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97

I think this might be an instance of "survivor bias" in that you only tend to hear from the people who were successful at it and made a lot of money off of it. Conversely you don't hear as much from the people who lost their shirt trying to flip a house or those who couldn't secure tenants at a good price. If you're interested in the idea of passive real-...


62

What is the truth about this? Pretty much no truth. At 48 years old, I received an offer for a job where I was paid far more than any other employment I had previously. I chose it over two other competing job offers that were offered at a very similar time. While I was laid off from that job, rather abruptly, I had a new job within a short time at age ...


54

Several other good answers that get into the details, but I think there are a few obvious things that need to be said here: Real estate isn't a risk-free golden ticket - investing in real estate involves a lot of risk. It's easy to fail at it, and then you have nothing to fall back on. Having a career with a skilled job isn't as dismal as you've made it out ...


50

What you are missing is that over the long run, the market expectation is positive, and for the S&P, about 10%/yr. But, day to day, any given day is very close to a flip of a coin. When you take your tiny gain at $105 (your example) and the stock continues to rise, what then? Your plan requires you to be right, not once, but twice. I remember the crash ...


46

Any amount greater than 0 is fine really.* Investing great lump sums is akin to timing the market, just set a monthly target and stick to it.** Consistency over the long term is the key to success. This is a marathon, not a sprint. [*] just make sure you use a low fee broker(some even offer promotional 0 fees choices) and ETF investing (a mixture of bonds/...


39

The sales pitch: A few decades ago, I had a friend that was starting out in real estate investing. He explained his reasoning like this: Buy a starter home. Get a decent house/condo with the best rates because it is an owner occupied purchase. Live there for 5 years. Buy another house, get some renters lined up for the first place. Renters cover the ...


25

I would call that strategy "waste of time": Your individual purchase decisions are not meaningful for the bottom line of the company. A single individual (you) simply isn't representative enough of the market as a whole. As the Canon example shows, how a company behaves depends of a lot more than consumer products, and many of those factors are difficult to ...


20

Two parter: Part 1: How much money do you need to have before you invest? You want to ensure that you have enough money in liquid form to cover emergency expenses/etc. before you invest in anything. If you lose your job and the market is down you don't want to have to touch your investment. I would keep enough money to cover 6 months of expenses/rent/...


19

If you are able to invest £2000-£3000 a month then you are already in amazing shape if you ask me. That's my entire wage (and that's after tax!!). I invest something like £80 each month, and even that will add up to quite a bit by the time I retire in 40+ years. Not quite sure what the "best investment" is, and it greatly depends on the timeframe you're ...


18

No. You have an overly pessimistic view of holding a job, an overly optimistic view of real estate investment, and you don't even mention other alternatives. Sure, you could get laid off from your job. That's stressful, but it's hardly the end of your life. Get another job. If you have marketable skills, this can be quite easy. I was fired once, and I got ...


17

Your investments are an attempt at hedging your consumer price risks. You are trying to choose stocks that will help fund your planned consumption, such that if the prices of your favorite products spike, your investment returns will roughly compensate. If you plan to consume N widgets per year, you are buying up-front your own "little factory" (small share ...


16

In the case of Apple you at least get dividends. Dividends provide zero total return. Obviously there will be more fees through the buying/selling. As of recently, there will not be more fees from trading because commissions are going the way of the dodo bird (extinct). Sure - for example if I had bought Apple end of July for 199$ and sold it mid ...


15

Joseph, I've read the other answers and your comments to the answers, and I think I might be able to shine a light on something you're missing (and that the other answers don't directly address) What you're describing is gambling. Let me describe why. Your algorithm is: Pick a stock to buy, add 5% to the price, and simply sell when it reaches that price. ...


12

If you have the option of a high deductible health plan you might consider using a High deductible plan with a Health Savings Account (HSA) in the years before the first child is born. You can contribute the maximum into the HSA but don't use the money. You may decide that in the year the child is born to pick a non-high deductible plan, but because the ...


11

There aren't any. Of these significant, relatively predictable expenses I would not necessarily classify child birth cost as either significant or predictable. Depending on your health insurance a healthy baby birth will cost very little out of pocket. Even with crummy insurance, many children can be birthed for less than $1,000. Often prenatal ...


11

The default choice for UK medium size investing should be a "stocks and shares ISA". You can invest in trackers or you can even buy individual stocks this way. A huge range of these standard products is available from UK banks. You can invest up to £20,000 per year this way, and take it out at any time (although not put it back in that year!) If you do it ...


10

You miss a 3rd scenario - what if the price bumps up to $12.05, and then drops back down to $11.50? If you wait to do this yourself, and don't have a standing sell order, you could likely miss the window of opportunity. But deeper than that, let's address the hidden psychology in what you're suggesting: "If I personally see the price rise quickly to $13, I ...


10

No, it is not even close to index investing. From Investopedia, with my emphasis: Index investing is a passive strategy that attempts to generate similar returns as a broad market index. Investors use index investing to replicate the performance of a specific index – generally an equity or fixed-income index – by purchasing exchange-traded funds (...


9

I get the appeal of real estate investing and it is a big part of my retirement strategy. I like owning property because it is a thing I can go and interact with, it feels more permanent and real than the numbers in my retirement/brokerage accounts. The fact is, though, plenty of people retire happily owning no investment properties. Being prepared for ...


8

That thing is called a mutual fund. They are readily available, either as a mutual fund proper, which has rules for investing and withdrawing, or as an exchange-traded fund, which trades in real time just like a stock. - What you are specifying is an actively managed mutual fund, where a monkey throws poo at a wall to pick stocks at random ... and ...


7

The idea is the same as how you treat money in a non-HSA account: "What are the pros and cons of investing money in my personal checking account?" The answer is in the long run you'll likely have much higher returns, and in the short run you have a much higher risk of losing a large chunk of your money. Similar to how you probably wouldn't invest your ...


6

You can achieve both outcomes by having a portion of your portfolio allocated to fixed income, this will lower the volatility of your total holdings without sacrificing too much expected return. When the inevitable dip occurs you can/should rebalance your portfolio to it's target weightings by exchanging fixed income for stocks on sale.


6

What is the truth about this? Only partial truth. Investing in real estate is a bad idea for many reasons: Houses depreciate at the same time housing market appreciates. If you buy a house that is 20 years old, 100 years from now it will be 120 years old. Probably old enough to be demolished. Housing market appreciation happens because it's the market ...


6

The key issue with your proposed strategy is that after you sell your small gain the stock price may never drop to your buy point again. Example you buy some apple stock at the start of the year in 2017 at about $116 per share. The price rises! lucky you! So you sell a month later for about $126 per share. The next step of your plan dictates we wait for ...


5

In your 529 example, you account for the 10% penalty, but not the tax on withdrawal. The gains, $190,290 are taxed, at ordinary (not cap gain) rate. Since that's on top of your income, I'd assume 22%, at today's rates. $41,864. Canceling out the entire amount you show as extra on the 529 choice.


5

I agree with the other answers recommending a low ER index fund, purchased through a low-cost well-respected (not "discount"!) brokerage, preferably one with a good selection of commission-free ETFs. If you think think it likely you will retire in the US, you can take advantage of your employer's retirement plan. Laws make it really expensive to move ...


5

How can I balance these two risks? Risk is a tradeoff. A Systematic Investment Plan (SIP) reduces risk but also reduces expected return. Since the market moves up more often than it moves down, statistically you're more likely to be better off investing the lump sum and letting it grow over time. Being better off investing regular amounts over time when ...


5

I think paper trading accounts are a waste of time. The best learning tool is losing money. It's kind of like touching a hot stove, touching a toy stove just doesn't have the same effect. I say put your strategy to work, after you've lost some amount of money you'll lose interest. It's not as though you're talking about short positions and buying on ...


4

The basic argument against purchasing life insurance that isn't term insurance is that you are mixing two very different products that don't need to be mixed. Decide how much life insurance you need. Base this on who needs money if your were to die. Look at their ages, their needs such as college or long term care if any have a disability, and the income ...


4

I have been investing towards multiple goals, like Retirement, House, Car, Vacation etc What if the stock market drops 10% or even 20% just before you are ready to buy a car or go on vacation? You're up a very malodorous, very toxic creek and lack a paddle, that's what. Thus, short term goals like "Car" and "Vacation" should be saved for in on or more of: ...


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