KEY POINTS –
- Buy stocks from within your retirement account as a way to accelerate your earnings.
- Buy stocks in companies that you know and understand.
- Don’t buy a stock unless you are willing to hold it for 10 years. Otherwise, pass.
Episode 1, Segement 1 audio transcript.
CRAIG: So what she’s asking is what are the benefits to buying stocks in your 401k or your 457? Do you do any of that yourself?
AMANDA: So is she asking in separate from her 401K or separate from her IRA.
CRAIG: Within it in it.
AMANDA: Yeah, so yes, I do. I do that in both of my funds. I have a Roth IRA and also a SEP IRA, so I do almost exclusively stock picks in the SEP and I chose to go that route because I have a higher tolerance for risk in that account and I find that the returns are actually much higher on stocks than on any mutual fund that some financial advisors behind a desk is just putting together. I guess it gives me a little bit more sense of control as well because I’m a bit of a control freak. I don’t know what’s in these funds that you know, you pick a fund and it’s just says, oh yeah this index fund or this whatever fund is doing so such and such the last few years and you know, the returns are six percent or five percent year-over-year. And that seems just way too low for me. Yes actually I’d rather take a risk of something higher and if I lose some money sometimes and that’s okay too but in the grand scheme of things it’s usually a better return.
CRAIG: Actually have that planned on the next episode about how I go about picking mutual funds for my 457 and my 401k. That’s the most common question that people send to me is ‘hey, what fund should I be in my 401k and I’m gonna tell them how I go through. It’s really boring it really simple but my returns are proven and it’s like you said about financial advisors some of these people just want you to be in like 20 different funds or something like that is crazy. I’m literally in two in each of the accounts. I keep it simple. I let the fund diversify. I don’t defer find my funds if that makes sense.
AMANDA: Yeah, yeah. I’m a little different than that. I I like to do my own diversification and I aim for 40% to 50% return each year.
CRAIG: Well, yeah, see that’s why we have you here.
CRAIG: So what I do is I don’t do stocks currently in my two other Fortune 500 corporate. Accounts the 401Ks but in my 457 that this is where I get leary because I post a lot in our Facebook group for the show and I’m afraid a lot of people copy what I do because they see how successful I am and it makes me clear about why I do what I do. So I have almost 50% of my money in stocks. Yeah. Now the stocks that I have and I’ve been very open about the stocks I have but they’re boring but they’re long-term successful. Yeah, like Microsoft. I have Microsoft and that’s my disclosure and I bought it in the 80s it is currently we’re recording this in November it’s in the 145 range. It’s almost a double in a year and a half. I know that company. I research it. I’ve lived it since the early eighties. Amanda knows. I’m a geek. I I know Microsoft I would not buy something unless I’m willing to hold it ten years. That’s kind of like a Warren Buffett rule.
AMANDA: I don’t move my money around once I buy something. I it sticks, absolutely. I don’t sell anything.
CRAIG: Microsoft is the most valuable company in the world right now I mean they go back and forth with Apple, but it’s not going anywhere and the other one I have currently is is Walmart. I have Walmart and I’m a big believer in Walmart even though everyone’s going towards Amazon. What has turned out to happen is Amazon’s a little bit down but Walmart is on a tear so anyway, these are companies that I know and by the way, my sister is a general manager of our own Walmart, so I yeah, it’s not insider information, she just tells me about the robots that she has working in her store. They’re adding on her store they’re putting health clinics and all the Walmarts coming up this next year they’ve been testing.
AMANDA: I love about Walmart I can now go shop online for Walmart in same day pick up and I can have my dog in the car with me.
CRAIG: I don’t know but you know what my sister told me that is very very popular at her store people.
AMANDA: You know what’s great about that you don’t have these impulse buys. Anyway so um off topic let’s put the benefit that I have I’ve accelerated like this year the games have not been as great as previous years.
CRAIG: I mean we’ve had 10, 11 year run on these mutual funds and so they’ve been they’re doing okay, they’re in the low 20%, can you believe we’re working we’re some greedy kids we’re like we only get 20 or some percent on our mutual funds this year. In previous years I’ve hit 30 40 on some funds, but my stocks is what’s really on a tear right now, so. Yeah for me I like doing it in solid companies not not $10 stocks. I’m buying the big boys, they’re not going anywhere. Walmart’s not going anywhere, it’s the largest retailer and I buy the largest technology company and I’m sitting on it.
AMANDA: I believe in those the next 10 years so yeah, so I I’m different than you. I’m I must have a different risk profile than you. I I like to invest in companies that I think are that I believe in first of all, I have to ethically align with their mission absolutely so you won’t see me investing in companies that I have a disagreement and opinion on some of the political aspects of how they operate or ethically so I have to believe in it but I also like, you know, I’m working for a big startup so a lot of my investments are also in startups and technology that I see their vision and see where they’re going and how they fit into the landscape absolutely yeah. So if the if we had another calm bubble, I’m kind of, Screwed but. It Yeah I mean my stuff is in tech stocks
CRAIG: I see Jim Kramer these other guys they talk about Merck and these other ones I don’t know them and I personally will not invest. I don’t even invest in mutual fund unless I know what the top 10 stocks that they have. Doesn’t have Microsoft, Amazon, Google, Apple, I mean, I gotta know what the top 10 and and we’ll get into that in other show. Anyway, Lacey the reason I do it is this accelerates my earnings because times are good right now and and I’m taking advantage of it. This isn’t gonna last forever.
AMANDA: Yeah, exactly, that’s exactly what I think. Is it definitely accelerates the earnings Yeah plus I like to pay someone to manage a fund every quarter. I hate those management fees. Oh, they’ll drain you and we’ll talk about that another day too because it’s only six dollars but I just get annoyed when I see them.
CRAIG: It’s something you can do on your own anyway. Oh, hopefully later and we’ll be shipping you that electronic gift card to you a hundred bucks just in time for Christmas.
AMANDA: No, no, why didn’t you give her a Walmart gift card? Craig
CRAIG: You know what? You know what? I just thought about that. That was kind of stupid. Actually the online store at Walmart is actually really good now since Microsoft helped them out with that. Yeah, they’ve partnered from Microsoft obviously you can’t put the online store over Amazon’s cloud. They put over Microsoft’s cloud Microsoft and then have been working together and it’s paying off so anyway.
What do you think?
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