Berkeley CSUA MOTD:Entry 36778
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2025/05/28 [General] UID:1000 Activity:popular
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2005/3/20-21 [Finance/Investment] UID:36778 Activity:very high
3/20    After not really investing seriously in the past, I'm ready to get
        serious about saving both for retirement and buying a house.  I have
        a pretty good idea what I want to invest in, but no idea how to go
        about doing it.  Since I mostly want to do exchange-traded funds (ETFs)
        I don't care too much about the specific fund offerings of a broker.
        I'm looking for a reputable broker with a full-service website, low
        fees, and the ability to invest in both domestic and foreign mutual
        funds and stocks.  What would you guys reccomend or warn me away from?
        \_ what's wrong with Etrade?
        \_ For retirement, just dump the money into an IRA. Get something like
           ING if you want safety. For the rest, I guess you could just go
           and buy QQQ for nasdaq and a Vanguard index fund for the S&P.
           If you want international there's index funds for various stuff
           also. That's bascially all you really need to know about
           investing your money. You don't need to really buy any other
           mutual fund. You can also buy bonds if you want real safety.
           Also, it's somewhat doubtful that you will be able to invest
           in a mutual fund that beats an index fund over the long run.
           Most of them will lose out on the S&P.
           Don't buy individual stock, don't buy precious metals, don't
           buy commodities.
           \_ what's wrong with precious metal? Gold's beating US dollar like
              hell. In fact everything's beating US dollar.
              Iraq+war+deficit+Bush=fucked US dollar.
              \_ More like Bush->(Spending+Tax Cut+War)->Deficit->F*CKED Dollar
              \_ Because buying gold is stupid. You need to take a look at
                 a historic graph. If you are going to invest seriously
                 for your retirement, you don't need to invest in knee-jerk
                 shit like gold or silver. If you are old enough, you'll
                 remember the silver run-up of the early 80s, or the gold run
                 up some time after. Precious metals just do not appreciate
                 at the rate of a good CD over time.  Also, if you really
                 believe that the U.S. economy is going to be fucked long
                 term, you're better off putting the money into foreign
                 currency. Again, historically this is very risky.
                 \_ I think you're off-base talking about "history" and
                    comparing gold to a CD.  Economic realities change, and CDs
                    are a fairly new instrument, without very much history
                    behind them.  Gold has thousands of years of history,
                    and it's been a good investment for nearly all of that
                    time.  -tom
                           \-I doubt that is true. Talking about 100s of
                            years ago is silly ... you cant compare
                            today's world to a world without real property
                            rights, "money" etc. If central banks holding
                            gold continue to sell [since gold holdings
                            dont pay interest], that cant be good for the
                            price of gold. Also while today you can hold
                            gold "on paper", historically there would
                            also probably have been a cost associated with
                            storing gold cheaply. There are many other reasons
                            comparing 1600 and today doesnt work.
                            \_ Ah, so "history" starts in 1975.  Right.  -tom
                               \- Where did that come from? Gold may have been
                                  a resonable "store of value" but that is
                                  different from an investment.
                    \_ Bwahahahahaha! Okay, tom, you can go ahead and live
                       in the medieval ages if you want. In a modern fiat
                       based economy gold isn't a good investment. What
                       are you gonna do, propose we invest in railroads or
                       PG&E? Gimme a break.
                       Oh, here's a link that will tell you why you shouldn't
                       invest in gold as a long term investment:
                       http://www.fool.com/Fribble/1996/Fribble960305.htm
                       Apparently even the experts believe that buy and
                       holding gold is not a way to make money. You have
                       to essentially buy/sell gold to make money. This
                       is as bad as buying any other commodity.
                       \_ I'm not saying you should invest in gold, but I
                          am sure that history says nothing about the value
                          of CDs vs. gold.  Look at the doofus above; he's
                          claiming on the one hand that "CDs historically
                          perform better than gold", and then says you have
                          to discount virtually all of the history because
                          the world has changed.  Here's a hint: The world
                          can change more.  -tom
                          \_ Gold is a hedge, not an investment itself.
                             \- maybe you should "invest" in guns as a hedge
                                against uncertain change.
                       \_ don't use "long term" too much.  try making
                          money today.
        \_ If you don't care about fancy stuff, try scottrade.  It's
           cheap, and customer service is good, and there are local
           branches where you can go in and talk to someone.  I used
           E*trade, Scottrade and Datek/Ameritrade before.  I didn't
           like E*trade because it's more expensive, and service is
           poor.  Scottrade and Ameritrade each have their strong points.
           Ameritrade is stronger at mutual fund offerings and after hours
           trading, etc., but scottrade has local branches and is also
           cheaper.
        \_ Your simplest, and arguably best, bet is to invest in a set of
           funds that covers as broad a portion of markets/commodities as
           possible.  Don't forget to invest internationally, and consider
           checking out Real Estate Investment Trusts (REITs) as a way to
           invest in Real Estate without losing your shirt.  I'd highly
           recommend reading Malkiel's "A Random Walk Down Wall Street" to
           understand why this strategy is worthwhile: http://csua.org/u/bfx
           As a previous poster indicated, an ING savings account is a safe
           place to keep your short-term liquid cash flow, but will give you
           poor returns overall if it is your only investment vehicle.
           Personally, I'm a fan of Vanguard for mutual funds.  They don't
           fuck over small investors (i.e. they were not indicted in some of
           the recent stock/mutual fund accounting scandals that a number of
           more institutional oriented firms weere), they have solid
           educational resources, and low fees.  I've heard good things about
           Schwab as well, but can't speak from experience in that regard.
           Be sure to max out your IRA every year, I believe the maximum
           contribution for 2005 is $4000.  Also, since you're young, you
           should put your money into a ROTH IRA (as opposed to a Traditional
           IRA).  With a ROTH IRA, you pay tax on the money you put in now,
           but get to withdraw your earnings when you retire tax free (if the
           benefit is not immediately obvious, here's a hint: compound
           interest grows on an exponential curve, which end of the curve do
           you want the gub'mint to take its bite out of?).  Finally, try to
           put together a down payment and purchase a house sooner than later.
           The interest on your mortgage is tax deductible, which can be
           really helpful if you're in a typical nerd tax bracket.  Also, even
           if you move and sell the place, you should get the money you paid
           in plus appreciation back out as equity.  Compare to rent which
           just makes a scary sucking sound as it takes a nasty bite out of
           your paycheck each month. -dans
           -dans
           \_ I'm a starving grad student barely making $15,000 a year and
              almost all of it goes to rent and living expenses. What is your
              recommendation for me?
                             \- what makes sense for you depends on your
                                expectation of future income prospects.
                                if you are an EE or ChemE from Berkeley,
                                "deficit spending" or running no surplus
                                may make more sense than if you are in a
                                10yr phd program in latin grammar with no
                                future prospect of reasonable income.
                                Just avoid credit card debt and dont go hog
                                wild when you start making real $. --psb
                                \_ I agree with psb on this.  Though,
                                   personally, I'm somewhat risk averse with
                                   respect to any debt, but that's a personal
                                   decision. -dans
              \_ 15k??? That SUCKS! What type of program are you in?
                  --not-so-starving grad student
              \_ Well, in theory, as a grad student you're making a
                 (reasonable, unless you're in the humanities :) bet that your
                 advanced degree will result in enough of an increase in
                 earning power to offset the cost of tuition and, more
                 importantly, the opportunity cost of additional years spent
                 outside of the work force.  I've heard that someone did a
                 study and found that if you want to optimize your lifetime
                 earning potential via education then you should get a
                 Masters, and then start working.  I'd like to see the actual
                 study, but the result seems plausible since a PhD candidate
                 usually spends at least 4 years longer in school than someone
                 who leaves with his/her Masters.  That said, you could just
                 keep doing the subsistence thing and count on the extra
                 earnings your advanced degree will generate, and you'll
                 probably do okay for yourself.  If you *can* find a way to
                 save some money now (even something little, like $100 a
                 month), it's really worth it.  As I said above, compound
                 interest grows exponentially, so even a small sum invested
                 now can pay off nicely in the future.  As for where to put
                 it, that's a no-brainer: ROTH IRA invested in a broad-based
                 no-load (this is just broker speak for low fees) index fund.
                 If you're just investing in a single fund, I'd suggest
                 Vanguard's Total Stock Market Index Fund.  If you already
                 have an account at some other brokerage firm, e.g. Schwab,
                 they should have something equivalent.  Just be wary of high
                 fees as they can really put a dent in your investments over
                 time.  Both Schwab and Vanguard's fees are quite reasonable.
                 One caveat to that fund is that it only covers the US market,
                 but you can expand into foreign markets in the future when
                 you have more income.  What's important is to develop good
                 saving/investment habits.  I've seen a lot of investment
                 advice that suggests putting aside 10% of your gross
                 income, for you, that's $1500 which is just a touch above
                 the $100 a month I suggested above.  If you can, set up a
                 mutual fund account that will automatically deduct $100 from
                 your bank account at the beginning of each month.  It's an
                 easy way to enforce savings discipline and it lets you take
                 advantage of something called dollar-cost averaging:
                 http://csua.org/u/bfy
                 -dans
           \_ if you're a first time home buyer, buying sooner rather than
              later is probably not too smart, considering we're probably
              in sort of a real estate bubble at the moment.
              \_ That's a nice idea, and I agree that we're in a real estate
                 bubble, but that's been the case for a long time.  True, it
                 has to pop sooner or later, but that could be later, as in
                 five or ten years from now, and holding one's breath and
                 preying it pops seems like a bad strategy to me.  I've seen
                 advice that suggests you should buy a residence if you are
                 going to be living in the same area for at least two years.
                 I think that's better advice than speculating on a bubble
                 that we're `probably in sort of'.  Just by way of comparison,
                 New York city is, like San Francisco, in a real estate
                 bubble.  Problem is that a) prices just keep climbing, b)
                 nobody who owns his/her place in New York is about to leave
                 the city (unless forced to at gunpoint), so demand outstrips
                 supply and will continue to do so, perhaps till doomsday.
                 Ten years ago, you could still buy something cheap in Harlem
                 because it was perceived to be a slum.  Then Bill Clinton
                 sets up office there, and lots of people flock there, buying
                 burnt out buildings and either renovating them or tearing
                 them down to put new ones up.  Today you can easily drop $1M
                 on a place in Harlem, and young white folks think of it as
                 a nice place to raise their kids.  When that kind of
                 gentrification is fueling your bubble, what will it take to
                 pop it? -dans
              \_ uh oh, someone started a circular, never-ending debate
        \_ Depending how much time you want to spend.  If you want to spend
           minimal time, buy broad based index funds and aim for an 8%
           return.  If you want a higher average annual return, you need to
           spend more time (which has cost), and you may be able to push
           your return to 15-20% or higher.
           \_ FLPSX has a 60+% return since I switched my 401(k) to it from
              FDGFX two years ago.  That's 30+%/yr.
              \_ You would have gotten a similar performance if you switched
                 to DVY.  Interesting that DVY's chart is so similar to FLPSX's
                 even though you would think it should look more like FDGFX's
                 since both are dividend funds.  2003 is an especially good
                 year though, and 2004 is not bad too, but I am talking about
                 the long term, so 15-20% is more realistic.  I had like a
                 75% return in 2003, but I started the year with some risky
                 non-diversified bets on individual stocks (BBY, NVDA, HELE,
                 etc.) so it should not be used as a gauge.  I have been
                 switching gradually to mutual funds, index funds and close
                 end funds since end of 2003 cause I don't have time to follow
                 individual stocks now.
                 end funds since end of 2003 cause I no longer have time to
                 follow individual stocks.
        \_ Wow.  Thanks for all the advice on investing strageties and all but
           I'm really asking about brokers.  I already know about mutual funds
           REITs, ETFs, Roths vs. IRAs, risk/reward tradeoffs, hedging, and all
           that.  Since I'm young I'm putting most retirement money in high
           risk/growth funds and some in foreign emerging markets funds.  The
           money for a house in a few years is going into a mix of large-cap
           funds and some in non-treasury bonds. -op
           \_ Vanguard.  'nuff said. -dans
              \_ Is their website full-featured, or will I have to get them on
                 the phone to trade?
        \_ I am going to go against the crowd here and recommend that you put
           your future down payment in a low or no risk instrument like a
           T Bill or Bond or CD. Your retirement money belongs in a Roth IRA
           with the most risk you can stand. -ausman
           \_ What broker do you like and why?
2025/05/28 [General] UID:1000 Activity:popular
5/28    

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www.fool.com/Fribble/1996/Fribble960305.htm
It's supposed to go up to $450/ounce i n a couple of days, or months, or something. Actually, more than a little---I went to the library and did some reading, and now I know enough about gold to bo re anybody. Like the fact that for many years, the value of our currency was tied to gold. Then, in the middle of the 19th century, we began to move away from the gold standard, and in 1864 the US government issued zero interest bonds that could be used as legal tender. These were prin ted with green ink, and called "greenbacks." They only had the faith of the US Government to back them, not gold, but these notes eventually b ecame today's currency. In the 1930's, the US moved further from the gold standard. Owning gold as an investment became illegal, and its value was pegged at $35 an oun ce. Technically we were off the gold standard, but with the gold price s et at an official rate our currency was still linked to it. In 1975, aft er a number of crises, the US government stopped setting a price on go ld and allowed the average citizen to own it. By the early 80's an ounce of gold had soared to $850, though in recent years it has oscillated be tween $350 and $450. Since most of the world's currencies no longer tie their values to precious metals, much of the allure has faded. Now, since gold doesn't add to its own value, and since it's worth is no longer linked to currency (unless you think society is going to collapse , and the major currencies will become worthless), you probably think yo u can't make money with it. According to the December 1 8, 1995 Hulbert Financial Digest, if you use the right market-timing str ategies, you CAN get a return (buy and hold doesn't work, they say). The winning timing method for an eight-year period is the Elliot Wave. Am I missing something, or is that almost as good as a CD? A five-year period using the Market Logic (Gold Model) gets you an annualized return of 67%. Not quite as high as the Lehman B ond Index, but maybe I expect too much. If society is collapsi ng around you, you can run off with a fair portion of your assets in you r pockets. Of course if that happens you'd probably have more important things to worry about than your wealth. Also, some of those bullish on g old point to its popularity among the newly prosperous in Asia. I person ally question how much the newly prosperous will put into $400 an-ounce gold as opposed to, say, buying VCR's, TV's, cars, and other things. Stock in a company usually grows in value, b ecause of increasing earnings, new products, dividends, stock buybacks, and so on. You can, for the most part, pick a winning stock based on a company's business prospects and the qua lity of its management. But personall y, I'll stick with good old Fool's Gold---stocks. Let's see, for an ounc e of the yellow stuff I can own five shares of Texaco.
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csua.org/u/bfx -> www.amazon.com/exec/obidos/ASIN/0393320405/102-7939998-1754521
com It's unlikely that you'll spot many dog-eared copies of A Random Walk flo ating amongst the Wall Street set (although bookshelves at home may prov e otherwise). After all, a "random walk"--in market terms--suggests that a "blindfolded monkey" would have as much luck selecting a portfolio as a pro. But Burton Malkiel's classic investment book is anything but ran dom. Since stock prices cannot be predicted in the short term, argues Ma lkiel, individual investors are better off buying and holding onto index funds than meddling with securities or actively managing mutual funds. Not only will a broad range of index funds outperform a professionally m anaged portfolio in the long run, but investors can avoid expense charge s and trading costs, which decrease returns. 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Decode the rating game for mutual funds and discover the unique a dvantages of index mutual funds over the wide range of riskier alternati ves. Year in and year out the best investing guide money can buy, this e nhanced edition includes an update of Malkiel's famous "Life-Cycle Guide to Investing," showing how to match an investment strategy to your stag e in life. All Editions Inside This Book First Sentence: In this book I will take you on a random walk down Wall S treet, providing a guided tour of the complex world of finance and... learn more) First Sentence: In this book I will take you on a random walk down Wall Street, providing a guided tour of the complex world of finance and practical advice on i nvestment opportunities and strategies. A s a teacher of corporate finance to law students, I have recommended thi s book to my students for over 10 years. 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csua.org/u/bfy -> flagship4.vanguard.com/VGApp/hnw/content/PlanEdu/InvestorEdu/PEdIEMFBasicsDollCostAvgContent.jsp
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