DIY Digital Architecture: 10 Tools To Model Dream Homes & Rooms

cdnson · 2012-05-26T17:03:03.067391+00:00

No, I'm asking how not why - show me a viable means for using this as a benchmark, let alone the basis for an alternative form of index fund that is remotely tax/cost efficient.

cdnson · 2012-05-26T16:57:14.695463+00:00

How?

cdnson · 2012-05-26T15:08:03.502155+00:00

1) The S&P 500 is not the market, agreed - it is most of the market, though. For clarity, how about we use a total-market index as our proxy. 2) Market cap weighting 'has to end' - what the hell do you even mean by that? What would replace it? Equal-weighting stocks so that the 'market' looks like a lop-sided mess, with tons of tiny stocks at a fraction of a fraction the value making up 'most of the market'?efw

thekenfl · 2012-05-26T15:04:53.716555+00:00

he doesn't have enough time to recover if there is a major downswing in the account value. Being safe would at least give him the chance to keep the $6k that he has and earn enough to keep up with inflation.

And what is $6000 over 30 years of retirement? About 50 cents/day. There is nothing to 'recover' from at this point - there is effectively no money at stake in the grand scheme of things. If anything, he might be better off to hide what little he has so he can more quickly and effectively qualify for government assistance.

But in reality, it should just be a wake-up call that he needs to save more.

You need to look at all of the risks involved - inflation (as you mention) is one such risk, but there is also shortfall risk: the risk you will not have enough to live above the poverty level in retirement. You may have to up some risks to have a better chance at avoiding this outcome. Life is trade-offs.

thekenfl · 2012-05-26T14:15:16.347658+00:00

This is generally good advice (safer as you get older) but with only $6,000 there is effectively no point in putting the money in safe bonds. I am normally not an advocate of reaching for yield or pushing the limits of safety, but this is a serious case of underfunded retirement.

I hope it can be explained entirely by paying down a house, finishing paying for kids' educations, etc... and that the intended savings rate will only go up from here, but if the OP is worried he might cash it in, all bets are off.

thekenfl · 2012-05-26T14:12:24.430930+00:00

Honestly, it doesn't matter. I say this as an opener because it is shocking, but the truth, and what he needs is a shock to his system.

The elephant in the room: $6000 will make almost no difference at retirement age, even if it does well in the market and doubles each of the next two decades. To be less hyperbolic: it matters only insofar as he sets himself up for better habits in the future.

What he really needs is a serious savings plan to substantially expand his retirement capital, and an aggressive allocation to make up for loss time (at the risk, of course, of not catching up due to bad-behaving markets). His biggest risk is shortfall risk.

Now, as to the intent of your question: you're right, he should not cash it in - he should roll it over into an IRA. Have him call Vanguard or Fidelity about how to do this.

cdnson · 2012-05-26T14:04:41.835765+00:00

After taxes and expenses, about 70% have to lose to the market via simple math. Since the winners rotate, that failure percentage goes up over time. The real question you should be asking yourself is: why does Wall Street want you to play their game and try to beat the casino, I mean, market? Who has a vested interest in people thinking they can beat the market?

cdnson · 2012-05-26T14:03:20.855314+00:00

Except that 'anyone' can't be 'everyone' so even if you were right this doesn't answer the question at all.

andreatjej · 2012-05-25T21:26:22.829811+00:00

I HEREBY PUBLICLY REPRIMAND YOU. However, I think completing it will push you to make lots of new friends, thus also support you. Caring for extroverts is hard :/

andreatjej · 2012-05-25T20:40:19.288557+00:00

This has insufficient upvotes. Please post to YSK main when completed as well. Since you are an extrovert: FUCKING FINISH ALREADY - I have no patience for you to finish packing. Still, your packing idea is awesome (wink wink).

antr · 1 day

Bonus points: the bookcase next to their whiteboard is a Blu Dot piece, the Chicago 8-Box: http://www.bludot.com/chicago-8-box.html

misnamed · 1 day

Congratulations on knowing that you will never develop a serious disease requiring long-term care (last year, 1/3 of medical insurance claims were contested, so that's not foolproof) nor a disability preventing you from working, nor having a family member in either of those situations, nor needing money to buy a home nor ... well, the list goes on.

MrsPibb · 1 day

I believe this is the karma train you are looking for

p0zz · 1 day

For a while, the idea was popularized you could invest in what you know, go by what products you used and liked, etc... there was a book about it based on some nice ladies who claimed to have kicked the maket's ass, but the math was fubared badly, resulting in a class-action. Whoops!

Founded in 1983, the group achieved fame for their stock market acumen, claiming investment returns of more than 23.4% per year from their inception through 1994. They received considerable attention in national media outlets, and authored a best-selling book, The Beardstown Ladies' Common-Sense Investment Guide, following it up with four more books.[1]

In 1995, personal finance counselor and best-selling author (Personal Finance for Dummies, Investing for Dummies) Eric Tyson wrote an article in the San Francisco Chronicle exposing the fact that this club did not have any documentation or audit to back up their claimed investment returns.

In 1998, an article in Chicago magazine asserted that the group's stated returns had included the new investments made by its members, and that when computed in conventional fashion, their annual rate of return for 1984–1993 was actually 9.1%, considerably less than the 14.9% return on the S&P 500 during the same period

http://en.wikipedia.org/wiki/Beardstown_Ladies

GaRFyelD · 1 day

(1) Euro is already down - switching out locks in losses to date, (2) currencies add volatility without expected return - dangerous insurance, (2) currency exposure is generally best gotten via equities (efficiency/cost among other reasons, plus positive expected return, etc...).

If you're really nervous (like: paranoid nervous), don't just buy one ex-EU currency - buy a little of all of the above, but keep most of your money in Euros because you'll need it to match obligations in Euros one way or another.

japanthrowaway · 1 day

throwaway is in the title ... :(

GeeWhilikers · 1 day

I now have $5,000 I can use to invest. I want to invest it properly for the future. What do you professionals recommend I do?

I am not a professional, and don't trust anyone who is. Read books - I would recommend starting with the Boglehead's Guide to Investing - and learn for yourself. It may turn out simpler than you think.

japanthrowaway · 1 day

Why do people always use throwaways to talk about their mistakes? Don't worry about answering - this was a rhetorical question.

omar_torritos · 1 day

Yup. I have taken screenshots on days where everything above the fold (~15 posts) is about Apple. I've been trying to get people interested in taking over /r/securities or pushing /r/trading more, but no luck so far. I have no issue with FB being a point of discussion (or Apple) but to newcomers it makes this place look like it's just hopped up on hot stocks.

omar_torritos · 2 days

Good question - and as a mod myself in other SRs, believe me, I know it's not trivial to deal with those kinds of things.

My best suggestion, FWIW, is to let the first one stand and swipe the rest.

It will be painful at first, as it will kill whatever budding conversations are going on in the latter threads, but people should learn quickly that their secondary posts won't stand - just as a repost would be banned even if it's getting upvotes.

omar_torritos · 2 days

Note: you weighing in with your own opinion skews the results regardless, in my opinion (edit: I don't mean that to be harsh, but re-reading it it looks kind of harsh)

However it is very possible that users from /r/all or from the domain were upvoting it, and not the /r/investing regulars that we're here to serve.

It is just as possible that this highly-upvoted thread is also being seen and voted from /r/all - I believe the voting is impossibly flawed as a method for dealing with this.

Moreover, if we're going to make this more serious, let's curb the constant duplication of threads about hot securities like Facebook and foster more discussion about longer-term 'serious' strategies - most people who show up here still seem to labor under the false impression that the way to 'invest' is to actively trade.

misnamed · 2 days

On the flip side, (1) VT it is effectively a share class of a larger mutual fund at a huge fund company and is not going anywhere (unlike other lower-volume ETFs), and (2) it holds stocks around the world and thus diversifies you against a Japan-like situation of 3 decades of flat returns and (3) it includes small caps, holding a total of 3700 vs. the 500 stocks in SPY, (4) the bid/ask at that level is not a big deal if you are buy-and-hold investing, only if you are trading, and (5) the ETF share class has over a billion dollars in it - again, not going anywhere.

Thus, I would stick to it if I could or wanted to only choose one fund/ETF. However, there is an easy best-of-both-worlds solution: VTI and VXUS (or any other pair of low-cost, all-US and all-ex-US ETFs). All of that being said, buying and holding one of the three you mentioned is a far better idea than buying and holding a more active, more expensive, less liquid and/or less diversified option - i.e. if it's a spectrum, any one of those is far more on the 'good' than 'bad' side of things.

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