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Ask HN: How do you invest?

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Re: Ask HN: How do you invest?

#11

Post by DerekH »

dsutoyo wrote: post #4
DerekH wrote: post #2

Personally, I invest in individual stocks like Starbucks (companies you think won't be going away anytime soon). I've tried to think like Warren Buffet. If you're investing in a company like Gillette, you're asking yourself, "Are men going to stop shaving?" That being said, I also put money in more conservative investments like mutual funds. You can usually set it and forget it. With the markets doing pretty good the…

Thank you for your insights. I also subscribe to Motley Fool as well and benefited from it. I tried reading in the past, and you are absolutely correct, it just either became too consuming and the financial jargons just became less interesting.

No problem. It's important to take your time and build it up slowly. After awhile, you'll realize you've put away good money and have made some substantial gains. If you're lucky, you'll collect a few 10 baggers and maybe even a 100 bagger in your lifetime. Couple that with a good product and/or a good job and you'll be pretty secure.

Re: Ask HN: How do you invest?

#12

Post by nicholas73 »

I actively traded stocks for a period. I can say that any gains you make represent work like any other, except you can lose all your money. If you do not want to focus on trading, do not trade. It can be a horrible way to live.

Warren Buffett's #1 rule is: Do not lose money. #2: Never forget rule number one.

What you really learn is that the amount of risk you should take on actually is a lot less than you think it is. Too much volatility will kill your returns (Kelly Criterion).

Second is that you shouldn't make an investment unless you just about have domain level knowledge. You need an edge. Over-trading increases volatility, which is bad because you lose more than you gain just by laws of percentages.

If I could tell my younger self what to do, I'd tell him to just sit tight. Hold the money and don't worry. You don't need to invest it all. At some point there will be a market crash and it will be a no-brainer to buy. Buy then and hold for long term. And you can hold because you have a cash cushion, and a price that makes financial sense no matter what (like a good dividend or rent percentage to invested capital).

Re: Ask HN: How do you invest?

#14

Post by 7402 »

1/3 in a domestic (U.S.) index fund, 1/3 in an international index fund, 1/3 in CDs, money market funds, savings bonds, or T-notes. Rebalance once a year. Spend no additional time thinking about any of this.

Re: Ask HN: How do you invest?

#15

Post by dsutoyo »

nicholas73 wrote: post #12

I actively traded stocks for a period. I can say that any gains you make represent work like any other, except you can lose all your money. If you do not want to focus on trading, do not trade. It can be a horrible way to live. Warren Buffett's #1 rule is: Do not lose money. #2: Never forget rule number one. What you really learn is that the amount of risk you should take on actually is a lot less than you think it i…

Good advice and thanks! When I was a lot younger, I definitely overtraded and didn't really do enough homework.

Re: Ask HN: How do you invest?

#16

Post by sparkpluglabs »

I had tried few different ways to invest and found the "coffeehouse investor" book to be pretty good guide on how to invest by spending really little time.

Book is really short. But you don't need to buy the book. The website lists the index funds, the returns over last 20 years and portfolio %. I am mostly invested in Vangaurd index funds and it has worked out well for me.

http://www.coffeehouseinvestor.com/coffeehouse-beans/coffeeh...

Re: Ask HN: How do you invest?

#19

Post by schoash »

wikwocket wrote: post #6

I believe in the 80% solution. Put your money to work rather than stuffing it in a mattress, but favor the 80%-of-optimal solution that's easy to set and forget, instead of the 100%-optimal solution that requires micromanagement, expertise, and luck. To that end, keep only a little in savings (emergency fund), and put the rest in a 401k or IRA, invested in index funds. Index funds are a great 80% approach, because: -…

what is a good amount for the emergency fund? Is it lie 4 times the monthly income or even more?

Re: Ask HN: How do you invest?

#20

Post by petervandijck »

schoash wrote: post #19
wikwocket wrote: post #6

I believe in the 80% solution. Put your money to work rather than stuffing it in a mattress, but favor the 80%-of-optimal solution that's easy to set and forget, instead of the 100%-optimal solution that requires micromanagement, expertise, and luck. To that end, keep only a little in savings (emergency fund), and put the rest in a 401k or IRA, invested in index funds. Index funds are a great 80% approach, because: -…

what is a good amount for the emergency fund? Is it lie 4 times the monthly income or even more?

Depends on your situation. If you have kids and fixed costs, 6-12 times monthly spend (not income). If you're alone and have more flexibility, 3 times monthly spend.
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