Investing questions

[XtrmWakeborder]

Hey guys:

I'm banking on the idea that anyone who can afford these boats are pretty successful and their advice could be a guideline to go by. I'm starting work full time in the summer and plan on using the save a third, invest a third, and spend a third theory. I plan on investing about 6k a year and putting the other 6k a year into a 401k for my 12k allotted investing section. "after taxes" Do any of you go by this theory? My main question is what books should I pick up to learn about investing, what investments to stay away from, and how to minimize risk?

Thanks alot guys, I figure this could help a lot of people and not just me

David

 

[Flyinbowtie]

You are heading the right direction.
I did something else that might be worth thinking about.
Every time I got a raise I waited until the check had settled down so I could see what it was worth. Then, I took 50% of the net the raise added and put it into the retirement $
That way, I always got a bit more $ in the spending funds, but the retirement account got a kiss too.
As far as books go, well, I dunno. I am not working anymore and the world you are moving into is a helluva lot different than the one I worked in. Be consistent with the amounts you save and invest, but don't assume that what you are doing now is what you will be doing in 20 years, both for a living and as savings/investment tools. The world is changing too much.
Me, all I invest in these days is bullets, non-perishable foods, and survival gear...

 

[TPC]

No better investment than your 401 K.
Some people selling investments will use smoke and mirrors to put gloss on other investments, but the 401K is first and foremost.
Do the max you can afford.

 

[cab_01]

Max the 401K. Then put 1% of you net into a Roth each year and increase that by 1% each year. It will be nice to have taxed fund and tax deferred funds later on.

 

[69 1/2]

More specifically use the Roth 401k. Much easier to pay the taxes now on the amount you throw in than the taxes on the gain many years down the road. A few only offer the traditional 401k though.

 

[XtrmWakeborder]

How about some short term investments? I'm looking to buy a house/condo in a few years and 60k a year just isn't going to get me there fast enough for the down payment. I'm living rent free for the time being so I kind of don't want to rent first.

 

[UltraLucky]

Couple books that might get you thinking in the right direction. Rule #1,
Rich Dad Poor Dad, & one of the David Bach books Finish Rich. These will give you some ideas of what is obtainable.

 

[Tom Brown]

I'm running a 1977 Glastron and drive a 13 year old Nissan. I would be pleased to provide as much advice as you wish.

 

[XtrmWakeborder]

I'm running a 1977 Glastron and drive a 13 year old Nissan. I would be pleased to provide as much advice as you wish.

LOL and you live in Canada. Ur exempt from this thread, please leave.

 

[Tom Brown]

Will do.

I'll leave you to the 26 year olds who use leased Escalades to tow their 40 foot twin turbine cats because that group clearly understands what investment is all about.

 

[XtrmWakeborder]

Will do.

I'll leave you to the 26 year olds who use leased Escalades to tow their 40 foot twin turbine cats because that group clearly understands what investment is all about.

NOOOOO come back! I need all the help I can get. Seriously. Any and all insight is welcome.

 

[stoker22405]

Buy Gold...

 

[Mondorally]

It's been said, but max out your 401 (k), especially if there is any matching from your employer.

Don't chase returns in the short term if you're putting the money aside to buy a house. I would say split the money between CD's and an IRA. I believe some of the IRA's allow the principal to be withdrawn for a first time home purchase. Double check you have access to the money for a home purchase before investing.

Richest Man in Babylon is a good book. A Random Walk Down Wall Street (I think that's the name, been years since I had a finance class) gives a different perspective on the stock market.

Don't follow the fads, don't chase last years returns.

This may sound obvious, but pay off all high interest debt (credit cards, student loans, etc.) before saving a penny. Earning 6% while paying 12% doesn't add up. You would be surprised how many people don't do the math.

 

[Tom Brown]

Any and all insight is welcome.

You seem like a smart guy, XtrmWakeborder. I'm sure you'll do well.

Right now you're young and the thought of retiring is so far away from your current lifestyle, it's pretty abstract. That's fine.

The thing is, you're going to blink and wake up with a strange man's hand in your groin. That man will be applying pressure to the angioplasty incision in your upper thigh, necessary because the blood thinners you're taking keep the cut from healing quickly.

Yes, it will happen. It's probably beyond your ability to completely comprehend at your age but these wake-up calls can be the most positive thing that can happen in your life.

When that day comes, you will be happy if you're surrounded by people you love, and are not riddled with consumer debt.

Here's the deal. If you decide to go for the twin turbine 40' Skater.... it will be very cool. It will undoubtedly bring you great joy. The fuel and maintenance will cost roughly everything you make, if you run it much. You won't be able to enjoy it as much as you'd like but maybe that's OK. When you are forced to sell it, you will take unfathomable loses on it. In fact, you will find it will consume a few years of your earning power.

The thing is, you only have so many years of earning power. How long do you intend to work? 30 years? If something you own depreciates by one hundred grand, it's just consumed 10% of your lifetime earning power. You may be making 100K/year but your spending power is much less than that, after taxes, food, lodging, and so on. It may be fun but weigh it against that.

Depreciating assets will kill you. That would be boats and vehicles.

Appreciating assets are what will put you in good standing 30 years from now when you hate your job and are so sick of working every day, you don't know how you're going to get up tomorrow. I'm talking about land.

If you live fast and hard, you will go through a bankruptcy each time the economy bubble bursts. In the grand scheme, maybe that's OK. That's how some people want to live. If you hold back a little, keep your debt under control and save a little bit, you will undoubtedly find opportunities that will set you up. Be careful of options that look like opportunities. Most aren't but some are. Be skeptical but not timid. When the economy is in the toilet and some ego centric putz has to sell assets to continue making the payments on his 40' Skater, those assets will go to people who have their debt under control and spend wisely.

Don't be a total Scrooge, though. That guy in the face mask with his hand 2" from your dink might be the last face you ever see.

I will share the only piece of wisdom I have and that is this: If you have to spend a lot of money to be happy, something is wrong and you would be well served by finding out what that something is. You can't spend your way out of depression.

 

[SBjet]

You are probably a lot better off if you don't try to pick individual stocks, find a nice S&P 500 index fund.
Think long term.
For short term, like saving for a down payment on a house, you can use CDs.
You can ladder the CDs.

One of the most important things is, don't buy a new car and put it on payments.

 

[Chico&Zeus]

Sell drugs...just don't smoke up your profits

 

[musicFunsun]

Wow TB, I won't tell anyone but i think you may be a really smart man.

 

[Instigator]

Sounds like your young and starting to think the right way. That's very good. Start investing young and let your investments compound. Research a lot. Listen to others and do your own research and then you can draw your own conclusions and make a better informed decision. Here is a free link to look at maybe help you start understanding.
http://finance.yahoo.com/calculator/retirement/ret-02
This page also has a lot of basic reference material that will give you some food for thought.
http://finance.yahoo.com/banking-budgeting/article/103815/Where-Do-You-Stand-on-America's-Wealth-Spectrum
Remember this. Start early and follow thru with the long term in mind. One thing that you can never get back is TIME. Right NOW you have the Most Time on your side.
Every $ 1.00 invested today with a consistent 7 % year over year return will compound and double every 10 years. Compounding is the biggest and safest key.

 

[TPC]

You seem like a smart guy, XtrmWakeborder. I'm sure you'll do well.

Right now you're young and the thought of retiring is so far away from your current lifestyle, it's pretty abstract. That's fine.

The thing is, you're going to blink and wake up with a strange man's hand in your groin. That man will be applying pressure to the angioplasty incision in your upper thigh, necessary because the blood thinners you're taking keep the cut from healing quickly.

Yes, it will happen. It's probably beyond your ability to completely comprehend at your age but these wake-up calls can be the most positive thing that can happen in your life.

When that day comes, you will be happy if you're surrounded by people you love, and are not riddled with consumer debt.

Here's the deal. If you decide to go for the twin turbine 40' Skater.... it will be very cool. It will undoubtedly bring you great joy. The fuel and maintenance will cost roughly everything you make, if you run it much. You won't be able to enjoy it as much as you'd like but maybe that's OK. When you are forced to sell it, you will take unfathomable loses on it. In fact, you will find it will consume a few years of your earning power.

The thing is, you only have so many years of earning power. How long do you intend to work? 30 years? If something you own depreciates by one hundred grand, it's just consumed 10% of your lifetime earning power. You may be making 100K/year but your spending power is much less than that, after taxes, food, lodging, and so on. It may be fun but weigh it against that.

Depreciating assets will kill you. That would be boats and vehicles.

Appreciating assets are what will put you in good standing 30 years from now when you hate your job and are so sick of working every day, you don't know how you're going to get up tomorrow. I'm talking about land.

If you live fast and hard, you will go through a bankruptcy each time the economy bubble bursts. In the grand scheme, maybe that's OK. That's how some people want to live. If you hold back a little, keep your debt under control and save a little bit, you will undoubtedly find opportunities that will set you up. Be careful of options that look like opportunities. Most aren't but some are. Be skeptical but not timid. When the economy is in the toilet and some ego centric putz has to sell assets to continue making the payments on his 40' Skater, those assets will go to people who have their debt under control and spend wisely.

Don't be a total Scrooge, though. That guy in the face mask with his hand 2" from your dink might be the last face you ever see.

I will share the only piece of wisdom I have and that is this: If you have to spend a lot of money to be happy, something is wrong and you would be well served by finding out what that something is. You can't spend your way out of depression.

Well said Brown.
"Don't say f#ck the Future, the future f#cks you".
- Paint store owner, Saturday Nite Fever

 

[catman-do]

First and foremost, like said before max out your 401k. Its instant free, pretaxed money. You cant get better than that. Beyond that, there are no single strategies that can help you. My wife has gone back into financial planning, and she is generally on the more conservative side as far as gains go. Her belief is plan for the distant future with gains that are pretty much bulletproof and provide a gradual consistant return. My belief is that I take more risks, I tend to like real estate investing more. You can gain HUGE very fast, and can also loose very fast. Just remember that losses are chances to learn mistakes. NO ONE becomes rich without making mistakes. You can write off losses, so I tend not to be as scarred of losses.

 

[RiverDave]

Not much to add, but wanted to thank xtrmwakeboarder, becuase I'm watching the thread as well and learning.

RD

 

[Wombat]

You seem like a smart guy, XtrmWakeborder. I'm sure you'll do well.

Right now you're young and the thought of retiring is so far away from your current lifestyle, it's pretty abstract. That's fine.

The thing is, you're going to blink and wake up with a strange man's hand in your groin. That man will be applying pressure to the angioplasty incision in your upper thigh, necessary because the blood thinners you're taking keep the cut from healing quickly.

Yes, it will happen. It's probably beyond your ability to completely comprehend at your age but these wake-up calls can be the most positive thing that can happen in your life.

When that day comes, you will be happy if you're surrounded by people you love, and are not riddled with consumer debt.

Here's the deal. If you decide to go for the twin turbine 40' Skater.... it will be very cool. It will undoubtedly bring you great joy. The fuel and maintenance will cost roughly everything you make, if you run it much. You won't be able to enjoy it as much as you'd like but maybe that's OK. When you are forced to sell it, you will take unfathomable loses on it. In fact, you will find it will consume a few years of your earning power.

The thing is, you only have so many years of earning power. How long do you intend to work? 30 years? If something you own depreciates by one hundred grand, it's just consumed 10% of your lifetime earning power. You may be making 100K/year but your spending power is much less than that, after taxes, food, lodging, and so on. It may be fun but weigh it against that.

Depreciating assets will kill you. That would be boats and vehicles.

Appreciating assets are what will put you in good standing 30 years from now when you hate your job and are so sick of working every day, you don't know how you're going to get up tomorrow. I'm talking about land.

If you live fast and hard, you will go through a bankruptcy each time the economy bubble bursts. In the grand scheme, maybe that's OK. That's how some people want to live. If you hold back a little, keep your debt under control and save a little bit, you will undoubtedly find opportunities that will set you up. Be careful of options that look like opportunities. Most aren't but some are. Be skeptical but not timid. When the economy is in the toilet and some ego centric putz has to sell assets to continue making the payments on his 40' Skater, those assets will go to people who have their debt under control and spend wisely.

Don't be a total Scrooge, though. That guy in the face mask with his hand 2" from your dink might be the last face you ever see.

I will share the only piece of wisdom I have and that is this: If you have to spend a lot of money to be happy, something is wrong and you would be well served by finding out what that something is. You can't spend your way out of depression.

What Tom has said is spot on, LAND is by far the best long term future.
Buy at the low end and sell at the high end BUT let common sense prevail and the future will be rosey.

 

[XtrmWakeborder]

Tom, and others, thanks for the comments. I knew I could come here for this. I guess I should have clarified why I want to start doing this. First and foremost I know the magic of compounding interest and If I start saving for retirement now instead of say 5 years, it will make a huge difference. I would love to max out my 401k, but I believe the limit is about 25k this year and there is no way in hell I could do that on 60k a year. "Before taxes" I see my grandparents struggling through life, and I don't want that when i'm old. I want to be comfortable along with my family. "If I ever have one" I do like the idea of depreciating assets, ie. boats and cars, but until recently I realized that neither material posessions, nor money could never make me happy. As you aluded to Tom. "I think thats the word I want" I just think that using the money I earn, to make more money will allow me to be more comfortable in the aspect of retirement and having stuff I need. Boats, cars, etc. are after that. The only reason I am looking short term "2 years" is because I want a condo/house. I do not like the idea of throwing away money each month on rent. As far as the other comment, I have zero debt. I saved and paid for all of college, don't use my credit card, have my car paid off, etc. I don't have that to worry about that. Realestate is something I am very interested in, but without a large amount of capital to start I don't see how I could possibly buy anything. I will definately have some in the future though. I guess I just need some ideas on what to do. Saving 2/3 of my pay will not allow for a big enough downpayment in 2 years so i figured i'd save 1/3, and split the other 1/3 between retirement and investing for a house. I'm banking on the fact that the investments would grow faster than the interest bearing savings account. Anyone have any better ideas?