How do i make my money grow 10% a year

[HannibalX]

Originally posted by: QED

Originally posted by: alphatarget1
My HSBC online savings is only 3.05% APY now... How do y'all invest your money?

Is your mortgage and any other debt completely paid off? If not, I'd start there instead.

+1

The quickest way to save money is to pay your house off.

 

[Special K]

Originally posted by: Pale Rider

Originally posted by: QED

Originally posted by: alphatarget1
My HSBC online savings is only 3.05% APY now... How do y'all invest your money?

Is your mortgage and any other debt completely paid off? If not, I'd start there instead.

+1

The quickest way to save money is to pay your house off.

Not if the interest rate of your mortgage after the tax deduction is significantly less that what you would earn in index funds over a long enough period of time - say 30 years for a 30 year fixed mortgage.

That said, I think having a paid off house offers a sense of security, even if it does not necessarily maximize your total net worth in the long run.

 

[Special K]

Originally posted by: 3cho

Originally posted by: TheoPetro

Originally posted by: 3cho

Originally posted by: TheoPetro


http://pics.bbzzdd.com/users/donkadonk/Div.jpg

The number is closer to 40 securities but that graph should give ya the idea. The point of this isnt to call you diversified its to point out that you can effectively eliminate a lot of unnecessary risk that you take on by holding fewer securities. You can keep on doing what youre doing, and you may make out quite well, but you are bearing much more risk than you are being compensated for.

that's actually a pretty nice graph. for some reason i think it is a bit flawed though. the markets are interconnected enough that a huge negative event can throw diversification out the window.

The graph is only showing systematic (light blue) and nonsystematic (dark blue) risk. Its true that a large negative event can shake the market and you can lose money. Thats accounted for in the graph because it is showing the standard deviation (risk) inherent in holding X securities. For example if you only have 2 securities and the markets tank you can lose (on average) 30% but if you have 40+ you would normally only lose a little more than 20%. You need a security market line and an efficient fronter graph to look at return.

thats true... but if you are a fund... levered up to like 15 to 1, and the russians default on their debt, no amount of diversification will help.

Is your example referring to LTCM? Can regulated mutual funds even take the types of risks that hedge funds can?

 

[HannibalX]

Originally posted by: Special K

Originally posted by: Pale Rider

Originally posted by: QED

Originally posted by: alphatarget1
My HSBC online savings is only 3.05% APY now... How do y'all invest your money?

Is your mortgage and any other debt completely paid off? If not, I'd start there instead.

+1

The quickest way to save money is to pay your house off.

Not if the interest rate of your mortgage after the tax deduction is significantly less that what you would earn in index funds over a long enough period of time - say 30 years for a 30 year fixed mortgage.

That said, I think having a paid off house offers a sense of security, even if it does not necessarily maximize your total net worth in the long run.

You can't count on getting that tax deduction, it may not always be there. Laws change, tax rates change, etc, etc. If some people in government get their way we will all be flat taxed in a few years anyway and there won't be any deductions.

If I stopped making a house payment today I would have $2500 extra every month PLUS all the entire value of the home.

You can make payments for 30 years if you want. 30 year loans are for suckers.

 

[ObiDon]

Originally posted by: edro

Originally posted by: 2canSAM

Originally posted by: LuckyTaxi

Originally posted by: Ticky
Get lucky in the stock market?


(Anyone else buy NVDA below 19.00?)

Nope but i bought $5000 of SKNY when it was $0.15.

Stupid ? time. You bought $5000.00 @ $0.15/(5000/0.15 = 33333) share right now it is at $0.38/share. So if you sold right now you would be looking at ~ $12666.00 (0.38x3333=12666)

Minus 25% Tax and X% Selling Fees.
Still, a very very nice gain.

yep, and if LuckyTaxi felt like playing it safe, he could sell $5000 worth and essentially be sitting on "free" shares.
that's not a recommendation... just a comment

 

[Special K]

Originally posted by: Pale Rider

Originally posted by: Special K

Originally posted by: Pale Rider

Originally posted by: QED

Originally posted by: alphatarget1
My HSBC online savings is only 3.05% APY now... How do y'all invest your money?

Is your mortgage and any other debt completely paid off? If not, I'd start there instead.

+1

The quickest way to save money is to pay your house off.

Not if the interest rate of your mortgage after the tax deduction is significantly less that what you would earn in index funds over a long enough period of time - say 30 years for a 30 year fixed mortgage.

That said, I think having a paid off house offers a sense of security, even if it does not necessarily maximize your total net worth in the long run.

You can't count on getting that tax deduction, it may not always be there. Laws change, tax rates change, etc, etc. If some people in government get their way we will all be flat taxed in a few years anyway and there won't be any deductions.

If I stopped making a house payment today I would have $2500 extra every month PLUS all the entire value of the home.

You can make payments for 30 years if you want. 30 year loans are for suckers.

Even without the tax deduction, let's say your mortgage interest rate is 5.5%. It's likely that the stock market will beat 5.5% returns over a 30 year period, so from a strictly net worth perspective, you would end up ahead by not paying the mortgage down and instead investing the difference. I don't think the fact that the loan is 30 years is that significant. If the interest rate is low enough, why not stretch it out over as long a period as possible?

 

[HannibalX]

Because having access to the full value of your home sooner than later is nice.

 

[ObiDon]

Originally posted by: Pale Rider
Because having access to the full value of your home sooner than later is nice.

i'm not sure i understand this statement. are you saying pay it off so you can borrow it back again? borrowing against your home (mortgages, helocs, etc...) is the only way you really have access to the value of your home.

 

[JS80]

Originally posted by: LuckyTaxi

Originally posted by: 2canSAM

Originally posted by: LuckyTaxi

Originally posted by: 2canSAM

Originally posted by: LuckyTaxi

Originally posted by: Ticky
Get lucky in the stock market?


(Anyone else buy NVDA below 19.00?)

Nope but i bought $5000 of SKNY when it was $0.15.

Stupid ? time. You bought $5000.00 @ $0.15/(5000/0.15 = 33333) share right now it is at $0.38/share. So if you sold right now you would be looking at ~ $12666.00 (0.38x3333=12666)

Stupid? I'm not selling now. I'm holding on, hopefully it hits $1.

Wasn't calling it stupid, was saying "stupid question time" as I was about to ask a stupid question

ahhh . ok ... hahaha ... yes lots of money to be made.

lulz less than $1 million revenue and $45 million market cap. Good pick though. If I were you I'd sell half.

 

[JS80]

Originally posted by: Pale Rider

Originally posted by: Special K

Originally posted by: Pale Rider

Originally posted by: QED

Originally posted by: alphatarget1
My HSBC online savings is only 3.05% APY now... How do y'all invest your money?

Is your mortgage and any other debt completely paid off? If not, I'd start there instead.

+1

The quickest way to save money is to pay your house off.

Not if the interest rate of your mortgage after the tax deduction is significantly less that what you would earn in index funds over a long enough period of time - say 30 years for a 30 year fixed mortgage.

That said, I think having a paid off house offers a sense of security, even if it does not necessarily maximize your total net worth in the long run.

You can't count on getting that tax deduction, it may not always be there. Laws change, tax rates change, etc, etc. If some people in government get their way we will all be flat taxed in a few years anyway and there won't be any deductions.

If I stopped making a house payment today I would have $2500 extra every month PLUS all the entire value of the home.

You can make payments for 30 years if you want. 30 year loans are for suckers.

You obviously failed finance 101.

 

[Special K]

Originally posted by: ObiDon

Originally posted by: Pale Rider
Because having access to the full value of your home sooner than later is nice.

i'm not sure i understand this statement. are you saying pay it off so you can borrow it back again? borrowing against your home (mortgages, helocs, etc...) is the only way you really have access to the value of your home.

Yeah, why do you need access to the full value of your home, if not to just turn around and mortgage it up again?

 

[HannibalX]

Originally posted by: JS80

Originally posted by: Pale Rider

Originally posted by: Special K

Originally posted by: Pale Rider

Originally posted by: QED

Originally posted by: alphatarget1
My HSBC online savings is only 3.05% APY now... How do y'all invest your money?

Is your mortgage and any other debt completely paid off? If not, I'd start there instead.

+1

The quickest way to save money is to pay your house off.

Not if the interest rate of your mortgage after the tax deduction is significantly less that what you would earn in index funds over a long enough period of time - say 30 years for a 30 year fixed mortgage.

That said, I think having a paid off house offers a sense of security, even if it does not necessarily maximize your total net worth in the long run.

You can't count on getting that tax deduction, it may not always be there. Laws change, tax rates change, etc, etc. If some people in government get their way we will all be flat taxed in a few years anyway and there won't be any deductions.

If I stopped making a house payment today I would have $2500 extra every month PLUS all the entire value of the home.

You can make payments for 30 years if you want. 30 year loans are for suckers.

You obviously failed finance 101.

Obviously.

 

[HannibalX]

Originally posted by: Special K

Originally posted by: ObiDon

Originally posted by: Pale Rider
Because having access to the full value of your home sooner than later is nice.

i'm not sure i understand this statement. are you saying pay it off so you can borrow it back again? borrowing against your home (mortgages, helocs, etc...) is the only way you really have access to the value of your home.

Yeah, why do you need access to the full value of your home, if not to just turn around and mortgage it up again?

Who said anything about doing that? Now you are free to take on another house.

 

[HannibalX]

You chappies can do what you like though.

 

[Special K]

Originally posted by: Pale Rider

Originally posted by: Special K

Originally posted by: ObiDon

Originally posted by: Pale Rider
Because having access to the full value of your home sooner than later is nice.

i'm not sure i understand this statement. are you saying pay it off so you can borrow it back again? borrowing against your home (mortgages, helocs, etc...) is the only way you really have access to the value of your home.

Yeah, why do you need access to the full value of your home, if not to just turn around and mortgage it up again?

Who said anything about doing that? Now you are free to take on another house.

As in sell the first to buy a second, or buy a second as an investment property? Long term real estate appreciation is only ~3-5% IIRC.

 

[imported_Lothar]

Originally posted by: TheoPetro
http://pics.bbzzdd.com/users/donkadonk/Div.jpg

The number is closer to 40 securities but that graph should give ya the idea. The point of this isnt to call you diversified its to point out that you can effectively eliminate a lot of unnecessary risk that you take on by holding fewer securities. You can keep on doing what youre doing, and you may make out quite well, but you are bearing much more risk than you are being compensated for.

Interesting graph, but it doesn't answer my questions.

If I buy 50 stocks do they have to be 2% of the portfolio each to eliminate unnecessary risk?
What if I buy 50 stocks with the top 10 accounting for 70% of my holding, the next 10 accounting for 20%, and the remaining 30 sharing 10%?
What if I buy 50 stocks and one company accounts for 51%, while the remaining 49 companies account for 1% each?

Buffett's "Top 10 equity holdings" alone represent 83% of his portfolio. Are you saying he's taking unnecessary risk?

That graph certainly isn't applicable in all cases.
What if the stock you own is a conglomerate? (Ex: Berkshire Hathaway, Leucadia National)
Berkshire has businesses in insurance, mortgage company, jewelry, restaurants, natural gas, corporate jet firms, retail, encyclopedia, print media, foot wear/clothes. That doesn't even include the investment portfolio.

Do one really need to pick 1 of each in insurance, mortgage company, jewelry, restaurants, natural gas, corporate jet firms, retail, encyclopedia, print media, foot wear/clothes to reduce risk when they can just pick Berkshire Hathaway?

A person who is 100% in Berkshire vs. someone else who is 20% each in AMD, Citigroup, Hersheys, Wal-Mart, and Thornburg Mortgage.
Who do you think has less risk? Does person B have less risk simply because he has more securities? (keep in mind the 2 paragraphs above this when answering this question)

Disclosure: I don't own Berkshire directly, but Leucadia is the top equity holding representing 22% of the portfolio.

 

[Nerva]

Originally posted by: Special K

Originally posted by: 3cho

Originally posted by: TheoPetro

Originally posted by: 3cho

Originally posted by: TheoPetro


http://pics.bbzzdd.com/users/donkadonk/Div.jpg

The number is closer to 40 securities but that graph should give ya the idea. The point of this isnt to call you diversified its to point out that you can effectively eliminate a lot of unnecessary risk that you take on by holding fewer securities. You can keep on doing what youre doing, and you may make out quite well, but you are bearing much more risk than you are being compensated for.

that's actually a pretty nice graph. for some reason i think it is a bit flawed though. the markets are interconnected enough that a huge negative event can throw diversification out the window.

The graph is only showing systematic (light blue) and nonsystematic (dark blue) risk. Its true that a large negative event can shake the market and you can lose money. Thats accounted for in the graph because it is showing the standard deviation (risk) inherent in holding X securities. For example if you only have 2 securities and the markets tank you can lose (on average) 30% but if you have 40+ you would normally only lose a little more than 20%. You need a security market line and an efficient fronter graph to look at return.

thats true... but if you are a fund... levered up to like 15 to 1, and the russians default on their debt, no amount of diversification will help.

Is your example referring to LTCM? Can regulated mutual funds even take the types of risks that hedge funds can?

nah, only hfs can be that levered. ltcm had a lot of contingencies, i think they could actually take volatilities thats within like 3 standard deviations, but obviously no one saw the russian default coming. i think that was how the story went. in '98, i couldnt tell common stocks from live stocks.

 

[imported_Lothar]

Originally posted by: Pale Rider
You can make payments for 30 years if you want. 30 year loans are for suckers.

Paying of your mortgage early isn't always beneficial and usually gives only a false sense of security.
Take a 30 yr loan and have the option to pay early if you want depending on conditions, but I see no reason to take a 15 yr loan.

 

[Scarpozzi]

Convert all your money to Kuan. Trust me, since the Chinese government is screwing with the rate, it will likely be worth more than the dollar in another 10 years.

 

[Train]

You ould dump $1000 or more into whatever stock Jim Cramer recomends, sell it 24 hours later at a 2% gain. Repeat 2 or 3 times a week. Annual rate will end up pretty high.

The market is slowly correcting for the "Cramer Effect" as its called, as the market eventually corrects for everything, but in the mean time it might be a decent way of making easy returns.

 

[IHateMyJob2004]

Berkshire Hathaway is currently a reasonable deal. It is slightly over-priced, but if your goal is to make 10%+ a year, BRK is a no brainer.

Or piggyback Warren Buffet and buy JNJ and USB. That's what I am doing.

 

[ChaoZ]

Originally posted by: IHateMyJob2004
Berkshire Hathaway is currently a reasonable deal. It is slightly over-priced, but if your goal is to make 10%+ a year, BRK is a no brainer.

Or piggyback Warren Buffet and buy JNJ and USB. That's what I am doing.

I might be able to afford .5% of a share.

 

[LegendKiller]

Even without the tax benefit in many cases it won't make sense to pay off a mortgage. Paying it off is pissing away money.

 

[TheoPetro]

Originally posted by: Lothar

Originally posted by: TheoPetro
http://pics.bbzzdd.com/users/donkadonk/Div.jpg

The number is closer to 40 securities but that graph should give ya the idea. The point of this isnt to call you diversified its to point out that you can effectively eliminate a lot of unnecessary risk that you take on by holding fewer securities. You can keep on doing what youre doing, and you may make out quite well, but you are bearing much more risk than you are being compensated for.

Interesting graph, but it doesn't answer my questions.

If I buy 50 stocks do they have to be 2% of the portfolio each to eliminate unnecessary risk?
What if I buy 50 stocks with the top 10 accounting for 70% of my holding, the next 10 accounting for 20%, and the remaining 30 sharing 10%?
What if I buy 50 stocks and one company accounts for 51%, while the remaining 49 companies account for 1% each?

Buffett's "Top 10 equity holdings" alone represent 83% of his portfolio. Are you saying he's taking unnecessary risk?

That graph certainly isn't applicable in all cases.
What if the stock you own is a conglomerate? (Ex: Berkshire Hathaway, Leucadia National)
Berkshire has businesses in insurance, mortgage company, jewelry, restaurants, natural gas, corporate jet firms, retail, encyclopedia, print media, foot wear/clothes. That doesn't even include the investment portfolio.

Do one really need to pick 1 of each in insurance, mortgage company, jewelry, restaurants, natural gas, corporate jet firms, retail, encyclopedia, print media, foot wear/clothes to reduce risk when they can just pick Berkshire Hathaway?

A person who is 100% in Berkshire vs. someone else who is 20% each in AMD, Citigroup, Hersheys, Wal-Mart, and Thornburg Mortgage.
Who do you think has less risk? Does person B have less risk simply because he has more securities? (keep in mind the 2 paragraphs above this when answering this question)

Disclosure: I don't own Berkshire directly, but Leucadia is the top equity holding representing 22% of the portfolio.

I am not positive on this answer so take it with a grain of salt.

If you are investing in conglomerates you should be aware of their exposure across different industries and account for them in your asset allocation.

BRK just got its ass kicked because of its exposure in the insurance industry. If you bought just into BRK you would bear the full brunt of that but if youre diversified you lower your unsystematic risk exposure.

As far as who has less risk in your third paragraph, I dont think im qualified to make that kind of call yet, maybe after the MBA. I do know that historically it is a statistical anomaly for someone to consistently beat the market. Based on that fact your best bet is to diversify and earn the market return instead of investing a lot of time in trying to beat the market.

If that doesnt answer it let me know and I will try to explain myself further.

 

[alien42]

invest in oil and oil services
invest in US exporters
invest in basic consumer goods