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Ask HN: What kind of personal financial investment do you do?

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Re: Ask HN: What kind of personal financial investment do you do?

#61

Post by encoderer »

brk wrote: post #3

Here is a short answer... My wife and I both contribute maximum contributions to our 401K's (no employer match). This is ~$16.5K/year, and we pick the funds the 401k allocation is invested in. Like any 401k plan, the options are relatively limited anyway. Our larger savings and retirement funds, and some other assets, are managed by a professional. We both have a higher-than-average amount of investment knowledge and…

If there's no match, it's generally advisable to not do this simply BEACAUSE the usually crappy fund selection.

You can open your own tax-advantaged IRA.

Re: Ask HN: What kind of personal financial investment do you do?

#62

Post by sp_ »

I just moved from Germany to the US and my US visa expires after one year. Having no idea in what country I will end up next, things like a 401k or any other country-specific investment form makes no sense to me.

As such I have already given up on establishing a state-sanctioned retirement fund any time soon. Instead, I live frugally and save more than 50% of my post-tax income. Some of that is invested in funds because I can easily keep those wherever I will move to in the future.

Right now I am investing some of that in managed funds but I am not very happy with this and will probably move to index funds soon. I don't have enough confidence that my actively managed funds will beat the average market.

Re: Ask HN: What kind of personal financial investment do you do?

#63

Post by spinlock »

beoba wrote: post #46
Femur wrote: post #12

Given the abundance of academic research on the subject of the efficient-market hypothesis, I think it is futile and foolish to try to "beat the market" by trying to pick individual stocks that are mispriced. Therefore, I own low-cost index funds and try to own the market as a whole. I do try to shelter as much of my portfolio as possible since taxes reduce returns. I have a 401k, 403b, Roth IRA, Traditional IRA, 457…

You may want to roll some of that into a single account, keeping track of that isn't going to get any easier...

I just consolidated everything into an IRA, Roth IRA and a separate account this year (I put them together at the same custodian). It's made my life so much easier and I actually understand my portfolio now (before it was just a bunch of assets). The only thing that's left to do is dig a few stock certificates out of the safety deposit box and have them converted to electronic shares so that everything really is in one place.

Re: Ask HN: What kind of personal financial investment do you do?

#64

Post by tastybites »

What I'm about to say might be controversial. It goes against the grain of the 'Look at me I'm so frugal' meme/arms race here on HN.

The financial crash of 08/09 left such a bad taste in my mouth (as in I lost many tens of thousands of dollars) that I have completely lost faith in the stock market and anything associated with it such as ETFs, mutual funds, 401k, etc.

Getting a 'real' job and putting money into my retirement accounts lost me tens of thousands of dollars in savings (so think about how much lost time that is) and the job that paid for it all. Yes, it absolutely sucked. I was furious, with myself, with others, with my parents (who advised me), etc. It was a terrible time. I drank.

I was forced into doing a startup in Dec. of 08. It's been profitable since the first month. You would be surprised at how well you can focus when you lose your job and half of the money in your bank accounts in the course of one business quarter.

I now keep large cash savings, put a small amount into my retirement funds, invest the majority of my 'extra' money back into my startup.

I bought myself an expensive Porsche, an expensive condo, and started spending WAY more on luxury goods / eating out because losing $XX,000 after being 'responsible' makes you realize how TOTALLY unpredictable this life is, especially when it comes to financial matters.

After working about 3x as hard on a day-to-day basis and changing my spending habits to purchasing much more expensive things, I now have way more money than I ever did (in cash and cash equivalents as well as equity in a business). Go figure.

This post isn't advice, it's just an honest recollection of the financial transformation I went through in the past 2.5 years.

Re: Ask HN: What kind of personal financial investment do you do?

#66

Post by ldayley »

sachinag wrote: post #51
patio11 wrote: post #37

A Roth IRA, maxed every year, is my main form of "real" investment. I try to put about 75% into index funds and 25% into handpicked stocks, which are my concession to desire to gamble. I don't buy bonds or CDs -- I'm young enough that short-term loss is a non-event, since nothing short of "my children are starving on the street" will induce me to touch the Roth ahead of schedule. Wild volatility doesn't matter becaus…

You should absolutely max your Roth first every year, as you can use the account for a first home purchase and qualified education expenses in addition to retirement. (We'll have a lot of this sort of stuff on Blueleaf as we get closer to launch. If there are specific questions, we can write answers/articles for them.)

You can pull money out of a Roth investment (IRA or 401(k)) at any time without penalty because the tax is not deferred. You pay normal income tax on all the contributions you make in the year you earn the money.

Re: Ask HN: What kind of personal financial investment do you do?

#67

Post by tocomment »

tricky wrote: post #21

we (married) drive shitty cars. our 401k's are maxed out. I shop around for the best savings account rate. I wind up changing banks every year or two. I pick stocks and hold for the LOL's. Currently getting a 12% APY on about $5000 invested. No real plan and not interested in dumping a ton of money there. It's just more interesting than the casino. We bought the house we're going to die in. paying it off asap. After…

self storage building? What's that?

Re: Ask HN: What kind of personal financial investment do you do?

#68

Post by johnwatson11218 »

encoderer wrote: post #59
jalada wrote: post #53

Earlier quoted context omitted.

I know your comment was all in dollars and this is probably generally an American topic. But regarding number 2, in England a student loan is the lowest interest loan you will likely ever get, so it's naive to pay it off in bulk; you might need to take out a real loan one day so keep the money, and even in today's climate you can probably put that money to good use.

That goes likewise for his "pay off your mortgage" advice. If your note is 4.5% and here in the US mortgage interest is tax deductable making your nominal interest rate even lower. So the calculation becomes... paying off that mortgage is like getting a guaranteed 4% return on your money. But there are many low-risk vehicles that can eclipse that. It's possible that you'd want to take that guaranteed 4%, but it's not…

I just want to add that in my opinion there is nothing less risky than owning your own home. When I look at what I pay in interest each month for a mortgage and think about how much cash I would need in safe government backed bonds to generate that much income it is a no brainer for me. I know it is unlikely but the government could default, or more likely inflation erodes the real gains over time.

After maxing out a 401K the rest of my money is going towards my mortgage.

Re: Ask HN: What kind of personal financial investment do you do?

#69

Post by mfrye »

* Trading 'high risk - high reward' in a taxable account with margin (ex: put in 10k and they give me $30k extra). About 15-20 trades per month, 30% day trades and the rest 5-10 day hold periods. I use stop losses to minimize risk. I have no losses YTD. I use Twitter to find stocks in play and trade based on technicals.

* Max Roth IRA in long term trades.

* 401k up to employer match

* No mortgage, no car, no kids, paying under 10k school loan off

* I rent in the city, walk to work (no public transit costs) and each year I can upgrade or downgrade my monthly rent based on my income changes.

I'm thinking about buying a detached property (minor HOA fees) in Miami or Las Vegas in cash to move and dedicate full time working on my startup and trading.

Re: Ask HN: What kind of personal financial investment do you do?

#70

Post by encoderer »

mrkurt wrote: post #9

Most of my money goes into a high yield savings account to survive with no income for a while (trying to get 18 months in there!). I do fund an IRA, my employer 401k (to get the most matching), and two Roth IRAs though. The investments in those are relatively conservative, I consider investing in my own products to be my "high risk, high gain" strategy. Roth IRAs are great, you can take the principle out at any time…

I do the same with my Roth principle. But it's worth mentioning that, when you roll a 401k into a Roth you owe taxes on it. And if you have to take a portion of that 401k principle to pay the taxes, you'd almost certainly be better off keeping it int he 401k.

Also, if you imagine you'll have the same tax rate now as you will at retirement, there's no advantage to a roth. Whether you prepay taxes or defer them, it's all the same, the cash available at retirement will be the same.

The real advantage to a Roth is if you think you're paying a lower tax rate now than you will be when you retire.

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