20 years ago I started working for a big ass company that pays dividends on their stock - I had relatively painless amounts of money taken from my very unimpressive paycheck and "gambled" with their stock. 10 years ago I stopped working for them but :"let it ride"

The dividends on those investments are the equivalent of an entire months take home pay at this point - also being reinvested.

You're probably not going to get in on a the next huge thing when its 50 cents a share and see it blossom to $300 - you can make lots of easy money long term if you can find a way to pull your head out of your ass in your 20's and do something modererately responsible with the money from your first real job.

Fizpez: you can make lots of easy money long term if you can find a way to pull your head out of your ass in your 20's and do something modererately responsible with the money from your first real job.

I teach a 5-hour financial responsibility class at the local high school - this pretty much sums up what I tell them about long-term savings.

I dunno, I jumped in the market on June 1 and to date Im up about 7.5%. That isnt bad.

I also won $10,000 on a $5 scratch ticket in 2005, and $1200 on slots 2 weeks ago. I don't buy tickets much and only gamble once/twice a year. Guess Im the successful idiot in this case.

Poor stupid me! Bought stocks and real estate many times in my life. Retired at 51. Just had my 'new' house assessed at 50% over what I paid for it last year. Lots of stupid there.

ThaGravy: Fizpez: you can make lots of easy money long term if you can find a way to pull your head out of your ass in your 20's and do something modererately responsible with the money from your first real job.

I teach a 5-hour financial responsibility class at the local high school - this pretty much sums up what I tell them about long-term savings.

Yeah that's all fine and dandy until 30% inflation hits in a few years. Roll your eyes all you want, but remember this.

If you have something to steal, the finance industry will steal it or have the government steal it on their behalf.

I watched more than one 'responsible investor' lose one third to half of their retirement savings in the past several years. Not so bad for the people who have 30+ years to go - pretty brutal for the people getting laid off and being forced into early retirement.

It's like going double or nothing on that last bet of the night and losing. Agony. The only argument I've ever heard that I feel is good for investing in stocks is so that your savings keep up with inflation.

Please, enlighten me on why this is a good system for building your retirement when there is always the risk of losing so much of your savings?

At least the lottery is honest and fully regulated

For every self-congratulatory story I read about personal success in the stock market there's one of someone who lost and had to deal with the repercussions. Anecdotal evidence being what it is, the lottery analogy seems appropriate.

Then again, varying degrees of risk can be assessed to every decision in life.

I'm sorry, I can't hear you over the rustling of my dividend checks. I just got another one the other day for ~$240.

Yea, the stock market is risky. Yea, it's not for everyone. Yea, there are serious regulatory issues that allow some people to unfairly manipulate it and harm small investors. Yea, it's bullshiat that companies scam their employees into 401(k) plans instead of offering decent pensions. Yea, it's bullshiat that putting your money in a savings account is basically a guaranteed way to lose it to inflation.

All of these things are serious problems that need addressed.

But if you think the lottery and the stock market are equivalent in any way, I'm going to have to point out that you're poor because you're stupid, not because anybody else is holding you back.

But if you think the lottery and the stock market are equivalent in any way, I'm going to have to point out that you're poor because you're stupid, not because anybody else is holding you back.

As I understand it, much like the lottery, not everyone can be successful with the stock market - there has to be more pay in than pay out, right? Otherwise, we're assuming that all business ventures that get invested in are successful, which just isn't the case.

//freely admits to being stupid when it comes to the stock market.

I have a modest amount of cash (~$26k) from my father's estate right now, and I have no idea what to do with it. As of now, it's sitting in a savings account losing value to inflation. I have 2 IRA's that I also inherited, and they have both lost a fair amount of value over the last year. I'll probably use about half of it to pay off some higher interest debt, but I don't know what to do with the rest. It's not enough to pay off my bigger debts (mortgage, student loans), but too much to just blow on hookers. I asked a banker friend of mine about it, and he said "There just really aren't any attractive options right now". I'm afraid if I invest, I'll lose it. I'm afraid if I sit on it, I'll lose it to inflation (ditto buying nearly worthless CD's). About the only other thing I can think of is the ol' guns, ammo and MRE investment plan. At least the guns would probably hold their value.

SusanCreature: As I understand it, much like the lottery, not everyone can be successful with the stock market - there has to be more pay in than pay out, right? Otherwise, we're assuming that all business ventures that get invested in are successful, which just isn't the case.

Of course not! Wealth is an infinite pie, there are no losers in such things, only winners.

/this is what a disturbing % of FARK actually thinks.

mod3072: I have a modest amount of cash (~$26k) from my father's estate right now, and I have no idea what to do with it.

Open an account at one of the local brokerage offices and talk to the advisers there. In less than an hour I went from knowing only the most general basic stuff about investing to knowing what the numbers meant, what to look for and so forth. You're not going to make a lot of money at first but you're not going to lose it all if you're in it for the long run.

/beating the S&P so far

my 401k did fairly poorly since the crash of 08 happened about the same time I got laid off. About two years later, after re-balancing, things were OK again and I made back my losses. The next year I had a return rate that was unbelievable (as in "if you told me your investment has this track record for a year, I'd say you're full of shiat"). However, I failed to re-balance again when Europe started tanking and my gains went *dying_packman_noise*

I did by stock for the first time the other day. A whole two shares for ~ $10 a piece. Mostly just to learn more with real money than I did following them in classes in high school and college.

/ losing money on those two shares, but not much; I look at stocks just like Vegas: don't gamble what you can't afford to lose.

I currently own shares in Chevron, Conoco, AT&T, a small paper company, 4 large insurance companies (like Aflac), AMAT, general motors. I don't expect to make hand over fist, but I don't expect to lose money either. All of them but GM pay large dividends, they are generally making tons of money. The only stock I sold from last year was mcdonalds. I can hold onto stocks for years on end, and I don't care. At some point their dividends and the stock value will probably be worth more than i bought it for.

Take AT&T. If I sell the stock in 7 years, the dividend stays the same, and the value of the stock goes DOWN by half, I still make enough money off dividends to cover my losses. If the stock is worth more than half of its current worth by then, I've made money.

SusanCreature: As I understand it, much like the lottery, not everyone can be successful with the stock market

No, that's not inherently true in principal. At least not if you're talking strictly about the traders on the market. If everybody constantly invests in successful companies that create additional value then all the traders could conceivably always win. In that scenario less competitive companies would be the only ones losing.

Of course, the odds of that happening are so low the point is moot and it's effectively impossible. When you sell your shares of stock at a peak after somebody else just bought their shares, you're taking their money, but that's the way it is.

The key here, though, is information versus luck. If your investment strategy is to throw darts at a board and hope they stick on winning stocks, then, yes, I suppose you've made your particular portfolio into little more than a glorified lottery ticket.

Smarter people, however, research. There's no guarantee that's going to make you a "winner", but it significantly improves the odds and it's not something you can do in a game of chance.

There's also the fact that "winning" in the stock market doesn't mean "never losing". I have several laggard stocks and funds in my portfolio that I've lost money on, but I can afford to keep hold of them because I have others that have gone up to compensate or more than compensate the drops. It's not just a simple win/lose scenario.

There is no surefire way to make money. None. There is no surefire way to succeed at anything in life ever. Everything you do every single day is a series of risk/reward assessments with varying levels of information available to you in order to evaluate your options. The stock market is no different. On the informational scale, however, it's far to the positive end while throwing your money down on a Powerball ticket is completely on the other.

There are serious, systemic problems with the market that need fixed and some people have access to far more information than others, but calling it a "lottery" is just something incredibly cowardly - or lazy - people do to justify to themselves their decision not to participate.

There are plenty of good reasons an educated and self-interested person would be justified in choosing to stay out of the market. None of those reasons involve being so incredibly ill-informed that you wind up saying stupid things like "the stock market is just like the lottery hurr durr".

mod3072: I have a modest amount of cash (~$26k) from my father's estate right now, and I have no idea what to do with it. As of now, it's sitting in a savings account losing value to inflation. I have 2 IRA's that I also inherited, and they have both lost a fair amount of value over the last year. I'll probably use about half of it to pay off some higher interest debt, but I don't know what to do with the rest. It's not enough to pay off my bigger debts (mortgage, student loans), but too much to just blow on hookers. I asked a banker friend of mine about it, and he said "There just really aren't any attractive options right now". I'm afraid if I invest, I'll lose it. I'm afraid if I sit on it, I'll lose it to inflation (ditto buying nearly worthless CD's). About the only other thing I can think of is the ol' guns, ammo and MRE investment plan. At least the guns would probably hold their value.

Start by reading this:



Or, if you prefer, lurk for a while at the Bogleheads forum:

http://www.bogleheads.org/forum/index.php (new window)

Their wiki is a valuable information resource:

http://www.bogleheads.org/wiki/Main_Page (new window)

Splinshints: There is no surefire way to make money. None. There is no surefire way to succeed at anything in life ever. Everything you do every single day is a series of risk/reward assessments with varying levels of information available to you in order to evaluate your options. The stock market is no different. On the informational scale, however, it's far to the positive end while throwing your money down on a Powerball ticket is completely on the other.

There are serious, systemic problems with the market that need fixed and some people have access to far more information than others, but calling it a "lottery" is just something incredibly cowardly - or lazy - people do to justify to themselves their decision not to participate.

QFT

For most shlubs, the best option is boring index funds. If you have the time, inclination, training/education, and information resources, you can try to beat the market. Odds are you won't win, though. Amateur investors, as well as most pros, usually underperform the market in the long run. Go with index funds and spend your time and energy on something else - your family, your hobbies, your job, whatever.

I used to believe in the whole "invest in your 20's" market several years back, now I'm just glad I got out when I did. I checked out after the flash crash, overall I was quite fortunate.

I came to the realization that I'd rather 'lose money to inflation' than pour money into companies that I don't feel contribute to any good to society. Long term, I would like to invest in local municipal bonds, things that I know would do good to my community. But I'd rather starve the beast. 90% of the companies paying dividends do no greater good, and NO ONE will miss them when they're gone.

If everybody constantly invests in successful companies that create additional value then all the traders could conceivably always win.

Are you implying that stock prices have anything to do with the company's performance? Stock prices go through the floor if a company misses it's sales projection by a penny even if they still made boatloads of money. My first stockbroker (very good at picking stocks) told me that playing the stock market is nothing but figuring out mob psychology and buying what they want before they have the chance - then selling it after they are all buying in. I have seen nothing to prove him wrong.

I have a modest amount of cash (~$26k) from my father's estate right now, and I have no idea what to do with it. As of now, it's sitting in a savings account losing value to inflation. I have 2 IRA's that I also inherited, and they have both lost a fair amount of value over the last year. I'll probably use about half of it to pay off some higher interest debt, but I don't know what to do with the rest.

LOL, a friend of mine was in a similar boat - market crashing and his retirement accounts losing money, so he lent it to us at 6% to do home repairs. We get a loan cheaper than the bank (if it was willing to give us one - which it wasn't) as well as cut the heat loss in our house, and he gets a 6% return on his investment rather than losing money in the market. Know and trust anyone poor? Lend them money to pay off, and close a high interest credit card at 6-10% (You'll be saving them ~ 20%/year). If they are doing a bulk payment and closing the card they can probably get off paying less than the full balance (especially if they are in default). Have them pay you instead. You will be doing them a favor and making money like my friend did. Be sure to put it in a legal note though. You can look up how to do that for free on the web.

I threw about a quarter of our savings into the market about 7 months ago. Interesting time to get involved. Only down about 4% (from a low of about 12%) at this point. Much more fun than watching that HUGE savings & cd "money" roll in. I think of it like vegas, I'm enjoying the gamble, and I can't remember the last time I left vegas only down 5%.

mod3072: I have a modest amount of cash (~$26k) from my father's estate right now, and I have no idea what to do with it. As of now, it's sitting in a savings account losing value to inflation. I have 2 IRA's that I also inherited, and they have both lost a fair amount of value over the last year. I'll probably use about half of it to pay off some higher interest debt, but I don't know what to do with the rest. It's not enough to pay off my bigger debts (mortgage, student loans), but too much to just blow on hookers. I asked a banker friend of mine about it, and he said "There just really aren't any attractive options right now". I'm afraid if I invest, I'll lose it. I'm afraid if I sit on it, I'll lose it to inflation (ditto buying nearly worthless CD's). About the only other thing I can think of is the ol' guns, ammo and MRE investment plan.



PMs, biatches.

MrBigglesworth: I dunno, I jumped in the market on June 1 and to date Im up about 7.5%. That isnt bad.
I also won $10,000 on a $5 scratch ticket in 2005, and $1200 on slots 2 weeks ago. I don't buy tickets much and only gamble once/twice a year. Guess Im the successful idiot in this case.


Aren't you late for the gym?

The article is about the fact that powerball tickets are doubling in price ($2) for the same return (for most, $0). Not about whether it's a good idea to invest in the stock market.
In case no one RTFA.