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Much talk about recently on how great defined qualified plans are. Well report after report shows holes, major holes yet who is listening? Yet another ...
Much talk about recently on how great defined qualified plans are. Well report after report shows holes, major holes yet who is listening? Yet another study!
The financial system put(s) up zero percent of the capital and (takes) zero
Percent of the risk and (gets) almost 80 percent of the return, and you, the
Investor in this long time period, an investment lifetime, put up 100 percent of the
Capital, (take) 100 percent of the risk, and (get) only a little bit over 20 percent of
The return. That is a financial system that is failing investors because of those
Costs of financial advice and brokerage, some hidden, some out in plain sight that
Investors face today. So the system has to be fixed.
I certainly hope we're not looking for the perfect investment. That would be a high return with low risk and low fees.
I think there's too much focus on bashing investment vehicles and not enough focus on just investing in the first place. While everyone can sit here and argue about mutal funds, annuities, tocks, 401ks the reality is that none of it matters since Americans simply aren't saving crap.
Who's ahead:
Bob: Invests $10,000 and loses half.
Tim: Invests nothing - just blows all his money.
I'll take Bob's $5,000 at the end of that year instead of Tim's zero.
I'm not touting losing money on investments but to be quite frank, I really don't care all that much what my returns are - just that I HAVE returns. I'll gladly put in $400 a month into the market instead of grabbing a new car payment. **** - so I put in $400 a month and am down 10% at the end of the year. I grab that new car and at the end of the year I not have zero invested, but am negative since I'm paying interest on a car loan.
Look at the what the average person hears:
I invest in my 401k - "That's stupid - fees are killing your return"
I invest in mutual funds - "That's stupid - bad average returns and fees."
I invest in the market - "That's stupid - way to much risk. Money may not be there when you need it."
I invest in CDs "Thta's stupid - very low returns don't keep pace with inflation."
Instead of calling everyone stupid let's just get people to do SOMETHING with their money instead of this "grass is always greener" crap.
You know how I pick my stock? We choose companies where we use and like their products. I could give a rat's ass about the P&E or where the market is.
I certainly hope we're not looking for the perfect investment. That would be a high return with low risk and low fees.
No but the study brings out the obvious normality of the structure. Lets face it, a qualified plan is from the government via the employer via the Fund. Now people should be skeptical about this, none of the identities have anyones best interest at heart except their's. I am a strong believer that the individual should take care of this themselves and look out for their best interest and not rely on ones employer or mulitple third parties that obviously have their interest to be concern about.
What the government should do if they have the individual best interest at heart is to cancel the Qualified Plans and come up with a Tax Structure the puts the incentive to save instead of spend. In other words tax spending not income. Now IMHO that would benefit many not some.
And this is why everyone should invest in stock. Because the primary responsiblility of any public company is to the shareholders. When you're a shareholder the companies are working for you every day. When you have most of your money in vehicles where the companies make money off fees, then they're working against you. I have some mutual funds just to spread the risk, but most of my money is in index funds - extremely low fees. Most of my portfolio is pure stock. Zero fees unless you trade and every day the CEO wakes up and his primary goal is to make me money!
And this is why everyone should invest in stock. Because the primary responsiblility of any public company is to the shareholders. When you're a shareholder the companies are working for you every day. When you have most of your money in vehicles where the companies make money off fees, then they're working against you. I have some mutual funds just to spread the risk, but most of my money is in index funds - extremely low fees. Most of my portfolio is pure stock. Zero fees unless you trade and every day the CEO wakes up and his primary goal is to make me money!
Geepers, yet another myth we need to dispell? Today's corporation, lets take GM, Walmart, anyone will do, they are in business to serve very few shareholders, ie the ones that have enough votes or enough shares to force Boards and CEO's to take notice. The small shareholder is basically a non factor when tough decisions have to be made. Basically why today, most decisions are done for the short term versus the long term financial health of the company. I know of very few FP'ers worth their salt advises the old rule "Hold Long", lets face it we can look at companies like GM or Walmart and their decisions they make today seems so stupid!
No one can explain to me and some have tried, to suggest Walmart's expansion since the death of the Old Man makes good sense for the company, this is something the old man himself suggested against. I can see where some benefit from it but looking at the long range view as a small investor, it simply doesn't make sense! In fact volumnes have been written about todays changes of the Corporate View and how it has change over a short duration.
Now don't get me wrong, investing in a good company is a good idea but understand, they will do what is best for very few and as a small investor you are along for the ride and count for nothing. So I suggest looking no further than 3-5 years max on holding any one company without seriously rethinking why you invested in that company and it really doesn't matter on their performance. In other words, buying stocks like Kodak and holding it for years is something that simply shouldn't be done like it once was, the old Blue Chip methology simply doesn't work like it once did.
Yet if you put a one-time investment of $10,000 into Walmart stock 10 years ago and cashed it out today you'd have $39,000 with reinvesting the dividends. That's a gain of 172%
Geepers, yet another myth we need to dispell? Today's corporation, lets take GM, Walmart, anyone will do, they are in business to serve very few shareholders, ie the ones that have enough votes or enough shares to force Boards and CEO's to take notice.
James -- My thought would be that if I owned 10 shares or 1,000,000 shares, my goal would be the same. I want my ultimate share value to rise.
Please explain to me your thoughts on why the major shareholders would have a different agenda than the smaller ones. The big shareholders are typically in for the long haul -- their goals should mirror my own.
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"Refried confusion is a-makin' itself clear" Dr. John
James - you have done absolutely zero actual homework on this. Go put your money in GE stock and over the next 20 years with reinvested dividends you'll be up significantly.
So what if you put $400 a month into GE for the past 10 years? You'd have over $74,000 now for a gain of 43%.
Reality is reality. $400 a month into a life vehicle returning 5% then take away the fees or $400 a month in GE stock for 43% and no fees.
It's real. It's not theory. My stock gains are real - not theory.
Quote:
Geepers, yet another myth we need to dispell? Today's corporation, lets take GM, Walmart, anyone will do, they are in business to serve very few shareholders, ie the ones that have enough votes or enough shares to force Boards and CEO's to take notice.
James -- My thought would be that if I owned 10 shares or 1,000,000 shares, my goal would be the same. I want my ultimate share value to rise.
Please explain to me your thoughts on why the major shareholders would have a different agenda than the smaller ones. The big shareholders are typically in for the long haul -- their goals should mirror my own.
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"Refried confusion is a-makin' itself clear" Dr. John
Steve, Though only one thought comes to mind, I agree with James. For example, dividends. Many wealthy individuals do not like dividends. They wish to defer income until the stock is sold.
A person owning 10 shares might be thrilled to death to get dividends. A person owninig 10,000 shares might be quite upset.That is one example I can think of.
I wonder if you owned 500,000 shares, how hard it would be to get your nephew a job interview?
Geepers, yet another myth we need to dispell? Today's corporation, lets take GM, Walmart, anyone will do, they are in business to serve very few shareholders, ie the ones that have enough votes or enough shares to force Boards and CEO's to take notice.
James -- My thought would be that if I owned 10 shares or 1,000,000 shares, my goal would be the same. I want my ultimate share value to rise.
Please explain to me your thoughts on why the major shareholders would have a different agenda than the smaller ones. The big shareholders are typically in for the long haul -- their goals should mirror my own.
Well for one small example think who are the large shareholders today? To give you a clue it likely isn't an individual but a "Fund" that represents individuals. Now what is the goal for most Money Funds today? Well to turn the largest percentage of return for every year, if not the Fund Manager is fired, gone as in Bye Bye Charlie! They even admit they are under great pressure to produce short term (or a yearly gain) gains not long term investments.
Or you could go to the extreme and guess how many Schillings there are out there. Or how many Citigroups that funded Enron Debacle or how many Anderson Firms that will make the paper trail look good for as long as possible. Now that is the extreme I understand that but we just got done with one seemingly long run of them and the next taking shape is HUD and forget his name, performance wasn't great yet he walks away with a package that rivals Welch's of GE, lets face it Jack ole' boy did good there yet you have dismal failures also walking away with golden parachutes that are simply outrageous. Now you tell me what is pushing these large yearly pay and retirement packages? Is it really nothing more than a prestige thing by the Boards?
Now there are a lot of examples, ones more complicated but these or just some simple ones most have no problem understanding. Spending addicts with your, the investors money.
James - you have done absolutely zero actual homework on this. Go put your money in GE stock and over the next 20 years with reinvested dividends you'll be up significantly.
So what if you put $400 a month into GE for the past 10 years? You'd have over $74,000 now for a gain of 43%.
Reality is reality. $400 a month into a life vehicle returning 5% then take away the fees or $400 a month in GE stock for 43% and no fees.
It's real. It's not theory. My stock gains are real - not theory.
No guy, going back and picking the winners of the past isn't reality. It be really nice to have the Wall Street Journal that isn't due to come out in ten years when picking stocks, that would be really nice! Sure you have winners and you have losers, yet the big trick is picking the company that will be the winner in ten years from now not the winner of the last ten years.
Its like MP3 players or Ipods, the company that beat the others with preloaded players will be a big winner. Yet who is that gonna be, most would guess Ipod but that is a gamble, even though I do like the leadership and forsight of the company I don't necerssarily agree they will be the big winner. So go run and find out if they will be the winner of the digital players in ten years from now. More than likely it will involve the sales of preloaded players, such as the Rolling Stones Box collection preloaded on an MP3 player, or all the works of Bach on this MP3 player. So the winner will likely find a way of using ultra cheap MP3 players likely not the high dollar IPod. The basic idea is instead of buying a CD you buy a MP3 player instead, a neat idea really for Box Collections which is already a big draw, I have one from almost all of my favorite bands.
I tell ya what - give me five Blue Chip companies at random and I'll tell you what you would have made with each of them over the past 10 years. Don't research it first - just rattle off five large companies off the top of your head.
I tell ya what - give me five Blue Chip companies at random and I'll tell you what you would have made with each of them over the past 10 years. Don't research it first - just rattle off five large companies off the top of your head.
Yet the best predictor of future results is past performance. What...don't want to name five companies? Name me a single Blue Chip company where if you invested over the last 10 years you netted a loss. Have fun searching - you'll be at it for a few months. Stock is the single best investment outside of real estate. Always has been, always will be. Direct stock is zero fees, no tax liablity if you re-invest the dividends and has historically returned over 10%. Maybe you can pull one or two examples? The rare exception instead of the rule in your stardard "scare tactic" style. You're one of those pointing to Enron as a reason to never invest in the market?
You can doomsay forecast this all you want to bury you financial head in the sand with annuities all day long. The life companies are making billions by taking everything over the cap, hitting you with insane fees and after inflation you're left with squat.
John, get a grip I never said not to invest in the stock market. Only thing I suggest is try to understand the enviroment if one is going to do that, and no, past performance does not relate to future performance. If so where the hell did Microsoft come from? Thinking the way you suggest should not of IBM been King of computers.
Once again, tell me which company is going to be the 800lb gorilla in the digital music field ten years from now? You can not tell me. Tell me since I'm investing heavily in Nano Technology which company will come out on top?
Plus you are also using the last ten and twenty years, no one with a brain thinks that we are going to duplicate the last twenty years in the next twenty years, that would be insane to even think that.
Yet I'll hold onto my 12 Blue Chip stocks for the next 30 years despite everyone yelling "the sky's gonna fall."
20 years ago when I first started investing I got into an investment club. Everyone kept projecting these horrible scenarios - they all bought and sold, bought and sold, bought and sold. I quit the club.
In the 90's I was supposed to sell. The next 5 years were predicted to be horrible. I make around 45% on average. From '95 to 2000 I was supposed to sell. Got slammed with a huge bear market. I bought more. ended up with around 30% with everything.
Was supposed to sell from 2000 to 2005 - prediction from the "experts" was "this can't continue and we're in for a HUGE adjustment. I believe I was up over 40% again.
Now it's "the next 5 years will be horrible." Yet I laugh, have been holding and buying the same companies over the past 20 years, am up just an ASSLOAD of money, and you can catch me selling in ohhhhh....about 20 years.
Have fun with trying to predict anything. In the mean time I'm buying around $500 a month every month.
Fees of the 401k
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