Investing Thread

[GSP_37]

How do you buy and sell shares?

Is there a website? App?

I'm a complete beginner here. But have started making decent money and looking to invest.

Go online and open a self directed brokerage account. Some might even have a local office. Send them a check to deposit. Wait. Check your account. Research, read news. Buy something good that doesn't have a crazy bubble P/E ratio or hype machine. Keep very good detailed cost records for tax time. Maybe even use something like Quicken to track your buys, sells, stock splits, dividends, etc.

 

[POWER2]

 

[Smokes]

I invest in UPS cause I get stock at discount though work and Amazon had UPS stock on edge. Amazon is working on building their own delivery service and that would crash UPS stock. I think UPS will be fine in the long run but I think it will crash before it will recover.

 

[MASShole]

What brokerage do you use and does the standard trade fee apply to DRIP?

Realized I never answered this. I use TD Ameritrade, but nearly all of the brokerage firms allow DRIPs for free because most of the time it's fractional shares. Generally you have to opt-in to DRIP, otherwise you'll get the divs as cash in the account. You can invest that cash once you accumulate enough for you to care enough to invest it. My min is $500 but I'd rather wait until I have $1k if I can. Right now I get about $4600 in divs per year in my 4 accounts, but I DRIP all of it.

My wife took a new job last year, and with her 401k they give a 50% match all the way up to the max contribution, which is totally unheard of. We're trying to max that out every year, and anything leftover we put into a Roth. Amazing.

Also, one thing I'm doing this year is claiming any small amount of self-employment income so I can open an individual 401k and transfer my traditional IRA holdings over to it. Once we hit about $180k in annual income (or something like that, can't remember, may be higher), we can't directly contribute to a Roth, but rather we have to invest in a non-deductible IRA, then convert those investments to a Roth once per year and pay taxes on it (absurd, since we already did, whatever). If I have any money in a traditional/rollover IRA (roth not included) then the conversion goes over without any issues. If there's traditional money, there's an absurd tax calculation and I'd rather not deal with that shit.

 

[MASShole]

I invest in UPS cause I get stock at discount though work and Amazon had UPS stock on edge. Amazon is working on building their own delivery service and that would crash UPS stock. I think UPS will be fine in the long run but I think it will crash before it will recover.

That's great. Do you get a discount on the shares you buy? The IRR of discounted shares is always pretty amazing.

 

[MASShole]

Can't argue with any of this. I know there are calculators to try and predict but I like to bank on worse case scenario.

Just using the rule of 72, you will likely come close to doubling your current investment 2.5 times assuming 7% rate of return in those 26 years. The whole $500k won't double, but whatever you have now will double, next year will be 2.4x investment, etc.

Assuming you have $0 now, and you invest $20k in a single investment every year (unlikely, but simple for this calculation), you'll have invested $520k. That $520k will end up being worth over $1.4M alone. If you're fairly conservative, and get a 5% RoR, it'll be worth nearly $1.1M.

Simple calculator: https://www.buyupside.com/calculators/recurringinvestmentcalculatordec07.htm

 

[MASShole]

One thing I've been trying to take more advantage of is having a high deductible health plan, and investing in an HSA. It's triple tax protected, assuming the withdrawals are for medical reasons. It goes in before tax (assuming employer plan), grows tax free, and comes out tax free. A lot of employers give employees a contribution as a thanks for not choosing the other plans (my last two employers gave me $1k and $1.4k respectively first paycheck of the year). Many places have mutual funds you can invest in once you hit a contribution threshold, likely $2k-$3k, so anything over that amount can be invested. My current HSA offers me low cost Vanguard funds.

The best part? Save your medical receipts! In 30 years, if you have tons of money in it, you can "claim" medical bills, show past receipts and get the funds tax free! College tuition? Tax free! Vacation for retirement? Tax free! As long as you held that HSA in the year of your receipts, you're golden. It's brilliant, and a great way to save for medical bills in retirement.

The current estimate for retirement medical expenses is around $270k, so it's a good thing to invest in anyway.

 

[kahiljabroni]

Justin using the rule of 72, you will likely come close to doubling your current investment 2.5 times assuming 7% rate of return in those 26 years. The whole $500k won't double, but whatever you have now will double, next year will be 2.4x investment, etc.

Assuming you have $0 now, and you invest $20k in a single investment every year (unlikely, but simple for this calculation), you'll have invested $520k. That $520k will end up being worth over $1.4M alone. If you're fairly conservative, and get a 5% RoR, it'll be worth nearly $1.1M.

Simple calculator: https://www.buyupside.com/calculators/recurringinvestmentcalculatordec07.htm

I had to go back and look at what I wrote lol. I did max my 401k but I still have to max my roth which I'm gonna do in the next month. I've got about a years worth of expenses in cash saved but it's not going up much with all the retirement investing. We're planning on trying to have a kid next year so the more cash the better in the short term...if I don't need it then it'll be a down payment on a investment property.

Alot of guys at my company don't invest in any retirement. They bank on the pension being there.

 

[MASShole]

I had to go back and look at what I wrote lol. I did max my 401k but I still have to max my roth which I'm gonna do in the next month. I've got about a years worth of expenses in cash saved but it's not going up much with all the retirement investing. We're planning on trying to have a kid next year so the more cash the better in the short term...if I don't need it then it'll be a down payment on a investment property.

Alot of guys at my company don't invest in any retirement. They bank on the pension being there.

If you can, try to put that cash in a high yield savings account. I have an account at Ally that pays 2.1%, which is as close to inflation as I can find, and it doesn't diminish over a set number of months. $25k will get $525/year in simple interest, which is nice.

Kids are expensive. My 5 year old is into lots of shit, and legos are pricey as fuck.

 

[kahiljabroni]

If you can, try to put that cash in a high yield savings account. I have an account at Ally that pays 2.1%, which is as close to inflation as I can find, and it doesn't diminish over a set number of months. $25k will get $525/year in simple interest, which is nice.

Kids are expensive. My 5 year old is into lots of shit, and legos are pricey as fuck.

Is that a strictly online bank? I would definitely do it for 2%

 

[MASShole]

Is that a strictly online bank? I would definitely do it for 2%

Strictly online! It links to external accounts very easily too. I have my checking and savings there. The only downfall is that if I have a ton of cash that I need to deposit, I can't. I don't have that problem, but if I did, that'd be the only issue. If I get cash I just spend it on groceries or gas instead.

In any case, you may be able to find a similar APR at a local credit union, but you'd have to look hard. Ally is easy and so far their service has been great.

 

[kahiljabroni]

Strictly online! It links to external accounts very easily too. I have my checking and savings there. The only downfall is that if I have a ton of cash that I need to deposit, I can't. I don't have that problem, but if I did, that'd be the only issue. If I get cash I just spend it on groceries or gas instead.

In any case, you may be able to find a similar APR at a local credit union, but you'd have to look hard. Ally is easy and so far their service has been great.

Thanks man, I'm going to check it out

 

[MASShole]

MSFT is killing it for me, close to 100% return (94% so far) and going strong. LMT already hit 100% return, V is getting close (91%, but I sold like $3k a year ago to buy something else, otherwise it'd probably be there now). TGT (84%) and APD (81%) are kicking ass too.

 

[Deleted member 220895]

I just invested in bitcoin on the stock market.


When I have high yields i'll get more 401k.

 

[boingyman]

Realized I never answered this. I use TD Ameritrade, but nearly all of the brokerage firms allow DRIPs for free because most of the time it's fractional shares. Generally you have to opt-in to DRIP, otherwise you'll get the divs as cash in the account. You can invest that cash once you accumulate enough for you to care enough to invest it. My min is $500 but I'd rather wait until I have $1k if I can. Right now I get about $4600 in divs per year in my 4 accounts, but I DRIP all of it.

My wife took a new job last year, and with her 401k they give a 50% match all the way up to the max contribution, which is totally unheard of. We're trying to max that out every year, and anything leftover we put into a Roth. Amazing.

Also, one thing I'm doing this year is claiming any small amount of self-employment income so I can open an individual 401k and transfer my traditional IRA holdings over to it. Once we hit about $180k in annual income (or something like that, can't remember, may be higher), we can't directly contribute to a Roth, but rather we have to invest in a non-deductible IRA, then convert those investments to a Roth once per year and pay taxes on it (absurd, since we already did, whatever). If I have any money in a traditional/rollover IRA (roth not included) then the conversion goes over without any issues. If there's traditional money, there's an absurd tax calculation and I'd rather not deal with that shit.

Once your Modified AGI is $193k (married, filled jointly), then the amount you can put into your roth reduces. Once it's over $203k (married) you no longer can put into a roth. So when your MAGI goes above $203k you then have to do a backdoor roth, which you only pay taxes on once (not twice) when you convert. Most dual income agressive families usually have to do backdoor roth once their gross is above $250k or so, since usually they max both 401k (or equivalent), healthcare premiums or HSA, social security, medicare, etc. It's very difficult to get MAGI down below $203k once you start making $275k/year (married, filled jointly) unless you have more avenues to use. For example when I worked for the state of california we could contribute to 457 and 403b plan. Dual income and both work for the state could put in $76k to max both out.

 

[boingyman]

I had to go back and look at what I wrote lol. I did max my 401k but I still have to max my roth which I'm gonna do in the next month. I've got about a years worth of expenses in cash saved but it's not going up much with all the retirement investing. We're planning on trying to have a kid next year so the more cash the better in the short term...if I don't need it then it'll be a down payment on a investment property.

Alot of guys at my company don't invest in any retirement. They bank on the pension being there.

Kids cost a shit load. Daycare/preschool, 529 plans, diapers, food, clothes, toys, travel cost once their over 2. Our annual liquid saving has definitely gone down a lot this past year since we had our 2nd kid who is 1 now. I'll admit too, my parents love to give us a lot of cash ($10-15k/year) everytime we see them so that helps us save a little more, but before we had kids we were saving over $50k/year liqud after retirement contributions.

Is that a strictly online bank? I would definitely do it for 2%

Shop around. Besides a high yield savings account also conisder a high yield no penalty CD account. I use one through Marcus (Goldman Sachs) This is of course to play it safe and a good place to park emeregency funds or saved funds that need to be used within X amount of years. I personally think it's good to take risk on some liquid money and open a taxable account and invest in the market. Even a fund that mimics the S&P usually yields good results. One of my taxable accounts I have in VFINX for the past couple of 3 years or so is doing really good. I should probably switch it up though as there have been better performers out there.

 

[MASShole]

Once your Modified AGI is $193k (married, filled jointly), then the amount you can put into your roth reduces. Once it's over $203k (married) you no longer can put into a roth. So when your MAGI goes above $203k you then have to do a backdoor roth, which you only pay taxes on once (not twice) when you convert. Most dual income agressive families usually have to do backdoor roth once their gross is above $250k or so, since usually they max both 401k (or equivalent), healthcare premiums or HSA, social security, medicare, etc. It's very difficult to get MAGI down below $203k once you start making $275k/year (married, filled jointly) unless you have more avenues to use. For example when I worked for the state of california we could contribute to 457 and 403b plan. Dual income and both work for the state could put in $76k to max both out.

When I said pay taxes twice, I meant I pay taxes on the income, put into a non-deductible IRA, then pay taxes again for the conversion to a Roth. That's how it works.

Sorry, I couldn't remember the exact MAGI income limits. It was $180k for awhile and I knew it went up recently but not by how much.

 

[MASShole]

Kids cost a shit load. Daycare/preschool, 529 plans, diapers, food, clothes, toys, travel cost once their over 2. Our annual liquid saving has definitely gone down a lot this past year since we had our 2nd kid who is 1 now. I'll admit too, my parents love to give us a lot of cash ($10-15k/year) everytime we see them so that helps us save a little more, but before we had kids we were saving over $50k/year liqud after retirement contributions.


Shop around. Besides a high yield savings account also conisder a high yield no penalty CD account. I use one through Marcus (Goldman Sachs) This is of course to play it safe and a good place to park emeregency funds or saved funds that need to be used within X amount of years. I personally think it's good to take risk on some liquid money and open a taxable account and invest in the market. Even a fund that mimics the S&P usually yields good results. One of my taxable accounts I have in VFINX for the past couple of 3 years or so is doing really good. I should probably switch it up though as there have been better performers out there.

You're lucky! Nice parents.

My daycare costs when I lived in Boston, for one infant, was $24k/year. Here in Colorado, it was about $12k, now down to $10k. I can't wait for my lil dude to hit kindergarden and we pay $0 in daycare.

Good idea on the CD. The savings account account I mentioned is the same yield as the S&P 500. If I was having that much cash as a backup, I wouldn't invest in anything other than non-volatile things, like a savings or a money market fund. Just personal choice.

 

[kahiljabroni]

Kids cost a shit load. Daycare/preschool, 529 plans, diapers, food, clothes, toys, travel cost once their over 2. Our annual liquid saving has definitely gone down a lot this past year since we had our 2nd kid who is 1 now. I'll admit too, my parents love to give us a lot of cash ($10-15k/year) everytime we see them so that helps us save a little more, but before we had kids we were saving over $50k/year liqud after retirement contributions.


Shop around. Besides a high yield savings account also conisder a high yield no penalty CD account. I use one through Marcus (Goldman Sachs) This is of course to play it safe and a good place to park emeregency funds or saved funds that need to be used within X amount of years. I personally think it's good to take risk on some liquid money and open a taxable account and invest in the market. Even a fund that mimics the S&P usually yields good results. One of my taxable accounts I have in VFINX for the past couple of 3 years or so is doing really good. I should probably switch it up though as there have been better performers out there.

I have considered doing a CD as well as taxable mutual fund investing. I hesitated on the latter because the market is red hot and I don't wanna buy high...same thing with real estate in my area. I've kind of decided by default to save up so I'll be ready for a downturn in either. Sounds like you're killing it yourself.

 

[boingyman]

When I said pay taxes twice, I meant I pay taxes on the income, put into a non-deductible IRA, then pay taxes again for the conversion to a Roth. That's how it works.

Sorry, I couldn't remember the exact MAGI income limits. It was $180k for awhile and I knew it went up recently but not by how much.

The money you put in a traditional IRA is fully deductable so if you max out at $6000, you can deducted $6000 from your gross. When you convert into a roth you then have to pay taxes for it, so it becomes a wash. You don't have to worry about paying taxes twice. If that was the case no one would recommend backdoor roth method.

You're lucky! Nice parents.

My daycare costs when I lived in Boston, for one infant, was $24k/year. Here in Colorado, it was about $12k, now down to $10k. I can't wait for my lil dude to hit kindergarden and we pay $0 in daycare.

Good idea on the CD. The savings account account I mentioned is the same yield as the S&P 500. If I was having that much cash as a backup, I wouldn't invest in anything other than non-volatile things, like a savings or a money market fund. Just personal choice.

$24k/year is high. In my area you only pay that much (or more) if it's one of those chain in-center daycare like Kinder Care. I think my 2 kids combined we pay about $1600/month. We do the $5000 dependent care FSA, which helps out a little. Yeah we can't wait till next year when my oldest starts kindergarden, however there's a chance we may send him to a private school that will be more then his actual preschool.

I think what to do with liquid cash depends on overall picture and goals. For us we are in a good position to invest a large portion of our liquid funds, but I understand about playing it safe. I'm even considering being really aggressive with our mortgage so we can pay it off in 10 years, but still debating if it's worth it outside of having that peace of mind.