Investments, IRAs, 401(K)s, and Stocks

My tax return this year is going to be my initial investment on a Roth IRA, with about $100 a month after that. I'm excited.

Originally posted by Stealth Moose
It's too bad they don't force us to go over this stuff in high school. It's essential in some degree, because such a large part of being wealthy or at least comfortable economically relies on it.

People like to say "I never used the Pythagorean Theorem herp derp. Why not teach us something important?" It's a false substitution, and there's more than one reason why we should absolutely be getting a rounded education (even with stuff most don't end up using). But the other point - that we should be learning some life skills (like basic investing) - is completely true. I probably could have been putting a grand or two a year into an IRA since about age 20-22 (I'm 29 now, for reference, and started with my company-match plan about a year ago). The fact that nobody told me this stuff angers me. And if I hadn't taken the initiative myself, I wouldn't even be doing anything. Just ridiculous.

My gf is 23 though. I'm kinda happy because I get to yell at her about this stuff. I got her to up the % of her paycheck that she puts into her own company-match plan (which is free money and should never be turned down), so I'm paying it forward. She has debt to pay off, so she shouldn't be thinking to expand beyond that like I am. But it's a start.

Originally posted by Tzeentch
Wish I knew more about economics and how money works in general.

It's difficult for me to focus on things that aren't inherently interesting for me, but I can recognize the importance of being money-smart.

Hm. Might be worth investing a class or two into.

It's not hard. I talked to the finance guy at my company a couple times, did a weekend's worth of google searches, and had a 5-minute conversation with my CWA last week. I'm not an expert, but I know what I need to. But good luck.

The IRA reminded me of the Irish Republican Army for some reason.

Anyways, Digi, have you ever considered/participated in stock trading?

For anyone looking to do some quick research, this site came recommended to me by both a friend and a Reddit list of best places to learn new skills:
http://www.investopedia.com/

Originally posted by Epicurus
The IRA reminded me of the Irish Republican Army for some reason.

Anyways, Digi, have you ever considered/participated in stock trading?

Technically IRAs and 401Ks are stock trading...they're just usually managed by a firm and involve a lot of comparatively steady mutual funds and not a lot of moves/trades (if any) over a period of years.

But, like, individual stock trading...sure, it would be fun. I'd love to set aside maybe 3-4K and romp around on an online stock trading service (eTrade is the most popular, but hardly the only one). But I'm not quite there financially, and I'm going to be getting my less volatile ducks in a row before trying anything like that. Second, it would require a LOT more research on my part. Realistically, it's only something I'd try if I felt like I at least half-knew what I was doing. If I'm going in blind just to mess around, I might as well bet on sports lines or something. I understand enough basics to get me started in safe stuff, but actual regular trading where I'm in control (not my CWA) is an entirely different ballgame. My brother works for a bank and manages stocks for large companies...I'm hoping to chat with him soon about where I can go for some digestible resources and advice.

Originally posted by Digi
it's only something I'd try if I felt like I at least half-knew what I was doing.

Clearly never going to happen 😱

That Investopedia site is pretty awesome. I got lost in a rabbit hole of articles last night. Many of them were a bit beyond me, but there's a lot that can be absorbed slowly.

Originally posted by Bentley
Clearly never going to happen 😱

Go back to the off-topic comic thread. Toothless insults belong there. This thread is srs bzznss.

uhuh

YouTube video

More generally, that Youtube channel (BigThink) has a lot of decent investing videos (most a lot shorter than this one). Just head to the channel and search for "investing"

http://www.coffeehouseinvestor.com/wp-content/uploads/2013/04/DSC_0333.jpg

A picture that's a condensed version of a lot of financial wisdom concerning investments. It seems overly fond of hyper-diversified index funds and mutual funds compared to many other sources of advice, but that's not the worst side to err on. A side box briefly espouses ETFs, but it seems very opposed to individual stocks. Which, again, isn't bad advice for the casual investor who still wants to make good decisions, but is also a bit restrictive in considering a full range of options.

Less trumpeted investments like life insurance, home ownership, etc. are also ignored, as are direct investments in, say, foreign exchanges or real estate. But that's to be expected from something that is in cheat-sheet format. As a quick advice guide, it's not bad.

Originally posted by ArtificialGlory
I don't trust websites that tell me a 2,000$ investment will turn me into a millionaire. Even if it supposedly takes decades.

Well, you shouldn't trust websites, that's for sure, unless you do your research on them. IRA accounts are always a GREAT idea. Look at it this way. If you're scared of investing into banks or the system. Have you ever lost, misplaced money, had it stolen or spent it on something you regretted? Well, you have, take two thousand dollars and invest it into one of your local banks, at an IRA account. Money is what makes the world goes round. After all what's two thousand dollars when all is said and done? This is of course for the people whom have a savings account.

Originally posted by jinXed by JaNx
Well, you shouldn't trust websites, that's for sure, unless you do your research on them. IRA accounts are always a GREAT idea. Look at it this way. If you're scared of investing into banks or the system. Have you ever lost, misplaced money, had it stolen or spent it on something you regretted? Well, you have, take two thousand dollars and invest it into one of your local banks, at an IRA account. Money is what makes the world goes round. After all what's two thousand dollars when all is said and done? This is of course for the people whom have a savings account.

He misunderstood the premise in that post. He's since learned a bit about IRAs. But yeah, IRAs >>> savings accounts, with incredibly rare exceptions.

There seems to be some general consensus among investing advice. In (roughly) this order...

- Pay off credit card debt first (generally the highest interest rates)
- Pay off student loan debt next
- Do those two first, unless your place of work will pay into an IRA or 401K by matching your contribution. That's free money. Do it even while working off debt.
- Have enough on-hand cash for about 6 months of living expenses, in case you lose your job or an emergency happens.
- Start a growth-oriented IRA as soon as the above are done (or perhaps when you're close on them).
- Beyond that, diversify your investments with other stocks, bonds, mutual funds, etc. that don't have large overlap with your original investments. For example, if your IRA is heavy in pharmaceuticals and biotech, your next investment(s) should avoid those industries.
- Ancillary investments like life insurance, owning a home, even starting a potentially-valuable collection (art, figurines, sports cards, etc.), are all valid ways to acquire wealth and security in other ways.

I've got my eye on a Small Cap mutual fund for my 2nd regular investment outside the company-match one I have going (I'm starting a Roth with my tax return this year, then paying into it regularly in smaller amounts). The goal is to pay into both, get some cash in the bank (currently I have very little) as a rainy day fund, and set aside maybe 2-3K to invest personally in ETFs or individual stocks. Researching this stuff has been surprisingly fun.

...

I heard an interesting take on diversification, and it was against diversifying. Now, the guy was absurdly rich, but he got there by researching a particular industry and focusing on individual stocks. This is a risk/reward thing. The potential returns on "eggs in one basket" approaches are MUCH higher than, say, index or mutual funds. But the risks are much larger as well. Just depends on your tolerance for risk. For the casual investor, though, and one who is probably having someone else manage their funds, low-risk index funds are probably preferable.

And on websites, Investopedia seems very, very thorough. I hadn't found a good site, but that seems to be the standard for 101-style investment learning (and it includes more advanced stuff too, but definitely realizes that most of its viewers are in the dark).

I've been continuing to dig; this stuff is fascinating. I'm actually probably going deeper than I need to. Like, for the money I'm going to have to invest in the next 3-5 years, some of the rabbit holes I'm going down are pretty intense, and deal with stuff that I'm not likely to be involved in ever, let alone in the near future. So, for example, I downloaded software that is basically a platform for foreign exchange (Forex) trading. It lets you set up a dummy account to practice and learn. I may never actually invest money in Forex, but it should prove enlightening.

Still, knowledge is good. And I don't want to hover around the lower middle class/middle class line for the rest of my life, and fear retirement. So it's progress. And my immediate goals are less exotic. Couple IRA accounts, a chunk in the bank that I might invest through my bank in low-risk stuff like CDs or T-bills, and a little bit of side cash to "play" with as I learn this stuff.

I may reload after another couple months of research and make a new thread on investing that's a lot more coherent. As I've stated elsewhere, it helps me to write this stuff down...organizes my thoughts, so to speak. Whether others are interested is almost ancillary (though it's a pleasant bonus, and nice to chat).

I've begun funding my Roth IRA with my tax return, and will be doing monthly payments into it. I also picked out an online brokerage and have been researching stuff like crazy. Today I authorized a 1K transfer to the brokerage, which should be available for purchasing stocks later this week. I'm still dipping my toe in the water, so to speak, and will likely just choose an index fund or broad ETF to start off with, and will put some conservative stop orders on it to protect myself.

Time is literally money in this case, more so than anything else I can imagine. So I'm trying to act fast but responsibly. Within a couple weeks, I'll having two mutual fund accounts with recurring payments into them and will (likely) own stock, and may begin filtering money into that on a monthly basis as well. So I'm excited to keep moving forward.

If anyone is looking for good resources - news websites, advanced charting sites, apps, money and fund calculators, online brokerages (there's more than just eTrade), etc. - I have a lot of good ones bookmarked or researched and would be happy to share. Interest in this thread seems minimal, though, so I may be talking to myself.

Welp. I own stock. It's about 1K worth, so it's not exactly a make-or-break scenario. But it's also well ahead of the schedule I initially set for myself.

I could technically be paying more into my Roth (though it's rolling now with recurring deposits, which is more than I could say a month ago). But the knowledge I've absorbed is fascinating. I want to test it. Thus, stocks. The learning curve for foreign exchange trading was a bit too steep for me, though I considered it as well.

I'm being reasonable. Conservative stop orders so that I can't lose much (10% of my investment at worst), and if I get about a year or two into the experiment, and have funded a few different positions and they're not working out and I don't know why, I'll cut my losses and fund my IRA more fully.

In the meantime, it's exciting.

That emptiness is where your soul used to be.

Quick, fill it with goods!

Originally posted by Stealth Moose
That emptiness is where your soul used to be.

Quick, fill it with goods!

Lol. They fit in there quite snugly, thanks. 😊

I have coworkers who will hear about this stuff that I'm doing when we're talking finances and they'll say things like "Oh, right, you actually want to retire..." There's some lighthearted sarcasm there, but they f---ing mean it. They aren't retiring in style, or possibly at all. They'll go straight from the workforce to the nursing home. And it's sort of seen as the norm.

That's terrifying to me. My mom is going to have to work until she can't. Some of what made things that way for her were out of her control, so it's not placing blame. But it's also a model I don't want to follow.

We consume so f---ing much. Dozens of different types of media. Or food. It's not all bad, but the volume of it, collectively, is often sickening to me. I cut the majority of the excess in my life and I'm saving maybe 5K a year from where I was 3 years ago. I could probably double that if I were more disciplined. But if I build my wealth, I can - and will - give back as I'm able. Whether it's to my family, or to charitable causes, it will mean something. And I can live and retire how I want instead of being a burden to others. I won't just be a suction on society, living paycheck to paycheck and consuming. That's the goal, at least. Maybe the market will underperform, I'll pick bad stocks, and I'll be in the same place. But it's worth a shot.

And to boot, this sh*t is fun. I got chills clicking the purchase button on my first stock trade. I don't know how people think it's so dry. And it's a form of personal betterment, which can be empowering.

So yeah, call me Gordon f---ing Gecko. At this point I consider it a compliment. My stock is up a fraction of a point in its first day. Break out the damn caviar.

/rant

Retirement is a nebulous term for people who live day to day, and very likely it will be a horrible thing for many in our generation. Already, the baby boomers are realizing the crunch, because they had the spendthrift years in the 80s and didn't save or invest enough.

Also, Google image search for "Greed is good" nets us this beauty:

setting up a Roth IRA literally now.

Planning to sell off some of the Disney Stock my dad bought me when I was born to pay for the first installment.

Originally posted by Stealth Moose
Retirement is a nebulous term for people who live day to day, and very likely it will be a horrible thing for many in our generation. Already, the baby boomers are realizing the crunch, because they had the spendthrift years in the 80s and didn't save or invest enough.

Also, Google image search for "Greed is good" nets us this beauty:

😂 That's epic.

But hell, I see it as the reverse almost. I want to provide for and support my (possible) family, children, etc. while living the life I envisioned. I also want to reach a level of comfort that I can do some good in the world instead of just surviving, so to speak. Greed, to me, is wanting the next iPhone the day it comes out, or eating out 5 nights a week...greed ISN'T wanting my current mutual funds and stock holdings to jump 10% in the next month.

Originally posted by Omega Vision
setting up a Roth IRA literally now.

Planning to sell off some of the Disney Stock my dad bought me when I was born to pay for the first installment.

Awesome.

👆

Disney's not a terrible stock, though. Nice growth potential even, which is shocking given their size, because they haven't monetized the Star Wars buyout yet. A shame you have to liquidize it. A Roth is a better long-term option though, for most.

Originally posted by Digi
Awesome.

👆

Disney's not a terrible stock, though. Nice growth potential even, which is shocking given their size, because they haven't monetized the Star Wars buyout yet. A shame you have to liquidize it. A Roth is a better long-term option though, for most.

Good deal. I've considered Disney in my research. There's a variety of reasons I likely won't own part of them in the near-term future, but they're a decent buy according to most analysts.

I just checked their dividend though, which is only about 1%...for a company so large, I thought it would be higher. So I guess the play is for growth. Still not terrible, given their recent success, market share, and bankable franchises.