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Thread: Money, Money, Money

  1. #1
    Cyburbian Michele Zone's avatar
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    Money, Money, Money

    It is so slow around here, I finally signed up for The Motley Fool, something I have been intending to do, some day, for ...er..several years now. I am really getting a knot in my stomach reading the first page, which sounds so ....much like.... um.... An Infomercial. (funny, I started to write "a not in my stomach" -- Freudain Slip? ) You know, they give you all these wonderful, glowing descriptions about what we Can Do For You and teasing, tantalizing descriptions of which stocks are hot...while not actually naming any names and so forth. All that Hype really does not go over well with me.

    We all know michaelskis is addicted to Dave Ramsey. I am not necessarily asking about A System or a book per se. I have done okay handling money in the past. I didn't so much as write checks for a while there. I am trying to ramp back up. So I just want to get a discussion going. (I had thought I might do that on Motley Fool, but now I feel kind of dubious about that prospect. Which is why I am now picking on you good folks. )

    My financial style: Very conservative. The type whose mantra is: Pay off debt. Buy a house. Live frugally. Shop sales. (It isn't really A Sale until it is at least 70% off. )

    But, I know that isn't enough. I need to also invest for growth at some point and do those more aggressive things. I just couldn't manage that when my life was in constant Crisis Mode for so long.

    To revive an old Cyburbia tradition:
    DISCUSS.

  2. #2
    Cyburbian nerudite's avatar
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    I love the Motley Fool... I've been using that site for at least five years. It's become less user friendly over the past few years, and they've moved a lot stuff over to the subscription that used to be free.

    I have a conservative pension plan through work, so I augment it with very aggressive RRSPs (IRAs or 401ks in the States). I also have about five or six stocks right now, that are a little on the risky side. But the way I see stocks is kind of like gambling... only spend what you can afford to lose. So playing the stock market is kind of like my form of gambling. My dad's a stock broker, so I often get tips from him. He's doing well this year... my stock portfolio is up about 25% in the past two months. I also bought into a new mutual fund in February that is doing incredibly well too... but I have to watch that one in the next year or so, since it's volatile and I may want to bail if it starts to go down.

    I love finance as a hobby... but I let real professionals manage my retirement savings. Doesn't hurt to have a dad in the biz though.

  3. #3
    Cyburbian Otis's avatar
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    I don't remember whether you're working now, but if you are, look into whether your employer has a 401k or a 457 (for government employees) program. These let you put money aside and not really feel the pinch. I work for a city, and in addition to the pension program they have a couple of 457 deferred compensation plans. I put over $1K per month into the 457, and because it reduces my taxable income my take home a essentially what it woul be without the 457. I have the 457 money invested in a couple of mutual funds. It builds up pretty fast. I picked the mutual funds based on past performance over the long run and how they during the downturn following Bush's election.

    In any event I prefer mutual funds to individual stocks because I am pretty fiscally conservative and unless you know a lot about what you are doing it pays to spread the risk over many stocks and not just one or a few.

  4. #4
    Cyburbian michaelskis's avatar
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    Investing all depends on where you are at in live, where you want to be, and where you live! Personally, I invest in diverse long term growth mutual funds. Right now I have 401(A), (government version of 401(K)) and a 457, and some others.

    I also look for funds that have a good long term track record. One of the mutual funds that I now own has been around since before the great depression and has changed overtime to keep up with new industries and such. I will not buy anything newer than 5 to 10 years.

    I find that mutual funds are the best value because while a person can get rich on single stocks, you can get very broke very quick. Mutual funds also have teams of people who specialize in specific categories and types that do that as their job.

    Final bit of advice, donít buy funds or investments from someone who lives paycheck to paycheck. Find someone in their late 30ís to late 40ís who sells because they enjoy it, not because they need the money.
    Not my monkey, not my circus. - Old Polish Proverb

  5. #5

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    So how do you not invest in things in which you don't believe, and are unwilling to support? I have my town retirement money in the "socially responsible" plan they offer (and which pays quite a bit less than some of the other options), but it holds stock in Wal-Mart.

    We just lost all of our savings for the last 2 years to IRS. We both finally had decent incomes and our employers didn't withiold anywhere near enough. So we went from having paid off all our cards and saved something to having to pay the state taxes on a card. Needless to say that is depressing, but back to the original question. With the town's pension plan, I have no choice. But otherwise I am paralyzed about investing because I can't find anything that is at least reasonably safe that also matches our values.

    Aren't those of you who invest uncomfortable with all these mutual funds and where they put the money?

  6. #6
    Super Moderator kjel's avatar
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    A great book is "9 Steps to Financial Freedom" by Suze Orman. Yes I know she's sometimes a little creepy on CNBC at night, but the book is very clear in explaining about many different kinds of investments, deals frankly with debt, various kinds of insurance, basics of estate planning, etc. If you are starting with a basic level of understanding this is an excellent book that lays it all out without making you feel stupid.
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

  7. #7
    Super Moderator kjel's avatar
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    Quote Originally posted by Lee Nellis
    We just lost all of our savings for the last 2 years to IRS. We both finally had decent incomes and our employers didn't withiold anywhere near enough. So we went from having paid off all our cards and saved something to having to pay the state taxes on a card. Needless to say that is depressing, but back to the original question. With the town's pension plan, I have no choice. But otherwise I am paralyzed about investing because I can't find anything that is at least reasonably safe that also matches our values.
    My friend you determine your wage withholding, not your employer. They withhold what you tell them to. Pay attention to the worksheet on the W-4 form you must fill out for withholding...you can get it from the IRS website and I think they may have an online calculator to help you determine what you should have withheld.

    Some easy ways to reduce the bite of the IRS at the end of the year are:
    ~Participate in your work 401K to the maximum amount. The money is taken out pre-tax dollars reducing the amount of your salary that is taxed. You probably won't miss it all that much anyways and it will grow at a faster rate in your fund than in your savings account.
    ~Take advantage of your flexible spending accounts for health care and child care expenses. Pre-tax dollars at work again!
    ~Buy a house. Some may argue this point, but the mortgage interest and taxes are deductible and make it worth the investment. Make sure you are financially stable before embarking on the homeownership path though.
    ~Donate to charity, church, etc. Tax deductible and often you don't miss the money if spread over a period of time.

    Few things about the matching values with investments. A good thing about diversified funds (whether stock or bond, etc) is that the risk is spread over the fund and not reliant upon a single stock. You need to look at the bigger picture and not get hung up on one stock holding in a portfolio. If that's against your principle all the way then look at some good diversified funds and find out what's in their portfolio and mirror that on your own creating your own personal fund.
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

  8. #8
    Cyburbian DetroitPlanner's avatar
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    I would suggest Wall Street Journal guide to personal finance, and a book on Wealth on minimum wage, whose exact title I forget.
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

  9. #9
    Cyburbian Wannaplan?'s avatar
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    Quote Originally posted by Lee Nellis
    Aren't those of you who invest uncomfortable with all these mutual funds and where they put the money?
    Yes. How can I learn more about those funds? I just got my quarterly 401k statement over the week-end, and it looks like things are going well for me. However, I do ask myself where my money is being used. I don't think I'd like my money to be invested in something like African diamond mining or new weapons development. I am sure some of the big oil companies are in my portfolio of mutual funds. If I could, I would like to direct some of my money toward renewable energy development (i.e. wind energy) and other sustainable businesses.

  10. #10
    Cyburbian
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    Quote Originally posted by michaelskis
    Investing all depends on where you are at in live, where you want to be, and where you live!
    And hell has finally frozen over. I agree completely. I have a few different investment accounts, one that is very conservative (grows at about 4% annually) , one that is moderate (averages 5-10% growth), and one that is very aggressive andone that is much more risky ( I had years where it doubled, but also years where it lost big).

    My basic formula is that I divide my monthly investment amount into 4, with 25% going into each of the three accounts and 25% going into an emergency fund. It works for me.

    On top of that, I put $50 a month into my kids college fund. It is pre tax deduction from my paychecks. I think my pay check changed by like $12 when I started doing it, but I make more now then I did when I started it, so I do not notice.

    I also participate in a flex spending account and my employer pays into my state retirement account. I am feeling very comfortable with my retirement right now. All of that can change, but being flexible is huge part of retirement planning. Plus, living in the moment is very important to your overall enjoyment of life.

  11. #11
    Cyburbian nerudite's avatar
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    Quote Originally posted by Wanigas?
    Yes. How can I learn more about those funds? I just got my quarterly 401k statement over the week-end, and it looks like things are going well for me. However, I do ask myself where my money is being used. I don't think I'd like my money to be invested in something like African diamond mining or new weapons development. I am sure some of the big oil companies are in my portfolio of mutual funds. If I could, I would like to direct some of my money toward renewable energy development (i.e. wind energy) and other sustainable businesses.
    I have a few RRSPs that have mutual funds in them (similar to 401k). I called my rep and got the name of the mutual funds, and then I got a summary of their major holdings. I also do that for mutual funds that I invest in on my own. I would think that your investment company has the portfolios online (if they are one of the big ones at least) or could provide that information to you. A lot of the big companies offer sustainable and ecologically friendly equity options. Of course, with the ethics come the reduced profit and that's a fact for now. In the long run though, who knows right?

  12. #12
    Cyburbian safege's avatar
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    Quote Originally posted by Wanigas?
    Yes. How can I learn more about those funds? I just got my quarterly 401k statement over the week-end, and it looks like things are going well for me. However, I do ask myself where my money is being used. I don't think I'd like my money to be invested in something like African diamond mining or new weapons development. I am sure some of the big oil companies are in my portfolio of mutual funds. If I could, I would like to direct some of my money toward renewable energy development (i.e. wind energy) and other sustainable businesses.
    Small Cap stocks would be your best bet. Micro Caps might invest a small percentage in alternative or green technologies, but 401K's have limited choices for most plans, and a Micro Cap may not be included.

    A separate Roth IRA could invest in any fund, or mutual fund that has a low enough minimum investment threshold. This is the best vehicle for making a statement. Hopefully, it also makes money...
    Psychotics are consistently inconsistent. The essence of sanity is to be inconsistently inconsistent.
    -Larry Wall

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