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Author Topic: How are you going to get rich, and what is rich to you?  (Read 5537 times)

Boss

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Re: How are you going to get rich, and what is rich to you?
« Reply #80 on: January 27, 2007, 08:45:49 PM »
While were on the topic of geting rich do any of you currently invest and if so what is your general strategy.

I'm an active investor but have no general strategy.  So far, I've done pretty well.  But it's sad to think that once I start law school I'll have to cash in all my investments to pay for it.

ouch!

are you sure thats the best move?

Well, apparently I'll be expected to contribute my assets to law school financing.  But I guess I'll have to decide whether it would be more worth it to keep my investments earning money, and to take out extra low-interest student loans.

I'm an avid investor, but I'm selling off some stuff as well.  It pains me to do it, but I'm trying to get to the point where I have zero debts (except our house) before going to law school. 
It's been brought to my attention that boss is my favorite poster  :-*

ciao-a-bunga

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Re: How are you going to get rich, and what is rich to you?
« Reply #81 on: January 27, 2007, 08:47:47 PM »
Also, rich to me means owning a townhouse in Dublin.  I suppose I could rent it out when I'm not visiting.

->Soon

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Re: How are you going to get rich, and what is rich to you?
« Reply #82 on: January 29, 2007, 09:03:20 AM »
 Investing in mutual funds can be complicated, but it doesn't need to be. If you want to spend your dollars wisely, buy low-cost index funds.

In any purchase, consumers make buying decisions using certain criteria. They at least want decent quality at a fair price. But a smart shopper's dream is to find above-average quality at a below-average price -- like buying a Camry for the price of a Corolla.

That adequately describes an index fund, which mimics an established benchmark, such as the Standard & Poor's 500 stock index.

The main alternative to buying an index fund is to buy an actively managed fund. Managed funds are operated by professional money managers who try to pick winning stocks. Winning is typically defined as beating the established index.

Think about that. You're paying professionals, and all they have to do is beat someone who does nothing. That's not an accomplishment. That's the least they could do for their pay. But most fail.

That sets up the longstanding argument between the stock pickers and the indexers. And it's no wonder consumers are confused. Evidence supports the counterintuitive ideas that passive management is better than active management, and you don't get what you pay for -- both of which are rarely true in other parts of consumers' lives.

"Professionals [usually] add value to our lives. The doctors, lawyers and dentists add value," said Gus Sauter, chief investment officer for the Vanguard Group, a leader in index funds. "But with money managers, the only way they can add value for one investor is to take it away from somebody else. Outperformance is a zero-sum game. So there is no aggregate value added.

"But people just assume that these professional money managers add value."

In 2006, 76 percent of active funds investing in large U.S. companies failed to beat a large-company stock index benchmark, the MSCI U.S. Prime Market 750, according to data from Morningstar Inc.

For large value funds, which try to pick undervalued stocks, 94 percent of active funds failed to beat the value index.

Here are reasons to buy index funds:

Quality. It was big news at the end of last year when one stock picker -- Bill Miller, manager of the Legg Mason Value Trust mutual fund -- failed to beat his benchmark. He had beaten the S&P 500 for 15 straight years.

So, it's extraordinary and newsworthy when a stock-picker can outperform an index over time. That means index funds are high quality because most actively managed funds can't beat them consistently. In many years, index funds beat about three-quarters of actively managed funds. And if you pick a fund that outperforms the index one year, it frequently has a hard time repeating that the following year.

Price. Index funds are cheaper than actively managed funds because you don't have to pay a stock picker or a bond picker. And index funds don't buy and sell stocks as frequently as managed funds, so the transaction costs and tax effects often are much lower.

Warranty. An index fund won't protect you from general market downturns, but you won't see years where your fund does terribly compared with the index. You're also protected against bad stock pickers who stray from the types of stock you want to own. So, like the factory warranty on a refrigerator, you're protected from something unusually bad happening.

"You have a great deal of certainty in advance that the index fund will provide the type of return you're looking for," Sauter said. "There really are no surprises. You get what you actually want to buy and you get it at a reasonable price."

Cost of ownership. A higher-cost managed fund isn't a one-time expense. You'll pay higher costs year after year because of the built-in expenses of the fund. It's like buying what you think is a nice car. But you know it will be expensive to operate, maybe needing frequent repairs and getting lousy gas mileage.

"The longer the time period, the more important that cost [of ownership] is," Sauter said. "Over 20, 30 or 40 years, the costs become extremely important."

Ease and convenience of use. The iPod digital music player is popular because it's easy to use. So are index funds. You could buy one mutual fund that will give you the aggregate returns of all U.S. stocks, for example. If you want to invest in the stock of foreign companies, you can buy an international index fund.

"A broad-market index fund should really be your default option," Sauter said.




some good advice....
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naturallybeyoutiful

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Re: How are you going to get rich, and what is rich to you?
« Reply #83 on: January 29, 2007, 08:09:11 PM »
Interesting question...

I believe that truly wealthy people do more than amass money and other assets.  They are also rich in the things that matter most.  Rich in integrity.  Rich in relationships.  Rich in generosity.  Rich in service.  Rich in humility.  Rich in wisdom.  Rich in forgiveness.  Rich in an understanding of the purpose for which they were created.   They have learned the secret of also investing their time and their talent in things that money cannot buy, and I can only hope to find a way to do the same!
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LawSchoolCutie

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Re: How are you going to get rich, and what is rich to you?
« Reply #84 on: January 29, 2007, 08:18:07 PM »
:) What's up! I love this thread. Looks like a lot of us don't think Law is the way to get rich
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Boss

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Re: How are you going to get rich, and what is rich to you?
« Reply #85 on: January 29, 2007, 09:09:04 PM »
I plan to become a loan shark.

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Re: How are you going to get rich, and what is rich to you?
« Reply #86 on: January 29, 2007, 10:41:31 PM »
:) What's up! I love this thread. Looks like a lot of us don't think Law is the way to get rich

not directly, no.
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Hank Rearden

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Re: How are you going to get rich, and what is rich to you?
« Reply #87 on: January 29, 2007, 11:07:01 PM »
Rich in an understanding of the purpose for which they were created. 

Which is?

 ???
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EEtoJD

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Re: How are you going to get rich, and what is rich to you?
« Reply #88 on: January 29, 2007, 11:29:18 PM »
Interesting question...

I believe that truly wealthy people do more than amass money and other assets.  They are also rich in the things that matter most.  Rich in integrity.  Rich in relationships.  Rich in generosity.  Rich in service.  Rich in humility.  Rich in wisdom.  Rich in forgiveness.  Rich in an understanding of the purpose for which they were created.   They have learned the secret of also investing their time and their talent in things that money cannot buy, and I can only hope to find a way to do the same!

I'm going to get rich by stealing from you. Then I'm going to buy you.
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ciao-a-bunga

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Re: How are you going to get rich, and what is rich to you?
« Reply #89 on: January 29, 2007, 11:47:44 PM »
Interesting question...

I believe that truly wealthy people do more than amass money and other assets.  They are also rich in the things that matter most.  Rich in integrity.  Rich in relationships.  Rich in generosity.  Rich in service.  Rich in humility.  Rich in wisdom.  Rich in forgiveness.  Rich in an understanding of the purpose for which they were created.   They have learned the secret of also investing their time and their talent in things that money cannot buy, and I can only hope to find a way to do the same!

I'm going to get rich by stealing from you. Then I'm going to buy you.

HAHAHA.  Totally credited.