Hey Prof, can I pick your brain???

[breederofkoi]

Hey Roy, I was wondering if you would mind giving me some insight. It pertains to the stock market, I'd just like your personal opinion.

Your one of the few people I know that dabble in it, and I'm trying to do a little checking around & am quizing everyone that I know.

I'm considering investing some money (of course, that means my truck engine will have to go hold). From what I hear, it's a good time to get into it if you can live with ups & downs.. If I don't do my motor right now, I'd have about 5-7K that doesn't have a purpose and could be invested (I know that probably wouldn't get me too much, but thats about all I have, it'll pretty much kill my savings account). I know that may not be much money to an investor, but it's a lot to me. I would have to go through an investor or someone with a very thorough knowledge of the market, I don't know enough about it to do e-trade or anything like that (I'd probably lose it all in a matter of hours if I tried it myself).

I guess I'm curious on your opinion and what you may do if you were in my shoes??? Also, what are the good investors that you know off, and which ones should be steered clear of??? Do you know of anyone that would be honest with me & advise me on what my best course of action should be, if there even is any??? If it would be stupid to invest in my situation, I would like to hear it, it'll save me worries, time & I'd be able to do my motor. Also, If you don't mind my asking, how are you doing in the market (up, down, or holding your own)??? Any thoughts or opinions you have would be greatly appreciated.

Thanks,
Jason

 

[ChrisAZ]

If you will be draining your savings account to invest, it's probably not a wise decision. Then again, it is better to invest it than spend it on mods. You really should have at least 6 months salary in the bank at all times just in case. I don't mess with stocks so I can't give you any advice on what to buy. I am sure Roy will pop in and let you know what he thinks.

 

[Prof]

Chris is correct.

My opinion...and I am not a financial expert...just a guy with a lot of scars from years of investing...

The market is very dicey these days...

I do not try to time the market...that means I make no assumptions about the market going up or going down...I make long term investments...five plus years is the horizon I use, if you are much younger than me then the horizon should be 20 years at least.

I also do not buy individual stocks. Even the people that spend 18 hours a day have spotty records in trying to do that.

I invest in money managers. I buy mutual funds that are well managed. Not superstars, just good reliable funds that return eight or 10 percent over time.

Right now my strategy (because I have little time left) is to assure return in a larger and larger portion of my investment portfolio...simply to remove risk from my future investments...I am sinking everything beyond a certain dollar level into guaranteed returns (Certificates of Deposit).

I have set a risk value, an amount of money that if it goes away, so be it.

Here are the fundamental guidelines that I think people need to live by right now.

We all need a year of liquid assets...the minimum cash you would need if you had no income tomorrow. That is goal number one in our current economic environment.

Once that is in place, it should be growing, because your needs will continue to rise.

Then, learn to live on 70 percent of your income. The other 30% should be invested in yourself first. Sharpen the saw...keep improving your skills, broaden your options with education, seek to create contacts that offer alternatives for the future...control what you can control, don't place yourself at the mercy of others.

I know this sounds harsh, but you have to make emotionless decisions. My daily driver is a 12 year old Volvo...probably worth $4500. But I love it. Yes, I want a CTS V, an '08 Viper, a ZR1 and I could buy all three today...but I drive my 1997 Volvo Sport Wagon...and I put 4 or 5k a month into the strategies I mentioned above.

Investing is a way of life not just a decision about where to place dollars.

I think your $7-10k should be in a certificate of deposit today. That assumes that you have maxed out your 401k contribution at work, and have deducted your maximum allowable for the pre-tax benefits deductions.


A long answer to a simple question...sorry for going off like that! But I enjoyed it!

P.S. Part of your budget needs to give back too...it is food for the soul. I budget after the above mandates, for contributions...it is candy for my soul, and I get the same charge from making contributions that I do from a quick sprint on the open highway! Sometimes it delays buying the new amp, or the wooden blinds for the sun room, but it is so cathartic...try it, you will love it.

 

[Prof]

Just a few more points...learn to compute future value of dollars...there are calculators all over the internet.

For instance...if your company will let you front load your 401k...max out your contribution as early in the year as possible...the future value of those extra dollars deposited and matched, will be huge dollars in years to come.

Look closely at all costs of financing. Work hard and make sacrifices to get to a point that you never ever pay financing charges on a vehicle again...two ways to go...suffer with what you have until you have the cash to buy the new vehicle...or get your credit rating to the point that you can finance for 0%.

The cost of financing vehicles over the span of your vehicle loving years is huge.

Look at paying as much on your mortgage as possible each month (extra principle)...and try to finance for 15 years and pay off early.

The concept is pay yourself...avoid at all possible costs any finance charges. Use an American Express Card that demands that you pay everything at the end of every month...don't finance anything.

Suffer without until you can pay cash.

He is another one...if you are close to getting social security take it as soon as you are eligible...put every penny in an interest bearing savings account...pay it all back at age 70, keep the interest, and then get the max payment from then on.

This also helps you get to that one year of liquid assets if an emergency arises...watch the federal register closely to be sure that the loop hole is not going to be plugged by the Social Security Administration.

Suffer now, to achieve independence later.

 

[VIPR PWR]

Very good advice Prof --So how does one discipline themselves to stick with the plan ....Both my son's need all the advice I can gather hahahaha...They just don't like to listen to dear old Dad.....
Also, What is your opinion on dealing with E-Trade , Ameri-Trade etc...

 

[Prof]

I didn't listen either...I married a very conservative lady who withheld sex if I didn't do what she said...that worked.

I simply do not invest in equities myself...all of the discount brokers are just people who try to drive commissions and there is nothing wrong with that...but your decisions about investments are just guesses...even the people who are the very best at selecting equity positions are often wrong. That is why I take a very conservative approach and balance my investments in mutual funds. I also diversify in several ways...within in funds, and I spread my assets across four different firms...and I only alter my strategy annually...and that is usually to get a little more conservative as I approach the grave.

I have everything I need, a lot of what I want and the freedom to do as I please...but it has taken several things to get there:

1. Years and years of 70 work weeks...even as a VP and CEO

2. Always living at a moderate level...well within my income...

3. Waiting for all of the things I really wanted...never an impulse buy.

4. Saving before any bills were paid...paying myself first...

5. Never loaning money to family or friends...just giving it, and if it comes back super...if not, no problem, I am glad to be able to help.

6. I also married a very smart, highly educated and hard working woman...

 

[TNVIPER]

I agree with all the above advice Prof....even learned something I was not aware of .........."He is another one...if you are close to getting social security take it as soon as you are eligible...put every penny in an interest bearing savings account...pay it all back at age 70, keep the interest, and then get the max payment from then on.
"......................

 

[Prof]

Just got to be careful that the loop hole isn't closed before you can repay the Social Security Administration...they will have to post the change in the Federal Register so there will be ample warning.

Suzie Orman was screaming this out about a month ago...I hate her, but she sometimes has some good insight...

 

[THEWELSHM]

I didn't listen either...I married a very conservative lady who withheld sex if I didn't do what she said...that worked.

I simply do not invest in equities myself...all of the discount brokers are just people who try to drive commissions and there is nothing wrong with that...but your decisions about investments are just guesses...even the people who are the very best at selecting equity positions are often wrong. That is why I take a very conservative approach and balance my investments in mutual funds. I also diversify in several ways...within in funds, and I spread my assets across four different firms...and I only alter my strategy annually...and that is usually to get a little more conservative as I approach the grave.

I have everything I need, a lot of what I want and the freedom to do as I please...but it has taken several things to get there:

1. Years and years of 70 work weeks...even as a VP and CEO

2. Always living at a moderate level...well within my income...

3. Waiting for all of the things I really wanted...never an impulse buy.

4. Saving before any bills were paid...paying myself first...

5. Never loaning money to family or friends...just giving it, and if it comes back super...if not, no problem, I am glad to be able to help.

6. I also married a very smart, highly educated and hard working woman...

Damn Roy you sound like a "Republican" or are you saving up to be one????

thewelshm

 

[breederofkoi]

I think I may already be living by the same philosophy as you, or at the least, pretty close to it. I've never been one for debt, I can't stand it.

I don't usually buy things on impulse, I usually save enough to pay for it before I do it. I did have to do a little financing on the truck when I bought though, just couldn't get all the cash together quick enough & I knew I wanted the first production year. When I bought the truck in 04, I gave them a personal check 30k & financed the 15k that was left over, that has been paid off for 2 years.

I beleive the max contribution for my 401k is 13%, I put 12% in it every check. As far as the mortgage goes, god I wish it would go away, I'm still new in it, so I owe quite a bit, but I do what I can. I've only owned my house for 4 years. I pay 900 a month on the mortgage, but my payments are only 550. Unfortunately, I do not have a years salary laying around, would probably quite a long time until that can happen, but it would be great.

Tooting my own horn, I'm proud to say that at 30 years of age, I'm happy that the only bills I have are the mortgage, gas, electric & trash service. School, my vehicles & my toys have all been paid for. My parents did a good job of grilling the value of a dollar into me, I tend to be pretty good with my money.

As I had stated, the original purpose behind the 7-10k that I have was to build a motor for my truck, but I've been thinking, if I could get in the market & possibly make more out of it, I'd be willing to put the truck off for a while (but probably only for about 1-2 years).

I appreciate all the info you've given me, gives me a little more food for thought. I'm still pretty unsure about what I'll do?????:dontknow: If you can think of any more good advice or possibly some good people to talk to, I'd greatly appreciate it (I'd definitely owe ya one). I think I'll probably end up needing a substantial amount of advise/help before I decide what to do.

One straight forward question, which may be hard to answer since everyones risk level is different. In all seriousness, do you think it would be a horrendously stupid decision to get into the market (in my situation)??? I appreciate honesty, even if its brutal. I'm a big boy, my feelings don't get hurt very easily.

 

[THEWELSHM]

I think I may already be living by the same philosophy as you, or at the least, pretty close to it. I've never been one for debt, I can't stand it.

I don't usually buy things on impulse, I usually save enough to pay for it before I do it. I did have to do a little financing on the truck when I bought though, just couldn't get all the cash together quick enough & I knew I wanted the first production year. When I bought the truck in 04, I gave them a personal check 30k & financed the 15k that was left over, that has been paid off for 2 years.

I beleive the max contribution for my 401k is 13%, I put 12% in it every check. As far as the mortgage goes, god I wish it would go away, I'm still new in it, so I owe quite a bit, but I do what I can. I've only owned my house for 4 years. I pay 900 a month on the mortgage, but my payments are only 550. Unfortunately, I do not have a years salary laying around, would probably quite a long time until that can happen, but it would be great.

Tooting my own horn, I'm proud to say that at 30 years of age, I'm happy that the only bills I have are the mortgage, gas, electric & trash service. School, my vehicles & my toys have all been paid for. My parents did a good job of grilling the value of a dollar into me, I tend to be pretty good with my money.

As I had stated, the original purpose behind the 7-10k that I have was to build a motor for my truck, but I've been thinking, if I could get in the market & possibly make more out of it, I'd be willing to put the truck off for a while (but probably only for about 1-2 years).

I appreciate all the info you've given me, gives me a little more food for thought. I'm still pretty unsure about what I'll do?????:dontknow: If you can think of any more good advice or possibly some good people to talk to, I'd greatly appreciate it (I'd definitely owe ya one). I think I'll probably end up needing a substantial amount of advise/help before I decide what to do.

One straight forward question, which may be hard to answer since everyones risk level is different. In all seriousness, do you think it would be a horrendously stupid decision to get into the market (in my situation)??? I appreciate honesty, even if its brutal. I'm a big boy, my feelings don't get hurt very easily.

"Buy real estate" hang on to it for a fews years!!!

:congrats: :congrats: :congrats: :congrats: :congrats: :congrats:

thewelshm

 

[BurntRubber]

I think I may already be living by the same philosophy as you, or at the least, pretty close to it. I've never been one for debt, I can't stand it.

I don't usually buy things on impulse, I usually save enough to pay for it before I do it. I did have to do a little financing on the truck when I bought though, just couldn't get all the cash together quick enough & I knew I wanted the first production year. When I bought the truck in 04, I gave them a personal check 30k & financed the 15k that was left over, that has been paid off for 2 years.

I beleive the max contribution for my 401k is 13%, I put 12% in it every check. As far as the mortgage goes, god I wish it would go away, I'm still new in it, so I owe quite a bit, but I do what I can. I've only owned my house for 4 years. I pay 900 a month on the mortgage, but my payments are only 550. Unfortunately, I do not have a years salary laying around, would probably quite a long time until that can happen, but it would be great.

Tooting my own horn, I'm proud to say that at 30 years of age, I'm happy that the only bills I have are the mortgage, gas, electric & trash service. School, my vehicles & my toys have all been paid for. My parents did a good job of grilling the value of a dollar into me, I tend to be pretty good with my money.

As I had stated, the original purpose behind the 7-10k that I have was to build a motor for my truck, but I've been thinking, if I could get in the market & possibly make more out of it, I'd be willing to put the truck off for a while (but probably only for about 1-2 years).

I appreciate all the info you've given me, gives me a little more food for thought. I'm still pretty unsure about what I'll do?????:dontknow: If you can think of any more good advice or possibly some good people to talk to, I'd greatly appreciate it (I'd definitely owe ya one). I think I'll probably end up needing a substantial amount of advise/help before I decide what to do.

One straight forward question, which may be hard to answer since everyones risk level is different. In all seriousness, do you think it would be a horrendously stupid decision to get into the market (in my situation)??? I appreciate honesty, even if its brutal. I'm a big boy, my feelings don't get hurt very easily.

This is what I do.
1. $2000 in an emergency fund
2. 12 months of living expenses in savings (cash, money market, what ever your comfortable with)
3. Specific savings (retirement, new car, 2nd home)
4. Long term savings (401k, roth...etc)

some may disagree with the 3 &4 order, but you can always put that money in an IRA when you want. but if you were saving for a home or you know you may need a new car in 2 years its tough to get out.
I am a little older than you and can say that having a family takes alot of money, if your single your lucky...and I would switch to a 15 year mortgage if you could afford it.
Dont be a rush to make money in the stock market, there are always good plays its just a matter of finding them

 

[Prof]

Damn Roy you sound like a "Republican" or are you saving up to be one????

thewelshm

I have been a Republican for years...but some refer to me as a RINO...

I am fiscally conservative socially liberal...(Jessie Venture model it embarrasses me to say...)

I have no idea how the country would ever get those two concepts to work together...but I cannot deny how I feel.

I became terribly disenchanted with the Republican Administration of the past 8 years...because it did everything that Republicans rail against...they increased the size of government, severely damaged the bill of rights, and took deficit spending to levels never before imagined.

I am still a Republican in fundamental philosophy, but so socially liberal that I have to speak out of both sides of my mouth at the same time...which really causes my nose to twitch!

 

[Django]

I have been a Republican for years...but some refer to me as a RINO...

I am fiscally conservative socially liberal...(Jessie Venture model it embarrasses me to say...)

I have no idea how the country would ever get those two concepts to work together...but I cannot deny how I feel.

I became terribly disenchanted with the Republican Administration of the past 8 years...because it did everything that Republicans rail against...they increased the size of government, severely damaged the bill of rights, and took deficit spending to levels never before imagined.

I am still a Republican in fundamental philosophy, but so socially liberal that I have to speak out of both sides of my mouth at the same time...which really causes my nose to twitch!

This is an accurate self assessment..... As Kris Kristofferson would say, "he's a walking contradiction"....

But then again, who isn't...........?:dontknow:

D

 

[Prof]

I think I may already be living by the same philosophy as you, or at the least, pretty close to it. I've never been one for debt, I can't stand it.

I don't usually buy things on impulse, I usually save enough to pay for it before I do it. I did have to do a little financing on the truck when I bought though, just couldn't get all the cash together quick enough & I knew I wanted the first production year. When I bought the truck in 04, I gave them a personal check 30k & financed the 15k that was left over, that has been paid off for 2 years.

I beleive the max contribution for my 401k is 13%, I put 12% in it every check. As far as the mortgage goes, god I wish it would go away, I'm still new in it, so I owe quite a bit, but I do what I can. I've only owned my house for 4 years. I pay 900 a month on the mortgage, but my payments are only 550. Unfortunately, I do not have a years salary laying around, would probably quite a long time until that can happen, but it would be great.

Tooting my own horn, I'm proud to say that at 30 years of age, I'm happy that the only bills I have are the mortgage, gas, electric & trash service. School, my vehicles & my toys have all been paid for. My parents did a good job of grilling the value of a dollar into me, I tend to be pretty good with my money.

As I had stated, the original purpose behind the 7-10k that I have was to build a motor for my truck, but I've been thinking, if I could get in the market & possibly make more out of it, I'd be willing to put the truck off for a while (but probably only for about 1-2 years).

I appreciate all the info you've given me, gives me a little more food for thought. I'm still pretty unsure about what I'll do?????:dontknow: If you can think of any more good advice or possibly some good people to talk to, I'd greatly appreciate it (I'd definitely owe ya one). I think I'll probably end up needing a substantial amount of advise/help before I decide what to do.

One straight forward question, which may be hard to answer since everyones risk level is different. In all seriousness, do you think it would be a horrendously stupid decision to get into the market (in my situation)??? I appreciate honesty, even if its brutal. I'm a big boy, my feelings don't get hurt very easily.

You have the right habits.

I only have this to say about the stock market...it cannot fall as far as it has fallen in the past year...because it can't go below zero (I don't think!). That is the best I can say...I am not investing more in my mutual funds now (my wife is still putting in huge amounts, there is a philosophy that says as the market falls, your contributions buy more equities per dollar because of the falling prices, and when it turns you will have more shares to take advantage of the upswing...

But, she is young and can stand a lot of risk...you are too...but without the cash reserves...my suggestion is to buy a 3 month CD with your dollars, and then ask us all again as the CD matures. The picture could be a lot more clear by spring...or maybe not...But you won't lose any money in the three months, you might lose a little opportunity if the market jumps up...but no one is predicting that...

 

[THEWELSHM]

I have been a Republican for years...but some refer to me as a RINO...

I am fiscally conservative socially liberal...(Jessie Venture model it embarrasses me to say...)

I have no idea how the country would ever get those two concepts to work together...but I cannot deny how I feel.

I became terribly disenchanted with the Republican Administration of the past 8 years...because it did everything that Republicans rail against...they increased the size of government, severely damaged the bill of rights, and took deficit spending to levels never before imagined.

I am still a Republican in fundamental philosophy, but so socially liberal that I have to speak out of both sides of my mouth at the same time...which really causes my nose to twitch!

Thats fair enough:congrats: :congrats: :congrats: :congrats:

thewelshm

 

[breederofkoi]

You have the right habits.

I only have this to say about the stock market...it cannot fall as far as it has fallen in the past year...because it can't go below zero (I don't think!). That is the best I can say...I am not investing more in my mutual funds now (my wife is still putting in huge amounts, there is a philosophy that says as the market falls, your contributions buy more equities per dollar because of the falling prices, and when it turns you will have more shares to take advantage of the upswing...

But, she is young and can stand a lot of risk...you are too...but without the cash reserves...my suggestion is to buy a 3 month CD with your dollars, and then ask us all again as the CD matures. The picture could be a lot more clear by spring...or maybe not...But you won't lose any money in the three months, you might lose a little opportunity if the market jumps up...but no one is predicting that...

That philosophy is more or less exactly how I was looking at, if the market stays low, I can get more assets per dollar, which means I'll make more when the upswing rolls around. Great minds must think alike (or at least one great mind and one mediocre mind). I bet we can all guess which ones which.

I hope your talking about a different CD than what I'm thinking. I know the CD's at my bank aren't doing dingus right now, my savings account makes a better return. I guess I'm partially afraid that the market will turn before I get in (keep in mind that this is coming from a guy that knows nothing about the trends the market takes, just goin off the fact that its pretty low right now).

Roy, if you don't mind, please keep me updated on what you hear (hopefully I'm not being too much of a burden). I know I won't do anything for at least 1 - 2 weeks. I have a family friend that works for Baird (I probably spelled that wrong), I was hoping to get a little input from her as well, but she is out of town for a weeks vacation.

 

[Prof]

Is she good looking...maybe I should check with her too!

Hell I don't care what she looks like...will she tease me...that's all it takes for me!

Stop by the "Go Dow Go" thread, we trade a few ideas there each week.

 

[iraqivet01]

With the current situation that the world is going through, definitely have that "oh Shit" fund..

Amen to Living within your means, and don't have credit card debit. If you do those two things that will put you heads up above others.

Credit cards companies are no better than a legalized loan shark that will bleed you dry if you get then built up and don't pay them off every month.

 

[Wifey]

Chris is correct.

My opinion...and I am not a financial expert...just a guy with a lot of scars from years of investing...

The market is very dicey these days...

I do not try to time the market...that means I make no assumptions about the market going up or going down...I make long term investments...five plus years is the horizon I use, if you are much younger than me then the horizon should be 20 years at least.

I also do not buy individual stocks. Even the people that spend 18 hours a day have spotty records in trying to do that.

I invest in money managers. I buy mutual funds that are well managed. Not superstars, just good reliable funds that return eight or 10 percent over time.

Right now my strategy (because I have little time left) is to assure return in a larger and larger portion of my investment portfolio...simply to remove risk from my future investments...I am sinking everything beyond a certain dollar level into guaranteed returns (Certificates of Deposit).

I have set a risk value, an amount of money that if it goes away, so be it.

Here are the fundamental guidelines that I think people need to live by right now.

We all need a year of liquid assets...the minimum cash you would need if you had no income tomorrow. That is goal number one in our current economic environment.

Once that is in place, it should be growing, because your needs will continue to rise.

Then, learn to live on 70 percent of your income. The other 30% should be invested in yourself first. Sharpen the saw...keep improving your skills, broaden your options with education, seek to create contacts that offer alternatives for the future...control what you can control, don't place yourself at the mercy of others.

I know this sounds harsh, but you have to make emotionless decisions. My daily driver is a 12 year old Volvo...probably worth $4500. But I love it. Yes, I want a CTS V, an '08 Viper, a ZR1 and I could buy all three today...but I drive my 1997 Volvo Sport Wagon...and I put 4 or 5k a month into the strategies I mentioned above.

Investing is a way of life not just a decision about where to place dollars.

I think your $7-10k should be in a certificate of deposit today. That assumes that you have maxed out your 401k contribution at work, and have deducted your maximum allowable for the pre-tax benefits deductions.


A long answer to a simple question...sorry for going off like that! But I enjoyed it!

P.S. Part of your budget needs to give back too...it is food for the soul. I budget after the above mandates, for contributions...it is candy for my soul, and I get the same charge from making contributions that I do from a quick sprint on the open highway! Sometimes it delays buying the new amp, or the wooden blinds for the sun room, but it is so cathartic...try it, you will love it.

Very wise words from a very wise man :rock: :rock: :congrats: