Financial/retirement planning

[Disclaimer]

You could always do the laddering thing with those... I forget what they're called, but you give the bank some money at a set interest rate for a certain period of time where they mature and you get the interest...

All day and no one posted what I was talking about.... CDs! I can't do a "see deez" nuts joke if no one plays along w/ my setup.

I can haz a disappointment.

Srsly though, laddering CDs could be an easy place to keep cash and be liquid if you have the diligence to keep laddering them. Not a real good investment strategy though. Nor are cats (see above), unless you're farming them for meat and the OP pays you top dollar.

[smashweights]

A few more articles that I've been directed to from other investment forums recently. I think, especially until you are much more knowledgeable, this total market indexing strategy is more the way to go and may even still be once you are more knowledgeable.

http://20somethingfinance.com/index-funds-versus-mutual-funds/

http://www.dailyfinance.com/2010/02/13/vanguard-founder-john-bogle-sees-no-good-alternatives-to-indexin/

http://investingroadmap.wordpress.com/2011/02/23/chapter-5-costs-are-a-big-deal/

Edited April 14, 2012 by smashweights

[jbot]

that's pretty much where i'm at as of now. i want to be more hands on, but my hovels of a business takes up much of my time, focus, and stress tolerance (and lets not forget, 60% of my net worth looool... oh god). so until that settles down, which will probably be when i'm 60 yrs old (god willing), i'm relegated to either a financial advisor or continuously dumping money into funds or other "safe" investments that will hopefully out grow inflation.

i do like reading the links. once I get my bearings on all this crap, I will start putting some of it into practice.

[smashweights]

that's pretty much where i'm at as of now. i want to be more hands on, but my hovels of a business takes up much of my time, focus, and stress tolerance (and lets not forget, 60% of my net worth looool... oh god). so until that settles down, which will probably be when i'm 60 yrs old (god willing), i'm relegated to either a financial advisor or continuously dumping money into funds or other "safe" investments that will hopefully out grow inflation.

i do like reading the links. once I get my bearings on all this crap, I will start putting some of it into practice.

I think the point of some of these links is that past analysis shows being more hands ends up yielding worse results for the majority of people in the long haul than just keeping costs down and indexing the market. Also that the desire to be more hands on and more active in playing with funds/stocks/money is more psychologically driven than performance driven. Particularly when paying a financial adviser, as many don't end up beating the market anyway over time and tack on additional costs over just buying your own funds directly. Primarily because the vast majority of people can't actually predict the market right consistently enough over 20-30 years until they retire.

Edited April 14, 2012 by smashweights

[jbot]

I think the point of some of these links is that past analysis shows being more hands ends up yielding worse results for the majority of people in the long haul than just keeping costs down and indexing the market. Also that the desire to be more hands on and more active in playing with funds/stocks/money is more psychologically driven than performance driven. Particularly when paying a financial adviser, as many don't end up beating the market anyway over time and tack on additional costs over just buying your own funds directly. Primarily because the vast majority of people can't actually predict the market right consistently enough over 20-30 years until they retire.

i generally agree that the majority of non-professional investors will perform worse than funds. i also think that the key is to be better educated and more judicious than the average investor... just like anything else in life, if you want better results than your peers/colleagues, more work needs to be done. right now, i am not willing/unable to put in the time and effort to be better than every other joe schmoe who is starting to think about retirement, so I'll join the masses and pay my dues to managers who do this for a living. but later, when i actually know what i'm doing, i'll try my hand at more advanced (and aggressive) investment options.

[smashweights]

i generally agree that the majority of non-professional investors will perform worse than funds. i also think that the key is to be better educated and more judicious than the average investor... just like anything else in life, if you want better results than your peers/colleagues, more work needs to be done. right now, i am not willing/unable to put in the time and effort to be better than every other joe schmoe who is starting to think about retirement, so I'll join the masses and pay my dues to managers who do this for a living. but later, when i actually know what i'm doing, i'll try my hand at more advanced (and aggressive) investment options.

Not just non-professionals, but even the majority of professionals do not. CNN showing that 79% of people who pick and analyze stocks PROFESSIONALLY fail to beat the S&P 500. How much better then, would we think the non-professional who's trying to squeeze analyzing stocks around a 40+ hour work week would do? I think what the data is showing is that knowing more and being more judicious simply doesn't end up translating into better returns in the long haul and that, paradoxically, doing LESS work will net better results: IE pick your index funds, HOLD THEM, keep pumping money in regardless of market fluctuations, and occasionally adjust your asset allocation between those index funds as you come closer to retirement. This is especially when you consider transaction fees, expense ratios, taxes from inefficient managed funds in non-tax exempt accounts, etc is money that you'll never see gains on. Paying an advisor 1% of your portfolio value to, in all likelihood, not to perform better than you would have done buying, say, Vanguard Total Stock Market Index or Fidelity-Four-In-One Fund, by the time you retire (say, you've got a $1M saved) means you're shelling out thousands per year more than you otherwise would have. Heck, if you think about it, a 1% fee to an IRA adviser once you hit $500,000 in your account means your $5k yearly limit of IRA contributions is ALL going to a management fee, this is even worse if it's compounded by paying managers fees on top of the fund's he/she picks for you's expense ratios.

http://money.cnn.com/2012/02/23/pf/fund_manager_performance.moneymag/index.htm

http://online.wsj.com/article/SB10001424052970204630904577056362881681018.html

http://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_philosophy

Edited April 14, 2012 by smashweights