What do you Invest in?

stlsmoore

Like the title says what do you invest in for your future besides certs? I'm trying to work my game plan now, to be honest I don't trust 401K's and stocks in general due to the little control I feel I have and low returns compared to some others. I want something that brings in recurring income rain or shine. I recently purchased a website that was making a few sales a month but I'm in the middle of selling it to a new owner. The return was pretty good but the internet moves so fast I don't like the fact that 5 years from now most likely the website would be irrelevant and possibly worth zilch.

Besides starting my own biz eventually, I'm thinking about purchasing mobile homes and renting them out. They're low enough that you can buy em' cash out right and not care if they get trashed (I'm assuming they will). The down side is that they're not appreciating assets, the value doesn't raise as time goes on, but from what I researched so far mobile homes doesn't depreciate nearly as fast as a car/truck/boat.

So again like the title says what do you invest in or whats your plans, I'm curious about what my fellow TE members strategies are.

dave330i

Things that reduce my taxable income.

vanquish23

IRA's and savings. Cisco lab equipment to get certified and you can sell them on ebay and get half your investment back.

paul78

@stlsmoore - looks like you live in US as I do.

So for me - reducing my taxable income as @dave330i and @vanquish23 mentioned are a priority for me. And deferring compensation using a 401K and other methods are a great way to save and invest for the future.

I can understand your reluctance if you are unfamiliar with how the capital markets work, but if your employer offers a 401k and you are lucky enough to get a matching contribution, a 401K is the absolutely best investment you can make. Most 401K investment choices are geared towards "non-experts". Pick a low-yield bond fund if until you are more comfortable.

After a 401k, I would suggest an IRA if you qualify or purchasing a home.

There is a school of thought, that one should invest in opportunities that one knows best. In our case on TE - that would be IT. But because I already work-full-time in IT, I tend to prefer diversification so I invest in non-IT related opportunities.

For example:
I do invest using the stock-market but I stick strictly to index and sector funds because I don't have the time to track individual stocks. And to limit risk, if I was to invest in mobile homes like you suggested, I would probably purchase a REIT fund that does that instead of trying to be a landlord or tying up capital. The stock market gives you liquidity and reduces your risk.

Some of my colleges and acquaintances in IT similarly invest in non-IT opportunities - for example, gas stations and restaurants - but that just seems like too much work to me

For my family - after doing all above - I do have a share in small partnership where we started to invest in condos which we will rent. The idea is to purchase 2-3 condos. The rental income is primarily a hedge against the possibility of continued falling real-estate prices but our bet is on a recovery in real-estate prices and capital appreciate of the properties. Right now, we bought 1 property and we are in the process of trying to rent it.

BTW - I'm a proponent of paying down debts first before investing.

N2IT

I agree with most of what is posted above.

I make it a priority to pay down intrest bearing debt. If the loan has deferred interest then I usually wait to the very end to pay off the debt. Free money is my motto.

401ks within a company I always invest as much as I can until the company stops matching. Again free money

BTW isn't there captial gains tax increase coming up in 2013? I believe for long term investments it's going from 15% - 20%. I believe they will increase the medcare tax ~4%

One other investment I have made since 1998 (due to my parents starting me off), is Roth IRA's. I have submitted the max amount since 98. I plan on continuing that trend.

paul78

N2IT wrote: »

... is Roth IRA's....

A Roth is definitely a great way to reduce taxes.

For those with kids, one other tax-advantaged vehicle to consider is a 529 plan. A good way to save for your kids college.

MickQ

I did gold when it was rediculously low back in the early/mid 00s.

stlsmoore

Great stuff so far, maybe I'll give 401K another chance. I do have some debts (car/federal student loan) that I'm making double payments on, I plan to have those knocked out in about 3 years.

Roguetadhg

1. Paying Debts. Loans, mostly. Then pay in advance for things that I do use a lot. I'd like to pay off my Jetta, by forcing 4/5 payments per month down my lender's throat.
2. Investing in Certifications, and furthering my technical knowledge as well as troubleshooting.
3. I'd like to get into a job that pay 40k... Whereas I'm making "Monopoly money" right now. I'm currently looking for new employment as it would help with #2.
4. I've told my fiance I can no longer pay for her car (This was 2 months of telling her this), so that'll free up some burden. Unfortantly she still has yet to find work. Due to my car things happening all at once, I don't really have a choice to help her or not. Her car will probably be repo'ed

N2IT

@Paul

My parents started my daugter with a 529 back 5-6 years back, she is 9 now. My son who is 4 has one as well.

Infact we insist on cash for gifts for our children to put in their college fund. Once they start making money I'll start them with a Roth.

+1 for mentioning the 529

Certification to me is more of a cost than an investment. I haven't had enough return on them to classify them as one.

@Rogue

I have been exploring interest free car loans for 5 years. That way I can space my payments out using deferred interest.

powerfool

I invest in things that will lower my overall expenses with a good return. For instance, before everyone was buying CFL bulbs, I bought them... spent $45 on enough for the entire house and knocked $15/month off of my electric bill. I bought a used Volkswagen Jetta TDI that gets 43 mpg and cut my fuel expense in half over my same model year Chevy Malibu. New washer and dryer set uses less water and has a fill cup for detergent, so the wife doesn't use nearly the detergent for each load... instead of going through 2-3 of the big Sam's Club jugs ($14/each) per month, we go through one jug about every 2-3 months.

I go with index funds unless I am going to be more active with my investments. I have developed some of my own rules for active stuff. I have certain things I do to select IPOs that I want to be involved, and I usually get out of them quickly, too... like VMware. I wouldn't touch Facebook with a stick. I purchase a small amount of Amazon every month.

On saving money, you have to remember that when you save money, that positive impact on you is tax free. So when people try to throw out that they don't do something because they lose money doing it... unless you are making $125+ an hour and you will actually use that time to be billable, the math is not going to add up, more often than not. I do my own car work and that saves me money... and I am learning a new skill as I get experience, in case of a global economic crisis or a zombie apocalypse. Which that brings me to other things I invest in... myself. I learn new skills as often as a I can. If I become experienced in something, I can be exposed to new opportunities. For instance, there are certain common issues with my car... not major things, and they are fixable, but if I can come up with a solution and develop a new part that will fix the root cause, then that is serious money. If you keep your blinders on, you won't see the opportunities.

tpatt100

I stick with mutual funds and dollar cost averaging. I tried doing individual stocks with Ameritrade but I am too impatient to mess with that. For some reason I am patient with buying low and selling high in mmos......

veritas_libertas

Cool topic. Like most on this thread I do the following:

1. Match what my company will give for my company 401K
2. Lower my power consumption: CFLs where acceptable, smart thermostat, turn on only the lights I need, etc.
3. Do what I can to improve the value of my home.

Now for a more IT/Tech Geek related:

1. I try not to pay for IT certs that I don't need. That's not to say I haven't made mistakes in that area.
2. I haven't bought a juiced out computer in years.
3. I purposefully buy low power computers unless I'm going to use them as servers.
4. My computer is set to go into standby if it's not being used.

tpatt100

lol I just bought a Synology DS413j and a couple of Shuttle pcs. The Synology was for the home, I have gotten bad about backing up files "again". The Shuttle pcs are for VMware playing/learning.

ptilsen

As others have said, I pay down high-interest debt as a top priority. I won't be overpaying my next mortgage, though, as the rate after the tax deduction, is less than the rate of inflation. My current rate is just a bit too high, but I'm in the process of selling. My next car will be purchased in cash, probably in 2014. I paid of my current car three years ahead of schedule.

I have a traditional 401(K), which has been good to me and hopefully will still be good in 40 years. While I do have a Roth IRA, I think they're overrated. Only the interest is tax-deferred; you're still using after-tax dollars to fund it, and the return is nothing to write home about.

My investment portfolio is primarily mutual funds and ETFs, but I do trade in some stocks. I've made gains on F, AAPL, STX, WDC, and HPQ (I shorted just before the latest drop), and I'm still long AAPL and F. I've made losses on others. But stock trading is extremely risky right now (and always will be), and I'll be moving away from that soon. ETFs and mutual funds have been good enough gains to justify getting away from common stock, and much lower losses. I'm unconcerned about the tax increase outside of the affect it will have on the market. It will affect profits, but I'm profiting off of having extra money, not off of working. It doesn't affect how much I have to invest outside of reinvesting profits.

I do exercise my company stock options, which are pretty good. The company is in a fairly stable industry and I don't expect to see any huge gains or losses.

I have a savings account just to keep liquid cash, but the interest rate is a joke and always will be. Precious metals appreciate faster and at steadier rates. I keep my savings at a certain level for emergencies, and the rest gets auto-invested into my ETFs and mutual funds.

Of course I invest in certifications and my education as well. My university is relatively cheap, and I've been pretty selective about my certs. I may try my hand in development in the future as I have time.

I am doing something arguably bad though, which is not paying back any of my deferred student loans. The interest it tax-deductible, but the rates are still high enough that this is a mistake. However, investing in assets (stocks, ETFs, mutual funds, real estate) gives me a safety net if I lose my job or something like that. Paying off my student loans ASAP saves me a couple percent interest, but leaves me with no safety net.

Ultimately, personal finances are about balancing the things you want, the things you need, a safety net, and asset building.

dave330i

Wife and I've been maxing out our 401k for a while. Last I checked, we can't contribute to Roth IRA and we don't bother with traditional IRA due to our 401k contribution (we have couple of rollover IRA). Rest of our money goes into investment property, kids' college funds, savings, market accounts & vacation fund.

ptilsen

You should be able to contribute to a Roth (to a limit), but not to a traditional because of your 401(K). But again, I wouldn't necessarily bother. The 401(K) and rollovers should be plenty for retirement. The rest of your "spare" money is definitely better spent on investments you get returns from before retirement, so you're making the right choice IMO.

YuckTheFankees

I invest in foreign currency and it has worked well for me. You might want to take a look.

paul78

YuckTheFankees wrote: »

I invest in foreign currency and it has worked well for me.

Just curious - what pairs do you trade? I find forex trading to be to speculative for my own taste but nevertheless I've always been fascinated by that market.

ptilsen wrote:

I do exercise my company stock options, which are pretty good.

That raises a good point. I assume your option grants are part of your compensation but it reminded me about ESPP's.

For people that work for public companies, I am often surprised that so many employees, especially in IT, do not participate in the company's employee stock purchase program. While there is some potential downside and there is no tax advantage, most companies structure the espp to be financially advantageous to the participant. A simple explanation that I found here for those unfamiliar - Employee Stock Purchase Plan (ESPP) Is A Fantastic Deal

ptilsen

I leverage our corporate ESPP, which includes 15% (taxable) employer contribution for all purchases. Certainly this can lose value, but my organization is simply in too static of a market to see serious capital depreciation. Plus it's undervalued, growing ahead of expectations, and so on. I would actually have invested in it prior to being employed if I had actually heard of it. Even if the stock declines 5%, for example, I would still be in the money after taxes and fees, and that's assuming I sold.

I think any employee working for a company that can reasonably be expected to succeed should take advantage of an ESPP if offered. I can see shying away if you work for a RIMM or a GM, but not an Apple or a Microsoft. Unless there is a serious risk of the stock plummeting, the ESPP is almost always an awesome deal.

Currency is way too speculative, IMO, and right now is probably the worst possible time to be trading currency. Europe, Asia, and the US are all highly volatile right now. Even stocks are too risky for my tastes, which is why I'm largely switching to safer assets which are either not at risk of serious downside from any particular regional crises or could recover in time from such crises.

Imran_Haider

I would love to invest in Web Design and Development company along with all marketing and sales services. Here in my country it needs less investment to start a small level company as compare to other businesses.