Investing General Discussion

Have 27k in an ameritrade (lot lot of money to me) need to put in something. Prob do like 5 vanguard funds at 5k each? I honestly don't think it helps me a shit bit if I spend 1 hour or 1000 hours picking stuff. Shouldn't be touching it for a long long time, practically retirement.

Poster said:

Friends and family, or any one of the numerous CRE crowdfunding websites?

I liked investing in Fundrise projects before they switched to their REIT model.

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This is very interesting to me. Have you had success with investing in particular structures?

ShakyJake said:

Need some advice...

As we all know, interest rates for a bank savings account is so stupid low it makes zero sense to keep your money there. So, alternatively, I've been placing any extra cash into a Vanguard ETF - specifically the VTI Total Stock market ETF.

I sold all my shares earlier this week because I'm becoming real nervous as the market continues to break record highs. Many indicators point to a meltdown.

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Sounds like you're trying to time the market, and that's a losing proposition most of the time. People have been claiming the market is going to pull back for the last 2-3 years, but it's still going up. I frequent the Mr. Money Mustache forums a lot, and there are people there "waiting" for the correction so that they can jump in. Meanwhile they're missing massive returns (see the end of this post).

Eomer said:

Yeah, for sure. The accumulation phase is pretty simple for most people. If you've got enough squirreled away that you've got non-sheltered accounts and the like, then it's probably time to start paying a financial advisor, but only one that's not going to try to shoehorn you in to a bunch of shit that pays him trailers. And yeah, shit gets a lot more complicated when you're nearing or in retirement.

Many people, though, seem to think that to save for retirement that it's all about maximum returns. When the reality for most middle class people is that it's about maximizing your savings and avoiding debt and over consumption. If the difference between a comfortable retirement and penury for a given individual is the difference between a 5% IRR and a 6.5% IRR, then they really fucked up somewhere along the way.

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This, for sure. I've got a pretty comprehensive spreadsheet for our accumulation phase, and the difference between 5% yearly returns and 10% is definitely significant, but not massive. Being able to stash away another $10-20k a year though? That shit is what makes a difference. Really, the ONLY time sequence of returns is incredibly important is the first 5-10 years of retirement, when you're no longer adding to your accounts. This is the point where a bunch of down years can crush your portfolio. Down years in accumulation just means you're more likely to have up years after (since the market always goes up).

The plus side is, usually if you see that the first few years of retirement are going poorly, you're not so far removed from the job market to find something full time or even part time to make up the income.

Picasso3 said:

Have 27k in an ameritrade (lot lot of money to me) need to put in something. Prob do like 5 vanguard funds at 5k each? I honestly don't think it helps me a shit bit if I spend 1 hour or 1000 hours picking stuff. Shouldn't be touching it for a long long time, practically retirement.

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If you go Vanguard, I suggest doing at least $10k so you can do their Admiral funds (some Admiral version may be lower than $10k, but I think most of them are). Not that Vanguard fees are high, but it'll save you a bit. One of the biggest destroyers of portfolios is fees. Like Blazin said though, you don't need to "diversify" much with Index funds. They already do that for you, which is kind of the point. At most, your diversification could be into a total market fund (pick your favorite index), an international index, a bond fund, and REIT. That literally covers just about everything.


So anyway, this year is the first year that we really got serious about socking money away after finding Mr. Money Mustache last year (it will be the first year we both max out our 401k's and IRA's). I've always looked at the end of year returns to see the big picture, but now that I'm following it more closely, dollar cost averaging is amazing. If you just looked at the YTD returns of the S&P 500 (I use VTSAX) you wouldn't be super impressed; currently about 6%, which is decent and maybe a little below historical average. But if you're doing DCA and you add in all those little bumps from January through April and the Brexit drop, you're looking at returns in the 12-16% range. In a market that everyone is saying is relatively flat. Fuck that noise, I'm doing great this year. I think we're up about 8% YTD in our Vanguard funds (no clue about 401k and TSP). I'll take that every year.

Yeah, I dumped a bunch of money in to various index funds in late January and early February, and that money in particular is up 15% or so (the Canadian stock market has done very well since that correction). In all honesty, that was very close to market timing on my part, but meh. We'd pulled some money out of the company late last year and I was sitting on it, as there was a possibility of either needing cash for a down payment on a house with the now ex-girlfriend, or investing in a real estate deal. But when most major markets had declined by 10% or more to start the year, I couldn't help myself and dumped the money in to the market. Unfortunately the money's within my holding company, so I'm not entirely clear on the tax consequences as I don't think there's a lower capital gains rate for passive income in a holding company, but fuck it. I'll still come out ahead even after taxes. And I'm pretty sure my holdco had accumulated a fair amount of losses over the years since the dividends that were flowing through it were tax free between the op-co and hold-co, so I might not actually have any tax consequences. We'll see, I guess.

Overall, my IRR for 2016 year to date is 13.2% (or up about 8% from the beginning of the year). IRR going all the way back to 2004 is 8.75%. The first 4-5 years of that wasn't true index investing, and was with pretty small dollars compared to where I'm sitting today (my portfolio didn't get big until early 2009, which was nice timing!). If I just look at 2009 until today, IRR is 9.8%. I'm only at about 15% bonds right now, but intend on getting that up to 25-30% over the next 5 years in order to smooth out the ups and downs and generate a bit more income. At that point, I'll pretty much have enough money socked away that I could retire and live a pretty decent lifestyle. I'd just need to figure out a way to convince my bro that he shouldn't come hunt me down. I don't include the value of my share of the business in my calculations, as it's impossible to say what I'll actually get for it, if anything.

I tried reading that Mr Money Mustache website, and gave up pretty quickly. I dunno, something about him and his writing style was fucking obnoxious to me. He's super sanctimonious about how awesome he is at living off canned beans and expired dairy. It got old really quickly. I'm all for living within your means and getting off the debt treadmill, but most of what I read there wasn't very applicable to me or my lifestyle.

He actually doesn't live super frugally. In fact, he makes a point to mention how he spends a shit load on groceries and isn't doing that.

The "sanctimonious" part which I could see being off-putting is his environmentalist stuff. He's big on biking, energy conservation, and just generally not being wasteful. That stuff is incredibly preachy, but on the forums a lot of people ignore it and just focus on the financial.

Fair enough. I started at his very first posts, and only made it through maybe 5-10 before I gave up. Maybe his more recent output he's toned things down. I also found that he wasn't nearly as funny as he seemed to think he was, did a lot of talking in third person to himself, etc etc. Maybe he found his groove later on, but the initial posts were really obnoxious.

I don't actually bother reading his posts anymore. So I definitely understand. I mostly read the forums where a lot of people took his advice and ran with it in a more practical way. The blogs that I actually like a lot more than his, but found through him, are GoCurryCracker and MadFientist. They both go more into the financial aspects of things like tax avoidance, Roth laddering, and things like cost/benefit analysis of mortgages.

All of this is more relevant to a retirement thread though, and not necessarily investing. For THAT, I recommend people new to investing read the JLCollins stock series. Read as much or as little as you want, but for someone who isn't looking to be an active trader but wants to understand why people recommend index funds, it's invaluable. I think taking the 2 or 3 hours required to read the whole thing is worthwhile for just about everyone. Index investing is probably good for 90-95% of all people. There are the outliers who it's probably not good for (whether because they can do better actively trading or don't have the means to index), but the vast majority of people should follow the advice in it.

First post here after browsing a little on rerolled and now reading through our new thread here. Going to post my current situation and general goals, and then ask for advice/feedback on how to move forward.

I'm 32, working at an international school. I get paid in local currency, and my overall salary when converted to USD has gone down from about 35k to 25k over the past 4 years. I have 30k in student loan debt. I had a bad year using my credit card, some my own fault some out of my control, so I'm carrying about 6k in CC debt. I've got about 1k in savings. I've been paying into my work retirement fund for 5 years (5%, matched). I'm not 100% sure if I can rollover that into a US fund or I just have to cash out when I leave. I'm planning on leaving at the end of this year to find a higher paying job (at least a better exchange rate). Making payments for student loans and CC is getting harder with the exchange rate constantly creeping up. I've got a decent cash-infusion beyond my salary coming, about 4k, coming this winter (employer savings fund).

This job was never for the money. I took it 5 years ago after finishing my masters to get my foot in the door in the international school scene. I taught ESL in Asia for 4 years after college and didn't save anything. Went back to school with the goal to be a real teacher, and I'm there. I've built up my resume, taking every opportunity I could get for training, and took on multiple leadership roles while here (grade level coordinator, department head).

So, goal this year is sending 1k home every month, 500 for CC, 500 for student loan minimums. I think I can get rid of my CC debt before I leave in June. I'll definitely use my savings fund payment to take a big chunk out of it. I want to keep at least 1k in personal savings around, maybe try to slip in a 100 or so a month if I can spare it. I'm guessing my retirement fund is somewhere around 10-12k when I leave. I need to check about rollovers, but I really don't know if I can.

So, questions about that.

If rollover is an option, where does it go? Roth IRA?
If it's not an option, what do I do. Split between a traditional IRA and a Roth, capping both for years maximum?

Moving from there. Medium term goals.

Prioritize maxing out contributions to IRAs each year? At what point do I then start looking for other options? What are the next types of options? Do I prioritize paying off student loans, or just meeting minimums and investing extra cash? What is the minimum amount of money I should have in savings before moving beyond IRAs.

Long term:
I want to stay working abroad. I want to bounce around different schools in different countries. Should I begin thinking about land at any point? It'd be great to have a summer home on the water in my home state. Some place to go back to over summer vacation. It could be rental property for times I'm not there. Is that stupid/crazy? Am I going to be screwing myself if I never own a home and just continue to travel the world?

Obviously I have very little knowledge beyond some basic points. Up until now, I've just been living slightly above my means, and its caught up to me and I need to make changes and start looking to the future. My biggest issue is I love to eat and drink, and am willing to spend on it. Besides that I don't have really buy stuff besides computers and games.

Help me FOH.

If you buy land to rent and are out of country, be careful. Get a management company or like 20k security deposits.

Always go Roth IRA 100%.

AladainAF said:

While I am a firm 100% believer in the Roth, I can't help but think by the time we retire in 20-30 years, the government will still tax them like regular IRAs.

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At that point you wire it out of the country and emigrate to a better country.

I disagree about Roth's. If you're a significant saver, the tax deduction on a Traditional means you can invest the difference. If you're only looking to invest $5500 though, sure, I support the Roth as maybe a good choice.

The other reason it's not always good is due to tax implications in retirement. Currently, I'm in the 25% tax bracket, and with a Roth, your last "taxable" dollars are used to fund it (said another way, the Roth investment will always be at your highest tax bracket). There's no way I'm going to be drawing enough out of my accounts in retirement to hit the current 25% "earned income" bracket. Worse, with current taxes, my Traditional IRA withdrawals would be subject to capital gains taxes, and not earned income; or 15%. But wait! If you're below the 25% tax bracket (which I plan on being), long term capital gains are actually 0%.

So essentially I'm looking at never paying taxes on a Traditional IRA, assuming current tax rates (and really, that's all you can do).

In my opinion, a Roth only makes sense for military/contractors working overseas in non-taxable countries.

I also plan on doing a Roth conversion ladder, where I roll extra Traditional IRA money into a Roth. This is a taxable event, but if your income is low enough and not subject to the 15% capital gains tax, is free. That money then becomes Roth principal after 5 years, and tax free forever. And best of all, principal can be pulled out prior to retirement age, penalty free.

Gravel said:

In my opinion, a Roth only makes sense for military/contractors working overseas in non-taxable countries.

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This used to be true, but Bush changed the tax rules for expatriates. For simplicities sake, if you were exempt up to 100k but made 120k, you were taxed at the rate as if you only made 20k dollars (minus standard deductions). Bush changed it so that 20k you pay taxes on, you pay in the bracket as if you made the full 120k.

Bottom line: if you are making over the ~$100k exemption from working overseas, you are paying at a higher tax rate for everything over that amount. I know my withdrawals at retirement will be far below the current rate I am currently paying. Easiest reasoning for Roth is if you tax rate now is lower, go Roth. If you project your retirement tax rate to be lower, go traditional.

Furious said:

WDC/NSDQ

Purchased 120 shares at a price of 47.50 USD for a total of $5700

1. (Forward) P/E under 15.
Pass 11.32. The S&P is at 25.4 right now so this is very reasonably priced.

2. Price to book ratio less than 1.5.
Pass 1.2. The closer the price is to book the better. Why pay more for a company than what they are worth in assets?

3. Market cap over 1 Billion.
Pass 15 Billion. I only want large caps that have enough volume that I can drop them when I want.

4. Current Ratio greater than 1.75
Pass 1.8. This is probably the most important metric I screen. I’ve seen so many companies that have their short term liabilities crush them when they have an unexpected earnings miss. Just look at all the oil companies, when debt comes calling you need to have the money! I would even like to have the current ratio over 2 but i’m less picky than BG.

5. Must pay a dividend.
Pass 4.2%. What can I say, I need that dividend.

6. 5 year historical dividend growth greater than 5%.
Pass 27.68% I also need that dividend to grow.

7. 5 year historical EPS growth greater than 1%
Pass 5.18% EPS growth should result in a higher stock price and a higher dividend.

8. Forward looking Payout Ratio under 75%
Pass 52%. I look at forward EPS/Payout Ratio because it gives me a picture of what I can expect coming up. Like many of the oil companies people researched, they looked and saw a current EPS and thought they could keep up the dividend payment. If they looked at the forward EPS they would have seen that they would not be able to cover the dividend without raiding the piggy bank (using credit) or slashing that dividend (i’m looking at you Conoco)

9. Must have a Moat and be relevant in 10 years
Pass. I would not normally have given this a pass because the world is quickly shifting away from HDD units. The recent SD acquisition makes a lot of sense for me as they are moving to a more SSD focused business model.

What do you think?

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The technical indicators look sound to me (although I am admittedly pretty amateur). You're 5th requirement of having a dividend is key to my latest investment strategy.

I'm looking to be contrarian and want the world to burn, so I've reallocated my assets to be 65/35 short-term vs. domestic stocks (95% of my investments are mutual funds). I feel this way based on economic indicators (manufacturing stalling, restaurant and service industry receding, the Federal Reserve already at super low interest rates, etc.) along with history (average around 5 years between recessions, we're at damn near 8) and our political prospects (shitty and shittier). For once, I am in a position at 36 years old where I have enough cash to play around with but if I fail it won't be the end of the world.

What I am looking at now is a plan to secure my investments, predicting a strong economic downturn in the next several years which I can then leverage a diversified buy on a spectrum of mid-large cap companies that pay dividends as well as a few that have historically have seen big swings in recessions.

Looking at Apple, Wells Fargo, IBM, U.S. Bancorp, Ford, GM, General Mills, John Deere, CBS, Harley-Davidson, and a few others. This would be roughly a $450k leverage towards these guys, but (based on history) I'd potentially get 10-15% in dividends on the original invest, not to mention a big bounce in intrinsic value.

Blazin said:

You nailed a nice entry into WDC and I realize this is a LT investment but I would bring to your attention the large head and shoulders pattern developing over the last 3 months. I can show this in detail on the charts if you are interested. The nuts and bolts of it is though, if share price fails to break the $54.56 high from 7/27 a reversion back to the high 40s becomes likely. l would also set a stop order at 49.50 any drop below the gap up on 9/7 would quickly drop back to your entry price.

WDC has been through a lot of pain making the fundamental picture more attractive but if it starts faltering I wouldn't hold on for the ride, take the $49.50 and look to re-enter if you still like what you are seeing on the next ER.



That's a nice list but really hurting on revenue growth which means the market is going to pay smaller and smaller PE's. I would ditch HOG it just gets slaughtered in any kind of economic downturn and you already have GM and Ford who are going to suffer at the same time. I would add Exxon or Chevron to that list to diversify into some energy (I prefer XOM). Would consider adding AT&T or Verizon, and one utility play (Southern?)

Bunch of conservative dividend players here myself included, but be mindful that the dividend plays are quite over extended from people chasing yield. Make your shopping list, but only start filling it during panics. Market volatility really picking up this week and market doing back testing now so the opportunities may be soon.

WFC is getting slammed for some shady practices from it's employees, I have really been wanting to get into it this last year but the reputation damage may be significant and now they have a bulls eye on them from the regulators. Citibank is going to eventually turn into a nice dividend play but that's not going to happen to we start seeing rates rise and the feds take their boot off its neck, but by then share price will already have moved in anticipation.

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I should have clarified. I plan to buy when the market hits 12k. The idea would be to buy them "on sale". I specifically chose HOG because it gets slaughtered. It also saw a 9x growth after the last recession.