Investing, Stock Market and Retirement Planning Thread

[Viva la Ben]

The price of Bitcoin crashed through $19,000 today, just days after hitting $10,000, $12,000, and other psychological barriers, and then retreated to $18,000. Many cryptocurrency experts are predicting Bitcoin will hit $50,000 or even $100,000 as institutional investors continue to pile in.

One of the drivers, according to James Ross of HedgeChatter, is lack of trust in government-issued “fiat” currency. Fiat currency is not limited in supply — as we’ve seen in recent eras of “quantitative easing” … read, printing money out of thin air — and that devalues the monetary supply.

Bitcoin, on the other hand, is cryptographically limited to 21 million coins.

https://www.forbes.com/sites/johnkoetsi ... -pressure/

[Viva la Ben]

This guy could have been any one of yinz computer nerds.
https://www.forbes.com/sites/bishopjord ... llionaire/

[NTP66]

I decided to keep my 403b contribution percentage the same the past two years, so now my final two paychecks of each calendar year are bigger thanks to maxing out on the retirement stuff earlier. And this got me thinking, is there actually an advantage to front load your retirement savings? One might even consider that market timing.

Actually, it can make quite a difference. To compare two extremes, think about the sequence of contributions made at the end of every year (say, $10K) vs the same sequence made at the beginning of every year. Then, *each* of the payment in the "beginning" sequence will earn you rate of return for *extra* year. So, the amount of money you will have at the end of investment horizon from the "beginning" sequence will be the the amount you's have from the "ending" sequence TIMES (1+ annual rate of return). So, if you are investing in stocks, where the expected annual rate of return is about 10%, you'll retire with extra 10% in your account.

To see some numbers: Assume annual contribution of $10K, T=30 years, r=10%

Ending sequence future value (in Excel):
+FV(0.1,30,-10000)=$1,644,940.23

Beginning sequence future value:
+FV(0.1,30,-10000,,1)=1.1*FV(0.1,30,-10000)=$1,809,434.25

"In between" sequence (monthly payments spread out over 12 months:
+FV(1.1^(1/12)-1,12*30,-10000/12)=$1,719,036.10
(i.e. 5% below the Beginning Sequence Future Value)

First off, thanks for providing an Excel function that's new to me. This is very interesting, and will make me take a closer look at my taxable account contributions, which is currently done on a monthly basis. Doing a little more digging, Vanguard published a study back in 2012 that came to the same conclusion, that lump sum contributions had a greater [double] chance of higher returns than DCA.

That said, the assumption is that the markets are trending upwards when you decide to invest that lump sum. If you time it wrong and invest in a high period, lose +50% of your investment, it'll likely take you longer to make that money back than if you DCA. At this point, I've got fewer than 20 years left before I [should be] able to retire, so the numbers wouldn't be as drastic as your example (speaking strictly about my taxable investing).

[dodint]

My minor in my undergrad was finance and I got very intimate with those Excel functions.

[willeyeam]

What is driving the price?

People that have no idea what they're doing

[NTP66]

lol, got texts from both of my sisters in the last hour asking about buying Bitcoin.

Are your 403b contributions maxed out? No? Then invest your money there first.

[columbia]

History would tell you that such things mean the bubble will burst in the nearish future.

[Juice]

[LITT]

i am embarrassed to say that i do not have a roth ira currently. any suggestions on entities to open one up with?

[NTP66]

i am embarrassed to say that i do not have a roth ira currently. any suggestions on entities to open one up with?

It depends on which investments you're going to choose, but Vanguard should always be your first consideration.

[MrKennethTKangaroo]

vanguard

not pnc

[count2infinity]

Just sat with the guy that handles all the financials of our company. He invited anyone interesting in stocks and whatnot. His portfolio is actually really really simple. DRKB, QQQ, DIA. He has small accounts for speculative investment, but beyond that, it's equal parts those 3. Since 2014 he's seen a 66.1% return compared to 45.2% from the S&P 500 over those three years. Was actually interesting to hear him discuss his daily trading too.

I still have no idea what I'm doing with stocks, but I hope by sitting with him and talking once a month, I'll learn enough to see how my 401K is doing.

[dodint]

I just ask columbia to explain things to me and then I wait for Tomas to get around to it.

[columbia]

That kind concentration of assets can be risky...

YMMV

[MrKennethTKangaroo]

not sure why anyone would invest in an index that follows the DJIA

[columbia]

not sure why anyone would invest in an index that follows the DJIA

QQQ also. It took ~ 15 years (and probably a lot of tears) to recover from the 2000 crash.

[count2infinity]

Beats me... just passing along what he does. He also buys and sells along the way with localized max and mins.

[NTP66]

Short-term CD rates have gone up much quicker than the long-term rates over the past year. Ally now has a 12-month, 2% CD, and an 11-month 1.75% CD that has no EWP. Navy FCU still has a 15-month, 2.25% CD, too. I’ve got a few CDs maturing next year and was hoping to jump on other 5-year CDs, but the new Ally one may work for now.

[MrKennethTKangaroo]

ally has 12 month 2%? Sheeeeet

[Tomas]

2% on 12 months? There are, I believe, at least 5 banks in my home state currently offering at least 3% (the best one 4.07%) on high-yield checking that can be earned on at least $10K, with quite doable minimums of monthly debit transactions (10-12), reimbursement of ATM fees, etc... Granted, those 4% are not going to last forever, but I think that they would not go from 4% to so much below 2% that the 2% CD would be a better investment option over the next 12 months...

[NTP66]

2% on 12 months? There are, I believe, at least 5 banks in my home state currently offering at least 3% (the best one 4.07%) on high-yield checking that can be earned on at least $10K, with quite doable minimums of monthly debit transactions (10-12), reimbursement of ATM fees, etc... Granted, those 4% are not going to last forever, but I think that they would not go from 4% to so much below 2% that the 2% CD would be a better investment option over the next 12 months...

There are a few 3% HY checking accounts available in my area, but the max is generally low (most under $15k), and requirements are too inconvenient (10-20 debit transactions/month, 4 web logins/month, etc.). And every single one of them has poor ratings.

[dodint]

Ice tea company rebrands as “Long Blockchain” and stock price triples

[NTP66]

lol

Vanguard is going to be using blockchain to help with how it updates and tracks the index data from their underlying funds in the near future.

[NTP66]

[columbia]

It’s now below 13k.