How should I invest my SEP-IRA?

[snafu]

Kudos, well done 2013 Net Worth outline. I think you should be making suggestions for 'new money' we're contributing to various retirement and non retirement portfolios. Since you asked....I'm looking at an ETF for 'Financials' and also the ETF Russell 2000 that's a tad expensive per unit. [we have a minus .08 currency differential] I hesitate to put my opinion forward as I see these as 'seasonal' purchases January to May.

[kv968]

If you did straddles, I might suggest looking for companies which are neutral short term with good long term growth prospects (like small caps). I can think of one company in particular which is in the news but is not growing as much now...

These techniques are not for rookies, and its possible to lose more than your original investment (covered calls lower this risk which is why they are allowed in tax deferred accounts).

Just to be clear, if you buy a straddle you can't lose more than your original investment. If you SELL one you could be in a world of hurt.

[kv968]

I appreciate the suggestions. I'm liking the emerging market idea. I have a total international index in my portfolio but nothing beyond that. KTP mentioned VWO. I've spent a little time today researching that one. Are there any others you would recommend? Certainly I'm a big Vanguard fan with the bulk of our money invested with them but I'm not opposed to seeking opportunity elsewhere.

If you're looking at emerging markets, then maybe give a look at iShare's EM Minimum Volatility ETF (EEMV). It takes about 200 stocks out of the EM MSCI Index that have lower volatility but still maintains diversification. Its a newer ETF but has decent assets under management and volume so getting in and out won't be a problem. Again, its new so who knows how the strategy will work but it has outperformed VWO so far.

[disneysteve]

Coincidentally, VWO was among the recommendations in this month's Money magazine. I just read it last night.

[jIM_Ohio]

I appreciate the suggestions. I'm liking the emerging market idea. I have a total international index in my portfolio but nothing beyond that. KTP mentioned VWO. I've spent a little time today researching that one. Are there any others you would recommend? Certainly I'm a big Vanguard fan with the bulk of our money invested with them but I'm not opposed to seeking opportunity elsewhere.

Jim, I appreciate the options suggestion. I've tried a few times to educate myself in that area and it just hasn't stuck yet. One of these days.

let me try in a few paragraphs.

Options are either calls or puts. Both are contracts. A call is the right to buy at a specific price. A put is the right to sell at a specific price.

You can either buy or sell an option.

If you buy a call, you expect the stock to go up (that is how you make money). You are under contract to buy stock at a price, and you would only excercise that right if the stock were trading higher than the contract price.

If you sell a call, you expect stock to be neutral or go down in price. You earn money writing the contract. If stock price goes up, you have to buy stock at current price and sell at lower price (meaning you lose money). If you already own the stock, you can use that position instead of buying at higher price (this is a covered call).

If you buy a put, you have the right to sell a stock at the contract price. You make money if the price goes down (because you buy at a lower market price, and have a contract to sell at the higher price of the put contract).

If you sell a put, you are expecting price of stock to go up. You make money when you sell, and if stock is neutral or goes up, you make money. If price goes down, you are obligated to buy stock at market price, then sell stock at a loss based on put contract.


You said the money was play money, so consider buying a large cap stock, such as PG or GM, and create a 100 share position. Then write a call (meaning you are selling a call contract) on same security. Your account will get credited with the price of the call contract, and then you "wait" until contract expires or gets exercised.

[disneysteve]

Thanks for the lesson Jim. At some point, I will think about getting involved with that. I just don't think I'm ready to tackle it now.

Right now, I'm thinking of doing a couple of things with this money. I like the emerging markets idea. And there is that part of me that likes taking a chance on an individual stock. And even before srblanco7 mentioned it, the 3D printing was something I was looking at. 3D (DDD) is the company that makes the Cube printer, the one currently being sold at Staples and Amazon. I know there are competitors on the horizon and some of the big guys (like HP, for example) will enter the market, but they may do it by buying up a company like 3D.

So I may split this money between VWO and DDD.

[disneysteve]

Decision made.

75 shares of VWO
25 shares of DDD

I'll try to remember to report back periodically with how this turns out.

[KTP]

Nice! I bought my 500 shares of VWO a wee early so you got in a few cents cheaper (VWO was as low as 39.27 today but is 39.47 after hours.)

I have never heard of DDD (cute name). I am well familiar with the glue gun type 3D printers but I am building a selective laser sintering machine using metal powder and a 20 watt average power 10kW peak power IPG doped fiber laser at 1064nm. (queue the "you'll shoot your eye out" responses). A UV laser would be better but I scored this doped fiber laser on ebay for $1800 from a defunct solar cell scribing company. Manufactured in 2009 with only a few hours on it, these little air cooled babies are $8000 new (I called IPG in Germany).

IF IPGP (the symbol for IPG) was not so expensive a stock, I would surely buy some as these doped fiber lasers are the future (and disk lasers). A similar higher power version was just used to shoot down live mortar rounds in a military test.

[disneysteve]

Nice! I bought my 500 shares of VWO a wee early so you got in a few cents cheaper (VWO was as low as 39.27 today but is 39.47 after hours.)

Well actually it isn't a done deal yet. I placed the orders to be executed in the morning so I won't know my final price until then. I won't quibble over a few cents though.

[disneysteve]

Got in to VWO at $39.50 and DDD at $94.62.