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Investment Thread

Discussion in 'Real Life Discussion' started by Lyndon Eye, Jul 12, 2013.

  1. Perspicacity

    Perspicacity High Score: 3,994 Prestige DLP Supporter DLP Gold Supporter

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    Last time I checked (which was some years ago, admittedly), Vanguard has a minimum investment for taxable or retirement accounts of $3000. Fidelity's minimum was comparable. This may be a higher minimum than many are willing to work with.
     
  2. SilverOtter

    SilverOtter Seventh Year

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    If you're planning to go over $15k eventually, I'd just start out with Betterment. The fees aren't really an issue and you should earn more in market changes and dividends than you'll pay out in fees anyway.

    If you start with Wealthfront and then decide to move to Betterment later you could potentially be selling and transferring at a market high, wouldn't be the end of the world but it's certainly annoying.

    On which is easier to use, I've never used Wealthfront so I'm not sure how easy theirs is to use. Betterment is really simple though.

    With Betterment you create certain "goals" like retirement, buying a house or large purchase, or general building wealth and it will give you advice on what sort of stock/bond allocation you want as well as what your growth-over-time will be with average market performance based on past data.

    There's also a Safety Net goal which some people use to replace their standards bank savings account, it's low risk with about 60% stocks, 40% bonds

    This link from peyo is a good article on why some choose to do this.

    For goals that have an end date, like wanting to purchase a house within the next 10 years, or wanting to retire at age 60, Betterment will give you advice on how much you need to put in weekly/monthly/yearly to reach your goal by the end date.

    If you have any questions let me know and I'll do my best to answer, and if you'd like 6 months free on top of the 30 days everybody gets for signing up you can use my referral link for it.
     
    Last edited: Aug 8, 2016
  3. SilverOtter

    SilverOtter Seventh Year

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  4. Inexistence

    Inexistence Seventh Year

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    So the past week or so I've gotten back on the hardcore investing, saving, etc hype. Since moving to the US two years ago, I hadn't really considered the use of 401k's, IRAs, and all that jazz, given that I likely wouldn't settle down here long term. But after getting onto

    JLCollinsNH's Stock Series, and consequently into Mad Fientist, I got really excited about it all, given that I enjoy nerding out about finances. I've been long into Mr Money Mustache, and the idea of early retirement. Never thought to save a hell of a lot more by affecting my taxes and reducing it down so much.

    So I opened up a 401k at work, and with 4 months left decided I need to max it out. Overall, maxing it out will save me around $6k in taxes, which is insane. I'm now looking into the ability to open up an HSA, which if I contributed the max, would bring my MAGI down low enough to be able to get a deduction on a Traditional IRA. Otherwise, I'm gonna bang everything I can into a Roth IRA.

    I'm so hyped up for this, this year I will have doubled my savings, and it's primarily a result of taking an active interest in this again, instead of just assuming that I can put money away that's left over.
     
  5. Shouldabeenadog

    Shouldabeenadog Auror

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    Thanks for all the advice, I went for betterment (I liked their dependance on VEA>VWO, but still lots in both) and opened a Roth for '16 and '17, and then i'll see what my actual paycheck turns into when I finished residency before I go into other vehicles.
     
  6. SilverOtter

    SilverOtter Seventh Year

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    HSA's are amazing if you can qualify for them! Betterment doesn't support them (yet!) but they have a few articles written about them and how they are great to have.

    For anyone interested: https://www.betterment.com/resources/life/truth-about-hsas-and-retirement/

    That's great! Welcome to the lovely world of investments. Remember you have until April 15th of the following year to max your IRA contributions. So if you haven't maxed 2016 before 15 April 2017 you should still be contributing to your 2016 goal up to that date.
     
  7. SilverOtter

    SilverOtter Seventh Year

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    Betterment has come out with a new feature for their service. Tax Coordinated Portfolios.

    Basically you 'link' different types of taxable, tax-deferred, and tax-exempt goals together and Betterment manages them together as a single portfolio to minimize tax impact on you and improve long term goals.

    Here's a link to the article they wrote: https://www.betterment.com/resource...t-news/introducing-tax-coordinated-portfolio/

    And here's a link to a white paper they wrote on the subject: https://www.betterment.com/resources/research/tax-coordinated-portfolio-white-paper/

    Sorry for the double post, it's been more than 30 days and I couldn't edit my previous post.
     
    Last edited: Dec 5, 2016
  8. pbluekan

    pbluekan Death Eater DLP Supporter

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    Keep an eye on the market right now. Things are shaky and this week is looking like the start of a genuinely bear market.

    Bond yields are extremely high, coupled with an already overheated economy and the slowly unraveling effects of Trump’s ongoing trade war, we are primed for this correction to continue for a little bit.

    There are also some rumblings in the lending world as well, due to low restriction standards in predatory auto loans and scaled back restrictions on subprime mortgages.

    By that same token, the real estate markets are throwing some red flags. For example, in Denver, home sales dropped 30% last month.
     
  9. Lindsey

    Lindsey Headmaster DLP Supporter

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    The price of homes in Seattle has dropped in the last three months, with the inventory growing. This was at the prime buying months as well. Of course, this is the time I've been thinking about buying. I'm keeping an eye out until January to see what happens in Seattle before I sign anything. Gives me a little bit more time to get a down payment secured too.
     
  10. Darth_Revan

    Darth_Revan Secret Squirrel Prestige DLP Supporter

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    We've been in a Trump Bubble ever since election day 2016 was followed by a rally fueled by pure speculation and tax cuts. What with the trade wars and rampant deregulation, we're primed for recession.
     
  11. pbluekan

    pbluekan Death Eater DLP Supporter

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    Pretty much this. The rise in bond premiums is what is giving me any sort of confidence in saying that this is actually a bear market.
     
  12. Erotic Adventures of S

    Erotic Adventures of S Denarii Host

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    Dos anyone here have experience in the Nz or Aussie stock market, I’m at the point where I want to start getting some of my money out of standard savings and be a bit more proactive.

    I’m only planning upto 10k to start with then maybe adding more in the future if I am happy with it.

    Whats the best way to go about investing having never done it before? If it matters most of my finances are with Westpac.

    Ideally I would like something fairly easy to interface and low fees, that may be a pipe dream but hoping.

    I am thinking more targeted investing that just funds and indexs, i have other savings in the equiviant of those, this is more money I would like to try and grow, but I am happy to take the risk on it.
     
  13. fire

    fire Auror

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    Probably best to stick to index trackers though? I don't see the point of active investment - you'll never beat the market, and it's stressful to worry about the most minute stock movements.
     
  14. SilverOtter

    SilverOtter Seventh Year

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    Not sure if anyone has seen this yet or not, but Fidelity recently started offering HSA accounts without fees to everyone instead of just those who have an employer using Fidelity to host their HSA.

    https://www.fidelity.com/go/hsa/why-hsa

    Seems like this would be a good place to move money to if you're not actively using an HSA through your current employer.
     
  15. Sesc

    Sesc Slytherin at Heart Moderator

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    Given that I unexpectedly turned up with 2k on my hands that I don't really need, I figured I'll start playing with stocks in the risky way and revive this thread. If it's fun, there's worse ways to burn money. On something not fun, for example.

    So! I consider myself reasonably intelligent. Hence:

    - People get paid astronomical sums and buy astronomical computing power to beat the market
    - The results are meh-ish
    - No one ever offered me any money to manage their money, so I'm very likely worse.

    (==> This is the reason you buy an All-World ETF at minimal overhead cost, and enjoy your 4% p.a. on average if you don't touch it for 20+ years. Do that. Not what follows.)

    And yet: The only strategy that seems to have at least some scientific merit is the momentum strategy -- but this means there is a strategy to beat the market. By a bit. On average. Anyone ever worked with it? From my understanding, it's exceedingly simple: You look at something like the first derivative (or rate of change, or "momentum") of the stocks from a certain periode, typically six months -- that is, (value today - value six months ago) -- to sort them, then you pick the top results, hold them for a month, then update the ranking and possibly change your picks.

    There are various adaptions, ex. Levy's Relative Strength, which does (value today)/(value six months moving average), but they all more or less lead you to the same place: You look at prior performance and pick the relative best performers. The result beats the market, on average.

    One drawback seems to be that it can invoke quite hefty losses, but as the linked paper notes, combining the momentum strategy with a trailing stop loss fixes that. It's also very handy, because this means it's automated. You buy and keep buying, and the system sells for you with a profit, on average. It's like finding the ??? in the Southpark scheme.

    (At the latest at this point, you should become suspicious. And yet ... see above.)

    Explanations for how and why this works are unclear, for me the most convincing was some behavioural psychology stuff, which also explains why not everyone is using this in the first place, and thus rendering it useless.

    Now I wonder whether this also works on shorter time frames. Have a picture:

    momentum.png

    This plots the first derivative, the rate-of-change, to identify the beginning of an upwards movement, here on a ten-day history, instead of six months.

    You buy (for example) when the 10-day-RoC becomes positive, here at approx. 24.5. Then you set a trailing stop loss e.g. at last day's low point, that'd be 23.2 here, so a distance of 1.3. This limits your potential loss to 5.3%. The stop loss is adjusted upwards every day if needed, but never downwards, so it always trails the latest high by those 1.3. And in the cycle here, we are lucky: The trailing stop loss moves up to 26.6 and gets triggered right after at the peak. You'd have sold 2.1 or 8.6% above your initial order. That's a tidy profit, in five days.

    Naturally, sometimes, you'll end up on the wrong side as the stock moves downwards immediately, and the stop loss gets triggered right away. But what's the result on average?


    TL;DR: I feel like investing some money and some time to test this. In any case the regular method, possibly also the shorter one. So far, I identified six long-momentum stocks in promising industries (e-commerce, e-mobility, IT) to start with. I'll tell you in a month whether I've got 4k or 0k :D

    And if we have experts here, feel free to laugh at me ITT. Or not, if that is how are rich and keep getting richer. Do comment.


    Just so I'm not accused of hording information ... I'm doing German stocks, but these are the current top momentum and Levy S&P 500 picks:

    Momentum (>27% in 6 months)
    Xilinx Inc.
    Ball Corp.
    Starbucks Corp.
    Dollar Tree Inc.
    Chipotle Mexican Grill Inc.
    AES Corp.

    Levy (>1.2):
    Xilinx Inc.
    Cadence Design Systems Inc.
    Chipotle Mexican Grill Inc.
    Dentsply Sirona Inc.
    Garmin Ltd.

    Note: I have no idea about any of them.
     
  16. Sesc

    Sesc Slytherin at Heart Moderator

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    The answer to my question is that no, research holds that short term trends and future performance are anti-correlated. That is, short term momentum is more likely to be followed by a downturn (reversion to mean). So I nixed that part, I didn't want to get into short selling. I sorted the German Prime All Share index by six-month performance, and now own the following stocks (with their initial position in the ranking):

    1. Diebold-Nixdorf (IT/Hardware)
    2. Eckert & Ziegler (Medical technology)
    5. Varta (Batteries)
    12. IVU Traffic Tech. (IT/Software)
    13. Deutsche Konsum (Real estate)

    I did no further research on any of them other than to make sure I'm not buying a broke company. I only picked due to the ranking, and then in a way that was a bit diversifying. Because I was impatient, I got a terrible deal on the Deutsche Konsum, which ruined my performance for the day. On aggregate: +0.59%, compared with +0.82% for the index. In a month, I'll resort and exchange stocks that dropped out of the top 15.

    I'll keep updating this post. Let's see how this goes.


    Update:
    Code:
               Value   Weekly   Index   Weekly
    Initial:  2823.30          4723.98
    Current:  2952.80  +4.59%  4836.09  +2.37%
     
  17. dhulli

    dhulli The Reborn

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    I use robinhood for commission free trades. I don't know if it's luck or what, but I've been option trading for the past year with 30% returns in the past year. And this year I'm already up 20%.
     
  18. dhulli

    dhulli The Reborn

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    Earnings season is almost here. I'm guessing FB is gonna beat and NFLX is gonna miss. And it's a +/- 20k gamble on that, so we'll see how that goes...
     
  19. EsperJones

    EsperJones Headmaster

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    Yeah, that's not investment, that's gambling.
     
  20. Sauce Bauss

    Sauce Bauss Minister of Magic DLP Supporter

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    Options contracts are a beautiful thing.
     
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