CO4X4 Ballers, which IRA Option?

[scottycards]

So if someone is going to make a fairly decent IRA contribution here in the next couple of weeks, where would you put your money?

My credit union has a 13 month IRA with APY of 4.8% right now.

The stock market is taking a beating, and that is continuing today, so I'm not very inclined (I'm pretty risk-averse) to sink a bunch of dough in there, although I know in the back of my head it will rebound, and this is a long term investment.

I'm leaning towards the 13 month IRA right now.

What say you, CO4X4 financial geniuses? :shrug:

[Leon Phelps]

I'm rockin a 13 monther with my 401k from my previous gig + some personal fundage.

I just have a planner I deal with down in Cherry Creek, I know just enough about retirement funds to get into a LOT of trouble.

[scottycards]

I'm the same way. I talk to someone in the know, but just thought I'd solicit ideas from others here, so that I can bring them up with him when we meet.

He'll give me his perspective, I have my ideas, but it's always good to see if there's anything out there that maybe didn't occur to either of us.

There was an article in the paper on Sunday that prompted my interest. It was about investing in real estate via your IRA. I'm way too skeered to do that, but I never even knew you could do it.

The IRA has to make the offer, all bills are paid by the IRA, and someone not connected to the IRA has to be the administrator. It was interesting.

[Steve]

The stock market is taking a beating, and that is continuing today, so I'm not very inclined (I'm pretty risk-averse) to sink a bunch of dough in there, although I know in the back of my head it will rebound, and this is a long term investment.

You answered your own question. Look at the long term history of the market. Without question, if it's a long term investment like you say, stocks are where to put your money, not a measly 4.8% return account.

Remember the advice 'Buy Low, Sell High?' The time to buy stocks is when the market is taking a beating, not when it's soaring. Most people do it backwards because they invest on emotion rather than intelligence.

[scottycards]

Man, for some things I have no aversion to risk.

When it comes to my retirement fundage, I'm like a little old lady. Right now, we have about 50% in mutual funds- my funds are pretty conservative, wifes are ridiculously agressive (like all overseas growth funds), and we have the rest locked into CD's.

So we're 25% stocks that are middle of the road.
25% stocks that I'd be scared to buy on my own, but Kelly will do it.
50% in the bank, under lock and key.

[Steve]

So we're 25% stocks that are middle of the road.
25% stocks that I'd be scared to buy on my own, but Kelly will do it.
50% in the bank, under lock and key.

Dunno how close you are to retiring, but that's an awfully conservative portfolio unless you're looking at retiring soon. I 'lost' over $20k in my 401k in January alone. But you know what? I don't care. If I look at the long term history of it, and keep it in perspective that it's still a long term investment, I'll more than make up for that small blip.

I don't want to rely on SS or any other gov't handout when I retire, and we have things we want to do in retirement that cost $$$. Our financial adviser is very good and is working with us to get there. He says that when the stock market takes a big dip people come out of the wordwork wanting to move from stocks to something 'safer.' That's buying high and selling low; a very stupid investment strategy.

With most investments, safe = low return. If that meets your goals then that's what you should do.

[scottycards]

I need to grow a set. I know. Fawk it, maybe this time since we're putting a significant amount out there, we'll go more agressive.

Index funds? S&P 500? Or is that too conservative? Seriously, I'm a total chicken when it comes to this stuff, and we're 25 years from retirement.

[Steve]

...we're 25 years from retirement.

Calculate what that investment will be worth in 25 years at 5%. Look at the long-term history of the US or other stock markets over the last 25 years; calculate what the same investment would be worth. You'll be shocked at the difference.

I've got a nice color graphic our financial adviser gave use recently. I'll try to remember to bring it with me tomorrow so I can scan and post it in this thread.

[Slacker]

Dunno how close you are to retiring, but that's an awfully conservative portfolio unless you're looking at retiring soon. I 'lost' over $20k in my 401k in January alone. But you know what? I don't care. If I look at the long term history of it, and keep it in perspective that it's still a long term investment, I'll more than make up for that small blip.

I don't want to rely on SS or any other gov't handout when I retire, and we have things we want to do in retirement that cost $$$. Our financial adviser is very good and is working with us to get there. He says that when the stock market takes a big dip people come out of the wordwork wanting to move from stocks to something 'safer.' That's buying high and selling low; a very stupid investment strategy.

With most investments, safe = low return. If that meets your goals then that's what you should do.

Sounds like we invest along the same lines.....

I'm 50 and looking long-term. I have an emergency reserve fund, and then everything else is in stocks. No bonds yet, as I consider myself too young to be that conservative. The stocks are a good mix of small caps, mid caps, blue chips, growth, income, european, asian, emerging markets, etc. I've taken my short-term lumps over the years, but the upticks have more than made up for the lumpy times.:D :D

And yes the market has retreated from 14,000 to less than 12,000 since October. But I don't really care because now I am buying more at a lower price, and holding for the long-term.

A 4% return at the bank when the inflation rate is 3% is hardly worth the effort.....

[Steve]

Sounds like we invest along the same lines.....

I'm 50 and looking long-term.

Yep, same age, same goals and same strategy it sounds like. :thumbsup:

[scottycards]

Thanks, guys. I knew what you were going to offer in terms of risk, and I know it makes sense. But it always helps to hear it from others.

I'll get with my planner, and get outside my comfort zone.

[Slacker]

Thanks, guys. I knew what you were going to offer in terms of risk, and I know it makes sense. But it always helps to hear it from others.

I'll get with my planner, and get outside my comfort zone.

I haven't had a comfort zone since I was 4 years old and hiding behind Momma's skirt. :D

My wife used to go :eek: when she opened the stock statements. Sometimes :eek: in a good way, and sometimes :eek: in a bad way. She doesn't even look any more....she's in a comfort zone with me being out of mine....

....and never ever confuse being out of the comfort zone with being reckless or stupid....

[Leon Phelps]

Great advice here, fellas. I do have X amount of dollars sitting around to play the market with. What would be your suggestions with current financial conditions. I decided to sit on the majority at the moment and make nothing on it due to shifting a LOT of cash around in different directions..... i.e. don't want to screw anything up

[Steve]

....and never ever confuse being out of the comfort zone with being reckless or stupid....

Well said. :thumbsup:

[denverd0n]

I'll get with my planner, and get outside my comfort zone.
Not the right way to think about it. You need to stay INSIDE your comfort zone! You need to work with a planner who doesn't push you to be OUTSIDE your comfort zone! You need, perhaps, to educate yourself so that you understand that your comfort zone is bigger than you thought. Or maybe a better understanding of the risk vs. reward issues--and how the right mix of asset types can actually lower risk--will make you realize that you can be comfortable with more volatile investments.

But in the end you should NOT be getting outside your comfort zone. If you understand asset allocation, and you understand risk vs. reward, and you are just not comfortable with anything but conservative investments, even if that means you give up some long-term returns, then that is where you should stay.

[scottycards]

Agreed. Heck, my wife's 401K, which she's been making full contributions with employer match to for 18 years has been on FIRE.

My funds have done quite well, but not like hers. I've got about 20 years of contributions to that as well.

But I still just like knowing there's money in the bank that ain't going anywhere, for any reason. My bank money in the IRA is just additional savings outside of our work 401k's. It's my little cushion if the sky falls or something- maybe a Zombie attack.

I'm glad you guys chimed in.

[Steve]

Great advice here, fellas. I do have X amount of dollars sitting around to play the market with. What would be your suggestions with current financial conditions.

MP, there are a ton of different funds with lots of small differences and very different histories. Unless you like to actively study the market and this stuff (I don't) a good financial adviser is worth his weight in gold. And unless you've got big bucks to invest, you're much better off in mutual funds than trying to guess right and buy individual stocks. (When I say "financial adviser" I'm not saying stockbroker. While many advisers are also licensed to sell stock, they're not the same thing.)

Let's put it this way: If you invest $100 in a mutual fund when the market's soaring v. the same investment when it's how it is now, which one buys more shares of stock? "Buy Low, Sell High" is good advice for stocks as well as real estate. Right now when everyone's scared and getting out of the market is when smart people get in because less $$$ buys more stock.

Too many people buy when the market's soaring and then get scared and sell when it goes down. That's called buying high and selling low, which is gauranteed to lose money.

Edit: I wouldn't even think of investing in stocks unless and until you have several months' worth of funds saved in a safe (bank) investment to carry you over if something happens.

[scottycards]

And yes, Steve. I'll be checking the funds to make sure I'm not investing in EVIL companies.

I know you're deeply concerned about that.......:flipoff2:

No Exxon/Mobil, no Wal-Mart, etc, etc, etc......:P

[Steve]

And yes, Steve. I'll be checking the funds to make sure I'm not investing in EVIL companies.

I know you're deeply concerned about that.......:flipoff2:

No Exxon/Mobil, no Wal-Mart, etc, etc, etc......:P

You'll be surprised - honestly - at how many "green" and other purpose-built funds are out there now. It's not hard to find them to suit your moral investment strategy as well as your financial investment strategy. :thumbsup:

I'm just a money-grubbing, morally bankrupt, selfish prick out for every dollar I can earn. ;)

[Leon Phelps]

I currently do have a financial advisor/planner that I work with, which takes care of pretty much everything. I'm just totally curious into what everyone else is doing currently.

I KINDA have a clue on whats out there, I've just never played the stock market, outside of my 401K.

[MinesJeep]

I can't wait to start my job and actually put some real money into the market. Right now is a great great buying opportunity, looking at getting a house too. Found a steal last year right at the beginning of the financial crisis so I couldn't get a loan to buy it. Now that things have shaken out for the most part and I'll actually have a full time job can't wait to find another steal on the market.

[Leon Phelps]

Edit: I wouldn't even think of investing in stocks unless and until you have several months' worth of funds saved in a safe (bank) investment to carry you over if something happens.

I'm not too worried about that. I play to loose, much like gambling. The amount I'm considering throwing in, has nothing to do with ANY aspect of my life. There is a gold Faberg? egg around to deal with hell potentially breaking loose.

[scottycards]

You'll be surprised - honestly - at how many "green" and other purpose-built funds are out there now. It's not hard to find them to suit your moral investment strategy as well as your financial investment strategy. :thumbsup:

I'm just a money-grubbing, morally bankrupt, selfish prick out for every dollar I can earn. ;)

I know! I've been looking, and there are tons of options. It's pretty cool, and now with it all being online, you can just click to see what the fund is made up of, and even then if you don't recognize the company, you can just Google and find out about them.

Not to mention, GREEN is super hot right now.

I'm pretty selfish as well, but I have to walk my talk, and have no problem going with a different fund.

[Steve]

...I have to walk my talk, and have no problem going with a different fund.

Same here, but I figured I probably have a pro-big business reputation here so figured I'd simply reinforce it with the self-applied selfish prick moniker. :D

[Leon Phelps]

Same here, but I figured I probably have a pro-big business reputation here so figured I'd simply reinforce it with the self-applied selfish prick moniker. :D

I like the Uncle Scrooge affiliation, it just feels like it fits you!

[Steve]

I like the Uncle Scrooge affiliation, it just feels like it fits you!

Have we met? We need to. :spit:

[Leon Phelps]

Have we met? We need to. :spit:

Not yet, whenever I get to the slope, or the next visit to Denver, you make, a pitcher of :beer: is on me.

[kmon35]

Disclaimer: I am not a financial adviser.

That being said, one of the things I looked at when picking my funds for my 401 and 457, was the history of the mutual fund itself. I picked several that have been around since the 1940's, and have showed good returns since inception.

I am hoping the market goes down just a little more, then I will pull my gaurenteed funds out, and place them into the market. Then when it has gone back up, out it comes again. This is a very small percentage of my total funds that I feel safe "playing with." I have done this a few times over the last 10 years with some good results.

Check with the company that administers your 401, they may provide financial planning for you at no cost.

[scottycards]

I have a brother in law that is a financial planner. If I had 10% of his money, I'd be sitting pretty.

We'll have a talk, as he's only been my bro in law for a couple of years, and I haven't yet had a reason to talk business with him.

I guess this will present a good opportunity to work with him.

[Xtremjeepn-Cole Ford]

Disclaimer: I am not a financial adviser.

.

Disclaimer: I am a Financial Advisor. :D


Couldn't resist. :D But that also means I can't post on the topic due to FINRA. :shrug:


I would be happy to answer any questions anyone has offline though.

[Steve]

What's FINRA? :confused:

[sweater]

I 'lost' over $20k in my 401k in January alone. But you know what? I don't care.

x 2

Nothing about growing a pair, it's about learning from all the suits headed to Wall Street every day. My 401(k)'s lost something like 10% of it's value over the last few months, but prior to that it was up something retarded like 40% over the last three years. I've got it all shoved into the "most aggressive, reckless, and coke-snorting daytrader" category at Fidelity and I feel fine.

Do it.

DO IT.

- mike

PS: no, seriously: DO IT. :D

[Swat]

The stock market has never posted a loss over any given twenty year period in history since 1925. That includes the big crash and Great Depression IF YOU WERE INVESTED IN A BROADLY DIVERSIFIED PORTFOLIO!!! Historical returns show little risk for long term investing and you can move towards safety as you get closer to needing the assets. There is much risk in the stock market for the short term. This recent market adjustment is just a little noise along the way if you have considerable time to work with.

Buy and hold and diversify? Market time? Chase the hot issues? Buy, hold and diversify! It's a little over 90% of the variance in returns across portfolio's. Trying to be a market shark by market timing and trying to pick the best performers combined only accounts for a little less than 10% of the variance in returns across portfolio's. The research confirms the old adage "of not putting all your eggs in one basket".

It is best to see a qualified financial advisor or planner to get set-up right based upon the time you have to invest and the risk you are willing to assume.

I personally take advantage of the pretax plans through my employer and do a Roth IRA on the side.

[Swat]

What's FINRA? :confused:

NASD gets a new name. The National Association of Securities Dealers became:

FINRA - Financial Industry Regulatory Authority

You can check out your Financial Advisor/Broker/Planner on the site as well as the broker dealer. http://www.finra.org/index.htm

[Slacker]

Not the right way to think about it. You need to stay INSIDE your comfort zone! You need to work with a planner who doesn't push you to be OUTSIDE your comfort zone! You need, perhaps, to educate yourself so that you understand that your comfort zone is bigger than you thought. Or maybe a better understanding of the risk vs. reward issues--and how the right mix of asset types can actually lower risk--will make you realize that you can be comfortable with more volatile investments.

But in the end you should NOT be getting outside your comfort zone. If you understand asset allocation, and you understand risk vs. reward, and you are just not comfortable with anything but conservative investments, even if that means you give up some long-term returns, then that is where you should stay.

Expanding your comfort zone is a good way of putting it. Getting outside your investment comfort zone is a lot like getting outside your comfort zone in skiing.

Start on the greens---get comfortable.
Move up to the blues---out of the comfort zone, but eventually comfortable.
Move up to the blacks---again out of the comfort zone, but again eventually comfortable.
Move up to the double blacks---maybe, maybe not. Could be pushing the limits of comfort.
Move down to the blues---getting older and don't want to break the bones or the bank account.
Move down to the greens---NEVER!!

[Steve]

NASD gets a new name. The National Association of Securities Dealers became:

FINRA - Financial Industry Regulatory Authority

Thanks. :thumbsup:

So, it's a self regulation thing? And there's a rule that you can't give free or public advice, like on here?

[Steve]

Scottycards, I've attached an asset allocation chart I recently got from our advisor. It gives the history of return for various types of investments on an annual basis from 1993 to mid-2007. From the chart: The Large-Cap Growth fund (stocks) had a high one year of 37.9% growth and a low one year of -28.1%. However, over the complete span of the chart if you had your money in that fund you would have increased your $$$ by just under 170% (ignoring compounding, which would make it quite a bit more, but which I don't care to calculate right now.) Cash, which includes T-Bills and the like never had a loss, but never had a return higher than 6.2%. That investment would have only given you a return of 59.1% over the same time period.

It's pretty easy to see from the chart where you should invest as long as it's for the long term, and it ain't in "safe" cash-based investments. Based on the long term history, we're starting to invest in real estate securities.

[scottycards]

Thanks, Steve. I really appreciate it.

[denverd0n]

Expanding your comfort zone is a good way of putting it.
Exactly. You shouldn't ever get OUTSIDE your comfort zone, but you can work to EXPAND your comfort zone (if you want to).

[Swat]

Thanks. :thumbsup:

So, it's a self regulation thing? And there's a rule that you can't give free or public advice, like on here?

Free advice is OK, but there is a need to assess an individuals finances, risk tolerance and time to invest for specific goals. Protecting wealth can get even more comnplicated with insurance coverages. Throwing out general advice can do more harm than good. (Not unlike the counseling profession.;) )

A broker dealer holds an individuals license and shares the liability for what that individual does. Every broker dealer has a compliance department which approves advertisements, articles, investment programs, insurance program etc. etc. etc. The industry is highly regulated as a few a-holes have given the rest of us a black eye.

[Swat]

Exactly. You shouldn't ever get OUTSIDE your comfort zone, but you can work to EXPAND your comfort zone (if you want to).


A great way to expand your comfort zone is to get some education. Knowing what the market has done over time relieves anxiety. Ibbotson's and Associates have great data on the history of the markets.

Here's a bit dated but great chart: http://www.morganstanleyindividual.com/investmentproducts/equities/why/ibbotson_chart.pdf

I like this one which shows a variety of asset classes and what was on top for return in a given year: http://www.allianzinvestors.com/documentLibrary/mutualFunds/supportingLiterature/investorEducation/the_importance_of_diversification_ac033.pdf

[Slacker]

So the overall markets went up about 3.75 percent as of 2pm today.......not bad for a one day return, huh? But it could go down more than that tomorrow. Hence the need for the long-term outloook....which for me is measured in years.

Index Last Change % change
? DJIA 12157.06 +416.91 +3.55%
? NASDAQ 2253.00 +83.66 +3.86%
? S&P 500 1320.40 +47.03 +3.69%

On the other end of the spectrum, I know some day traders that view 1 second as a long-term investment...:eek: :eek: :eek: