Paying someone to invest my money (a "learn me")

Driven5 said:

In reply to RX Reven' :

I am not disagreeing with you... Merely answering the question you asked. Yes 9% is noticeably better than 7%, but 7% is considerably better than 3.625%.

Hi Driven5,

Thanks for being patient with me...I think I'm raging against the cookie-cutter X% in bonds by X age drivel and you inadvertently caught some of the crossfire; sorry about that.

How about this, if you can retire with a significant amount more than you need, say 25%, you've probably got enough buffer to be able to go all equity.

Wow!  I haven't seen this thread in forever!

So, I still know next to nothing compared to those who do, but i thought I owed you guys an update as to what happened since I started this and now:

1) We signed up and got an account with Schwab.
2) We decided we liked the "Dogs of Dow" strategy, and so far it's been doing us pretty good.  (It did take a hit when COVID was at its worst)
3) Based off the success we've had with the dogs, and after watching them for a while, we decided to invest a large portion of our savings in VOO and SPY (both are S&P500 ETFs), both are doing wonderfully.
4) We have bought a couple individual stocks because of dips we perceive as "recoverable" (and mostly due to COVID) but we didn't put a whole lot of money in them (BB and RYCEY, to be specific).  BB is basically dead even from when we bought it, RYCEY is up 50%.  When we sell those, we'll put it back into the dogs or S&P.  Or maybe we'll just hold.  Who knows.  

Some things we've learned on the way:
1) Marathon, not a race. 
2) If you make a stock tracker in excel (or similar), check it at the beginning and at the end.  I used to check that thing nearly every day and what a roller coaster that turns out to be.  Now, I check it at the end of the year when it's time to re-up the dogs, and write a report for Mrs. Hungary.  It makes me feel special
3) Stay away from anything that's "trending".  I mean, there's a chance that jumping on the Reddit train will make us some money, but we now run away from anything that's being Meme'd.
4)  we haven't lost anything unless we sell, or unless whatever caused the loss becomes unrecoverable (this goes with never sell your equities out of fear).  Boeing stock took a huge hit, and my manager had a BUNCH of money there.  He sold it when it dropped to $120 (from $320, pre-covid/737max).  Now it's back up to $220.  Boeing aint going anywhere, and he wasn't retiring tomorrow, that was a stupid sell.
5) I do terrible when trying to buy individual stocks.  It's great to look at history and say "oh man, it looks so easy".  It' aint "so easy" in real life.  Hence the dogs strategy...
6) Going with #5.  That guy in my office who tells me he just made $XXXXXXXXXX today, and $XXXXXXX last week, and umpteen million on some Chinese stock?  He probably didn't.  In fact, he probably looses more money than he wins, I just never hear about the losses.  In fact... both guys in my office that say that crap show up at the same office to do the same work I do every day.  By my calculations, they should be Warren Buffet by now.  Marathon, not a race.

Anyhoo, if any of the above is dumb please tell me so I can fix it.  I do want to say that you guys are awesome and I have the first few pages of this thread printed and in my "10-Year Plan" binder (It's called "Ice Cream Shop in Spain", as kind of a joke) and so far it's proven to be super helpful. 

Thanks everyone, I owe you pretty big for getting me started in the market.

Cheers!

That's awesome! I'm so glad you're taking care of your own money, it's one of the most important things we can do ourselves in this modern era. Your strategy is way more active than mine but it's working for you so stick with it. Good job, and enjoy that ice cream shop.

In the years since my initial post here, I've simplified mine and even the "play" money is in vtsax. It's done extremely well and we're just about at the end of our 10 year plan, with it surviving, despite lots of big life changes.

I was just gonna say that there are lots of people that will let you pay them to invest your money.  Very, very few will beat the market or even do as well as you can with some commonsense investing practices.  Glad to hear you're doing well.

In reply to 1988RedT2 :

There's a scene in an old Woody Allen movie from the 70's where he's at a cocktail party...

Girl          "What do you do for a living"

Woody    "I'm a financial advisor"

Girl          "Oh, that sounds so interesting, what exactly is that"

Woody   "Well, basically, I help people with their money until there's none left"

In reply to Hungary Bill (Forum Supporter) :

You look to be on a good track to me. A couple of minor thoughts though...

I'd caution against allocating a large portion of your portfolio to the Dogs. It's a concentrated, rather than diversified, risk strategy. While over certain timeframes it has certainly out-performed the broader market, that can quickly be nullified when just one company (GE, Kodak, Sears, etc) takes a dive. My understanding is that the highest dividend yield funds of the group are generally also the most under-performing (struggling) companies... Thus their being labeled 'dogs'. So you're basically betting on a subsequent recovery bounce that historically and statistically is not exactly a safe bet. These days I don't think the risk vs reward is generally not considered all that favorably when compared against the total market (my preference) or S&P, which I think is why there are so many similar index funds but the DotD funds seem to have all but disappeared. If you're interested in the Dow, I'd think you could find less risky (more diversified) funds that still track the same DJAI target.

I also don't see much benefit in having redundant funds. VOO consistently provides (slightly) higher total annual returns than SPY. So if you want an S&P fund, unless its use is being forced by workplace retirement account option limitations, I'd put it all in the former and drop the latter.

Driven5 said:

In reply to Hungary Bill (Forum Supporter) :

You look to be on a good track to me. A couple of minor thoughts though...

I'd caution against allocating a large portion of your portfolio to the Dogs. It's a concentrated, rather than diversified, risk strategy. While over certain timeframes it has certainly out-performed the broader market, that can quickly be nullified when just one company (GE, Kodak, Sears, etc) takes a dive. My understanding is that the highest dividend yield funds of the group are generally also the most under-performing (struggling) companies... Thus their being labeled 'dogs'. So you're basically betting on a subsequent recovery bounce that historically and statistically is not exactly a safe bet. These days I don't think the risk vs reward is generally considered all that favorably when compared against the total market (my preference) or S&P, which I think is why there are so many similar index funds but the DotD funds seem to have all but disappeared. If you're interested in the Dow, I'd think you could find less risky (more diversified) funds that still track the same DJAI target.

I also don't see much benefit in having redundant funds. VOO consistently provides (slightly) higher total annual returns than SPY. So if you want an S&P fund, unless its use is being forced by workplace retirement account option limitations, I'd put it all in the former and drop the latter.

You're 100% on your statement about the dogs.  I liked this strategy initially because it had a healthy track record and it was something that let me touch it (so I felt like a real investor).  We were absolutely RAKING it in before covid and that was great.  But like they always say, the worst thing that can happen to a gambler is to hit it big early on.  Looking at my trackers, we showed slightly over 20% total return on investment after the first three years, before dropping to near 10% post covid (Hence the reason we started in on the S&P's).

Regarding the redundant VOO/SPY.  We did this because we were dealing with two different buckets of money and don't yet know how to put both of them into one pot and keep them separated (it's important to us that we absolutely do not mix the two for our budgeting purposes).  We noticed that, like you said, VOO tends to out perform SPY by a small margin so we allocated the buckets accordingly.

With all that said I've calculated the percentage of my holdings and here's where we stand:

VOO/SPY= 85%
Individual Stocks (RYCEY/BB): 8%
Dogs of Dow: 7%

With regards to growth based off our original cash investments (this is cash invested/current balance):
VOO/SPY=+5% (since June/July)
Individual Stocks: +17%  (Since May for RYCEY and August for BB)
Dogs of Dow: 16% (Since 2017)

I think that the above all, the most important takeaway I can communicate to anyone who reads this in the future is just how much different this is with comparison to our previous savings strategy that was a combination of CDs and a Money Market Savings account.  Prior to our investing we were making decimal points of growth from interest.  After investing, our returns have grown exponentially in comparison.  We're not the type of people who are ever going to get rich off the market, but it has helped us 1-million percent in our journey to financial independence.

I usually don't come to this part of the forum because I come here for cars but, for some reason, I ventured off topic today and found this. I'm a financial advisor and while we've had great success over the years in terms of returns that's not why people hire and retain us. If that's what you're most concerned about, have the capacity and interest to do your own research and are good at sticking to a plan, you probably don't need an advisor. We tell people that every day and actually often help them set up their own brokerage accounts at Schwab, etc. and provide direction on what makes sense to buy. It's totally doable.

One of the primary areas in which we provide value is not making the short-sighted and often emotion-driven decisions that most investors make on their own. There's great conversation in this thread about how to be successful when investing on your own. A lot of people conflate investing and trading which are two totally different animals. Lots of people start out on a path of investing, end up trading and that's part of why an average investor will under perform really whatever benchmark they are striving to beat. 

I assume it would be less so in this community of DIYers but we have many clients who feel they don't or actually don't have the time/capacity/interest in doing it themselves as capable as they may be. I'm a financial advisor and could totally do my own taxes but have zero interest and pay someone to do them for me.

What we harp on is this: D-E+T

Diversify (that can mean something different for every client re: why include bonds discussion), subtract emotion, add time. 

As discussed in this thread, literally anyone can be well diversified and can do so in an exceedingly inexpensive manner with index funds. In some ways, anyone can give themselves time - start saving earlier or work longer but also, give whatever strategy you've put in place time to work. 

The hardest part of the equation is always keeping emotion out of your decision making. Don't try to time the market and don't make investment decisions reacting to an event (elections, etc.) or trend.

In reply to Hungary Bill (Forum Supporter) :

The best part is that you're no longer losing money after inflation!

Regarding the VOO/SPY separation of funds, here are two potential options off the top of my head. For single account holder control, you should be able to create individual sub-accounts for each source of funding. For multiple account holder control, and extra separation, you should be able to each have your own separate account and have them linked to allow single-account visibility and even single-account control if you want.