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Tuesday Sober Thread: Hope I Die Before I Get Old

Discussion in 'General Discussion' started by DrFrylock, Sep 7, 2010.

  1. DrFrylock

    DrFrylock
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    We usually have sober threads on Mondays, but since it was a long weekend everything gets shifted back one day this week.

    I was unable to give serious thought to retirement investments until I finished graduate school; between working and scholarships/fellowships I was able to squeak out debt-free, although not by much. Right when I finished and started making enough money to put a good amount away, the economy was in freefall for a while, and I thought my money was better off in my bank account. When things didn't seem to be getting any worse, a good friend of mine harangued me until I signed up for various retirement plans. He was a very good friend indeed, as this was about the time things started to turn around, and I started my dollar cost averaging on a nice uptick.

    At some point in my life, I would also like to be able to own a house near where I work, but I live in an expensive market. In the city where I work, which is fairly industrial, a tiny 1200-1500 sq. ft. detached house is going for about $600,000-$800,000 right now. These are houses that are not on the waterfront, don't have a gold mine in the backyard, nothing. If you want to put 20% down, that's $120,000 cash right there. Ouch. And that's just a place to live - not a real investment.

    FOCUS: What are your long-term investment/savings plans? Are you worried about your ability to retire? Any tips for the young'ins that are just starting to think about these issues?
     
  2. Kubla Kahn

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    Fuck y'all nigguhs, Im hittin the Lottery!
     
  3. Disgustipated

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    Here in Australia we have this thing called Superannuation. From what I understand it's pretty close to the 401K. Here it's mandatory by law, and set at a minimum amount of 9% of your gross wage. This gets locked away into investments, subject to tax and administration fees and you can only get it in certain dire emergencies of when you reach retirement age upon which it is doled out to you in allotments over time. That's the core of it, and there's a myriad of rules around that but the general rule if that if you try and shirk things, you pay.

    Basically it's a crock of shit in my opinion. It's getting better, but only through painful times. I had a mandated Superannuation provider when I was working for a law firm. Through mismanagement and excessive fees I lost money over time. At that rate, I would have ended up owing money to the trustee.

    So, when I became self-employed my partners and I started a company whose sole aim is to buy stuff and make investments. I can do this and avoid Superannuation as I don't technically earn a wage. We diversify what we buy, but have substantial residential and commercial property holdings (fully tenanted). We import heavy machinery from overseas and sell it here at better quality and a fraction of the price of what is available here. We've owned laundromats. Shares are a bit of a dirty word, but it has some of those too. Basically anything that can turn a profit, we'll look at. We're fully in control of whatever we choose to invest in.

    The best pieces of advice I can give anyone are:

    1. Diversify. The old adage of putting all your eggs in one basket applies. Sure, you might be lucky, but I'd rather bank on skill; and
    2. You don't lose or make money until you sell. This is especially the case on the stockmarket. A lot of people freak out when their shares fall in value. Ultimately, the most important values are what you paid for it and what you got for selling it. Until you sell it, you haven't made a profit or a loss.
     
  4. Frank

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    I work with retirement plans (don't ask me investment advice, I don't do that part) and naturally put a good chunk of change in them. I agree with the "don't put your eggs in one basket" statement and have a pretty diversified portfolio, also half of my deferrals are pre-tax and half are roth (after tax money, but contributions and earnings will not be taxed in retirement). My company puts 3% of my salary away for me (safe harbor, not match, it goes in whether or not I contribute) and has a pretty bitchin' pension plan, it honestly can compete with a government plan, except ours is actually funded.

    My advice as someone who works in benefits:

    - Start contributing to your 401k, 403b or whatever RIGHT AWAY. It is so much easier to part with the money if you've been doing it since your first paycheck rather than forcing yourself to take a "pay cut" down the line.
    - When choosing a job, factor in the benefits as real dollars: even if you're only 23, a 36k job with health care, pension and 401k with match is usually better than a 40k contract job.
    - If you are in a high deductible health plan and you're not maxing your health savings account (the one that rolls over year to year) deferrals, you are a fucking moron.
    - If you have the money, now is the time to increase your deferrals. You want to buy low and sell high, we are at a low, it's time to buy.
    - If you're younger than 50, don't count on Social Security to be there when you retire.

    Edit: FYI, I'm in the US and know nothing about laws, plans and other crap in other countries.
     
  5. BL1Y

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    $165k in student loan debt, no job prospects in sight; I figure by the time I'm 40 or 45 I'll have paid down my loans enough to be able to start saving for a down payment on a house, and maybe when I'm 50 or 55 I can start thinking about saving for retirement. ...Fuck.
     
  6. scotchcrotch

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    As someone pointed out on here before, dollar cost averaging doesn't reduce risk at all. It's a ploy by brokers to increase trades, and thus, their commissions.

    I've got 70 percent in index funds mirroring the S&P. The rest I put in dividend funds.

    Going to expand to real estate pretty soon. Although the hassle involved with real estate has kept limited to Reits so far.

    Oh, and for the love of God do not rely on company stock for retirement. Since you already rely on them for income, you're taking on entirely too much risk.
     
  7. Frank

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    This can't be stressed enough, a lot of companies did and still do default you into company stock for your 401k. Remember when Enron went bankrupt and all those people lost their retirement accounts? That's because they invested (or didn't elect not to invest) their entire 401k's in Enron stock.

    Even if a company goes bankrupt your 401k stays intact unless you have it invested in company stock or in a unitized investment indexed to the stock. As soon as you start with a new firm make your own elections, or at least make sure the default election isn't company stock.

    My old company defaulted people who were hired in the 80's and earlier into company stock. The stock price is half what it use to be. You can imagine telling the guy who never looked at his statements for 35 years and didn't know he was defaulted to company stock that he lost a couple million dollars the month before he plans on retiring was not a fun phone call.
     
  8. TX.

    TX.
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    Screw 401ks. I'm investing in a set of fake titties that will attract my billionaire J.P. Marshall-esque beau. We'll get married, I'll have to throw him a bone or two to consummate the marriage, and then I'll just patiently wait it out.

    Strategery.
     
  9. Durbanite

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    I'm pretty sure I'll be dead by retirement age - it'll either be a heart attack (or something else heart-related) or an asthma attack that gets me. I'm leaning towards the heart attack, since Ventolin isn't so good long-term for the heart. I've been on it for twenty years. Oh well. So far, one of my dad's aunts and my gran died from heart complications, as did my mom's aunt (but that was more self-inflicted as opposed to genetic - she was also diabetic. 2 litres of Coca-Cola a day for nearly 10 years will do that). Both my parents have high blood pressure, too.

    As such, I'm not wasting anything on a 401k or investment or any of that shit when I find a job - I'd be spending it on better medication for a (hopefully) better quality of life.
     
  10. ghettoastronaut

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    It's all about the pension. Cheeeah.
     
  11. dixiebandit69

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    So no one is ging for the 3rd world retirement plan (having a shitload of kids you can't afford to take care of in hopes that the ones who don't die will take care of you when you are old)?
     
  12. BL1Y

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    But do take advantage of stock options that are above water; just use the option and then sell the stock (or sell the option), and use the money to buy something else.
     
  13. toddus

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    Without going into details I haven't worked full-time since 30. Since then I have worked purely part-time consulting. This is anywhere from 0-20 hrs a week. I probably average 8 working days a month. Myself and my family easily live off what I make from this while my goal is to constantly increase the rest of my savings.

    To do this I have a very diversified portfolio although a decent proportion of it is tied up unconventionally in small-caps. I have invested in a number of very vanilla small to small-mid cap companies which I in turn provide free advice to which is something I love doing.

    My advise, simple. If you cannot in 60 seconds concisely explain what the investment is, the expected return and the risk: don't invest.
     
  14. MooseKnuckle

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    That's so dumb. The best strategy is to adopt a black kid, age 15 or so. You want to make sure you get a good, strong, healthy one. Not the fat ones. Then you simply wait for them to make the NBA/NFL and piggyback on their success. If they're 18-20 and aren't showing any signs of being a great athlete, you simply give him back and get a new one. You're only giving up about 3-5 years per child, so if you start at a young age you'll be able to go through a dozen or so black kids. And let's be real, 1/12 black kids become millionaire athletes.

    Now, if you get a late start it might be wise to adopt 2 black kids at a time instead of 1. Of course, there are up sides and down sides. On one hand, they could challenge each other and the competition could make them both, or at least one of them, into better athletes. But on the other hand, all that competition between black people tends to lead to shankings and shootings. So your not-so-athletic black kid could get jealous and kill the great athletic black kid if he looks at him funny, and then you're fucked.

    A good way to prevent that from happening is to get the poor athlete black kid a Rhyming Dictionary and hope he makes millions as a rapper. That's assuming your black kid knows how to read, which is hit or miss from what I hear. You should probably make sure you get one that already knows how to read. If you try to teach one how to read, it just agitates them and turns them against you, and you'll never get any of that money if they land a contract.

    Oh, and AIDS. Watch out for AIDS when handling your black kid.

    I know there is a lot of information here, and there's a lot of stuff I didn't get into for reasons of brevity, so feel free to PM me and I can explain the Adopt-A-Black Retirement Plan in more detail. Or you can just wait for the book.
     
  15. Harry Coolahan

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    I'm just planning on living off of social security when I retire in 45 years.
     
  16. zyron

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    HAHAHAHAHA, good luck with that.
     
  17. Muses

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    I am young and at the moment focused more on things like choosing a college major than long-term investing, but I would like this board's perspective on Scott Adams' 9-point, 129-word "Unified Theory of Everything Financial":

    How good is this "unified theory"? Can it really be that simple?
     
  18. Frank

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    You can pretty much completely ignore this information until you're done with college, but it's good advice for when you get out.

    If you have any real assets you should definitely do this ASAP so your loved ones aren't fighting over who gets what.

    Probably the best piece of advice here, credit card companies usually charge outrageous rates on their cards if you carry a balance. Barring an emergency situation that I honestly can't even conceive you should ALWAYS pay your credit card in full before the due date. If you don't have enough money in your bank account to pay off your card at all times, you are overextending yourself financially.

    Credit cards are a game, if you know how to play the game they are a way to take out interest free loans and get cash back for it. If you don't know how to play the game you will ruin your life with the insane interest payments and fees. Before you take out your first credit card ask yourself which one you are. If you're the latter ask for a very small maximum on the card.

    Easier said than done, but if you can sock away that much money ($21,000 grand this year?) do it. At a minimum you should be putting aside 6% of pay. Don't open an IRA if you aren't hitting the 402g limit on your 401k unless you are the smartest investor alive.

    ... and you are comfortable that you will be there for a few years. If you have to move for a new job within the first year or two this will probably end up being a terrible investment since you're paying all interest and had to pay all those bank fees. Also factor in expected utility costs and taxes when you buy a house, not just the mortgage payment, banks are way too generous with loans.

    Probably not a bad idea if you can find a money market account with a good APR. I'm a little paranoid about money market accounts since they are not FDIC insured but the government is bailing banks out so you can probably just pull the money out before the ship totally sinks.

    Investment vehicles other than 401k's, like life annuities, have fees associated with them so that's probably why he advises against them, but I don't think buying a life annuity with a portion of your 401k is a bad idea, you'll PROBABLY lose money on it, but it's a good way to hedge against a longer than expected life.

    But the basic jist is this: DON'T SPEND MORE MONEY THAN YOU HAVE. Make sure you have a nest egg outside of your 401k that you can tap into in case shit goes down. The only debts you should have are car, house and tuition. If you have to finance it, don't buy it. If you find yourself in a situation where if your paycheck comes a week late and you can't pay the bills because of it, you have failed. If your car breaks down and you don't have enough in the bank for a down payment on a new one, you have failed. There are always expenses you can cut out of your life to save more money, identify them and get rid of them. That's not to say "never buy anything for fun" but if your back is against the wall financially you should only be spending money on necessities.
     
  19. ROC711

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    I bought a house in Florida that is 1/8 mile from the beach. I figure with the beach erosion and hurricanes, in 10 years it will be beachfront and I can sell it for a lot of money.
     
  20. Juice

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    Im 24, I make 45K / year (not much, but hopefully in a promising career path). I put 8% into my 401k every paycheck (what I can afford), and about 50 bucks every paycheck into my Heath Savings Account. Other than the money I am saving here, I am virtually broke. I almost have to live paycheck to paycheck and do not have the income to have a nest egg. I should cut back my 401k contribution but Im absolutely paranoid about not putting enough away early. My other expenses are about 500 bucks a month towards paying off my loans and the rest takes up my other living expenses. The upside is, I dont have a family to support.

    My question is, is it worth it to consolidate tuition loans and does it hurt credit? (Sallie Mae never gives me a straight answer)