Investing 101
Whether it’s having an emergency fund grow in an online savings account or asset allocation within our 401k accounts, successful investing plays a huge part in our wealth building strategies. It’s very important that we lay out a plan based on our true risk tolerance and time horizon. And most important of all, diversify, diversify and diversify.
- Why Investing in Stocks was Not a Financial Mistake
- Not Caring About the Wild Stock Market Swings
- 10 Activities for a Bear Market
- How I Started Buying My First Stock
- Great Entrepreneurs Suck at Investing
The Case for Low Cost Index Funds
I’m not the person who will tell you that you have a low chance of beating the stock market benchmarks by yourself because you can, as I’ve done over the years. I’m the person to tell you though that even if you can do it, you should most likely just stick with index funds. For one thing, you probably have a real job where you should focus your energy in because beating the market takes a lot of time out of every single day and energy out of you. Sure, you might be missing an opportunity on the investment end by going with low cost index funds but when you can concentrate more on your family and career, you get so much more.
- We Should Buy Index Funds Even if We Can Beat the Market
- Why We Always Recommend Buying Low Cost Index Funds
Housing Related
- Whether I Should Buy an Investment Property in the Current Housing Slump
- Considering Your Primary Home as an Investment
401k, IRA and Retirement
Retirement should always be on our minds when we make financial decisions. How is this change going to affect me long term? Chances are good that since you are here, you already know a bit about discipline and investor behaviors. Here are some articles on more detailed notes on various situations and retirement vehicles.
- A Down the Trenches Look at 401k vs Traditional IRA
- What to Do With My 401k After I Quit
- Where to Roll Over My 401k
Stock Broker Reviews and Other Investing Options
And finally, where should you actually put your money to work once you know what to invest in? Most people talk about the types of investments but not many people will talk about the companies (brokerage firms) that help you buy and sell equities. Here are a few reviews of popular stock brokers where you not only can read what I think, but what many others think of the company too.
- Tradeking Review
- Scottrade Review
- OptionsHouse Review
- OptionsXpress Review
- Lending Club Peer to Peer Review
{ 9 comments… read them below or add one }
this is more of a tax question: what can you do to minimize penalty for withdrawing 401k funds used for business expense needs?
I believe it’s being controlled…just like we all are financially. 401k? Create your own! It’s only 25% tax for awhile, until you stop spending and retire by age 30 or less, then your tax on long term capital gains is 5% or on dividends is 0%. Any money you do make you can then reinvest, spend, or do whatever you want with. What’s with this controlled waiting til age 70+ to retire on YOUR MONEY! F*** 401ks, Roth IRA, Banks, etc. They just want your money so they can loan it out and make fortunes. It’s time you CONTROL your money and YOUR FORTUNES! Spend Less, avoid taxes, Save More, and Invest/loan with your decisions and your rates!!!!!!!! Retire extremely young and have fun and be happy!!! That’s what I am doing now and loving it. Don’t be lazy and controlled by governments and corporations. Make your own governments and corporations!!! The Vatican does it and owns almost everything. Why not follow God’s will? (P.S. Save all your posts and write your own book/blog/podcast/videos/movies/games/etc, create your own websites/apps, don’t let others get rich off of your entertaining posts!!!)
Mr. john you made some great points there and I sort of had an epiphany with what you wrote there at the end! I’m being serious when I say “I want to learn what you have learned”. How can I get in on this free-form out of the box style of creative thought? In addition, what do you believe to be a good starting point for first time investors searching for a safe but lucrative enterprise?
For long term investors, low cost index funds are great. They are also easy in easy out if they want to learn to be a touch more active. I cover more of the trading aspect at http://www.seeitmarket.com but each individual needs to access what there passion is and how much time they have to dedicate to investing. Enjoyable blog here.
Hi David, Fantastic blog you have here, very informative and well put together. I’d like to echo Andrew’s comments and encourage everyone to check out SeeItMarket, it’s a great site that I visit every day. Another thing investors should think about is learning options trading. I know some people view options as WMFD’s, but use correctly they can really improve your returns and also minimize your risk. There are some simple strategies to protect yourself from selloffs such as we have had recently.
Keep up the good work, will look forward to your future articles.
Like Andrew, I’m a big advocate for index funds, especially if don’t want to hire an advisor. Finding an advisor who will work with small accounts can be difficult. If you can sit through the draw downs of index funds, then you’ll be fine.
You make an excellent point that beating the market is a real time and energy draining investment. Sadly many people think that they can throw a few thousand pounds at the market and they’ll be rich, and when it doesn’t work out they quickly lose interest. In my experience it’s all about medium term investments, which don’t always yield an instant return. It’s about researching your market and knowing how it’s going to respond to a certain situation. Thanks for teaching us that it all boils down to hard work…..
I agree with the do it yourself approach but make sure you know your investments and your broker and their specialties. I personally choose ETFs for a variety of reasons that I cover on my blog. Additionally I would read up on some technical analysis basics that will help you understand how markets move.
I have access to a 457 plan at work because I have a city job. The plan is very similar to a 401k but in this case has no employer matching money. I can still deposit up to 17k a year and this is in addition to the structured retirement plan that takes 7% of my paycheck every two weeks. If I stick around at my job for another 15 years or so, we should be doing well during retirement.