Oil prices dropped AGAIN. It’s like an abyss without a bottom.
Since the last negative oil prices. I learned there’s actually a place you can buy crude by the barrel in Pennsylvania. Only caveat is they store it in like… those huge cylindrical tanks ya sometimes see so ya gotta bring your own means of storage. But theoretically there’s money in grabbing some, and being paid a bit to do so and then selling it back to them at a later date, if one has the means.
We’re now seeing the fallout for the oil companies.
So a weird question. If you were to say get a lump sum of money and are smart enough not to go and spend it on things. How would you best take that money, and make more money with it to help you with long term goals?
Disclaimer: I am not an official investment advisor or expert. Investing in almost anything is gambling, and you could risk losing all your money. SEC don’t come after me for an Internet post.
My personal advice for just about everyone is to invest in index funds. Index funds, whether ETFs or mutual funds, are the absolute safest bet with the best return for long term investing. The way they work is you buy shares in the fund. Then the fund managers invest the money in such a way as to very closely mimic the returns of an actual index, usually something like the S&P 500.
Your investment is tied to the health of the overall market, and not the potential wild swings of an individual company. If you invest in Apple, and iPhones all have batteries explode, you could lose a lot. If you invest in the entire stock market all at once with an index fund, then you only lose everything if everyone else also loses everything, and the entire market tanks.
If we don’t have financial Mad Max, then the outlook on index funds is terrific. Historically, almost all investors doing fancy nonsense would have made more money if they had just invested in index funds and called it a day.
https://grow.acorns.com/warren-buffett-index-funds/
It would be quite expensive to buy like, one share in each S&P 500 company, and it would be a huge hassle to manage it. There might also be all kinds of transaction fees. It wouldn’t work out great. You could easily buy several shares of VTI, SWPPX, or FXAIX. These all have extremely low fees, which means the least amount of your money goes to the pockets of wall street financiers.
If you’ve already got money in a 401k, you can just allocate it to the index fund(s) with the lowest fees available from the choices they give you. Alternatively, you can use an online brokerage like Etrade or whatever to directly buy shares. You could also open a personal account directly with the places offering the funds, like Fidelity or Vanguard. It honestly doesn’t matter much which one you go with.
What does matter is that you want to make sure you have automatic dividend reinvestment setup. Almost all of the index funds are going to pay out dividends on a regular basis. If those cash dividends sit in your account, they might earn some interest, but not much. You could withdraw them, but they won’t be that much. Instead, you want that money to automatically be used to buy more shares. So now not only are the value of your shares rising, but you’re getting more shares over time as dividends pay out.
The only thing to watch out for, and this is true for all long-term investments, is to reduce risk as you get closer to the time of withdrawal. Presumably you are saving for retirement. That means as you approach retirement age, you need to hope the market doesn’t crash the day you walk off the job. You want to start selling your shares and move the money to lower risk investments. This will protect you if the market just happens to dip at the wrong time.
And that’s pretty much it. There are safer investments than index funds, but they don’t pay out much. There are investments that could have higher payouts, but the risk of those is well into gambling territory.
TL;DR: Google for index funds or index ETFs. Pick a good one with low fees. Make sure you have automatic dividend reinvestment. Invest loooong term. Move the money to a safer place when you get close to the end.
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This flowchart is a pretty good guide. Since this (presumably) isn’t coming from your employer you can skip a couple steps. If your career is tied to the overall health of the economy or it’s just generally hard to find new jobs, consider leaning closer to 6 months for the emergency fund. Like Scott said, index funds are the way to go for investments, but as you get closer to retirement start moving some of that money to bonds so your fund doesn’t move with the market so much.
Edit: When planning your emergency fund don’t forget about health insurance. It’s really expensive when you’re unemployed.
Investing is about time/risk tradeoffs. I recommend reading a book. I’m sure there are plenty of books out there, but Personal Finance for Dummies explains a lot of the basics, lays out the risks, and has great overall advice. The same author also wrote Investing for Dummies, which I assume is also excellent.
If anyone wants to learn about big time investing, I will be happy to teach anyone to play 18XX games. 1 on 1 tutoring free of charge.
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I say fuck stocks and invest in entrepreneurship but, obviously that’s not great advice for most people. Its just not obvious to me.
But if you had some sense in the back of the mind to do something like that instead of stocks, I say fuxkin go for it.
I agree with scott about index funds if you’re looking at long term stock market stuff. If you are looking more mid-term to short-term I would say either the emergency savings account or paying down any debt you have outstanding if doing so would cut your monthly expenses (car loan, part of student debt if its in multiple loans, etc.). Then you could either save the month to month difference with auto-deposits or use the same money to snowball down the rest of any debt you have.
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In general, if you have any debt with an interest rate higher than the return you would get from an investment, pay the debt off first.
But yeah, index funds. “Time in the market beats timing the market,” as the saying goes.
Oh also my refinance went through just fine, so I think I’ve pretty much effectively secured my housing. I have to pay a tiny bit of PMI because I wound up landing at 84% loan-to-value, but I’ll get to 80% pretty quickly. Still barely touches the savings in interest payments.
Also, apparently, when you don’t go anywhere for 3 months, and when you get to skip two mortgage payments because you’re refinancing, you get some extra liquid kicking around. Just gotta figure out where to best apply it - probably pay down some debts and then start dropping extra income into the 403(b) program from work.
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Wow, I never thought I’d see the day.
I’ve spent a lot of time at the LME (though not for several years now), and it’s a very neat place. They’re trading real goods, and the outcry system was overall pretty effective.
So, those Redditors who hijacked GameStop’s stock yesterday are now going after AMC (both the theater chain AND the TV channel), Naked Brands, BlackBerry, and Blockbuster (yes, really).
TD Ameritrade and Schwab have had to suspend trading as a result, and Discord banned the WSB server.
EDIT: Could they be going after Dogecoin, too? It’s strangely trending on Twitter and rising in value like crazy.
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Honestly, not a surprise. As I mentioned in the other thread, they’ve got a bit of a habit of playing fast and loose with SEC rules, and as for the hate speech, well, let’s just say they were living up to their “If 4chan found a bloomberg terminal” motto.
Koss Corporation and Nokia are the latest stocks to be hijacked. Meanwhile, Public.com had to halt trading at the behest of their clearing firm, Apex Holdings (who also happen to be the clearing firm for Robinhood). Public will not stand for it.
EDIT: M1 Finance (who is also under Apex’s thumb) has made a similar stance. They managed to reopen trading.
Where does the money come from?
In other words, the GameStop bubble will have the same practical effect as any other pump-and-dump scheme: transferring wealth from those who got into the scheme late to those who got into it early. The fact that there are short-sellers on the other side of some of these trades doesn’t change the analysis.
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GameStop short sellers have lost $20 billion in the past week.
Two interesting articles about it -
Turns out most of the action on this may have been Hedge fund on Hedge fund financial warfare, with smaller - but by no means small, we’re still talking some pretty rich people - retail traders may have just been a catalyst that they exploited.
Oh, and a LOT more evidence came out that WSB general crowd, even at the very start, had an alarming amount of nazis has come through. That’s easy enough to find, so I’m not linking it here due to the pretty vile nature of the evidence.