24 year old trying to get to millionaire by 35, punch holes in me plan

[Texas Proud]

Try comparing DODFX to VGTSX, who's the winner now?

Lets go with that.....

in the last two years... looks like a tie... for 5 years... Dodge wins...

But again, and you seem to ignore this for some reason... Dodge wins with a lot more risk....

 

[wabmester]

in the last two years... looks like a tie... for 5 years... Dodge wins...

It wasn't a tie. Vanguard paid a 1% higher dividend.

 

[Poundkey]

AJ......I don't really have any advice for you. Look to people like Brewer for that. I do have a question.....seriously now. I have a son about your age and income and I can't get him to to take any interest in investing, much less retirement. My question is......what, or who, motivated you at such a young age to to set these goals for yourself? Was it a parent, professor, etc. or something that was just naturally in you to do? My son is frugal and debt free, but his only concern is enough money for camera equipment, camping gear, his next trip to Alaska, Austrialia or whatever. I can't even interest him in books about investing.
Sorry to go off topic like this, but I was just interested in what moved you.
Thanks

 

[HFWR]

Nuthin' up my sleeve... Presto!!

 

[sgeeeee]

I'm kinda thinking troll, but just in case . . .

AJ,

No one should be trying to convince you to invest in a different style than you feel comfortable with. That would be the biggest mistake you could make. I don't really think anyone is. If you spend enough time listening to how various people got to a safe, comfortable retirement one thing becomes clear: there are an infinate number of ways to achieve financial success. This board has folks who focus on real estate. We have market timers and asset allocators and everything in between. We have long-term buy-and-hold strategies and we have traders. We have indexers, managed fund proponents, stock pickers, junk bond advocates, . . . And, if we can believe what they say, we have examples of successful people in all classes.

I think a lot of investment discussions begin to sound like car talk. "Chevy's are better so anyone who drives a Ford is a moron." It's not enough simply to indicate one's preferance for a Chevy. The Chevy fanatic has to condem all other preferances too.

A lot of investors who have achieved more success and who have more experience than you don't use your approach to investing. That doesn't make you or them wrong. Many posters in this thread have pointed out that your approach may work well for you. The resistance you are experiencing is related more to the other part of your posts -- implying that anyone who uses another approach is a moron. The worst part about taking that stance isn't the "bitch slappin'" you are going to get on this board, it is that such a stance will keep you from learning. Based on your posts, you are not a very sophisticated investor and you still have a lot to learn. You seem naive about issues like managing risk, the importance of time-frame, etc. when making comparisons.

If you're not a troll, good luck. If you are, I hope you like being bitch slapped.

 

[AirJordan]

AJ......I don't really have any advice for you. Look to people like Brewer for that. I do have a question.....seriously now. I have a son about your age and income and I can't get him to to take any interest in investing, much less retirement. My question is......what, or who, motivated you at such a young age to to set these goals for yourself? Was it a parent, professor, etc. or something that was just naturally in you to do? My son is frugal and debt free, but his only concern is enough money for camera equipment, camping gear, his next trip to Alaska, Austrialia or whatever. I can't even interest him in books about investing.
Sorry to go off topic like this, but I was just interested in what moved you.
Thanks

Hi Poundkey, nice to hear a friendly voice besides one pummeling me. I'll give you the lowdown on me and what started me towards investing. At the risk of sounding too bigheaded, I'm one of the most driven people on the face of the planet, I demand nothing but the absolute best out of myself (said as I'm browsing the forums during work ), which lead me towards finding new challenges in life. My parents are complete neophytes when it comes to investing, and they know it, and they have throughout their lives, told me how they wish they could have just socked away an extra 5-10k a year, and they'd be millionaires.

While I went to an elite private school, college, etc. my family was by no means rich as I've just said, and I've had to work crap summer jobs, do construction work to support myself, all the while the spoiled trust fund kids in my class got to go out drinking and enojy their parents money. I swore that I would make myself a millionaire by 35. So in that respect it was a bit of envy of the good life that my classmates had which drove me towards investing.

What has helped me continue on this path, is my love of numbers and gambling (which when you get down to it, is what the stock market is). The market fascinates me, and now that I've become bored with poker, it's become my new hobby.

As far as getting your son motivated, it wasn't until I started watching Mad Money (yah I know probably not the best place to start) and read Cramer's book, in addition to Four Pillars, Random Walk Down Wall Street, and Lazy Investor's Guide, that I actually pulled the trigger. It sounds like your son isn't the type to be swayed by fast cars or Armani suits. Well, I'm that shallow, and I want all of the finer things in life. I work damn hard for my money every year, so the least I can do is try to make that money work for me.

As for your son, it takes an hour to set up an account at Vanguard and just put money in
VTSMX, VGSIX, VEIEX, NAESX, VIVAX, VGTSXl. With indexes he never has to touch a thing. But there will become a time in his life when he's motivated or needs to impress some girl (hey, I'm not the best looking guy, I use what I can $$), and will realize that having a bit of money helps a bit.

Hope this answers your q

 

[AirJordan]

The resistance you are experiencing is related more to the other part of your posts -- implying that anyone who uses another approach is a moron. The worst part about taking that stance isn't the "bitch slappin'" you are going to get on this board, it is that such a stance will keep you from learning. Based on your posts, you are not a very sophisticated investor and you still have a lot to learn. You seem naive about issues like managing risk, the importance of time-frame, etc. when making comparisons.

If you're not a troll, good luck. If you are, I hope you like being bitch slapped.

No I'm not a troll even though I come off as one, and probably am deserving this bitch slapping I'm getting (whoop that trick, Hustle and Flow anyone?) I certainly have a lot to learn, and I'm just finding it odd, because everywhere else I go, they seem to love my portfolio (Fund Alarm, Motley Fool, M Star, some friends I have on Wall Street), but here I've run into a brick wall. I'd eventually like to become sophisticated enough that I can pick my own equities but I have a bit to go before I get to that stage. We all have our different styles, I like actively managed funds, with the occasional stock that I find as a steal. To each his own, since this style doesn't seem to be in vogue here.

Hopefully you accept my humble apology, for coming off like an ass

 

[Alex]

No I'm not a troll even though I come off as one, and probably am deserving this bitch slapping I'm getting (whoop that trick, Hustle and Flow anyone?) I certainly have a lot to learn, and I'm just finding it odd, because everywhere else I go, they seem to love my portfolio (Fund Alarm, Motley Fool, M Star, some friends I have on Wall Street), but here I've run into a brick wall. I'd eventually like to become sophisticated enough that I can pick my own equities but I have a bit to go before I get to that stage. We all have our different styles, I like actively managed funds, with the occasional stock that I find as a steal. To each his own, since this style doesn't seem to be in vogue here.

Hopefully you accept my humble apology, for coming off like an ass

i don't think you need to apologize to anyone, and your certainly no ass! You are doing great and if you save your money diligently you'll achieve your goals. The fact that you opened yourself to criticism tells me alot about the kind of person you are.

Here is my advice: Taxes are going to become an issue for you, so I'd rethink the whole active management thing. If you are enamored with some active funds, thats fine, just keep them in your tax sheltered accts. The core of your taxable holdings should be in low cost, tax efficient index funds or tax managed funds. Other than that, you have a decent set-up. Keep saving and have fun!!
Good luck AJ!!

 

[Poundkey]

Thanks AJ......very interesting. I gather then that it was basically you and your observations of others that motivated you.
Actually my son does have one VG fund (besides his MM) , but I promise he wouldn't have a clue how much is in it if I ask him right now....pretty funny. He has plenty of math skills (AE from Texas A&M) just no interest in using it for investing. I loaned him "Four Pillars", but doubt he read it. Did NOT loan him "When Genius Failed"......afraid it might scare him....LOL.
Ahh...the folks here aren't really pummeling, just giving advice.
Thanks again

 

[FIRE'd@51]

AJ,

I'm curious about the email address in your profile. If you don't mind sharing, what is your connection, if any, to Wesleyan University?

 

[WanderALot]

Leveraged beever-cheeze futures should do the trick...

oooh, is there an index fund for that?

 

[Texas Proud]

Hi Poundkey, nice to hear a friendly voice besides one pummeling me. I'll give you the lowdown on me and what started me towards investing. At the risk of sounding too bigheaded, I'm one of the most driven people on the face of the planet, I demand nothing but the absolute best out of myself (said as I'm browsing the forums during work

Again with the "I am better than you"... but that is fine... but have seen some that you could not approach in 'driven'... the worst one I can remember would not take time off to take his wife to the hosptial as she died of cancer...

And... being driven as you are... you will never RE...

And, it does seem like you think money is scoring of who is better... guess what.. you win.. (well, not now as I am a lot older... but you will in the end..)

BTW... how many hours do you have to WORK to get your salary.. I remember the lawyers I used to 'boss' around even with making less than 25% of what they made... they would put in 2800 to 3000 hours a year (chargeable)... and I would make them work all night if I needed it... I would hate to be doing that for any amount of money..

 

[Martha]

Well if he spends his time screwing around on the Internet and messing with his investments, his billable hours will suffer.



Oh wait, I am not the office police anymore.

 

[ERD50]

FYI: From an interview with Merton Miller*:

http://tinyurl.com/2s3upg

Interviewer: In fact, I thought the most convincing of Gene Fama's points was that he took ten years of mutual fund data from The Top 20 Mongingstar funds and looked at their performance for the following ten years.

Miller: And there was no correlation. It has all the earmarks of a random process. <snip> All the studies have found that there is no correlation between the results of the previous five years and the subsequent five years. Virtually no correlation.

It's not just some old pharts on a forum saying it. Nobel Laureates have parsed the data, and that is what they found.

-ERD50


http://en.wikipedia.org/wiki/Merton_Miller

* Merton Howard Miller (May 16, 1923 – June 3, 2000) won the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 1990, along with Harry Markowitz and William Sharpe.

He was born in Boston, Massachusetts. He worked during World War II as an economist in the division of tax research of the Treasury Department, and received a Ph.D. in economics from Johns Hopkins University, 1952.

 

[AirJordan]

AJ,

I'm curious about the email address in your profile. If you don't mind sharing, what is your connection, if any, to Wesleyan University?

Busted Well I just said Haverford so people wouldn't trace me in case my boss reads this site. Yup I can say I survived Middletown for 4 years, you a fellow cardinal?

 

[DRiP Guy]

Busted Well I just said Haverford so people wouldn't trace me in case my boss reads this site. Yup I can say I survived Middletown for 4 years, you a fellow cardinal?

So, we have established you are a liar... and a slacker wasting work time and resources... and a braggart.... anything else we need to know? I guess not, at least for me -- I don't see any reason all the other "attributes" you mentioned should not be considered just as bogus as your supposed alma mater.

 

[unclemick]

Hopefully you accept my humble apology, for coming off like an ass

'Never apologize Mr CoHill. It's a sign of weakness.' - She Wore a Yellow Ribbon.

Oh! - and John Wayne never asked - 'Who is John Galt?'

At least not to my knowledge.

heh heh heh

 

[dusk_to_dawn]

I didn't read through the thirteen pages of replies, but if you are 24 making 100k, my advice would be to keep the 100K job unless a secure higher paying job comes along, max out the 401K and the Roth IRA and live as far below your means as you can. If you can do this for 10 years, you are set.

 

[Bikerdude]

Busted Well I just said Haverford so people wouldn't trace me in case my boss reads this site. Yup I can say I survived Middletown for 4 years, you a fellow cardinal?

Just got back from a few beers at "Gatekeepers". Peter says "Hi"

 

[AirJordan]

So as far as I can see, the only tax advantage that you have with index funds is that you don't have to pay capital gains every year since they hold the same funds am I correct?

 

[mb]

So as far as I can see, the only tax advantage that you have with index funds is that you don't have to pay capital gains every year since they hold the same funds am I correct?

AJ,

Since I've given up and become a "haystacker" but you don't seem to be so inclined I'll give you advice on something that may help you achieve you goals with managed funds.

Index funds are usually tax efficient because the turn over is low but managed funds vary widely in their tax efficiency and it can be a considerable drag on performance.

If you want to use managed funds I suggest looking at the tax efficiency and keeping the tax inefficient funds and the funds that you may trade in and out of a lot in IRAs or 401ks as much as possible.

Dodge & Cox, for example, is usually pretty tax efficient because it has low turn over so it would do well in a taxable account. (In fact IMHO part of the reason that D&C has done so well is that it has many of the characteristics of an index fund such as low expenses, low turnover, consistent style, management that does not chase trends.)

Since you are invested in managed funds I assume that you have done your homework and know how large D&C has become and how difficult it is for a large fund to out perform the market (see comments from other poster regarding Magellan) and have a good "court worthy" argument on why it will continue to out perform the market in the future.

MB (who may still have a bit of a testosterone problem since he has owned D&C for 15 years)

 

[Olav23]

If you want an estimation of how much of your returns are eaten up by taxes, check the morningstar "Tax Analysis" tab for your fund:

For the DODFX:

http://quicktake.morningstar.com/FundNet/Tax.aspx?Country=USA&Symbol=DODFX&fdtab=tax

This looks like quite a tax efficient choice. Over a 5 year period, only .5% of the return was eaten up by taxes. Compare that to something like:

http://quicktake.morningstar.com/fundnet/Tax.aspx?Country=USA&Symbol=HYLAX&fdtab=tax

This is a junk bond fund. 5 year return is not too shabby with 8% return, but then if we look at it at an after-tax return, 4%. You lose almost 3% a year in taxes. This is a very bad choice for a taxable account.

Index fund or managed fund, do your research. Use the terrific free tools available to you, like morningstar. I'd forgo the star rating junk, and dive into the pages of numbers they offer on each tab. Check expense ratios, tax-adjusted return, beta/r^2/alpha/sharpe (to make sure it isn't just a closet indexer), and how well it beats its index during good markets, and how well it protects from the downside of the index when things go bad.

Besides that, just keep sockin' it away. You'll get to where you need to be without problem.

If you really want to learn how things work, dive in and read everything you can, contradictory to your assumptions or not. This goes for everything in life, I'd imagine!

 

[calmloki]

.... It sounds like your son isn't the type to be swayed by fast cars or Armani suits. Well, I'm that shallow, and I want all of the finer things in life. I work damn hard for my money every year, so the least I can do is try to make that money work for me.
...

I think it is very important to dress like a millionaire at all times. I doubt, however, that the tyvek jumpsuit i wore under a rental yesterday would have impressed many women. Strive on - an unhealthy dose of envy for the rich kids will serve your career well - my motivator is guilt for not doing anything up to the standards of my parents.

 

[trixs]

What has helped me continue on this path, is my love of numbers and gambling (which when you get down to it, is what the stock market is). The market fascinates me, and now that I've become bored with poker, it's become my new hobby.

This is exactly what drove me to investing I first started when I was 15 because I saw it as a huge game. 9 Nine years later and I still love the market and well on my way to making that magical number.

Poker? Well I am playing poker right now lol.

-trixs

 

[AirJordan]

This is exactly what drove me to investing I first started when I was 15 because I saw it as a huge game. 9 Nine years later and I still love the market and well on my way to making that magical number.

Poker? Well I am playing poker right now lol.

-trixs

Hey trixs, I should send you an email or something. Sounds like we are in similar boats. I'm very curious how someone my age is investing, and maybe we can help each other learn a bit about this financial game.

I'm at wblakefinley@wesleyan.edu, if you care, and where do you play poker at? I used to play at Pacific and made, well I'll just say a large sum, playing limit over there. Glad to see a few friendly faces among the **** storm this thread has become.