Investment Thread

[YmoBeThere]

Would you give your child a stock picker’s book?

Yess (the extra s was due to 3 letter posts not meeting the site threshold)

[fuse]

Hey all, I was just wondering what, if any recommendations some of you may have for learning about and getting started when it comes to investing in stocks?

For reference I have money saved up that's not doing much just sitting in my account which I realize is much better than most of America but it feels wasted there. If I wanted to take 5k of it and look towards options where should I start looking? Excluding 401k and Roth IRAs that is because I already have both.

If you don't feel comfortable sharing on this thread please feel free to PM me and it would be greatly appreciated. You don't need to share your own secrets but direction here at the minimum would be nice, cause I know nothing on this stuff and when I try to read up on it I get lost quickly. Makes sense considering growing up I only ever failed a single class... Finance. At least I'm consistent, so best to consider me a child when discussing this stuff.

Books, no idea.

Armchair quarterbacking- invest in what you know.

Presumably, you have more experience than you are giving yourself credit for if you have a 401k and a Roth, unless someone chose the funds for you.

I’m not sure what you’d learn, an S&P 500 tracking mutual fund is likely a safe place to consider starting. Even doing research on why you choose a particular fund over another you’ll likely gain more insight.

Actually maybe Ramit Sethi’s I will teach you to be rich might be an interesting read.

Full disclaimer: I’m not a financial advisor, I don’t play one on TV, and am in no way qualified to help anyone manage their money. Follow any and all advice above at your own risk. 😀

[JNort]

Books, no idea.

Armchair quarterbacking- invest in what you know.

Presumably, you have more experience than you are giving yourself credit for if you have a 401k and a Roth, unless someone chose the funds for you.

I’m not sure what you’d learn, an S&P 500 tracking mutual fund is likely a safe place to consider starting. Even doing research on why you choose a particular fund over another you’ll likely gain more insight.

Actually maybe Ramit Sethi’s I will teach you to be rich might be an interesting read.

Full disclaimer: I’m not a financial advisor, I don’t play one on TV, and am in no way qualified to help anyone manage their money. Follow any and all advice above at your own risk. 😀

Well my work has the 401k with a match and I've had a ton of people tell me to start a Roth IRA which is why I got it.

[budwom]

My only strong advice is that much, if not most, of the financial advice community does NOT have your best interests at heart...they want to put you in funds which pay them hefty commissions...just be aware of who you go to and what their true motivations are...I have helped out quite a few pals by pointing this out and steering them away from this deplorable nonsense (and no, I never touch their money or want any fee at all). Educating yourself is key.

[left_hook_lacey]

I'm not allowed to post in the Presidential thread but wanted to continue the conversation about 401k, education, etc. My wife and I are constantly drilling our kids on the importance of investing early, even just a little, and why it's important to start early. We even show them charts and calculators of where she and I would be financially if we had been taught more about 401k, investing, etc. in high school or from our own parents. Then we show them how much they could have in just 20 years or so investing in 401k, IRA, etc. even with a very modest salary.

With all that said, what are the board's thoughts on ESPP? I had one at my old job because we got a 15% discount. I have yet to join at my current job because I missed the open enrollment period. But my new job only offers 5% discount.

[bundabergdevil]

I'm not allowed to post in the Presidential thread but wanted to continue the conversation about 401k, education, etc. My wife and I are constantly drilling our kids on the importance of investing early, even just a little, and why it's important to start early. We even show them charts and calculators of where she and I would be financially if we had been taught more about 401k, investing, etc. in high school or from our own parents. Then we show them how much they could have in just 20 years or so investing in 401k, IRA, etc. even with a very modest salary.

With all that said, what are the board's thoughts on ESPP? I had one at my old job because we got a 15% discount. I have yet to join at my current job because I missed the open enrollment period. But my new job only offers 5% discount.

I've personally taken advantage of one in the past. My employer at the time (a big stable, well-managed - IMO - blue chip that has increased dividends 30+ years) paid portions of bonuses in stock, had LT stock incentive awards, matched 401K contributions with stock, and offered an ESPP. I guess the primary watch out, particularly for middle management, is that your portfolio allocation could quickly become way too over-exposed to your employer's stock.

[Jeffrey]

Specifically, the FDIC estimates the "unbanked" at about 6% and "underbanked" at about 18%. My comments weren't very specific but this figure is what I had in mind...

I'm guilty of paying little attention to regulators, and their reports, even when they are visiting. I prefer to drive looking out my windshield. Rearview mirror driving is dangerous and significantly increases the probability of future major wrecks.

This probably also isn't the appropriate thread, so I'll leave this alone after this post.

[elvis14]

With all that said, what are the board's thoughts on ESPP? I had one at my old job because we got a 15% discount. I have yet to join at my current job because I missed the open enrollment period. But my new job only offers 5% discount.

So we have an ESPP here. You can put up to 10% of your pay into it. Every 6 months stock is bought at the current strike price or 85% of the current market price. If the current market price is lower it'll become the current strike price and can be locked in for up to 2 years.

I consider the ESPP free money. On average your money is tied up for 3 months. Then you get at least 15% profit if you cash in when it's bought. I know you guys will correct me if I'm wrong but gaining 15% for money that's tied up for an average of 3 months is kinda hard to beat is it not?

Since it's only the company stock it's a little easier to play with than general stock market purchases. I cash some in, I leave some behind (in case the good thing happens). I've been at my company a long time so there have been times where I've had to be patient. But there were also times where my strike price was $23 a share and market price was $80.

[JasonEvans]

With all that said, what are the board's thoughts on ESPP? I had one at my old job because we got a 15% discount. I have yet to join at my current job because I missed the open enrollment period. But my new job only offers 5% discount.

I mean, even with just a 5% discount, you are getting (for example) a $20 stock for $19, so that is a kinda good thing. But, as previously mentioned, you want to be careful your company's stock does not represent too much of your investment portfolio.

[left_hook_lacey]

I mean, even with just a 5% discount, you are getting (for example) a $20 stock for $19, so that is a kinda good thing. But, as previously mentioned, you want to be careful your company's stock does not represent too much of your investment portfolio.

I think my biggest concern is with the taxes. I'm not sure how long to hold on to it. If you sell it immediately after the purchasing period, you eliminate the risk, but you have to pay "ordinary income" tax rate + a fixed sum based on your income bracket.

If you hold on to it for two years from the offering period, it gets taxed at capital gains tax rates, which are less than ordinary income tax rates , but still considerable at only a 5% discount.

Seems like that money might be better served going straight to a pre-tax fund like 401k or Roth.

At my former job, yes the 15% discount was a no brainer, but at 5%, it seems like I'm tying my money up for very little gain, and considerable risk.

Maybe I'll just take that extra money I was considering putting into ESPP and invest in crypto currency which I understand even less than ESPP.

TO THE BITCOIN THREAD!!!

[fuse]

For ESPP, it “sorta” depends on the stock and the discount.

I worked at a large value company whose stock moved very little, and was dividend focused. I decided the 5% discount wasn’t worth it.

I’m now back at a growth company with a 15% discount and a two year look back.
Seems like an easy decision.

Prior ESPP purchases I’d generally hold until I “needed” to sell.
I agree with the other poster about concentration risk.

I may not be interpreting the rules correctly. If you sell the same day you acquire the ESPP and reinvest into something else immediately you are not subject to capital gains (primarily because there are none).

[rthomas]

So I have a question and trying not to be political. After 3 years of Trump, obviously the market overreacts to every tweet, every tariff, and every China this and China that. Obviously the market reacts, goes up and down on a daily weekly monthly basis, but where are we with market growth?

[snowdenscold]

So we have an ESPP here. You can put up to 10% of your pay into it. Every 6 months stock is bought at the current strike price or 85% of the current market price. If the current market price is lower it'll become the current strike price and can be locked in for up to 2 years.

I consider the ESPP free money. On average your money is tied up for 3 months. Then you get at least 15% profit if you cash in when it's bought. I know you guys will correct me if I'm wrong but gaining 15% for money that's tied up for an average of 3 months is kinda hard to beat is it not?

We have the same setup with our ESPP.

I would add that you will always pay ordinary income tax on the 15% discount portion you receive, and then capital gains on the rest (long-term if you hold it I believe a year from purchase, or 18 months from offer date, or something similar).

I usually only hold onto about three or four 6-month periods worth, so as to make sure I'm never paying short-term CG, but also to make sure the company which employs me is not too high a percentage of my equities.

ESPP seems like a no-brainer since I've already maxed my 401k.

[JasonEvans]

So I have a question and trying not to be political. After 3 years of Trump, obviously the market overreacts to every tweet, every tariff, and every China this and China that. Obviously the market reacts, goes up and down on a daily weekly monthly basis, but where are we with market growth?

This site has a great interactive graphic where you can see the percent gain for each president at the same point in their presidency.

So, as of today, just a couple months less than 3 years after he took office, the market is up 39.3% under Trump. Here are how some other presidents compare at this point in their terms.

Trump +39.3%
Obama +50.6
GWB -10.1
Clinton +53.3
GHWB +23.6
Reagan +34.7
Carter -13.8

Historically, the market under Trump is about average. A bit better than his modern GOP counterparts but significantly worse than his two nemesis, Obama and Bill Clinton.

These are merely observations/facts, not a statement on the value of these presidencies. Heck, as many have said here and elsewhere, the impact of the president on the economy is probably somewhere between not much and nada.

[Bluedog]

This site has a great interactive graphic where you can see the percent gain for each president at the same point in their presidency.

So, as of today, just a couple months less than 3 years after he took office, the market is up 39.3% under Trump. Here are how some other presidents compare at this point in their terms.

Trump +39.3%
Obama +50.6
GWB -10.1
Clinton +53.3
GHWB +23.6
Reagan +34.7
Carter -13.8

Historically, the market under Trump is about average. A bit better than his modern GOP counterparts but significantly worse than his two nemesis, Obama and Bill Clinton.

These are merely observations/facts, not a statement on the value of these presidencies. Heck, as many have said here and elsewhere, the impact of the president on the economy is probably somewhere between not much and nada.

Yep to the bolded. Presidents get WAY too much credit/blame for stock market and job numbers performance in my opinion. (Certainly Trump touts it when things are going well). The Fed can certainly have more influence.

Also, looking at stock market performance after the person gets sworn in could be misconstrued given the market already had a few months to price it in (e.g. while the market plummeted the day after Trump was elected, it then went way up in the next two months in anticipation of a Republican-led corporate tax cut). So, Obama gets "credit" even though it was clearly the market responding to the most recent election. Conversely, Obama inherited the great recession and prices plumetted his first few months in office, which was largely an inherited state. Not much he could do about that.

Ironically, the economy is probably the most influential issue when it comes to voters' minds even though it may not be something the president can totally influence. That's probably why we get voters changing their minds so much election to election -- depends on the state of the economy. With Trump, probably not as much given it seems people on both sides have stronger opinions than with most candidates, but I bet if the economy suddenly went into the stinker, you'd see a lot of white working class voters in the upper Midwest switch sides and that's where the election is going to likely be decided.

Back to investing, ESPP with a discount usually is a no brainier. I had one that offered 50% discount and always did the max of what I could and just sold it off relatively quickly.

[Jeffrey]

Seems like that money might be better served going straight to a pre-tax fund like 401k or Roth.

At my former job, yes the 15% discount was a no brainer, but at 5%, it seems like I'm tying my money up for very little gain, and considerable risk.

Your age, marginal tax bracket, dollars available to invest, etc. should be known and considered before answering.

For example, at only a 5% discount, if you’re under 35, have a marginal tax rate of 24% or less, and cannot afford investing in both, then I’d put the money in a Roth 401k invested in a broadly diversified equity index fund.

[Jeffrey]

Trump +39.3%
Obama +50.6
GWB -10.1
Clinton +53.3
GHWB +23.6
Reagan +34.7
Carter -13.8

These are merely observations/facts, not a statement on the value of these presidencies. Heck, as many have said here and elsewhere, the impact of the president on the economy is probably somewhere between not much and nada.

I disagree. IMO, those returns are not random or surprising. My favorite economic Presidents were Clinton and Reagan while my least favorite was Carter. GWB entered office near a market top and Obama near a market bottom.

[left_hook_lacey]

I disagree. IMO, those returns are not random or surprising. My favorite economic Presidents were Clinton and Reagan while my least favorite was Carter. GWB entered office near a market top and Obama near a market bottom.

Also, 9-11 happened right after Bush took office and the stock market was literally closed for a few days. I don't remember how bad the impact was, just remember the market drops in the news.

Then soon after, the housing bubble burst. I'm not smart enough to know who's fault that was.

Shew, for a second there I thought I was posting in the presidential thread. 😂

[Jeffrey]

Shew, for a second there I thought I was posting in the presidential thread. 😂

Thanks for the laugh.

On a serious note, it shows there's a definite connection between the subjects.

[left_hook_lacey]

Thanks for the laugh.

On a serious note, it shows there's a definite connection between the subjects.

Thanks for the advice