The doctor is IN - the JohnT advice thread.

[Ted Striker]

Well, yeah

[Pekka]

Aaahh.. I misunderstood you the first time.. I thought you meant that I should save it all in cash. That's why I thought it was little weird.

Now I'm getting to see this whole balancing thing.. hey, it sounds like a good idea. I'm trying to learn these things, I'm not very good at this, sorry. But I'll be good I just need to learn and follow these things closely.

You and JohnT as well seem to know about these things. What would you (JohnT's answer is also appreciated and everyone elses too) suggest I start doing as .. my personal learning process? Maybe I should look into other methods and models of forming a portfolio, so then I would truly understand this one better. I should be reading on some papers, shouldn't I? What would you suggest would be the best paper to be reading on regularly? right now I just know the basic moves and how it works basically, but I don't have any superior knowledge, just the average Joe knowledge. And we all know that won't get me anywhere.

[pchang]

My last post was for Pekka's benefit. He doesn't seem to really get it yet. As for Striker, consider the following:

Automatic car wash franchise.
Start up costs ~ $400,000 (more if real estate is expensive in the area)
Potential gross income: $100,000 / year.
Potential expenses: $20,000 / year.
Amount of work required: 10 hours a week to empty the cash, refill the expendables (soaps and such), and routine maintenance.

You can roll your 401K into an IRA, and have the IRA invest in the business.

Such an idea appeals to me, but my retirement savings haven't reached a high enough level yet to do something of this sort. I have explored businesses and franchises, but at my level, they all require significantly more work than 10 hours a week.

[pchang]

Start learning here. http://flagship5.vanguard.com/web/pl...cOverview.html

It is US-centric, but the general principles hold for everyone.

[Ted Striker]

Originally posted by pchang
My last post was for Pekka's benefit. He doesn't seem to really get it yet. As for Striker, consider the following:

Automatic car wash franchise.
Start up costs ~ $400,000 (more if real estate is expensive in the area)
Potential gross income: $100,000 / year.
Potential expenses: $20,000 / year.
Amount of work required: 10 hours a week to empty the cash, refill the expendables (soaps and such), and routine maintenance.

You can roll your 401K into an IRA, and have the IRA invest in the business.

Such an idea appeals to me, but my retirement savings haven't reached a high enough level yet to do something of this sort. I have explored businesses and franchises, but at my level, they all require significantly more work than 10 hours a week.

3 of my coworkers have actually started their own businesses. 2 of them are doing well.

The other one is doing alright but I think he always underestimates the time committment.

[pchang]

Really though, just do what I said in the previous post. There is no reason to learn any more than that.

[Pekka]

you see, you americans have the business down at young age... in this POS commie country it's illegal to make money so I have to learn everything in dark after midnight and be alert if the mind police come and shoot me with tazers and nipplegrinders.

But this is interesting, I'm currently reading few businesses (domestic) who manage your portfolio, I mean they invest for you, what is it in english... like funds, yeah? Pretty interesting.. some of these are really succesful. But then again you need big bucks to get these better services from them. Anyways, I'm about to get into pchangs link. Damn it this 'ohh pure nature and country side, aah look at the little puppies' country. I need to get PAID!

But then again, I lack your brain fat cells and short atteniton span and immidiate rewarding system so I have determination, motivation, passion, confidence and sisu. I'll make this work for me. I have already started (5 minutes ago).

[Spiffor]

Originally posted by Pekka
I need to get PAID!

I wasn't aware Finland made it illegal for its workers to get paid.

[pchang]

There are very good portfolio modelling tools available. But, I think you would have to pay for them. I get them for free because I am a high roller.

[Kuciwalker]

Originally posted by Spiffor
I wasn't aware Finland made it illegal for its workers to get paid.

Yes, it's that evil.

[Pekka]

spiffor, well they did. Look at our GNP.

pchang, oh you're a player then? That's good to know, so you're not just a .. man of theory . What do you think of this pchang, I mean this is advertising so it's .. it's like that but there are these funds that say they have average return of 19% in 3 years, basically they are higher right now, but that's what they average.. I can't see lower profits in their results as they are up to date all the time, they are up in there and the longer in time they go, the higher the profit goes, there is this oen program with them that has gotten 37% profit in one year already. The poitn is they seem to be good at long term. I'm not saying I'm putting any money to these guys, I learn it all first so I know what I'm doing and who I'm trusting my money with but just to say, is this good thing or not in general?

They kind of need bigger investments though, so they don't take no penny pandlers, but that doesn't really bother me, I mean quality services costs more. I'd rather trust my money with quality service than save in the wrong places.

[pchang]

3 years is not a long time in the investing world. You want at least a 10 year history. The standard deviation in the rate of return for stock funds is usually at least 20. You need at least 10 years of data to get a good average rate of return and standard deviation for the performance of a stock or fund.

[Pekka]

No they have longer history, that's just their advertising campagn (19% in 3 years). Just to promote their few activities, of course there are lot of programs you can get yourself into.

[pchang]

Do you know what standard of deviation means in this case?

If a fund has an average rate of return of 9% and a standard of deviation of 20%, it means that in 68 years out of 100, the fund will have a rate of return somewhere between -11% and +29%. In 32 years out of 100, the fund will have either a worse rate than -11% or a better rate than 29%.

[pchang]

Men chase returns like we chase women. We are easily distracted by something that looks hot. Fund companies typically advertise the 3 year returns of their funds that have been doing well recently. These types of ads are surprisingly effective.