Investing General Discussion

Tinger said:

One day I'll actually be able to invest, it's fun reading this.

Edit:
Say, Isn't this a bad idea?
BMO Bundles Uninsured Mortgages in a Canadian Bond First

Click to expand...

Its not the same bad idea your thinking about from a decade ago, ok well it is the same idea, but this one has training wheels on and your wearing a helmet.

The difference is, these are prime mortgages not subprime, thus they are not bad loans to people who will not repay them, they are good loans to people who pay.
Canada just changed the rules to make it harder to qualify for larger loans, they make everyone qualify as if the rates are 4.64 not 2.64, which has cooled the market a tiny bit, but not to the point of contraction.
This makes prime mortgages more secure, if rates rise, people should still be able to pay the monthly.

It will also depend how heavily waited the mortgages are in Vancouver and Toronto which some have been called bubbles waiting to pop. I think they could go further, but i am not willing to bet on it.

Fogel said:

Double check the fees you're paying on your 401k. If they're too high, you're probably better off only contributing enough to benefit from employer matching and investing the rest yourself through vanguard. I've heard horror stories on 401k fees

Click to expand...

Very good point here, but what company manages your employer's 401k plan? Mine is through Fidelity and there are very good low cost Indexed options. Do not get suckered into the "actively managed" funds bullshit. The fees on that are insane and do not seem to do any better than the indexes. I personally use a 60% S&P 500 Index and 40% Target Date Fund (pick the year closest to when you plan on retiring).

Soygen said:

5% total. That's very good compared to the norm.

Click to expand...

I agree. My 401k would be much fatter if I had that matching for the last ~15 years I have been with my company. 50% of the first 6% (3% of my pay) is fairly average in my experience.

Benchmark Your 401k Plan: 2015 - 401khelpcenter.com

Employer Contributions

The average company contribution in 401k plans is 2.7% of pay. Numerous formulas are used to determine company contributions. The most common type of fixed match, reported by 40% of employer's, is $.50 per $1.00 up to a specified percentage of pay (commonly 6%). Thirty-eight (38) percent of all plans match $1.00 per $1.00 up to a specified percentage of pay.

Click to expand...

Wmt has saved my marriage Blazin ..

Last two days have been crazy. Dow topped 21k again and Nasdaq broke 6k for the first time ever.

Sadly, I have still been sitting in VCSH and missed the boat.

I have about 10% in vcsh, still sucks, i need cad to punch me in the stomach for trying to time the markets

AladainAF said:

So my business account has been growing in cash and I've wanted a large amount "for my sanity" over the last year in there just in case of unforeseen circumstances as my business is quite unpredictable and I wanted to make sure I always had enough on hand. I already have a financial adviser on a personal level, but I'm sitting on like $125K in my corporate bank account which is really fucking dumb and I'd like to invest about $75k of that elsewhere but it needs to be something rather safe, somewhere I could liquidate it/withdrawl it if I had to, and something I can invest in and forget it as long as times are good. In other words, something very conservative, but something that will pay more than a savings account at a bank. While I could pour it into my company, due the nature of my business it wouldn't benefit from it. I already have personal investments, this is just my companies money but I really hate it sitting in a bank account.

Plot twist: The money has already been taxed and is basically just retained earnings that my CPA says I can withdrawl anytime for personal reasons just to let him know so I can update the books. However, I dont need the money personally, and want to keep it in a business account one way or another.

Any recommendations on something set up for this kinda purpose?

Click to expand...

I'm guessing you don't have any long term debt? I was in the exact same position you're in and decided to pay off 50k worth of debt from a shitty 6.75% loan that I took out to buy out my ex business partner. I'd ask your financial advisor. Money market is pretty shit. If you lease space have you considered investing in real estate for your business?

AladainAF said:

I don't lease space, I work in home office. No long term business debt, no long term personal debt other than mortgages which are very very advantageous such as a 3.25% 30 year. I guess I'll work with my CPA/Financial advisor and just be like WTF do I do with this money.

Click to expand...

This is one of those good problems to have. Grats on the successful business.

Aladain, it's not sexy, but annuities and over paying into life insurance are good investment vehicles for business earnings protection. A very famous running back once moved his money to them after slaughtering his wife and her boyfriend, it's the only cash he had left after the civil trial! Once the annuity/insurance becomes 'yours' after 9 months, the money becomes protected from virtually everything - lawsuits, IRS, divorces, etc.

There are more liquid options, but talk to your advisor about those if you want to know more!

Thoughts on VITAX? Killed it last year. Still doing really well this year (compared to Energy, Utilities, Financials, etc).

Month-end ten largest holdings
(57.7% of total net assets) as of 03/31/2017

1 Apple Inc.
2 Alphabet Inc.
3 Microsoft Corp.
4 Facebook Inc.
5 Intel Corp.
6 Cisco Systems Inc.
7 Visa Inc.
8 International Business Machines Corp.
9 Oracle Corp.
10 Mastercard Inc.

So my 401K should be hitting "oh hello valued customer" levels at some point in the next couple of months/years depending on the market. It's currently with Fidelity and 100% in Vanguard 2050 fund right now. Should I consider doing something else with it like getting an external advisor/company or whatever rather than sticking with big generic fidelity? I've talked to their advisors maybe twice and they all seemed retarded or just poorly trained Filipino call center workers who go back and forth between cable company tech support and financial adviser.

Just curious what you think is considered a "valued customer" or what that might give you?

I use Fidelity and use their own Target Date Retirement (also 2050) and the return is pretty similar. This is not an open mutual fund, but what is offered to my company for their 401k plan. The 1 year return rate has been +14.73% and an expense ratio of 0.07654% ($0.77 per $1000).

The Vanguard Target Retirement 2050 Fund also has a similar 1 year return of +14.70%, but your expense ratio is a bit higher at 0.16% ($1.60 per $1000).

In either case, the fees are quite low. If you try and use their actively managed crap, your fees are going to go through the roof. It doesn't seem like a lot, but over time and compounded you can be sapping hundreds of thousands away in lost money. Fees are the devil in these long term investments! The secret these big fund managers won't tell you is that they all invest in Indexed funds themselves, but make a killing in service fees by selling everyone else managed funds.

Everything You Need to Know About Expense Ratios - The Simple Dollar

Why the Expense Ratio Matters
Before getting into exactly how you can minimize your expense ratio, let’s step back and look at why it’s important.

It’s easy to look at a fee of 0.50% or 1% and assume that it’s too small to matter. I mean, how many of us would even notice a half a percent difference in the price of the groceries we buy — if a carton of milk cost $1.99 instead of $1.98? Anyone?

But the truth is that a 1% fee really adds up when you’re contributing a significant amount of money over a long period of time.

For example, let’s assume that you and your spouse are both maxing out your IRAs, meaning you’re contributing a combined $11,000 per year. And let’s also assume that you get an 8% annual return over a 30-year period until you reach retirement age.

In that situation, a 1% fee would end up costing you a total of $234,001.

Or, to put it another way, simply finding a similar investment that only costs 0.20% per year would give you an extra $183,208 in retirement.

I don’t know about you, but that extra money would make a difference for me and my family.

Click to expand...

Pay Attention To Your Fund’s Expense Ratio
To see how expense ratios can affect your investments over time, let’s compare the returns of several hypothetical investments that differ only in expense ratio. The following table depicts the returns on a $10,000 initial investment, assuming an average annualized gain of 10%, with different expense ratios (0.5%, 1%, 1.5%, 2% and 2.5%):

Those thieves