What are your thoughts on investing?

[jthayes]

In light of all the financial talk lately I'm thinking of investing some money. What in? I'm not sure yet, probably a somewhat diversified portfolio to lower risk.

The stock market has been up and down a bit in recent years but over longer time frames it seems to pan out a bit. I'm interested in your opinions/experiences.

Are you thinking of investing? Have you already invested before? If so, how long for? Any tips you wish to pass on etc.

Cheers,

[Mayo]

Go for managed portfolio investing, that way you wont blow your savings.
First thing first go for prominent companies that will manage your money, NEVER-EVER invest in some small fly-by-night companies that promise you 1000% p.a. return, they are mostly shams. Even in prominent management firms you will not get over 15% p.a. return, and even there you have a risk of loosing some money.
If you will go on the path of investing personally into stocks at least get some guidance by expert stock operator who is "on the scene" i.e. works in the stock exchange and has at least a decade of experience(LOL though luck to find this kind of guys, mostly they are already in higher echelon, and you will be talking with kids got just out of the school -- though even there you will find some jewels if you are lucky).

Now for ultimate, and i am striving for it too go for Trend Following, especially read what Ed Seykota has to say on the subject. Now for trend following you need good mathematical skills and lots of SELF CONTROL, i.e. go thorough all the Steve's articles, learn how to get up at 5AM every day, go work out every day, learn yoga or other meditative technique to calm your mind,.... lots of things to do here.... huh maybe in the next five years i will be ready for this kind of trading but until i get to control my life in full spectrum i can only learn and put the savings into 4%p.a. banking account, or better yet reinvest into the business that i already got and hope to make multiple returns on investment.

[Eggzachery]

I'd say set up a qualified retirement account (roth/ira/whatever), start an automatic bank draft, diversify how it gets invested (again, once set up it can be done automatically), and finally, the key step...

Forget about it! The Dow has averaged something like 12%, but the average investor sees a return of 3%! Why? They can't stop fussing with their investments and chasing high returns. So they end up buying high, selling low, and futzing up in general.

The investors who fair the best are the ones who set up automated systems and promptly forget about it.

[Mayo]

@Eggzachery"The investors who fair the best are the ones who set up automated systems and promptly forget about it."

That's for sure! The less you fuss about and do other things instead the more you profit! (^_^)

@jthayes
If you still want to gamble then go check Trend Following Trading Systems, Original Turtle Trading System and Trend Trading but don't go buying the course nor the mumbo-jumo Turtle trading software, read the books first, lots of them and read the docs on turtletrader.com....

[jthayes]

Thanks for your feedback guys.

I'm not trying to hard core gamble just find something to put my money in for a next 5-10 years. I'm thinking something like a manged portfolio.

I totally agree about the people who keep buying and selling all the time. I'm more interested in finding something I can put my money in and forget about it (mostly).

[RT Wolf]

I would recommend buying index funds for you.

Index fund - Wikipedia, the free encyclopedia

[wilsonng]

RT Wolf is right.

If you believe that the stock market will rise, and the economy will do well, and public companies will continue to make good money, index funds is something worthwhile looking into.

Talking about a diversified portfolio, you might want to put also some money in bonds, or bond investment funds.

Normally, fixed securities like bonds, and stocks are the most popular investment vehicles.

Unless you have specialized knowledge, it is better to go for mutual or index funds rather than choosing and buying stocks for yoruself.

As usual, it is good to get investment advice. Doing research or getting advice can be time consuming and costly, but then again, foolish decisions that make you lose money can be disastrous. In investments, the saying, " a little knowledge is a dangerous thing", holds very true.

[ahimel]

Since you're in Australia, I don't know what tax-deferral options are available to you. In the US, you can grow your money tax-free, as long as you intend to use it (and do use it) for education or retirement. Australia may have different incentives, or no incentives, or maybe you guys don't pay taxes on investments? But if you can avoid taxes, it's a HUGE benefit. So see if your goal for the money is something that matches what the government wants you to do.

I'd be wary of managed funds. What Eggzachery says about the irresistability of buying high and selling low unfortunately applies just as much to professional money managers as it does to you. Most of them can't resist following trends either. I'd recommend index funds instead.

I'd also solidify your goals. Money that's been in the stock market for 5 years will probably have gone up in value, but might have lost some. Money that's been in there for 10 years will almost certainly have gained value. (There is no 10-year period that the US stock market has lost value -- including any 10 years surrounding the Great Depression. But past performance does not guarantee future results.) So when will you need the money? You'll need to be more conservative for nearby goals.

PM me if I can answer any questions for you. I can't do Australia-specific questions, but I can help with general finance questions.

[jthayes]

10 years is a good time to see where my money is at I think so I will probably set that as my purpose/goal of making a ROI. The market can change too much over short periods (couple of years). Gets tempting to move around when the chips are down.

Suggestions thus far seem to suggest index funds mainly so I'll have to look into these more thoroughly.

Thanks for the thoughts so far,

[TeeZee]

I just did a few months of personal research into investing and here in Canada one option that makes sense for retirement saving is index funds. There is something called the "couch potato strategy" that I am using and is quite simple and has good returns. It basically means just buying a mix of index funds and then review them once a year.

[Fusebox]

Speak to a financial advisor(s). Start early, plan for a long time.
I would definitely recommend getting into the share market, your financial advisor will be able to make a porfolio for you based on your risks, age, time you want to invest for etc.

Australian share market is expected to do very well again this year.

[marky]

always seek advise, but be careful too. talk to as many people as you can. some financial advisers are interested in selling you products that get them high commissions and then you never hear from them again (until they have something more to sell you).

if at all possible, stay away from mutual funds that have loads. there are MANY good mutual funds out there with no loads and low expenses too. dont buy the line a financial adviser will give you saying "there is no such thing as a free lunch". i got burned a few times by such tactics. also stay away from annuities, and certainly do NOT let anyone sell you an annuity within an IRA...that is sooo dumb, having a tax deferred investment within a tax deferred instrument. but people fall for it.

if you go with a financial advisor, go with one that is fee based, tied to the success of his/her recommendations.

never buy stock unless you have a couple million to play with. go for the diversified protection of mutual funds. its worth the 1% fee or so the fund manager charges to have them worry about the timing of the market.

real estate is another good investment, just remember to be in for the long haul. when you buy a property expect to hold on to it for at least 5 years. do not buy and expect to flip a couple months later making 10% profit...those days are gone, and people are getting bured now who fell for that frenzie too.

[AAMM77]

Beyond dumb luck, if you want to successfully invest, you have to become truly interested in it. I started playing around with the markets in college and got the hang of it enough that since graduating I’ve made the bulk of my income each year from trading/investing. Although there are a lot of trading/investing methods, the old buy low sell high (or sell short high and cover your short low) adage is the foundation of successful investing. That is what Warren Buffet does. Around the time I was graduating college (2002) I started studying the commodities markets. Looking at the charts, I could clearly see a lot of commodities were really cheap. I hence opened up an account to trade commodity futures and road commodities up successfully (sugar, OJ, corn, rice) making a 1000% return by 2006. In 2006 commodities weren’t cheap like they were in previous years, but I tried to stick with commodities. Consequently, in 2006 commodities ate back a chunk of that 1000% return I had accumulated. Commodities might keep going up, but they are no longer cheap, like they were, and so they are more risky than when they were cheap. I like cheap stuff and since commodities aren’t cheap like they were I’m moving on for the time being.

There are always cheap undervalued stocks to be found, and that is where I’ve turned my focus. For instance, there are some cheap undervalued junior mining stocks out there that haven’t followed the run up in metals. That is the kind of stuff I look for. Most people just jump on the band wagon when things are hot and so buy high when they should be selling. And as far as giving your money to someone else to invest, you are at the mercy of the general market trends if you do that, because all those professionals care about is beating the market, which is fine if the market goes up, but not if it goes down. So summed up, my suggestion is to become an expert. Play around with it yourself--even if you also give some money to a professional to invest for you. The greatest lesson to learn in investing is that losing a little money won’t kill you (its often the price of a good education). You want to control your losses and let your gains fly. I don’t recommend any particular method besides find what is undervalued and cheap. But I do recommend studying it all enough to figure out what method you prefer. There is a free weekly Podcast called the Financial Sense Newshour that gives the best finance and economic information around--in my opinion. Unlike the stock market cheerleading squad you get at a mainstream place like CNBC, Financial Sense gives great non-mainstream, no B.S. info. And each week they have a guest with a book out or some financial outlook that allows a person to sample lots of trading methods and economic perspectives. I highly recommend it. If you can’t get really interested in it though you probably won’t have much success.

[rene_stpierre]

Hi.

I suggest you take a look at Forex. I have seen some interesting tools that make investing in Forex almost automatic and less risky.

You can do a Google search on this topic and I am sure you will find quite a few tools.

I must admit I did not do a full study on these tools yet but, when I have cleared the debts and maxed-out investing in my Retirement Savings Plan, Forex is the next place I will look to invest my money.

Good Luck!
René

[openeyes]

If the plan is to invest in stocks, the people recommending index funds are spot on. For people with less than 100 grand to invest, Vanguard is best. Planning to hold for at least 5-10 years is good. Do dollar cost averaging, having a set amount put in each month. Don't worry about temporary falls in the market, it just means the index fund will be able to buy more stocks (lower prices) that month. If you're in the US, look at Roth IRAs. You pay the tax on the amount you initially put in just like normal income, but whatever profit you make will be tax free. With normal IRAs it's the opposite: no tax while it's invested, but whatever you ultimately take out is taxed.

[soso]

Rene and all be very careful about ANY promotion/advertising of Forex investing (oh and is not really investing but trading, big difference). There is a lot of buzz around Forex and many many sharks trying to sell "successful" systems & seminars through which people can make millions by doing nothing!
There is no such thing, nobody will give you the means to make huge amounts of money, why would they sell it for a few hundred/thousands dollars when they can use it for themselsves!

In the end is like everything else under the sun, you must do the work for yourself and the trading bussiness, being Forex or stocks,futures etc, is not an easy one.

Sorry to burst your bubble about Forex but I see too many newbs falling for these sharks.

Originally Posted by rene_stpierre

Hi.

I suggest you take a look at Forex. I have seen some interesting tools that make investing in Forex almost automatic and less risky.

You can do a Google search on this topic and I am sure you will find quite a few tools.

I must admit I did not do a full study on these tools yet but, when I have cleared the debts and maxed-out investing in my Retirement Savings Plan, Forex is the next place I will look to invest my money.

Good Luck!
René

[da1prophet]

The most profound thing I read in this thread was that whatever investment strategy you choose has to be something you're interested in. I could give you a list of investment products, markets even specific stocks that have done well for me but that's not the point. The point is that everyone has a different opinion and experience in investing, so specific "laundry lists" of financial products is pointless.

Here's my experience--I've done very well investing in stocks of companies in industries that I a) know about and b) am interested in. Restaurant stocks, hotel stocks, casino stocks--not due to any intrinsic quality or lack of it--but because these are industries that I know so I can understand and to a certain extent predict market trends. I wouldn't suggest that you follow my strategies blindly, but I'm sure that you have your own areas of interest/expertise that you could start from.

It's one of those things where you have to do it yourself or hire a professional you trust implicitly. The problem with hiring a professional as one of the other posters noted is that many of them are more interested in selling you certain products. Nothing wrong with someone looking out for their own financial self interest, but they're not always in a situation where your financial success is their #1 concern.

[jthayes]

Thanks for all your continued feedback everyone. I'm soon to meet with a financial adviser when I can find the time to make the call to the number I got put in contact with.

Somebody made a good point about ensuring your financial advisor has something riding on the advice they give too. I think that's a good point. If they are going to make a small comission off of the ROI you make they are more likely to work harder for it.

Never having spoken to a financial advisor before I don't really have any way of knowing whether or not this one will be a good one, but I'll post back my experiences and advice I got fiven before I commit to anything.

Cheers guys,

[RT Wolf]

When money is involved, it's all about financial incentives. So keep an eye on them.

Good luck, and have fun!