
Ask HN: Investments - aakriti1215
What do you use to invest your savings? How do you decide what stocks to buy&#x2F;keep?
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arca_vorago
Just head over to /r/wallstreetbets to see all the things to not do. Or...
leverage x3, yolo, and join in the yacht club. Up to you.

Want safe returns? They're smaller but have less risk. Index funds, CD's,
t-bonds. Want lots of money? You take a gamble.

Unless you are applying machine learning etc into higher freq trading, I'd
avoid stock picks in general. The market thrives off little guys shoveling
cash into the mouths of big movers who have faster connections and data
sources (bloomberg terminals), know more, and move faster on info. Algorithmic
trading accounted for over 85% of market volume in 2012!

If you are really interested though, I think the key differentiator for those
who still pursue more risky options is hedging techniques.

I'm just a sysadmin learning data science and wanting to apply it to the
market, only paper trading so far, so take what I say with a grain of salt.

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dsacco
I agree with the bottom line here, but there is plenty of opportunity for
market making strategies without going into high frequency trading (which
you're not going to be doing as a solo retail investor anyway). There are
opportunities where demand is available but liquidity is disproportionately
lower. You'll need a lot of capital, but as a smaller investor it might be
worth it for you whereas larger firms might not find it worthwhile (or know
about it, yet).

Just a clarification, because it seems like the most mentioned facet of what
traders do these days is something with "machine learning" and "high frequency
trading", but the actual use of either of those in active trading is small.
Even in algo trading, the "machine learning" is very often just rebranded
statistics, and not very complex statistics either (think linear regression).

That said, unless you have a real plan to do better than average in the
market, you probably won't, so the advice to just invest passively is right on
the mark.

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tedmiston
I'm a big fan of index funds or robo advisors (on top of index funds) for the
bulk of one's investments. A little individual stocks on the side and a high-
interest checking / savings account are a decent way to round it out.

If you're looking at investing five figures or more and unsure of allocation,
it's worth doing a bit of research or sitting down with a financial
professional.

Also remember that everyone has their own risk tolerances. If people give you
advice like "never buy individual stocks", that's just their way of saying
that their risk tolerance is below average. It's worth feeling out how much
you'd be comfortable losing in exchange for potentially greater rewards.

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fenici
My primary investment is in Australian residential property, secondary is
broad index funds (Vanguard ETFs), third is cash. I don't trade stocks, it's
too much like gambling IMO.

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jfaucett
I've been looking into Vanguard ETFs recently but it looks like the quarterly
dividends don't even make up for inflation. The total stock market ETF is
paying about $2 yearly at a market price of around $125.

What specific index funds do you invest in?

~~~
Gustomaximus
> Vanguard ETFs recently but it looks like the quarterly dividends don't even
> make up for inflation

The gain is expected from capital growth, not dividends.

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akg_67
I suggest you do some reading before getting started with investing.

Bogleheads wiki and forum has good information and knowledgeable forum
participants.

[https://www.bogleheads.org](https://www.bogleheads.org)

[https://www.bogleheads.org/wiki/Main_Page](https://www.bogleheads.org/wiki/Main_Page)

In addition, following books will give you good fundamental understanding of
why and what of investing.

Your Money or Your Life, Vicki Robbins ...

Millionaire Next Door, Thomas Stanley

A Random Walk Down Wall Street, Burton Malkiel

Personally, 95% of my investment portfolio is in Index Funds/ETF. The other 5%
I use as play money that keeps me engaged in investing, finance, and trying
out new strategies and investments.

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idoh
I have all of my investments in an S&P 500 ETF. I've been wondering - should I
diversify my ETFs or go all-in on the S&P 500? In other words, go large cap
only, or large + mid (and or small) cap?

~~~
akg_67
You may want to consider reviewing Boglehead wiki link I posted, specially the
section about Asset Allocation. If all your investment is in S&P500, you are
exposed to US Large Company stocks only. You may want to consider diversifying
your portfolio to other asset classes. At minimum, you want to setup 3
ETF/fund portfolio: Total stock market, Investment Bond, and International
Equity.

Studies have shown that a 60:40 stock:bond portfolio performs almost as well
as all stock portfolio but with lower yearly volatility.

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smt88
Don't pick stocks. Put your money in index funds.

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amerkhalid
100% of my savings are in index ETF or funds.

But I have a small yearly budget (less than 5%) for gambling with stocks. I
enjoy picking stocks and reading financial news. I got lucky with a few picks
but mostly it is a wash. This is a hobby for me, just requires a lot of
discipline to not go above yearly budget.

As for how I pick stocks; financial news, regular news, if I like the company
& its CEO. I definitely read up on CEO's biographies. Finally, I would do
financial analysis, mostly avoid companies with a lot of debt, or very high
PEs.

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et-al
Here's a similar Ask HN from five days ago if you didn't see it:

[https://news.ycombinator.com/item?id=14256980](https://news.ycombinator.com/item?id=14256980)

(I recommend using the search box at the bottom in the future.)

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aakriti1215
Thanks! I didn't see that one, I'll be sure to search first in the future!

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1ba9115454
Businesses I build my self. In a way when you buy a stock you are buying a
fraction of a business at a premium rate.

Why not invest in your own business, you get total ownership at a huge
discount to the stock market.

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zerr
How to invest in index funds as a foreigner residing outside US?

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barelyusable
Vanguard automatic investment in S&P500 index fund. Make it every week to get
52 investments per year. Increase the amount of weekly investment each time
your income goes up.

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miguelrochefort
100% of my savings are in ETFs (XAW.TO and XIC.TO).

I'm looking at getting back into cryptocurrencies (Bitcoin and Ethereum).

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bsvalley
Buying stocks with your savings is not good at all :)

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kazinator
Buying stocks with all your savings when you're close to retirement is
probably bad.

Buying stocks with some of your savings when you're 27 is probably not too
bad.

