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    Default Saving and Investing your income

    It took me two years of stripping to finally realize what stripping really is: an awesome cash generating opportunity that I can take to my advantage and secure myself a decent financial future. How am I going to do that? Well, I figured that working full time and saving will bring me to the point where I will actually invest my money. Now that point is here and my question is (to the like minded ladies out there) is where is the best place to invest? I'm not an expert on the stock market and not even close(I want to come as close as I can tho), but I did my research and I figured that my best bet right now would be what's called a "sophisticated couch potato" portfolio, which is 75% invested in an index fund mirroring S&P 500 performance and the other 25% invested in fixed income government bonds. Keep putting a x amount of money every month and leave it there to compound for 5-10 years until it reaches a fat sum of money with which I would be able to retire from the industry and do something else with my life. The question is: what do you ladies think? Do you have an investment/exit strategy? Would be great to hear!!

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    Default Re: Saving and Investing your income

    I'm investing-tarded, so I simply got a Roth IRA when I turned 18 and contribute to it regularly. I go through Fidelity.

    It seems that bonds are relatively useless these days - they have extremely, disappointingly low returns on investment.

    Dollar Den has tons of information about investing, so I'd encourage you to search through that material! We have some very investment-savvy users on here (I'm lookin' at you, Melonie & Zofia).

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    Default Re: Saving and Investing your income

    While not everyone may agree with this position, consider the following ...

    Most Americans working vanilla jobs / careers will have 40-odd years worth of hopefully slowly rising incomes before reaching retirement age. In contrast, historical up-down cycles in stocks and bonds tend to run something around 7-13 years. So, over the course of a vanilla job career, losses taken during a down cycle can ( typically ) be made up for by simply waiting for the next cycle to roll around.





    However, like professional athletes, dancers and camgirls tend to have a relatively short time window of maximum earnings potential. Thus they arguable don't have the same option of simply waiting out multiple down cycles because their available earnings potential 14+ years from now is likely to be much less than it is today. From this peculiar standpoint, professional athletes, dancers and camgirls need to treat their investments in a similar way as people with vanilla jobs / careers that are age 55 or so ... i.e. within 7-13 years of retiring and no longer earning 'big' money ... thus highly 'exposed' to a single economic cycle.

    The 'standard' investment advice cited by the OP is indeed the usual advice given to working Americans in their 20's and 30's. But it is given based on an assumption that the person is in a position of being able to slowly 'time-average' their investment purchases over the course of another 30+ years of vanilla earnings. However, where professional athletes, dancers and camgirls are concerned, the situation actually involves making large investment purchases over the course of 7-13 years ... with potentially little or no additional investment purchases beyond that point as their high earnings potential window closes down. Thus if a professional athlete, dancer or camgirl happens to 'buy in' at a high point in the 7-13 year cycle, and as a result incurs 30% losses, it's very likely that said losses cannot be made good before their high earnings potential window closes on them.

    This of course leads to a school of though that professional athletes, dancers and camgirls should be more concerned with 'preservation of wealth' than with 'return on investment'. Investing strategies targeted toward 'preservation of wealth' typically do not involve being long the S&P or long US corporate bonds.
    Last edited by Melonie; 04-07-2014 at 08:53 PM.

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    Default Re: Saving and Investing your income

    Thanks for input! So what would be the best way to start investing? if the index funds are no go due to the nature of our career, what's the best place to start investing and the best way to continue?

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    Default Re: Saving and Investing your income

    Also, what's the best way to learn about investing?

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    Default Re: Saving and Investing your income

    Thank you for input! What is the " preservation of wealth" strategy? What's the best way to go about it? In other words, Melonie, what's your best advice?

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    Default Re: Saving and Investing your income

    ^^^ one of my favorite 'starting points' is

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    Default Re: Saving and Investing your income

    In regard to investment advice, only licensed professionals are allowed to give that !

    However, I can tell you where my own investments are positioned right now. I'm totally out of FIRE stocks and US corporate / gov't bonds. A significant ( but minority ) share of my portfolio is in physical gold and silver ... and I also own some ( highly speculative ) gold and silver miner stock shares. I'm presently out of foreign ( emerging market ) stocks, but have an eye peeled for a re-entry point if and when China's finances settle down.

    In terms of diversification I own a fair amount of shares in USO ( a proxy ETF for crude oil ) as well as some Canadian Dollar denominated GIC's ( similar to US bank Certificates of Deposit but obviously in Canadian dollars not US dollars ). There's a lot going on right now in regard to Russia and China making a challenge against the US dollar's 'reserve currency' status, so I wanted to 'hedge' my downside risk if the US dollar's 'purchasing power' were to suddenly take a 'dump'.

    Again, please do not construe my own investment decisions as investment 'advice'. Do your own due diligence. After all, I'm just a 'dumb' blonde with big boobs ! But I did spend 10+ years sitting on the laps of Manhattan stockbrokers, bankers, lawyers, politicians etc. 'innocently' listening to them converse among themselves while they assumed the 'dumb' blonde with big boobs couldn't possibly understand what they were talking about !!!
    Last edited by Melonie; 04-07-2014 at 09:07 PM.

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    Default Re: Saving and Investing your income

    oops, already answered

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    Default Re: Saving and Investing your income

    So what would be the best way to start investing? if the index funds are no go due to the nature of our career, what's the best place to start investing
    One of the first rules of any business ... including investing ... is to control costs. From that standpoint, trading in blocks of less than 100 shares can 'eat up' via high broker's fees most of the potential gains those stock shares are expected to provide. And being forced to sell an investment at the 'wrong' time because you unexpectedly need the cash can cost you dearly in terms of investment losses. So before you actually get into stock and bond investing, a pre-requisite is to save up a fair amount of 'cash' ( like $10,000+ ) . My favorite way to do this ... which also provides an 'emergency fund' cushion should something happen which prevents you from working, and also helps establish financial 'discipline' ... is to purchase 'laddered' maturity Certificates of Deposit at a local bank or credit union. If you can afford to set aside $1000 per month, buy a $ 1000 six month maturity CD. If you can set aside more than $1000, do so and buy a larger CD. Do the same every month for the next 6 months.

    Then once the first of your CD's mature 6 months down the road, you can 'roll it over' into a new 6 month CD as well as purchasing an additional 6 month CD. Do the same for the next 6 months. So at the end of the first year you will have $12k+ worth of total CD's, with $2k+ becoming available every subsequent month as your 'laddered' maturity CD's actually mature. Granted that the rate of return will suck, but the loss risk is extremely low and the $2k per month of available 'cash' will prevent you from being forced into a position of having to sell off stock and bond investments at the 'wrong' time ( i.e. at a major loss ). Think of these CD's as an 'insurance policy', with the low rate of return being the price of the 'insurance premium'.

    Once the 'emergency fund' of 'laddered' maturity CD's has been created, and you have thus 'insured' yourself against being forced to sell investments at the 'wrong' time if something unexpected were to happen, you can simply continue to 'roll over' your maturing CD's without buying additional CD's, and start diverting the $1000 per month of savings toward a brokerage account. Once you have accumulated a few thousand dollars in your brokerage account to cover the purchase cost of a 100 share block plus broker's commission , you can then consider which investments you might want to buy.
    Last edited by Melonie; 04-07-2014 at 09:44 PM.

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    Default Re: Saving and Investing your income

    I go through Fidelity.
    I fully agree with your financial 'wisdom' that big Wall St banks / brokerages ... who take positions in stock IPO's, who underwrite bonds, who take on counter-party risk via swap and collateral debt obligation contracts, who operate 'proprietary' trading desks which buy and sell stocks, bonds, commodities etc. on the banks own behalf ... aren't always working in the best interest of 'small time' investors. And as exemplified by LTCM, Lehman, MF Global etc., 'small time' investor money isn't always 'safe' in the hands of these 'hot-shots'. Like you, I prefer to use an 'old school' Investment House that avoids these activities and 'just' manages other people's money. However, my specific preference is Vanguard as oppose to Fidelity, since Vanguard offers a wider array of very low overhead 'in house' mutual funds and ETF's, as well as reasonably priced open market stock / bond / options commission fees.

    I also have a certain amount of fear regarding the use of Schwab and similar 'bargain basement' brokers. My fear stems from past examples that, during sudden market downturns, for 'some unexplainable reason', their ability to execute immediate stop-loss trades suddenly fell apart for minutes or hours. This arguably resulted in Schwab clients taking much larger losses than Wall St bank / broker clients or Investment House ( Fidelity, Vanguard etc. ) clients whose sell orders executed in milliseconds. Pure coincidence, of course !!!

    As to 401k's, IRA's and other official gov't sanctioned retirement accounts, I have a very different opinion than 'mainstream' financial advisors. However, I certainly agree that Roth IRA's ... where the contributed money has already been taxed, and where future withdrawls won't be subject to future year tax or inclusion as additional income for purposes of means-tested gov't benefit program eligibility ... are the 'least of the evils'.
    Last edited by Melonie; 04-07-2014 at 10:11 PM.

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    Default Re: Saving and Investing your income

    if the index funds are no go due to the nature of our career
    Please understand that index funds aren't ALWAYS something for professional athletes, dancers and camgirls to view with suspicion. However, if you look at the following chart it's pretty obvious why buying into an S&P index at this particular time might not be such a great idea if the idea is to 'preserve wealth' over the course of the next year or two.





    On the other hand, the most well known investing adage goes something like this ...

    'The market can remain irrational longer than speculative investors can remain solvent' !

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    Default Re: Saving and Investing your income

    Melonie, I am really thankful you are on this forum! I feel totally inspired by you. You're a legend to me!

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    Default Re: Saving and Investing your income

    ^^^ thanks, but in the final analysis I'm just a 'dumb' blonde with big boobs !

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    Default Re: Saving and Investing your income

    ^^^ Maybe but I'm still willing to have your baby.

    As far as investments , I agree with Melonie that you would be well advised to emphasize "wealth preservation" as opposed to "growth".
    Plus I'd add in that I prefer to invest MY money ( so take this for whatever it might be worth ) long term in rock solid stocks. The only "playing around" I do is with commodities and even then I do so on a "macro" basis. Like Mel I also own physical gold.
    Last edited by Eric Stoner; 04-09-2014 at 08:26 AM.

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    Default Re: Saving and Investing your income

    I prefer to invest MY money ( so take this for whatever it might be worth ) long term in rock solid stocks
    Are you talking about stocks that are 'rock solid' because ...

    - they are assured a gov't sanctioned monopoly ( Con-Ed, Verizon, Duke Energy, AT&T, Time-Warner et al ) ?

    - they are assured an 'addict' customer base ( Philip Morris, Diageo, Lorrilard, Molson/Coors et al ) ?

    - they are assured of having the US gov't as their major customer ( Northrup/Grumman, Harris et al ) ?

    - they are assured of having an 'inelastic' demand at any price ( oil companies, agribusiness companies ) ?

    I'm just trying to figure out your criteria for 'rock solid'.

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    Default Re: Saving and Investing your income

    Good question. I'm going to drop a few names of stocks strictly for illustrative purposes. I make no recommendation that they be bought or sold. I won't even confirm or deny that I currently own them.

    It's an admittedly broad definition but it takes in things such as a long track record of solid earnings ( e.g. Exxon Mobil , IBM , Intel, Nike, J.P. Morgan Chase; just to name five out of at least a hundred ) and generally excludes something hot and topical with nebulous long term prospects. I also look for stable and proven management ( that leaves out G.E. since Welch left lol ). What is it they do ? What do they make and/or what service(s) do they provide ? Where do they make it ? Where do they sell it ? To whom ? For right now , stocks that are based on sales to the American middle class ( J.C. Penney , Applebee's etc. ) aren't doing too well because their customer base is hurting. Luxury goods makers and sellers are doing GREAT ! So are many lower end retailers ( Dollar Stores , McDonald's , Wal-Mart ).

    A long time ago I was heavily invested in defense stocks under Reagan and G.H.W. Bush. ( I guess I can't call him "Bush The Smarter " anymore thanks to the crackdown on anything that has a whiff of politics lol . ) These days it's an area I shy away from . I also don't invest in tobacco stocks . I do invest in well run utilities serving areas with sensible government regulation. I don't invest in coal but I also have avoided most of the alternative energy companies. I like diversified over one trick ponies.

    All things being equal I like innovative, well run "tech" companies the best. Akamai and Electronic Arts are two good examples.

    With energy I did miss one boat and that was independent domestic oil and gas exploration. I'm kicking myself because it's an area I do follow and those drilling on state and or private land ( and not just in N.D. ) have done VERY well. I also missed the boat on First Solar in the alternative energy area. One of the biggest success stories ( so far ) in that area.

    I hope that answers at least some of your questions.
    Last edited by Eric Stoner; 04-09-2014 at 11:55 AM.

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    Default Re: Saving and Investing your income

    Quote Originally Posted by Melonie View Post
    While not everyone may agree with this position, consider the following ...

    Most Americans working vanilla jobs / careers will have 40-odd years worth of hopefully slowly rising incomes before reaching retirement age. In contrast, historical up-down cycles in stocks and bonds tend to run something around 7-13 years. So, over the course of a vanilla job career, losses taken during a down cycle can ( typically ) be made up for by simply waiting for the next cycle to roll around.





    However, like professional athletes, dancers and camgirls tend to have a relatively short time window of maximum earnings potential. Thus they arguable don't have the same option of simply waiting out multiple down cycles because their available earnings potential 14+ years from now is likely to be much less than it is today. From this peculiar standpoint, professional athletes, dancers and camgirls need to treat their investments in a similar way as people with vanilla jobs / careers that are age 55 or so ... i.e. within 7-13 years of retiring and no longer earning 'big' money ... thus highly 'exposed' to a single economic cycle.

    The 'standard' investment advice cited by the OP is indeed the usual advice given to working Americans in their 20's and 30's. But it is given based on an assumption that the person is in a position of being able to slowly 'time-average' their investment purchases over the course of another 30+ years of vanilla earnings. However, where professional athletes, dancers and camgirls are concerned, the situation actually involves making large investment purchases over the course of 7-13 years ... with potentially little or no additional investment purchases beyond that point as their high earnings potential window closes down. Thus if a professional athlete, dancer or camgirl happens to 'buy in' at a high point in the 7-13 year cycle, and as a result incurs 30% losses, it's very likely that said losses cannot be made good before their high earnings potential window closes on them.

    This of course leads to a school of though that professional athletes, dancers and camgirls should be more concerned with 'preservation of wealth' than with 'return on investment'. Investing strategies targeted toward 'preservation of wealth' typically do not involve being long the S&P or long US corporate bonds.
    If you're referring to 100 percent of the money a dancer or athlete earns, I would disagree. I agree that a dancer shouldn't put all of her savings in the stock market, but even if a dancer is only going to work 7 - 13 years in the business, she will still need money when she's in her 50's, 60's and beyond. A dancer that is earning a lot in her 20's has a good opportunity to invest money for retirement, and 30 - 40 years later, she could have a significant amount of money to retire on. Even if a dancer is planning to leave dancing in her early 30's, it doesn't mean she can't get another job doing something else to support herself, without taking money out of her investments.

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    Default Re: Saving and Investing your income

    ^^^ agreed ! My point was about the risks of having a peak income time window of 7-13 years, buying into the stock markets at a peak, losing ~30% of investment value as a result, and then not having the same high income available to continue investing a similar amount of additional future money to 'time average' away the losses.

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    Luxury goods makers and sellers are doing GREAT ! So are many lower end retailers ( Dollar Stores , McDonald's , Wal-Mart ).
    Agreed that this HAS been the case recently. However, the record sales / profits for luxury goods companies like Tiffany, Ferrari etc. have arguably been fueled by FED money-printing policies increasing the value of 'investments' primarily owned by the top 10% earners ... FED money-printing which is now being 'tapered' down thus arguably causing in the value of said 'investments' to now be down for the year.

    And even where the 'bargain basement' retailers are concerned, profit margin compression and/or falling sales volumes are starting to be an issue ... see as well as .

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    Default Re: Saving and Investing your income

    I did some research about wealth preservation and it looks like (at least right now to me) that the best strategy would be blue chip stock investing that pays sucky, but almost guaranteed dividends(5%). Or maybe I'm getting it all wrong again?

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    ^^^ one thing to keep in mind with blue chip stocks ... as is true for any stocks or bonds for that matter ... is that, unlike a bank CD, the market price of the underlying stock shares is subject to change. A few blue chip stocks known for their 'high' dividend payments are as follows ...

    AT&T - current dividend 5.8%




    Annheuser-Busch - current dividend 3.8%




    Eli Lilly - current dividend 3.4 %




    Had you bought AT&T shares a year ago you would have gained 6% in dividend earnings but lost 1 - 38/35 = 8.5% in reduced share value. Had you bought Annheuser Busch shares a year ago you would have gained 3.8% in dividend earnings and also gained 4% in share value. And had you bought Lilly a year ago you would have gained 3.4% in dividend earnings and just about broken even on share value.

    The point of course is that 'high' dividend paying blue chip stocks are still stocks. And while a comparatively high rate of dividend / yield appears to be a 'good' thing, in reality it only remains good if the value of the underlying stock shares doesn't decline. This potential loss risk to underlying value is something that doesn't exist in the world of CD's ... where the gov't guarantees that the $5000 or whatever you pay to purchase a CD today will result in the same $5000 or whatever being repaid to you in full when the CD matures, along with $50 or whatever in interest earnings.

    Judging the likelihood that any particular company's stock shares are going to increase or decrease in value in the near future requires an analysis of a whole bunch of factors, from the probable direction of the economy in general, to probable 'customer demand' for the specific product or service offered by a particular company, to the probable changes in 'costs of doing business' for the particular company, to 'how high' the price of the company's stock shares already is relative to similar other companies, etc.

    It's also possible to limit the risk factor involved in purchasing individual blue chip company stock shares ( remember, a 100 share block of a single $50 per share blue chip stock will have a purchase cost of ~$5000 ) by purchasing shares in a Mutual Fund that specializes in blue chip companies. This option means that $10,000 of investment gets spread over 30+ different companies held by the mutual fund, versus only 2 blue chip companies if individually owned. One down side, of course, is that the mutual fund will impose a management fee which 'sucks up' ~1% of your potential earnings. Another down side is the fact that, among the 30+ different companies held by the mutual fund, the potential average gains and average dividend earnings will be less than those of 1 or 2 'best performing' companies which you might have picked on your own. But that becomes an up side if you had picked 1 or 2 'worst performing' companies on your own.
    Last edited by Melonie; 04-13-2014 at 06:34 AM.

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    Default Re: Saving and Investing your income

    Quote Originally Posted by Melonie View Post
    One of the first rules of any business ... including investing ... is to control costs. From that standpoint, trading in blocks of less than 100 shares can 'eat up' via high broker's fees most of the potential gains those stock shares are expected to provide. And being forced to sell an investment at the 'wrong' time because you unexpectedly need the cash can cost you dearly in terms of investment losses. So before you actually get into stock and bond investing, a pre-requisite is to save up a fair amount of 'cash' ( like $10,000+ ) .
    Concretely, factor your buy+sell brokerage into your ROI. In America your have much better brokerage rates but for eg. in Australia typical retail brokerage is $29.95 flat rate up to $30k of stock. So say your average person buys $6k of stock, then the stock goes up, then they sell it. The brokerage for buying+selling amounts to nearly $60 which is 1% of the initial investment. So if you pick a stock or index that will go up, and you're right but it goes up 1% or less then you've lost money. Imagine if you subtracted 1% from the interest rate your savings account pays - that's what you're doing to your stockmarket investment in this example if you kept your shares for 1 year. This is a huge disadvantage for short term investors, but should be factored into longer term investments too. People like diversifying but you always need to calculate what the fees are doing to your ROI.
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
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    Default Re: Saving and Investing your income

    Quote Originally Posted by Versalia View Post
    I did some research about wealth preservation and it looks like (at least right now to me) that the best strategy would be blue chip stock investing that pays sucky, but almost guaranteed dividends(5%). Or maybe I'm getting it all wrong again?
    I've been specifically buying stocks that pay dividends for a couple years now, it's going pretty well. They pay quarterly but I put the dividends right back into the stocks instead of taking the cash payments, so it's a snowball effect. If you have a big enough portfolio you could actually live modestly just off of dividend income. (You need like 7 figures worth of stock for that to work though) Melonie is right that you want to buy in increments of 100ish shares to make the broker fee worth it.

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    Default Re: Saving and Investing your income

    ^^^ true over the course of the last couple of years at least ... thanks to FED zero interest rate / money-printing policies creating a 'premium' for any investment promising decent yield at a reasonable degree of risk. However, for purposes of wealth preservation, dividend stocks are still stocks, and 'past results are no guarantee of future performance'.

    And the FED is now on record with its intentions to 'taper' off earlier money-printing policies ... which is likely to allow interest rates to rise across the board thus removing the 'premium' which high dividend stocks have recently enjoyed. Put another way, if it ( again ) becomes possible to earn 5% dividends from a future US treasury bond purchase involving very low loss risk, a dividend stock paying the same 5% would lose it's comparative yield advantage while retaining it's greater loss risk.

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