The Investment Thread (stocks, bonds, real estate, retirement, just not gold)

[PharmDBro2017]

Even if the market crashes... history has shown it will come back and continue to go up 6-8% over time.... why stress about it unless you’re about to retire?


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[wagrxm2000]

Even if the market crashes... history has shown it will come back and continue to go up 6-8% over time.... why stress about it unless you’re about to retire?


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Because I am lol

It also applies to new investors though, the first 10 years are extremely important in compounding.

 

[wagrxm2000]

Totally wrong since you haven't put that number yourself. One of these days I'll do it for you.

You might want to do the numbers then

 

[wagrxm2000]

Totally wrong since you haven't put that number yourself. One of these days I'll do it for you.

Here I found you an article to save you some time.

Would Dollar Cost Averaging Have Saved You From “The Lost Decade”?

 

[PharmDBro2017]

Because I am lol

It also applies to new investors though, the first 10 years are extremely important in compounding.

Gotcha. When do you plan to retire and how old will you be then?


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[wagrxm2000]

Gotcha. When do you plan to retire and how old will you be then?


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My retirement is a number, 3 million. If we crash before we make it, unfortunately I'll be working through the recovery. While I talk about alternatives, I haven't decided if I'll try it or just wait for the recovery.

50 is the max I plan on working though, well full time. I'll stay on part time as long as I'm needed.

 

[mentos]

How do you guys retire early in your 50s if you can't withdraw from 401k/IRA/HSA until 65? Do you live on your taxable acct for 15 years?

 

[Momus]

Here I found you an article to save you some time.

Would Dollar Cost Averaging Have Saved You From “The Lost Decade”?

Investing to S&P 500 $10k/yr or $833/month

10 years, 2 bear markets, One of the the worst case scenario.
$100k total invested principal becomes $106k (~1%/yr return)
Sure, this look like sh1t after inflation. 2 bear markets in a decade. But, are you losing nominal money? Nope...

Let's do 15 years (from 2000 until 2015)
$150k total invested principal becomes $294k (~8.5%/yr return)

Let's add 3 more years ~18 years (from 2000 to 2018, right after you graduate rxm2000 = so obvious)
$180k total invested principal becomes $443k (~9.2%/yr return)

How about 25 yrs (the start of SPY = S&P 500 ETF inception 1993 to 2018), not doing jack sh1t, just DCA
250k investment becomes $865k (~8.8%/yr return)

If you invest $50k/yr (kinda hard as single rph, but, absolutely doable with dual income), after only 25 years of investing $1.25M total principal invested, you will have $4.32M now in 2018. Yes, that's not a mistake. Index investing is definitely dead, right? History showed we are in record "high/bubble" in pretty much every decade, had many terrible bears along the way and continue to move up for the last 200 years. So what if today is the market peak? You are going to be fine even if we crash. Market can also continue to run up another 30-40% while people are sitting on the sidelines waiting... waiting... For a 24 to 35 year old new grads? Invest now, and keep investing until you are hitting that magic number. Time is your ally. Tune out the noise. If you hit a bear market in your lifetime (and you WILL), pick up another job, never sell and buy even more even if it's your own blood in the street until it hurts. You will be rich as hell in 30 years.

If you keep investing for 40 yrs at only $10k/yr, the numbers get so absurd, but stock market history and math doesn't lie. Many people will work until they are 65 years old (a 40 years career).
$400k total invested capital becomes 3.5M (~avg 9%/yr return)
$400k total invested capital becomes 2.7M (~8%/yr return) - if you think it's going down
$400k total invested capital becomes 2M (~7%/yr return) - if you think it's going down even more
WTFOMGBBQ, it won't get 7% you said. Who told you to only put in $10k/yr if you think returns is going lower?

Long live DCA and index funds. Keep it simple, keep it stupid. Make tons of money doing absolutely nothing.

 

[wagrxm2000]

Investing to S&P 500 $10k/yr or $833/month

10 years, 2 bear markets, One of the the worst case scenario.
$100k total invested principal becomes $106k (~1%/yr return)
Sure, this look like sh1t after inflation. 2 bear markets in a decade. But, are you losing nominal money? Nope...

Let's do 15 years (from 2000 until 2015)
$150k total invested principal becomes $294k (~8.5%/yr return)

Let's add 3 more years ~18 years (from 2000 to 2018, right after you graduate rxm2000 = so obvious)
$180k total invested principal becomes $443k (~9.2%/yr return)

How about 25 yrs (the start of SPY = S&P 500 ETF inception 1993 to 2018), not doing jack sh1t, just DCA
250k investment becomes $865k (~8.8%/yr return)

If you invest $50k/yr (kinda hard as single rph, but, absolutely doable with dual income), after only 25 years of investing $1.25M total principal invested, you will have $4.32M now in 2018. Yes, that's not a mistake. Index investing is definitely dead, right? History showed we are in record "high/bubble" in pretty much every decade, had many terrible bears along the way and continue to move up for the last 200 years. So what if today is the market peak? You are going to be fine even if we crash. Market can also continue to run up another 30-40% while people are sitting on the sidelines waiting... waiting... For a 24 to 35 year old new grads? Invest now, and keep investing until you are hitting that magic number. Time is your ally. Tune out the noise. If you hit a bear market in your lifetime (and you WILL), pick up another job, never sell and buy even more even if it's your own blood in the street until it hurts. You will be rich as hell in 30 years.

If you keep investing for 40 yrs at only $10k/yr, the numbers get so absurd, but stock market history and math doesn't lie. Many people will work until they are 65 years old (a 40 years career).
$400k total invested capital becomes 3.5M (~avg 9%/yr return)
$400k total invested capital becomes 2.7M (~8%/yr return) - if you think it's going down
$400k total invested capital becomes 2M (~7%/yr return) - if you think it's going down even more
WTFOMGBBQ, it won't get 7% you said. Who told you to only put in $10k/yr if you think returns is going lower?

Long live DCA and index funds. Keep it simple, keep it stupid. Make tons of money doing absolutely nothing.

So like I said, lost decade which is happening again.

The point is simple, we're at a peak, after this first recession we will go through another. That could be 15 years from now. The only money you'll make off this is dividends. Good job making 2% per year, you might as well had put your money in a CD.

I've said this so many times, your charts are showing returns at a peak. You better show them at the up coming troughs too.

 

[wagrxm2000]

How do you guys retire early in your 50s if you can't withdraw from 401k/IRA/HSA until 65? Do you live on your taxable acct for 15 years?

Yeah. You have to remember, at this point, your house is paid off and kids are gone. These are a huge part of our total costs each year.

 

[PharmDminus]

How do you guys retire early in your 50s if you can't withdraw from 401k/IRA/HSA until 65? Do you live on your taxable acct for 15 years?

look up the Roth IRA conversion ladder, the easiest way to do it

 

[Momus]

So like I said, lost decade which is happening again.

The point is simple, we're at a peak, after this first recession we will go through another. That could be 15 years from now. The only money you'll make off this is dividends. Good job making 2% per year, you might as well had put your money in a CD.

I've said this so many times, your charts are showing returns at a peak. You better show them at the up coming troughs too.

Even a broken clock is right twice a day.

 

[WVUPharm2007]

How do you guys retire early in your 50s if you can't withdraw from 401k/IRA/HSA until 65? Do you live on your taxable acct for 15 years?

IRA is 59.5.

 

[wagrxm2000]

Even a broken clock is right twice a day.

Heck yeah it is. Just watch (no pun intended).

 

[rickyroxy]

Need suggestion from experts in investing.

My current situation. Gross income $150k/yr Maxed out 401k, HSA. Have been buying ESPP ~ 12k/year for last 8 years. Wife just started working. Not huge paycheck but extra side income approx 24k/yr. Just started roth IRA for both of us with vanguard.

So question is that which would be a better priority to invest ESPP or roth IRA for both of us which would be 11k/year.

Another option is 529 or college prepaid plan for kids (2 of them, 4 years old). Which priority order is better. I can not contribute to all of them together.

 

[BMBiology]

Need suggestion from experts in investing.

My current situation. Gross income $150k/yr Maxed out 401k, HSA. Have been buying ESPP ~ 12k/year for last 8 years. Wife just started working. Not huge paycheck but extra side income approx 24k/yr. Just started roth IRA for both of us with vanguard.

So question is that which would be a better priority to invest ESPP or roth IRA for both of us which would be 11k/year.

Another option is 529 or college prepaid plan for kids (2 of them, 4 years old). Which priority order is better. I can not contribute to all of them together.

I say 529. Even if you buy stocks and sell them, you won’t pay much tax (if any) during retirement (won’t be making much money). That is why I don’t think Roth IRA is that good.


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[WVUPharm2007]

Need suggestion from experts in investing.

My current situation. Gross income $150k/yr Maxed out 401k, HSA. Have been buying ESPP ~ 12k/year for last 8 years. Wife just started working. Not huge paycheck but extra side income approx 24k/yr. Just started roth IRA for both of us with vanguard.

So question is that which would be a better priority to invest ESPP or roth IRA for both of us which would be 11k/year.

Another option is 529 or college prepaid plan for kids (2 of them, 4 years old). Which priority order is better. I can not contribute to all of them together.

Depends on the company. I'm not buying CVS stock. I've seen behind the curtain.

 

[pezdispenser]

Need suggestion from experts in investing.

My current situation. Gross income $150k/yr Maxed out 401k, HSA. Have been buying ESPP ~ 12k/year for last 8 years. Wife just started working. Not huge paycheck but extra side income approx 24k/yr. Just started roth IRA for both of us with vanguard.

So question is that which would be a better priority to invest ESPP or roth IRA for both of us which would be 11k/year.

Another option is 529 or college prepaid plan for kids (2 of them, 4 years old). Which priority order is better. I can not contribute to all of them together.

Aim to save around 15% for retirement which is 26k for you guys. 401k 18.5k + HSA 6.9k (if you use it for retirement) = 25.4k so that's almost there.

You can do the ESPP but I would not recommend holding and accumulating the stock. Just sell them after the minimum holding period, and reuse the capital to buy them again for the discount through the ESPP. After a couple of years of recycling the money, you will not have to budget for it from your salary.

529 is similar to a Roth in that you don't get a federal tax deduction, but it grows tax free, plus you may get some state tax benefits depending on your state. Yes, you should be saving for your kids' college so look into what's best for you.

I love the Roth IRA, and would do it before any taxable investing but after any tax deductible accounts like the 401k and HSA. Since you're almost at your 15% goal, you may not need to do it. Often it's for hyper-savers who just want to max out everything, and are debt free. Over many years it will compound so much that most of the account will be from investment earnings, and these will be completely tax free of course. Here's mine after 10 years of 5-5.5k contributions. Almost half the balance is tax free growth!

 

[STAR3URY]

Depends on the company. I'm not buying CVS stock. I've seen behind the curtain.

What makes you say that?

 

[WVUPharm2007]

What makes you say that?

The company is run in a questionable manner that I don't believe will be sustainable. Also, Bezos is coming.

 

[rickyroxy]

Aim to save around 15% for retirement which is 26k for you guys. 401k 18.5k + HSA 6.9k (if you use it for retirement) = 25.4k so that's almost there.

You can do the ESPP but I would not recommend holding and accumulating the stock. Just sell them after the minimum holding period, and reuse the capital to buy them again for the discount through the ESPP. After a couple of years of recycling the money, you will not have to budget for it from your salary.

529 is similar to a Roth in that you don't get a federal tax deduction, but it grows tax free, plus you may get some state tax benefits depending on your state. Yes, you should be saving for your kids' college so look into what's best for you.

I love the Roth IRA, and would do it before any taxable investing but after any tax deductible accounts like the 401k and HSA. Since you're almost at your 15% goal, you may not need to do it. Often it's for hyper-savers who just want to max out everything, and are debt free. Over many years it will compound so much that most of the account will be from investment earnings, and these will be completely tax free of course. Here's mine after 10 years of 5-5.5k contributions. Almost half the balance is tax free growth!

View attachment 228425

Thank you for your valuable info. Interesting strategy for ESPP. How do you buy them again after selling with capital? I thought you can only do it from payroll deductions. If you could do only one which one would you prefer, Roth or 529?

 

[pezdispenser]

Thank you for your valuable info. Interesting strategy for ESPP. How do you buy them again after selling with capital? I thought you can only do it from payroll deductions. If you could do only one which one would you prefer, Roth or 529?

If you do ESPP through payroll deductions, then just reuse the money indirectly by offsetting the money going in with the money coming out after sales of stock, so that overall they are balanced. You should probably use the money coming out on expenses that can be made in a lump sum manner like a 529 deposit, or a principal payment on loans.

In your case, I would do the 529 since you are already saving enough (15%) for retirement.

 

[mentos]

My wife has an HMO with zero premium but it has a 2k deductible. It's cheaper to be on separate plans due to no premium on her plan. I said it would be better to pay the 2k out of pocket and let the money in HSA compound, but she thinks we should use HSA money to pay it cause we might die before 65. Should I just use HSA for the 2k?

 

[WVUPharm2007]

My wife has an HMO with zero premium but it has a 2k deductible. It's cheaper to be on separate plans due to no premium on her plan. I said it would be better to pay the 2k out of pocket and let the money in HSA compound, but she thinks we should use HSA money to pay it cause we might die before 65. Should I just use HSA for the 2k?

It's all about the odds of survival and the risk of getting that old without enough savings. If you expect to die before you reach 60, then saving for retirement is pointless. But if you retire penniless, you will live in abject poverty. It also depends on what your current savings look like. If you are 35 years old with $1 million already in your retirement accounts, you probably don't have to worry about it. If you are 35 years old with $15,000 in your retirement account, I'd suggest using every tax advantaged savings mechanism available including HSA because you are way behind.

I don't touch HSA and have it set to deposit the maximum every paycheck into an index fund.

It's also an effective backup plan. What if something crazy happened and neither of you had a job? Imagine that happened in 5-10 years and having $25,000+ in an account you could use on your healthcare no matter what happens to you professionally. A lot of peace of mind there, too.

 

[gwarm01]

Does anyone have plans for making money during the next recession?

I imagine I'll continue putting a monthly amount into my Schwab broad market ETF and profit off of the recovery.

It sure would be nice to find an area that tanks massively only to come back strong in a few years.

On another note, how are you guys handling your Roth IRA? I haven't opened one yet, but the new tax law will likely leave me with enough extra each paycheck to max one out. I should have started one years ago, but it was so much easier to just increase my 403(b) percentage.

 

[WVUPharm2007]

Does anyone have plans for making money during the next recession?

I imagine I'll continue putting a monthly amount into my Schwab broad market ETF and profit off of the recovery.

It sure would be nice to find an area that tanks massively only to come back strong in a few years.

On another note, how are you guys handling your Roth IRA? I haven't opened one yet, but the new tax law will likely leave me with enough extra each paycheck to max one out. I should have started one years ago, but it was so much easier to just increase my 403(b) percentage.

As I've said a million times, I'm a huge fan of Vanguard and they are who I recommend to anyone that asks. You just set up an account, link your bank account, it takes a few days to activate it through your bank, you send them money, and you select what funds to invest in. All of their in-house funds have no fee and low expense ratios. Something simple like their s&p 500 or retirement date target accounts would be the best to start with for a novice. I think it is $1000 to start a fund. And from there, I just have it deducted every other Friday on payday for the federal max biweekly rate ($211.53). It's pretty simple. It pretty much goes along on auto pilot for me.

 

[PharmDBro2017]

Question regarding 403b/401k investments:
When looking at expense ratios of the funds that I am investing into, how much is too much? Vanguard has the best expense ratios that I've seen, yet the growth is not as well as some of the other funds. Specifically looking at VPMAX (yearly gain was like ~30%, ER of 0.33), and two other funds that have 40% yearly gain and have ER of 0.73% and 1.33%.

Trying to figure out if it is worth it to invest in these higher ER funds? Not sure how to calculate the risk vs. reward here, over the next 25-30 years. Any thoughts/advice?

 

[Momus]

People are bragging about becoming 401(k) millionaires — and posting their balances to social media

He wrote that he has contributed $308,000 to his 401(k) since 1995, and posted a detailed rundown on his yearly contributions and resulting balance of $1,007,375.50 by age 45.

Wow, Indexing does NOT work!

 

[Momus]

Question regarding 403b/401k investments:
When looking at expense ratios of the funds that I am investing into, how much is too much? Vanguard has the best expense ratios that I've seen, yet the growth is not as well as some of the other funds. Specifically looking at VPMAX (yearly gain was like ~30%, ER of 0.33), and two other funds that have 40% yearly gain and have ER of 0.73% and 1.33%.

Trying to figure out if it is worth it to invest in these higher ER funds? Not sure how to calculate the risk vs. reward here, over the next 25-30 years. Any thoughts/advice?

No, past performance is no guarantee of future results.

 

[wagrxm2000]

People are bragging about becoming 401(k) millionaires — and posting their balances to social media

He wrote that he has contributed $308,000 to his 401(k) since 1995, and posted a detailed rundown on his yearly contributions and resulting balance of $1,007,375.50 by age 45.

Wow, Indexing does NOT work!

Give me 308k in 95 and you'd have 2 million by now.

However yet again, top of a bull market, that will be half a million soon which will be a horrible return rate over 23 years.

No, past performance is no guarantee of future results.

Except when indexing and giving the past 100 years right? Haha

 

[PharmDBro2017]

No, past performance is no guarantee of future results.

In the current market, it’s a pretty decent indicator for the near future, right?

I mean an average of 30% over the past 3-5 years is a good indication of how things are going.


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[Momus]

Give me 308k in 95 and you'd have 2 million by now.

However yet again, top of a bull market, that will be half a million soon which will be a horrible return rate over 23 years.



Except when indexing and giving the past 100 years right? Haha

Yet, you don't have 2M portfolio.

He dca his investment for 23 yr. If he put all $300k in 95 without contributing a penny after, it would be 2.17M now.

 

[Momus]

In the current market, it’s a pretty decent indicator for the near future, right?

I mean an average of 30% over the past 3-5 years is a good indication of how things are going.


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5 yrs is not enough time to differentiate performance from luck. Stocks market is a really long investment 30 yrs.

3 Important Lessons from the Downfall of Legendary Stockpicker Bill Miller

Stick with broad based index funds

 

[wagrxm2000]

Yet, you don't have 2M portfolio.

He dca his investment for 23 yr. If he put all $300k in 95 without contributing a penny after, it would be 2.17M now.

I also haven't worked since 95 and have a family I like to spoil....

 

[Momus]

I also haven't worked since 95 and have a family I like to spoil....

Not relevant to index fund performance.

How do you explain tripling your balance with DCA or 7x your balance lump sum with just "sh1tty index fund" thru 2 bear markets?

 

[wagrxm2000]

Not relevant to index fund performance.

How do you explain tripling your balance with DCA or 7x your balance lump sum with just "sh1tty index fund" thru 2 bear markets?

I never said indexing doesn't work, you're the one saying it's the only way.

What I am saying is my way is more rewarding to my family.

Yet again, we are at the peak of a bull market. Average returns are going to be higher then usual right now.

 

[PharmDBro2017]

If I wanted to start indexing, is it a bad idea to buy at the high current price? Wait for a bear market?


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[wagrxm2000]

If I wanted to start indexing, is it a bad idea to buy at the high current price? Wait for a bear market?


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Most people here are going to tell you to dollar cost average over your entire career.

There is a good chance however you will have a negative return for awhile. No one knows when the next collapse will occur though.

 

[Momus]

If I wanted to start indexing, is it a bad idea to buy at the high current price? Wait for a bear market?


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Do you care if you buy at 26,000 DOW now and when you are 60 yrs old it will be at 200,000?

DOW was 1000 in the 80s.
S&P at 30 in the 30s, now? 2800+

You could be like a friend of mine waiting since 2011, 2013, 2016. And, he is still waiting.

The point is every decade has a market high for the past 200 years. Yet, we break up higher even with 10 bears along the way.

Studies showed lump sum tends to produce better result 60% of the time. DCA will give you less capital risk IF we go down from here. You don't have 100-500k lying around since most people get biweekly pay check. That's why most do DCA. As soon as you have the money, invest. Make compounding works for you. Time in market, not timing.

 

[PharmDBro2017]

Wow: Amazon, Berkshire Hathaway and JPMorgan Chase & Co. to partner on U.S. employee healthcare.


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[WVUPharm2007]

Wow: Amazon, Berkshire Hathaway and JPMorgan Chase & Co. to partner on U.S. employee healthcare.


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“The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,

So I thought it was just gonna be Larry Merlo vs Jeff Bezos...now it's Larry vs Bezos, Warren Buffett, and Jamie Dimon...

...welp.

 

[gwarm01]

Oh man, I just made a thread about that.

 

[WVUPharm2007]

I might have to give up the Venture Card for this new sucker:

Visa Signature Card | Alliant Credit Union

$59 annual fee (1st year waived)
No foreign transaction fee
3% cash back year 1, 2.5% cash back thereafter.

That's the best I've ever seen.

 

[pezdispenser]

Pretty good January for my Vanguard account. I never touched any cryptos. Just going to sit back and watch that train wreck.

 

[WVUPharm2007]

Dow down 2.5% today. Muh paper wealth.

 

[PolarPop]

Dow down 2.5% today. Muh paper wealth.

Probably will keep going after everyone sees the 666.

 

[Momus]

Dow down 2.5% today. Muh paper wealth.

Needs 2600 points drop just to get to correction definition (10%)

 

[wagrxm2000]

Guess what was positive today.......Amazon

 

[gwarm01]

Whelp. Somebody popped my bubble.

 

[BMBiology]

Non stop bleeding. This is why cash is always king.


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