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[–]PumpDumpPumpDump 178 points179 points180 points 11 years ago* (41 children) | Copy Link
You'll get lots of stupid advice on this subject, from people who don't have any money or are just crazy. I'm in my thirties and nearing a couple of million in net worth, so here's real, simple advice to get there, too:
(1) Start early. Compound interest is your friend.
(2) Save at least 10 percent of your income, preferably more.
(3) Get an emergency fund of at least six months to a year's living expenses in cash. Just leave it in your bank account or some other form that is liquid so you can immediately access it if needed.
(4) Don't try to game the market. Just stick it in index funds that track major market indexes and leave it there. Make sure the fees are low - high fees are how parasites suck away your money. So do taxes if you trade a lot. Vanguard is the best option right now, but Fidelity has some good funds too.
(5) Don't use a financial planner. They're parasites, and will encourage you to do things that generate fees for themselves but don't help you.
(6) You want your allocations to be around 90% stock type investments / 10% bonds when you're starting out. I have a mix of mostly S&P, then some more small cap / mid cap, then some real estate and international indexes. As you get older, put more money in bonds.
(7) DON'T PANIC. This is the single most important piece of advice. The stupidest thing you can do is panic and sell a bunch of stock when the market crashes. It will happen, probably three or four times during your life. Guess what? A couple of years later, it will have recovered, and the only people who lost money will be the morons who sold when it was low. It's buy low, sell high, not buy high, sell low. Just look at the most recent crash. The Dow was at 6,500 and I was pumping money in while the dumb money was selling. Here's the reality: if the Dow was going to crash down to 2,000 or something, we're all screwed anyway. That's zombie apocalypse levels, and the whole system would meltdown and anything you have would be worthless anyway. So don't worry about it, have some balls, and stay the course.
(8) Don't believe the people who think you should stuff all your money into mattresses or the Iraqi dinar or gold or whatever crazy investment scheme they have. "Oh, but the economy / Wall Street is a scam for the rich and powerful!" Yes, it is. And what do the rich and powerful do? Own a lot of stock. There's a reason the government put all its efforts into saving the stock market first in 2009/2010, not helping the average person. If you can't beat 'em, join 'em. If you have a lot of stock, you're benefiting from all the corporate efforts to squeeze out labor in favor of profits. Those are your profits now, you have a cut. That's your government now, you own shares in its masters.
(9) As you get older, put more money into bonds. You need this because of the buy low, sell high rule. Once you're actually using your money to live off of, you'll be selling parts of your portfolio each year. Bonds are stable, stocks go up much more over time but they fluctuate. If stocks just crashed, you want to sell bonds to live off of. If stocks are partying like it's 1999, you want to sell stocks to live off of and refuel the bond portion you sold in down years.
10) You can safely live for 30 years off by withdrawing around 4% of the starting value of your portfolio in the first year, adjusting the amount you withdraw each year upward for inflation. Just keep that in mind for planning, and for how much you need. Use #9 to make this even safer, as well as other techniques, i.e., cut your spending some in years where the stock market is down, overshoot with your initial amount.
11) Once you retire, the first few years are by far the most important in terms of whether your portfolio will last under the 4% rule. If you withdraw a bunch of money in a bear market in year 1-3, it makes it harder to recover and creates a risk you'll run out in the later years. So be careful about that, and maybe go in with some extra money to cover the first few years so you don't need to take anything out of the portfolio itself.
[–][deleted] 11 years ago (3 children) | Copy Link
[permanently deleted]
[–]Senior Contributordeepthrill 5 points6 points7 points 11 years ago (1 child) | Copy Link
Just fucking buy the fund yourself. The expense ratios are so low, that the difference between a .10% er (if you did it yourself) and the .18% er for them to do it for you and for the simplicity, is going to add up a minuscule amount of money, maybe a dinner once every 8 weeks (for $1 million saved, the difference is $800 a year for them to do it for you). Just buy the target fund directly, and spend your time trying to increase your income.
[–]alpha_n3rd 0 points1 point2 points 11 years ago (0 children) | Copy Link
Fidelity also has targeted funds. Some large employers even create their own funds and hire their own fund managers. Check with your benefits dept. Check the expense ratio though I've heard sometimes they're higher.
[–]Kyuzo_ 5 points6 points7 points 11 years ago (0 children) | Copy Link
This should be sidebar-ed as basic RP financial advice. It's an incredibly complicated subject, but as a very basic rundown, this is solid. Point 1 especially.
[–]rhettdu 1 point2 points3 points 11 years ago (0 children) | Copy Link
♂
I can't actually give one of these but you deserve one. I encourage those out there who can to do so. It's exactly this sort of quality comment that we need to encourage
[–]2alisonstone 1 point2 points3 points 11 years ago (0 children) | Copy Link
I am also a big supporter for "just put it in an index fund" for most people. Don't fuss too much about getting 1% more by doing some crazy strategy. Even if you are smart enough to beat the market, for most people, the effort required isn't worth it. Unless your parents gave you a million dollars when you turned 21, spending your youth trying to figure out how to pick stocks is like working below McDonald's wage. The only people who should be picking stocks are those in the investment management industry, because they get paid a huge salary whether they are right or wrong.
The reason is because starting capital matters. Sure compound growth is amazing, but it doesn't overcome your starting point because you can't compound forever. You will eventually die. Or you will eventually want to use your money to buy a house or whatever. So if you only have $10k, don't bother trying to beat the index by 2% (which is very good, you have to put in a lot of effort to consistently beat by 2%), because that is only $200. That's before taxes. You rather put your efforts into increasing your capital early in life. That might be working overtime, doing some side gigs, finding ways to save money, etc. I know some people who spend an extra 15-20 hours a week researching stocks on top of their day job, only to make an extra $2k by the end of the year. It's just a terrible waste of time. It's mostly mental masturbation where you try to show off that you are smarter than everybody else. If you love picking stocks so much, then you should go into the investing profession where you get paid to do the research.
[–]TheRedThrowAwayPill 1 point2 points3 points 11 years ago (1 child) | Copy Link
Sooo ... should I enter that Vangaurd fund now when the market is UP?
Orrr ... should I wait until the 2nd recession hits at the end of the 2015?
[–]LonelySavage 0 points1 point2 points 11 years ago (0 children) | Copy Link
Now. It's not really "Buy low, sell high"; it's "Buy whenever, hold forever". The trend, in the long term perspective, is always up.
[–][deleted] 2 points3 points4 points 11 years ago (6 children) | Copy Link
I am going to have to disagree with your last few points. You should not be touching the capitol to live off of. Say you have 2 million invested, you make a conservative 7%. If you leave 2% in to offset inflation, then you are still living on 100,000$ a year from investment alone, not to mention your actual income. As you said rich people in lots of stocks and bonds, they maintain this in a generational way by not spending the Capitol.
[–][deleted] 7 points8 points9 points 11 years ago (3 children) | Copy Link
The word you are looking for is not capitol, which means state capitol. The word you are looking for is capital which means money.
How would one go about making a conservative 7% a year?
[–]Orxbane 3 points4 points5 points 11 years ago (0 children) | Copy Link
Yeah, 7% conservatively isn't realistic in this economy, and 2% inflation is laughable.
[–][deleted] -5 points-4 points-3 points 11 years ago (1 child) | Copy Link
Most index finds run about 10, and are fairly safe, and you are right about my wording.
[–]PumpDumpPumpDump 8 points9 points10 points 11 years ago (0 children) | Copy Link
That's great if you can do it, and I don't disagree that it means there will be a big pile of money there when you die. But it also roughly doubles the amount you have to save to retire. So yeah, if you want to leave a huge pot to your kids, don't touch principal.
But also note that the 4% rule is the option that lets you spend the most with near 100% safety of it not running down to zero. If you run historical simulations on it, most of the time you actually ended up with around the same as what you started with, and in many events you end up with more (if the stock market went up the first few years after you start drawing things down). Sometimes it gets close to zero, but that's actually pretty rare. Even at 4% you're still likely to leave your kids a decent chunk.
But my view is, me first, let kids make their own money.
[–][deleted] 0 points1 point2 points 11 years ago (2 children) | Copy Link
So i am 25 fresh out of law school and making around 50k salary right now. I have about 70k in debt. Could you give me some advice looking for the back half of my twenties? Rent or try to buy a house? Student Loans? Investing while trying to pay these bills?
[–]2alisonstone 0 points1 point2 points 11 years ago (0 children) | Copy Link
Figure out ways to save money. Depending on your state and local taxes about 1/3 to 1/2 of money you earn is going to taxes. It's far easier to pay off your loans by figuring out ways to save money, because a dollar saved leaves a dollar in the bank whereas an extra dollar earned is only a fraction of a dollar in the bank. This gets worse if your salary is high enough such that you don't qualify for the student loan interest deduction. In that case you will end up easily paying something like 6% using after-tax money, which is easily equivalent to a 8-9% pre-tax. Paying that loan would be like buying a guaranteed 8-9% bond.
[–]YourShadowScholar 0 points1 point2 points 11 years ago (0 children) | Copy Link
It's nice to see someone successful say this. I have literally always thought this HAD to be true... I don't get why people sell in these circumstances at all.
[–]Surrma 1 points1 points1 points 11 years ago [recovered] | Copy Link
How do you make money off index funds? Say I invest 10k a year for 10 years and that money grows to 250k. Do you make money off the dividends? So if I start investing when I am 30 when I am 45 or 50 am I generating passive income from the index fund?
I don't know much about that.
[–]Axoc 0 points1 point2 points 11 years ago (0 children) | Copy Link
Sounds very similar to Dave Ramsey's savings and investment advice, so if you're wanting a different source with similar ideas, check out some of his motivational / educational speeches on YouTube.
[–]DolorousRedd 0 points0 points0 points 11 years ago [recovered] | Copy Link
How much would you recommend investing initially? Either as a % of income or just a base level to make it reasonably useful.
As much as possible, really. I regularly invest 20-25% of my monthly salary.
[–]ChristopherBurr -1 points0 points1 point 11 years ago (0 children) | Copy Link
great advice. A agree with almost everything you've said.
[–][deleted] -1 points0 points1 point 11 years ago (0 children) | Copy Link
who think you should stuff all your money into mattresses or the Iraqi dinar
I do know a site where you can buy 1 million dinar and have it shipped to you for about $1000
I always thought it was weird.
[+]the99percent1 -6 points-5 points-4 points 11 years ago* (3 children) | Copy Link
Follow this advice and you should be fine.
I, however am using a leveraged 200% savings in stock via Leverage Margin loans. A margin loan gives you a 2:1 leveraged position. So let's say you have $5,000 to invest, the bank loans you another $10,000. You now have $15,000 to play with. At twenty-ish, this is significant because it allows you to diversify your portfolio and lower your investment risk whilst maximizing your investment strategy.
If you think about it, your savings and future savings is a bond. Thus, when you talk about 90%/10% stock to bond rule, you aren't taking into consideration your future income.. If you take your future savings into account, you are probably only investing 30%/70% stock to bond.
And that's why leveraged margin financing is such a good thing. It brings your future savings into play, today. More money invested means less risk as you can diversify and cover all sorts of ground. You start off aggressive and begin to scale your portfolio back as you age. Your stock to bond ratio would look like this. At 24, you go 200%/10% by the time you are 30, you scale back to 170%/10%, 35, 100%/50% and by the time you are 45, 70%/50% and so on so forth.
If you use this strategy, you cannot lose, even when the markets bear at any time. Time is your best ally. You see, when you are 24, and have 30k invested. Even if you write-off 30k, in the long run, it's nothing. At 35, you have 100% invest BUT 50% is in bonds, so you've covered yourself. Whereas, most 35 year olds are ONLY just beginning to invest in stocks. And at 45, you have made your money many times over that even if you take a hit, you'd still be up due to investing 20+ years. You cannot lose...
The average person will throw $100,000 into stocks at age 50. That is a sure fire way to lose it all, at an age where you absolutely cannot afford to lose money. Use time as your ally. Invest young, but at a leveraged position.
There are however some downsides.. For instance, if the market bears, you are likely to receive the dreaded margin call. Where the bank will force you to top up your on your position and keep their margin ratio balanced or sell the stock altogether. Quite often, you can lose the money AND have a loan to pay off. It is absolutely critical that you diversify. If you do, you'll do just fine.
and let's just say, losing 40k at age 25 is better than losing 300k at age 50..
Start young, hold long and let compound interest do its magic.
Resources:
https://www.interactivebrokers.com/ind/en/main.php - low cost, low interest rate and a comprehensive global markets to invest/diversify in.
https://www.moneysmart.gov.au/investing/borrowing-to-invest/margin-loans -FAQ of margin loans
http://www.lifecycleinvesting.net/index.html - get the book.
[–][deleted] 10 points11 points12 points 11 years ago (2 children) | Copy Link
Are you really saying that using margin you cant lose? This may be the dumbest thing I have read in this entire thread.
[–]the99percent1 -4 points-3 points-2 points 11 years ago (0 children) | Copy Link
Did you even see that I touched on the downsides, or do you just fail at comprehension/life...
[–]_GORDONRAMSAY -12 points-12 points-12 points 11 years ago [recovered] | Copy Link
If you think you can achieve a net worth of 2 million at any point in your life without a significant amount of luck and/or a silver spoon you are living in gaga land.
[–]PumpDumpPumpDump 10 points11 points12 points 11 years ago (0 children) | Copy Link
Given that I came from a middle class family and started out with around negative $100,000 net worth from student loans in my early twenties, I'm not the one living in the fantasy world.
My money comes from three basic sources, in about equal proportion:
(1) savings from high paying job, which I got from hard work in school (2) savings from a side business, which I got from hard work after school (and, if you want to talk about luck, was the only successful one of about 15 or so ideas that I've seriously tried, and which imploded after being wildly successful temporarily) (3) growth from investments after initial savings
If you have a loser attitude, you'll end up a loser. You achieve success by failing over and over again, and by "failing upwards." In other words, don't screw up the baseline you've already achieved on a gamble.
I failed a ton of times, at a ton of things. There's lots of jobs I didn't get, things I screwed up, and business ideas I had that ended up being stupid. But I always took lessons from the failures, and when times have been flush I save, save, save.
If you just say "oh, I'm a loser who can never make $2 million," well, guess what, you never will. If you ram your head against the wall enough times, eventually you'll get "lucky" and break through.
It's not even like there's lots of competition out there. Most people are lazy, don't bother to educate themselves about anything after their formal schooling ends, and don't ever try to improve themselves at all. Most people live literally paycheck to paycheck and don't save anything. If you just want to sit on the sidelines and whine about how impossible it is, fine, but this isn't exactly the forum for people who aspire to be losers.
[–][deleted] 0 points1 point2 points 11 years ago (0 children) | Copy Link
Even conservative estimates for usual retirement age put me over 2 mill and I'm not even saving that much right now...I should have started a lot sooner.
[–][deleted] 11 years ago (2 children) | Copy Link
[–]Man-with-a-pitchfork 5 points6 points7 points 11 years ago (1 child) | Copy Link
which means I get student loans So I have more than enough to invest,
which means I get student loans
So I have more than enough to invest,
No, you don't. You don't start investing until you don't need new student loans any more, and preferably have paid back all the old ones.
(This is assuming that you pay non-neglible interest on the student loans.)
You don't invest borrowed money.
[–]Transmigratory -4 points-3 points-2 points 11 years ago (2 children) | Copy Link
If you're in the UK, make use of spread betting. It is like trading, but potentially more profitable and is tax free. Though since loses can exceed your account balance, I'd advise this if you already are comfortable with regular trading.
[–]SimplySerenity 0 points1 point2 points 11 years ago (1 child) | Copy Link
So this is only something you can do in the UK? It sounds interesting.
[–]Transmigratory 0 points1 point2 points 11 years ago (0 children) | Copy Link
Indeed.
I would imagine that if you had a bank account in the UK, you should have access to it too given that the income would still be in UK soil.
Best part is you can open up a £100k account, for example, and deposit part of it (like 10%). Your profits would be treated as if you had a £100k in the account rather than £10k.
Though the reason I said that this should only be an option for those who are quite comfortable with trading and have proven themselves profitable is because, as you can imagine, your loses can easily be greater than your account balance.
Of course, I'm not quite sure why my post was deemed unpopular; I just stated a fact.
[–][deleted] 25 points26 points27 points 11 years ago (10 children) | Copy Link
This is going to sound like nothing, but it can be huge.
A lot of hobbies are money suckered. Find one you can make a little money from, even if only to keep it self sufficient. Like woodworking? Build stuff and sell it. Like going to garage sales and rifling through other people's shit? Figure out which items are underpriced and sell them online. Anything, as long as it makes back some money. Worst case scenario, your hobby is "cheaper" than it otherwise would be. best case, you start a new business for yourself.
More likely it's self sufficient and brings beer money. Can't complain about that.
[–]SmegRimmer 16 points17 points18 points 11 years ago (2 children) | Copy Link
Ive been doing this for years. I have a rather shameful uber nerd hobby.
Warhammer 40k. (whatever, i enjoy it). Turns out i only ever really liked painting and building the things and never had the patience to play the actual game, or be around the people who do.
It also turns out, I am pretty good at painting the things.
I now have a mini side job, i buy up used minis online for as cheap as i can get them, and sell them again painted/converted and with good photographs for around 300% markup on the original cost.
For the man hours, it is certainly not a sustainable way to make a living, but since I enjoy doing it in my spare time I don't see it as a loss.
TLDR, even the nerdiest of hobbies can net you a decent second income as long as you enjoy doing it. As the man said, if you are good at something, never do it for free.
[–]fugued-1 points 11 years ago [recovered] (1 child) | Copy Link
Do you mean Minis, as in Mini Coopers?
[–]Hasmond 1 point2 points3 points 11 years ago (0 children) | Copy Link
With "minis" he means miniatures, here are some examples of what he is a talking about.
[–]1independentmale 2 points3 points4 points 11 years ago (0 children) | Copy Link
I just want to back this up. Most of my hobbies either make me money or break even. As a result, I have a lot more disposable income than my coworkers. Even though we all have comparable salaries, they spend their free time playing video games and building bigger and better gaming rigs. I buy & sell things that interest me, build stuff in my shop to sell, design web sites on the side and so on.
[–]Scroph 6 points7 points8 points 11 years ago (1 child) | Copy Link
I did the exact thing with computer programming and.. I'm not trying to contradict you, and this might be a subjective point of view, but when the hobby starts bringing in money, it turns into a business and you tend to resent it when it doesn't bring you as much as you'd like, or when it stops bringing money altogether.
I ended up getting greedy and started taking gigs I didn't particularly enjoy just to make a few more bucks.
The way I see it, you either spend money on a hobby in exchange for the sanity/peace of mind you gain from practicing it, or in the best case scenario, the hobby is - like you said - self sufficient. But again, you mileage may vary.
[–][deleted] 2 points3 points4 points 11 years ago (0 children) | Copy Link
I love garage sales and do the flipping thing. It's become self sufficient + beer money, basically. You're right, it can get a little tricky and give you the business mindset long before you should have it. My basic point was hobbies usually are money pits. It's a good idea to have one (or two or three) that can make a little back.
In the end it's usually the one you figured would be least successful that turns out best.
[–]rhettdu -2 points-1 points0 points 11 years ago (2 children) | Copy Link
I'm very hesitant to go into my hobby because I'm afraid if I tell everyone, there won't be any left for me. Suffice to say it involves online gambling and you really have to fuck up pretty stupidly to lose. The profits are pathetic but it keeps me out of trouble.
[–][deleted] 1 point2 points3 points 11 years ago (0 children) | Copy Link
Interesting. I've toyed with what I'll call a similar idea myself, but never bothered. If the risk is genuinely slim to none and that isn't just you talking yourself into it, I'd say try it out first, before making it a hobby. I see how that's a dangerous path though, and why you don't want to say a word about it.
[–]omg_cats 39 points39 points39 points 11 years ago [recovered] | Copy Link
Lot of overly complicated advice here from people trying to look smart. Here's the basics:
Starting a new job is the time to negotiate salary. Get the most money you can in the beginning. Pretty much everywhere will offer you lower and promise raises. Don't fall for it.
You almost always need to change companies to get a big raise, so start looking for a new job after 2-3 years.
Put in 100% effort at the office, always. Get noticed. If nobody's noticing, quit.
Have a liquid emergency fund of 6-12 months living expenses.
If you have debt > 6% interest, pay it off before investing in ANYTHING. Paying off high interest debt is a guaranteed return.
Your credit score is your worth as far as banks go. Don't fuck it up. If it's fucked up, repair it. Get on credit karma to know where you stand.
Never, ever, ever carry a credit card balance month to month. Use an Amex card to pay for everything during the month and pay it off in full. Amex has good rewards and most of their cards don't allow you to carry a balance so it's good discipline built in. The Costco Amex is great.
Once debt is paid off: Max out your tax-sheltered investments: 401k & IRA. Do this first. Don't invest in anything else until these are at the legal max.
Here's the truth: until you have all those items checked off, which 95% of you don't, all the forex/stock market/precious metals/Bitcoin/rentals bullshit is a waste of time. These are the absolute minimums. Once they're done, THEN take some money and make "real" investments.
[–]rockmasterflex 3 points4 points5 points 11 years ago (2 children) | Copy Link
Truly, with many Americans carrying student loan debt (which, for the most part, is over 6%), talking about investing your money is silly, since none of the markets have reliable >6% returns.
It's simple math. If you have $20k burning a hole in your wallet and you have two choices: 1) Pay off $20k of student/home/etc loans valued at 6% 2) Buy index funds rated with ROI of around 3%
Either way you are spending $20k. In scenario 1, you are saving (seeing in your take-home money) 6% off $20k. In scenario 2, you are seeing a portfolio grow by 3%. The 6% is a better deal.
Unless you stumble upon some kind of low-risk investment opportunity that pays out higher than your student loans or home loan cost in APR, you should just be paying off your loans. Your loans are a guaranteed ROI for the money you pay up front.
[–]forgottenpasswords78 4 points5 points6 points 11 years ago (0 children) | Copy Link
This!
Analyse all your debts and find out which are costing you less than market return. (this will usually only be your home loan) borrow as much as you can from this source.
Everything else should be considered infected with Ebola.
Then use your money to invest in things that will make more than what you are paying for the debt + tax. If you can't find anything then pay down debts.
Also, if you make enough money such that you don't qualify for the student loan interest deduction (I think it is something like $75k), then you are paying the interest with after-tax money. Depending on your state and local taxes, that 6% after-tax interest rate is easily equivalent to 9-10% pre-tax. Pretty hard to beat a risk free 9-10% bond.
[–]SimplySerenity 1 point2 points3 points 11 years ago (1 child) | Copy Link
So how much should you be putting away into your tax-sheltered investments then as compared to savings? If you've got your emergency fund, should you be putting what you would normally put away away into savings straight into the investments? Or save with a combination of both?
[–]ragear81 points 11 years ago [recovered] (2 children) | Copy Link
I'm in college and will be getting my first "real" job soon. I feel intimidated that I shouldn't negotiate for my salary for my first job - because I don't want to risk losing it. I have a 3.0 which is decent but not great but I'm also graduating with the #1 internal auditing school in the world. IS this something I should do at my first job? Or shouldn't I wait until 2nd or 3rd + to negotiate salary?
[–]forgottenpasswords78 0 points1 point2 points 11 years ago (0 children) | Copy Link
Get a job that you like first.
Then look for another one and use the fact that you really like your current job to convince them to pay you more to steal you away.
If you have no job then you are desperate and would blow a homeless dude for a position.
[–]zchyGFX -3 points-2 points-1 points 11 years ago (0 children) | Copy Link
Good post, but I wouldn't say bitcoin is still a waste of time. It's still early so it's still good to get in on it, you don't need to buy a whole coin but $20 here and there will add up and help for the future.
[–]Slydermv 12 points13 points14 points 11 years ago* (0 children) | Copy Link
Best way it reduce time to retirement, become financially independent or increase your savings (whatever your goal may be) is increase your savings rate.
Check out this blog:
http://www.mrmoneymustache.com/
With a family of four he effectively retired in his early 30's. The family spends about 25k a year.
While you might not make it to his level of frugality, there is great insight in the blog in terms of the way to think about money and shit you need versus shit you don't need. Honestly a 8 dollars star bucks a day costs you 3k a year and compounded over 10 years at 7% - 50 fucking grand (over 30 years it's like over 300k)!
By make some changes that don't affect my lifestyle at fucking all... I save about 50% on my income a year (I mean shit like installing programmable thermostats, making my own coffee in the morning, bringing my lunches to work, etc.)
Investments (this is Canadian):
http://canadiancouchpotato.com/
Pay down high interest debt first, invest into tax sheltered accounts second, then non registered after.
Mutual funds, financial planners, blah blah blah are a fucking scam set up to leech off your hard earned dollars charging over 2% for "actively managed investments" that rarely if ever beat the markets long term. It take o little work it's ridiculous. Set up an online brokerage. buy 5-7 ETF's that cover Canadian (cause I'm for Canada), US, International stock indexes, and bonds ETF's that do the same. Add money and re-balance once a year. The above blog has model portfolios that average over 10% rates of return after MER's
http://www.forbes.com/sites/greggfisher/2013/08/28/in-mutual-funds-is-active-vs-passive-the-right-question/
Invest you money, re-balance once a year, switch to a higher rate of bonds versus equities as you age, and don't freak out when the market drops.
Real Estate is good as well to diversify, but I have not dipped my hands into it so I'll let someone else who has explain.
[–][deleted] 7 points8 points9 points 11 years ago (0 children) | Copy Link
Advice for someone who's in college and looking to get ahead of the game:
If you haven't started investing, do so now. Even if it's only what seems like a small amount of money. Open a Roth IRA with a low cost company (my pick is Vanguard, but the specific company does not matter as long as they don't charge lots of stupid fees), and put what you can scrounge up into a super low cost index fund. Either S&P 500 or total market index, doesn't matter as long as the fees are ultra low, far less than a quarter of one percent. Starting to see a pattern here? Fees are important over the long term, and you're investing for the long term.
Okay, you have some money invested now. Two things. One, that money is no longer eligible to be spent on things until you are independently wealthy, or until it's the only thing keeping you from sucking dicks under a bridge for cash. Once you are under a bridge with a dick and a twenty in front of you, by all means, bust out the check book. Two, add to your pile. The most important thing you can do early on is add to the pile, and learn where it should be invested as you go (there are slightly better places to be than 100% in a total market fund, but it's the best place to start with a small amount of money). For motivation, look at an investing calculator. It adds up a fucking lot faster than you might think.
[–]yummyluckycharms 15 points16 points17 points 11 years ago (0 children) | Copy Link
Lets boil it down to the bare minimum people....
Financial success requires three steps:
1) Earning money at a job
2) Saving said money (investments)
3) Reducing expenditures (personal finance)
Right now Op you are kinda asking about all three, which means you are going to get overwhelmed by volume and range of answers.
Addition: Since you are starting off, you are should be looking for simple to implement solutions. Remember - most people will only have about 500k- 1 million when they retire - and that includes their house. Be realistic in your goals and that way you wont be disappointed.
[–][deleted] 6 points7 points8 points 11 years ago (0 children) | Copy Link
easiet way to live a comfortable life??
live within your means, its that simple
[–]pilledwillingly 7 points8 points9 points 11 years ago* (6 children) | Copy Link
Stay away from hobbies involving cars, boats, jetskis and motorbikes. Condoms, and lots of them. Back yourself. If there's a $10,000 training package that increases your lifetime employability by 5%, probably worth looking into it.
[–][deleted] 1 point2 points3 points 11 years ago (5 children) | Copy Link
Why stay away from vehicles? Explain in details.
Second part of your advice rings with me really well. Had that in mind already.
[–]pilledwillingly 4 points5 points6 points 11 years ago (3 children) | Copy Link
Compared to other hobbies, financially, motorsports bleed you dry. People finance to keep up with the latest fad and bury themselves in debts and depreciating assets just to have some flash wheels or do some offroading.
Get a 4 cylinder, <4 year old, economical car, keep it until it's 10 years old, sell it and repeat. This advice is for a urban/suburban non-mechanically inclined person mind you.
[–]SimplySerenity 1 point2 points3 points 11 years ago (2 children) | Copy Link
If you are mechanically inclined maybe try finding a cheap classic that just needs a little bit of fixing up. I bought a 71 super beetle for cheap, fixed various things wrong with it over the summer, and now I have a cheap reliable car that's worth more than I put into it.
[–]pilledwillingly 1 point2 points3 points 11 years ago (1 child) | Copy Link
Exactly. If it's a hobby that's going to either make money or break even on time invested, go nuts. The kids on 25k a year dumping 50% of their paycheck into a bank loan for their hobby are insane. I've got about $100k net worth - 2011 Hyundai i30, white, since it's easier to get panels for. You don't need a sick ride to get pussy, it's not the 70's, dial it back and put that cash towards getting out from under your boss' s desk.
[–]1raceAround126 2 points3 points4 points 11 years ago (0 children) | Copy Link
I race cars as a hobby. I have to admit that it isn't cheap!
The car itself is one of the biggest factors. I started racing Mini Coopers in the 90s (my cousins got me into it). That was probably the cheapest form of racing I can remember.
Some competition can give you money back, but when you compare what you make against the car, tools, consumables, storage, transportation, fuel, etc. It just isn't what I would call an economical hobby. It's great fun, but you have to know what you're doing and you ideally need to start low.
A better hobby is play an instrument in a covers/bar band. Easy money.
[–]blackhawks93 2 points3 points4 points 11 years ago (0 children) | Copy Link
I bought a sports car and paid 13k for it. Ended up putting 3k into it before selling for a loss at 8k. Thats why.
[–][deleted] 4 points5 points6 points 11 years ago* (2 children) | Copy Link
The well rated comments listed so far are pretty good generic financial bits of advice, but for RP specific financial advice:
1) Find a career that is stable that you can grow in skills, and every 2-3 years, find a new company and a new position higher up the ladder to shoot for.
2) Learn to negotiate, and build a reputation for being strong-willed, but not wrong. When you go into a negotiation for a promotion, people will see that you've got a history of taking a position, and that stance resulting in your team, your division, your company making a lot of money.
3) Figure out what your financial priorities are; a house, fine clothing, fancy cars, expensive whiskey, whatever, then work towards them.
4) Learn to value your time investments in people and activities and how to put a value on your time. Once you know how to evaluate what your time is worth, set a minimum value you will accept for your time, and cut out anything that doesn't earn that value for you time. Do not maintain interactions with someone who does not at least contribute to you the time and resources you invest into interactions with them.
5) Share your financial goals with your relationship, but not your assets. If things turn sour, you don't end up in court fighting to keep your hard earned money, clothes, cars, house, or anything else. If, on the other hand, your relationship looks like it's heading toward marriage, get a prenup, and make sure you specify what assets you consider yours, what assets are your partner's, and what is to be shared.
6) Be aggressive in keeping on top of your career, and demand that your partner does the same; the moment one of you stops working towards your goals if you haven't already achieved them, the moment the relationship starts to die.
[–][deleted] 0 points1 point2 points 11 years ago (1 child) | Copy Link
I like this. Best comment i got so far.
For #2, what do you mean by "srrong willed, but not right." ?
Also, I can't get married. Not with what I've been learning on RP. It's just not an option for me.
[–]Gotmilkyy 7 points8 points9 points 11 years ago (1 child) | Copy Link
Definitely agree with you. I rarely visit the sub anymore without sorting by top (day/week/month). Even then you get rape cases and what I overhead on the news that my mom insists on watching.
I'm not saying there's anything wrong with those posts, but TRP is over saturated with it and most of the comments are satirical and therefore don't help anything.
When I see one now I don't even bother clicking it. I stick to the FR's and Illimitable man's theory posts. Big ups to that guy, so much knowledge.
[–]blackhawks93 3 points4 points5 points 11 years ago (0 children) | Copy Link
Buy good health insurance with a high deductible and start working out. The best way to save money is to lead a healthy lifestyle and also don't neglect an awesome diet.
[–]RPREALITY7 points 11 years ago* [recovered] (25 children) | Copy Link
Historically the S&P500 has averaged about 10% but this is an arithmetic mean, not a geometric mean (.1+0.08+0.12/3, instead of 0.10.080.012, which is how compound interest works).
The reason I bring this is up is because the major indices are at an all type high now due to the Keynesian games the fed in the US are playing.
An index is a basket of stocks in a fund, this is called diversification. The way you can value a stock is via the dividend discount model: Price at time 0 = Dividend forecast in 1 year / (Required return - growth rates). With the fed keeping rates basically at 0, stock prices are blown up at the moment and the indices are at all time highs (the Keynesian's see this as a good thing, lol).
So just be weary about jumping into the index funds as 'safe bets' right now.
I like the idea of putting a little bit of money into silver at the moment, it's a gamble but one I think is well worth it.
For your average person, a passive investment strategy is best. Very few fund managers outperform the markets each year consistently and they are the big dogs. Get into some index funds and opt in for dividend reinvestment. Just be aware that the indices are at all time highs now, so it probably is not the time to buy now. Also stay away from bitcoin, way too much volatility and it was basically a pump and dump, the ship has sailed.
edited to make my thoughts on silver more clear, I am definitely not suggesting you dump all your money into it. Is it so undervalued currently that dropping a few hundred or a couple of grand into it might make sense? I think so, because of the potential upside.
[–][deleted] 9 points10 points11 points 11 years ago (24 children) | Copy Link
The stock market has regularly made all time highs over its history. Telling people not to start investing because of the market being near all time highs is amateur advice in addition to being simply awful advice.
Why are you recommending silver?
[–]RPREALITY 0 points0 points0 points 11 years ago [recovered] | Copy Link
There is a difference between genuine growth or synergies increasing prices and prices being artificially propped up by 0% interest rates, do you understand that? I said be weary of investing now because it is fairly likely you will see a significant capital loss when rates do eventually rise, do you understand that? Run some numbers through the dividend discount model and see how that affects stock prices, even with a 2% increase in rates, let alone 5%.
Silver is far below it's historical average compared to the US$. I have put a little bit of money into it and will continue to.
[–][deleted] 1 point2 points3 points 11 years ago (22 children) | Copy Link
And you know when rates will rise? What happens if the stock market goes up another 30% before rates rise. What happens when the market doesn't crash because of rising rates?
Current valuations are generally supported by top and bottom lines that companies are posting, do you understand that?
Your reasoning behind silver is laughable.
[–]RPREALITY0 points 11 years ago [recovered] (21 children) | Copy Link
Do you have a finance or economics degree? I can run you through the maths but you seem to be misunderstanding to such a degree it does not seem useful for my time if you do not.
[–][deleted] 1 point2 points3 points 11 years ago (20 children) | Copy Link
I have the necessary math finance and economics background to understand what you are trying to say, which is why I challenged you on it. Id be interested in what your background is since you clearly advised people to not invest in markets due to all time highs.
You also obviously seem to think you know when rates will rise, which is funny because for the past 4 years people saying the same things that youre saying now have missed out on a massive bull market.
[–]RPREALITY2 points3 points4 points 11 years ago (19 children) | Copy Link
I said be WEARY of investing at an all time high, go burn all your money on a fire for all I care. QE is supposedly over, which means that the fed is at least signalling they think the USA economy has recovered, thus rates should rise accordingly. Did I ever claim to know when it will happen? No, or else I would be giving specific advice on fixed income securities.
Would you like me to run you through the maths / economic logic? At no point did I ever say the stock market is BAD. I think it is a fantastic investment and actually said the best thing for the majority of people to do is to get a passive fund (this is consistent with financial and economic theory). However, this is an advice thread, meaning people are likely to act on this information and since the least informed are the most vulnerable I am offering a different perspective to the '10% a year every year forever' thinking, which is very common.
[–]tits_out_forTheBoys 4 points5 points6 points 11 years ago (2 children) | Copy Link
the fed is at least signalling they think the USA economy has recovered
I find it laughable that people think our economy has recovered.
Interest rates haven't risen yet. The Fed only SAID they plan on raising them, but they never DID. Nor will they, because they cannot. Not if they want to keep our economy afloat.
What is a recovery?
We never had one!
Lost on our Fed is the essential truth that the recession is the recovery, it is the fix, it is the happy reversal of that which made us ill initially, including excessive consumption of housing. Recession is the market’s way of correcting the mistakes, the misallocations of capital, the labor market mismatches... If Bernanke were brainy he would understand that his unwillingness to cease ‘supporting’ the economy is the Green Monster of a barrier to the economic recovery we all crave. Yellen represents more of the same. Like Bernanke, her hunger for adulation will cause her to continue ‘helping’ the economy stay afloat, and in doing so, she’ll cruelly rob us of the recovery we so desperately desire.
Lost on our Fed is the essential truth that the recession is the recovery, it is the fix, it is the happy reversal of that which made us ill initially, including excessive consumption of housing. Recession is the market’s way of correcting the mistakes, the misallocations of capital, the labor market mismatches...
If Bernanke were brainy he would understand that his unwillingness to cease ‘supporting’ the economy is the Green Monster of a barrier to the economic recovery we all crave. Yellen represents more of the same. Like Bernanke, her hunger for adulation will cause her to continue ‘helping’ the economy stay afloat, and in doing so, she’ll cruelly rob us of the recovery we so desperately desire.
I strongly advise you to read that article and reconsider your economic viewpoints.
[–]guy_from_the_thing -1 points0 points1 point 11 years ago (0 children) | Copy Link
this times a million! they can't raise rates. It's all jawboning. When the bond bubble pops it will be the mother of all bubbles. Glad to see some people on here are not delusional regarding the main stream cheer leaders of the so called recovery.
[–][deleted] -1 points0 points1 point 11 years ago (15 children) | Copy Link
Why should people be weary of investing at all time highs?
QE is not supposedly over, it is over.
By telling people not to invest now you are saying you believe that rates will rise in the very near term.
What math and economic logic are you so desperate to run through?
[–]RPREALITY2 points3 points4 points 11 years ago* (14 children) | Copy Link
Why should the Dutch have worried about investing in tulips at their all time high? There is no doubt that stock prices are at all time highs largely due to ~0% interest rates. The reason to be concerned is that if the fed does raise rates soon (within a year or 2), which ending QE signals they will, is you will see a large drop in index prices, aka a capital loss.
Look at a company with a beta of 1 (you have the required background so I'm sure you know what that means), which is all equity financed and let's assume the MRP has been 5%.
Their current cost of equity is 6% and let's say since they grow at the same pace as GDP ~3%.
If they pay a $3 dividend each year and rarely change dividend policy (again, I'm sure you already knew this to be the norm), then their price today should be ~ 3/0.03 = $100.
Now let's say they up rates to 5% and because of this growth opportunities drops to 1% (projects become a lot less profitable with higher rates, which again, I'm certain you already knew...).
Now the price would be 3/0.04 or $75. That would be a 25% capital loss in 1 year.
That is why it is worth considering not buying at an all time high with rates at 0% and data suggesting they will rise in the short term.
This will be my last post on this matter, I have made my point and supported it with the academically accepted financial and economic logic. I do not believe you have more than a basic understanding of how finance / economics works and are probably falling victim to the Dunning-Kruger effect and I do not feel like playing professor to somebody demonstrating a fairly average level of reading comprehension ability.
[–][deleted] -2 points-1 points0 points 11 years ago (13 children) | Copy Link
Comparing tulipmania to the stock market is absolutely ridiculous.
There is no doubt that stock prices are at all time highs largely due to ~0% interest rates.
This is simply not true. As i pointed out before top AND bottom lines generally support current valuations.
The market also apparently does not agree with you as QE has ended and we haven't experienced anything like what you're describing. Using only the DDM to place a price on a stock is laughable.
You obviously have a tenuous at best grasp on the things you are trying to talk about.
[–]analt223 1 point2 points3 points 11 years ago (2 children) | Copy Link
Good dividend paying stocks. Taxed at 15% only (heh heh) is key. I make about 60k a year before taxes. I put the max amount possible into my 401k, and try to put about 1,000 to 1,500 a month into dividend paying stocks. Some of the high yield ones pay almost 1% a month. But even stocks that pay about 5% a year in dividends is much much better than anything you will get the old fashioned way sadly.
My passive income is about $850 a month now. More than enough for my monthly rent. Now im working on getting dividend income for my cell phone, gas for my car, and internet covered.
As a few others have suggested, cheap hobbies are key too. I go to garage sales all the time. You occasionally meet some kinda cute milf or something to practice flirting with too which can be fun. I used to be huge in collecting retro video games (video games get way too much hate on this subreddit btw, as long as you arent some WoW addict and can learn discipline video games are great), but the market got too demanding around 2009 and not enough supply. So I quit doing that. But the point was that it was cheap entertainment. Can not stress that enough.
You're investing more than 50% of your pre tax income?
[–]analt223 0 points1 point2 points 11 years ago (0 children) | Copy Link
pretty much. I have 1 major bill, rent. Its about 650/month (split a 2 bedroom with my sister). My car is paid for (although i will be buying a new one soon, this one has about 110k miles on it), and I paid of my student loans when i got my job after college (combined with the fact that i had only one small loan, since i had hope scholarship since i lived in south Georgia). Outside of minor bills (like i said, gas, twice a month trips to the grocery store, occasional eating out and casual dating, gym, etc), i have a lot of extra cash right now.
One tip I have to offer: be prepared to change companies and cities. If you really want to maximize your earnings, it has been well documented that people get larger raises when jumping to the next ship than when simply doing their job well and hoping they are noticed when the annuals come around:
http://www.forbes.com/sites/cameronkeng/2014/06/22/employees-that-stay-in-companies-longer-than-2-years-get-paid-50-less/
I have managed to double my income in two years by switching companies, then switching my job within a company twice. It required me to move three times, so now I'm playing catch up in terms of my social life, but being well-founded financially means that once I get a good group of friends and some inertia with women underway, I'll be better off for it in the long run.
[–][deleted] 11 years ago (1 child) | Copy Link
[–]Gbombay90 0 points1 point2 points 11 years ago (0 children) | Copy Link
Two options: 1) If you can find a GIC or high interest savings account that pays better interest than your loan put the money in there, you won't make a lot but it is FREE money at little to no risk (well not free to the taxpayers but you get the point)
2) Take the money and invest is blue chip stocks that pay dividends. This is what I did in 2010 when the provincial government gave me money I really didn't need for school. The dividend will typically be much higher than your interest rate and the capital appreciation (rise in the stock price) will be a bonus. This carries higher risk because of stock price declines, If you used this strategy in 2006/2007, panicked and sold in 2008/2009 you would have lost 25-40% of your money.
[–]lukins 1 point2 points3 points 11 years ago (0 children) | Copy Link
Bachelor Pad Economics. Worth the minimal cost to get. It as an absolutely red pill way to look after your finances. Discusses the recommended case of not getting married, but also discusses how to handle your finances if you decide to do so. I read it and highly recommend it.
[–]YourShadowScholar 1 point2 points3 points 11 years ago (1 child) | Copy Link
Some advice on how to actually make money would be more interesting than this personal finance copy/paste =/
[–]Night--Writer 1 point2 points3 points 11 years ago (1 child) | Copy Link
Great advice all around, so let me share some anecdotal evidence. Some of the best advice to get me 'on the board' (as my friend calls it) walked out his door with $20 in his pocket and turned it into 50k in savings within two years (Drug dealer at the time). He's naturally one of the most Red Pill people I've ever known. What does 'on the board' mean? It's your first 10k.
Lots of people envision the lavish life, but they live paycheck to paycheck as they buy a new car or a new apartment. Some have maybe 5k in savings, because to them that's a lot.
I took my buddies advice as he told me to save my first 10k before I think about anything else, after that I was on the board (monopoly reference in a way) and could actually start using that money to make money. This also lets you know the value of what it took to get that first 10k. My buddy is now taking his savings and is running a legitimate company where he takes his profits and puts it back into the business- he's doing phenomenal too.
But for me, in a few months I'll almost triple that 'on the board' number in savings and it's taken about 15 months to do it. Now I can spend a little here and there on myself- but my eye is still on the bigger picture. The next big thing for me is how I will invest that money. But for people who are broke as shit, living paycheck to paycheck, right now you need to 'get on the board'. Once you're there then the financial advice will actually apply to you (exceptions apply).
TL/DR: You need capital first- at least 10k. If you're not on the board right now with at least 10k, then work and save until you're on it.
[–][deleted] 0 points1 point2 points 11 years ago* (0 children) | Copy Link
10k is basics, got it. It's the first brick that will attract more bricks to build the walls of my empire.
[–]Mire_Lurker 0 points1 point2 points 11 years ago (1 child) | Copy Link
Wow guys. Amazing material. This has sparked my interest and looks like the key to being location independent and earning. I'm loving the stuff about Term deposits and compound interest.
Basically if you build the right account with enough cash in there it's a 'Mini-job' that can give you passive monthly/yearly/quarterly income.
My question is this if it's so easy why doesn't everyone do it? Is it just a discipline thing or what?
Because most people don't have the knowledge of the existence of those things, nor do they have people in their circle that talk about these things. Everybody is near sighted and don't think ahead.
Also, it's not easy at all, keeping track of those things. The hard work you put into it will reward you in the future.
[–]1favours_of_the_moon 0 points1 point2 points 11 years ago (0 children) | Copy Link
https://geiststeuerung.wordpress.com/2014/04/18/financial-planning/
"Many people on RedPill subreddits have requested that I do a post on financial planning. I thank you for your interest, and I now have time to do so, and am happy to oblige.
The first thing you should do is set aside 10% of every paycheck. Everytime you get paid, you should put 10% aside. Now, this is a hyperinflationary phase, so it is not a good time for “saving,” per se. However what I recommend is to put that money into commodities, primarily precious metals."
[–]zephyrprime 0 points1 point2 points 11 years ago (0 children) | Copy Link
Redpill is primarily about women. Redpill knowledge in general on the internet is primarily about politics. The reason you don't hear us talking about finances much is because most good financial common knowledge that most people fail to apply because they are short sighted idiots with no will power. There isn't nearly as much financial knowledge that is secret forbidden knowledge and hence redpill.
[–][deleted] -1 points0 points1 point 11 years ago (11 children) | Copy Link
Compound Interest is insane:
If you put in $10,000 in an account and leave it then in 25 years at 10% avg. profit it will have $100,000 in it while making $10,000 onwards per year.
[–][deleted] 6 points7 points8 points 11 years ago (9 children) | Copy Link
If u somehow would manage to get 10% anually over 25 years you would be the king of hedge funds.
But this isnt 1970 anymore. Do your compound interest calculation with 1% to get a feel of what u can expect in todays world
[–][deleted] -1 points0 points1 point 11 years ago (8 children) | Copy Link
King of hedge funds or ... any schmuck in your basic total market index fund. Either way.
[–]RPREALITY4 points 11 years ago [recovered] (7 children) | Copy Link
There is a difference between a geometric mean and an arithmetic mean. The index funds quote their arithmetic mean for this very reason. If you invest $10 and the market goes up 10% in year 1, down 5% year 2 then back up 10% in year 3, your arithmetic mean return is (0.1-0.05+.1)/3 = 15%. But that is not the way compound interest works. When you invest your $10 in year 1 it becomes $11, then when the market drops 5% it becomes $10.45, then when it goes up 10% in year 3 you have $11.495, which is obviously lower than the $11.50 you would have expected (before fees and taxes).
Now when you start throwing in multiple negative years, high inflation, taxes etc this schmuck getting his easy 10% in index funds for 25 years is not too easy to find.
[–][deleted] 3 points4 points5 points 11 years ago (5 children) | Copy Link
CAGR of the S&P500 is just north of 10%, over the past 50 years. Even over all the data we have, going back to the late 1800s before modern economics were applied, it's 9.11%. Total market outperforms the S&P500 slightly. So what's the problem?
http://www.moneychimp.com/features/market_cagr.htm
[–]RPREALITY 2 points2 points2 points 11 years ago [recovered] | Copy Link
One of the first things they teach you in finance school is that a market portfolio is only as good as the market proxy. Going all the way back to the 1800s is silly, the market is nothing like that. I would argue going back any further than the GFC (~2007) is useless too, since the market conditions are vastly different now. Using your same calculator, going back to 2007 and including inflation (which matters in reality), the actual return has been ~5% or about half of that magic 10%.
There is no doubt the stock market and other markets are great investments but just be aware it isn't magic and there are other things to consider than average return over 200 years. I have another post ITT about interest rates and how they affect stock prices, you might find it interesting given the current climate of 0% interest rates in the US.
Or is it the same as 2009? Going back to 2009 with the calculator gives a figure of about 17% annually, that's much higher than 5.
We weren't talking inflation-adjusted values.
You can cherry pick dates to support any value you like. Rates won't stay low forever. Best you can do is look at the dozen or so times we've done all this before, and plan accordingly.
[–][deleted] 1 point2 points3 points 11 years ago (1 child) | Copy Link
What the fuck is finance school?
[–]GhostInTheRedPill -1 points0 points1 point 11 years ago (0 children) | Copy Link
*Past performance does not guarantee future results.
That is actually not at all what people mean when they talk about returns. They mean real returns.
Why are you getting downvoted? This is good advice, I'll keep that in mind.
[–]photovoyeur 1 point2 points3 points 11 years ago (5 children) | Copy Link
I'm studying forex at least two hours a day (i'm graduated in economics and already familiar with some concepts), in June i'm gonna start with a virtual/simulated account and maybe in the next year i will drop some money on it
[–]1independentmale 4 points5 points6 points 11 years ago (4 children) | Copy Link
One thing to watch that I'm sure you know, but I'll say it just in case: Make sure you understand how your actual transactions will affect the market.
I did virtual day trading for a few months and made a lot of money on paper, so I put some real money into it. Unfortunately I failed to consider the effect of my trades on the market. The penny stocks I played with didn't have a lot of volume so my trades had actual impact. Lost thousands of dollars in a few seconds when similar trades on paper always made money. I did manage to get that money back through a series of less risky trades over several weeks.
Stick with stocks that move huge volume so your transactions are only a tiny pittance of the whole.
[–]photovoyeur 5 points6 points7 points 11 years ago (0 children) | Copy Link
forex market and stock market are two different beast
[–][deleted] 4 points5 points6 points 11 years ago (2 children) | Copy Link
You think somebody posting here has the money to move a forex market?
[–]photovoyeur 2 points3 points4 points 11 years ago (0 children) | Copy Link
no single person in the world can move the forex market, maybe a large bank can move it and only for a short time.
[–]1independentmale 0 points1 point2 points 11 years ago (0 children) | Copy Link
No, I suppose not. I read "forex" but my mind said "stock."
[–][deleted] -4 points-3 points-2 points 11 years ago (2 children) | Copy Link
Modern media and people working in the banking/finance/retirement industry will insist you 'send money to Wall Street' through 401Ks, mutual funds, etc. Then you have a lifetime of fees siphoned off your accounts. Obviously, some money in Wall Street is OK, such as when a company matches your 401K contribution. They will rarely tell you to invest in real estate, collectibles, local business, private mortages, assets to run side gigs, etc.
Real estate: if you have good credit, W2 employment, downpayment, the banks are gifting you a ridiculous low interest rate to set-up income for life. The property doesn't have to be in your area, either. It could be anywhere in the country.
Collectibles: biggest secret among mega-wealthy. Vintage watches, guns, stamps, antiques, classic guitars, etc will double in value every 7-10 years.
Local business: this could be a start-up, but the start-up game is complex. Just local coffee shops, theatres, etc. often have local investors. I've been approached to be part-owners of children sports establishments (v-ball, swimming) because they are highly profitable but need upfront cash.
Private mortgage: this is like online lendingclub, prosper, but you can deal without a middle man, especially if there are assets backing the loan.
Assets to run side gigs: you can rent assets online now, or buy/sell off craigslist with a truck, and if you have time. Many people sell items at low prices because they need money quickly.
[–]milkyboon 2 points3 points4 points 11 years ago (0 children) | Copy Link
Gotta put an extra caution on Collectibles.
"You can only sell a collectible to a collector." Other than that, these Collectibles are worthless to normal folks.
[–]TheLife_ -1 points0 points1 point 11 years ago (0 children) | Copy Link
My method is this. Pre-30, there are four things I put money into. Silver, stocks, savings and experience.
Silver - I receive two 1oz coins every year for my birthday and at Christmas time. I watch the market and when the price is low, I'll buy one or two more. I keep a simple spreadsheet to claculate the total cost and average cost of each coin, counting the gifts as $0.00. I won't sell it, per se, but tracking the value is going to give me an asset in the long run I can leverage against.
Savings - I put $100-$200 a month into this, divided up between several savings accounts. Keeping it separate keeps the amounts down, which stops me being motivated to spend it. When the accounts reach a certain amount, I then turn them into term deposits at the bank. It's not gaining much interest, but it's highly stable and highly liquid. It looks good on my financial profile when going for a loan and again will help to provide leverage in future loan requests.
Stocks - Not a lot of money goes in here. I'm mostly dabbling and turning it into a hobbie. I've only just opened the account up and have begun setting up some watch lists, mostly in the tech sector. This is probably the least important part of my method, but is tied intrinsically to the single most important part.
Experience - The most important part of a pre-30's financial plan. Get into a bit of debt and learn to manage it. Go out and get educated. Spend money on courses, licenses, renting, holidays. Gain skills and interests. Spend money on your car/bike. Start and fail a business. Your financial situation can recover from setbacks at this age, and you will gain a lot of confidence playing the entreneur role. I have a personal loan I used to buy a motorbike, a credit card which is recovering from being maxed out, and am building a student loan to get a degree and a diploma.
My 1 year goal is to finish my studies (completely achievable) and next year I plan to start a business.
[–]FallenHighSchoolJock -5 points-4 points-3 points 11 years ago (5 children) | Copy Link
Making money just to get women is a fools game and will leave you unfulfilled. Focus on your mission and doing what you love or what means a lot to you and try and be successful in that field. You'll be a lot happier than if you score some golddigger who'll just divorce rape you. This shouldn't be relevant to TRP. If you want advice on money go to /r/personalfinance
[–][deleted] 6 points7 points8 points 11 years ago* (4 children) | Copy Link
I thought this was a place where men discussed all things related to manhood. How does finances not fal into it? You want this sub to be all about what feminists are writing and analyzing cuckold posts from /r/relationships ?
[–]dan_legend -4 points-3 points-2 points 11 years ago (3 children) | Copy Link
I'm sorry but Fallhighschooljock is right, all your financial questions can be answered unbiasedly from /r/personalfinance. Hell it was /r/personalfinance that first got me asking why i threw so much money away on women when it is 10 times more attractive obviously to have lots of money saved up than spending lots of money like an idiot.
Is that so? Maybe we should rename this sub to /r/thingswomendothatmenhate/ or /r/feminismisthenewnaziparty/
Get out of here man. I'm trying to raise interesting discussions about things that can benefit all the men in the sub that didn't get that solid father figure to walk them through these things.
[–]dan_legend 0 points1 point2 points 11 years ago (1 child) | Copy Link
So point them towards personalfinance you fucking asshat.
Tell that to the 211 dudes who support this post, you dingdong.
[–]CommodoreSillyPants -1 points-1 points-1 points 11 years ago [recovered] | Copy Link
Mess around with stocks. You can set up an account with scottrade with only $500. You'll make some bad trades starting out but then you'll figure it out and gain a steady income off it.
I started with $500 in my account about 9 months ago, and now I'm pretty damn near 6 figures.
[–]YourShadowScholar 2 points3 points4 points 11 years ago (3 children) | Copy Link
That sounds...unbelievably unlikely. Why is everyone else saying you just lose money doing that?
You have to research it and be patient with it. They probably gave up after the first few bad trades. The stock market takes persistence.
[–]YourShadowScholar 2 points3 points4 points 11 years ago (1 child) | Copy Link
What about all the people saying even professionals never beat the market and whatnot?
[–]tyranus89 -1 points0 points1 point 11 years ago (0 children) | Copy Link
Lately, TRP has turned into this ... sex focused sub about spinning plates
Look at the sidebar. Directly under "Welcome to The Red Pill":
The Red Pill: Discussion of sexual strategy in a culture increasingly lacking a positive identity for men.
[–]420butfukkk -1 points0 points1 point 11 years ago (1 child) | Copy Link
Read "Rich dad poor dad." Here's a very brief overview of the book: buy assets, don't buy liabilities. Assets are revenue generating objects that put (hopefully) more money in your pocket than they took out. Liabilities take money out of your pocket and put nothing back in.
[–]TheG3cko 3 points4 points5 points 11 years ago* (0 children) | Copy Link
OwO What is this?
[–]I_HaveAHat -1 points0 points1 point 11 years ago (0 children) | Copy Link
As a 20 year old, what can I do at a min. wage job and schooling to secure funds for the next couple of years, until I can get a real job?
[+][deleted] -15 points-14 points-13 points 11 years ago (33 children) | Copy Link
Not sure how many people will agree with me on this, but it's important to start accumulating physical gold and silver while prices are at these low levels. As a college kid, silver is probably your best bet. Find a coin shop in your area and buy 1 oz at a time regularly.
YouTube: Peter Schiff Was Right
[–][deleted] 5 points6 points7 points 11 years ago (16 children) | Copy Link
Well the thing about gold and silver is they are speculation rather than investments. They don't actually pay out dividends or rent money, etc. so they can be good to have a few of but they shouldn't be your main asset so to speak.
[+]tits_out_forTheBoys -6 points-5 points-4 points 11 years ago (15 children) | Copy Link
In the short-term, it's speculation. But it's nearly a long-term certainty to gain a hell of a lot of value on the dollar.
There's an incredibly long explanation for why that is, but to put it simply, the only reason why our economy is afloat right now is because the Fed has been recklessly inflating the money supply. Look at this graph...in the last 7 years, our money supply has multiplied by FIVE.
The only reason why the dollar's exchange value remains intact is because the central banks abroad holding dollar-denominated currencies have followed suit with over-inflating their money supply (through QE and interest rate manipulation). But just because two skydivers are falling in tandem, doesn't mean they both won't hit the ground.
0% interest rates have already completely lost their effect on GDP growth, and QE is becoming less and less effective (which is why there's been three rounds of these emergency stimulus measures). Once QE loses its remaining effect on our economic growth (and believe me, there will be a QE4), then the Fed will have run out of its ammunition to influence our economic growth in the short-term. When that happens, inflation will spiral out of control (i.e. hyperinflation) causing the dollar to lose much of its value.
And whenever the dollar loses value, the price of hard assets (precious metals and real estate) receives a big boost in their value. Gold is one of the better hard assets to accumulate because it's retained worldwide value over the last 6,000 years. Considering that an eventual collapse of the dollar's value is pretty damned predictable (see "note" below), it's crucial for investors to accumulate gold in their portfolios as a means for long-term economic well-being.
Note As the original commenter mentioned, read up on Peter Schiff's viewpoints for the clearest explanation of why the U.S. dollar will predictably collapse down the road. Also, Steve Forbes wrote a book in May 2014 called Money: How the Destruction of the U.S. Dollar Threatens our Economy.
[–]Kyuzo_ 2 points3 points4 points 11 years ago (0 children) | Copy Link
Realistically, the Japanese economy is probably a much better example for failed stimulus measures and economic stagnation than the gloom and doom you're predicting, but that doesn't help economists sell newsletters.
Markets have this lovely way of adjusting in the long run to meet changing conditions.
[–][deleted] 5 points6 points7 points 11 years ago (2 children) | Copy Link
Hedging against the dollar is a good idea, but I think one can do better than precious metals like gold. Transaction/holding costs are relatively high, and they don't produce any value compared to something like real estate. I'm inclined to agree with Warren Buffet's assessment in the 2011 letter to Berkshire Hathaway shareholders. I've pasted the relevant bits below for convenience.
Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A. Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B? .... A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge).
Can you imagine an investor with $9.6 trillion selecting pile A over pile B?
....
A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
A bit (<5%) of gold in the portfolio as an inflation hedge / speculation / fun-money probably won't hurt for most people, but I wouldn't recommend a lot of it for someone unless they were wealthy enough already and were willing to exchange future gains for an extreme inflation hedge.
The current valuation of gold reminds me of how tulips were so overvalued back in the 17th century, except gold doesn't wilt.
[–][deleted] -1 points0 points1 point 11 years ago (1 child) | Copy Link
Gold is something that you can own completely without any aspects to threaten the ownership. Land and businesses are vulnerable to taxation and legislation. Gold is great as buy it and forget it and it is probably the safest investment you can find. Yes it is volatile, but unlike most other investments there is a limit on how much the price can drop and you never have to put your trust in third parties. Gold has been valued for tens of thousands of years and the most sought after thing of the most powerful men in the history of the world.
without any aspects to threaten the ownership
Gold is just as vulnerable to taxation and legislation. And theft. Gold isn't free to store (unless you have a nice vault lying around), and if you're not trusting a third party with it, then you're taking on the burden of protecting it yourself.
Gold has been valued for tens of thousands of years...
The valuation of gold is pretty shaky, and is not unlike modern currencies in that it's largely valued based on peoples' perceptions rather than something more tangible. Virginity was valued highly in the past too for thousands of years, and I think around here we know how drastically that perception has changed in the last 50 years or so.
[–][deleted] 0 points1 point2 points 11 years ago* (4 children) | Copy Link
Ya but you can always invest overseas and aren't assets like stock or housing protected from inflation similar to gold since they aren't actual dollars? They just aren't protected from economic collapse, although you don't only have to invest in the US only or at all.
[–]tits_out_forTheBoys -2 points-1 points0 points 11 years ago* (3 children) | Copy Link
Stock prices are not protected by inflation. The price of a stock is determined by the underlying value of its business. Businesses within the United States are primarily funded by dollars. If the dollar collapses, stock prices will go down with it (relative to the dollar's market value). If and when that happens, investors who pooled most of their money into hard assets - specifically gold and precious metals - will be better off than anyone else.
But keep in mind that's a long-term outcome that won't realistically occur for at least a couple of years. During that time, you're going to want to be invested in equities. As the money supply continues to increase, asset prices will continue to rise, and publicly traded businesses will continue to have the ability to fund their share buyback programs with minimal interest debt, thus providing a boost to their EPS that's independent of the growth in their net income. So your optimal short-term strategy is to be invested in equities, particularly the companies returning cash to their shareholders (through dividend payments and stock buyback programs).
For the long-term, keep an eye on how QE is affecting our GDP growth. Once that stimulant loses its effect, you'll need to shift your money into gold and other hard assets, because that's when the value of the U.S. dollar will begin to collapse. At that point, the Fed will no longer have ammunition to fund the increasingly demanding principal repayments on the government's gigantic debt burden.
You do know that QE is over right? Why do you keep talking about it like it is ongoing?
Your comment regarding inflation is also wrong.
[–]tits_out_forTheBoys -2 points-1 points0 points 11 years ago* (0 children) | Copy Link
The only reason you think it's wrong is because you're viewing "inflation" as defined by the Keynesian school of economic thought.
As defined by the Austrian school of thought, "inflation" is the expansion of the money supply. In the short-term, yes, inflation is good for the market value of equities because it boosts asset prices across the economy.
But my comment was referring to the end-game of the Fed's reckless expansion of the money supply over the last decade. That end-game is hyperinflation -- or uncontrollable expansion of the money supply, as deemed necessary by our government's mountain of debt obligations. It's a strong long-term likelihood, and it will cause corporate America to suffer.
In the short-term (the next couple of years), I agree, there's plenty of gains to be made at the back end of this policy-driven, secular bull market. At the end of that bull market will be another epic crash, and it will have been caused by the Fed's incredibly irresponsible expansion of our money supply.
Right now, stocks are artificially inflated. Due to minimal interest debt, companies are returning cash to shareholders (through dividends and share repurchases) at a rate that represents a historical high point. Because of that fact, we can logically make two conclusions:
Dividends and share repurchases are a huge reason why the market is currently priced where it is. Share repurchases have boosted corporate EPS to a level which allows the market's P/E ratio to fall relatively in line with its historical ranges. Now, I'm not saying that it shouldn't be priced where it is. What I am saying, however, is that the market is currently dependent on the minimal interest rate environment. Why? Because corporate net income, as a percentage of stock prices, remains unimpressive in comparison to historical levels. While this piece of information won't have an effect on the price of the market in the short-term, it's just one of the many signals that the market is headed for a long-term crash.
Because cash is being returned to shareholders at a historically high rate, companies are reinvesting money into their own businesses at a historically low rate. This is yet another sign that long-term gains are being sacrificed for short-term prosperity. Just another signal that this is a bubble that's forming, and a crash is on the long-term horizon.
Now, let's say the Fed doesn't raise interest rates and instead decides to announce QE4. Let's say that just like the previous 3 rounds, QE4 is less effective than its predecessor and never accomplishes its goal of "recovery" (also like its predecessors). Let's say that because of that, the Fed does yet another round of quantitative easing which eventually loses its entire stimulative effect on our economic growth. What happens next? At that point, the Fed is out of ammunition for keeping the economy afloat. The end of QE will prick the current bubbles in stocks, real estate, and bonds, just as higher rates pricked the housing bubble in 2006.
Zero percent interest rates have allowed the federal government to continue operating under a crushing debt load. Now, given that information, let's say the scenario in my previous paragraph plays out. Escalating levels of debt will prevent the Fed from raising interest rates high enough to break the inflationary spiral. The last time that inflation really got out of hand was back in the early 1980s when a boldly inspired Federal Reserve was able to put the genie back in the bottle by hiking interest rates all the way up to 18%. The economy not only survived that harsh medicine, but it prospered as a result. Does anyone seriously believe that we could survive even a quarter of that dosage today?
Once the Fed runs out of stimulative ammunition, it will be powerless to contain the expansion of the money supply that's necessary to fulfill the government's rising mound of debt obligations. The endgame will be hyperinflation.
[–]tits_out_forTheBoys -3 points-2 points-1 points 11 years ago (0 children) | Copy Link
Because it's predictable that another round will be announced in the coming months...it's the only remaining ammunition for the Fed to keep our economy afloat. Peter Schiff explained it best:
But I don't even believe that a burst in the energy bubble is even our biggest worry. Much greater and more fragile bubbles likely exist in the stock, bond and real estate markets, which have also been inflated by the easiest monetary policy in history. More importantly at present the Fed lacks the firepower to fight a new recession that a bursting of any of these bubbles could create. Since interest rates are already at zero, it has no ability to aggressively cut rates now in the face of a weakening economy. All it can do is go back to the well of quantitative easing, which is exactly what I think they will do. Despite the widely held belief that 2015 will be the year in which a patient Fed finally begins to normalize rate policy, I believe the Fed has no possibility of withdrawing the stimulus to which it has addicted us. QE4 was always much more probable than anyone in government or on Wall Street cares to admit. A recession and a financial panic caused by sub $60 oil will significantly quicken the timetable by which the Fed cranks up the presses. When it does, oil could once again increase in price, along with all the other things we need on a daily basis. That should finally dispel any remaining illusions that the Fed could successfully land the metaphorical plane. More QE may minimize the damage in the short-term, but I believe it will keep us trapped in our current cocoon of endless stimulus, where we will slowly suffocate to death.
But I don't even believe that a burst in the energy bubble is even our biggest worry. Much greater and more fragile bubbles likely exist in the stock, bond and real estate markets, which have also been inflated by the easiest monetary policy in history. More importantly at present the Fed lacks the firepower to fight a new recession that a bursting of any of these bubbles could create. Since interest rates are already at zero, it has no ability to aggressively cut rates now in the face of a weakening economy. All it can do is go back to the well of quantitative easing, which is exactly what I think they will do.
Despite the widely held belief that 2015 will be the year in which a patient Fed finally begins to normalize rate policy, I believe the Fed has no possibility of withdrawing the stimulus to which it has addicted us. QE4 was always much more probable than anyone in government or on Wall Street cares to admit. A recession and a financial panic caused by sub $60 oil will significantly quicken the timetable by which the Fed cranks up the presses. When it does, oil could once again increase in price, along with all the other things we need on a daily basis. That should finally dispel any remaining illusions that the Fed could successfully land the metaphorical plane. More QE may minimize the damage in the short-term, but I believe it will keep us trapped in our current cocoon of endless stimulus, where we will slowly suffocate to death.
[–]Kingoffistycuffs 0 points1 point2 points 11 years ago (0 children) | Copy Link
Something else to keep in mind with the dollar is, that it is currently the only currency that is able to be traded straight across for oil. That's why currency abroad is devaluing at a similar rate as the petro dollar. also why any country that try's to sell oil in there currency is swiftly invaded there government toppled and one that likes to play "nice" is brought into power
[–][deleted] -1 points0 points1 point 11 years ago (4 children) | Copy Link
Gold moving from 200 to 1400 is a factor of 7..
[–]tits_out_forTheBoys -3 points-2 points-1 points 11 years ago* (3 children) | Copy Link
And it will be a much larger factor in the coming years when the value of the dollar is destroyed.
In a healthy economy, a country's money supply grows at a similar rate as it's real economic growth (i.e. the amount of goods and services being produced within the economy). Well, the U.S. has had very little real economic growth in the last 7 years, and yet our money supply has grown five-fold. That means that our economy is currently artificially inflated.
The Fed continues to feed us the following narrative: “The economy is in genuine recovery, but it still requires ongoing emergency stimulus from the Fed.” Anyone who believes that bullshit is clearly not thinking critically. The current "recovery" is already 73 months old, or 15 months longer than the average. How will the Fed deal with another contraction (which seems likely to begin within the next year or two) with rates still at or very close to zero? QE appears to be the only option.
Given that reality, the big question is no longer whether the Fed will raise or lower rates, but by how much they will ramp up or taper off QE. When the economy contracts, QE purchases will increase, and when the economy improves, QE will be tapered, and may even approach zero for a time. But interest rates will always remain at zero or, at the least, stay far below the rate of inflation. This will continue until QE loses its potency as well.
And when QE finally loses its potency, the Fed will lose control of inflation, due to the continual need to rapidly increase the money supply in order to pay back the constantly increasing, mammoth-sized debt burden of the U.S. government. When the money supply spirals out of control, we'll be hit with hyperinflation and the value of the U.S. dollar will rapidly decrease, and possibly even be destroyed altogether. In either scenario, gold will be a lot more expensive than it is right now. Unlike the dollar, gold has intrinsic value and has been recognized as an international medium of exchange for over 6,000 years.
Do what you will, but I'm accumulating gold. The Fed is incentivized (due to term elections) to keep the economy afloat in the short-term at the expense of our long-term health. Which is exactly why interest rates haven't gone up in the last 8 years, why there's been 3 rounds of QE, and why another round of QE will be announced as the energy market bubble nears its collapse. It's because the Fed isn't incentivized to care about our economy's long-term well-being, the only thing that matters to them is continuing to grow the U.S. government by recklessly inflating the money supply, which conveniently makes our economy appear healthy in the short-term.
Well it's not healthy...it's doomed for eventual failure due to the eventual collapse of the dollar's value. Consider the fact that China is by far our largest creditor. They've been swapping our currency like crazy, in addition to liberalizing their gold markets in an effort to reduce their reliance on the U.S. dollar.
[–]merodiaj 2 points3 points4 points 11 years ago* (2 children) | Copy Link
I really hope nobody takes this seriously.
As long as the people and corporations of the worlds largest economy need to acquire dollars to pay their taxes, the dollar will remain valuable.
If you go 100% all-in for gold, you will be forced to sell gold periodically to (1) pay your taxes and (2) buy stuff (food, electricity, etc.) from other people, so that they can pay their taxes.
Gold is at a 5 year low and with commodity prices everywhere plunging, there is no recovery in sight. Even 10 year oil spot prices, and black gold is more liquid than yellow gold, are at all-time lows. Unless you bought gold in 2005, you basically lost money or you are just breaking even.
QE is only necessary because the failings of the EU, Japan and the BRICS means that the USA is the only large and safe economy in the world. This increases the demand for dollars. So the Fed must either keep supply steady (i.e. limited) and allow the price of the dollar to skyrocket (deflation, which means your $100K mortgage or business loan is now all of the sudden a $200K beast pushing you into bankruptcy -> economic destruction of US small businesses and home owners), or they must pump additional dollars into the system to satisfy demand (QE).
Through QE they sell dollars in exchange for bonds, stock and other assets. So if/when the demand for dollars dries up, they can use those capital assets to buy back dollars, keeping the value of the dollar steady in the future.
Those almost-austrian Swiss are in the same boat as Europes safe haven. They hate QE, but they are also doing it on a massive scale (relative to their smaller economy), because otherwise the Swiss Franc would deflate so hard that their economy would tank. They are buying up Euro-bonds like there is no tomorrow.
The Fed is far from bankrupt. They didn't give away money for free. They have acquired huge, gigantic, reserves of liquid capital.
You realize that by betting against the dollar, you are betting against the Fed and the rest of the US Government, right?
Literally the most powerful organization in the world.
They even have the power to confiscate your gold, your land and anything you own if they deem it necessary. You will bankrupt yourself if you fight them. Better to join them.
[–]tits_out_forTheBoys -2 points-1 points0 points 11 years ago* (1 child) | Copy Link
Whether or not people take me seriously, I'm speaking the truth.
In 1971, the Nixon Shock ended the convertability of the U.S. dollar into gold. As of 2011, the Fed owned 75% of Forex gold reserves, a ~$460 BN value, representing more than 10% of its balance sheet.
If gold is such a poor investment, then why does the Fed hold so much of it? In 2011, Ron Paul asked Ben Bernanke that very same question, to which he replied "Because it's tradition."
Now, if you want to buy into all the bullshit that the Fed spins out to the public, be my guest. If you want to hold onto your ego-invested beliefs in Keynesian economics, which is inherently illogical, that's your decision.
But I personally took the time to re-learn economics after studying it in college, and it's now abundantly clear to me that the government-mandated Keynesian school of thought that's taught in colleges across the country is a complete farce. The Keynesian school of thought is meant to delude people into thinking that our central banks are acting in the best interest of the economy...when in reality, their entire purpose is to help the government grow (by inflating the money supply, encouraging a mammoth-sized debt burden, and providing the government the means to rapidly increase spending...which is exactly how the government grows in size).
No, that must all be wrong because it's not what any of the economic "experts" have been taught. But little do they know, we were all taught a lie! Consider this the Financial version of TRP...Austrian economics is the only true way to gauge the health of our economy. And without understanding the Austrian school of thought, everyone who thinks they "know" how the economy works (i.e. the ego-invested Keynesian "experts") don't have a damned clue how it really works. Anyone who jumped on that train is headed down a path of financial destruction. I'm happy af that I'm not one of those people because I'll be ready for when shit goes down. And I'm proud to say it's because I was able to think for myself, consider opposing viewpoints (i.e. Austrian economics), after which I made a complete paradigm shift as it relates to the field of economics. And I honestly pity the Keynesian apologists who have no idea where the economy is heading, or even the current state of its health.
But if you were willing to swallow TRP, then you sure as fuck are capable of swallowing the financial RedPill. But that decision is yours to make...just understand that the stakes are a bit higher for this pill, so this decision is an important one.
[–]merodiaj 0 points1 point2 points 11 years ago (0 children) | Copy Link
In 2008 I donated to the Ron Paul compaign and I was fully supporting Lew Rockwell and the Austrians. (I'm still ashamed that if you Google my name, you'll find articles I wrote in support of Ron).
But all those guys who followed Peter Schiff, Gary North, etc. lost a lot of money.
The red pill is about reality. And reality is that if you follow Warren Buffet's investing advice (stocks), you'll be much better off than if you follow Peter Schiff (gold), because gold is just a shimmering metal, while stocks are real capital goods producing real products and services in the real economy.
But do as you wish.
[–][deleted] 2 points3 points4 points 11 years ago (5 children) | Copy Link
Why is it important to accumulate gold and silver?
Peter schiff is a clown, and has been spouting bullshit for his entire career. A broken clock is right twice a day.
[–][deleted] -2 points-1 points0 points 11 years ago (1 child) | Copy Link
He recommended buying gold at $250. He's been right all along. Study Austrian economics.
[–]tits_out_forTheBoys -2 points-1 points0 points 11 years ago (2 children) | Copy Link
Peter schiff is a clown
Why, because that's what the media's saying? You've been brainwashed into disrespecting one of America's most knowledgeable economic theorists.
You know why me and llcjer support him? Because we actually read his shit. Accepting his views requires an ability to think for yourself. It's similar to the paradigm shift that we all made after swallowing TRP.
[–][deleted] 0 points1 point2 points 11 years ago* (1 child) | Copy Link
Keep telling yourself that. Here's an idea: you keep hoarding gold and other precious metals because the end is right around the corner. See how you feel in 40 years.
Peter Schiff sounds really smart to people who don't know better.
[–]tits_out_forTheBoys -2 points-1 points0 points 11 years ago (0 children) | Copy Link
right around the corner
I never said that. But I do believe it's 2 to 5 years down the road. And I'll continue to be invested in equities until I see the signals that the crash is right around the corner. Why wouldn't I want to reap the benefits of a stock market bubble in the process of forming? I'm just saying that I'll be hedged for the inevitable eventuality of a crash in not only the equities market, but also the likely the crash in our currency's value.
[–][deleted] -1 points0 points1 point 11 years ago (7 children) | Copy Link
Isn't it good to wait a while? It's not nearly as low as it was pre-Iraq war
[–]H42 1 points1 points1 points 11 years ago [recovered] | Copy Link
You buy every week. It is dollar cost averaging. You can never truly predict the bottom of a market, so by always buying a small amount regularly, you will do ok.
[–][deleted] 1 point2 points3 points 11 years ago (4 children) | Copy Link
Won't fees from frequently trading/buying eat up a lot of profit?
[–]H42 0 points0 points0 points 11 years ago [recovered] | Copy Link
Not really. The point of stacking is to acquire a hoard. You buy and hold.
It is possible to buy metals at, or below spot price. Usually a small premium is paid more than spot.
[–]merodiaj 0 points1 point2 points 11 years ago (2 children) | Copy Link
I don't want to be mean, but you have drank the kool-aid and you are losing a lot of money. Just the fees you pay to the banks to buy gold are chipping away at your net worth.
Please, fire up Excel and calculate
(a) how much you have spent on Gold to acquire your hoard,
(b) how much you would receive if you had to sell it today at the best price you can get (which will be significantly below spot) and
(c) how your net worth would have looked if you had invested in low-fee index funds. I personally like high dividend ones.
This will be a bitter pill to swallow, but they have lied to you.
[–]H42-1 points 11 years ago [recovered] (1 child) | Copy Link
I have never paid any bank when buying metals.
When I have sold metals, I get more than spot. There is a ready market at www.realcent.com and www.bullionstacker.com, if you participate in the forum and get a good reputation.
Presently, spot price has increased my hoard's dollar value by 46.5%, from what I paid in 2008 & 2009.
Who are them those "they" guys? Nobody I've spoke to about metals investing has lied to me. Perhaps your guys have lied to you?
I'm on board with you, H42.
It's funny how you're being accused of being deluded when merodiaj is vomiting out the same bullshit we hear the media spinning out to us.
Newsflash, merodiaj: It's typically the commonly accepted beliefs that need a reality check. The people who hold the unpopular views are the men who've thought for themselves, and likely possess some knowledge that you've yet to attain.
Or you can keep going around acting like you already know everything about effective financial management, feeling good about how your beliefs are commonly accepted and therefore validated. The day your portfolio loses a large chunk of its value, you get to say "Oh well, nothing I can do about bad luck!" But the only reason it'll be "bad luck" is because you decided to pigeonhole your financial viewpoints according to the widespread, commonly accepted beliefs. And to be honest, that contradicts the entire premise of this sub -- using free thinking in order to unveil and accept life's realities.
[–]disorderly -1 points0 points1 point 11 years ago (0 children) | Copy Link
We'll probably never see that again. Don't forget how much inflation has taken place over that time.
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