Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[Amnorix]

Originally Posted by Hog Farmer

Go with mutual funds.

Specifically index funds. Low fees are your friend, especially over a long investment horizon.

[Amnorix]

Originally Posted by Rain Man

Everyone will tell you to go with a mutual fund or index fund. I'm the voice in the wind who disagrees and thinks you get better returns from stocks, and particularly dividend-paying stocks.

Depends on the amount of effort he is willing/able to invest. For most folks, I think mutual funds are the better approach.

[lewdog]

Originally Posted by SAGA45

I need help here. Want to grow my my money. I'm getting a late start at age 41 but better late than never. I don't know much at all about investing. Can somebody offer some advice for a good starting strategy?

First question is do you participate in any employee sponsored retirement plans such as a 401k?

[lewdog]

Originally Posted by Rain Man

Everyone will tell you to go with a mutual fund or index fund. I'm the voice in the wind who disagrees and thinks you get better returns from stocks, and particularly dividend-paying stocks.

Most studies today lean heavily against this idea, as you know. The common man simply doesn't have the discipline, knowledge and in many cases time to fully manage investing in individual companies and beat mutual/index funds across time.

Care to share your individual returns on your investments as a whole? Are your employee sponsored retirement plans behind your gains you've made in the market yourself?

[Rain Man]

Originally Posted by lewdog

Most studies today lean heavily against this idea, as you know. The common man simply doesn't have the discipline, knowledge and in many cases time to fully manage investing in individual companies and beat mutual/index funds across time.

Care to share your individual returns on your investments as a whole? Are your employee sponsored retirement plans behind your gains you've made in the market yourself?

First off, I'm not sure how these brokerages calculate returns, and I don't really trust how they do it. In my case, I'm particularly unsure how they're counting dividend reinvestment. They classify my returns on individual stocks as if I'm contributing the money from dividend reinvestment, when I'm not. Those are actually returns, not costs. And I think they don't count imbedded fees in mutual funds, which overstates those returns. But I'll just report what they say.

Here's an example in one of my accounts. I decided in that account long ago that I would do what I'm told and go with mutual funds. I did it all the way you were supposed to - I picked a small set of diverse funds, all highly rated, and ... bleah. I was constantly trailing the market. So about three years ago I started chucking the mutual funds out the door and buying my own stocks. Here are my annual returns versus the S&P 500.

5-year return: Underperformed by 3.23% per year (mutual funds suck)
3-year return: Overperformed by 0.10%. As soon as I ditched the mutual funds I quickly caught up.
1-year return: Underperformed by 0.19%. Running about equal now but the S&P was up 23 percent so the difference is noise.

That account's not killing it, but look at the five-year return. My returns with mutual funds were pathetic, and as soon as I got out I started making up ground. Now I'm tracking the S&P's returns.

A second account is newer, so I've only got three years of data. I would expect this one to underperform a bit because I put in a large cash infusion to start it, and have bought very slowly. Three years later I'm still at over 20 percent cash. But here's where I'm at versus the S&P just to be consistent.

3-year return: Overperformed by 0.62% per year.
1-year return: Underperforming by 1.79%. Not having a great year this year, but that's cooked into the three year return above.

I'm winning that battle despite having a cash position that's averaged over 20%.

The third account will only give me calendar year comparisons for last year and this YTD.

2016: Overperformed by 3.82% (I killed the S&P)
2017: Underperforming by 1.96%. (I lost 1.4 percent against the S&P this month for some reason, which is most of that.)

I'm winning again.

Granted, this is just against the S&P. Nasdaq is smokin' this year, and I'm underrepresented in Nasdaq.

In the long run, I've got enough diversification that I'd rather buy stocks once for a $5 purchase fee, and then not pay fees every year so some mutual fund manager can go gambling (or charge me to rebalance an index fund). There's some rebalancing to be done occasionally and I like to play games by buying and selling, but the bottom line is that I used to hold mutual funds and I consistently underperformed the market by a fair margin. Now I hold stocks and I don't.

[petegz28]

There are a couple of funds I like that outperform index funds regularly.

Fidelity OTC Portfolio
Fidelity Blue Chip Growth

I have those along with an SP500 fund, Midcap fund and some Eurp and Pac Basin funds..

but in general...index funds and time in the market along with the correct asset allocation is how you make your money over the long haul

[DaFace]

Originally Posted by SAGA45

I need help here. Want to grow my my money. I'm getting a late start at age 41 but better late than never. I don't know much at all about investing. Can somebody offer some advice for a good starting strategy?

Here's a good road map. It's not THE right answer, but it's A good answer. Ask as you have questions.

[DaFace]

Originally Posted by Rain Man

In the long run, I've got enough diversification that I'd rather buy stocks once for a $5 purchase fee, and then not pay fees every year so some mutual fund manager can go gambling (or charge me to rebalance an index fund). There's some rebalancing to be done occasionally and I like to play games by buying and selling, but the bottom line is that I used to hold mutual funds and I consistently underperformed the market by a fair margin. Now I hold stocks and I don't.

Obviously everyone should do what works for them, but just for the record, I currently hold three index mutual funds. It costs me nothing to buy and sell them any time I want, and the expense ratios are 0.06%, 0.04%, and 0.03%.

I wholeheartedly agree that actively-managed mutual funds are a ripoff, but index funds are practically free.

[lewdog]

Originally Posted by Rain Man

First off, I'm not sure how these brokerages calculate returns, and I don't really trust how they do it. In my case, I'm particularly unsure how they're counting dividend reinvestment. They classify my returns on individual stocks as if I'm contributing the money from dividend reinvestment, when I'm not. Those are actually returns, not costs. And I think they don't count imbedded fees in mutual funds, which overstates those returns. But I'll just report what they say.

Here's an example in one of my accounts. I decided in that account long ago that I would do what I'm told and go with mutual funds. I did it all the way you were supposed to - I picked a small set of diverse funds, all highly rated, and ... bleah. I was constantly trailing the market. So about three years ago I started chucking the mutual funds out the door and buying my own stocks. Here are my annual returns versus the S&P 500.

5-year return: Underperformed by 3.23% per year (mutual funds suck)
3-year return: Overperformed by 0.10%. As soon as I ditched the mutual funds I quickly caught up.
1-year return: Underperformed by 0.19%. Running about equal now but the S&P was up 23 percent so the difference is noise.

That account's not killing it, but look at the five-year return. My returns with mutual funds were pathetic, and as soon as I got out I started making up ground. Now I'm tracking the S&P's returns.

A second account is newer, so I've only got three years of data. I would expect this one to underperform a bit because I put in a large cash infusion to start it, and have bought very slowly. Three years later I'm still at over 20 percent cash. But here's where I'm at versus the S&P just to be consistent.

3-year return: Overperformed by 0.62% per year.
1-year return: Underperforming by 1.79%. Not having a great year this year, but that's cooked into the three year return above.

I'm winning that battle despite having a cash position that's averaged over 20%.

The third account will only give me calendar year comparisons for last year and this YTD.

2016: Overperformed by 3.82% (I killed the S&P)
2017: Underperforming by 1.96%. (I lost 1.4 percent against the S&P this month for some reason, which is most of that.)

I'm winning again.

Granted, this is just against the S&P. Nasdaq is smokin' this year, and I'm underrepresented in Nasdaq.

In the long run, I've got enough diversification that I'd rather buy stocks once for a $5 purchase fee, and then not pay fees every year so some mutual fund manager can go gambling (or charge me to rebalance an index fund). There's some rebalancing to be done occasionally and I like to play games by buying and selling, but the bottom line is that I used to hold mutual funds and I consistently underperformed the market by a fair margin. Now I hold stocks and I don't.

Thanks for doing that. Good info and interesting. It will be very interesting to see how your returns hold up in a down market and if your individual stock preference tends to lose more than something like a mutual fund or index.


Care to discuss good dividend paying stocks that you own? I feel myself that I could use some dividend paying individual stocks, either for passive income in the future or just continued dividend reinvestment.

[JohnnyHammersticks]

Originally Posted by lewdog

Would be curious if anyone else wouldn't mind sharing their individual stock picking success this year. I'm here to show it's ****ing hard! I opened my first brokerage account to start this year. All the things you read discuss the difficulty in beating the market with individual stock picking. Something like 5% of individual investors are successful in this. It's why there's so much talk about passively investing most of your money in mutual funds and index funds that track sectors of the market.

My brokerage account has 5% of my total invested money, so not a lot. I also chose some fairly risky investments across the board but that can technically be true of much of individual stock picking it seems. However, the percentage growth on the stocks in it and the portfolio overall is somewhat interesting when comparing to the great year the market has had.

My 401k/Roth IRA combined has gained 17.8% year to date.

Here's the current stocks I own and percentage of gains/loses for the year:
X- US Steel+28.86%
UA- Under Armour -15.76%
TWMJF- Canopy Growth +2.27%
UBQU- Ubiquitech Software Corp -62.50% (total penny stock. I bought when shares hit $.02-I don't have a lot of cash in this but quite a few shares given it's price)
PEMIF- Pure Energy Minerals Ltd +22.47

Total Growth +1.31%

So pretty big swings on almost all those stocks! It's definitely a learning curve and I think in future purchases I'll be selecting more stalwart companies Obviously pales in comparison to my retirement accounts.

Recent considering Ford stock due to the yearly dividends they always pay out. The stock itself has always been a rather dud with few swings/gains, but it's paid a yearly dividend from 4.6%-7.2% every year no matter what (I find this amazing coming from an automaker!). That seems somewhat attractive.

I totally agree with your $PEMIF idea, and am holding 125K shares myself. They're a couple years away, but I love their lithium extraction technology. Evaporation ponds are wasteful and wreck havoc on the environment. 90% extraction rate vs. 40-50% for evaporation ponds. I think the share price will continue channeling between $0.30 and $0.50 for the next year or so, but I think their future is really, really bright.

[A Salt Weapon]

Thinking I need to setup a Roth IRA, tossed between Vanguard and Fidelity. I plan on doing the max $5500/yr in addition to my 401k through work (currently 6% with a 3% match).
I have about $11k in a savings account right now and that should let me do the max for this year and next in 1 shot.
Preferences on which company to use?

My only debt currently is my truck I bought in Jan17 at 3.04%, (43k financed, 31k left, I’ve been paying extra on already, but thinking it might be smarter to invest the extra money instead of paying it off early.)

I am single HOH with 2 dependents (~60k/yr gross income), so my tax liability is lower now than it would be later, unless lowering my taxable income drops my income into the free shit eligible category (EITC, etc), which I should look at before the end of the year.

Anyone have some free ChiefsPlanet advice for me?

[lewdog]

Originally Posted by A Salt Weapon

Thinking I need to setup a Roth IRA, tossed between Vanguard and Fidelity. I plan on doing the max $5500/yr in addition to my 401k through work (currently 6% with a 3% match).
I have about $11k in a savings account right now and that should let me do the max for this year and next in 1 shot.
Preferences on which company to use?

My only debt currently is my truck I bought in Jan17 at 3.04%, (43k financed, 31k left, I’ve been paying extra on already, but thinking it might be smarter to invest the extra money instead of paying it off early.)

I am single HOH with 2 dependents (~60k/yr gross income), so my tax liability is lower now than it would be later, unless lowering my taxable income drops my income into the free shit eligible category (EITC, etc), which I should look at before the end of the year.

Anyone have some free ChiefsPlanet advice for me?

I won't assume anything, so do you have some sort of emergency fund savings somewhere else that would cover living expenses if something happened where you got laid off or had to take time off work?

[A Salt Weapon]

Originally Posted by lewdog

I won't assume anything, so do you have some sort of emergency fund savings somewhere else that would cover living expenses if something happened where you got laid off or had to take time off work?

About 3-4K set aside after this first 11k gets invested. I’m netting about $1k/mo to save/invest currently.

[A Salt Weapon]

I’ve reduced my min living expenses to about 600/mo give or take, so if I did do something stupid like lose my job or something, I could get a part time job at McDonald’s to pay the bills. So my thinking is while I have this disposable income, it might be smart to start investing it instead of just letting the savings account build up 20k/year.

[SAGA45]

Thanks for all the advice guys! Greatly appreciated!