how do you invest your 401K and IRA money...

[Dancing Fire]

by purchasing the stocks of your choice or by purchasing mutual funds?

my daughter thinks i'm a genius b/c i made her 49% in 6 months with her Roth IRA $$$,but little does she know that daddy been losing his A$$ in the stock market in the past.

 

[Octavia]

I have most of mine in retirement date-targeted funds. I could probably make more if I managed it myself (which I used to do) but my current job only offers funds, not individual stocks, and my roll-over IRA from the former job is so pitiful, it's really not worth the time.

 

[rubybeth]

With the 401k my husband has, and my 457b, we just went with the best performing mutual funds that our companies had. For our IRAs, we went with growth and aggressive growth mutual funds with a good and long track record. We've got 30+ years to retirement, though. I am jealous of my dad's huge amount of Apple stock, which he bought when it was around $70/share. Right now it's at $358/share.

I've read a lot to back up the idea that investing in index funds is the way to go. I'm not sure I totally believe in putting all my eggs in one basket, but as we get closer to retirement, we'll definitely be moving from aggressive growth and international funds to more conservative options.

 

[partgypsy]

http://www.bogleheads.org/forum/viewtopic.php?p=878734&sid=c0c74b20f4af1388f2b0cf6521169e1d

This wasn't the exact reference I was looking for, but basically research shows over a 20 year period of time, a passive investor will beat an active investor. 99% of the time. The reference I had earlier was 3% difference (10% versus 7%) which I would feel is significant since people chase smaller differences in return.

I can't say I do this completely (buy and hold) for retirement but I pretty much try not to fudge with my allocations that I have set out to do since my retirement horizon (sigh) is so far away. If I'm ever going to get rich quick, it will have to be another way.

I know people will pop up and say they beat the market, but really this is all about time periods. Anyone can beat the market a short period of time, but averaged over the long term, seems the passive will have a higher net gain. It does seem counter intuitive, but there you go.

 

[lulu]

For the past 15 years we have paid experts to manage it and it has been worth it.

 

[Dancing Fire]

For the past 15 years we have paid experts to manage it and it has been worth it.

hope it wasn't Madoff...

 

[Trekkie]

by purchasing the stocks of your choice or by purchasing mutual funds?

my daughter thinks i'm a genius b/c i made her 49% in 6 months with her Roth IRA $$$,but little does she know that daddy been losing his A$$ in the stock market in the past.

Good on you! I think it's important to explain to her that is a risk involved. The stock market is a fun game but sometimes one loses.

Me? I'm very, very cautious with money. Perhaps too cautious. I like my money where I can see it and appreciate it (sparklies) or where I know it is reasonably safe (property).

The only practical advice my dad ever gave me was about money management. I started saving for retirement when I was 19 - a year after I bought my first house. And no, I did not receive a down payment from parents, nor any other form of financial assistance.

I believe in befriending compound interest. This means avoiding debt and saving, saving, saving! The only debt I make is for mortgages and even those are paid off way before the bank's required 20 or 30 years. My first house was paid off in 32 months and my next house will be paid off in 5 years. Even so, I think that's a ridiculously long mortgage and it physically hurts to think of the interest I'll be paying. But I have to remind myself that I no longer work in IT, I'm a student and I should be grateful the bank is giving me a bond at all. Yet... I refuse to pay a penny more interest than I need to. Why should I line the bank's pockets with my money?

I also don't believe in buying brand new cars, especially not if they're bought on credit. Not only do you lose a hefty percentage once your drive it off the showroom floor, you also pay your arse off in interest! Sounds like a lose/lose situation to me. That's why I drive a 1994 model VW Citi Golf. I look after it and it looks after me. It is very reliable and it was manufactured locally so spares are cheap.

I look at the tenants in one of my properties and I'm astounded at how they can live the way they do. They're a young couple, roughly the same age as me and my FI, and yet they both drive brand new, imported cars. Expensive clothes bought on credit - the clothes are costly in the first place and then they double the price by taking so long to pay off the balance that they end up paying twice! They have expensive coffee and deli lunches every single working day... And yet they complain that they're broke and they can't pay the rent.

Huge disconnect.

I recently told the girl (we know each other socially) that when I bought the property they live in (4 years ago) the mortgage was less than their combined car installments. She told me that they needed their cars to get to work. Why they need such expensive cars I don't understand, but I won't argue the point with them...

ETA: I'm sorry for the rant. I'm just really pissed off because this is the second month this couple has short-paid and I'm getting tired of having to fund their extravagant lifestyle. Because really, that's what it amounts to. And as I know them socially, it will be difficult to evict them.

 

[lulu]

"Dancing Fire][quote="lulu|]For the past 15 years we have paid experts to manage it and it has been worth it.[/quote]
hope it wasn't Madoff...

lol. Just my luck he's at Smith-Barney on a jail work release program!

 

[Dancing Fire]

[quote="Trekkie|1298013396|I recently told the girl (we know each other socially) that when I bought the property they live in (4 years ago) the mortgage was less than their combined car installments. She told me that they needed their cars to get to work. Why they need such expensive cars I don't understand, but I won't argue the point with them...

ETA: I'm sorry for the rant. I'm just really pissed off because this is the second month this couple has short-paid and I'm getting tired of having to fund their extravagant lifestyle. Because really, that's what it amounts to. And as I know them socially, it will be difficult to evict them.[/quote]


can i move in and live for free? i need a new BMW...

 

[soocool]

Ok some advice from a 54 yo. I started putting money away as soon as I started working (yes, even those part time jobs in high school and college). I had money in IRAs when they paid large percentages (around 15%) and even put some in mutual fund IRA when I could. I knew I would retire someday and my parents always harped on us to save a portion of what we earned and that we would thank them someday for this. So mom and dad, I am thanking you for all your wisdom! When I worked full time I purchased some pharma stocks that over the years have paid off big time by reinvesting the dividends (I have held on to them for many many years). I still have my 401k (I have a portion in a fixed rate fund and some in mutuals)with a major company I once worked for and even after I had left they gave me a nice chunk of company stock (ESOP).

DH has also done much of the same, and has his 401ks in 2 different mutual funds (one he rolled over from a previous employer plus an ESOP and pension) and one from his current employer (plus ESOP and pension). (he is of the lucky few who has a pension plan)

I consider myself semi-retired as I do not work full time anymore (I do consulting for about 2 months out of the year- I use some of these funds to contribute to my yearly max to IRA, the rest DH and I have purchased a number of parcels of land).