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Hello from sunny San Diego
Old 08-27-2017, 06:42 PM   #1
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Hello from sunny San Diego

Hey guys, a little bit about myself: I found these forums through the recommendation of a financial counselor, who served 20 and retired from the US Navy (it seems there are a few active and prior service-members here). I myself am an active duty US Marine stationed in beautiful San Diego and am now beginning to educate myself on becoming financially independent. I'm 30yo, single, no kids, and I am not looking to retire for at least another 20 years (not sure if it would even be considered early retirement at that point). However questions about early retirement itself are not what bring me here, though I know that is the main thrust of the discussions here. My questions center around stock investing.

I know that before I begin to invest I not only have to educate myself (reading classic books on the subject) but that it is also helpful to have an expert on my team. Whether that be in the form of stock broker, or even a CFP/CFA. However I inherently dislike the notion of taking advice from those that work based on commissions, but my view about this might be limited because if they're not making you money they'll lose your business pretty fast. There are also independent equity analysis firms such as Morningstar, Value Line, S&P Capital IQ, Argus Research, that make money based off subscriptions to their reports. There are also subscription based investment newsletters such as The Prudent Speculator, and Investor Advisory Service. My question is how do you decide where to get your investment advice from (also what have your experiences been with any sources), and what professional should I have on my team to help me accomplish my investment goals (if any). Or is a professional such as a CFA or the services of an investment company such as Edward Jones not needed when I could instead rely on the reports of equity analysis firms, or investment newsletters and buy the stocks through computershare's website. Pros/Cons of using a professional's service vs relying on newsletters and equity analysis firms would be much appreciated. Also what sort of professionals should I be considering?

I thank anyone who first, read through all this, and then also provided meaningful answers.
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Old 08-27-2017, 06:53 PM   #2
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Welcome aboard, Futuristic. I can't really answer your question; I've always done it myself since I was a young naval officer before you were born. But I'm certain there will be plenty of other members along in a minute or two who can.
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Old 08-27-2017, 07:12 PM   #3
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... I know that before I begin to invest I not only have to educate myself ....
The education is simpler than you would imagine. Just search "passive versus active investing", and you will find that ~ 85% of the active stock pickers can't beat the simple approach of buying and holding a broad-based stock index fund over a 5 year period. And very few of the 15% are successful in the next 5 years.

So just figure an asset allocation (AA), and historically, anything from 95/5 to 40/60 is just fine, there's little sensitivity.


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... Or is a professional such as a CFA or the services of an investment company such as Edward Jones not needed when I could instead rely on the reports of equity analysis firms, or investment newsletters and buy the stocks through computershare's website. Pros/Cons of using a professional's service vs relying on newsletters and equity analysis firms would be much appreciated. Also what sort of professionals should I be considering?
... .
You don't need any reports. Nobody can predict the future, which is what stock picking and reports are all about. People will tell you it's about picking 'good companies', but 'good companies' have their stock price pushed up based on those expectations, so it all gets circular. The company has to do better than expected to have their price rise higher than the market, and by definition, we can't know that if we are making decisions based on expectations.

It's one of those rare areas where being lazy pays dividends. Just buy some broad based index funds to match your AA, then forget about it. That is very likely the best you can do, and the easiest.

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Old 08-27-2017, 08:03 PM   #4
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Hey bud - Fellow San Diegan here... Navy, 18 yrs.

I don't think most people need professionals, but if you choose to go that route, go with a flat fee advisor, not someone who charges a percent of assets under management. At all costs, avoid First Command or basically anyone who calls knowing you are military or offers help because you're military.

Books: a member here, Nords, wrote The Military Guide to Early Retirement. It's a good start specific to our situation. I recommend The Intelligent Investor with today's notes as a great start to your education.

Otherwise, I'd echo a lot of what Erd said about passive investing. Coupled with your pension and health care, it's very powerful.

You sound like you're eligible for Blended Retirement. Have you decided what to do there?
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Old 08-27-2017, 10:28 PM   #5
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Check out Bogleheads.org, a website for devotees of Jack Bogle, the founder of Vanguard and passive (i.e. Index) investing. Read about the impact of Asset Under Management and fund expense ratios on long-term performance. Read about how only 1% of the funds beat the Vanguard Total Stock Market Index Fund over 30 years. Of course, we won't know which funds until 30 years from now. I don't like those odds.
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Old 08-28-2017, 06:28 AM   #6
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About those fees ERD50 warns you about...

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Old 08-28-2017, 07:30 AM   #7
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Welcome to the forum - also a San Diegan. But not active military. That said - I live very close to Miramar.... so many neighbors and friends are military (Navy and Marine).

You're doing great thinking about this at your age... many of us didn't start planning for retirement till later.

For me, I'll echo what ERD50 said about passive investing. There are plenty of stock pickers here - but I find it much easier to achieve decent results with index funds. Diversification is my friend. And I'm lazy. You don't need a CFP or FA - you can do it yourself. Some books that are good reads on the subject: The Millionaire Teacher; A Random Walk Down Wallstreet; The Wealthy Barber. All are easy reads.

Again - welcome to the forum.
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Old 08-28-2017, 08:18 AM   #8
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How big is your portfolio now? It might suffice to buy a few dividend-paying blue chips for 10 years while you educate yourself. Education always includes practical experience. By then you will be better prepared to invest for yourself.
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Old 08-28-2017, 09:03 AM   #9
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How big is your portfolio now? It might suffice to buy a few dividend-paying blue chips for 10 years while you educate yourself. Education always includes practical experience. By then you will be better prepared to invest for yourself.
I really can't agree with that approach at all. It violates the basic rule of diversification, which I do not think should be violated. Even Blue Chips can present "specific company" risk. I just see no reason for anyone to go there, especially someone just starting out.

A broad-based index fund gives you diversification across hundreds/thousands of stocks.

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Old 08-28-2017, 11:23 AM   #10
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I really can't agree with that approach at all. It violates the basic rule of diversification, which I do not think should be violated. Even Blue Chips can present "specific company" risk. I just see no reason for anyone to go there, especially someone just starting out.

A broad-based index fund gives you diversification across hundreds/thousands of stocks.

-ERD50
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Old 08-28-2017, 05:48 PM   #11
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Retired Military here. + 1 on Bogleheads.org, passive investing and Nords. If you educate yourself and follow the recommendations already posted (minus the dividend-paying blue chips) you are well on your way. Oh and retiring at 50 is early retirement for most and if some day you get married and have kids just adjust the plan, don't trash it.
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Old 08-29-2017, 08:23 AM   #12
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Thank you all for replying. I'm going to take what everyone said under consideration.

My plan is now to research active vs passive investing. If its true that most stock pickers do not beat a broad based index fund then that eliminates most of the complexities of trying to pick great stocks to invest in.

I believe I read a recommendation of Jack Bogle's books by Warren Buffet in his "Essays". I'll continue reading books on the subject, including the ones recommended in this thread.

ERD - By asset allocation do you mean what mix of stocks I wish to have in a fund?

Nash - I tried reading the original Intelligent Investor, did not go over too well. I might have to look at one with today's notes. I however will not be retiring from the Marine Corps as I want to move on to the next stage of my life.
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Old 08-29-2017, 10:32 AM   #13
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Thank you all for replying. I'm going to take what everyone said under consideration.

My plan is now to research active vs passive investing. If its true that most stock pickers do not beat a broad based index fund then that eliminates most of the complexities of trying to pick great stocks to invest in. ...
Exactly. Simpler, and better. Win-Win!


Quote:
ERD - By asset allocation do you mean what mix of stocks I wish to have in a fund? ...
Yes, 50/50 being half stocks, half fixed income (bonds). Some might show three numbers for stocks/bonds/cash. But I try to keep cash small, just cash flow amounts, and keep my money working. Historically, any stock/fixed ratio from 95/5 to ~ 35/65 has had similar success rates over a 30 year period, the higher stock ratios provide more potential upside, but higher volatility.

I prefer to keep the stocks and fixed in separate funds, the simplest is to get one Total Stock Market fund, one Total Bond fund. That was you can rebalance when you want, control selling (and therefore cap gains). A mixed fund may need to sell to maintain their balance, whether you want to or need to or not.

You can throw some international into that, or REITS, but I dunno, it just seems those all average out over time, I'm not sure it's worth it, probably won't help or hurt much either way.

-ERD50
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Old 08-29-2017, 12:05 PM   #14
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Welcome to the forum, as several said you can do the financial planning and decisions yourself. Just like ERD50 said, pick an allocation that works for you, I say at 30 you should be 80% or more in stock funds. You have at least a 20 year plan, so the need to get ahead of inflation is good to have stocks vs fixed income. 20 years will take out the short term volatility. Also you need to just keep the regular contributions going in to retirement savings, strive for 15% of gross to savings. 15% may be tough now, but the more you invest and the earlier you invest the greater the compounding over time. You may have heard the term "pay yourself first", that is the 15% savings in reference to paying yourself first. Another term you need to learn is "live below your means (LBYM)". Follow those two terms and you will do well in your goal for retiring at 50 years age.

Another thing to consider in your education is to learn about the tax rules and how it affects your plans. There is no one answer for this, but having a better understanding will ensure you maximize the portion you keep.
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Old 08-29-2017, 01:26 PM   #15
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Nash - I tried reading the original Intelligent Investor, did not go over too well. I might have to look at one with today's notes. I however will not be retiring from the Marine Corps as I want to move on to the next stage of my life.
TII is a tough read if you just digest what Graham was talking about fifty years ago. The "Revised edition" version with Jason Zweig's notes helps translate it to today. The bottom line is that Graham would recommend the average person today invest in passive index funds.

Sorry to hear you won't get to 20, but I definitely understand!
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Old 08-29-2017, 06:53 PM   #16
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Congratulations on planning ahead for the future. Amazing how many people don't.

The best advice I ever got is "just start."
Put some in basic savings or certificates of deposit. Interest not great, but you know it will be there and won't go down in value.

Put some in a total market index fund with low cost. Many people swear by Vanguard, but Schwab, Fidelity, etc. they all have them.

If you have the curiosity do some research and buy 10 or 20 shares of stock of a company that interests you. Google "Dogs of the Dow" or "dividend growth stocks for some ideas. Learn how it works.

The point is it's your money, it's your decision, and like everything else in life you learn the best from doing and experience. The sooner the better. But, not all in one place.

There is no one right way to invest. But there are a lot of wrong ways.

There are those who prepare for the future, and those who don't.

It's like planting an orchard one tree at a time. Over the years they grow and bear fruit. The more you plant and cultivate the bigger the orchard and the more fruit.
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Old 08-31-2017, 11:46 PM   #17
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I subscribe to BlueChip Growth by Louis Navellier and so far it's working very well for me. I really like his approach of 60/30/10%, conservative/moderate/aggressive and he recommends to hold for at least one year and the fees he charges for two years is next to nothing. I found that diversification is the key to counter volatile market and stick with the 60/30/10 approach with steady gain.


BTW: I recommend you open a Roth IRA first unless you have some kind of 401K with matching.


Thank you for your service

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Old 09-04-2017, 12:40 AM   #18
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Originally Posted by Futuristic View Post
Hey guys, a little bit about myself: I found these forums through the recommendation of a financial counselor, who served 20 and retired from the US Navy (it seems there are a few active and prior service-members here). I myself am an active duty US Marine stationed in beautiful San Diego and am now beginning to educate myself on becoming financially independent. I'm 30yo, single, no kids, and I am not looking to retire for at least another 20 years (not sure if it would even be considered early retirement at that point). However questions about early retirement itself are not what bring me here, though I know that is the main thrust of the discussions here. My questions center around stock investing.

I know that before I begin to invest I not only have to educate myself (reading classic books on the subject) but that it is also helpful to have an expert on my team.
Welcome, Marine, but perhaps you're overthinking this.

Maximize your contributions to the Thrift Savings Plan (I recommend the C, S, and I funds-- or at least the L2050 fund). Maximize your contributions to equivalent index funds in your Roth IRA (from Fidelity, Vanguard, or Schwab). Save even more in taxable accounts.

If you're curious about the details of asset allocation (or any other investing topics) then start with the Bogleheads Wiki (https://www.bogleheads.org/wiki/Main_Page) for an overview and dive into their recommended resources.

Every day you waste polishing cannonballs seeking a deeper understanding is another day that compounding can't start its job.

A good plan, violently executed now, is better than a perfect plan next week.

You might be eligible to opt in to the military's Blended Retirement System. (http://militarypay.defense.gov/BlendedRetirement/) If you have any doubts about retiring from the Marines (as well you should) then you should opt in to the BRS and get the full 5% DoD match on your TSP contributions.

Please post more questions here, or send me a PM, or e-mail NordsNords at Gmail.
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