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Mutual funds. Depending on the amount of risk you want to take on, you can either do a stock, bond, or money market fund. Money market funds tend to be about even with inflation over time, but most have been relatively flat-lined for the past couple of years. These are about as close to no-risk as you can get.
Example: https://personal.vanguard.com/us/funds/snapshot?FundId=0045&FundIntExt=INT
Then you have your bond funds, where you have the option of government bonds, or corporate bonds, or both. Higher risk than the money market, but still much safer than stocks. Some examples:
https://personal.vanguard.com/us/funds/snapshot?FundId=0083&FundIntExt=INT
https://personal.vanguard.com/us/funds/snapshot?FundId=0522&FundIntExt=INT
https://personal.vanguard.com/us/funds/snapshot?FundId=0029&FundIntExt=INT
And of course, stock funds. I recommend index-based funds for stocks. If you'd like to learn more about why they are recommended, I suggest you read A Random Walk Down Wall Street. Some examples:
https://personal.vanguard.com/us/funds/snapshot?FundId=0085&FundIntExt=INT
https://personal.vanguard.com/us/funds/snapshot?FundId=0533&FundIntExt=INT
https://personal.vanguard.com/us/funds/snapshot?FundId=0770&FundIntExt=INT
The risks obviously go up from money market -> bonds -> stocks, but so do the potential returns. I know many (all?) of those funds should be available as an ETF as well.
Note: Not legal advice, not licensed to give investment advice, don't blame me if you lose all your money, etc etc. For disclosure purposes, yes, I am invested in some of those funds.
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I personally Collect old coins / papers / medals from ww1 and ww2. I think I saw it mentioned before but as long as you don't damage these things the price does not drop and only increases over time. Plus I absolutely love being able to (carefully I must admit) Read through a newspaper from 1939 and from 1945. It's incredible to have these things first hand but make sure you put proper research into everything to avoid being ripped off and ensure that what you are paying for is not a fake or copy.
That said my favourite in my collection is easily an Irish Schilling from 1966  I got it for about 50 dollars 15~ years ago and it is now worth aprox. 80 dollars.
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Australia7069 Posts
how are stocks in pilot training schools going?
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United States24514 Posts
On January 03 2012 05:23 Kiante wrote:
how are stocks in pilot training schools going?
Well I guess I could use the 10k to help fund a pilot's license, then make back the money working summers as a pilot XD Would need more than 10k.
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Most of the advice given in this blog is complete crap. Since you're US, everything I say will apply to you.
1) Avoid all mutual funds. They are a scam. Mutual funds perform literally no better than random selection. There's been plenty of studies on this, and the data is clear. Avoid them.
2) Do not buy ETFs. ETFs perform badly and you can end up screwed if you need to reclaim assets and SURPRISE! they aren't there. Avoid them.
3) Inflation is way worse than the government says it is. You see numbers around 3-4% be tossed around, which is still incredibly high. What they don't say is that if you calculate CPI the way you did before Nixon, we're at almost 10% inflation. The last time I checked the past 3 years or so averaged over 9.6%. What does this mean? Well obviously you need to invest in something that's going to appreciate in dollars by 10% a year.
4) Continuing off of what I said above, buy hard assets. Lots of them. Precious metals are good, but be aware that due to heavy amounts of speculation (due to cheap credit and debt panics and lots of brokers trying to make a quick buck) there will be heavy short term fluctuation. You can see the graphs for gold/silver, and they've been performing wonderfully up until a few months ago when the prices started going bonkers. What happened is all the speculators started bailing out of precious metals thinking it was a bubble, and then all the people who know anything about economics saw a great buying opportunity so it shot back up, and back and forth. Not to mention the eurozone nonsense is putting upward pressure on the dollar which should be losing much more value than it is.
5) If you're going to buy precious metals, buy physical assets, not certificates. Know your scams, do your research, and by god avoid Goldline which is, I believe, under investigation. Solid coins and bullion are your best bet. Gold and silver are not the only metals that are going up too. Copper, platinum, uranium... all sorts of metals are worth looking into. It's just that gold and silver are the most trade-able.
6) Look into foreign investments, especially in Asian markets. South East Asia is exploding. Look at what Hong Kong and Singapore have achieved over the last couple decades. Australia and New Zealand are ripe markets. Indonesia, Malaysia, and even the poorer Asian countries are readily developing. This is where the growth is going to be.
7) Listen into Peter Schiff's show at www.schiffradio.com if you want a good politico-economic sense of what's going on, especially with regards to domestic monetary policy. He's also pretty entertaining. I also recommend contacting his firm Euro-Pacific Capital. They're trustworthy.
8) Whatever you hear, double and triple check with other sources and make your own assessments. Make sure what you do has logical backing and makes sense. If the fundamentals are telling you one thing while the 'professionals' are saying another, go with the fundamentals. Don't do anything you don't feel comfortable with. If you don't understand a market, don't invest into it.
9) Lastly, think long term. You're not looking to gamble, you're looking to invest. Just a few really good investments can make your portfolio. You want to be able to put your money somewhere and not have to panic check stocks every day to make sure you don't miss a sell trigger. That's why gold and silver are the best things to own right now. Nothing has performed more consistently in recent years. The fundamentals are solid. There is no reason to thing that as a long term investment you'll lose value.
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i don't understand why everyone keeps talking about having to panic check stocks
don't most online trading companies allow you to use limit orders? that's all i do..
limit order to buy at $xx.xx or lower
limit order to sell at $xx.xx or higher
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I already posted that in one of those threads with lots of stupid advice on how to get wealthy:
I can really recommend reading the two books Fooled by Randomness and The Black Swan by Nassim Nicholas Taleb before you start getting involved into investment stuff.
I personally have my money in like a seperate account with my bank where i get 2% if i remember correctly. I personally think i simply dont have the time to gain enough knowledge to get a higher % than that without it being a pure gamble. All the advice that gets thrown around is just noise imo, if you are serious about it, you probably have to put alot of work into it.
edit: I understand that putting it into your bank account is not really an option for you, but anyway, treat carefully and be super wary, especially with things that sounds really good. one thing that MIGHT be a good idea is to change your dollars into another currency that is more stable - not sure if your bank offers something like a foreign currency account, mine doesnt for example. the one thing i would personally like to put my money into is chinese yuan, but from what i know its not available for public trading.
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United States24514 Posts
On January 03 2012 08:46 LaSt)ChAnCe wrote:
i don't understand why everyone keeps talking about having to panic check stocks
don't most online trading companies allow you to use limit orders? that's all i do..
limit order to buy at $xx.xx or lower
limit order to sell at $xx.xx or higher
Yea, mine does. I have an order right now to sell if my stock ever gets up to the goal I want. This isn't always viable though.
I'd be doubly careful about putting in an order if a stock goes low enough.
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On January 03 2012 09:42 micronesia wrote:Show nested quote +On January 03 2012 08:46 LaSt)ChAnCe wrote:
i don't understand why everyone keeps talking about having to panic check stocks
don't most online trading companies allow you to use limit orders? that's all i do..
limit order to buy at $xx.xx or lower
limit order to sell at $xx.xx or higher Yea, mine does. I have an order right now to sell if my stock ever gets up to the goal I want. This isn't always viable though. I'd be doubly careful about putting in an order if a stock goes low enough.
definitely, you only want to do a limit purchase order with a stock you are comfortable with the trends of
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Do you own a house?
If so, I'd just upgrade the crap out of it. Provided you don't live somewhere that is still heavily affected by the bubble burst I think it's really the best type of investment. It's something material you can actually enjoy and it increases in value.
If not, I would try to do so asap.
Unless you have A LOT of money to play with, I still firmly believe real estate is the single best investment the average American can make. I'm not talking about investment like during the housing bubble.
The sooner you buy a house, the sooner you pay it off. This is essentially the biggest single continual expense you will ever have. If you are able to get rid of it sooner, you free up a lot of your money. And the increased value over time is just the cherry on top.
Let's be realistic. Not very many people will ever become millionaires or even gain substantial financial gain dabbling in stocks. Unless you're already at that level, your goal should be to be able to retire to a comfortable life.
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I suggest putting some money into the ishares S&P 500 index fund. The best thing about it is the annual fee is just 0.09% compared to mutual funds where its like 1-2%. If your only investing a few thousand dollars it's way cheaper than spending money on transaction fees/buying many individual stocks. And remember that trying to time/beat the market doesn't even get the experts anywhere.
http://us.ishares.com/product_info/fund/overview/IVV.htm
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On January 03 2012 13:49 jacosajh wrote:
Do you own a house?
If so, I'd just upgrade the crap out of it. Provided you don't live somewhere that is still heavily affected by the bubble burst I think it's really the best type of investment. It's something material you can actually enjoy and it increases in value.
If not, I would try to do so asap.
Unless you have A LOT of money to play with, I still firmly believe real estate is the single best investment the average American can make. I'm not talking about investment like during the housing bubble.
The sooner you buy a house, the sooner you pay it off. This is essentially the biggest single continual expense you will ever have. If you are able to get rid of it sooner, you free up a lot of your money. And the increased value over time is just the cherry on top.
Let's be realistic. Not very many people will ever become millionaires or even gain substantial financial gain dabbling in stocks. Unless you're already at that level, your goal should be to be able to retire to a comfortable life.
People don't buy houses to invest in. People buy houses to live in. If he thinks that his standard of living will be best improved by upgrading his home, then by all means he should do that, but that's consumption not investment.
Real estate investment would be finding some property/land that you think is undervalued and buying it to sell later. People don't buy homes to sell later. They buy homes to live in them.
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i was actually thinking about investing too soon so ill watch this thread until i leave to korea or decide to invest (whichever comes first)
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On January 03 2012 17:16 EternaLLegacy wrote:Show nested quote +On January 03 2012 13:49 jacosajh wrote:
Do you own a house?
If so, I'd just upgrade the crap out of it. Provided you don't live somewhere that is still heavily affected by the bubble burst I think it's really the best type of investment. It's something material you can actually enjoy and it increases in value.
If not, I would try to do so asap.
Unless you have A LOT of money to play with, I still firmly believe real estate is the single best investment the average American can make. I'm not talking about investment like during the housing bubble.
The sooner you buy a house, the sooner you pay it off. This is essentially the biggest single continual expense you will ever have. If you are able to get rid of it sooner, you free up a lot of your money. And the increased value over time is just the cherry on top.
Let's be realistic. Not very many people will ever become millionaires or even gain substantial financial gain dabbling in stocks. Unless you're already at that level, your goal should be to be able to retire to a comfortable life. People don't buy houses to invest in. People buy houses to live in. If he thinks that his standard of living will be best improved by upgrading his home, then by all means he should do that, but that's consumption not investment. Real estate investment would be finding some property/land that you think is undervalued and buying it to sell later. People don't buy homes to sell later. They buy homes to live in them.
Often times, that is more like speculation, not investment. Which is what happened during the housing bubble.
Instead, too many people get caught up in all the investment hype. In the process, they tie up funds that can be used for something they can enjoy now and still have long lasting return -- your home.
Now, I know the title specifically talks about "beating inflation." But that is a mentality that goes along with the investment hype. For simplicities sake, let's say you invest $10,000 at 5% and inflation is at 4%. You don't even need to do any math to tell you that's hardly a worthy investment.
As an alternative, let's say you buy a home for $150,000. You can spend $50,000 (correctly) and the value of your home can go up to $225,000 automatically. And you get to enjoy it, whatever it may be, even if the value of your home goes down temporarily.
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On January 04 2012 00:56 jacosajh wrote:Show nested quote +On January 03 2012 17:16 EternaLLegacy wrote:On January 03 2012 13:49 jacosajh wrote:
Do you own a house?
If so, I'd just upgrade the crap out of it. Provided you don't live somewhere that is still heavily affected by the bubble burst I think it's really the best type of investment. It's something material you can actually enjoy and it increases in value.
If not, I would try to do so asap.
Unless you have A LOT of money to play with, I still firmly believe real estate is the single best investment the average American can make. I'm not talking about investment like during the housing bubble.
The sooner you buy a house, the sooner you pay it off. This is essentially the biggest single continual expense you will ever have. If you are able to get rid of it sooner, you free up a lot of your money. And the increased value over time is just the cherry on top.
Let's be realistic. Not very many people will ever become millionaires or even gain substantial financial gain dabbling in stocks. Unless you're already at that level, your goal should be to be able to retire to a comfortable life. People don't buy houses to invest in. People buy houses to live in. If he thinks that his standard of living will be best improved by upgrading his home, then by all means he should do that, but that's consumption not investment. Real estate investment would be finding some property/land that you think is undervalued and buying it to sell later. People don't buy homes to sell later. They buy homes to live in them. As an alternative, let's say you buy a home for $150,000. You can spend $50,000 (correctly) and the value of your home can go up to $225,000 automatically. And you get to enjoy it, whatever it may be, even if the value of your home goes down temporarily.
Yes, well, that's the point. You shouldn't think of home improvement as investment, and you should not do it for investment purposes. You should do it because it makes your house nicer and that's a benefit you want to enjoy.
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If your only goal is to beat inflation, any ETF indexed to real assets is sufficient. I don't agree with the suggestion of holding physicals as the storage cost and the illiquidity make this less attractive when purchased in high quantities. Gold ETFs do not track gold perfectly, but it does the job for what you are trying to do without the hassle.
One thing to note:
Over the last 20 years, every 1 percent increase in inflation (CPI) has been associated with about 10 percent increase in commodity prices. So you only need a relatively small addition of commodities as they are highly volatile and do not generate long term real returns like investing in stocks. In your case, consider putting in less than 10% of your total portfolio.
The rest of your portfolio can be dedicated in return-generating investments. If you do not want to invest in risky stuff, just buy high dividend-paying large cap stocks. If you are not looking into spending the money in the near term, risky investments are better as there is the benefit of time diversification.
People who suggest investing in obscure stuff like home improvements etc. don't really get the point of how these things are illiquid assets that are hard to value, and cannot be sold easily. They are things that are nice to have on top of an already diversified liquid portfolio, but you shouldn't rely on them to generate returns in consistent fashion.
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Another thing I should mention is that mutual funds as a whole are just ETFs that charge higher management fees. Don't buy them unless you have the ability to pick the top performing managers.
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From my opinion (Trader opinion), any kind of inflation linked bond with a country unlikely to default (UK, US if you live there) is the absolute best choice if you want to buy something and close your eyes for 5-10 years. TIPS or inflation linked gilts are absolute king.
It is also the one i would reccommend in 99% of situations given the likelyhood of your personal situation to most people in here - a medium to small amount of cash, little experience in investing, even less experience in trading etc.etc.etc. for a whole bunch of psychological and practical reasons.
edit:
i'll fill this space with my thoughts on some of the things said in this thread.
gold or silver:
The vast majority of you lack the understanding and/or the capital to trade gold or silver. Don't do it. It's a high risk asset, and one of the most complex commodities at that, as it has a huge number of extraneous factors affecting it.
If you want to invest in it, place a SMALL amount of your capital (no more than 10%) in gold, and hold it for MINIMUM 1 year (i.e be prepared for significant drawdowns)
Cash is NOT trash. It is one of the best performing and most liquid assets right now, and given current economic conditions, we can only expect it to become more and more valuable (cash i assume = the USD). It is also, the absolute safest way of storing your money.
Don't be a fool and buy into stocks right now. If you're going to do some kind of spread trade vs blue chip tech vs smallcap, then thats OK
If you want, i could write a book on a whole list of technical, fundamental, and socioeconomic reasons why you should at least wait 6 months if you're going to touch stocks, which is a much riskier way of handling your money/
Mutual funds are generally a way of exposing yourself to stock beta, which btw, is almost certainly not a great idea right now. However given costs and size etc. It is the usual way of exposing yourself to stock beta for most regular people
ETF's are also a common way of exposing yourself to beta, though different kinds of beta (i.e inverse funds, or commodities beta)
I'd avoid these in general, as you lack both the understanding and capital to trade them properly. (i.e your investment will be no better than random selection)
It would be pointless for me to tell you to buy miner vectors ETF on heavily technical information with correlation from some other commodities only for me to tell you to sell it 5 days later, have you be late on the trade etc.
If you're really interested in this kind of stuff, smartmoneytracker is a good starting point on cycle analysis which is usable by semi advanced people who are willing to risk their own money on a part time basis (i.e as part of their usual savings
If you are going to touch stocks in any way, trade some long term futures spreads (1-12 months) and be well beta hedged.
Good ones for example - long standard chartered, short citigroup
etc.
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Lastly, investment isn't a way to make money, it's a way to save money
Making money through investment is incredibly difficult, and leagues beyond what most of you can imagine.
Trading is even more difficult, and is something i spend 12 hours a day, and then the other 4 hours of free time i get, obsessing over, likely will do for at least a year before i become successful. Really, unless it's your career, it's not for you
FWIW i trade interest rates (spreading strategies)
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On January 04 2012 02:39 BrTarolg wrote:
From my opinion (Trader opinion), any kind of inflation linked bond with a country unlikely to default (UK, US if you live there) is the absolute best choice if you want to buy something and close your eyes for 5-10 years
I wouldn't do that, because the inflation adjustment is not going to match real inflation. You can look at the numbers governments come up with versus numbers older metrics and private sources come up with, and they don't match. I don't know much about the UK, but in the US real CPI for the last 3-4 years has been over 9% (last I looked) whereas reported CPI is somewhere in the ballpark of 3-4%.
It's safe in terms of you pretty much know the yield and there's little to no risk of getting nothing back. I'll give you that. I would never buy them so long as we continue to keep interest rates too low and print money. The fundamentals are bad and the numbers are bad. It might've been good 10 years ago, but not anymore.
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On January 04 2012 02:39 BrTarolg wrote:
From my opinion (Trader opinion), any kind of inflation linked bond with a country unlikely to default (UK, US if you live there) is the absolute best choice if you want to buy something and close your eyes for 5-10 years. TIPS or inflation linked gilts are absolute king.
It is also the one i would reccommend in 99% of situations given the likelyhood of your personal situation to most people in here - a medium to small amount of cash, little experience in investing, even less experience in trading etc.etc.etc. for a whole bunch of psychological and practical reasons.
edit:
i'll fill this space with my thoughts on some of the things said in this thread.
gold or silver:
The vast majority of you lack the understanding and/or the capital to trade gold or silver. Don't do it. It's a high risk asset, and one of the most complex commodities at that, as it has a huge number of extraneous factors affecting it.
If you want to invest in it, place a SMALL amount of your capital (no more than 10%) in gold, and hold it for MINIMUM 1 year (i.e be prepared for significant drawdowns)
Cash is NOT trash. It is one of the best performing and most liquid assets right now, and given current economic conditions, we can only expect it to become more and more valuable (cash i assume = the USD). It is also, the absolute safest way of storing your money.
Don't be a fool and buy into stocks right now. If you're going to do some kind of spread trade vs blue chip tech vs smallcap, then thats OK
If you want, i could write a book on a whole list of technical, fundamental, and socioeconomic reasons why you should at least wait 6 months if you're going to touch stocks, which is a much riskier way of handling your money/
Mutual funds are generally a way of exposing yourself to stock beta, which btw, is almost certainly not a great idea right now. However given costs and size etc. It is the usual way of exposing yourself to stock beta for most regular people
ETF's are also a common way of exposing yourself to beta, though different kinds of beta (i.e inverse funds, or commodities beta)
I'd avoid these in general, as you lack both the understanding and capital to trade them properly. (i.e your investment will be no better than random selection)
It would be pointless for me to tell you to buy miner vectors ETF on heavily technical information with correlation from some other commodities only for me to tell you to sell it 5 days later, have you be late on the trade etc.
If you're really interested in this kind of stuff, smartmoneytracker is a good starting point on cycle analysis which is usable by semi advanced people who are willing to risk their own money on a part time basis (i.e as part of their usual savings
If you are going to touch stocks in any way, trade some long term futures spreads (1-12 months) and be well beta hedged.
Good ones for example - long standard chartered, short citigroup
etc.
----
Lastly, investment isn't a way to make money, it's a way to save money
Making money through investment is incredibly difficult, and leagues beyond what most of you can imagine.
Trading is even more difficult, and is something i spend 12 hours a day, and then the other 4 hours of free time i get, obsessing over, likely will do for at least a year before i become successful. Really, unless it's your career, it's not for you
FWIW i trade interest rates (spreading strategies)
Why would he trade gold/silver? I think all he's gonna do is buy and hold... Using TIPS to beat inflation means you have to put 100% of your portfolio into it, there are way more efficient ways of going about it.
I also don't think you should tell him to trade any sort of spread, as that involves shorting and some sort of view on intermediate/short term fundamentals, which are by no means beginner friendly.
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EPT
