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Thread: What should I do with my money?

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    Default What should I do with my money?

    I've been working harder and smarter than ever before in my life, an dont plan on stopping anytime soon. I've saved alot of money so my question is what should I do with it? Should I get a financial advisor to guide me in the right direction? Should I just continue to add to my nest egg? Should I look into saving a portion and invest the rest...??? I have no idea what to do I've never had this much money before.

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    Banned Melonie's Avatar
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    Default Re: What should I do with my money?

    General order of priorities ...

    - pay your taxes

    - save up an 'emergency fund' equal to 6 months worth of living expenses in an 'instantly accessible' bank account

    - pay off outstanding loans

    - start making 'core' investments which involve relatively low 'risk' of future loss

    - start making 'speculative' investments which involve a higher potential return as a trade-off versus higher 'risk' of future loss

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    Default Re: What should I do with my money?

    first three are done. next two not a clue...

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    Default Re: What should I do with my money?

    ... well, 'core' investments are usually longer term investments involving comparatively low risk of potential capital losses in exchange for comparatively little rate of return. If you live in a high tax rate state, one such investment might be tax free Municipal bonds issued by that state. Other 'core' investments might include stock shares of dividend paying public utility companies which are essentially 'guaranteed' a profit via gov' rate setting. Additionally, there are solid but 'boring' large cap stocks like MO or XOM. And of course there is a wide array of 'core investment' mutual funds available that are comprised of some / all of the above. And certain sources would add physical gold to the list of 'core' investments as well. Also, some would consider bank CD's ( especially non US dollar denominated bank CD's such as ) to qualify as 'core' investments.

    is the first of several pages discussing the 'core investment' strategy.

    While investment advisors argue the point, typically 'core' investments make up 50% of a diversified investment portfolio. The idea of course is to use 'core' investments to try and provide a comparatively low ( higher than bank savings accounts and consumer CD's anyhow, but much lower than 'speculative' investments ) reliable rate of return in exchange for a comparatively low risk of capital loss.

    In the way of personal opinion, I am not a huge fan of mutual funds ( versus direct purchase of stocks or bonds ) for a couple of reasons. First is that mutual funds can only be traded at the end of the day ... which represents additional downside risk if the economic 'sky should fall'. Second is that, one way or another, mutual funds 'skim' profits from the underlying stock and/or bond shares in order to pay the 'operating expenses' of the fund i.e. multimillion dollar salary for the fund manager, more millions for accountants, yet more millions for attorneys etc.

    ~
    Last edited by Melonie; 05-31-2011 at 01:48 PM.

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    Default Re: What should I do with my money?

    Quote Originally Posted by Melonie View Post
    In the way of personal opinion, I am not a huge fan of mutual funds ( versus direct purchase of stocks or bonds ) for a couple of reasons. First is that mutual funds can only be traded at the end of the day ... which represents additional downside risk if the economic 'sky should fall'. Second is that, one way or another, mutual funds 'skim' profits from the underlying stock and/or bond shares in order to pay the 'operating expenses' of the fund i.e. multimillion dollar salary for the fund manager, more millions for accountants, yet more millions for attorneys etc.
    Melonie, overall an excellent post. The only place where our views diverge is on the topic of mutual funds. Most beginning investors simply do not have enough money to create a properly diversified portfolio. Mutual funds offer a number of distinct advantages, including: (1) the ability to access various sectors and asset classes with a small amount of money to invest; (2) professional management of that money, as opposed to rumor chasing and the skittish "buy high, sell low" approaches common among retail investors; and (3) ways to continue to add to investments in a disciplined way via automatic investment plans.

    The most reputable fund companies, including Vanguard and Fidelity, also do a very good job of offering a large lineup of funds with no sales charges and low annual expense ratios.

    Now I'm not saying that a non-professional cannot build a solid investment portfolio, but it takes a fairly large chunk of money, as well as a great deal of time, effort and learning to conduct ongoing investment and overall market research. IMHO most people are simply lacking in the time or resources necessary to do a proper job of it.

    Anyway, just my
    Last edited by rickdugan; 05-31-2011 at 06:44 PM.

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    Default Re: What should I do with my money?

    I agree with your basic point that, in exchange for their 'cut', mutual funds do allow a comparatively low 'buy in' cost as compared to buying 100 share blocks of individual company stocks, or buying $ 5000 fractional bonds, or coughing up the $10,000 minimum for a foreign currency CD. The 'minimum' buy-ins required is indeed an important consideration for investors on a budget. However, I would also point out that there are now tons of ETF's and ETN's available that offer similarly low buy-ins, offer similarly wide exposure to a broad array of underlying assets, offer some level of professional fund management, but do NOT suffer from the two drawbacks to all mutual funds I posted earlier.

    While not necessarily recommending any of the ETF's referenced at the link, I provide it as an example of the amount of 'diversity' it's now possible to achieve through ETF's versus mutual funds ...

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    Default Re: What should I do with my money?

    spend it!
    just kidding
    FUCK YEAH finally retired after 6 years dancing!!
    NEW to camming
    Use the discount code "DANCER" to get 15% off ALL mermaid bikinis & swimwear at



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    Default Re: What should I do with my money?

    If all you want is to invest in a broad market index, like the S&P500, popular ETFs win over closed end or mutual funds in my books because you can trade them intraday if you like, and you don't want to pay too many fees for someone to just buy an index portfolio for you.
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: What should I do with my money?

    i have no idea what you just said. i dont know ANYTHING about trading or stocks...

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    Default Re: What should I do with my money?

    ^^^ ok to start with some basics. When companies want to raise money from investors they sell shares of company 'stock' ... basically each share represents a tiny fractional piece of that company. Each share of a particular company's stock may go up or down in value based on the buy / sell bid prices on the stock market it is traded on. Sometimes the company also pays dividends to the owners of its stock shares ( somewhat similar to interest earned on bank savings accounts and CD's ). However, unlike bank deposits, there are no guarantees that tomorrow's price for stock shares will be the same or higher than it was yesterday. Under favorable economic conditions, stock share prices usually stay the same or go up, and companies also pay dividends to shareholders.

    The problem with owning shares of just a single company is that tomorrow's share price and/or dividend payments are contingent on that one single company doing well. This introduces an element of volatility / risk that is far beyond that of a FDIC guaranteed bank account or CD. In order to try and minimize the volatility / risk effects investors usually buy shares in a wide array of different types of companies. Key company performance is also organized into 'indexes' such as the Dow Jones, the S&P, the Nasdaq etc. which measure a basket of the stocks of many different companies.

    In individual investor usually cannot afford to buy 100 shares of 50 different companies to minimize volatility / risk. Therefore financial houses have created two different types of stock share based investments that aggregate shares of many different companies and spread the cost among many investors. The first is Exchange Traded Funds ... which basically buy shares of many different companies based on some common thread like being part of the S&P index or being involved in the transportation business or being involved in oil / gas, and then resells fractional ownership in the form of shares of the ETF. Thus an individual investor can effectively buy 1/1000ths of a share in every company listed on the S&P by purchasing 100 shares of the SPY ETF. ETF shares trade on the exchanges like stock shares. However, the stock shares comprising the ETF are set by whatever 'definition' the ETF issuing company sets down when the ETF is created, and all future ETF holdings are basically forced to follow that 'definition'.

    The other type of stock share aggregating investment is the mutual fund. Mutual funds do the same sort of reselling of fractional ownership to individual investors that ETF's do. The primary difference is that Mutual funds are actively managed by a professional ... who makes daily decisions as to which ( and how many ) different company stock shares should be bought and sold by his mutual fund. If the fund manager sells companies that are performing poorly and buys companies that are performing well the mutual fund will gain more than an ETF ( where there is no active management of the fund's holdings ). But Mutual Funds have a few drawbacks ... with the two major ones being that the fund manager takes a 'cut' as well as the fact that fund shares can only be bought and sold at the end of the trading day ( as compared to stock and ETF shares that can be sold at any time that the markets are open ). Mutual Funds can basically follow any sort of 'definition' that they choose ... from owning 'small cap' stock shares to owning stocks of Chinese companies to owning stock shares of telecommunications companies to owning stock shares of green energy companies ( there are literally thousands to pick from ).

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    Default Re: What should I do with my money?

    thanks for the info mel. i read through it and i understand some of it but i really dont understand all of it. for someone like me..which will probably never understand how to properly do these things on my own, what do you recommend?

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    Default Re: What should I do with my money?

    for someone like me..which will probably never understand how to properly do these things on my own, what do you recommend?
    I would recommend that you immediately stop 'short selling' your own abilities !!! The 'gold foil hat' would tell you that the basics of successful investing aren't really all that complicated. They would also tell you that the 'myth' that successful investing is immensely complicated has been promulgated for decades because certain parties have a huge financial stake in selling professional financial advisory services and collecting professional investment management fees !!!

    An 'objective' source of info to help get started in understanding investments can be found at


    However, IMHO at least, these days it would also appear that a famous old investing adage has never been more true ... 'Don't Fight the FED' . After more than a year of printing up shiny new US dollars out of thin air by the billions, the FED has announced that it is going to stop doing so at the end of this month. This is likely to have profound effects on US stock and bond markets. Because of the expected volatility, IMHO at least, this is a better time to learn more about investments and investment risks rather than actually making investments for the first time.

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    Default Re: What should I do with my money?

    Quote Originally Posted by Twinkle Toes View Post
    i have no idea what you just said. i dont know ANYTHING about trading or stocks...
    Aw sorry, just trying to help Just trying to say that if you want your investment to just go up when the market goes up, you shouldn't have to pay through the nose to obtain such a portfolio nowadays.
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: What should I do with my money?

    Twinkle Toes,

    Do you own a house, or are you renting?

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