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LOL, the tent thing is funny sorry. I get your point for sure, but it's almost like saying I could rummage through dumpsters to eat food. I'm NOT a morning person, so a tent wouldn't get it done. I'd never be able to sleep. The noise, temperature variations, light, it would be miserable. Especially if I was 80 years old! It would be tough for me to spend two nights in a tent right now at 35, I guarantee I'd be a zombie by the end of the trip.
I think the biggest key is that most people don't have the opportunities or don't consider the potential investments for their money and the toughest money to save in a lot of ways is the first money. You have to be really aggressive as a young person, really frugal, to put aside enough money to start making some progress in life about saving. It's hard! Especially if there's not much coming in compared to what you spend. But you have to start somewhere. It's like when I'm writing a new screenplay, that first blank page is the most intimidating, worst thing ever. I often stare at it for an hour just nervous how it should start. But once I hit 50 pages, it's like skiing downhill to the finish line because there's a lot of momentum. Money is kind of the same way. When you get to a certain critical mass there's just more you can do with it.
Probably if it were me and I was 22, start starting out, no money to my name, I'd focus hard on saving money and trying to be able to afford a townhome or condo or something on the lower end, but I'd want to be a property owner as fast as I could because I don't want to pay rent and I want to see the appreciation of an asset. The stock market overall is a good place to put money long term, so I might put excess funds into an ETF or something like that.
Bottom line, though, if I was trying to build wealth for the future I'd be looking at buying investment properties. When I owned one rental place myself I was making about 5.6% ROI after all expenses including management and property taxes, but the asset was still appreciating as well. That would be an ideal scenario. The more money you can sock away early, the more it can turn into over time, but you have to be investing aggressively enough to hit higher returns. Just barely outpacing inflation won't really get it done as far as a luxurious retirement.
There are all kinds of ways to make money if you're a bit open minded to the possibilities. Like there are routinely things that go up for sale online that will immediately be worth twice or three times as much on eBay, but you have to know what those things are and be there to hit refresh and hopefully buy them within the few seconds they sell out. That'd probably be how I'd turn my first few thousand into a few thousand more, because it's pretty easy and a sure-thing it just relies on limited supply of an item and much higher demand.
Generally speaking, super safe investing isn't actually that safe because of inflation. People act as if it's a new thing that keeping all your money in CDs or bonds doesn't generate enough enough money to retire on. Truth is, that has been more the norm than the exception if you look at return data going back to the 1920s. People remember the double digit returns on CDs back in the 1970s and 1980s. But they forget about the double digit inflation that went along with it. Granted, real (after inflation) returns on conservative investments were better at that time than they are now, but they weren't as good as people imagine; and that period of time was an anomaly, not the norm. It's a classic example of looking at the past through rose colored glasses.
A portfolio of 60% stocks and 40% bonds will typically far outpace a portfolio of CDs or bonds over the course of 30 years and that has pretty much always been the case. In most cases, with such a portfolio you'll end up with more money (after inflation) at the end of 30 years than you started with if you follow the 4% rule and adjust annually for inflation.
You missed my point. I was responding to a post that said a safe 4% return is hard to find. A 4% CD is not a wise choice, but a safe one.
LOL, the tent thing is funny sorry. I get your point for sure, but it's almost like saying I could rummage through dumpsters to eat food. I'm NOT a morning person, so a tent wouldn't get it done. I'd never be able to sleep. The noise, temperature variations, light, it would be miserable. Especially if I was 80 years old! It would be tough for me to spend two nights in a tent right now at 35, I guarantee I'd be a zombie by the end of the trip.
I think the biggest key is that most people don't have the opportunities or don't consider the potential investments for their money and the toughest money to save in a lot of ways is the first money. You have to be really aggressive as a young person, really frugal, to put aside enough money to start making some progress in life about saving. It's hard! Especially if there's not much coming in compared to what you spend. But you have to start somewhere. It's like when I'm writing a new screenplay, that first blank page is the most intimidating, worst thing ever. I often stare at it for an hour just nervous how it should start. But once I hit 50 pages, it's like skiing downhill to the finish line because there's a lot of momentum. Money is kind of the same way. When you get to a certain critical mass there's just more you can do with it.
Probably if it were me and I was 22, start starting out, no money to my name, I'd focus hard on saving money and trying to be able to afford a townhome or condo or something on the lower end, but I'd want to be a property owner as fast as I could because I don't want to pay rent and I want to see the appreciation of an asset. The stock market overall is a good place to put money long term, so I might put excess funds into an ETF or something like that.
Bottom line, though, if I was trying to build wealth for the future I'd be looking at buying investment properties. When I owned one rental place myself I was making about 5.6% ROI after all expenses including management and property taxes, but the asset was still appreciating as well. That would be an ideal scenario. The more money you can sock away early, the more it can turn into over time, but you have to be investing aggressively enough to hit higher returns. Just barely outpacing inflation won't really get it done as far as a luxurious retirement.
There are all kinds of ways to make money if you're a bit open minded to the possibilities. Like there are routinely things that go up for sale online that will immediately be worth twice or three times as much on eBay, but you have to know what those things are and be there to hit refresh and hopefully buy them within the few seconds they sell out. That'd probably be how I'd turn my first few thousand into a few thousand more, because it's pretty easy and a sure-thing it just relies on limited supply of an item and much higher demand.
We are blessed, but we had 2 good incomes, lived frugally, saved a significant portion of our incomes, and invested aggressively in equites earlier in our lives. BUT, if I had to do it all over again, I agree we would diversify more into rental properties.
I think it completely depends on your expected quality of life, right? I mean there are some general good guidelines that I think make a lot of sense, but beyond that, it's going to be up to you to decide how you want to spend your retirement years, what you can possibly afford to save, etc.
Me personally, it sounds like a nerve-racking idea that I'd be eating into my principal (which is already worth less each year because of inflation), so if I had $1 million and was able to get a 5-6% return, that's $50-60K per year before taxes, but the problem there is I'd probably need the $1M to be tied up into a good, solid investment that was illiquid to make that type of return so I'd only have access to the cash coming off the top. I would then need an emergency fund of some amount, whether that's $100K or whatever, to make sure I'm not needing to sell off the investment.
I can't see the reasoning about how you'd need less money during retirement than you do any other time, I would think it's quite the opposite actually. Most people who work regular jobs don't get to travel as much as they may like, so you may want more money for traveling. You also have to fill your days with activities, and for many people Netflix and TV are great options after 8 long hours of work, but if you're free all day, you may want to go play some golf or go fishing or watch some live sports events or whatever it is you personally like doing.
I can see how if you paid your mortgage for 30 years and then retired the same year that you paid it off completely, that could definitely make living on less money per month completely doable. Or perhaps you decided to downsize your house, but again, I have trouble relating personally to any of these things. The more time I spend in a house, the bigger I want it to be and the more features it needs to have. I work from home so there's no functional difference between my life right now and my life if I were to "retire." I can't think of a single thing that would be cheaper for me if I declared myself retired tomorrow, financially, but obviously at age 35 if I did that, I think I'd get some awkward conversations from people I know about what exactly I intended to do for the next however many decades.
Since retiring, I spend way less on food, as I cook instead of eating out. My drinking is at home instead of at bars and restaurants. I hardly ever buy clothes and when I do, it’s shorts and tee shirts. No dry cleaning. I put only about 4K miles a year on the car instead of 17k, so way less in gas, tolls, and maintenance. Plus low mileage insurance discounts.
I do spend more on entertainment - usually golf or sporting events. In my case, I get a lot of free tickets and golf from entities that I’ve supported over the years.
You missed my point. I was responding to a post that said a safe 4% return is hard to find. A 4% CD is not a wise choice, but a safe one.
Sorry, I'm not good at multiquote or I would've quoted both of you. I didn't miss your point.
My point was looking to put 100% of your money in an investment with a guaranteed rate of return almost guarantees you won't have enough to retire on--unless you've saved an awful lot--which most people will be unwilling or unable to do.
My point was looking to put 100% of your money in an investment
with a guaranteed rate of return almost guarantees you won't have enough to retire on...
The bigger mistake being made here is calling CD's or Tbills (or Gold ftm) an investment.
They aren't. At best they're a hedge but mostly they're just a safe harbor.
The lesser mistake is confusing the degree of safe that's an appropriate goal
for those at one age/situation in life with those at some other. All are NOT equal.
i think those that made 13% on gold in 2017 would call that an investment . so would those who got 24% in 2009 ,30% in 2010 , 10% in 2011 ,7% in 2012 , etc .
it took equities 13 years to get back to even in 2000 adjusted for inflation .
it is just gold can be more about timing the markets than time in the markets , same as any commodity would be whether it is oil , foods or metals .
You missed my point. I was responding to a post that said a safe 4% return is hard to find. A 4% CD is not a wise choice, but a safe one.
It’s a wise choice if the market corrects 50% as you’re retiring as long as it’s a short term CD or government bond. Those top out at about 2 1/2% at the moment. There is enormous sequence risk right now. Remove Facebook, NetFlix, Alphabet, Amazon, and Apple from your market index and things don’t look so rosy for 2018. Then layer on soaring deficits and national debt. This looks to be a good time to have cash after a long run-up.
CDs obviously won’t track inflation in the long term but there are times where capital preservation is kind of important. The next correction is unlikely to be the short 18 month blip of 2008.
Sorry, I'm not good at multiquote or I would've quoted both of you. I didn't miss your point.
My point was looking to put 100% of your money in an investment with a guaranteed rate of return almost guarantees you won't have enough to retire on--unless you've saved an awful lot--which most people will be unwilling or unable to do.
I agree with you about the inflation factor.
Inflation and return sequence risk (worth a whole other thread to discuss) are two of the biggest dangers to a retirement portfolio.
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