Need Help Investing

[CrazyCanuck]

Sort of my area of expertise so I'll add in my 2 cents...

Considering I live in Canada and our laws are different concerning taxes, IRA, 401K, etc. I will refrain from giving global financial advice. Besides Schneed covered that very well, I would take his advice on all counts.

But I can comment regarding stocks. I've been through the recent crash as well as the dot com bubble in 2000 so I've taken my investing lumps and I've learned some lessons that I follow today.

- I NEVER buy individual stocks anymore. I lived through Enron and Worldcom and I will never trust an individual company again, I don't care how big they are. For instance I love Apple but I would never buy it straight up. They could go bankrupt tomorrow and it wouldn't even shock me. With that in mind I recommend buying ONLY mutual funds or ETFs.

- Personally I own zero mutual funds, 100% ETFs. Why pay a fund manager 2% to underperform the market when you can buy the market and save the 2%?? And don't try to "beat the market", just try to "match the market" and keep your fees as low as possible. Now I won't say all mutual funds are bad, the ones Schneed and Matty mention sound like solid investments with LOW FEES. So do your research, make sure you're diversified, and most importantly make sure the fees are low. Anything over 1% in fees is getting expensive.

- I prefer ETFs because they are cheap, can be bought and sold at any time just like a regular stock, and give you broad diversification in one investment. Now not all ETFs are created equal and a lot of the recent ones to come on the market are terrible for individual investors. For starters anything that is "levered" (ie double bull, double bear, etc.) are bad news for individuals. Unless you are a trader you will get killed over the long run. The key is to stick with the "standard" ETFs that have been around for a while.

If I was building a portfolio for a new US investor it would look like this:

- 40% SPY (S&P 500)
- 20% EFA (England, Europe, Japan... basically all developed markets outside of north america)
- 20% EEM and/or EEB (emerging markets and BRIC countries)
- 20% XIU.TO (Top 60 companies on the canadian market)

With the above portfolio you will have diversification across hundreds of companies all over the world, and you won't have to lose sleep if one company goes bankrupt or misses their earnings or cuts their dividend, etc.

As you get more comfortable you can start reweighting your portfolio to get more exposure to particular countries and/or particular industries.

I won't bother giving my macro views on the world cuz they are just my opinions and that's the whole point. Don't listen to anyone's opinions, just try to match the market and keep your fees as low as possible. That will serve you a million times better than taking stock tips from the dorks on CNBC.

GOOD LUCK!!

[saden1]

Originally Posted by Daseal

Schneed. Few questions here myself. First of all, I'm relatively young (26) so I have my 401K (taking advantage of the max amount of matching) on the most aggressive setting it can go on, last quarter it did pretty well. Considering I haven't worked much, it wasn't a lot of money, but that will change in time. How long would you leave it on aggressive? I was thinking the first 10 years, then pulling it down to moderate.

I know you push stock, but watching my grandmother deal with stock has really turned me off. Cost basis BS, the fact that turning it in can skyrocket your income bracket that year, etc. It's been such a hassle I kind of want to avoid it. If it ends up being the most effective investment vehicle, then so be it -- but it seems like a huge hassle.

Where do you stand on IRAs? I was under the impression that the return from IRAs were quite good and that should be the 2nd thing, after your 401K, that you focus on as a young person saving for the future.

Thanks!

Follow the "120 Minus Your Age" rule and you'll be alright. As for aggressiveness you need to make sure you allocated your purchase of aggressive funds in similar fashion.

[Hog1]

Care to get the ball rolling?

http://www.thewarpath.net/parking-lo...come-true.html

[firstdown]

Originally Posted by Mattyk

According to my year ending statement for 2009 my annualized rate of return was 26.5%

My funds are:

Janus Twenty 60%
Vanguard Total Bond Market Index Fund 20%
Vanguard Wellington Fund 20%

So your saying that your funds increased 26.5% from 2008 or they earned an average of 26.5? If your getting a return of 26.5 then your in the wrong business and you make Madoff look like a amateur.

[budw38]

Great advice from Schneed , just remember he charges $ 100 for advice . The only thing I would add < my 2 cents > , would be to open an self-directed < brokerage > IRA House Your Retirement With Self-Directed Real Estate IRAs .Self-directed IRA offers investment alternatives You can buy individual stocks as well as Mutual Funds & ETF's . I doubt I will ever buy a M. Fund again , just seems too easy to beat them .... Individual stocks < many of them > pay much higher dividends then M. Funds and you have no fees and expense ratio's .... in an IRA , you also pay ZERO in taxes . Good luck and be ... pro-active .

[budw38]

Originally Posted by firstdown

So your saying that your funds increased 26.5% from 2008 or they earned an average of 26.5? If your getting a return of 26.5 then your in the wrong business and you make Madoff look like a amateur.

The market is up 75 % since 3-10-2009 .... or something close to it .... we need Shanny to increase our win totals by 200% this year

[Trample the Elderly]

Toilet paper and booze man, toilet paper and booze.

[budw38]

Originally Posted by Trample the Elderly

Toilet paper and booze man, toilet paper and booze.

Don't forget the smokes .... just own the Company , stay away from the nicotine.