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Old 03-03-2007, 11:12 AM
 
Location: Vermont / NEK
5,774 posts, read 12,325,897 times
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...when you're 65, you're not going to want to do the things you wanted to do at 45

a line well worth rereading and retaining
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Old 03-03-2007, 11:36 AM
 
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I agree so much with the live while you are still young, but I hope the younger people are getting the part about keeping debt down and diversifying. We need to be careful not to keep all our eggs in one basket. And I fully agree, DO NOT take out equity loans if you don't have to, they are out there everywhere tempting people. I think alot of people who seem to be living large don't have a pot to **** in. Large debt is very difficult to get out of, and it isn't fast. In todays life a million dollars will not take you very far. Everyone should talk to an investment counslor at least once, just to see how there present investment plan will pan out down the road, and to find out how much it takes to contunue the lifestyle they want. We did it about 10 years ago. It will suprise many how much they need to plan for.
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Old 03-03-2007, 11:44 AM
 
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One more thing, if you keep your credit card debt very low, your cash flow will be much higher giving you more available money for living and saving. I just think everyone should take advantage of company matches in 401k's stock programs or what ever is offered, minimum input is a little like minimum payment on credit cards, slow progress.
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Old 03-03-2007, 01:08 PM
 
1,075 posts, read 3,247,099 times
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How does one build that nest egg, i think the best plan is first off you need to start building your portfolio, start off with a money market, it will become your emergency fund giving you the liquidity to pull any amount out when needed along with checking privileges , build it up so that you have sufficient funds available for emergencies.

have enough in there so that if something were to happen to your income source you would have a few months house payments, car payments, insurance payments, etc.

next thing you would need to do is have sufficient life insurance, short term disability.

contribute the maximum amount to that 401 but if your company does not contribute then don't bother find another vehicle, set up your roth ira, diversify into mutual funds, growth large & small cap, overseas, value, income, reinvest the dividends.
buy a few stocks, income stocks, growth stocks.
ira's can be self directed having both mutuals & stocks into them.

make use of tax free investment vehicles, if your contributing the max to your 401s & ira's you can also stow much of it away in an annuity.

pay down those outstanding debts.

once you have that built up & retirement comes knocking on the door you can set up monthly distributions from your investments to supplement income & still maintain some growth in them, use it to finance that new car possibly.

you need to keep it all as diversified as possible, never let a bank talk you into cd's between inflation & taxes you will see no gain, the biggest mistake you can make is not watching your investments thinking that's your brokers job, there is no possible way for them to stay on top of every single clients portfolio, that's were the financial planner comes in, but you yourself are mostly responsible for tracking them.

make sure you have a good cpa.
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Old 03-03-2007, 01:40 PM
 
Location: Sherman Oaks, CA
6,239 posts, read 15,454,358 times
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Quote:
Originally Posted by joee View Post
...the biggest mistake you can make is not watching your investments thinking that's your brokers job, there is no possible way for them to stay on top of every single clients portfolio, that's were the financial planner comes in, but you yourself are mostly responsible for tracking them...
I agree, and you shouldn't accept an answer that you don't understand. You deserve a detailed explanation of what's going on in your portfolio, and how your investments are being managed. Also, if you're truly worried about market risk, then you shouldn't be investing in the stock market. It's the "being able to sleep at night" factor.

I guess the true lesson here is "caveat emptor". Let the buyer beware, and never assume that your advisor is always acting in your best interests. I'm lucky to work with two very good, expert advisors who have been in the business for twenty years. I've also seen the other side, too. It scares me to think of the retired people who fall into the wrong hands, and then end up losing 80% of their investments when the market goes south!
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Old 03-03-2007, 03:20 PM
 
70 posts, read 262,585 times
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This gets confusing, can anyone recommend a book that explains the differences in all of these options? Isn't there a cap on how much tax free investment you can have?
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Old 03-03-2007, 04:18 PM
 
1,075 posts, read 3,247,099 times
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Tax free you are somewhat limited but tax defered there are quite a few options, as in variable annuities which work for some but not others, but you never want to let them annuitize, you can put a lot of money in those non qualified once you max out your 401 & ira.

fresh out of the gate start with the sec and just go from there
http://www.sec.gov/investor/pubs.shtml

get a few prospectus and read through them, lots of stuff to learn just think of it as an investment in your future, so many things you can do with money.

just don't jump into something you don't understand or take unnecessary risks but that's common sense.

Last edited by joee; 03-03-2007 at 04:55 PM..
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Old 03-30-2007, 03:38 PM
 
8 posts, read 56,867 times
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Quote:
Originally Posted by relocated46 View Post
Because this forum is filled with people of all ages I would like to get peoples take on preparing for retirement. I don't think people realize that 401k's are not enough to retire on alone. I saw a program on TV not to long ago on this topic and think people need to be more prepared than they think they are for retirement. I also have friends who live in big houses with extra toys etc... but only contribute to a 401k for retirement and I think they are going to be in for a big suprise down the road, I am 46 and 60 is looking closer, faster everyday. Do any of you retired people or smart investors have opinions to share? I also hope you college kids read this and ask questions, the millionare next door is not always the one driving the Mercedes.
Wow, MoMark hit the nail right on the head! A little background. Had $1M in 401K. When the tech bubble burst, it went down to $1/2M. A health issue forced me into retiring. Keep in mind that I have a nice pension from my company and social security. Companies nowadays are doing away with the pension plans which I think is so unfortunate for you young people. So far I have not had to tap very much into my 401K which is now an IRA. I did take money out to pay off my mortage and buy a new corvette. Paying off your mortgage is a big plus. An old lady driving a corvette is just plain funky and it makes me smile. I am concerned as the "Bushies" say we have inflation under control. That is pure bull. My house/car insurance went up, gas is going out of sight, my maintenance fee has almost doubled since I bought my condo, my health insurance from my company went from $32 to $167 in 5 years (and the coverage was minimal). I could go on and on but you get the point. Don't forget, now, that a pension never goes up. Your SS goes up a tiny bit but it does not even come close to our real rate of inflation. You also have to be careful with investing. When I first retired, every day I watched the market and my stocks go up and down. At the end of each year, I would see very little increase. Yeah, I had some winners but the losers outweighed any winners. With the hedge funds/day traders, you just can't win. So, like the typical old person, I am now invested in CDs. I sleep at night, get an extra $20K from my $1/2M and let it build up to replace the money I took out recently.

So, put as much as you can in your 401K. You are going to need it. You still have some years left before you hit 60, so you can afford to put some of your money into growth and income funds.

I will let you in on a secret. "It's not fun to get old". Keep that in mind and try and enjoy life to its fullest now when you are young and vibrant. When you hit 65, you will remember what I put down on this messsage to you and, hopefully, you will laugh and say "She was right". Of course, the alternative to not getting old is unacceptable to me.
The Happy Retiree
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Old 03-30-2007, 09:05 PM
 
Location: Springfield, Missouri
2,814 posts, read 12,077,955 times
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Quote:
Originally Posted by relocated46 View Post
Because this forum is filled with people of all ages I would like to get peoples take on preparing for retirement. I don't think people realize that 401k's are not enough to retire on alone. I saw a program on TV not to long ago on this topic and think people need to be more prepared than they think they are for retirement. I also have friends who live in big houses with extra toys etc... but only contribute to a 401k for retirement and I think they are going to be in for a big suprise down the road, I am 46 and 60 is looking closer, faster everyday. Do any of you retired people or smart investors have opinions to share? I also hope you college kids read this and ask questions, the millionare next door is not always the one driving the Mercedes.
My story is completely opposite the conventional wisdom. I don't trust 401K's at all. Think about it, even if you build up a very sizeable dollar amount, it's all subject to the whims of the stock market. "Experts" will tell you that over time it compounds and grows and historically that the stock market is the best rate of return plus the tax benefits, etc. I think they're full of sh*t.
When I get to the age I can start pulling money out of a 401 to live on, so will 75,000,000 other Americans be doing the same thing. All of these tens of millions of people cashing out portions of stock to live on constitute a huge percentage of the accumulated wealth floating stocks. When so many become dependent on withdrawing by selling stocks to pay mortgages that are not paid off and regular living expenses, they will recreate in the stock market what's already happening in the real estate market...too many people trying to sell at once which drives prices down. Stock prices will fall and that juicy 401K will shrink regardless of what you do. It's not the place to bet all your eggs.
Instead, pay your house OFF. Pay your house off. 1/3 of Americans live in paid-for homes. It's the safest security and usually the largest living expense. Pay off credit cards and stop using them when you don't have ready cash.
Stop buying new SUV's and new cars every three years.
Save money in CD's and government bonds.
I'm not saying don't save for a 401K, but most of the popular "knowledge" and "wisdom" is parroted by people repeating what they've heard others emphatically state is true. And I don't believe it is.
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Old 03-31-2007, 10:21 PM
 
1,075 posts, read 3,247,099 times
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MoMark, although i do respect your opinion on the market i'm going to go back the opposite way with things lol, in a 401 you have a choice of funds to invest within the family of funds, usually 3-6 different funds whether it be growth, income, value, you have say so over how much risk you want to take, 401s are a good way to save for that old age, depending on the employer match that money has the possibility to grow much faster, yes i said possibility lol as nothing is guaranteed in the markets, historically the market rises but yes there is some downfall from time to time but over the years you will come out ahead.

Now, true others will be pulling money out of funds along with you at retirement, but it's not like all that money is going to come out overnight, the average daily volume of stocks traded on the market daily is 100,000 to million shares or more, so the small part of retired peoples withdrawals is a very minimal amount having hardly any affect on markets, equivalent to a pin head on a football field, as fast as one sells another buys almost, plus there not going to be pulling money out all at one time it's never going to happen, all that will be happening will be a few shares sold here and there plus monthly minimum distributions required by law since that 401 must be converted over into a retirement account such as ira it can't sit in a 401 after retirement.

So the retiring people will have no effect upon the market what so ever, the small amount a person gets in return for a cd or gov bond is not worth anything but a little security of not losing anything, if your getting lets say 5% return on a cd, inflation is running say 3%, your getting a 2% return on your money, now plug in taxes you have to pay when the cd expires and your left with very little, gov bills are going to be the same way if little change.

Now with the stock market, say mutual funds for example, say you get a 10%return, 3% inflation your still 7% in the green, even minus taxes & fees your still going to come out on top, plus there's that chance of over 10% gain but also under 10% but over the years with dividends & cap gains reinvested your going to come out better, stocks if it's growth your good untill you sell minus dividends.

Another thing to look at is the tax bracket people are at in their young years could be a high bracket, now when they retire & the tax man comes to visit they will be in a lower bracket paying less taxes on the money earned in investments, but if you feel that the security of the money is more important then that's fine also, myself i used to be a broker so that's why i go the opposite way lol.

Just for the heck of it if you ever have some time to kill, pull up an investment site of funds you might be interested in if you were to invest, run a projection out x amount of years vs. cd's and just play with it, the amounts may be surprising.

later friend

Last edited by joee; 03-31-2007 at 11:12 PM..
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