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Dapper Dan

Trad climber
Redwood City
Topic Author's Original Post - Nov 22, 2015 - 02:31pm PT
I'm 34, married, pretty tolerant of risk in the stock market. My wife and I both contribute (mandatory and employer matched) to pensions through work (CalSTRS) , and we both contribute to separate IRA's on top of this.

I have several other ETFs and index funds that we contribute too monthly, but now we're at the point where we are wondering what other kind of funds and investment vehicles should we be looking at?

Individual stocks?
Real estate?
Bonds?
Annuities?

I'm looking for something with low expense ratios, and something I can just contribute to monthly, basically no brainer investments that a novice can manage and understand ... Thanks !
Dapper Dan

Trad climber
Redwood City
Topic Author's Reply - Nov 22, 2015 - 02:50pm PT
BTW , we're in the Bay Area, a 2 bed 1 bath here on the peninsula south of SF is $850,000 and rising , it's insane ...
darkmagus

Mountain climber
San Diego, CA
Nov 22, 2015 - 03:18pm PT
and sometimes you don't even need to use your own money
Dapper Dan

Trad climber
Redwood City
Topic Author's Reply - Nov 22, 2015 - 04:55pm PT
you don't need bonds at your young age and annuities are a bad investment overall. If you like real estate, I would recommend you go into the real estate funds vs actually investing in flipping unless you truly know what you are doing real-estate wise.

Thank You ! I meant real estate funds, awesome advice , especially about bonds , much appreciated . I wonder if Vanguard has the research ^^^ tools you mentioned ...
Reilly

Mountain climber
The Other Monrovia- CA
Nov 22, 2015 - 05:01pm PT
At your age 20% bonds would not be out of order although that would be the
max and, to be honest, right now it would only be considered the equivalent
of holding cash, which you should have a good 10% in, especially right now.

Most of the people I know with serious wealth did so through real estate.
But it is a real dog eat dog business and you better have good beta. You
are young enough to take a flyer and still get back on the rock, so to speak,
so go for it! I would highly caution you about REITs, a lot of them
are bogus. My mum did very well on a private sort of REIT but, again, do
yer research, especially as to the credibility and legitimacy of the issuers.

As to getting into individual stocks, why bother unless you have an expertise
in the field or lots of time to do the research? That said, it is hard to
fault buying quality and holding it. My Proctor & Gamble has been very very
good to me (bought at $7). ;-)

I prefer Vanguard because their management fees are the lowest and as an
old sailor I like their naval schtick. ;-)

Check out Fritz's thread about 'not being skeered'. I posted an interesting
article about equity valuations the other day.

And, yes, annuities are the biggest scam going.
Reilly

Mountain climber
The Other Monrovia- CA
Nov 22, 2015 - 05:06pm PT
I disagree about bonds in general, I've done very well on them the last few
years with little risk involved. The reason you want to be in them is that
they will make you money when your equities are not.
Reilly

Mountain climber
The Other Monrovia- CA
Nov 22, 2015 - 05:18pm PT
Ragetta, I hear you. When I was his age I was a commodities trader.
Now shall we talk about risk? Who needs to free solo? ;-)
Kalimon

Social climber
Ridgway, CO
Nov 22, 2015 - 05:24pm PT
AAPL

INTC

VOO

VXF

VPU

VDE
Reilly

Mountain climber
The Other Monrovia- CA
Nov 22, 2015 - 05:30pm PT
Buy me a drink and I'll tell you about slugging it out in the silver trenches
against the Hunt brothers in late '79-80. Now THAT was some highballin'!
The free soloing I did before that was tame!
Dave

Mountain climber
the ANTI-fresno
Nov 22, 2015 - 05:34pm PT
What Ragetta said.

Stick to low cost mutual funds / index funds. 80%+ of fund manages aren't good enough to beat the S&P 500. 7-8% annual average return over time. Understand business cycles average 7-8 years so dips and drops will happen.

Real estate has averaged less than 1% over the last century. Not quite as good as the S&P 500.

Read up on John Bogle (Vanguard's founder). He has some good books out there.

Stick to easy autopilot investments. I'm 37, so I'm in the same boat. I put as much as is reasonable (10-12%, plus I'm lucky - my company matches 9%) in the 401k plus more in a non-restricted account outside the 401k / IRA stuff so it can be accessed to retire early on my private island (don't I wish...).
Reilly

Mountain climber
The Other Monrovia- CA
Nov 22, 2015 - 05:42pm PT
Regatta*, we were all young, once. I love my bonds now cause they let me sleep. ;-)
Hey, made 8.8% last year on 'em! The only risk I take now is playing in
the junk bond game. Very minor exposure so I pretend I'm still bold. ;-)

*Sorry, that's the sailor in me.
Reilly

Mountain climber
The Other Monrovia- CA
Nov 22, 2015 - 05:46pm PT
Don't get me started on RMD's! You hear that, Bernie?

so what's the low down on 'ragetta'? Non lo capisco.
donini

Trad climber
Ouray, Colorado
Nov 22, 2015 - 05:50pm PT
Gold and energy.....hmmmm, maybe not now.
Reilly

Mountain climber
The Other Monrovia- CA
Nov 22, 2015 - 05:54pm PT
Jim, you got all the energy you need.
ms55401

Trad climber
minneapolis, mn
Nov 22, 2015 - 05:57pm PT
Jesus Christ, another one of these threads?

All right, fine.

Someone above posted that Roth IRAs are good for young folk. Well, they're pretty much good for anyone who isn't already a multi-millionaire.

That's my advice. If I were an as#@&%e (I am), I might suggest that you move to a state where the cost of living isn't so high.
Dapper Dan

Trad climber
Redwood City
Topic Author's Reply - Nov 22, 2015 - 06:02pm PT
I might suggest that you move to a state where the cost of living isn't so high.

lol I've been saying that for years , but wife can't bear to leave CA , I told her let's compromise and move to Sac....
rick sumner

Trad climber
reno, nevada/ wasilla alaska
Nov 22, 2015 - 06:23pm PT
Invest in Jammer futures.
Fritz

Trad climber
Choss Creek, ID
Nov 22, 2015 - 07:44pm PT
Thanks all for the good advice on this thread. I do advocate Vanguard Mutual Funds because of their extremely low fees.

And a bow to Reilly for his good advice & mentioning this thread.

U.S. Stock market "CORRECTION!!" Why am I not "too-skeered"
http://www.supertopo.com/climbers-forum/2677901/U-S-Stock-market-CORRECTION-Why-am-I-not-too-skeered

All I can think to add is, at your tender age, a ratio of 90% stocks & 10% bonds might be more appropriate, considering the long term performance of stocks over bonds.

Land. You can make a lot of money investing in land & you can lose a lot of money investing in land. Do you feel lucky?
Bargainhunter

climber
Nov 22, 2015 - 09:06pm PT
Dapper Dan,

Start here: https://www.bogleheads.org/wiki/Getting_started

Or if you'd prefer a book, start here: http://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/1118921283/ref=dp_ob_title_bk

Your questions indicate that you haven't thought much about the concept of asset allocation. Start with the wiki above gradually learn about things like asset allocation based on your risk tolerance, diversification, expense ratios, tax efficiency of your investments, and creating an IPS (investment policy statement) that you adhere to.

Basic financial literacy is absent in American education, and this is a baffling.

A minimum wage earner who invests $5 a day, from 20 until retirement age of 70, in a low cost Total Stock Market fund (historic annual average yield of ~10%) in a ROTH IRA will have more than $2.3 Million at age 70. Plenty of dirtbags can do this, but they don't. Curious isn't it?

EDIT: It's like climbing a big wall. Very daunting and appearing impossible when you first start (which prevents many from even starting), but once you commit and put effort into it, bit by bit progress is made and that progress encourages you more and the end becomes achievable! Even better than a big wall, compound interest eventually takes over and does the heavy work for you, eclipsing your contributions with effortless, substantial gains.
Dapper Dan

Trad climber
Redwood City
Topic Author's Reply - Nov 22, 2015 - 09:11pm PT
You can max out your Roth - each of you - and then put the rest into your 401K

^^^ this is our situation. We have great 401k's as teachers, but they only become great when you put the years in. A realistic goal is to try to retire with 75% of your final monthly take home as your pension going forward. That means we are only trying to come up with 25% through outside IRA's, to equal in retirement what we were getting while were teaching ... and we will not ever be getting social security.
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