PromoTheRobot Posted October 10, 2008 Posted October 10, 2008 Over my life, I have put money into IRAs. (Thankfully not too much.) I was always lucky enough to invest just as the market tanked. Each time, I used a financial adviser who earned money off me by providing "expert" financial advice and direction that I couldn't get on my own. Here is the nutshell of my advice from these "experts". Day 1: ME: Boy, the market really took a dump today. What should we do? ADVISOR: Best thing to do is stay put. The market always bounces back. A week later: ME: The market's in a tail spin. I've lost 30% of my retirement. Shouldn't we park my money in a money market account until things stabilize? ADVISOR: Worst thing you can do. You'll miss the rally. Trust me, the market is getting ready to do a 180. A month later: ME: My retirement money is mostly gone, !@#$. I thought you were supposed to watch out for my money? ADVISOR: Hey, no one saw this coming. Once-in-a-lifetime event. We were all caught by surprise. But if I were you I'd stay right where you are. ME: Let me ask you something. If staying in the market is so good, what is causing the market to lose 700 points a day? ADVISOR: That's all the money guys pulling their assets out before the whole thing $h!ts the bed. PTR
Chef Jim Posted October 10, 2008 Posted October 10, 2008 So let me ask you a question. If you had not put your money in IRAs over the years, what would you have done with it?
SD Jarhead Posted October 10, 2008 Posted October 10, 2008 Savings account maybe? I'm just helping keep the thread alive.
PromoTheRobot Posted October 10, 2008 Author Posted October 10, 2008 So let me ask you a question. If you had not put your money in IRAs over the years, what would you have done with it? Probably spend it on strippers and booze...and I'd still be where I am today, but I would have some fun memories. PTR
DC Tom Posted October 10, 2008 Posted October 10, 2008 So let me ask you a question. If you had not put your money in IRAs over the years, what would you have done with it? I'd have bought a rainbow-farting unicorn. The value of those can only go up!
Chef Jim Posted October 10, 2008 Posted October 10, 2008 Probably spend it on strippers and booze...and I'd still be where I am today, but I would have some fun memories. PTR Now a good financial adviser, like me would have done a much better job creating the relationship with you and finding out what's important. See I would have know about the strippers and booze thing and I would have taken that massive commission I made off of your $100 per month Roth IRA contribution (that would be $2.50) and taken you to a strip club and bought you a couple of drinks. See it's all about building the relationship. You're happy, I'm happy, Wall Street's happy, our wives are...well three out four ain't bad.
taterhill Posted October 10, 2008 Posted October 10, 2008 According to Dalbar, the average equity mutual fund investor earned less than inflation over the past 19 years. Fear and greed lead many investors in the chase for returns. Let's take a look at the numbers. According to the Dalbar study going back to 1984: - The average investor earned: 2.7% a year - Inflation grew 3.14% a year - The S&P 500 earned 12.22% a year How does this happen? Selling in to down markets and buying into up markets....
Booster4324 Posted October 10, 2008 Posted October 10, 2008 According to Dalbar, the average equity mutual fund investor earned less than inflation over the past 19 years. Fear and greed lead many investors in the chase for returns. Let's take a look at the numbers. According to the Dalbar study going back to 1984: - The average investor earned: 2.7% a year - Inflation grew 3.14% a year - The S&P 500 earned 12.22% a year How does this happen? Selling in to down markets and buying into up markets.... Wait, so there is an average ror for all investors in equity markets, yet none for...oh skip it.
SDS Posted October 10, 2008 Posted October 10, 2008 How does this happen? Selling in to down markets and buying into up markets.... Many times a whole year's gains can be reduced to gains made over 10 days... Now which 10 days out of 250 should you invest in? That is why you don't buy and sell on your own....
Chef Jim Posted October 10, 2008 Posted October 10, 2008 Wait, so there is an average ror for all investors in equity markets, yet none for...oh skip it. Yes, DALBAR did a study on it.
ExiledInIllinois Posted October 10, 2008 Posted October 10, 2008 So let me ask you a question. If you had not put your money in IRAs over the years, what would you have done with it? What I did. Gov't securites... Still made 5.12% over the last 10 years. Here are the 10 year historical rates of the funds that assume risk that is was innvolved in: 6.01%=Fixed Income Index Investment Fund 5.88%=Common Stock Index Investment Fund 7.66% (since 2001)=Small Capitalization Stock Index Investment Fund 8.53% (since 2001)=International Stock Index Investment Fund I turned out to be the best advisor out of all the experts... I made money when the market was high and wisely got out and played it safe before it tanked. Over the long haul I didn't lose much... And whatever I lost was totally made up during the peaks in the mid 1990's. Sorry to hear your story PTR... The money men are all frauds! The sad thing is that we have been all pacified now, me thinks in a bygone era... Their heads would have been bashed in or they would have been chased to some remote part of the country (ie: When the Mormons were chased out of the Western Reserve of Ohio)...
drnykterstein Posted October 10, 2008 Posted October 10, 2008 Yes, DALBAR did a study on it. Wow interesting.
ExiledInIllinois Posted October 10, 2008 Posted October 10, 2008 Yes, DALBAR did a study on it. I guess I am a market timer? I am just indifferent to big gains... Becuase they will alwys be followed with big losses. Why not be slow and steady. It is not the size of the wand, it is the magic in it, especially when it is compounded at a rate that beats inflation. Thst is all I need. For me... The one big loss is like the taking the first hit of crack... You then become a slave to the system, alwys trying to make your money back. IMO, you only go to Vegas with the money you are willing to lose... And if you lose it, you go home.
Chef Jim Posted October 10, 2008 Posted October 10, 2008 What I did. Gov't securites... Still made 5.12% over the last 10 years. Here are the 10 year historical rates of the funds that assume risk that is was innvolved in: 6.01%=Fixed Income Index Investment Fund 5.88%=Common Stock Index Investment Fund 7.66% (since 2001)=Small Capitalization Stock Index Investment Fund 8.53% (since 2001)=International Stock Index Investment Fund I turned out to be the best advisor out of all the experts... I made money when the market was high and wisely got out and played it safe before it tanked. Over the long haul I didn't loose much... And what ever I lost was totally made up during the peaks in the mid 1990's. Sorry to hear your story PTR... The money men are all frauds! The sad thing is that we have been all pacified now, me thinks in a bygone era... Their heads would have been bashed in or they would have been chased to some remote part of the country (ie: When the Mormons were chased out of the Western Reserve of Ohio)... Good job but there are an awful lot of mutual funds out there that would have returned close to double that over the past 10 years. You didn't show your allocation, just the funds you picked but it seems like a lot of risk for that low of return. You must have had quite a bit in the fixed income fund.
ExiledInIllinois Posted October 10, 2008 Posted October 10, 2008 Good job but there are an awful lot of mutual funds out there that would have returned close to double that over the past 10 years. You didn't show your allocation, just the funds you picked but it seems like a lot of risk for that low of return. You must have had quite a bit in the fixed income fund. Fixed income and securites... I know I am young and they say otherwise... I am just conservative and didn't want to be "sucked into the game"... I just don't want to play the game... As long as I am outpacing inflation and make bigger strides during the peaks... I am happy. I know you have solid valid points, I just don't trust and rather be slow and steady... I am happy slicing into the "peaks." Call it stupid. Another note... Now that huge numbers of Baby-Boomers will start retiring... What do you think the "game" will look like? I really had a better vision to this point. I for one see this dropping drastically (which it has) and then leveling out... I just don't see the huge swings we saw in the late 1980's and 1990's. I am no expert by any means... But, I like to believe I can see things culturally... That has helped me.
Chef Jim Posted October 10, 2008 Posted October 10, 2008 Fixed income and securites... I know I am young and they say otherwise... I am just conservative and didn't want to be "sucked into the game"... I just don't want to play the game... As long as I am outpacing inflation and make bigger strides during the peaks... I am happy. I know you have solid valid points, I just don't trust and rather be slow and steady... I am happy slicing into the "peaks." Call it stupid. Another note... Now that huge numbers of Baby-Boomers will start retiring... What do you think the "game" will look like. I really had a better vision to this point. I for one see this dropping drastically (which it has) and then leveling out... I just don't see the huge swings we saw in the late 1980's and 1990's. I am no expert by any means... But, I like to believe I can see things culturally... That has helped me. I never said it was stupid. I put a portion of almost all my clients retirement accounts, no matter how young they are, in bonds. Especially if they're new to investing. In times like these they understand why.
ExiledInIllinois Posted October 10, 2008 Posted October 10, 2008 I never said it was stupid. I put a portion of almost all my clients retirement accounts, no matter how young they are, in bonds. Especially if they're new to investing. In times like these they understand why. Another note... Was out with my son for supper... I gave him 5 bucks to play the claw game and told him: "Win something for his sister" (He's a lucky little pisspot! ) He didn't win... I said: "Stop, you already wasted 5 bucks!" He said: "Can't stop now, this thing is timed to grab." I reluctanly gave him 3 more bucks... He won at 6 bucks (probably a 5 buck stuffed toy... A rabbit)... Thank God! He is like the old lady at the slot machine... Must have skipped a generation and went right from my grandmother to him!
BillsFanNC Posted October 10, 2008 Posted October 10, 2008 Get yourself into low cost index funds with companies such as Vanguard or Fidelity. With a well laid out plan based on your individual situation that includes proper diversification, asset allocation and regular re-balancing of your porfolio you can ride out the ups and downs. There hasn't been a single ten year period in the history of the stock market where it lost. Investing is about the long run. Do not try to time the market, it's ultimately a losers game for 99% of us. I said it in another thread, buy this book, read it and put your plan into action.
Boomer860 Posted October 10, 2008 Posted October 10, 2008 Invest in soup kitchens they will be doing a volume business.
Rubes Posted October 10, 2008 Posted October 10, 2008 I'd have bought a rainbow-farting unicorn. The value of those can only go up! That was freaking hilarous.
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