investing in the stock market?

[Benton]

Are any of you all investing in the stock market? I'd be interested in how you search for good investments. Those of us who got our first real job in the 401k era are starting to accumulate the kind of money that takes some attention to keep it invested in smart things.

Some of the people that I work with are still buying into the state (VA) pension fund, but given the way the state has started borrowing money from the fund, I'm glad I opted to taking my retirement money up front. Of course, that means I'm responsible for investing wisely so that there will be enough when I retire. Now I've got enough riding on the stock market that I watch it pretty closely.

Anyone else in the same boat?

 

[Slow Puffs]

It's a brave person who enters the stock market after the huge "correction" not that long ago.

In my age group, many who held large stock portfolios from medium to high risk took a smacking and are now delaying retirement plans.

In Canada, many pensions funds took huge hits and their weaknesses were exposed.

Fortunately, my Pension Fund (I took early retirement at 55 and got a greatly reduced pension for not waiting until age 65) is fairly conservative in its investing. My wife is still working and her pension plan is self-directed but it was and is quite conservative.

Because she has only worked outside the home for a little over 20 years, her pension will be modest. What I have done is purchase in Canada what is called a spousal RRSP (Registered Retirement Savings Plan). The amount is tax deductible until you withdraw it, then it is taxed like income. So I get the deduction, she gets the money.

This year I went into the "Bond Market" as the financial advisor shared the general principle that when interest rates are low, bonds usually do better.

Then, there are those who invest in "tobacco cellars". They are likely sitting on the best investment.

The stockmarket in my understanding will still not be stable for a number years. It's a young man's game but not for people nearing retirement, IMHO.

 

[shootist51]

I would recommend that you contact the people overseeing your 401k and ask about converting it to gold and silver investments. I would steer clear of companies that have mining interests and opt for actual investment in bullion.

 

[Carlos]

Metals are high. Buy low, sell high.


We have a deferred compensation at work. I invest in a choice of about 40 different mutual funds, bond, money markets, retirement funds, stable return etc. Only pay federal tax when withdrawing after retirement, hopefully at a lower tax rate that when I was earning. I put the same into it that I have been doing for years. My plan to increase it with my raises each year failed when my cost of health insurance sky rocketed, and we failed to get adequate raises. I keep putting money into it.

 

[Slow Puffs]

I think that is the key Carlos. Keep making yearly investments. When we were raising five kids, there was no "extra" money, just the monthly Pension deduction. Once the kids left the "nest", I've tried to put some away. A diverse portfolio seems the better way to go.

I remember the technology craze in the late 1990's. I think I bought into a dot.com mutual fund at about $34.00 a unit. Then techno stocks sank and my techno mutual funds went down to $2.50 a unit almost overnight. Fortunately, it was small money that I put in that mutual.

I noted that many commentators say that your biggest asset will be your house and property. We always lived in a "church owned" house until I retired and were fortunate to scrape up a downpayment. But now we are saddled with mortgage payments for the rest of our lives.

 

[puros_bran]

Not to derail the subjct of gambling.. err.. i mean Stock Market Investing.. but Puffs thats one of the most miserable things the various Churches do to their ministers, and the sad thing is, it happens all the time.. One of the few things we seem to be Ecumenical about.

 

[Slow Puffs]

Yep, those who could own their own sure had an advantage. Heck, half my years, the house came with furniture and you always had people's cast-off furniture as well. It was considered part of the pay. :roll:

 

[Doc Manhattan]

I'm also with Carlos--long-term and diverse (in type, agressiveness, and liquidity).

If you're set on a DIY stock-heavy portfolio, understand that you're gambling. Get informed and don't invest anything you couldn't lose tomorrow.

Don't pay any attention to the hot investment of the week, the blogs, the newsletters, or the TV economic talking heads. Their track records are spotty at best, and even if they're right, the strength of your investment is badly diluted by the legions of other people who saw/read the same thing you did.

You're better off becoming an expert on an industry and investing based on industry trends. If you're finding out about companies in Fortune or the WSJ, it's usually too late to make a strong move. That means lots of boring reading and research, but that's what it takes. You're trying to find a company that's going to make a killing before everyone else figures it out... that's not going to happen if you don't know jack about the company, their competition, and their consumers.

It goes without saying that smart portfolio move #1 is to get clear of debt. Debt interest turns your money into someone else's investment,,, that's the exact opposite of what you want.

 

[Benton]

Doc is dead-on about getting out of debt first. I wouldn't be thinking about investing at all if I had any credit-card debt or a car loan. I buy almost everthing on plastic, but that's only because they pay me a kickback; we pay the whole thing off every month so that we don't pay intrest. Our mortgage is only debt and that is financed at less than 5% fixed; making a big down-payment ensured that we never came close to getting underwater.

I paid my fool-tax during the dot.com bubble and bought a stock a year before the plunge and two years before the company went bust. The funny thing is that I recently found my copy of Graham's Intelegent Investor, which is full of good advise that would have warned me away from the dot.com bubble. The bookmark was my receipt from Border's, dated 1998. It was marking a page about 1/3 of the way into the book. If I had just kept reading I'd be at least $2000 richer now.

The best piece of advise in the book is "only buy profitable companies and don't pay too much for them." Seems obvious now, but when the internet was about to change everything back in 1998 we didn't listen.