It's time for poker players to start putting their money to work.

[BonusMidas]

Scorpion, Have you heard of the new degrees for financial engineering? I have been considering going for a masters in this along with an MBA. Do you think it would be useful for the area that you have worked in?? or would it be a waste of time and money..

[Scorpion Man]

no, not counting dividends, you got me...but jeez, cmon...main point still stands. that is FOURTEEN YEARS without cap gains and slaughtered versus inflation...its hard for most people to relate to that kind of timeframe.

[DesertCat]

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no, not counting dividends, you got me...but jeez, cmon...main point still stands. that is FOURTEEN YEARS without cap gains and slaughtered versus inflation...its hard for most people to relate to that kind of timeframe.

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Not sure of what the dividend rates were during that period, but 4% a year would produce a 73% total return if compounded (reinvested) for 14 years. Even 3% would produce a 51% compounded return. And I'm not calculating the "dollar cost averaging effect", i.e in years where the index fell, dividend yields would be higher and buy more new shares, creating an even higher long term compounded return.

This means that even during a period of one of the most extreme periods of inflation in our country's history, an index fund would have still kept you above water. So your point doesn't appear to 'stand'.

[good2cu]

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The main problem is finding a trustworthy finical advisor. ,,,,,,,. It is outside our social network, many of us are only one or two years outside of high school.

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YES. Agreed. But just because its the "main problem" does not mean its not the right answer. Not everyone needs an advisor. Hell...I did not use one for very many years. I do believe that the vast majority of young poker players could benefit from one, though, even if the purpose were only to get educated...this is not prison...you can always walk from an advisor you don't like or don't need anymore.

Your point about the social network was the WHOLE REASON I STARTED THIS THREAD IN THE FIRST PLACE. I know this is not your world, but it is mine. I was offering to help with some perspective.

There is nothing wrong with index funds and CDs, as long as you have a plan that is well executed and diligently followed. The simple fact is that most people do not follow through on even the most basic financial plans. If you are going to read all of the time, actively rebalance your portfolio when one category outperforms over time, not leave too much money in cash out of laziness, etc...then you might be fine. The simple fact is that it takes time to get educated about your financial alternatives, and one mistake that could have been avoided by dealing with people with more experience is incredibly valuable.

The financial world is always changing. This mantra that you should index and hold forever is not totally accurate or ideal. Did you know that if you bought the Dow Jones in 1968, you did not get back to even for FOURTEEN years, in 1982? Much worse than this, it was down 40% (!) in inflation adjusted terms over that time. If you happened to be buying indexes in 2000 as your main entrypoint it was a total disaster. It is not as simple or as "low risk" as people make it out to be. You can lose real money in any asset at any time.

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I agree! You sound like your getting furstated. Personally this theard has helped me a lot.

How do I find a trustworthy finical advisor in the real question.

[Izverg04]

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So I have two pools of money...poker bankroll, investment money. If both of them are high risk, and they both have a bad month (which is bound to happen at some point)...that could lead to a dramatic change in your financial situation, and possibly cause you to have to make some changes in your life...like dropping down in games etc. Where if you had your investment money in something very stable, it would just be a bad poker month, everything would be fine.

Not sure if I necessarily subscribe to the above post yet...

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Had to comment here. Your investment gambles are completely uncorrelated to your poker gambles -- so you are not increasing your risk by taking gambles that have similar risks in investing, at the same time as playing poker. You say, what happens if you take an awful month on both fronts? Because these investments are uncorrelated, the chance of that happening is just as big as having two awful poker months back to back -- it will happen if god hates you, but that doesn't stop you from playing. Thinkg about this in terms of playing on two tables instead of one table. If your winrate doesn't suffer, your RoR is just the same, with the earning rate doubled.