MUScoop
MUScoop => The Superbar => Topic started by: muwarrior69 on March 24, 2015, 12:41:53 PM
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Are most of you students and just post between classes or just taking a study break? Are you guys at work when you post? If so, do you work from home? Or do you travel and post while your in the air or on the train going to and from work? Perhaps some of you own your own business? I know today that your time and work time overlap and can be a grey area. Just curious how you guys balance work/school time and Scoop time. Ok, now tell me to mind my own business and stop being a prick for asking such a personal question. I can take it!
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I don't work anymore. At a corporate meeting for our company prez who was retiring, he stated he was doing so because there were other things he wanted to do in life.
That hit home with me - so I quit shortly after.
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brandx, curious to hear more about your decision. How old are you? How did you know when your nest egg was big enough?
OP, I have a regular office job (I work in IT). We have a pretty liberal computer usage policy. It basically goes like this: if you get your work done, do what you like (with some exceptions obviously, certain things are off limits, such as many of Keefe's picture posts), but Scoop, Facebook, CNN, Yahoo Finance, etc. are all sites I will peruse 1-2 times a day with no fear of what my boss will say. He does the same thing. Just get your work done, and life is good.
Personal and work life overlap all the time. I can take personal calls at work, or run errands at lunch, knowing that I may very well get a work call at 9 pm if something goes wrong. I can work from home occasionally, but I might also have to stay late a couple nights a week. I will browse the internet at the office, but also do some work from home on the occasionally weekend. It evens out. The key is flexibility. If you are flexible, your boss will be flexible back with you (at least in my case).
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brandx, curious to hear more about your decision. How old are you? How did you know when your nest egg was big enough?
OP, I have a regular office job (I work in IT). We have a pretty liberal computer usage policy. It basically goes like this: if you get your work done, do what you like (with some exceptions obviously, certain things are off limits, such as many of Keefe's picture posts), but Scoop, Facebook, CNN, Yahoo Finance, etc. are all sites I will peruse 1-2 times a day with no fear of what my boss will say. He does the same thing. Just get your work done, and life is good.
Personal and work life overlap all the time. I can take personal calls at work, or run errands at lunch, knowing that I may very well get a work call at 9 pm if something goes wrong. I can work from home occasionally, but I might also have to stay late a couple nights a week. I will browse the internet at the office, but also do some work from home on the occasionally weekend. It evens out. The key is flexibility. If you are flexible, your boss will be flexible back with you (at least in my case).
I worked IT as well. And it sounds like we worked in a similar environment.
My dad was terrible with money, but he taught me one thing from the time I got an allowance as a kid. He always told me to put away 25% of the money I got and it is something I always continued to do. So by early 50's, the nest egg was there. And my wife always made good money (and still works part-time), so even putting a couple kids through college left us in pretty good shape.
I realize most people don't put away that kind of money, but just check with your financial advisor and he'll run the numbers for you. You're probably in better shape than you think.
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I used to be on here in class when I was a student, I'm so adhd the actual class time was always in one ear out the other anyways.
My last job I'd be checking here on my phone while traveling to work or at lunch. Now I'm in sales and basically make my own schedule so I check for a minute here or there and exit out.
I worked IT as well. And it sounds like we worked in a similar environment.
My dad was terrible with money, but he taught me one thing from the time I got an allowance as a kid. He always told me to put away 25% of the money I got and it is something I always continued to do. So by early 50's, the nest egg was there. And my wife always made good money (and still works part-time), so even putting a couple kids through college left us in pretty good shape.
I realize most people don't put away that kind of money, but just check with your financial advisor and he'll run the numbers for you. You're probably in better shape than you think.
Did you start saving right out of college? Or pay off loans first? Orr...
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Like Bleuteaux, my job is task driven independent of what day/time it is. That said, the nature of my job saddles me with hours of downtime on some days (especially when travelling), while other days I barely have time to hit the head. But I find that most of my Scooping from work is merely the result of my needing some sort of release between jobs/calls/meetings etc. just to clear my head & refresh before the next item on the calendar - and Scoop has proven to be the perfect receptacle in that regard.
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I post from work and my boss can suck it if he ever finds out! He has threatened us for 15 years with "software" that will track our browsing but is too cheap to buy it apparently.
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I can do my work blind folded. So postin' ain't no big thang.
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Did you start saving right out of college? Or pay off loans first? Orr...
Do both.
I respect Dave Ramsey and agree with a lot of his stuff, but the idea that you should put off saving for retirement until you are debt free seems insane to me. My student loans have a 5% interest rate and I would have left a ton of money on the table (work 401k match and an average of about 10% annual returns in the stock market since I have started working) if I followed his advice.
Pay your debts and save at the same time.
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I worked IT as well. And it sounds like we worked in a similar environment.
My dad was terrible with money, but he taught me one thing from the time I got an allowance as a kid. He always told me to put away 25% of the money I got and it is something I always continued to do. So by early 50's, the nest egg was there. And my wife always made good money (and still works part-time), so even putting a couple kids through college left us in pretty good shape.
I realize most people don't put away that kind of money, but just check with your financial advisor and he'll run the numbers for you. You're probably in better shape than you think.
Good for you. 25% is very admirable. I'm only 29, so nowhere close to retirement, but I love hearing success stories.
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Do both.
I respect Dave Ramsey and agree with a lot of his stuff, but the idea that you should put off saving for retirement until you are debt free seems insane to me. My student loans have a 5% interest rate and I would have left a ton of money on the table (work 401k match and an average of about 10% annual returns in the stock market since I have started working) if I followed his advice.
Pay your debts and save at the same time.
Good Advice. My wife and I have no debt. At present we live off our pensions and social security and have more than enough money to pay our bills and living expenses. Next year we will start taking distributions on our 401ks and do not have to worry that we will out live our money. It's just so sad that we reward borrowing and punish saving in this country.
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Do both.
I respect Dave Ramsey and agree with a lot of his stuff, but the idea that you should put off saving for retirement until you are debt free seems insane to me. My student loans have a 5% interest rate and I would have left a ton of money on the table (work 401k match and an average of about 10% annual returns in the stock market since I have started working) if I followed his advice.
Pay your debts and save at the same time.
You pick the percentages but you should do both. The money saved earliest is the money that works the hardest. That $5K you save at 28 is worth more because of all the years it works for you than that $25K you save when you are 60 and will be spending at age 65.
Also, always pay additional principal each month on your debts, even if $50/month.
And finally, work your tail off the first 3 years out of college -- no cars, trips or other luxuries. You will be amazed how much debt you can pay and how much you can sock away.
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Good Advice. My wife and I have no debt. At present we live off our pensions and social security and have more than enough money to pay our bills and living expenses. Next year we will start taking distributions on our 401ks and do not have to worry that we will out live our money. It's just so sad that we reward borrowing and punish saving in this country.
THAT is the key. Everything is cash for me (Debit card & PayPal same as cash).
The only reason I even have a credit card is for travel - never a good practice to use a Debit Card on the road.
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I agree with almost everything you said brandx. The only thing I will point out is you should never use your debit card as a debit card with a PIN entry. I am part of a PCI Compliance team and it is 100% recommended by experts in the card security industry that you use credit cards when not paying in cash and just pay off the balances of those credit cards every month. Given the sophistication and creativity of hackers it is becoming easier for them to get account information. Since your debit card provides direct access to your bank account it is essentially giving hackers an open door to your account when they get your data.
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I agree with almost everything you said brandx. The only thing I will point out is you should never use your debit card as a debit card with a PIN entry. I am part of a PCI Compliance team and it is 100% recommended by experts in the card security industry that you use credit cards when not paying in cash and just pay off the balances of those credit cards every month. Given the sophistication and creativity of hackers it is becoming easier for them to get account information. Since your debit card provides direct access to your bank account it is essentially giving hackers an open door to your account when they get your data.
I put about 90% of monthly charges on my credit card - which I pay in full every month.
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You pick the percentages but you should do both. The money saved earliest is the money that works the hardest. That $5K you save at 28 is worth more because of all the years it works for you than that $25K you save when you are 60 and will be spending at age 65.
Also, always pay additional principal each month on your debts, even if $50/month.
And finally, work your tail off the first 3 years out of college -- no cars, trips or other luxuries. You will be amazed how much debt you can pay and how much you can sock away.
Two of the biggest money wasters: Cars and vacations.
jsglow and I buy modest, reliable vehicles a couple of years old and drive them until they die. Right now I am driving a 10-year-old Mazda 3 with 125,000 miles on it. We did splurge about nine years back and bought a 2-year-old Miata that had 11,000 miles on it as a "summer car". We found the original price sticker in the glove box and discovered we paid exactly $11,000 less. In other words, the depreciation on the car was $1/mile for the first owner. We have since put on over 100,000 miles more on it (less that 15 cents/mile). Never had to do anything much more than regular maintenance to either car.
Regarding vacations, you don't have to go to Jamaica or visit The Mouse every year. We did have the occasional big trip, but we also have done a lot of camping. I have acquaintances who went on lots of elaborate, expensive vacations who are now complaining that they can't afford to send their kids to the college of their choice. But yeah, they have some great snapshots.
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I'm 34. I usually just post from my phone during a break on occasion or before or after work.
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Regarding vacations, you don't have to go to Jamaica or visit The Mouse every year. We did have the occasional big trip, but we also have done a lot of camping. I have acquaintances who went on lots of elaborate, expensive vacations who are now complaining that they can't afford to send their kids to the college of their choice. But yeah, they have some great snapshots.
This is very much personal preference. Some of those trips are incredible memories. I went to London when I was in my mid-20s and could barely afford it, but I wouldn't trade it for another $1500 in savings or an iPad. Life is short, I don't want to get to a point where I wish I could have seen things but didn't cause I was socking away money. Especially when young with earning potential ahead.
I'm not pointing out anyone on here, but the WSJ just had some glowing article about a 92 year old "great stock picker" who was a janitor but died with $8MM in his portfolio. He wore ragged old clothes and drove a rusty beater. The article praised his frugality. Sounds absolutely stingy and miserable. I'm totally in agreement with the over-reliance on debt and general financial irresponsibility in the US right now, but I'm never gonna side eye living for the moment.
On topic, I'm 29, work for a large company, but my days are ebb and flow and I work better when I take 10-15 min breaks here and there. Its all good as long as work gets done.
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I agree with almost everything you said brandx. The only thing I will point out is you should never use your debit card as a debit card with a PIN entry. I am part of a PCI Compliance team and it is 100% recommended by experts in the card security industry that you use credit cards when not paying in cash and just pay off the balances of those credit cards every month. Given the sophistication and creativity of hackers it is becoming easier for them to get account information. Since your debit card provides direct access to your bank account it is essentially giving hackers an open door to your account when they get your data.
I know you're right as I also did some work with the PCI Compliance team in my job. When I set up a dept. to monitor and record their rep's phone calls, PCI Compliance came into play because of Credit Card information being recorded.
I've gotten better and use it less than I use to - but I'm just a lazy guy. The good thing is that I just transfer a small amount of money whenever it gets low so there is never more than a couple thousand in it.
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This is very much personal preference. Some of those trips are incredible memories. I went to London when I was in my mid-20s and could barely afford it, but I wouldn't trade it for another $1500 in savings or an iPad. Life is short, I don't want to get to a point where I wish I could have seen things but didn't cause I was socking away money. Especially when young with earning potential ahead.
Agreed, but if you do it once or twice every year, and start having a wife and kids in tow, and you are doing it with money that would have otherwise gone into your 401(k), you increase the risk of being one of those guys who are still working when you are 70 because you can't afford to retire.
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Two of the biggest money wasters: Cars and vacations.
jsglow and I buy modest, reliable vehicles a couple of years old and drive them until they die. Right now I am driving a 10-year-old Mazda 3 with 125,000 miles on it. We did splurge about nine years back and bought a 2-year-old Miata that had 11,000 miles on it as a "summer car". We found the original price sticker in the glove box and discovered we paid exactly $11,000 less. In other words, the depreciation on the car was $1/mile for the first owner. We have since put on over 100,000 miles more on it (less that 15 cents/mile). Never had to do anything much more than regular maintenance to either car.
Regarding vacations, you don't have to go to Jamaica or visit The Mouse every year. We did have the occasional big trip, but we also have done a lot of camping. I have acquaintances who went on lots of elaborate, expensive vacations who are now complaining that they can't afford to send their kids to the college of their choice. But yeah, they have some great snapshots.
I've always kept one new car (relatively speaking) for my wife and an older car for myself. A waste of money to have 2 brand new cars all the time.
And we always traveled a lot, but even on three week go across the country trips, we camped most nights. With kids, why would anyone even want to be tied to an expensive hotel room? Get 'em outside. They love it.
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This is very much personal preference. Some of those trips are incredible memories. I went to London when I was in my mid-20s and could barely afford it, but I wouldn't trade it for another $1500 in savings or an iPad. Life is short, I don't want to get to a point where I wish I could have seen things but didn't cause I was socking away money. Especially when young with earning potential ahead.
Yes, this.
Loads of research out there shows that spending money on experiences - vacations, concerts, sporting events, etc. - makes us happier than spending money on material goods. It also builds closer bonds among those who share the experiences together.
http://www.theatlantic.com/business/archive/2014/10/buy-experiences/381132/
http://www.forbes.com/sites/hbsworkingknowledge/2013/08/05/want-to-buy-happiness-purchase-an-experience/
http://www.cnn.com/2009/HEALTH/02/10/happiness.possessions/
To the original question, my job alternates between periods of being extremely busy and periods of waiting for the next thing crisis to appear so I can be extremely busy again. So, a lot of hurry up and wait. I spend a lot, probably too much, of the wait time here.
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Yes, this.
Loads of research out there shows that spending money on experiences - vacations, concerts, sporting events, etc. - makes us happier than spending money on material goods. It also builds closer bonds among those who share the experiences together.
http://www.theatlantic.com/business/archive/2014/10/buy-experiences/381132/
http://www.forbes.com/sites/hbsworkingknowledge/2013/08/05/want-to-buy-happiness-purchase-an-experience/
http://www.cnn.com/2009/HEALTH/02/10/happiness.possessions/
To the original question, my job alternates between periods of being extremely busy and periods of waiting for the next thing crisis to appear so I can be extremely busy again. So, a lot of hurry up and wait. I spend a lot, probably too much, of the wait time here.
It's not an either or proposition. There are a multitude of ways to keep travel expenses low and have a wonderful time.
To my original point -- no vacations for three years after college and save like crazy. Starting life after college is expensive and full of change. You need to put together an emergency fund and get a handle on the responsibilities and expenses of your new adult life.
Once you have a handle on those things and see how your money is working for you, then integrate some fun trips into the mix.
Oh, and the original point of the tread. My job is essentially like writing term papers all day so its about 45 minutes of writing and 15 minutes of refreshing the brain.
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I am in my mid-50s and semi-retired after a 30-year career. I write a little (freelance), coach and officiate youth sports. I do what I want to do and what makes me happy.
My wife is a year younger and works full-time. She was a stay-at-home mom until our kids were well into their teen years. Now the least she can do is be my Sugar Mama - ha!
I never made $100K in a year. My wife isn't close to that. We put one of our kids through Lawrence, an expensive liberal-arts college in Appleton. The other only went to college for one year; his choice. We usually have 2 new-ish cars but don't buy expensive wheels. We like traveling when we have time but we don't get to do it very often, and take only 3-5 day trips when we do. We love Hawaii and try to go every other year or so, but can't always manage it. When we do spend money on things, we try to buy quality but we don't spend frivolously on "stuff." It's just not important to us to have the latest and greatest. We have very little jewelry and don't buy tons of designer clothes/shoes/etc. We eat out with friends fairly often but we rarely go to high-end establishments.
We have zero debt, not even a mortgage.
How did we do it?
We have socked away the maximum in our 401(k)s since the mid-80s and in our Roth IRAs since those became law in 1998, and we mostly have been buy-and-hold investors.
During most of our kids' childhoods, we were very careful with what we spent without being ridiculously cheap. For example, while other parents were lavishing $1000 birthday "theme" parties on their pre-teen kids, we would have gatherings at our house, and our kids seemed to enjoy themselves just fine.
We have used credit cards for almost every purchase since we got married 30+ years ago but never once have we failed to pay off our balance at the end of the month. Never once. It's been a great way to accumulate airline miles and hotel points.
We did get lucky with our Chicago house, which we bought in 1994 and sold in 2004 for a nice profit, so that definitely helped our bottom line. We used proceeds from that sale to pay cash for our current home in N.C.
As you see, though, we're pretty much just regular folks. We're not cheap but we shop carefully and we think before we buy anything that costs more than $20. We hate debt. We save and invest whatever we can. We'll never be "rich," but we should have financial independence forever.
Here's to life!
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Mid 40's, solo worker...wife takes care of the kids. Looking to retire in the next few years. Will definitely be moving out of California, but might keep the house to rent out...we'll see.
Max out on 401K, drive a used pickup truck 2006 with about 80K miles on it. We don't buy super nice cars, our home is nice, but not insane. I cut my own grass, carpool into work, have solar panels, give my son his buzz cuts. Can't wait to get out of the giant money suck that is California.
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(http://upload.wikimedia.org/wikipedia/commons/5/59/Percent_of_Income_from_Capital_Gains_and_Dividends_(2006).gif)
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I'm 52, and paid as long as I get my work done...which means I can post on Scoop during the workday if I'm not in a meeting.
Regarding the saving/retirement thing...I had a financial plan like others here:
*lived frugally early on, eating at home and paying off student loans ASAP.
*stayed well within our means (including driving my '92 Accord for 17 years).
*dumped max contributions into 401(k)s and IRAs.
*paid off our house early (100% debt free by 50).
We started spending more around 45, traveling (from Singapore to Paris, Seoul to Rome) and getting newer cars (a 2015 VW GTI soon!).
We both could retire comfortably within the next year or two, but I plan to stay on longer because I actually like my job. I may gradually cut back the hours as money becomes less of an issue.
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I'm 52, and paid as long as I get my work done...which means I can post on Scoop during the workday if I'm not in a meeting.
Regarding the saving/retirement thing...I had a financial plan like others here:
*lived frugally early on, eating at home and paying off student loans ASAP.
*stayed well within our means (including driving my '92 Accord for 17 years).
*dumped max contributions into 401(k)s and IRAs.
*paid off our house early (100% debt free by 50).
We started spending more around 45, traveling (from Singapore to Paris, Seoul to Rome) and getting newer cars (a 2015 VW GTI soon!).
We both could retire comfortably within the next year or two, but I plan to stay on longer because I actually like my job. I may gradually cut back the hours as money becomes less of an issue.
Life is good!!
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Great stories everyone, gives me confidence.
My wife and I are in mid 30's, each sock away 15% of our income in 403(b)s, just started a Roth (I know I know, a bit too late, but we are trying). Currently rent, but live in high cost area (Boston), and have a down payment fund, but housing prices and PMI have scared us off thus far. Daycare for the next few years is taking it's toll, but adjusting our spending to ensure we keep that retirement fund pumping.
Any other ideas, or "wish I would have dones" from folks?
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Great stories everyone, gives me confidence.
My wife and I are in mid 30's, each sock away 15% of our income in 403(b)s, just started a Roth (I know I know, a bit too late, but we are trying). Currently rent, but live in high cost area (Boston), and have a down payment fund, but housing prices and PMI have scared us off thus far. Daycare for the next few years is taking it's toll, but adjusting our spending to ensure we keep that retirement fund pumping.
Any other ideas, or "wish I would have dones" from folks?
Thanks for making me a feel a little bit better. Was starting to feel a little inadequate next to all of these financial Einsteins.
I'm 29, still renting in Chicago, for the same reasons you listed, but will probably buy within the next year. I keep going back and forth between waiting until I have a 20% down payment, yet risking home prices and interest rates going up, or buying sooner and biting the bullet with PMI. Only have enough for about a 10% down payment right now.
I guess another alternative is my credit union is offering a 5/5 ARM, which only requires a 5% down payment and has no PMI, offers 3.25% introductory APR but can increase 2% every 5 years, with a 9.25% lifetime cap. I think that is on the table, since my first home will probably only be for 8-10 years, so I'd only have to deal with 1 increase. Any thoughts on this as a quicker way into home ownership from the wise Scoop sages?
Have some student loans that still need to be paid, nothing massive, but about 30% of my annual income still remaining. That's my only debt. Decent interest rate at 5%, so haven't been paying it off any quicker than the minimum payment, have just been socking away into the Roth IRA and 401k.
The Roth IRA is a great tool. I have just been pumping as much as I can into that. It gives some nice security as it is more liquid than a 401k because in an emergency you can pull out contributions at any time penalty free, and you can withdraw contributions and up to $10k of earnings towards a first home after 5 years of being open. I am coming up on my 5th year in about 18 months, at which point I could avoid PMI, but not sure I want to wait that long or empty a potential retirement fund.
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Any other ideas, or "wish I would have dones" from folks?
Wish I had dumped every penny into Google in 2005.... ;)
Seriously, the only significant financial "mistake" I made in my early 30s was believing in the big name mutual fund managers, and putting too much money into high-fee funds. Some did well, but on balance, they didn't beat the index funds. I finally switched to mostly low-cost index funds about 15 years ago. I have a small part of my portfolio in stocks (Apple, Intel, Cisco), but for secure long-term growth, it's hard to beat a few well-selected index funds.
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I'm 29, still renting in Chicago, for the same reasons you listed, but will probably buy within the next year. I keep going back and forth between waiting until I have a 20% down payment, yet risking home prices and interest rates going up, or buying sooner and biting the bullet with PMI. Only have enough for about a 10% down payment right now. Have some student loans that still need to be paid, nothing massive, but about 30% of my annual income still remaining. That's my only debt. Decent interest rate at 5%, so haven't been paying it off any quicker than the minimum payment, have just been socking away into the Roth IRA and 401k.
PMI - I never had to pay in 14 years of having a mortgage. I re-fied in 2013 and ended up having to pay PMI because "the drop in appraised home value prices". In my case if the appraisal was like $4,000 higher I wouldn't have had to pay PMI. Zillow average indicated the appraisal should have been little higher, but if I had another appraisal completed, there was no guarantee it was going to be any different. Plus we would have lost the rate (as the rates went up slightly in the interim) if we waited on another appraisal.
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PMI - I never had to pay in 14 years of having a mortgage. I re-fied in 2013 and ended up having to pay PMI because "the drop in appraised home value prices". In my case if the appraisal was like $4,000 higher I wouldn't have had to pay PMI. Zillow average indicated the appraisal should have been little higher, but if I had another appraisal completed, there was no guarantee it was going to be any different. Plus we would have lost the rate (as the rates went up slightly in the interim) if we waited on another appraisal.
Sorry if this is being too invasive, but I don't see how that makes sense. Have you been in the same house for those 14 years, or was a move involved? If you've been in the same house, shouldn't you have had enough principal paid off where the drop in the appraised value of the home didn't matter? I thought PMI was only used when someone doesn't have 20% of the value of the home paid off. I.E. I just bought a $200k home that I could only take out 160k and needed to pay 40k up front to avoid PMI. If you had avoided PMI from the get-go how did the refinance bite you in the butt like that?
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Any other ideas, or "wish I would have dones" from folks?
Wish I had gone to work for Mark Cuban when offered in 1998, but I was promoted in the MU Athletic Department and my wife was pregnant.......oh well.
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We're DINKs in our mid-30s. We sock about 20-25% of our annual income away into retirement funds (401(k)/403(b), other investments). We only ever have one car on a loan at a time, plan is to get at least 10 years out of a car before trading in for a new or newish mid-range vehicle.
We try to take small to medium vacations 3 or 4 times a year, like a long weekend or a week at most. Typically those vacations are to visit friends or family, or trips like a weekend in Door County. We just got back from a long ski weekend in Keystone/Copper and stayed with friends in Castle Rock near Denver. It's not an official policy but generally take a big vacation every other year (2 weeks in Boston/Maine, 10 days in Ireland, Europe proper in the next year or two, etc). Put investments into our house, like hopefully a new kitchen this year to keep it up to date and marketable should we ever want to move.
We definitely could be living a fatter lifestyle if we wanted and not saving as much as we do.....but on our current trajectory we could retire at 52 (wife is a PT and long careers in that field are tough) live until we're 95 and not have to worry about social security being around or accounting for the pension I have through my company (they killed it about 6 months after I was vested).
Had a profound conversation with my dad when I graduated from Marquette. After he retired from the Air Force he went to work for a series of defense contractors and did very well for himself and the family. He sat me down and said "You've become accustomed to a lifestyle living with us you simply can't afford right now. Never have a lifestyle you can't afford because you won't have it for long and then you'll be really pissed."
As for the OP, I work for a Fortune 500 company and am really good at my job so can get stuff done pretty easily while taking breaks to go on Scoop and have fun/clear my brain. Some days I'm never on, some days I'm on once an hour depending on meetings, work load, travel, etc.
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Wish I had dumped every penny into Google in 2005.... ;)
Seriously, the only significant financial "mistake" I made in my early 30s was believing in the big name mutual fund managers, and putting too much money into high-fee funds. Some did well, but on balance, they didn't beat the index funds. I finally switched to mostly low-cost index funds about 15 years ago. I have a small part of my portfolio in stocks (Apple, Intel, Cisco), but for secure long-term growth, it's hard to beat a few well-selected index funds.
Who are you with? I just opened a Vanguard account for my non-retirement savings. I'd like to just dump some cash into index funds and only review them every 3-6 months.
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Thanks for making me a feel a little bit better. Was starting to feel a little inadequate next to all of these financial Einsteins.
I'm 29, still renting in Chicago, for the same reasons you listed, but will probably buy within the next year. I keep going back and forth between waiting until I have a 20% down payment, yet risking home prices and interest rates going up, or buying sooner and biting the bullet with PMI. Only have enough for about a 10% down payment right now.
I guess another alternative is my credit union is offering a 5/5 ARM, which only requires a 5% down payment and has no PMI, offers 3.25% introductory APR but can increase 2% every 5 years, with a 9.25% lifetime cap. I think that is on the table, since my first home will probably only be for 8-10 years, so I'd only have to deal with 1 increase. Any thoughts on this as a quicker way into home ownership from the wise Scoop sages?
Have some student loans that still need to be paid, nothing massive, but about 30% of my annual income still remaining. That's my only debt. Decent interest rate at 5%, so haven't been paying it off any quicker than the minimum payment, have just been socking away into the Roth IRA and 401k.
The Roth IRA is a great tool. I have just been pumping as much as I can into that. It gives some nice security as it is more liquid than a 401k because in an emergency you can pull out contributions at any time penalty free, and you can withdraw contributions and up to $10k of earnings towards a first home after 5 years of being open. I am coming up on my 5th year in about 18 months, at which point I could avoid PMI, but not sure I want to wait that long or empty a potential retirement fund.
You shouldn't feel inadequate. My wife and I saved her salary for 3 years so we could put a 1/3 down payment on a house. Things are a lot different today than when we started saving for retirement. My wife and I both have income from our company pensions which we did not contribute one penny ( not too many of those today). Supplemental savings which companies matched didn't start until the late 70s. My wife and I started those in the early 80s. You have to remember the Dow index back then was around 1000 (correct me if I'm wrong) and look at where it is now. Our 401k is worth 5x what we put into it (conservative investments). Yes, Roth IRAs are great; we have about 20% of our income from Roths. What looks very small today can be a lot bigger tomorrow. I am no Einstein. In the early spring of 2008 my wife and I both lost our jobs so we just decided to retire. The silver lining on loosing our jobs was that we moved our 401ks out of the stock market before it crashed. Were not all geniuses, sometimes it's just good luck!
The biggest difference however is that the cost of a home, car, taxes and daily living expenses took a lower percentage of our income than it does today. Our incomes went a lot further than incomes today which is sad. In this respect your generation does have it harder.
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Thanks for making me a feel a little bit better. Was starting to feel a little inadequate next to all of these financial Einsteins.
I'm 29, still renting in Chicago, for the same reasons you listed, but will probably buy within the next year. I keep going back and forth between waiting until I have a 20% down payment, yet risking home prices and interest rates going up, or buying sooner and biting the bullet with PMI. Only have enough for about a 10% down payment right now.
I guess another alternative is my credit union is offering a 5/5 ARM, which only requires a 5% down payment and has no PMI, offers 3.25% introductory APR but can increase 2% every 5 years, with a 9.25% lifetime cap. I think that is on the table, since my first home will probably only be for 8-10 years, so I'd only have to deal with 1 increase. Any thoughts on this as a quicker way into home ownership from the wise Scoop sages?
Have some student loans that still need to be paid, nothing massive, but about 30% of my annual income still remaining. That's my only debt. Decent interest rate at 5%, so haven't been paying it off any quicker than the minimum payment, have just been socking away into the Roth IRA and 401k.
The Roth IRA is a great tool. I have just been pumping as much as I can into that. It gives some nice security as it is more liquid than a 401k because in an emergency you can pull out contributions at any time penalty free, and you can withdraw contributions and up to $10k of earnings towards a first home after 5 years of being open. I am coming up on my 5th year in about 18 months, at which point I could avoid PMI, but not sure I want to wait that long or empty a potential retirement fund.
My personal opinion, jump now, you will save more by a lower interest rate than you will lose on PMI. Hell, if house values go up, you pay extra a month to pay down principal, or remodel the house enough to improve the valuation and you can make PMI go away pretty quick. Bought our house just off the floor in 2009, only put 10% down and got rid of the PMI a year ago. Interest rates are going up in the next year and baring some sort of disaster they will never, ever be this low again. Better to lock in now, especially if it's a house you will be in 10+ years.
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I work in the medical field. During therapy, I put my laptop on my patient's back as I ride em like a horse.
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I work in the medical field. During therapy, I put my laptop on my patient's back as I ride em like a horse.
(https://media4.giphy.com/media/uH27sheFg9One/200.gif)
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Sorry if this is being too invasive, but I don't see how that makes sense. Have you been in the same house for those 14 years, or was a move involved? If you've been in the same house, shouldn't you have had enough principal paid off where the drop in the appraised value of the home didn't matter? I thought PMI was only used when someone doesn't have 20% of the value of the home paid off. I.E. I just bought a $200k home that I could only take out 160k and needed to pay 40k up front to avoid PMI. If you had avoided PMI from the get-go how did the refinance bite you in the butt like that?
I originally bought from my mom, way below market rate than built an addition (because the original home was basically a 1.5 bedroom house).
After 9/11 a lot of New Yorkers got out of the City and moved to Connecticut and drove up "the value" of home prices like crazy and my town was a big landing spot because of the excellent school system.
House appraised value dropped $85-$90k from mid-2000s.
FWIW, despite paying the PMI, my mortgage is still less per month than it was before the re-fi and that includes getting rid of 3 years of payments as we took a shorter term.
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FWIW, despite paying the PMI, my mortgage is still less per month than it was before the re-fi and that includes getting rid of 3 years of payments as we took a shorter term.
When doing a refi, always try to pull off a shorter term, even if it means having 25 years left on a 30 and doing a refi into a 20. If one can get it into a 15, then they will find -- depending on the rate -- that the payments start with paying more principal then interest each month. Which is fantastic because I hate paying interest more than I hate the Badgers.
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PMI - I never had to pay in 14 years of having a mortgage. I re-fied in 2013 and ended up having to pay PMI because "the drop in appraised home value prices". In my case if the appraisal was like $4,000 higher I wouldn't have had to pay PMI. Zillow average indicated the appraisal should have been little higher, but if I had another appraisal completed, there was no guarantee it was going to be any different. Plus we would have lost the rate (as the rates went up slightly in the interim) if we waited on another appraisal.
PMI isn't necessarily bad... 2010 was an opportune time for my wife and I to buy a house, defaults were high, prices were low, inventory was plentiful, etc., but lending was tight, and my wife was pregnant with our 2nd child. So between a 20% down payment and issues regarding my wife taking a 10-12 week maternity leave, going the conventional route was too much of a burden... so we FHA'd the loan, got a better interest rate than what we were quoted for a conventional, but we're paying PMI. When I did the calc, over the life of the loan, PMI only added about 20 bps to the overall rate we were paying net of the Chase 1% refund we get every year on PI pmts, so we still have an effective rate sub 4.5%, not to mention that we bought the house for $40-50k less than what we should have paid for it (and still about a $100k below a stabilized market value). Had we waited a year or two for incomes to stabilize and post the 20% down, the house we have would likely have not been on the market, and we would have paid at least $75k-100k more for a similar house nearby.
In short, PMI was a necessary evil to take advantage of getting the home we wanted in a very favorable marketplace, and in the end, we still came out ahead. If you can avoid PMI, excellent... but look at the context of the situation/market before you dismiss it.
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PMI isn't necessarily bad... 2010 was an opportune time for my wife and I to buy a house, defaults were high, prices were low, inventory was plentiful, etc., but lending was tight, and my wife was pregnant with our 2nd child. So between a 20% down payment and issues regarding my wife taking a 10-12 week maternity leave, going the conventional route was too much of a burden... so we FHA'd the loan, got a better interest rate than what we were quoted for a conventional, but we're paying PMI. When I did the calc, over the life of the loan, PMI only added about 20 bps to the overall rate we were paying net of the Chase 1% refund we get every year on PI pmts, so we still have an effective rate sub 4.5%, not to mention that we bought the house for $40-50k less than what we should have paid for it (and still about a $100k below a stabilized market value). Had we waited a year or two for incomes to stabilize and post the 20% down, the house we have would likely have not been on the market, and we would have paid at least $75k-100k more for a similar house nearby.
In short, PMI was a necessary evil to take advantage of getting the home we wanted in a very favorable marketplace, and in the end, we still came out ahead. If you can avoid PMI, excellent... but look at the context of the situation/market before you dismiss it.
What are the requirements for an FHA loan?
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Who are you with? I just opened a Vanguard account for my non-retirement savings. I'd like to just dump some cash into index funds and only review them every 3-6 months.
My work retirement plan is managed by Fidelity, so most of my money is in their index funds, but Vanguard's are just as good IMHO.
The simplest plan to start (and I think a very good one) would just be to dump most into the Vanguard Total Stock Market Index Fund, and smaller portions in the Total Bond Market Index Fund and Total International Stock Market Index Fund. You can also throw a bit into one or two of their sector funds if you like - their Health Care Fund has been doing very well, for example.
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If you are on TD Ameritrade they have no transaction fee funds, at least one of which just tracks the S&P 500 (SVSPX I think). You can't sell for 6 months after purchase or you owe a transaction cost, but 0 transaction fees and something like a .05% management fee is pretty solid on keeping your costs low.
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Wish I had dumped every penny into Google in 2005.... ;)
Seriously, the only significant financial "mistake" I made in my early 30s was believing in the big name mutual fund managers, and putting too much money into high-fee funds. Some did well, but on balance, they didn't beat the index funds. I finally switched to mostly low-cost index funds about 15 years ago. I have a small part of my portfolio in stocks (Apple, Intel, Cisco), but for secure long-term growth, it's hard to beat a few well-selected index funds.
Shortly after 9/11, my Mom passed and I obtained a small amount of funds. Never did the stock market thing, since both wife and I were going to get federal pensions, which under the Civil Service were excellent. My brother worked on Wall Street and I told him I wanted to invest these funds in Nextel, since everyone had one and thought it was the wave of the future. So, I took 10K of it and invested in Nextel. Then the Blackberry came along and Nextel with its "walkie-talkie" aspect was thing of the past. Lost 7K on that deal when I sold it last year after Sprint took over and T-Mobile deal to buy Sprint went south. BUT, at the same time as Nextel investment, my brother mentioned that he and his best friend were to invest in a computer company and said it was a gamble, but recommended that I get in. So, I took 20K and bought shares of this computer company and held onto to it. Heck, it was only a few bucks a share at the time and it was inheritance money and I took a chance. That company was Apple and the rest is history. Those are the only stocks I have ever purchased, so sometimes the gamble pays off, sometimes it doesn't.
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Shortly after 9/11, my Mom passed and I obtained a small amount of funds. Never did the stock market thing, since both wife and I were going to get federal pensions, which under the Civil Service were excellent. My brother worked on Wall Street and I told him I wanted to invest these funds in Nextel, since everyone had one and thought it was the wave of the future. So, I took 10K of it and invested in Nextel. Then the Blackberry came along and Nextel with its "walkie-talkie" aspect was thing of the past. Lost 7K on that deal when I sold it last year after Sprint took over and T-Mobile deal to buy Sprint went south. BUT, at the same time as Nextel investment, my brother mentioned that he and his best friend were to invest in a computer company and said it was a gamble, but recommended that I get in. So, I took 20K and bought shares of this computer company and held onto to it. Heck, it was only a few bucks a share at the time and it was inheritance money and I took a chance. That company was Apple and the rest is history. Those are the only stocks I have ever purchased, so sometimes the gamble pays off, sometimes it doesn't.
Glad it worked out for you, but I would have taken that 30k and dumped it into an SP500 index fund. Return on that would also have been excellent.
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I can do my work blind folded. So postin' ain't no big thang.
Saves money on loupes then, aye?
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Shortly after 9/11, my Mom passed and I obtained a small amount of funds. Never did the stock market thing, since both wife and I were going to get federal pensions, which under the Civil Service were excellent. My brother worked on Wall Street and I told him I wanted to invest these funds in Nextel, since everyone had one and thought it was the wave of the future. So, I took 10K of it and invested in Nextel. Then the Blackberry came along and Nextel with its "walkie-talkie" aspect was thing of the past. Lost 7K on that deal when I sold it last year after Sprint took over and T-Mobile deal to buy Sprint went south. BUT, at the same time as Nextel investment, my brother mentioned that he and his best friend were to invest in a computer company and said it was a gamble, but recommended that I get in. So, I took 20K and bought shares of this computer company and held onto to it. Heck, it was only a few bucks a share at the time and it was inheritance money and I took a chance. That company was Apple and the rest is history. Those are the only stocks I have ever purchased, so sometimes the gamble pays off, sometimes it doesn't.
Hold on, so you bought $20K worth of AAPL shares at around $2 and have held it since then? Through both stock splits? If so, what building are you putting your name on at MU? Oy vey
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ZFB has been spending less lately. Instead of higher cost escorts he's just visiting low-cost Jack-shacks. End result is the same, but he saves tons of time & money.
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Sure 'bout that? Thought F*ckin' frequented the neighborhood glory hole, ai na?
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I post usually at night because using the phone is a PITA. I stay away from accessing any website I can't justify to an investigator.
As for all you in your late 20s - early 30s concerned about PMI, see if your parents or in-laws or other relatives are an option for a loan to get you out of PMI territory. If financially able, your parents will be happy to help - they'd rather do it when alive than wait until they're dead. And in a couple of decades when you're well off...pay it forward.
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My main advice to the 20-somethings and 30-somethings is don't buy a house till you really can afford it.
A house is not an investment; it's a place to live. If you are really lucky, you will make a little money over time, but it's often not as much as one thinks it is after all the extras are figured in: closing costs for buying; closing costs for selling; property tax; insurance; maintenance; minor repairs; major repairs. And all that is in addition to the interest and principal, of course.
There are folks who buy a house for 300K and sell 5 years later for 330K and think they actually "made money" on the deal. In all likelihood, they lost money, and quite a bit of it because of all the extras.
Renting gets a bad rap. My wife and I were between houses in 2007, thought we would rent for 4 months. Because of circumstances, we ended up renting for 40 months. I thought we would hate it but we actually liked it. We liked not having to do yardwork, liked not having to shovel snow, liked not having to worry about maintenance, and especially liked that we could leave if we wanted to without being tied down by a house to sell.
When we moved to N.C., we bought a house. Owning is fine, but frankly, I miss a lot about renting. In Chicago, we rented in Lakeview, walking distance to Lincoln Park Zoo, the lake and all kinds of entertainment. Bus line downtown outside our front door. El right down the street. To buy that convenience, a decent condo would have cost us $500K minimum and a house would have been 7 figures. Our rent wasn't cheap but it wasn't outrageous for all we got, including a doorman. As I said, I miss it sometimes.
Buy a house because you want a house and because you need a place to live. Don't buy it because you think you're supposed to by a certain age or because yahoos tell you "renting is throwing money away" or because you look at it as an investment.
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Do both.
I respect Dave Ramsey and agree with a lot of his stuff, but the idea that you should put off saving for retirement until you are debt free seems insane to me. My student loans have a 5% interest rate and I would have left a ton of money on the table (work 401k match and an average of about 10% annual returns in the stock market since I have started working) if I followed his advice.
Pay your debts and save at the same time.
Student loans are low interest and aren't considered bad debt. I only pay the minimums on my student loans because there have been years inflation was higher than the interest rate I have. I'm in my 40s and make more than I deserve and still do it that way.
Don't ever forget to live your life. The future is uncertain and the end is always near. It's not all about "the future." How many bums are on the street because they didn't save enough? None. You'll figure it out.
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Student loans are low interest and aren't considered bad debt. I only pay the minimums on my student loans because there have been years inflation was higher than the interest rate I have. I'm in my 40s and make more than I deserve and still do it that way.
Don't ever forget to live your life. The future is uncertain and the end is always near. It's not all about "the future." How many bums are on the street because they didn't save enough? None. You'll figure it out.
What are your loans' interest rates at? What sort of rates would make you switch your strategy?
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My main advice to the 20-somethings and 30-somethings is don't buy a house till you really can afford it.
A house is not an investment; it's a place to live. If you are really lucky, you will make a little money over time, but it's often not as much as one thinks it is after all the extras are figured in: closing costs for buying; closing costs for selling; property tax; insurance; maintenance; minor repairs; major repairs. And all that is in addition to the interest and principal, of course.
There are folks who buy a house for 300K and sell 5 years later for 330K and think they actually "made money" on the deal. In all likelihood, they lost money, and quite a bit of it because of all the extras.
Renting gets a bad rap. My wife and I were between houses in 2007, thought we would rent for 4 months. Because of circumstances, we ended up renting for 40 months. I thought we would hate it but we actually liked it. We liked not having to do yardwork, liked not having to shovel snow, liked not having to worry about maintenance, and especially liked that we could leave if we wanted to without being tied down by a house to sell.
When we moved to N.C., we bought a house. Owning is fine, but frankly, I miss a lot about renting. In Chicago, we rented in Lakeview, walking distance to Lincoln Park Zoo, the lake and all kinds of entertainment. Bus line downtown outside our front door. El right down the street. To buy that convenience, a decent condo would have cost us $500K minimum and a house would have been 7 figures. Our rent wasn't cheap but it wasn't outrageous for all we got, including a doorman. As I said, I miss it sometimes.
Buy a house because you want a house and because you need a place to live. Don't buy it because you think you're supposed to by a certain age or because yahoos tell you "renting is throwing money away" or because you look at it as an investment.
What you are saying is true if you end up moving around, but maybe not if you plan to stay put for awhile. When you rent, you are always paying the current market rate for housing, but when you purchase, you are locking in most of the costs up front.
We still live in the first house we bought 25 years ago. At the time, we were childless newlyweds. A lot of our friends were buying condos or smaller houses, but we got a place we knew would serve our long-term needs. We have refinanced a few times, and what we pay for our mortgage and property taxes (after the income tax deductions) is less than the rent on a decent two-bedroom apartment in our area. We certainly could have paid off our mortgage by now, but our investments are earning more than the interest rate we are paying.
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What you are saying is true if you end up moving around, but maybe not if you plan to stay put for awhile. When you rent, you are always paying the current market rate for housing, but when you purchase, you are locking in most of the costs up front.
True; was a big driver for us to buy a couple years back. Our rent went up double digits two years in a row; just read a story showing the average increases here are still well ahead of national averages. Take even a modest average increase and scale it out 5, 10, 20 years, then compare to the mortgage which will be fixed for that entire time and may eventually pale in comparison. Also nice that the rates were so low (and are still pretty low) that the after-tax effective rate can be exceeded by investments without even trying, so there's not even an incentive to accelerate payments.
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If you are handy with a hammer and pipe wrench then consider buying a duplex -- living in one unit and renting out the other. You collect a rent check and half of your house maintenance expenses become deductible business expenses. You may pay some cap gains when you sell, but you have over the course of the years you owned the place generated income that cut your owning costs significantly.
When you are ready to move into a new house, you can rent out the other half and the place will cash flow to the point it helps pay the mortgage on your other house. When you do finally sell, you have a nice pile of cash to pay down the mortgage on your other house.
I would only recommend this in areas where you can get good tenants with money.
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Student loans are low interest and aren't considered bad debt. I only pay the minimums on my student loans because there have been years inflation was higher than the interest rate I have. [...]
Not anymore; not even close. Student loan interest rates are going off at 6% on the low end and plenty are north of 8%.
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Not anymore; not even close. Student loan interest rates are going off at 6% on the low end and plenty are north of 8%.
Yeah, the student loan interest depends totally on when you went to school. I went in the 80s, so I had plenty of loans with double-digit interest rates. Got those suckers paid off as quickly as I could.
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What you are saying is true if you end up moving around, but maybe not if you plan to stay put for awhile. When you rent, you are always paying the current market rate for housing, but when you purchase, you are locking in most of the costs up front.
We still live in the first house we bought 25 years ago. At the time, we were childless newlyweds. A lot of our friends were buying condos or smaller houses, but we got a place we knew would serve our long-term needs. We have refinanced a few times, and what we pay for our mortgage and property taxes (after the income tax deductions) is less than the rent on a decent two-bedroom apartment in our area. We certainly could have paid off our mortgage by now, but our investments are earning more than the interest rate we are paying.
Excellent points, chick.
You bought a house to live in long-term. Hopefully it will have turned out to be an outstanding investment, too.
I agree that when you rent you are paying the current market rate and when you buy you are locking in costs up front. That didn't work too well for those who bought in Phoenix or Vegas in 2006, when they felt they had better buy -- even if they had to win bidding wars -- because, by gosh, they would "miss out" before prices went even higher!
As far as paying off the mortgage, that's an individual choice. I like being unencumbered, but I certainly understand your reasons for not paying off your mortgage. Many financial experts would say I was foolish for doing so, and I could give a rat's rear what they say!
Real estate is very local and a principal residence should be viewed as long-term, just as you did. Congrats!
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Excellent points, chick.
You bought a house to live in long-term. Hopefully it will have turned out to be an outstanding investment, too.
I agree that when you rent you are paying the current market rate and when you buy you are locking in costs up front. That didn't work too well for those who bought in Phoenix or Vegas in 2006, when they felt they had better buy -- even if they had to win bidding wars -- because, by gosh, they would "miss out" before prices went even higher!
As far as paying off the mortgage, that's an individual choice. I like being unencumbered, but I certainly understand your reasons for not paying off your mortgage. Many financial experts would say I was foolish for doing so, and I could give a rat's rear what they say!
Real estate is very local and a principal residence should be viewed as long-term, just as you did. Congrats!
Gotta give jsglow credit where it is due. If it were up to me, we would have joined many of our friends in moving up to a bigger, fancier house than we needed, because, hey, we could afford it, and why not show off how successful we are? But in retrospect, I am glad we stayed put.
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Excellent points, chick.
You bought a house to live in long-term. Hopefully it will have turned out to be an outstanding investment, too.
I agree that when you rent you are paying the current market rate and when you buy you are locking in costs up front. That didn't work too well for those who bought in Phoenix or Vegas in 2006, when they felt they had better buy -- even if they had to win bidding wars -- because, by gosh, they would "miss out" before prices went even higher!
As far as paying off the mortgage, that's an individual choice. I like being unencumbered, but I certainly understand your reasons for not paying off your mortgage. Many financial experts would say I was foolish for doing so, and I could give a rat's rear what they say!
Real estate is very local and a principal residence should be viewed as long-term, just as you did. Congrats!
I agree with all of what you say. We waited until I was 35 to buy a house and then paid if off in 15 years (with a 30 year mortgage that started at 13.5% in the 80s).
I too prefer no debt, but can see reasons for buying early especially with the low rates. But as you said, don't buy a home as an investment; do it because that is where you want to live long term.
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Student loans are low interest and aren't considered bad debt. I only pay the minimums on my student loans because there have been years inflation was higher than the interest rate I have. I'm in my 40s and make more than I deserve and still do it that way.
Don't ever forget to live your life. The future is uncertain and the end is always near. It's not all about "the future." How many bums are on the street because they didn't save enough? None. You'll figure it out.
how are student loans not bad debt? Arguably it's the worst kind, since you can't get rid of it even through bankruptcy. Not an expert on poverty but I'd say the ability to live well within your means (which means by definition accumulating some savings) will probably help you weather storms better than without.
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how are student loans not bad debt? Arguably it's the worst kind, since you can't get rid of it even through bankruptcy. Not an expert on poverty but I'd say the ability to live well within your means (which means by definition accumulating some savings) will probably help you weather storms better than without.
Some student loans are not "bad debt." Some are. We shouldn't paint with too broad a brush.
$200k in debt from 4 years undergrad at MU, 3 years of law school at MU, and no job? Student loan = bad debt. Same debt but a $100k year job at a big firm? Student loan = good debt.
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Some student loans are not "bad debt." Some are. We shouldn't paint with too broad a brush.
$200k in debt from 4 years undergrad at MU, 3 years of law school at MU, and no job? Student loan = bad debt. Same debt but a $100k year job at a big firm? Student loan = good debt.
+1
I took on $30k in graduate school debt and I know I am easily making 50% more than I would have had I only had my MU undergraduate degree (which left me no debt thanks to scholarships and generous help from my parents). It sort of sucks starting 30 grand in the hole, but its worth it in the long run.
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+1
I took on $30k in graduate school debt and I know I am easily making 50% more than I would have had I only had my MU undergraduate degree (which left me no debt thanks to scholarships and generous help from my parents). It sort of sucks starting 30 grand in the hole, but its worth it in the long run.
I took on between $60-$70K for grad school, but my first job was a 60% raise from my previous position, and at my next raise is will put me probably the same % above where I would be similarly if I hadn't gone. So my loans are very annoying, but I don't regret it financially in the least.
As for loans, mine that I got between 2010-2012 average out to around 7% (most were at 6.8%). Even looking at potential re-financing would only get me down to 4%-ish, which would then extend them out another few years. Not a brutal double-digit rate, but still not a sure guarantee to beat from an investment/cost of money perspective.
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I took on between $60-$70K for grad school, but my first job was a 60% raise from my previous position, and at my next raise is will put me probably the same % above where I would be similarly if I hadn't gone. So my loans are very annoying, but I don't regret it financially in the least.
As for loans, mine that I got between 2010-2012 average out to around 7% (most were at 6.8%). Even looking at potential re-financing would only get me down to 4%-ish, which would then extend them out another few years. Not a brutal double-digit rate, but still not a sure guarantee to beat from an investment/cost of money perspective.
As an old guy, saddling students with 6.8% on loans where they know minimum payments are the norm is disgusting.
We should be encouraging education and helping our young people keep this as the greatest country on Earth. Instead, we are falling behind other industrialized countries, especially in the sciences.
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There is some horsecrap advice and thinking in this thread.
The answer to most topics mentioned in the thread is "it depends."
The median financial acumen of Scoop is not strong.
As for the original post... I own a company, but much of what we do is provide services (top-notch) to our clients. On a normal day at a client location I don't even think about Scoop. I'm incredibly focused, efficient and excellent in what I do. Fortunately (and well deserved), I have certain days during the "work week" where I can muddle through the MUScoop muck at a leisurely pace, but for the most part it's very early in the AM or at night.
As for the money talk... two quick things for now...
1) I find it interesting that a couple of folks with a similar background to me have the similar thoughts on vehicles. I refuse to pay a ton for a car. Granted, I want certain things in a car: leather interior with heated seats, sunroof, SUV... but past that there aren't many requirements. I want a care that works and is comfortable when I'm sitting in it. Why pay $30k+ more than is needed for that? It's bizarre to me. That said, if you LIKE cars and get off on a "nice car," cool, more power to you. It's just not my thing. Financially it's irrational, but mostly I just don't care about the newest, priciest cars. (Houses are a different story... 3,500 sq ft per person may seem a bit much, but I like to pace.)
2) Relative to much of this fine nation and my humble upbringing, my current financial status is great. However, I would like to accumulate more wealth. Scoop family, please leave me money in your will or even better, begin making gifts this year! You may gift me $14,000 in 2015 without any IRS reporting requirements attached. Just send it to me and we're good. I will do interesting things with it. Thanks in advance for your generosity.
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ZFB has been spending less lately. Instead of higher cost escorts he's just visiting low-cost Jack-shacks. End result is the same, but he saves tons of time & money.
I mostly scoop while in the sh!tter at work.
if it's pink and it stinks....
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Some student loans are not "bad debt." Some are. We shouldn't paint with too broad a brush.
$200k in debt from 4 years undergrad at MU, 3 years of law school at MU, and no job? Student loan = bad debt. Same debt but a $100k year job at a big firm? Student loan = good debt.
sure I'm not arguing against investing in yourself and using loans to do that, im just saying once you have the education part done why pay student debt off last?
If you have, say, $100k in total debt.... $50k left on mortgage and $50k in student loan debt. If interest rates were the same, pay the student debt down more aggressively. Even more so if the student loan debt is at 7% and your mortgage is likely near 3-4%?
Bad debt != bad investment
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If you have, say, $100k in total debt.... $50k left on mortgage and $50k in student loan debt. If interest rates were the same, pay the student debt down more aggressively.
I don't mean this in the wrong way, but this is stupid.
It depends on the specifics, but let me ax you something on one of the many considerations to be made...
With student debt interest deduction (adjustment) phase-outs being what they are (another law that penalizes success), your after-tax cost on the mortgage debt can be considerably less in the example you gave.
Don't go by anyone's "rule of thumb" or unsupportable views. Consider your situation careful from a multitude of angles, or find someone to help you do so.
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What are your loans' interest rates at? What sort of rates would make you switch your strategy?
One of them is 1.5% and the other is 3.5%. Down to about $50k total. It's from grad school from late 1990s into early 2000s. Marquette is paid off and I don't remember what the rate was. Both are lower than my mortgage rate. I have the ability to pay it off entirely, but I'd rather invest the cash at a higher rate of return.
I had no idea loans were 6-8% now. That definitely would change my strategy. Between that and the overall cost I might have not gone to grad school or at least thought a lot harder about it. I definitely would have just paid it off outright at those rates.
As for the idea of "bad debt" a mortgage provider will treat student loans very differently when assessing your credit risk than if it's consumer debt. $50k in grad student loans they won't blink at. If it's credit cards you'll be in trouble.
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I had no idea loans were 6-8% now.
Don't sweat it - they're not.
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Don't sweat it - they're not.
Yerp.
Stafford is @ 4.66% for both subsidized and subsidized, while Parent PLUS is 7.2%, and Grad PLUS are 6.2%.
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I don't mean this in the wrong way, but this is stupid.
It depends on the specifics, but let me ax you something on one of the many considerations to be made...
With student debt interest deduction (adjustment) phase-outs being what they are (another law that penalizes success), your after-tax cost on the mortgage debt can be considerably less in the example you gave.
Don't go by anyone's "rule of thumb" or unsupportable views. Consider your situation careful from a multitude of angles, or find someone to help you do so.
Didn't you just give a reason why what he said is correct? If after-tax cost on mortgage debt is considerably less, wouldn't you want to pay that off last?
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Yerp.
Stafford is @ 4.66% for both subsidized and subsidized, while Parent PLUS is 7.2%, and Grad PLUS are 6.2%.
Not only that, but the student loan interest is a federal tax deduction whether or not you itemize. (Depending on your income of course.)
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One of them is 1.5% and the other is 3.5%. Down to about $50k total. It's from grad school from late 1990s into early 2000s. Marquette is paid off and I don't remember what the rate was. Both are lower than my mortgage rate. I have the ability to pay it off entirely, but I'd rather invest the cash at a higher rate of return.
I had no idea loans were 6-8% now. That definitely would change my strategy. Between that and the overall cost I might have not gone to grad school or at least thought a lot harder about it. I definitely would have just paid it off outright at those rates.
As for the idea of "bad debt" a mortgage provider will treat student loans very differently when assessing your credit risk than if it's consumer debt. $50k in grad student loans they won't blink at. If it's credit cards you'll be in trouble.
Gotcha. I agree with interest rates that you have it's a lot easier to make that call. As the interest rates on whatever debt you have go higher and higher the decision to invest vs. pay off debt starts getting more and more gray, where it almost comes down to personal preference.
At the end of the day as long as you're saving the money and putting it towards something that's either knocking down debt or earning money for you, you can't really go wrong.
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Yerp.
Stafford is @ 4.66% for both subsidized and subsidized, while Parent PLUS is 7.2%, and Grad PLUS are 6.2%.
They have absolutely come down then, cause my last Stafford in 2012 was 6.8% and my Grad PLUS from that year (taken because costs rose $500 above my Stafford's per semester by the time I graduated) were at 7.9%.
So its not like its some ridiculous rate from the distant past.
Not only that, but the student loan interest is a federal tax deduction whether or not you itemize. (Depending on your income of course.)
Yeah, funny enough, that was a great deduction, but as Jay Bee made the comment about penalizing success, as I've used that graduate degree to my advantage and have progressed in my career, I won't be getting that deduction in 2015 as the government has deemed I'm now too affluent.
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Yeah, funny enough, that was a great deduction, but as Jay Bee made the comment about penalizing success, as I've used that graduate degree to my advantage and have progressed in my career, I won't be getting that deduction in 2015 as the government has deemed I'm now too affluent.
Just remember what the IRS' middle name is.
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Don't sweat it - they're not.
Actually, they are if you were in grad school around 2009-2011, when I was.
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Yeah, funny enough, that was a great deduction, but as Jay Bee made the comment about penalizing success, as I've used that graduate degree to my advantage and have progressed in my career, I won't be getting that deduction in 2015 as the government has deemed I'm now too affluent.
Ditto. It was nice the first year out of grad school, when I only had 6 months worth of income for that year. I haven't been able to use the student loan interest deduction since. Oh well, good problem to have I guess.
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Didn't you just give a reason why what he said is correct? If after-tax cost on mortgage debt is considerably less, wouldn't you want to pay that off last?
Thanks, G0lden3agle... been doing my best to not take that the wrong way over here.
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I mostly scoop while in the sh!tter at work.
if it's pink and it stinks....
They got one of those on your bottled water delivery trunk?
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What are the requirements for an FHA loan?
Not sure what it is now, but the material difference in 2010 was the down payment... 3% vs. 10%-20% for conventional. I think the credit score requirement was a bit lower, but not by much (we were well above both thresholds, so this wasn't an issue), but they were much more lax when it came to documenting employment (in our situation, the bank could accept a letter from my wife's employer that she was on maternity leave in lieu of paycheck-stubs and as verification of employment under the FHA loan but there were more hoops for a conventional loan).
The only downside to FHA - for us - was that if you amortized over 30 years, you're locked in to PMI for at least 7 years (and thereafter, until you have 20-25% equity or so). There was a bit more paperwork, and an FHA inspection is required so if you're buying a "fixer-upper" you may not qualify for FHA (unless you go the 204k route, which is another matter altogether).
That all said, again I reiterate this was a good situation for my wife and I given the market and circumstances at the time... YMMV. Jaybee says it best:
Don't go by anyone's "rule of thumb" or unsupportable views. Consider your situation careful from a multitude of angles, or find someone to help you do so.
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Not only that, but the student loan interest is a federal tax deduction whether or not you itemize. (Depending on your income of course.)
I know people who make well over $100k/year who are paying upwards of 20% of their after-tax income towards student loans yet don't qualify for the interest deduction. For those keeping score at home, that's a mortgage payment on a $350,000 home.
Student loans suck.
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When I went to graduate school my Company paid for both books and tuition. Don't Companies pay for that anymore?
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When I went to graduate school my Company paid for both books and tuition. Don't Companies pay for that anymore?
Its becoming increasingly rare, likely due to the rising rate of tuition and the proliferation of graduate degrees in the marketplace. I have two friends in part time MBA programs at GE Capital and Unilever that are getting tuition reimbursement, but both have required 2-3 year stints with the company afterwards. The Unilever deal actually requires payment upfront and then disbursements following program completion within that contracted timeline.
My employer at the time I began grad school would pay no more than $5K a year. The idea was for certification courses and other forms of classes I believe, not full grad school. If you went over $2500 a year, then the 2 year stint with the company afterwards kicked in, or you reimbursed the company. I get it for a full tuition, but for $5K, that was laughable as I was planning to leave immediately after graduation, so thanks but no thanks.
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One reason to pay off student loans first (all other things being equal): Should you face some sort of financial tragedy and have to declare bankruptcy, your student loans won't go away like your other debts will.
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Its becoming increasingly rare, likely due to the rising rate of tuition and the proliferation of graduate degrees in the marketplace. I have two friends in part time MBA programs at GE Capital and Unilever that are getting tuition reimbursement, but both have required 2-3 year stints with the company afterwards. The Unilever deal actually requires payment upfront and then disbursements following program completion within that contracted timeline.
My employer at the time I began grad school would pay no more than $5K a year. The idea was for certification courses and other forms of classes I believe, not full grad school. If you went over $2500 a year, then the 2 year stint with the company afterwards kicked in, or you reimbursed the company. I get it for a full tuition, but for $5K, that was laughable as I was planning to leave immediately after graduation, so thanks but no thanks.
Not to mention, even if you do get reimbursed, you still have to pay up front, which might not be possible for everyone.
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Not to mention, even if you do get reimbursed, you still have to pay up front, which might not be possible for everyone.
Just take out a student loan and pay it back the minute you get reimbursed. Interest won't even get a chance to accumulate.
One thing to note: you get taxed on any tuition benefits over $5,250 per year. I believe that is a relatively new rule.
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Its becoming increasingly rare, likely due to the rising rate of tuition and the proliferation of graduate degrees in the marketplace. I have two friends in part time MBA programs at GE Capital and Unilever that are getting tuition reimbursement, but both have required 2-3 year stints with the company afterwards. The Unilever deal actually requires payment upfront and then disbursements following program completion within that contracted timeline.
My employer at the time I began grad school would pay no more than $5K a year. The idea was for certification courses and other forms of classes I believe, not full grad school. If you went over $2500 a year, then the 2 year stint with the company afterwards kicked in, or you reimbursed the company. I get it for a full tuition, but for $5K, that was laughable as I was planning to leave immediately after graduation, so thanks but no thanks.
I completed my MBA at Marquette with tuition reimbursement through by employer (Rockwell Automation). $8000 a year in reimbursement, I have to pay for the classes upfront and then if I got the grades they would reimburse within 6 weeks of completing the class. It only went to tuition, no books or incidentals. I also "owe" 3 years for the "debt" to be forgiven. If I leave before a year after I owe it all, before 2 years 2/3rd, before 3 years 1/3rd.
Only complaint was they wouldn't cover in-person/distance learning hybrids....had to attend in person which meant Madison, MU, UWM, or MSOE.
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When I went to graduate school my Company paid for both books and tuition. Don't Companies pay for that anymore?
A few still do, but as others have said, it seems to be less common than it used to be.
True story: I was teaching a health law course in a nearby MBA program a few years back. In the first lecture, I started with the basic intro stuff (my background, what we'd cover in the course, etc), and then I asked the six students to introduce themselves and tell us why they were in the MBA program and taking the class. Five of the six simply said that they were taking it because their employer was paying.
It was not the most motivated group of students I've ever seen....
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My company used to pay for MBAs but everyone would get the free MBA and then leave for another job.
Now you can only get tuition reimbursement if your manager approves and it is directly applicable to your current job. MBAs don't count.
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One reason to pay off student loans first (all other things being equal): Should you face some sort of financial tragedy and have to declare bankruptcy, your student loans won't go away like your other debts will.
That's an incredibly negative way to live one's life.
Focus on what you can control, not planning for the worst.
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That's an incredibly negative way to live one's life.
Focus on what you can control, not planning for the worst.
Good to know... Considering downside is living ones life poorly?
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Good to know... Considering downside is living ones life poorly?
Exactly. That's why I don't have any medical insurance. Thinking that I might get seriously ill a is an incredibly negative way to live my life.
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Exactly. That's why I don't have any medical insurance. Thinking that I might get seriously ill a is an incredibly negative way to live my life.
Fun fact, I had a friend in college whose family "didn't believe" in health insurance. They felt it was a waste of money. Well both him and his brother broken bones within a month of each other (his hand requiring surgery and pins, and his brother's collarbone). His parents had to pay close to $25K out of pocket.
They sure showed the man!
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Didn't you just give a reason why what he said is correct? If after-tax cost on mortgage debt is considerably less, wouldn't you want to pay that off last?
I'm trying to get him thinking, but now you're stealing his thunder. I'm glad to see you're at least thinking now.
The point is you MUST THINK and consider the specifics. And challenge that thinking.
Now... consider this (again, among the multitudes of considerations that may be relevant)...
The student interest deduction does not require you to itemize to take it. Taking a standard deduction instead of itemizing and taking a mortgage interest deduction may be the best route for your tax situation... in that case, you receive a "tax-savings (lol)" on the student interest... but you get no incremental benefit for the mortgage interest. Still want to pay off the student loan first?
Also remember... the considerations are not only about the current year and current situation.. you must also project into the future. Intelligent planning. So many angles to consider.
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I'm trying to get him thinking, but now you're stealing his thunder. I'm glad to see you're at least thinking now.
The point is you MUST THINK and consider the specifics. And challenge that thinking.
Now... consider this (again, among the multitudes of considerations that may be relevant)...
The student interest deduction does not require you to itemize to take it. Taking a standard deduction instead of itemizing and taking a mortgage interest deduction may be the best route for your tax situation... in that case, you receive a "tax-savings (lol)" on the student interest... but you get no incremental benefit for the mortgage interest. Still want to pay off the student loan first?
Also remember... the considerations are not only about the current year and current situation.. you must also project into the future. Intelligent planning. So many angles to consider.
Serious question- do you realize how condescending you come across on here?
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Serious question- do you realize how condescending you come across on here?
Beejay is just a dick period.
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Serious question- do you realize how condescending you come across on here?
This is something you should talk to your psychiatrist about.
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I know people who make well over $100k/year who are paying upwards of 20% of their after-tax income towards student loans yet don't qualify for the interest deduction. For those keeping score at home, that's a mortgage payment on a $350,000 home.
Student loans suck.
Would they have been able to go to college without student loans?
Would they have been able to make $100k annually without college?
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Would they have been able to go to college without student loans?
Would they have been able to make $100k annually without college?
Let's say the answer to both is 'no.'
Now, we get to the real issue.
Person A is in the exactly same situation as Person B.
They both go the same route through college. Same amount of college loans, financial situation, etc.
Person A isn't a great student, but things start off OK. They get a job, are paid $60k, which is more than they would be making had they not gone to college. They are not in a dire financial situation.
Person B is an incredible student who also interns/works during school. They quickly move up at their first company because they are good at what they do. They are paid $100k.
Why should our tax system treat these two differently?
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It shouldn't. But our tax system isn't really about fairness.
I was just responding to his assertion that "student loans suck." I think they *can* suck. But oftentimes they are helpful.
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Exactly. That's why I don't have any medical insurance. Thinking that I might get seriously ill a is an incredibly negative way to live my life.
If you got catastrophically sick or injured, couldn't you just file bankruptcy and wipe out those bills?
Paying off student loans first just because they can't be discharged in bankruptcy is operating from a "worst case" scenario. So yes, that is a negative perspective.
Do what you want. I sincerely wish you the best of luck. Have a good day.
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It shouldn't. But our tax system isn't really about fairness.
Understatement of the year
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If you got catastrophically sick or injured, couldn't you just file bankruptcy and wipe out those bills?
Paying off student loans first just because they can't be discharged in bankruptcy is operating from a "worst case" scenario. So yes, that is a negative perspective.
Do what you want. I sincerely wish you the best of luck. Have a good day.
So bankruptcy is a negative perspective.... But you recommend it if you get catastrophically sick, and that's not negative?
Terminal illness, bankruptcy and no medical coverage is pretty sunny.
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This is something you should talk to your psychiatrist about.
im assuming JayBee can lead us in how to think about this as well.
YOU MUST CONSIDER SO MANY THINGS!!!
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So bankruptcy is a negative perspective.... But you recommend it if you get catastrophically sick, and that's not negative?
Terminal illness, bankruptcy and no medical coverage is pretty sunny.
I was being glib.
Neither extreme outcomes are ones I would wish on anyone and hope that they are a distant thought for everyone. But I am reminded that bankruptcy for some people is a very real, actual concern. I'm fortunate in that I don't even think about bankruptcy. No more than I stay inside for fear of being hit by a train or a stray bullet.
But I realize that I am very fortunate that I take that for granted based on my own financial situation. I shouldn't have passed judgment and I'm sorry for that. I'm sure some hedge fund manager would look sideways at me.
We are all trying to navigate this big orb the best we can while we are here.
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Mid 40's, solo worker...wife takes care of the kids. Looking to retire in the next few years. Will definitely be moving out of California, but might keep the house to rent out...we'll see.
Max out on 401K, drive a used pickup truck 2006 with about 80K miles on it. We don't buy super nice cars, our home is nice, but not insane. I cut my own grass, carpool into work, have solar panels, give my son his buzz cuts. Can't wait to get out of the giant money suck that is California.
You Californians should be nominated for philanthropists of the decade...or so-you of course realize how many families you support out there
I was told at an early stage in my career to invest in what you know-invested in my business and building. Bought for low to mid 6 figures. 25 years later, worth low 7 figures plus the building. Stocks are legalized gambling unless you know and trust someone well and/or get lucky. Put away max into Ed jones advisory mutuals-safe. Also bought a house in az. During the real estate low. That is where I vacation. Property taxes are low. House is low maintenance except for the pool(a must down here). No grass to cut- just a little round up once in a while
Post on scoop in and around business for escape. I'm my own boss and he says as long as you get your chores done...and when I'm down here in az. When not on the Golf course or on the lake(havasu) chasing the spring breakers just to keep the blood pressure up
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There is a lot of really bad investment advice in this thread.
If you're so desperate that you're coming to MUScoop for investment advice, I'd suggest contacting a fee-only financial advisor instead.
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I think it is a really interesting thread-getting to know a little more about some of the sluggos that post here, what has worked and not worked in some of our situations, where/ what some of us do, etc. anyone who takes and uses any of the info discussed here, imho, I would hope, does so at their own risk-yes? Or do we need a disclaimer-I would hope not as there has been a lot of crazy advice written about on the scoop-hey heyna? Haven't seen any lawsuits....yet 8-) And I would also hope none ever need to evolve from this, if that is possible, but a lawyer I am not as I'm sure ya'all have figured out
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There is a lot of really bad investment advice in this thread.
If you're so desperate that you're coming to MUScoop for investment advice, I'd suggest contacting a fee-only financial advisor instead.
Such as?
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There is a lot of really bad investment advice in this thread.
If you're so desperate that you're coming to MUScoop for investment advice, I'd suggest contacting a fee-only financial advisor instead.
+1
Everyone should have a financial advisor. I didn't for about the first 10-12 years and it cost me a lot of money.
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+1
Everyone should have a financial advisor. I didn't for about the first 10-12 years and it cost me a lot of money.
+1
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+1
Everyone should have a financial advisor. I didn't for about the first 10-12 years and it cost me a lot of money.
Honest question. What advice did your financial advisor give you that you couldn't figure out on you own? It's good to max out your 401k contributions?
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Honest question. What advice did your financial advisor give you that you couldn't figure out on you own? It's good to max out your 401k contributions?
Of course I knew to max out the 401K.
But unless you make your living in the financial sector, you don't have any clue what the best place to put your money is.
And I'm not calling you out here. I thought the same thing when I was young. Why should I pay someone to manage my money? Until I did - and saw the difference in the returns I was getting every year. And I never interfered with what he did except once.
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But unless you make your living in the financial sector, you don't have any clue what the best place to put your money is.
Even there, we have plenty who can handle their jobs but are incompetent in managing their own funds. Kind of like how so many hairdressers look like they have a dead animal on their head.
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Of course I knew to max out the 401K.
But unless you make your living in the financial sector, you don't have any clue what the best place to put your money is.
And I'm not calling you out here. I thought the same thing when I was young. Why should I pay someone to manage my money? Until I did - and saw the difference in the returns I was getting every year. And I never interfered with what he did except once.
Hmm, thanks. Good to know. How do you find a good one? So many just come across as squirmy.
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Hmm, thanks. Good to know. How do you find a good one? So many just come across as squirmy.
Word of mouth is still the best in my opinion, or something like Angie's list I suppose could have good value as well.
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Hmm, thanks. Good to know. How do you find a good one? So many just come across as squirmy.
Take a look at http://napfa.org/
The ones who really are Fee-Only are a pretty small fraction of the total.
Also, check out any broker you're thinking about choosing on http://brokercheck.finra.org/Search/Search
If someone is trying to take a percentage of your portfolio, run. If someone is pushing their company's products, run. If someone is saying they're a financial advisor but they are pushing insurance products, run away as fast as you can.
Most fee-only advisors will only touch portfolios with more than $500k in assets. Also, if you have a 401k with crapty options you need to come to terms with the fact that there may not be anyone that could give you great advice until you roll that money over into an IRA when you leave your job.
Edit: Again, taking advice from someone on the internet isn't a great idea. For all you know, I'm talking out of my ass. I, personally, am a lazy portfolio (http://www.bogleheads.org/wiki/Lazy_portfolios) guy and I do all of my own investing since it's on autopilot... so even *I* don't take my own advice. Ha!
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Take a look at http://napfa.org/
The ones who really are Fee-Only are a pretty small fraction of the total.
Also, check out any broker you're thinking about choosing on http://brokercheck.finra.org/Search/Search
If someone is trying to take a percentage of your portfolio, run. If someone is pushing their company's products, run. If someone is saying they're a financial advisor but they are pushing insurance products, run away as fast as you can.
Most fee-only advisors will only touch portfolios with more than $500k in assets. Also, if you have a 401k with crapty options you need to come to terms with the fact that there may not be anyone that could give you great advice until you roll that money over into an IRA when you leave your job.
Edit: Again, taking advice from someone on the internet isn't a great idea. For all you know, I'm talking out of my ass. I, personally, am a lazy portfolio (http://www.bogleheads.org/wiki/Lazy_portfolios) guy and I do all of my own investing since it's on autopilot... so even *I* don't take my own advice. Ha!
Why would you suggest someone find a financial adviser instead of opting for a "lazy portfolio" like what you linked to?
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Why would you suggest someone find a financial adviser instead of opting for a "lazy portfolio" like what you linked to?
If people are on MUScoop looking for investment advice then they probably don't know enough to make up their own minds about their investment choices. Controlling your spend, increasing your income and managing the risk/reward potential of your investments are all things that are very important. Not everyone wants to put the time and effort into becoming an expert in these things, at which point you pay an expert a fee.
Edit: To come completely clean, I'm attempting to retire within 10 years (projected at 8 years from now) on a comfortable salary due to being a very aggressive saver. I'm in my mid 30s and my wife is in her early 30s, and we're on pace to save 50% of our take-home this year.
Because of this my saving habits, my investment goals and the amount of risk I'm willing to take on is different than someone that's looking for traditional retirement 30 years from now or 5 years from now.
I wouldn't want to get preachy about how I think people should invest or how they should live their life. Investing for retirement (or even for your heirs) is a deeply personal thing. If you aren't an expert in it and you don't want to spend the time to research it besides reading MUScoop, then paying a professional is probably the best option, as long as they aren't unnatural carnal knowledgeing you by taking a percentage of your portfolio, or selling you on their company's products that they make a commission on. Hope that makes sense!
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If people are on MUScoop looking for investment advice then they probably don't know enough to make up their own minds about their investment choices. Controlling your spend, increasing your income and managing the risk/reward potential of your investments are all things that are very important. Not everyone wants to put the time and effort into becoming an expert in these things, at which point you pay an expert a fee.
Edit: To come completely clean, I'm attempting to retire within 10 years (projected at 8 years from now) on a comfortable salary due to being a very aggressive saver. I'm in my mid 30s and my wife is in her early 30s, and we're on pace to save 50% of our take-home this year.
Because of this my saving habits, my investment goals and the amount of risk I'm willing to take on is different than someone that's looking for traditional retirement 30 years from now or 5 years from now.
I wouldn't want to get preachy about how I think people should invest or how they should live their life. Investing for retirement (or even for your heirs) is a deeply personal thing. If you aren't an expert in it and you don't want to spend the time to research it besides reading MUScoop, then paying a professional is probably the best option, as long as they aren't unnatural carnal knowledgeing you by taking a percentage of your portfolio, or selling you on their company's products that they make a commission on. Hope that makes sense!
Very much so! I was interested in where you were coming from telling people they should get an investor when you yourself look to be mostly an indexer, which is really how I've gone about things as well. Thanks for the further explanation.
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If people are on MUScoop looking for investment advice then they probably don't know enough to make up their own minds about their investment choices. Controlling your spend, increasing your income and managing the risk/reward potential of your investments are all things that are very important. Not everyone wants to put the time and effort into becoming an expert in these things, at which point you pay an expert a fee.
Edit: To come completely clean, I'm attempting to retire within 10 years (projected at 8 years from now) on a comfortable salary due to being a very aggressive saver. I'm in my mid 30s and my wife is in her early 30s, and we're on pace to save 50% of our take-home this year.
Because of this my saving habits, my investment goals and the amount of risk I'm willing to take on is different than someone that's looking for traditional retirement 30 years from now or 5 years from now.
I wouldn't want to get preachy about how I think people should invest or how they should live their life. Investing for retirement (or even for your heirs) is a deeply personal thing. If you aren't an expert in it and you don't want to spend the time to research it besides reading MUScoop, then paying a professional is probably the best option, as long as they aren't unnatural carnal knowledgeing you by taking a percentage of your portfolio, or selling you on their company's products that they make a commission on. Hope that makes sense!
Pretty sure no one is coming on here and taking a fellow Scooper's financial insight as Gospel; I certainly am not. Its a message board, no one here is under any illusion that it should take the place of a qualified investment advisor. Some of us are interested in personal finance and are using the board as a forum to shoot the chit. Sometimes I go on Yahoo Finance message boards, but I'm never under the impression that my time there should somehow replace working with a real finance professional. Sometimes its just fun to talk about. If you aren't interested in the conversation then don't participate.
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Pretty sure no one is coming on here and taking a fellow Scooper's financial insight as Gospel; I certainly am not. Its a message board, no one here is under any illusion that it should take the place of a qualified investment advisor. Some of us are interested in personal finance and are using the board as a forum to shoot the chit. Sometimes I go on Yahoo Finance message boards, but I'm never under the impression that my time there should somehow replace working with a real finance professional. Sometimes its just fun to talk about. If you aren't interested in the conversation then don't participate.
I'm glad we finally hired an MUScoop Hall-Monitor. Keep up the great work, man!
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nm. not worth it
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nm. not worth it
Hey! You didn't even inquire about what the Hall Monitor position pays! Talk about poor financial planning...
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Pick individual stocks and live a little, you skirts.
My latest pick has gone up 49% in the past 6 weeks. Holla
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Pick individual stocks and live a little, you skirts.
My latest pick has gone up 49% in the past 6 weeks. Holla
That's not investing, that's gambling.
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That's not investing, that's gambling.
What's the difference? Do you have some magical investments that can't lose their value?
There are different levels of risk. What level you choose to accept is up to you. But all of it has risk.
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What's the difference? Do you have some magical investments that can't lose their value?
There are different levels of risk. What level you choose to accept is up to you. But all of it has risk.
Agreed, no offense chick, but that's is antiquated thinking. There are plenty of ways to invest besides buying mutual or index funds. I have coworkers who I've talked financial markets with who told me that holding anything less than 2-3 years is "gambling". Buy and hold is no longer a guaranteed "safe strategy". Different strokes for different folks.
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That's not investing, that's gambling.
Not necessarily.
In Jan 2014, I bought Kraft Foods, a solid, boring, dividend-paying company; it had been knocked down after a disappointing earnings report. Since then, through some ebbs and flows, its price moved up about 20% in the 14 months or so I owned it -- pretty nice but not a rocket ship to the stars given that we're now in Year 7 of a bull market.
Then, last week, Warren Buffett and a private equity partner decided to buy Kraft and merge it with Heinz, another old, "boring" company that he bought and took private last year.
In less than a week since the news, Kraft has shot up from $61 to $90, and my original investment is up 73%. That's not some cutting edge biotech or a risky solar venture or anything crazy like that. It's a freakin' mac & cheese company!
Buying Kraft wasn't a real gamble. It's a solid, old-world, blue-chip company. But I nonetheless was rewarded handsomely for having patience and not selling during its ebbs.
I also take exception to those who think we can't learn from each other even though we aren't "financial professionals." Many of us have real life experience in a variety of things. Thinking that way is like a former prep basketball player thinking he alone has some special insight into how college hoops works.
My mind is always open to new ideas. If I decide they don't suit me, I just say thanks and move on to the next one.
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Bought Disney at the beginning of 2014. Up 108%. I just wanted to own ESPN and Star Wars.
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Bought Disney at the beginning of 2014. Up 108%. I just wanted to own ESPN and Star Wars.
Am I missing something or would you have had to have bought middle of 2013 to be up 108%?
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Am I missing something or would you have had to have bought middle of 2013 to be up 108%?
Ah yep, beginning of '13: 01/02/2013
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Ah yep, beginning of '13: 01/02/2013
Impressive nonetheless!
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My dad bought me 1 share of Disney when I was 10 years old (almost 20 years ago). I have no idea how much it is worth now. I still was getting paper dividend checks in the mail until a few years ago. I have no idea what happened to it.
Any idea what it would be worth and how I could track it down?
Obviously, if there were no splits, it would only be worth $105.97, which is what it is trading at. Just wondering how I could find out the split history.
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My dad bought me 1 share of Disney when I was 10 years old (almost 20 years ago). I have no idea how much it is worth now. I still was getting paper dividend checks in the mail until a few years ago. I have no idea what happened to it.
Any idea what it would be worth and how I could track it down?
Obviously, if there were no splits, it would only be worth $105.97, which is what it is trading at. Just wondering how I could find out the split history.
Look at Yahoo Finance. But also here...https://www.stocksplithistory.com/walt-disney/
Split 3-1 in 1998 and marginally in 2007. So your position is likely worth about $320.
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What's the difference? Do you have some magical investments that can't lose their value?
There are different levels of risk. What level you choose to accept is up to you. But all of it has risk.
Buy quality, dividend-paying stocks over the long-term is not gambling. Buying speculative stocks in what is hot at the moment is gambling. Investing is part understanding economics and part understanding human nature. People will stampede in and out of a stock for stupid reasons and create opportunities for others. I bought Target in the 50s right after their data breach because everyone dumped it right away. It was bad and it did impact business short term, but Target is still Target and soccer moms and Walmart-haters still spend money there. It has since rebounded into the low 80s.
A year later, Home Depot had a data breach, but by that time, the public didn't think of it as a huge deal and the stock continues to charge ahead like this season's Kentucky basketball team.
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Buy quality, dividend-paying stocks over the long-term is not gambling. Buying speculative stocks in what is hot at the moment is gambling.
This commentary is stupid.
What is the definition of "quality?"
What is the "long-term?"
It's all gambling.
More importantly, buying certain dividend paying stocks will result in limiting your upside & opportunity.
There are arguments that can be made for various strategies & decisions... but it all gets down to the specifics of the investor.
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Not necessarily.
In Jan 2014, I bought Kraft Foods, a solid, boring, dividend-paying company; it had been knocked down after a disappointing earnings report. Since then, through some ebbs and flows, its price moved up about 20% in the 14 months or so I owned it -- pretty nice but not a rocket ship to the stars given that we're now in Year 7 of a bull market.
Then, last week, Warren Buffett and a private equity partner decided to buy Kraft and merge it with Heinz, another old, "boring" company that he bought and took private last year.
In less than a week since the news, Kraft has shot up from $61 to $90, and my original investment is up 73%. That's not some cutting edge biotech or a risky solar venture or anything crazy like that. It's a freakin' mac & cheese company!
Buying Kraft wasn't a real gamble. It's a solid, old-world, blue-chip company. But I nonetheless was rewarded handsomely for having patience and not selling during its ebbs.
I also take exception to those who think we can't learn from each other even though we aren't "financial professionals." Many of us have real life experience in a variety of things. Thinking that way is like a former prep basketball player thinking he alone has some special insight into how college hoops works.
My mind is always open to new ideas. If I decide they don't suit me, I just say thanks and move on to the next one.
I don't think there's anything wrong with your philosophy, but wouldn't you be better off getting an index instead of trying to pick out one Blue Chip?
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I don't think there's anything wrong with your philosophy, but wouldn't you be better off getting an index instead of trying to pick out one Blue Chip?
For 98% people, yes. These guys are telling you about how they bought kraft, DIS, AAPL, etc., how about the one's they flopped on? If you don't have the time and financial acumen just go into index funds.
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If interested in a risky play, SNTA is trending toward it's upcoming offering price of $1.75 today. Now at $1.93.
If it drops just a bit more, I may in - with the intent of holding at least 18 months.
Risk / reward heavy on this one. Go for it.
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Biggest question for me is how much are the markets propped up,due to the Fed actions....
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Biggest question for me is how much are the markets propped up,due to the Fed actions....
That is a question, but when will said Fed actions start to be pulled back?
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That is a question, but when will said Fed actions start to be pulled back?
The day after I move completely out of cash.
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The day after I move completely out of cash.
Too true :D
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This commentary is stupid.
What is the definition of "quality?"
What is the "long-term?"
It's all gambling.
More importantly, buying certain dividend paying stocks will result in limiting your upside & opportunity.
There are arguments that can be made for various strategies & decisions... but it all gets down to the specifics of the investor.
I guess getting out of bed in the morning is a gamble because you might get hit by a bus....but if you stay in bed, you gamble that a plane won't crash into your house. But it all depends on what strategy or decision a person makes and the specifics of what that person needs to get done that day.
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This commentary is stupid.
What is the definition of "quality?"
What is the "long-term?"
It's all gambling.
More importantly, buying certain dividend paying stocks will result in limiting your upside & opportunity.
There are arguments that can be made for various strategies & decisions... but it all gets down to the specifics of the investor.
All risk looks like gambling to someone unable to manage it.
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I don't think there's anything wrong with your philosophy, but wouldn't you be better off getting an index instead of trying to pick out one Blue Chip?
I own 30+ individual companies, mostly blue-chip, proven dividend growers. I did significant research and due diligence before each buy. I am a very reluctant seller; like Buffett, my goal is to own each company forever. Also like Buffett, I do occasionally sell, usually because something fundamentally has occurred to make me no longer want to own shares in a particular company.
Over just about any decade of time, a portfolio of high-quality, dividend-growing companies has beaten the S&P500 or the Dow or any other index.
Nevertheless, I am not into Dividend Growth Investing because of such outperformance. I am all about building a portfolio that will provide an income stream capable of giving me and my wife a stress-free, financially secure retirement. In 8-10 years, when both of us are retired, the combination of that income stream, Social Security and pensions will provide us with a six-figure "salary" -- something I never had during my working years.
One interesting thing is that, unlike the accepted retirement strategy of selling off 4% of one's investments every year to fund retirement, we will never have to sell a share of stock if we don't want to. The money we need to live on will come from dividends, Social Security and pensions. So we will be able to leave a legacy to our heirs, too.
Is it guaranteed that these companies will continue paying and growing their dividends? Of course not. In investing, nothing is guaranteed. However, if Johnson & Johnson, Procter & Gamble, Pepsi, 3M, Chevron, ConEd, AT&T, Altria, etc, etc, all stop paying dividends, there's probably been a zombie apocalypse and investing will be the least of our concerns.
I can't tell you if the stock price of Johnson & Johnson -- or the S&P 500, for that matter -- will be up, down or sideways tomorrow, next month, next year or next decade. But I can tell you with considerable confidence that JNJ will raise its dividend again the last week of April and in many Aprils to come. Why? Because this "Dividend Aristocrat" has been raising its dividend for 52 consecutive years through wars and recessions and political gridlock and Cubbie collapses.
I know it probably sounds like I am trying to sell folks on DGI. I am not. I am not a broker or adviser or financial professional and I gain not a single cent if every Scooper instantly adopts the strategy. (Nor do I lose a single cent if y'all reject it.) I was asked why I invest the way I do and I am answering that question.
All of us must choose investment styles that suits our personalities, risk tolerance and comfort levels. DGI suits me. It might not suit another person here.
And yes, just investing in an index would be far more simple. But not only does DGI let me achieve my goals better than any index I know of, I also enjoy the challenge and satisfaction of stock selection.
For those who are more interested, my favorite site on this subject is SeekingAlpha.com. Here is one writer's list of the 25 best authors on the site: http://seekingalpha.com/instablog/912334-tim-mcaleenan-jr/2782723-the-25-best-authors-on-seeking-alpha#comments_header
My favorites are David Van Knapp, Chuck Carnevale and a guy who goes by the pen name "Chowder," but most of the folks listed are very good. Some are older but many are quite young and offer that vantage point.
Anyway, happy investing.
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I own 30+ individual companies, mostly blue-chip, proven dividend growers. I did significant research and due diligence before each buy. I am a very reluctant seller; like Buffett, my goal is to own each company forever. Also like Buffett, I do occasionally sell, usually because something fundamentally has occurred to make me no longer want to own shares in a particular company.
Over just about any decade of time, a portfolio of high-quality, dividend-growing companies has beaten the S&P500 or the Dow or any other index.
Nevertheless, I am not into Dividend Growth Investing because of such outperformance. I am all about building a portfolio that will provide an income stream capable of giving me and my wife a stress-free, financially secure retirement. In 8-10 years, when both of us are retired, the combination of that income stream, Social Security and pensions will provide us with a six-figure "salary" -- something I never had during my working years.
One interesting thing is that, unlike the accepted retirement strategy of selling off 4% of one's investments every year to fund retirement, we will never have to sell a share of stock if we don't want to. The money we need to live on will come from dividends, Social Security and pensions. So we will be able to leave a legacy to our heirs, too.
Is it guaranteed that these companies will continue paying and growing their dividends? Of course not. In investing, nothing is guaranteed. However, if Johnson & Johnson, Procter & Gamble, Pepsi, 3M, Chevron, ConEd, AT&T, Altria, etc, etc, all stop paying dividends, there's probably been a zombie apocalypse and investing will be the least of our concerns.
I can't tell you if the stock price of Johnson & Johnson -- or the S&P 500, for that matter -- will be up, down or sideways tomorrow, next month, next year or next decade. But I can tell you with considerable confidence that JNJ will raise its dividend again the last week of April and in many Aprils to come. Why? Because this "Dividend Aristocrat" has been raising its dividend for 52 consecutive years through wars and recessions and political gridlock and Cubbie collapses.
I know it probably sounds like I am trying to sell folks on DGI. I am not. I am not a broker or adviser or financial professional and I gain not a single cent if every Scooper instantly adopts the strategy. (Nor do I lose a single cent if y'all reject it.) I was asked why I invest the way I do and I am answering that question.
All of us must choose investment styles that suits our personalities, risk tolerance and comfort levels. DGI suits me. It might not suit another person here.
And yes, just investing in an index would be far more simple. But not only does DGI let me achieve my goals better than any index I know of, I also enjoy the challenge and satisfaction of stock selection.
For those who are more interested, my favorite site on this subject is SeekingAlpha.com. Here is one writer's list of the 25 best authors on the site: http://seekingalpha.com/instablog/912334-tim-mcaleenan-jr/2782723-the-25-best-authors-on-seeking-alpha#comments_header
My favorites are David Van Knapp, Chuck Carnevale and a guy who goes by the pen name "Chowder," but most of the folks listed are very good. Some are older but many are quite young and offer that vantage point.
Anyway, happy investing.
My style of degenerate gambling is the same as yours.
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First off, in the interest of full disclosure, I am a financial advisor so don't hold that against me.
Most financial advisors, or at least most good financial advisors, are using Modern Portfolio Theory when designing or building portfolios for their clients. MPT is basically the idea that you should be able to construct portfolios that can achieve the highest possible returns with the least amount of risk as possible through broad diversification and asset allocation.
Every distinct asset class has strengths and weaknesses that let it play a specific role in your investment strategy. Balancing how much of each asset class to include in your portfolio should be your primary goal as an investor. This will depend on factors such as risk tolerance, income needs, time horizon, etc.
So, what are these distinct asset classes? Most people think it's just a mix of stocks, bonds and cash. But it's a bit more complicated than that. Within those categories there are different asset classes, different kinds of stocks and different kinds of bonds. It's important to have exposure to all these areas as the returns are not always correlated and can protect you in the years the S&P gets clobbered like the early 2000s.
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First off, in the interest of full disclosure, I am a financial advisor so don't hold that against me.
Most financial advisors, or at least most good financial advisors, are using Modern Portfolio Theory when designing or building portfolios for their clients. MPT is basically the idea that you should be able to construct portfolios that can achieve the highest possible returns with the least amount of risk as possible through broad diversification and asset allocation.
Every distinct asset class has strengths and weaknesses that let it play a specific role in your investment strategy. Balancing how much of each asset class to include in your portfolio should be your primary goal as an investor. This will depend on factors such as risk tolerance, income needs, time horizon, etc.
So, what are these distinct asset classes? Most people think it's just a mix of stocks, bonds and cash. But it's a bit more complicated than that. Within those categories there are different asset classes, different kinds of stocks and different kinds of bonds. It's important to have exposure to all these areas as the returns are not always correlated and can protect you in the years the S&P gets clobbered like the early 2000s.
MPT is great for high net worth individuals who have the "entry fee" to get into solid, diversified investments within various asset classes... it doesn't work as well for your average investor/saver who wants (or is told) he/she needs exposure to various asset classes, and ends up buying into bad FoF or real estate investments (whose performance is hamstrung on the buy) just so they can check the "DIVERSIFIED?" box. Real estate, especially, is the hot asset class again... but talk to anyone who bought TIC shares in the mid-2000s or zombie REITs more recently, and you'll find most people (read: not all) are better off foregoing a full-blown MPT strategy for a simple, but diverse, offering of mutual funds, because short of going out and buying your own foreclosure to flip, TICs and zombies are pretty much the only RE investments that the average, "median-net-worth" individual has access to.
http://www.wsj.com/articles/latest-fear-for-property-investors-zombie-reits-1427221093?mod=WSJ_hpp_MIDDLENexttoWhatsNewsForth
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MPT is great for high net worth individuals who have the "entry fee" to get into solid, diversified investments within various asset classes... it doesn't work as well for your average investor/saver who wants (or is told) he/she needs exposure to various asset classes, and ends up buying into bad FoF or real estate investments (whose performance is hamstrung on the buy) just so they can check the "DIVERSIFIED?" box. Real estate, especially, is the hot asset class again... but talk to anyone who bought TIC shares in the mid-2000s or zombie REITs more recently, and you'll find most people (read: not all) are better off foregoing a full-blown MPT strategy for a simple, but diverse, offering of mutual funds, because short of going out and buying your own foreclosure to flip, TICs and zombies are pretty much the only RE investments that the average, "median-net-worth" individual has access to.
http://www.wsj.com/articles/latest-fear-for-property-investors-zombie-reits-1427221093?mod=WSJ_hpp_MIDDLENexttoWhatsNewsForth
We have never used non-traded REITs. There is no need to buy these illiquid investments when you get exposure to the asset class through a mutual fund or etf. We use Vanguard's (VGSLX) and T. Rowe Price(TRREX). Both excellent REIT fund options.
Non-traded REITs pay very high commissions to the broker. You have to be very careful with them.
Also, MPT can be used by everyone, not just HNW clients. Most fund companies do offer broadly diversified funds(asset allocation, target retirement funds, etc)
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We have never used non-traded REITs. There is no need to buy these illiquid investments when you get exposure to the asset class through a mutual fund or etf. We use Vanguard's (VGSLX) and T. Rowe Price(TRREX). Both excellent REIT fund options.
Non-traded REITs pay very high commissions to the broker. You have to be very careful with them.
Also, MPT can be used by everyone, not just HNW clients. Most fund companies do offer broadly diversified funds(asset allocation, target retirement funds, etc)
Non traded REITs are not for everyone. They are for high net worth investors who are looking for alternatives. If they are placed as a small part, 3-5% or less, of a HNW investor's portfolio, given that all your other due diligence is complete, there is nothing wrong. As for your commission concern, any respectable non traded REIT is available in a fee based program.
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In 8-10 years, when both of us are retired, the combination of that income stream, Social Security and pensions will provide us with a six-figure "salary" -- something I never had during my working years.
Yikes. Must have been a liberal arts major, ai nal?
Nonetheless, that's great if your disciplined investing will result in a relatively comfortable retirement. Congrats!
For the guy on here saying he was retiring soon at what sounded like ~age 45... and others... How much net worth would you need today (or at some age in the future) to be comfortable in making a decision to retire?
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For the guy on here saying he was retiring soon at what sounded like ~age 45... and others... How much net worth would you need today (or at some age in the future) to be comfortable in making a decision to retire?
That depends on how aggressively you control your spending (which will also accelerate your wealth accumulation). My wife and I will, based on forecasts, be able to comfortably retire indefinitely on $1.5MM.
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
I consider it to be less of a traditional retirement, and more of a "we don't have to work anymore, but if we generate some income that'd be cool too." I'll be under 45 and my wife will be younger than that, so that's a lot of years to travel/work/whatever else. No more cube-farms for me, though. That's for sure.
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That depends on how aggressively you control your spending (which will also accelerate your wealth accumulation). My wife and I will, based on forecasts, be able to comfortably retire indefinitely on $1.5MM.
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
I consider it to be less of a traditional retirement, and more of a "we don't have to work anymore, but if we generate some income that'd be cool too." I'll be under 45 and my wife will be younger than that, so that's a lot of years to travel/work/whatever else. No more cube-farms for me, though. That's for sure.
Good for you. With my wife not working, it's all on me and I have to wait a bit. 45 has already come and gone, but I'm hopeful a few more years. What will more than likely happen is I get out of the rat race, still work but at something entirely less stressful (and less income as a result).
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Good for you. With my wife not working, it's all on me and I have to wait a bit. 45 has already come and gone, but I'm hopeful a few more years. What will more than likely happen is I get out of the rat race, still work but at something entirely less stressful (and less income as a result).
Life can always throw me a curveball or two, and I'm sure it will. It's tough to plan more that a decade out.
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That depends on how aggressively you control your spending (which will also accelerate your wealth accumulation). My wife and I will, based on forecasts, be able to comfortably retire indefinitely on $1.5MM.
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
I consider it to be less of a traditional retirement, and more of a "we don't have to work anymore, but if we generate some income that'd be cool too." I'll be under 45 and my wife will be younger than that, so that's a lot of years to travel/work/whatever else. No more cube-farms for me, though. That's for sure.
Just out of curiosity. How much of the 1.5MM is in IRAs/401Ks vs non-qualified?
I ask because of your young retirement goal, your IRAs won't be accessible without a penalty before you turn age 59.5. Unless you plan on doing a 72-T distribution, but that really isn't a good option at age 45.
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Non traded REITs are not for everyone. They are for high net worth investors who are looking for alternatives. If they are placed as a small part, 3-5% or less, of a HNW investor's portfolio, given that all your other due diligence is complete, there is nothing wrong. As for your commission concern, any respectable non traded REIT is available in a fee based program.
High net worth investors don't buy non-traded REITs... they buy into private equity funds that invest in real estate. Non-traded REITs are bought by investors who want to think they're high net worth, or, at the very least were high net worth investors before they bought non-traded REITs.
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Just out of curiosity. How much of the 1.5MM is in IRAs/401Ks vs non-qualified?
I ask because of your young retirement goal, your IRAs won't be accessible without a penalty before you turn age 59.5. Unless you plan on doing a 72-T distribution, but that really isn't a good option at age 45.
SEPPs are a viable option if you split your IRAs into multiple accounts the calculation and draw-down would only be from one account. That wouldn't be a ton of cash, though, and not factoring into my plans.
I have about 25% of my investments in a Roth at the moment, and growing. The Roth 401k option is very powerful to make a ton of principle available without penalty. That, in addition to a Roth conversion ladder (http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/), will allow me to access my tax-advantaged accounts while only paying income tax on the money.
That is all assuming, though, that tax law won't change over the course of my lifetime. That's why this year, after we sell our home, we are ramping up our taxable investments in addition to our tax advantaged investments. Better safe than sorry!
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That depends on how aggressively you control your spending (which will also accelerate your wealth accumulation). My wife and I will, based on forecasts, be able to comfortably retire indefinitely on $1.5MM.
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
I consider it to be less of a traditional retirement, and more of a "we don't have to work anymore, but if we generate some income that'd be cool too." I'll be under 45 and my wife will be younger than that, so that's a lot of years to travel/work/whatever else. No more cube-farms for me, though. That's for sure.
Entirely depends upon how long y'all plan on livin'. 1.5 ain't what it used to be. May wanna rethink pullin' the plug so early even if you and da Mrs. Live like paupers. Just sayin', ai na?
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Entirely depends upon how long y'all plan on livin'. 1.5 ain't what it used to be. May wanna rethink pullin' the plug so early even if you and da Mrs. Live like paupers. Just sayin', ai na?
I think dude is speaking a little crazy, but he may not be ballin 'Quon style.
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I'm guessing Skatastrophy has run the numbers on his scenario with a little more thoroughness and diligence than we have. I'm cautiously skeptical of what he's saying, but if it works for him and his family then I'm very impressed. Well done.
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I'm guessing Skatastrophy has run the numbers on his scenario with a little more thoroughness and diligence than we have. I'm cautiously skeptical of what he's saying, but if it works for him and his family then I'm very impressed. Well done.
The thing that I would be concerned about is the unknows that time brings, and say 20 years into it, you find yourself having to re-enter the workforce.
That being said, I'm 46 and enjoy my job and have no desire to retire anytime soon.
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I think dude is speaking a little crazy, but he may not be ballin 'Quon style.
Truth. This would be living on $45k to $50k a year. Most likely using geographic arbitrage to lower our expenses and facilitate easier travel.
Shoot for the moon, you know? If I don't feel comfortable retiring on that much when push comes to shove, I'll still have a ton of money socked away and a career to continue until I do feel comfortable.
Check this out if you're interested in running numbers for yourself: http://www.firecalc.com/
The interface sucks (you navigate through the tabs up top to plug your numbers in, and it's not all straightforward), but it can run simulations based on past time periods to try and predict how long your money will last. As a note: Past performance is never a guarantee of future success.
Edit: I don't mean to take over this thread with my, admittedly, extreme views on budgeting and saving. Thanks for listening guys. Hopefully I didn't come off as preachy.
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Hopefully I didn't come off as preachy.
Preachy? Nah, don't sweat that. Crazy? Now that's more like it.
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High net worth investors don't buy non-traded REITs... they buy into private equity funds that invest in real estate. Non-traded REITs are bought by investors who want to think they're high net worth, or, at the very least were high net worth investors before they bought non-traded REITs.
They buy non traded REITs and PE funds and other alternatives.
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There is a lot of really bad investment advice in this thread.
If you're so desperate that you're coming to MUScoop for investment advice, I'd suggest contacting a fee-only financial advisor instead.
One doesn't have to look at it as advice; just insights and case studies. I think this is one of the more interesting threads in a while.
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The thing that I would be concerned about is the unknows that time brings, and say 20 years into it, you find yourself having to re-enter the workforce.
That being said, I'm 46 and enjoy my job and have no desire to retire anytime soon.
Same here. However, I do save and invest like I could retire at 55 but I want to work until 65. I can't trust today's economy to allow me to work that long. Always save now because you may not be able to save later.
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That depends on how aggressively you control your spending (which will also accelerate your wealth accumulation). My wife and I will, based on forecasts, be able to comfortably retire indefinitely on $1.5MM.
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
I consider it to be less of a traditional retirement, and more of a "we don't have to work anymore, but if we generate some income that'd be cool too." I'll be under 45 and my wife will be younger than that, so that's a lot of years to travel/work/whatever else. No more cube-farms for me, though. That's for sure.
Great stuff, Ska.
I was "involuntarily retired" at 48. I was worried at the time, but, 6+ years later, I have no complaints or concerns. I have no stress in my life, and I work when I want to while doing what I enjoy (freelance writing, basketball reffing, baseball umping, coaching, volunteering, etc). We are debt-free and have no financial worries.
Our caveat is that my wife is still working and plans to work another 6-8 years; she makes about 60K. Our single biggest expense -- by far -- is our investments. We max out her 401k and both of our Roth IRAs. So we have gotten used to living on relatively little money and should have little problem getting by with our $1.5M or so when she finally does hang it up.
While we watch our money -- in other words, unlike most folks, we actually think before we spend -- we are not cheap. We take nice vacations, buy what we need, maintain a nice house, take care of our health, do fun spontaneous things (like a last-minute trip to DC for the S16/E8 in 2013), treat our grown kids to join us on vacation, etc.
Truth is, my wife could stop working tomorrow and we'd be just fine. But she likes her job so we might as well bank a little more $$$. Plus, I like saying I have a Sugar Mama!
Anyway, just wanted you to know you're hardly "out there" with your plans. I wish you good fortune.
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Awesome anecdote, MU82! I'm glad that everything is working out well for your family.
Your sentiment resonates with me: Your wife is working because she wants to, not because she has to. That is how you know that you're following your passions!
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Awesome anecdote, MU82! I'm glad that everything is working out well for your family.
Your sentiment resonates with me: Your wife is working because she wants to, not because she has to. That is how you know that you're following your passions!
God bless you both....to be able to work because you want to. Haven't been in that situation ever. Some day.
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Thanks, Chicos and Ska.
Truth be told, I had a pretty good job and planned to keep it at least until my mid-50s. But sometimes life happens ... and recessions happen ... and bad management happens. And so a person just has to deal with it. Obviously, I'm a fortunate guy.
Now back to the subject at hand ...
There was at least one poster who said this topic was worthless and stupid. I find it quite interesting. I like hearing about the financial decisions that my peers make because I always like to learn.
If that bothers anybody, stop clicking on the freakin' post!
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If interested in a risky play, SNTA is trending toward it's upcoming offering price of $1.75 today. Now at $1.93.
If it drops just a bit more, I may in - with the intent of holding at least 18 months.
Risk / reward heavy on this one. Go for it.
Hold for a long while... unless you want quick $$$... $2.10 today. Up 8.8% since my post.
$$$$
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Hold for a long while... unless you want quick $$$... $2.10 today. Up 8.8% since my post.
$$$$
$2.26 now. Up 17%+. Have another one up 11% today on a day in the red for the markets overall. Let's EAT!!
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$2.26 now. Up 17%+. Have another one up 11% today on a day in the red for the markets overall. Let's EAT!!
Investing in individual biotech stocks can be extremely risky. At this point Synta is a lottery ticket more than an investment. The have been a serial disappointer when it comes to reporting their phase 3 results. The stock has lost over 75% of it's value since it's IPO.
They have zero revenues and like most oncology discovery companies an extremely high cash burn rate.
If their current phase 3 for ganetespib fails to yield good results, you are going to lose most of your investment. Sounds like you've done your DD and are fairly confident with this stock. Good luck!
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If their current phase 3 for ganetespib fails to yield good results, you are going to lose most of your investment.
I'm sure if that happens, he won't be giving us daily price updates...
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I'm sure if that happens, he won't be giving us daily price updates...
Yep. Just like gamblers. Only talk about their wins, not their losses.....
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$2.26 now. Up 17%+. Have another one up 11% today on a day in the red for the markets overall. Let's EAT!!
If you're into these types of plays, there's a community built around it on Reddit called Wall Street Bets:
http://www.reddit.com/r/wallstreetbets
I get my fix just reading those folks, but I'm not much of a gambler!
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SNTA to $2.42. +25% since my recommendation. Have yet another today up 9% in addition to SNTA's 8%. On a crazy run lately. $$$$$
SNTA is absolutely scary. Have been in & out (nh) a few times.
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If interested in a risky play, SNTA is trending toward it's upcoming offering price of $1.75 today. Now at $1.93.
If it drops just a bit more, I may in - with the intent of holding at least 18 months.
Risk / reward heavy on this one. Go for it.
SNTA to $2.42. +25% since my recommendation. Have yet another today up 9% in addition to SNTA's 8%. On a crazy run lately. $$$$$
SNTA is absolutely scary. Have been in & out (nh) a few times.
if you call that a "recommendation" ;D
sounds like a chicos type recollection
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If interested in a risky play, SNTA is trending toward it's upcoming offering price of $1.75 today. Now at $1.93.
If it drops just a bit more, I may in - with the intent of holding at least 18 months.
Risk / reward heavy on this one. Go for it.
March 31... Jay Bee speaks.. $1.93
February 15... Listeners reap... $2.90 closing price.
Up more than 50% since my post on SNTA.
I AM THE STOCK MARKET
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March 31... Jay Bee speaks.. $1.93
February 15... Listeners reap... $2.90 closing price.
Up more than 50% since my post on SNTA.
I AM THE STOCK MARKET
But not THE CALENDER ;)
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I AM THE STOCK MARKET
Then please stop selling off right after you have a good day