[Volks]

Does anyone know what is the best way to invest money so that you are making at least 10% per year on the principal, year after year?

[mduell]

Enron, Worldcom, Tyco

[Athens]

If you live in the right place Property.

[RAILhead]

Don't think like that.

You need to invest AT LEAST 15% of your income (before taxes) into retirement. The best way to do this is:

1. If you have a 401k at work, invest up to the match. If the match is 4%, then you still need to invest 11% somewhere else — DON'T count the match amount, just consider it gravy.

2. Invest the maximum (currently $4000 per year) into a Roth IRA. This grows TAX FREE. Invest in solid mutual funds with good, LONG TERM track records (think Growth or Index funds).

3. If the 401k plus whatever percent the Roth is still leaves you needing to invest more (to make your 15%), put that back into your 401k.

Now sit back, relax, and let it earn. While it's doing that, save additional money so that you can open-up Large-Cap, Mid-Cap, Small-Cap, and International funds.

While you're doing that, read books about millionaires so that you can learn how they made — and KEPT — their money. I'll give you a hint: long-term investments are how the rich stay rich, not penny stocks, day-trading, or real estate.

[sworthy]

I totally agree with RAILhead. By buying into mutual funds of varying size and nationalities (and in different industries) you can sufficiently disversify yourself. Don't worry about hitting some arbetrary goal of 10% per year though. On average, the stock market has done that, currently, thoughts are that the next few years will see 7-8 percent returns. Just hold for the long haul and realize why compound interest is the 8th wonder of the world.

[SVass]

PONZI

Or small cap value funds in a Roth IRA if you want to personally make a few bucks. Actually, whoever has political power at the moment will steal it if it is widely available. (Currently, the dominant party in the US is stealing money by running a government deficit. Corporate CEOs are stealing pension money by giving themselves bonuses and then saying that their pension/health fund is bankrupt.) sam

[turtle777]

My 401(k) made 16% this year. Here how the different parts performed:

US Large Cap Stock Fund (PDF file) -12.1%
Non US Developed Markets Fund (PDF file) 20.9%
US Small Cap Stock Fund (PDF file) 11.2%
Non US Emerging Markets Fund (PDF file) 37.2%

So basically, don't do US blue chips, everything else grows.

-t

[RAILhead]

15% is a MINIMUM. The market has averaged 11 to 12% since inception so if you account for 4% inflation, you'll stay ahead of the game.

[Scotttheking]

Originally Posted by RAILhead

While you're doing that, read books about millionaires so that you can learn how they made — and KEPT — their money. I'll give you a hint: long-term investments are how the rich stay rich, not penny stocks, day-trading, or real estate.

I'll agree with everything but what I bolded.

What state are you in and how much do you have to invest? There are some real estate investments around here (Arizona at the moment) that pay 12-15%, but you need between $125k and $5 million (or more), depending on what you do and the interest rate.

[turtle777]

Originally Posted by Scotttheking

I'll agree with everything but what I bolded.

What state are you in and how much do you have to invest? There are some real estate investments around here (Arizona at the moment) that pay 12-15%, but you need between $125k and $5 million (or more), depending on what you do and the interest rate.

Hampton Roads, VA made easily 15% each year, even on real estate of $ 150k and up. Amazing market, but probably not going to continue like that.

-t

[Busemann]

Originally Posted by Volks

Does anyone know what is the best way to invest money so that you are making at least 10% per year on the principal, year after year?

Get into quality mutual funds, or be a risk taker and buy stocks. 10% a year shouldn't be very unachievable if you play it smart.

[Buckaroo]

Well, you could subscribe to the Bowser Report and invest in Stocks. It has a very good track record. I made almost 30% this year. It would have been better if I hadn't deviated from the plan slightly.

[RAILhead]

Time has shown that the RE market in no way whatsoever has the same consistent track record as that of the stock market, therefore, it's somewhat idiotic to use it for retirement planning.

From the Motley Fools to Business Week, no investment planner worth his/her salt recommends RE for long-term investment purposes — unless you have money to lose.

[mindwaves]

Invest in these stocks:

Oil and Gas
Emerging markets
Healthcare
Small companies

[Scotttheking]

Originally Posted by RAILhead

Time has shown that the RE market in no way whatsoever has the same consistent track record as that of the stock market, therefore, it's somewhat idiotic to use it for retirement planning.

From the Motley Fools to Business Week, no investment planner worth his/her salt recommends RE for long-term investment purposes — unless you have money to lose.

Dude, you make me laugh so much. Owning a property and leasing it can be quite profitable, long term. I'm happily getting good returns, and I know plenty of people who hold a large amount of real estate as their investment of choice, including my dad.
Many many people have gained their wealth through real estate. And I'm not talking about buying your house and waiting for it to go up in value.

[JoshuaZ]

Clearly none of you has heard of the investment wonder that is Baseball cards. You buy a bunch, and then just sit back and chew all the gum.

[RAILhead]

Originally Posted by Scotttheking

Dude, you make me laugh so much. Owning a property and leasing it can be quite profitable, long term. I'm happily getting good returns, and I know plenty of people who hold a large amount of real estate as their investment of choice, including my dad.
Many many people have gained their wealth through real estate. And I'm not talking about buying your house and waiting for it to go up in value.

As usual, Proud Of You.

[Athens]

Originally Posted by Scotttheking

I'll agree with everything but what I bolded.

What state are you in and how much do you have to invest? There are some real estate investments around here (Arizona at the moment) that pay 12-15%, but you need between $125k and $5 million (or more), depending on what you do and the interest rate.

Vancouver average price is 400 000 and increasing by 6% right now, Montreal is 200 000 average and going up by 15% right now.

[Athens]

Originally Posted by RAILhead

Time has shown that the RE market in no way whatsoever has the same consistent track record as that of the stock market, therefore, it's somewhat idiotic to use it for retirement planning.

From the Motley Fools to Business Week, no investment planner worth his/her salt recommends RE for long-term investment purposes — unless you have money to lose.

I disagree, land has always been a solid investment. Can you think of a property that is worth less now then 20 years ago... Well at least in the market I am in anyways. I imagine its not the same for every city and town.

[Athens]

Originally Posted by Scotttheking

Dude, you make me laugh so much. Owning a property and leasing it can be quite profitable, long term. I'm happily getting good returns, and I know plenty of people who hold a large amount of real estate as their investment of choice, including my dad.
Many many people have gained their wealth through real estate. And I'm not talking about buying your house and waiting for it to go up in value.

Of the few millionaires I know, its been through property. One guy, he has about 200 000 in cash and 4 million in properties between 5 houses. Just this year alone one of his properties assess land value shoot up by 20 000 and stands at 350 000, he bought it 13 years ago for 90 000. That’s a pretty good return considering he has made another 100 000 renting it out in that time

[Scotttheking]

Originally Posted by Athens

Of the few millionaires I know, its been through property. One guy, he has about 200 000 in cash and 4 million in properties between 5 houses. Just this year alone one of his properties assess land value shoot up by 20 000 and stands at 350 000, he bought it 13 years ago for 90 000. That’s a pretty good return considering he has made another 100 000 renting it out in that time

Impressive. I don't actually own any properties directly, but other people I know do.

People I know who have far more than I do run the gamut of investing styles, so I've had the opportunity to pick up a few things. It is quite interesting how they all believe they have the best way, when others are doing great with a different style. It has given me a pretty broad view of different ways of investing.



RAILhead, you don't seem to understand, what you give as "advice" is often horribly inaccurate. When you make statements such as above and in many other threads, instead of quoting personal investment sites that aren't ever going to talk about other topics, just say it's your opinion. Meanwhile, the rest of us will just go on doing what we are doing.

[Athens]

Originally Posted by Scotttheking

Impressive. I don't actually own any properties directly, but other people I know do.

People I know who have far more than I do run the gamut of investing styles, so I've had the opportunity to pick up a few things. It is quite interesting how they all believe they have the best way, when others are doing great with a different style. It has given me a pretty broad view of different ways of investing.



RAILhead, you don't seem to understand, what you give as "advice" is often horribly inaccurate. When you make statements such as above and in many other threads, instead of quoting personal investment sites that aren't ever going to talk about other topics, just say it's your opinion. Meanwhile, the rest of us will just go on doing what we are doing.

Ya so is his story how it all started. He bought his first home in the 60's while working for GE. A good paying job that had him all over the world because he was one of the few xray techs then. Anyways when he was going to be overseas for a year he decided to rent out his house. When he got back, and this was dirt cheap too even by the standards of the day he found out the city had bought all the houses around his to make way for a new Bridge. Anyways they gave him a original market value offer a couple months after he left, but never got it. When he got back they where offering him 4 times its value to get the property because it was the only one left. That money he got from that he bought 2 houses. Rented one and lived in the other one. As the value of the houses went up he sold both of them, it went from there. He's been burned once too, one guy turned one of his houses into a grow up and destroyed the house. But the value of the land by that time still made it a net positive investment and luck, a company wanted to buy the land for a new business park and gave him what the value of the house was before hand no knowing it was pretty much wreaked, they where going to level it all anyways.

[RAILhead]

No, you don't understand. Something is only as valuable as the amount someone's willing to pay. I have over $75,000 worth of guitars alone, but no one will ever pay that much for all of them, statistically. So are they worth $75k? Do I have $75k "worth" of guitars?

No.

Can someone have $5 mil in RE? Can they be "worth" $5 mil in RE? No, they can only be worth as much as someone's willing to pay — and, statistically, playing with that risk is far greater than the risk of a diversified stock and fund portfolio. Simple as that.

And of course, do what you're doing.

I should add: I'm saying this because I have an issue with recommending RE to "average" Joe's. Can it be good? Yes, it can — but most average Americans have no idea how to handle investment property of flipping, etc, and pushing them to that end is a grave error in my opinion when it comes to assisting someone with retiring a millionaire.

[Scotttheking]

Your statement is a truism. Of course it's only worth what someone will pay for it. That's how all investments are.

For someone with a lower net worth (I'd include you in that category based on what you said, it's not an insult. I wouldn't do any of this myself, either), it's probably not a good idea to get into something like commercial real estate or to buy a tract of land in an area that is near a growing city. Working your way into real estate takes time and knowing your market. There are so many other ways to invest that don't involve actually owning properties directly.
That said, leasing a house in an area that has solid growth and plenty of employers is a great investment if done well. People always need a place to live.

Edit to respond to your edit: I NEVER advocated flipping properties such as what's being done now with houses. The people I have contact with who do RE have, for the most part, avoided that as well, and most of their "flipping" was just a fluke that happened to occur now.

PS: The idea of retiring a "millionare" is amusing now, because $1 million isn't worth much anymore. Anyone in my generation who sets that as a goal will be shocked to find they don't have enough. For instance, my "retirement" goal is $4.25 million, which is an estimate taking into account inflation over time and such. That won't be worth much when I retire, although it sounds like a ton now.

[Athens]

Originally Posted by RAILhead

No, you don't understand. Something is only as valuable as the amount someone's willing to pay. I have over $75,000 worth of guitars alone, but no one will ever pay that much for all of them, statistically. So are they worth $75k? Do I have $75k "worth" of guitars?

No.

Can someone have $5 mil in RE? Can they be "worth" $5 mil in RE? No, they can only be worth as much as someone's willing to pay — and, statistically, playing with that risk is far greater than the risk of a diversified stock and fund portfolio. Simple as that.

And of course, do what you're doing.

I should add: I'm saying this because I have an issue with recommending RE to "average" Joe's. Can it be good? Yes, it can — but most average Americans have no idea how to handle investment property of flipping, etc, and pushing them to that end is a grave error in my opinion when it comes to assisting someone with retiring a millionaire.

Like I said its prob different between all the markets. Vancouver’s case, we are out of land to develop. With the US Border to the South, the Ocean to the west, Mountains to the East and North the only place left to go is up. Even condo's go up in value here which is not the norm for most cities.

[SimeyTheLimey]

Originally Posted by RAILhead

Time has shown that the RE market in no way whatsoever has the same consistent track record as that of the stock market, therefore, it's somewhat idiotic to use it for retirement planning.

From the Motley Fools to Business Week, no investment planner worth his/her salt recommends RE for long-term investment purposes — unless you have money to lose.

Institutional investors are the most long-term, risk adverse investors. They are heavily into real estate.

I had a couple of real estate lawyers in law school who laid out the economic models of commercial real estate versus other investments. Commercial real estate has a considerable edge. It's not just the relatively low risk and relatively high appreciation, it's most particularly the considerable tax benefits. The tax code is very generous to real property and to the expenses needed to make it commercially useful.

Of course, like any investment, the value can go down as well as up. There are no sure bets, but real estate has the benefit that busts tend to be local. Unlike stocks, the real estate market in one area can tank but that might not affect another market at all, so a diversified investor can survive even owning a transparent building or two. In any case, over a long enough time, it's one of the best investment vehicles. Hence the reason why institutional investors are so interested in the market. They don't have money to lose.

[Doofy]

Real estate is a good thing if you know what you're doing. One of my properties has increased in value by 150% over the last four years. Last year I made $17k in one afternoon on a $208k property (literally sold it the day I bought it).

The key is to buy the property in an area with a population density problem. Like the UK.

[Athens]

Originally Posted by Doofy

Real estate is a good thing if you know what you're doing. One of my properties has increased in value by 150% over the last four years. Last year I made $17k in one afternoon on a $208k property (literally sold it the day I bought it).

The key is to buy the property in an area with a population density problem. Like the UK.

Most major cities, Vancouver, Calgary, Montreal, Toronto, Seattle, San Fransico, are the ones that come to mind and I know are good. I imagine New York, Chicago, Detriot are good too. Its bad in towns, and places that have tons of room to grow.

[Eug Wanker]

Originally Posted by RAILhead

No, you don't understand. Something is only as valuable as the amount someone's willing to pay. I have over $75,000 worth of guitars alone, but no one will ever pay that much for all of them, statistically. So are they worth $75k? Do I have $75k "worth" of guitars?

No.

Can someone have $5 mil in RE? Can they be "worth" $5 mil in RE? No, they can only be worth as much as someone's willing to pay — and, statistically, playing with that risk is far greater than the risk of a diversified stock and fund portfolio. Simple as that.

And of course, do what you're doing.

I should add: I'm saying this because I have an issue with recommending RE to "average" Joe's. Can it be good? Yes, it can — but most average Americans have no idea how to handle investment property of flipping, etc, and pushing them to that end is a grave error in my opinion when it comes to assisting someone with retiring a millionaire.

Real estate can be a very solid investment. Indeed, contrary to your previous posts, most stuff I've read has suggested that in the right context, it makes perfect sense to put a portion of one's investments in real estate. The main problem is that too many people fall into the get-rich-quick-on-real-estate category, and that's a mistake. It's all about diversification, and real estate can be one part of that. And I say this as someone who has zero in real estate at the moment (besides my house), and one who does not plan on getting into real estate any time soon.

And yes, $5 million in real estate can indeed be worth 5 million. Yeah, it's not as liquid but usually $75k in real estate is worth a lot more than $75k in guitars.

Anyways, just like one shouldn't day trade, one shouldn't buy real estate to flip either.

[RAILhead]

Right, flipping and looking to RE for quick "investment" cash is what I'm referring to.

As for "millionaire," that term *is* used a bit liberally now. What I've done is decided how much I want to pay myself after retirement and what I want to be able to live off of each year. My wife and I have discussed it, and we think we'll be happy on only $120,000 per year, so we only have to have around $3 to $3.5 million in the bank. Piece of cake.

[Bandit240]

Check out www.daveramsey.com See if he is on a radio station in your area. We're following his plan to get out of dept and start saving up for retirement. Roth IRA's are a good idea, but you can only put in so much a year. I dont know alot about this stuff, but check out that site and listen to some of Dave's shows. Ive learned alot about money management there.

[RAILhead]

DR has some great stuff — especially for people just starting the process of debt elimination and getting control of their finances. He also ascribes to the 15% rule for retirement investment.

Stick with his plan, and you do well.

[Volks]

Yeah actually I'm pretty disgusted by the real estate market. It's unbelievably overpriced. I don't want to be involved with foreclosures, tenants being evicted, tenants suing you, tenants destroying your property, tenants not paying rent and having to go to court to get them out, houses falling apart and you having to fix them; taking out 2nd, 3rd, and even 4th mortgages with banks; owner financing and the lawsuits that go with it; dealing with real estate lawyers who charge you $500 for three minutes on the telephone.

I've seen that all and it's not pretty. Carlton Sheets and his clones are a$$holes, straight up.


I guess it's great if you can just buy huge amounts of land until somebody wants to pay you, so they can develop it. But you probably already have to be a millionaire to do that.

[Person Man]

Originally Posted by RAILhead

DR has some great stuff — especially for people just starting the process of debt elimination and getting control of their finances. He also ascribes to the 15% rule for retirement investment.

Stick with his plan, and you do well.

I'm putting the max into my 401K ($15000), which at the moment is roughly 11-12% of my salary. My employer puts in an additional 6% of my salary a year in the 401K.

I'm also putting about 6-7% in a savings account for the time being, until I buy my house in the next 2-3 months, and then plan on using some of that money on other types of investments.

I'd open a Roth IRA but my income is too high to do so, but there are other types of investments I'm looking at as well.

If I take just my 401K, though, and project a 9% rate of return over 30 years, I'll have about 4 million or so available when I retire. Though I make around $130K I probably live comfortably on about $75K, so whatever the equivalent of $75K will be 30 years from now is probably enough for me a year (I may even take a part time job if I get bored enough).

[Doofy]

Originally Posted by Person Man

so whatever the equivalent of $75K will be 30 years from now

$600k ish.

[Dakar]

"Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor."

[RAILhead]

Remember: the Roth cap is on your MAGI, so you should do what I do: donate a LOT to charity. I'm still under the radar as far as still being able to write-off charity donations.