Full Circle’s Mutterings on Money
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31-01-2016, 05:50 PM
RE: Full Circle’s Mutterings on Money
(31-01-2016 05:25 PM)Heatheness Wrote:  
(31-01-2016 04:29 PM)Full Circle Wrote:  Dodgy

Laugh out load

I figured someone would bring this up.

OK smarty-pants you asked for it. In my OP I said that LBYM was part of my philosophy. When my wife and I married we would invest $50 a month into a Mutual Fund. We always paid ourselves first meaning that the $50 was sacrosanct. I could do without a new pair of shoes, that money could not be touched.

As years passed that $50 became $100 and then $200 etc. If one of us got a raise half of it immediately would go into the kitty. It took us a long time to grow that $50/mo into something meaningful.

I take the view that each dollar I save is a worker in my financial army. I can put that $1 to work for me and it can make me 5 cents a year independent of what I bring home in the form of a paycheck. If I spend it I just downsized my little army of minions making me 5 cents a year on their own.

Like I said, I’m a visual kind of guy and this little picture of thousands of little $1 minions working for me makes me smile. Smile

[Image: minions-1.jpg]

It was not a crack but I have no desire to spill my guts here. Your advice is fine, your assumption that everyone can have financial security if they just buckle down and LBYM is short-sighted, arrogant and presumptive.

Not being nasty just a realist. That's all.

I’m not assuming anything. I simply shared my own personal experience. Take what you like from what I’m writing, you are free to ignore it as well.

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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31-01-2016, 06:03 PM
RE: Full Circle’s Mutterings on Money
(31-01-2016 04:56 PM)Dom Wrote:  
(31-01-2016 02:34 PM)Full Circle Wrote:  Dom, that is a question that can only be answered by each individual and not what I intend to deal with in this thread. That is a question best answered in threads like “What would you do if you won the Lotto”.

This won’t be a philosophical exploration on what to do with whatever money you have, I will only be discussing how best to accumulate and put that money to work for you making more money in appreciation, dividends and interest. Thumbsup

It has nothing to do with winning the lotto.

Are you then making money just to make it and anticipate making it until you drop dead?

Or are you trying to retire at 60?

Or are you trying to buy/build a home to retire in and how many years will it take to get there?

If you are 40, you have 4 decades before you die (maybe).

If you are 60 you have only two.

Your age makes every difference if you are trying to reach goals.

For myself, the first step was to figure out how much time I had left to accomplish my goals and how much money I needed for it. And that had a HUGE influence on how I handled my investments.

Dom, as I said this isn’t a philosophical exploration on how to live your life or what to do with your money or your time.

I’m sharing information I wish I had known when I was much younger.

Think of this thread as similar to a thread on, “How to Grow a Garden”. Maybe you hate plants, or are allergic to pollen. Maybe you live in the city. I don’t know you’re predilictions or circumstances and I’m not making any value judgements.

Money is a tool, it doesn’t care one way or another what you want or need it for and I’m approaching this thread with no intentions of telling anyone how they should live or plan their lives. It’s not for me to say.

Take what you think is useful and discard the rest, or ignore everything I’m saying here.

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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31-01-2016, 07:16 PM
RE: Full Circle’s Mutterings on Money
(31-01-2016 04:16 PM)Full Circle Wrote:  Rant #2.

I sometimes think that the talking heads who dispense with all sorts of “financial wisdom” are no better than thieves and criminals.

For example. How many times have you heard that when you are young you should be aggressive with your investments? After all, if you have $10,000 when you’re say 30 and lose it all you still have many years left to make it back up.

I think this is ass-backwards and I’ll tell you why in one word...Compounding.

At 5% growth that $10,000 invested when you are 30 years old will become $256,168 by the time you are 65! In other words you just kissed a quarter of a million dollars good-bye becuse the prevailing wisdom says you should be aggressive. Such bullshit.

If anything I think you should be less aggressive when you are young. Why aren’t people being told this?

I think because the risk capital has to come from somewhere, and the older more conservative investors will only put a little money in the risky parts. If a younger investor loses a bunch of money, he/she will still have an opportunity to earn more money to invest. [/cynic]
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31-01-2016, 07:18 PM
RE: Full Circle’s Mutterings on Money
(31-01-2016 06:03 PM)Full Circle Wrote:  
(31-01-2016 04:56 PM)Dom Wrote:  It has nothing to do with winning the lotto.

Are you then making money just to make it and anticipate making it until you drop dead?

Or are you trying to retire at 60?

Or are you trying to buy/build a home to retire in and how many years will it take to get there?

If you are 40, you have 4 decades before you die (maybe).

If you are 60 you have only two.

Your age makes every difference if you are trying to reach goals.

For myself, the first step was to figure out how much time I had left to accomplish my goals and how much money I needed for it. And that had a HUGE influence on how I handled my investments.

Dom, as I said this isn’t a philosophical exploration on how to live your life or what to do with your money or your time.

I’m sharing information I wish I had known when I was much younger.

Think of this thread as similar to a thread on, “How to Grow a Garden”. Maybe you hate plants, or are allergic to pollen. Maybe you live in the city. I don’t know you’re predilictions or circumstances and I’m not making any value judgements.

Money is a tool, it doesn’t care one way or another what you want or need it for and I’m approaching this thread with no intentions of telling anyone how they should live or plan their lives. It’s not for me to say.

Take what you think is useful and discard the rest, or ignore everything I’m saying here.


Ok, so this thread assumes that there is no time limit nor a goal to achieve. It is about the mechanics of investing if you start early and addresses young people.

[Image: dobie.png]Science is the process we've designed to be responsible for generating our best guess as to what the fuck is going on. Girly Man
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31-01-2016, 07:55 PM
RE: Full Circle’s Mutterings on Money
Awesome thread, thank you. FC, I think I agree with you about not being risky early in your life. I plan on putting any investments in index funds, low fees and generally good returns, right? I absolutely agree someone should tell this shit to high school/college students.

Here's a question: are mutual funds good for anything? I'm no expert, but I've heard/read that mutual funds have really high fees because they're being managed, but don't significantly out perform index funds. If so, why do people use them?

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31-01-2016, 08:23 PM
RE: Full Circle’s Mutterings on Money
(31-01-2016 07:18 PM)Dom Wrote:  Ok, so this thread assumes that there is no time limit nor a goal to achieve. It is about the mechanics of investing if you start early and addresses young people.

I wish I would have been clearer, and yes it is about the mechanics.

The reason I said I wish someone would have taught me all these things when I was younger is because time is the one true and irreplaceable commodity.

Applying the proper mechanics to a lifetime of investing makes an enormous difference to wealth accumulation.

As for a specific goal, no, I’m not trying to define a goal here for anyone, we all make our own. Maybe it’s putting kids through college, retiring early, traveling the world or tending a garden. Because time is so limited having the wherewithall to achieve your own personal goals is THE goal.

To continue with the garden metaphor I’m just trying to pass on how to make better compost and grow plumper tomatoes. Cool

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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31-01-2016, 10:01 PM (This post was last modified: 01-02-2016 09:04 AM by Full Circle.)
RE: Full Circle’s Mutterings on Money
(31-01-2016 07:55 PM)Imathinker Wrote:  Awesome thread, thank you. FC, I think I agree with you about not being risky early in your life. I plan on putting any investments in index funds, low fees and generally good returns, right? I absolutely agree someone should tell this shit to high school/college students.

Here's a question: are mutual funds good for anything? I'm no expert, but I've heard/read that mutual funds have really high fees because they're being managed, but don't significantly out perform index funds. If so, why do people use them?

Great question, I was going to eventually address which are the most efficient investment products and since you are asking now we might as well get on with it.

Mutual Funds have been the King of the Hill for a great many years, the first one came out in 1924 and went public in 1928. But in 1990 a new product came out called an Exchange Traded Fund or ETF.

ETFs have some very attractive features over Mutual Funds and the first of these is lower Expense Ratios as you say, or what you are charged for owning them. They also are more transparent, have better tax efficiency and are tradable like common stocks. All pluses.

Here is a nice summation https://www.ici.org/pdf/per20-05.pdf but for even a better understanding read A Comprehensive Guide to Exchange Traded Funds by Joanne Hill, it’s free from Kindle online books here http://www.amazon.com/Comprehensive-Guid...aded+funds

Of all the different fund families I am partial to Vanguard and Blackrock (iShares). Vanguard charges on average lower fees than all the others.

As for Mutual Funds out-performing index funds, significantly or at all, it is but a sad tale indeed. There is much information showing how actively managed funds UNDER-performed the very indexes they are trying to beat and the results are just pitiful.

http://www.cnbc.com/2015/06/26/index-fun...study.html
http://money.cnn.com/2015/03/12/investin...ive-funds/

And here I want to make an important point, anyone trying to “beat” the market, and by the “market” I mean the S&P 500 Index (we’ll talk about global equities soon enough) has to take on substantially more risk. They do this by either taking outsized positions on a few companies, using margin (borrowing money) or investing in very volatile assets - none of these things are good long term strategies for capital preservation. They may get lucky here but you can count on one hand portfolio managers that have consistently kept up with, much less beaten the market over time.

In one year 60% of actively managed funds underperform.
In ten years 70% underperform.
In twenty years 80% underperform.
“Winning the Loser’s Game”

And it’s not the same ones, the guy with the hot hand one year will have a disasterous year the next, the only consistent decile in returns is the bottom 10%, those guys ought to go do something else and stop losing money for their investors.

Beating the market is a fool’s errand, in my opinion the prudent thing to do is build a portfolio that has the best return you can get for the most amount of risk you are willing to take or tolerate. That’s it. If like me all you can stomach is a 3% loss then you have to be happy with lower average returns than the S&P 500. How much lower? You will be surprised, but I don’t want to get too ahead of myself.

I’ll explore the world of available assets next.

Tip #6 - An active manager in a Mutual Fund has to overcome the drag of about 3.25% in operating costs just not to lose money! A Hedge Fund manager has to overcome 5-7% plus 20% off any gains just for their clients to make money.

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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01-02-2016, 07:08 AM
RE: Full Circle’s Mutterings on Money
(31-01-2016 08:23 PM)Full Circle Wrote:  
(31-01-2016 07:18 PM)Dom Wrote:  Ok, so this thread assumes that there is no time limit nor a goal to achieve. It is about the mechanics of investing if you start early and addresses young people.

I wish I would have been clearer, and yes it is about the mechanics.

The reason I said I wish someone would have taught me all these things when I was younger is because time is the one true and irreplaceable commodity.

Applying the proper mechanics to a lifetime of investing makes an enormous difference to wealth accumulation.

As for a specific goal, no, I’m not trying to define a goal here for anyone, we all make our own. Maybe it’s putting kids through college, retiring early, traveling the world or tending a garden. Because time is so limited having the wherewithall to achieve your own personal goals is THE goal.

To continue with the garden metaphor I’m just trying to pass on how to make better compost and grow plumper tomatoes. Cool

Ok then, for a young person defining the target amount and time available to reach it is not that important. Once you are around middle age, it becomes crucial to figure out how much money you need to have to retire when and how you want, so you can tailor investments accordingly.

Personally, I didn't get serious about it until I was 40, and I retired at 58, having achieved the $ amount needed to live my life the way I want to. Now I am in a very different phase of money management.

I agree with you, the earlier you start the easier it is. I worked my butt off trying to achieve my goals within 15 years - I literally worked some 12 or more hours a day 7 days a week for those 15 years to raise enough money to invest to get where I wanted to be in such a short time. Much easier to start early, but many of us end up starting late.

One thing is for sure, nothing is more miserable than poverty in your old age. And unless you invest, you are pretty much guaranteed to end up poor.

No matter what your income, you have to put away a percentage for later.

[Image: dobie.png]Science is the process we've designed to be responsible for generating our best guess as to what the fuck is going on. Girly Man
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01-02-2016, 09:02 AM
RE: Full Circle’s Mutterings on Money
(01-02-2016 07:08 AM)Dom Wrote:  Ok then, for a young person defining the target amount and time available to reach it is not that important. Once you are around middle age, it becomes crucial to figure out how much money you need to have to retire when and how you want, so you can tailor investments accordingly.

Personally, I didn't get serious about it until I was 40, and I retired at 58, having achieved the $ amount needed to live my life the way I want to. Now I am in a very different phase of money management.

I agree with you, the earlier you start the easier it is. I worked my butt off trying to achieve my goals within 15 years - I literally worked some 12 or more hours a day 7 days a week for those 15 years to raise enough money to invest to get where I wanted to be in such a short time. Much easier to start early, but many of us end up starting late.

Congratulations Dom! Fifteen years is not much time to accumulate everything one needs to retire with some semblance of financial security.

One of the things I have noticed from conversations with people is that they attempt to force fit the returns to the time they have available, in other words if they think they need $250K to retire and only have ten years left to make that they then take on huge risks to achieve their goal, most end up losing much of what they started with.

(01-02-2016 07:08 AM)Dom Wrote:  One thing is for sure, nothing is more miserable than poverty in your old age. And unless you invest, you are pretty much guaranteed to end up poor.

No matter what your income, you have to put away a percentage for later.

You got that right.

I am one of four siblings. I am the only “ant” of the bunch, the others are all “grasshoppers”, money burns a hole in their pocket. Luckily they are great earners but you can’t keep that up forever so I worry for them in their old age. They have no minions working for them. Undecided

Thank you for clarifying my intent with this thread, it is mostly about the mechanics, and while I may digress here and there about personal money management habits, that’s not the focus.

“I am quite sure now that often, very often, in matters concerning religion and politics a man’s reasoning powers are not above the monkey’s.”~Mark Twain
“Ocean: A body of water occupying about two-thirds of a world made for man - who has no gills.”~ Ambrose Bierce
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01-02-2016, 09:15 AM
RE: Full Circle’s Mutterings on Money
I'm not a fan of "financial strategies"....

Plan all you like - you're still at the whim of fate.

Anyone who figures that "diversifying their funds" --- and having it all in paper --- cash, stocks, bonds -- isn't remembering history correctly....

ALL markets are capable of crashing - and are likely to, at some point.

....

I find it downright amusing when "experts" tell you that investing in gold, silver and other such things is "risky".

Even if your house burns down -- if you've got some gold, it'll still be there. It might be melted, but it's still gold.

I'm not saying saving money is a bad idea -- it's not.... But don't count on intangible things, that are simply a concept when you get right down to it -- to sustain you should things really turn to shit.

Some investments that I find good ---

Guns, (when bought properly -- that is, don't pay retail prices) -- ammo (properly stored, ammo keeps a lifetime) -- structural steel, or any building materials (again, properly stored) -- land - especially land capable of providing either an income (by renting it out as farmland) - or farming it yourself. Tools. Mass produced items such as nuts, bolts, screws, nails, rivets, --- In the event of a mass meltdown -- mass produced items will become exceedingly scarce -- and excellent trading material.......

Laugh all you want.....

But, if things really get bad, let me know how your stock portfolio tastes.................

.......................................

The difference between prayer and masturbation - is when a guy is through masturbating - he has something to show for his efforts.
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