Stock Market gurus? Real Estate hounds? Tell me about your financial intelligence.. - Page 2 - Mothering Forums

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#31 of 36 Old 07-09-2003, 05:55 PM
 
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Dh and I have been talking a lot about this stuff lately. He's had his Roth IRA for a few years now and I plan to open one this year. We're pretty young--early 20s--so I'm glad we're getting started early.
About paying yourself first--this is something I always hear but haven't been taking too seriously--we have a good amount in savings, is it best for me to start my Roth IRA asap, or should we wait until we're sure we have "enough" saved in the bank for emergencies, etc?
El's--thanks for the velcro tip!
Do any of you read the Bottom Line?
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#32 of 36 Old 07-14-2003, 06:47 PM
 
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we have a good amount in savings, is it best for me to start my Roth IRA asap, or should we wait until we're sure we have "enough" saved in the bank for emergencies, etc?
I'd say get that Roth started ASAP. If I'm not mistaken, it's always possible to withdraw contributions from a Roth, since the income has already been taxed. You won't be penalized unless you start to dip into some of the gains. Obviously, looting your retirement funds should be a last ditch thing.
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#33 of 36 Old 07-16-2003, 12:31 AM - Thread Starter
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Sorry -- I lost track of this thread when it was moved!:

Any good stockpickers out here? Do you adhere to any methodology? We have a chunk of change that we'd like to throw into the market, but are having trouble committing.

Motley Fool has a theory in which you take the top 30 companies on the S&P and rate each by yield, then compare the yield with stock price. Essentially, you are left with 5 companies that are supposedly poised for growth. We did the work and came up with Eastman-Kodak, Honeywell, Alcoa Industries, General Electric, and SBC Communications. Two of these companies I've never heard of (SBC and Alcoa). And, I'm not keen on Kodak.

Peter Lynch tells us to follow the 'Rule of Five' and "Don't buy anything you can't draw in crayon". Basically, buy what you know.

I like this idea better, but am afraid I won't see any growth. The companies we tend to choose seem to have pretty stable/moderate growth. This is good for the long term, but we were hoping to be aggressive with this money. Our 401k's and Roth IRA's have the more moderate-aggressive balance.

Any idea's? How do you all choose stocks/funds?
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#34 of 36 Old 07-16-2003, 01:00 AM
 
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I think the Motley Fool theory you're mentioning, is what they used to call the "Foolish Four", which was a variation on the Dogs of the Dow style of investing, popularized in "Beating the Dow". The Fools later ditched this strategy in a very public way, so I'd be surprised if they're still touting it.

I do think the original Dogs of the Dow strategy does have some merit, it's basically a mechanical approach to value investing, where you buy companies that are undervalued, and are likely to come back. I don't see anything wrong with just choosing from the 30 companies in the Dow, since they're all big, solid companies. I've probably owned shares in about half of them at one point or another.

I'm not buying anyhing right now, especially since the market has run up so much in the last few months. I think we're near a short term top right now, and the market could head south in a big way very soon. I'm thinking about buying shares in companies that mine gold, since there could be a good deal of economic chaos coming our way, and gold tends to do well in times of trouble.
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#35 of 36 Old 07-17-2003, 08:57 PM
 
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this has been a really interesting thread, i'm glad i stumbled upon it! this may be a little ot, but here's where this discussion - esp. the real estate parts got me thinking....

dh and i have our home and mil's house (which we rent out and use the $ to pay her apt. rent)... between the 2 of those plus credit card debt, we owe around $210,000... we could sell our house today, pay off the mortgages and cards and have about 50k in hand... so here's the thing - if we did that and lived in mil's house mortgage free, we'd be living in a town that neither of us like. it's rural, red-neck (sorry if that offends some, but even the locals there would probably self-describe that way), conservative - not to mention the house is located next to orchards that are regularly sprayed. and there's no work to speak of. however, if the economy picks up even modestly, allowing us to continue our business here (if it goes anymore flat or tanks we could be in deep doo and have to move anyway ), paydown our mortagages/debts and in 10 yrs. would only owe $116,000 and have real estate assets of $219,000 (that's if our houses did not appreciate in value at all).... we live in a town we love and have work we enjoy.

so, to my mind it makes sense to stay put and pay the piper (assuming all is ok with the economy)... but what do some of you think? is being mortgage free with a small but decent savings living in a crappy place better than being in debt but relatively happy?
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#36 of 36 Old 07-18-2003, 12:52 AM
 
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I don't have the answer to your question but wanted to remind you to calculate the tax savings from the mortgage deductions into your equations. I think a lot of people put too much stock in being mortgage free, and don't run the numbers to see what they're paying in interest vs. what they're saving in taxes. And are you deducting both mortgages on your taxes? I think you can deduct both, although you need to check with an accountant to make sure.

What interest rates are you paying on the mortgages? Now is a great time to refinance, you could save a bundle!

I also put a real premium on quality of life, myself. What's the point of living somewhere you hate if you can afford not to?

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