Investing - Money and Finance

[Tami]

What do CBR types think about investing money for the future? What types of investments, other than collectable comic books, do you prefer?

[GOLGO 13]

I have been contributing 20% of my gross paycheck every 2 weeks into my 457 plan through my job for 20+ years. I mostly invest in blue-chip stock (Microsoft, Apple, pharmaceuticals, yadda, yadda) mutual funds. It's also known as a deferred compensation plan.

So what happens is that my interest from my mutual funds get reinvested back & that grows tax deferred until withdrawal (retirement). Eventually, my interest starts making interest. That is the glorious magic of compounding interest.

If you are 25, and you start with $5,000 in a savings account, and you put in $200 a month for 40 years, your money can grow to over $158k by the time you are 65. If you can up your contribution to $500 a month, you can end up with over $380K. If you start five years later, at 30, you only end up with over $315K. You miss out on tens of thousands of dollars, just by getting a late start.

Compounding interest separates the rich from the broke. The great Albert Einstein once said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn't … pays it.”

So I started investing in the Clinton administration (mid 90's) through the difficult Bush years. Continuing on with Obama & still at it today with Trump. I kept automatically investing every paycheck & experienced dollar cost averaging. That is you buy more shares when the price goes down & less when the price goes up. So those shares I brought cheaply have now increased in value. Me am super-smart!

During one year during the Obama administration, I made 18% return on my money. No bank will ever give you 18% return on your money on it's best ever year.

Do you have a 401k through work Tami?

[Tami]

I have been contributing 20% of my gross paycheck every 2 weeks into my 457 plan through my job for 20+ years. I mostly invest in blue-chip stock (Microsoft, Apple, pharmaceuticals, yadda, yadda) mutual funds. It's also known as a deferred compensation plan.

So what happens is that my interest from my mutual funds get reinvested back & that grows tax deferred until withdrawal (retirement). Eventually, my interest starts making interest. That is the glorious magic of compounding interest.

If you are 25, and you start with $5,000 in a savings account, and you put in $200 a month for 40 years, your money can grow to over $158k by the time you are 65. If you can up your contribution to $500 a month, you can end up with over $380K. If you start five years later, at 30, you only end up with over $315K. You miss out on tens of thousands of dollars, just by getting a late start.



So I started investing in the Clinton administration (mid 90's) through the difficult Bush years. Continuing on with Obama & still at it today with Trump. I kept automatically investing every paycheck & experienced dollar cost averaging. That is you buy more shares when the price goes down & less when the price goes up. So those shares I brought cheaply have now increased in value. Me am super-smart!

During one year during the Obama administration, I made 18% return on my money. No bank will ever give you 18% return on your money on it's best ever year.

Do you have a 401k through work Tami?

To be honest, I'm unemployed. I worked for the State and had a State Pension in my last job. If I get lucky and find employment, then I'll try to do a better job of managing my money, maybe investing.

[ed2962]

I have some bonds. I also have savings from the sale of family property.

[GOLGO 13]

To be honest, I'm unemployed. I worked for the State and had a State Pension in my last job. If I get lucky and find employment, then I'll try to do a better job of managing my money, maybe investing.

Ah gotcha. For some reason I had the impression you live in NJ. NJ also has a deferred compensation plan for state workers so you could invest in as well as your pension for retirement. From what I see NJ has a 10 year vested plan to qualify for a pension.

I'm currently a NY State worker with less than 24 months left till I can retire. Investing is not difficult at all Tami. If you get back with the state please look into it. You'll be sooooo glad that you did.

[GOLGO 13]

I have some bonds. I also have savings from the sale of family property.

Sounds cool Ed. Ever thought of investing some of your savings?

[4saken1]

Best bet IMO is to invest as much as you can afford into a 401K (when you find employment, that is). The most you can contribute currently is $18k. Your contributions come out of your paycheck before it gets taxed, but you will eventually be taxed on it when you retire. I remember hearing that even so, most people will likely be in a lower tax when they retire anyways so this is still a good thing.

Most 401ks offer various funds to invest in. It is better to diversify than invest it all in one type of fund. If you are young, try to stay away from low yield safe bets like government bonds, which don't offer much return. I've found that I do well investing most of my retirement in funds which follow the Dow Jones and S&P 500, with a smattering of money in International Investments, too. Stay away from investing in anything which has already experienced a sharp climb recently, in most cases like this you probably already missed the boat. I had a friend tell me last December that I was foolish for not investing in Bitcoin when it was over $15k. Now that it's hanging around $6k, I'm glad that I didn't. Another thing to avoid is getting nervous and selling when your investments drop in value. Unless you think it's going to go belly up or never recover, this is a horrible decision.

Once you have some money stashed away in your 401k, you can borrow against it if other investment opportunities arise. I would caution you against this unless you are at a job that you are extremely secure in your position. If you take out such a loan and then lose your job, you could screw yourself if you can't pay back into your 401k. If you do decide to do this, however, keep watch of the different industries and wait to see which stocks crash. Often times, a company might get some bad publicity, and their value will decrease significantly. In most cases, especially if they are a larger company, they will recover pretty quickly and you can clean up nicely.

There are other ways to capitalize on depressed markets, too. By the time the housing bubble crashed, I had my house almost entirely paid off. I took out a loan on it, and even though I wasn't able to get top dollar, I used the money that I got to purchase 2 separate 4-plexes at rock bottom price. Now that the market has recovered and rents are on the rise, the rent on each unit nearly pays the mortgage for the entire building. At the price they currently are selling for, I wouldn't make the same investment, however.

[Toreador]

Have a small IRA and a stock account. Also have an app on my phone that takes left over cents (rounding to the nearest dollar) when using debit/credit cards and invests the money into stocks based on your preference.

[ed2962]

Sounds cool Ed. Ever thought of investing some of your savings?

Yeah, I saw a guy at my bank I few years back and he helped me put together a small portfolio. I'll admit I never think about it except on the days I get the statements.

It's like I have what I call my everyday checking and savings accounts which have just peanuts in them.

Then I have another savings account which I never touch and is a bit healthier.

Then I have bond/investment money.

It's nowhere enough to retire on at this point, but should disaster strike, I'll have a little to fall back on.

[4saken1]

Have a small IRA and a stock account. Also have an app on my phone that takes left over cents (rounding to the nearest dollar) when using debit/credit cards and invests the money into stocks based on your preference.

That's really cool! What's the app called? How much of a cut do they take?

[4saken1]

Yeah, I saw a guy at my bank I few years back and he helped me put together a small portfolio. I'll admit I never think about it except on the days I get the statements.

It's like I have what I call my everyday checking and savings accounts which have just peanuts in them.

Then I have another savings account which I never touch and is a bit healthier.

Then I have bond/investment money.

It's nowhere enough to retire on at this point, but should disaster strike, I'll have a little to fall back on.

I'm kinda the same way. My bank account never has a whole lot of money in it (enough to tide me over for a couple months), but I do enjoy seeing my quarterly 401k statements. Rent checks at the beginning of the month can be tense, too! There have been times when unforeseen expenses have eaten up almost the entire thing. One time, due to two simultaneous evictions (lawyers fees were $1,500 each) and lack of rent from said tenants, I actually ended up owing the property management company at the end of the month. Luckily, they were nice enough to just take it out of the rent from the following month.

[Toreador]

That's really cool! What's the app called? How much of a cut do they take?

It's called Acorns. You link whatever accounts/cards you want and it not only takes the spare change of your purchases but you can also deposit a monthly amount and there are several stores/websites linked to acorns where if you go to site/store through them a percentage of your purchase is deposited to your account.

I can give you a referral link to the site to join online and it will give me a $5 bonus but it will give you a $5 bonus to your account as well. You'll find more information at the website.

EDIT: Forgot to answer your question. The fee starts at $1/month for the basic investing service (there are 2 other services that have additions for $2 and $3) for accounts up to around $5000 then the fee is 0.25% of your account. College students pay no fee.

[Tami]

Ah gotcha. For some reason I had the impression you live in NJ. NJ also has a deferred compensation plan for state workers so you could invest in as well as your pension for retirement. From what I see NJ has a 10 year vested plan to qualify for a pension.

I'm currently a NY State worker with less than 24 months left till I can retire. Investing is not difficult at all Tami. If you get back with the state please look into it. You'll be sooooo glad that you did.

I do live in NJ, but there was no deferred compensation plan available that I ever heard about. It must of started up after I left my job. The Christie Administration, for the most part, was not very kind to state workers.

[anyajenkins]

Collectibles (like comics) aren't good for long term investing. That market is too volatile. I stick with 401k /irs's in mutual funds. I actually tried to research and do more investing myself but it's really hard and I don't have enough hours in the day, lol. The mutual fund/index fund is easier because it let's you invest in lots of different companies at once so you're a lot more diversified. I still can't look at the statements when the market is down, I freak out and want to sell, which as mentioned earlier, is a bad idea.

[GOLGO 13]

A bunch of good stuff....

Everything he said was top shelf information. True, true, true.

I do live in NJ, but there was no deferred compensation plan available that I ever heard about. It must of started up after I left my job. The Christie Administration, for the most part, was not very kind to state workers.

Hi neighbor!

Well, if you get back into state service you have it immediately when you start working. You can even use your previous state service to add to your pension & become vested.

... The mutual fund/index fund is easier because it let's you invest in lots of different companies at once so you're a lot more diversified. I still can't look at the statements when the market is down, I freak out and want to sell, which as mentioned earlier, is a bad idea.

Index funds are super low cost & they just ebb & flow with the market. Since the market has routinely yielded "10%" more or less, it's a fantastic method of accumulating wealth.

Never ever sell when the market dips, that's when it's time to "BUY". Admittedly, not an emotionally easy thing to do, but its a popular Warren Buffett rule.