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Ask HN: Getting Started Investing

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Re: Ask HN: Getting Started Investing

#61

Post by tedmiston »

badfrog wrote: post #47
formercoder wrote: post #37

Earlier quoted context omitted.

This might be related but I think the bigger arb opportunity is looking outside of SF/NYC. There are some PE funds operating in the Midwest and doing great, but I think it’s still pretty difficult to find early/growth equity funding.

Isn't that just choosing wise places to put your capital? Where's the arbitrage?

The arbitrage is that the same amount of dollars to pay engineers goes further in the midwest than on the coasts which extends the runway of a company with the same amount of funding because of reduced burn rate.

Drive Capital (ex-Sequoia) is a good example. You might be surprised how uncommon this idea still is today.

Re: Ask HN: Getting Started Investing

#62

Post by AlchemistCamp »

icedchai wrote: post #20

Do you really want to invest in early stage, high risk ventures that have a low probability of return? Open a Vanguard or Fidelity account. Buy index funds. Invest regularly. In 10 - 15 years you'll have a small fortune.

In my opinion, index funds are overrated at this point. Over the past couple of centuries, England and especially the US have had exceptional returns.

Most indexes have zeroed out at some point, however. War, economic collapse, revolutions, etc happen. Even if we've reached "the end of history" and these risks no longer exist (which I don't think is true), then there's still the question of valuation.

Stock markets have grown faster than GDP in both countries, and as a result, valuations are much less attractive than they were 70 years ago. Maybe the reason is because real GDP growth has slowed. Maybe it's because stocks have simply become much more popular than they used to be. Either way, I'd make index funds part of, rather than my entire strategy.

Re: Ask HN: Getting Started Investing

#63

Post by dehrmann »

o-__-o wrote: post #56
dehrmann wrote: post #40

Earlier quoted context omitted.

> If you want to invest, I recommend index funds. This. I've gotten this question from family, and the answer's just pair VTI and BND at some ratio you're happy with (or buy a target date fund) and wait.

Very weird time we are in right now. US Markets at all time high, stronk us economy, faltering global outlook, plus tariffs. Market may go to the moon, or it may collapse. That ratio needs to be tweaked at least monthly maybe bimonthly through the rest of this year (lots of uncertainty coming up)

Caveat: if you're a long-term investor, pay no attention to this or my comment.

I completely agree that we're in a weird time. A few weeks ago, there was a bad economic report and the market rallied because it assumed that made it more likely the Fed would cut rates. I get it, but it's also absurd, and by reductio ad absurdum, the Fed alone can't power the economy.

There have been rumblings that volatility is probably underpriced (options almost always imply less downside risk than there really is, anyway), especially in the political climate with Iran and Brexit and the economic climate of a US trade war with China and--now--France.

On the other hand, money is cheap, you gotta put it somewhere, and Vision Fund II looks like a sucker's bet.

Re: Ask HN: Getting Started Investing

#64

Post by dehrmann »

tedmiston wrote: post #60
dehrmann wrote: post #40

Earlier quoted context omitted.

> If you want to invest, I recommend index funds. This. I've gotten this question from family, and the answer's just pair VTI and BND at some ratio you're happy with (or buy a target date fund) and wait.

Yes, but there are some subtle advantages [1][2][3] to buying the VTSAX fund over the VTI ETF if you can meet the minimum. The analogous fund for BND is VBTLX. There are some big caveats to watch out for with target date funds like increased expense ratio vs holding the underlying funds directly and the glide path. I avoid them personally, but they're not all bad. [1]: https://www.bogleheads.org/forum/viewtopic.php?t…

If we're looking for subtle advantages, I really like VTCLX (for US investors).

Except for the fact that its top 5 holdings are in tech, and I work in tech.

Re: Ask HN: Getting Started Investing

#65

Post by tedmiston »

dehrmann wrote: post #64
tedmiston wrote: post #60

Earlier quoted context omitted.

Yes, but there are some subtle advantages [1][2][3] to buying the VTSAX fund over the VTI ETF if you can meet the minimum. The analogous fund for BND is VBTLX. There are some big caveats to watch out for with target date funds like increased expense ratio vs holding the underlying funds directly and the glide path. I avoid them personally, but they're not all bad. [1]: https://www.bogleheads.org/forum/viewtopic.php?t…

If we're looking for subtle advantages, I really like VTCLX (for US investors). Except for the fact that its top 5 holdings are in tech, and I work in tech.

VTCLX looks interesting. It looks like the top 10 holdings match VTSAX but comprising 20% of VTCLX vs 18.8% of VTSAX.

https://investor.vanguard.com/mutual-funds/profile/VTCLX

https://investor.vanguard.com/mutual-funds/profile/VTSAX

Re: Ask HN: Getting Started Investing

#66

Post by darkteflon »

The objectively best advice you can get is to buy index funds - either ETFs or through a Vanguard account. This will give you the highest probability of a favourable outcome over the long term.

Unfortunately people also find this advice to be too boring and therefore usually ignore it. I expect that’s what you’ll do, too - no offence intended.

Best of luck!

Re: Ask HN: Getting Started Investing

#67

Post by badfrog »

o-__-o wrote: post #54
badfrog wrote: post #44

Earlier quoted context omitted.

> you can’t spread your bets widely enough to hedge them What does hedging mean in startup investing? I'm used to the meaning in securities where you take an inverse position to limit losses.

Put money in Uber. Hedge with money in Lyft. Uber goes hockey stick, you’re golden. Lyft goes parabolic while Uber is still trying and now losing? Hedge. Taxi industry may fail entirely? Sell puts on car max because market will soon be flooded with depreciating assets (cars) from drivers who no longer taxi. Hedge. Hedging is not an inverse, it is protection on your original investment. A lot of the times this is simp…

> Taxi industry may fail entirely? Sell puts on car max because market will soon be flooded with depreciating assets

Why would you do that? When you sell puts, your upside is limited to the premium and the downside is close to unlimited (the full value of all the shares at strike price). Whereas if you were to buy calls, your downside is limited and upside is unbounded.

And FWIW, speaking in layman's terms, I would consider two long positions with opposite prospects to be inverse.

Re: Ask HN: Getting Started Investing

#68

Post by tedmiston »

andreshb wrote: post #55

If you are in the U.S., wait until you become accredited and have enough excess cash that you can do this part time. Otherwise, make this your full time job and make sure you have enough income to wait 8-10 years before you start seeing return. You can also invest in a first time fund, where the manager will charge 2% management fee and 20% carry (success fee). Getting access to entrepreneurs depends on your geograph…

Startup Investor School links for the curious:

- Videos: https://investor.startupschool.org/

- Blog post: https://blog.ycombinator.com/startup-investor-school/

Re: Ask HN: Getting Started Investing

#69

Post by charlesdm »

o-__-o wrote: post #57
charlesdm wrote: post #18

Earlier quoted context omitted.

Because most people doing things are not worthy of investment (i.e. crappy ideas, bad execution, not ready for investment, etc)

Again way too many barriers to entry. I just need $100k to prove my idea. These funds have billions. They won’t lend 100k because it has a prototype app, a handful of interest, but no investor pitch? But they will give $1m to someone who can pitch a dream with no product? Please come to me with $100k and I’ll offer you simply a guaranteed 0% return (no loss on investment) so I can pad my bank account and make “real”…

Lol dude, "just" $100k. Barriers to entry? Totally honest: I'm an investor and I wouldn't invest $100k in you with a mentality like that. We're all in this to make money.

What you need is to prove your idea. No one is going to put $100k (or $100 million for that matter) in an untested idea, unless you have a relationship with an investor. And investing is a relationship business.

If a friend whom I trust and I know is a talented chef comes to me with a restaurant idea, I'll consider investing. If a random person comes to me, there is I'm happy to invest in a good tech business. But most things that I see just aren't great businesses.

You're likely in the US, but many EU countries have investment entities (generally funded by EU funds) that "give out" loans at 3% APR. If you want it, you can get it done. But there are very few barriers to entry. A good idea in need of funding will find funding.

Re: Ask HN: Getting Started Investing

#70

Post by darkteflon »

o-__-o wrote: post #56
dehrmann wrote: post #40

Earlier quoted context omitted.

> If you want to invest, I recommend index funds. This. I've gotten this question from family, and the answer's just pair VTI and BND at some ratio you're happy with (or buy a target date fund) and wait.

Very weird time we are in right now. US Markets at all time high, stronk us economy, faltering global outlook, plus tariffs. Market may go to the moon, or it may collapse. That ratio needs to be tweaked at least monthly maybe bimonthly through the rest of this year (lots of uncertainty coming up)

The times are always weird. You’ll be perpetually waiting if you’re waiting for stuff to get “normal”. Absorbing the essential truth of this is part of the zen of indexing.

Nobody knows what outcome you’ll get, but indexing is a solid process. That’s all you can do - maximise the quality of your process. Anything else is noise.

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