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Discussion Starter · #1 ·
I saw mention of investments in a different thread and it's a topic I'm becoming more interested in recently. I don't recall another thread about it, and i figure it deserves its own thread.

So what are ya'll doing in terms of investments? Both in terms of retirement and shorter term stuff.

I'm a fairly recent college grad and I'm just stating to invest. I automatically contribute enough of my check (before tax) to my 401(k) to max out the company match. I picked a fund that is pretty aggressive since I have a long time before retirement. I also want to invest a little more so I'm looking into IRAs, specifically a ROTH IRA.

I'm mainly looking to hear what you guys do, and get some advice from more seasoned veterans.

TIA
 

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I don't do enough. But your young, start right with retirement. Good job on contributing up to your company's match on a 401k now start putting 5k a year into an IRA or Roth IRA.
 

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I don't do enough. But your young, start right with retirement. Good job on contributing up to your company's match on a 401k now start putting 5k a year into an IRA or Roth IRA.
Agreed. I also have a Roth with Firstrade with some Vanguard ETF's and index funds.
 

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Roths are great. I have my money split between 50% large cap stocks, 25% mid caps, and 25% in a highly-rated mutual fund. For the next 3-4 years (at least), stocks are the place to be. Quite a few stocks can still be bought at a discount, since many haven't fully recovered to pre-recession highs.

IRAs are also great because you don't pay capital gains tax on stocks you sell. So when they make a good run and you want to get out, you can do so without tax worries.

I would personally avoid ETFs. Why choose an index that mixes good and bad stocks, when you can just own the good stocks? If you're willing to put the time in for homework, and don't mind a little more risk, single stocks are the way to go.

Mix it up between sectors, add in a couple high yield dividend payers, have some fun with a spec play or two, and go for it.

PS - I love Google Finance for research and tracking growth.
 

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Just a few pointers. Some were posted earlier.

Get started early. A small amount saved now has lots of time to grow.
Get help from a professional. (get a reference from a friend)
Contribute to your 401K at least to your employers match. That's a no brainer.
Don't put all your eggs in one basket. Diversify.
Review your choices more than once a year.

Good luck. In todays market you need it!
 

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Were you looking at grkguy's thread and my posts lol?
The elders on here will have better advice than me probably. I'm 22 and I bought my first stock 3 years ago. It's been doing extremely well for me, but it's hard to pick winners like that. I was probably pretty lucky in my pick. As for the future, I think I'm taking my earnings and putting them into a long term, semi-aggressive mutual fund. Mutual funds provide you with a diversified portfolio so your risk is lowered and you can pick a fund for different levels of aggressiveness too. The idea I don't like is that you have other people doing work for you that isn't rocket science.

Our personal finance class is discussing intro stuff right now, but like others say put money into a 401k asap...some people choose not to and i do not know why. Roth IRA's are cool because I believe your earnings are tax exempt in the end rather than tax deferred like a typical IRA.
 

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I don't know all the specifics about a Roth IRA, but I think a regular one has some tax advantages IIRC, and that the Roth eventually isn't making as great of a return after a specific income. Wiki has enough info on it that my head can't handle it at this hour. Goodnight for now.

I also just realized this. Mutual funds based on an index like the S&P500 are kind of biased. The stocks included in that index have been swapped out over time if they start to do poorly with better stocks to keep the % of return at what it "should" be. So essentially, you could end up picking a stock that ends up being swapped by another down the road b/c it was doing poorly so you'd rely on your other stocks to save you. Another reason why I am still searching for my own stocks right now.
 

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I feel that about 1/2 of your portfolio should be in Gold !!! Metal is what will be traded for food in the next 20 years. Go to Thailand and Viet Nam for your solid stuff..Get to know someone there who can "steer" you to the right "market". Gold is already over $1375..when I bought mine..in 1970..it was $12.75!!!!!
 

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I think gold is a good idea if it's part of your portfolio, but other than that it's speculative. People are only going to pay what it's worth and with money being tight now, I think it may be overvalued. What happens when the economy booms again and people aren't worried about money? Gold's going to go down. And gold won't pay out dividends or interest like a stock or bond might. I guess the stock market is speculative, too b/c regardless of all the financial statements companies give out, the market is emotional. God forbid the President dies tomorrow, the market will go down for God's sake. However, I see higher chances at making gains through securities rather than gold.
 

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^I think large caps have the best risk/reward potential for the next 18 months. Of course if something massive and unforeseen happens, then you reevaluate. But...

I don't think gold is speculative at all. People are really really scared of inflation right now, which pushes people to hard assets. Gold, oil, other commodities, etc. Lots of people are saying gold is going to 2000 long term. I think there are plenty of other things you should own before gold. I don't have any, and I am generally not a fan of ETFs, but if you must, a good one to watch is the SPDR Gold Trust: GLD. Up 25% over the last year.

Copper is good, too. I stay away from silver.
 

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Take advantage of tax deferred accounts such as employer sponsored 401Ks if available to you, and/or (preferably and) IRA accounts.

WRT Roth vs. Traditional, folks who are young will benefit from a Roth account. Those who are closer to retirement should blend between the two.

With a Roth, you do not get any immediate tax benefits. In other words, you pay income taxes on your contributions. However, your capital gains grow tax free, and you don't pay taxes on the amount you ultimately withdraw.

For example, if you contribute $5,000 this year to a traditional IRA, you get to deduct $5k from your taxable income. Nice! At a 5% annual return, for 30 years, that $5k becomes more than $21,000. In a traditional account, you pay taxes on that $21,000. If you invested in a Roth account, you would have paid taxes on your $5,000, but you wouldn't be paying taxes on the $21,000. It's a choice between paying taxes now on a small amount vs. paying taxes in the future on a larger amount.

I recommend to my friends and family contributing to a Roth account, and maxing out 401K contributions such that you maximize any employer match. That, and Roth accounts for young folks. I really stress avoidance of fees, as they are detrimental to long term returns.

If you really know nothing, you should probably seek professional advice, although it may come at a high cost. Also, most "professional advice" is pretty standard, so you can advise yourself (at no cost) by reading the internet! There are countless websites that can point you in the direction of a well diversified portfolio. I usually recommend Vanguard (.com) for a good place to put both tax deferred (traditional or Roth IRA) and taxable accounts. Low fees, tons of choices, plenty of free advice.

Remember these things:
- Be diversified (don't get caught up in investing "fads")
- Avoid fees
- Avoid taxes
- Maximize employer matching contributions

Hope this helps.

Andy Kurz
Chartered Financial Analyst
Saab enthusiast
 

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^I think large caps have the best risk/reward potential for the next 18 months. Of course if something massive and unforeseen happens, then you reevaluate. But...

I don't think gold is speculative at all. People are really really scared of inflation right now, which pushes people to hard assets. Gold, oil, other commodities, etc. Lots of people are saying gold is going to 2000 long term. I think there are plenty of other things you should own before gold. I don't have any, and I am generally not a fan of ETFs, but if you must, a good one to watch is the SPDR Gold Trust: GLD. Up 25% over the last year.

Copper is good, too. I stay away from silver.
Copper is a commodity, gold is not...

In a land where food is scarce or more important than money as the scenerio above alludes, no one will give a crap about gold, starving people don;t wear jewlry,

Unless a good has in intrinsic value, like copper, it can easily be discounted to nothing.

Everything in balance, and diversify
 

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^?

Gold = commodity. You may think that it is overvalued, maybe to the extent that it doesn't have a value, but that doesn't make it any less of a commodity.
 

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Copper is a commodity, gold is not...

In a land where food is scarce or more important than money as the scenerio above alludes, no one will give a crap about gold, starving people don;t wear jewlry,

Unless a good has in intrinsic value, like copper, it can easily be discounted to nothing.
ORLY?

  • commodity |kəˈmäditē|
    noun ( pl. -ties)
    - a raw material or primary agricultural product that can be bought and sold, such as copper or coffee.
    - a useful or valuable thing, such as water or time.
  • Gold is too expensive to use by chance. Instead it is used deliberately and only when less expensive substitutes can not be identified. As a result, once a use is found for gold it is rarely abandoned for another metal. This means that the number of uses for gold have been increasing over time.
  • The most important industrial use of gold is in the manufacture of electronics. Solid state electronic devices use very low voltages and currents which are easily interrupted by corrosion or tarnish at the contact points. Gold is the highly efficient conductor that can carry these tiny currents and remain free of corrosion. Electronic components made with gold are highly reliable. Gold is used in connectors, switch and relay contacts, soldered joints, connecting wires and connection strips.

    A small amount of gold is used in almost every sophisticated electronic device. This includes: cell phones, calculators, personal digital assistants, global positioning system units and other small electronic devices. Most large electronic appliances such as television sets also contain gold.

    One challenge with the use of gold in very small quantities in very small devices is loss of the metal from society. Nearly one billion cell phones are produced each year and most of them contain about fifty cents worth of gold. Their average lifetime is under two years and very few are currently recycled. Although the amount of gold is small in each device, their enormous numbers translate into a lot of unrecycled gold.
  • Gold is used in many places in the standard desktop or laptop computer. The rapid and accurate transmission of digital information through the computer and from one component to another requires an efficient and reliable conductor. Gold meets these requirements better than any other metal. The importance of high quality and reliable performance justifies the high cost.

    Edge connectors used to mount microprocessor and memory chips onto the motherboard and the plug-and-socket connectors used to attach cables all contain gold. The gold in these components is generally electroplated onto other metals and alloyed with small amounts of nickel or cobalt to increase durability.
  • How would iron work as a dental filling? Not very well... your dentist would need blacksmithing tools, your smile would be rusty a few days after a filling and you would need to get used to the taste of iron. Even at much higher expense, gold is used in dentistry because of its superior performance and aesthetic appeal. Gold alloys are used for fillings, crowns, bridges and orthodontic appliances. Gold is used in dentistry because it is chemically inert, nonallergenic and easy for the dentist to work.

    Gold is known to have been used in dentistry as early as 700 B.C. Etruscan "dentists" used gold wire to fasten replacement teeth into the mouths of their patients. Gold was probably used to fill cavities in ancient times;, however there is no documentation or archaeological evidence for this use of gold until a little over 1000 years ago.

    Gold was much more generously used in dentistry up until the late 1970's. The sharp run-up of gold prices at that time motivated the development of substitute materials. However, the amount of gold used in dentistry is starting to rise again. Some motivation for this comes from concerns that less inert metals might have an adverse effect on long-term health.
  • Gold is ductile and malleable, meaning it can be drawn into very thin wire and can be beaten into very thin sheets known as gold leaf.
  • Gold produces a deep, intense red color when used as a coloring agent in cranberry glass.
  • In photography, gold toners are used to shift the color of silver bromide black and white prints towards brown or blue tones, or to increase their stability. Used on sepia-toned prints, gold toners produce red tones. Kodak published formulas for several types of gold toners, which use gold as the chloride.
  • As gold is a good reflector of electromagnetic radiation such as infrared and visible light as well as radio waves, it is used for the protective coatings on many artificial satellites, in infrared protective faceplates in thermal protection suits and astronauts' helmets and in electronic warfare planes like the EA-6B Prowler.
  • Gold is used as a drug to treat a small number of medical conditions. Injections of weak solutions of sodium aurothiomalate or aurothioglucose are sometimes used to treat rheumatoid arthritis. Particles of a radioactive gold isotope are implanted in tissues to serve as a radiation source in the treatment of certain cancers.

    Small amounts of gold are used to remedy a condition known as Lagophthalmos, which is an inability of a person to close their eyes completely. This condition is treated by implanting small amounts of gold in the upper eyelid. The implanted gold "weights" the eyelid and the force of gravity helps the eyelid close fully.

    Radioactive gold is used in diagnosis. It is injected in a colloidal solution that can be tracked as a beta emitter as it passes through the body. Many surgical instruments, electronic equipment and life-support devices are made using small amounts of gold. Gold is nonreactive in the instruments and is highly reliable in the electronic equipment and life-support devices.
  • If you are going to spend billions of dollars on a vehicle that when launched will travel on a voyage where the possibility of lubrication, maintenance and repair is absolutely zero, then building it with extremely dependable materials is essential. This is exactly why gold is used in hundreds of ways in every space vehicle that NASA launches.

    Gold is used in circuitry because it is a dependable conductor and connector. In addition, many parts of every space vehicle are fitted with gold-coated polyester film. This film reflects infrared radiation and helps stabilize the temperature of the spacecraft. Without this coating, dark colored parts of the spacecraft would absorb significant amounts of heat

    Gold is also used as a lubricant between mechanical parts. In the vacuum of space, organic lubricants would volatilize and they would be broken down by the intense radiation beyond Earth's atmosphere. Gold has a very low shear strength and thin films of gold between critical moving parts serves as a lubricant - the gold molecules slip past one another under the forces of friction and that provides a lubricant action.
  • Gold is used as the reflective layer on some high-end CDs.
  • Automobiles may use gold for heat dissipation. McLaren uses gold foil in the engine compartment of its F1 model.
  • Gold can be manufactured so thin that it appears transparent. It is used in some aircraft cockpit windows for de-icing or anti-icing by passing electricity through it. The heat produced by the resistance of the gold is enough to deter ice from forming.

Right.
 

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Roths are great. I have my money split between 50% large cap stocks, 25% mid caps, and 25% in a highly-rated mutual fund. For the next 3-4 years (at least), stocks are the place to be. Quite a few stocks can still be bought at a discount, since many haven't fully recovered to pre-recession highs.

IRAs are also great because you don't pay capital gains tax on stocks you sell. So when they make a good run and you want to get out, you can do so without tax worries.

I would personally avoid ETFs. Why choose an index that mixes good and bad stocks, when you can just own the good stocks? If you're willing to put the time in for homework, and don't mind a little more risk, single stocks are the way to go.

Mix it up between sectors, add in a couple high yield dividend payers, have some fun with a spec play or two, and go for it.

PS - I love Google Finance for research and tracking growth.
I agree pretty much entirely.

When I turned 26 I got an etrade account and went bombastic into stocks. Made a lot of money with risky investments such as aol (16x return), did well with banks like citi (2x when I sold it) and had some duds (athm remember that?) But the point is to diversify.

Meanwhile I matched all stock purchases with ira and 401k contributions. These are mostly mutual funds, muni bonds, and regular bank bonds.

I lost my stock portfolio by shorting stocks and not paying attention when the world caved in in 2008ish. My own fault. I rode many swings in the market in times like 2001 when people lost their shirts. This I did by being on top of my shit. If you play stocks you have to be on top of the news and be diversified.

But the most important thing that keeps me alive even through my stockmarket disaster is the 401k and ira portfolio.

Now that I'm older and not as stupid, I know to keep away from stocks since I don't have the tome for it.

My investment money is all heading towards buying real estate. Its too cheap to ignore, and it produces income.

So my advice over all else is that real estate is the best thing you can invest in. By far.
 

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Gold is good, as jk88 points out. If only to hedge against the general stockmarket, gold is good.
Most of the worlds money, is based on gold reserves.

So by investing in gold, you are essentially putting money into currencies. This is a great vehicle for diversification.
 

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You wanna know something cool about bonds and ira's? Sometimes local governments will allow tax incentives like allowing you to pay future taxes now, at a fixed rate.

Puerto rico recently allowed people to pay a 5% fixed tax on investments such as bonds and ira's on what would've been higher taxes come expiration.

They did this to raise capital immediately, vs waiting for that taxable income to mature in the future. Errbody I know jumped on this.

I foresee such one-time benefits becoming more common as municipalities go bankrupt.
 

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Discussion Starter · #20 ·
Thanks for all the help guys. there's some really good advice in here. I think the consensus is to continue doing what I am (maxing 401k match and setting up a Roth IRA). I'll start researching these other investments to get into a few months down the road.
 
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