How are you investing?

[spectastic]

I got money sitting in the bank that I'm probably never going to use until I start a family or retire. What are you guys doing to invest?

 

 

[dstock]

I worked and had a decent salary before going to grad school- I stocked away some money in retirement accounts (roth ira and ira) and made initial investments in mutual funds in these accounts about 2 years ago.  I still have uninvested $ sitting in these accounts and I continue to use this to make incremental purchases on more mutual funds-- about once a month I buy more when I think its at a relatively good price.   I have never sold any of them yet. 

 

No idea if this is a good strategy but its been working for me.

[biisis]

I read too much Marx to consider financial investments.

[spectastic]

I heard it's unwise to sell until you're 59 or something, because the government takes out more tax if you do. good thing is that my employer puts in 6% to my 401k, but I'm totally lost on what to put my money in. There were a whole bunch of options, and the only one I recognized was the sp500. I just picked mine based on their ratings.

 

did you make an HSA account? I almost never go to the doctor, unless it's covered. But they're income tax free, so I guess it makes sense to keep a healthy stack there and fill it up as needed.

 

who do you use to handle all your investments?

[spectastic]

I mean.. I don't plan on spending too much time on this stuff. I'd like to setup something and worry about maybe once a year. Put in for some stable investments, and hope the market doesn't get f*ked. maybe invest in some specific stocks that are looking up, like natural gas producers, pharmaceuticals, and whatnot. I mean you can always trade it if something doesn't look good.

Edited October 26, 2014 by spectastic

[ERR_Alpha]

I've always done CD accounts for money I knew I wouldn't need. The interest rate isn't too high but it's guaranteed.

[smg]

I read too much Marx to consider financial investments.

 

Word.  I stash my spare coin under my mattress.  

[TakeruK]

Until now, I've kept extra money in GICs (Canadian version of CDs). When I started, the interest rate was like 4% to 5% per year, but now it's hard to find them at anything more than 1.5%. When I go home next month, the plan is to start moving some of that into mutual funds -- they might be more risky but I would feel comfortable with something like a 50/50 split between GICs/CDs and mutual funds. Also, at <2% interest, I'm still losing money on GICs due to inflation!

 

I'm doing this through my Canadian "Tax Free Savings Account" (TFSA), which is a nice setup where any money you make by investing out of the TFSA is completely tax free. I have not yet invested in retirement savings plans yet because you get a nice tax break when you do invest, so it's only worth it to do so when you have enough income to be taxed. So the eventual plan for the money I currently have in GICs (and eventually mutual funds) would be to put it in a RRSP (Canadian version of IRAs I think). 

[raneck]

I'm doing monthly investments into a Roth IRA, buying an index fund based target date fund (as I am incredibly lazy).

[maelia8]

I invest 10% of my income monthly in an IRA, because it's easy and I don't have to worry about it. I am lazy and my father recommended it.

[dstock]

I heard it's unwise to sell until you're 59 or something, because the government takes out more tax if you do. good thing is that my employer puts in 6% to my 401k, but I'm totally lost on what to put my money in. There were a whole bunch of options, and the only one I recognized was the sp500. I just picked mine based on their ratings.

 

did you make an HSA account? I almost never go to the doctor, unless it's covered. But they're income tax free, so I guess it makes sense to keep a healthy stack there and fill it up as needed.

 

who do you use to handle all your investments?

 

6%!!! jealous. If you have a 401k at your job do they offer a free meeting w/a financial advisor? that would be a good source of info.

 

Within a retirement account I think you can buy and sell without a tax penalty- withdrawing funds out of the retirement account before age 59 is what triggers the higher tax.  Don't take my word- you can find more info on this by searching online.  I never used an HSA because I didn't have a lot of medical expenses that would make it worth it.  I have accounts with Fidelity and Vanguard.  One is my Roth IRA and one is a regular IRA from when I left my job and moved my 401k there.  I don't know enough to say one is better than the other.  I'm just figuring it out as I go. It's educational to get used to all this now, so someday when I have $$$$ I will already know how it works

[spectastic]

nice to see what other people do with their money. I'm just starting to get a clue. coworker's bf works in natural gas, straight out of college, just got a $10k paycheck, and invests 75% into his 401k. I can only assume that's more than what the oil refineries make. dude's gonna be chilling on his island by the age of 40.

[spectastic]

6%!!! jealous. If you have a 401k at your job do they offer a free meeting w/a financial advisor? that would be a good source of info.

 

Within a retirement account I think you can buy and sell without a tax penalty- withdrawing funds out of the retirement account before age 59 is what triggers the higher tax.  Don't take my word- you can find more info on this by searching online.  I never used an HSA because I didn't have a lot of medical expenses that would make it worth it.  I have accounts with Fidelity and Vanguard.  One is my Roth IRA and one is a regular IRA from when I left my job and moved my 401k there.  I don't know enough to say one is better than the other.  I'm just figuring it out as I go. It's educational to get used to all this now, so someday when I have $$$$ I will already know how it works

 yea, oil and gas treat their employees well. I actually got the short end when I hired in. most people get a whopping package to help them move and a sign on bonus. I got a whopping $500 to relocate all my shit. Had I known that at the time, I'd have asked for more.

 

 

 

but no, we don't really have financial advisors as far as I know. all I got was that $500 I told you about, which serves as an anecdote on how much my company sucks at retaining its employees. a coworker tells me that back when it still belonged to DuPont, we had twice the staff we have now, and every employee that comes in basically spends an entire week going over their money plans. we don't get any of that. nor did we get any type of formal training fresh out of college. anything unrelated to production and making Charles Koch more money is tossed to the side. sinking ship.

Edited October 27, 2014 by spectastic

[Vene]

I've always done CD accounts for money I knew I wouldn't need. The interest rate isn't too high but it's guaranteed.

Treasury bonds are also good for that, but interest rates are very low at the moment. The advantage over CDs being you can withdraw the money from the bond early if you need it.

Edited October 27, 2014 by Vene

[danieleWrites]

I have an emergency fund, savings, in an accessible savings account that basically earns no interest (savings accounts never do). I've got my stuff in a few mutual funds and an index fund. Nothing really fancy, but they consistently perform better than inflation. I've read a ton of Marx, too, enough to know that until the revolution happens, we're in a capitalist economy so sticking money in jar for later is the same thing as losing money. $100 this year is worth $98 next year is worth $96 next year is worth $70 in ten years is worth $40 in 20 years. When the revolution happens, money won't mean anything anyway.

[seeingeyeduck]

Did a bunch of reading on this last year and came to the conclusion that the SP500 out-performs almost every other type of targeted niche fund over time. The rare occasion when the laziest option is perhaps the best one! Of course, if you're an insider and know the commodities market inside-out then that's different, but for the average person the best option seems to just be find the index fund with the lowest fees, as even a decimal percentage point makes a 5-6 figure difference over time. As far as we can tell, Vanguard is pretty good for low fees. I hear tell that govn't employees have access to a super low fee fund but too bad for the rest of us!

 

I don't have a good sense how much diversification is a good idea though. We have a CD and emergency fund savings acct, but they don't really earn anything and we don't think of them as investments. I've been meaning to look into a type of bond called the TIPS bond - I think they keep up with inflation over time? - so if anyone knows anything about that, I'd be curious to hear what you think.

Edited October 28, 2014 by seeingeyeduck

[raneck]

For small purchases, I would recommend I-bonds over tips.

TIPS function like normal bonds, except the principal (I.e. Face value) of the bond is inflation adjusted according to the CPI. They earn an interest rate that is based on the inflation adjusted face value.

Essentially the overall treasury market has an "expected" inflation amount priced in. If inflation is higher than expected, TIPs win since you get more interest based on the inflated principal. If it is lower, normal bonds win, since the tips interest rate is now being applied to a lower principal. If inflation is as expected, normal bonds will edge out TIPS, since there is a small premium baked into the TIPS rates to cover the "insurance" you are buying. For a given maturity length, TIPS rate + expected inflation < normal bond rate.

I-bonds are a similar product, but have some benefits/drawbacks. They are essentially inflation linked CDs. They aren't marked to market like bonds, and so can be redeemed from the treasury for their face value at any time, past a one year holding period. ( bonds can't be redeemed until maturity, you have to sell to another person to get your money before that) There is also a small early redemption penalty if cashed in before 5 years. I used I-bonds to hold my emergency fund.

[rising_star]

Yea, I'm also lazy and just do the target-date retirement fund. Eventually I'll buy shares in a stock market index to complement this. Eventually.

[Amelorn]

I was fortunate to have been drilled on the stock market by my grandfather from a very young age.  Coupled with some intrinsic interest, I am not useless in picking.  It helps that my discipline helps with giving me macro trends (ie, coal is rapidly losing favour, maybe I shouldn't buy coal stocks/bonds; so...China....maybe should get on that one).  

 

My holdings are split between sector ETFs and individual stocks:

Alibaba - this will probably end up covering a lot of my grad school expenses, hehe

ASHR - ETF of class A shares of Chinese stocks

TAO - A Hong Kong real estate ETF

EWA - An ETF of Australian stocks

DFJ - Japan small cap ETF

Blackstone - An 'alternative asset' company.  Swings significantly, but grows over the long term + pays a 6% dividend.