New To Investing Thread

[treysolid]

All the advice I've ever heard about investing is to diversify, but now I'm beginning to question that. I wonder if we are living in an age where american tech and finance stocks will be the major market driver for the next 30-50 years? Should I get the eff out of international and small cap and just do S&P 500? Or even "better", just put all my money in FGCKX (S&P 500 on steroids)?

[meow meow]

Thing I started doing this year: set 401K contribution to 100% of salary. Max it out as early in the year as possible. Over time: profit.

interesting.  once you hit the contribution limit, does your employer automatically stop contributing to the 401k and you start getting paid again, or do you have to do something?

[michigancat]

In a similar brag, I accidentally went over the contribution limit by a payment last year (I think because of a bonus). It was accepted and invested but eventually the provider caught it and mailed me a paper check for the amount plus earnings. I think taxes were withheld. The good news is it was pulled out of the market and into cash in early March!

[steve dave]

Thing I started doing this year: set 401K contribution to 100% of salary. Max it out as early in the year as possible. Over time: profit.

does your company match 0%? this is a decent strategy if so.

[steve dave]

All the advice I've ever heard about investing is to diversify, but now I'm beginning to question that. I wonder if we are living in an age where american tech and finance stocks will be the major market driver for the next 30-50 years? Should I get the eff out of international and small cap and just do S&P 500? Or even "better", just put all my money in FGCKX (S&P 500 on steroids)?

international has sucked complete crap for my entire lifetime and all indications are that it will continue to. there isn't the stability or central banking to prop up anyone in times like this. USA-USA-USA will probably continue to dominate because of it. Small caps still have merit but this is going to be a brutal year for them. Big ups, big downs. The big fat greedy USA stocks are feasting and will feast every time something crazy like this happens. I posted a little bit ago but the S&P is basically a tech index now. Big, fat, successful tech who are going to gobble up competition at cut rate prices through this thing.

[ben ji]

In a similar brag, I accidentally went over the contribution limit by a payment last year (I think because of a bonus). It was accepted and invested but eventually the provider caught it and mailed me a paper check for the amount plus earnings. I think taxes were withheld. The good news is it was pulled out of the market and into cash in early March!

Around 1/3 of my pay is commission/bonus that is paid quarterly. I have to just sort of guess on the percentage to withhold then when it gets to Nov/Dec I can figure out how much I will make that year and set a defined number to finish maxing it out.

[steve dave]

Also if you are in REIT you've got your ass kicked through this thing and I'm betting that ass kicking is going to continue for a long time because there are a lot of people that will just never go back to the office after this thing clears up. If I had any stand alone REIT I'd take the bounce that has happened to this point and move it. I'm wrong like half the time which is why I still have a stupid job so tifwiw.

[Kat Kid]

My asset allocation is very lol right now.

[steve dave]

My asset allocation is very lol right now.

yours changes every 7 minutes though

[chum1]

This sample of one international fund makes it seem like international may be okay long term, but I am still skeptical.

Around five years ago, I picked five different types of mutual funds for one of my retirement accounts. It's impossible not to notice that one of them is really, REALLY lagging behind the other four. It's meant to be a long term investment, of course, but should I go ahead and dump it anyway because it seems like such a loser "lately?"

Since 2002 +8%
10 year +8%
5 year -1%
1 year -10%

Is it an international fund?

Yep

Performance for each of the five mutual funds looks about the same for 10+ years, so maybe I just answered my own question.

[chum1]

I just learned about this Kapur plutonomy stuff. The basic idea is that the rate of spending by the rich is increasing far faster than the non-rich due to changes in distribution of wealth, so you can take advantage by investing in things rich people buy.

https://www.investopedia.com/terms/p/plutonomy.asp

[catastrophe]

Thing I started doing this year: set 401K contribution to 100% of salary. Max it out as early in the year as possible. Over time: profit.

does your company match 0%? this is a decent strategy if so.

I’ve been doing this for years and now feel like a big dumb giant idiot after this year’s crash. Henceforth I will be spacing out my contributions to mitigate that kind of risk.

[catastrophe]

All the advice I've ever heard about investing is to diversify, but now I'm beginning to question that. I wonder if we are living in an age where american tech and finance stocks will be the major market driver for the next 30-50 years? Should I get the eff out of international and small cap and just do S&P 500? Or even "better", just put all my money in FGCKX (S&P 500 on steroids)?

I think it’s fair to say no one knows. I heard a pretty good point from a bud on the S&P 500 vs. international stocks though. The largest US companies already do plenty to diversify and are definitely tangled in international economies as well. You’re not necessarily hitching you’re wagon to the US economy by investing in a major US corporation.

[chum1]

Thing I started doing this year: set 401K contribution to 100% of salary. Max it out as early in the year as possible. Over time: profit.

does your company match 0%? this is a decent strategy if so.

I’ve been doing this for years and now feel like a big dumb giant idiot after this year’s crash. Henceforth I will be spacing out my contributions to mitigate that kind of risk.

Even in the absence of a crash, it works out better in the long run to buy at regular intervals vs. lump sum up front, right?

[michigancat]

I've never had the cash required to do the 100% contribution thing and therefore it never crossed my mind

[catastrophe]

Thing I started doing this year: set 401K contribution to 100% of salary. Max it out as early in the year as possible. Over time: profit.

does your company match 0%? this is a decent strategy if so.

I’ve been doing this for years and now feel like a big dumb giant idiot after this year’s crash. Henceforth I will be spacing out my contributions to mitigate that kind of risk.

Even in the absence of a crash, it works out better in the long run to buy at regular intervals vs. lump sum up front, right?

Haven’t looked up the math on it, but obviously doing 100% in January could do better than even amounts spaced out through the year. It’s also a lot riskier though, and doesn’t allow you to take advantage of dips that occur throughout the year. So I think the better play is evenly spaced out even if you got enough in the bank to handle no income for a couple months.

Sort of case in point, I set up a 529 for kid #1 and picked an arbitrary amount I’d put in it. Funded it all in one year. A year later the account hadn’t gained any value. Market had dropped in the meantime and had just come back, and I missed all that action cause I just wanted to be done with it ASAP.

[chum1]

Thing I started doing this year: set 401K contribution to 100% of salary. Max it out as early in the year as possible. Over time: profit.

does your company match 0%? this is a decent strategy if so.

I’ve been doing this for years and now feel like a big dumb giant idiot after this year’s crash. Henceforth I will be spacing out my contributions to mitigate that kind of risk.

Even in the absence of a crash, it works out better in the long run to buy at regular intervals vs. lump sum up front, right?

Haven’t looked up the math on it, but obviously doing 100% in January could do better than even amounts spaced out through the year. It’s also a lot riskier though, and doesn’t allow you to take advantage of dips that occur throughout the year. So I think the better play is evenly spaced out.

I'm pretty sure that, empirically, buying at regular intervals yields higher gains than 100% up front over the long term precisely due to dips. Sort of counterintuitive. I read a book on the subject once. Of course, maybe the book was wrong.

[Spracne]

Plot twist: I'm 100% in bonds!

[catastrophe]

I don’t doubt it’s a better long term approach, but you can just look at the past couple years as an example of different approaches paying off.

In 2019 the Dow was never lower than it was in Jan/Feb, so lump sum up front would’ve made you more.

In 2020, you do the same and you’re mumped.

[michigancat]

Thing I started doing this year: set 401K contribution to 100% of salary. Max it out as early in the year as possible. Over time: profit.

does your company match 0%? this is a decent strategy if so.

I’ve been doing this for years and now feel like a big dumb giant idiot after this year’s crash. Henceforth I will be spacing out my contributions to mitigate that kind of risk.

Even in the absence of a crash, it works out better in the long run to buy at regular intervals vs. lump sum up front, right?

Haven’t looked up the math on it, but obviously doing 100% in January could do better than even amounts spaced out through the year. It’s also a lot riskier though, and doesn’t allow you to take advantage of dips that occur throughout the year. So I think the better play is evenly spaced out.

I'm pretty sure that, empirically, buying at regular intervals yields higher gains than 100% up front over the long term precisely due to dips. Sort of counterintuitive. I read a book on the subject once. Of course, maybe the book was wrong.

In theory, over time, there should be no difference. It's still essentially dollar cost averaging, you just do it annually instead of every two weeks. Of course it doesn't matter if you're putting 100% in bonds.

[michigancat]

Plot twist: I'm 100% in bonds!

Did you start the year 100% in bonds?

[Spracne]

Plot twist: I'm 100% in bonds!

Did you start the year 100% in bonds?

Based off a conversation I had with someone ITK in early January, yes.

[steve dave]

Interestingly, a 100% bond fund has probably out performed the S&P ytd but depending on which bond funds you’ve been in it hasn’t been by a huge amount anymore. And it’s probably about equaling the NASDAQ. Still a bold and successful play though spracs.


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[Cardiac Cats]

Everyone calm down. Lump sum investing out performs DCA, because math.  Alternatively, if you think you're DCA'n a payroll contribution, you're probably not.  That's lump sum too, it's the lump you have on that day. A true DCA is when you have say $12K and decided I'm going to put this in at $1K/month.

If you're not reading Ben Carlson's blog A Wealth of Common Sense, take the 5 minutes every(ish) day to do it.
https://awealthofcommonsense.com/2018/05/the-lump-sum-vs-dollar-cost-averaging-decision/

Some companies continue to "match" contributions if you've maxed out the limit. My company does not, so instead I have to go like 50% for 3 months and then the minimum to get company match for the last 9 months. Huge pain, but I'm all about lump sum/get my money in the market ASAP.

And to those concerned about diversification, look what EM and Int'l Stocks did in 2012 and 2017. Move your money now and you'll just miss the next ride up. And look at the "Equal Weighted" return.
https://awealthofcommonsense.com/2020/01/updating-my-favorite-performance-chart-for-2019/

As Sam Hinkie once said, "Trust the Process".

[steve dave]

EVERYONE CALM THE eff DOWN!