
Ask HN: How would you invest money if you were 25 again? - 25money
I'm trying to learn the best way to invest my money but I can't find much that matches my profile (young, no long term perspective, decent salary, no debt).<p>I don't want to lock it in long term bonds because I want to be free to take it out whenever I want.<p>I don't want to risk all of it in stocks but I want a better yield than the net &#60;2% most of it is making now.<p>It's not much but enought to become pressing to invest (&#60;50k).<p>How would you do it if you were 25 again ?
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vabmit
I'd invest in a way that didn't consume thousands of hours worth of my time.

I'd do what Mark Cuban recommended people like those found on HN (young
entrepreneurs who want to launch a start-up) do: 6 month term back CD's:

[http://blogmaverick.com/2010/08/20/the-stock-market-is-
still...](http://blogmaverick.com/2010/08/20/the-stock-market-is-still-for-
suckers-and-why-you-should-put-your-money-in-the-bank/)

When I was in my early 20's the president of a start-up I was working for
(whom was a former professional stock trader) essentially gave me the same
great advice Mark Cuban gave everyone. He told me to not focus on investing in
the stock market because the amount of time I'd need to invest to do well
would never yield as good of a return as I could get from investing that time
instead on my computing and start-up related skills. He advised me to stick to
what I was good at (computers) rather than trying to take on essentially a
second job and build a second career in trading.

Looking back, I'm 100% sure he was absolutely right. In the last ten years,
I've spent thousands and thousands of hours reading books on the investing,
reading financial news, watching Bloomberg and CNBC programs, doing research
on companies, developing and testing trading strategies, doing simulated
trading, and trading. From all that time investment, my return was probably
-5%. It was almost flat. That isn't bad considering that the markets have been
so bad over the last 10 years. In fact, it's pretty good. But, had I spent all
those thousands of hours on start-ups I probably would have had at least one
big success by now.

I also would have been a lot less stressed and lived a lot happier life. I
vividly remember the sick feelings I got during the crashes and upon watching
the fallout from unforeseeable things like the bail-outs and the oil super
spike.

Even if I didn't do bank CD's, I could have just bought index funds and done
better with out all the work and wasted time. I think CD's are the way to go.
If you really want stocks, it's index funds.

I almost got involved in the real estate market and other types of
investments. I'm glad I didn't. Again, it would have taken a huge amount of
time investment to compete with other involved professional investors. And,
looking back now, I can almost say for sure I would have come out essentially
flat if I made very good decisions and with heavy losses if didn't.

~~~
lzw
Stock investing takes maybe 20 hours a year of time. Meanwhile, those bank CDs
are going to not let you keep pace with inflation.... If You had used bank CDs
anytime in the last decade you would have lost money in real terms.

I am amazed that people are so ignorant of history that this kind of dumb ass
advice gets offered and people think it is so wise, and of course the
dumbasses who know nothing of investing or economics mod it up.

Reminds me of the responses I've gotten in the past when I tried to share how
much success I was having investing myself-- was told that it was better to
leave it up to a broker or fund manager because "I'm and expert bin
programming ,they are experts in finance". I was shocked that people were
proud of their ignorance.

------
mipnix
It all depends on what your plan for the money is and when you might need it.
Don't play with your living expenses. Don't play with your beer money.

Assume that what you play with will lose value-that is not what you are
striving for but if you take that approach you're already a winner. You'll
sleep better.

Pay yourself first. Avoid credit at ALL costs.

Live beneath your means:

"Annual income twenty pounds, annual expenditure nineteen nineteen and six,
result happiness. Annual income twenty pounds, annual expenditure twenty
pounds ought and six, result misery." -Dickens

Have some money with which to make outrageous and stupid bets on the market.

Beyond that, there is no magic. Nobody knows what the market is going to do
and if they tell you they do, clench your sphincter muscle.

Diversify. Everything in moderation...including moderation.

Cheers.

------
richardw
Seriously, stocks. Over the long term it'll do fine. The last 10 years has
been a joke but it won't last forever. Focus on companies that pay an solid
and increasing dividend, and don't sell them. That will force you to buy
companies that you think will last. Some might not, so diversify. Read the
book "Rule #1" - not a bad place to start. Except do what Buffett does - buy
stocks that you won't sell (in general).

If you're worried about going all-in (which you should be) use value
averaging, in which you put some money in each month, but more as the market
drops.

<http://en.wikipedia.org/wiki/Value_averaging>

~~~
eru
If you really want to do what Buffet does, read "Security Analysis" by
Benjamin Graham, Buffet's mentor, or his more casual "The Intelligent
Investor".

If stocks have gone down, that's not the right time to sell. When stocks are
valued much more by the market than you think is reasonable, then selling
might be interesting.

Avoid transaction costs and other fees as much as possible.

~~~
richardw
I fricken love places you get downvoted by adding to the conversation.
Anyways, Buffett went far further than BG ever did. Charlie Munger played a
part in his transformation from picking up cigarette butts to being the
investor he is today. BG would never have invested in BYD, for example. Still,
for the original poster, a 25-year-old who is currently scared of stocks, I'd
still say Rule #1 is a good place to start. Security Analysis isn't exactly
light reading.

~~~
eru
I agree, and you are right, Buffet started out with Graham but doesn't follow
him any longer. (And I did not downvote you.)

I recommended Security Analysis because it is hard reading -- we are on Hacker
News here.

If you do not have time or inclination to read Security Analysis (or some
other heavy weight text), perhaps you should just buy some index fund instead
of picking stocks. (That's what I did by the way, despite having read that
book.)

~~~
richardw
Cool, I wasn't sure but thanks for the note :)

------
eru
I am not 25 yet.

> I don't want to lock it in long term bonds because I want to be free to take
> it out whenever I want.

Lots of bonds have secondary markets, that mean you can sell them at any time.
Of course, you find the most liquid secondary markets in government bonds ---
and those, in general, do not yield much at the moment.

> I don't want to risk all of it in stocks but I want a better yield than the
> net <2% most of it is making now.

Are you talking about nominal or real yield?

Whatever you invest in, make sure that you do not pay too many fees. (Low fees
are the primary incentive to go for exchange traded index funds.)

And of course, there's always the possibility to invest in yourself.

------
crsmith
If you choose to invest in stocks, invest in the S&P 500.

------
ww520
Real Estate. Real Estate. Real Estate.

Real Estate investment cycle is very long, 6 to 10 years, and very
predictable. You are 25. There are plenty of time to catch a few cycles.

~~~
fanboy123
wow i wish i had the ability to downvote.

~~~
eru
Please don't. Please use the voting buttons for expressing contribution to the
discussion, and not agreeing/disagreeing.

And real estate is not that bad an investment in general, if you do not rely
on it going up forever. The real problem is its illiquidity.

------
tjpick
when I was 25 I was getting 8% by shoving it in a savings account. I'd shove
twice as much in if I was 25 again.

~~~
eru
What was the inflation rate back then?

~~~
tjpick
3 years ago <http://www.rbnz.govt.nz/keygraphs/fig1.html>

~~~
eru
OK. In the Euro area you could not get such high rates on a savings account.

~~~
sireat
Actually, you could get very good rates, if your savings were in troubled
Eastern EU country banks (denominated in Euros, and insured by the FIDC
version of said country). Obviously, not as safe as Treasuries, but also much
less riskier than say a random 3rd world bank.

Wonder, how are Euro saving account rates in Greece these days..

~~~
eru
Yes. Though I wouldn't include New Zealand in the list of random 3rd world
countries.

~~~
pyarriv
The term "Third World" was primarily used by the US government during the Cold
War to refer to countries which were not aligned with the Soviet Union, nor
with the US. It has nothing to do with the state of development a country is
in although I am aware of its frequent erroneous use in the sense of
"developing country". The "Third World" included countries such as Qatar,
which, according to the International Monetary Fund, featured a GDP of $83,841
per capita in 2009 - ranking #1 world wide.

------
lzw
Normally, stocks are the way to go, but we are not in normal times. The best
place for you to put your money that fits your requirements is bullion. Gold,
silver or platinum, or a spread of all three.

Right now, were in a high inflation environment, with the interest rates being
forced down below the inflation rate. This is very similar to the scenario
that created the housing bubble, only there is no longer a mania in housing.
We have an ongoing sovereign debt crisis in europe, most of which is not being
recognized and an even bigger one in the USA which nearly nobody recognizes,
and hasn't even started yet.

This means that the dollar is poised to crash, interest rates will have to
rise sharply, and both of these are very bad for bonds. Stocks will rise in an
inflationary environment but this is really due to the decline in the value of
the dollars used to price them.

I'm sure I'm going to be down voted for saying this because it is popular to
believe that inflation is low (by changing the baskets of goods to pretend
prices aren't going up) and that the "recession is over" etc. Etc. It is
popular because it makes the government's job easier and the government wants
to just print money like never before without consequences. But there are
always consequences.

I've been around a long time, and when I was 25 I was not wise enough to save.
If I'd bought stocks then, it would have been a good investment, but having
many hears of investing experience now and having studied investing and
studied economics, I have learned a thing or two. After I made a killing from
knowing the housing market was going to implode, I got out of every asset with
counter party risk. I've done better than %25 a year holding the "dumbest",
least fancy investment you can- bullion. Meanwhile, the derivatives bubble is
just getting going, with one of the largest bubbles being in paper gold, btw,
such as etfs. Buy physical gold, silver and platinum, and hold onto it for a
couple years.

2008 was the rough equivilent of 1929. We're just now entering the first part
of the truly great depression. If you do want ot invest in stocks anyway, make
them Canadian mining companies or canadian royalty trusts. Two reasons-
commodity based businesses will do better, and thevcanadian dollar will do
better, so assets in Canada and priced in canadian dollars will provide some
protection from the decline in paper money.

We have about 90 years of inflation that the us has managed to export to other
countries. This means we've benefited from low cost of living by exporting our
inflation abroad for a very long time. This only owkrs, though, when you're a
major industrial power and the other countries want to finance your debt
because they believe you will be able to repay it.

The US has recently passed the levels where repayment is traditionally
considered viable, and has inly increased the rhythm of the printing
presses...at the same time we are longer the manfuacturing power we were.

This is going to be a very painful crisis.

~~~
eru
> Right now, were in a high inflation environment [...]

Have you checked inflation figures recently?

~~~
mipnix
I'm not sure that is correct.

The fear of inflation is there but the latest figures I am aware of put the
inflation rate at below 1.0% (If you never need to buy food or fuel). Some
even worry about the prospect of deflation.

~~~
lzw
The CPI is not inflation, it is government propaganda. Even it has shown %20
inflation in recent years if you read the report and do the math, rather than
listen to the talking heads on CNN. Impossible to have monetary deflation when
the money supply is expanding.

