Retirement plans.

[JerichoHill]

@@Let me clarify. I don't mean to put everything into owning homes.
--K

But, for the non-financially trained person, its a great initial investment because you get use out of it.
--Fair enough, I'll agree with you on that first sentence.

So, no, don't plan for retirement by buying 4 homes. But, a home, free and clear, is probably the best thing for the lay person to shoot for.
--Depends on the market and their mobility. If they move around alot, buying a home makes little sense (unless its an investment property). You basically need to be in a home for 3-5 years for you to be as well off as you would have been renting. Anything longer than that time frame and the homeowner is better off, and vice versa.

--Funny that you mention the buy 4 homes to retire on. That's actually part of my financial plan. We've got 3 so far =). Figure we buy a few more and keep saving in 401ks and IRAs and such, and by 50 we'll be retired and I'll be posting to CFC on a laptop somewhere on a yacht in the carribean.

 

[JerichoHill]

I follow my grandfather's system by having no private pension and instead buying stocks. I am one of Sweden's top stockmarket experts in my age group (15 years old) IMO a pension plan can't beat my 25% a year. Your money is also freer if you invest it yourself. Your house isn't an asset since it doesn't give you money and you need it to live (I don't think you can sell your house and be homeless) Recomended reading: Rich dad, poor dad by Robert Kiosakyi

Umm, you're 15 years old, how can you lay claim to being an expert? Not trying to offend, but I'm lost on that. Because there's not a whole lot of time there to judge how well you're performing, because I'm guessing you have a year or two at most, and I also wonder how you buy the stocks (through your father?)

 

[JerichoHill]

@@Lotus

OMG you're a day-trader?

That's a rough life.

 

[AL_DA_GREAT]

Umm, you're 15 years old, how can you lay claim to being an expert? Not trying to offend, but I'm lost on that. Because there's not a whole lot of time there to judge how well you're performing, because I'm guessing you have a year or two at most, and I also wonder how you buy the stocks (through your father?)

I did my first deal at 9. I have been trading independantly for 3.5 years. I have a stockbrocker. Same as grampa.

 

[JerichoHill]

Fair enough, but still, I'd be hesitant to call you an expert at 15 when you don't have adv. calculus down pat or modeling or anything else like that. While alot of good stock research can be done by reading articles and look for good management and other non-math intangiles, a good math basis is almost necessary, regardless of provided charts etc.

I mean, I've been investing in the market since I was 11, and I'm by no means would consider myself an expert. Lucky is what I would say.

 

[AL_DA_GREAT]

Fair enough, but still, I'd be hesitant to call you an expert at 15 when you don't have adv. calculus down pat or modeling or anything else like that. While alot of good stock research can be done by reading articles and look for good management and other non-math intangiles, a good math basis is almost necessary, regardless of provided charts etc.

I mean, I've been investing in the market since I was 11, and I'm by no means would consider myself an expert. Lucky is what I would say.

Ok that was a bit optimistic. I find mathemaical analysis of the stock market rarely works long term. although it does work on a day to day basis. How are you doing with Financial independents?

 

[amadeus]

OMG YES!

And if you bought 1000 bux of Enron then... you'd be ... a .... um ....

Out a thousand dollars.

Are you actually going to invest all of your money in only one stock?

Easy to cherry pick from the present and intellectually dishonest, as well.

Let's go to the instant replay!

And if you bought 1000 bux of Enron then... you'd be ... a .... um ....

 

[JerichoHill]

I find math gives a good base on which to then use the intangibles to see the full picture. Buffett does this...as do good poker players and good fantasy league players. Get the math down to instinct and then rely on other information.

I'm at a point now where I have no need to speculate with stocks, I'm just coasting and setting things up since (as you age) you naturally become more risk averse.

 

[El_Machinae]

Sock away everything you can into tax-free plans, and sock the rest away into your regular account. Even though the world might get worse, money is always good insulation.

I recommend income stocks, but I'm particular to them - I like to see my annual income grow, since I plan on it growing forever.

As for property ... your local realty environment + global warming should be factored in.

 

[Whomp]

A.) Show me a company that matches dollar for dollar ("100%") w/ the 401k. I know the NFL matches 2 for 1 (best around, that I know of), but realiistically we're talking about 5 or 6%. By IRS law, YOU can only contribute up to 15k a year, so we're not exactly talking about a 'pot of gold at the end of a rainbow', being gifted to you by your employer. Some may be higher than 5 or 6%, but the gov't gives 5% to it's spoiled-rotten federal employees, so let's be realistic here. Chump change.

Not chump change when other disposable dollars can be invested in a taxable account or in my case towards deferred comp.

Tax avoidance is a good thing when you're taxed at a 35% rate (~$5250 taxes avoided). Add the match (6% of comp) and in my case the max of $4000 match. So let’s look at the math. That’s 27% return on top of a share price that’s up 35% this year 19k * 35% = $25,650 on my $15k invested (78% this year without the tax benefit).
Not bad for a stock that’s appreciated from $4.56/share (when I started) to $85.87 yesterday (excluding dividends) of which I have a reasonable concentration in. Add to that the ancillary benefit of acquiring company stock (versus mutual funds). It's called "net unrealized appreciation" which offers a substantial added benefit to 401k's but I won’t get into that in detail here since this is a basic savings discussion.

B.) You cannot get an -input- tax benefit on BOTH the 401k and IRAs if you contribute to both. By default, my 401k contributions are tax deferred, thus whatever I put into an IRA is taxed up front.

I don't qualify for IRA's and Roths but you're wrong. A person whose maxed out a 401k can contribute to an IRA or Roth (without the deduction) if their income is under the income limit.

C.) 401k plans don't make as much sense now as they did a few years ago, before the tax law changes. The benefit has been reduced. If you still want to get the max matching -sure, why not- percentage, but beyond that you can easily achieve higher yields (with investment-friendly tax laws) by investing the money elsewhere.

In hindsight, how would you have suggested I return greater than 75% on my invested dollars in 2006? Oh and guarantee $4000 of it before I even start investing every year too, please.

D.) I'm giving bad advice? You're the one talking about taking loans from a retirement account. That NEVER makes sense. What do you think it's interest free, even for 'special circumstances'? I've never heard any advisor or financial expert say anything to the contrary - that is, it's NEVER ideal. Nothing to see here, but a bunch or red tape. This only applies as an option for someone, if they suddenly find themself in the poor house.

It's not a loan. It's a withdrawl when you acquire your first home. The money grows tax free while you accumulate enough for that first home purchase then a tax free withdrawl from a Roth for the down payment.

E.) Where can you invest 401k money? Gov't securities (YAWN), bonds, and perhaps various flavors of stock funds, say common stock (S&P 500), or a small-cap fund, international stocks... and that's typically about it - at best. INDEX FUNDS... might as well tie my money up into real estate. Granted I'm actively shifting stuff around, but come on... it's pretty LAME.

Most sophisticated 401k plans have a brokerage window. Look it up. In the meantime even mutual funds with a 20-50% headstart (matching/pretax $) before it's even invested is huge.

F.) Of course you can go wild day-trading the money in your IRA. It's an investing account like any general one. The reason I said 'conservative', is because the simple fact of the matter is, if you take some losses in the precious IRA, guess what - you can't readily reinforce it, and attack again. The IRA account is like a 'glass investment' - careful! Don't break it! It's very delicate. To me, it just seems less flexible, less liquid, etc. Best to just pick good funds, and let it ride. SLOWLY, over time. I.e.... big deal. But yeah - it's not unbridled, thus I don't feel comfortable messing with it much. "Better be careful with what picks I invest in... because if I get it wrong, the account takes a hit, and I can't get back to par until next year, when I can contribute!" -Psychologically, it's an investing account with it's hands tied, that's how I think of it. If you want to go hog-wild with your IRA, fine. For me, that's just a bit awkward. Why bother anyway, since it's so relatively small to my general investing account - less leverage. Thus, the IRA is a 'novelty item', for retirement. Sure, I pick good funds... and pick specialty funds based on what the market will be doing, but whatever. Overall, it's not exactly blowing my mind with excitement.

You are correct there's no tax loss benefit or leverage but who said it's the only investable funds?

G.) Early withdrawals... if you become disabled. Otherwise, you can wait 'til 59.5 like the rest of us. "Early retirement"... sure, but that doesn't mean you get some special dispensation to start making retirement account withdrawals. This is a pretty exotic idea... where are you getting this? I somehow think whatever it is - doesn't apply to me in any way. There may be 'highly special case' situations, but for normal people like me, no. Though... "I wish".

Wrong. Look it up. Systematic equal periodic payments (SEPP's) Penalty free and this assumes you don’t use the NUA benefit on top of that.

H.) Retirement accounts in general... even at max contributions (which I do - only for the fun of it, might as well, since I am a money-saving machine), these are nothing sexy. They give you a nice little 'novelty item' bonus, after you've busted your @ss working for 40-50 years, thus making most people feel they're "making a smart move".

So you are contributing. SEP?

Maybe I'm sounding too harsh here, hey, like I said, I have them. I use the tools available. But, I FIRMLY believe the money can be more effectively used elsewhere, to achieve higher yeilds (yes, even after taxes). That being the case, you have to ask, "what's the point".

Where? Trading? As you know very few people can trade sucessfully and you know this because that's what you do. Don't tell people on this board they can because we've both seen plenty of people commit financial suicide thinking they can trade.

Like the guy I know who quit his day job a few months ago and just received his first $100k maintainence call. Why? Because he doesn’t have the emotional makeup to trade. He believes he's fundamentally right on a long and has no sell discipline, he doesn'twalk away flat everyday and play for another day. So what's he doing now? He’s sleeping like a baby every night. Sleep for 3 hours wake up and cry, sleep for 3 hours wake up and take a dump.
You know and I know that trading takes a special person and until you get run over on a trade you haven’t traded.

C'mon now. Think outside the box. Me? My sheer hatred of working for a living - like some slave to a grindstone, for some petty $20-30 bucks an hour, as MY LIFE slowly goes by... that drove me to consider 'what else is there'.

These accounts just aren't sexy, man. See, putting 2k shares on a couple of oils Wed. morning @ 10:30 EST when they squeezed (based on missed expectations), and making a quick $500 in 8 minutes, and then shorting as the prices inevitably fell in line with the fundies (as reported), for a quick thou in about 3/4 hour subsequently.... that's the way to go. That 'floats my boat'... not sitting at some desk, wasting my time, waiting for some stranger to come up so I can say, "how may I help you, SIR?"... or, waiting for some type-A personality boss to come around, pestering me.

To each their own. I'm one of the most 'un-indoctrinate-able' people around. So, Mister Panda, that's my approach. I dont' call it 'bad advice', I just call it the road less traveled... because most people just stay on the one they see right in front of them, that they were pointed down, that everybody else is on. For someone that is such a stingy bastard, I am prepared to 'risk' 'funny money', because that's simply the name of the game. It IS a game, really. You have to realize that. Then you detach from the emotion that money inspires, and you can go in and play. And it's not that hard to win. Hundreds... thousands. I haven't got to the millions yet (still a rookie), but I 'll keep you posted.

Congrats. You're an entrepreneur.

Oh and I realize it’s a game....with the deck stacked in your favor if your savvy, disciplined and a prodigious saver.

Your approach is different because you require risk management, liquidity and leverage and retirement accounts don't have that but we're not talking about you. We're talking about every day people who can't do what you do (which I'd estimate 95% of the population can't successfully).

I wish you luck in your trading and the millions you’ll have one day. Let’s face it, trading is not for everyone. They haven't been steamrolled on a trade (as any good trader has) and don't have the emotional makeup to do it. Build the reputation and do what some of my Merc friends have done and start a hedge fund. With that said we agree that people should save and the tools they use will differ from person to person.

 

[.Shane.]

Are you actually going to invest all of your money in only one stock?

Are you being intentionally dense? Obviously, that's the point I'm trying to make. You can cherry pick good and bad examples.

Thanks for agreeing w/ me.

 

[Lotus49]

@@Lotus

OMG you're a day-trader?

That's a rough life.

It's a hobby that makes me money. Long-term, I intend it to lead me to financial independence. I've no idea what you mean about it being a 'rough life'. I'm an air traffic controller as well, which is something people say is 'stressful'.

I dunno. I guess things are - what you want them to be.

Personally, I look at it, that if your'e smart enough to get by on your own, one way or another, if it really came down to it... why should you worry - at any given time, on any given day.

Reading your post, it only reminds me of how many old wives' tales there are out there, and how such a vastly huge percentage of the population subscribe to them. I've found, that nearly every SINGLE thing in life is over-rated, and if you actually go for something, it's amazing how easy it really is, if you apply yourself. MAYBE my aptitude is slightly higher than average, but not by any huge amount, I wouldn't say.

 

[Lotus49]

Not chump change when other disposable dollars can be invested in a taxable account or in my case towards deferred comp.

Free money is always great - thus there's no reason not to take it. My 401k matches up to 5%. So, the money going in is tax-deferred, and even if I only invest in gov't securities, I basically still get a 100% return (w/interest) just because of the matching - going just with 5% contributions. That's not a 'bad deal'. For most people, it's a great deal. But my point still stands - that if your real goal in life is to retire COMFORTABLY, as in, multi-millionaire status, then these retirement accounts are not gonna do it for ya. That's why I think of them as novelty items, for retirement. When I come of age, ready to make withdrawals, my reaction will be - "Oh, great... how cute is this." I'm planning on retirement accounts total (SS, IRA, 401k) to be at MOST 2 to 3% of my liquid net worth, AND income, when I'm withdrawing from them. And if it's 2 or 3%, then I've basically failed. Not gonna happen.

But more to the point, the money that goes into these accounts is more conservative in terms of POSSIBLE return, by quite a long way (OK, an IRA you can go hog-wild with, like we said... but why do that with an IRA?), so with SS you're throwing money down the DRAIN -not EVEN putting it under mattress- and 401k's you're investing in index funds... which are great when the markets are on the rise, and then if you're smart you call the top right, and then throw it all into gov't securities and make... maybe 5%. ooh " " Meanwhile, I get some petty 200-somethin' bucks a month from my employer. Gee. Thanks. I'm set now. Boy, I'm ready to go build my own personal Grace Land. Maybe buy one of those artificial islands from 'The World' formations, in Dubai... for a winter home.

I could easily make better total returns than that, just picking mutual funds, man. Easily. So, sure - I put some petty BS contribution into the retirement accounts, just for the fun of it, but the real dough is coming from my active investing/trading, in other general investment accounts.


Tax avoidance is a good thing when you're taxed at a 35% rate (~$5250 taxes avoided). Add the match (6% of comp) and in my case the max of $4000 match. So let’s look at the math. That’s 27% return on top of a share price that’s up 35% this year 19k * 35% = $25,650 on my $15k invested (78% this year without the tax benefit).
Not bad for a stock that’s appreciated from $4.56/share (when I started) to $85.87 yesterday (excluding dividends) of which I have a reasonable concentration in. Add to that the ancillary benefit of acquiring company stock (versus mutual funds). It's called "net unrealized appreciation" which offers a substantial added benefit to 401k's but I won’t get into that in detail here since this is a basic savings discussion.

Not a terrible haul, I admit. But, not everyone has a 401k that lets them pick individual stocks. Plus, putting all this money into one stock, and hoping it goes from 5 bucks, to 86 (over what time frame?) is not my style.

So, you're up 78% this year, with this cash in question - 15 G's (oooohhh - that's still not much power, man.... you've gotta get more). I can list quite a few mutual funds, if you like, (that I'M invested in) that are up about the same amount (well, not if you just buy and hold - not this year anyway - more on this in a bit). And no, I'm not going to be taxed 35%. Inside of 52 weeks, you don't have to SELL, but you can trade/transfer/swap whatever they call it, into another fund. No tax implications for selling short-term. But yeah, these are mutual funds. I get double the leverage... because let's say -for example- you've got a hundred K in an account, and you invest 80% of that (80 thou) into mutual funds... good ones, specialty funds, that invest in a particular sector that is poised to rally. Plus you're flexible, shifting the money to different funds as market indicators move. Then, with 20K as ''descretionary funds" (basically just there to cover potential losses), you still have the whole hundred grand acting as leverage, because you're trading on margin. Thus, double leverage/investment potential, for every dollar.

Yeah, that's right - I trade on margin. For a few minutes at a time. Never overnight. This gives me the ability to execute my philosophy, of concentrating LARGE amounts of money, at one (maybe two or three) targets at a time, for just a few minutes (couple of hours maybe, depends), when the time is right. When is the time right? That's the art and science that is a whole 'nother discussion. But, it's not that hard - not rocket science, by any means.

Suddenly, I'm up substantially higher than could be remotely possible with any cute, precious, conservative retirement account. And, what is your stock(s) in question going to next? Do you always call it right, with your medium/long-term investment plays? What about a bear market? Bottom line is, with mine, I'll always have total control over how much money I make, and when/how I execute. Plus, frankly, it's fun. Not 'a hard, stressful life'.

I don't qualify for IRA's and Roths but you're wrong. A person whose maxed out a 401k can contribute to an IRA or Roth (without the deduction) if their income is under the income limit.

I have both, and contribute the max to both. You'd better believe I check with the IRS regs to see if I could write off my IRA contribution, but no - I couldn't. Btw, the whole point of a ROTH IRA is that you DO pay taxes up front, but not upon withdrawal. Traditional IRA - it's the reverse. When deciding which is best, you've got to decide what you're income will be at 60+ VS. now. Me, I plan on raking in the dough when I'm a stinky old geaser, so I'd rather take the tax break then.

BUT, another thing... "I" can't have both 401k and IRA contributions tax-deferred. I checked that. If the 401k is not taxed, then the IRA must be. Thus, it would have been STUPID for me to get a traditional IRA, right? (Remember the whole point of the traditional IRA - no taxes up front) Now, what you're saying about income brackets doesn't apply to me. That must require a pretty darn low amount of income... because I'm not exactly Donald Trump over here, in terms of income - I'm above GDP per capita, but nowhere near double (yet... ). So, that which you mention doesn't apply to me (ME... a typical healthy, lower-middle-class working American).

In hindsight, how would you have suggested I return greater than 75% on my invested dollars in 2006? Oh and guarantee $4000 of it before I even start investing every year too, please.

Be more actively involved with your money. It could easily have been done - even just sticking with mutual funds. Heck, I actually did it... I rode emerging markets and materials right up until they broke trend back in May (40-50% haul with several funds, from Jan. - I can give names if you like), then switched/swapped into some 'bear funds' for a couple of months (they sell short), called the bottom a little too early, but nevertheless got back into financials, tech, healthcare, plus emerging markets & materials again - to catch the rally past several months. I didn't even need to trade stocks myself, but why not take several thousand from time to time, on some ridiculously easy intra-day trade setups? Sometimes you see something obvious, and might as well make few hundred, at least.

But, the ability to do this for a living, is my goal. Not quite there yet, but my sheer determination (and ability to analyze & go vastly in-depth into incredibly boring stuff) will get me there. And I''m nothin' special. Just some average white guy, really. So, if I can do it...


It's not a loan. It's a withdrawl when you acquire your first home. The money grows tax free while you accumulate enough for that first home purchase then a tax free withdrawl from a Roth for the down payment.
Most sophisticated 401k plans have a brokerage window. Look it up. In the meantime even mutual funds with a 20-50% headstart (matching/pretax $) before it's even invested is huge.

Hmm, possibly - I know there's exceptions out there. But again, I know none of this applies to ME. You must work at "We love our employees, Inc." or something. Even if I had a medical emergency, I don't get special dispensation. Sure, I could take a loan from my 401k, to buy a car, a house, whatever. But it's not 'penalty free' in my case. There's interest rates. Thus, it's a LOAN. Why would I put the money in there, just to take it out as a loan? If I'm so poor that I can't put a good down-payment on a house, without tapping into my retirement accounts, then maybe this purchase is a little... unwise???


You are correct there's no tax loss benefit or leverage but who said it's the only investable funds?

You work for the company where dreams are made. I work for the gov't. Funny, I thought I had a decent deal going. But yeah, I can only invest in 5 funds (gov't securities / bonds / common stock (S&P 500) / small cap (RUS 2K) / International). I feel like such a hated employee now.

But yeah, once again, doors are open to you, that aren't to me. Thus, I'm making my own d@mned doors.


Wrong. Look it up. Systematic equal periodic payments (SEPP's) Penalty free and this assumes you don’t use the NUA benefit on top of that.
So you are contributing. SEP?


As I said, I'm contributing. But, ONCE AGAIN, you are getting a benefit, that is not available to me. There is no way I can get my hands on the money going into my IRA and 401k -with all intended benefits intact- any sooner than I can convince the gov't to start mailing me SS checks, just because "I feel like retiring".

Man, you must really like where you work. Though, I do know of a sector/career path in the gov't that could rival this. I'm trying to get into it... early retirement, etc. But, for the rest of the 99% of us...


Where? Trading? As you know very few people can trade sucessfully and you know this because that's what you do. Don't tell people on this board they can because we've both seen plenty of people commit financial suicide thinking they can trade.

Yeah, well, those people weren't thinking with their brains. How exactly, can you lose all your money? Going with this simple premise: set stop-losses @ 7%, take profits @ 21%, you only have to be right 1/4 of the time, to prevent loss of capital. -That's the first thing I ever read, when I picked up my first book on investing. I think it was actually in the 'Foreward' chapter.

Now, if you just log-in and start pushing buttons randomly, based on HOPE, and EMOTIONS, yeah - you'll lose hundreds of dollars in a couple of minutes. I know - I've done it, back when I was getting started about 2 years ago (I've said I'm a rookie).
If you just try to mindlessly ride momentum trains, follow the herd, blah blah, and put no concerted thought or logic into what you're doing, then yeah- I would recommend you consult a financial advisor, and go back to working for a living.

Like the guy I know who quit his day job a few months ago and just received his first $100k maintainence call. Why? Because he doesn’t have the emotional makeup to trade. He believes he's fundamentally right on a long and has no sell discipline, he doesn'twalk away flat everyday and play for another day. So what's he doing now? He’s sleeping like a baby every night. Sleep for 3 hours wake up and cry, sleep for 3 hours wake up and take a dump.

Maint(e)nance call? I assume you mean margin call... hmmm, well, everybody's different. Money inspires passion. When it's YOUR money on the line, some people watch the level II data flash, and suddenly they just get all squirrely inside, and can't make sound decisions. The adrenaline takes over, I guess.

See, I have an advantage... but it's a waste of time to try to explain to someone how my head works. That's beside the point. The point is, the average person CAN do this. Hey, I haven't quit my job. I'm not ready yet. And if need be (once/if I do), I can come back.

This whole "you're gonna lose a hundred thousand dollars!!" Reminds me of that movie.... "you're gonna shoot yer eye out!"

COME ON, man.


You know and I know that trading takes a special person and until you get run over on a trade you haven’t traded.

If you can't take a loss of two thousand dollars in 15 minutes, and then move right on from it (something I've done, many times), then you're right... you'd best keep working for a living. Sitting at a desk. "May I help you sir?" "OK boss, whatever you say!" "doo-bee-DOO-bee-DOO!!" *thumps chest a la Jerry's kids*


Congrats. You're an entrepreneur.


Runs in the family. You only live once, man. Take some (calculated, intelligent, informed) risks. If your brain just doesn't have have it takes, no matter how hard you try... well, survival of the fittest.


Oh and I realize it’s a game....with the deck stacked in your favor if your savvy, disciplined and a prodigious saver.

Me being a massively thifty saver is the backbone for all of this. I am a saver, before anything else - financially speaking. It's the 'crux' (probably misused, and mis-spelled) of what leads to a self-made millionaire.


Your approach is different because you require risk management, liquidity and leverage and retirement accounts don't have that but we're not talking about you. We're talking about every day people who can't do what you do (which I'd estimate 95% of the population can't successfully).


None of that is hard!! All you guys are STRAINGING your brains (not to mention wallets) going to college, so you can get a job, and work for decades. What's the product of that... money. Yeah, you get the experience, the pals, the friends, but the whole point is to earn money. So, WHY would you not make the most of what you've labored to produce? "OK, I just spent a whole year making 35 G's... now I'm just gonna blow most of that money, and what little I do save, well, I dunno - I'll just throw it somewhere, and check on it in a about a decade. Yeah."

Bottom line with me - is I want to be someone that doesn't ever have to worry about money. Ever. The irony is, that in order to achieve that, I have to focus, and concentrate on money, as hard and in-depth as possible. Basically, if you want to win, and prosper, you got to play the game. Thus, it behooves you to learn the rules of the game, and try to find the line of least resistance. That's my best talent, actually - finding the line of least resistance. I'm lazy!! Lazy, but intuitive.

Look at it this way, every time you pay a bill, buy a product, move money from a savings account to a checking account - or whatever, you are managing your money. That's your money - the green stuff, the electronic numbers that determine what you can and can't do in your life. So, if you're not 'scared' to manage your check book, use online banking to pay bills, etc... then what's the 'wildly exotic' point of view regarding equity trades? It's not hard. Losses can be easily controlled (I never take much in the way of losses anymore - that was just when I got started, and was tading like an idiot... still made a total APY profit even then, though - barely). You JUST have to be willing to put it on the line... just a little bit.

Most people would rather not risk. Instead, work for a living, until they croak. My sheer hatred of feeling like I'm some little cog in a machine, mindlessly working, surrounded by numbskulls - is what's driven me to realize that you only live once, so for crying out loud - take some risk. And what-da-ya know... once you adjust psychologically and take a logical approach, it's all under control, in hand.


I wish you luck in your trading and the millions you’ll have one day. Let’s face it, trading is not for everyone. They haven't been steamrolled on a trade (as any good trader has) and don't have the emotional makeup to do it. Build the reputation and do what some of my Merc friends have done and start a hedge fund. With that said we agree that people should save and the tools they use will differ from person to person.

I have no aspirations of glory, popularity, fame, or even riches. I just want to be the master of my own destiny.

I figure a few mil, will do the job though.

It takes money to make money... and using leverage, it's a good hill to climb, but getting to the point where I'm in the millions is in sight. A ways off, but in sight. Once I get there... I'm set. My life is MINE.

The bold is my replies, obviously. That saved a whole 45 seconds of messing with quote tags!

P.S. I'll probably eventually change my view on trading w/ IRA money. I'm still a rookie. I'm waiting until I'm relatively an expert, before I mess with it. Probably will take some time...

Meantime, my stinkin' little scapl trades, swing trades, playing the gaps, reading the TA (technical analysis) for when to make intra-days moves - is putting all this retirement accout stuff to SHAME. That was my only point, here.

That point being - that if you jsut do what everybody else is doing, you'll wind up in the same boat as them. I look at this whole big system like 'The Matrix'... where everyone's just 'doing their thing'... not breaking out, and exploring their potential. Nobody's using their brains. I don't get it.

 

[JerichoHill]

@@Lotus49
--How was my post an old-wives tale? I naturally assumed that day-trading is stressful, which it is, as according to a slew of psychology journals, and I believe there's even a statistically signficant higher rate of health issues with day traders (as compared to other day traders, as I recall)

Does not mean that there are not exceptions, just a general rule of thumb.

 

[Lotus49]

@@Lotus49
--How was my post an old-wives tale? I naturally assumed that day-trading is stressful, which it is, as according to a slew of psychology journals, and I believe there's even a statistically signficant higher rate of health issues with day traders (as compared to other day traders, as I recall)

Does not mean that there are not exceptions, just a general rule of thumb.

Common belief: Air Traffic Control is a stressful job.

Reality of the matter / point of view from an insider: No it isn't. If you see you have two planes coming together, that are going to crash and blow up into a spectacular ball of fire if you don't step in and say something... well, key up and say something! Just watch what you're doing. No big deal. No reason to panic... it's all routine. Planes land... planes take off. Blah.

When I first started - heck yeah - it was nerve-wracking. But, once you get some skill, experience, aptitude, and confidence, meh... just another day at the job.

Same for traders. There sure can be some emotions.... some excitement, some disappointment, etc. But I wouldn't do it if it were 'stressful'.

It's a lot like playing a computer game. Only instead of beating the Greek army, and taking some of their cities... you made 300 bucks.

 

[Whomp]

We're all good Lotus and you're rookie of the year in my eyes.
I have a very sweet gig. From my perspective, I don't work and every day is a new challenge.

You're supplementing your income through trading and that's great but you're singing to the choir on that one. I've been a prodigious investor (both on the taxable and retirement side) and have seen a lot over the last 20 years of doing it. I could retire now but my lifestyle would not be what I want.
I feel I'll need ~$5 million to maintain my lifestyle so I use every advantage I have. I use 3 buckets for my money. 1/3 goes towards my dreams, 1/3 goes towards aggressive allocations and 1/3 goes towards absolute return (mostly non correlated asset classes to stocks and bonds). Indexes are not my gig.

As far as the guy who got a maintainence call (when you drop below 30% cash available) it's worse than a margin call. It's the next step where you the fed calls and wants the money now. There's no waiting for settlement dates.

He's a lousy trader but thought it was easy and he refuses to admit he's wrong by setting stops, use stochastics or bollinger bands etc.
IE He's been hanging onto a long in FTO from 38 to 24 and back to 30.
In the process he got run over by a eighteen wheeler and a maintainence call. Hence, he sleeps like a baby.

Back to the orignal OP Red Stranger (very young) is asking whether he should invest. You may say he should trade his way to extra savings. I'd say start with the Roth if it's available and he qualifies.

 

[Lotus49]

I''ve only ridden one single stock down - it was the first stock I ever bought, back in fall of '04; I bought 100 shares of XMSR, and didn't finally sell it until the teens. Overall, not much in the grand scheme of my net worth, but I guess it was a lesson I had to learn the hard way... ONCE. I'll never take that kind of loss again... 'hoping' it's going to come back to a level where I'd 'like' to sell it. So, I finally set a stop loss (better late than never), it went through it, shares automatically sold, and I've moved on.

First year, my dad (a CPA) helped me with this new part of doing my taxes. Little did I realize that trading literally hundreds of times was going to make doing taxes myself - a pain in the butt. But yeah, after it was all said and done, I made 200 bucks!! -my first year. I got it right way more than I got it wrong. Problem was, when I got it wrong, I didn't get out when I should have. I lost 2k in BOOM, in a single day. Plus, scalp trading GOOG (w/ several hundred shares) can sometimes go against you, if you get over-confident.

That's what happened... I got over-confident. At first, the stock market was this fascinating new thing, I got up every morning real early, and spent hours getting ready, preparing hit lists, studying everything. I was a novice, but, I had lots of enthusiasm and rigor. After a bunch of winnings, I took for granted how 'easy' it could be, and basically started gambling, thinking I was just so good at reading the TA in real time, that I could just make a living concentrating hordes of money in one stock, at any given time for a scalp trade. Well, I quickly found out, it wasn't that 'easy'.

So, took several months off, and started over, this time coming back wiser, and more conservative (only pulling the trigger when I'm really confident, and NOT holding on... once the trade starts to go against me).

But yeah, my dad was impressed - that with all that crazy trading as a total rookie in late '04, I was actually able to turn a profit. But, I look at some of the things I did back then... and shake my head. I had no discipline, and really didn't know what I was doing. But that's the name of the game... apply what you've learned, and stay in the game.

In very specific parts of the market, there's plenty of trends you can bank on, again and again. One thing I've learned, is that if you can just learn what trends everyone ELSE is watching for... you can take advantage of that, once you see certain things trigger, that signal something a lot of people are watching for... it's hard to miss (for at least some limited time, for some % move), and also the exit signs are easy to read -what everyone else is watching for- so you can get out pretty near the top of these little moves. Of course, again the idea here is for concentrate large sums of capital on these moves. XLE climbs a mere 50 cents, you've -relatively conservatively- put down 500 shares... that's $162, AFTER taxes. You've just made more in 5-10 minutes than most people make in a day's work. How did you 'know' XLE was going to climb? That gets into technical crap... but basically it's not so hard, if you just watch the market over time, and study it.

That's another thing I've done. I've got a pretty good trading platform... some days I'll just go in and watch the market nearly all day, never trading a share... just watching everything in real time, going in an exploring everything, like it was an addictive computer game. Difference here is, money is actually up for grabs - so you should be even more 'interested'. "What would I do in 'this' situation"? There's a hammer, go in now, long @ $44.60. Keep an eye on it. Trailing stops set. Give it a chance.... not yet.... stick with it. Ha... there we go. Just like I thought. Stochastics stalling... MACD histogram trending down, band is tightening, strength has peaked, sell now, and standby to short...

I get it right far more than I get it wrong (and when I do get it wrong, I see it almost immediately). Anyway, I think it's fun. The main thing you have to do, is think just as clearly and calmly when your money is actually on the line, as you do when you're just 'watching' the market - 'pretending' to play, while honing your skills. The only way to make this work, is to actually make money by trading the real thing... so you have no choice but to get comfortable with that, if you're to have success.

Anyway, that's my approach to retirement. I have more faith in my abilities & intelligence, than I do other people, career paths, jobs, bosses, etc.

And I've been playing complex/in-depth/attention-to-detail/micro-management strategy & economic management games for virtually my whole life (go check out Victoria, by Paradox - nice and complicated, and great for economic management). So, like many (here perhaps), I'm nice and conditioned for this.

Just think, instead of you guys micro-managing each city, every turn, squeezing everything possible out of your economy, production, diplomacy, etc. in Civ... you could be using those very similar skills to make money. Granted, the graphics aren't as good, but hey...

 

[JerichoHill]

The problem with that is for guys like us who do trade, we enjoy it, but others dont, which are why there are other prodcuts available for them

 

[Whomp]

Lotus pm me if you're interested in doing this on a full time basis and would be willing to move to Chicago. I have clients that have a very successful futures trading firm. They are very young, growing rapidly, trading 24/6 on a ridiculous technology platform. They generally hire engineers without egos out of college but I'm sure they'd be willing to talk to you.

 

[Birdjaguar]

@Lotus49: It is far simpler to pick the major market swings. Buying the S&P or Total market in March 2003 and selling at the soon-to-be-forthcoming top will net a larger gain without any cost or risk of your frantic day-to-day scramble.