help me decide what to do with my money
 

So I am a total fish when it comes to investing money. All I have invested right now was like $15,000 in some tax shelter thing from last year. I have about $100,000 sitting around, some of which I will need for taxes next year, but I would like to make it work for me somehow. I would really like to open some type of busisness, but considering I know nothing about that, that probably wouldnt be best. So, I assume I should go with some type of stock market thing, which I am also clueless about. I would like to find something that obviously wont busto my money but would also give a pretty decent return. I read somewhere that mutual funds were for super fish and that most of the less stable investment tools were still super stable.

So...I am planning on finding someone to invest my money for me here in Vegas (if you know anyone good, please let me get their name) on monday before I go off for more wpt events, so if you guys would tell me the most +ev thing to do, it would be wonderful. I greatly appreciate it.

Re: help me decide what to do with my money
 

You're just now looking into how to invest your money?? You've probably given up a lot of EV over the past few years.

Read the FAQ (noob [img]/images/graemlins/grin.gif[/img])
cliff notes: buy some index funds, vanguard.com is a good place to start

http://forumserver.twoplustwo.com/showfl...c=#Post11651909

Oh and if you hire someone in vegas to help you with your finances odds are they will screw you.

Re: help me decide what to do with my money
 

Ok, so I went to this vanguard site and apparently I am retarded and have no clue what type of account I should be opening. I do know that I need to be able to get my money out with fairly short term notice. God I am such a fish. Can anyone just give me basic guidelines and tell me what to do? I love you all. Ill go read faq now. [img]/images/graemlins/smile.gif[/img]

Re: help me decide what to do with my money
 

Countrywide savings will pay you 5.4% on your money right now with zero risk if you have 50,000-90,000 to invest.

Re: help me decide what to do with my money
 

its alot of money so do your homework and never, ever let anyone make investment choices for you. especially if they profit in any way from their decision. put it in a money market fund until you are ready to decide.

Re: help me decide what to do with my money
 

If you want low risk, use a high-yield savings account or money market account offering 5%+ interest.

However, if you can tolerate the risk of loss, as it sounds you can, then I would advise you invest in index funds. There's no way to go broke with index funds, but as with all stock investments, there's a risk of loss. Historically, however, stocks have climbed at a rate averaging 10% per year, and this high return is what you get in exchange for the risk you assume.

Index funds are not for super fish. They have the same expected returns as individual stocks, but with much less variance. Index funds are just a subset of mutual funds that charge low expenses, typically have low turnover (meaning low taxes), and passively follow an index.

If you choose to invest in index funds, there are two equivalent methods. One way is to invest directly with a fund company. If you do this, use Vanguard. Vanguard has extremely cheap, well-diversified index funds that cover a broad range of asset classes. The second way is to use ETFs. ETFs are a version of index funds that trade on an exchange, like stocks. They will have the same performance as normal index funds. There are a few differences. One difference is cost: ETFs typically have lower expense ratios but you have to pay a commission/spread each time you buy or sell. One small benefit of ETFs is that they cover a few more asset classes than Vanguard alone. It's also a easier to harvest tax losses. But for the most part, it doesn't matter whether you choose normal index funds or ETFs.


The simplest plan:
1) Go to vanguard.com
2) Open an account, and an IRA if possible too
3) Stick it all in Target Retirement 20XX
4) Sit back and relax

(Read the sticky for more information.)

Re: help me decide what to do with my money
 

Well I don't know how much you'll need next year for taxes.

But I'd open a Vangaurd Roth IRA (if you are eligible), if not, open a regular IRA. Put $4K into Target Retirement 2045 or so.

That leaves you with $96K. Figure out how much you'll need for taxes next April. Take at least that much, and put it into an online "e-savings" account, such as FNBO Direct, ING Direct, HSBC Direct, Countrywide, etc. FNBO Direct currently gets you %6 guaranteed return, but the rate will likely drop to %5-something in October. These accounts are great for short-term savings. They are FDIC-insured and the rates are guaranteed.

Let's say you put $50K in there (taxes plus some more), that leaves you $46K, keep $4K or so in your checking account just to have for whatever reason, and you can put the other $42K into independent (non-retirement) mutual funds through Vangaurd. Such as Total Stock Market or Total International.

Maybe do $50K e-savings, $30K Total Stock Market, and $12K International or so. You may wish to do more or less e-savings to lessen or increase your risk.

Come first week of Janaury, pull $5K out of your e-savings account and put it into your IRA. (I believe $5K is the max next year.)

Re: help me decide what to do with my money
 

You don't want mutual funds, you want index funds [though technically, an index fund is a type of mutual fund].

Re: help me decide what to do with my money
 

[ QUOTE ]
You don't want mutual funds, you want index funds [though technically, an index fund is a type of mutual fund].

[/ QUOTE ]

If you read my post, I recommended Total Stock Market, and Total International. Both are index funds. They are also mutual funds.

Post deleted by Mat Sklansky
 

Re: help me decide what to do with my money
 

[ QUOTE ]
[ QUOTE ]
You don't want mutual funds, you want index funds [though technically, an index fund is a type of mutual fund].

[/ QUOTE ]

If you read my post, I recommended Total Stock Market, and Total International. Both are index funds. They are also mutual funds.

[/ QUOTE ]
My comment wasn't directed at you. It's for OP because when I first learned about the market, the words confused me.

On another note, I highly recommend HSBC.

Re: help me decide what to do with my money
 

[ QUOTE ]

Vanguard is ok. Personally I use an online broker and www.ishares.com funds, even less menagement fee's. All of this is a whole lot better than keeping money in your safe at the Bellagio heh


[/ QUOTE ]

Just want to let OP know that you can buy ETF through discount online broker(i.e. scottrade/ameritrade..etc for a low fee or even free with zecco) That fee would typically be lower than the fee mutual funds charge you to buy their fund index. (not too sure if it is waived if you put in a lot of money)


[/ QUOTE ]


[ QUOTE ]

The Intelligent Investor
Rich Dad Poor Dad
A Random Walk Down Wall Street
Reminiscences of a Stock Operator
The Millionaire Next Door
Fooled By Randomness
The Black Swan
How to Make Money in Stocks


[/ QUOTE ]

Blue, which books would you recommend reading first for complete beginners?

Re: help me decide what to do with my money
 

Thanks for all the help so far. What I am understanding is that I need to invest in a bunch of index funds, as listed in the link Newt posted. If this is incorrect let me know. Thanks for the info.

Re: help me decide what to do with my money
 

[ QUOTE ]

The Intelligent Investor
Rich Dad Poor Dad
A Random Walk Down Wall Street
Reminiscences of a Stock Operator
The Millionaire Next Door
Fooled By Randomness
The Black Swan
How to Make Money in Stocks



--------------------------------------------------------------------------------



Blue, which books would you recommend reading first for complete beginners?

[/ QUOTE ]

i would go in this order..

-reminiscences of a stock operator (only because its so awesome)
-rich dad poor dad (just to learn basic stuff)
-the intelligent investor (long considered one of best investment books ever written)
-how to make money in stocks (i never hear much about this but i thought it was great it has everything u need to know about investing in stocks)
-fooled by randomness (just an overall fun read. i think taleb is a lil full of himself, but i still liked it)
-the millionaire next door (i didnt think this book was anything special. i read it and the millionaire mind and was just kinda bored. didnt learn a whole lot.)

and.. i havent read the black swan or a random walk down wall street, but i hear good things and they are on my to do list. just my 2 cents.

Post deleted by Mat Sklansky
 

Re: help me decide what to do with my money
 

The Richest Man in Babylon is a simple and leisurely read to get pumped about investing and to change your friends' poor spending habits.

Once you read all of the books above, I highly recommend reading all of the greats' books: almost all of Warren Buffett's writings, Lynch's two books, everything you can about Soros, etc. etc. Their different yet extremely successful philosophies and insights are fascinating to read about.

http://invest-faq.com/bookshelf.html has a good list of books I use from time to time.

Re: help me decide what to do with my money
 

It's much harder than it seems for a financial advisor to add value (alpha) to your account. Outperforming the market is very tough to do when you are paying someone between 1-2% to manage your money. As an amateur investor the first thing you should learn is the fee structure of various investing vehicles. All mutual funds or ETFs make money somehow by charging you, so figure out how it works. Don't really look at annualized returns because they are just a function of the risk exposure of a fund.

Portfolio theory involves having a well diversified collection of assets. In the past few months, this theory has gone to [censored] because many investment vehicles thought to be well-correlated weren't so correlated (equity market went down, bond yields down, gold prices down, etc).

Increase your EV by getting broad exposure to the market while paying as little as you can in fees.

If you need the money in the next year, I'd suggest just using ING and getting 5% or whatever.

Re: help me decide what to do with my money
 

Again, thank you for all the info. If all I have to do to make 10% is to just put it in a bunch of index funds, why do I need to read all the books? Are they just there if I want to become a day trader or whatever? Also Jason, you say not to look at the annual return. If that is the case, what should I be looking at when deciding where to put my money?

Re: help me decide what to do with my money
 

The purpose of financial advisors is not to add alpha. You pay them to keep up to date with stock knowledge, manage your risk, possibly give you access to DFA funds, and manage your portfolio for you. Many also help you out with taxes.

Re: help me decide what to do with my money
 

To add to blueman's book list, I'm reading The Essential BUffett and finding it illuminating (I'm a total noob at this stuff as well).

Post deleted by Mat Sklansky
 

Re: help me decide what to do with my money
 

[ QUOTE ]
... I would really like to open some type of busisness, but considering I know nothing about that, that probably wouldnt be best.

[/ QUOTE ]

Everyone seemed to ignore this portion. Yes, index funds are great but your upside is limited and it doesnt really adress your desire to run a business. Now, being on the poker tour it's not possible for you to put in the 80 hr work weeks required to get a business off the ground.

However, could you possibly invest in say one of your friends businesses, i.e. Brian Townsend with cardrunners? It doesnt even have to be poker related and you can determine what level of participation you want. Want to share in the overall direction of the business then get yourself a seat on the board.

You could even get one of your non-poker buddies to run something for you. There's more out there than the stock market.

Re: help me decide what to do with my money
 

For friends new to indexing (and investing in general), I always recommend "The Smartest Investment Book You'll Ever Read: The Simple, Stress-Free Way to Reach Your Investment Goals," by Daniel Solin, which for beginners is much easier to read and apply than "Random Walk" and similar books, including those by Jack Bogle. In a few brief pages, this book will tell you everything you need to know about indexing (and why for many people it's superior to more active investing strategies) and provide simple instructions for getting started. Vanguard is probably the way to go, btw. Good luck!

Re: help me decide what to do with my money
 

[ QUOTE ]
[ QUOTE ]
... I would really like to open some type of busisness, but considering I know nothing about that, that probably wouldnt be best.

[/ QUOTE ]

Everyone seemed to ignore this portion. Yes, index funds are great but your upside is limited and it doesnt really adress your desire to run a business. Now, being on the poker tour it's not possible for you to put in the 80 hr work weeks required to get a business off the ground.

However, could you possibly invest in say one of your friends businesses, i.e. Brian Townsend with cardrunners? It doesnt even have to be poker related and you can determine what level of participation you want. Want to share in the overall direction of the business then get yourself a seat on the board.

You could even get one of your non-poker buddies to run something for you. There's more out there than the stock market.

[/ QUOTE ]

Yes, there is no faster way to insolvency than investing in your friends' businesses. Well other than cocaine and investing in your friends' businesses that is...

J

Re: help me decide what to do with my money
 

[ QUOTE ]
So I am a total fish when it comes to investing money. All I have invested right now was like $15,000 in some tax shelter thing from last year. I have about $100,000 sitting around, some of which I will need for taxes next year, but I would like to make it work for me somehow. I would really like to open some type of busisness, but considering I know nothing about that, that probably wouldnt be best. So, I assume I should go with some type of stock market thing, which I am also clueless about. I would like to find something that obviously wont busto my money but would also give a pretty decent return. I read somewhere that mutual funds were for super fish and that most of the less stable investment tools were still super stable.

So...I am planning on finding someone to invest my money for me here in Vegas (if you know anyone good, please let me get their name) on monday before I go off for more wpt events, so if you guys would tell me the most +ev thing to do, it would be wonderful. I greatly appreciate it.

[/ QUOTE ]

first figure out how much you want to invest long term (your investments will have more variance but will have a better return). if you are investing long term, just dump into Brazil, Russia, China, India index funds. I promise they are going up ten years from now, but they could easily have a 30% slide so if you need the money next year it'd be a risky investment.

for the short term, i dont know what is best.

Re: help me decide what to do with my money
 

[ QUOTE ]

The Intelligent Investor
Rich Dad Poor Dad
A Random Walk Down Wall Street
Reminiscences of a Stock Operator
The Millionaire Next Door
Fooled By Randomness
The Black Swan
How to Make Money in Stocks

gl

[/ QUOTE ]

I would add The Little Book of Common Sense Investing by John C. Bogle and put it first on the reading list. If you are just starting in investing, S&P 500 Index fund is the way to go. If possible max out an IRA. I prefer a traditional IRA to a Roth IRA for most people unless they think their tax bracket during retirement will be higher than during their contribution years. But the income cap for traditional IRAs is lower, so you may have no choice other than a Roth IRA. As Strassa says, keeping fees at an absolute minimum is an absolute requirement for best long-term growth.

Re: help me decide what to do with my money
 

[ QUOTE ]
Most Corporate fools save x% of their income in their 401k then invest it in the stock of the company they work for. Would be pretty hard to think of a worse investment strategy than that.

[/ QUOTE ]

Any corporation with a decent benefits package matches to some degree the contributions you make to your 401k, so the 401k and roth ira should be your first investment vehicles as a "corporate fool".

After enron, there was tremendous pressure to move 401ks away from company only stock and give people more investment options. Your statement about single company 401ks is very rapidly becoming less true.

I'm an accountant, so granted the places I've worked will be better about giving you options, but at my last firm we had 15+ different investment options for our retirement plans, and complete control over the distribution between funds our money went into. Saying that MOST people invest their whole 401k in their companies stock couldn't even be close to the truth anymore.

Post deleted by Mat Sklansky
 

Re: help me decide what to do with my money
 

Thanks [img]/images/graemlins/smile.gif[/img] I actually have $50,000 online now, so im happy about that. I hahve been reading Why We Want You to be Rich by Trump and Kiyosaki and they are constantly bashing stocks and mutual funds, saying you have little or no control compared to other things, like real estate or owning a busisness. They also sorta bash trading stocks, like most of what I am hearing here, stating that the fees will eat you alive. So...I am wondering if what they have to say is true or if I should basically ignore it.

Re: help me decide what to do with my money
 

[ QUOTE ]
That leaves you with $96K. Figure out how much you'll need for taxes next April. Take at least that much, and put it into an online "e-savings" account, such as FNBO Direct, ING Direct, HSBC Direct, Countrywide, etc.

[/ QUOTE ]
Since he'd be putting money in Vanguard anyway, why not just put this portion in a money market fund?

Re: help me decide what to do with my money
 

[ QUOTE ]
Thanks [img]/images/graemlins/smile.gif[/img] I actually have $50,000 online now, so im happy about that. I hahve been reading Why We Want You to be Rich by Trump and Kiyosaki and they are constantly bashing stocks and mutual funds, saying you have little or no control compared to other things, like real estate or owning a busisness. They also sorta bash trading stocks, like most of what I am hearing here, stating that the fees will eat you alive. So...I am wondering if what they have to say is true or if I should basically ignore it.

[/ QUOTE ]

They made their money in real estate. So of course they would recommend real estate over stocks.

Obviously, you do lose a lot of control when you invest in index funds (you have basically no control over what, e.g., GE or Microsoft will do in the future).

But the comment about trading fees is only applicable to active stock traders. The basic "index" investor rarely trades (the premise of index investing is buy and hold), so doesn't have lots of fees.

If you own your own business, you have a ton of control and could theoretically make a ton of money (e.g., this is how Michael Dell and Bill Gates made their money). But you can also lose all of it, which is unlikely with an index fund strategy.

Re: help me decide what to do with my money
 

Investing in yourself yields you infinite return on your investment.


Why the hell wouldn't you invest in your financial education?


Not educating yourself about something and letting someone else run the entire show for you (money manager) is the stupidest thing in the world and those kinds of people are the bottom feeders of investing.

Re: help me decide what to do with my money
 

Listen to Trump........invest in stocks with a small percentage of your investment bankroll.