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Suggestions for someone getting high income, wanting high returns
12-09-2012, 10:45 AM
Any suggestions? Stocks are too volatile for me to put large sums of money into, so I've been looking at high return mutual fund accounts to act as sort of a checking account, perhaps spreading my money across 4 of them to reduce the risk. I realize at first I won't be getting any kind of returns I can live off of, but I figure after pumping $4,000 a month into them I should be able to see something happening in a year or two. Hard to tell what the next year will bring, but a couple funds I've been looking at have returned >20% this year, have a high P/E ratio, have low risk (according to Morning Star) and low overhead fees for taking out your money. Hell some of them have returned >10% in just one month. I don't mind jumping out of a fund early, and in fact I don't imagine I'll be in each fund more than a year.
So while mutual funds seem to be the best bet for me, my knowledge is limited. Is there anything else out there that's just as safe as mutual funds but return more? Something that is beneficial for someone with a stable high income job?
Thanks
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12-09-2012, 12:28 PM
more return = more risk
period, end of story, anyone telling you otherwise is straight up lying or ignorant. Example: Madoff, Stanford, etc.
thank the central banks of the world for distorting interest rates and screwing people over so the banks can stay afloat. Meaning you can't get a decent ROI in bonds therfore everyone is chasing stocks and high yields to get returns. This always ends badly, always...when is the hard part.
if you spread it across 4 different funds but they are all similar in style, then it won't matter, they will rise and fall together.
saving money is the most important part. You're doing that. The investing part is the second part. Save money and don't lose it. Play it conservative.
The best way to get rich fast...is to get rich slow. Boring and effective.
Greed and fear separate people from their money . You're being greedy.
My .02
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Suggestions for someone getting high income, wanting high returns
12-09-2012, 02:02 PM
Like learning how to communicate with women, it is very rare that you will just wake up and be rich. Wealth is generally a slow burn, that grows exponentially on itself.
I save 25% of my check into a fund that pays a guaranteed 8% annually. It doesn't sound like much, but in 30 years it will leave me a millionaire. With that, I have a savings account that I contribute $400/month to in order to remain liquid.
Have enough to have fun now, but always save.
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12-09-2012, 04:06 PM
guaranteed 8% fund is a scam/ponzi scheme or a lie in my opinion.
There are no guarantees
10 yr us treasuries yield 1.6%
US Junk bonds yield about 6.5% -below investment grade aka might default
10 yr Greece 15% they will default
which means 8% is VERY risky, it is below investment grade. (7.4% spread from US treasury rate).
can't guarantee a return with stocks...Madoff did. It was a ponzi scheme.
Stanford guaranteed around 10% with bonds when US rates were around 2%. It was a scam. (8+% spread from 08 or 09 T rate)
Can you get an 8% return...yes.
Is there risk in it...absolutely, bc the only way you get it is taking on higher risk to get higher return or using tons of leverage.
Example of the leverage would be a some type of a structured investment vehicle based on LIBOR rates with 3x leverage would yield you around 8% I think, it did a few years ago.
The same LIBOR rate that Barclays is being sued over for manipulation by the US and UK government.
No thanks.
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12-09-2012, 04:50 PM
from 73 to 82 inflation probably averaged very close to 8% a year
CPI based on the way it was calculated in 1990 is about 6% for 2012
CPI based on 1980 methodology is around 10% for 2012
since politicians manipulate it to pay less for social security etc. the official rate is 2% or around there.
wouldn't matter if interests rates weren't manipulated too, but they are. I think I'm off my soap box.
My opinion for OP find a pro to manage it who believes in capital preservation and when the market has a PE of around 10 (trailing earnings not future earnings) and dividends in the S&P 500 are 6% or so, then take on more risk.
Until then defense is the way to go, 3-5% returns w/o losing 40% like in 08 (to get back to even you would need a 60+% return, that takes years). Heavy losses destroy your ability to get a compound rate of return.
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12-09-2012, 06:49 PM
I hear this a lot from people, that I'll lose everything if I risk. I'm not a pro, but if I'm checking my fund performance everyday, ready to pull out if I'm losing too much, is it really possible to "lose everything" in one day? I mean I know it has happened in the past, but I think at that point no stock/fund is safe so there's nothing you could have really done about it. Everybody was affected when '08 hit. Also, MF's are already by nature diversified, so you guys are telling me even with a diversified portfolio of funds (in different sectors) I'm still going to lose it all? Sorry but I don't buy that. For example, 4 different funds, each in different sectors, each with $50,000, will not go down in flames at the same time all in one day. I may lose some of my money, but certainly not all. What you guys seem to be describing is a scenario where, no matter how much research you do, you'll pretty much lose all your money because the funds are doing jack shit. But what I'm seeing is not so bleak. Forget a savings account. I like the idea of my money in the bank earning some serious interest based on my decisions, and not some asinine .03% per year.
Plus the main ingredient of my plan is that I can keep putting $4000 into my investments every month. At the very least it'll be a checking account where the money I waste will be on something meaningful and not a hoe, and at best my money can actually start making me some money. Again I'm no expert, but I have done research. And the funds that I've been watching have returned pretty good numbers since I first starting watching the beginning of last month. If I had put money into them I'd have made some nice returns. From what I've seen from the last few years, mutual funds usually have a 6 month to 1 year maturity period. If you get in, and it hasn't improved significantly in 6 months, then you need to move out.
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12-09-2012, 08:10 PM
I'm not saying you will lose everything.
check to see how your funds did in 08. Is the guy managing that fund in 08 still managing it today? Did the funds behave similarly that year?
If you want 8% returns per year when the market goes down and it always does can you handle losing 20-40% of your money. Everyone says yes, I'm in it for the long run. Reality is they panic and sell (fear). Something like 75% of retail investors waaaay underperform the market bc they don't know what they are doing, they buy at the top and sell at the bottom. These are not dumb people either, doctors, lawyers included, they underperfom by alot bc they don't really know about the investment game.
Fear and greed ruin them or moving around from what is the hottest trend ruins them bc fees eat them alive or they always are late to the party.
You settle for 3% returns maybe when the market goes down you lose 10%. You can recover that in a few years. Losing 40% takes many years to recover from. Wasted time.
Investing using the rear view mirror (what did well last month/last year) is a long term losing strategy.
Those are the theories, but newbies never listen.
Everybody didn't lose big in 08, most did, the guys who knew what they were doing didn't. Politicians and crooked Wall Street analyst claimed "nobody saw it coming"...horseshit it was telegraphed and not hard to see that it was coming. I pray the next downturn will be as obvious.
Best of luck, and I loved your Japan posts
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12-09-2012, 09:27 PM
The market returns 4% on average when factoring in the bad times too my understanding which could be wrong. If OP can save 4k a month even if he gets hammered its not the end of the world. Hes saving / investing more per year than the average person is grossing.
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12-12-2012, 07:00 AM
Start with reading The Intelligent Investor and go from there.
You're an example of the problems of today's generation. "I want a huge return, guaranteed, in an incredibly short time frame, and without having to learn anything about investing'. I want a job where I work 1 morning a month testing condoms on super models getting paid 250k. Simply not in the cards.
Unfortunately a lot of people who lose money and are scammed didn't do their due diligence, and got greedy. That's why it's imperative to know about this stuff before you go in.
Stay away from mutual funds. The management fees will kill you, and over the long term (20 years+) something like 90% of funds under perform the market. If you want stability and don't know much about the markets, your best bet is index funds. Boring, but the work:reward ratio is about the best you will find given that you said yourself you don't know much about this stuff.
Bank preferred can yield 5-6%, REITs 10-16%, neither a scam per se, simply examples of returns commensurate with risk, but generally long run (decade +) the risky stuff will outperform.
FYI you want low P/E, and historically ignoring all else "chasing the losers" has been a far more profitable strategy than "chasing the winners" If in '08 you did the exact opposite of what what everyone who panicked did, you would have made a killing. I bought a little, sold nothing, it didn't sit well with me at the time but in my head I knew it was right. 4 years later wish I had of bought a ton more.
What is January Fever, and why will it cause your funds to go up 10%? And why will it do this with "no doubt"? What can you do in Afghanistan where you will clear 500k in a year or two? This sounds like the beginning of a story of someone who's in jail. "It was a sure thing, I was going to make 300k, if only......."
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11-28-2014, 04:56 PM
..
"Me llaman el desaparecido
Que cuando llega ya se ha ido
Volando vengo, volando voy
Deprisa deprisa a rumbo perdido"
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Suggestions for someone getting high income, wanting high returns
11-28-2014, 05:03 PM
Real estate.
"Money over bitches, nigga stick to the script." - Jay-Z
They gonna love me for my ambition.
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11-30-2014, 10:58 PM
You saw what happened in 08, right?
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11-30-2014, 11:35 PM
Quote: (11-30-2014 10:58 PM)Peregrine Wrote:
You saw what happened in 08, right?
We all did. If you buy on the basis of appreciation, you're doing it wrong.
You make money in real estate when you BUY, not when you sell. Thats what so many people do not realize.
"Money over bitches, nigga stick to the script." - Jay-Z
They gonna love me for my ambition.
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12-01-2014, 12:05 AM
Quote: (11-30-2014 11:59 PM)Peregrine Wrote:
You make money in real estate when you buy? I'm not sure I follow.
Quote:Quote:
This is as crucial as getting out before the 20-40% corrections when they are as evident as 2008.
In that case, I'd get out now.
You need to buy below market value, in order to get instant equity in a property. But essentially, the money is in the good few deals, and you should never bank on a property appreciating.
Corrections are cyclical, even if you don't get out, the market rallies; it just takes time. Just don't sell when a stock starts falling. You have to treat all of these investments with cold calculation, not with emotions of happiness when you make a dollar, and depression when you lose.
"Money over bitches, nigga stick to the script." - Jay-Z
They gonna love me for my ambition.