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Post by MoBuckChaser on Jun 6, 2017 14:39:44 GMT -6
Let me tell you this. You can put it in the market and lose 20-30% the first year. You will be gambling. Buy something and sell it for a profit. Anything! Pay $400 for something and sell it for $600! You just made 50% on your money! I have been doing it my whole life. You can as well.
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Post by kl9 on Jun 6, 2017 14:59:40 GMT -6
^^ There is more that goes into the equation than that... 1. Opportunity cost of time. 2. Timeline for your profitable activities to make a fair comparison to a capital market investment. 3. Your level of risk aversion. Not only to capital markets, but also to the risk you assume in "flipping" activities. 4. You're gambling on yourself and your ability to turn a profit. You could easily face considerable losses if you're not prudent. This is not different than publicly traded companies. Yes, you do have your own equity on the line so that helps.
My (young person) advice is to diversify. Not only amongst stocks/funds, but also among alternative investments. Such as real estate and other assets, much like you do Mo.
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Post by badgerfowl on Jun 6, 2017 15:12:01 GMT -6
"Buy for a dollar, sell for two." - Prop Joe, The Wire.
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Post by MoBuckChaser on Jun 6, 2017 15:27:57 GMT -6
Diversity is another word for you making less money, and in my opinion, the advisor to make more! They Are not helping you in the least to diversify into one sector that goes up and into another sector that goes down at the same time. They call it slow growth, I call it, Your fucked! You can't have half your assets going up in value while the half go down in value. Making 5-10% or trying to make 5-10% on a Hundred grand in the markets will get you no where! Take my word for it!
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Post by kl9 on Jun 6, 2017 15:47:22 GMT -6
I could almost guarantee that not diversifying has financially wrecked more people than it has made wealthy.
If I was someone saving for retirement I would not approach the capital market (or any investment for that matter) as a get rich plan. I would have my retirement funds that offer growth given my risk aversion and protection through diversification.
If I was trying to strike it rich I would take a portion of my funds and do as you say, invest in something you understand completely and try to turn a profit.
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Post by MoBuckChaser on Jun 6, 2017 16:48:34 GMT -6
I can guarantee a diversified portfolio after taxes will not keep up with actual inflation. Not happening no matter how much anyone says different!
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Post by sd51555 on Jun 6, 2017 16:59:42 GMT -6
Diversified is a broad and subjective term. If you're over diversified, you are the market and will only ever be the market. Everything hits a rough patch which is why you should have some diversification. I'm over-diversified now. But until I get more confident that I can avoid major losers, I'll only slowly weed out my under-performers and move towards a consolidated portfolio. About the simplest and safest route to earn some money is to take the emotion out of it and just be in an "asset allocation" portfolio.
When H&R Block Financial Advisors was still around (got sucked into Ameriprise) they used to offer an asset allocation product. You put x into an account and they spread it equally across ten sectors via mutual funds. Every six months the account would automatically rebalance itself selling some of the winners and buying some of the laggards. As it fluctuated you would always be in a state of buying low and selling high, unless you kept knee-capping a winner and pouring it into a dud. The circuit breaker is that the investments were broad indexes.
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Post by Bwoods11 on Jun 6, 2017 17:07:01 GMT -6
I'm not very diversified... I'm 80% real estate. But, not worried.
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Post by kl9 on Jun 6, 2017 17:40:15 GMT -6
I'm not very diversified... I'm 80% real estate. But, not worried. That's likely because you have a long investment horizon and your liquidity needs are low. You are also a RE agent by profession I believe?
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Post by Foggy on Jun 6, 2017 20:10:06 GMT -6
I used to have a brokers license and an insurance license.......and made a living selling financial planning for a couple of years. I hated it......so I went back to the manufactiing industry after a few years. I have always owned stocks and bonds.....and today I live off the procesds of my investment income.....and continue to grow our nest egg each year by investing in stocks and bonds and other financial investments. No much for real estate income....but I do have a contract-tor-deed building sale for some additional income. I've now lived off my financial assets for over 15 years in retirement.....and have more money now than when I retired.....and have spent quite well over that time. I have also gifted many of our family members.....and I will continue to do so as long as my money grows in value. No easy task. In the past, I have used a couple of brokerage companies to run my investments over time (waterhouse and Schwab) as well as some mutual fund companies to hold my money. I really like the folks at T Rowe Price and the folks at VANGUARD - allot. I was pretty good at increasing my wealth....but it required allot of time and I had to keep my eye on the markets on a daily basis. ARGHHH! It was allot of work to me....but may be a pleasure to others? I dunno....but I needed a better plan to grow old with.....and somebody to "run my money" so I could enjoy life again. Today I have an independent financial planner and they make all the investment decisions for me......and send me a monthly "allowance" to live off of. Almost all my money is with these folks.....and I have come to trust this company allot. We know each other pretty well and stay in contact as needed. If I felt any impropriatay actions......I would fire these guys in a heart-beat.....but I am not worried about them. They do have my best interests in mind.....and they get paid pretty well for looking out for me. They do have some size requirements to get involved with them.....so they are not for everyone. We do not look to outperform the markets......we aim to preserve and protect my investments.....and to provide a reasonable rate of return that I will not "outlive". <-----that is kinda hard for a guy like me to accept....as I have always wanted to outperform in the past. Now.....preservation (and estate planning) seems most important. Needs change with time. IF I did not work with a company like this......I would likely contact Vanguard and look into their fund management plans ----- which very well could outperform the guys I work with. I also may look hard at companies like "Weath Enhancement Group" - whom I nearly hired.....but chose my current planner instead. (mine does more trust work, etc). I can help you in this area.....but I am not going to write this stuff on a website. I am iwilling to tlalk on the phone if I can help......or have some coffee at a local place....better.
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Post by batman on Jun 6, 2017 20:22:40 GMT -6
Little bit of MO, little bit of Foggy in my financial planning. There is no right or wrong, "but a fool and his money are soon parted". For sure.
I have made a shit pod more money in what I 'control' vs what I don't.
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Post by Foggy on Jun 6, 2017 20:30:15 GMT -6
One other thing I would like to add......is that some investment such as real estate are not liquid like stock or bonds. Yep.....I have made some good money in real estate too. But, you may do as well in a real estate investment trust as in your privately held real estate. AND.....you are LIQUID!!! If you want your money tommorow......you can do so in a REIT. Not so in a farm or a building that is privately held. And you don't have to deal with tenants, taxes and other issues.
These things get harder as you get older and perhaps more distant from these things ( OZ???) Retun on investment isn't everything.......IF YOU HAVE "ENOUGH" from prior investing. Just saying.
I do realize this is not advice for everyone.....nor should be good advice for someone in their "earning years". But you do need to take your age and time horizons into account when making generalizations about how to invest.
The end.
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Post by Foggy on Jun 6, 2017 20:41:17 GMT -6
Diversity is another word for you making less money, and in my opinion, the advisor to make more! They Are not helping you in the least to diversify into one sector that goes up and into another sector that goes down at the same time. They call it slow growth, I call it, Your fucked! You can't have half your assets going up in value while the half go down in value. Making 5-10% or trying to make 5-10% on a Hundred grand in the markets will get you no where! Take my word for it! No offense MO.....I know you have done well with land. More power to you! But, many people could get their investments locked up in bad times. I have called this the "musical chairs syndrome".......when you get "caught" holding an asset you cannot sell when you want to. Happens often with folks when they hold real estate.....and get old. Lots of farmers are caught living in farms they cannot leave due to high taxes they will owe if they sell......and they don't quite know how to proceed. LOTS of folks caught in that scenario. Lots. Some refuse to take a loss.....others are afraid to pay the taxes on a gain. Seen it all the time. ONE of the best things the stock and bond markets offers is INSTANT LIQUIDITY! You can have your money "RIGHT NOW" at any time you want. So....you gotta factor in some "trade-offs" when you talk about big gains. I also own some big "outperforming" assets. Things like MLP's which can provide 50% and more ROI in a year......but I won't put all my eggs in the MLP basket.....as it too can crash. You have a gift for what you know....but not everyone is equipped for your world. AND.....it's not easy to grow old playing your game. Just keep that in mind.....'cause your getting closer my friend. Grin.
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Post by Foggy on Jun 6, 2017 21:00:22 GMT -6
OK....now I am on some kind of an educational rant......but there are LOTS of factors that folks look at when they invest. Such as:
Income Capital Gains treatment (long term and short term - think taxes) Safety Performance Tax classifications / benefits Liquidity Estate Tranfers and cost basis Stability Offsetting losses (when taking gains on others) Portabilty Tractability and Reporting (valuations) Stepped up basis at your demise Yadda / Yadda
Performance is but one element of an investment decision. Yep....it is a BIG one.
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Post by daydreamer on Jun 7, 2017 5:00:01 GMT -6
I will say Foggy knows what he's talking about. I would encourage everyone to look at findyourindependentadvisor.com Great educational material on the differences between brokers and independent advisors and how they each get paid. There is also an advisor directory you can search by zip code. Another good one is napfa.org Foggy also mentioned Fee Only in an earlier post...they don't get paid to sell anything/product. Same side of the table as you.
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