Investing - Basic Questions for 2015

[asphaltgambler]

I know this has been asked / discussed frequently, maybe overly so but............................................... .I'm looking for possibly a different direction this new year. In the past few years I have made a good bit of tax-free $$$$ cash by buying, fixing, restoring classic cars, trucks and motorcycles. A very healthy ROI that, to do any better you would probably have go into the illegal drug trade. BUT...............................here are the 'problems' that come with that especially in the last 6 months.

1) Consistency: Finding the right _______ to flip. It is increasingly difficult to find / buy anything where there is enough margin to make any money at all. I have a lot of resources / people to pull from, but good buys are just too scarce. I don't see much improvement in the upcoming year. Typically these deals are almost always off of most conventional 'radar'.

2) My Time: Since going full time merit employment with the county in June of last year, I do not have the spare day(s) to commit as before. So my actual 'spare' time has become much more valuable. It's just is not real time enough to commit to any additional major projects like partial / major resto's, nor do I want to as I'm a little burnt out physically and mentally.

3) Buyers with MONEY: I know going into a deal what my selling price will be. No different than any other buy/hold/sell investment strategy, as the old saying goes "You've already made money the moment you buy it". Recently, I'm not seeing the buyers with the disposable income as, say, 6-8 months ago. I know part of this is the time of year, but there seems to be trending where if the 'item' is p$1500 or $25K (representing good value and under fair market) it still won't sell.

4) Make my $$ work for me: I thought about this a lot and as I get older I need whatever investment to be accruing value even as I sleep, quickly and with much less physical involvement directly from me.


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



OK everyone ready? 1-2-3 go!!

[widgeon13]

What kind of return are you targeting and how much risk are you willing to take?

[asphaltgambler]

I'll answer truthfully= The most for the least!! But more to the point, my risk has been very slight in the past few years because I know the market so well and I have so much real experience in the auto business, decades actually. I know valuations like it's second nature.

Honestly, I like the idea of actively investing in stocks, bonds, commodities markets but I know jack about those other than commodities are the 'bad boys'. I so know that there are stocks that bare dividend(s) as well as interest. I like the idea of researching and investing online accounts at my fingertips. My real fear with this is that there is too much relevant information about a stock that I (or Joe public) would never see these days. That only real pros with the inside scoop could make any money at all. Further that I would lose money through investments with things I couldn't control.

[paulgtr]

if you're looking for guaranteed tax free return on your investment
cash value life insurance is the way to go

mass mutual has a very good dividend rate and new York Life is doing better every year

then you can use etf or c share mutual funds for liquidity

you decide how much you always want liquid

[asphaltgambler]

Please explain, thanks

[paulgtr]

in a nutshell,
the IRS allows life insurance to be a tax shelter.
so mutual Insurance companies. those who are not traded on the stock exchange.
with strong enough financial ratings can design a life insurance contract that functions like a bank.

so strong mutual companies like mass or NYLIFE have big cash reserves as much as 400 billion that they use on behalf of their policy holders who own those companies and share in their profits like share holders.
the risk must be guaranteed to show a return.
over time the dividend and cash value grow and is available to the client as a loan or surrender.
using the loan function keeps the growth tax free.
you are essentially loaning from yourself instead of a bank and at the same time getting the most from your money.
it's not liquid right away, so I don't recommend putting all your eggs in this basket
but if you are looking for a permanently guaranteed winner no matter what the stock market does, is the best solution.

[wdfifteen]

I recommend a fee-only investment adviser. (Fee-Only Financial Advisors Home - NAPFA - The National Association of Personal Financial Advisors) It costs $800 in my neck of the woods for the first evaluation of your goals and resources. After that I get a $500 "tune-up" every two or three years (depends on changes in the economy and my goals). He/she will look at what you want to accomplish, where you are in life, what you have to invest, what kinds of investments you are comfortable with, your desire/ability to be active in managing your investments, etc. They are familiar with all forms of investment from real estate, to life insurance, money market accounts (probably not the details of collectibles though). I would not even talk to anyone who does not tell you up front how much they are going to make advising you.

[Dantilla]

I like real estate, for the same reasons you like cars-

I control the value. It is tangable, whereas stock values are determined to a great extent by the emotions of "the market", where prices can fluctuate greatly on a whim.

Real estate always has intrinsic value. It will never be mis-managed to the point where it becomes worthless like a penny stock, or lose all value through a bankruptcy, as occasionally happens with stocks.

Like cars, in real estate you make money when you buy, not when you sell. I've yet to loose money on a fixer-upper, but I understand the difficulties of the current market- I quit buying fixer-uppers when the housing market got too hot, as there were no bargains to be purchased. Now that the bubble has burst, and the "masses" are fleeing real estate, it's time to find bargains once again. Good money to be made right now in single-family real estate.

Sorry, but I gotta disagree with paulgtr about cash value life insurance. Always a poor choice for an investment. "Tax free" is good, but the rate of return on the money is pathetic. The only people I've heard plug cash value life insurance are insurance salesmen, where the commissions are very high. The only reason for the high commissions are because they produce high profit for the insurance companies. More income for the insurance company, less income for the investor.

[Z-man]

Dirt. As in real estate. Right now, the RE market is very soft - inventory levels are low, at least here in North New Jersey. Most people are not buying right now. So this gives you time to find a fixer-upper and prep it for the spring when the market gains more traction.

You already have a talet at fixing this up -- but with filipping cars. Flipping houses require some of the same skills, a little more equity up front, a longer time to 'repair,' but a whole lot greater return on the other side.

Do some research, find a desireable location, then find a house in that area that requires a little attention, and have at it. Pay attention to details when fixing the home, don't cut corners, find what is popular now in homes (granite? open floor plan? master suite on first floor?) and work those into your repairs.

My $0.42,
-Z

[paulgtr]

I wouldn't,
I work in the field and don't charge a fee.
those who charge a fee don't have access to training or products I don't have.
they just charge you for the same advice I can give for free.

[wdfifteen]

Originally Posted by paulgtr

in a nutshell,
the IRS allows life insurance to be a tax shelter.
so mutual Insurance companies. those who are not traded on the stock exchange.
with strong enough financial ratings can design a life insurance contract that functions like a bank.

You are also paying for life insurance that you may or may not need or want. While a cash value policy is a part of my portfolio, it was chosen very carefully as an adjunct to the whole investment plan. It is not the place to start a porfolio. I recommend you read this:

The Truth About Life Insurance - daveramsey.com

[wdfifteen]

Originally Posted by paulgtr

I wouldn't,
I work in the field and don't charge a fee.
those who charge a fee don't have access to training or products I don't have.
they just charge you for the same advice I can give for free.

You work for free??

[paulgtr]

Originally Posted by Dantilla

I like real estate, for the same reasons you like cars-

I control the value. It is tangable, whereas stock values are determined to a great extent by the emotions of "the market", where prices can fluctuate greatly on a whim.

Real estate always has intrinsic value. It will never be mis-managed to the point where it becomes worthless like a penny stock, or lose all value through a bankruptcy, as occasionally happens with stocks.

Like cars, in real estate you make money when you buy, not when you sell. I've yet to loose money on a fixer-upper, but I understand the difficulties of the current market- I quit buying fixer-uppers when the housing market got too hot, as there were no bargains to be purchased. Now that the bubble has burst, and the "masses" are fleeing real estate, it's time to find bargains once again. Good money to be made right now in single-family real estate.

Sorry, but I gotta disagree with paulgtr about cash value life insurance. Always a poor choice for an investment. "Tax free" is good, but the rate of return on the money is pathetic. The only people I've heard plug cash value life insurance are insurance salesmen, where the commissions are very high. The only reason for the high commissions are because they produce high profit for the insurance companies. More income for the insurance company, less income for the investor.

comparing what the commission is to the value of the policy is always in the policy owners advantage and unlike real estate is much more accessible to the owner in using the intrinsic value at their discretion.

[paulgtr]

Originally Posted by wdfifteen

You work for free??

I will not charge you an hourly rate.
if you take my advice and then go to Charles Schwab I don't make a dime, yes it happens, I only get paid if you do business from what ever carrier you decide to use.

[wdfifteen]

Originally Posted by Z-man

You already have a talet at fixing this up -- but with filipping cars. Flipping houses require some of the same skills, a little more equity up front, a longer time to 'repair,' but a whole lot greater return on the other side.

^^
This. With your talent you should not lock your money up someplace where you can't get it immediately if the opportunity/desire to put your skills to work making some big money. You might be better off with a lower return investment that keeps you liquid enough to take advantage of your skills if you get the chance.

[recycled sixtie]

It depends on your tolerance of risk. If you buy now the stock market is high and cannot stay at this level forever. It is very disconcerting to buy high and watch your investments go down in value. Likely they will go up again.

I do like mutual funds as the $$$ is professionally managed. The prof. stock pickers are able to choose stocks which they think will do well in the long run. Buying ETFs is a low cost way of buying investments. The commission is cheaper than buying mutual funds.

A little knowledge is a dangerous thing particularly with investments.

If you go to a financial planner then they may try to influence you into buying mutual funds because they get paid via commissions. A fee based financial planner is compensated with an hourly fee. This may suit you as he /she will give you direction as to how you are doing financially and what level of preparation you have for retirement. I actually have a fin. planner who I invest with with the $$$ going into mutual funds. I get separate statements from both so I know the $$$ are actually invested in the mutual fund co. and not going into the financial planner's pocket.

If you don't want risk then guaranteed returns can be had from bank deposits but returns are puny.

Be very careful of going with somebody unless they have a good name and references. In terms of mutual funds I spread $$$ around to more than one organization. I like Fidelity, Vanguard, Templeton to name a few. Don't put all your eggs in one basket.

$$$ cost averaging is a good way to go. Buying a specific amount each month averages out the peaks and valleys of the market.

Feel free to pm me if you need any more advice. I took the Can. Securities Course back in the 1960's. It has served me well on the understanding of the various investment vehicles etc.
Cheers,

Guy

[asphaltgambler]

Real estate appeals to me for all those same reasons. I've had several conversations with my wife concerning this specifically. I know quite a bit about construction, know a few guys who are building industry contractors / sub-contractors. SFH's out side my immediate area are affordable 'fixer's. My logic is that there are homes cheap enough to buy / 'flip'.

[wdfifteen]

Originally Posted by paulgtr

I will not charge you an hourly rate.
if you take my advice and then go to Charles Schwab I don't make a dime, yes it happens, I only get paid if you do business from what ever carrier you decide to use.

There you go.

[paulgtr]

Originally Posted by wdfifteen

There you go.

right, but you'll pay the same fees on top of paying an advisor

[Dantilla]

Originally Posted by paulgtr

the IRS allows life insurance to be a tax shelter.

Are you looking for a tax shelter, or income?

the risk must be guaranteed to show a return.

If a return is guaranteed, the return is low.


.... available to the client as a loan ...

....you are essentially loaning from yourself

I'm not interested in borrowing my own money.



it's not liquid right away,

.... a permanently guaranteed winner.

Once again, it it's guaranteed, the return will be disappointing.

.

Just one guy's opinion. I've played with the numbers, and in every case I've looked at, cash value life insurance was a poor choice.

YMMV.