Savings and retirement

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Dunn
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Savings and retirement

Post by Dunn » Tue Dec 27, 2016 4:24 am

Alright, curious what kind of advices you fine folks have on this subject. Book recommendations are welcome as well.

Wife and I are in our early 30's. We currently have a mortgage and some college debt, but that's it. We are looking at a move sometime in the near future for career growth and for better opportunities for our son, 1 yr old. I am in the National Guard, so I do have some semblance to a military retirement but it is far from something to bank on since I've yet to decide to stay in the full amount needed to make it worthwhile. Other than a meager savings/emergency fund, that's it. Though we are looking at doing an IRA starting in 2017 and with this next move I'm hoping to land a gig with a decent 401k.

Having a kid and working around an aging population has made me acutely aware at our shortcomings in this area. I don't want to be like my folks and have little in the way of emergency funds and retirement options, though they didn't need to worry about that last bit. There plan was just to tuck some away and hope for the best.

So lay it on me. There's so much out there and it contradicts at times. With not a ton to invest, it's kinda important for us to make the right choices so I'm trying to get educated on this. Better late than never.

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Re: Savings and retirement

Post by Turdacious » Tue Dec 27, 2016 4:57 am

Start doing military stuff for points. It's an easy way to boost your retirement to near active duty levels if you do the work. Options vary by service. There may be some options that benefit your civilian goals and will get you points. Look at Tricare as a primary/secondary insurance (if you aren't using it already) option-- it protects you from surprise bills and you can sign up midyear.

In general-- 401k > IRA > TSP but if you and household six are both making incomes, the IRA option has advantages. IMHO the best book on the subject: https://www.amazon.com/Simple-Wealth-In ... 0966976312 You can probably find a cheaper copy elsewhere.
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Re: Savings and retirement

Post by vern » Tue Dec 27, 2016 5:06 am

Your Money or Your Life by Joe Dominguez is the best book I've read on this subject. (Skip the investment advice though as it is dated.)

Here's a good summary...

http://www.mrmoneymustache.com/2012/12/ ... your-life/

Nords is the resident military retirement expert over there...

http://www.mrmoneymustache.com/2012/02/ ... privation/

Doing some poking around on the MMM site won't hurt you either. Best of luck Dunn!
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Re: Savings and retirement

Post by dead man walking » Tue Dec 27, 2016 3:07 pm

put your long-term investments in basic index funds with low fees. vanguard is probably the best.

that is, unless you're an investment genius or are planning a long con. you need andy's advice for those topics.
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Re: Savings and retirement

Post by Hanglow Joe » Tue Dec 27, 2016 3:19 pm

Good work on acknowledging your finances. A lot of people avoid the inevitable and then are stuck.

First, pay of all credit card debt if you have any. CC's whack you at 18% interest. Putting money in a savings account at 2% return while you owe is a loss of -16

Second, start by investing in a Roth IRA. I don't remember what the max is, either 5k or 6k. You and your wife can both invest. It's after tax so when you're 70 when you pull it out you won't get hit by the tax man. You can invest for 2016 up until 4/15/17.

Once you land a decent gig, max out the 401k contribution.

Set up a budget of money you're going to invest every month, no matter what. It could be $250, $500, $1k, whatever. Stick to it.

Cut out any wasted spending. Whether it be grabbing a coffee or 2 daily. (Make it at home) Brown bagging a lunch, Cable TV package, Phone plans, all this stuff can be trimmed back.

For investments, you're young. Equities are the way to go in a mutual fund.

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Re: Savings and retirement

Post by johno » Tue Dec 27, 2016 6:08 pm

dead man walking wrote:put your long-term investments in basic index funds with low fees.
^Yes.
Regardless of what any of your friends/buddies/family are doing, DON'T try to pick stocks. (People will brag about their wins, but downplay their losses, giving a distorted view of the game.)
Also, don't play the leverage game, don't buy equities on margin.

Have some serious emergency reserves; pay off debt; as your income increases keep your lifestyle a notch behind; the Dave Ramsey radio show has inspired me to keep my spending down, mostly by getting comfortable with the car I've been driving for ten years (Ramsey is a bit like the Money Moustache guy, with some Christianity thrown in). Give Ramsey a listen, he may inspire you & spark new ideas.

This is years off for you, but my daughter saved us Big $$$ by being a good student, doing a "Running Start" program that earned her college credits while she finished high school, then finishing her education living at home & attending a nearby state school. She has no student loan debt and is buying her own condo...has equity built up right now. Nothing but winning.

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As I've said before, if you are willing to move, West Coast fire fighters are paid substantially better than FF's in the South or on the East Coast. I'd avoid moving to Cali because I think their pension system is so generous that it will blow up in the next 20 years. Consider Oregon or Washington...you could also probably continue your military commitments there.
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Re: Savings and retirement

Post by Pinky » Tue Dec 27, 2016 7:02 pm

johno wrote:
dead man walking wrote:put your long-term investments in basic index funds with low fees.
^Yes.
Regardless of what any of your friends/buddies/family are doing, DON'T try to pick stocks. (People will brag about their wins, but downplay their losses, giving a distorted view of the game.)
The only thing I would add to this excellent advice is that you also shouldn't try to pick industries, or anything else. Look for the broadest index funds you can find. Don't be the asshole who puts everything in index funds for emerging markets and the energy sector.

Edit (I thought of something else): Whatever you set up, pay as little attention to it as possible once it's established. If you feel the need to check your investments more than once a year or so, you're doing something wrong.
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Re: Savings and retirement

Post by climber511 » Tue Dec 27, 2016 7:43 pm

I've been retired now since 2003 - I did some things right and a few not really wrong but could have done better I'm sure. I retired from the Post Office so a solid pension check each month and group health insurance taken out of it automatically - certainly in the "right" column. When I started retirement savings there were no ROTH IRAs so I bought several traditional ones that are coming due here soon (70 1/2) and I'll owe a shit ton of taxes on them. Pay the taxes up front and go ROTH. Set up everything possible payroll deduction - out of sight out of mind - if you get your grubby little hands on the money, it won't always get put into the saving plan. Put almost all of your savings into things with an upside but not much risk - the Index Fund advice is very sound. Use dollar cost averaging to your advantage. Once in a while throw a few hundred into some individual stock you like the looks of - only do this if you can think of it as "mad money" - they will fail much more often than not but if you hit say 1 you could make some money. Get out of debt as quick as you can. Use accelerated amortization on your home loan and pay it off quick. Pay all credit cards as them come - never pay the insane interest rates they have on them. Look at some of the more secure bonds or bond funds - they seem to go up when stocks go down so they hedge your bets a little. Don't even think about playing the market on your own - I know some pretty smart people who have lost their ass thinking they could beat the system. Most of the books I have read are pretty sound and say all the same things - you don't ever have to think beyond the basics really to prepare a good savings plan.

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Re: Savings and retirement

Post by Holland Oates » Tue Dec 27, 2016 8:51 pm

This is for everyone. Do not for the love of gawd do a fucking reverse mortgage. My wife works in the insurance business and those fucking snakes at the reverse mortgage companies are the biggest bunch of fucking scumbags around. They will do everything in their power to fuck guy around.
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Re: Savings and retirement

Post by Shafpocalypse Now » Tue Dec 27, 2016 10:45 pm

Make more money.
Conservatively invest long term.

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Re: Savings and retirement

Post by powerlifter54 » Tue Dec 27, 2016 11:27 pm

All great advice. I am a fan of Dave Ramsey. Generally.
1. Pay down your consumer debt.
2. Build a cash emergency fund. About 3 months of the take home more or less.
3. At least maximize your 401k to your employers matching limit. You probably need more.
4. Get on a budget and live at slightly less than your means.
5. Index funds. http://www.fool.com/investing/general/2 ... index.aspx
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Re: Savings and retirement

Post by Sangoma » Wed Dec 28, 2016 5:04 am

Property. I think you call it Realty in the USA. Very versatile market, still hasn't fully recovered from 2008. If you put some effort in studying and researching it you can find bargains at very affordable price. And other alternatives, such as lease options etc. Sure, it's more headache than investing in index funds, but the rewards are way more significant.
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Re: Savings and retirement

Post by Pinky » Wed Dec 28, 2016 2:15 pm

Real estate is an idiotic investment.
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Re: Savings and retirement

Post by Freki » Wed Dec 28, 2016 2:36 pm

Echoing some others.

What Vern said about MMM and Nords seems to know his way around military retirement, based on what others said there. Or Ramsay, they're two sides of the same coin: get rid of debt ASAP, live simply, save, save, save. The anti-moustachian wall of shame thread is a gold mine of what NOT to do...and a weapons grade dose of schadenfruede.

Max out the 401K (or similar) as much as you can. Use index funds as much as possible in that and other savings/investment. Books by John Bogle, founder of Vanguard, MAY be of interest. Get them from the library, don't pay for shit you don't have to.

My addition: do a little research on asset allocation and I'd suggest a stock index fund and bond index fund. Also, to reiterate the DO NOT LOOK AT IT MORE THAN ONCE A YEAR. But, rebalance it once in a while. So if you have 70% stocks/30% bonds ideally and at the end of the year it's 75%/25%, sell off some of the stocks and buy bonds. During the year, the bonds got cheaper and the stocks appreciated. It's a fairly common thing you're supposed to do, my 401K company has an option that once clicked, it does it at the end of every year until told not to.

An important part of investing is not getting emotional about the highs/lows. The BJJ/GS mind will be quite valuable here.

Real estate, no. If you want something in that find a REIT fund or ETF w/ a fat dividend and kick back. To my point, from today's WSJ:

The Housing Gap
The volatile housing market of the past 15 years is widening the divide between pricey urban and coastal areas and more affordable inland regions. Much of the spoils of the recent boom have been concentrated in pricier markets. Homes in ZIP Codes where the median value is $500,000 to $1 million are now worth 103% more than they were 16 years ago, while in ZIP Codes where the median home was worth $100,000 to $150,000, prices have risen 16% since the trough of the market. In more rural areas outside major cities, demand for housing has been flat, with little new supply and more people leaving for larger cities and coastal regions. We report that the contrast offers one explanation for the frustration building in the mostly rural, middle-American areas that helped propel Donald Trump to victory in the presidential election.
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Re: Savings and retirement

Post by Turdacious » Wed Dec 28, 2016 2:58 pm

Take a look at doing some gig work as well (Uber, etc...). Tons of opportunity out there with flexible scheduling. You're gonna get socked at the end of the year by the IRS (it's generally 1099 work, so no taxes are taken out), but taking that money and putting it directly into a retirement account is not a bad way to go.
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Re: Savings and retirement

Post by Sangoma » Wed Dec 28, 2016 9:42 pm

I generally don't argue about business, but will say it just once, just because I hate to see mistakes made by ignorance: real estate is one of the best investment strategies. It is one of the most efficient and safest, provided - like with anything else - you do your homework. Especially with the American banking system which limits your liability in case of serious collapse.

For those willing to take time to read here is the pre-school level primer on real estate: Why Real Estate Is One of the Best Ways to Make Money
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Re: Savings and retirement

Post by Turdacious » Wed Dec 28, 2016 11:15 pm

She's comparing borrowing money to fund real estate investments with borrowing money to make stock investments. Nobody here is suggesting buying stocks on margin.

Also while Ramsey is good read some of Michael Markey's criticism of him for balance.
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Re: Savings and retirement

Post by climber511 » Thu Dec 29, 2016 2:47 am

Real estate can be a good way but as retirement approaches may not be liquid enough for your purposes - the time of life you find yourself in can matter as to what's proper "for you".

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Re: Savings and retirement

Post by Shafpocalypse Now » Thu Dec 29, 2016 3:34 am

Find a business and use it to deduct, deduct, deduct... Sell those fucking Indian clubs, reduce your workspace, etc

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Re: Savings and retirement

Post by Pinky » Thu Dec 29, 2016 1:16 pm

The historic rates of return on real estate are terrible compared to the stock market. If you consider the amount of work most people who invest in real estate have to put into their investments, the returns get much worse.

The woman who wrote that Huff Post piece is a moron or a con artist. Anyone who picks real estate over the stock market as a way to save for retirement is a fool.
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Re: Savings and retirement

Post by dead man walking » Thu Dec 29, 2016 2:28 pm

Pinky wrote: Anyone who picks real estate over the stock market as a way to save for retirement is a fool.
pinky. such a girly name. not an economist. so wrong. you're fired! #therealdonald
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Re: Savings and retirement

Post by powerlifter54 » Thu Dec 29, 2016 3:07 pm

Real estate can work but not part time. Military friends who played the buy a house each tour and rent it when you leave have had mixed results. Having redone/updated several houses, it is not for the faint of heart, disorganized, partially interested, or cash poor.

To recap.
1. Savagely attack and manage debt.
2. Set up, save into, and keep an emergency fund. You make better decisions when you can make cash deals. In fact it changes your entire financial outlook more than anything else.
3. Long term save for retirement via tax preferred instruments like Traditional IRA/401k or Roth IRA/401k. Dollar cost averaging into Russell 1000/3000 index funds works best for most. When you get within 10 years of retirement you need to adjust a bit and be a bit more careful. Having said that i have a little bit of Gold, a little bit of Dividend paying stocks, and little bit of Bond exposure in Mutual Funds, but just enough so when i feel the market is high enough over the next 10 years i will move out of mainly growth. You can't tell the market peak but you can tell when it is high enough, Then if the market dumps you can move back in. Again not in any way thinking market timing works, but just that you can play it safe.
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Re: Savings and retirement

Post by nafod » Thu Dec 29, 2016 3:34 pm

I can't believe someone hasn't suggested marrying Donald Trump
Don’t believe everything you think.

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Re: Savings and retirement

Post by Turdacious » Thu Dec 29, 2016 3:38 pm

nafod wrote:I can't believe someone hasn't suggested marrying Donald Trump
There are some jobs Americans won't do.
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Re: Savings and retirement

Post by Pinky » Thu Dec 29, 2016 11:13 pm

dead man walking wrote:
Pinky wrote: Anyone who picks real estate over the stock market as a way to save for retirement is a fool.
pinky. such a girly name. not an economist. so wrong. you're fired! #therealdonald
But my hands are HYUGE!
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