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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?

#101

Post by riemannzeta »

Any large cash positions are vulnerable to the high rate of inflation that is an inevitable result of Fed policy in the last few years. Best bet in this economy if you want safety is large cap equity issues from companies with highest quality brands, which will permit them to raise prices with their increasing costs. Another good bet is real estate, but diligence in that market requires too much time for my taste.

An excellent risk-return optimized investment is an ETF short on the bond market, such as TBT. Because it's traded as an ETF, your loss is limited to whatever you pay. Because it's a short on the bond market, whose yields are at multi-decade lows, it's got pretty decent appreciation-potential.

Plus you get the satisfaction of seeing all those financial services insiders (most of whom want a frothy bond market) suffer as you make money.

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

#102

Post by netmau5 »

I keep a Roth at max contribution. It is my preferred retirement vehicle as you can withdrawal your contributions without penalty. I'm still young and naive enough to believe that I won't actually need to have a retirement plan because I'll get rich before then, so a Roth was a good compromise of maintaining control over my money versus not having a backup plan at all.

A significant portion of my personal wealth is tied up in my tech company's stock (>50%). Since this is a large position and completely unreasonable in any money management strategy, I attempt to balance it by being extremely conservative elsewhere (note: you can never truly manage such a high-risk exposure). This has led me to invest in gold, treasuries, and/or funds composed mostly of these components.

Having a major in economics and actively trading equities and options for some years, I personally believe it is foolish to try to trade these individually for all but the professionals. Actually, I believe even if you are a professional, you probably don't know how to trade these either, but that's another story. Bottom line: don't play a game when your the sucker.

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

#103

Post by Femur »

jblow wrote: post #88

I am kind of shocked by the uniformity of answers here, so I will add a dissenting voice. In the current economic climate, it is pretty much a waste "investing" in anything until you have, say, an 8-figure sum in cash laying around doing nothing. I don't have that, so I am not bothering with "investing". I put "investing" in quotes because I feel the word tends to be perversely used; people really mean speculation, t…

>In the current economic climate, it is pretty much a waste "investing" in anything until you have, say, an 8-figure sum in cash laying around doing nothing.

Why do you say that? It is clear that money can be made investing with less than an 8-figure sum. For instance, the Vanguard S&P500 index fund returned 22% last year and 10.66% since its introduction in 1976. The fund minimum is $3,000.

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

#104

Post by illumin8 »

jblow wrote: post #88

I am kind of shocked by the uniformity of answers here, so I will add a dissenting voice. In the current economic climate, it is pretty much a waste "investing" in anything until you have, say, an 8-figure sum in cash laying around doing nothing. I don't have that, so I am not bothering with "investing". I put "investing" in quotes because I feel the word tends to be perversely used; people really mean speculation, t…

Your long rant basically says don't invest money at all, just keep cash in your mattress?

Who in their right mind would follow this advice? Let's say we don't worry at all about saving money, and just funnel our energy into "creative endeavors." If those creative endeavors are profitable, what are you going to do with the money?

It doesn't take a lot of energy to setup a 401k or Roth IRA. It doesn't take a lot of energy to pick an asset allocation that protects you from most risks. For example, a bond allocation will protect your money during a period of deflation, while a gold allocation will protect your money during periods of inflation. A stock allocation will grow your money during periods of prosperity. Just pick a good allocation and rebalance yearly. It should only take you a couple hours a year to worry about it, and you'll be exponentially better off at retirement than someone who stuck all their cash in a mattress.

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

#105

Post by drm237 »

tastybites wrote: post #90
rabidsnail wrote: post #81

Earlier quoted context omitted.

Your time horizon is too short. If you had left your money where it was instead of taking it out at the first sign of danger then it's likely you would have made it all back by now. There's a lot of volatility in the stock market (that's why the returns are higher than savings, money markets, etc), but the spikes and dips average out if you're thinking in terms of decades and not months. That's not to say that your s…

> Your time horizon is too short That's not really the point, I think the point is that I shouldn't have been investing in something that could evaporate on paper in 3 months. Either way, yes, the point is I'm a terrible equities/retirement investor and a better small business person. Everyone here has excellent reading comprehension, as I would expect on HN. > That's not to say that your startup isn't a better inves…

You sold because you were afraid of another "double dip" that didn't happen, and now you think you had "pretty good forward-sight"?

"You should have held on to it" is not hindsight, that's typically stock market investment advice. Unless a company's stats have changed to the point where it's now a bad investment, you should hold it and ride out the storm.

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

#106

Post by ydant »

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.

Which is limited to $5,000 per year at best (if not old enough for accelerated contributions), isn't it? Or am I missing something?

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

#107

Post by praptak »

meterplech wrote: post #80
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…

If I were to translate the grandparent post into advice for OP it would be "go with deposits".

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

#108

Post by illumin8 »

ydant wrote: post #100
tocomment wrote: post #67

Earlier quoted context omitted.

self storage building? What's that?

Self-storage might be a US phenomenon. It's basically someone building a bunch of windowless locked garages of varying sizes (some the size of a small closet, some bigger than a car) for people to store their excess stuff. The price per square foot is pretty high, and a lot of people will rent for years - never even interacting with the stuff. If the renter defaults, the storage company typically (through contract) o…

Self storage is the epitome of American excess. We bought so much crap at the big box retailers that we ran out of space in our McMansions to keep it all. So, we put some of it in storage. This excess stuff that we obviously don't need, since we haven't used it in years, will stay there in storage, being air conditioned in the summer, heated in the winter, and having rent paid for it, until we eventually run out of space and need a bigger storage unit.

There should be an episode of Hoarders where they find crazy people that have been storing junk in self-storage facilities for decades and look at what exactly they have that is so important that they need to lock it up for years and never see it or touch it.

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

#109

Post by seanos »

bradshaw1965 wrote: post #45
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…

...I don't buy bonds A lot of people would argue that even for a young person a portfolio with a small bond allocation is actually less risky with higher returns then a 100% allocation to stocks.

Actually, expected returns will be slightly lower but well worth it as the reduction in risk from the diversication away from 100% equities is huge. E.g. 20% in bonds will barely diminish expected returns whilst significantly reducing your overall risk.

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

#110

Post by tastybites »

drm237 wrote: post #105
tastybites wrote: post #90

Earlier quoted context omitted.

> Your time horizon is too short That's not really the point, I think the point is that I shouldn't have been investing in something that could evaporate on paper in 3 months. Either way, yes, the point is I'm a terrible equities/retirement investor and a better small business person. Everyone here has excellent reading comprehension, as I would expect on HN. > That's not to say that your startup isn't a better inves…

You sold because you were afraid of another "double dip" that didn't happen, and now you think you had "pretty good forward-sight"? "You should have held on to it" is not hindsight, that's typically stock market investment advice. Unless a company's stats have changed to the point where it's now a bad investment, you should hold it and ride out the storm.

Yes, the entire point of my original post is that I am a terrible stock market/retirement investor and a much better small business person.

You must have missed the part where I didn't sell at the bottom, started a profitable company, liquidated the equities to invest into myself at +60% off lows, and then came out ahead 2.5 years later.

'Oh you should have held' is hindsight advice, it's not real advice. It isn't even really saying anything at all. It's just something you say after you hear someone's story about how they lost money.

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