Investing for Retirement

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GeddyWrox
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Re: Investing for Retirement

Post by GeddyWrox »

Michael wrote:
November 16 17, 12:44 pm
Home ownership is overrated:
Owning a home may help you save money, but it won't help you make money.

Households are better off taking control of their finances than relying on fluctuating home values. That is the finding of a new study conducted by Florida Atlantic University, Florida International University and the University of Wyoming.

"On average, renting and reinvesting wins in terms of wealth creation regardless of property appreciation, because property appreciation is highly correlated with gains in the traditional financial asset classes of stocks and bonds," wrote study co-author Ken Johnson of FAU's College of Business, in a release.
Still, researchers in the study claim the old adage of "throwing your money away on rent," doesn't hold up. That is because it assumes that the extra money a renter saves by not owning a home and not saving for a downpayment is simply spent on goods or services and not invested.

"When you assume that those monies are reinvested at a rate of return, renting, on average, wins in terms of wealth creation," Johnson said. "Of course, many renters will not reinvest those monies and will instead use them for consumer goods, which is the least desirable option in terms of building wealth."
Link


Not surprised by this article. Recently, I've come to this conclusion home ownership is one of the most overrated things an adult can "accomplish". If I ever move from my current place I'll be looking to rent.
Counterpoint.

I am 45 and will be wiring in my final home loan payment tomorrow at noon. Own a $200,000 house free and clear. Piece of mind. Boom.

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Jocephus
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Re: Investing for Retirement

Post by Jocephus »

thats gotta feel good, congrats

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Fat_Bulldog
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Re: Investing for Retirement

Post by Fat_Bulldog »

Congrats GW!

I am a loser. I have many, many years left to pay. But, that will soon hopefully be my only debt other than a car here and there.

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IMADreamer
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Re: Investing for Retirement

Post by IMADreamer »

House is paid off but I just bought 48 acres across the road from my house last winter and it will be paid off in a very long time.

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Fat_Bulldog
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Re: Investing for Retirement

Post by Fat_Bulldog »

I am finally at a place in life where I can put away for retirement. I am currently contributing about $1k per month to my 401k. The performance of my 401k this year has been 26.49%. I know that isn't sustainable performance but I plan on keeping my contribution pace about $1k for the long term to my 401k.

Within a year from now or so, I will have additional debt paid off and would like to use that flexibility to invest about $1k per month in another format other than my 401k. Any advice or insight into what would be best?

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Re: Investing for Retirement

Post by Michael »

Congrats on a paid off house!
Fat_Bulldog wrote:
December 11 20, 8:55 am
I am finally at a place in life where I can put away for retirement. I am currently contributing about $1k per month to my 401k. The performance of my 401k this year has been 26.49%. I know that isn't sustainable performance but I plan on keeping my contribution pace about $1k for the long term to my 401k.

Within a year from now or so, I will have additional debt paid off and would like to use that flexibility to invest about $1k per month in another format other than my 401k. Any advice or insight into what would be best?
Congrats to you as well! What are your life goals with this other money? Retirement, college fund, fun, etc?

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Fat_Bulldog
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Re: Investing for Retirement

Post by Fat_Bulldog »

Michael wrote:
December 22 20, 1:33 pm
Congrats on a paid off house!
Fat_Bulldog wrote:
December 11 20, 8:55 am
I am finally at a place in life where I can put away for retirement. I am currently contributing about $1k per month to my 401k. The performance of my 401k this year has been 26.49%. I know that isn't sustainable performance but I plan on keeping my contribution pace about $1k for the long term to my 401k.

Within a year from now or so, I will have additional debt paid off and would like to use that flexibility to invest about $1k per month in another format other than my 401k. Any advice or insight into what would be best?
Congrats to you as well! What are your life goals with this other money? Retirement, college fund, fun, etc?
Those are all of my goals.

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thrill
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Re: Investing for Retirement

Post by thrill »

Michael and others - what role, if any, does crypto play in your portfolio. I have a wealthy friend who has done very well and is encouraging me to put like $10k in the crypto market under his guidance. He's legit. Worked at Morgan Stanley and is my business partner of like 10+ years now, so I trust him as a dude but crypto seems to encourage weird zealotry that I'm suspicious of.

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Re: Investing for Retirement

Post by Michael »

Fat_Bulldog wrote:
December 23 20, 8:35 am
Michael wrote:
December 22 20, 1:33 pm
Congrats on a paid off house!
Fat_Bulldog wrote:
December 11 20, 8:55 am
I am finally at a place in life where I can put away for retirement. I am currently contributing about $1k per month to my 401k. The performance of my 401k this year has been 26.49%. I know that isn't sustainable performance but I plan on keeping my contribution pace about $1k for the long term to my 401k.

Within a year from now or so, I will have additional debt paid off and would like to use that flexibility to invest about $1k per month in another format other than my 401k. Any advice or insight into what would be best?
Congrats to you as well! What are your life goals with this other money? Retirement, college fund, fun, etc?
Those are all of my goals.
Tax deferral is almost always the best choice assuming you are comfortable with not being able to access that money for a long time. Therefore, further upping your 401k ($19,500 max a yr) or contributing to a ROTH IRA is great for retirement needs. If you want to setup your kids with college funds, a 529 is a nice tax deferred vehicle. Given I don't have kids, I don't know much about 529's but they are common and easy to setup on sites like Vanguard.

"Fun money" to buy something like a boat or a mid-life crisis car I'd just put the money in a money market fund, which is a safe low interest way to invest. The problem with risker investing with money that you'll want in like 3 years is it might not all be there when you need it.

Anyway, it sounds like you're doing great!

thrill wrote:
December 23 20, 8:40 am
Michael and others - what role, if any, does crypto play in your portfolio. I have a wealthy friend who has done very well and is encouraging me to put like $10k in the crypto market under his guidance. He's legit. Worked at Morgan Stanley and is my business partner of like 10+ years now, so I trust him as a dude but crypto seems to encourage weird zealotry that I'm suspicious of.
Personally, I don't. However, a lot of investors enjoy speculating and I totally get it. For example, many bogleheads enjoy watching CNBC and buying speculative assets because it's a fun sport for them. They know a 3 fund portfolio is the best long term bet, but they want to have fun and relieve their FOMO. A common solution is to create a separate "fun investing" account. Basically something like 2-5% of the money you invest can go towards whatever you want and the rest goes towards your 3-fund portfolio. The fun fund can have crypto, swamplands, tech stocks, oil fields... whatever. This is particularly helpful solution for people who have a strong urge to tinker with their portfolio without significantly impacting their long term financial goals. So I guess I would consider doing something like an "investment %" as opposed to a set dollar amount (ex 10k) because you may start overweighting risky assets in your portfolio with the latter approach.

As for your friend - respectfully, like stocks analysts, I put no value in crypto predictions. Crypto may continue to boom, but I don't think anyone really knows anything.

As always I'm not a professional so YMMV.

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Popeye_Card
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Re: Investing for Retirement

Post by Popeye_Card »

Interesting Atlantic article on index funds.

https://www.theatlantic.com/ideas/archi ... my/618497/

This is somewhat frightening:
Indexing has also gone small, very small. Although many financial institutions offer index funds to their clients, the Big Three control 80 or 90 percent of the market. The Harvard Law professor John Coates has argued that in the near future, just 12 management professionals—meaning a dozen people, not a dozen management committees or firms, mind you—will likely have “practical power over the majority of U.S. public companies.”

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