Investing 101

  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 3:49 AM GMT
    Hello Real Jockers, boys..men - anyways i wanted to start this thread on wise Investment choices etc. As gay men some of us only live to take care of ourselves. Some of us are not partnered nor have children so its easier to save for a rainy day etc. My question is, what are some possible lucrative Investment choices that might be available for someone that i described above. I know allot of you who have found financial stability through investing would be hesitant to explain or give advice but i am not asking about your personal investing decisions..just advice for fellow real-jockers so they can start their own investment research. I know most people would opt for real estate or investing in the market (risky). But i heard Suze Orman suggested that in this market its better to rent than to buy as the housing market will get better. So do you guys believe this? And when it comes to the market or investing in property, how small should one start out? And is there other lucrative business areas within which people can start investing in besides the market or real estate?

    stock-market-investing.jpg
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 4:18 AM GMT
    wish I could help, but I know nothing about this stuff. But yeah I think it would be interesting to know this kind of stuff
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 4:28 AM GMT
    Even though there are some great buys out there in this housing slump we're in... I've thought quite a bit about investing in some real estate. One for me and another for a rental.
    BUT the more I think about it, I have decided to pass...at least for now.
    Too many of the properties I looked at had some pretty hefty repairs to be done in order to make the place liveable. I'm not willing to invest in a low priced house, only to sink MORE money into it. Better to spend more (if you can) and get something that is turn-key ready.
  • Profire

    Posts: 224

    May 22, 2011 11:04 AM GMT
    Investing in residential real estate and renting out properties is best done for people who have a passion for it. Its a tough job, with a potential for big repair bills, non-paying tenants and empty housing while you find tenants.

    If you buy cheap homes in bad neighborhood, than you need to expect to have tenants who are not as credit worthy and you can expect to spend a fair amount of time trying to collect the monthly rent. Plus, people take terrible care of properties that they don't own, so you will need to visit the property on a regular basis to inspect it, make repairs, general upkeep, etc.

    Additionally, the residential real estate market isn't expected to bottom out until mid- to late 2012.

    Some people have a passion for real estate and they enjoy doing those types of things, so its not work to them. If you don't have a passion for it, then it becomes tedious.

    If you have extra money, put it in the stock market in an Index Fund.
    Multiple studies have shown that most investment managers can't beet the indices on a regular basis, plus investment managers have to cover their higher management fees.
    An Index Fund has minimal fees, routinely beats active investments, is expected to beat inflation and is, for the most part, a hands-off approach. Review your allocation on an annual basis and leave it alone.

    On average, residential real estate is expected to increase 3%, bonds 4% and stocks 6%.

    Start saving and investing early, use the concept of time and compounding to help build your wealth.
    There are no get-rick-quick schemes that work.
    Work hard, save early and often and invest.
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 3:34 PM GMT
    Profire said

    If you have extra money, put it in the stock market in an Index Fund.
    Multiple studies have shown that most investment managers can't beet the indices on a regular basis, plus investment managers have to cover their higher management fees.
    An Index Fund has minimal fees, routinely beats active investments, is expected to beat inflation and is, for the most part, a hands-off approach. Review your allocation on an annual basis and leave it alone.

    On average, residential real estate is expected to increase 3%, bonds 4% and stocks 6%.



    I really liked your feedback..hope other realjockers got some ideas..but this right here i could not understand for the life of me...im now thinking im gonna run down to barnes and noble and buy "stock market for dummies"
  • Posted by a hidden member.
    Log in to view his profile

    May 22, 2011 3:48 PM GMT
    tereseus1 said

    I really liked your feedback..hope other realjockers got some ideas..but this right here i could not understand for the life of me...im now thinking im gonna run down to barnes and noble and buy "stock market for dummies"

    Make that "investing for dummies" and you should get all the info you need. Some basic stuff:
    Start investing now
    Invest some percentage of your monthly income every month
    Max out investments where the government and/or your employer contribute to your investments as well, like 401k or IRA
    Don't invest everything in one place, institution, bank, stock etc
    Spread your investments across stocks, bonds and real-estate
    Go for funds rather than individual stocks, bonds.
    The longer-term your investment the higher the risk can be, if you have the guts for it.
  • Profire

    Posts: 224

    May 22, 2011 4:08 PM GMT
    First of all, start with your employer.
    If they have a 401(k), contribute as much as you can, but a minimum, enough to get the company match (if they match any of your contributions).
    Within the 401(k), you can either leave it in cash or invest it into mutual funds.
    Invest the money into an Index Fund, such as the as an S&P Index Fund or something similar sounding.

    If you want to invest outside of your employer's programs, go to a brokerage firm, such as Vanguard, Fidelity, eTrade, etc. and open a brokerage account where you can put money and then tell them where to invest it, such as mutual funds.

    No need to go buy a book, that most likely won't be read and all the information is readily on the internet.

    http://www.fool.com/60second/indexfund.htm
    Here is a quick primer on Index funds.

    When looking for an index fund, look for anything fund with the word "index" in its name, and look for low fees.

    couple of quick points:
    1. stick with mutual funds, and especially since you are starting out, stick with index funds.
    2. Maximize your 401(k) contribution, but at a minimum, contribute enough to get your employer match. This is an instant raise from your employer and it also reduces your taxes.
    3. Stay away from individual stocks. There are giant investors, fund managers, hedge funds,etc, that have way more money than you and have tons of people working for them to get the inside scope. By the time you, as a small investor hear about it, its too late and you have lost it all.
    4. start now, put a little away every paycheck and don't ever borrow against it.
    5. As you get a raise, put more money into your investments. If you get a $1,000 raise, put $500 in your investments. If you get a bonus, put half away. You still get to enjoy your raise/bonus as a reward for your hard work, but you also help your future.

    If you have any specific questions, feel free to PM me.
    I will be more than happy to answer any question that I can, and if I don''t know it, I will tell you that as well and point you to a place that might have the answer.
  • Profire

    Posts: 224

    May 22, 2011 4:16 PM GMT
    tereseus1 said
    Profire said

    If you have extra money, put it in the stock market in an Index Fund.
    Multiple studies have shown that most investment managers can't beet the indices on a regular basis, plus investment managers have to cover their higher management fees.
    An Index Fund has minimal fees, routinely beats active investments, is expected to beat inflation and is, for the most part, a hands-off approach. Review your allocation on an annual basis and leave it alone.

    On average, residential real estate is expected to increase 3%, bonds 4% and stocks 6%.



    I really liked your feedback..hope other realjockers got some ideas..but this right here i could not understand for the life of me...im now thinking im gonna run down to barnes and noble and buy "stock market for dummies"


    Couple of other things:
    1. A "mutual fund" is where a brokerage firm (like Vanguard or Fidelity) will get a bunch of money from individuals, such as you or I, and they will actively manage the money for you. Say you invest $5,000 into the fund and 10,000 other people invest with the brokerage, then they have $50million to go invest.
    2. The mutual fund will charge you a fee each year to manage your money, based on your total balance. They more they charge you, the less you get to keep, thus you want to keep fees as low as possible.
    3. "Actively managed" mutual funds are where the investment manager is actively buying and trading stocks. They are trying to beat the market and through all their research and buying and selling stocks, they think they are better than the overall market.
    4. "Passive" investments, such as index funds, are mutual funds (see my explanation above) and the investment manager mirrors the benchmark (such as the S&P500, total stock market, Dow Jones Industrial Average, etc) that everybody is trying to beat. These benchmarks don't change much, so once the investment manager sets the investments, they don't need to really do any trading of stocks, thus they can charge lower fees.
    Research has shown that only about 20% of Active investments beat the index or benchmark, so for the most part, if you put your money into an index fund, you will, on average, beat 80% of all the other investors.

    Hope this helps
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 5:07 PM GMT
    One of the best gifts I ever got was a subscription to Money magazine. That was a long time ago, but it got me familiar with terms, ideas and it was a good starting point - even though now, I don't agree with some of what they say.

    For excellent free on-line help, go to morningstar.com and set up a free account. Then you can go to the disucssion boards (discuss tab) and read the questions and answers and post your own. The posters have no ax to grind, rather they are interesting in investing and many love to help newbies.
    The ones most appropriate are "investment basics," "sudent community," and "portfolio design management." Some of the best will ask you specific details about where you are now financially and you should not be shy about answering them.

    You can also set up portfolios for free to test all of the advice you get. For example, one poster above likes index funds, some like ETF's, I don't and after 30 years of investing, I feel comfortable in buying and selling mutual funds and can easily beat them with five star funds. One way to test which works for you is by using morningstar's portfolio feature and set up watch portfolios, one an index, one an ETF and one of activly managed funds. If you like index funds, go to the "boglehead" forum in the discussion boards.

    Morningstar.com also has a classroom (free) for the basics. Under the tab, "real life finance," go to "start investing," then midway down in the center you will see "get started classroom."

    Vanguard, Fidelity and T. Rowe Price all have good sites with free information for the new and experienced investor. And if you decide to buy funds, Fidelity and other funds have a feature where you can open a no fee brokerage account to hold funds from different fund families.

    Its a new world, investing, to those not familiar with it and it takes time to learn it slowly. At the gym, watch the business news if they have that channel.

    Orman is a good motivational speaker but due to some of the products she markets, due to regulations, she cannot include them or their category in her presentations and you may find what she says doesn't apply to you and your situation. For example is it better to rent or buy, you can use an online calculator to look at the financial aspects. I tried owning rental property but I am a worrier and it was not for me, rather part of my portfolio is in REITs.

    good luck
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 5:17 PM GMT
    If you read this and don't have a 401K and/or Roth IRA - Do it tomorrow. Your future self will thank you for it. Real estate investments should come after you've contributed to a retirement plan.
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 5:29 PM GMT
    First, pay off credit card debt. Second, max out your contribution to your 401 (k). Third, have a cash reserve of 9 months of expenses. Fourth, invest in yourself, read the Wall Street Journal and investment books. Fifth, invest in yourself finish a BA or get an MBA or other degree that will help you make money. Sixth buy ETFs such as SPY and VTI. Seventh make sure you have the maximum disability insurance, health insurance, and umbrella liability insurance. Eighth, consult with a fee only CFP. Ninth, get an advanced care directive, power of attorney for property, and power of attorney for health. Tenth, save at least 10% of you income!


    So said the Oracle at Delphi
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 5:35 PM GMT
    I would forget any stock market-based investments, as stocks are an absolute roller-coaster at the moment and likely to remain so for the foreseeable future. I have just got out of them and luckily lost nothing (but did not make anything either).

    The advantage of real estate is that, as well as being a sound long-term investment, it also gives you a roof over your head. I do not think prices will drop significantly further, so this may be a good time to take the plunge. Buying my home when I was 27 was the best decision I ever made.

    If you are very risk-averse, just hunt around for the best interest rates and pop your money in the bank. As others have said, pay off any debts first, as the interest rates you are paying on them will far surpass anything you will make on a savings account.

  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 5:44 PM GMT
    i bought Ford a month ago. Its up $1. Short term target is $14, long term $18.
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 6:02 PM GMT
    I suggest reading "The Intelligent Investor" (see link below). It was originally written by Benjamin Graham, who heavily influenced Warren Buffet. It describes Value Investing (which is takes a more long term approach to investments and is based upon the principle that the price of an investment will reflect its worth in the long run). It is somewhat of a dry book, but to simplify things, it suggests that if you don't want or have the time to actively track your stocks everyday to invest in funds that reflect the stock index; over time, almost no one performs better than the overall stock market (and in fact, I believe 80% of people do worse). Warren buffet suggests this approach for most of the population in fact. Yes, the stock market is down today, but that actually argues you should perhaps consider investing more now, as the stock market is only likely to go up in the next 30 years or so that it will take for you to reach retirement.

    Keep in mind that this method is a long term investment strategy. It highly discourages day trading (especially due to all the fees associated with any transaction).

    http://www.amazon.com/Intelligent-Investor-Definitive-Investing-Practical/dp/0060555661/ref=sr_1_1?s=books&ie=UTF8&qid=1326045277&sr=1-1
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 6:08 PM GMT
    TheGuyNextDoor saidThere's lots of ways to make your money grow.. that's for sure!
    As far as real estate goes, a lot is being at the right place at the right time...
    There is a lot of power in the purchase of a repossession.

    I own 3 repos and live in one. Rent out the other 2. (Modern 2 storyTriplex) Worth 600K now. Original investment a mere 75K!
    All 3 are paid off now, just 15 very quick years later! My space is mortgage/rent free now as well at the 2 rentals that are free and clear which bring in $2,100 a month in income I didn't use to have...
    That's a whole extra paycheck!
    6K a year go out in Property taxes and Ins. but that's covered in less than 3 months.. The rest is bank!

    Also, come on people, if you can take advantage of your company's 401K,, Jump on it as soon as possible... More FREE Money!
    My 18 yrs at my current job have flown by! Most places with a 401K either match, or up to 50% match what you put in and really causes that Money to grow over 100K before you blink an eye! I toss a few 100. a month to a Roth IRA, a little comes out per month for a credit union at work so when ever you need 2K for a car down payment or sudden expense, it's there waiting and not upsetting your apple cart.

    First off,, make sure you have enough per month to have an enjoyable life now.. save the rest and make it grow so when the time comes to retire, as we all will some day,, you have enough then to enjoy it.


    Before you recommend that, I have to ask- is there a way to check on the background of your tenants before giving them a contract? My dad let out his old farm to some yahoos before he left for Minneapolis a long time ago. Long story short, the cunts (trust me- I do not use that term liberally) trashed his place long before and around the time they got evicted.
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 6:20 PM GMT
    Bullwinklemoos said
    Before you recommend that, I have to ask- is there a way to check on the background of your tenants before giving them a contract? My dad let out his old farm to some yahoos before he left for Minneapolis a long time ago. Long story short, the cunts (trust me- I do not use that term liberally) trashed his place long before and around the time they got evicted.


    Good references. I let my place, fully furnished, for 4 years, to 3 sets of tenants, while I lived abroad and when I returned I found the place just as I had left it.
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 6:21 PM GMT
    Mil8 saidBefore you recommend that, I have to ask- is there a way to check on the background of your tenants before giving them a contract? My dad let out his old farm to some yahoos before he left for Minneapolis a long time ago. Long story short, the cunts (trust me- I do not use that term liberally) trashed his place long before and around the time they got evicted.

    Good references. I let my place, fully furnished, for 4 years, to 3 sets of tenants, while I lived abroad and when I returned I found the place just as I had left it.


    Thank you. I apologise for the language in a civil thread such as this, but the property was (and still is) in pretty bad shape after they left.
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 6:23 PM GMT
    Yes, for a montly fee, you can subscribe as a landlord to Experian or one of the other bureaus and do a credit check. Not only will you get that, but you can let your tenants know that their rental payments will be posted to their credit record thereby either helping or hurting their score.

    Many employers now use a credit report as part of their selection process so not paying on time could have far reaching consequences for a renter - not to mention for major purchases and loans.

  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 6:24 PM GMT
    Bullwinklemoos said

    Thank you. I apologise for the language in a civil thread such as this, but the property was (and still is) in pretty bad shape after they left.


    No need to apologise. I'd have killed the cunts.icon_wink.gif
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 6:37 PM GMT
    I have always wanted realjock to have a forum for personal finance.
  • Posted by a hidden member.
    Log in to view his profile

    Jan 08, 2012 6:58 PM GMT
    Five stars for not mentioning "socially responsible investing."