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I liked Ramsey's message about debt, although don't go to his extreme with the cash envelopes. Paying off credit card balances every month means no debt and also "cash back" reward on the card balance. I liked his taking a long term investment view, but don't necessarily buy into his very optimistic >10% returns on stock investments as if these are "set rules", and definitely disagree with his endorsement of actively managed funds.
I suspect that Ramsey makes his wealth on his products and real estate investment, not necessarily via mutual fund investment, thus can stand to ignore expense ratios and commissions while he makes the real money elsewhere. However, this model does not apply for others who may not have an interest in real estate investment, and whose portfolio build-up is on the index fund side.
Do-It-Yourself'ers can use Vanguard "target funds" with lower expense ratios, if they want a fund that they don't have to manage... although, realistically management can be a matter of "how many % stock index, how many % bond index" question, does not have to be so complex.
Lowexpectations: it was a little north of $250K, that was all transferred into American Funds (25% Growth and Income Funds, 25% Growth Funds, 25% International Funds, 25% Aggressive Growth Funds). The other portion was in an employer sponsored 401K and was not moved.
a generation of younger investors have been scared away from the markets just because of target funds and lack of advice..
being placed in aggressive allocations because they are young without them having the pucker factor to stay in them when the sledding gets tough is an awful way to get introduced to investing.
this is true across the board regardless of age as investing is to complex and to personal of an issue to make one size fits all based on just age.
a 25 year old who bails out in downturns and losses money each time would be far better served getting help finding a less aggressive means of investing.
there are no standards from company to company either in target date funds . one fund may be 90% equity allocations and another 70% for the same target date.
easy solutions to complex issues rarely work for everyone.
everyone wants to see the best doctor or the best lawyer yet when it comes to one of the most important decisions of their financial lives few want to part with a penny and seek help. they think this requires no special expertise until they get scared and lose money or until they create such a tax torpedo that it can't be undone cheaply..
no area of peoples lives are they more ignorant then financial matters yet this is the one area they refuse to pay for help.
Last edited by mathjak107; 07-14-2014 at 03:41 AM..
a generation of younger investors have been scared away from the markets just because of target funds and lack of advice..
being placed in aggressive allocations because they are young without them having the pucker factor to stay in them when the sledding gets tough is an awful way to get introduced to investing.
this is true across the board regardless of age as investing is to complex and to personal of an issue to make one size fits all based on just age.
a 25 year old who bails out in downturns and losses money each time would be far better served getting help finding a less aggressive means of investing.
there are no standards from company to company either in target date funds . one fund may be 90% equity allocations and another 70% for the same target date.
easy solutions to complex issues rarely work for everyone.
everyone wants to see the best doctor or the best lawyer yet when it comes to one of the most important decisions of their financial lives few want to part with a penny and seek help. they think this requires no special expertise until they get scared and lose money or until they create such a tax torpedo that it can't be undone cheaply..
no area of peoples lives are they more ignorant then financial matters yet this is the one area they refuse to pay for help.
well i did great as an investor but i did a lousy job preparing in advance to keep what i earned. the tax ramifications now of my structure will be painful tax wise to un-do and a lot of it i can't.
for the most part it is to late to un-do 35 years of bad tax planning ,but who knew from such things.
had i done things different and had guidence in my early years with no extra effort i could have been drawing 100k a year in retirement income and paying 1800 bucks in taxes while letting my social security grow and delaying it. instead that 100k will be taxed quite heavy as it stands on how i did it.
there is sooooo much value in a good planner i can't even tell you in words,
but you need to have the knowledge to identify just who the right planner is. it is like i work as a motor control specialist and can design some pretty complex stuff for controlling fans and pumps. but do not ask me to install or build it. if i put a light bulb in and it works i want "good job"
the same is true in identifying good planners, you need to know at least the more advanced basics to see if this planner meets your objectives.
by the way , my planner is commissioned . ssssssshhhhhhhhh, and we are buying a long term care policy. .
Any tips for identifying a good financial planner? Or good books? I've read a lot about the investment side of personal finance, just started reading about the insurance side. I would definitely be interested in any resources you could suggest for the long haul (insurance, estate planning, tax planning, etc.)
it isn't a book , it is an education overall you need . you can start right here for your basics. you can read the works of dr wade pfau , michael kitces , bill bernstein .
they will all give you enough feel for what is correct logic or a plan as you interview planners.
according to vanguard , the grand pappy of do it yourself investing their own study shows the typical small investor cuts himself short by about 3% a year by NOT USING AND SEEKING A PLANNER OR ADVISOR.
number 1 on vanguards list is discipline. small investors bail when they should buy or rebalance. they are awful at even getting the gains the funds get as they hust time things wrong. a good advisor can find a mix that matches your own risk tolerance. most folks were way to aggressively invested to match their pucker factor and lost money for it.
number 2 small investors are grossley tax inefficient in their planning
number 3 investors need help in other areas of their financial lives especially help on the spending side.
i have always been a do it yourself investor although i use a newsletter i have followed for more than 25 years just for the discipline..
well now that i am retiring we met with a planner last friday week to help me with the tax maze of planning.
well i did great as an investor but i did a lousy job preparing in advance to keep what i earned. the tax ramifications now of my structure will be painful tax wise to un-do and a lot of it i can't.
for the most part it is to late to un-do 35 years of bad tax planning ,but who knew from such things.
had i done things different and had guidence in my early years with no extra effort i could have been drawing 100k a year in retirement income and paying 1800 bucks in taxes while letting my social security grow and delaying it. instead that 100k will be taxed quite heavy as it stands on how i did it.
there is sooooo much value in a good planner i can't even tell you in words,
but you need to have the knowledge to identify just who the right planner is. it is like i work as a motor control specialist and can design some pretty complex stuff for controlling fans and pumps. but do not ask me to install or build it. if i put a light bulb in and it works i want "good job"
the same is true in identifying good planners, you need to know at least the more advanced basics to see if this planner meets your objectives.
by the way , my planner is commissioned . ssssssshhhhhhhhh, and we are buying a long term care policy. .
Very interesting response. First, congratulations on the years of disciplined investing. You deserve it.
Looking back on everything, what would you have done differently to improve tax planning from a younger age? Of course there's the 401k. I'm aware of low cost index funds for taxable, Roth IRAs or backdoor Roth for tax inefficient investments, but I'm sure there is a lot more to it than that.
Your comments are openly welcome by younger generation that want to do it right. Please PM if you'd prefer. I'm not counting on getting a dime from SS. I wish I could opt out.
Very interesting response. First, congratulations on the years of disciplined investing. You deserve it.
Looking back on everything, what would you have done differently to improve tax planning from a younger age? Of course there's the 401k. I'm aware of low cost index funds for taxable, Roth IRAs or backdoor Roth for tax inefficient investments, but I'm sure there is a lot more to it than that.
Your comments are openly welcome by younger generation that want to do it right. Please PM if you'd prefer. I'm not counting on getting a dime from SS. I wish I could opt out.
Ss will still be around in the future but the amount of your benefits are in question. Ss isn't a retirement program. It's insurance and a social safety net so letting folks opt our makes zero sense
Very interesting response. First, congratulations on the years of disciplined investing. You deserve it.
Looking back on everything, what would you have done differently to improve tax planning from a younger age? Of course there's the 401k. I'm aware of low cost index funds for taxable, Roth IRAs or backdoor Roth for tax inefficient investments, but I'm sure there is a lot more to it than that.
Your comments are openly welcome by younger generation that want to do it right. Please PM if you'd prefer. I'm not counting on getting a dime from SS. I wish I could opt out.
if we had them when i started i would have done 2/3's roths and 1/3 deferred traditional.
i would have filled the traditional with income generating stuff that gets taxed regardless at regular rates.
i would have filled the roth with equities and the taxable with equities as well where i would be pay zero to 15% capital gains today.
i would have started paying for a long term care policy earlier on so the rates would be much lower then i will pay today.
that would have let me pay next to zero tax while drawing an income delaying ss to grow
- Most attempts at beating the market will fail.
- Most people end up with below-average performance, on account of psychological factors.
- The main role of an investment advisor at the retail level is to serve as therapist, to prevent retail investors from doing stupid things for emotional reasons.
- Sometimes such therapy is essential.
- Professional advice is far more useful for tax-questions, where the practical consequences are far more complex than the principles, than for investment-questions, where the basic principles account for 99% of the practical consequences.
Recently I've been doing some introspection regarding tax consequences, along the lines mentioned by Mathjak. The upshot is most unpleasant. If growth-predictions are to be believed, I'm going to be one tax-fleeced old man, unless some preventative maintenance is implemented.
It's amazing how much advice is available for free, especially once you've crossed some thresholds at the major investment firms (Fidelity and Vanguard being the prime examples).
yep , many of us did great jobs investing and growing our savings and lousy jobs keeping it later in life.
the problem is our system says we have to pay our fair share but it turns out our fair share is whatever we can figure out to save by finding better ways of not paying more than we have to.
there are lots of tax savings measures out there but like building a bridge it all has to be put in place early on. later on it is like telling the guys who built the bridge , it is nice but can you move it 2"' to the left.
the combination of utilizing roths, traditional accounts, taxable accounts ,over funding life insurance , annuities and life insurance swaps can save quite a bit of taxes as well as provide guarantees you can't get from simply investing on your own.
sure you could do better on your own if the investment gods smile on you but tax wise the tax man takes quite a bit back if you are not wise.
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