Learning to invest?

[Geronimo]

Like many I have the standard 401K mutual fund investments, but I want to take a more active roll and maybe a line of more risk tolerant investments.

I have done some looking around but it looks like a sea of pay me i'll train you scams.

So question is, where the heck do you turn to learn the ropes in investing and trading?

[masraum]

https://paulmerriman.com/

Paul is a retired financial advisor. Since he retired, he's been spending his time trying to educate people on investing. I first ran across him as a regular contributor to www.marketwatch.com.

He had lots of articles, charts, and recommendations.

He has created a new class/curriculum to teach investing at, I think, the Univ of Washington.

He gives not only advice on the actual investing, but also advice on how to choose a financial advisor.

His main advice is to purchase multiple low cost index funds spread across multiple asset classes and hold them for the long term. The way that he's chosen the asset classes is based on historic long term performance. Ie, he has checked every 40 year period for the last 100 years (or something like that) and checked all of the numbers. He backs all of his analysis with charts and figures. Yes, he admits that past performance is no guaranty of future performance, but it's the best that we've got to go on until you find someone that can actually tell the future.

The basic break-down is

Tax deferred
90% equities divided as follows
1/2 domestic, 1/2 international
1/2 large cap, 1/2 small cap
1/2 growth, 1/2 value
and then the remaining 10% split 50/50 between international and domestic REITs

His recommendation for taxed investments is the same but to leave out the REITs because their returns are taxed as short term cap gain, IIRC.

He calls his plan the "Ultimate Buy and Hold strategy"

Paul Merriman is a nationally recognized authority on mutual funds, index investing, asset allocation and both buy-and-hold and active management strategies. Now retired from Merriman, the Seattle-based investment advisory firm he founded in 1983, he is dedicated to educating investors, young and old, through weekly articles at Marketwatch.com, and via free eBooks, podcasts, articles, recommendations for mutual funds, ETFs, 401(k) plans and more, at his website.

In 2013 he created The Merriman Financial Education Foundation, dedicated to providing comprehensive financial education to investors, with information and tools to make informed decisions in their own best interest and successfully implement their retirement savings program. A major project of the Foundation is funding the curriculum development and teaching of the 4-credit course, “Personal Investing” (for non-finance majors), at Paul’s alma mater, Western Washington University, which began Fall 2013.

In his retirement, Paul remains fervently committed to educating and empowering investors. In 2012, he wrote and published the “How To Invest” series, distilling his decades of expertise into concise investment books targeted to specific audiences – “First-Time Investor: Grow and Protect Your Money,” “101 Investment Decisions Guaranteed to Change Your Financial Future,” and “Get Smart or Get Screwed: How To Select The Best and Get The Most From Your Financial Advisor.”

Paul is also the author of four previous books on personal investing, including Financial Fitness Forever: 5 Steps To More Money, Less Risk and More Peace of Mind (McGraw Hill, Oct. 2011). The book was part of the “Financial Fitness Kit” offered on the TV show, “Financial Fitness After 50,” created exclusively to raise funds for local Public Broadcasting Service (PBS) stations.

Paul’s book, Live It Up Without Outliving Your Money! Creating The Perfect Retirement, published by John Wiley & Sons, was released in an updated edition June 2008.

Over the years Paul has led more than 1,000 investor workshops, hosted a weekly radio program and has been a featured guest on local, regional and national television shows. Paul has written many articles for FundAdvice.com, a service of Merriman LLC. This website was identified by Forbes as one of the best online resources for investors.

Paul’s weekly podcast, “Sound Investing,” was named by Money magazine as the best money podcast. Paul has been widely quoted in national publications and has spoken to many local chapters of the American Association of Individual Investors (AAII). Twice he has been a featured guest speaker at Harvard University’s investor psychology conference.

Paul began his career in the 1960s, working briefly as a broker for a major Wall Street firm. He concluded that Wall Street was burdened with too many conflicts of interest and decided to help small companies raise venture capital. In 1979, he became president and chairman of a public manufacturing company in the Pacific Northwest. He retired in 1982 to create his independent investment management firm.

[RWebb]

trading is what you do with OPM

investing is what you do with your money


A Random Walk On Wall Street is a good book; join Bogleheads; avoid fees

Valueline is good for the stocks they cover - your library may have it

investing in small cap or foreign stocks is difficult due to low information levels, so let a good, cheap pro do it - buy mutual funds for that

[Sooner or later]

One Up on Wall Street by Peter Lynch (Magellan) is another beneficial read.

[tabs]

Go to Vegas and put it all down on the Pass Line at the Crap table.

[Seahawk]

Andrew Tobias has been very good to me.

https://books.google.com/books/about/The_Only_Investment_Guide_You_ll_Ever_Ne.html?id=D W8pCgAAQBAJ&printsec=frontcover&source=kp_read_button

Figure out your risk tolerance, level of involvement, etc. then start slowly, do not hurry.

[sammyg2]

I'm almost done with this book:


It's good.
They also have a book on investing, if it's anywhere near as good as the retirement planning book, it's worth the read:

[pwd72s]

Originally Posted by sammyg2

I'm almost done with this book:


It's good.
They also have a book on investing, if it's anywhere near as good as the retirement planning book, it's worth the read:

Bingo! Cindy & I often wish we'd had these on hand when we started investing. I suggest the 2nd book listed as a start. Both very educational, both based on the thinking that nobody cares about your money more than you and that you CAN do it yourself.

[sammyg2]

Originally Posted by pwd72s

Bingo! Cindy & I often wish we'd had these on hand when we started investing. I suggest the 2nd book listed as a start. Both very educational, both based on the thinking that nobody cares about your money more than you and that you CAN do it yourself.

And IIRC, you set me on to that book. Thank you.

[Cajundaddy]

Bogle, Buffett, and Merriman all follow a similar proven strategy based on very low costs, buy and hold, and long term dollar cost averaging. This is as close to a sure thing as there is in the markets.

If you are looking for short term/high risk, fortunes can be easily made and lost with more speculative investments. A game I no longer play, but a few friends have managed to hit big. A few have also lost big.

[Bill Douglas]

I'm NOT investing.

I'm fairly cashed up waiting for another big one. Then more (half price) property or stocks.

I have some money in local shares (stocks) with Auckland Airport. But it's only one stock and I more or less know what it's doing so I buy and sell the same stock and make some money that way. Nothing random for me. Only companies I know well.

[masraum]

Originally Posted by RWebb

trading is what you do with OPM

investing is what you do with your money


A Random Walk On Wall Street is a good book; join Bogleheads; avoid fees

Valueline is good for the stocks they cover - your library may have it

investing in small cap or foreign stocks is difficult due to low information levels, so let a good, cheap pro do it - buy mutual funds for that

Mutual funds or ETFs

[pwd72s]

It's true that your age is a factor in investing. Somebody in their 20's or 30's can and should take a different approach than those in their 60's and 70's. The books Sammy suggested cover that topic well.

[KFC911]

I have read nary a book, but I'd bet we all have reached this point by sharing commom traits...yet every single one has a different approach imo.

It's sorta ingrained in me ....

How's yer debt and spending?

Have fun...with balance

.....and keep yer day job

[masraum]

Originally Posted by pwd72s

It's true that your age is a factor in investing. Somebody in their 20's or 30's can and should take a different approach than those in their 60's and 70's. The books Sammy suggested cover that topic well.

Paul Merriman also addresses that in some of his various articles, and his recommendations (he has recommendations for Mutual funds that would meet his buy and hold plan as well as ETFs that are geared toward a few of the big brokers, like Vanguard, Fidelity, etc...) include recommendations for "aggressive," "moderate" and "conservative" investors which would generally be in line with an age based approach. WHen you're young, go all in on equities. As you get older, you start shifting some investments into bonds which are less volatile. I think he ends up with a 60/40 split.

[biosurfer1]

Dividend growth investing. I'm convinced it's the (not so) secret sauce to wealth.

[wildthing]

Agree on low cost index funds as a base. Also most 401k plans don’t offer much else.

If you do have an IRA or a taxable brokerage account, and want to pick stocks, www.fool.com.

Invest. Don’t trade.

[masraum]

Originally Posted by wildthing

Agree on low cost index funds as a base. Also most 401k plans don’t offer much else.

If you do have an IRA or a taxable brokerage account, and want to pick stocks, www.fool.com.

Invest. Don’t trade or speculate.

FIFY.

Pssht! I've had lots of 401ks over the years, and while most of them would have an S&P500 index fund and maybe a couple of others, most also had a bunch of other actively managed funds. At least these days most seem to also have target date funds, although, I think most of those tend to be conservative.

[legion]

Here's what I learned as a Finance major in college. Are you ready for it?

The secret to investing is to put your money in a no-load index fund. The next part is very important: add as much as you can to it every year, and don't touch it until you retire. You will outperform something like 99.99999% of managed funds over that time. You will outperform 99.9999999% of active investors. Literally doing anything else has a much closer chance to 100% than what I have quoted above that you will underperform the index fund strategy.

[masraum]

Originally Posted by legion

Here's what I learned as a Finance major in college. Are you ready for it?

The secret to investing is to put your money in a no-load index fund. The next part is very important: add as much as you can to it every year, and don't touch it until you retire. You will outperform something like 99.99999% of managed funds over that time. You will outperform 99.9999999% of active investors. Literally doing anything else has a much closer chance to 100% than what I have quoted above that you will underperform the index fund strategy.

That's what I hear and read as well.

if the expenses are 1% or 2% or 3% vs .04%, .1% or even .25%, you're making a big difference over 40 years.

Also, most folks let their emotions rule. They have money in the market. The market goes down, and down, and down, and they panic and they sell. Then, they wait, it starts going up, and up, and up, and their confidence returns and they buy back in with what they sold before. No one ever made money by selling low and buying high. Just leave that stuff alone. Only one thing should happen, more stocks/funds/etc... should be purchased.

Another thing that a lot of folks make the mistake of doing is buying this company or that company because they know the company or they know the business. Yeah, I suspect the Enron folks thought they knew what was going on too. That's why you buy funds. If you buy a fund and it's got 100, 500 or 1500 individual stocks in it and one of them tanks, how much of a hit are you going to take? Not much. If you own stocks in 5 or 10 different companies because you know the company, but then something happens, PR nightmare, executive naughtiness, etc..., then how much of a hit are you going to take?

low cost index funds, buy in and let the stuff sit there until you are ready to take it out.