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unglee
12-22-2005, 12:43 PM
I have about $20K I'm looking to put away somewhere relatively safely--don't want anything too volatile. Right now it's in a platinum savings account accrueing at a hefty 1%--what's a better alternative? Mutual funds? CD? I don't really need to touch the money.

Thanks for any and all help.

lastsamurai
12-22-2005, 02:45 PM
I would put it all on New England this monday night football...

All kidding aside...It DEPENDS. what your risk factor is...what you are saving it for? (ie first time home buyer, kids college education, ect) your age, how discipline you are keeping track of your investment.
IF you are looking long term-5-10 + plus years look for a good GROWTH fund that only invests in US stocks. I'm not a firm believer in diversification.

unglee
12-23-2005, 03:42 AM
Thanks for the response.

I'm 25 yrs old, with no debt and no real "plan" for this money. I don't need to worry about anything like the kid's college education, certainly. I'm just in the fortunate situation of having this extra money, and wanted to know what some more seasoned investors would do with it in my situation. I've never invested before and was just hoping for some helpful pointers towards a relatively safe solution for my money.

Dan Mezick
12-23-2005, 10:49 AM
Spread in 2 or 3 sector ETFs that are moving. Metals, energy, Japan. Resist the urge to buy the overall US equities market right now.

Sniper
12-23-2005, 10:52 AM
[ QUOTE ]
I'm 25 yrs old, with no debt and no real "plan" for this money.

[/ QUOTE ]

Well your first goal should be to "Create a Financial Plan"... and your first step toward achieving that goal should be to understand what a Financial Plan is and why its important. You can accomplish that by reading some books, and/or paying a visit to a Financial Planner.

[ QUOTE ]
I'm just in the fortunate situation of having this extra money, and wanted to know what some more seasoned investors would do with it in my situation.

[/ QUOTE ]

What a seasoned investor would do with their money wont help you, as you may have a very different risk/reward profile.

[ QUOTE ]
I've never invested before and was just hoping for some helpful pointers towards a relatively safe solution for my money.

[/ QUOTE ]

The safest most proactive step you can take beyond educating yourself, would be to open an Emigrantdirect or ING savings account... which would earn you about 4% on your money!

Once you have put together a financial plan and given consideration to your risk tolerance, then you could start allocating to other investments with potentially higher returns.

Dan Mezick
12-23-2005, 11:06 AM
excellent advice. Eventually a CFP will show up here offering his services, and do very well.

Acehawk74
12-25-2005, 07:20 AM
[ QUOTE ]
I'm not a firm believer in diversification.

[/ QUOTE ]

Someone should teach you about systematic and unsystematic risk, and how diversification can eliminate the unsystematic risk in a portfolio. Just a thought.

gjpure
12-27-2005, 10:45 AM
I work for a financial planner here in Michigan. I am not liscened to give specific advice, but I can tell you that you can do much better than CD's and savings accounts and still invest safely.

The decision on what to do with your money also depends on many various factors such as: other assets, taxes, age, income, goals, dreams, marital status, etc.

Our company's website is www.davidwhitefinancial.com (http://www.davidwhitefinancial.com)

Give us a call if you are interested in more info.

-Glenn

Sniper
12-27-2005, 01:11 PM
First, I fixed your link..

[ QUOTE ]
I can tell you that you can do much better than CD's and savings accounts and still invest safely.

[/ QUOTE ]

What other products would allow for a better than 4-5% guaranteed return, with essentially no downside risk?

Dan Mezick
12-27-2005, 02:41 PM
Good move.

Some CFP (maybe your office) is going to make a pretty penny advising the best of the 2+2 young guns. The ideal CFP will be a poker player and capable of assuming a mentoring role with a style customized for these great young players.

It's actually shocking to me that CFPs are not all over this.

If I was 21 and interested in managing portfolios, I'd just go and take the classes and get the CFP and then market my services to the many great young players here.

Several of them are going to retire millionaires by 35 provided they get the proper advisors on their team early in the poker career. Certainly this is a win-win for all involved.

I know of no CFP that caters to poker players. WHAT A NICHE.

Most CFPs struggle explaining advanced financial concepts to clients. Winning players by default get anything related to risk and reward-- immediately.

Marketing CFP services to winning young poker players. What a killer business model for the right CFP firm. Some of these kids will have liquid net worth well over 500K by the time they are 27, 28, 29. And they are going to live for another 30, 35, 40, 50 years.

What an opportunity. It's HUGE-- and wide open.

http://www.cfp-board.org/

12-27-2005, 03:41 PM
I'm not a cfp but i did stay at a holiday inn /images/graemlins/smile.gif

12-27-2005, 04:35 PM
Check out I-bonds, you can buy them online (treasurydirect.gov) and they are safe and return a decent interest rate, currently I think around 6.73 or so. Although that is adjusted every 6 months.

Ed Miller
12-27-2005, 05:27 PM
[ QUOTE ]
Good move.

Some CFP (maybe your office) is going to make a pretty penny advising the best of the 2+2 young guns. The ideal CFP will be a poker player and capable of assuming a mentoring role with a style customized for these great young players.

It's actually shocking to me that CFPs are not all over this.

If I was 21 and interested in managing portfolios, I'd just go and take the classes and get the CFP and then market my services to the many great young players here.

Several of them are going to retire millionaires by 35 provided they get the proper advisors on their team early in the poker career. Certainly this is a win-win for all involved.

I know of no CFP that caters to poker players. WHAT A NICHE.

Most CFPs struggle explaining advanced financial concepts to clients. Winning players by default get anything related to risk and reward-- immediately.

Marketing CFP services to winning young poker players. What a killer business model for the right CFP firm. Some of these kids will have liquid net worth well over 500K by the time they are 27, 28, 29. And they are going to live for another 30, 35, 40, 50 years.

What an opportunity. It's HUGE-- and wide open.

http://www.cfp-board.org/

[/ QUOTE ]

In the last few months, I've considered doing exactly this. Actually, my plan was to team up with a CFP rather than to become one.

I don't know, though... I don't think it's as instantly lucrative a niche as you are suggesting. That's precisely because of how smart successful poker players are.

The financial industry supports itself on the ignorance of its customers. While a lot of these 18-25 year olds are ignorant now, many won't be two years from now. They'll be smart... and when they have millions, they will know what to do with it... and that won't be paying me $20k a year to put it in index funds for them.

Sports millionaires... that's a great niche. But poker players? The money isn't as good in poker, and they are too savvy to sign on for the long haul. They need short term direction, not long term management.

Actually, the niche that could be somewhat lucrative is the windfall niche. The lottery winner niche. The inheritance niche. The big tournament winner niche. The "average Joes" that happen to win big tournaments and don't know what to do with the cash. But there are plenty of people who already cater to that niche. Which is not to say that a player known in poker circles who also caters to that niche wouldn't have a "niche within a niche." But it would be connection-based, not expertise-based.

I dunno.. I thought it was a great idea too when I first thought of it. But then I said, "How many of these guys are sticking around for the long haul?" and I decided that most, ultimately, will outgrow the CFP service.

Dan Mezick
12-27-2005, 06:26 PM
Anyone really smart values expert advisors. It's really that simple.

With expert advisors you amplify your own talents by leveraging subject matter experts in other related domains.

[ QUOTE ]

AUTHOR:
John Davison Rockefeller (18391937)

QUOTATION:
I have no use for men who fail. The cause of their failure is no business of mine, but I want successful men as my associates.



[/ QUOTE ]

eastbay
12-27-2005, 07:43 PM
[ QUOTE ]
Anyone really smart values expert advisors. It's really that simple.


[/ QUOTE ]

Wasn't that the justification for why mutual funds were supposed to be the place to put your money over the past two decades? That's where the experts were and they were always going to be able to do better than know-nothing you. It appears that advice turned out to be wrong, or at least not any better than set-it-and-forget-it index investments.

eastbay

Uglyowl
12-27-2005, 08:00 PM
[ QUOTE ]
Wasn't that the justification for why mutual funds were supposed to be the place to put your money over the past two decades

[/ QUOTE ]

There are two things I can think of that have changed drastically over the last twenty years:

1. The information gap has shrunk significantly.

2. The brokerage costs are significantly less which allow individual investors to put together a portfolio rather cheaply.

With some mutual fund fees on the high side and the information gap not as large, it is very difficult for a fund manager to continously come out on top.

There are great uses for funds though.

Dan Mezick
12-27-2005, 10:04 PM
East,

Mutual funds managers dont dispense personal financial advice, they just do a job managing a portfolio in accordance with the mutual fund's stated profile and objectives.

CFPs provide a more personal service that includes a considerable amount of advice about handling net worth through all stages of life. This advice includes aspects of estate planning, handling windfalls and inheritance, financial effects of life milestones (death of parents or spouse, marriage, divorce etc).

CFPs are not typically qualified to be mutual fund managers and vice-versa.

In using the term "expert advisors" I intended to connote "personal team of expert advisors" including members with expertise in accounting, legal, and financial planning.

No one here is throwing dimes on the idea of indexing.

eastbay
12-27-2005, 10:58 PM
[ QUOTE ]
East,

Mutual funds managers dont dispense personal financial advice, they just do a job managing a portfolio in accordance with the mutual fund's stated profile and objectives.

CFPs provide a more personal service that includes a considerable amount of advice about handling net worth through all stages of life. This advice includes aspects of estate planning, handling windfalls and inheritance, financial effects of life milestones (death of parents or spouse, marriage, divorce etc).


[/ QUOTE ]

You made a general statement: "Smart people rely on expert advice." I applied your generality to show that it isn't "as simple as that" in general. I don't need any "experts" to tell me that I should save my money, diversify, and invest to match my desired balance of risk and return, just as I don't need any "experts" to manage my investment portfolio in a mutual fund, when their value added is demonstrably nil.

I think the point here is that financial advice for the vast majority of people isn't rocket science. I have had many people tell me what their "financial advisors" have done for them and I tell them they could have come out ahead by buying a $30 personal finance book and reading it in a couple of evenings.

Smart people don't pay premiums for "expert advice" on subjects which aren't all that complicated.

eastbay

12-28-2005, 02:07 AM
very true eastbay, financial advisors are for the dumb and lazy

eastbay
12-28-2005, 02:57 AM
[ QUOTE ]
very true eastbay, financial advisors are for the dumb and lazy

[/ QUOTE ]

On the flip side, people like Suze Ormon seem to have made an entire (probably lucrative) career out of telling people to pay their highest interest loans first and to take advantage of their employer's 401k. So not to detract from Dan's idea too much... advisors may be for the stupid but that's a big market.

eastbay

lastsamurai
12-28-2005, 04:44 AM
[ QUOTE ]
[ QUOTE ]
very true eastbay, financial advisors are for the dumb and lazy

[/ QUOTE ]

On the flip side, people like Suze Ormon seem to have made an entire (probably lucrative) career out of telling people to pay their highest interest loans first and to take advantage of their employer's 401k. So not to detract from Dan's idea too much... advisors may be for the stupid but that's a big market.

eastbay

[/ QUOTE ]

I have to disagree with you. I know there are a few bright people on this site but one broker cant follow all 50,000 different mutual funds and stocks out there...if you work with a broker atleast you get a second opinion. Most of the Big ticket clients have 5-6 brokers nation wide...its their form of diversification... Do you think a doctor or a lawyer has the time to sit in front of his computer and analyze stocks all day? If your broker/cfp has a good track record why try to reinvent the wheel...look what happened to those investors who thought they didnt need a broker...opened up an account with etrade in 1999...saw JDSU triple in 3 months only to see it go below 10. If you have the discipline to screen your stocks and pick winners..more power to you...

eastbay
12-28-2005, 09:17 AM
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
very true eastbay, financial advisors are for the dumb and lazy

[/ QUOTE ]

On the flip side, people like Suze Ormon seem to have made an entire (probably lucrative) career out of telling people to pay their highest interest loans first and to take advantage of their employer's 401k. So not to detract from Dan's idea too much... advisors may be for the stupid but that's a big market.

eastbay

[/ QUOTE ]

I have to disagree with you. I know there are a few bright people on this site but one broker cant follow all 50,000 different mutual funds and stocks out there...if you work with a broker atleast you get a second opinion. Most of the Big ticket clients have 5-6 brokers nation wide...its their form of diversification... Do you think a doctor or a lawyer has the time to sit in front of his computer and analyze stocks all day? If your broker/cfp has a good track record why try to reinvent the wheel...look what happened to those investors who thought they didnt need a broker...opened up an account with etrade in 1999...saw JDSU triple in 3 months only to see it go below 10. If you have the discipline to screen your stocks and pick winners..more power to you...

[/ QUOTE ]

I thought the one thing we could agree upon was that

1) you don't have to "pick winners"
2) the people who supposedly can, can't. c.f. the already discussed mutual fund "expert advice" theory.

and if you say "Warren Buffett can", fine, buy Berkshire Hathaway.

eastbay

gjpure
12-28-2005, 11:19 AM
Equity Indexed Annuities and Fixed annuities can fit that catagory, as can certain private REITS. I all depends on how you define risk, but EVERY investment holds some degree of risk, it just depends on if you are comfortable with that risk or not.


The other guy's idea on being a financial planning to only poker players is an interesting one. But I wonder: How do you know if the "niche" is big enough, and how would you find your clients and convince them to start investing their money. Certainly, many are making a lot of money at a young age, but they also have school loans, debts, bills, etc. that dissapate later in life. So I wonder how profitable it would be to a financial planner. Regardless, however, if you have any significant amount of cash just sitting in a bank and are not sure what to do with it, interview several financial planners and go with one that makes sense and with whom you feel comfortable. After all, it's your money. You may have bluffed it fair and square!

Sniper
12-28-2005, 12:26 PM
Equity Indexed Annuities are fairly complex investment vehicles... a definately "read the fine print" before locking your money away type of investment.

One example warning on these investments (http://www.seniorjournal.com/NEWS/GuardWealth/5-10-24Equity-IndexedAnnuities.htm)

SEC comments on Equity Index Annuities (http://www.sec.gov/investor/pubs/equityidxannuity.htm)

NASD Alert on Equity Indexed Annuities (http://www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&ssDocName=NASDW_0106 14&ssSourceNodeId=451)

CNN Money article (http://money.cnn.com/2005/12/13/pf/expert/ask_expert/)

buffett
12-28-2005, 01:29 PM
Wonderful post, Sniper. I love it when we agree on something, and I especiallly like situations like this one where I vehemently agree with you.

Here's my favorite quote from your links: "the high commissions equity-indexed annuities offer create a huge conflict of interest for the advisor. If you were an advisor and had the choice of making 2% or 15% on an account, which would you choose? Is it any wonder equity-indexed annuities have become so popular?"