[serious]ask me about personal finance

[Litodude]

good debt(hah)/credit, bad debt, debt management, rent, investing, retirement, 401ks, ira, roths, i'm in college wtf do i do, i has a babby wtf do i do, i'm 16 wtf do i do, CDs, bonds, stocks, mutul funds, indices, forex, btc, futures.

i will answer ur questions when i wake up

do not ask me about death loans

[Izzy]

What are death loans?

[leonid]

Now everyone is going to ask about death loans and nothing else

[Litodude]

it's called a mortgage in french and none of u need that shit in ur life right now

ok gn

[Spenner]

Will there ever be another golden time to invest in a shitton of BTC like a few years ago when they were like 5USD a piece?

[rushyrulz]

i'm in college wtf do i do

[pokelda]

im 12

[DotKritic]

Should I buy TWTR stock?

[dAnceguy117]

401ks, ira, roths, CDs, bonds, stocks, mutual funds, indices, forex, btc, futures [serious]

I've probably learned about each of these at least once but have since forgotten. what are these things and what should I be doing with money that I might someday have

[Hateandhatred]

Is there a way to invest in MLMs? Like invest in their growth, then retract the stocks when the officials kill it?

[psychoangel691]

I actually had gotten a decent amount of money back from a tax return and was considering putting it into a stock but I have no idea what I'm doing when it comes to that stuff. My father used to use etrade some time ago, but I look at that site and I'm just like wtf am I doing. Info on how to invest in stocks would be cool.

[kommisar]

Originally Posted by Litodude

it's called a mortgage in french and none of u need that shit in ur life right now

ok gn

a house is a huge investment

whether you get return on it depends on your ability to predict the market in your area and your ability to increase the value of your property.



if I had any serious questions to ask you about finances, how much money do I need to get started in stock market trade?

[Litodude]

i wanna address the above 1st because didn't i just say something about not wanting to talk about it, but i have to run errands now:

yea because a house is a house is a house do not use your primary house mortgage as leverage or figure you are going to flip a house and sell it for a measly 5%-8% gain over fucking YEARS because a) fees might just eat you alive and you might never get profit in the first place b) do not think your house is liquid (only a room in your house is at most!!) c) why would you risk losing where you live d)this does not apply if you have multiple properties and d) you should learn by now since you've all livd through the housing crisis in the US and.

people..

abandoned their homes...

cuz they couldn't afford to sell it...

let alone make payments to live in it (that's another lesson about debt)

brb

[Reincarnate]

Adding my own shit to this thread.

The thing about personal finance is that it's personal. The answers will differ for everyone since so much depends on timing, circumstances, goals, risk sensitivity, education, patience, rationality, emotion, utility, etc.

That being said there are usually some pretty good heuristics to live by. IMO:

1. Ensure you have an emergency fund that will get you through at least 3-6 months of expenses. So if you lose your job, you have some time to get a new one while being able to pay all your bills. This is imperative which is why I am writing this one first. If you don't have an emergency fund, it should be your #1 goal right off the bat. If that seems too much for you, then at minimum, save at least $1000, which is enough to handle most emergencies that may realistically float your way (flat tire, hospital bill, etc). My point here is to have a buffer to keep you afloat. Otherwise you're totally exposed and at the mercy of chance, and believe me -- bad things can, do, and will happen. It's just a matter of when, not if. So prepare yourself! Keep this money in a money-market fund (such as those offered by Sallie Mae) and don't touch it unless you need it. Ideally you should never have to touch that money ever again. But it's there if you need it.

2. If you have a 401k option with your employer, you need to contribute at least whatever amount the employer matches. In other words, if they match half of your contributions up to 6%, you need to be contributing at least 6%.

3. You can get aggressive with the 401k more than you think. It's taken out of your paycheck pre-tax and so in terms of net pay, it's not as big a deal. The limit in 2013 is something like $17.5k.

4. If you can, open up something like a Roth IRA especially if you're young and in a low tax bracket. This is great not only for tax diversification purposes, but you have more fund choices (such as with Vanguard). The max cap is something like $5500 in 2013.

5. Pay off your credit cards in full every month so you never have to pay interest. If you owe interest, pay that shit off ASAP because you're tossing money down the hole. There's almost never a good reason to live off credit like that. If you are, then you fucked up somewhere, but that's OK -- all you can do is focus on making the right moves going forward.

6. Pay off your student loans aggressively, especially those with interest rates exceeding 4%. That's a hell of a guaranteed return, especially once you're clocking past 5, 6, 7%.

7. Mathematically speaking you are better off paying off your debts by order of interest rate, starting from the highest and working your way down. This guarantees that you minimize how much you waste in interest overall. However, personal finance is not purely mathematical -- it's also psychological. Sometimes you are better off eliminating small balances regardless of interest rate. The feeling of "eliminating debt" is usually an effective motivator to keep you going.

8. Don't time the market. You have no idea what the fuck you're doing. Seriously. This isn't me being facetious or arrogant. You have no idea what the fuck you're doing. And neither does anyone else. If you're going to buy something, plan to hold onto it for a while. Don't get in the habit of trying to "get in low and sell high" in the short term.

9. Live within your means. Just because you have $X doesn't mean you can afford something that costs $X. You also have to account for unforeseen expenses and give yourself some breathing room, and also consider money that you can leverage for later growth. Make sure whatever you spend is less than whatever you earn. A good rule of thumb (for starters) is to save at least 20% of your paycheck every month if you can. If you can't do that, then you need to cut expenses because saving less than that is not doing yourself any favors.

10. If you are considering buying something that you can't hold onto for at least 4-5 years, then don't buy it. For instance, don't buy sneakers that will turn to shit after 6 months of use. If you buy cheap, you tend to buy twice, or even thrice -- and you usually spend more in the end trying to cut corners.

11. Don't bother with financial instruments that come with hefty fees. On average, it's not worth it. Keep fees low -- those suckers add up.

12. Don't compare yourself to others or bother "keeping up with the Joneses." There will always be others out there who make more money, have fewer expenses, and have it easier than you do. Trying to mimic someone else's lifestyle to make yourself feel better is folly. All you can do is optimize your lifestyle and live within your means. You'd be surprised -- many people you think are living large are actually living on debt and are totally broke with no savings.

13. Save early, and save often. Try to have, at minimum, one year's salary in your 401k by the time you hit 30. Ideally you want more, but the point is to get used to saving for retirement early on. You won't want to be working when you're sufficiently old, and it's going to be harder to save the longer you wait, especially if you plan on having kids and shit.

14. Learn to cook. If you're always eating out, you're wasting a lot of money. A lot of people spend more money than they think when it comes to food. Girls also dig guys that can cook.

15. Don't listen to "financial fad" advice. It's sort of like physical fitness. Everyone wants the newest and latest diet pills and fad diets when really what matters if moving more and eating less. Same applies to finance. Spend less, save more. Don't get sucked into pyramid schemes and the latest "BUY GOLD NAO" fads.

16. Buy off-brand shit if you can. Usually it's the same (if not very close) to the name-brand stuff, and it costs a lot less.

17. Don't buy a car if you can help it. You not only have to buy the car, but you have to pay insurance, constantly buy gas, pay for repairs, pay for maintenance, and then you need to pay to ultimately park it somewhere. And you can only sell it for a fraction of what you paid for it. Yeah, public transportation for me, please. If I really need a car, I can either hit up a friend who already has one, or rent a car.

18. Never, ever co-sign a loan. Ever. Ever.

19. Schools and universities in the US are way too fucking expensive. Unfortunately, they're still worth it. Even so, try to pick one that'll be affordable in terms of loan payments if you don't have parents who can foot the bill. If you want a very, very rough rule of thumb, every $10k you borrow is another $100/month over 10 years. This isn't an exact figure but it gives you an idea of magnitude.

20. Apply for scholarships. You'll win a bunch of shit by default because most of your peers aren't really trying.

21. Don't buy a house because you think it's a good investment that you can sell off for more value later. Buy a house only if you want a house.

22. Don't fuck up your credit. Shit stays on your report for like 7 years and takes a lot of effort and consistently good usage to repair. Start early and always pay on time. Keep your utilization low (ideally under 30%, 10% if you can). If you're maxing out all your cards, you're not doing it right.

23. If all else fails, get a better job if possible. But don't expect it to be a cure-all. A $50k/year guy who makes smart decisions will be richer than the guy who makes $120k/year and doesn't give a shit.

24. Don't bother with stocks until you've got everything else in your life solidified.

25. Don't lend money to friends unless you're OK with the possibility of never getting it back.

26. Don't accept money from friends unless you have a plan to pay it back quickly. Otherwise you risk fucking up the relationship.

27. If you're financially stable, you'll be more attractive. I'm not even kidding here. Having your shit together = sexy.

28. Don't marry crazy. Always get a pre-nup, too. It's the smart thing to do.

29. People tend to be happier buying experiences rather than stuff. In other words, taking a trip with friends to another state is a lot more fun than blowing money on a bag or some tech gadget that'll wind up in the back of the closet after a few months.

30. Don't be afraid to reward yourself every once in a while. You don't have to live like a pauper to make smart choices. The goal is to get used to the idea of working with a lot less than what you're actually pulling in. Rewards help keep you going, too.

31. Just because a banker/advisor/officer/etc is willing to lend you money, it doesn't mean you should take it. Back before 2009, subprime loans were all the rage. Loans were being handed out like candy to people who couldn't afford them, and the officers knew this. But they profited off this structure and so it was in their best interest to arrange the transaction.

32. ...which leads into my next point. If you ever plan on seeing a financial advisor, make sure, firstly, that they "operate in a fiduciary capacity." This means they work for you. Otherwise they may be trying to sell you shit and get you to invest in things because the company is compelling them to, even if it's not in your best interest.

[kommisar]

i'm going to buy a house because the market here is cheap and I don't live in America. it'll be purely for living reasons, I don't expect to use it as a means to retire (HAH)

housing market in Calgary is INSANE and houses are selling like hotcakes faster than they can be built. That is probably one of the few places using houses for profit is a good idea

[Litodude]

ahh nice. yea i don't quite know the market in canada for housing, though i can assume the colder the area == easier to get a house lol.

damn everything rubix said is pretty much spot on, i'm just here to give generic financial advice that isn't biased toward any agenda except self-improvement. i also don't see anyone asking me precise questions so my answers will be broader:

Originally Posted by Spenner

Will there ever be another golden time to invest in a shitton of BTC like a few years ago when they were like 5USD a piece?

You can't honestly speculate a market like BTC in the short-term. I will say that long-term it will continue to increase, but short-term (1-4 years) is 99% subjective. There are uses for cryptocurrencies (i.e. SilkRoad transactions, VPN purchases, etc.), and there's even an ATM in Canada for BTC popping up. It's new, there's no governing body, nothing is insured, so you have a chance of losing it all. But if you were lucky as the engineer I heard about on NPR who owned 24 BTCs or something in 2009 where BTC was @ $.004/per and now it's @ $200+/per well, you'll be a lucky guy eh?

The market is there, and there is potential, but you should be wary and research more about it yourself. I might make a position in the future.

Originally Posted by rushyrulz

i'm in college wtf do i do

Live within your means and don't acquire unnecessary debt. FINISH school, otherwise your investment is a wasted effort unless you're a prodigy.

Originally Posted by DotKritic

Should I buy TWTR stock?

Yes. No.

Originally Posted by dAnceguy117

401ks, ira, roths, CDs, bonds, stocks, mutual funds, indices, forex, btc, futures [serious]

I've probably learned about each of these at least once but have since forgotten. what are these things and what should I be doing with money that I might someday have

fucker.

a 401k is the same thing as an Individual Retirement Account, it's just a fancy way of saying that whichever company you're working for, is offering you a retirement account. An IRA itself is individually owned; you control it - you manage it. They have different yearly limits (IRAs are generally around 5-6k, whereas a 401k is around 16-17k) A Roth IRA or Roth 401k is almost the exact same thing as above, but instead of being taxed when you take your money OUT of your IRA/401k, in a Roth, they tax it IMMEDIATELY.

Why do you want to invest in a Roth IRA first? Because it's gaining interest over decades, tax free!! You're also betting tax rates will increase over time...You don't have to know economics to know taxes will be going up, wholly and/or individually.

A Certificate of Deposit is something a bank gives you for letting them borrow your money. $1k, 3k, 5k, are usually the smaller amounts you give a bank to issue you a CD, and however long they keep your money (6mo, 1yr, 5yr, etc.) will give you back a certain % of interest. I don't recommend doing this right now, because the return rates are like 3-5% over like fuccen 5 years.

A bond is something the government (any federal agency or municipality, or corp, but mostly the gov't) gives you for letting them borrow your money. Same thing as above. I don't recommend doing this, because the rates are like 1-2% over like fuccen TWENTY years.

The above two are extremely safe forms of investment assuming your individual retirement accounts are sufficiently maxed out.

A stock is a portion of a publicly traded entity/company/business that they give you when you let them borrow your money. We'll use a cake metaphor, where a cake is a company and a slice is a stock:

There are many different many different flavors of cakes which can range from agriculture to big oil, to tech, to money, to good, to commodities; there are many. There are many different sizes of cakes and within them you can get many different slices of said cake; if you were richer you would obviously be able to afford more slices.
There are plenty of cake enthusiasts that like particular types of cake whom are willing to pay a certain price for the cakes, depending on what people say about them, and sometimes the smaller, or not-well-known types of cake and be easily swayed by public opinion and the reviews written about that cake. Suddenly your cake might seem extra-extra special because of a special ingredient the baker announced he put in the cake. Sometimes the cake lovers might not be so enthused to enjoy the new ingredients in the cake. Bigger and more popular cakes on the other hand general don't get swayed often unless the head chef says something important about the cake, and that could have hugely detrimental or substantially positive effects on the price of the cake because more people make or may not want to keep buying the same cake. Some people might say they're tired of the cake and move on to another cake that has potential to grow into a niche between a few cake enthusiasts. And in between them, they will divvy up the slices and give themselves a shitload of pieces because we're America and we're fat bastards.


A mutual fund is a group of stocks where you give your money to "professionals" [people] and hope that they get you a decent return while giving themselves a cut of the profits by charging you a 2% fee on your profits. The margin of profit may be high or lower. Probably higher. This is also called a hedge fund. opinion: It's a fucking waste

An Index is a broad spectrum of companies that have an accurate representation of the current health of the market. The most popular one nowadays is the Dow Jones (Dow) and the Simple&Poor 500 (SnP/S&P). If you beat the S&P in their overall earnings for the fiscal year, you 'beat' the market!

ForEx = Foreign Exchange. Think stocks, but with money!

BTC = Bitcoins

Futures = Kind of like stock options but not really. http://www.investopedia.com/video/pl...act-explained/

Options = Buying and selling of contracts* of certain stocks at a specific date for a specific price. The closer you are to the price of the slices of cake at the target date, the more valuable your contract is.

* 1 contract = 100 shares.

[Litodude]

Originally Posted by Hateandhatred

Is there a way to invest in MLMs? Like invest in their growth, then retract the stocks when the officials kill it?

The pyramid scheme only works if you're on top.

Originally Posted by psychoangel691

I actually had gotten a decent amount of money back from a tax return and was considering putting it into a stock but I have no idea what I'm doing when it comes to that stuff. My father used to use etrade some time ago, but I look at that site and I'm just like wtf am I doing. Info on how to invest in stocks would be cool.

I gave a basic tutorial, but investopedia and motley fool helps immensely. Have you gone through the necessary checklist to ensure you can afford investing in stocks (a highly risky investment?) Let's see:

0. ZERO DEBT. NO CREDIT CARD BILLS. NO CAR PAYMENT. NUFFIN. EXCEPT A LOW-INTEREST RATE STUDENT LOAN THAT YOU CAN SUFFICIENTLY PAY OFF WITHIN 6 MONTHS BUT DECIDE TO EXTEND IT TO 3 YEARS TO BUILD YOUR CREDIT AT AN EXTREMELY LOW-FIXED-INTEREST RATE (like 3-6% fuccen please).
1. 401k match (approx. $6k)
2. Roth IRA max (6.5k single)
3. 401k max ( 17.5k (including the 6k initially))
4. Stocks/bonds/CDs/2nd IRA
5. Startup-company (unless you're REALLY REALLY REALLY convince the your simfile is going to revolutionize the world, or you're a young entrepreneur that has a unique skillset with like-minded individuals with an idea that cannot easily be replicated and/or improves upon something currently existing in a drastic manner (The iPhone7))

[Reincarnate]

Originally Posted by Litodude

1. 401k match (approx. $6k)
2. Roth IRA max (6.5k single)
3. 401k max ( 17.5k (including the 6k initially))
4. Stocks/bonds/CDs/2nd IRA
5. Startup-company (unless you're REALLY REALLY REALLY convince the your simfile is going to revolutionize the world, or you're a young entrepreneur that has a unique skillset with like-minded individuals with an idea that cannot easily be replicated and/or improves upon something currently existing in a drastic manner (The iPhone7))

+1 to this ordering

IMO, until you're maxing out your 401k and IRAs, you probably shouldn't be getting into stocks. If you're going to invest in something risky, do it with surplus money. And until you're set everywhere else, you don't yet have surplus money.

[Litodude]

actually i edited c:

[Reincarnate]

Still agreed (pretty much said the same thing above anyway).

The nice thing about student loan debt is that usually you can deduct it on your taxes (up to $2500 IIRC).