Investments

[f3lix]

$500 is petty. Think about what $500 gets you. 3-4 weeks rent? a month of food? $10 if you do nothing with it for a year? It's nothing. If you live paycheck to paycheck, then it seems like a lot, but that's only because that kind of thinking is narrow minded. A house will run you $100k for starters. A car will run you $3k in a very used condition. Gas is $50 to fill up a car.

$500 is nothing.

Checking/Savings accounts with a bank is for teaching children how to save.

[DDTempest]

I was thinking about all this and I may have figured out the difference between the likes of f3lix, UB, and DJFC and some of the rest of us in terms of the worthwhile nature of savings.

Lets say something happens to you. You get hurt, your car blows up or whatever. The cost is about $5,000.00, how long will that take you to recoup? For me, if I did absolutely nothing every month for a year I could probably come up with $5,000.00 ... talking, no going out ... minimal grocery shopping ... basically work and home. Or I can squirrel away a few hundred bucks every month and keep a $5,000-$10,000 safety net on hand. How long would it take you guys to shrug off that financial blow?

This is where having savings comes into play. For me, its great to have a safety net in an account, even if it is worth less money ... I know the deductibles on my insurance contracts and I know I have it covered if shit happens. I have nothing to fall back on. I don't have any real prospects for hopping into a significantly higher income bracket anytime soon.

I am willing to wager you guys are in a different boat so spending that extra cash before it loses value may be the best thing to do, I honestly don't know.

[f3lix]

I make my money work for me, not the inverse.

[Ugly Bastard]

[Der Fuhrer]

f3lix you talk a big game. I'd like to know what the annualized rate of return on your investments were for 09.

[DJ FC]

F3lix you're being a bit of a cock.

First of all not everybody on this site can play poker. And $500 is $500 no matter how much $$$ you have. Even if you're expecting inflation, investing your $500 will be worth more than spending it.

Don't listen to F3lix in this thread until he changes his tone. He's being an arogant asshole.

Blonde if you want my advice, open a Scottrade account and put all your money into a single ETF. Buy that thing and just hold it. Pretend like you never had the $500.

If you ever get extra cash, save it up until you have $500-$1000 and do the same. Pretend like it never existed.

[DDTempest]

So whats the thoughts on 401ks?

I have roughly $15k in a 401k mostly in S&P 500 (about 35%) and the bulk of the rest in a total market fund (dow) (about 60%). The returns have not been stellar considering the bottom falling out of the market in the end of '08 but it does give me the total cost invested as around $14,500 or so. About $6,000 of that is from my employer so my actual total cost is around $8,500 out of pocket. Of course if I had that $8,500 it would have been taxed at around 20% so I would have a good bit less once I factor that in to invest otherwise and would be further taxed on any gains I sustained from that (unless I put it into a Roth IRA).

Am I mostly correct in my assumptions here?

[f3lix]

Trust Fund: 73%
Roth IRA: 5.8%
Bonds: 2.5%
Stocks: 15.6%
HCP – 65% (5% dividends)
NUAN – 25%
AIG – 1%
WWE – 9% (8% dividends)
Cash on hand: 1.8%
Money market .9%

[f3lix]

As you can see by the percentages, I practice what I preach. Less than 3% is cash on hand/money market. The rest is working for me. I feel it takes being a "cock" to get the point across that you should not being "working" for money. Additionally, I teach high school marching bands, tuba lessons, and work at UNLV

[Der Fuhrer]

I'm more interested in your aggregate return on said investments.

[f3lix]

The 1040 I just filed showed an increase of 6.7% on investments and does not account for the rise in stock prices.

[THEINCREDIBLEdork]

Don't listen to a stupid college kid like f3lix, your goal should be to save about 6 months worth of income that is liquid.

[f3lix]

Actually, what I was taught is to generate cash flow. If the world were to shut down for one year, could you financially survive? Everything that costs you money still costs money (car payment, mortgage, college loans, food, rent, kids, etc.) and everything that brings in money still brings in money (dividends, interest, property rented out to others, etc.)

Your cash in must exceed your cash out, thus generating a positive cash flow.

[Ugly Bastard]

Woah woah slow down. I wanna write this stuff down.

... okay, continue please.

[f3lix]

Not sure if you're being sarcastic or not, UB, but I posted that because many people consider their house and car an asset when it's really a liability until its paid off. Those same people are the ones bankrupt now from the collapse.

[DJ FC]

Originally Posted by f3lix

Not sure if you're being sarcastic or not, UB, but I posted that because many people consider their house and car an asset when it's really a liability until its paid off. Those same people are the ones bankrupt now from the collapse.

F3lix I actually agree with a lot of what you have to say. But you come off as being painfully ignorant.

For most people their equity in their home is their single best asset. And if you want to consider equity in a home a liability I will gladly take it off you.

[f3lix]

It's not yours til you own it. As long as you're paying, the bank owns it and if Katla explodes, we'll see just how big of an asset homes are.

[Ugly Bastard]

You seem to have a pretty black-and-white, almost third-grade level of understanding about some of this stuff f3lix. If you're making payments on your house then you don't own it? Well sure, not all of it I suppose, but you certainly have some equity in it. Your equity in your house is how much you could sell it for - how much you have left to pay on your mortgage.

[THEINCREDIBLEdork]

Originally Posted by f3lix

Actually, what I was taught is to generate cash flow. If the world were to shut down for one year, could you financially survive? Everything that costs you money still costs money (car payment, mortgage, college loans, food, rent, kids, etc.) and everything that brings in money still brings in money (dividends, interest, property rented out to others, etc.)

Your cash in must exceed your cash out, thus generating a positive cash flow.

people lose their jobs or get sued without having the world shut down. Your recommendation is to actually live paycheck to paycheck? Not everyone has a trust fund that contains 80% of their assets.

wait a minute, are you just trolling us?

[DDTempest]

Originally Posted by f3lix

Not sure if you're being sarcastic or not, UB, but I posted that because many people consider their house and car an asset when it's really a liability until its paid off. Those same people are the ones bankrupt now from the collapse.

I'll agree 100% that a new car is not an asset, its a black hole to put your money into and watch it vanish.

I'm not a financial wizkid at all. I would consider myself a C student at best in all this and even I can point out your logic here is fucked. Lets ask a couple of questions f3lix:

1. Do you live somewhere?

2. Do you pay to live there?

3. Is it fair to assume that everyone lives somewhere and pays to live in that somewhere?

Here, I'll answer for you to save us all time:
1. yes
2. yes
3. yes

Ok moving on ... After the deductions I get on my taxes my mortgage is equal to the cost of a one bedroom apartment in an area of town I won't get assraped in leaving my home. Every year the price to rent a (decent) place goes up around here (5-10%). My mortgage payment? Stays the same. Meanwhile I have a hedge against inflation as home prices tend to correlate with inflation AND I build equity. While the equity is not incredible at this point, it is significantly higher than the equity I had in my apartment complex.

Granted for you a house is not a financial asset because I don't imagine you intend to live in the same place for long enough to break even on it, but for us living in houses responsibly (not outside our means or in a vinyl village) it is an asset for sure.

[DJ FC]

F3lix is just being a fuck.

Sure feels nice to sit on a pile of investments and collect your interest.

In order to have enough interest and dividend income to do this your investments must be much more than 1 years worth of living expenses...

[Fruitacious B]

I'm just hoping to find a factory or serving job at a decent restaraunt. For those non-collegiate young adults like myself, the simplest aspect of what you guys are talking about (having any money whatsoever) is still pretty damn hard. The thought that I'll ever have any money to invest at all is nothing more than a fancy illusion.

[Ugly Bastard]

Fruit, you don't need a college degree to generate wealth. The examples of this are endless. Read Matt Drudge's wiki (this example comes to mind since I was just reading it last night). Graduated at the bottom of his high school class. Was nearly sent to a mental institution. Worked at 7-Elevens and gift shops in his early years before starting an email newsletter that distributed L.A. gossip. That letter grew into one of the biggest sites on the internet, Drudge Report, from which he makes millions a year. The only limitations that exist are the ones in your head.

[f3lix]

Leave the mid-west, fruit. Lots of money to be made out there.

[BigDongedHoe]

Originally Posted by Ugly Bastard

Fruit, you don't need a college degree to generate wealth. The examples of this are endless. Read Matt Drudge's wiki (this example comes to mind since I was just reading it last night). Graduated at the bottom of his high school class. Was nearly sent to a mental institution. Worked at 7-Elevens and gift shops in his early years before starting an email newsletter that distributed L.A. gossip. That letter grew into one of the biggest sites on the internet, Drudge Report, from which he makes millions a year. The only limitations that exist are the ones in your head.

Gotta agree with UB on this one. The only people who say they can't make something of themselves are the same ones who limit their ability to that level.