Investment suggestions?

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il-besa
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Post by il-besa »

Hi EREr's,

well this is indeed an obvious question...

how can I invest my savings to guarantee a decent passive income?

and what is for you a decent % return?
Assuming I don't want to risk the capital and I want a stable income to live out of.
I've not 30% in saving account (2.4%) and 70% in bonds and founds (estimated 3%).
I like simple things and I would prefer not to be obsessed by investments.
Thanks!

D


Marius
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Post by Marius »

The most stable system I know of is Harry Browne's permanent portfolio. It does well in nearly all circumstances, even when everything else is bleeding. It's simple and easy.
But while it's low risk, the return is also modest. During good times it seriously underperforms stock-heavy portfolios.
Historical returns:
EU&US versions: http://www.marcdemesel.be/2010/06/data- ... enten.html
US version: http://crawlingroad.com/blog/2008/12/22 ... l-returns/


JohnnyH
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Post by JohnnyH »

@Marius: thanks a lot! I've been thinking about reading that book and forgot about it until your post.
These results are very impressive, 1970-2003 [when author died I think :( ]

Max: 36.7%

Min: -6.2%

Average: 9.515%

% years positive: 29 out of last 33, 88%

http://www.harrybrowne.org/PermanentPor ... esults.htm
I'm going to read that book as soon as I can get my hands on it.
@il-besa: if you want to stay in USD you should look into rewards checking accts. There are some available nationwide that pay 4%, with a few caveats... Some even better rates for some local banks.


il-besa
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Post by il-besa »

Thanks guys!

That book is surely my next read, after I'll finish Rich Dad Poor Dad :)
I'm not in USD, I'm in EUR.


il-besa
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Post by il-besa »

Any more suggestion is welcome, or is Harry Browne's permanent portfolio the standard used by EREr's? :)


Night Runner
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Post by Night Runner »

il-besa, I *strongly* advise against finishing Rich Dad Poor Dad - or following any of its advice. Kiyosaki's story is full of inconsistencies and downright lies... You can read a *very* detailed review here: http://johntreed.com/Kiyosaki.html


jacob
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Post by jacob »

There does not seem to be a particular ERE standard or way of investing. At least I have seen many different opinions on the right way to invest.


JohnnyH
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Post by JohnnyH »

@jacob: will you ever go in to detail on your investment strategies? We're all curious!:)


jacob
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Post by jacob »

It is mostly a combination of qualitative picks, sector focused (currently telecom), dividend payers, based on a need for cashflow and what I think the future will be like.
I use the Dogs of the Dow in my IRA.
I would prefer to move to a more mechanical approach (to allow me to agonize less about buying and selling decisions), but I need to think more about this.
Don't listen to what I do though... I've only been investing for 5-6 years.
I very much educate myself by doing. What this means is that there's some inertia in my portfolio simply because I don't want to trigger capital gains taxes by switching things around.


jacob
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Post by jacob »

Investing is far more complicated than frugality. I figure maybe in another 10 years I will be wise enough to start a running commentary on it. So far, I have only experienced half a bull market and what is probably half a bear market.


Kevin M
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Post by Kevin M »

What about this ETF?

http://www.ftportfolios.com/Retail/etf/ ... Ticker=FDL
Currently yielding about 5%. Pretty heavy in telecom and utilities, but the P/E is not too bad < 15. Price/book is a little high but not too bad.


JohnnyH
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Post by JohnnyH »

I look at that FDL chart and all I can see is the "h" pattern, poised to take out 08 lows.
This chart demonstrates my fears, and why I have less than 15% in equities right now.

http://www.kingdom-investment-club.com/ ... 3_copy.jpg


Kevin M
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Post by Kevin M »

@JohnnyH - where is your money?


il-besa
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Post by il-besa »

@Night Runner: WOW, reading this forum all my idols are falling apart :D
I'm still reading the book but I'm not that impressed so far - probably because is not my first reading on the subject.

YMOYL had a much bigger impact, but hey, I've to finish reading first.
Thanks for the link!


JohnnyH
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Post by JohnnyH »

Sadly, I'm mostly in currencies right now... Which is likely even riskier than equities! ;(
I'm more of a trader than an investor, so I usually have at least 25% in USD. Which is down about 7.5% since June.


Robert Muir
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Post by Robert Muir »

@il-besa, don't be too dismayed. While I thought there was a lot of carp in RDPD, the key insight for me (similar to Jacob's) was K's definition of an asset. Before RDPD, I would have considered my car, M/C, and house assets. I now see them as expenses/liabilities and my various investments as assets.
As for investments, I think the current environment is about as bad as it can get for folks with cash to invest. Equities seem overpriced, bonds appear to be bubblish, and gold is in a definite bubble. I'm 60/40 equities/cash, looking for something with serious value to put the cash portion in.


Q
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Post by Q »

I have invested a good amount into prosper.com with a roughly 12% return rate so far (which includes 3 charge-offs).
The problem with prosper is that you need to do some analyzing, but you could automate and let them do it for you.
I also invest in ETF's, 5 specific ones, which overall have returned about 10% since starting the account.
Lastly, I trade/track my companies stock in my 401k and make moves based on educated guesses. Since the company has a relatively stable position, I follow the whims and act accordingly.
I'm currently saving up cash to start dogs of the dow in january (about 25k), and then a separate day trading account to make moves between about 10 to 15 stocks following the 1% rule.


JohnnyH
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Post by JohnnyH »

I can second p2p, in my case LendingClub, being a great performer. We should run a thread on it...
@Q: 1% rule?


George the original one
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Post by George the original one »

In the US, look at Master Limited Partnerships. They're primarily in the pipeline & energy business. Some ticker symbols to get you started are WPZ, OKS, NSH, SXL, EPD. "King coal" MLP tickers are ARLP, NRP.
There are also financial MLPs, but the one I'm familiar with is not as stable for generating income.
Like a REIT, the best way to value MLPs is on their distributable cash flow. There are tax consequences to MLPs, particularly if you're trading them (which I do) and you might even have to file additional state taxes (if the income from operation in that state is high enough).


jacob
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Post by jacob »

How easy are MLPs to handle taxw-ise? (I have the, perhaps faulty, impression that you need to file state taxes for each state the MLP operates in.)


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