What kind of performance should I expect?

[pdisme]

I know some of you guys are getting pretty impressive returns but in somewhat risky endeavors; what would you feel to be an acceptable return over the past nine months from what I'd call mild to medium risk? I'd like to gauge the performance of my financial advisor.

[RAiMA]

I wouldn't mind knowing just to scope out the competition :p

[pdisme]

Well, I put in a fixed amount of money each month with the maximum I'm allowed to contribute going into life insurance where it is then invested tax deferred, the rest goes into IRA. The value of the account continues to increase and I'm accumulating more shares in all of my holdings obviously, but there's been small losses each month for about the past nine months; without giving numbers about the account as a whole, I'd say the average loss is equal to about 10% to 20% of what I'm putting in each month. Obviously this is a very small amount when compared to the value of the account as a whole but I mentioned this concern because I felt like I was throwing money away when a CD or something like that would be giving me a positive return even if just a few percent, but he said I'm in for the long term, I'm accumulating shares at a time when it's good to be buying and as the market turns around I'll be in a much better position. I assume he's right, I just don't like seeing negative numbers. :)

[RAiMA]

Most people don't like seeing negative numbers as the physchology doesn't allow them to handle the situation well. When people manage their own funds, they have to be able to deal with it and see it as a numbers game. As long as the gains are more than the losses, then it's fine. In order for this to work, the profits generally have to be big and the losses small, so you have have more losses than gains trades, but still make a profit.

There was a guy in taiwan or something that had a winning trade ratio of 30%, but he was still made enough money to send the country's bank broke. He's no longer welcome in the country :p

If you don't want any losses, go for the CD.

I myself have started managing my own so called IRA. In australia it's called a self managed fund. I'm managing it at a super conservative level. The majority of my money is in CDs and a small percentage is in commodities (even then, I'm only trading about 30% of my capital in the commodities account). So far the commodities is earning about double what my total CDs are earning per month. Well worth learning about investments and the physchology behind it.

[Shawn]

Our accountant keeps pushing a product on us that's a mutual fund that on average sees 12% returns a year over the past 20 years or so. But on his chart which shows since like 1920 it went down several times, but over the long haul it has increased like he said. That said, I still don't want to invest in it right now. Luckily, I'm able to put that money to better uses in my business and see better returns, and then the 'safe' money goes in 4-5% money market accounts.

[zzzzdoc]

Well, I put in a fixed amount of money each month with the maximum I'm allowed to contribute going into life insurance where it is then invested tax deferred, the rest goes into IRA.
Don't you have your own corporation? I thought you were an S-Corp? If so, why put in the smaller amount for an IRA when you can contribute up to $45K/year in a Profit Sharing Plan / MPP / SEP / etc???

I get to put my old guy hat on here for a second, but nothing beats the compound interest of putting the max away every year from the second you start a real job. You can never make up those returns later, no matter how big a home run you hit. And most of investing is really being a HOF singles hitter. That's what gets most people comfortable retirements.

And yes, the Murci was bought by a home run. Sometimes the curve ball just hangs there waiting to be hit out.

[pdisme]

Don't you have your own corporation? I thought you were an S-Corp? If so, why put in the smaller amount for an IRA when you can contribute up to $45K/year in a Profit Sharing Plan / MPP / SEP / etc???


Yes on the s-corp and yes on the SEP; but we don't contribute the maximum to that because we have two employees who both have to receive the same percentage contribution that my partner and I give ourselves due to when they were hired so we limit the amount contributed. Employees brought on after a certain date don't have to be given any of the SEP money for whatever reason, I can't remember all the rules on that.

[zzzzdoc]

Yeah, I've run into that scenario before. It's a real PIA.

Can you piggy-back another type of plan on top, like a MPP or DC plan? Seems like a waste to not be able to max it out. Especially considering that you'll never get any Social Security.

[pdisme]

I'll ask on the other two, not sure on that.

Hillary says she's going to fix SS and everything else within the first year of her presidency so we don't need to worry. :grinning-smiley-003