Investments: - Tilted Forum Project Discussion Community

blktour · 03-02-2009, 04:02 PM

Well I did a search and found nothing. I was trying to find NOSOUPS posts hoping to see anything that might help me on the financial side.

I am looking to open up something that lets me invest in my future. I am 25, young, single and make decent money. I tend to spend too much money on crap, so I am trying to invest about $100 a month into something like an IRA or Mutual fund.

I called my financial advisor or whatever you call it. at USAA. he said I should do some risk since I am young.

He said something about a 60% and 40% split of 60 being stocks, and 40 being mutual funds Roth Ira. Balance strategy he called it.

I am just wondering what is my best bet to invest into with about $100 a month that will help me in the future?

I am so lost as to what to do, and hope you all can help me. I am also trying to get into my 401k at my job, but I want to know what would be better. a 401k or the mentioned above?

what are the pros and the cons of each?

braisler · 03-02-2009, 05:05 PM

You can check on the regulations involved, but you are usually able to participate in a 401k/403b plan and still have an IRA... certainly you'd still be able to have a Roth IRA as those are after tax dollars. Depending on where you work your company might offer a 'match' for your 401k. That is, they will put in the same amount or a % of the amount for every dollar you contribute. If your employer has this, use it to the maximum allowed. It is like getting an immediate 100% return on your money, or better. In my case, I contribute 5% of my income to my 403b and my employer matches to 10%. Big impact obviously!

So, if you are starting with $100 a month... it isn't a lot, but it is a good start. Take a careful look at your budget and see if you can't scrape together even more just now. It might hurt now, but will pay off big in the long term with compounded interest on your investment return. Particularly right now as we are in an economic downturn. I'd venture a guess and say that for each $100 you put aside this year, it will be the equivalent of putting away $150 or $200 two years from now.

Anyway, if you are looking to start a brokerage account (investing on your own), you can set one up with any of the online companies pretty easily and also set up a monthly automatic contribution. I use Ameritrade, some friends that I know have been satisfied with Etrade. Trades cost $7-10 each. You probably want to wait until you get about $500 together for each stock purchase just to keep the cost of investing down. I mean, if you buy 5 shares of a $20 stock for $100, you just lost 10% to the transaction fee. As far as what stocks to purchase, I'll reserve any recommendations. There is a lot of information out there. I'd recommend you get some investing books from the library or peruse some quality investment websites. I started with the Motley Fool books, but you can read much of that same information online. That will provide you a good basis for what makes a good company to invest your money.

Another option to consider is ShareBuilder. I haven't used it myself, but the idea is that you can contribute a small amount each month and with low transaction fees buy into stocks or mutual funds automatically. This requires less day to day or month to month management on your part. If you know yourself well enough to know that you aren't going to want to be constantly on top of your investments, then this might be a good option for you.

Good luck to you! And congratulations on taking the first step on building your future wealth.

blktour · 03-02-2009, 06:07 PM

wow! thanks!

I know my employer contributes dollar for dollar. I have emailed my benefits manager and they sent me a form, that asks for percentage. I asked if we can do by dollar amount, but she hasnt gotten back to me.

I work off of commission so % wise will kill me if I make more sales one month compared to the other dont you think ?

ASU2003 · 03-02-2009, 07:21 PM

If you think taxes will have to go up in 40 years, or you will be in a different tax bracket, then the IRA option is the best route.

Then again, if you think that market is only going to go down for the next 6 months, a CD would be a safe bet. At least you won't lose money. Then again, you never know where the top and bottom will be.

NoSoup · 03-02-2009, 08:18 PM

Well, first and foremost before putting any money away long term make sure all high interest debt - especially debt not secured by an asset (ie mortgage or vehicle loan) is paid off.

Assuming it is, I would then set up your emergency fund - a pretty liquid account that you can stash a minimum of three months expenses (Ideally six, especially in this economy) away. The reason I say it needs to be pretty liquid is because it doesn't necessarily have to be at your local bank, but perhaps an online bank (ING Direct offers great savings rates and no fees) or even Certificates of Deposit. Be aware, though, that most online banks require a few days to get your money out, but generally it will probably be worth a higher interest rate.

That said - I would highly recommend a 401(k) or similar plan if your employer matches funds. As far as a flat dollar amount vs. a percentage, it doesn't really matter. I imagine that your employer would match on a percentage basis, so that's what I would tend to go with. Although you are paid on a commission basis, overall it's still just going to be X% of your gross annual income - and remember, that percentage will have a lesser effect than the actual percentage because it is taken out before taxes. If you put 6% into your 401(k), you'll likely only see a 3-4% decrease in the net amount of your check.

All that aside, here is what I think based on the limited info from your post -

Being a young, single guy that tends to "spend too much money on crap" I bet you have more flexibility than you think. Consider one technique generally referred to "Paying yourself first." In essence, If you think you can comfortably sack away $100 bucks a month, I'd start out with $200 - take $100 out of each check religiously and put it in whatever account you choose, and don't touch it for any reason. (barring emergencies) I'm betting that you'll be able to find a way to make your monthly budget work without the $200, and that way you won't get towards the end of the month and find rationalizations to whittle the amount you're saving down based on how badly you want that new Ipod or whatever

Your financial advisor and I probably don't see eye to eye on this part, but I generally tend to be more conservative as I grow older - thank you Enron, Worldcom, IM Clone and stupid Washington Mutual.

I'm sure you'll find lots of folks that will encourage you to invest in stocks right now, as they are signficantly lower than they were in recent history. However, with the absolute absence of any economic data that supports the notion we are in imminent recovery phase, I wouldn't rush out to buy stock any time soon. On a personal level, I am banking my cash until I see some data to support that the stock market will be on an uptick, then I'll probably snag some up. I very well might miss out on a few percentage points of gain, but I'm limiting my losses in the meantime - to me, at least, it's worth it.

If you do end up investing in stocks now or in the future, I do recommend Sharebuilder - it's a great resource for long term investors that don't necessarily care about the day to day prices. I believe that once you choose what stocks you're going to buy, they purchase in bulk every Tuesday - so you might have to wait a few days for the stock to actually be purchased, and the price may vary slightly, but ultimately a few cents in stock price won't matter over the long term, and the fees are very reasonable - I think it's $4.

Regardless of what you decide, congrats on starting to save money early - I think a lot more people right now are wishing they had done the same.

If you have any more questions, let me know

blktour · 03-03-2009, 11:04 AM

NoSoup: You motivate me financially! I was going to go out and splurge again, but you held me back. We need like weekly chats! haha.

So will I have to pay off my house, truck, and student loan before I can start this? or I can start it now? I assume that the bills below will always be there, so I take it as that, and when they dissapear I will have that much more money to save?

Well I always thought that my finances have been messed up.

I make about 4k take home every month.

I have about $15k that I do not touch for ANYTHING. My "nest egg" is what I call it. for emergencies.

I have a mortgage and all bills total at about 1500/month. gas/water/electric/mortgage.
car and insurances: 570/month.
gas about $60/week.
student loan: $200/mo
food: varies
little bills: netflix: $25/mo. wow, $68/every 6 months, ak airlines yearly subscription, $75/yr.
costco and sams each $50/yr.

I work for my local cable company so I get free cable, internet and cellphone. so I have it but I dont pay for it.

Do you all think that I am making decent money that I can support this lifestyle?
I just always feel that I am living beyond my means and that it will catch up to me one day. I guess I scare myself into not spending?

I never really gave it much thought.

My whole mind set is that i tell myself I am broke so I wont spend much money, but always find ways to justify a new system in my truck, or that new TV, or what have you. haha.

genuinegirly · 03-03-2009, 11:22 AM

Sounds like you're doing well when it comes to expenses.
You don't need to pay off your house or student loans before you start investing.

When it comes to your truck - depends on how much you owe and what your interest rate is. If you're going to make 5% interest on an investment but you're paying 10% interest on your truck, then you'll want to pay the truck off first.

USAA? You're in a military family?
We use USAA for insurance but not banking. Not sure how it works with them. Good that you're asking them questions. Bad that they're recommending investing so much in stocks when the market is so incredibly unstable. Even if you're young, risky investing may be too unsettling at the moment. It is for us. We don't have much money in stocks currently.

If your $15k nest egg is in the same bank that you're trading through, you may not have to pay comission on trades. You should check on that. Every penny helps. Especially when you're starting.

blktour · 03-03-2009, 11:28 AM

Well I have a 5.25% on my truck. I just got it, and owe about $26k.

I was prior military, I just got out last year, so they let me become a member for life. I only do banking, insurance and credit card with them. I have my mortgage with wellsfargo.

I know that they are a business and want money also. that is why I am weary about dumping too much money in stocks. he said since I am young I can afford to be risky. hmmf

Would it be benificial to me, to refinance my home with USAA to see if i get a lower interest rate? I have 5.5% on home right now. I just bought the place in july of 08.

I have lots of questions. sorry everyone.

braisler · 03-03-2009, 11:41 AM

No, you don't need to pay off your house or student loan. Those debts are relatively 'good' debts since a)you can deduct the interest paid if you are paying enough to itemize your taxes, b)at least in the case of the mortgage you likely have a pretty decent interest rate. Questionable on the truck, what is your interest rate on that loan, are you underwater on the truck's value vs. the loan amount? Honestly, I'd never borrow money to buy a car. I know that is not everyone's solution, but borrowing money to purchase a depreciating asset is a losing proposition. If you aren't too much underwater with the loan and you really want to consider saving a lot of money, you might consider selling your truck and buying a lower cost, reliable vehicle. Cheaper to own with no payment, cheaper to insure, maybe lower gas mileage. I realize this might draw some criticism as some people are absolutely married to their vehicle, but I thought I'd throw it out there.

Take that 15K and make sure that it is earning SOME kind of return. If it has to be totally safe and secure and relatively liquid, set it up into a CD ladder with INGDirect or some other online bank. If you haven't heard of a CD ladder it just means to divide the money into chunks and invest it over time so that you have a certain amount maturing each set period of time. You could take your $15K and divide it into $1.25K chunks and then buy a 12 month CD each month for the next 12 months. Then next year, you just roll the CD over into another 12 month CD. This method allows your money to be totally secure, while still maximizing your return, and making sure that you have money coming out each month if you need it.

You might also take a look at your finances to see what can be trimmed. Netflix might be replaced by a streaming site like Hulu since already have free internet, etc. Movies are also available for download via torrent, etc. depending on how concerned you are about broadcast rights, copyright etc. I'm not trying to make any judgments here, just offering suggestions about how you might trim your expenses. Cut one or both of Costco and Sam's. I doubt that you really need both of those places. You know better than me what you get there, but I find them to be pretty overlapping in what they offer.

The other area that sticks out to me is your car payment and insurance. $570 per month seems pretty high to me. I don't know how much of this is loan payment and how much is insurance. If you haven't shopped for insurance in a while, you might check around and see if you can't get a better rate. You are a homeowner, and 25, so you have 2 out of 3 of the big things the insurance companies look for, the other being marriage, when determining your rate. Ask your current insurer and any company you call for quotes about discounts for homeownership, for bundling your home insurance and auto-insurance, for raising your deductible from $250 to $500, etc. The last one can be a bigger difference than you think. Realistically, you aren't going to want to get insurance involved if the accident is under $500 damage anyway, since your rates are almost guaranteed to go up if you do.

---------- Post added at 02:41 PM ---------- Previous post was at 02:35 PM ----------

Ouch on the truck. That is a huge expense. I am sure that you love it, but ouch. At least the loan is not really that high of an interest rate.

The mortgage isn't too high either, maybe a bit above market. You could certainly make some calls around to see what rates and payments you could get elsewhere. You can usually do a preliminary talk through without incurring any obligation or expense. Bankrate.com has the national average mortgage for 30-year fixed at 5.25 right now. So that wouldn't likely be worth it.

Don't apologize for your questions. People love to help. Or they'll not be interested and move on.

genuinegirly · 03-03-2009, 12:10 PM

braisler, you're offering great advice. I'm going to be picky, though...

Quote:

Originally Posted by braisler

... If you haven't shopped for insurance in a while, you might check around and see if you can't get a better rate.

I'll be shocked if he finds insurance that is less expensive (and as comprehensive) than USAA. They're usually about half the cost of any other insurance company.

Also - I'm not sure you realize that the OP is in Alaska. It's exceptionally important to have a solid, reliable truck in AK. I can't fault him for having a new truck with any and all cold-weather bells and whistles.

braisler · 03-03-2009, 12:32 PM

Quote:

Originally Posted by genuinegirly

braisler, you're offering great advice. I'm going to be picky, though...

I'll be shocked if he finds insurance that is less expensive (and as comprehensive) than USAA. They're usually about half the cost of any other insurance company.

Also - I'm not sure you realize that the OP is in Alaska. It's exceptionally important to have a solid, reliable truck in AK. I can't fault him for having a new truck with any and all cold-weather bells and whistles.

That's ok, I'll pick right back.

My wife's father was military, so we qualify for USAA too. I ran them against other insurers and came up with saving a couple of hundred per year going with Progressive over USAA. Also, I was particularly prompting him to re-contact his own insurer and other insurers since he has recently turned 25 and also recently bought a house. Those are big milestones when it comes to determining insurance rates. If he got insurance for the truck last year when he was 24, today's quote might be a lot lower. Some insurers will automatically lower your rate, most won't unless you ask about it.

I do recognize that he is in Alaska. A 1998 AWD Subaru might also work and cost around $4000. Or any other number of capable, sound, and sturdy vehicles that could be had for under $5000. I know that some people just LOVE their cars/trucks, and that is cool. As long as you realize that love is costing you some big money. A $26K truck that will be worth, what maybe $10K in 5 years, $5k in 8 years.

Hey, are Alaskans still getting checks from the Oil Reserves/Alaska Permanent Fund? I remember a friend who lived there saying that they used to get $4K per year for their family. This could be a source of a little cash infusion that you could throw at your investment accounts.

blktour · 03-03-2009, 01:13 PM

Yes I am in alaska and i do need a decent truck here. that is why I got a MINI truck and not a full blown truck. I tried the subaru and they are not good here for some reason. all? no. but I dont want to take my chances, since there is a subaru shop here that is always packed. If i got a subaru, it would be new of course, and that wouldnt help me out a bit. hehe.

I feel on the truck portion that I need a good truck to take care of all that I need and to get me to work daily and comfortable. yes I love my truck. though I made the mistake of getting it brand new, and fully upgraded and no money down. so that is why my payment is high. I will not get rid of it since I have upgraded alot of things to it to make it worthy of our long winters. studded snow tires (one sunny day will make the roads ICE.) and car starter since I have no garage. also towing package and all the stuff needed to tow people out when they need help. stuff like that.

I know it depreciates. that is where i made the mistake. but I will pay for it for the next 3 years or so. till then, I will keep this truck ,and KNOWN what it has really been through, and not get any surprises like I did with other cars that were only $10k or so, and then had to dump money on hidden faults.

I pay only $99 for full coverage at USAA. I went price hunting last month and the lowest I got was at Geico for $127. I will stick with USAA for now.

yes we are still getting our PFD here. last year we got about $3k each person.

braisler · 03-04-2009, 08:29 AM

Is the PFD check something that you usually budget for? That is, when that money shows up are you using it for covering known expenses, making ends meet, or are you looking at what size HDTV you can buy? If it is the latter, maybe you can use that PFD check to fund your new investment account with a large chunk of cash.

If you haven't already, you should definitely check out the Tilted Frugality thread. There are tons of tips there on how to save money on everything from entertainment to food to energy costs. Every dollar saved can be another dollar that you could invest. Frugal living can be kind of addictive in a good way. Once you get started you may find yourself pushing to see how much further you can take it.

blktour · 03-04-2009, 10:24 AM

i will check that out. Thanks Braisler!

As far as the PFD, I just save it. I dont spend it as I get it. I use it to fix things that need to be fixed or even give it to family members who need it more than I do. This is recently though. Started about 3 years ago. Before that I just spent it. I never expect it or "wait" for it.

thingstodo · 03-06-2009, 04:27 AM

Quote:

Originally Posted by blktour

wow! thanks!

I know my employer contributes dollar for dollar. I have emailed my benefits manager and they sent me a form, that asks for percentage. I asked if we can do by dollar amount, but she hasnt gotten back to me.

I work off of commission so % wise will kill me if I make more sales one month compared to the other dont you think ?

I would absolutely contribute the maximum amount your employer matches. It usually isn't taxed. Your aren't smart if you don't take advantage of free money.

Then, I would save enough to have cash to live on for six months. CDs that mature every 3-6 months on a rotating basis generally earn a higher rate than a savings account. For example, if you have $20,000 stick it in 4 different CDs that mature every few months. That way you'll always have a stream of available cash but earn the best return.

Then I would reduce debt. At that point I would then begin to save for investing.

new man · 03-06-2009, 07:41 AM

I have USAA insurance. Our two most recent cars (we have had for 8 and 10 years respectively) have had body repair done 7 times. One of which was my fault. USAA has taken care of us each time. They take our original deductible, they deal with the other company, we go to a USAA shop, and they refund our deductible when the other company takes responsibility. So I will take their service, even if someone else can undercut them by a couple hundred a year.

It sounds like your truck is your big splurge, and that's not necessarily a bad thing. It's when you trick it out, throw a snowmobile on the back, add a camping/hunting trailer, and do all the other things that dwindle your money down.

Definitely get into your 401k to at least pick up the match. After that, consider a Roth IRA. You pay with after tax money, but the earnings are tax free at retirement. You also have more flexibility; you can take out your contributions before retirement without penalty. This allows you emergency funds later in life, but your earnings continue to grow. If you ended up in the same tax bracket into retirement, then the Roth confers no advantage or disadvantage over tax deferred money. But if you are in a higher tax bracket, then you will come out ahead with the Roth. But the 401k gives you tax savings up front.

As far as asset allocation, you are young and have many years until retirement. Put your money in stock funds. The market is incredibly low. Even if it goes lower, it will go up at some point. You are starting at or near the bottom. Get in there. USAA's funds are ok, but do not offer that many choices. I would prefer a broader mix, personally, but some people would suffer from paralysis by analysis.

NoSoup · 03-06-2009, 10:09 PM

[QUOTE=new man;2605164] The market is incredibly low. Even if it goes lower, it will go up at some point. You are starting at or near the bottom. Get in there. QUOTE]

This is a pretty big assumption. Although the stock market is low relative to where it was, I don't think anyone has any idea where the "bottom" actually lies. If you would have told someone a couple of years ago the DOW would be struggling to hit the 7,000 mark you probably would have been laughed at while they escorted you to the nuthouse.

Perhaps we are within a couple hundred points of the "bottom" - but on a personal level I'm adopting the wait and see strategy...

thingstodo · 03-07-2009, 08:24 AM

[quote=NoSoup;2605413]

Quote:

Originally Posted by new man

The market is incredibly low. Even if it goes lower, it will go up at some point. You are starting at or near the bottom. Get in there. QUOTE]

This is a pretty big assumption. Although the stock market is low relative to where it was, I don't think anyone has any idea where the "bottom" actually lies. If you would have told someone a couple of years ago the DOW would be struggling to hit the 7,000 mark you probably would have been laughed at while they escorted you to the nuthouse.

Perhaps we are within a couple hundred points of the "bottom" - but on a personal level I'm adopting the wait and see strategy...

And to build on this comment, I have read several places that say the people that make the most money when things improve aren't the ones that catch things at the bottom; rather, they are the ones that catch thngs after they have been going up for a short period of time. I have no idea why and no basis other than perhaps catching a ride on the momentum is better than guessing at the bottom.

Cynthetiq · 03-07-2009, 08:38 AM

really? Get in there? Had I followed that advice.... the first time and each subsequent time I'd be wiped out.

Quote:

View: Panicked by the stock market
Source: Latimes
posted with the TFP thread generator

Panicked by the stock market
Opinion
Panicked by the stock market
Every time the market pros tell us to stay calm, I get very nervous.
By Joe Queenan

March 6, 2009

On Monday, the Dow Jones industrial average nose-dived another 300 points. So, what advice did the perky money manager quoted in my local newspaper the next morning have to offer? "I think we're going to look back and see that this was the best buying opportunity we've seen in years," the man said. "When General Electric is selling for less than the cost of a light bulb, that's an opportunity."

The best buying opportunity in years is now 14 months old. Financial advisors started touting it about the time the Dow hit 11,000, and they have grown increasingly enthusiastic as it has worked its way down past the 7,000 level.

As the Dow has tumbled deeper into the abyss, money managers, stock analysts and even well-meaning journalists have consistently warned laymen about the risks of throwing in the towel. Over and over, investors have been told not to panic because no one has really lost any money until they've sold their stocks. Meanwhile, the market has surrendered more than half its value and seems perfectly prepared to continue its merry toboggan ride south. So even if you haven't actually lost any money yet, it may seem as if you've lost money. It may seem, in fact, as if you've lost half your life's savings.

About a year ago, I began collecting hilarious articles warning the public not to make the mistake of panicking. My favorite is "The Economy is Fine (Really)," which ran in the Wall Street Journal on Jan. 28, 2008. In it, Brian Wesbury, chief economist for First Trust Portfolios, opined: "It is hard to imagine any time in history when such rampant pessimism about the economy has existed with so little evidence of serious trouble." Wesbury also noted that "initial unemployment claims, a very consistent canary in the coal mine for recessions, are nowhere near a level of concern." He concluded: "Dow 15,000 looks more likely than Dow 10,000. Keep the faith and stay invested. It's a wonderful buying opportunity."

"Are you ready for Dow 20,000?" was the headline of a March 24, 2008, Barron's article, in which the very fine journalist Jonathan Laing allowed "veteran strategist" James Finucane to hang himself. Finucane believed that "months of stock liquidation and cash buildup, horrible sentiment and a bailout that could alter investor psychology have lit the fuse for an explosive rally."

In the last year or so, there have been hundreds, if not thousands, of articles warning investors about the idiocy of panic selling. One ceaselessly regurgitated bromide warns investors that if they missed out on just a handful of the top-performing days during the 1982-2007 bull market, they would have ended up with a 25% smaller return. No one, not even Warren Buffett, can time the market, laymen are warned, and those who duck in and out do so at their peril. So stay the course. Buckle up for a bumpy ride. And whatever you do, don't panic.

A few months ago, I decided that the time had come to panic, so I started to move a portion of my emaciated 401(k) into cash. I felt like a jerk at the time, knowing only too well that the man who is bearish on the United States of America will end up a pauper, and that if I got out now, I risked missing out on that massive, once-in-a-lifetime rally. But I was willing to take that chance, as half a loaf is better than none, and my 401(k) is now about half the loaf it once was. That first time I panicked, the Dow was trading at 9,500.

Afew weeks ago, I panicked again and moved another hefty chunk out of the market. The Dow was then trading at 7,500; now it is approaching 6,500. I fully expect to panic again at 6,000, probably at 5,000, and might even get in a bit of late-in-the-day panicking at 4,000. Tentatively, I am drawing a line in the sand at the crucial watershed of Dow 3,000, because any hysterical selling beyond that point would be anti-American and counterproductive. But even that hideous benchmark is subject to revision. I realize that I have come late to the panic mode, but as my father always said: No matter how bad you have been burned, it is never too late to try dousing yourself with water. Remember that, son.

One thing that encourages me to panic is the steady cascade of admonitions from luminaries urging me not to panic. Last week, professional cheerleader and Wharton School professor Jeremy J. Siegel wrote an Op-Ed article in the Wall Street Journal arguing that stocks are significantly undervalued because the S&P calculates its earnings incorrectly. I couldn't understand all of his reasoning, but basically he said that stocks were cheap. The next day, Jason Zweig, author of the Journal's "The Intelligent Investor" column, fired back: "The belief that stocks become virtually riskless if you just hold them long enough -- popularized a decade ago in books like Jeremy Siegel's 'Stocks for the Long Run' and James Glassman and Kevin Hassett's 'Dow 36,000' -- has been shattered by reality." Hassett, by the way, was one of John McCain's top advisors. Talk about dodging a bullet.

The lower the Dow goes, the more adamantly some professionals insist that the worst is over. In this week's Barron's, portfolio manager William D'Alonzo said: "Whether it takes six months or several years for this crisis to bottom, we believe the market has largely discounted the economic downturns, and that it is essential to remain in the market to take part in its eventual recovery." No thanks; I'm panicking.

Meanwhile, Tobias M. Levkovich, chief U.S. equity strategist for Citigroup Global Markets, wrote in his Feb. 26 report: "Stock prices are showing up as attractive against other assets." Since then, the Dow has dropped almost 700 points more. Citigroup, it bears noting, is a banking colossus that may cease to exist as an independent entity soon, if rumors of impending nationalization are true. In other words, the top analyst for a bank that has effectively imploded is telling investors to buy stock in the equity market that Citigroup helped to destroy. This is a little bit like the chief petty officer on the Titanic offering up survival tips: Whatever you do, don't abandon ship; it's cold out there in the North Atlantic.

Well, with all due respect, sir, I know that your intentions are honorable and that you've got loads of experience in this field. But right now, I'm no longer accepting advice from employees of the White Star Line. There is a time for hysteria, and a time when cooler heads should prevail.

This is the time for hysteria.

Lindy · 03-11-2009, 07:27 AM

Quote:

Originally Posted by blktour

....since I have no garage. also towing package and all...

I almost missed this, and I don't mean to threadjack, but why would anyone build a house in Alaska without a garage???

Lindy

blktour · 03-11-2009, 08:59 AM

cost too much maybe? or maybe the lay out plans were already done in the lower 48 so they just made them here? haha. our winters are not as bad as others think. Montana is known to have worse weather than us. haha.

Lindy · 03-11-2009, 05:24 PM

Quote:

Originally Posted by blktour

...our winters are not as bad as others think. Montana is known to have worse weather than us. haha.

One of my high school friends teaches school in Juneau, and says that although they get a lot of snow, winter is actually colder in Western Kansas.

Lindy

thingstodo · 03-14-2009, 07:07 AM

It's all perception. I lived in Georgia at one time and winter seemed very cold. I now live in Michigan and it doesn't seem as cold here in the winter than places like Virginia or North Carolina.

03-02-2009, 04:02 PM	#1 (permalink)
blktour Psycho Location: Anchorage, AK	Investments: Well I did a search and found nothing. I was trying to find NOSOUPS posts hoping to see anything that might help me on the financial side. I am looking to open up something that lets me invest in my future. I am 25, young, single and make decent money. I tend to spend too much money on crap, so I am trying to invest about $100 a month into something like an IRA or Mutual fund. I called my financial advisor or whatever you call it. at USAA. he said I should do some risk since I am young. He said something about a 60% and 40% split of 60 being stocks, and 40 being mutual funds Roth Ira. Balance strategy he called it. I am just wondering what is my best bet to invest into with about $100 a month that will help me in the future? I am so lost as to what to do, and hope you all can help me. I am also trying to get into my 401k at my job, but I want to know what would be better. a 401k or the mentioned above? what are the pros and the cons of each?

03-02-2009, 08:18 PM	#5 (permalink)
NoSoup Non-Rookie Location: Green Bay, WI	Well, first and foremost before putting any money away long term make sure all high interest debt - especially debt not secured by an asset (ie mortgage or vehicle loan) is paid off. Assuming it is, I would then set up your emergency fund - a pretty liquid account that you can stash a minimum of three months expenses (Ideally six, especially in this economy) away. The reason I say it needs to be pretty liquid is because it doesn't necessarily have to be at your local bank, but perhaps an online bank (ING Direct offers great savings rates and no fees) or even Certificates of Deposit. Be aware, though, that most online banks require a few days to get your money out, but generally it will probably be worth a higher interest rate. That said - I would highly recommend a 401(k) or similar plan if your employer matches funds. As far as a flat dollar amount vs. a percentage, it doesn't really matter. I imagine that your employer would match on a percentage basis, so that's what I would tend to go with. Although you are paid on a commission basis, overall it's still just going to be X% of your gross annual income - and remember, that percentage will have a lesser effect than the actual percentage because it is taken out before taxes. If you put 6% into your 401(k), you'll likely only see a 3-4% decrease in the net amount of your check. All that aside, here is what I think based on the limited info from your post - Being a young, single guy that tends to "spend too much money on crap" I bet you have more flexibility than you think. Consider one technique generally referred to "Paying yourself first." In essence, If you think you can comfortably sack away $100 bucks a month, I'd start out with $200 - take $100 out of each check religiously and put it in whatever account you choose, and don't touch it for any reason. (barring emergencies) I'm betting that you'll be able to find a way to make your monthly budget work without the $200, and that way you won't get towards the end of the month and find rationalizations to whittle the amount you're saving down based on how badly you want that new Ipod or whatever Your financial advisor and I probably don't see eye to eye on this part, but I generally tend to be more conservative as I grow older - thank you Enron, Worldcom, IM Clone and stupid Washington Mutual. I'm sure you'll find lots of folks that will encourage you to invest in stocks right now, as they are signficantly lower than they were in recent history. However, with the absolute absence of any economic data that supports the notion we are in imminent recovery phase, I wouldn't rush out to buy stock any time soon. On a personal level, I am banking my cash until I see some data to support that the stock market will be on an uptick, then I'll probably snag some up. I very well might miss out on a few percentage points of gain, but I'm limiting my losses in the meantime - to me, at least, it's worth it. If you do end up investing in stocks now or in the future, I do recommend Sharebuilder - it's a great resource for long term investors that don't necessarily care about the day to day prices. I believe that once you choose what stocks you're going to buy, they purchase in bulk every Tuesday - so you might have to wait a few days for the stock to actually be purchased, and the price may vary slightly, but ultimately a few cents in stock price won't matter over the long term, and the fees are very reasonable - I think it's $4. Regardless of what you decide, congrats on starting to save money early - I think a lot more people right now are wishing they had done the same. If you have any more questions, let me know __________________ I have an aura of reliability and good judgement. Just in case you were wondering...

03-03-2009, 11:04 AM	#6 (permalink)
blktour Psycho Location: Anchorage, AK	NoSoup: You motivate me financially! I was going to go out and splurge again, but you held me back. We need like weekly chats! haha. So will I have to pay off my house, truck, and student loan before I can start this? or I can start it now? I assume that the bills below will always be there, so I take it as that, and when they dissapear I will have that much more money to save? Well I always thought that my finances have been messed up. I make about 4k take home every month. I have about $15k that I do not touch for ANYTHING. My "nest egg" is what I call it. for emergencies. I have a mortgage and all bills total at about 1500/month. gas/water/electric/mortgage. car and insurances: 570/month. gas about $60/week. student loan: $200/mo food: varies little bills: netflix: $25/mo. wow, $68/every 6 months, ak airlines yearly subscription, $75/yr. costco and sams each $50/yr. I work for my local cable company so I get free cable, internet and cellphone. so I have it but I dont pay for it. Do you all think that I am making decent money that I can support this lifestyle? I just always feel that I am living beyond my means and that it will catch up to me one day. I guess I scare myself into not spending? I never really gave it much thought. My whole mind set is that i tell myself I am broke so I wont spend much money, but always find ways to justify a new system in my truck, or that new TV, or what have you. haha. Last edited by blktour; 03-03-2009 at 11:14 AM..

03-03-2009, 11:22 AM	#7 (permalink)
genuinegirly Eat your vegetables Super Moderator Location: Arabidopsis-ville	Sounds like you're doing well when it comes to expenses. You don't need to pay off your house or student loans before you start investing. When it comes to your truck - depends on how much you owe and what your interest rate is. If you're going to make 5% interest on an investment but you're paying 10% interest on your truck, then you'll want to pay the truck off first. USAA? You're in a military family? We use USAA for insurance but not banking. Not sure how it works with them. Good that you're asking them questions. Bad that they're recommending investing so much in stocks when the market is so incredibly unstable. Even if you're young, risky investing may be too unsettling at the moment. It is for us. We don't have much money in stocks currently. If your $15k nest egg is in the same bank that you're trading through, you may not have to pay comission on trades. You should check on that. Every penny helps. Especially when you're starting. __________________ "Sometimes I have to remember that things are brought to me for a reason, either for my own lessons or for the benefit of others." Cynthetiq "violence is no more or less real than non-violence." roachboy

03-03-2009, 11:28 AM	#8 (permalink)
blktour Psycho Location: Anchorage, AK	Well I have a 5.25% on my truck. I just got it, and owe about $26k. I was prior military, I just got out last year, so they let me become a member for life. I only do banking, insurance and credit card with them. I have my mortgage with wellsfargo. I know that they are a business and want money also. that is why I am weary about dumping too much money in stocks. he said since I am young I can afford to be risky. hmmf Would it be benificial to me, to refinance my home with USAA to see if i get a lower interest rate? I have 5.5% on home right now. I just bought the place in july of 08. I have lots of questions. sorry everyone. Last edited by blktour; 03-03-2009 at 11:38 AM..

03-02-2009, 05:05 PM	#2 (permalink)
braisler Addict Location: Midway, KY	You can check on the regulations involved, but you are usually able to participate in a 401k/403b plan and still have an IRA... certainly you'd still be able to have a Roth IRA as those are after tax dollars. Depending on where you work your company might offer a 'match' for your 401k. That is, they will put in the same amount or a % of the amount for every dollar you contribute. If your employer has this, use it to the maximum allowed. It is like getting an immediate 100% return on your money, or better. In my case, I contribute 5% of my income to my 403b and my employer matches to 10%. Big impact obviously! So, if you are starting with $100 a month... it isn't a lot, but it is a good start. Take a careful look at your budget and see if you can't scrape together even more just now. It might hurt now, but will pay off big in the long term with compounded interest on your investment return. Particularly right now as we are in an economic downturn. I'd venture a guess and say that for each $100 you put aside this year, it will be the equivalent of putting away $150 or $200 two years from now. Anyway, if you are looking to start a brokerage account (investing on your own), you can set one up with any of the online companies pretty easily and also set up a monthly automatic contribution. I use Ameritrade, some friends that I know have been satisfied with Etrade. Trades cost $7-10 each. You probably want to wait until you get about $500 together for each stock purchase just to keep the cost of investing down. I mean, if you buy 5 shares of a $20 stock for $100, you just lost 10% to the transaction fee. As far as what stocks to purchase, I'll reserve any recommendations. There is a lot of information out there. I'd recommend you get some investing books from the library or peruse some quality investment websites. I started with the Motley Fool books, but you can read much of that same information online. That will provide you a good basis for what makes a good company to invest your money. Another option to consider is ShareBuilder. I haven't used it myself, but the idea is that you can contribute a small amount each month and with low transaction fees buy into stocks or mutual funds automatically. This requires less day to day or month to month management on your part. If you know yourself well enough to know that you aren't going to want to be constantly on top of your investments, then this might be a good option for you. Good luck to you! And congratulations on taking the first step on building your future wealth.

03-02-2009, 06:07 PM	#3 (permalink)
blktour Psycho Location: Anchorage, AK	wow! thanks! I know my employer contributes dollar for dollar. I have emailed my benefits manager and they sent me a form, that asks for percentage. I asked if we can do by dollar amount, but she hasnt gotten back to me. I work off of commission so % wise will kill me if I make more sales one month compared to the other dont you think ?

03-02-2009, 07:21 PM	#4 (permalink)
ASU2003 immoral minority Location: Back in Ohio	If you think taxes will have to go up in 40 years, or you will be in a different tax bracket, then the IRA option is the best route. Then again, if you think that market is only going to go down for the next 6 months, a CD would be a safe bet. At least you won't lose money. Then again, you never know where the top and bottom will be.

03-03-2009, 11:41 AM	#9 (permalink)
braisler Addict Location: Midway, KY	No, you don't need to pay off your house or student loan. Those debts are relatively 'good' debts since a)you can deduct the interest paid if you are paying enough to itemize your taxes, b)at least in the case of the mortgage you likely have a pretty decent interest rate. Questionable on the truck, what is your interest rate on that loan, are you underwater on the truck's value vs. the loan amount? Honestly, I'd never borrow money to buy a car. I know that is not everyone's solution, but borrowing money to purchase a depreciating asset is a losing proposition. If you aren't too much underwater with the loan and you really want to consider saving a lot of money, you might consider selling your truck and buying a lower cost, reliable vehicle. Cheaper to own with no payment, cheaper to insure, maybe lower gas mileage. I realize this might draw some criticism as some people are absolutely married to their vehicle, but I thought I'd throw it out there. Take that 15K and make sure that it is earning SOME kind of return. If it has to be totally safe and secure and relatively liquid, set it up into a CD ladder with INGDirect or some other online bank. If you haven't heard of a CD ladder it just means to divide the money into chunks and invest it over time so that you have a certain amount maturing each set period of time. You could take your $15K and divide it into $1.25K chunks and then buy a 12 month CD each month for the next 12 months. Then next year, you just roll the CD over into another 12 month CD. This method allows your money to be totally secure, while still maximizing your return, and making sure that you have money coming out each month if you need it. You might also take a look at your finances to see what can be trimmed. Netflix might be replaced by a streaming site like Hulu since already have free internet, etc. Movies are also available for download via torrent, etc. depending on how concerned you are about broadcast rights, copyright etc. I'm not trying to make any judgments here, just offering suggestions about how you might trim your expenses. Cut one or both of Costco and Sam's. I doubt that you really need both of those places. You know better than me what you get there, but I find them to be pretty overlapping in what they offer. The other area that sticks out to me is your car payment and insurance. $570 per month seems pretty high to me. I don't know how much of this is loan payment and how much is insurance. If you haven't shopped for insurance in a while, you might check around and see if you can't get a better rate. You are a homeowner, and 25, so you have 2 out of 3 of the big things the insurance companies look for, the other being marriage, when determining your rate. Ask your current insurer and any company you call for quotes about discounts for homeownership, for bundling your home insurance and auto-insurance, for raising your deductible from $250 to $500, etc. The last one can be a bigger difference than you think. Realistically, you aren't going to want to get insurance involved if the accident is under $500 damage anyway, since your rates are almost guaranteed to go up if you do. ---------- Post added at 02:41 PM ---------- Previous post was at 02:35 PM ---------- Ouch on the truck. That is a huge expense. I am sure that you love it, but ouch. At least the loan is not really that high of an interest rate. The mortgage isn't too high either, maybe a bit above market. You could certainly make some calls around to see what rates and payments you could get elsewhere. You can usually do a preliminary talk through without incurring any obligation or expense. Bankrate.com has the national average mortgage for 30-year fixed at 5.25 right now. So that wouldn't likely be worth it. Don't apologize for your questions. People love to help. Or they'll not be interested and move on. __________________ --- You do not really understand something unless you can explain it to your grandmother. - Albert Einstein ---

03-03-2009, 01:13 PM	#12 (permalink)
blktour Psycho Location: Anchorage, AK	Yes I am in alaska and i do need a decent truck here. that is why I got a MINI truck and not a full blown truck. I tried the subaru and they are not good here for some reason. all? no. but I dont want to take my chances, since there is a subaru shop here that is always packed. If i got a subaru, it would be new of course, and that wouldnt help me out a bit. hehe. I feel on the truck portion that I need a good truck to take care of all that I need and to get me to work daily and comfortable. yes I love my truck. though I made the mistake of getting it brand new, and fully upgraded and no money down. so that is why my payment is high. I will not get rid of it since I have upgraded alot of things to it to make it worthy of our long winters. studded snow tires (one sunny day will make the roads ICE.) and car starter since I have no garage. also towing package and all the stuff needed to tow people out when they need help. stuff like that. I know it depreciates. that is where i made the mistake. but I will pay for it for the next 3 years or so. till then, I will keep this truck ,and KNOWN what it has really been through, and not get any surprises like I did with other cars that were only $10k or so, and then had to dump money on hidden faults. I pay only $99 for full coverage at USAA. I went price hunting last month and the lowest I got was at Geico for $127. I will stick with USAA for now. yes we are still getting our PFD here. last year we got about $3k each person.

03-04-2009, 08:29 AM	#13 (permalink)
braisler Addict Location: Midway, KY	Is the PFD check something that you usually budget for? That is, when that money shows up are you using it for covering known expenses, making ends meet, or are you looking at what size HDTV you can buy? If it is the latter, maybe you can use that PFD check to fund your new investment account with a large chunk of cash. If you haven't already, you should definitely check out the Tilted Frugality thread. There are tons of tips there on how to save money on everything from entertainment to food to energy costs. Every dollar saved can be another dollar that you could invest. Frugal living can be kind of addictive in a good way. Once you get started you may find yourself pushing to see how much further you can take it.

03-04-2009, 10:24 AM	#14 (permalink)
blktour Psycho Location: Anchorage, AK	i will check that out. Thanks Braisler! As far as the PFD, I just save it. I dont spend it as I get it. I use it to fix things that need to be fixed or even give it to family members who need it more than I do. This is recently though. Started about 3 years ago. Before that I just spent it. I never expect it or "wait" for it.

03-06-2009, 07:41 AM	#16 (permalink)
new man Banned	I have USAA insurance. Our two most recent cars (we have had for 8 and 10 years respectively) have had body repair done 7 times. One of which was my fault. USAA has taken care of us each time. They take our original deductible, they deal with the other company, we go to a USAA shop, and they refund our deductible when the other company takes responsibility. So I will take their service, even if someone else can undercut them by a couple hundred a year. It sounds like your truck is your big splurge, and that's not necessarily a bad thing. It's when you trick it out, throw a snowmobile on the back, add a camping/hunting trailer, and do all the other things that dwindle your money down. Definitely get into your 401k to at least pick up the match. After that, consider a Roth IRA. You pay with after tax money, but the earnings are tax free at retirement. You also have more flexibility; you can take out your contributions before retirement without penalty. This allows you emergency funds later in life, but your earnings continue to grow. If you ended up in the same tax bracket into retirement, then the Roth confers no advantage or disadvantage over tax deferred money. But if you are in a higher tax bracket, then you will come out ahead with the Roth. But the 401k gives you tax savings up front. As far as asset allocation, you are young and have many years until retirement. Put your money in stock funds. The market is incredibly low. Even if it goes lower, it will go up at some point. You are starting at or near the bottom. Get in there. USAA's funds are ok, but do not offer that many choices. I would prefer a broader mix, personally, but some people would suffer from paralysis by analysis.

03-06-2009, 10:09 PM	#17 (permalink)
NoSoup Non-Rookie Location: Green Bay, WI	[QUOTE=new man;2605164] The market is incredibly low. Even if it goes lower, it will go up at some point. You are starting at or near the bottom. Get in there. QUOTE] This is a pretty big assumption. Although the stock market is low relative to where it was, I don't think anyone has any idea where the "bottom" actually lies. If you would have told someone a couple of years ago the DOW would be struggling to hit the 7,000 mark you probably would have been laughed at while they escorted you to the nuthouse. Perhaps we are within a couple hundred points of the "bottom" - but on a personal level I'm adopting the wait and see strategy... __________________ I have an aura of reliability and good judgement. Just in case you were wondering...

03-11-2009, 08:59 AM	#21 (permalink)
blktour Psycho Location: Anchorage, AK	cost too much maybe? or maybe the lay out plans were already done in the lower 48 so they just made them here? haha. our winters are not as bad as others think. Montana is known to have worse weather than us. haha.

03-14-2009, 07:07 AM	#23 (permalink)
thingstodo A Storm Is Coming Location: The Great White North	It's all perception. I lived in Georgia at one time and winter seemed very cold. I now live in Michigan and it doesn't seem as cold here in the winter than places like Virginia or North Carolina. __________________ If you're wringing your hands you can't roll up your shirt sleeves. Stangers have the best candy.