holy shit you remember that story/i told that story?



btw, it's "hello...." not "hey"

Peter, glad the book was helpful. You should put all your excess money, if you're lucky enough to have some, into index funds. Don't market time, just regularly put it in. Find the lowest cost broker that will allow you to do it. Any of the big brokerages is fine but don't spend $9.99 on a trade that will only be a $500 or $1000 investment.

edit: i figured out how bryan knew that story, i just saw the thread that was bumped. peter, my dad said it in not a real jewey voice but i can say that to this date, ive never seen anyone dead pan something so funny given the circumstance.

Pete, if you go with index funds, make sure to diversify the funds themselves. The extent of diversification depends on your appetite for risk, but I'd be sure to have exposure to foreign and domestic equities (I'm partial to foreign and domestic energy equities, domestic medical and pharmaceutical equities, and equities in large corporations who produce/distribute products with relatively inelastic demand [read: consumer staples]), commodities, and maybe some currencies or bonds.

Yeah I'm gonna picture it my way.

This is pretty good advice. Food, medicine, and energy aren't going out of style any time soon.

Make it easy for noobs:

IWM
MDY
SPY

Sign up for 'fantasy finance' (I think yahoo has this still) with these ETFs for a bit and see how they react differently than the SP500 and DJIA do. If you can follow that, and stomach losings 2% of your money in one day, then you can consider selecting other investments, but study after study has shown that individual investors rarely beat the basic SP500 so you will need to analyze how involved you want to be with your money. Or sign up for the g2t financial advice blog. He will deny it exists, but just keep PMing him until he lets you in.

Both of you give good advice.

You don't have to diversify too much - the S&P 500 gets about half of its earnings overseas these days Also, that incorporates 500 companies! My personal portfolio only has 15 or so companies.

The MDY is a good ETF. Its mid cap companies. They tend to be safer than small caps and grow faster than large caps.

The end result will be you will not get rich from investing, but it should do better than any other place you can put your money and help sustain your buying power regardless of inflation.

This is pretty much what I'm looking for.

I ordered the book, it's supposed to get here tomorrow.

For those more interested in the return of their capital than the return on their capital, the trick is to make sure you're properly positioned to mitigate tail risk. That's a fancy way of saying try your best to avoid instruments whose value is particularly vulnerable to improbable events. Staying away from that kind of volatility should increase the probability that your capital is sheltered from extreme movements in social, economic, and political currents.

It's easier said than done, of course.

I invested in the XFL once. I believed in Vince McMahon.

Sounds like a good lecture for an insurance group.

So I read this yesterday.

Avoid PFGBest.

And? Nothing sexy about it. Just put a certain amount in every 3 months and forget about it.

Is that what made you rich?

What do you do for a living?

Sounds good.

For money that may possibly need to become more liquid in the short-medium term (say 2-5 years) is it still worth it to put that into index funds, or should index funds be viewed strictly with the long term in view?

Great question. While I can't help you with the exact percentages, you should always keep some money in cash/short term bonds (when yields are higher, now it's the same thing as cash). You should not have 100% of your money in equities. Maybe 80/20? It really depends on how much you have to invest vs. what your short term cash needs are. I'd say a good rule of thumb would be to assume the market could go down 50% tomorrow, at any time. If you are not comfortable with how much your assets would be if that happened, invest less.

However, the majority of your money should be in equities when you're young. It's ok if it takes you a year to fully invest it as you don't want to market time.

The stock market is the single best vehicle to preserve your wealth and to maybe even grow it (in real terms). Any other instrument (cash, government bonds, precious metals) is not going to do the job in the long run.

homersheinken: I asked you that question, not to be a dick, but to prove a point. I make my living off of the stock market. I have almost 20 years experience now. It's my full time job. 99% of people should not buy individual stocks or attempt to become rich from the stock market. The 1% that do are doing it full time and have a leg up on the 99%. If you have a cavity, you would never try to fix it yourself - you'd go to a dentist. Same goes for investing, even though the commercials make it seem so easy.

The reason why no financial advisor will ever advocate index funds is because they MAKE NO MONEY selling the product. Fees are very low, commissions online are extremely low, etc.

Depending on the amount of assets you have, you really only need to be in 1 ETF, either SPY or MDY. As your assets grow and you get much older you would probably want to diversify into a bond ETF that is lower risk/lower return by its nature. That is where your "20%" could go. There is no need to do that now, just leave it in cash. Interest rates are just too low to matter.

I wasn't trying to be a dick either, it was a serious question. I'm a web developer and this thread has been helpful

I'm thinking about getting back into investing. Would it be a bad idea to, say, buy an index fund like MDY and sell a covered call a month out?

My response was going to be: I know nothing about web developing and if I wanted to build a website I'd hire someone because others are do it full time and can do a much better job than me.

The best way to answer this: Yes. Don't do that. Here's why:

Covered calls are a way to lower your risk (volatility) and cap your return but won't make a difference long term EXCEPT cost you a lot of money in commissions. I can explain pretty easily. Do you agree with the statement that you have no edge whether the stock market is going to go up or down in the next month? Do you agree with the statement that you can't time the market? If you agree with both of those, then trading the options market on index funds - even if it's selling covered calls - is a no win game. You will not only lose commissions, but you will lose the spread on the options. It will be a big drag over time in your account. Many months the calls will expire worthless, many months they will have cost you a lot of money. Over years, it will completely wash out, except you will lose a lot on commissions and spreads. I put on covered calls but only when I have a specific view on a company and what I think it will do over the near term.