Investing 101... How's your portfolio?

[Ben]

The only investment I have is a 401k at work that I started in 2003. At the end of the last quarter, I had $3,400 in it. I actually made 2% profit on it, being in a conservative portfolio. It will grow more now that I've upped the % out of my pay to 10% (figure I should sink a little more into it while I can) and moved it into different porfolios, 50% aggressive, 50% conservative.

My employer matches up to 6%, so that's pretty good. I considered taking some of this money out to go to C3, but I decided against it, since I would have been nailed for taxes, and those bastards get enough of them from me, IMO.

I do have a savings account, but I really don't put much into it. It's for emergencies like insurance deductibles.

[Deanpaul]

Spend the money at least once on a financial advisor.  It helps if it is someone you know personally or that a close friend may of dealt with.  I started planning in my mid 20's.  My portfolio at work will end up being 750K (worst case) to 1.25M (best case) depending on how the market does.  If you have 401K at work, sink at least 6% of your income if you can.  I also have a portfolio outside of work through some private plans I was able to get into through a family member.  It also helps with my company since I have a pension and paid medical when I retire.  Medical is going to be huge when all of us retire.  Im sure you all are seeing plans diminishing  over the last few years.  Give it 20-30 years and medical will be the most expensive part of everyones life.  Also, what some fail to realize is that a million bucks 25-30 years from now wont be a heck of alot of money.    

Make certain you hire an independent financial advisor - meaning he gets paid by you, not by the services/systems/stuff he sells you. Otherwise you'll walk out with scam crap like "Universal Life Insurance" and other legally iffy set ups. We talked to one of these guys and he was sliiiick.

[Scott]

We have quite a few investments:

My 401k...sounds about where Matt was/is, it was up near $60k in the summer of '01 and I think I'm almost back there now.  I'm almost 90% in Aggressive funds though and 10% conservative.

IRA...Maxed out each year

Life Insurance....My company offers no benefit for me for life insurance and so I needed a policy.  After doing tons and tons of research we settled on a VUL policy which basically is a long term savings plan.  If you don't need Life Insurance its probably not the best way to go.  Its a policy where you contribute tax free for as long as you live.  Those investments are put in mutual funds that gain interest.  You can withdraw the money when you retire again tax free. 

You want to contribute to your 401k and IRA's first before sinking money into any long term life policy.  Buy cheaper term life which has the same death benefits but not the savings portion.  Its just another tax-free option of investing.

We also have college savings plans set up for the boys and a money market that we keep for an emergency fund (which has been drained in the past few months)

Princess sounds like you want a savings account with a pretty high rate of return.  Most investments are too risky for your savings to be in, and you also want it to be fairly liquid (savings account, CD or Money Market), I doubt your bank will be able to beat the interest paid on a Money Market account, that would be my personal suggestion

[Famine]

I was watching television last night, and I saw somthing about a "Roth IRA" and I'm just curious as to what that is, vs all these other things. And if it could be explained simply, because I'm not all good with math.

Kevin

[Morgbug]

Stop buying Star Wars toys. Right now. I mean it, do it today. Stop. Cold turkey.

Best piece of advice you'll ever read.  No word of a lie. 

I'm not entirely convinced that you can, or should retire by 40 though.  Whatcha gonna do for the next 40-50 years?  You're going to need a lot more money than you think to retire at 50 because life expectancy is pretty good (well, maybe not with your current diet )

I'm going to suggest that what you should do is put away 10% of what you earn.  Being in Canada, I haven't the foggiest of the nuances of the US system for investing and retirement, but find a reasonable investment.  You should be able to tolerate more aggressive funds when you're younger, so I would suggest finding those through that same independent financial advisor that has been mentioned previously.  No offense, but I seriously doubt you are prepared or willing to make the sacrifices (hello, no toys) to retire by 40, so invest smartly and have fun too.  I lived a beer commercial from 19-28 and still managed to put away money.  I worked at The Keg for that period of time while I was going to school.  I also travelled fairly extensively.  The cost?  Retiring sooner, having the house paid off sooner, etc.  Was it worth it?  You better believe it. 

I don't understand the 401K or IRA myself, mostly because I don't have too.  Up here in Canada the government allows you to put away a percentage of your income tax free for retirement purposes.  My wife and I both have pension plans that are sponsored by our employers, I think that equates roughly to the 401K plan you speak of. 

Like Jesse, we also have an RESP plan for our daughter.  An RESP plan is the same as the RRSP in that you can put the money away tax free and when you take it out for your child's education it is taxed at their income level which is likely to be pretty negligible. 

That RRSP is the main retirement vehicle in Canada.  My wife and I both max out each year with our contributions so we're as good as it gets there.  Like everyone else in the North American investment market, we were hammered by poor returns for the last several years, but fortunately we're still young, relatively speaking - at least 25 more years before we start dipping into those funds. 

Our pension plan is nice.  Again, I don't know how this compares to a US system, but when we retire, we'll essentially be paid two pensions on a monthly basis.  Given that we make about the same amount of money, we looking at having an equivalent income of about one of our full salaries when we retire on top of everything else.  25 years of service generates a 50% dollar adjusted income when you are retired.  That's awfully nice and is on top of what our investments will return.  We know we'll have the pensions but we invest on the premise that we won't and we'll have to live off the investment return only. 

Would I like to have more put away?  Yeah.  Would I like to do real estate?  Maybe.  Our market is no SoCal so while it's a relatively safe investment, it's certainly not a pot of gold where I am.  My wife is less than keen on it too.  I see it as a relative no brainer to buy a house/condo/townhouse as a rental property and have the rent pay the bills+mortgage each month.  You lay out the initial cash and any repair money and at the end of it all you're in pretty nice shape.  But, she's harder to convince.  All things in time.  I'm not overly concerned about where we are right now.  I'd always like to have more though.

[Famine]

I have every intent of saving money. This fall I'm going to try every possible way to get a job working at the railroad, that way I can put away money in a 401k, and have a bigger check. I can put off buying most toys for a year, only buying 20 or 30 in the year. With the paycheck you get from the railroad (or the cement plant) wich is about 1000 dollars after a 40 hour work week, after taxs. If I were to put some away into the 401k, and put the rest in the bank, for one whole year, I'd acumulate almost 50k, wich I could put toward housing, or an engagment ring, or even a house.

Who knows.

I'm still cutrious as to what a Routh IRA is, if anyone knows.

Kevin

[Jesse James]

Roth Accounts are just ones you pay the taxes up front so when you cash them out you don't have taxes to pay...

For instance you put $10,000 in today, pay your taxes, you take it out at age 62 or whatever and whatever it's earned is yours, no taxes...  More or less, in a simplified way of explaining it, that's all it is.  It's something everyone should invest in immediately when they start their careers because it's probably the best investment towards retirement for everyone to use.

Myself, I have no money to be pissing around with in the markets, so I don't.  I have as an experiment or for classes, but never for my own benefit down a long-term path.  I actually made money off of Hasbro once in a little experiment, but that's something I highly recommend AGAINST trying.

Seems like most people have things pretty under control for themselves...  That's good.

To me, I feel that if you're not into this stuff, and if you don't have very much money to throw around with investing, it's in your best interest to let a professional handle your money.  Most of us know someone who has done well under an investment broker, and I think it's best to talk to some of these people, find out who they use, and then get in touch with them and set up meetings to discuss his/her future with them.  For instance my mother's best friend who passed away had one of the best investors in my area who I know (made her tons after a messy and costly divorce, and she was eventually quite well off, but sadly she died young)...  My girlfriend's father was able to retire early partly due to his investor, etc...  It's possible to jump into the market when it's high or low and make money though, it's just who is "steering your particular ship", so to speak.

I've been a business student the majority of my life and I don't even trust myself 100% with investing.  I like a specialist opinion.

The main thing is if you're in things for the long term, have specific and realistic goals you want met, and if you have a diverse portfolio, you're going to end up doing well, but portfolio divesification's much harder than it sounds.  I'd be reluctant to put one together myself...  As long as you're not looking for quick/high returns you're going to be ok though with a reputeable investor though.

Oh, and I prefer investors who take their cut on the back end of things because they're the ones who are gonna work harder to make you more...  But that's my opinion, some feel otherwise for their own reasons.  You may pay more with my option but you may yield more too.  Just my observations though.

I'm sure people with actual retirement build-ups know more than me about where they stand.  There's plenty of options...

Oh, let me also say if you're looking through various financial institutions for investment, DO NOT discount your insurance companies in your area.  I know that a recent small account I had (holding my $ for Celebration 3) didn't yield much but like maybe $50 or so extra, but had I looked around a LITTLE harder I'd have found a 3 - 4% higher rate at most Insurance company.

Fin. Inst. De-regulation has opened up a lot of competition, and rates are a bit more competitive, so don't hold yourself to strict ideas of who you feel can do the best for you.  Had I looked a little harder I'd have done a bit better in a fairly short period of time.  I'm kicking myself in the ass over that now...  That's my gas money to and from Celebration 3 right there had I done things better.  When I put it in those terms I really begin to hate myself.

[Infamy Of Crete]

Everyone here sound like they are taking care of themselves quite well. I do wish I had listened to my Accounting teacher in the 80's and put that 2,000 dollars away At the time. 2,000 dollars may as well have been a million to me.

If your younger than 40 get into risky stocks and go after more aggressive funds you have the time to bounce back and if it works you'll be counting your lucky stars. I was extremely lucky in real Estate it had nothing to do with the my brawny brain power I bought in an area that was built out and was a conveniant  suburb of a Metropolitian statistical area(lots of capitol wealth).  I do agree Morgbug   40 is way to early to retire you will find by 40 the purpose of your life changes dramatically, it's not about what you can get, but what your capable of accomplishing albeit, financial, personal, social or whatever becomes the  purpose in your life. You'll want to pursue that I believe  that's when you become truly wealthy,  because you are ruled by passion.   
This isn't scientific and it's not like you have an epiphany,but you'll be on to bigger things in your  life thingsthat are bigger than you(similar to those feeling after your first child is born). Well that's my story and that's how I feel about my life right now.


Morgbug-
We have pension plans here in the untied states however they are completely seperate from our 401k's basically good large companies provide them however they are getting harder and harder to find. your work x amount of years oyu get x amount of dollars during retirement. it's a little more complicated than that but it's ontop of a 401 k plan 401k are a way to put money away now and then with draw the funds later in life when your income is less so that your tax brackets are reduced and you pay less taxes on the amount you initially invested.

Famine-
THat sounds like a good pay for a young guy over 50,000 a year for a young guy is great money. the median age in america is 36 and the median income is $51,400 per house hold. individual income is about $36,197. Consider yourself  far above the curve. THe top 5% of americans make over $164,000 per house hold while 18% earn over $94,000 dollars. In  Most foreign  nations the GDP is far lower than the  U.S.,  as I said is 36,197/year  India, $410/year China $890/year Ethiopia is $100/year. sorry Statistical analysis is part of my job I can whip this crap out like you wouldn't believe.      With over 50,000 a year you should be able to save comfortably.

[Famine]

I don't have the job yet, but I've been doing every thing possible to get one or the other. This summer job at the boathouse resturant is just to help me cover the cost of the toys, the convention, and some new threads. I might put a little away in an emergency account.

Kevin