What do you consider your savvy or wise investments?

[Anonymous]

Buy a house when everyone is saying "don't buy a house!" Going against the grain has always been the key to good investing. Doing this when everyone else is paralyzed with fear about buying is an especially good time, so you're lucky.

Also, buy mutual funds and sell them.

[Anonymous]

Live underneath your means..don't buy the expensive car..it's a depreciating asset the minute you drive off the lot. Don't buy more house than you need and agree do not look over your shoulder and blame the world for your finances..when you take control of your life/money..you tend to do better.

[Anonymous]

Anonymous wrote:OP asked about specific types of investments and how to choose them. "Invest early" isn't really responsive (or even possible if, like some of us, "early" is already over!). Does anyone have anything more concrete, like PP who suggested international/emerging markets ETFs?

What I've always heard from investment people who are smarter than I am (and who I deal with often at work), is that it really doesn't make a huge difference what you invest in (so long as you're relatively diversified). What makes a much bigger difference is the amount you invest, and how long you can keep it invested.

So for example, it really only makes a marginal difference over the long run whether your portfolio is invested 20% emerging markets vs. 40% emerging markets. What will make a much bigger difference in the long run is whether you're investing $5000/yr vs. $7000/yr, or alternatively, investing $5000/yr now vs. waiting 3 more years to begin investing.

So they would probably say: "Don't sweat the details. If you just buy into a Vanguard total market fund, and start investing as much money as you can reasonably afford there year-after-year, then you're already ahead of 90% of the people in the US. Any further research or studious tweaking certainly can help improve your investments some, but that further work is optional because it will result only in relatively marginal improvements. Congratulate yourself on a job well done just for starting the savings process."

[Anonymous]

I disagree with the previous poster that it doesn't matter what funds you hold. While, it is true that the important thing is to be saving, a high-cost or low-return fund could set you back a lot in the long-run. ditto if you are chasing market returns or buying and selling a lot.

My general "wise" tips are:

Have a will & living trust if you're married/have kids
Buy LOW COST funds (Vanguard, etc.) and hold them. The costs of a 5% load will kill you in the long run.
Automate savings, and make it difficult for yourself to withdraw them.
Start saving for retirement NOW. Although you may be able to "afford" it because you expect a higher salary later in life, you will also likely have more expenses (family, house, etc.)
Start saving as soon as you have a full-time job. Always save up to the max of an employer 401k max at least if you have that. Then open a Roth IRA, then up to the IRS max.
Buy a house as soon as you can afford it and are going to stay in an area at least 3-5 years, meaning you already have 6 months living expenses saved, at least 10% down, and can get a fixed mortgage.
Buy a house based on location first, then size of property (get a 3-4 bedroom before a 2 bedroom), then amenities (nice bathroom, etc.) But don't buy with a payment more than 1/3 of your take-home income.

[Anonymous]

My last few tips are:

Get a fee-only financial planner to write you up a plan if you have no idea where to start. go to napfa.org to find one. Should be that expense and could save you thousands in the long run to get you on the right track.

Read and watch Suze Orman & Dave Ramsey for the basics, and get Money & Fortune magazine from time to time (once you've read 1-2 they start to repeat) for some good tips (not stock tips, but general investment tips).

Also read "A Random Walk Down Wallstreet" for some great advice on NOT following bubbles and to be as diversified as possible.

[Anonymous]

Anonymous wrote:Posters keep mentioning their (or other peoples) wise or savvy investments. Can you share what type of investments these might be and how did you choose or find out about them? Thank you, signed "everything I invest in seems to go south"

Shorting the 'burbs.

Moved here from Chicago in 2003, and saw how that city was rocked by a wave of gentrification. So I bought a house in a gentrifying area of DC before the wave hit here. If I'd bought in the burbs, I would've seen a massive decline in price. As it is, it's been rock solid since the peak.

[Anonymous]

OP here - explain to me how this could happen. DH has had his job for about 15 years. His company requires that you invest 15% of your salary in their retirement plan which consists of Vanguard family funds. DH contributes to several of these funds. I just did the math and looks like over the course of the 15 years he has invested $336,000 into these funds. The shocker for me is that the total value of his portfolio is only about $350,000. This does not make sense to me. Thank God it isn't worth less than he contributed over 15 years. Can anyone explain this? When I look at the prospectus(s?) over the years they indicate a certain amount of growth. Of course, some of the years it worth less but still.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Posters keep mentioning their (or other peoples) wise or savvy investments. Can you share what type of investments these might be and how did you choose or find out about them? Thank you, signed "everything I invest in seems to go south"

Shorting the 'burbs.

Moved here from Chicago in 2003, and saw how that city was rocked by a wave of gentrification. So I bought a house in a gentrifying area of DC before the wave hit here. If I'd bought in the burbs, I would've seen a massive decline in price. As it is, it's been rock solid since the peak.

Wow, all of these good posts about proper financial planning, and then we get a bozo.

One pick does not equal a successful long term strategy. Those of us who have lived here a while remember what things were like a few decades ago. Anyway, never trust someone who has the hot tip. They just haven't invested long enough.

[Anonymous]

OP, consider investing in a "target date" fund. You shouldn't try to outsmart people who invest for a living. These target date funds will offer you a diversified portfolio appropriate to your age. Younger people can afford more risk, whereas older people should have less risky investments.

I have my retirement funds, for example, with TIAA-CREF with a target date of 2040 (when I plan to retire). I do an automatic deduction from my paycheck for the max amount. My school does a match. I don't have to tinker with the fund at all.

If you have more money to invest, try a 529 for a state that uses Vanguard (or some other company that has a lot of good, no-load funds).

After you've "paid yourself" in this way, make sure you live within your means.

[Anonymous]

Anonymous wrote:OP here - explain to me how this could happen. DH has had his job for about 15 years. His company requires that you invest 15% of your salary in their retirement plan which consists of Vanguard family funds. DH contributes to several of these funds. I just did the math and looks like over the course of the 15 years he has invested $336,000 into these funds. The shocker for me is that the total value of his portfolio is only about $350,000. This does not make sense to me. Thank God it isn't worth less than he contributed over 15 years. Can anyone explain this? When I look at the prospectus(s?) over the years they indicate a certain amount of growth. Of course, some of the years it worth less but still.

sure. first of all, check the numbers to make sure you have his actual input correct. then look at WHEN during the year he put the $ in - was it evenly spread throughout the year, or did he front load or back load (i.e., max out in the first few months or skip a few months and make higher contributions later in the year). This could make a huge difference - for example, the economy tanked in fall 2008 - if he front loaded that year, he would have lost a fair bit by buying when the market was high. The economy tanked in 2001 as well, so his early contributions probably didn't grow as you would have liked. Finally, which funds is he invested in? Big difference between a money market fund, a sector fund (tech? agh!) and diversified stock.

just to add my $0.02, I agree with the pps that said if you cant spend a lot of time/energy watching your finances, the savviest plan is to build a diversified portfolio of low-cost funds and just rebalance every couple years. It's not sexy, you're not going to strike it rich, but you're also not going to lose big. For every person on this board who got lucky with gold or oil or a house, there is at least one other person who had the opposite happen. If you want to put more time into it, you can certainly make money in things like real estate, but to make it more than a gamble you have to invest a lot of time in figuring out the trends, neighborhoods, financing costs, rentals, taxes, repairs, etc.

[Anonymous]

"My general "wise" tips are:

Have a will & living trust if you're married/have kids
Buy LOW COST funds (Vanguard, etc.) and hold them. The costs of a 5% load will kill you in the long run.
Automate savings, and make it difficult for yourself to withdraw them.
Start saving for retirement NOW. Although you may be able to "afford" it because you expect a higher salary later in life, you will also likely have more expenses (family, house, etc.)
Start saving as soon as you have a full-time job. Always save up to the max of an employer 401k max at least if you have that. Then open a Roth IRA, then up to the IRS max.
Buy a house as soon as you can afford it and are going to stay in an area at least 3-5 years, meaning you already have 6 months living expenses saved, at least 10% down, and can get a fixed mortgage.
Buy a house based on location first, then size of property (get a 3-4 bedroom before a 2 bedroom), then amenities (nice bathroom, etc.) But don't buy with a payment more than 1/3 of your take-home income. "

I agree with these. By saving 20% of my and then, our, income, we accumulated $1 million of net worth in 13 years. The second million only took 7 years. We don't own real estate (other than our home, which we own outright) and we have no fancy stocks or other financial instruments. Plain vanilla low cost mutual funds, and saving like crazy, should do the trick.