Cash and Short Term Investments.... Educate me please.

BIG WOOD

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I have zero knowledge of things like the stock market, yet I'm considering gambling with it to use the money to invest in a startup Roth IRA. Do I sound stupid enough with my uneducated reasoning? I'm going to make a Visit to my local financial advisor Monday and see if he has some time to help point me in the right direction. But in the meantime, who wants to give me their opinion on the short term stock market investments?
 
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Beeks

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Shouldn't have to gamble anything to start a Roth IRA. You can contribute up to $5500 a year to it. Simply start putting money into a Mutual Fund. We use target Mutual Funds via Vanguard.
 

BIG WOOD

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Shouldn't have to gamble anything to start a Roth IRA. You can contribute up to $5500 a year to it. Simply start putting money into a Mutual Fund. We use target Mutual Funds via Vanguard.
I know you can start it that way. I'm just wanting to start it with a big push
 
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FB7777

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First suggestion would be to talk to your accountant and find out what your max contribution to a SEP IRA

You can contribute up to 25% of your net income to this plan, the money saved on taxes is like a return on your capital

It will reduce your tax burden annually , and you have up until Apr 15 2017 to make a previous year contribution

Vanguard is a great place to start, I have been with them since 1998... I would suggest a Life Strategy Fund based on your age. Because they are passively managed , the cost is .25% annually to operate the fund

A financial advisor is going to take a fee ( as much as 2% ) of your investment before the money drops in an investment account. It will be hidden under something like 12B-1 fee.

Financial advisors are parasites sucking off the margins of your investment returns

Go Vanguard.com , their investment advice is free.

No one has a lower cost structure than them
 
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FB7777

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To address your last question, my personal opinion on the overall market right now is that it is risky to 'jump All in '



Especially if you don't have a long term investment intent for this money. Since you are considering a Roth , I assume you are looking long term

Consistent ( boring) systematic investing over the long pull is the best way to achieve your financial goals IMO


That said , anyone who claims to know what the market is going to do tomorrow, next month or next year is FOS... myself included :lol:
 

Chris A

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Great advice Fred, I just fired my FA after 3 years of shitty service, I'm managing my wife and my IRAs through E-Trade now
 
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Wandslinger

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That's why I just moved my Roth from traditional Mutual Funds into trust deeds...10.99 %, not bad. Still in a Roth so no penalties incurred. The downside, typically 2 to 5 year terms and then you have to find a new home.
 
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Papa John

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Beware-- I'll bet that Financial Advisor will try like the dickens to sell you a whole life or cash value Life insurance policy-- don't fall for it!

Just listen to Fred Boyle-- investing in a SEP IRA for last year will give you about a 30%-50% immediate return on your investment through tax savings. it would be hard for a stock to bet that rate of return.
 

jcooper

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But in the meantime, who wants to give me their opinion on the short term stock market investments?

If you don't have the money to lose, don't put it in the market.

Start watching bloomburg, great non biased(generally) info. Learn as much as you can. It becomes addicting, I started "investing" about two years ago and find it fascinating. Love learning about it, years ago, didn't get "it".... Everything Fred said is money!


To address your last question, my personal opinion on the overall market right now is that it is risky to 'jump All in '

I agree, pick a fund or something. Maybe take some of the money(you don't need!) and buy some stocks you like, trade a little. Some site have "fake" accounts you can set up just to see how you would do for free. Freds, also right about the fees - they eat your profits.


The market went really high really quick. Lots of individual stocks are very expensive(very quickly). Example - amazon a month ago was 750$, now it's 808$... That's a lot, (imo). :headscratch:
 
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FB7777

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That's why I just moved my Roth from traditional Mutual Funds into trust deeds...10.99 %, not bad. Still in a Roth so no penalties incurred. The downside, typically 2 to 5 year terms and then you have to find a new home.
Sounds like a great investment, especially in a tax deferred account considering you need to roll it into different investments every few years

That's why I like selling call options on my underlying positions, I pay tax on my call premiums but hold the stock long term to avoid cap gains

My SEP is where I can trade in and out without incurring tax
 

ruff

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  • There is no single person or entity that ever made money timing the market on a consistent basis. None.
  • As Fred suggested, in the long term low fee passively managed (usually index funds) seem to always beat actively managed funds.
  • Short term investment in the stock market is indeed a gamble. So as long as you understand that and wish to gamble, go for it. Just don't plan on it making a profit and possibly loosing.
 
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FB7777

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  • There is no single person or entity that ever made money timing the market on a consistent basis. None.
  • As Fred suggested, in the long term low fee passively managed (usually index funds) seem to always beat actively managed funds.
  • Short term investment in the stock market is indeed a gamble. So as long as you understand that and wish to gamble, go for it. Just don't plan on it making a profit and possibly loosing.
Bravo

The problem, I believe is the individual ego... you make a couple good moves and all of sudden you believe you can beat the market

Someday I'll learn :eekk:
 
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KevinD

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If you invest in individual stocks do not put all your money into one, two or even a few.
I try to limit my exposure to no more than 5% in any particular stock or fund.
If one stock takes a dump for whatever reason its not the end of the world.
 

jcooper

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My SEP is where I can trade in and out without incurring tax

Hey Fred! One question about your SEP IRA. From what I'm learning about this specific type of Ira is - if you have employees you have to contribute the same amount or % for them also?
 

Papa John

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Hey Fred! One question about your SEP IRA. From what I'm learning about this specific type of Ira is - if you have employees you have to contribute the same amount or % for them also?

Yeah Fred- Is that still true? I think that's why I closed my SEP IRA along time ago.
 

Chris Howell

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I have zero knowledge of things like the stock market, yet I'm considering gambling with it to use the money to invest in a startup Roth IRA. Do I sound stupid enough with my uneducated reasoning? I'm going to make a Visit to my local financial advisor Monday and see if he has some time to help point me in the right direction. But in the meantime, who wants to give me their opinion on the short term stock market investments?
I'm a major believer in the stock market because you can make money from work that other people are doing. To me the definition of working smart is getting paid while other people do the work for you.

I began investing in the stock market in 1990 at the advice of my older brother. Best advice I was ever given. I could retire now if I wanted to at 51 years of age, but there are tax benefits to continuing to work… Not to mention that I love what I do.

If you're new to stock investing you should probably stick with mutual funds since they are very diversified and don't carry the same amount of risk that individual stocks do. That's how I got started out. Once you've built up a portfolio you can then invest in individual company stocks that tend to generate MUCH higher returns, but carry more risk.

Here's my current favorite stock. It's a Brazilian mining company called VALE (pronounced "valley").

http://finance.yahoo.com/news/why-v...ARyZWdpb24DVVMEc3ltYm9sA1ZBTEU-?.tsrc=applewf
 
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FB7777

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Sound advice Chris... with the possible exception of the link to Vale SA. Lol


Before this thread turns into a stock pickers bonanza, I would caution everyone to do their own research, Vale has had a hell of a run last year at nearly 400%
Negative PE and high beta make it too risky for me
 

Chris Howell

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Sound advice Chris... with the possible exception of the link to Vale SA. Lol


Before this thread turns into a stock pickers bonanza, I would caution everyone to do their own research, Vale has had a hell of a run last year at nearly 400%
Negative PE and high beta make it too risky for me
Stocks should be purchased when their value is low (on sale). The masses often wait until a company is doing phenomenally well and then say, "Me, too! I want in!" People buying shares of Tesla are paying a fortune. But those who got in early are making a killing.

VALE is definitely not for everyone. In fact, you need nerves of steel to invest in foreign stocks. I've got an advantage in that I've got a nice portfolio already, so foreign stocks are something that I can afford to take risks with. The potential benefits are huge, but they are not without risk. Risk little, gain little.

By the way, I'm not trying to steer anyone towards VALE. Just using it as an example of a stock that's got incredible potential but is currently on sale.

Check out this graph for its past year's performance.

IMG_8048.PNG
 

BIG WOOD

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Stocks should be purchased when their value is low (on sale). The masses often wait until a company is doing phenomenally well and then say, "Me, too! I want in!" People buying shares of Tesla are paying a fortune. But those who got in early are making a killing.

VALE is definitely not for everyone. In fact, you need nerves of steel to invest in foreign stocks. I've got an advantage in that I've got a nice portfolio already, so foreign stocks are something that I can afford to take risks with. The potential benefits are huge, but they are not without risk. Risk little, gain little.

By the way, I'm not trying to steer anyone towards VALE. Just using it as an example of a stock that's got incredible potential but is currently on sale.

Check out this graph for its past year's performance.

View attachment 69292
What's your thoughts on marijuana stocks?
 

BIG WOOD

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That explains your overall line of questioning :stir:
There's just been a few articles floating around about how it might be good to invest in s few of those on the market. There's s couple good ones showing growth in Canada. I don't know if we have that available for us to invest in
 

Chris Howell

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What's your thoughts on marijuana stocks?
The problem with marijuana stocks is that the profits of companies that are doing this are being sapped by ridiculous state taxes. It's like gambling. Because of the huge profits involved, the government is taxing them heavily which is the only reason why it's being legalized at all.
 
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FB7777

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I'm currently researching a company named Spicolli Industries. It's a start up based out of Ridgemont California

Angel Investor cash is at a high burn rate but they should be able to dilate margins in a few years
 

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