Looking for advice on Investing/How to get into Investing

[CaptainJ]

Currently 18 years old, going to be leaving University with a degree in History and student loan debt. Quite the burden I have to bear to take me into my financial world.

Looking for advice from Professional investors/successful businessmen. What plan of action should I take?

I've been reading around the basics of investing and nailing the mindset of a rich person, now i want some practical knowledge. I'm planning on using Real Estate investment as my means of accumulating wealth, but I am wondering if the stock market would be more effective. Ofcourse the big problem will be getting start up capital, seeing as i don't know what jobs i will be able to get with a history degree.

So can anyone give me some recommended practical reading? Maybe their own experiences? Tips, a guide etc. Any help or discussion is appreciated as I'm just looking for any opportunity to talk about investing and wealth.

Cheers

 

[CaptainJ]

Come on, not takers? All these wealth threads popping up, yet no one is willing to shed some light on their work and share their expertise?

 

[synergy1]

I am not a professional in the finance sector, and my background is in engineering. disclaimer aside, I have two solid book recommendations for you.

1- Buffetology Recommended by someone else on this forum, I picked it up and read it. I understand the basics on how to value a company, and what goes into the research prior to buying stock ( if thats the path you seek)

2. Intelligent Investor Buffet read this at age 19, and considers what he got out of it to be a great influence for his success. its very, very dry, but the advice is timeless. Consider it supplementary background material for the first workbook I mentioned, but it goes into pretty grueling detail. be sure to be up to par on your economics...

As for amassing large amounts of wealth, I can offer you mere speculation since I am not a millionaire as of today. I feel that by understanding the markets, how the financial system works, and how money has been made by successful people, one is able to set the right course. My role model is Buffet, and I learned what he did to make that fortune. I have set my course, and am hoping it was the right one!

Message boards are a two edged sword. On one hand, you have folks who offer genuinely good advice. On the other, you have idiots like STR8UP who offer horrible advice which could crush an unknowable kids life and get them in trouble with the banks ( see his post about leveraging debt that myself and duffdog tore apart).

good luck!

 

[OzyBoy]

Do a search on the web. There is a lot of information out there... and also a lot of scams too. :wave:

 

[CaptainJ]

I am not a professional in the finance sector, and my background is in engineering. disclaimer aside, I have two solid book recommendations for you.

1- Buffetology Recommended by someone else on this forum, I picked it up and read it. I understand the basics on how to value a company, and what goes into the research prior to buying stock ( if thats the path you seek)

2. Intelligent Investor Buffet read this at age 19, and considers what he got out of it to be a great influence for his success. its very, very dry, but the advice is timeless. Consider it supplementary background material for the first workbook I mentioned, but it goes into pretty grueling detail. be sure to be up to par on your economics...

As for amassing large amounts of wealth, I can offer you mere speculation since I am not a millionaire as of today. I feel that by understanding the markets, how the financial system works, and how money has been made by successful people, one is able to set the right course. My role model is Buffet, and I learned what he did to make that fortune. I have set my course, and am hoping it was the right one!

Message boards are a two edged sword. On one hand, you have folks who offer genuinely good advice. On the other, you have idiots like STR8UP who offer horrible advice which could crush an unknowable kids life and get them in trouble with the banks ( see his post about leveraging debt that myself and duffdog tore apart).

good luck!

Thanks I'll check out those books. Although, I don't consider STR8UP's advice horrible at all, in fact it got me off my ass to consider investing as a means to avoiding the rat race. Rofl, I thought he crushed Duffdog's "You have to be lucky to be wealthy, nothing else governs it at all" argument. And I trust his advice because it has worked for him and dozens of other wealthy men. Someone did argue it was the economic time period that made his wealth possible, but those people are forgetting that the economy goes in circles and that each time period, recession, depression or boom has it's own opportunities. Creativity was the big thing he was selling, no doubt extremely important for making wealth.

I would do a search on the web if I knew what to look for, without finding some get rich quick scam. Plus on the message board it's much more personal and valuable getting advice from people.

 

[synergy1]

Thanks I'll check out those books. Although, I don't consider STR8UP's advice horrible at all, in fact it got me off my ass to consider investing as a means to avoiding the rat race. Rofl, I thought he crushed Duffdog's "You have to be lucky to be wealthy, nothing else governs it at all" argument. And I trust his advice because it has worked for him and dozens of other wealthy men. Someone did argue it was the economic time period that made his wealth possible, but those people are forgetting that the economy goes in circles and that each time period, recession, depression or boom has it's own opportunities. Creativity was the big thing he was selling, no doubt extremely important for making wealth.

I would do a search on the web if I knew what to look for, without finding some get rich quick scam. Plus on the message board it's much more personal and valuable getting advice from people.

I don't disagree with the idea of being fortuitous, opportunistic and all that, but it kind of goes without saying. What he was preaching was a R/E market that could do no wrong ( It did) by borrowing easy money ( no longer easy). For some, it no doubt worked...especially if they got out before the sub prime crap and oversupply hit. The residential and commercial sectors still have plenty of supply out there too!

On a side note, I really would love to see how successful STr8 was. He posted a lot of advice and never follower through by showing examples of success. In a way, I hope he made out okay..he seems somewhat insecure and miserable so him getting some level of success at least alleviated any financial woes he might have had.

 

[strong like bull]

a few things regarding str8up:

his advice was to wisely acquire as many income producing assets as possible, as quickly as possible, in order to reach wealth at an age early enough to enjoy it.

he always advised to do homework before investing into a property. why? 'cause the money is made when you BUY, not when you sell! if you dont do the due dilligence and get into an investment, "hoping" in time itll become a good deal... youre askin' for trouble.

also, the subprime meltdown wasnt caused by people like str8up. his advocation of interest only loans was in the sense that as opposed to paying a $1,000 30yr fixed, you can pay a $600 interest only and invest the $400 difference. leveraging it to buy more income producing assets or wisely investing it into something with good growth, liquidity and safety in the longrun, you actually come out ahead.

thanks to the wonders of compounding interest, if planned correctly you could pay off that house even SOONER if you chose to use that invested money.. as opposed to making the 30yr payments. which is ironic, considering many people take the traditional mortgage because they want to pay off the house sooner... lol

the meltdown was caused by people who got an interest only or an ARM because that $600 was the most they could afford. they werent investing a $400 difference. they were operating on the financial "red line," one slip and they were falling behind. also note that people who were too "reponsible" or "old fashioned" to take their equity out of their homes and re-invest it.. ending up losing it! thats the result of being too afraid of risk to make any real money.

str8ups advice of responsibly acquiring real estate is as golden day as it was then. in fact, probably even moreso. why? because with housing values so low, you can buy property dirt cheap. houses with a $600 mortgage that rent out for $900 are all over the place... and if you had ten of them, all rented out with tenants paying down your investment.. how far ahead could you be ten years from now?


anyways, i just finished a book that may be of interest to you. its called "Millionaire By Thirty: The Quickest Path to Early Financial Independence". its part of the Missed Fortune and Last Chance Millionare series. very interesting strategies using real estate as the basis. very sound concepts and its a shame more people dont know of them!

i dont want to spoil the read for you, but the concepts show how and why youd acquire properties, then take out the equity and re-invest it. a lot of people would have been better off today, if they had taken out their idle, no rate of return equity and re-invested it on a regular basis... whereas now, after market going down, they cant get to it when they need it.

also check out www.creonline.com , www.biggerpockets.com


good luck,
SLB

 

[ATX1001]

A few things off the top of my head..

There's no such thing as get rich quick but there is such as thing as get rich slow.

Understand and utilize compounding

Read rich dad, poor dad but take it with a grain of salt.

diversify (which is hard to do when you don't have much money I know) across a broad range of asset classes.

Pay off all high interest debts first (eg. credit cards).

and most importantly don't do what I did which was to buy/read all the books then do nothing. 1 book + action for teh win, 100 books + kb jockey for the loss.

 

[OzyBoy]

You can also invest your money at the casino. Just don't bet the farm

 

[CaptainJ]

Cheers SLB. I'll be sure to check out that book.

One thing I really need to learn about however is No money down. I have very little in the way of money and most if not all mortgage packages demand a 20-30% down payment. So i don't really understand how no money down works, am i negotiating it with the owner of the property and paying him monthly? Or do i still need to take out a mortgage?

 

[strong like bull]

thats where the creativity comes in. do a search on google and browse real estate investing websites; theres different strategies to those who want to buy, but cant satisfy traditional credit/down payment requirements.

one example is doing a "subject to" where the deal is "subject to owner carrying mortgage," or "seller financed." basically instead of going to a bank for financing, you work out a deal with the seller that involves him carrying the loan and you paying him. everythings written up on contract and the deed is yours, yet he carries the loan. at that point, everythings negotiable including down payments. it can also be worked in that within x years youre required to acquire traditional funding for the rest of the mortgage, at a time when youd be able to qualify.

is everyone willing to do that? no, but it happens. it would typically be a house that is For Sale By Owner, whos owned the house for quite some time and just wants their money out of the house, or someone who has to relocate, or needs to sell asap for an urget reason, etc. the majority of people want to use real estate agents and sell their homes the traditional way, but even on craigslist ive seen FSBO listings advertising seller carrying the note.

another example.. it may be a nationwide program, but out here in AZ we have houses for sale that have been acquired by HUD. foreclosure types, advertised at a relatively low cost. part of the program though is that HUD pays up to 3% of closing and loan costs, with only $100 down payment. depending on the cost of the house you could get into it with maybe $2500 tops.

heres a link to one on craigslist for 132k. 3 bed, pool, fireplace, rv gate, yard, etc.

http://phoenix.craigslist.org/nph/reb/1664150201.html

whats more, ive seen many similar listed at 70k-90k. the houses typically need a bit of TLC, but for getting them at cost theyre usually a good deal. part of the HUD deal is that you have to live in the house for a few years as this program isnt tailored for investors. but as a first time buyer itd be a great starting point and im looking to get into one in the near future.

times change but nothings impossible for those who believe theres a way. str8up was right on the money about a lot of things. even today, theres still ways to get into a property no money down you just have to be willing to make it happen.

-SLB

 

[CaptainJ]

Cheers for clearing that up SLB, I thought that was how it worked.

So I'm going to University next year, and i'm thinking, would it be impossible to actually begin investing in the second year?

The Uni has rocketed up from low conditions to the top 10 spot. It's got loads of private school kids living out of daddy's purse and I'm thinking the small town is going to boom (It's renowned as a successful area for growing businesses). My plan of action is Student accommodation. It's an area with high rent prices, but I bet the actual house prices would be low and rent would easily support monthly repayments with profit left over.Those private school kids pay through the nose and thousands will need new accomodation each year. If you register with the Uni, they will also advertise it to the students. So, plan of action.

Buy a house for my second year accomodation, live in it and rent it out to friends who I'll share it with? The problem is that i have quite limited time in which to find and finance the house, and I kind of want to live it up carefree for a while. Would it be too impractical getting started so early? Should i wait until I've graduated before i begin?

 

[strong like bull]

it sounds like youve got the right idea in regards to the student accomodation housing. supply and demand!

i understand where youre coming from about wanting to life care-free for a while. im about to turn 25 and finally putting myself in position to buy my first house and eventually leverage that to pick up a 2nd, 3rd, etc. funny thing is, ever since i was 17/18 ive wanted and seen myself happily and successfully owning multiple properties as at LEAST a "side business" or long term investment plan. i always felt deep down long-term, that is where i would find my place.

so why did i wait so long to get started? a large part was i wanted to live care free for a while. by the time i was 19 i was working at one of the hottest bars in phoenix, which was fully stocked with some of the hottest, wildest girls in phoenix. lots of parties, trips to mexico, etc. loads of great times but it all came with a price!

i was 22 by the time i grew out of it. and thank god i got out when i did because in the process of living the "dark side" lifestyle i racked up quite a bit of debt, earned myself a DUI and went through more trouble than was worth it. ive learned from my mistakes and understand the importance of discipline, vision, building upon dreams and all that happy stuff. but its taken a couple years just to re-align myself financially and get back on track.

looking back, i dont regret the wild times i had. actually, i would regret NOT experiencing them. but it wouldve been wise to not have been as reckless.. i could have started earlier with building my future and eventually every man realizes, the most precious asset of all is time. the power of time and compounding interest creates a snowball effect, where the sooner you start and faster you allow it to grow, eventually it gets so big that someone starting 10yrs after you did would have to dedicated multiples more in order to catch up.

as far as your situation, only you will know when youre ready. just understand that the longer you wait to start, the longer you wait to reach your goals. i didnt realize until it already happened, but life can get busy. FAST.

find the balance. what if you were able to acquire a house in that student district, have one room for yourself and rent out the other rooms to students at a good enough rent to either cover the mortgage and live rent free, or give yourself a great deal on a place to stay? win-win for all and if desired you could just sit on it for a few years until youre ready to take the next step. by the time you graduate you would already have one great asset in your pocket.. whereas if you waited to after you graduate before starting, you lost a few years worth of potential growth.

plus, if the town is going to boom the way you think, youd definitely want to get in asap.

good luck

-SLB