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wrote:Bear in mind that the market is in an unusual place. The GOP tax cuts are releasing lots of funds which are doing unusual stuff. We are currently in a place of odd bullish optimism (arguably analagous to the sentiment that preceded the crash of the late 20s) where stocks are strongly overvalued and yet people are buying more.
One of the greatest things you will learn from Bernsteins two books is how important disciplined mental habits are to an investor. Bernstein writes at one point that even when you have an intellectual understanding of how human psychology affects investment choices (notably greed, mania, and terror), nothing can quite prepare you for your first experience of an actual market correction (e.g. a "crash"), when you wake up and find out that you have lost a third of what you had the day before.
But a mentor like Bernstein (who was a neurologist in his earlier career and who has a special understanding of the way the brain affects investments) is a good place to start.
Buffet is of similar mind, he says that when you buy a stock you need to be willing to not touch it for 10 years.
wrote:
wrote:Bear in mind that the market is in an unusual place. The GOP tax cuts are releasing lots of funds which are doing unusual stuff. We are currently in a place of odd bullish optimism (arguably analagous to the sentiment that preceded the crash of the late 20s) where stocks are strongly overvalued and yet people are buying more.
One of the greatest things you will learn from Bernsteins two books is how important disciplined mental habits are to an investor. Bernstein writes at one point that even when you have an intellectual understanding of how human psychology affects investment choices (notably greed, mania, and terror), nothing can quite prepare you for your first experience of an actual market correction (e.g. a "crash"), when you wake up and find out that you have lost a third of what you had the day before.
But a mentor like Bernstein (who was a neurologist in his earlier career and who has a special understanding of the way the brain affects investments) is a good place to start.
Buffet is of similar mind, he says that when you buy a stock you need to be willing to not touch it for 10 years.
I've yet to choose and pick, yes that is the stock I will buy. I've just let morningstar do its thing. Thank you so much for all the tidbits and info you guys. Forums have never let me down yet.
To give you an idea of how unaware of day-to-day activity on Wall Street a sane individual investor can be, I was unaware until you guys mentioned it that the markets had taken a big hit. Last time I had heard, investors were still riding high on their euphoria of the last few years and the last 6 weeks.
But there you go. Checking to see what Wall Street is doing constantly brings you nothing but grief in the long term. One reason is that our brains are wired to be more upset by bad news than pleased by good. Thus if you check the market 100 times in a year for news, and the results were 60 pluses and 40 minuses, the grief/worry caused by the 40 minuses will be greater than the pleasure caused by the 60 pluses.
Make cool rational decisions that are calculated to help you long term and then go play with your kids, go to the gym, watch a good movie, or make some good food. Anything but obsess about the market.
wrote:To give you an idea of how unaware of day-to-day activity on Wall Street a sane individual investor can be, I was unaware until you guys mentioned it that the markets had taken a big hit. Last time I had heard, investors were still riding high on their euphoria of the last few years and the last 6 weeks.
But there you go. Checking to see what Wall Street is doing constantly brings you nothing but grief in the long term. One reason is that our brains are wired to be more upset by bad news than pleased by good. Thus if you check the market 100 times in a year for news, and the results were 60 pluses and 40 minuses, the grief/worry caused by the 40 minuses will be greater than the pleasure caused by the 60 pluses.
Make cool rational decisions that are calculated to help you long term and then go play with your kids, go to the gym, watch a good movie, or make some good food. Anything but obsess about the market.
That's one of the best pieces of advice you can give me. Thank you greatly. No reason to stress. Do research and do your best.
I read the WSJ everyday and just reading how the market was going up and no one seemed concerned started scaring me. And the fact that bond yields kept rising
there seemed to be no bears around. All euphoria. Seen this before. It’s just keeping an eye on the big picture. If it goes down another 10 or 15 % then there might be some good buys.
wrote:To give some more insight my main goal right now BEFORE going all in is to pay off my credit card debt. Currently have about $14K in card debt and want that gone. My income is $90K a year and I remember reading somewhere that if you expect to be making less at retirement than to stick to a standard 401K. Not that I'm a master, thats obviously why I'm asking questions lol. I did confirm this morning that my employeer driven 401K does not have any type of Match program. They do stick a percentage of profit every year in there but I would much rather have a match program. Still as morningstar has managed to grow 5% average in the first quarter that I've used them. That isn't awful right? I hate that couldn't make contribuations without going through a paystub which is why I'm trying to decide what a second avenue might be for a place to put extra money. Thank you for all your help. I currently am half way done with my first readthrough of If you Can.
I don't know if you've taken into consideration the tax benefits of contributing to a 401k.
wrote:I read the WSJ everyday and just reading how the market was going up and no one seemed concerned started scaring me. And the fact that bond yields kept rising
there seemed to be no bears around. All euphoria. Seen this before. It’s just keeping an eye on the big picture. If it goes down another 10 or 15 % then there might be some good buys.
I was bearish enough to have taken out almost $1M at the end of the year. Still kept enough money in to benefit if the market keeps going up, but if it goes down (even lower), I have cash to jump at opportunities.
Tac
i agree. always have some dry powder.
Aside from the 401k which I can't comment on without knowing particulars about the investment options available within the 401k, I have a very specific recommendation for you.
The above allocation represents an aggressive (100% stocks, 0% bonds), global (roughly 50% US, 50% international) and low-fee (every fund listed has a low expense ratio and is commission-free at Schwab) portfolio tilted toward small-cap stocks. (Historically, small-cap has outperformed large-cap.)
Every $100 can be allocated entirely, with zero idle cash, using the above allocation.
Historically, the stock market has returned ~9% annually. At age 31, you have around 35 years till Social Security's full retirement age.
Assuming you contribute 5,500 annually for 35 years, you'll have $1.3 million at retirement.
Check for yourself using Bankrate's Roth IRA calculator.
If you like the sound of that, don't delay ! Start today!
If you want advice regarding your 401k, post your investment options, preferably with name, symbol and expense ratio for each investment.
Credit for portfolio allocation goes to Paul Merriman.
Historical portfolio performance at Portfolio Visualizer.
wrote:
wrote:To give some more insight my main goal right now BEFORE going all in is to pay off my credit card debt. Currently have about $14K in card debt and want that gone. My income is $90K a year and I remember reading somewhere that if you expect to be making less at retirement than to stick to a standard 401K. Not that I'm a master, thats obviously why I'm asking questions lol. I did confirm this morning that my employeer driven 401K does not have any type of Match program. They do stick a percentage of profit every year in there but I would much rather have a match program. Still as morningstar has managed to grow 5% average in the first quarter that I've used them. That isn't awful right? I hate that couldn't make contribuations without going through a paystub which is why I'm trying to decide what a second avenue might be for a place to put extra money. Thank you for all your help. I currently am half way done with my first readthrough of If you Can.
I don't know if you've taken into consideration the tax benefits of contributing to a 401k.
Not at the time but I definetly am aware of it now.