Investing

[Fine Vol]

What is your preference?

1.CDs
2.Stocks
3.Real Estate
4.Bonds
5.Mutual Funds
6.ECT.

 

[droski]

I'm young.

I'm 100% in stocks, though i've been seriously thinking about switching my 401k to cash for the next couple of months.

 

[Fine Vol]

I have some money in a aggresive 401.

 

[droski]

I'm currently
50% S&P 500
20% russell 2000
15% agressive growth fund
15% company stock (restricted)

 

[SWIL]

Young here as well. Right now all I've got is an Aggressive 401k. Going to break into Real Estate sometime very soon.

 

[droski]

I did the math and here in LA it's actually a better investment to rent and invest the difference in my 401k than it is to buy a house. That's assuming of course that real estate and the stock market have the same returns.

edit: and by house I mean shack of course

 

[Lexvol]

I did the math and here in LA it's actually a better investment to rent and invest the difference in my 401k than it is to buy a house. That's assuming of course that real estate and the stock market have the same returns.

Isn't the average mortage term 50 years out there now?

 

[SWIL]

I did the math and here in LA it's actually a better investment to rent and invest the difference in my 401k than it is to buy a house. That's assuming of course that real estate and the stock market have the same returns.

edit: and by house I mean shack of course

The Real Estate market in Cali is extremely bearish right now as well. Not really the case here in ATL.

 

[droski]

The Real Estate market in Cali is extremely bearish right now as well. Not really the case here in ATL.

If I was planning on staying in a place for 10+ years i wouldn't worry about it, but really the only thing I would consider is a condo or something and the condo market is still very overpriced and tanking. They are still building condos like crazy around me and there are tons of for sale signs.

 

[lawgator1]

It depends on your situation. Facotrs to consider include: whether you want to invest one lump sum versus make contributions over time; whether it needs to be liquid, i.e. accessible; whether there are significant tax consequences; whether you can get good, informed, and uninvolved advice on exactly which security to buy; whether you are in it for long or short term.

If you are talking about a significant amount of money (say, over $50,000) perhaps from inheritance or gift or saving a ton over time, I think your best bet is to hire a flat fee advisor. Someone that is not getting any sort of commission on steering you into anything in particular.

If its smaller than that, I like the idea of buying into funds that are already diversified. You can do those with as little as a thousand bucks and make routine contributions to it.

Last, if you are just trying to build up that initial nest egg but need to be able to get to it if circumstances require, one thing to consider is a savings account with an on-line bank. Some of them pay over 5% now on their savings acounts. I've got one where I can just go online and transfer in as little as ten bucks more if I want to. Do that a few times a week. Adds up. Plus 5% annual rate.

 

[droski]

Isn't the average mortage term 50 years out there now?

When my maid told me she was thinking of buying a home, that was the day when i realized the mortgage brokers in the area might not be doing their due diligence.

 

[droski]

It depends on your situation. Facotrs to consider include: whether you want to invest one lump sum versus make contributions over time; whether it needs to be liquid, i.e. accessible; whether there are significant tax consequences; whether you can get good, informed, and uninvolved advice on exactly which security to buy; whether you are in it for long or short term.

If you are talking about a significant amount of money (say, over $50,000) perhaps from inheritance or gift or saving a ton over time, I think your best bet is to hire a flat fee advisor. Someone that is not getting any sort of commission on steering you into anything in particular.

If its smaller than that, I like the idea of buying into funds that are already diversified. You can do those with as little as a thousand bucks and make routine contributions to it.

Last, if you are just trying to build up that initial nest egg but need to be able to get to it if circumstances require, one thing to consider is a savings account with an on-line bank. Some of them pay over 5% now on their savings acounts. I've got one where I can just go online and transfer in as little as ten bucks more if I want to. Do that a few times a week. Adds up. Plus 5% annual rate.

The fact of the matter is if you have less than 500K in liquid assets you are far better off in a vanguard or fidelity than you are with an investment advisor. The fees are just too high for small investors.

 

[lawgator1]

The fact of the matter is if you have less than 500K in liquid assets you are far better off in a vanguard or fidelity than you are with an investment advisor. The fees are just too high for small investors.

Makes sense to me.

Bottom line is that you will pay for the management of money. It might be a combination of a simple trading fee plus what you pay the advisor, or it might be the money market management fee. Trust me, they all get theirs.

 

[Fine Vol]

I am going to invest, IN A TICKET TO WATCH THE VOLS KICK HELL OUT OF THE GATORS

 

[lawgator1]

I am going to invest, IN A TICKET TO WATCH THE VOLS KICK HELL OUT OF THE GATORS

If your hope is for that outcome, you'd be better off just flushing your cash down the toilet.

 

[droski]

Makes sense to me.

Bottom line is that you will pay for the management of money. It might be a combination of a simple trading fee plus what you pay the advisor, or it might be the money market management fee. Trust me, they all get theirs.

I'm a money manager with over $300 mil in assets and trust me that you can't make money off of an account under 500K without ripping off the client. and as far as I am concerned anything over 1% including all management fees and commisions for a stock account is a rip off. Just do the math:

200K account.
1% fee
unless you are managing it yourself at least .35% goes to the manager
That's .65% for your commision which comes to $1300
40% payout of $1300
Means $520 into your pocket every YEAR

Not worth my time.

Now imagine if you only have 50K. You are probably being sold loaded funds with 4% upfront. If your broker is willing to take a 50K account (and isn't on welfare) and it's not as a favor, he's probably a crook.

 

[Fine Vol]

If your hope is for that outcome, you'd be better off just flushing your cash down the toilet.

 

[volfan2024]

Or if you invested 50,000 in a municipal tax free bond, interest rate alot less though.My forte was,is always going to be real estate, save and pay your house off early, it appreciates normally everywhere but not so much in California , at least not in Bakersfield where my neice lost(appreciated) about 75,00 within a few months time, holding out to sell.I actually think there was some market manipluation going on out there as well with some investors.I hear a shack would be worth a fair amount of money in the Santa Barbara area Droski.

 

[lawgator1]

I'm a money manager with over $300 mil in assets and trust me that you can't make money off of an account under 500K without ripping off the client. and as far as I am concerned anything over 1% including all management fees and commisions for a stock account is a rip off. Just do the math:

200K account.
1% fee
unless you are managing it yourself at least .35% goes to the manager
That's .65% for your commision which comes to $1300
40% payout of $1300
Means $520 into your pocket every YEAR

Not worth my time.

Now imagine if you only have 50K. You are probably being sold loaded funds with 4% upfront. If your broker is willing to take a 50K account (and isn't on welfare) and it's not as a favor, he's probably a crook.

Fine, sounds to me like droski is the man.

Allow me to take advantage of your expertise. I am a partner in my firm, which we began about six years ago. We offer a 401k to employees and ourselves. Right now, I'm the only one close to maxing it out and we've got 11 employees, so you can imagine its probably a total asset of less than a few hundred thousand.

Our banker has us set up with a well-known 401k and money management fund, and we have no upfront fees and their commission is out of the growth of the funds. But I question whether they are not high.

Every quarter we get a statement and, regardless of the fund, it seems as though the fees eat up half of any projected gains. Example: They give you a chart showing what would happen to $10,000 invested in a particular fund over 10 years, with a rate of return of 5%. At the end of that ten year period, the gross return might be 60%, but after the management fee it is half that, or just 30%.

I get the impression from our banker that this is not unusual. But we are such small potatoes that I wonder whether much effort went into finding our best match-up.

 

[Fine Vol]

Fine, sounds to me like droski is the man.

Allow me to take advantage of your expertise. I am a partner in my firm, which we began about six years ago. We offer a 401k to employees and ourselves. Right now, I'm the only one close to maxing it out and we've got 11 employees, so you can imagine its probably a total asset of less than a few hundred thousand.

Our banker has us set up with a well-known 401k and money management fund, and we have no upfront fees and their commission is out of the growth of the funds. But I question whether they are not high.

Every quarter we get a statement and, regardless of the fund, it seems as though the fees eat up half of any projected gains. Example: They give you a chart showing what would happen to $10,000 invested in a particular fund over 10 years, with a rate of return of 5%. At the end of that ten year period, the gross return might be 60%, but after the management fee it is half that, or just 30%.

I get the impression from our banker that this is not unusual. But we are such small potatoes that I wonder whether much effort went into finding our best match-up.

Get bigger potatoes.

 

[droski]

Fine, sounds to me like droski is the man.

Allow me to take advantage of your expertise. I am a partner in my firm, which we began about six years ago. We offer a 401k to employees and ourselves. Right now, I'm the only one close to maxing it out and we've got 11 employees, so you can imagine its probably a total asset of less than a few hundred thousand.

Our banker has us set up with a well-known 401k and money management fund, and we have no upfront fees and their commission is out of the growth of the funds. But I question whether they are not high.

Every quarter we get a statement and, regardless of the fund, it seems as though the fees eat up half of any projected gains. Example: They give you a chart showing what would happen to $10,000 invested in a particular fund over 10 years, with a rate of return of 5%. At the end of that ten year period, the gross return might be 60%, but after the management fee it is half that, or just 30%.

I get the impression from our banker that this is not unusual. But we are such small potatoes that I wonder whether much effort went into finding our best match-up.

Ha. I'm not THE man. I should have said my partner and I have 300+ mil under management.

Performanced based commisions are highly unusual and frankly I thought were illegal (outside of hedge funds). Why pay a % of your winnings if the market is up 40% and your advisor is only up 35%? You'd be much better off with Fidelity or American Funds who both have much better 401k systems for small companies. Your total fees (including all the comissions, fees, and managing the 401k) would likely be under 1% a year. Personally i find 401ks for small companies to be a huge pain and not worth the effort.

 

[lawgator1]

Ha. I'm not THE man. I should have said my partner and I have 300+ mil under management.

Performanced based commisions are highly unusual and frankly I thought were illegal (outside of hedge funds). Why pay a % of your winnings if the market is up 40% and your advisor is only up 35%? You'd be much better off with Fidelity or American Funds who both have much better 401k systems for small companies. Your total fees (including all the comissions, fees, and managing the 401k) would likely be under 1% a year. Personally i find 401ks for small companies to be a huge pain and not worth the effort.

Ergo my suspicion that no one really thought it through much when figuring out where to place us. And I am probably wrong about how I characterize their fee. It is, according to their site, the "load" and its 1%. Although in each fund they list a gross annual operating expense, typically apparently right around 2%.

They make it virtually impossible to figure out to the uninformed person what the heck is going on.

 

[Fine Vol]

My company matches up to 50% of my contribution to my 401. I dont remember the max contribution though.

 

[droski]

Ergo my suspicion that no one really thought it through much when figuring out where to place us. And I am probably wrong about how I characterize their fee. It is, according to their site, the "load" and its 1%. Although in each fund they list a gross annual operating expense, typically apparently right around 2%.

They make it virtually impossible to figure out to the uninformed person what the heck is going on.

to me that would imply you are paying 3% a year in fees which is very high. you should never have a 401k that pays a load. I would really suggest talking to a fidelity 401k rep. they specialize in these type of 401ks.

 

[lawgator1]

to me that would imply you are paying 3% a year in fees which is very high. you should never have a 401k that pays a load. I would really suggest talking to a fidelity 401k rep. they specialize in these type of 401ks.

Okay, I will do so. Thanks for the suggestion.