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Thread: Investment Thread - For all your money needs

  1. #201
    I'm about to open a 1% APY Sallie Mae MMA. Anyone have experience with them? Is there a better savings/MMA option out there? I'm leaning towards them because 1% is really good (these days, sadly), and I already use them to pay off my loans.

  2. #202
    I'm bringing this back.

    Tell me about stocks. What is a reasonable amount to expect to invest if I just want to try it?

  3. #203
    The Pumpfaker Baconwfu's Avatar
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    Quote Originally Posted by lbE08 View Post
    I'm bringing this back.

    Tell me about stocks. What is a reasonable amount to expect to invest if I just want to try it?
    I wouldn't bother investing anything less than $1000
    If I only had $1000, I wouldn't invest in stocks because you'll be exposing your investment to too much risk (buying multiple stocks would likely rack up large commissions for the brokerage and investing in one or two stocks is inherently risky)
    I'd suggest investing in some mutual fund or index.

  4. #204
    cookout = blabbermouth?
    wfudkn's Avatar
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    Maybe this is the thread to post this rather than start a new thread, but does anyone on the board work for a private equity firm?

  5. #205
    Quote Originally Posted by Baconwfu View Post
    I wouldn't bother investing anything less than $1000
    If I only had $1000, I wouldn't invest in stocks because you'll be exposing your investment to too much risk (buying multiple stocks would likely rack up large commissions for the brokerage and investing in one or two stocks is inherently risky)
    I'd suggest investing in some mutual fund or index.
    how would you explain that process/the difference to a 3rd grader? nay, i'm selling myself short... an 8th grader?

  6. #206
    The Pumpfaker Baconwfu's Avatar
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    Quote Originally Posted by lbE08 View Post
    how would you explain that process/the difference to a 3rd grader? nay, i'm selling myself short... an 8th grader?
    What process?
    The process of actually setting up an account which would enable you to "invest" in securities or how to pick investments?

  7. #207
    stocks/mutual fund/index, 'investing' in securities, picking investments. i don't know where i missed learning this stuff in my life, but i'm so investment-illiterate it's scary.
    pit lecture series style.

  8. #208
    Quote Originally Posted by wfudkn View Post
    Maybe this is the thread to post this rather than start a new thread, but does anyone on the board work for a private equity firm?
    No, but I've audited them

  9. #209
    Quote Originally Posted by Baconwfu View Post
    I wouldn't bother investing anything less than $1000
    If I only had $1000, I wouldn't invest in stocks because you'll be exposing your investment to too much risk (buying multiple stocks would likely rack up large commissions for the brokerage and investing in one or two stocks is inherently risky)
    I'd suggest investing in some mutual fund or index.
    Quote Originally Posted by lbE08 View Post
    how would you explain that process/the difference to a 3rd grader? nay, i'm selling myself short... an 8th grader?
    I'll take a cut at this...

    Brokerage Fees (admin fees) - when you execute a trade/purchase there is a fee associated with the processing/handling of that trade. If you buy stock from a bunch of organizations, you'll rack up a bunch of fees. If you only buy stock in one or two organizations, you're tying too much wealth (by percentage of investment) to the success of one or two organizations - you won't be diversified - which is the risk Bacon mentioned.

    Does that make sense?

  10. #210
    Quote Originally Posted by wfudkn View Post
    Maybe this is the thread to post this rather than start a new thread, but does anyone on the board work for a private equity firm?
    I believe buckets is in private equity in LA.

  11. #211
    Quote Originally Posted by leftcoastdeac View Post
    I'll take a cut at this...

    Brokerage Fees (admin fees) - when you execute a trade/purchase there is a fee associated with the processing/handling of that trade. If you buy stock from a bunch of organizations, you'll rack up a bunch of fees. If you only buy stock in one or two organizations, you're tying too much wealth (by percentage of investment) to the success of one or two organizations - you won't be diversified - which is the risk Bacon mentioned.

    Does that make sense?
    yeah, that part made sense to me. i understand the fees, etc. i guess i'm more unsure of mutual funds/indexes, and who cares if you're diversified if you're just testing the waters?
    but thank you- you did explain yourself clearly.

  12. #212
    just open an account with vanguard or fidelity as they seem to have the lowest expense ratios, buy a total stock market index fund which is as diversified as you can get with only stocks and then profit.

  13. #213
    THE quintessential dwarf dartsndeacs's Avatar
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    I would invest in real estate bridge lending.

    In real estate, people often enter into contracts to buy things before they have the money to buy it. At some point in the process, the deposit the purchaser puts down goes "hard" meaning that if they fail to come up with the money, then the seller gets to keep the money and the real estate.

    Lending these days is real real tough, so often alot of these people who are in contract to buy things and are "hard" will bend over about as much as you want them to just to close the transaction.

    So you can commonly lend someone $1,000,000 on an asset worth about $1,800,000 (good safe protection). Get a 3% fee up front ($30,000) and collect 10-12% interest. 15% returns are pretty standard for this line of work, and all you need to do is make sure whatever they're buying is worth well in excess what your loan is worth, then its no risk.

  14. #214
    Quote Originally Posted by lbE08 View Post
    yeah, that part made sense to me. i understand the fees, etc. i guess i'm more unsure of mutual funds/indexes, and who cares if you're diversified if you're just testing the waters?
    but thank you- you did explain yourself clearly.
    General rules of thumb: you can invest in an individual company by buying its stock. For instance, you could buy a share of IBM for about $200/share right now. If you buy a mutual fund, you can pick the "type" of fund - some are tech funds, some are international funds, some are growth, some are dividend-yielding funds, etc. These funds are, generally, comprised of various companies - a tech fund may own IBM, Apple, eBay, Microsoft, etc. By buying a share of the mutual fund, you are, in effect, buying in to all of the companies. It is a way to diversify your investment, as opposed to having all of your eggs in one basket by buying only an individual, single stock. "Index" funds are funds designed to track a various index. For instance, the Dow Jones Industrial Average ("the Dow") is really an index of 30 companies, all of which are large (IBM, Microsoft, Bank of America, Caterpillar, Johnson & Johnson, McDonald's, etc.). It is designed to give you a broad spectrum snapshot of 30 of the leading companies - the theory being that as goes those companies, as goes the world because they are so large and in a variety of industries. You can buy an index fund that will track the Dow exactly. These funds have lower fees because the money managers don't really make any decisions - they simply track an index that is already established. Other indexes include the S&P 500, the Russell 2000, and others.

    Diversification really only matters if you have serious money at stake. With $1000, and assuming you are young, you should just buy a company that you like. Track your investment, see what happens, learn about its competitors, see how those stocks compare with your own in terms of performance, try to figure out why they performed the way they did, etc. You will learn a ton about investing in general by going this route, and as you accumulate additional wealth, you will be better prepared to invest it in the market and elsewhere. Even if you lose the $1000 (and you won't lose it all unless the company you choose goes bankrupt), if you follow it this way, the knowledge you gain will be worth way more than the money you lose. And, since most stocks have appreciated over time, chances are if you hold the stock long enough, you will eventually have the opportunity to sell it at a profit.
    Last edited by ABCDeac; 03-07-2012 at 08:42 PM.

  15. #215
    The Pumpfaker Baconwfu's Avatar
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    Quote Originally Posted by lbE08 View Post
    yeah, that part made sense to me. i understand the fees, etc. i guess i'm more unsure of mutual funds/indexes, and who cares if you're diversified if you're just testing the waters?
    but thank you- you did explain yourself clearly.
    Stock: % of ownership in a company. Most public companies have millions of shares (individual unit) of stock
    Mutual Fund: An organization that owns a stock in many different companies....professionally managed money from a pool of investors
    Index: Example, the S&P 500. A statistics that measure a section of the stock market. Often used as bench marks to measure the performance of funds.

    What's your goal for investing? Are you planning for retirement, just wanting to mess around, trying to save for something? If you just want to break into investing so you're more comfortable then it doesn't really matter, but you don't want to get into the habit of picking stocks that you don't know anything about....and if you're just testing the waters you don't know anything about any stock. Most people, myself and most of the people on the thread included, are woefully uninformed when it comes to picking stocks. There are smart people who spend their professional livelyhood following a few stocks for 60 hours a week and still get it wrong.

    I don't really know what "testing the waters" means. Mutual funds and indices will be much less volatile than individual stocks, so if you're testing the waters and you want to get out then you're less likely to be on the bad end of a big fluctuation in an individual (of a few) stock's prices

  16. #216
    Resident Astrophysicist
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    lbe, you could always set up a fake portfolio on Google Finance and fund it with say, $10,000. Then, pick stocks and allocate that money between them. It will give you a chance to test the waters with fake money until you get a chance to do it on your own.

  17. #217
    Abcdeac wins this round, but really thank you all for your information. I believe I actually get it now. Whew. Yayyy adulthood!
    I know how to spell definitely.

  18. #218
    Quote Originally Posted by palmab03 View Post
    I would invest in real estate bridge lending.

    In real estate, people often enter into contracts to buy things before they have the money to buy it. At some point in the process, the deposit the purchaser puts down goes "hard" meaning that if they fail to come up with the money, then the seller gets to keep the money and the real estate.

    Lending these days is real real tough, so often alot of these people who are in contract to buy things and are "hard" will bend over about as much as you want them to just to close the transaction.

    So you can commonly lend someone $1,000,000 on an asset worth about $1,800,000 (good safe protection). Get a 3% fee up front ($30,000) and collect 10-12% interest. 15% returns are pretty standard for this line of work, and all you need to do is make sure whatever they're buying is worth well in excess what your loan is worth, then its no risk.
    My dad just got screwed on this. In retrospect there was nothing he could have changed; he even went in with another lender to share risk. They were getting 15% IIRC. The buyer made 2 of 5 payments then he got brain cancer and his lawyer came back with the phone call "you will not be receiving any future payments". Awful situation for everyone involved.

  19. #219
    I've never been much on the stock market...but it's been really neat to work for a publicly traded company, listen to all of the analyst and earnings calls, and track the company's stock price. It's relatively easy to pick up on the key metrics used to gauge stock price in a specific industry.

  20. #220
    Quote Originally Posted by wfudkn View Post
    Maybe this is the thread to post this rather than start a new thread, but does anyone on the board work for a private equity firm?
    What's up?

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