vfinx and vbinx.
Two Vanguard mutual funds that have done well over time.
After your initial investment, commit a fixed amount to contribute on a monthly basis.
Sit back and watch your investment grow.
Avoid individual stocks.

quote:

Originally posted by JALLEN:

quote:

Originally posted by ChicagoSigMan:


I would also recommend the annual letters of Warren Buffet to the Berkshire Hathaway shareholders, particularly this year's letter at page 21-24 where he discusses active vs passive investing. Spoiler alert - 99.99% of all investors (including many of the highest paid hedge fund managers) would do better over the long run with a low cost index fund than any active strategy.

Link to Buffet's letters

This is very interesting. I've been following Buffett, and Graham, for decades. We went to school on the same book, Securities Analysis by Ben Graham. Buffett took the course from Graham himself, the only A+ student Graham had, IIRC. I did less well.

Oddly, Buffett is one of the very few active investors who has done better in the long run than passive investing, a lot better. Since 1965, the S&P has compounded at 9.7%, including dividends. Berkshire Hathaway, which Buffett took control of in 1965, has a compounded annual increase of 19.8%, or 20.8%, depending on whether you look at per share book value or change in market value.

When Buffett took control, shares of Berkshire were trading at around $10. Had you bought $10,000 of it (1,000 shares) and kept them since, those would be worth $263,600,000 as of the close today.

One factoid is that investors in BRK have paid Buffett no fees for investment management. He drew a salary of $50,000 a year for decades, and now is paid $100,000 per year. He receives some security help and other amounts, maybe $400k total.

True. Buffet is not a highly paid CEO, but he does own about $73 Billion worth of BRK shares - and that's after giving away shares to the Gates Foundation worth $13 Billion). To give everyone an idea of the power of compounding, Buffet, now 87 became a millionaire at the age of 30 and a billionaire at the age of 56.

Another interesting fact: although Buffet has not earned any investment management fees at BRK, before buying Berkshire Hathaway (a struggling textile company at the time), he ran Buffet Associates - an investment partnership similar to a hedge fund. Unlike the traditional hedge fund fee structure of 2% of managed assets and a 20% performance fee, he charged no fee on managed assets and 50% of net profits above 4%. 4% was the risk -free rate at the time, so he felt it would be unfair to charge investors for earning what they could earn with no risk at any savings bank. He later changed the terms to take 25% of any losses, which he felt was fair since he got 50% of any gains. So if the fund broke even, he owed the investors 1% (25% of the 4% hurdle rate) and if the fund lost 10%, he would take 25% of that loss so that the investors were only down a net 7.5%. Try getting that deal from a hedge fund manager today.

quote:

Originally posted by msfzoe:
vfinx and vbinx.
Two Vanguard mutual funds that have done well over time.
After your initial investment, commit a fixed amount to contribute on a monthly basis.
Sit back and watch your investment grow.
Avoid individual stocks.

Vfinx is a great fund and warren buffer invested in for his million dollar charitable bet with hedge fund manager. I like this letter as well.

http://www.bobbrinker.com

I misspoke VFIAX is the buffet index fund. Vtsax is a beast too in the trump market.

A lot also depends on your time frame. You can go a little riskier (if you prefer) if you have a long term horizon, risking short term market fluctations for long term gain. Short term (if you need the money in say, five to seven years), then stick it in a low cost mutual fund.

As with some others, I base that on my finance degree (and 32 years of investing).

It's your call, but mutual funds are a good way to eliminate the risks specific to a specific stock. They can be diversified so you don't have to be.

quote:

Originally posted by 2tonicP220:
Bogleheads

John Bogle should receive the Medal of Freedom. Follow this mans advice, or suffer the consequences - I'm dead serious. Keep it simple, do it yourself, never pay a % under management fee, invest in very low cost funds (Vanguard all the way for me). Really, all you need are three funds, maybe two. Asset allocation has a lot of variables, and once you start asking questions, folks can better guide you.

This fella is fantastic:

http://jlcollinsnh.com/

As is www.mrmoneymustache.com

Proof in the pudding is I retired at 46, and never had a high paying job. What I did however was always stay invested, never sold in the panics (actually quadrupled my investments), always did it myself, lived well but frugally/well under my means, and worked on staying healthy and fit. $$$, especially F-you kinda money gives you great freedom, and a great feeling to boot.

IMO, I would not start out with individual securities, rather very low cost mutual funds. Good luck.

This

quote:

Originally posted by Skins2881:
I have a degree in finance and was a financial planner for five years following college, and I have zero interest in investing in individual stocks.

Rather go to Vegas with jhe888. 1/2 budget on hookers and blow the rest on roulette. I am sure I'd fair better than individual stocks.

Good luck, you'll need it.

PS I also came in second overall in the country in a multi-campus investing simulation. Still wouldn't do it.

This. In spades.

"A Random Walk Down Wallstreet" by Burton Malkiel was used as a text in one of my college Econ classes. Great read. Malkiel is/was a Princeton Economist who promotes a buy and hold theory of Mutual Funds. Talks a lot about attempts to time the market, and crowd buying mentality.

The Bogleheads' Guide to Investing – August 18, 2014, by Taylor Larimore

or, just peruse the forum and read the wiki here https://www.bogleheads.org/

At Jallen's recommendation I purchased and read the little book on investing and the intelligent investor. 2016 was my first year having a retirement account thanks to a SEP from my employer. I'm sure the market being at an all time low last February helped but of the stocks that I picked using those 2 books the least saw me a 40% gain and the most a 95% gain. The Vangaurd mutual funds I chose returned 5%, 12% and 25%. I put 1/3 into stocks, 1/3 into Mutual funds and the last 1/3 I never invested.

After making my investments I just let them be and forgot about them for the year. I'm brushing back up on the books now while waiting for my next SEP contribution.

Are you taking advantage of all your tax advantaged investment opportunities like your 401k and IRA?

quote:

Originally posted by Aeteocles:
Are you taking advantage of all your tax advantaged investment opportunities like your 401k and IRA?

Yes, and do you own a house?

I do my own trades and research, the books listed will get you started.

I have my taxable account at Schwab. They just announced this week they are lowering their expense cost on their proprietary SP500 fund to just .03% that's 2 bps lower than vanguard. And no load of course. I spose vanguard will follow suit in order to maintain bragging rights. Schwab also offer a huge choice of Other no load, low cost funds. As well as a big list of commissionfree ETF, if you must buy an individual stock online trades are just 4.95$. Schwab is nice because most of their huge list of mutual funds is $100 to start and no minimum subsequent investment. If my 7 year old gets a check for $25 for her birthday in to the fund it goes.

I'm using Wealthfront, Betterment, and Motif for my taxable investing. I'm exploring Vanguard right now as well. The important part is setting aside money to save/make work for you.