The most interest per year

[Goshawk]

So my goal is to save money and get the most yearly return on it. That means putting money into investments that make good returns. Most have a 401k plan of some form. Yet the skill level required to get a 10% return on a 401k is pretty high.

Myself I depend in part on an advisory service that costs $200 a year. But even that advisory service is wrong one third of the time. The service uses typical mathematical formula to predict market trends. I only believe the advisory service if they match what the market risk looks like. (Wild guess perception on my part. Some gambling).

Have a friend who admitted he gets poor return on his 401k. But know he does not move his money like I do. I switch funds to try and buy the dip, or sell the gain.

Overall point is that it's pretty hard to make the markets work for you. To make your money get 10% interest. Almost impossible if you are not a stock market hobbiest of some sort. And can see why many loose money or get 0% interest.


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[jonney38]

So my goal is to save money and get the most yearly return on it. That means putting money into investments that make good returns. Most have a 401k plan of some form. Yet the skill level required to get a 10% return on a 401k is pretty high.

Myself I depend in part on an advisory service that costs $200 a year. But even that advisory service is wrong one third of the time. The service uses typical mathematical formula to predict market trends. I only believe the advisory service if they match what the market risk looks like. (Wild guess perception on my part. Some gambling).

Have a friend who admitted he gets poor return on his 401k. But know he does not move his money like I do. I switch funds to try and buy the dip, or sell the gain.

Overall point is that it's pretty hard to make the markets work for you. To make your money get 10% interest. Almost impossible if you are not a stock market hobbiest of some sort. And can see why many loose money or get 0% interest.


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[jonney38]

As I'm sure you know, higher returns usually come from higher risks. The trick is to find as much return as you can with the risk you can tolerate.

I have a PhD in economics, but I can't say I know a lot about the stock market. What I know is that I have found the sweet spot of return and risk I can tolerate. And, it takes very little knowledge or skill.

You are making two mistakes as I see it. One is spending $200/yr for and advisor and the other buying and selling trying to beat the market. There are two choices. One is a good dividend paying no load stock mutual fund or two like Vanguard utilities or high dividend. Then, sit on it--don't try to outsmart the market. This will to up and down but give you eight or more % over a decade. At 8% your money will double in nine years.

The other is to make your own mutual fund. This is what I have done. I buy stocks directly from the companies instead of a broker and reinvest the dividends. Reinvesting the dividends is important because it provides about 1/3 of the long term return.

To do this latter requires more effort but is quite interesting. There is a news letter--I think is it $75.00/yr.  Look for DRIP and/or Charles Carlson, investor advisor.  To buy stocks directly (it's actually from another company that handles it for the actual company) you can write, call or look on the internet. Then you have to put a check in the mail and wait a while until you get mail back saying the price and quantity you bought. There is some extra paper, four reports a year from each company and you have to report each one's dividends on you income tax. The companies do send a statement at the end of the year.

The small investor can do well in the market but only by taking advantage of something not available to money market managers. MMM have to have good returns annually or maybe quarterly. You do not. So you let them kill each other and they eventually raise the stock market for your benefit. When you go in and out you are helping some one else, not yourself.

 

[Goshawk]

Am buying/selling only vanguard ETF so no fees. The funds are all indexed funds, so they track pretty well what is going on for the market. You are right that the general wisdom is that you can't beat the market. Yet for the past three years am making 10% at least. If I don't do something stupid. Know that companies like Warren Buffet is doing better than me.

Know other services that are using more sophisticated math and doing better with creating their own ETF kind of like you describe. Wanting to try that, but seems very risky if I don't know the math well enough. Something to consider.


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[GotSmart]

Invest in Cemeteries.

People are dying to get in. 

The three absolutes are life, death, and taxes.  Hospitals are subject to high management costs.  Taxes do not go to the public.  That leaves death.

 

[Spirituallifetime]

Motly Fool at fool.com is a good service to use, but they believe In buy and hold for the long term. Be careful of buying and selling, the short term ivestment taxes are high. Buy and hold for at least a year and one day to reduce the tax on the investment gains. The best way to compare mutual funds to find the best one, look at the 10 year and life of fund returns if it is 10% or higher it is a good fund to buy and hold! Most funds don't average 10% a yaer but there are some that do! Find the funds with 10% or higher average returns for the 10 year and life of fund returns and hold for 5 years or more.
I have also done the drip investing and it works good too but you have to buy and hold.

 

[jonney38]

Goshawk--I should not have said one cannot beat the market. There are people that do. And there are those who try and fail. It is my guess the different between the two is more often luck than brains.

I saw a guy interviewed who had started and run a big mutual fund. He said his fund historically was right 60% of the time. I've read that all sectors, not individual firms, yield nearly identical returns over 20 year periods which is why time bails out mistakes.

As I understand Warren Buffets success, it is not based much on mathematical analysis. For example, he went deep into railroads. When you think about it, railroads are the most monopoly structured businesses in the economy. Fright volume can go down, like the coal business, but no other kind of transportation can compete with rail and some things have to use them. Thus, they are assured to be profitable no matter the time in history. He owns other stocks that all seem to have a lock on some part of the economy. That's not complicated stuff.

All this said, I do not want to portray myself as an expert. I've make some really stupid buys (anyone want to buy my BP shares?).

Motly Fool at fool.com is a good service to use, but they believe In buy and hold for the long term.  Be careful of buying and selling, the short term ivestment taxes are high. Buy and hold for at least a year and one day to reduce the tax on the investment gains. The best way to compare mutual funds to find the best one, look at the 10 year and life of fund returns if it is 10% or higher it is a good fund to buy and hold! Most funds don't average 10% a yaer but there are some that do! Find the funds with 10% or higher average returns for the 10 year and life of fund returns and hold for 5 years or more.
I have also done the drip investing and it works good too but you have to buy and hold.

 

[AngryVanMan]

Level of skill required to get 10% returns year over year?  Good question.  There are two data points I always consider here:

• > 75% of accredited professional investors do not beat the market over the long term.
• Regular retail investors as a whole under-perform the market.  As long as they try to 'beat the market' they consistently under-perform.

The second data point is interesting, because if you just bought a broad index fund and did nothing, you would track market performance.  The more you "do" with your money, the worse your expected outcome will be over time.  

The only way to beat the market is to obtain competitive advantage that professional investors do not have.  Understand the implications of information asymmetry and your inherent disadvantage as an individual investor, and work from there.  Beating the market is possible, but highly improbable. 

Buffet has a competitive advantage in the information asymmetry race - he reads SEC filings and 10K reports every single day, has insider knowledge in a wide array of businesses that Berkshire owns or controls, and they constantly develop ways to exploit the poor and low income (who are at an information disadvantage) to see returns on the business model, which is why they are big into things like mobile home sales - they exploit the greater fool relentlessly.

http://www.investopedia.com/articles/trading/10/beat-the-market.asp

 

[vsession]

We're still on a big bull run, so the 10% you've seen in the last 3 years may or may not be representative for the next 3 years.

Beating the market is not easy, you need to read every day about what's happening to have a chance to get into the momentum, remember that every time a move happen in the market, you're already too late. Individual investor doesn't have inside information that allows them to buy before a big move, often is more being lucky than actual timing. 50% of the market is technical analysis and 50% is psychology. I've seen many stocks that say, buy me I'm right where you should with technical analysis just to see that stock go down, down, and down again. Something there a reason why, something there no real explanation.

In March this year I started doing day trading/swing trading and after 8 months I'm still not sure if I want to keep doing it. It takes time, discipline and you need to have a plan. So 184 transactions later with an +15.39%, I honestly think it's too much work for the reward. The prior 2 years were all in mutual fun with an +6.69% and +5.82% that involve no work at all. I started to put money back in mutual fund, mostly dividend one and will probably end up with 60% of my portfolio in them during the next few months and only use 40% for day trading/swing trading occasionally. I find it challenging enough to keep doing this work, yes I consider that work.

Your best bet is to reduce expenses and put more money into saving than hopping to get a high interest rate every year. You can look at MMM and ERE for inspiration, most of the people there are looking at saving rate more than market returns. There's good info in the stock market thread here too.

 

[Trebor English]

Bernie Madoff paid his investors only 1% per month.  If someone promises a good yield, watch out.

 

[Goshawk]

Bernie Madoff paid his investors only 1% per month.  If someone promises a good yield, watch out.

For those that forget. Madoff was a scam artist pyramid scheme person who bilked dollars from investors. Paid the old investors with the new investors money. And took his cut. He never invested the money he was in charge of. Bad investment companies happen


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[RVTravel]

Bernie MADEoff with everybodies money for sure..lol.

 

[BadSaver]

I think you should have read A Random Walk Down Wallstreet, understand efficient market theory. Have a grasp of allocations and efficient frontiers. 

An interesting web site:
https://portfoliocharts.com/portfolios/

There's a website out there that calculates your portfoloios efficient frontier. I'm in the boonies with my iPad...limited resources.

Also, I like dividends. So, I have some stocks I'd classify as Widow & Orphan stocks - 30 years of constant and rising dividends.

I understand that you beleive the market is not efficient and that you want to beat it. Good luck!

 

[BadSaver]

The mind errors toward beleiving in predictability when it's unpredictability that is the norm. Change is constant. The world is divided up into what we know, what we know we don't know, and what we don't know. We are constantly confronted with that which we don't know, but the mind adjusts without admitting the error.

We can make a list of things we didn't predict - dot com bubble, internet, housing market collapse, Etc. It's impossible to predict tomorrow's news headlines.

What's the next Apple or Google? We don't know what will change (upredictability)or who will thrive in the change. Therefore portfolio theories. Diverisification - market averages usually win over time.

What I find facinating, I think more about the unknown than the known, is that we can predict what will not change. I laughed when I read about investing in cemetaries. Cemetaries don't change.

Imagine you left your town for 50-years. At an intersection (4 corners)there was a cemetary, gas station, flower shop, and a restaurant. On returning home, which one did not change? The cemetary... You wouldn't be able to guess the outcome of the other corners.

Things that do not change are the most fragile. When forced to change they collapse. When investing into low change predictability, risk looks like no risk at all. Imagine I flipped a coin 10 times and it came up heads. What's the chance of heads on the next flip. The witnessed events have nothing o do with what will happen.

I think the fault is again human preception. Black Swan type events. You witness a similiar event over and over and assume the events are related and have some form of predictability. The population observed is not a statistical population of all variables.

As a known, what might not change (looks predictable) I mentioned Widow & Ophan stocks. 

Understanding what we don't know is a big deal. Understanding how we don't know, the characterictics of that knowledge are a big deal. fallacies are a big deal. Solomon said, to divide your wealth among 7 things, 8 in bad times. The stock market might be 1 of the 7.

I wrote this on my iPad. Sorry it's messy.

 

[Goshawk]

The mind errors toward beleiving in predictability when it's unpredictability that is the norm. Change is constant. The world is divided up into what we know, what we know we don't know, and what we don't know. We are constantly confronted with that which we don't know, but the mind adjusts without admitting the error.

We can make a list of things we didn't predict - dot com bubble, internet, housing market collapse, Etc. It's impossible to predict tomorrow's news headlines.

What's the next Apple or Google? We don't know what will change (upredictability)or who will thrive in the change. Therefore portfolio theories. Diverisification - market averages usually win over time.

What I find facinating, I think more about the unknown than the know, is that we can predict what will not change. I laughed when I read about investing in cemetaries. Cemetaries don't change.

Imagine I you left your town for 50-years. At an intersection (4 corners)there was a cemetary, gas station, flower shop, and a restaurant. On returning home, which one did not change? The cemetary...

Things that do not change are the most fragile. When forced to change they collapse. When investing into low change predictability, risk looks like no risk at all.

I think the fault is again human preception. Black Swan type events. You witness a similiar event over and over and assume the events are related and have some form of predictability. The population observed is not a statistical population of all variables.

As a known, what might not change (looks predictable) I mentioned Widow & Ophan stocks. 

Understanding what we don't know is a big deal. Understanding how we din't know and the characterictics of that knowledge are a big deal. fallacies are a big deal. Solomon said, to divide your wealth among 7 things, 8 in bad times. The stock market might be 1 of the 7.

If you going to get biblical. 1) knowledge education. 2) health 3) stock market 4) relatives and friends 5) government institution (welfare and as) 6 & 7 etc) no idea. 8) savings.


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[GotSmart]

http://investsnips.com/list-of-publicly-traded-funeral-and-death-care-service-companies/

Publically traded death care companies.

 

[BadSaver]

I classify my decisions as predictive and non-predictive. I prefer non-predictive decisions over predictive decisions. For example spending less (budgeting) over increasing investing risk. Non-predictive decisions allow for change.

Investment areas perhaps: Savings, Investments, Pensions, Annuities, Business, Job Skills, Social Security, and Assets.

 

[Goshawk]

I classify my decisions as predictive and non-predictive. I prefer non-predictive decisions over predictive decisions. For example spending less (budgeting) over increasing investing risk. Non-predictive decisions allow for change.

Investment areas perhaps: Savings, Investments, Pensions, Annuities, Business, Job Skills, Social Security, and Assets.

I always mix ASSETS with SAVINGS. Every though one is liquid-fast to use and the other is not. Good point.


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[BadSaver]

If you going to get biblical. 1) knowledge education. 2) health 3) stock market 4) relatives and friends 5) government institution (welfare and as) 6 & 7 etc) no idea. 8) savings.


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#4 arguably is a risk. Planners tend to have to bail out those out who don't plan. I've to learn to tell those I love NO! Planning is like going to the roller rink. Watch out for those around you! Family and friends Account for Some of my greatest loses

Good list!

Sorry, don't mean to get off topic.

 

[BadSaver]

There's two sides to every deal. If I have a heart attack, bad day for me, the ambulance driver just had a good day.

Non-predictive decisions allow you the ability to be on the right side of the deal. A coin has 3 sides. Head, tail, and EDGE. To stay on the Edge is to HEdge your bet.