| Investment Learning Courses |
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johnnyD2014
First Time Poster
Cash: $ 0.25
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Joined: 22 Oct 2014
Location: United States
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| Investment Learning Courses |
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I've heard about courses and material you can buy that are offered to assist an individual in learning how to invest in stocks/forex/options/etc.
What have you all heard about these courses, would you think they are worth it to check out, how should I learn about investing other than just simply reading about it?
What advantages or disadvantages can you see with this? I want to make sure I kind of cover all my bases before I get a course or product to help me learn how to invest.
Thanks!
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Wed Oct 22, 2014 11:22 pm |
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Wino
Senior Member
Cash: $ 113.80
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Joined: 03 Aug 2012
Location: Dubai
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| Re: Investment Learning Courses |
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quote:
Originally posted by johnnyD2014
I've heard about courses and material you can buy that are offered to assist an individual in learning how to invest in stocks/forex/options/etc.
What have you all heard about these courses, would you think they are worth it to check out, how should I learn about investing other than just simply reading about it?
What advantages or disadvantages can you see with this? I want to make sure I kind of cover all my bases before I get a course or product to help me learn how to invest.
Those who "play" the market(s) lose about 19 to 1. That's right. Out of 20 people who try to win quickly, 19 of them end up losing money.
If you want to invest successfully, then you should do three things:
1. Live on less than what you earn.
2. Don't jump in and out of the market.
3. Invest in indexed mutual funds.
Number one means you have money to actually invest. Without that, then you're living on borrowed time. Oldguy argues that you should borrow to buy, but his "formula" requires that you have enough money up front to buy the item, so you can then play the "interest paid vs interest earned" game to your advantage. Without having money already, you can't do oldguy's method.
Number 2 means that you have to just let the funds lie where they are. I don't mean that you should totally ignore them, but you should not be panicking every market fall, and celebrating every market rise. At the most, you should not be evaluating your investments more often than about once per quarter. Personally, I do an annual inventory. What I do is compare my investments against similar investments elsewhere. I only "trade" when there is an obvious disparity. People who trade regularly end up selling when the market is low and buying when high. This is because emotionally, you panic/worry when you lose money, so you "get out before you lose anymore;" also, the converse of "buying while it's flying" happens because you see the market as a "good" investment. Just sit and forget, for the most part.
Number 3 means you are "betting" on a large segment of the economy that is not tied to any one sector. Total stock market index, S&P500 index, Nasdaq 100, and the Wilshire 5000 are all common indices such as I'm talking about here.
If you want to invest, I suggest you ask questions on forums, and read locations that people suggest. Bogleheads is a popular site. As well, if you have access, you can get a lot of good information from Morningstar, but you have to know a bit more to use it effectively.
If you follow my suggestions above, you will most likely be a millionaire in 40 years, assuming you deposit $100 per month. If you "play" the market, you will either be the 1 in 20, or most likely, you'll lose money 19 years out of every 20. In any case, the odds of you beating the S&P500 over any significant period of time are roughly the same as being hit by lightning.
There are exceptions to the "rule" I just mentioned, and you can watch almost every one of them on one of the "talking heads" financial shows at least once per week. By and large, recreational investors lose money.
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Thu Oct 23, 2014 11:30 am |
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oldguy
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As Wino says, 'investing' and 'playing the market' are way different. Eg, if you invest in the generic broad US market (SP500 Index), $5000/year @ 11% for 30 years, never sell, simply accumulate, it will be $1,100,000. Meanwhile the players have a high probably of never attaining a million.
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Thu Oct 23, 2014 1:28 pm |
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PapaGeek
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Location: Maryland
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I got my original education from InvesTools. A reasonable start for beginners and they do have an excellent website for investigating your decisions, but, it is expensive! It’s not that the website has anything on it that isn’t available for free on the web, it is just that they put it all together in one place. Having things in one place means you can investigate a company in a few minutes instead of a few hours or even days.
Since I was investing in an IRA, the idea of investing in options wasn’t possible. The only option strategy the government allows in an IRA is a covered call. Worth learning about, but not for beginners. I got my original education on covered calls from of all places, “The Covered Call Cowboy”. That site no longer exists. It did teach me all the fundamentals of covered calls, but his strategy was to merely look for the calls with the highest returns, which also means the highest risk!
I then found a book which has become my investing bible, Phil Town’s “Rule #1” which was published I think in 2006. My drive to work was just over an hour each way and I also got the book on audio CD’s which I have listened to countless times. I highly recommend this book.
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Sat Nov 01, 2014 2:30 pm |
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PapaGeek
Contributing Member
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Joined: 17 Jul 2014
Location: Maryland
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quote:
Originally posted by oldguy
As Wino says, 'investing' and 'playing the market' are way different. Eg, if you invest in the generic broad US market (SP500 Index), $5000/year @ 11% for 30 years, never sell, simply accumulate, it will be $1,100,000. Meanwhile the players have a high probably of never attaining a million.
While I totally agree that if you know very little about investing, mutual funds and index funds are far better than individual stocks; I totally disagree that the S&P gives high returns.
The S&P did fairly well through 1991, then slowed down for 3 years. The returns from 1992 through 1994 were 7.49%, 9.97% and 1.33%.
The S&P took off like a rocket for the next 5 years. The returns from 1995 to 1999 were 37.20%, 22.68%, 33.10%, 28.34% and 20.89%. I know more than a couple families who retired during that time period thinking that the market would support them in their golden years.
The entire market crashed for the next 3 years. The S&P lost 9.03% in 2000, 11.85% in 2001, and 21.97% in 2002. Those families that I just mentioned were devastated and just about every one of them had to get part time jobs to make ends meet!
Without hitting you with the numbers again, the market came back for 5 years then crashed again in 2008 where the S&P lost 36.55% (OK, one number) and has done well for the past 6 years.
The biggest problem with relying on indexes can be explained with the following example: You start off with $500,000 in your account and the index returns an average 10% per year and you live off of that $50,000 income so your balance at the end of each year stays at $500,000. Then comes a devastating -35% drop (like 2008) in the index. Your “Income” for that year is $-175,000 but you still need to take out $50,000 for living expenses so your balance drops to $275,000. To make this example easier to follow, let’s say the index jumps 55% the following year which gives you an income of $151,250, you still take out your $50,000 so your balance is now $376,250 and if the market goes back to a 10% average return you will continue to earn $37,625, not the $50,000 you need.
The point of that example is that fluctuations in the market, like 2008, can have a devastating effect on “average returns”. The -35% and +55% returns still average out to 10%, but they caused your balance to drop 24.75%. I plugged in the 2000 to 2002 three year drop numbers into my spreadsheet and the market dropped 42.85% while the balance in your account would have dropped 62.11%.
Just be careful, enjoy the “average” returns on your funds, but don’t rely on them! It’s easy to “ride out” drops in the market when you have an alternate steady source of income like a job, in fact, this is a great opportunity to “buy low”. But how can you “buy low” when you need that income to live off of? Instead, you are forced to “sell low”!
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Sun Nov 02, 2014 11:55 am |
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Wino
Senior Member
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Location: Dubai
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No one suggests removing 10% of your principle per annum. In your imaginary example, the recommended distribution on $500K is $20K per annum, which is 4%. The gains do not matter. Your 4% should be based on your balance at retirement, not a recalcuation done annually. This method allows growth for inflation, dips in the market, and a maintenance of your principle for the remainder of your life. Too many folks believe the 4% is "four percent of whatever it is today."
I posted the numbers on a different post within the last month, but I showed how "average return" will always deliver less actual results than a fixed rate or return of equal value, depending on volatility. The greater the volatility, the greater the spread between average return and actual return. For those who want the official term, the actual return is called "annualized return" for analysis purposes.
I wouldn't even attempt to retire on $500K, but it could be done if one had no debt and was willing to live on less than $2000 per month (plus any other income such as social security). I would suggest that $1M in today's dollars would allow one to withdraw just over $3K per month for living, and that should be sufficient for most folks, as long as they have no debt.
The track record of non-indexed mutual funds and other managed brokerage accounts historically has NOT beaten the S&P500. So, no matter what you think of the rate of return of the S&P500, it has been historically better than the next-best alternative.
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Mon Nov 03, 2014 4:26 am |
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littleroc02us
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An thus is the reason why I believe in a diversified array of investments. My wife and I have 401k's, Roth IRA's, a large real estate portfolio consisting of highly equitable rental properties and a low balance on our primary residence.
As most of us believe and have facts for, the S&P 500 has returned 11% historically going way back. PapaGeek is taking data from very specific dates and showing the high returns and the low returns and is concerned that Index funds might leave you short when taking 10% out at retirement out of a 500k portfolio. First of all, no one here thinks that 500k is sufficient for a liberal retirement enjoying the things you've been waiting to do your whole life, so let's just throw that out of the equation.
The fact is that a 4% withdrawl rate on let's say a 2 million dollar portfolio is more reasonable. If one were to take out 4% on 2 million is more of my liking which is 80k a year, which is over 6k a month. Now if your one that only has a retirement account and nothing else and the market goes down 35% your gonna have to probably reduce your withdrawl for that year. But if you take my wife and I for example, we have other investments like cash flow from our rentals, which we hope to accumulate many more before retirement. These properties will be paid off by that point and will have an NOI of around $1,500 assuming inflation each after taxes and insurance and maintenance fees. So if we had 5 properties all paid for that would be $7,500 cash flow which we could easily live off of and not touch our Roth IRA's since there is no RMD's required. We could ride the waves of the market until it improves again.
If we didn't want to touch either our Roth's or our rental properties, we could tap social security which should be the max since I've already been working for 25 years and I'm only 43, I should easily make the 35 year mark that they require for the maximum distribution. Plus since my 401k will have RMD's after age 70 1/2, we could tap that nest egg if nothing else. And if I stay in my current position with the State of Minnesota for another 18 years I will meet the 90 rule, where I'll receive a pension.
So my point to all of this is if you have diversifications, you can ride any storm, but if you have all of your eggs in one basket you may have to live on beans and rice waiting for the market to improve again.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Mon Nov 03, 2014 8:53 pm |
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Frank Holmes
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Tue Sep 19, 2017 8:40 pm |
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ProThinker
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Comprehensive 15-module free investment course available here.
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Thu Oct 05, 2017 4:00 am |
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