 and it was a gift so she wouldn't qualify. Was thinking about opening up a brokerage account in her name and letting her play with it on her own.

[Hog's Gone Fishin]

Originally Posted by Amnorix

Ditto. Hog Farmer probably has good advice for you.

I do. I do.

Buy rental

Insure rental

Burn down rental.

Collect money.

[lewdog]

Originally Posted by wutamess

She got close to $300 for her 13th. So I told her maybe we should invest it? She took the bait and said sure.

She's only 13 and it was a gift so she wouldn't qualify. Was thinking about opening up a brokerage account in her name and letting her play with it on her own.

That's a terrible idea and sets a very bad early example about "investing." And no offense, but seeing this post and some of your others, makes me think you don't know a ton about investing.

Investing for most of your money should be about long term gains, not short financial success (which many times leads to total loses). "Playing around" with a brokerage account could lead to a few wrong clicks and that $200 invested could turn into owing thousands of dollars. If you don't understand this concept, than a brokerage account is also not for you.

I would suggest taking that birthday money and putting it into a savings account, teaching the lesson of rainy day fund or saving up for something in the future. If you allow your daughter to do jobs around the house, start paying her small amounts and documenting it. Once she reaches a certain amount, opening up a Roth IRA would be the best investment option you could give her long term. This is what my parents did for me when I turned 15 and had a summer job.

I am totally against teaching individual stock buying as a get rich quick scheme. If I lost all the money in my brokerage account, I'd be fine. It's play money for me and most should treat it as such. I pump my 401k and Roth IRA for retirement, and so should most people.

[wutamess]

Originally Posted by lewdog

That's a terrible idea and sets a very bad early example about "investing." And no offense, but seeing this post and some of your others, makes me think you don't know a ton about investing.

Investing for most of your money should be about long term gains, not short financial success (which many times leads to total loses). "Playing around" with a brokerage account could lead to a few wrong clicks and that $200 invested could turn into owing thousands of dollars. If you don't understand this concept, than a brokerage account is also not for you.

I would suggest taking that birthday money and putting it into a savings account, teaching the lesson of rainy day fund or saving up for something in the future. If you allow your daughter to do jobs around the house, start paying her small amounts and documenting it. Once she reaches a certain amount, opening up a Roth IRA would be the best investment option you could give her long term. This is what my parents did for me when I turned 15 and had a summer job.

I am totally against teaching individual stock buying as a get rich quick scheme. If I lost all the money in my brokerage account, I'd be fine. It's play money for me and most should treat it as such. I pump my 401k and Roth IRA for retirement, and so should most people.

I'm a novice investor. I admit. However, what have I said (or done) that makes you think I know little about investing? I have a 401K and Roth IRA both stocked with multiple high performing index, ETF and mutual funds for long term growth. I also have a play account I use for "gambling" money with the stock market.

Anyhow... Maybe I used a wrong buzz word or something. A regular brokerage account in her name cannot play the options market. So in that case... she will learn about investing and I"ll see what she can do and she will either fail or succeed but it'll be her choice.

Thanks for your input.

[DaFace]

Originally Posted by wutamess

I'm a novice investor. I admit. However, what have I said (or done) that makes you think I know little about investing? I have a 401K and Roth IRA both stocked with multiple high performing index, ETF and mutual funds for long term growth. I also have a play account I use for "gambling" money with the stock market.

Anyhow... Maybe I used a wrong buzz word or something. A regular brokerage account in her name cannot play the options market. So in that case... she will learn about investing and I"ll see what she can do and she will either fail or succeed but it'll be her choice.

Thanks for your input.

Yeah, it's really does just depend on the core purpose. If you want her to "have investments," safe funds are the way to go. If you want it to be a learning experience, throw it in a brokerage account and have her pick a couple of stocks for companies she likes and see how it goes. Even if she loses most of it, it'll be a good lesson that will pay off down the road.

[Iowanian]

Originally Posted by Amnorix

Ditto. Hog Farmer probably has good advice for you.

I know what I'm getting into...and it's why I said I'd never want to do it. We managed several houses for another guy when I was a kid. I've cleaned out more gross houses than I'd care to say. I always said I couldn't be a landlord because if I scooped 50lbs of dogshit off of a 3 month old carpet I paid for I'd go to jail.

Looking ahead, it's more realistic to make a small, steady profit 10 years from now....college money, car payment level money. I haven't closed on 1 and I'm already looking at 2.

Time is my biggest problem. Too many hustles to go along with a good job and busy family life.

[Hog's Gone Fishin]

I bought most of my properties with 100% financing. 20% from the owner and 80% from the bank.

[Kiimo]

Do you pay PMI on all your properties?

[Hog's Gone Fishin]

Originally Posted by Kiimosabi

Do you pay PMI on all your properties?

No

[Bugeater]

Originally Posted by Hog Farmer

I bought most of my properties with 100% financing. 20% from the owner and 80% from the bank.

How long do you typically finance them for?

[Kiimo]

Do you avoid PMI because the owner is financing your 20% downpayment? Or is it because you are financing with a non-conforming loan with a higher interest rate?

[Hog's Gone Fishin]

Originally Posted by Bugeater

How long do you typically finance them for?

15 years with the bank

with the owners for the 20% I offer them a 5 year balloon ammoritized for a 15 year payout but normally give them a higher interest rate like 8% to help motivate.

I never ever ever ever do a 30 year loan.

[Hog's Gone Fishin]

Originally Posted by Kiimosabi

Do you avoid PMI because the owner is financing your 20% downpayment? Or is it because you are financing with a non-conforming loan with a higher interest rate?

I avoid PMI because it costs money.

[Kiimo]

I'm clear on why you want to avoid PMI I'm just unclear on the how. It's like people buying condos out here and saying they don't pay association dues because they're a ripoff. Okay...go on...

[Hog's Gone Fishin]

Rentals can be tough if you only have 1 or 2 and the reason is they normally don't generate enough cash flow. A hot water heater replacement can cost you $1000 and if you're clearing $50 /month on a rental after Principal/Interest/Taxes and Insurance well then two rentals will pay for that one water heater in a year. My break seemed to have come at 10 rentals to cover itself without having to pull money out of my pocket. but keep in mind I was at 100% financing too.