Investing Thread

[lostfan]

What I do is let the dividends collect in a cash account and wait, when I find a bargin stock or an opportunity arises where a good company is hammered for no reason or bad reasons, I'll diversify the collected dividend money into that new company/opportunity. It allows you to take money paid by other companies and diversify it. To me, I already have shares of the companies paying dividends, so I'd rather have something else, possibly at a better price, and even if I do decide to buy more shares of the same company, I get to decide when to do so, usually at a better price. With dividend reinvestment, your stuck buying shares at whatever price the stock happens to be at, which isn't always the best time to buy.

I want the stock to go up b/c that means more money for me... it also means the % of stock I buy when the dividend payment comes is less. If the stock tanks for a while, the reinvestment buys more % of shares and it's a better value, but it's still not good that the stock tanks. Eh as long as the stock doesn't totally bomb and stay down, you don't lose money.

[Y2HH]

I want the stock to go up b/c that means more money for me... it also means the % of stock I buy when the dividend payment comes is less. If the stock tanks for a while, the reinvestment buys more % of shares and it's a better value, but it's still not good that the stock tanks. Eh as long as the stock doesn't totally bomb and stay down, you don't lose money.

 

It's not that you would lose money, and it's not that it's even a bad idea to auto reinvest, I just prefer to use dividends as a method of diversification, and to keep income taxes as simple as possible for if/when I sell.

[lostfan]

It's not that you would lose money, and it's not that it's even a bad idea to auto reinvest, I just prefer to use dividends as a method of diversification, and to keep income taxes as simple as possible for if/when I sell.

I need to stop caring about what the portfolio looks like week to week... in 2008 and 2009 I didn't look at it at all.

 

What I do right now is transfer cash from my checking account every month and let it sit and then when I have enough I either buy something else (to diversify) or I add to something that's already in it. I don't have that many stocks, though, I added a couple so I could have some small cap stuff but the rest I think I'm just going to find an ETF for small cap growth stocks, and after that just start putting stuff in a S&P 500 index fund.

[Y2HH]

I need to stop caring about what the portfolio looks like week to week... in 2008 and 2009 I didn't look at it at all.

 

What I do right now is transfer cash from my checking account every month and let it sit and then when I have enough I either buy something else (to diversify) or I add to something that's already in it. I don't have that many stocks, though, I added a couple so I could have some small cap stuff but the rest I think I'm just going to find an ETF for small cap growth stocks, and after that just start putting stuff in a S&P 500 index fund.

 

I do the same, every paycheck a certain % goes into my 401k, and a certain % goes into my brokerage -- the rest goes into the spendings account. I call it that, because it's just a savings/checking account used for bills/household/everyday life...thus a spending account.

 

I then wait as the money I put in + the dividend money builds up and a bargain stock comes along, something very cheap, etc...and I'll buy that. Or, I'll buy an increased position in something I already have if the price is at what I consider to be a "buy price".

[bigruss]

Bumpadoodle.

 

So I've got a few questions. I just set up an account with Vanguard and Im going to be investing in their Total Stock Market ETF and their Total International Stock ETF. Now, do I want to purchase into it now or do you guys see a dip coming and it would be worth holding off for a few months.

 

Also, I got a credit card application that intrigued me, it's an American Express that offers up to 6% cash back at supermarkets, 3% at gas stations and department stores, and 1% on everything else. It also has a $75 annual fee, but that could pretty easily be made up by the supermarket cashback (average of $25 a week covers that), my biggest concern is that they say that balance transfers cost $5 or 3% each time, so does that mean each time I pay my statement online that I would get hit with a 3% charge? That would completely kill the extra cashback.

 

Current portfolio includes: VZ, BP, KO.

Edited July 1, 2011 by bigruss22

[NorthSideSox72]

Bumpadoodle.

 

So I've got a few questions. I just set up an account with Vanguard and Im going to be investing in their Total Stock Market ETF and their Total International Stock ETF. Now, do I want to purchase into it now or do you guys see a dip coming and it would be worth holding off for a few months.

 

Also, I got a credit card application that intrigued me, it's an American Express that offers up to 6% cash back at supermarkets, 3% at gas stations and department stores, and 1% on everything else. It also has a $75 annual fee, but that could pretty easily be made up by the supermarket cashback (average of $25 a week covers that), my biggest concern is that they say that balance transfers cost $5 or 3% each time, so does that mean each time I pay my statement online that I would get hit with a 3% charge? That would completely kill the extra cashback.

Balance transfer means, if you move a credit card balance from another card to the Amex. You will not get charged for paying your bill.

 

I will give you two answers to the questions about buying.

 

One, if you are a long term investor (or even medium term), you need to avoid thinking like a day trader. Don't wait for the perfect dip, or jump on a bandwagon. Decide what you want to do long term, and do it. So if I were you, I'd buy whenever you are ready.

 

Two, if you want to know what's going on out there, I've see some of the "experts" say we are oversold right now, and others saying the economy will further dip and the markets will go with it. So take your pick, one or both groups are wrong, maybe one is right.

 

[bigruss]

Balance transfer means, if you move a credit card balance from another card to the Amex. You will not get charged for paying your bill.

 

I will give you two answers to the questions about buying.

 

One, if you are a long term investor (or even medium term), you need to avoid thinking like a day trader. Don't wait for the perfect dip, or jump on a bandwagon. Decide what you want to do long term, and do it. So if I were you, I'd buy whenever you are ready.

 

Two, if you want to know what's going on out there, I've see some of the "experts" say we are oversold right now, and others saying the economy will further dip and the markets will go with it. So take your pick, one or both groups are wrong, maybe one is right.

Thanks for the response! Good to know about hte balance transfer.

 

Yea, Im just 21 yrs old and I started investing last summer since I have had some pretty well paying internships, so this is a long term investment (mainly so that Im not just sitting on a bunch of cash in a bank account that gives me nothing, and I wanted to get some practice in before I graduate). So far I've felt more comfortable buying stocks with good dividends to help increase my buying power and to offset some of the risk, but Im willing to invest a certain portion in riskier stocks. I just don't want to invest now and see the market tank and realize I could've bought more shares at a cheaper price in just a month or so. I'm not in a rush or anything but by the end of the summer my goal is to have close to 10k invested (currently at about 2k in those 3 stocks I mentioned before).

[southsider2k5]

Thanks for the response! Good to know about hte balance transfer.

 

Yea, Im just 21 yrs old and I started investing last summer since I have had some pretty well paying internships, so this is a long term investment (mainly so that Im not just sitting on a bunch of cash in a bank account that gives me nothing, and I wanted to get some practice in before I graduate). So far I've felt more comfortable buying stocks with good dividends to help increase my buying power and to offset some of the risk, but Im willing to invest a certain portion in riskier stocks. I just don't want to invest now and see the market tank and realize I could've bought more shares at a cheaper price in just a month or so. I'm not in a rush or anything but by the end of the summer my goal is to have close to 10k invested (currently at about 2k in those 3 stocks I mentioned before).

 

If you goal is 50 years from now, don't worry about where the market is today when you buy.

[Swingandalongonetoleft]

I use Scottrade. Pretty satisfied with it. Only complaint is that it doesn't show pre-market/afterhours pps, but I'm not sure the other big guys do either. Good thing for cnbc.com.

[bigruss]

I use Scottrade. Pretty satisfied with it. Only complaint is that it doesn't show pre-market/afterhours pps, but I'm not sure the other big guys do either. Good thing for cnbc.com.

I will say that I've been very pleased so far with Optionshouse.com and google finance to check in on the market.

[southsider2k5]

I will say that I've been very pleased so far with Optionshouse.com and google finance to check in on the market.

 

It is hard to find a broker that won't give you a decent rate and some good tools anymore. optionshouse is supposed to be solid.

[Y2HH]

If you are buying into ETF's/funds, make sure you pay attention to the cost basis -- this is the % they're going to skim off of your money, whether your ETF/fund goes up or down, it's the house take. I prefer investing into Index funds because their cost basis are like 0.15%, where MOST mutual funds and whatnot will have a cost basis of almost 1%, or more.

 

The stocks in your current portfolio look good.

 

I'd thinking about swapping your VZ stock for T (AT&T), but we are in the same boat on this one. I currently own VZ, but their P/E ratio is over 30, which is pretty high...AT&T, which pays roughly the same dividend (depending on when you bought VZ), has a P/E of only 9.3, and it's currently 6$ cheaper. I've been considering doing this myself. It's something to think about, anyway.

 

Oh, and a little advice -- never listen to anyone that claims to know if the market is going to dip or pop...anyone that makes such a claim should be a billionaire, because it would really be that easy to become a billionaire if you *really* knew when/if the stock market was going to way up or way down. Like others have said, with a long term outlook, don't listen or care about such things, find a stock at a decent price, and buy it.

Edited July 1, 2011 by Y2HH

[Y2HH]

Oh, as for your question about cash back bonuses, etc...

 

1) NEVER agree to pay a fee to hold a credit card. They're already going to collect interest payments in the case you hold a balance...they deserve no such fee, not ever.

 

2) Watch those cash back bonuses...most default to 1% or less, with "specials" such as you are talking about. Those special high yield cash back %'s usually come with strings attached. For example, Discover offers rotating deals on things such as 5% back on gasoline purchases from July-September...HOWEVER, they offer that 5% back on the first 300$ you spend on gasoline, and that's it...after that 300$ it's defaulted back down to 1%.

[bigruss]

If you are buying into ETF's/funds, make sure you pay attention to the cost basis -- this is the % they're going to skim off of your money, whether your ETF/fund goes up or down, it's the house take. I prefer investing into Index funds because their cost basis are like 0.15%, where MOST mutual funds and whatnot will have a cost basis of almost 1%, or more.

 

The stocks in your current portfolio look good.

 

I'd thinking about swapping your VZ stock for T (AT&T), but we are in the same boat on this one. I currently own VZ, but their P/E ratio is over 30, which is pretty high...AT&T, which pays roughly the same dividend (depending on when you bought VZ), has a P/E of only 9.3, and it's currently 6$ cheaper. I've been considering doing this myself. It's something to think about, anyway.

 

Oh, and a little advice -- never listen to anyone that claims to know if the market is going to dip or pop...anyone that makes such a claim should be a billionaire, because it would really be that easy to become a billionaire if you *really* knew when/if the stock market was going to way up or way down. Like others have said, with a long term outlook, don't listen or care about such things, find a stock at a decent price, and buy it.

Vanguard is under .2% for each I believe, it's almost nothing. Yea when I was buying VZ I thought about T, and I ended up buying VZ at about $29.50 a share, so the dividend is better currently. I've been watching the stock because of the P/E, but I do believe they have a stronger outlook than AT&T. I'll keep monitoring that one.

 

I see your guys' points, I'll most likely invest as soon as the money transfer occurs.

[bigruss]

Oh, as for your question about cash back bonuses, etc...

 

1) NEVER agree to pay a fee to hold a credit card. They're already going to collect interest payments in the case you hold a balance...they deserve no such fee, not ever.

 

2) Watch those cash back bonuses...most default to 1% or less, with "specials" such as you are talking about. Those special high yield cash back %'s usually come with strings attached. For example, Discover offers rotating deals on things such as 5% back on gasoline purchases from July-September...HOWEVER, they offer that 5% back on the first 300$ you spend on gasoline, and that's it...after that 300$ it's defaulted back down to 1%.

Yea Im really wary of paying the annual fee, but I looked into the fine print and the cashback that they are advertising is there to stay as long as you have the card, it won't go away after a trial period and there is no minimum. It also has unlimited Reward Dollars and an extra $150 cash back if you spend $500 in the first 90 days (which isn't hard for me since I use my CC for everything). The only thing now is that annual fee...

[Y2HH]

Yea Im really wary of paying the annual fee, but I looked into the fine print and the cashback that they are advertising is there to stay as long as you have the card, it won't go away after a trial period and there is no minimum. It also has unlimited Reward Dollars and an extra $150 cash back if you spend $500 in the first 90 days (which isn't hard for me since I use my CC for everything). The only thing now is that annual fee...

 

Just keep in mind that they did every calculation possible on this, and they wouldn't offer it if they knew they were going to lose money. Especially in an era where most companies have dropped annual fees, they're putting it back in for a reason. While it may have unlimited reward dollars, as does Discover, it's probably not unlimited on the 6% cash back deals, but on a 1% basis or some such thing.

 

I do the same thing as you are talking about with my Discover, I use it for everything and pay it off in full every month, and then credit my account whenever 50$ stacks up in the cash back bonus, which happens quite a few times a year. But I have no annual fees, and would cancel the card if they ever implemented one.

[lostfan]

VZ and T looked almost identical at the time I bought VZ. I got it for about $30 a share in 2009, now it's worth $37.80 - it was 40 shares at the time, and my unrealized gain on it is $283.98... not sure what the exact percentage is on that without writing it out, but that's pretty decent. If I'm buying right now, I'd probably get T (thinking of getting in before the T-Mobile acquisition, if it gets approved). T's stock hasn't really gone up very much in the same time period but if we are talking years or decades, that's pretty irrelevant. It's not like either company is going anywhere.

[Swingandalongonetoleft]

I need to stop caring about what the portfolio looks like week to week... in 2008 and 2009 I didn't look at it at all.

 

I would probably go crazy, and I don't consider myself one to make a lot of trades (sometimes 1-2 actions/month). Maybe once in a while I won't check the portfolio, but I need to get a quote from my favorites. Some I don't care about day to day, like Natural Gas plays, but others (Tech) I have to know about because admittedly some are risky (LVLT).

[Jenksismyhero]

Didn't know where to put this, but I figure it's "investment" related.

 

So has anyone else been screwed by an escrow fund review? My wife and I bought a place last year. For some unknown reason (which i'm investigating) our property taxes went up by $500/installment (2nd of last year, and first of this year), and our house insurance went up by $500. My bank sees this and "projecting" into the future tells me that the escrow fund is gonna be like 800 bucks short next year. Thus, they're asking me for that plus an amount near double that so they can set up a "reserve" account. So at the end of the day my monthly payments are going up about $300 a month.

 

For you long time home owners out there - do property taxes and insurance go up like that every year? I mean, i figured they'd go up some, but that seems a bit excessive.

[southsider2k5]

Yeah it sucks, but you have to keep an eye on that stuff, because the banks don't really care if you get hit.

[kapkomet]

Didn't know where to put this, but I figure it's "investment" related.

 

So has anyone else been screwed by an escrow fund review? My wife and I bought a place last year. For some unknown reason (which i'm investigating) our property taxes went up by $500/installment (2nd of last year, and first of this year), and our house insurance went up by $500. My bank sees this and "projecting" into the future tells me that the escrow fund is gonna be like 800 bucks short next year. Thus, they're asking me for that plus an amount near double that so they can set up a "reserve" account. So at the end of the day my monthly payments are going up about $300 a month.

 

For you long time home owners out there - do property taxes and insurance go up like that every year? I mean, i figured they'd go up some, but that seems a bit excessive.

 

Oh yea, I got SCREWED the first year they did that to me, because the first year, they based my payment on land value only. So, woot! my payments were okay, then WHAM! It was almost $5000 in a year (welcome to Texas property taxes).

 

I actually ended up messing myself up worse because I had no choice but to refinance and roll it back into my mortgage - sort of - I got a slightly lower rate but I had to start over again + 5k. Over the life it will end up being ok, but it was sad seeing my principle balance go back up.

 

Then last year, my insurance went up bigtime, and I got hit but lukily I could absorb it this time.

 

This year, I shopped my insurance around, and property taxes went down because the housing market sucks, so I got back to even instead of the + up plus regular payments.

 

Moral of the story - make sure you're paying on the approximate appraisal value, and shop your insurance around because a lot of them like to play games with the replacement value to jack up rates.

[Y2HH]

Didn't know where to put this, but I figure it's "investment" related.

 

So has anyone else been screwed by an escrow fund review? My wife and I bought a place last year. For some unknown reason (which i'm investigating) our property taxes went up by $500/installment (2nd of last year, and first of this year), and our house insurance went up by $500. My bank sees this and "projecting" into the future tells me that the escrow fund is gonna be like 800 bucks short next year. Thus, they're asking me for that plus an amount near double that so they can set up a "reserve" account. So at the end of the day my monthly payments are going up about $300 a month.

 

For you long time home owners out there - do property taxes and insurance go up like that every year? I mean, i figured they'd go up some, but that seems a bit excessive.

 

What happens is this...in IL, the first year you buy your house, it's tax is assessed on the value of the house BEFORE the sale. So if, for example, the people living there bought that house for 125,000$ years ago, and say 10 years later it's worth 200,000$, the taxes on that house is based on that 200,000$ assessment. The first year you buy the house from them, your taxes are based on that older 200k assessment. Now, if you buy that house from them for say 270,000$...the city/township is nice enough to automatically readjust the assessed value of that house at 270,000$ for your following years taxes...hence the huge bump in tax. Normally, them raising income taxes won't hit that hard...but it tends to hit especially hard when people first buy because of this reassessed purchase value. A lot of houses for sale were houses people bought 15-20 years ago for really low values, and were lucky that the city (or township) never bothered to really "reassess" what the house would actually sell for.

 

And whats really REALLY awesome, is say there is a huge downturn in the housing market (ahem), and your house would actually sell for less than you paid for it...they won't be so quick to "reassess" you downward and lower your tax payment, in IL, that can take YEARS...if ever.

 

My friend bought his house new for 270,000...two years later you could buy that EXACT house, on his exact block (with free additions) for 235,000. They're still sending him tax bills for a 270,000 assessment...despite the fact that that house is provably worth less than 235,000. He's been putting up a fuss about it legally, but nothing has come of it...he's still getting taxed at 270k. Politicians are awesome.

Edited July 10, 2011 by Y2HH

[lostfan]

Illinois is shady like that, my dad was b****ing about how they won't reassess him down even though his house is worth way less than that. Here in Maryland, Anne Arundel County reassessed us for like 50k less than what I paid for it... that was kind of deflating, and the lower property tax was kind of a small comfort. A pointless comfort actually, I think they just raised the taxes to keep their revenue at the same levels... meh, it didn't actually affect me, it only really sucks when looking at it on paper.

[mr_genius]

And whats really REALLY awesome, is say there is a huge downturn in the housing market (ahem), and your house would actually sell for less than you paid for it...they won't be so quick to "reassess" you downward and lower your tax payment, in IL, that can take YEARS...if ever.

 

I recently bought some property in Chicago for a goodprice. The tax assessment is nearly double what I paid for it. I am hoping to get the tax rate on it lowered, I think I have a good case; paid price, bank assessment, recent sale prices of similar buildings in the area, ect. But I'm sure they will be dicks about me paying a tax rate of the ACTUAL VALUE of the house, not some bulls*** bubble price. I might get a lawyer to handle it.

[kapkomet]

you should be able to appeal the assessments.