Investing - Basic Questions for 2015

[wdfifteen]

Originally Posted by lukeh

Look up these two managed funds (PYSCX and PVSCX) and compare them to a low cost Vanguard S & P index ETF (VOOV) over the past 5 years. Why wouldn't I pick the managed fund? Sometimes the best costs more. What do I care as long as I end up with more in my pocket?

What you care depends on what your needs are. If my returns were based on last year's performance I'd still be all over managed funds. But you can't foresee which of the hundreds of funds are going to outperform the index. That only happens in hindsight.
As it is, I have to go with balancing my needs with realistic expectations.
Forty years ago when I had a long recovery horizon I was 80% in managed, aggressive funds. Most years I hit more winners than losers, some years I didn't. Now that my recovery horizon is right in front of me, I can't afford to pick a loser. Everyone's needs are different. Choosing the best for you is a complex calculation.

[sc_rufctr]

Investing? I really don't get the whole stock market thing and God knows I've tried.
It's not tangible and I don't like risk.

For me it's real estate and I keep it simple. I buy the right property in the right suburb, rent it out and sit on it. So far so good.

[VincentVega]

Good thread, I like to see different opinions.

You listed as one of your requirements

5) Small $$ Amounts: Where the investment is liquid and requires amounts from $10K and down.

Unless you consider a monthly note on a rental or flip I think that puts RE out. Some can make it work but there is considerable risk, $$ needed up front for funding, time and $$ to repair/upgrade, taxes, RE fees, potential renter issues.... It can work but it's not easy.

As mentioned earlier, Vanguard etf's trade for free from their website. You can start with next to nothing, just need to buy 1 share. Trickle in some $$ when you have it into a few indexes, int, growth, divident (VIG, VYM...). Then when the market tanks buy some more. Not exciting but it works and you can sell whenever you want and arent stuck with a car in your garage or a house that wont sell.

[aschen]

Pretty much every credible source on the internet and media are adement that whole life insurance is a terrible idea. There are countless illustrative real life examples that show negative rates of return in practice.
Most of the premiums go to commissions and the insurance companies.

Ill happily consider any arguments to the counter, however, but the only people I have seen recommend these are people that sell them.

[paulgtr]

Originally Posted by Cajundaddy

I'm sorta old school and like to spread things out to mitigate risk long term. I like Real Estate, Vanguard index funds, muni-bonds (tax free), and I use life insurance but it represents maybe 5% of my investments. Over time this has worked pretty well with RE being high risk, high return and VG being low risk lower return. I do buy and sell stocks with side money but realize that game is pretty rigged so you need to know who is doing what to who. I don't like being out of the loop so index funds work better for me as an investment tool.

With investing, there is a tell that indicates someone is ripe for fleecing. It's the one who believes you can get high returns with low/no risk. They always get cleaned out first by buying pie in the sky.

this is what makes the most sense of what I've read.
but it's a lot of what people feel comfortable with.
since my business is referral based, not doing well for my clients in a highly competitive market would put me right out of business.

[lukeh]

Originally Posted by masraum

For me, 5 years does not demonstrate long term, consistent results. Five years is a blip. I think about long term as being 20, 30 or 40 years. Lots of funds can beat the market in short periods here and there. If those funds are beating the market long term, then, yeah, they may be worth the premium. But, if they beat the market like a red-headed stepchild for 5 years, and then drop down to a normal level for a few years, and then drop below the market for a few years, you aren't making money unless you sold them before they dropped, and you're still paying the expert his high fees.

I have a hard time paying the experts high fees when pretty much everything that I've read indicates that over the long term, active investing doesn't beat the market, especially when you factor in the costs.

How the mutual fund graveyard can hurt investors - CBS News

Okay, 5 years isn't enough...I can see that. What if I gave you the symbols of funds that beat the S & P over the past 20 years, 40 years, 60 years or even 80 years (and I can)? Then why would you take the index over those managed funds?

I get the entire fee thing but we are talking rates of return after fees. If over 40 years managed fund XYZ after fees has beat the index why does it make more sense to invest new money in the index?

Maybe I'm not seeing it but if for 30 years car A has been going around the track faster than car B why would I bet money on car B? It seems like it would be a mistake to bet on the car that has a worse historical track record.

[paulgtr]

Originally Posted by aschen

Pretty much every credible source on the internet and media are adement that whole life insurance is a terrible idea. There are countless illustrative real life examples that show negative rates of return in practice.
Most of the premiums go to commissions and the insurance companies.

Ill happily consider any arguments to the counter, however, but the only people I have seen recommend these are people that sell them.

since it's only part of my inventory, life insurance isn't the sole focus, nor does it generate much of my income.
it does work well if properly designed to fit into a portfolio. not sure if folks have seen a max over funded policy that is paid up in 7 years. after that it is pure profit for the policy holder. put it where you normally put your muni bonds.
I can't speak for any one but myself, but I take my time with clients to understand their objectives and find the best model to achieve their goals.
if I have put them on the right path and they do well, isn't that what is important?

[masraum]

Originally Posted by lukeh

Okay, 5 years isn't enough...I can see that. What if I gave you the symbols of funds that beat the S & P over the past 20 years, 40 years, 60 years or even 80 years (and I can)? Then why would you take the index over those managed funds?

I get the entire fee thing but we are talking rates of return after fees. If over 40 years managed fund XYZ after fees has beat the index why does it make more sense to invest new money in the index?

Maybe I'm not seeing it but if for 30 years car A has been going around the track faster than car B why would I bet money on car B? It seems like it would be a mistake to bet on the car that has a worse historical track record.

OK, 20, 40, 60 years beating the S&P500 after fees, yeah, that sounds like a good deal.

[aschen]

Debunking The Myths Of Whole Life Insurance | The White Coat Investor- Investing And Personal Finance Information For Physicians, Dentists, Residents, Students, And Other Highly-Educated Busy Professionals

[Dantilla]

Originally Posted by porsche4life

A good realtor is key in this too. Make sure you find a realtor that understands investment properties, and is willing to wait it out with you to find the right one!.

+1.

No, make that plus........ about a thousand.

[paulgtr]

take $9,500 a year as an example for 20 years
guaranteed at the end of that time you would have $309,000 of tax free dollars.
you wouldn't take it?

[aschen]

so your policies have a guaranteed NET rate of return of around 5% APR? Starting today into 20 years in the future from today.

I don't believe it

[paulgtr]

and that's the conservative company that pays me less commission

[aschen]

Sorry but I honestly don't believe your supplied data, or more accurately the fine print hides some nasty details.

Sorry to be so blunt, but something is hidden from view

[paulgtr]

no need to apologize.
usually folks who are life insurance agents don't know how to maximize the products they offer.

it's a tool that has to be used properly.

no smoke and mirrors

[paulgtr]

nice chatting,
good night and happy new year

[wdfifteen]

Invest in Bovada!

[wdfifteen]

Originally Posted by paulgtr

take $9,500 a year as an example for 20 years
guaranteed at the end of that time you would have $309,000 of tax free dollars.
you wouldn't take it?

Tax free cash value?

[LWJ]

Back to the OP. I like real estate. I have always done well with it. For the reasons you have done well with vehicles. You say the market is dry? You need to change mediums? I disagree. You have an expertise. Use it. Maybe just in a different way? Can you be the guy that finds a cherry 70 Cuda on demand? What about some othe method of trading your skill set for dollars? If the market is tight,there is a whole different set of opportunities to be had. Example, I have some cars of various interest that I am interested in selling. I don't know how far to invest in pretting them up to maximize ROI. You do. That is valuable and possibly needed.

[sc_rufctr]

Let's say I have $100 a week to "invest"($400 to $500 a month).

Is there something that will give me a decent return safely?