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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?

#71

Post by spinlock »

rmrm wrote: post #32

After a failed startup where I went without salary for nearly a year, I found myself 30 years old, with 2 car payments, 15K in credit card debt, and $0 in the bank. This forced me to reevaluate my relationship with money : ) Step 1 was digging myself out of the hole, which didn't take too long -- paid off the cars and the CC debt. I use EmigrantDirect for a Savings Account, they pay 0.9% on balances currently, genera…

I agree with just about everything you're doing. I am still invested in the market but I know what you're saying about expecting a correction. I actually used the dip the market took last week to put some more money to work.

I totally agree on housing. Mortgage rates aren't going to get any cheaper ever again (although I said the same thing in 2003) so it is a good time to lock in a low rate. But, I live in the SF Bay Area and rents are so cheap compared to housing prices (still) that it would be really hard to up our housing costs by 50% (at least) and move into a worse place. Unfortunately, the wife has her heart set on home ownership so we might wind up going that way.

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

#72

Post by brk »

encoderer wrote: post #61
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.

Actually, this year she switched hers to an IRA.

The other issue we've run into is that there is some law that says (and I forget the exact details) 401k contributions from the highly-paid employees can't be more than x% greater than the average employee contribution in the company. So if you work someplace where several other people are not doing 401K allocations, you get a "refund" at the end of the year (has happened to both of us).

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

#74

Post by mrkurt »

encoderer wrote: post #70
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 a…

Oh right. When you rollover, you pay normal income taxes on it. My big point was that if I have a year where I have minimal income, normal income taxes are going to be so low that rolling it over makes a ton of sense. I doubt I'll ever have a lower tax rate than in a year with very little income.

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

#75

Post by brk »

tastybites wrote: post #64

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 ret…

I don't think it's controversial.

For one thing, I generally advise people to try to be prepared for future financial catastrophic events (job loss), but also enjoy the fruits of your labor in the short-term.

Also, most of history has proven out that the most reliable path to wealth is self-employment/entrepreneurship. However this also has very high risks, so if you're not ready to FULLY commit, your best option might be a 9-to-5 and a slightly less spendy lifestyle.

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

#76

Post by RoadRunner_23 »

bpeters wrote: post #19

See a financial advisor and figure out what plan is right for you. Not only is this question open ended, but answers are and should be tailored to the individuals needs, plans, and long-term goals. To "hack" investing, just focus on figuring out what type of long-term goals you have. 5, 10, 15 years, and retirement, what do you want to have achieved or saved by then. When do you want to retire? Are you wanting to man…

Your local Credit Union Bank, will offer free financial advise, if you have an account with them. Our credit union advisor, was really patient in answering pretty much all our questions..

well.. he will try to sell some of the bank services, but finally he was able to convice us to roll over IRA to our bank's IRA.

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

#77

Post by sachinag »

ldayley wrote: post #66
sachinag wrote: post #51

Earlier quoted context omitted.

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.

Only up to contributions, not gains. But for most young people, you're right: contributions > accumulated gains.

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

#78

Post by mberning »

I got out of employer 401k. Yes they are tax advantaged, but your money is hostage and you will be harshly penalized if you ever need it for some unapproved use. I find that these penalties cause me to be much more conservative with the amount of money that I am willing to invest.

Since I got out of tax advantaged accounts I now use an online broker to buy exclusively index funds. In the past I was only comfortable investing say 15% of my money (after living expenses), but now I feel comfortable investing 40-50%. I don't need to simultaneously keep a huge amount of cash savings because at any time I can sell my index funds and have the money in less than a month.

You also pay extremely low fees with index funds whereas 401k plans can have pretty high fees depending on the provider.

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

#80

Post by meterplech »

tastybites wrote: post #64

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 ret…

This isn't controversial at all. This is pretty much the typical HN answer. But, the OP wasn't looking for this...

"I realize the general consensus around here may be that the best investment would be in yourself (have 25k? start a business!), but surely some people have "normal" investments, too. How do you hack it?"

Congrats on making this decision to do a startup, but that's not what he is looking for.

For what it's worth, I think that the way "big money" wins and "little guy" loses is exactly because of this. When people lose a ton of money, they lose confidence in the market and don't get to make much of it back in the subsequent rebound. To answer the OP's point, I invest in tech stocks/ETFs that I understand. I cut my losses very quickly, but buy more shares on my way up if it's going up. That's how after taking only a 10% loss in the market collapse I grew my portfolio about 80% the past 2 years in the recovery. Good luck! If you want more thoughts/ideas definitely email me- in profile. I'd be happy to discuss.

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