Everybody talks about spending the money they take out of their bankroll.

I really, really prefer to invest it.

If I can take out $1,000 per month, and I spend it, then it's gone.

If I can take out $1,000 per month, and I invest it in something paying 10% per year, every year, then after just 1 year I have put away $12,000 and am earning $1,200 per year off of my investment -- that's another $100 per month. Start compounding and things get really nice after a few years....

Right now, I am throwing all of my bankroll profits into Novastar Financial (NFI).It's always risky to put a lot of $$ in one place, but Novastar right now is paying more than 25% in dividends. Every $1,000 I invest, I expect to see $250+ coming back to me over the next 12 months, and most likely every year thereafter.

(NOTE: THIS IS NOT A RECOMMENDATION TO BUY THIS STOCK!!!! I am not even close to being a professional investment advisor, and if I were, I would definitely not tell anybody to invest a large % of their money in any one stock. And if I did, I would definitely not pick Novastar, which is in a very strange situation that you have to understand very well before committing money to it.)

Anyway. What, if anything, are the rest of you guys investing in these days?

I went into a bit of a shell the last year or so and have been hoarding precious metals. They performed very well. I am simply going to hold as a hedge, but have been looking to get back into the stock market (I dabbled in day trading during the late 90s, sold everything in 99 to pay for law school, getting out a few months before the market tanked. That money was far easier than poker - any monkey could do it).

I am thinking about a straight forward approach, investing in Spiders to start, dollar cost averaging over 12 months, and looking for aggressive emerging market funds after that to diversify unless something better comes along (such as a wave of real estate foreclosures). I do not have the desire to invest much energy into specific stock evaluations like I did 8-9 years ago. Too much time away from poker.

BTW - why are you putting all of your eggs in one basket? A fund tied to an index, like Spiders, is far safer. Investing too heavily in one company or one sector is no different than playing above your B-roll in a high variance game. Could work out very well, but the risk of ruin is not acceptable.

Re: Kenny's question: What shobute said. Both parts.

I am constantly WAY over-rolled for the games I play. I should probably move up but I'm a wuss and really enjoy playing games I know I can crush with minimal variance. I've had sort of Iceman-like troubles, though several levels lower: higher games have had higher variance and not enough better winrate to make it worth it. So I have a money sitting around doing nothing from day to day. I can leave that $$ in neteller earning zip, or I can send it to work in my bank account earning like 3% interest, or I can invest it somewhere that will likely pay much better returns, though with a little more risk.

And you don't have to invest in stocks. But mutual funds are relatively safe and easy. You don't have to trust any stock broker: just diversify into everything.

You can buy like four different mutual funds and basically own a piece of most things going on in the world. Index funds do not try to pick stocks, they just own a piece of (almost) every security within their sector.

The easiest way would be something like this:

Buy one mutual fund that owns a cross-section of every stock in the USA;
one mutual fund that owns a cross-section of every major non-USA stock;
one mutual fund that owns a cross-section of American bonds;
one mutual fund that owns a cross-section of every major US REIT (real estate investment trust).

If you really want to, you can throw a small % of your portfolio into gold too, though I never have bothered.

Vanguard mutual funds are about the largest in the world. Their specialty is low fees: they take as low a cut as possible of your earnings in order to support the people who manage the money. FWIW, my mutual fund investments are all index funds through Vanguard. The best performing of late for me has been the foreign stock fund. I'm a believer that the USA's fiscal policy (massive, massive budget deficits as far as the eye can see, and no political will to change that) has to lead to inflation and a devaluation of American currency over the long run, so I'm happy to have a chunk of my money invested in stocks valued in other currencies.

A point that is frequently missed in these types of discussions is that a lot of people, especially young people and others that heve never had money to invest before, is that while you may not be inclined to start investing, you have already made an investment decision. You choose to leave your money in Neteller or a checking account, gaining 0% interest (and some banks charge fees for checking accounts). That is an investment decision. Simply by the fact that you have money, where you put it is your investment strategy, whether you have made the decision consciously or not.

So, if you are going to have money, you have a need for a reasoned investment strategy.

My $.02 - Especially for you young single guys, you have a very high tolerance for risk in your investment strategy. There is nothing wrong with a 100% stock allocation in your investment portfolio, diversified among Vanguard type funds, and biased toward emerging foreign markets and emerging technologies.

You do not need thousands of dollars sitting in Neteller. Almost all stock funds are liquid, so if you ever do need to tap your investments after a bad run at poker, your sell orders clear every business day, the money is in your bank the next day, and in Neteller within the week.

You do not need a full service broker unless you have a mid-seven figure portfolio and special needs. You can use online services and discount brokers. Some online services even have initial deposit bonuses.

The last point I would make is that if you have any high interest rate debt, pay that first. Paying debt gives you a guaranteed rate of return on your money equal to the percentage interest rate on the debt. If you have an 18.9% debt on a credit card, paying off the balance is guaranteed 18.9% return on investment. It is hard to beat that in the markets on any consistent basis.

Second everything that emmasdad just said.

One thing to add: if you're paying off debts, that is effectively tax-free money you earn, so it's even better than it looks.

Say you have two options: either make an investment that will pay you $200 per month in interest, or else pay off a debt that has been costing you $200 per month to finance. It looks like it should be a wash either way, but that's misleading. It is always better to pay off the debt, because you will have to pay taxes on the $200 per month you gain from your investment. Depending on your tax rate, a $200 monthly savings on debt payments might be worth as much as $250 per month or more from investments.

If I include my wife and my pension contributions, our 457K (similar to 401K), other investments and the extra money I pay towards out house payment....we are at almost 40%.

This doesnt include poker money in the mix at all. My house will be paid for in just over 2 years and then the extra money Im paying towards the mortgage and the regular mortgage payment money will be added into the savings / investment pool.

We're both cops so its not like we are rich or anything, and we live in a moderately nice house in a nice safe neighborhood. We still go on vacations once or twice a year. If we can do it, anyone can do it. You just have to budget your money and not go crazy on frivolous things. (thats what the poker money is for).

Ill be retiring at age 50 (9 more years) and because of my savings and pension, my standard of living will be almost triple what it is now. For you young guys, start saving now so you wont be working when youre 65 like your parents will be probably be doing.