Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Overall in the past 80 years, stock has returned an average of over 11%.
even a 50/50 mix has returned the proverbial 7% which is what you need to pull 4% a year and add 3% for inflation each year.... does everybody? no but its a guide and a conservative one at that .....
will prices go up 3% every year? probley not but sure as heck 20 years from now that 20.000 a year you were living on will be close to 40,000 needed.... can your portfolio do that for you? if not then you all better review your plan people.....
Last edited by mathjak107; 08-02-2009 at 02:59 AM..
That is much much better then wiping out your portfolio in a short plan.
You can move that money into Money Market MF's.
ha ha ha as soon as you can be the first market times to get it right all the time you can do that....the rest of us mortals only have our long term money in riskier asset classes and what we need to eat near term is nice and safe although not growing much but a good plan has that all figured in in its overall return
You mean large cap vs small cap funds?
Short term money should not be in the stock market which is less then 5 years.
nooooooooooooo, the bucket sysyem means you set up 3 buckets.
my system looks like this:
bucket one is safe money , cd's, money markets, bank, insurance companies gic deals.... you have 7 years worth of withdrawls,,,used to eat and live now
bucket 2 is a little riskier bonds, bond funds, un-traded reits, fixed annunities with market participation, another 7 years worth , used to eat in 8 years
bucket 3 is where the action is...
make sure your diversified, buying a handful of individual issues is speculating not investing , or buying one asset class like stocks is risky
pretty much bucket 3 is stocks, stock funds, reits, gold, commodities, fine art , real estate and anything else you can think of to invest in, just make sure you cover all the bases.... if nothing is going down while other things are going up then your not diversified enough
you refill buckets 1 and 2 when ever markets are up.... that gives you 15 years worth of money before you even care what the markets doing....even today there has never been a 15 year period where we werent up enough to have this plan work.... heck 15 years ago we were in the 4,000's...today we are in the worst down turn since the great depression and we are at 9000 plus
You mean large cap vs small cap funds?
Short term money should not be in the stock market which is less then 5 years.
5 years? not in my book today i consider short term money anything under 15 years... .. 5 years is way to risky,,, pull out 5 year returns and they are wild swings all over the place, even 10 years you can be down and i wouldnt committ money to the market,,, i feel you need at least 15 years or longer and we are talking 15 years until needed not 15 years until you retire..... even at 65 there is long term money tucked away god willing you live to 90..
thats what i mean folks when i say bad markets didnt kill anyones retirement , bad planning did
how many folks out their just pile money into 401k choices that they dont even understand, their co-worker told them what they picked and they didnt have a clue either...... and then a year or so before they retire they want to sell everything because heck they are retiring, they cant have money in the market anymore...... then we have a downturn and games over.....retirement is killed
the worst thing anyone can do is sell equities at a loss in a down turn..your killing the goose that lays the golden egg...
Last edited by mathjak107; 08-02-2009 at 03:37 AM..
tex im glad you asked these questions because im sure there are sooooo many of our viewing audiance that had not a clue to any of this ....
hopefully your questions impacted enough lives now so these people stop committing financial suicide, either by having no plan and just flinging 401k money into random stock funds or they are so conservative they will go broke in retirement from lack of growth..
one more note... im not a financial advisor in anyway...i dont give financial advice ,, i merely give you my opinions and pass on what i have learned...
i enjoy discussing planning and who knows one day i may even enter the industry
So you do recommend paying cash for a home if possible?
Well also Renting is half the overall cost of buying.
Over lifetime, I may throw away less money in renting that means I can invest in the stock market with my left over money.
if you can make more with the money take a mortgage, if you cant or you want the security of knowing your home is payed for then dont..... we bought a home 2 years ago and even though i could make more we payed cash..... i wanted the comfort of not having a mortgage on my retirement home. dont forget by the time a 30 year mortgage is paid for the origional price of the home will cost you 2 to 3x that price
forget about the tax deductions, those are like spending 3 dollars from your piggy bank to get back 1 dollar on your taxes.
also big problem is homeowners forget everyone gets the standard deduction whether you rent or buy... if your married the first 11,400 if married or 5700.00 single dont count... hypothetically a tenant can knock his rent calculation down by the same amount as the home owner... also more and more of us are getting hit with the amt tax, either from to many deductions or 2 much income...in that case you get nooooooooooo deductions as your on a flat rate.... i always say forget tax deductions in most calculations for cost of housing..
dont forget also each year as the interest paid is less and less so is your deduction.
i like the people who think this deduction for owning a home on the taxes and mortgage interest is some kind of plus.... there piggy bank is actually spending that extra money over and above the cost of the house but they see that 1 dollar coming back as some great magic... ha ha ha maybe madoff missed a scam here
if you dont buy then yes that money should be invested for the long term well diversified..... all asset classes not just stock...in fact you better invest that difference and not spend it or the homeowners got you beat!
Last edited by mathjak107; 08-02-2009 at 03:40 AM..
also big problem is homeowners forget everyone gets the standard deduction whether you rent or buy... if your married the first 11,400 if married or 5700.00 single dont count... hypothetically a tenant can knock his rent calculation down by the same amount as the home owner....
i like the people who think this deduction for owning a home on the taxes and mortgage interest is some kind of plus.... there piggy bank is actually spending that extra money over and above the cost of the house but they see that 1 dollar coming back as some great magic... ha ha ha maybe madoff missed a scam here
Mathjak, I usually agree with your financial advice, but you are way off base here. What you have written only is true in the seven states that don't have a state income tax. For the rest of us, the state income tax deduction alone can be more than enough to hit or exceed the standard deduction on its own. For example, I paid almost $13,000 in state and local income taxes last year. I would have paid that whether I owned a house or rented; therefore, the first dollar of mortgage interest and property tax I pay is discounted about 35%. Consequently, a $2,000/month mortgage only has an effective cost of $1,300/month. You can't rent a one bedroom apartment around here for that amount.
Wow, mathjak, you must live in an expensive area. We put no money down when we purchased in 1995 and with both of us working 2 jobs (him for the whole time and me once the kid was a bit older), we paid it off in just under 10 years. It only helped on taxes in '95 and '96 after that, our standard deduction was more.
Mathjak, I usually agree with your financial advice, but you are way off base here. What you have written only is true in the seven states that don't have a state income tax. For the rest of us, the state income tax deduction alone can be more than enough to hit or exceed the standard deduction on its own. For example, I paid almost $13,000 in state and local income taxes last year. I would have paid that whether I owned a house or rented; therefore, the first dollar of mortgage interest and property tax I pay is discounted about 35%. Consequently, a $2,000/month mortgage only has an effective cost of $1,300/month. You can't rent a one bedroom apartment around here for that amount.
not off base at all, all im saying is your calculations for what your net costs of buying here should start after the standard deduction.... couldnt you say the first 11,400 were actually your mortgage interest and you got nothing back actually yet over the standard deduction ? you could say that and then figure your are getting back 1/3 of the state and local taxes you paid.....
what were playing with here is called marginal tax rate....that means you look at things like the very next dollar or deduction puts you in the next bracket...
so in this case hypothetically lets say the renter has no deductions, he gets 11,400 if married off his income... you fill the deduction bucket with all your deductions as the homeowner, your mortgage interest, your real estate taxes all go in . dosnt really matter what goes in , in what order... if you put the mortgage interest and real estate taxes in first then you cant count it up to 11,400.00 , if you put your other deductions in first well then you cant count them otherwise if you take the mortgage interest and real estate taxes outside the standard deduction bucket it can be said that your not getting back 1/3 of your state and local taxes you paid in or contributions , or medical because of the house ,because those are in the standard deduction bucket and you lost those up to 11,400.00 instead....... its total tax bill and total tax rate thats important here
its like if you are bumping the limit on the 28% tax bracket the next dollar of interest is figured at the next bracket even though you could say well im counting this as part of the money at the lower brackets still and bump some other income into the higher bracket in its place........
its the entire tax situation you are interested in.... dont forget as you get into your mortgage and pay less interest that 2,000 a month your paying gets no deduction and cost you 2,000 a month even if its principal ... ... if you trip the amt tax you get nothing on any of the above as deductions and thats becoming easier and easier as your deductions go up
in my case we sold an investment property, the gains tripped the the amt on income,,, we paid a load of state and local taxes
fast forward following year,,.. we took the deduction for all the state and local taxes paid on the sale the year before, i had some dental implants done for a medical deduction and voom tripped the amt again for the 2nd time...all deductions went right out the window and your on a flat rate.... with some local real eastate taxes being in the 5 digits in our area its becoming quite easy to trip this tax ....
you get the idea.
Last edited by mathjak107; 08-02-2009 at 09:46 AM..
Wow, mathjak, you must live in an expensive area. We put no money down when we purchased in 1995 and with both of us working 2 jobs (him for the whole time and me once the kid was a bit older), we paid it off in just under 10 years. It only helped on taxes in '95 and '96 after that, our standard deduction was more.
im home based in new york city, cant get much worse...... we have a home in the poconos of pa too
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
