Investing questions

[koonja]

New to investments here.

My company matches 6% of my contribution to 401K. 3% cash match, and 3% investment match. It's a good number, but they don't advise you at all (which I'm not complaining about, because that's what makes investing so fun, right?).

But I have forgotten what little I once knew in college about stocks and so I have it set to put all 3% investment into the company stock.

So, yeah. That's where I'm at and wondering if I should spread out the 3%? If so, how?

What are EFTs? I heard these might be a strong option if you're not looking to touch your investments for 30 years or so. Is this true?

FWIW, the company is Verizon. So maybe I should just keep it going to their stock? Maybe just loading up with one massive company will be the most beneficial in the long term? Or maybe it's boring and won't return much because who knows if they'll be better off now that they are in 30 years? IDK.

Really, any advice will help and be appreciated.

 

[BleedBlueGold]

New to investments here.

My company matches 6% of my contribution to 401K. 3% cash match, and 3% investment match. It's a great number, but they don't advise you at all (which I'm not complaining about, because that's what makes investing so fun, right?).

But I have forgotten what little I once knew in college about stocks and so I have it set to put all 3% investment into the company stock.

So, yeah. That's where I'm at and wondering if I should spread out the 3%? If so, how?

What are EFTs? I heard these might be a strong option if you're not looking to touch your investments for 30 years or so. Is this true?

FWIW, the company is Verizon. So maybe I should just keep it going to their stock? Maybe just loading up with one massive company will be the most beneficial in the long term? Or maybe it's boring and won't return much. IDK.

Really, any advice will help and be appreciated.

I'm a complete novice to investing and can tell you that the bolded is probably one of the worst things you can do. If this is your retirement we're talking about, then putting all of your eggs into that company's basket is risky. You cannot guarantee what will happen over the next 30-40 years. If anything goes wrong w/ Verizon and they tank, then literally your entire retirement tanks with it.

I've never had a problem with people investing in their own company stock, but at least be smart about it and spread it around. With that said, I'm sure there are plenty of others on this board who are much more educated on this subject than myself.

Thanks for starting this thread btw. I've recently had some investing questions as well and wondered what the pros on this site had to offer.

 

[koonja]

I'm a complete novice to investing and can tell you that the bolded is probably one of the worst things you can do. If this is your retirement we're talking about, then putting all of your eggs into that company's basket is risky. You cannot guarantee what will happen over the next 30-40 years. If anything goes wrong w/ Verizon and they tank, then literally your entire retirement tanks with it.

I've never had a problem with people investing in their own company stock, but at least be smart about it and spread it around. With that said, I'm sure there are plenty of others on this board who are much more educated on this subject than myself.

Thanks for starting this thread btw. I've recently had some investing questions as well and wondered what the pros on this site had to offer.

Thanks for the advice. I think I'll leave 1% with VZ and spread out the other 2%. I did a little research and eft seems to have a good reputation.

 

[Irish#1]

I agree, spread that portion out across stocks and bonds. In my former job, I was issued stock as an annual bonus. At one time I had about $150K in company stock. It had climbed from about $30 to $60 in just a few years. Then the CEO decided he was smarter than everyone and it plunged to $7.00 per share. This was before the economy soured.

BTW............If they are matching 6%, then I would put 6% in every paycheck. Especially while your young. It might be a little painful just starting out, but I guarantee you you'll find a way to make due and by the time you're ready to retire (and I've been long gone lol), you'll have a small fortune.

 

[Oberon]

I'd recommend checking out the Morningstar.com forums, especially the section for beginners. Conventional wisdom will be to learn, save as much as you can, max out tax-advantaged accounts (401k with full company match, IRA), and spread your investments around as many non-correlated asset classes as possible (domestic stocks, intl stocks, bonds, cash, maybe commodities/real estate). These days, there are many great options for getting broad exposure to different asset classes, for low fees.

 

[koonja]

I agree, spread that portion out across stocks and bonds. In my former job, I was issued stock as an annual bonus. At one time I had about $150K in company stock. It had climbed from about $30 to $60 in just a few years. Then the CEO decided he was smarter than everyone and it plunged to $7.00 per share. This was before the economy soured.

BTW............If they are matching 6%, then I would put 6% in every paycheck. Especially while your young. It might be a little painful just starting out, but I guarantee you you'll find a way to make due and by the time you're ready to retire (and I've been long gone lol), you'll have a small fortune.

Would you be willing to invest my real money in exchange for reps and vbucks? FYI, i do contribute 6% of every paycheck. It hurts to see on that pay stub, but I know it's the right move.

 

[koonja]

So for the time being before I learn more about this, I change my 3% from all to my company, and put it as this:

25% - Small Cap US Small Group
25% - Internaional Company
30% - Blended fund investment Verizon Fund 2055
20% - Bonded Managed Income PIM Real Return


Is this a good start?

Literally no idea what this means. I take it these are mutual funds since I don't pick specific companies? FWIW, Fidelity handles our 401K.

Man, I'm ignorant about this stuff.

 

[Irish#1]

Would you be willing to invest my real money in exchange for reps and vbucks? FYI, i do contribute 6% of every paycheck. It hurts to see on that pay stub, but I know it's the right move.

I just sent you a PM.

 

[T Town Tommy]

Whne you are young and starting out in your profession it is vital that you find a way to invest. Give up that daily coffee, pack a lunch instead of eating out, etc. It may not seem like a lot, but at a minimum I would invest enough to get the company match. That's free money for you. I started investing 10% at the age of 26 and received a 6% company match. Luckily my company offered several different investment options so I chose aggressive growth funds. I have since diversified my portfolio to help with the overall risk factor. I have also been able to up my contribution level to over 18% of my pay. I still get a 6% match from my company as well bringing my total investment to 24%. I am 46 years old now and with a conservative growth estimate of 7% on my investments, I will retire with enough in savings to live very comfortable. That would not have occured if I had not started at 26. I am not really qualified to give investment advice, but there are several out here who are. Other investment tools include Roth IRA's which grow tax free and are good options to explore.

 

[tussin]

Whne you are young and starting out in your profession it is vital that you find a way to invest. Give up that daily coffee, pack a lunch instead of eating out, etc. It may not seem like a lot, but at a minimum I would invest enough to get the company match. That's free money for you. I started investing 10% at the age of 26 and received a 6% company match. Luckily my company offered several different investment options so I chose aggressive growth funds. I have since diversified my portfolio to help with the overall risk factor. I have also been able to up my contribution level to over 18% of my pay. I still get a 6% match from my company as well bringing my total investment to 24%. I am 46 years old now and with a conservative growth estimate of 7% on my investments, I will retire with enough in savings to live very comfortable. That would not have occured if I had not started at 26. I am not really qualified to give investment advice, but there are several out here who are. Other investment tools include Roth IRA's which grow tax free and are good options to explore.

Roth RAs are a great option, but they aren't necessarily tax free, the money you put in is already taxed.

Kuehnja,
1. Make sure you take full advantage of the company match; it's free money.
2. I would focus on a target retirement fund (probably 2055 in your case) or some index funds that track the S&P or the Total Stock Market, only invest in a bond fund if you aren't currently in a target retirement fund. You should have a pretty aggressive asset allocation at your age and you don't want too much bond exposure. At your age, I'd suggest an allocation of 80%+ equities at the minimum.
3. After your match, if you'd like to invest even more, you should turn to Roth IRAs as Tommy mentioned. Roths are taxed as you put the money in and tax free upon retirement. This is attractive because presumably you will be getting taxed at a higher rate when you're older.

 

[wizards8507]

Roth RAs are a great option, but they aren't necessarily tax free, the money you put in is already taxed.

Kuehnja,
1. Make sure you take full advantage of the company match; it's free money.
2. I would focus on a target retirement fund (probably 2055 in your case) or some index funds that track the S&P or the Total Stock Market, only invest in a bond fund if you aren't currently in a target retirement fund. You should have a pretty aggressive asset allocation at your age and you don't want too much bond exposure. At your age, I'd suggest an allocation of 80%+ equities at the minimum.
3. After your match, if you'd like to invest even more, you should turn to Roth IRAs as Tommy mentioned. Roths are taxed as you put the money in and tax free upon retirement. This is attractive because presumably you will be getting taxed at a higher rate when you're older.

Those target retirement funds are usually much too conservative (i.e. bond-heavy). I know the old "invest in bonds the same percentage as your age," but there's no reason why a 20 or 30-something should be in bonds whatsoever because he can absorb the risk in the market. Plus, in a low interest rate environment, bonds have nowhere to go but down. Rates will rise eventually which will devalue all the bonds acquired at the prevailing low rates we see now.

My mix, if anyone cares. I'm 24M, married, no kids.

20% each.

SEQUOIA FUND
FIDELITY CAP APP UNITIZED
FIDELITY DVRS INTL UNITZD
VANGUARD INST INDEX PLUS
BARON GROWTH UNITIZD

 

[tussin]

Those target retirement funds are usually much too conservative (i.e. bond-heavy). I know the old "invest in bonds the same percentage as your age," but there's no reason why a 20 or 30-something should be in bonds whatsoever because he can absorb the risk in the market. Plus, in a low interest rate environment, bonds have nowhere to go but down. Rates will rise eventually which will devalue all the bonds acquired at the prevailing low rates we see now.

My mix, if anyone cares. I'm 24M, married, no kids.

20% each.

SEQUOIA FUND
FIDELITY CAP APP UNITIZED
FIDELITY DVRS INTL UNITZD
VANGUARD INST INDEX PLUS
BARON GROWTH UNITIZD

It's easy to have a bullish strategy during a bull market. I think every young person should have minimal bond exposure for diversification purposes (I have ~10%).

 

[wizards8507]

It's easy to have a bullish strategy during a bull market. I think every young person should have minimal bond exposure for diversification purposes (I have ~10%).

To each his own, I suppose. My perspective is that it's ALWAYS a bull market when we're talking about retirement accounts for a young person because the "market" is 40 years long. Every 40-year market in history has been a bull market.

 

[Old Man Mike]

Kuehnja: you and I are direly opposed on everything, but I'll tell you what worked for me.

a). take the company's offered money every time [i.e. matching funds];

b). pay attention to wizards [at least until you get married or have other relationship responsibilities --- go all in on the Market.] In the long term the market will thrash anything else around --- if it tanks the whole deal is a catastrophe, and American Big Money will not let that happen. I think it was somebody like Mark Twain who said: if you live in a Capitalist economy you better become a Capitalist. If you have a wife and kids, it's still a better long term deal, but pressures will probably force you to think more conservatively. When drops occur, just don't panic and ride them out. Some monster like Verizon is probably bulletproof.

c). despite the fact that Verizon is probably bulletproof, it's still the smart move to spread out. These decisions depend upon what your internal workings are like. If you're going for the gold rings, just hit the supermonsters like Microsoft, Amazon, Google, but mainly the uber-base of everything, the energy sector. Also, if you're hip enough, the vital areas of the materials base. Civilization can't continue without the underlying energy and materials [ex. aluminum, iron, copper], so they rumble on. Basics if you want "steady"; electronic toys if you're a futuristic gambler.

Another way to go, which most do not, is to find a "package" of what are called "social choice stocks". These stocks are the sort of things which don't overtly violate people's sensibilities who are advocates for things like environmentalism or social justice causes [they are still big companies, just ones with no overt kickass style activities]. On the surface they sound like economic losers, but they have been my choice for years, and they always have taken losses much less seriously during downturns than the Devil-take-the-hindmost stocks.

I was an somewhat underpaid teacher all my life. By going the way above, I retired with nearly exactly one million dollars in my retirement account.

For what it's worth. OMM

 

[cody1smith]

My retirement
Storage
Land
Rental property
Ira's (suck)
I have some stocks which I have done very well with over the last 10 years or so. I also have a whole folder full of stocks that are currently worth nothing or are in bankruptcy ect. Its risky no matter how smart you are or what you know.

Stocks are so risky and almost crazy to invest in unless you are willing to spend at least 10 hours weekly doing homework on the market. But they can also make you liquid money right now.

I invested several thousand dollars in siri several years ago when it was trading near its low. Right before the merger with XM. It went up like crazy and is still trading for what I consider an under valued price. Anyway I sold enough to buy my cabinets and countertops when I built my last house. 22k worth. I had 1260 dollars in the cabinets. Yes you read that right. Plus it is still saving me today and will be for 20 more years. Because it was money I did not have to borrow. So I look at it as I am making 3.425 percent on that money every year.

Moral of the story I guess is saving for retirement is great, most don't do it and that is a huge part of what is wrong with our country. So max out the match on your 401k
take advantage of the roth IRA option. But invest some for now. Do some work read some books and just make time to educate yourself with a couple sections of the market. Don't bet the farm on it and get in over your head though. Live poor and retire wealthy in my opinion sucks!

 

[wizards8507]

Another way to go, which most do not, is to find a "package" of what are called "social choice stocks".

If you go that route, you really need to do your research about what exactly they're using as their criteria for "social choice" because it might not agree with your perspective on the matter. Some funds might take a "green" route and only invested in companies that are helping the environment. Others (see the Timothy Fund) might take a "Christian" approach and not invest in companies that promote abortion, pornography, alcohol, tobacco, gambling etc. A lot of those funds use criteria that are so strict that it's difficult for them to keep pace with the market and aren't (IMO) worth it.

Another consideration about socially-conscious funds is that there's no benefit to a company if you invest in their stock. You might think tobacco is one of the biggest evils in the country, but if you decided to invest in a fund that held Philip Morris, you can rest in peace knowing that none of your money actually GOES to Philip Morris. They got all their cash from the transaction at the time of their IPO, and any subsequent transactions are just between investors. You're not helping that company or supporting what they stand for if you hold a mutual fund that carries their stock, you're just betting on the long-term growth of that stock from which you yourself will benefit.

Unrelated, but it came up and I haven't commented: I'd stay away from single-company stocks, even something large like Verizon, unless you're getting some kind of preferred employee pricing (i.e. 5% discount or something like that). It's just too risky and nobody is truly "too big to fail," especially if your trust lies with politicians. Nobody thought that Standard Oil or Enron would ever go belly-up either, but shit, as they say, happens.

 

[NDFANnSouthWest]

Read Rich Dad Poor Dad. Assets vs liabilities.

My portfolio:
Real Estate....cash flow rentals
Stocks - very diversified
Gold/Silver - wealth preservation against a weak over printed $

Also, there is a guy names Dave Ramsey....he has a talk show...great stuff. Do a google search and listen to his sound advise...

 

[wizards8507]

Read Rich Dad Poor Dad. Assets vs liabilities.

My portfolio:
Real Estate....cash flow rentals
Stocks - very diversified
Gold/Silver - wealth preservation against a weak over printed $

Also, there is a guy names Dave Ramsey....he has a talk show...great stuff. Do a google search and listen to his sound advise...

I'd also read Millionaire Next Door.

Don't buy real estate until you can pay cash for it.

(I personally don't like precious metals because if everything goes bad enough where you need them, nobody will want to buy them simply BECAUSE it's "that bad".)

 

[NDFANnSouthWest]

I'd also read Millionaire Next Door.

Don't buy real estate until you can pay cash for it.

(I personally don't like precious metals because if everything goes bad enough where you need them, nobody will want to buy them simply BECAUSE it's "that bad".)

Excellent suggestion....

 

[koonja]

Thank you all for your opinions. If I coud rep each of you I would.

 

[NDBoiler]

New to investments here.

My company matches 6% of my contribution to 401K. 3% cash match, and 3% investment match. It's a good number, but they don't advise you at all (which I'm not complaining about, because that's what makes investing so fun, right?).

But I have forgotten what little I once knew in college about stocks and so I have it set to put all 3% investment into the company stock.

So, yeah. That's where I'm at and wondering if I should spread out the 3%? If so, how?

What are EFTs? I heard these might be a strong option if you're not looking to touch your investments for 30 years or so. Is this true?

FWIW, the company is Verizon. So maybe I should just keep it going to their stock? Maybe just loading up with one massive company will be the most beneficial in the long term? Or maybe it's boring and won't return much because who knows if they'll be better off now that they are in 30 years? IDK.

Really, any advice will help and be appreciated.

This shouold answer all your questions in a clear and concise way:

<iframe width="640" height="360" src="//www.youtube.com/embed/VsEpjTcWkyw?feature=player_detailpage" frameborder="0" allowfullscreen></iframe>

 

[NDFANnSouthWest]

There are alot of ppl that argue against precious metal...and I see both sides of the argument. However, when the fed reserve continues to print money....what will happen...supply and demand...right? I hope the $ never crashes however I want to be prepared if it does.

 

[wizards8507]

There are alot of ppl that argue against precious metal...and I see both sides of the argument. However, when the fed reserve continues to print money....what will happen...supply and demand...right? I hope the $ never crashes however I want to be prepared if it does.

Ammunition and tobacco.

And land, too.

 

[jerboski]

I would recommend diversity and not putting it all in Verizon. The key is to eliminate or marginally reduce systematic risk which is done by diversity. There are many ways to do this through indexes or mutual funds. I personally think the Vanguard is a great index particular the one that follows the S&P500. Keep in mind there is no right or wrong answer, the question is how risky are you and what are your goals. It seems you are young so I would recommend being moderately aggressive however be sure that your portfolio is diverse so don't put it all in Verizon.

 

[NDFANnSouthWest]

I would recommend diversity and not putting it all in Verizon. The key is to eliminate or marginally reduce systematic risk which is done by diversity. There are many ways to do this through indexes or mutual funds. I personally think the Vanguard is a great index particular the one that follows the S&P500. Keep in mind there is no right or wrong answer, the question is how risky are you and what are your goals. It seems you are young so I would recommend being moderately aggressive however be sure that your portfolio is diverse so don't put it all in Verizon.

Good advise...look at Enron. smh

 

[Buster Bluth]

In three words:

railroads and marijuana

 

[LoveThee]

Not sure if you're familiar with the site Kuehnja, but Reddit is a site with a lot of good info to consider for questions like these. You could check out subs like /r/investing or /r/personalfinance

Good luck with your investments!

 

[IrishHokie22]

There's some really good advice in this thread. I'd pay close attention to what wizards, old man mike, and goose tranio said. I'd add in my thoughts but they more or less echo what has already been posted.

In a nutshell though, you want to be diversified (don't put it all on Verizon) and assuming you're in this for the long-haul, you want the vast majority of your portfolio to be made up of equity securities (stocks). Don't be afraid to put part of your portfolio in an international mutual fund as well. Americans tend to be afraid to invest internationally but it's been proven that having a portion of your portfolio in international stocks reduces risk.

 

[jerboski]

Good advise...look at Enron. smh

Cant even imagine being an every day employee at Enron when their CEO and executive team was telling all their employees to continue buying Enron and investing in the company when they knew what was going on and all the debt they were hiding. Blows my mind

 

[zelezo vlk]

It is my honest opinion that anybody who wishes to invest their money should read A Random Walk Down Wall Street by Burton Malkiel. It gets dry, but it's incredibly insightful.