Retirement Planning...

[doodude]

I dont wanna be a nudge or anything but Im trying to figure out how every one got so financially secure...

Cuz me, where Im not freaky about money by any means, instead of purchasing that Radiant Silvergun CD for several hundred $'s, I invested it in a mutual fund & rather than buying that hard to find old classic game, _________, I put that cash into a high interest savings account.
As Ive heard a money Guru once say, " Im living like no one else so that later I can live like no one else".

I have no debt & my house & my cars are paid for & I make a good living.
I have no children & Im not going to have any ( filthy little buggers! ) so I have disposable income, but Im still not comfortable spending the kind of cash I see being thrown around for games & consoles.
And it seems to be quite a bit...

Im not asking for anyone to explain their portfolio, standard of living etc.

Im just wondering, is everyone, anyone, planning for retirement some day or prepared for ( gasp ) an emergency?

[Ed Oscuro]

1. Don't get a job like dave's
2. Save money
3. Kill children before they are old enough to siphon college moneys
4. ?????
5. There's another step in here - oh, right, you DIE.

That is my plan for planning the success of others.

Care to give me power of attorney?

[moozooh]

I expect the world to change drastically enough in the nearest twenty years to render all retirement plans impossible/infeasible/useless.

[sven666]

i secured my future with property investments.

that and cave cardboard boxes

[Twiddle]

I expect the world to change drastically enough in the nearest twenty years to render all retirement plans impossible/infeasible/useless.

It's been happening to the Vietnam Generation. They have the Greatest Generation to thank for that!

Better sell off your collection of ipods for some future financial solvency.

Also, the greatest part about having a million in the bank to live off the interest rate is that inflation will outstrip that interest rate twofold.

[benstylus]

There's a quote that goes something like: "Someone once asked me, 'When is the best time to invest?' My answer to him was "When you have money.'"

So, I try to live reasonably, and whenever I have a bit of cash to spare, I stick it in my IRA account and invest it in mutual funds.

Mutual Funds really are the only way to go for investing, as far as I'm concerned. Real estate is fine also, but there's a whole lot more hassle to it (finding a renter, maintenance, etc.) for almost no difference in return (if you're in a good mutual fund anyway).

Stocks are completely out - mutual fund managers have an extensive network of contacts and researchers, they have the power to buy significant amounts of shares of a company, and thus, access to key people at the company to determine whether or not to make said purchases. If I were to invest in stocks directly, I'd basically be pitting me and my free time versus mutual fund managers and what they do for a living, and I don't like those odds.

Variable Annuities are absolutely inappropriate for IRA investments - actually, I'd say for most people, annuities are pretty bad in general. The only people that make any real money on annuities are the people that sell them. I recently did an analysis for someone of how their annuity had performed for them... They've had it for 10 years, and it had essentially earned them about 4% a year after factoring out the cost of the life insurance portion. Meanwhile, the commission the broker was receiving was around 15%.

Let's see - bank accounts? As was mentioned before, interest rates on bank accounts will likely be outstripped by inflation. So although the interest rate may be guaranteed, it's a guarantee that my money is never going to amount to anything.

Bonds or CDs? A little better than bank accounts, but compared to the returns a good mutual fund can provide, they're not really worth it.

[doodude]

There's a quote that goes something like: "Someone once asked me, 'When is the best time to invest?' My answer to him was "When you have money.'"

So, I try to live reasonably, and whenever I have a bit of cash to spare, I stick it in my IRA account and invest it in mutual funds.

Mutual Funds really are the only way to go for investing, as far as I'm concerned. Real estate is fine also, but there's a whole lot more hassle to it (finding a renter, maintenance, etc.) for almost no difference in return (if you're in a good mutual fund anyway).

Let's see - bank accounts? As was mentioned before, interest rates on bank accounts will likely be outstripped by inflation. So although the interest rate may be guaranteed, it's a guarantee that my money is never going to amount to anything.

Im in agreeance on the mutual funds & try to spread them out so no one fund can damaged me too badly in itself.
A ya, Im no trader so picking stocks is not my style.

Ive got an ING high interest banking account that I drew everything out of last year to pay off all my debts & make a substatial purchase so I havent looked at it for a year at least. I left in $50 to to hold it.
Then it was ( I think ) 5.14% interest & now its 3%. Im so glad I took it out when I did...

[benstylus]

Im in agreeance on the mutual funds & try to spread them out so no one fund can damaged me too badly in itself.
A ya, Im no trader so picking stocks is not my style.

Ive got an ING high interest banking account that I drew everything out of last year to pay off all my debts & make a substatial purchase so I havent looked at it for a year at least. I left in $50 to to hold it.
Then it was ( I think ) 5.14% interest & now its 3%. Im so glad I took it out when I did...

Yeah, I don't have a whole lot invested at the moment, but I've split it about 50/50 between funds focusing on US companies and funds focusing internationally. I'm still pretty young (28 ), so I've got the money in fairly aggressive funds. I figure the good part about mutual funds is the most I can lose is everything

[The n00b]

Mutual funds are good and they are great for the low rollers who maybe just want to retire and get a nice cabin in the woods. I don't see the point of having more than one mutual fund though. The whole point of a mutual fund is to spread your money around and try to beat the market. Most mutual funds even have an army of researchers so you won't get shafted on one dudes Enron nightmare. So if you invest in more than one mutual fund...you are essentially a mutual fund of mutual funds... No fund is investing in some super secret stock market...

Stocks? If you're a low roller and you are happy to be one, don't buy stocks. Your mutual fund guy will be buying tons of them though if he's actually trying to make you money. Also mutual fund guys don't have super secret awesome information with great contacts that makes us better than you. That's right I worked for a mutual fund company and I didn't see anyone with great contacts. Warren Buffet is the exception not the rule...

[benstylus]

Mutual funds are good and they are great for the low rollers who maybe just want to retire and get a nice cabin in the woods. I don't see the point of having more than one mutual fund though. The whole point of a mutual fund is to spread your money around and try to beat the market. Most mutual funds even have an army of researchers so you won't get shafted on one dudes Enron nightmare. So if you invest in more than one mutual fund...you are essentially a mutual fund of mutual funds... No fund is investing in some super secret stock market...

Different Funds have different investment strategies. Different strategies are more or less successful at different times. You can go for global funds vs domestic, small company vs large company, growth vs value, stock vs bond, sector vs general, etc.

Stocks? If you're a low roller and you are happy to be one, don't buy stocks. Your mutual fund guy will be buying tons of them though if he's actually trying to make you money. Also mutual fund guys don't have super secret awesome information with great contacts that makes us better than you. That's right I worked for a mutual fund company and I didn't see anyone with great contacts. Warren Buffet is the exception not the rule...

It's interesting that you use the term "low roller" because buying individual stocks is essentially equivalent to gambling - may as well take your money to the tables in vegas - you'll have better odds there than you would by buying stocks on your own, and you'd probably have a lot more fun.

No, it's not a "secret network" information that they get, but when they have the power to buy 5 to 10 million dollars worth of shares from a company, that company will more than likely provide them with access to the information they need to make that decision - including access to the top brass of the company to ask detailed questions about where the company is at and what it's future prospects look like. And they've got people who get paid solely to do this research.

In contrast, you as an individual investor probably won't be able to have a meeting the the CEO of a large company, and instead of choosing stocks for a living, you're working for a living and then spending your free time trying to pick the next hot stocks going off what you read on the internet or investment magazines or "hot tips" you may pick up from a friend or co-worker.

A good fund can earn 12% a year or more on average, and if you're putting away even just $3,000 a year, that can add up to about a million and a half over 36 years. I'd hardly call that being a "low roller".

I've worked in an accounting office for several years, and seen lots of tax returns, and it's been my experience that people who invest directly in stocks, by and large, lose money - even if they think they're doing well.

[doodude]

I disagree with the idea that multiple mutual funds do no good.

Ive had 5 mutual funds for years.
Some may hold the same kind of funds but in different quantities. As in one may hold a majority of Exxon stock, another hold mostly bonds while another holding cash or mostly utilities or foreign investments.

They also range in how volatile or aggressive each fund may be. And not every mutual fund is as equally successful.

As a result, each one has had different results over the years. The year end is usually from 5% to 12% return but they each fluctuate with world events & so on.

Im not a big investment guy by any means so I prefer the 'low roller' style so that barring any catastrophe I can retire comfortably with a cabin in the woods rather than a box in an alley.

Picking individual stocks is just too time consuming & takes far more effort than just finding a good mutual fund.
IMO the trick is to get rid of all your debt & then instead of paying 1000's in bills every month invest that same amount into your IRA's & MFs.
And Shmups of course...

EDIT: Looks like youre faster on the draw there Bent...

[The n00b]

Okay guys try tracking the performance of 2k worth of stock index funds vs your 5 different mutual funds? Keep in mind you'll also have to mark the fees you pay for those funds as losses. I'm willing to bet that your funds won't hold up after all the losses from fees are assessed.

I guess you guys also missed the part where I said I used to work for a mutual fund company. There were no top meetings with CEOs and, if by chance, there were he/she can't give us insider information only what's available to the public. CEO's will also do anything to make their company look good so investment firms watch out for that too.

Lastly I have to wonder if you guys are so wiling to invest why do you care so little about your own money? These super researchers are using the same sources available to you. Anyway better people than I, namely Warren Buffet, have tried in vain to explain the stock market to the uneducated who think it's merely gambling and they have failed miserably.... It's been my experience that those who invest for long term growth usually end up far richer than those guys who play it too conservatively.

[benstylus]

Okay guys try tracking the performance of 2k worth of stock index funds vs your 5 different mutual funds? Keep in mind you'll also have to mark the fees you pay for those funds as losses. I'm willing to bet that your funds won't hold up after all the losses from fees are assessed.

I've done the comparisons on index funds versus the funds I've got. In the long term, mine win on every count - even after the fees.

I guess you guys also missed the part where I said I used to work for a mutual fund company. There were no top meetings with CEOs and, if by chance, there were he/she can't give us insider information only what's available to the public. CEO's will also do anything to make their company look good so investment firms watch out for that too.

Nope, didn't miss that, but "working at a mutual fund company" tells us nothing about what you actually did there. I worked at a target store for two years, but that doesn't make me an expert on everything that goes on in the corporation from top to bottom.

If you were answering phone calls and telling people their share balance, that doesn't qualify you to say everything that goes on.

Lastly I have to wonder if you guys are so wiling to invest why do you care so little about your own money? These super researchers are using the same sources available to you.

Not entirely, as has been explained before. The other difference is that these people have this as their job, and regular investors must do it in whatever free time they have outside their regular job. How much time have you got to research stocks compared to a mutual fund manager and his support staff?

Plus, millions of dollars of investment can mean a decent share of voting stock if it comes to that.

Anyway better people than I, namely Warren Buffet, have tried in vain to explain the stock market to the uneducated who think it's merely gambling and they have failed miserably.... It's been my experience that those who invest for long term growth usually end up far richer than those guys who play it too conservatively.

Those who invest for long term growth choose mutual funds instead of stocks

[Ed Oscuro]

Bonds or CDs? A little better than bank accounts, but compared to the returns a good mutual fund can provide, they're not really worth it.

That reminds me, I need to run down and pull my moneys out of a CD and put it in teh dow or sumthin

I let the CD roll over last year and the new interest rate is so horrible I didn't have to pay taxes lolol

yeah I should do something about that

[doodude]

My reasons for the Mutuals is for the reasons stated ( I think ) by both arguments.

Long term growth = consistent, better returns
Of my 5 mutuals 3 are very aggressive while the other 2 are not.

I dont have the stock picking savvy that a Mutual fund mgr & his team do.
I dont have the time to pick investments beyond a Mutual.

The only stock that I was looking at last year was Toyota ( TM ). Last year it sold for $95. I thought about buy 1000 shares on a money gurus tip.
It reached a high of around $170 & since I didnt purchase I was kicking myself in the ass.
Now, its back down to $98. If I had the time I could watch it daily or put a sell cap on it I guess.
Now, Im just trying to figure out if I want to buy it while its low at $98.
Decisions. decisions...

[GaijinPunch]

I have a few funds, and that's it. They outperform the market, so you anyone that wants to bitch and moan about how investing in stocks is better, knock yourself out. Remember though, there are people that do it for a living, so they're most likely better than you. They also don't do it with their own money.

My retirement plan is this: Save my fucking money b/c I won't get a cent out of social security. Literally, as I've only paid in 2 years to the US, and I managed to wipe out my Japanese payments when I left 3 years ago.

[The n00b]

hmm this has the makings of a shmup challenge.

[Neon]

Also, the greatest part about having a million in the bank to live off the interest rate is that inflation will outstrip that interest rate twofold.

There goes my plan for life. Penisknuckles!

[benstylus]

Penisknuckles!

You must work in Sony's marketing department. Now I know where that wretched ad came from...

[SAM]

I expect the world to change drastically enough in the nearest twenty years to render all retirement plans impossible/infeasible/useless.

Yes, the traditional way of pay for your home, then your kids, finally save for your retirement, no longer works. Or at least very risky, unless you happen to be self-employed.

http://money.cnn.com/2008/05/21/news/ec ... /index.htm

We have to start planning for our retirement now and start saving early.

Also, the greatest part about having a million in the bank to live off the interest rate is that inflation will outstrip that interest rate twofold.

Yes, Bonds or CD won't works for long when you take into account for the effect of inflation. Only stocks (this include mutual funds, tracker fund and invest in stocks directly) could do the trick.


My Plan

My plan is simple, accumulate enough stocks so that I could live on the dividend when I retired. Dividend from stocks are not like interest from bond or CD, they increase with time. And dividend from stock usually growth faster than inflation, in other words my retirement income source is hedged against inflation.

Currently my net dividend income accounted for 15% of my annual income, when it comes to 40% to 50% I could retired.

I have a few funds, and that's it. They outperform the market, so you anyone that wants to bitch and moan about how investing in stocks is better, knock yourself out. Remember though, there are people that do it for a living, so they're most likely better than you. They also don't do it with their own money.

Well those people are making money by "trading" stocks, those people just seat before the monitor all days, looking for opportunity to buy low and sell high, you certainly couldn't beat them if you try to make a profit by "trading".

"Investing" in stocks is about being a shareholder or parter of the corresponding company. You just hold on to your shares and share the profit the company has made each year, you don't have to sell unless you suddenly need a lots of money. It just like buying a home, you won't loss money just because currently there is a housing downturn, you could just hold on to it. When you retire, your home is most likely worth much more than you pay for it initially. Thus there is very little risk in investing in stock as long as you are picking only blue chip companies.

Actually the current market values of my stocks are not very meaningful to me, since I only want the dividends.

Picking individual stocks is just too time consuming & takes far more effort than just finding a good mutual fund.
IMO the trick is to get rid of all your debt & then instead of paying 1000's in bills every month invest that same amount into your IRA's & MFs.
And Shmups of course...

Well you don't need to invest in a lots of different companies. You just need to pick 12 to 20 good ones. Like I said before, once you bought the shares, you don't need to sell, so all you need to do is to found 20 companies worth investing in before you retire. That shouldn't be a lots of works. I invested 5 different companies now, and I only need to find 15 more in the next 20 years.

[Dave_K.]

I expect the world to change drastically enough in the nearest twenty years to render all retirement plans impossible/infeasible/useless.

I'm looking forward to becoming a financial burden on my children. Thats something the government can't take away. After all, isn't that why you invest in having kids?

[doodude]

I expect the world to change drastically enough in the nearest twenty years to render all retirement plans impossible/infeasible/useless.

I'm looking forward to becoming a financial burden on my children. Thats something the government can't take away. After all, isn't that why you invest in having kids?

Can you say State Run Nursing Home!?


I was mistaken about the Toyota stock reaching $170 per share as it only made it to $137 from a selling price of $95.
And to correct myself, I was looking to buy 100 shares not 1000.
Now its back down to $97+ & Im still having trouble pulling the trigger cuz I have no debt & Ima scairt to take on any for a gamble. In spite of it being Toyota which seems to me a pretty good long term gamble!

[SAM]

I'm looking forward to becoming a financial burden on my children. Thats something the government can't take away. After all, isn't that why you invest in having kids?

That's model won't work now, unless you are having many kids like people in the old days. If you only have one to two, I couldn't see how he/she could support you, your wife, his/her husband/wife's parents and manage to have his/her own kids.

And the priority of resource allocation is usually as follow:
(1) kids
(2) themselves (i.e. home loan)
(3) parents

Be sure to have many then, but first you must afford to have that many.

Can you say State Run Nursing Home!?

Don't bet on that! You could ignore me for everything I had said so far, but never ever bet on a State Run Nursing Home. When you are in there, those people take hold of your checkbook, lock you up within, and you would be too old to fight them.

How well you were treated would totally depend on whether there are any relatives would come to visit you and how often. It is hell, no matter you are rich or poor, once you were in, you are finished.

EDIT: I heard that they would perform drugs test on people living there whom are without a relative or whom are not able to tell others.

[doodude]

I was attempting to say that Dave_k's kids would probably dump him in a state run nursing home.

But I could be wrong.

Maybe they will give him the Master bedroom & 1st dibs on the morning shower...

Its difficult to convey dry humor on a forum...

[Twiddle]

Well if you have a dehabilitating disease when you're in a state-run nursing home you'll be treated much better

[GaijinPunch]

Well those people are making money by "trading" stocks, those people just seat before the monitor all days, looking for opportunity to buy low and sell high, you certainly couldn't beat them if you try to make a profit by "trading".

I work in finance, so yes, I'm quite aware off the difference. The thing is, simply "investing" in a stock or two is pretty stupid these days. Anyone with a pulse will tell you you need to spread out your exposure over many stocks. You also have to watch them to make sure the CEO isn't getting blowjobs in the office, that they're not giving served but uneaten sushi to the next customer, and that a rogue trader doesn't have a 5 billion Euro position on. If any of the above (or far less) happens you have to act. It's not black and white, but if you're not trading your stocks, you've got some risk on. That's the beauty of the fund -- someone that knows away more about that shit than you does it for you. That was my main point.

I invested 5 different companies now, and I only need to find 15 more in the next 20 years.

1: How long does it take to find a good company?
2: Isn't it smarter to invest now when you can take the hit that stock volatility introduces now rather than in 20 years?

[SAM]

1: How long does it take to find a good company?

If you are just need to find 20 or so good companies to invest in, it is quick. Filter like this, in Foutune 500, got ROE >= 14%, then look at its past history, see if it got a stable growth (in both dividend & EPS) in the past 10 to 20 yrs. Then you found one, put it on your watch list.

Wait for it's price to get lower, when it's P/E is <= 16 (best with <=12), you could start buying.

I invested 5 different companies now, and I only need to find 15 more in the next 20 years.

2: Isn't it smarter to invest now when you can take the hit that stock volatility introduces now rather than in 20 years?

You are completely right that I should have started with 20 different companies right in the beginning, instead of adding more on the go. But my problem is my island's stock market got only limited (good) chooses. It's only recently, when my net asset reaches a certain, I could open brokerage a/c to invest in stocks oversea.

May be I should consider increasing the speed of adding companies into my profile. Currently I only put new money into newly added companies, and this limited my speed diversification.

[jormungand]

I think retirement planning is a very, VERY smart thing to do as early as you possibly can. My employer matches our 401k contributions 100% up to 25% of your salary, so I put away 25% every paycheck, and have been for almost 12 years. I have an investment "officer" that works with the bank I use, and my money gets spread out over many different investment options, and I am contacted by phone anytime she thinks there would be a golden opportunity to make more money...and since she is my sister, I get all that for free. I also get a large sum of money dumped into my 401k twice a year from our proffit sharing, usually around $5-6000. My goal is to retire at 50...barring any major speedbumps. I also bought into some pretty good stocks on the side, namely gillette/duracell, and one of my best friends lives in Texas, and his eye dr. is Michael Dell's brother..we both got into Dell stock when it was just under $5 a share.

[GaijinPunch]

If you are just need to find 20 or so good companies to invest in, it is quick. Filter like this, in Foutune 500, got ROE >= 14%, then look at its past history, see if it got a stable growth (in both dividend & EPS) in the past 10 to 20 yrs. Then you found one, put it on your watch list.

You're forgetting that it's the users responsibility to make sure the 20 stocks are diverse enough for a safe portfolio.

The other options are:
*Find a few funds
*Open an account with a place and pay a small fee to have someone do all that for you.

I do the latter. I literally spend a few hours a year bothering with it (other than checking the balance on occasion) and it out performs the market. For someone with a full schedule, it is win win.

[DEL]

GaijinPunch wrote;

You also have to watch them to make sure the CEO isn't getting blowjobs in the office, that they're not giving served but uneaten sushi to the next customer, and that a rogue trader doesn't have a 5 billion Euro position on. If any of the above (or far less) happens you have to act

Yup, stock and shares are a form of gambling (which many people don't really realise). Plus they are rigged to blow every decade or so. See 9/11 for that .
The fact is that the big boys actually want crashes and recessions to happen every so often. They can swoop in and clean up during a recession, buying companies for next to nothing and low priced properties. Plus they can do the 'put option' thing on shares before crashes.
So these factors are worth bearing in mind for long-term investments in stock & shares