***OFFICIAL*** Bankroll Management For Real Life, Not Poker

[BennyLaRue]

I thought I posted in the right thread. I am on step 5,6,7

Right, and you presented specific investments you think will help you with that. These specific investments are where you need to rethink what you're doing.

You picked an Invesco fund that is:

1) Higher fee than what I've mentioned numerous times; it has ongoing expenses of 1.34% of your investment every year vs. 0.07% for VTI. That doesn't sound like a ton of money at face value but if you think about it, that is 15% of the 9% return that you're targeting. It's serious rake...it could mean retiring or otherwise hitting a savings target months or years later.

2) An actively managed fund, not an index fund (ie. Finance dudes that drive nice cars you paid for pick specific stocks they THINK will perform well instead of investing in the whole market, which is what an index fund does). Managed funds have a history of poorer performance in the long run than index funds because let's face it, most of these guys aren't terribly adept.

More on Index funds from Investopedia: Index Investing: Index Funds

3) Specific to a particular industry (Real Estate), which is not protecting your investment through diversification. You need to spread your risk around so you don't lose everything when one market tanks, and they do and the Real Estate market is not protected from this at all just because it tanked recently. Look at the 3-year return for your Invesco fund...it's -0.09% and over the last 5-years it's only 1.66%. It's even worse if you don't know anything about this particular industry because then you can't time your entrance and exit in that market, which is the only time investing more specifically than an index fund can make sense.

4) Performing more poorly than the stock market as a whole. You have to be careful with the "Since Inception" number without putting it into context. Your Invesco fund has been around since Oct 2003. Put it next to an index fund like IVV, which invests in each of the 500 big companies that make up the Standard & Poors 500 index. What's the return on IVV since Oct 2003? 28.3%.

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As for Micromet, if you have to ask, you shouldn't even go near it. Taking investment advice from a salesman's email? Honestly, it's horrifically dumb to even consider it. Do you buy Viagra from an email? Do you engage the Prince of Nairobi when he asks for $250? This Micromet tip might not be a spam email and you might even know the guy but it's still the same. He's A SALESPERSON. He wants you to buy this because HE will make money off of it. Can you tell me the company's cash flow situation? It's earnings outlook compared to the industry? Do they have an actual product or just promising lab results? If they have gotten to the product stage, is it government approved or is it $90M in legal fees away from approval and they have $250K in cash and are up to their eyeballs with debt as is?

Do not buy individual stocks you know nothing about, especially in an industry you know nothing about. That isn't investing, it's pure gambling and this would be the investment equivalent of shoving pre with 72o.

[mrhappy333]

Right, and you presented specific investments you think will help you with that. These specific investments are where you need to rethink what you're doing.

You picked an Invesco fund that is:

1) Higher fee than what I've mentioned numerous times; it has ongoing expenses of 1.34% of your investment every year vs. 0.07% for VTI. That doesn't sound like a ton of money at face value but if you think about it, that is 15% of the 9% return that you're targeting. It's serious rake...it could mean retiring or otherwise hitting a savings target months or years later.

2) An actively managed fund, not an index fund (ie. Finance dudes that drive nice cars you paid for pick specific stocks they THINK will perform well instead of investing in the whole market, which is what an index fund does). Managed funds have a history of poorer performance in the long run than index funds because let's face it, most of these guys aren't terribly adept.

More on Index funds from Investopedia: Index Investing: Index Funds

3) Specific to a particular industry (Real Estate), which is not protecting your investment through diversification. You need to spread your risk around so you don't lose everything when one market tanks, and they do and the Real Estate market is not protected from this at all just because it tanked recently. Look at the 3-year return for your Invesco fund...it's -0.09% and over the last 5-years it's only 1.66%. It's even worse if you don't know anything about this particular industry because then you can't time your entrance and exit in that market, which is the only time investing more specifically than an index fund can make sense.

4) Performing more poorly than the stock market as a whole. You have to be careful with the "Since Inception" number without putting it into context. Your Invesco fund has been around since Oct 2003. Put it next to an index fund like IVV, which invests in each of the 500 big companies that make up the Standard & Poors 500 index. What's the return on IVV since Oct 2003? 28.3%.

---

As for Micromet, if you have to ask, you shouldn't even go near it. Taking investment advice from a salesman's email? Honestly, it's horrifically dumb to even consider it. Do you buy Viagra from an email? Do you engage the Prince of Nairobi when he asks for $250? This Micromet tip might not be a spam email and you might even know the guy but it's still the same. He's A SALESPERSON. He wants you to buy this because HE will make money off of it. Can you tell me the company's cash flow situation? It's earnings outlook compared to the industry? Do they have an actual product or just promising lab results? If they have gotten to the product stage, is it government approved or is it $90M in legal fees away from approval and they have $250K in cash and are up to their eyeballs with debt as is?

Do not buy individual stocks you know nothing about, especially in an industry you know nothing about. That isn't investing, it's pure gambling and this would be the investment equivalent of shoving pre with 72o.

Benny, thanks for the response. This was just the reason I posted here.
I did want to gamble a little with some speculative stuff, but the kids money and all my other monies, I want to be diversified and building some $$.

I bought some CPST capstone turbine recently at 1.40 and it went to 2.10 and I sold it at 1.90 and made some nice $ with my Gambling Bank Roll.
Im a total noob at this and that is probly my equivalent of shoving Pre with 72o and hitting 772 on the flop.
Your sound Advice is very much apreciated.

[Donachello]

Yeah, for now the main expenses starting after graduation are going to be rent, student loans and food/gas. Job situation currently is not a salary position but looks to be a mix of part-time jobs to equal a pretty much full time position for the foreseeable future. I have 6 months until I need to start paying off the debt but I'd like to start putting a dent into it asap to avoid interest and just to get out from under it and I am willing to sacrifice some quality of living to do so.