I Hate Gambling Money In The Stock Market
*sorry I am going to get off on a rant here*
My wife has it setup that every month a huge chunk is taken out of our bank accounts and automatically goes into this brokerage account where our “wealth manager” then decides what we should invest in. I dont frickin get it. I think its a huge gamble and a big risk on what I have worked my ass off to earn. I mean hell this joker takes 1% of our “wealth” for his “wealth management” fee but is only giving us atbest like 12% return per year. I guess this is a ok return but man 12% return on 12 months of holding my money? With ppc I am pissed off if I do not see a 800% ROI and that is a daily turnover. I mean where is the disconect?? Its not like I am fully reinvesting in PPC either cause I can ONLY SPEND SO MUCH there just is not enough search volume in many of the niches so I do build up a stockpile of cash but I would much rather invest it in a FDIC insured account(s) then gamble with it in the stock market.
I guess what it boils down to really is if I am going to gamble my money I would rather do it on something I understand… like PPC. I would feel much safer investing in something like… GOLD where I know there is next to zero chance it will completely lose value.
Maybe I could start a mutual fund where I manage peoples money on PPC then when I return HUGE ROI …. well I dunno how that would work
ok rant off…
- 71 Comments. What say you?
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I would give you my money to invest in PPC, like you said before, you’ve already got more money than you can spend in PPC because the Search Volume isn’t enough.
That is a nice achievement though, wouldn’t you say?
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Shoe-
12% ROI per year in stocks is pretty good. FDIC will give you whatever percentage but it’s not really building wealth.
What happens if all the PPC gets DDOS for a month or something? At least you have some rainy day money earning some serious returns.
My $.02.
Ari
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I said EXACTLY the same thing to my wife 2 weeks back… It´s hard seeing so much money do a measly 12% annually when you are use to HUGE ROI. And those “Wealth Managers” get to risk YOUR money for 1% of 12% increase - thats just rude? I am really trying to scale up my PPC spend so I ONLY get a 20% per day but have a lot more of funds actually “in play” each day.
20% on $1000 for a week is $3583
(1000 - 1200 - 1440 - 1728 - 2073 - 2488 - 2985 - 3583)
I would say this is great topic for your show - How to increase your spend!
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The big question to ask is “does the “wealth manager” still take his/her 1% if they loose you money”? I’m sure it depends on what exactly they invest in, but over hear (UK), investment managers /fund owners take MASSIVE commissions, but continue to take them even when they loose you money. It’s like the anti-affiliate. Pay-per-or-regardless-of-performance.
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Umm, first question: If you think 12% isn’t enough, why are you doing it? You say they’re YOUR accounts, not her’s alone - right?
Second: Of what is the wealth manager taking 1% - managed funds or profit? “Normally”, they take 20% of the profits and if they lose money they have to get the losses back first before they can take their share in profits again - risk sharing of some sort, but rather fair anyway.
Last but not least, 12% in stocks is OK considering that you’re not lifting a finger. PPC may have a greater ROI but you’re going to have to take care of things yourself or pay if outsourcing.
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It’s all about eggs and baskets.
You want to keep different stacks of money in different places, so you don’t lose it all with one accident. Just think about those poor saps that worked at Enron and had their current savings (salary) and future savings (401k) all tied up in the Enron business. Enron stock was racking up huge returns until it imploded. Then poof - all gone.
You’ve got what you need to sustain your business and your lifestyle with a safety cushion, so it makes sense to pack some away for retirement. If you are putting that monthly chunk of change into a tax deferred retirement account then it is growing at 12% without Uncle Sam taking his share. You can’t say that about your PPC returns.
Also, 12% is pretty good for the stock market, but you don’t need to be paying 1% to get it. If you really want a stock advisor then find somone who’s fee-based not percentage or commission based. I would argue that a stock advisor is unnecessary, just autopilot your long-term savings into a cheap index fund. Vanguard is a good choice, they’ve got some of the lowest priced funds around.
Sorry if this seemed like a lecture.
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Diversity of investments is crucial. If I were making your kind of money, I would be buying commercial real estate in addition to buying stocks.
There are many different “aims” of investing…you should have a chat with your wealth manager to see if you and he are on the same page with investment strategy.
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hey shoe,
i dont think you’re making a fair comparison.
your PPC traffic would be considered operating a business,
while handing your cash to the equity investment manager is passive income.
active income will always beat passive income hands down.
and from what you’re saying about a 12% ROI, it sounds like he’s buying mainly into blue chips.
running your own biz always gives better returns, at the same time, the chances of losing all your capital are greater, compared to a risk-managed investment account.
oh, yeah, the 1% goes towards paying for the bank’s nice, shiny offices and the manager’s salary too.
i guess the alternative would be to stash the cash in a FD or money market fund which might give 5-7% return?
unfortunately, I’d guess the manager’s other clients are likely lawyers, dentists, and doctor’s who might not have any better idea what to do with their cash.
the shoemoney PPC private fund might be an idea worth exploring. i’ll drop you an email later.
cheers and have a great new year!
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Shoe, many wealth managers will charge you a flat fee instead of a percent. As your wealth grows, so does the guys who take a percent.
Consider talking to a certified financial planner who charges a flat fee.
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shoe this is one of those times you dont want to listen to your loving wife. Stop screwing around with the stock markets unless its in markets that you are conversant with. Its like the ppc programs that you promote. You dont promote shit that you are not interested in, thats why you are so successful. So why should you let someone else buy stocks in companies that they dont even know about. Damn i hope i am clear.
check out mark cubans blog
http://www.blogmaverick.com there is some good info on there. Otherwise if i were you i would be trading MYSELF on companies that i am interested in and have enough insight on rather than have some bitch doing the work for me.
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“wealth manager”
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Thats a good name for him
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Try checking out the Hartford Leaders Variable Annuity that guarantees your principal that has subaccounts such as American Funds, MFS & Franklin Funds. It can be used for any kind of money for retirement savings. It charges approximtely 2% to guarantee your money so that it can never be lost. Go to hartford’s website and look at their performance that goes as much as 28% or more.
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With the initial revenue amounts you have, you might be better going for a conservative wealth protection approach (such as gold, index funds, favorable money markets, etc). The goal is to lot lose it should the PPC market disappear; just a probability thing.
I got into investing when I was 12 so it is slightly different for me; I developed a small system I use before buying anything — you could probably do something like that and not pay a professional money manager (that doesn’t sound like he is doing his job). E-mail me if you want it and I’ll shoot you over how I go about it.
Once I get my currency hedge fund going, I’ll let you know how I went about that…that has been a lot of fun perfecting; I just need to do the paperwork now to get it going.
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With Prosper loans I hear most people average about %25 annual interest. I’m averaging about %15 there. Still, no comparison to the money I make with PPC.
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I highly suggest gold. I would like to see a picture of you sitting with a pile of gold bars.
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Shoe, i am also paranoid of stock market and i know its not a healthy attitude for long term wealth building.
I parked most of my money in money market funds (thats a huge 7 digit number!) .I dont even have the guts to move part of it to a very conservative portfolio (50% index fund + 50% bond fund).
Every time when the market moves (like the recent DOW runup) i get sick
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I imagine someone like you is pulling in close to $1,000,000 per month. I would look into putting it into a hedge fund.
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Hey Shoe … you may want to try taking a little bit of the money you give to your “wealth advisor” or what ever he is called and set up a self directed RSP where you can invest a little of your money as you see fit. (ie: Google, Yahoo stocks). Another thing you may want to consider is to setup an ERSP for your daughter.(E=Educational).
Good Luck Jeremy and have a great New Year, bets wishes to your wife, daughter and family!
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At the risk of getting in the middle of a ‘domestic disturbance,’ I’d say your wife has the right idea, but may be paying a bit too much.
Your business may be great today and managing investments in your own business may give you the best control over your assets, but will that be the case in five years? You’ve got to sock away some cash in case business craps out.
If you’re paying 1% for someone to ‘manage’ a batch of mutual funds, you could buy an index fund and a money market fund yourself to save the 1%, plus some fees and commissions. (Ask your ‘manager’ if you are also paying a sales commission when he/she sells you a fund. Remember most ‘money managers’ are sales people who usually get their income when they sell you something at a nice commission.)
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You have to play on stocks by yourself to get bigger profit.
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12% is awesome. But if you are really worried just drop it in a 5.05% guaranteed FDIC account like emigrantdirect.com.
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You can make some decent ROI with penny stocks, but you can also get screwed just the same. It’s fun to watch and track though instead of those longterm plays.
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I’d say the best thing is to do what you know how to do. If your ppc biz is pretty much saturated, branch out into other non-ppc internet businesses
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12% is a good return on the stock market (in recent years).
Here the average stock market return last year was 6%, but residential property went up 11%. Although in the US, historically property isn’t so good, and I’d worry that the European property market is unrealistic.
There is some wisdom in diversified investments, but if you are making 800% of ppc, and think with more cash you can make more money, then sure get some private investors. I’d punt some money, but I suspect the amount I have to invest wouldn’t interest you. If the return is that good, you should need to offer more than a fraction of it, to attract a lot of investors.
Gold is a terrible long term investment, for one it is at a relative high this year. The annual return has barely outstripped inflation (1 to 3%), and that is presumably dependent on people finding new uses for gold in electronics. And other vagaries of the gold market (supply issues).
Recently the stock market has barely outperformed government bonds, and other extremely safe investments. That 12% sounds good, but is that a one of, or has this fund repeatedly done that well? I seem to remember there is some interesting maths surrounding whether one should routinely invest in the stock market, or only invest when you think times are good, but it has never been a big question for me.
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I’ve been investing in Secure Computing SCUR for the past six years. They’ve recently been beat up unfairly for two aggressive aquisitions done in 2006. I’ve done way better than 12% by buying SCUR when they are getting nailed for taking some risk and dilution due to the aquisitions. I’m in for $20k now and expect to do well in 2007. Not saying you should do the same but just telling you what’s worked for me recently.
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Shoe,
I’d say you’re in a unique situation compared to the average investor who does the 9-5 job. Hell, you’re unique matched up against the small business guy who invests his capital into his operation. The margins you make, and ability to spread them out on such a wide scale is not something joe6pack investor will ever achieve.
Diversification. You’re already spreading your risk over different websites, as a smart wealth manager spreads the risk over different stocks.
I’d say your decision is fairly simple. If you’re able to take that capital that’s in the stock market, and use your business to create a higher return than 12%… do it.
If your major concern is risk, rather than return, look into government bond funds with a decent yield.
If you want more diversification such as real estate, you might try techniques suggested by Robert T. Kiyosaki. Rich Dad, Poor Dad is a good place to start.
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I know you are a fan of Warren Buffett. You could always drop some more money in Berkshire Hathaway. Not many can beat his historical returns.
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To make good money you have to keep moving your money from wave to wave, whether it’s between different stocks or between stocks and real estate or whatever.
Warren Buffet has his core businesses, but he made a killing by liquidating his US dollars a couple years ago as the dollar was falling against the Euro and other currencies.
Catch the wave.
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800% ROI ?
Are you doing this with arbitrage, what you mean by ppc?
regards
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Check out this article for a contrarian view on the wealth management industry: http://www.sanfran.com/home/view_story/1507/
Good info on how Google tride to prep their employees for a sudden windfal after the IPO.
Still, If your guy can average 10% long term (for over 7 years minimum) then you’ve found a good one. Stock market returns much lower than that over the long haul.
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WOW, look at all the financial wizards reading your blog, if they were half as smart as they wanted you to think they were they would be making a mint themselves instead of working from there mom’s basement!
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I think diversification of wealth for growth. is OVERHYPED. I know of no great fortunes built on investing small amounts of money in stocks/businesses that you dont control. I believe this is only amplified with the business owner, who can return much better numbers by reinvesting in their own enterprise.
There are two times I think diversification does make sense: as a method of shifting risk and maitaning wealth, and when more capital will not necessarily improve your business.
At that point, I personally still like to seek investments i have some influence over as opposed to stocks in the open market.
Now, for the average joe without a business to invest in, maybe giving your money to someone else makes sense. But keep this in mind: anyone who is a good stock picker will make much more as a trader than in asset manager.
I am with you shoe - I say take your money and put it into your business, or at least assets you control.
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The U.S. dollar index lost 7% in value over the year so really your return was only 5%.
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I have 5.3% lockeed in at my credit union… FDIC insured, only $10k minimum. Not risky AT ALL, I would assume you do this already too and your wife is looking to make a better return.
I too do not play in the stock market but 12% isn’t bad esp. if you don’t need the money for PPC or other business ventures.
If you have a decent amount of $ leftover why not get into some other business ventures? Sure you’ll have to learn about the business but maybe do something related to one of your hobbeys.
Storage units are a nice investment… economy down ppl downsize put stuff in storage economy up ppl buy shit run out of room and needa store it..
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I like to work with this kind of SEO because in my case I dont know much this adsense stuff and could not get someone like you but I like to give my money to you and share at last
nice idea
are there any this kind of system ?
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Well put Shoe. What about investing in big PPC companies listed on the stock market - are there any? There is one of the world’s biggest domaining organisations on the Nasdaq - Marchex.
Happy New Year
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Consider it investing in making your wife happy :]
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You’re in the same enviable position of Microsoft and Google - you’re generating cash from your business faster than you can or want to use it to expand operations. The result is that it goes into a piggy bank. Microsoft and Google pay employees and/or outside firms to manage the piggy bank for “normal” returns which are much less than their main business returns - so do you.
That being said, you may well be be unhappy with the fees and safety of investments from your piggy bank manager. The best solution to that is a little shopping around. What you don’t want to do is manage the piggy bank yourself because that’s time away from the really profitable activities, but there’s no reason why the piggy bank manager shouldn’t be taking your general guidance.
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It’s called diversification. You don’t want all your eggs in your business. The idea here is not to get the absolute best return, but to insure your future income streams. Honestly, for completely passive income you should not expect more than 4 or 5% return. You’ll get more on average, but you want to account for possible losses.
Run your business aggressively, but invest as insurance.
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12% is a horrible return, especially since you are paying a wealth manager 1% for it. You could have paid less than 0.5% and got a > 14% return by investing in a S&P 500 fund.
I have a lot of respect for you and have learned a ton about internet marketing from you Shoe, but from the sound of things you guys don’t really know how to manage your money. My recommendation: fire your wealth manager and invest in index funds and/or find someone more competent to handle your investments.
According to Morningstar, the Vanguard S&P 500 Index (VFINX) got 15.6% return in 2006:
http://quicktake.morningstar.com/fundnet/snapshot.aspx?Country=USA&Symbol=VFINX
If I were you I would try to read this book as it is a great resource and will teach you the ropes of picking stocks through value investing. But if you don’t have time to read it, stick with the index funds:
http://www.wealthjunkie.com/2006/03/15/rule-1-buy-this-book/
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Shoe,
To make bog gains in the stock market takes a lot of time and persistance–just like making big money in anything. True, most wealth managers will not make you rich, and some of them will just plain do a poor job of managing your money or try to stick you in a bunch of commission products like variable annuities and loaded mutual funds. You want to make great returns? Then concentrate your assets in a few companies that are growing from small to large and hold on for a bumpy ride! It’s not easy to do, man. If it were, everyone would be rich. Do your own homework, learn to read financial statements, and do the research. Most importantly, great investors have BALLS!
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“800% ROI ?
Are you doing this with arbitrage, what you mean by ppc?”
I’d like to know a few more details also :^p
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Hey dude,
Get rid of the “wealth manager” open an account with Vanguard or Fidelity and invest in a no-load mutual fund. Hard to beat the S&P500. Dear God I am NOT spamming here but I did write an article on the topic.
http://financialcontemplations.com/SP500.php
I also cover penny stocks, needless to say I am reading your articles.
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DJIA was up 16.3% for 2006, S&P 500 up 13.6%. 12% in stocks is not that good. Vanguard 500 Index Fund (VFINX) which theoretically tracks the S&P was up 15.6% with an expense ratio of 0.18%.
Don’t throw away money for people who are selling you subpar performance.
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I’m with dingbat, get rid of the wealth management guy, your best risk management policy for your money is investing in index funds and some lower risk bonds.
If you look at your wealth managers historic performance after his fees, it’s fairly probable that he is doing no better than the virtual no-risk S&P 500.
So long-term, low-risk investment in an S&P 500 index returns approximately 10% with no fees.
For med-risk or high-risk, you can go with more creative funds and still avoid the management fees, which are borderline worthless. (Try folio.com and create your own index fund, very simple).
I’d highly recommend http://www.fool.com and search for wealth management and index funds.
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BTW, for those that don’t know, the wealth manager doesn’t take a % of profit, he takes his 1-2% of the actual value of your account (profit/loss is irrelevent) and most often they also sting you for additional fees for other transactions done on your portfolio.
I’d be completely shocked if Shoemoney has actually gotten 12% return.
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LOL! Yeah, but look how many comments! What a good comments bait!
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12% is really good.
Why?
Check these stats out:
$10,000 initial investment
12% increase per year
After 10 years (reinvesting that 12% every year)
will make you:
$31,058 if my calculations are correct.
I guess it is a good way to secure money for your kids school and college fees.
Just imagine if keep pouring money in it every month.
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What would Warren Buffett do?
http://en.wikipedia.org/wiki/Warren_Buffett#Investment_approach
Don’t use an financial manager when you could just put money into an index fund that will beat the market most of the time, unless he is helping you with tax issues.
Also, Warren would never buy Google stock.
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this makes me laugh…
sitting on the blog of a guy who pulls in around $10 million a year, just having a quick rant about his stock account. all of a sudden we have hundreds of seasoned investors offering advice.
sounds like too many people feeling better for their own opinion…
keep pulling that 800% ROI shoe, you know you ain’t big time till you hit 1000%…
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Shoe, DIY:
see http://www.stocksystem.com/, then just “ride the waves” with any ETFs (ie. GLD)
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You should considering becoming an angel investor if you financials are as good as you make everyone feel. As an angel you invest money in startups and eventually you own part of the next Google or YouTube. Risk? There is always risk. FDIC only insures you up to $100K per account.
Christoph
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Shoe..don’t touch the stock market! Invest in real estate -safest investment for the long term. Only limited supply of land. Go for vacation properties where you’ll see huge returns in the next 5 years when the baby boomers retire - tons of great opportunities in Canada. Let me know.
johnny i
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I think you’re a pu**y for doing what your wife tells you in the first place, especially when its about money.
I am also a pu**y cause I dont put my real info
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But few investments are secure. Like who cares if something is FDIC insured if that insurance is only for a half of a percent of deposits, and is backed by nothing but the exact currency is it allegedly protecting anyway?
Watch the money masters to see how insecure the value of the US dollar is.
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Since it’s inception the stock market has averaged an 11% gain including the big drops in the the 30’s and the 70’s.
Further, 98% of all investment “experts” fail to match much less surpass the vanguard index fund. They actually issued this challenge in the Wall Street Journal about 10 years ago and the results were pitiful for the so called “experts”.
JB
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Interesting concept - an investment fund for PPC. Already happening in a way with Demand Media.
Take investment money - buy domains and domain holding companies - build user driven content websites on domain names = profit!
A smaller scheme would be investors putting money into domains, hosting, adwords/adcenter and reaping the profits (if any).
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Dude, buy gold instead. It is only going up as the dollar crashes down.
I bought gold just last year at like $450 and ounce and now it is at almost $650! Better than 12% I say and no one can go and “make” more of it.
The key is to buy semi-numismatic stuff. Non-confiscatable (if you know history well, this matters) and is easy to liquidate or barter with.
Stocks will screw you eventually.
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“stock will screw you eventually”
that is why warren buffet is the second world’s richest man…
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It’s not easy to put your faith in someone else. I like to know everything thats goin on around me but I just cant. I have to trust the people I work with.
If your ‘wealth manager’ knows their stuff, then get used to it and settle. 12% isn’t so bad.
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Where do I send my check?
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A mutual fund is a ridiculous ideas…However, if you called it a hedge fund-you get to charge 3% plus 25% of the profits!! Good luck Shoe-enjoy your blog
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Stock market is real gambling…i have many friends who have doubled their investment.. but this is not my way of earning.. but it has given alot of things to people of india.. We earn alot with stock market. !
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Got to deversify (what if you get canned from PPC) go and read Graham (the Guy that taught warren buffet)
12% on stocks is prity dam good and Stocks have a long back history compared to bonds and other securites. let alone PPC.
and if your doing 12% on you pension dont forget to work out the real rate of return after the tax relife
You are of course maxing out your tax free investemts (those wieird ass state bonds) first.
In the uk thats Max yr cash ISA then max the indexedlinked NS certs (some max on the Prieium bonds)
personlay I self select IT’s to avoid paying the UT(mutuals) fee’s
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I will never deal with the stock market…rather invest in real estate
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Start that fund and I’ll invest
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It’s all about diversification, because you never know what will go up and down, and it’s always a good idea to have some piece of the action elsewhere. Putting all of your money into your business is like going and buying one stock. You have all of the same exposure financially that way, whether you like it or not. That’s why it’s worth putting at least some of your money into assets where profits are driven by unrelated factors. You don’t have control over them, but if you time it correctly, it’s a fantastic supplement of income.
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[...] First stop has to be Shoemonkeys blog and i happen upon this post. [...]
Everytime I’ve played around in the stock market I’ve lost money (except for Starbucks). I bought Sun Micro around $80, sold it a few years later for around $5. I bought Walmart at ~$50 and sold it years later for ~$50. Netflix was a stinker. I bought that at $20, then they had a web conference and told everyone how they doubled their profit, and what did the stock do?? it went down 66% over fears of Amazon’s program. See how well founded that was, huh? I’m all for putting our savings into CD’s at the bank. It’s not 12%, but with a credit union you can get ~5%.
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[...] stock market right now is at a all time high. I hate the stock market. People are pleased with returns like 12-15% on their money. I do not have much money in the stock [...]