Investing 101

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Jez
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Investing 101

#1

Post by Jez » Sun May 05, 2019 8:31 pm

As some of you may know, I have been recently blessed with a full time job that pays very well. As part of being more responsible adult, I have been thinking of taking some of the extra income (not a huge amount) and investing it.

But, I don't know a damn thing about investing.

What are some good sources to begin learning? I am hoping that within a year I will have acquired enough knowledge to be comfortable investing a few grand to begin with. Not a huge amount, but just to start.

Thank you in advance my fine wonderful people.
I have learned silence from the talkative, toleration from the intolerant, and kindness from the unkind; yet, strange, I am ungrateful to those teachers.

~Khalil Gibran

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Re: Investing 101

#2

Post by much ado » Sun May 05, 2019 8:54 pm

Well, the current market has been in a bull run for a long time. It seems due for a substantial pullback sometime in the next two or three years. If I were you, I would accumulate my savings in an FDIC-insured savings account. I would not lose any of my savings over this time, and I would be likely to be presented with a good buying opportunity if I were patient. This is only what I would do. It is not investing advice, because I am not licensed to give financial advice. Good luck! :thumbs:

Edit: Investopedia has a lot of good, basic information. https://www.investopedia.com/

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Re: Investing 101

#3

Post by ZekeB » Sun May 05, 2019 8:58 pm

Buy low, sell high. Don't let the Duke Brothers corner the silver market.

What much ado said. I'd run from the stock with my tail between my legs until it crashes. It will. Hopefully before the election. After the crash is a good time to start looking into stocks again. BTW, my 457 is currently 100% invested in a guaranteed 3% return. I may not be getting rich, but I can sleep at night every time the market responds to something stupid that Trump said earlier in the day.
Trump: Er hat eine größere Ente als ich.

Putin: Du bist kleiner als ich.

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Re: Investing 101

#4

Post by NotaPerson » Sun May 05, 2019 8:58 pm

You might start with Ric Edelman. He writes about this stuff in a way that's very easy to understand. He has put out several books over the years, and has a radio show/podcast every weekend.
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Re: Investing 101

#5

Post by MRich » Sun May 05, 2019 8:59 pm

I don't know much about the ins and outs of various investment strategy, so I have professionals handle my money.
I have an investment counselor and he's been really good for me. He handles about half of my money, and the rest I have at my credit union's asset management group.

My father has a guy from Edward Jones who handles probably about 90% of his money. Edward Jones has franchises all over, so if you move you can just find another guy in your new location and everything will transfer over.

Make an appointment with several professionals; let them know you are checking things out and aren't ready to commit. I think you'll find someone whose style you're comfortable with.

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Re: Investing 101

#6

Post by BigSkip » Sun May 05, 2019 11:19 pm

Jez wrote:
Sun May 05, 2019 8:31 pm
As some of you may know, I have been recently blessed with a full time job that pays very well. As part of being more responsible adult, I have been thinking of taking some of the extra income (not a huge amount) and investing it.

But, I don't know a damn thing about investing.

What are some good sources to begin learning? I am hoping that within a year I will have acquired enough knowledge to be comfortable investing a few grand to begin with. Not a huge amount, but just to start.

Thank you in advance my fine wonderful people.
If your job offers a 401K start there. If not begin by doing an IRA (Roth or traditional - Roth saves tax $ down the road and traditional saves tax money now) and just drop money into an index fund via dollar cost averaging. If you are just starting out no need to get fancy.

We are on a long bull run but I wouldn't worry about trying to time the market. If it is money you won't need any time soon just dollar cost average, index, and ride it out.

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Re: Investing 101

#7

Post by MN-Skeptic » Sun May 05, 2019 11:45 pm

I highly recommend Investing Made Simple: Index Fund Investing and ETF Investing Explained in 100 Pages or Less by Mike Piper.

I also recommend the Bogleheads' website. Bogleheads are folks who follow John Bogle's (he's the founder of Vanguard) basic advice to invest in low expense ratio index funds. The Bogleheads' website has a very active forum which uses the same forum software as The Fogbow, so you'll feel right at home. There are a lot of knowledgeable folks who post there. Bogleheads' also has a wonderful Wiki with a lot of great, basic information about investing.

A couple of points - When it comes to investing, one of the first things you decide on is your asset allocation. Ok, already confused you, huh? Basically, if you're young and have a lot of time for investments to grow, you put more into stocks and less into bonds. Stocks are more volatile, but, over time, they've outperformed bonds. If you're young and stocks tank, you can patiently wait for them to rebound. But, the closer you get to retirement, the more you probably want to be in safer bonds or CDs. 10 years ago my husband and I were probably 80% stocks. 2008 sucked. But we stayed the course and the stocks rebounded and we made out very well. However, before my husband retired in 2016, we changed our allocation to 40% stocks. You don't want to have to sell stocks in a down market, so it's best to be not too heavily weighted in them when you retire.

One of the points made at Bogleheads and also voiced by Mike Piper in the book I recommended is that you can be adequately diversified by owning just three broad based index funds: an S&P 500 fund, an international fund, and a bond fund. A lot of folks are intimidated by the thought of investing on their own and rely on a investment manager. If that's the only way you'll invest, ok. But you are fully capable of managing your investments on your own! Moreover, you save the management fee. There's an article at Bogleheads Wiki on a Three-Fun Portfolio which you might want to read.

By the way, my husband was passionate about investing. It's thanks to his lead on investing that I didn't need to worry about money when he passed away last year. If you have any questions, don't hesitate to PM me.

A true story from last year - My sweetie passed away April 17, 2018. In late June, when I took the trash out, I noticed a package on the ground from Amazon addressed to my husband. Perplexed, I opened it. It was The Bogleheads' Guide to the Three-Find Portfolio by Taylor Larimore. My husband had pre-ordered it in January. It's like my sweetie was still looking out for me.
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Re: Investing 101

#8

Post by Jez » Mon May 06, 2019 8:10 am

Thank you very much everyone. I'm going to be checking out the sources recommended, and that forum, MN-Skeptic. Theoretically I have about another 17 years before I am eligible to retire, doesn't sound that long from now if you read it that way. But I also know that I'm late to the game and will probably continue to work until my head hits the keyboard.

I have the 401k from the contract which will be rolled over into the current one I just set up through the bank. I'm doing max/matching (6%) and they have a program where it will automagically increase by 1% annual to a max of 12%. Of course, that can be changed at anytime, but it seemed like a good idea from what I read. It's in a mixed stock/bond fund, so should be relatively stable.

The last couple of 401k's ended up being cashed out to be able to pay off medical bills, move, and various other expenses that overwhelmed me. If I stick to my current budget (based off my old pay) I should have plenty left over from each paycheck to be able to get out from under the debt I have (damn medical bills). I may even get a newish car to replace the 12 year old beast I have now. Betsy is beginning to get slower and hesitate when I press the gas. Plus, the keyfob hasn't worked in more years than I care to admit and when you remove the key from the ignition, it doesn't always realize it's gone. So, it makes that annoying binging sound of "you forgot your key". So, starting research on newer vehicles which in the past has taken me at least a year until I decide on something.

I really just don't want to have to worry too much when I do finally retire. I have no children so I don't have to worry about leaving them anything. As long as there is enough to use the good Hefty bags, I'll be fine.

Again, thank you all for the information. I shall be pouring over it in my spare time. :)
I have learned silence from the talkative, toleration from the intolerant, and kindness from the unkind; yet, strange, I am ungrateful to those teachers.

~Khalil Gibran

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Re: Investing 101

#9

Post by PaulG » Mon May 06, 2019 12:55 pm

The three fund investing plus maxing out your 401k is certainly what I did. But another thing that nobody's mentioned is that paying off debts can get you a better rate of return than investing. If you are paying 7 percent on a loan, you would need an investment paying better to offset simply making an extra payment on the loan. Depending on the medical debt, maybe you should pay that off first. Good luck!

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Re: Investing 101

#10

Post by RoadScholar » Mon May 06, 2019 12:59 pm

...and lots of personal debt is held at interest rates that no investment could ever be expected to yield.

Paying debt off is a really good idea. It's just not as much fun as buying assets!
The bitterest truth is healthier than the sweetest lie.
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Re: Investing 101

#11

Post by Jez » Mon May 06, 2019 1:09 pm

RoadScholar wrote:
Mon May 06, 2019 12:59 pm
...and lots of personal debt is held at interest rates that no investment could ever be expected to yield.

Paying debt off is a really good idea. It's just not as much fun as buying assets!
Strangely, the only debt I have right now is old medical bills that will be taken care of very soon. Oh, and one credit card that I closed and have been paying off little by little. Should be done with that in about 2 months.

So, by the end of the year, I should be technically debt free. :D
I have learned silence from the talkative, toleration from the intolerant, and kindness from the unkind; yet, strange, I am ungrateful to those teachers.

~Khalil Gibran

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Re: Investing 101

#12

Post by MN-Skeptic » Mon May 06, 2019 1:33 pm

Paying off debt is great, but you also have to check to see if your employer matches a portion of your 401(k) contributions. That's free money. Strive to contribute at least up to the amount that the employer matches.
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Re: Investing 101

#13

Post by RoadScholar » Mon May 06, 2019 1:39 pm

Jez wrote:
Mon May 06, 2019 1:09 pm
RoadScholar wrote:
Mon May 06, 2019 12:59 pm
...and lots of personal debt is held at interest rates that no investment could ever be expected to yield.

Paying debt off is a really good idea. It's just not as much fun as buying assets!
Strangely, the only debt I have right now is old medical bills that will be taken care of very soon. Oh, and one credit card that I closed and have been paying off little by little. Should be done with that in about 2 months.

So, by the end of the year, I should be technically debt free. :D
That puts you in a tiny minority of Americans. Congratulations!
The bitterest truth is healthier than the sweetest lie.
X3

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Re: Investing 101

#14

Post by Jez » Mon May 06, 2019 2:54 pm

MN-Skeptic wrote:
Mon May 06, 2019 1:33 pm
Paying off debt is great, but you also have to check to see if your employer matches a portion of your 401(k) contributions. That's free money. Strive to contribute at least up to the amount that the employer matches.
They match up to 6%, which is what I elected for them to take. After that, it will go up 1% every year (in March) up to 12% total. They have different "packages" based on when you turn 65. Apparently, this helps accelerate your contributions automatically. I'm good with that. If it doesn't do well, or I'm not liking how it's doing, I can jigger with where stuff goes. I'm just going to start with the recommended for right now.
I have learned silence from the talkative, toleration from the intolerant, and kindness from the unkind; yet, strange, I am ungrateful to those teachers.

~Khalil Gibran

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Re: Investing 101

#15

Post by Sugar Magnolia » Mon May 06, 2019 3:19 pm

RoadScholar wrote:
Mon May 06, 2019 1:39 pm
Jez wrote:
Mon May 06, 2019 1:09 pm
RoadScholar wrote:
Mon May 06, 2019 12:59 pm
...and lots of personal debt is held at interest rates that no investment could ever be expected to yield.

Paying debt off is a really good idea. It's just not as much fun as buying assets!
Strangely, the only debt I have right now is old medical bills that will be taken care of very soon. Oh, and one credit card that I closed and have been paying off little by little. Should be done with that in about 2 months.

So, by the end of the year, I should be technically debt free. :D
That puts you in a tiny minority of Americans. Congratulations!
We pay off our house this summer, no credit cards for many years, no car payments ever, and our only bills are utilities and food and monthly stuff like that. If we can't pay for it when we want it, we either do without or wait until we can. We owe nothing but our credit sucks.

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Re: Investing 101

#16

Post by neonzx » Mon May 06, 2019 3:19 pm

Hey Jez,
Great topic!

There is no one-size fits all, no single plan that works for everyone on financial management. Yes, like you, younger me dipped into 401k plans when moving jobs to pay off bills (and play). They were not good choices for me.

Of course, fully fund your new 401k plan at least to what your employer requires for maximum matching. That's 'free money' and part of your compensation.

Pay yourself some amount first from every paycheck. Yes, the medical bills eventually need paid, but it's not sexy nor rewarding to send those payments. Paying yourself is rewarding. Put the money aside somewhere. It's your money -- a security blanket. It's not for family nor friends to borrow from. It's an emergency fund for YOU and you alone.

As far as investments, I'm not going to give you any advice because past performance is no guarantee of the future returns. I don't know your situation nor risk tolerance in the gambling markets.
To which Trump replied, Fuck the law. I don't give a fuck about the law. I want my fucking money.

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Re: Investing 101

#17

Post by MN-Skeptic » Mon May 06, 2019 3:22 pm

Jez wrote:
Mon May 06, 2019 2:54 pm
They match up to 6%, which is what I elected for them to take. After that, it will go up 1% every year (in March) up to 12% total. They have different "packages" based on when you turn 65. Apparently, this helps accelerate your contributions automatically. I'm good with that. If it doesn't do well, or I'm not liking how it's doing, I can jigger with where stuff goes. I'm just going to start with the recommended for right now.
:thumbs: That’s the perfect way to handle it. So many people procrastinate, then end up doing nothing. I’m thrilled that you are contributing to you retirement now. The longer the money has to grow, the better for you.
MAGA - Morons Are Governing America

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Re: Investing 101

#18

Post by Jez » Mon May 06, 2019 3:54 pm

neonzx wrote:
Mon May 06, 2019 3:19 pm
Hey Jez,
Great topic!

----snippy-----
That is something i want to work on, having that security blanket. I've never had one, in truth. Maybe a couple of hundred dollars at most. But, my expense here are maybe $1000-1250 at most, and that is when I buy most of the groceries, my part of the utilities and the rent that I pay Dawn. I actually probably pay her more than we agreed on initially. She has been incredibly understanding the last few weeks I've been on unemployment because she has been there and knows where I'm at right now, and that things are about to turn a corner for me.

I'm not feeling too bad though. I've been living really well within my means for the most part over the last couple of years, it's become a habit, thankfully, and haven't been doing too badly. After a conversation with my father, I found out that my Executive brother (who makes close to 3x what I make now) calls him for a bail out on occasion. I realize he lives in an area with a higher cost of living then I do at the moment, but we lived in the same metro area for years. I know the rent, commute costs, etc. I have no idea how he is blowing through that much money every month. I would be hard pressed to do it, I can tell you that.

I know a part of my new paycheck will be going to my dad each payday. We just need to figure out how I'm going to get the money to him. I don't have any paper checks, and his bank doesn't use Zelle. I guess we'll figure it out. :)
I have learned silence from the talkative, toleration from the intolerant, and kindness from the unkind; yet, strange, I am ungrateful to those teachers.

~Khalil Gibran

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Re: Investing 101

#19

Post by Sugar Magnolia » Mon May 06, 2019 3:58 pm

Jez wrote:
Mon May 06, 2019 3:54 pm
neonzx wrote:
Mon May 06, 2019 3:19 pm
Hey Jez,
Great topic!

----snippy-----
That is something i want to work on, having that security blanket. I've never had one, in truth. Maybe a couple of hundred dollars at most. But, my expense here are maybe $1000-1250 at most, and that is when I buy most of the groceries, my part of the utilities and the rent that I pay Dawn. I actually probably pay her more than we agreed on initially. She has been incredibly understanding the last few weeks I've been on unemployment because she has been there and knows where I'm at right now, and that things are about to turn a corner for me.

I'm not feeling too bad though. I've been living really well within my means for the most part over the last couple of years, it's become a habit, thankfully, and haven't been doing too badly. After a conversation with my father, I found out that my Executive brother (who makes close to 3x what I make now) calls him for a bail out on occasion. I realize he lives in an area with a higher cost of living then I do at the moment, but we lived in the same metro area for years. I know the rent, commute costs, etc. I have no idea how he is blowing through that much money every month. I would be hard pressed to do it, I can tell you that.

I know a part of my new paycheck will be going to my dad each payday. We just need to figure out how I'm going to get the money to him. I don't have any paper checks, and his bank doesn't use Zelle. I guess we'll figure it out. :)
Most every bank has the ability to simply transfer funds to any other bank account. I think ours is called personal pay and POP money. You can set it up to automatically or do it individually each time. Log into your bank account and look for the 'transfer' option. My kids think it is a fabulous invention because I can give them money without ever getting up from my chair.

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Re: Investing 101

#20

Post by Volkonski » Mon May 06, 2019 4:16 pm

We would be almost debt‐debt free now but Harvey had other ideas. ;)

With all the construction going on in our part of Texas homes are at a premium. We are getting about a call a day from realtors.
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Re: Investing 101

#21

Post by tek » Mon May 06, 2019 4:58 pm

One of the things I did early on is similar to what others have mentioned here..

The (brand new!) credit union at my first real job had the ability to take your direct-deposit check and divvy it up into various accounts.. I was making the big money ($23K/yr!) so one of the things I did was stash $75/wk into a fuggadaboudit account. If you don't see it, you don't miss it.

That credit union would also let you set up as many accounts as you wanted.

Later, when daughter.tek was born, ms.tek and I both started a set-aside for college. After 18 years, that pretty much covered things - and made it so that we didn't have to agonize about whether she could go to the more expensive school or not.. I know that's not directly relevant to your situation, but you are right to feel a stash of money is a great thing to have.. I wish daughter.tek would work toward that :(

As far as investment advice, I have none, except for "don't think you can time the market.."
I did some work for a company doing the infrastructure for high-frequency trading a few years back, and that was enough to convince me that the individual investor can't implement the old "buy on rumor, sell on news" strategy.. you have to be in it for the long haul.

I've been self-employed for a couple decades now, so now employer match for me :( .. I was pretty stupid and had mostly kept all my rolled-over IRAs (from prior employers) and my Keough in essentially cash, until I whacked myself upside the head a few years ago and let Fidelity manage it. Not free, but they have been doing a pretty good job so far.

Nowadays, of course, most banks allow you to set up automatic transfers between accounts..
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Re: Investing 101

#22

Post by tek » Mon May 06, 2019 5:19 pm

Volkonski wrote:
Mon May 06, 2019 4:16 pm
We would be almost debt‐debt free now but Harvey had other ideas. ;)

With all the construction going on in our part of Texas homes are at a premium. We are getting about a call a day from realtors.
Maybe it is worth a roll-out and a roll-in later after things crash?

I only say that half-heartedly. I'm starting the process of leaving the home we've owned for 27 years, and not really looking forward to it. I'm especially gonna miss the kitchen, which after living there for 16 years I finally remodeled into what I wanted..
There's no way back
from there to here

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Re: Investing 101

#23

Post by neonzx » Mon May 06, 2019 8:22 pm

Sugar Magnolia wrote:
Mon May 06, 2019 3:58 pm
Most every bank has the ability to simply transfer funds to any other bank account. I think ours is called personal pay and POP money. You can set it up to automatically or do it individually each time. Log into your bank account and look for the 'transfer' option. My kids think it is a fabulous invention because I can give them money without ever getting up from my chair.
Very true. And I have a more elderly neighbor who sends (happened again today) his out-of-state adult children cash on a regular basis with Western Union because he's ... old. It's so easy to move money without paying,

But he's slow to the party. I've trying to get him on onto Sling (which I decided is best for him) along w a base internet service for months. Old dogs, new tricks. For now, he's still stuck on antenna TV. (which is no FoxNews -- and there is no FoxNews on 'Sling', so there is a method to my madness)
Off Topic
As a humorous aside, this old guy got off on a rant yesterday w politics and how what the country was founded upon shouldn't be changed. He decided to go on the 'gay marriage' rant, which was obviously amusing because.

He still doesn't know I'm gay, I've heard him speak on the phone that he has 'one friend' in this community -- that person is me -- I sit with him every day. I sit with him every day for an hour or two as he talks about his dead wife. For 4 months, his only friend is some gay guy.

It's going to be interesting when I break the news to him.
To which Trump replied, Fuck the law. I don't give a fuck about the law. I want my fucking money.

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Re: Investing 101

#24

Post by Princess foofypants » Fri May 10, 2019 11:08 pm

Jez, I’m late to the party as usual but some suggestions...

1). 3-6 months of expenses in the bank. Keep it separate from checking so it takes a bit of work to get to it. Short term cds and/or money market. I know it isn’t sexy but it is important.

2). Always put the maximum percentage your company will match into your 401k. Nothing compounds like pre-tax money plus a match. If you don’t feel comfortable doing an asset allocation choose an age-based fund and let the professionals do it for you.

3). Don’t try to time the market, instead concentrate on time in the market. This has worked extremely well for me for over 3 decades.

4). After you have accumulated some money other than emergency fund and 401k I’d suggest starting with mutual funds. Interview financial advisors, ask for referrals and find someone you feel comfortable with. Financial advisors are commissioned sales people. Every firm has good ones and bad ones.

5). Don’t even think about individual stocks until you have at least $50 to $100,000 in funds and 401k. Sure they are more fun. But the general rule seems to be if you buy 25 stocks, 1 will be a total dud. If you buy 1 stock that one is the dud.

6). Don’t get discouraged and don’t get emotionally involved with anything you own.

7). Read everything. Ask questions. This is your future and it is important.

Just a few thoughts from someone who has been there and fortunately have been there successfully.

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Re: Investing 101

#25

Post by Princess foofypants » Fri May 10, 2019 11:10 pm

tek wrote:
Mon May 06, 2019 4:58 pm
One of the things I did early on is similar to what others have mentioned here..

The (brand new!) credit union at my first real job had the ability to take your direct-deposit check and divvy it up into various accounts.. I was making the big money ($23K/yr!) so one of the things I did was stash $75/wk into a fuggadaboudit account. If you don't see it, you don't miss it.

That credit union would also let you set up as many accounts as you wanted.

Later, when daughter.tek was born, ms.tek and I both started a set-aside for college. After 18 years, that pretty much covered things - and made it so that we didn't have to agonize about whether she could go to the more expensive school or not.. I know that's not directly relevant to your situation, but you are right to feel a stash of money is a great thing to have.. I wish daughter.tek would work toward that :(

As far as investment advice, I have none, except for "don't think you can time the market.."
I did some work for a company doing the infrastructure for high-frequency trading a few years back, and that was enough to convince me that the individual investor can't implement the old "buy on rumor, sell on news" strategy.. you have to be in it for the long haul.

I've been self-employed for a couple decades now, so now employer match for me :( .. I was pretty stupid and had mostly kept all my rolled-over IRAs (from prior employers) and my Keough in essentially cash, until I whacked myself upside the head a few years ago and let Fidelity manage it. Not free, but they have been doing a pretty good job so far.

Nowadays, of course, most banks allow you to set up automatic transfers between accounts..
Good advice.

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