Advice on how to invest child's B-day money...

Discussion in 'The Okie Corral' started by XDRoX, Apr 29, 2012.

  1. Cinic

    Cinic Spongy Member

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    FWIW, it's not a 10% off the top of all surplus. It's 10% of earnings. It's not nothing, but they're not penalizing the original principal withdrawal. Granted, if it's an old account, the earnings can be significant.

    Also, those earnings are taxable if not part of a qualified withdrawal.
     
  2. RWBlue

    RWBlue Mr. CISSP, CISA CLM

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    I am not saying it is all good.

    What is spot price?
    What is buy price ?
    What is sell price?
    Today at your local shop


    If your house is robbed what portion of the gold in your house can be lost?
     

  3. Glocksanity

    Glocksanity

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    Okay. And the last twelve years, the S&P has done nothing while silver and gold have skyrocketed.

    You cherry pick your entry points and I can do that too. What matters is the next ten to fifteen years.

    I will take my chances with gold and silver, an asset class that has no counter party risk. You take your paper assets and let the crooks on Wall Street make good on them.

    Enron? Lehman Brothers? MF Global? The Fed printing money like there's no tomorrow? The rest of the world starting to abandon the US dollar the the world's reserve currency?

    Gold and silver...trusted for over 5,000 years.
     
  4. Glocksanity

    Glocksanity

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    S&P 500 in March 2000~ 1527
    Gold in March 2000~280

    S&P in April 2012~1400
    Gold in April 2012~1,650

    So, since then, Gold has gone up about 6 times while the S&P has done nothing. Oh wait, you have dividends of about 3% per year!

    I'll stick with this current trend as it still has a ways to go.
     
  5. arclight610

    arclight610

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    Um, no. For gold to be $600, silver would have to be around $10. It costs $20 just to get it out of the ground. You will NEVER see gold below $1000/oz again, at least not with this dollar.

    The DOW has still yet to break its high of 14164, and its been about 5 years. There has been inflation during that five year period. Although people might be back up to where they were, their purchasing power is not the same. It's taken 2 rounds of quantitative easing and a Fed interest rate at 0% to just keep it around 13000.
     
    Last edited: May 2, 2012
  6. VinnieD

    VinnieD

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    Get a Roth IRA that's invested in mutual funds. The growth on those is insane. We're talking like %12 APR. That'll double your money every 7 years, and the market can compensate for inflation.

    If you want a little more stability but still get aggressive growth, look into fixed indexed annuities. Those usually have a guarantee of principal, so you can't possibly lose money. They earn money on a monthly basis up to 1.5% (so a potential of up to 18% per year.)

    What to stay away from. CDs are a joke. You'd spend a lifetime to double your money just once.

    Stay far far away from whole life policies. They promise you insurance and savings in one. They are lying. It's one or the other. You get one, you lose the other, and the agents outright lie about the interest rates you'll be getting. They tend to promise the maximum, but only ever deliver the bare minimum. Whole life is the biggest scam ever perpetuated on decent working people, and it's revolting that an entire industry has grown around it.
     
  7. Bren

    Bren NRA Life Member

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    My sister-in-law invested my nephew's money, that he was saving for a Bennelli shotgun, into remodelling her bathroom. I'm not sure that's the way to go. I hope the lesson he learns from it is how to hold a lifelong grudge.
     
  8. Dragline

    Dragline

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    Gold and silver both took a dump today along with Palladium which was a bit of a surprise as I expected an upward trend for Palladium.
     
  9. Bilbo Bagins

    Bilbo Bagins Slacked jawed

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    :rofl:


    Ummm Anything that was on the Dow Jones Index

    http://www.stocks-for-beginners.com/gold-market-price.html

    [​IMG]


    Ok besides 1980, and the last 6 years tell me when in history of the US dollar when gold was worth over $600 an ounce :whistling:

    [​IMG]

    Let me guess you were telling people to buy real estate in 2007.

    Buy low and sell high my friend.
     
  10. 07 LMB Z06

    07 LMB Z06

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    After some quick comparisons of Large-Cap Value ETF's on Yahoo Finance I doubt I'd recommend any over that fund. It looks like it has done great pretty much since inception. There are some 3x leveraged ETF's that are performing with it, but of course then your Beta spikes so that's not really a fair comparison.
     
  11. RWBlue

    RWBlue Mr. CISSP, CISA CLM

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    I was hoping that I would find something better.:dunno:
     
  12. certifiedfunds

    certifiedfunds Cosmopolitan Bias

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    I bet you said that at $1200

    In fact, I'm pretty sure you did.
     
  13. arclight610

    arclight610

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    Tell me when in the history of the US dollar where the Fed loaned out money at 0%? Never, until now.

    Of course gold has never reached $600 in the past, because there was less money in circulation. However, there are multiple instances of gold reaching purchasing power levels of what $600 would buy today.

    I'm not a gold/silver bug, but I do see alot of room for growth.
     
  14. 07 LMB Z06

    07 LMB Z06

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    Well, as you said in your post, timing is important. I was just comparing returns since inception to get the full picture, but several of the ETF's I compared have been outperforming that fund over the last few months.

    Here's one example, both Large-Cap Value:

    YAFFX:
    - Year to date return: ~6%
    - Annual expense: 1.25%
    - Beta: .90

    IVE:
    - Year to date return: ~11%
    - Annual expense: 0.18%
    - Beta: 1.06

    So you're looking at nearly double the returns with an increase in your Beta of only about 18%; all while reducing your annual expenses by about 85%.

    Again, this assumes correct timing. Once you start to push out to 2 year comparisons and 5 year comparisons it looks better for YAFFX.

    That isn't always the case and is why I simply suggested comparing an ETF before jumping right into a mutual fund.
     
    Last edited: May 2, 2012
  15. southeastmo

    southeastmo

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    Put 100% of it in a age based 529 plan, you will be able to use it for schools in or out of the state. Use the new monies to open a growth mutual fund. There are several good fund families, I would let your impression of the people you talk to help guide you, or interview some local people.
     
  16. Glocksanity

    Glocksanity

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    Gold and silver have crushed the S&P since 2000. I think that trend will continue. Simple as that.

    All these investments asset classes go in cycles. Now is the time for precious metals. The trend is your friend.

    Gold and the Dow will eventually meet, it is just a matter of where. Could be 6,000, could be 20,000. But they will meet again.

    Time will reveal the correct investment. Wall Street is full of crooks. Our government is full of crooks. Gold and silver are honest money. Boom!
     
  17. certifiedfunds

    certifiedfunds Cosmopolitan Bias

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    Best post yet
     
  18. Glocksanity

    Glocksanity

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    Really? Anything that was on the DJI?

    Because AIG was on it and its price plunged from about $2,000 to $35 over the last dozen years or so.

    Some investment that would have been.

    You see, the DJIA replaces the losers with winners. That is why it never goes down for long. And you have no way of knowing who the future winners will be. So, no. You are incorrect to state that anything on the DJI would have done well.

    Well, then. Just stick with the whole index? Well, that has gone nowhere for a dozen years.
     
  19. Patchman

    Patchman Florist

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    You really have two (2) options. One is to open a 529 College Savings Acct and the other is to open a Uniform Trust for Minors Acct (UTMA).

    In some states, if you open a 529 approved by that state, each parent can contribute up to $15K (or something like that) per year. And the first $5K is deductable off your state taxes. So if you and your spouse both open a state approved 529 for the kid, and each contribute at least $5K, you can deduct a total of $10K from your income for state taxes. And at the end of each year, you don't get a 1099 or anything. When 529 money is used to pay for a qualified higher education institution (college and graduate school), every penny is tax free.

    UTMAs, on the other hand, is an account that will name you (or your spouse) as custodian. But the money legally belongs to the child from day 1. You can invest in mutual funds, stocks, etc... but as custodian are responsible for it. And at the year's end, that UTMA account will send you a 1099 dividend and/or interest statement and somebody has to pay the taxes! You're allowed to use money from the UTMA to pay for the taxes, investment fees, etc... but not to spend it on yourself (ie: kid is a real screw-up. You and wife says "forget this" and close account and use money for vacation-that's a problem!). And if the account has your kid's SSN (for tax purposes), you'll need to do a tax return yearly for the kid (or at least do one to see if the kid needs to file a return).

    All in all, I'd fund the 529 first.
     
    Last edited: May 2, 2012
  20. RWBlue

    RWBlue Mr. CISSP, CISA CLM

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    I never understood the love for gold and silver. They cost way more than they are worth.