Cashing out plans?? do they work

[Maulik]

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The best way to go about this is getting a ROTH IRA with a firm like Vanguard and dumping that money into an S&P500 index fund. 10.5% annualised returns since 1900s.

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a) take advantage of any tax free growth possible.
b) canadians can enjoy the power ofthe S&P500
we're from canada, eh. we don't have roth iras. we only have rrsps, which are roughly equivalent to iras. and their limits are lower.

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[Scuba Chuck]

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If you are serious about investing. The best way to go about this is getting a ROTH IRA with a firm like Vanguard and dumping that money into an S&P500 index fund. 10.5% annualised returns since 1900s.

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Great. The blind leading the blind. You're right on the Roth IRA though.

[Maulik]

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If you are serious about investing. The best way to go about this is getting a ROTH IRA with a firm like Vanguard and dumping that money into an S&P500 index fund. 10.5% annualised returns since 1900s.

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Great. The blind leading the blind. You're right on the Roth IRA though.

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[img]/images/graemlins/confused.gif[/img]


those who are not interested in handing over their funds to a stockbroker are best served by the aforementioned idea.


please explain otherwise.

[Moonsugar]

Ok, not to be a nit but this stuff kills me. You have no idea if this guy should put money in a ROTH, you don't even know if he is eligible to have a ROTH.

Also, the Vanguard SP500 index fund was created in 1974 so it hasn't returned 10.5% since 1900s. SP500 hasn't been around that long either. I think it is a great product, but it doesn't have the attributes you posted.

Investmentment advice was my profession for the last 11 years. How it is delivered in America totally sucks but if someone really wants to learn about investing the best book on the subject I have ever seen is The Intelligent Asset Allocator It is thorough, is relatively easy to understand and the method of investing it gives is simple, cheap and easy to follow.

Financial planning questions, such as if someone should/could open a ROTH, how much of their poker winnings they should invest, should they get a 20 or 30 year mortgage etc. are very dependent on the financial situation and personality of the person and his family and it is extremely difficult to give good advice to someone given the info we typically have on a board such as this. Sometimes it could do more harm than good. For instance some joker with only poker income could open a ROTH, a violation of the tax law or someone could put 'all' their savings in tax deferred accounts such as a ROTH, which would not be prudent at all.

[fnord_too]

I don't like the letting the rest sit in neteller part. I think that is fine up to some amount, but if you continue to succeed, you will end up with a lot of dead cash there, and that is a terrible fate for capital.

Personally, I have a lot of long term financial plans, and poker is a component of them. By and large, I have the following general priorities:

1. Absolute necessities (mortgage, car payments, taxes, stuff like that)
2. Bankroll Protection
3. Elimination of short term debt. (It irks me that I still cary some short term debt).
4. Various savings (portfolio, capital for things like home improvements/additions, cash reserves, maybe other property, etc.)
5. Toys (this actually jumps up to 3 at times, since a lot of the toys I am talking about are not huge investments, things like a little vaction here, a new palm pilot there).

When my savings gets to an acceptable level, bankroll protection will move down in some sense, since it can easily be replenshed. (effective bankroll protection will still be number two, but this is really just an exercize in semantics).

[Scuba Chuck]

I'm not interested in going into depth on this topic, but I will post once.

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How it is delivered in America totally sucks

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I agree 100% Well, I agree that a large majority of FAs are in it for themselves, more than for their clients.

Unfortunately where you miss the point is the cyclicality of invetments. For example, what we all remember is that from 1981 through the end of the millenium the Dow Jones Industrial Average (DJIA) moved from 875 to 12,875. That's an incredibly exponential move. But, we all seem to fail to realize that this is trend is not permanent. It's not how the market moves all the time. The next argument, I'm sure I'll be given is that since 1925 (or pick any other 70+ yr time horizon), the market index has returned (insert any return you want here).

The argument is the following. Indexes do not move in a linear line at a 30 degree angle all the time. In fact, if you watch more closely, you'll notice that returns are flat for a period of time, and then move at a very high pace.

Specific example: (I read this for the first time in Fortune in a 2001 Warren Buffett article).

December 31, 1964: DJIA 874.75
December 31, 1981: DJIA 875.00

Here is a 17 year example where our major index failed to perform.

My final point is that for the past 20 years, almost no mutual fund could beat the indexes. That's about to change over the next secular market experience.

Scuba

[skirtus]

I had a very simple cash out plan. My wife would just spend whatever I made at the tables that week. I than had to cash out to pay the credit card.

[mosdef]

i agree that it is usually worth while to fill up all the tax-sheltered investments you can. one issue with dumping poker winnings into a tax-sheltered investment vehicle in Canada is that the limit on your tax-deferred investment contributions is a percentage of taxable earnings. so if you are a college kid not reporting your poker winnings, your RRSP maximum contribution will be too small to absorb your winnings.

[A_PLUS]

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I would invest all of your winnings in the London stock market. Party Gaming might be a good choice.

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hmmm..I really need to get moving on that financial advice newsletter.

[Maulik]

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Also, the Vanguard SP500 index fund was created in 1974 so it hasn't returned 10.5% since 1900s. SP500 hasn't been around that long either. I think it is a great product, but it doesn't have the attributes you posted.

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this is what I was getting at...
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The next argument, I'm sure I'll be given is that since 1925 (or pick any other 70+ yr time horizon), the market index has returned (insert any return you want here).


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...but I suppose I'm guilty of the terrible information that is published monthly by Forbes, Business Week, Money, Smart Money who go on & on about the latest fad. The idea was index funds are good investments for those who don't have the time to choose their own securities. Regardless, index funds serve as a better vehicle for most young poker players than most things they will come across via media, friends, etc.

And investments like poker are situational as mentioned above. Usually a standard line like a ROTH IRA is good for you... is.