The Investment Thread (help with savings, stocks, retirement funds, etc.)

[smokew11]

fuck Art History....personal finance should be a required college course. high school too

[Benny003]

Originally Posted by smokew11

fuck Art History....personal finance should be a required college course. high school too

It really should be. I can think of few other things that could be taught that are more practical to modern living.

[Tiduwho]

Originally Posted by Benny003

It really should be. I can think of few other things that could be taught that are more practical to modern living.

And educate the common man to better himself? Best to leave him in the dark so he can spend, don't want the economy to go dark with $300 million people all saving instead of spending. Might throw a wrench into this nice stock market we have here.

[rconverse]

Isn't the stock market surge really due to company's buying back their own stock?

[jiggajm18]

i get that it is better to start young doing smaller saving than doing nothing at all. but i really think that that message makes younger people not take the responsibility of saving for retirement as seriously as they should. and that has the potential to create bad habits that are very difficult to break.

[Tiduwho]

Originally Posted by rconverse

Isn't the stock market surge really due to company's buying back their own stock?

Long term economic growth over the past hundred years has been greatly influenced by consumer spending, which obviously helps businesses. To follow, stock market long term over the past hundred years has also benefited from spending --- the more we spend, the more companies make, the healthier our county is, the more people get paid, and the cycle repeats.

If we had a large shift in sentiment away from spending our hard earned money: the economy, and the stock market, could be greatly hampered. Rather than 8% return per year, if all 300 million Americans are stuffing all their money under their mattress, businesses go under, economic health of our country goes under, stock market returns go under.

Part of the reason you can say that over 40 years of compounding interest, you'll do just fine is that we have an economy that continually grows, even if it's a slow pace in certain decades. If everyone got the memo, there wouldn't be enough of the pie to go around or to profit from.

/cynic

[Tiduwho]

Originally Posted by jiggajm18

i get that it is better to start young doing smaller saving than doing nothing at all. but i really think that that message makes younger people not take the responsibility of saving for retirement as seriously as they should. and that has the potential to create bad habits that are very difficult to break.

I don't follow. Parent tells you "save your money Johnny, the more you save now the easier money will be for you later in life!"

So Johnny starts putting $5 away every week in his piggy bank. Over time, he makes more money, keeps saving. Saving becomes just a normal part of life, you pay yourself first, you never see it when you take 10% off the top, and so you never miss it.

It's like getting in shape. If you've always been athletic and involved in sports, working out is easy and just a part of your daily life. If you are 300 pounds and about to make a drastic change in your lifestyle, it's a lot easier to wake up and long for all those calories you used to get after a few months. Hence why just as people diet and then later balloon back, people with bad savings habits that start late, renege on them and splurge after a couple months of saving diligently.

You don't miss something if you never had it to begin with. It's gone on the front end. Your paycheck was already down to $1000 from when you first set up your deductions. You never lived with it at $1400 and had to adjust your lifestyle down. Your lifestyle was setup based on your $1000 paycheck instead.

Methinks Parents learned up Johnny pretty good.

[jiggajm18]

i'm talking more about the message we send young workers about what percent they should save for retirement. a lot of things i read say between 3-6%. that's just not enough. especially if you're entry level, you're probably making 40k, 50k if it's a good job. let's say you contribute 3% a year, you are putting less than $2,000 a year into your account. you probably also aren't getting more than a 3% raise a year (if you're lucky).

and i think it's also important to remember that a lot of younger works job-hop frequently. studies show that when you leave a job, particularly if you are young, and you have a low balance in your 401k, you are likely to cash it out.

and even in your post, you started it off with "the more you save". which is exactly my point. we do young employees a disservice by telling them that putting away something is better than nothing. i'm not arguing that that is false - it's not, it's true. but we should be focusing on telling them that they should save more if they can.

[jiggajm18]

let's say you get hired at 50k a year, put in 6% a year, get a 3% raise each year, and receive an annual return of 8%. in 30 years, in today's dollars, you'll have about 460k. that's not even enough to retire on today, let alone 30 years from now.....

[Tiduwho]

Originally Posted by jiggajm18

i'm talking more about the message we send young workers about what percent they should save for retirement. a lot of things i read say between 3-6%. that's just not enough. especially if you're entry level, you're probably making 40k, 50k if it's a good job. let's say you contribute 3% a year, you are putting less than $2,000 a year into your account. you probably also aren't getting more than a 3% raise a year (if you're lucky).
and i think it's also important to remember that a lot of younger works job-hop frequently. studies show that when you leave a job, particularly if you are young

and even in your post, you started it off with "the more you save". which is exactly my point. we do young employees a disservice by telling them that putting away something is better than nothing. i'm not arguing that that is false - it's not, it's true. but we should be focusing on telling them that they should save more if they can.

First Bold: Who says 3%-6% though? Are you saying we send this message passively as this is the amount that companies match? Otherwise, basically any article you find will advise 10% minimum, 15% better, 20% best. Even using 12th grade level language in google asking what to save, these are your results:

http://money.cnn.com/retirement/guid...mag/index7.htm
http://www.learnvest.com/knowledge-c...-need-to-save/
http://moneyfor20s.about.com/od/savi...owmuchsave.htm



Second Bold: Lack of financial education, again, the same problem referenced. Cashing out your 401k = dumb. If young people were taught in high school to always rollover, that problem would be minimized.


Third Bold: I think that's the message given. That's the message I always give young people. Save more. The more the better. In actual financial course workshops and the like, they make this plain as day. The problem again is that this should be taught required in high school.

[rconverse]

Originally Posted by Tiduwho

Long term economic growth over the past hundred years has been greatly influenced by consumer spending, which obviously helps businesses. To follow, stock market long term over the past hundred years has also benefited from spending --- the more we spend, the more companies make, the healthier our county is, the more people get paid, and the cycle repeats.

If we had a large shift in sentiment away from spending our hard earned money: the economy, and the stock market, could be greatly hampered. Rather than 8% return per year, if all 300 million Americans are stuffing all their money under their mattress, businesses go under, economic health of our country goes under, stock market returns go under.

Part of the reason you can say that over 40 years of compounding interest, you'll do just fine is that we have an economy that continually grows, even if it's a slow pace in certain decades. If everyone got the memo, there wouldn't be enough of the pie to go around or to profit from.

/cynic

Yeah, I totally get it. I was specifically asking about the past 5-8 years in terms of buybacks. I read an article that basically said a major reason the markets rebounded so quickly is that companies poured profits into buying back stock. While this increased the overall stock market, it simultaneously increases a lot of 1%-ers net worth/bonuses because a lot of that is in stock. The article went on to talk about how this creates even more income inequality as the worker bees don't benefit much from the stock market increase like the HCE's do.

[smokew11]

im glad we have a mandatory 7.5% contribution, because if we didnt, i probably wouldnt have done more than i had to when I started and didnt know any better

[AJF_41]

Originally Posted by rconverse

Isn't the stock market surge really due to company's buying back their own stock?

I wouldn't really say that Rog..
Buybacks have accelerated since the bottom of the recession, but I don't think they are a driver of the equity market..
Multiple expansion is a huge part of S&P move, investors are willing to hold equities (and chase them), as returns everywhere else (fixed income) are low given rates. Plus QE money flow out is making its way to equity market (at least I think it is)..

Here's a good look at quarterly buy-backs by S&P 500.
Corporations do a horrible job timing purchases.
You can see the largest quarterly buy-backs took place at the peak in 2007.

Buy high, don't buy low.
#corporateamerica
#averageinvestor

http://www.factset.com/websitefiles/...yback_12.16.14

Originally Posted by Tiduwho

Long term economic growth over the past hundred years has been greatly influenced by consumer spending, which obviously helps businesses. To follow, stock market long term over the past hundred years has also benefited from spending --- the more we spend, the more companies make, the healthier our county is, the more people get paid, and the cycle repeats.

If we had a large shift in sentiment away from spending our hard earned money: the economy, and the stock market, could be greatly hampered. Rather than 8% return per year, if all 300 million Americans are stuffing all their money under their mattress, businesses go under, economic health of our country goes under, stock market returns go under.

Part of the reason you can say that over 40 years of compounding interest, you'll do just fine is that we have an economy that continually grows, even if it's a slow pace in certain decades. If everyone got the memo, there wouldn't be enough of the pie to go around or to profit from.

/cynic

[rconverse]

Originally Posted by smokew11

im glad we have a mandatory 7.5% contribution, because if we didnt, i probably wouldnt have done more than i had to when I started and didnt know any better

Mandatory or that's what they start you at and you can opt out? I think that's kind of a high for a start to be mandatory to be honest. Just my opinion.

[rconverse]

Originally Posted by AJF_41

I wouldn't really say that Rog..
Buybacks have accelerated since the bottom of the recession, but I don't think they are a driver of the equity market..
Multiple expansion is a huge part of S&P move, investors are willing to hold equities (and chase them), as returns everywhere else (fixed income) are low given rates. Plus QE money flow out is making its way to equity market (at least I think it is)..

Here's a good look at quarterly buy-backs by S&P 500.
Corporations do a horrible job timing purchases.
You can see the largest quarterly buy-backs took place at the peak in 2007.

Buy high, don't buy low.
#corporateamerica
#averageinvestor

Okay, I was just going over one article, so not exactly concrete. Thanks, bud!

[Arby]

Originally Posted by AJF_41

I wouldn't really say that Rog..
Buybacks have accelerated since the bottom of the recession, but I don't think they are a driver of the equity market..
Multiple expansion is a huge part of S&P move, investors are willing to hold equities (and chase them), as returns everywhere else (fixed income) are low given rates. Plus QE money flow out is making its way to equity market (at least I think it is)..

Here's a good look at quarterly buy-backs by S&P 500.
Corporations do a horrible job timing purchases.
You can see the largest quarterly buy-backs took place at the peak in 2007.

Buy high, don't buy low.
#corporateamerica
#averageinvestor

http://www.factset.com/websitefiles/...yback_12.16.14

[smokew11]

Originally Posted by rconverse

Mandatory or that's what they start you at and you can opt out? I think that's kind of a high for a start to be mandatory to be honest. Just my opinion.

yeah we didnt have a choice. school employees are state employees. i dont know if that has anything to do with it

[rconverse]

Originally Posted by smokew11

yeah we didnt have a choice. school employees are state employees. i dont know if that has anything to do with it

I don't know either. I haven't worked in this industry in over 7 years, so am not as familiar as I used to be. I just thought that 7.5 was a high number and was curious whether it was truly mandatory or not. I know people are often involuntarily started in these type plans but typically they can opt out. I was just wondering if you couldn't opt out. Meaning the 7.5% was truly mandatory.

[smokew11]

Originally Posted by rconverse

I don't know either. I haven't worked in this industry in over 7 years, so am not as familiar as I used to be. I just thought that 7.5 was a high number and was curious whether it was truly mandatory or not. I know people are often involuntarily started in these type plans but typically they can opt out. I was just wondering if you couldn't opt out. Meaning the 7.5% was truly mandatory.

yeah as far as i know its mandatory

check out the last page for our employer contributions

[rconverse]

Originally Posted by smokew11

yeah as far as i know its mandatory

check out the last page for our employer contributions

No offense, but I'm not going to check out your ER match.

But, I totally understand the intent of starting people out contgributing to their retirement. Yeah, it was called auto-enrollment!! (sorry, that was eluding me)

Anyway, I'm just so insubordinate. I'd be like "fuck you". Why don't I do what I want with my money and you go fuck off?

[smokew11]

i for one was glad about the 7.5% mandatory contribution. it comes close to what I'd be able to do in a Roth, and this way I can still contribute to a Roth...plus I'll be vested in June, so if I leave I'll be able to bring all my employer contributions and do what i want with it

[rconverse]

Originally Posted by smokew11

i for one was glad about the 7.5% mandatory contribution. it comes close to what I'd be able to do in a Roth, and this way I can still contribute to a Roth...plus I'll be vested in June, so if I leave I'll be able to bring all my employer contributions and do what i want with it

Yeah, well you definitely want to take advantage of the match regardless of anything else.

[smokew11]

our match is really insane

[rconverse]

Originally Posted by smokew11

our match is really insane

That's awesome and explains why you'd be very pro mandatory contributions. Or, at least partially explain as it's a decent idea to begin with. I'm not against it but I hope people can opt out if they really think it's necessary. I think, back in the day, the auto-enrollment was 2-1.5% and people could opt out. (Not that they should.) 7.5% is kind of high to be mandatory, imo.

[smokew11]

yeah i def hear what you're saying, im just happy it works for me...since that money has come out since day 1, ive never factored that into my budget, which means its not missed at all. if i continue teaching for another 30 years and hit a final avg salary of $80k (our final averages are taken by dividing the 3 highest-salaried years), i'll have about $1.8mm in my psers account

[unccrombie]

Originally Posted by jiggajm18

let's say you get hired at 50k a year, put in 6% a year, get a 3% raise each year, and receive an annual return of 8%. in 30 years, in today's dollars, you'll have about 460k. that's not even enough to retire on today, let alone 30 years from now.....

while your numbers are true, you don't assume a company match in addition to your 8% RoR.

that 460k in 30 years, with a 6% company match every year, and your numbers yields ~$835k in 30 years

[AJF_41]

what would warren buffett do

WWWBD

[unccrombie]

Originally Posted by AJF_41

what would warren buffett do

WWWBD

eat a buffet to save cash, honestly.

[dpresti]

Need some advice guys. I have some debts that I want to pay off.
Here they are:

student loan - 14,209 @ 3.125%
irs payment plan - 10,324 @ 0.05%
car - 13,596 @ 3.75%

Logic would tell me to pay down the student loan or car first. I've got enough cash to pay off one right now. What would you guys do, how would you plan this out?
I want my only debt to be my house, and I think i'll be keeping my car for a long time. 2010, with 55k on it.

thanks guys

[unccrombie]

Originally Posted by dpresti

Need some advice guys. I have some debts that I want to pay off.
Here they are:

student loan - 14,209 @ 3.125%
irs payment plan - 10,324 @ 0.05%
car - 13,596 @ 3.75%

Logic would tell me to pay down the student loan or car first. I've got enough cash to pay off one right now. What would you guys do, how would you plan this out?
I want my only debt to be my house, and I think i'll be keeping my car for a long time. 2010, with 55k on it.

thanks guys

car
irs
student

student loans are deductible, the other 2 are not. work your way down from highest interest rate.

pay off the car immediately...like now as you said.