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Why aren't you saving money for retirement?
- Thread starter ActionableMango
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Yes, I'll pull $500 out of RobinHood and go pay some Investment Strategist 25% of my investment to "invest correctly" and propagate the system.
nah thx. This isn't investment money anyway, it's hobby money.
You clearly don't know what you're talking about. First, no investment strategist (whatever that is) charges 25%. Second of all, tracking index funds in a tax advantaged account is normally on the scale of .05%, which is far less than you're paying for Robin Hood if you ever put any actual money into it. To add to that, if you're not saving for retirement and "just playing around" than not only do you really not know what you're doing, you're being financially irresponsible.
Nobody serious chargers 5% that would be outrageous. Also paying $7/trade and trying to beat the market? What are you doing?
Many financial invests will direct you towards funds that are frontloaded at around 5%...your average finanacial adviser. What I am saying is its often better to invest yourself because its hard for those guys to beat the market to offset the % they take. I personally just invest in ETFs - nothing fancy. What the market does - is how I will do. Works for me. I'm not buying and selling short term - sorry of my previous message implied that. I'm not trying to beat anything
I am blown away by your pedantic soi-disant brilliance and magnificent financial éclat. I don't get blown away often, but holy crap, man. Many wisdom. Such investment. Very Finance. Wow. 0_o
In case you are unable to to detect sarcasm, my sedulously investing friend, that first comment of mine was intended as a deadpan, self-deprecating manner of saying "I'm not saving for retirement." Whether you take that be me admitting what you might perceive as my own impercipience, or vice versa, is immaterial. I don't know how you possibly could have taken it seriously when I said my retirement savings was $500... :?
RobinHood does not charge me one red cent; I have no clue where you dreamed up your erroneous and parochialistic statement, but I'd suggest you undertake a modicum of research with a fervidity equal to that of your supercilious monetary advice before beginning a temerarious sophistry on the internet.
In all seriousness, yes I should begin investing for retirement. So, in the end, in spite of your mien, you win.
Personally, I don't like the word 'Retirement'. Not that I don't want folks to have a goal of living without *having* to work, but I get enjoyment from doing productive stuff with my time. And I'm a happy capitalist that enjoys being compensated for some of that productive stuff (wherein other hobbies such as helping neighbors with handyman stuff or my form of meditation: tinkering in the yard or on the home.
Add to that -- many of my acquaintances that 'retired' seemed to deflate and die off a few years after leaving their principle employment. As if the will to live was tied to their sense of who they were in a work environment.
What drew me to this 5-yr-old thread was the topic, and the many good ideas tossed back and forth here. I have a few of my own, that I shared with colleagues at my first 'semi-retirement' job in a retail space. Maybe they'd be worth posting for discussion.
Add to that -- many of my acquaintances that 'retired' seemed to deflate and die off a few years after leaving their principle employment. As if the will to live was tied to their sense of who they were in a work environment.
What drew me to this 5-yr-old thread was the topic, and the many good ideas tossed back and forth here. I have a few of my own, that I shared with colleagues at my first 'semi-retirement' job in a retail space. Maybe they'd be worth posting for discussion.
Between retirement and social security, I will make more when I retire in seven years than I make working. By retirement, I won't even need the social security to accomplish that. There is enough in my funds to cover that until I am in my 90s. I always went into safe stuff - lower return, but less risk. So I feel comfortable.
I've been a saver/investor for most of my career so when it is time to retire, should be good to go.
There's probably a post or 3 on legal stuff, but I didn't see any so once one has figured out their cash flow and done a balance sheet for assets and liabilities, I've suggested to coworkers:
Get legal docs in order: this is for your family -- if you are medically incapacitated or dead, it won’t matter to you, right? But your family will have enough of a nightmare on their hands without dealing with someone else controlling your life support or estate. Do these four items ASAP: write a WILL, a LIVING WILL (advance healthcare directive – share a copy with your doctor), financial and legal POWER OF ATTORNEY, and HEALTH CARE PROXY (medical power of attorney). How? Use free library books. Visit nolo.com or suzeorman.com - style websites. Credit unions, professional memberships, and employee benefits often offer free/low-cost consultations. Or visit an estate planning lawyer. All in order of increasing cost.
I'd really suggest this for anyone over 18 -- maybe call it 'step 1'.
Get legal docs in order: this is for your family -- if you are medically incapacitated or dead, it won’t matter to you, right? But your family will have enough of a nightmare on their hands without dealing with someone else controlling your life support or estate. Do these four items ASAP: write a WILL, a LIVING WILL (advance healthcare directive – share a copy with your doctor), financial and legal POWER OF ATTORNEY, and HEALTH CARE PROXY (medical power of attorney). How? Use free library books. Visit nolo.com or suzeorman.com - style websites. Credit unions, professional memberships, and employee benefits often offer free/low-cost consultations. Or visit an estate planning lawyer. All in order of increasing cost.
I'd really suggest this for anyone over 18 -- maybe call it 'step 1'.
I can not like this post enough, as I can't express how important this is.
About 16 years ago my father had a kidney removed due to there being a benign tumor growing in it. At that time, he had nothing set up, and I didn't think anything about it as he was in perfect health after that removal.
Fast forward to this time last year, to where he had blockage from that kidney to where no waste could exit his body. While handling that and clearing that blockage, his heart stopped. They were able to restart his heart, but that then required a pacemaker to be installed, plus monthly monitoring. Well, for years (from when my children were born and I had started to set this up), I had been jumping on him to set this up, and not only did I get a quick and simple Medical Power of Attorney, Durable Financial Power of Attorney, Real Estate Power of Attorney, and Revocable Living Trust set up for him, but he finally got it more professionally done...
.. Good thing that he did, because 2 months after he signed the paperwork for those same exact Powers of Attorney, Living Trust, and Living Will with a reputable Life Insurance company, he passed away from Stage 4 kidney failure. He had a considerable portfolio set up, that not only included stock in a number diverse but stable, major companies, but real estate, and multiple pensions. If none of that were to have been done, all of his assets would go to probate, in which anyone who thinks they have a legal claim to them could argue for it in court.
To protect from that, while saving money for retirement is a good thing, one should think about how to KEEP IT from being argued over and distributed by the courts. I'd suggest having nothing less than the following legal docs created, signed, and notarized:
- Living Will. This can be used to show who executes your final directions for what should be done with your assets.
- Revocable Living Trust. The ability to put those assets into a trust will prevent those assets from being argued over in probate court.
- Medical Power of Attorney. This dictates who can make medical decisions on your behalf should you become incapacitated.
- Durable Financial Power of Attorney. This dictates who can make any/all banking, and/or financial decisions on your behalf should you become incapacitated.
- Real Estate Power of Attorney. Same as above, with pertaining to real estate transactions only. This would only apply if you own any land, such as your house. While the sale of a house or land could be considered a financial transaction, the Real Estate PoA takes precedence.
BL.
my goal is to be in a state of work optional
last I checked, my savings rate is 75% or so
last I checked, my savings rate is 75% or so
With inflation the way it is and the job market, my wife and I’ve been doing a lot of talking about retirement, I’m still young (35), I work in the government sector, so I’m officially retiring at 52, but I realize that’s not the ‘norm’ for the majority people who work until 65.
That said, I believe it was Warren Buffett that said some thing that we try to live by, we invest our funds not just into our savings, but also into purchasing of property/land, which to me, long-term holds value and actually accrues, which is something if we decide to build or sell, we have that option -v.s.- investing into the ‘stock market’ as an example.
Anyways, my point is, I think it’s equally important not just to save your money or assets, but what are your intentions with the money that you plan on saving 15–20 years from now? (Rhetorical)
Also, our debt overhead is extremely low, as we pay almost everything off immediately, unless there’s some type of perk or rewards on the side. And we don’t have children, so there’s no expenses there.
Oh, on a side note:
I was reading an interesting report today, that basically summarized that inflation will not subside until at least mid 2024, which will continue to impact manufacturing and production. So a lot of interesting times are ahead, especially for those who are already falling behind.
That said, I believe it was Warren Buffett that said some thing that we try to live by, we invest our funds not just into our savings, but also into purchasing of property/land, which to me, long-term holds value and actually accrues, which is something if we decide to build or sell, we have that option -v.s.- investing into the ‘stock market’ as an example.
Anyways, my point is, I think it’s equally important not just to save your money or assets, but what are your intentions with the money that you plan on saving 15–20 years from now? (Rhetorical)
Also, our debt overhead is extremely low, as we pay almost everything off immediately, unless there’s some type of perk or rewards on the side. And we don’t have children, so there’s no expenses there.
Oh, on a side note:
I was reading an interesting report today, that basically summarized that inflation will not subside until at least mid 2024, which will continue to impact manufacturing and production. So a lot of interesting times are ahead, especially for those who are already falling behind.
I decided to just buy a land parcel and I have had people offering way more than what I paid. It's prime real estate due to the area growing. As per investments, I have stuck to AMD stock for a while and a little on Visa. I hate when they tell me to "Diversify" in the stocks. I don't see really rich people like Musk or Bezos diversifying their wealth. I see the "diversify" as a manner of pressure to stick money into the stock market for some investor to make money off me.
That rant aside... inflation has taken a toll on the budget to be honest. To a point where I considered spending some time in my home country to save more than usual.
When I was a kid, I would walk in my Dad‘s back-office in our home, (It kind of looked like Bruce Wayne’s Computer set up in the Batcave from the 1989 Michael Keaton film…
) I remember he was in their for hours trading/buying in the stock market every single day as an investor. And then there was a time when he completely got out the stock market, and I asked him why, and he said “Because I want to sleep at night .”What he was saying was, there’s no certainty in that industry and everything is completely variable, even when you think you’re ahead. He made some serious money in the stock market in the mid to late 1990s, but that was a different time then, and he was a shark. I played in the stock market for a little bit, but not enough to ever claim I had the proper guidance to be successful, nor do fake financial risk not knowing the game.
For me, what I like about land acquisition, is that nobody can take it from you (Being that you were the deed holder), and it only can go up in value, not down. And then there’s one day where you can either sell that land or build. So it’s a win-win for us.
Anyway, in terms of retirement, yes I think it’s equally important to invest money into various accounts, but I fear that cash isn’t going to be what it once was in the future, and that’s why I look at other avenues of where you can make money that not only accrues values, but there’s demand. And right now, if you have land, especially in a desirable venue, there’s a lot of money to be made.
I was going to post the same ideas about Trusts, but you did a better job.
All estates (that’s you) should explore the value of a Revocable Living Trust. Assets transfer to heirs much faster, privately, without court probate interference. For very little money and a few minutes with a notary (sign with a Notary!), these documents are invaluable, but not mandatory. Have more complex needs? Interview a few estate planning attorneys; extra elements such as Special Needs Trusts may be worth exploring. Have you considered being an organ donor? In many states, you can sign up for free the next time you renew your driver’s license.
Get things notarized!!!! I have a neighbor who didn't. The kids have paid more in legal fees fighting each other than the estate is worth, because the legal paperwork wasn't notarized.
Reading these posts, I might add in something more. Before doing the legal stuff, figure out where you are.
Six letters, begins with ‘B’: Getting a handle on finances means knowing the comings and goings of your money – yep, know your Budget. Use a notebook or software tool like Personal Capital, Quicken, Banktivity, Gnucash, Mint or a spreadsheet (LibreOffice, OpenOffice and Numbers are free) to enter in ALL of your assets and liabilities (build a Balance Sheet). Now you know your Net Worth – the place to start with your financial plan. Next, track ALL income and ALL expenses (build a Cash Flow Statement). Update the data weekly or monthly.
Are you thinking, ‘That’s insane – every receipt, every transaction – for just how long?’ You may only need a month, or 3 or more for establishing what you take home and spend. Think about it: whether you put everything in a shoebox and run your accounting once a month, or utilize online tools like PersonalCapital.com to harvest the data from your accounts instantly, somehow a real picture of cash flow has to be built. Include your taxes. If the Cash Flow Statement shows a loss at the end of the month, one MUST find a way to change the lifestyle for more income and/or less spending until a balanced budget is achieved. Uncover these two numbers: how much you took home in a year, and how much you spent in a year. Worth repeating: financial freedom is simple: spend less than you take home, invest the rest wisely. You don’t know what you don’t know until you run honest numbers.
Six letters, begins with ‘B’: Getting a handle on finances means knowing the comings and goings of your money – yep, know your Budget. Use a notebook or software tool like Personal Capital, Quicken, Banktivity, Gnucash, Mint or a spreadsheet (LibreOffice, OpenOffice and Numbers are free) to enter in ALL of your assets and liabilities (build a Balance Sheet). Now you know your Net Worth – the place to start with your financial plan. Next, track ALL income and ALL expenses (build a Cash Flow Statement). Update the data weekly or monthly.
Are you thinking, ‘That’s insane – every receipt, every transaction – for just how long?’ You may only need a month, or 3 or more for establishing what you take home and spend. Think about it: whether you put everything in a shoebox and run your accounting once a month, or utilize online tools like PersonalCapital.com to harvest the data from your accounts instantly, somehow a real picture of cash flow has to be built. Include your taxes. If the Cash Flow Statement shows a loss at the end of the month, one MUST find a way to change the lifestyle for more income and/or less spending until a balanced budget is achieved. Uncover these two numbers: how much you took home in a year, and how much you spent in a year. Worth repeating: financial freedom is simple: spend less than you take home, invest the rest wisely. You don’t know what you don’t know until you run honest numbers.
Some things to consider in a USA retirement that might effect your plans:
- Your 401k (unless a ROTH) will be taxed at regular rates on withdraw.
- Your SS will be taxed if you exceed certain incomes.
- You might need to pay for medicare if you exceed certain income levels.
- You need to consider what happens if you can no longer care for yourself. Staying in your own home with caregivers comes out of your pocket.
Oh I agree, which is why recently I am looking to acquire two new land parcels (fairly large ~1.8 acre) in my home country in areas I know are growing at an accelerated pace.When I was a kid, I would walk in my Dad‘s back-office in our home, (It kind of looked like Bruce Wayne’s Computer set up in the Batcave from the 1989 Michael Keaton film…
What he was saying was, there’s no certainty in that industry and everything is completely variable, even when you think you’re ahead. He made some serious money in the stock market in the mid to late 1990s, but that was a different time then, and he was a shark. I played in the stock market for a little bit, but not enough to ever claim I had the proper guidance to be successful, nor do fake financial risk not knowing the game.
For me, what I like about land acquisition, is that nobody can take it from you (Being that you were the deed holder), and it only can go up in value, not down. And then there’s one day where you can either sell that land or build. So it’s a win-win for us.
Anyway, in terms of retirement, yes I think it’s equally important to invest money into various accounts, but I fear that cash isn’t going to be what it once was in the future, and that’s why I look at other avenues of where you can make money that not only accrues values, but there’s demand. And right now, if you have land, especially in a desirable venue, there’s a lot of money to be made.
As you and others point out -- having multiple asset classes is excellent diversification. Real estate in my area has gone up 30-40% since the onset of the pandemic. However, to buy now may be to buy in 2007 -- and make no mistake, these land and home valuations is simply bubblicious. When we see peak (a month ago, ten months hence?) is only guessing. However, bidding wars in my hot market have ended. People are getting asking, but no catfights above now. Your real estate gambit is a reasonable 'investment'. Real estate is certainly as good a play as paper investments.
Musk and Bezos invest in their businesses. Very different than people with W2 gigs. Their armies of accountants play the uber-rich game of taking out loans to live on at interest rates well below anything we could get, and well below what their paper wealth is earning in the markets. The loan interest is a write-off, btw. Their 'lifestyle' budget is managed quite differently. Other uber-wealthy folks play similar games (Buffet, Soros, Gates), where their businesses or non-profits pay for most of their lifestyle.
One recent politician built multimillionaire status by parlaying real estate and other businesses attached to name recognition only. Nearly all of those businesses have failed and gone bankrupt, but many millions were extracted for him and his family in the process. Bankruptcy laws, loss carryover and depreciation tools of real estate investing has allowed him to forego paying any taxes for a decade or more. Compensation extraction from the businesses is his 'business model', not maintaining or growing an actual profitable business.
As for diversification, I'm sure you heard of Enron. That company, and thousands of others, are the downside to not being diversified. Don't get me wrong -- I'm thrilled you made a couple educated guesses on chips and cards and are doing (presently) well with them. I hope that continues for you. I have a friend who did the same with Tesla and some pot stock, buying in July 2019. He grouses about the money he lost in pot and how Tesla is 'down' from November (yet he's up 20x from his buy-in, go figure). Personally, I'm a fan of ETFs and agree with the likes of Buffet, JL Collins, and others that a low-cost ETF and 'being the market' is vastly easier than trying to 'beat the market'. If someone makes 0.02% off of my holding VTI for the trouble of maintaining that ETF, I'm ok with that. Any one, or 100 companies go under in any given year -- I still have 3400 companies propping my gamble up. I cannot imagine the accountant armies of the uber-rich not having tremendous diversification, tendrils into everything, as a golden parachute if somehow things go sideways with their main businesses. A billion here, a billion there -- pretty soon you're talking real money.
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In Michigan, 2 acres is nothing in terms of land. There’s a lot of farming community and business agriculture that nobody has scooped up, because land has more than doubled, if not tripled in value, and is no longer desirable/attainable unless you have the expendable income, or you have the right ‘connections’.
The only caveat, which is tax variables and eminent domain, which does happen from time to time, but it depends how desirable land that you’re acquiring is in competition with commerce.
Anyways, way off topic, my point is, buy land, hold for at least 10 years if you can, and there’s no reason value shouldn’t accrue.
BTW, I have no idea what you mean by ‘home country’ and that’s totally variable in terms of what land would mean by your definition and what specific province/country, but in the U.S, land is very desirable in a specific target demographic, especially if it’s in the area that’s thriving in commerce and business.
We had a piece of land that was on a very desirable lakefront property that we sold back in 2018, and we totally regret it, because it more than quadrupled in value by today’s home-front, so now we’ve learned our lesson to hold and wait for the return. Patience=Higher returns.
I've been long BRK for over 20 years and so I follow what Buffett says regularly, especially in his annual shareholder letter. If I remember correctly, his real estate comment isn't so much a recommendation that all individual investors should invest in real estate but that of the three major investment categories (currency and currency equivalents; assets that don't produce anything, such as gold and tulips; and assets that create wealth, such as businesses and real estate), he views wealth creating assets to be best in most circumstances. So real estate is more of an option within a category of possible investments in Buffett's view.
They do. In finance terms, "diversification" essentially means constructing a portfolio that is composed of assets that do not all increase or decrease in value in lockstep. It doesn't mean "buying an index fund" or "buying stocks a broker is pushing". The point of the strategy is to reduce the volatility of a portfolio, which isn't necessarily limited to stock, bonds, and mutual funds, over time. So when we see Bezos has purchased the Washington Post or Elon is taking over Twitter, they are diversifying. They are putting some of the wealth from their Amazon, PayPal, and Tesla holdings into other places. It's also a very good bet that their family offices follow strategies that involve diversification.
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ETA
Opportunity cost can enter into buy/sell decisions as well. For example, if you used the proceeds from the sale to invest in a business that increased its value by 10x in the last four years, selling was a good decision in most cases. Or if you had a pressing need to raise funds in 2018, you did what you needed to do...no regret necessary.
For anybody interested, here are three books I've used to think about the behavioral aspects of investing:
- Beyond Greed and Fear (Shefrin)
- Why Smart People Make Big Money Mistakes and How to Correct Them (Belsky, Gilovich)
- Thinking, Fast and Slow (Kahneman)
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Well, these parcels are not in the country, but in the city. So, sizes like that are hard to come by and quickly gain value within 5 years.