OT: Beginning to Save for Retirement
- Thread starter robcac26
- Start date
It's not modern portfolio theory. It's Schwab calling it free then forcing you to keep money in their bank deposit program that they are making money on. To make up for this cash drag they are forced to take a bit more risk with the remaining allocation choices.
You can buy a target date retirement fund for cheaper. Or there are ETFs that are asset allocation based that would be cheaper as well.
Vanguard life strategy fund or a target date index fund. Simple but effective and automatically kept in their allocation.
I will also say I think the Schwab (or any robo) is fine for the small cost if someone really is uncomfortable. I just mention because after doing the reading why pay the extra .25% (or equivalent) if you don't need to? It adds up.
Make monthly investments into a DRP that includes (in large part) ticker symbols NXJ & NJV assuming you live in NJ. These funds exist for other states as well.
Make sure that on top of the monthly investment all dividends are re-invested into the corresponding fund while you are working.
Remember me fondly every month in your retirement.
Make sure that on top of the monthly investment all dividends are re-invested into the corresponding fund while you are working.
Remember me fondly every month in your retirement.
Yes this, or a municipal or school job too will include the pension. When you calculate the net present value of those things, the values is in the millions of dollars.
Physical Gold & Silver...all these stock guys are going to be :cry: and soon.. You need to get out of the Federa Reserve System....What the hell good is paper if they are going to negative interest rates...lmao
Negative interest rates could be coming to America.
"We're taking a look at them ... I wouldn't take those off the table," Federal Reserve chair Janet Yellen said Thursday at a Congressional hearing.
http://money.cnn.com/2016/02/11/news/economy/negative-interest-rates-janet-yellen/
Negative interest rates could be coming to America.
"We're taking a look at them ... I wouldn't take those off the table," Federal Reserve chair Janet Yellen said Thursday at a Congressional hearing.
http://money.cnn.com/2016/02/11/news/economy/negative-interest-rates-janet-yellen/
I haven't done it yet but instead of doing a paper 401K you can set-up a tax free retirement plan in which you buy physical gold & silver - must be US Mint Coins or buy farmland and lease it out to a farmer or buy a truck and lease it out to a driver.
These stock guys will push paper but with the amount of debt this country is in and it is becoming evident the Federal Reserve does not value the currency they are printing ie..negative interest rates.
You are far far better off owning something of physical legit value than a piece of paper.
imo
What are our debt masters doing - China?
Amassing physical Gold & Silver and buying US Farmland.
Why Is China Buying Up Our Farmland?
http://www.slate.com/articles/news_...eroin_treatments_and_california_s_trucks.html
These stock guys will push paper but with the amount of debt this country is in and it is becoming evident the Federal Reserve does not value the currency they are printing ie..negative interest rates.
You are far far better off owning something of physical legit value than a piece of paper.
imo
What are our debt masters doing - China?
Amassing physical Gold & Silver and buying US Farmland.
Why Is China Buying Up Our Farmland?
http://www.slate.com/articles/news_...eroin_treatments_and_california_s_trucks.html
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You also need investors who are not tapped out by a 25k investment. I use car washes and golf ranges, but i cannot pretend to be an expert as to why some fail and some succeed. That being said there are many people who run "basic" businesses like these or laundry mats or fast food franchises and do very well. Rental real estate is even more simple than these businesses to a large degree though. All you need is a good general contractor and a good property manager and you are off and running.
Agree - father worked for the state for 25 years, saved very little and is living a comfortable life off his pension. Wife is a teacher and is set too (as long as things don't change, even though they really need to). The system will change (has to change in fact), but I see that more for people coming in and less for people based on the more years they worked.
As far as investing for retirement I think you have a lot of good advice here with the Vanguard/Maxing out Roth theory. There is no 'pie in the sky' way to do this - stay the course and be consistent.
It's already mostly gone. I was being somewhat flippant. If you're an educator you're now in ABP which is basically a 401k wth a 5 percent mandatory employee contribution and an 8 percent employer contribution.
You absolutely can put some of your money into individual stocks with Vanguard (as I have done).
And while an additional 0.5% in fees is $5 per year per $1000 invested, that amount compounds over time. And since he is saving for retirement, he is not investing $1000 for 1 year. If he puts $5000 into his retirement fund every year, assuming an average return 9% and a fund/brokerage fee of 0.2% vs 0.7%, the extra half percent fund fee will cost him more than $250,000 over the 40 years it takes him to age from 25 to 65. For an extra quarter million dollars, you bet I'm concerned if I'm needlessly paying an extra half percent in fund/brokerage fees.
What's funny is my mom and dad throughout the 70's, 80's and 90's invested strictly in CD's. They were extremely disciplined with their monthly retirement installments to the point where we ate peanut butter and jelly sandwiches for a couple of weeks if things were tight. They were living large when interest rates were just 5%, one year they locked in at 6.5% and they took the entire family on vacation to Europe. However, since 2008 my poor mom hasn't made squat on her money forcing her to work since she refuses to touch the principal.
However you decide to invest the money:
1. Start now. (Which it seems you will do).
2. Invest the same amount each paycheck.
3. Never, ever miss a payment to yourself, so to speak.
4. Max put the 401k contribution if your employer does decide to offer one.
5. Numbers 2 + 3 will ensure a crude dollar cost averaging system.
You will most likely retire early.
1. Start now. (Which it seems you will do).
2. Invest the same amount each paycheck.
3. Never, ever miss a payment to yourself, so to speak.
4. Max put the 401k contribution if your employer does decide to offer one.
5. Numbers 2 + 3 will ensure a crude dollar cost averaging system.
You will most likely retire early.
Really? I'm worried that I missed the boat since I'm 28 and should have started this a long time ago. What is considered an early retirement, and how does social security come into play, or should I not even bother taking that into consideration?
robcac, I am not a financial advisor, but I don't think 28 is too late. It would have been great to have started in your early twenties, but it just isn't easy to do. Just get going now and maximize your contributions to the extent you are able. I started later than you, but had a pretty good string of years where I contributed the allowable maximum and never, ever missed a contribution. With the company match it accumulated. Like other posters suggested, I just put it into index funds and rarely looked at it. Kind of an autopilot sort of thing which some may not advise, but worked well for me.
To me, early retirement is any age before Social Security full retirement age, which I think is 67 for you? If you get going now I would guess you will do a lot better than that unless the world as we know it comes to amend. (who knows).
As far as Social Security goes, I always assumed it would not be available to me nor would a pension, and that the only money I would have would be what I saved. Of course I am a both a pessimsit and a cynic where the government is concerned so take that with a grain of salt. But I wouldn't factor Social Security into your planning at this point.
I applaud you for taking a serious look at this at age 28. I suspect you will do just fine. There is some good advice on this board. Consider some of it and get going. Good luck. Here is to your retirement at 55. :)
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I can understand her not wanting the principal redeemed... After decades of saving just for the purpose of using it during retirement, it feels wrong somehow, because you have never took money out before..... I will probably start drawing out of non retirement mutual funds in the next couple of years, and I hate to do so, even though this was its purpose..... At least with an IRA you are required.
Here is a basic rule of thumb:
- If you save 10% of your income from now until you retire, expect to retire at 65
- If you save 15% of your income from now until you retire, expect to retire between 60-62
- If you save 20% of your income from now until you reitre, expect to retire around 55 and possibly earlier
Why would you suggest a 28 year old kid invest in munis for a goal that is 30+ years away?
If he starts buying them in a DRP now and uses the TAX FREE monthly dividend to buy more he'll have a nice completely TAX FREE stream of monthly income long before he's ready to retire.
They're not munis. They're closed end funds that invest in munis for the purpose of monthly income.
Of course this shouldn't be his only investments towards retirement but they sure wouldn't hurt on the conservative side of his portfolio.
The OP is 28 years old. Why invest in bond funds. Quite frankly actively managed mutual funds are last decades news. ETF's are the way to invest now. No load funds carry no initial investment fee (load) but the management fees eat into your return. The OP would not be wasting his money on the Tony Robbins book. I wish it had been written 20 years ago. I would have taken a different investment path.
There are three asset classes, equity, debt and cash. Stocks, bonds and money markets. Any intelligent investor will hold all three, in percentages based on age and risk profile. A good rule of thumb for non-professionals is to have 110% minus your age in equity. In bear markets equity should be curtailed significantly. Nobody should ever have all equity. EVER.
ETF's were sexy fifteen years ago. Don't tell me about yesterday's news. Next point, fees, why would you want to pay buy and sell commissions on an S&P ETF when you can get the same thing from Vanguard or T Rowe with no commissions? Management fees for index funds are ridiculously low across the board.
About fees, Suzy Orman did all of the pikers wrong in the worst way when she started harping on fees and everyone took up that ridiculous drumbeat. Fund returns are reported net of fees and expenses, so if XYZ fund shows a net return of 6.8% but I see it has an expense ratio of 1.2% whilst fund ABC shows a net return of 5.3% and only has an expense ratio of .4%, does that mean I should give up the extra 1.5% of return because I want to spite some fund manager? Absolutely idiotic thinking.
Yeah. Tony Robbins. Why don't you go ahead and lead us in a round of woo claps. Or woah claps, or whatever the hell it was. The man is an idiot who loves two things, talking about how great he is and how great you could be if only you were just like him, and taking money from people who want to hear about how great he is and how great you could be if only you were just like him.
I wasn't attacking you with my earlier post, I just didn't want OP steered the wrong way. I've been a broker, and I've spent the last 18 years in the 401k business. Nobody here hasn't shopped at one of our clients, or eaten or used or driven one of their products. We manage some of the biggest retirement plans in the country. This is what I do for a living.
FINRA would take away your licenses for recommending a leveraged muni bond fund in an IRA.
Vanguard is the way to go. It's non profit status allows them to have the lowest fees. If you put in 25K, you can further lower your fees.
Keep in mind that going back into the 25% bracket does not make your entire income 25% taxable, only the incremental amount above the 25%/15% line.
Also, I have had a lot of success with Vanguard Wellesley Fund and Vanguard Wellington Fund, and I would encourage taking a strong look at these. Both have given about a 6% - 7% return over the life of each fund, including all the downturns we have had (e.g., 2000, 2008, etc.). My father-in-law invested in these for about 30 years in his retirement (starting in early 80's), and I have for the last 6 years, and they are some of the best Vanguard has to offer. Wellington is 55% stocks/ 45% bonds, and Wellesley 55% bonds/ 45% stocks, so they kind of balance each other, and the stocks are usually US large cap stocks. If you have a 25 to 35 year horizon, these are great vehicles for you.
When I worked for a Wall Street outfit I was impressed that pool full of sharks used Vanguard for their retirement program.
open an account with wealth front. they manage your first $15k for free if you use my link. the will ask you some questions and based on your risk profile they will investment in a basket of ETF's. They will also periodically re balance your portfolio and also practice tax-loss harvesting which is a huge plus.
http://wlth.fr/1Hj8cP4
http://wlth.fr/1Hj8cP4
@czxga You can read the book here - http://www.cachhoctienganhthanky.co...14/12/Money-Master-the-Game-byTonyRobbins.pdf
Check out beginning on the 4th page what some of the worlds greatest investors are saying about the book.
BTW, I'm not attacking you either. You are in the business and I'm not. I just read and listen a lot. (but not Suzy Orman haha).
Some things I'd like to point out.
I have 99.99% Equities.
I can buy and sell thousands of shares of a Vanguard S&P 500 ETF for $7.95 total in my Fidelity Brokerage account and an IShares S&P 500 ETF for no fee.
Over the last few years there has been a large reduction in money invested in actively managed mutual funds and a large increase in money invested in ETF's
I could sell all my ETF's within 5 minutes if an event in the country or world indicates a sell off is eminent. With a Mutual Fund my funds would be sold at the NAV at the end of the day. Think 9/11/2001 or Housing crash.
I'm past 401K's now but I've see some real crazy plans in my working years. First, I had an employer who decided he didn't want to risk our money in stocks so invested in Bank Guaranteed Investment Trusts. That was until the bank went under and our money was tied up in litigation for a few years. The same company was good enough to give us 50% match on our money and invest the money on each paycheck. Another company gave us a much lower match and only invested our money every quarter. A third company only matched based on some profit formula and then only invested our money 3 months after the year end close of business.
Now I have my Rollover IRA and a Roth IRA that a manage by myself and do a transfer from Rollover to the Roth at the end of each quarter based on my RMD % based on age. I had to calc the RMD % myself based on the IRS tables since I'm not 'Required' to withdraw anything yet.
Some good discussion here in this thread. I'm know I'm no expert and never worked in the Financial Services industry so no one should take what I say as gospel. Each person has to do their own research (read & listen) and learn by their mistakes. I'm out of this thread now. Have a good day.
Of course if dealing with IRAs there is no tax loss harvesting and once you're past the $15K you are paying a needless 0.35% fee which (as someone noted above) can severely impact your returns.
Conversely, you could open a target date fund at a place like Fidelity or Vanguard which will also rebalance and adjust your allocation as you progress older AND won't charge an additional fee on top of the ETF expenses.
How exactly would you have been able to sell your etfs before the market reopened on 9/17/2001?
Some good points
1) do not have kids is really sound advice, you must figure in NJ ~1 million/kid over life time with 4 years of college But your heart does not always listen. BTW 4 years of college right when you want to really load up your 401k +/or Roth sucks as Tuition drains you Big Time
2) Go 401k +/or Roth or what ever if company matches
3) Vanguard is good start. BTW try some high risk stocks at 28 take some risk.
4) Real estate Buy hold and rent My first property pays me yearly in rent what I paid for the house, a few years after I graduated from college. God is not making anyone habitual land. (Silver is at a fair price gold is still inflated), with oil going south and if you do not do precious metal stay away.
5) Whole Life insurance is a scam. They are betting you will live and you are betting you will die. with no kids so what if you die. Invest that $100-200/month in some risk stock and some safe bonds. You will build your own insurance policy, in land/stock/bonds.
6) Pay yourself first
7) Have no mortgage when you retire; was the point that was trying to be put forward in an above post and that is sound advice.
8) Do not count on social security <<< Major point. If it is still working in 40 year>>> it is party money!
9) invest in the stock market, do not play the stock market
1) do not have kids is really sound advice, you must figure in NJ ~1 million/kid over life time with 4 years of college But your heart does not always listen. BTW 4 years of college right when you want to really load up your 401k +/or Roth sucks as Tuition drains you Big Time
2) Go 401k +/or Roth or what ever if company matches
3) Vanguard is good start. BTW try some high risk stocks at 28 take some risk.
4) Real estate Buy hold and rent My first property pays me yearly in rent what I paid for the house, a few years after I graduated from college. God is not making anyone habitual land. (Silver is at a fair price gold is still inflated), with oil going south and if you do not do precious metal stay away.
5) Whole Life insurance is a scam. They are betting you will live and you are betting you will die. with no kids so what if you die. Invest that $100-200/month in some risk stock and some safe bonds. You will build your own insurance policy, in land/stock/bonds.
6) Pay yourself first
7) Have no mortgage when you retire; was the point that was trying to be put forward in an above post and that is sound advice.
8) Do not count on social security <<< Major point. If it is still working in 40 year>>> it is party money!
9) invest in the stock market, do not play the stock market
Stay away from life insurance and annuity products--the fees are ridiculous and bear no relationship to performance. Your better bet is to invest in a Vanguard index fund like Index 500. No fees , low costs and performance typically beats a managed fund.
I feel like a dummy after reading this thread, because I have a Northwestern Mutual Whole life insurance policy. I have term which is much bigger, like 5x's the amount of the whole life policy, but I do have a small whole life policy that I pay about $200 per month into. It's been running for about 2 years now. Are you guys saying I should cut this off or cancel it?
I do invest heavily into ETF's and a target retirement Vanguard mutual fund separately. I also have hit my 401k by 6% and the company matches that 6% too...
Should I dump my Whole life policy, or because I'm two years in, should I just keep it going? I viewed it as forced savings, and was old on the 7% dividend NW Mutual provides.
I do invest heavily into ETF's and a target retirement Vanguard mutual fund separately. I also have hit my 401k by 6% and the company matches that 6% too...
Should I dump my Whole life policy, or because I'm two years in, should I just keep it going? I viewed it as forced savings, and was old on the 7% dividend NW Mutual provides.
I think his point is that he could sell his ETFs first thing in the morning on 9/17/2001, while mutual fund transactions would occur at the end of the day.
Of course that sort of timing only really matters if you are actively churning your investments and trying to time buys and sells perfectly. And if you are doing that, you are more likely to be investing in individual stocks, and not mutual funds, and especially not index funds. For the OP, who is looking basic advice on saving for retirement, this type of active management is not meaningful to him. It is really hard to time the market. If you took OTB's advice, and dumped your ETFs on 9/17 in the morning vs 2.5 months later, it wouldn't have saved you anything.. The S&P 500 was 1085 on 9/7/01, and 1150 on 11/23/01.
Yes that was a bad example since the Stock Exchange didn't open on 9/11. What I'm trying to point out is I could buy or sell ETF's at any time during the time the stock market is opened. I think you know what I mean.
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