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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?

#121

Post by tricky »

johnwatson11218 wrote: post #68
encoderer wrote: post #59

Earlier quoted context omitted.

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…

same here. the great advice above (or below) re: accounting for the standard deduction when calculating nominal tax savings for mortgage interest and the fact I received the tax form from my mortgage company yesterday showing how much I paid in 2010 (ouch!) I can't imagine any low risk vehicle out there that can compete with quickly paying off your house.

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

#122

Post by khafra »

tachibana wrote: post #83

Warren Buffet's rules of investing: 1) Never lose money. 2) See rule #1. I use municipal bonds to immunize my expenses ( http://en.wikipedia.org/wiki/Immunization_%28finance%29 ). Municipal bonds (affectionately called "munis") are not subject to federal income tax because of a Supreme Court decision in the 1890s. Most states also exempt the interest on their own municipal bonds from their own income tax (of course,…

Aren't municipal bonds paying better these days because of fear (justified or otherwise) that lots of them--especially in California--are going to start defaulting?

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

#123

Post by jpiasetz »

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…

Everything can evaporate in 3 months. The world is a risky place, tomorrow someone could come out with something to make your startup irrelevant. Houses prices dropped, used car values drop with the GM and Ford bail out, we mine more gold every year. You show me an investment that is always going to beat inflation and I'll show you a scam.

The only way to real be secure is diversification and never stop innovating and hustling. If you do you'll get burnt no matter what you have your wealth in.

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

#124

Post by Bootvis »

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.

For young people financial theory advises against investing excess capital in bonds and for investing in stocks[1]. The idea is that in the long run stocks have a higher return then bonds and the volatility doesn't matter much (agian this applies only to excess capital). If your portfolio does go south, you've plenty of time to earn some extra income and if things go up you can hit a home run.

In practice people tend to increase their relative holdings in stocks, this is highly risky since it's much harder to make up losses and the end of your working life.

For me: Where I live a special accounts for retirment do not exist so I don't have an opinion on those.

The excess cash I'm now started earn will be invested in simple ETF's. They provide good diversification for a small price.

[1] So good for you!

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

#125

Post by tricky »

jessriedel wrote: post #115
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…

What saving account rates have you been able to find lately? My bank in CA offered a checking account with 5% interest back in 2007, and it's only down now to 3.5%. Most people I talk to say these are very high rates. Can I do better?

That is amazing. What bank is it? Right now the best I can find is a 1.1% money market savings account.

Another thing to consider is the banks that offer cash to open an account. I put $2500 in a new ING Direct account for 6 months and they gave me $50

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

#126

Post by evilduck »

illumin8 wrote: post #104
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 ene…

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

That's pretty clearly not what was said.

The upshot is that you are better off taking the mental energy you would have expended on "investing" and subsequently worrying about your money, and instead funneling it into your creative endeavors

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

#127

Post by neilk »

illumin8 wrote: post #108
ydant wrote: post #100

Earlier quoted context omitted.

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 s…

This American Life did a segment on the auctions for abandoned self-storage units in "Contents Unknown".

http://www.thisamericanlife.org/radio-archives/episode/399/c...

That said, self-storage isn't just for people who can't stop accumulating stuff. In cities like San Francisco and especially Manhattan, it often makes sense to put rarely-used or not-yet-used items in storage, like camping gear, or heirloom furniture that you don't have the space for at the moment.

I've found self-storage useful when moving between cities -- it's hard to predict exactly when you'll find the right place, so it's a reasonably cheap way to buffer the transfer.

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

#128

Post by stewiecat »

* 401(k) through employer, maxed out (or close to) every year.

* Additional $200/month into a (taxable) mutual fund

* Whole life insurance through a solid insurer (Northwestern Mutual in my case).

* Rolled over all old 401(k)'s into a rollover IRA through my financial advisor.

Plan is to not have to work past 55.

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

#129

Post by riemannzeta »

tachibana wrote: post #83

Warren Buffet's rules of investing: 1) Never lose money. 2) See rule #1. I use municipal bonds to immunize my expenses ( http://en.wikipedia.org/wiki/Immunization_%28finance%29 ). Municipal bonds (affectionately called "munis") are not subject to federal income tax because of a Supreme Court decision in the 1890s. Most states also exempt the interest on their own municipal bonds from their own income tax (of course,…

Risk of default on these bonds has never been higher -- hence the yield. The market has plummeted in the past few months, but don't try to catch a falling knife.

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

#130

Post by riemannzeta »

synacksynack wrote: post #111
riemannzeta wrote: post #95

Still chuckling about Bucheit's suggestion of spreading cash out into a huge number of FDIC-insured savings accounts -- "Think of it as RAID for your cash" he says, as I recall.

CDARS is a simplified way to do that with CDs, essentially distributing amounts past the FDIC limits into different banks behind the scenes, so that you only have to deal with one account, but get insurance on the entire amount. http://www.cdars.com/

Very interesting. Thanks.
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