Advice for a newbie investor?

[BonVivant]

In the end nothing is 100% safe. The closest is US Treasuries. The I-Bond is the highest yielding - very good now. You can buy $10K per year and get another $5K through tax refunds per year.  You can hold an I-Bond for 30 years!!! With inflation returning, the other treasuries might be good investments again but I’d wait until the rate hikes are done. 
 

Another safer play is to buy a multifamily (1-4 units) where you live in one unit and rent the others out. Bank will finance it like a primary and you get great tax benefits (ask a CPA).  Only take a 30 year fixed rate mortgage.  The rents will subsidize you!!  Yes it might take work, but it’s worth it when it’s paid off. Rent = income. (As rates hike, watch for opportunities when ARMs reset. Folks will get priced out of their own homes and won’t be able to refinance. Train wreck. Another is AIRBNB STR income properties…. If there is a deep recession and people stop traveling. I don’t think we get a deep one, maybe a shallow one). 
 

Another good inflation hedge is solid dividend payers (essential goods, energy, REITS).
 

So do your research and homework.  Ask questions. And be patient.

I never could understand crypto and what it actually did. I did play with BTC and ETH but sold last fall (lost $1k). Whew!!  Seeing what is happening to it now, I got lucky. Thank god for being around a while. In the end, making money and profits matter.

The Cheap money era is over for a long time.  I got skeptical when someone paid like $60k for an invisible sculpture and a 12 year old made over $1M selling her NFTs. 🤔🧐🫣🫢🤦🏽‍♂️  Those were top signals to my mind. Tulips in Holland (read about it - classic bubble mania). But good for those two. 

[coriolis888]

3 hours ago, BonVivant said:

In the end nothing is 100% safe. The closest is US Treasuries. The I-Bond is the highest yielding - very good now. You can buy $10K per year and get another $5K through tax refunds per year.  You can hold an I-Bond for 30 years!!! With inflation returning, the other treasuries might be good investments again but I’d wait until the rate hikes are done. 
 

Another safer play is to buy a multifamily (1-4 units) where you live in one unit and rent the others out. Bank will finance it like a primary and you get great tax benefits (ask a CPA).  Only take a 30 year fixed rate mortgage.  The rents will subsidize you!!  Yes it might take work, but it’s worth it when it’s paid off. Rent = income. (As rates hike, watch for opportunities when ARMs reset. Folks will get priced out of their own homes and won’t be able to refinance. Train wreck. Another is AIRBNB STR income properties…. If there is a deep recession and people stop traveling. I don’t think we get a deep one, maybe a shallow one). 
 

Another good inflation hedge is solid dividend payers (essential goods, energy, REITS).
 

So do your research and homework.  Ask questions. And be patient.

I never could understand crypto and what it actually did. I did play with BTC and ETH but sold last fall (lost $1k). Whew!!  Seeing what is happening to it now, I got lucky. Thank god for being around a while. In the end, making money and profits matter.

The Cheap money era is over for a long time.  I got skeptical when someone paid like $60k for an invisible sculpture and a 12 year old made over $1M selling her NFTs. 🤔🧐🫣🫢🤦🏽‍♂️  Those were top signals to my mind. Tulips in Holland (read about it - classic bubble mania). But good for those two. 

Very good analysis.  

[KeepItReal]

Markets are testing new lows for 2022.  Are you buying?  Do you consider the market to be cheap?  

[+ Vegas_Millennial]

6 hours ago, KeepItReal said:

Markets are testing new lows for 2022.  Are you buying?  Do you consider the market to be cheap?  

I am buying with every paycheck.  Because I don't plan on selling for another 20-40 years, then yes markets look cheap compared to where I expect them to be in 2040-2060.

So, I am thankful every week the market goes down, and I get to buy more on sale!

If my time horizon was to sell within the next 2 years, I wouldn't buy any more now.

[+ FrankR]

8 hours ago, KeepItReal said:

Markets are testing new lows for 2022.  Are you buying?  Do you consider the market to be cheap?  

The price can go down…doesn’t mean it is cheap!  I dont stop my 401k contributions, regardless of market gyrations. Do have some reserve cash I would like to invest, but waiting for a major bear market. 

 

In the meantime I tell my friends the same thing: given the current macro economic situation…there is no shame in holding a little more cash. 

[handiacefailure]

At least you have a pension which will help a lot.   Most people like me are trying to save everything for retirement.   If you also have retiree insurance you should be ok for retirement.

Hopefully you put the money into a roth instead of a traditional ira.

If you don't already have a trust set one up and put $10k in an Ibond under your name and $10K in the trust name (you don't need a separate fed id for the trust for that)   Secure and rate of return is amazing and if in a year rates go down you can always cash out for a three month penalty and still have a good return.   There's a thread on this board about them and Suze Orman did a couple podcast you should listen to on them.

Listen to some of Suze Ormans podcasts.

If you want to buy individual stocks diversify and dollar cost average and your age if they are dividend stocks reinvest the dividends.

By dollar cost averging I mean buy small amounts of individual stocks once a month instead of once.

 

 

[BuffaloKyle]

18 hours ago, FrankR said:

 I dont stop my 401k contributions, regardless of market gyrations. 

I was thinking of lowering my 401k contribution until the markets start to rebound but as of now I'm not losing any of my own money just a huge chunk of my employer's match so I'll just ride it out. 

[rojjodc]

15 minutes ago, BuffaloKyle said:

I was thinking of lowering my 401k contribution until the markets start to rebound but as of now I'm not losing any of my own money just a huge chunk of my employer's match so I'll just ride it out. 

No, maximize your 401k every year if you can.  If you have a choice of investments, consider a portion in a diversified international fund (maybe 20-30% or less if you want to tiptoe) which have done terribly but will rebound at some point in the future.

Different asset classes take turns as top performers as shown here  - you can do your own research for other similar charts:

(1) performance of asset classes over time - Bing images

 

[BonVivant]

On 9/24/2022 at 12:53 AM, Vegas_nw1982 said:

I am buying with every paycheck.  Because I don't plan on selling for another 20-40 years, then yes markets look cheap compared to where I expect them to be in 2040-2060.

So, I am thankful every week the market goes down, and I get to buy more on sale!

If my time horizon was to sell within the next 2 years, I wouldn't buy any more now.

Yes through my 401k - also a long term hold. 
 

It is said that wealth is made in bear markets like now. You cannot time the bottom. But you just buy a little every paycheck and hold. 

[jayjaycali]

Automatic withdrawals into a roboinvestor like Wealthfront.  Get the money invested before you spend it and it should roughly track market trends. Especially good to get in now, since the market is crashing.  

[+ Vegas_Millennial]

On 9/24/2022 at 6:16 PM, BuffaloKyle said:

I was thinking of lowering my 401k contribution until the markets start to rebound but as of now I'm not losing any of my own money just a huge chunk of my employer's match so I'll just ride it out. 

I never understood this rational.  Let's imagine using that logic for anything other than stocks:

----

Escorts prices are too low right now.  I'm going to wait until prices rise and then hire.

Housing is a buyers market right now.  I'm going to wait until it starts to become a seller's market and then buy.

Furniture is on sale right now.  I'm going to wait until the sale is over to go furnish my house.

----

The stock market is the only market where the general public runs away from the store when prices drop.

[Rod Hagen]

I HATE this stuff.  BORING.  But, whoever recommended The Elements of Investing.  Thank you, it's a great book.

[BuffaloKyle]

On 9/24/2022 at 9:16 PM, BuffaloKyle said:

I was thinking of lowering my 401k contribution until the markets start to rebound but as of now I'm not losing any of my own money just a huge chunk of my employer's match so I'll just ride it out. 

I just got my 3rd quarter 401k statement in the mail and it actually wasn't too bad! Still losing money of course but no where close to what I thought. 😁

 

On 9/24/2022 at 9:37 PM, rojjodc said:

No, maximize your 401k every year if you can.  If you have a choice of investments, consider a portion in a diversified international fund (maybe 20-30% or less if you want to tiptoe) which have done terribly but will rebound at some point in the future.

I'm pretty limited in what I can invest in. The company I work for recently switched to a new plan where the positive is instead of a straight match on what I put into it they contribute 2% more than what I put in. The negative I guess is you don't have much to choose from for what it goes into. I do know 90%  of it goes into stocks and 10% in bonds. So when the stock market does come back I'll be in good shape. I'm only 36 and already thinking I'll be working until 70. So I'm not sweating it at all at this point in my life.

[Guest]

On 9/24/2022 at 6:16 PM, BuffaloKyle said:

I was thinking of lowering my 401k contribution until the markets start to rebound but as of now I'm not losing any of my own money just a huge chunk of my employer's match so I'll just ride it out. 

No, no, no, no. That's the opposite of what you should do. You cannot time the market, but the worst thing you can do is to buy less when the market has a big drop. Do not put money into the stock market that you think you'll need over the 10 years, because rebounds can take that long. As long as you have a 10+ year window, just make the max 401k contribution each month. That way you buy more when prices are down. But above all, do not buy less in a bear market. Never sell in a bear market. 

Rule #1 of investing: diversify

Rule #2 of investing: increase risk as your time horizon increases, decrease risk as your time horizon shortens