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Zooey

Investing

investment poll   

4 members have voted

  1. 1. How do you invest your money?

    • property
      2
    • individual stocks
      2
    • individual index funds
      1
    • mutual funds
      0
    • electronically traded funds
      1
    • bonds
      0
    • crypto / gold / beanie babies
      2
    • I don't (I keep my money solvent and lose >5% a year thanks to inflation!!!)
      1


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Curious how y'all handle your money.

I was lucky and had a job with matching 401k benefits that automatically invested in various funds for me, but I no longer do. As a result I'm trying to figure out what kind of spread (e.g. 25% large cap funds, 25% ____ etc, 10% intl etf, ...) to set up for my portfolio going forward and would love to hear y'all's mid-20s-to-adulthood thoughts and experiences on this topic

 

(Does this break any rules? I don't know which it would, I guess I just never saw trading discussions back in the day since mostly everyone was <18. I am not a licensed broker and this is not financial advice? By the power of greyskull?)

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I struggle to see how it would realistically break any rules of old. I simply think topics of this kind did not exist because the community as a whole was not old enough to actually debate this kind of topic. That said, as long as it is just a theoretical discussion on the subject of investments, there ought to be no harm, and thus no foul. :tongue:

To add to the discussion, I would say that all of this depends on several factors, such as your personal desires, your income, the place you live (or want to live), availability of good options, and such. For me, my first investment was to first buy a house, and I am currently downpaying that loan to remove future interest rates. I calculated that this would be more valuable to me in the long run, rather than paying down the loan for longer, but then also investing in an index fund. I also have a minor 1-time investment in a spread of minor investments that could, potentially, have insane payouts (stocks and cryptocurrency), but I consider to be "lost" and I have no expectations on any payout. It is your typical "fire and forget" investment, and I only spent as much as I would use if I were to walk into a casino for gambling. Besides, who in their right mind would make a silly currency called Etherium valuable, anyway? :laugh: 
 

One of the major experiences I have learned is to not underestimate the value of having a lot of money as a buffer fund, should something go wrong. When you are an adult, things will always go wrong at some point. I am fortunate in the sense that I have free healthcare, but if you lack that, it might be wise to have a lot of funds readily available to pay costs should something unfortunate happen.

At the end of the day, the important part is to figure out what your best options are based on your situation. Taking the time to consider all the factors involved, and options you have, is important. It is easy to say that investing in an index fund yields better results than hedge funds, but... if funds are statistically worse for you compared to buying property, then you should naturally buy property.

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It depends on one's circumstances, but there are still some universal truths when it comes to good investing.

A notable one: You shouldn't invest in individual stocks/bonds. Why? Because if you choose to put your money into individual stocks instead of a well-established index fund, you're essentially betting that you know how to choose stocks better than the world's largest investment firms, which are armed with professionals whose entire lives revolve around making optimal investments. One investment expert (John Bogle, I think?) analogizes it to playing a game of tennis against an unknown opponent who's probably a professional tennis player, and betting that you'll win. And it's possible that you'll win, but it's a poor bet.

Now, there are numerous mutual/index funds out there that will skim as much money as possible from your savings in the form of fees and non-fiduciary investment choices. These are scams. Unfortunately, they're everywhere, from television ads to even some 401(k) plans. But fortunately, it's easy to ignore them in favor of a good index fund. There are just a couple of very basic metrics that tell you whether a fund will be favorable to you. If you're given a list of options under your 401(k) plan, for example, you should—under U.S. law—be given a statement comparing them, and you need only look through the statement to find the plan with the lowest expense ratio and highest rate of return. In the U.S., there's a decent chance it will be a Vanguard plan, if offered.

The only caveat I can think of to simply choosing an index fund with the lowest expense ratio and highest rate of return is that it will probably be a fund that's largely made up of stocks, which are considered risky. But if you're a 20-something who's decades away from retirement, this is fine. Even if the stock market were to crash tomorrow, it's certainly going to recover within a couple decades, and thus will be more lucrative than bonds during this time. I would even argue it's worthwhile for a young person to invest in a fund that's 100% stocks.

Of course, not everyone is able to invest in these funds in general, because they may not have enough money leftover after paying for basic living expenses. In this case, property is often the only viable investment, because the monthly cost of rent may roughly equal the monthly cost of a 30-year mortgage. Indeed, this is the only way many people are able to accrue wealth in their lives.

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I made a series of poor choices with credit, which led me into an IVA—trying to go self-employed, assigning too many material purchases to finance and loans. Until it, all became too overwhelming and has left me in financial ruin essentially.

I don't know enough about investment and crypto. Somewhere out there is a single bitcoin with my name attached, I'm pretty sure, but I have no idea where that is.

It's not something I've ever really looked into, probably because I tend to focus on the present and enjoy myself (fear of depression taking over). I've stopped myself from making some financial decisions that could have benefited me.

I constantly see investment advertisements such as etoro popping up suggesting they make it simple and easy to match trades. The argument I make in my head is that IF it were indeed that easy, we'd all be rich like one of those payday loans. Yeah, don't worry about the APR; we'll tuck that number somewhere obscure; you'll be fine.

Much like South Park's approach to investment in their Stick of Truth and Fractured but whole games, you can invest $20 and watch it disappear or spin the wheel and see where it lands you.

I've forced myself into a scared bubble when it comes to finances, and without someone guiding me through all of that, I don't think I'll ever be able to leap. Many gambling and investment businesses talk about only investing/gambling what you can afford to lose.

Well, the number I can afford to lose is pretty low. So it is worth even putting in a tiny amount when the return will be small, and the amount of time for a return will be significant.

I wonder if instead of spending, let's say, £20 a month on the Euromillions that could be used to create something better investment-wise. (I should probably save it because the money I save will ultimately be better than the money I waste hoping for a vast jackpot) I'm human; I make dumb decisions.

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My investment technique involves betting my life savings on the over in the Bills vs. Chiefs game this weekend. 

I also own a house, which has appreciated in value ~15% since I purchased last year. I like to trade stocks as a hobby, but I wouldn’t call that an investment. I have a 401k through my job.
 

I really think the best thing you can do in your 20s is invest in real property as soon as possible. Buy a 3br 2ba house, rent out the room, and pay off as much of the principal as possible in 2-3 years. As soon as you have enough equity in the house cash-out refinance it and roll that money into a second property that you rent out. Lather, rinse, repeat. If it’s something you’re interested in and you actually put the time in to learn how the industry works, flipping houses can make you a lot of capital. I have a friend who pulls in well over a million a year flipping houses as his side job. It takes a lot of capital to get into on the front end and there are too many traps people fall into when they first get started, but if you take the time to learn and to shadow and learn from someone who knows what they are doing, it’s a great way to build wealth. 

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Another thing to add on to houses... if you have sufficient knowledge in regards to renovating a home, there usually is a lot of money involved in renovating houses in your spare time. You will end up with longer days, but there is a lot of money to be gained from it if you know what you are doing. Restoring houses and selling them is a great source for revenue, as the housing market is usually quite hungry for solid deals.

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I do mutual funds.  I’ve been thinking about doing bonds too.

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