If you had $10,000 laying around...

[particlewave]

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

[fatmike]

Originally Posted by particlewave

I'm 34, my child will be starting college in 5 years, and I am currently in college with 2-3 years to go. Tuition eats up most of my pay, but I've managed to squirrel away a little bit again and am tired of it sitting when I know that there are better things that I could do with it.

All good advice and most are ideas that I've mulled over. The best advice that I saw was speaking with a financial advisor. Thanks for the opinions!





It was just a hypothetical.......And I did that already
I'm thinking of selling her, though...more to invest.

This is actually a pretty easy question. In order:

1 - Have 6 months of living expenses in a savings account. If you don't have this already, do it and maintain it.
2 - Pay off any high interest debt (credit card, car loan, etc.).
3 - Fund a Roth IRA annually. Invest in a mix of bonds + stocks. I recommend the Vanguard Total Stock Market fund and the Vanguard total Bond market fund. Maybe 35% bonds/65% stocks. Keep the funds forever, add every year and don't look at them more than once a year.

Only after you've done all three of those things should you even contemplate some of the other suggestions on this thread.


/

[Johnny Danger]

This is what I would do !


Diabolik - the 'money orgy' scene - YouTube

[WhipE350]

Originally Posted by Johnny Danger

This is what I would do !


Diabolik - the 'money orgy' scene - YouTube

Yup that about sums it up for me! Easy choice.

[Perfectlap]

If you hire any manner of 'financial advice" person make sure theyre a fiduciary. Don't buy any explanations for why they aren't. This was a lesson my folks learned the hard way at an age where there are no mulligans.

Don't buy mutual funds. Biggest scam ever. The number of funds that beat the S&P 500 over 10 years is a shocking joke. Their fees are not properly reported, they calculate only the front end and that's based on your total contribution not on the actual part of your return that stays in their pockets. And they don't disclose the back end fees like trading fees and spreads on a per fund basis. Combine the two (fixed and variable fees) and in the long term its no different than carrying a high interest credit on high debt...you are getting robbed blind. And the pee poor performance applies to virtually ever managed asset class hedge funds in particular. The author Michael Lewis said it best in one of his early books, Liars Poker I believe, these guys are nothing more than well paid toll takers. Bottom line, if you are investing a significant portion of your available capital into the stock market, invest in index funds, ETFs and run from active management fees as fast as you can.
Those guys were saying for years that their plans reduced risk to justify their hugely inflated fees and salaries. Then came the mother of all tests of this justification in 2008 and they all failed miserably. The number of funds that preserved their investors' capital and didn't bleed half of it or more, nearly overnight, could fit in a thimble. They were forced to ride out the down turn and pray for a reversal just like every index fund but still charged you their inflated fees. And how much are these fees costing you over the course of 30 years since your initial investment? Try as much as 66% according to John Bogle, the longer they manage this money the less you'll see. Its the big dirty secret of most 401k plans that try to steer you into mutual funds instead of index funds. I called the investment firm handling my 401k funds and was not surprisingly told that no matter what I chose I would still have to keep half of my contributions stuck in their pre-selected group of "diversified" mutual funds sucking away a third or more of each years return. Returns that the s&p handily beat for every single one of those over-priced funds.

As for picking individual stocks, that's also a very tough game to win. The S&P is going to beat 99.6% of those who try. Fine for a few shares but that's really just a learning exercise and not an overall strategy for the bulk of your finite capital. If the $10k you are putting into a company stock is anything approaching double digits of your total investments you are headed for a costly lesson.

[TeamOxford]

Originally Posted by Perfectlap

Its the big dirty secret of most 401k plans that try to steer you into mutual funds instead of index funds.

An index fund IS a mutual fund, just one that is not actively managed, and carries a lower expense ratio.

If the OP is seriously considering investing $10k, I would suggest that he do nothing (other than putting it in a savings account) for at least six months, while he does his own research on the subject. It's not rocket science, trust me.

It was originally stated that the money was"$10,000 that you don't need(assume that all bills, etc. are paid" and that the OP was "thinking of investing, but haven't the first clue where to start."

I'd make sure that some of the tenets laid out by fatmike had been fulfilled first:

1 - Have 6 months of living expenses in a savings account. If you don't have this already, do it and maintain it.
2 - Pay off any high interest debt (credit card, car loan, etc.).

But if you're really looking for more of a kick than watching your money grow, I'd do what Porsche Chick suggests:

"spend a month in France, renting an apartment, flying cheap, and eating cheap."

OR............for just $10,000, you could subscribe to the TeamOxford Postcard Club, which guarantees you a brand new postcard EVERY WEEK for a full year, from some new exotic locale!

Just PM me, dude!

TO

[01SBox]

Very good advice.

Originally Posted by TeamOxford

An index fund IS a mutual fund, just one that is not actively managed, and carries a lower expense ratio.

If the OP is seriously considering investing $10k, I would suggest that he do nothing (other then putting it in a savings account) for at least six months, while he does his own research on the subject. It's not rocket science, trust me.

It was originally stated that the money was"$10,000 that you don't need(assume that all bills, etc. are paid" and that the OP was "thinking of investing, but haven't the first clue where to start."

I'd make sure that some of the tenets laid out by fatmike had been fulfilled first:

1 - Have 6 months of living expenses in a savings account. If you don't have this already, do it and maintain it.
2 - Pay off any high interest debt (credit card, car loan, etc.).

But if you're really looking for more of a kick than watching your money grow, I'd do what Porsche Chick suggests:

"spend a month in France, renting an apartment, flying cheap, and eating cheap."

OR............for just $10,000, you could suscribe to the TeamOxford Postcard Club, which guarantees you a brand new postcard EVERY WEEK for a full year, from some new exotic locale!

Just PM me, dude!

TO

[Porsche Chick]

OR............for just $10,000, you could suscribe to the TeamOxford Postcard Club, which guarantees you a brand new postcard EVERY WEEK for a full year, from some new exotic locale!

Just PM me, dude!

TO[/QUOTE]

For $10K, I will send you a postcard Twice a week!

[Perfectlap]

Originally Posted by TeamOxford

An index fund IS a mutual fund, just one that is not actively managed, and carries a lower expense ratio.

yes I should not have have used 'mutual fund' to describe all actively managed funds in contrasting them to passively managed index funds. My mistake, but expense ratios are most certainly not the only difference between passive and active management of your mutual funds. Expense ratios which the actively managed mutual fund industry loves to tout, are only half the story: Expense ratios do NOT include transaction costs and hidden fees (the point of my previous post) and these are nearly as much as the actively manged fund's already over-inflated expense ratio. costs on top of cost. These too are almost always higher than passive index funds.

The last think tank (Demos-Hiltonsmith Report) that took a hard look at what this 'double charge' represents to a two-earner household where each is making the average U.S. salary estimated:

$50K invested returning 7.11% (mutual fund average before inflation) = +$3,555
Expense ratio 1.23% = -$615
(Now the part they leave out of the expense ratio)
transaction fees 1.23% = -$615

true fees: ( $615+$615)/$3,355 = 34.6%
Now toss in inflation to whittle down the 7% return to 5% and the 'true fees' are nearing 50%........

Cost to that average income household? nearly $155K in lost savings. If your're in the higher income household bracket? Nearly $280K. Meh...who needs $280k
Already retired and you left the $357,872 in the 401k put? First year of retirement you'd be out $5,723 in fixed expense ratio fees and variable costs. That's a nice trip to Hawaii you're not taking for nothing in return.

expense ratios are not the only difference folks. Take a hard look at your actively managed mutual fund investments. And don't be surprised if you don't see these transaction costs and hidden fees in your prospectus. They leave those for the SAIs than no one ever reads and are opaquely reported. Largely why the lawyers have gotten nowhere in fighting these 'excessive fees' in many legal cases, they tell you up front that you're being taken to the cleaners but most think the expense ratio is the only consideration.

and as far as the actual performance part of the equation, consider this scathing analysis of mutual fund 'managers'
S&P 500 index funds beat 99.6% of fund managers over 10 years-- Number of fund managers that beat the S&P over the past 5 years: 5

[BIGJake111]

put it with my boxster to trade for a clean 986 S