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Honestly I say slow and steady wins the race. I have a father-in-law that was very aggressive in investing in stocks, looking for that big score. He lost a ton of money in the dot com crash and the rest in the 2008 crash. Now he's close to retirement and has nothing left and lots of debt. He was living above his means with all the overtime he was making, now the overtime in gone and he's struggling to pay the bills. Besides what he will get from social security and a pension he has nothing for retirement. Don't be the rabbit in the race, be the turtle. You'll finish ahead in the end.
Yes...for once in my life I'd love to get something for "nothing".
Though all those people with capital gains in their hands wouldn't exactly agree that the gains are for nothing. They would tell you that they busted their butt and denied themselves a variety of things/experiences at some point in their lives to amass the capital that is now giving them something for nothing. (save of course those who were born with serious nest-eggs).
I know virtually nothing about investing, other than that it's good to have extra cash lying around so that you can invest it as opposed to keeping it in a savings account. I did however see my parents buying a few real estate pieces in their life which now supplement the miserable pensions they ended up with from the jobs they worked under a communist regime. Those were very smart moves they made as they are now doing quite well. Had they not bought that real estate they would be virtually screwed today.
I find it amazing to see how a few apartments that they own today can generate income without them lifting a finger (the assumption is that they lifted enough fingers when they earned the money to buy the apartments).
They are nowhere close to rich but they are OK in old age because of these apartments. And yes, they are overseas.
There is a reason that real estate income is categorized as passive income. Once you have it setup, it really does run on its own. I have my property managed by a real estate company and they charge a percentage. IMO, their fee is money well spent. At first I managed it myself just so I knew what I would be paying for. The way I look at it, I'm not going to get rich managing the properties, it's going to be from owning the properties. Their fee is tax deductible as an expense to offset rental income.
A great thing about investment properties is the depreciation deductions. That can be used to offset the rental income that is generated. While doing my taxes, I "lost" money from my rental property because of all the deductions I was able to claim. In reality though I generated thousands of dollars in cash flow and paid down the mortgage, increasing the equity I own in the property. As a bonus, the property appreciated in price.
The reason I like real estate is that if bought properly it will cash flow in a down economy as well as an up economy. In my experience the same can't be said of stocks. Stocks look great when the market is up, but gets me nervous when it's down. What happens when it's time to retire, and the market is down. Then I'd be forced to sell even more shares to generate cash compared to waiting till the market goes up again. So if the market stays down for a while, I'd be selling my stocks faster just to pay the bills.
Don't get me wrong, I also participate in a TSP, IRA, and ROTH-IRA. I do so because I want multiple income streams in case one is not doing as well as another. Social Security may not be around by the time I retire, so I'm setting myself up so I will not rely on it either. I'm hoping to generate enough income from rental property and stock dividends that I only have to take the RMD and nothing else. If I stay with the current company for a while and get a pension, even better.
I'd hang onto your cash and buy the upcoming dip. Then if Obama gets defeated by Romney in the fall, buy whatever you can. Businesses have been holding their collective breath for two years now waiting on the 2012 election, chiefly due to their worry that the God awful health care legislation might stick.
Just curious -- how rich do you think you need to become, in order to feel secure and content? The answer to your OP depends on the answer to that question.
You are now spending about $140K on your present lifestyle, which is three times the national average. How much better could you live if you had a lot more, and how important is that enhancement in your future plans?
So far as "brokerage fees"... If you go to a full service broker - a local financial business in your town. Then have them invest your money for you, they will charge high commissions and fees. That is how they make their money. They have to pay the rent on that building. You could pay $2000 or more in commissions to buy an investment!
However if you use an online broker and buy/sell investments yourself, then the commissions might be under $10 to buy or sell a stock. Or $1 to buy or sell one bond.
Also full service brokers are NOT in business to make YOU money! They could care less if you go broke. They are in business to make themselves the most commissions possible. And will therefore recommend THOSE investments to you.
The reason I like real estate is that if bought properly it will cash flow in a down economy as well as an up economy. In my experience the same can't be said of stocks. Stocks look great when the market is up, but gets me nervous when it's down. What happens when it's time to retire, and the market is down.
As little as I am familiar with all the jargon of investing...(fees, offsetting rental income, deductions, etc), my gut feeling says exactly what you said above.
It seems to me that real estate is something that would have to work even in a bad economy because the reality is people HAVE TO place their head under SOME KIND OF roof, no matter how horrible or good the economy is.
The reason why my parents invested in real estate is because:
1) they have no clue what the stock market exactly does and how it works (though they are aware it exists, they've heard of it ).
2) Even if they understood all of its intricacies, they would not trust it for the life of them - especially in the corrupt country they live in. :-)))
So for them the ONLY place they would ever consider putting some extra money in is real estate. There is absolutely no other option for them - they would never consider it, regardless.
This attitude must have rubbed off on me, so my first thought was:
as soon as I have enough money lying around, I am buying a rental unit - period. But then I hear people talking about related hassles and they make them sound like fighting tsunamis and I get scared.
But like you said, what's wrong with paying a management company a fee? After all, you're still making passive income - which is the sweetest kind of income I can think of.
Stocks sound very fuzzy and intangible to me. Real estate - I can put my finger on it.
Then again, I would be a very small and unsophisticated investor - and I suppose those are more likely to look for tangibles (land, real estate, things they can touch).
Just curious -- how rich do you think you need to become, in order to feel secure and content? The answer to your OP depends on the answer to that question.
You are now spending about $140K on your present lifestyle, which is three times the national average. How much better could you live if you had a lot more, and how important is that enhancement in your future plans?
140,000 on our lifestyle? Who said we spend that kind of money? We make 165,000 between the two of us, gross - both working full-time jobs.
So what are you talking about?
After mortgage and all other expenses, we aim to have at least half of our take home income left over. Much of this is by making frugal choices every step of the way and not by having the "lifestyle" you seem to be imagining.
The rest of the money will pile up at some point. What is wrong with not wanting to be out of breath until the end of your days?
Yes, I would like to be able to work less and less over time. That's all.
Call me lazy, but I really love those "smell the roses moments" when I don't have to do absolutely zip:
just sit there and stare at the moon. I rarely have them now. I wish I could have been a SAHM and just run the household at a slower-pace while kids are at school, but we weighed our options and decided that me keeping my career is the wiser and safer choice for us in the long run.
What I end up doing is have a career (often working from home), AND run the household, AND cook from scratch, AND act as baby-sitter, AND doing all sorts of things SAHM-S do IN ADDITION to working on my job - which admittedly, does have a wonderful amount of flexibility.
I can have both a job and be around for my family - but that leaves me out of breath pretty much every day.
When I hear SAHM-s in the neighborhod that they do "scrap-booking" and other darling occupations like this, but that they also don't cook (despite being SAHMS!)... well...I don't exactly feel the need to apologize for my "lifestyle". Overall, between job and household/kids, I work like a dog.
So yes - I would like this money I am currently working for to start doing something back for me too.
THAT'S when I will be truly content. For me, it is not about "stuff rich". It's about "time rich".
We already have a pretty modest lifestyle compared to most people who make what we make, actually compared to many people who make less than what we make. I wish you could see my car. Most middle-class American would not be caught dead in it.
PS: Another aspect about being content with whatever source of income you have from a current job, is that "the current" times don't stay "current". As long as your entire livelihood is dependent on an employer continuing to make deposits in your checking account every month, I don't think you should be entirely content. Not in our times. Employers can always get rid of you. This is a fact.
However if you use an online broker and buy/sell investments yourself, then the commissions might be under $10 to buy or sell a stock. Or $1 to buy or sell one bond.
So something like Ameritrade?
They say they charge 10 dollars for stocks.
So something like Ameritrade?
They say they charge 10 dollars for stocks.
Right.
ETrade (also has below investment grade bonds = higher yield, but more risk.)
TD Ameritrade.
Scott Trade
Etc.
The more well known online brokers also have optional "fancy" trading software. You can get what is known as "Level II" or "Market Depth" which will show you other people's orders/prices to buy/sell stock. And get a PC with two screens - have charts and so forth on both screens when using their advanced software.
Also they have more research and instructional information/videos on their web sites and have live events. And sometimes will hold seminars in large cities across the U.S.
There are online brokers which might charge under $5 a trade, but I don't know if they offer as many other "goodies"?
Then there is also a more advanced international online broker "Interactive Brokers" - 10K minimum. They say you can buy anything (international) there.
140,000 on our lifestyle? Who said we spend that kind of money? We make 165,000 between the two of us, gross - both working full-time jobs.
So what are you talking about?
.
You did, and then you just repeated it. You make $165K between you, and save 10% or 15%. That's $140K. You're talking about aggressive investing, and you can't even grasp the simple concept that what you earn minus what you save is your cost of living at the standard you have chosen for yourselves.
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Who said we spend that kind of money? We make 165,000 between the two of us, gross - both working full-time jobs. 
