yesthattom: (Default)
[personal profile] yesthattom
A few weeks ago I impulse-purchased The Little Book That Beats The Market, mostly because the foreword is by someone I trust. I read it, and it was basically my investment strategy, but he worked out a trick that makes the difficult math disappear.

According to his simulations, you can turn $15k into a million in 17 years. That’s when I retire. So I hope to invest $30k.

Wish me luck!

Date: 2007-01-30 11:36 pm (UTC)
vasilatos: neighborhod emergency response (deco wiener)
From: [personal profile] vasilatos
Anything at all I can do to talk you out of this? I know whereof I speak. And I can talk with you about how much you need to retire and how to get that much, starting where you are now, etc etc etc etc. Or I can refer you to places I consider reliable. Not This Book.

Just remember: past performance is no guarantee of future results. past performance is no guarantee of future results. past performance is no guarantee of future results. past performance is no guarantee of future results. past performance is no guarantee of future results.

Date: 2007-01-31 12:28 am (UTC)
From: [identity profile] majelix.livejournal.com
You could try pointing out this (http://www.amazon.com/Little-Book-Value-Investing/dp/0470055898/ref=bxgy_cc_text_a/103-9166154-0877434) or this (http://www.amazon.com/Little-Book-Common-Sense-Investing/dp/0470102101/sr=1-1/qid=1170202341/ref=pd_bbs_1/103-9166154-0877434?ie=UTF8&s=books) little book. Of course, the Green one still makes you bother having to learn about business and P/E ratios and SEC filings and blahblahblah. Which is great and all if you want to do that.

Personally, I'd rather just pull a Ronco (http://www.google.com/search?hl=en&client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial&hs=Zv2&q=just+set+it%2C+and+forget+it&btnG=Search) and put a few no-load, low expense mutual funds (or indices, or etfs. Whatev) in my 401k/403b/ira/tax-avoidance plan of choice. Interestingly, this is also what Mr. Tobias suggests (http://www.amazon.com/Only-Investment-Guide-Youll-Ever/dp/0156029634/sr=1-1/qid=1170203204/ref=pd_bbs_sr_1/103-9166154-0877434?ie=UTF8&s=books) for most of us.

Date: 2007-01-31 12:52 am (UTC)
vasilatos: neighborhod emergency response (deco wiener)
From: [personal profile] vasilatos
Yeah. Plus, depending on your state, you might have access to relatively high-dividend-yield tax-free bond funds that can be quite gratifying and a good portfolio balancer. I'm guessing New Jersey has some nice CEFs in that category. I'd have to look. Heck, you can get 5% out of ING CDs at this point. Some nice Vanguard or Fidelity mutuals, perhaps TRRBX, which is designed for people retiring at that approximate time.

The whole "Magic Formula" thing makes me nearly as nervous as the too-good-to-be-true promised returns.

In general, 10% will double your money in 7 years, and 7% will double your money in 10 years. See? 10% == 7 years double, 7% == 10 years double. Planning on a better return than that is unlikely to win you better. Indexing into the S&P will do you just fine. Tom is correct, however, that he needs about a million roonies if not more when he retires in 17 years. There are calculators that will figure out how much to save each month at what return to get whatever you think you need, depending on how long you expect to live.

I don't do value investing (too much like religion) so take that for what it's worth. Again, past performance is no guarantee of future results. past performance is no guarantee of future results. past performance is no guarantee of future results. past performance is no guarantee of future results.

Date: 2007-01-31 06:51 pm (UTC)
From: [identity profile] xthread.livejournal.com
I don't do value investing (too much like religion)

Pray elaborate...

Date: 2007-01-31 07:13 pm (UTC)
vasilatos: neighborhod emergency response (Default)
From: [personal profile] vasilatos
Look. Value investing is a perfectly valid strategy. I just don't enjoy it. But by all means, read the book Tom recommends, and go to http://www.fool.com/index.htm where you can pick and choose your preferred style: value, dividend, mutual funds, smallcap, etc. and there are discussion groups. There are also discussion groups at http://morningstar.com and at http://marketwatch.com and at http://thestreet.com and at http://finance.yahoo.com and at http://finance.google.com/finance and at your own broker's site.

Personally, I'm the old traditional your-age=bond-percentage, 20% real estate, 14% international, and the rest mostly indexed funds. I confess to a passion for CEFs in states where they're available, and I note that New Jersey has 13: BNJ (from http://www.etfconnect.com/select/FindAFund.aspx) though trading at a premium, is one example, though its state tax status is a little unclear and I don't know New Jersey.

Date: 2007-02-02 12:24 am (UTC)
From: [identity profile] xthread.livejournal.com
Hmmm.. That mix sounds extremely risk averse - in fact, it looks to me like your only real chance for significant inflation-adjusted upside is the international portion. What rate of return are you trying to achieve?

Date: 2007-02-02 02:43 am (UTC)
vasilatos: neighborhod emergency response (deco wiener)
From: [personal profile] vasilatos
It jumps around between 10 and 20%, which is fine with me. And the risk aversion level sort of depends on how old I am, doesn't it? Which is the traditional point.

Date: 2007-02-02 04:17 am (UTC)
From: [identity profile] xthread.livejournal.com
Yes... except for the part about median lifespans having increased rather dramatically over the last forty years, and median working lives having started to stretch over the last decade.

Date: 2007-02-02 04:25 am (UTC)
vasilatos: neighborhod emergency response (linden street)
From: [personal profile] vasilatos
Point taken. Having highjacked Tom's journal already, what's your mix?

Date: 2007-02-02 04:48 am (UTC)
From: [identity profile] xthread.livejournal.com
A decade ago, 20% cash (working capital) and 80% stocks, almost entirely in various parts of the tech sector. After I used that to fund my startup, which sadly drained the entire portfolio, I've been very slowly building back in the last two years, let's see, call it 35% growth fund, 65% individual stocks. But then, I'm a young pup with no significant liabilities; that's a significantly riskier mix than I'd recommend to anyone who wasn't very well insulated against having their portfolio crash.

Date: 2007-02-02 05:05 am (UTC)
From: [identity profile] xthread.livejournal.com
Oh, and I would describe every one of the individual issues as being a 'distress purchase' - pick up an otherwise solid company when they've just stumbled and their stock has plummeted because speculators have all bailed out.

Date: 2007-01-31 01:20 pm (UTC)
From: [identity profile] yesthattom.livejournal.com
Have you read the book?

This isn't my retirement strategy.

Date: 2007-01-31 01:29 pm (UTC)
From: [identity profile] entirelysonja.livejournal.com
I was having trouble imagining that it was -- I always figured you for the type of person who invested in employer-sponsored 401(k) plans. You just linked this investment effort with the word "retirement" in your post, which made it sound that way.

Date: 2007-01-31 04:34 pm (UTC)
vasilatos: neighborhod emergency response (gull)
From: [personal profile] vasilatos
Ah. I feel better now. Go to town! Value investing has its obvious pluses (see the author of the book, Buffet, etc). Good luck! I was worried that you were risking all your savings.

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