Best retirement strategy?

[Ricboff]

If anyone reads this again the one thing you should take from it....DO NOT BUY UNIVERSAL OR WHOLE LIFE INSURANCE. One of the worst products on the market, period. And I work for a company that makes a lot of money by selling those 2 products.

http://whitecoatinvestor.com/12-questions-to-ask-before-purchasing-whole-life-insurance/

the flow chart he provides is ,well,...................wild.....

 

[Jstack34]

pile of cash in savings?
only earning 1% ?

what to do with it?

figure out your expenses for 6 months, leave that in savings, consider it your emergency fund, you need to keep this money in risk free accounts at all times.

if you have any left over then:

Do you have any debt? pay it down, better yet pay it off.....No debt

still have money left?.....Yes

if you have earned income and it's not over the limits, roth ira........Maxed out in '16, probably do so again this year but just investing in random funds - not sure how smart it is

still have money left?.........Yes

now you are ready to start investing.

you need to set some goals, what and when and how much cash will you need?

new car in a year?..........No
bigger house in 5 years?.......Dont own a house, but want to avoid looking @ this - currently paying almost nothing in rent
extra income starting now?
retire in 10 years?.........Only 27

see where I am going?, you need clear and defined goals so you can put together a plan. otherwise you're like the guy from idiocracy saying "i like money"

See above lol

 

[Jstack34]

Good post by buddyboy, jstack read it a few times and take action

reluctant to add further as not enough infirmation as to goals posted. With said , a few thoughts ;

you said 'investing '. I think you're looking at saving for retirement ? To better the bank's 1% high interest savings account ? I'll make a few
generalizations ;

For investing purposes , at 1% return you're not beating the rate of inflation . The power of your money is eroding . There is a very high probability that inflation will rise under the new govt . The market is anticipating this - mortgage rates shot up and yellen has warned they will raise interest rates as much as 3 times in 2017. We've hit the bottom for cheap rates , bond yields are telling you this . Add to this protectionist policies and staples/buying shit will be more expensive . be frugal

a few notorious , iconic investing gurus have warned of lower investment returns over the next decade including Bogle (founder of vanguard ( they have an educational aspect at their site , their fees r rock bottom ) ..I do NOt know if his position has changed post Trump victory

with that in mind , as buddleboy stated : eliminate debt , if its not making you money get rid of it- that's bad debt . Beholden to no one . Educate yourself on the basics of investing . It's not hard ..all there at your fingertips . ego and emotion erode returns , destroy them. If a market drop
of 10-30% makes you scared ? Your asset allocation is way off . Consider a well respected professional handling your money

I guess I need to look into basics of investing. Don't like the idea of paying someone to manage my $ as I don't trust them and the fees they charge

 

[NorthernStar]

Refi to a 15 year mortgage, will save a boatload of dollars over the life of the note

Not this.

If you can make more than the rate you borrowed your money at then a 30 year will be a better choice. If I take out a 30 year mortgage and invest the difference between my payment and the payment on a 15 year mortgage. You take out a 15 year mortgage and after it is paid off invest the amount of the payment. A the end of 30 years we both have our mortgages paid off and my pile of cash will be larger than yours.

 

[festeringZit]

Not this.

If you can make more than the rate you borrowed your money at then a 30 year will be a better choice. If I take out a 30 year mortgage and invest the difference between my payment and the payment on a 15 year mortgage. You take out a 15 year mortgage and after it is paid off invest the amount of the payment. A the end of 30 years we both have our mortgages paid off and my pile of cash will be larger than yours.

Paying off a mortage early has 0 risk, investing to try and beat the mortgage rate has inherent risks. I'm not saying you are wrong, I'm saying you aren't taking risk and risk aversion into account.

 

[NorthernStar]

Paying off a mortage early has 0 risk, investing to try and beat the mortgage rate has inherent risks. I'm not saying you are wrong, I'm saying you aren't taking risk and risk aversion into account.

On the reverse side of the risk equation. If I have cash and have an emergency I can do whatever I want with it. If for example I wasnt working and had $100,000 in equity in my home there may be no way to access my asset. Having ready access to funds allows for a different type of freedom. This is a better long term strategy and requires someone to have a plan and follow it.

Personally right now I dont see the market to be a good spot to be right now. I looked at my returns the last three years on my indivual stock picks....29%, 3% (for someone smart I sure made some dumb investments), followed it up with 46% return last year. I put about 75% of one of my accounts into cash for now, I am thinking of going into a safe haven like Norweign bonds. The market has gone up significantly the last 8 or 9 years and I think a market correction is coming. Last time I moved into a cash position on a significant portion of my investments we there was a 20% correction within in 9 months. Not a perfect science.....not easy to know when to jump in and when to jump out.

I spent the last couple days watching a stock I kicked ass and took names with and sold last Friday. Wondering if I should have held onto it longer. Main reason was the market not the stock.

 

[X-Files]

Other than my work 401k that they are matching...What should I get in to?

Im in my late 20's.

The title of this forum should give a clue ;

 

[Ricboff]

On the reverse side of the risk equation. If I have cash and have an emergency I can do whatever I want with it. If for example I wasnt working and had $100,000 in equity in my home there may be no way to access my asset. Having ready access to funds allows for a different type of freedom. This is a better long term strategy and requires someone to have a plan and follow it.

Personally right now I dont see the market to be a good spot to be right now. I looked at my returns the last three years on my indivual stock picks....29%, 3% (for someone smart I sure made some dumb investments), followed it up with 46% return last year. I put about 75% of one of my accounts into cash for now, I am thinking of going into a safe haven like Norweign bonds. The market has gone up significantly the last 8 or 9 years and I think a market correction is coming. Last time I moved into a cash position on a significant portion of my investments we there was a 20% correction within in 9 months. Not a perfect science.....not easy to know when to jump in and when to jump out.

I spent the last couple days watching a stock I kicked ass and took names with and sold last Friday. Wondering if I should have held onto it longer. Main reason was the market not the stock.

Norweigen bonds ? How are they more safe than TIPS ? What are they yielding ?

Isreal has never defaulted on a bond . Their current 10 yr is yielding just under 4%

 

[Ricboff]

I guess I need to look into basics of investing. Don't like the idea of paying someone to manage my $ as I don't trust them and the fees they charge

good for you. Personal finance/basics in investing is not taught in schools. Crazy. In Ontario , in high school, its now offered as an elective. Not good enough, but progress none the less.


i'd highly recommend a read on the psychology of investing/behavioral finance. The loss of money has a greater effect on the mind/greater extreme than gains. Loss aversion. For basic reading- swedroe/bogle/bernstein.

keep in mind, speculating and investing are NOT the same. If you like to play speculate with a % of your money , invest the rest. Want to know how hard it is to beat the index? Ferri/benke showed us ; over 82 % of PROFESSIONAL money portfolio managers cannot beat the index

https://d9l6g2vjiqrcr.cloudfront.net/documents/BMT-PS_Whitepaper.pdf

similar studies confirm this. That's an eye opener, no? Professional's have a LOT MORE at their fingertips than you and I, yet over time they can't beat the index and are PAID to handle your money. Of course, under 20% DO beat the index--brilliance in every walk of life


as for financial advisors. Good and bad in all professions. A well respected FLAT FEE advisors (NOT % AUM) is not a bad idea for some. They can provide ; estate planning/tax efficicny, planning as to products, where they should go/ asset allocation/ portfolio product changes...etc. Another set of eyes, if you will, in a fiduciary manner




you are asking advice at a GAMBLING FORUM. Mindset likely quite different than say, at an investing forum. Keep this in mind.

 

[MattyMatt]

Well, he had to make sure he had all 3 covered...

gambling,speculating,and investing