Retirement - Managing your money

[letsgetsailing3]

Originally Posted by Uncle Bob

Fair response, I will offer the view at which I arrived some time ago, that is to embrace the concept "do what you do well and pay others to what they do well",of course with the caveat that research and due diligence on your part are of extreme importance.

I will offer the view at which I arrived some time ago:

The folks who are willing to manage my money charge a lot, and don't do it better than I do. Plus, to know this, I'd STILL have to pay a lot of attention. Why pay for someone else's boat? When I lose my own money, I have nobody to blame but me.

So here's my (unpaid, and worth almost what you're paying) advice:

1) Either a) manage your own investments, or b) if you don't want to put your own time in, invest in low overhead index funds. Why give someone else 2-4% of your return?

2) Choose a mix of equities and treasuries. Base that mix on your time frame (age), situation, and risk tolerance. The "bucket" strategy advocated above isn't a bad way to go. Even if you had a financial manager, you'd have to go through this exercise. Any decent brokerage has easy-to-use online tools for this.

3) Skip speculative, high-risk stuff like crypto. The technology is sound, but the overall concept relies on the "bigger fool theory". Don't be "the bigger fool".

[goboatingnow]

We work on the basis of both occupational and state pension benefits so we do not invest any capital. We draw down fron that occasionally as a reserve fund we actually save some of our pension income to help top up the capital we still retain housing assets as backup.

[gonesail]

buy yourself a few bags of dogfood. it's quite edible and you can save a lot of money by not drawing from your savings

[goboatingnow]

Originally Posted by gonesail

buy yourself a few bags of dogfood. it's quite edible and you can save a lot of money by not drawing from your savings

Hmm. I’m not a fan of the texture , Jacko quite likes them I prefer filet myself.

[Anders]

Originally Posted by gonesail

buy yourself a few bags of dogfood. it's quite edible and you can save a lot of money by not drawing from your savings

That was not used as input for my early retirement planning.

[letsgetsailing3]

Originally Posted by gonesail

buy yourself a few bags of dogfood. it's quite edible and you can save a lot of money by not drawing from your savings

"If I had known dog food was THIS good, we could have saved a lot of money..."

[NPCampbell]

Originally Posted by letsgetsailing3

1) Either a) manage your own investments, or b) if you don't want to put your own time in, invest in low overhead index funds. Why give someone else 2-4% of your return?

Good advice. I have this self guiding rule of "No one cares more about my money than me ... unless I am giving my money to someone else. Then it's possible that they care more about liberating my money than I do."

[Cheechako]

My philosophy upon retirement was to maintain enough wealth to ensure I dont lose the wealth I no longer have the time or ability to rebuild.

When you have maybe 10-20 years left, you dont need to risk anything by being greedy. As such it's mainly invested in no risk cash investments. Yes I'm leaving money on the table. No I can't take it to the grave anyway.
Most investment decisions I've made in the past 40 years were good as long as I didn't get greedy. When I wanted more than 35-40% return, I ended up losing. I had one investment that increased 50% in two weeks, the pundits aid "it's going further up!" I stayed longer and actually lost part of the investment. I should have just sold at 50% increase! GREED.
I got out of stocks etc in 2008 , perfect timing. 2 years later I had 35% more than I would have had if I stayed in.
I sleep easy this way.
The highest gains have been real estate.... by far.

The stock market is nothing more than a Ponzi scheme run by those at the top, as is Crypto. Fortunately the Stock Market has goverment controls and more public trust built over the years. But still, it's highly biased to the already wealthy.

[dannc]

Originally Posted by Anders

Firecalc defaults to a 4% withdrawal rate plus inflation and it uses the same methodology that Bengen did when he found out that 4% was 100% safe. The difference is that Firecalc by default uses different portfolio allocation while Bengen in his original paper used a 50%/50% mix of s&p500 and intermediate term treasury. Bengen does not mention portfolio expenses and he probably did not include them in the calculations.

We may be splitting hairs...

Firecalc's default number does use a 4% withdrawal but it one has to do the math to realize it is 4%. The default numbers are $750,000 investment and spending $30,000 a year, which happens to be 4%, but the site never uses 4%, or any percent for that matter.

If one uses Firecalc with various withdrawal rates and other variables, one can see that 4% rate has a high probability of not running out of money but the website is not advocating any particular withdrawal rate.

What I did was start with various assumptions of an investment amount, with allocations we are using, other variables, and then used Firecalc to show the probabilities we would run out of money at a given withdrawal rate and time. It just so happens, that with the numbers I used, 4% pops up as a decent answer. Firecalc is not telling me to use 4%, or advocating any particular rate, it is just the answer based on my inputs.

Later,
Dan

[Captain Graham]

Originally Posted by Cheechako

My philosophy upon retirement was to maintain enough wealth to ensure I dont lose the wealth I no longer have the time or ability to rebuild.

When you have maybe 10-20 years left, you dont need to risk anything by being greedy. As such it's mainly invested in no risk cash investments. Yes I'm leaving money on the table. No I can't take it to the grave anyway.
Most investment decisions I've made in the past 40 years were good as long as I didn't get greedy. When I wanted more than 35-40% return, I ended up losing. I had one investment that increased 50% in two weeks, the pundits aid "it's going further up!" I stayed longer and actually lost part of the investment. I should have just sold at 50% increase! GREED.
I got out of stocks etc in 2008 , perfect timing. 2 years later I had 35% more than I would have had if I stayed in.
I sleep easy this way.
The highest gains have been real estate.... by far.

The stock market is nothing more than a Ponzi scheme run by those at the top, as is Crypto. Fortunately the Stock Market has goverment controls and more public trust built over the years. But still, it's highly biased to the already wealthy.

I do not agree with some of your statements.

The stock market is not a Ponzi scheme.
You are buying shares in companies and if they do well you are rewarded.
The S&P 500 companies on average grow at 10% per year over the last 30 years.
So any S&P mutual fund also has grown 10% per year over the last 30 years.
If you are looing for larger then 10% yearly returns they maybe you are in the area of speculation and it may seem like a Ponzi scheme.

My approach to investing is basically what Dave Ramsey recommends.
1. Use your 401k up to the company match.
So if your company matches 50% up to 10% then put into your 401k 10%
2. Use a Roth IRA for money after the company match up to 15%.
In my case I started late and I have been putting 25% into my retirement in order to catch up.
3. In both accounts I invest in the following
a. 40% in large cap mutual funds that have a track record of beating the S&P
b. 30% in mid cap mutual funds that have a track record of beating the S&P
c. 30% in small cap mutual funds that have a track record of beating the S&P
I do not do international funds.

By putting money into these funds ever pay check I am cost averaging my investments and over 20 years I have done well enough.

The issue now that I am 3 years away from retirement is how to protect my retirement nest egg from a down turn in the market.

Some have said invest in stocks that give a reliable dividend and live off these dividends.
This way even if the stock price drops you will still get the income you need and you can wait out the market down turn.
In general I like the idea but I will be reviewing this strategy and comparing it to the other strategies.

I would recommend everyone who is thinking about investing to
1. Only do what you understand.
2. Try to learn and understand different strategies.
3. Do not try to get rich quick, slow and steady wins the race.
4. Understand yourself and what will make you sleep well at night.

[valhalla360]

Originally Posted by Captain Graham

I am assuming no inflation just to make the numbers easy
.

"Easy" can be very wrong.

Even at more modest 2-3% inflation, over 20-30yrs, it can make a huge difference in the outcome, so it's silly to leave it out.

You hear this all the time from folks pushing you to wait until 70 to pull social security but they never factor in inflation or ROI. If you get a decent return on the money you can leave invested by taking SS early, there often is no break even point no matter how long you live...and it's surprisingly low rate of return.

I agree with the bucket strategy but 2 buckets is plenty to benefit from the higher returns in the market without getting slammed by a downturn.

To the side issue: Paying a "professional" money manager....Show me a manager who has outperformed the market consistently for 20-30yrs and we can talk. Sure they may get lucky from time to time but reality is no one is regularly beating the market. Take the time to learn and keep your expenses low and don't play the day trader...I'll give you 100-1 odds you beat the professionally managed portfolio when expenses are accounted for.

[sailorboy1]

Originally Posted by AKA-None

Why would you ask a bunch of strangers how to manage your retirement funds ...............

On a boating forum

[Kd9truck]

Originally Posted by Captain Graham

Some have wondered why I started this thread.
Many people have a dream to cruise the world when they retire.
They will need money to make their dream a reality.

This thread is not how to save and invest your money.
It is how to manage withdrawing your money from your saving to help fund your retirement dream.

I just though some on this forum may have some ideas that would help us all.

I changed careers at 30 from Chef to firefighter,and took a significant pay cut for a job with a great pension system, I focused on maximizing the options in the system and studying to promote myself for raises so I could contribute more to the wealth building options, …….It changed my life. I raised a family living a voluntary “check to check” existence, I call myself middle class millionaire, all my possessions are paid for, boats,houses,tuitions and cars.

I could only do it by not owning a boat.

Cheers

[Anders]

Originally Posted by Captain Graham

I would recommend everyone who is thinking about investing to
1. Only do what you understand.
2. Try to learn and understand different strategies.
3. Do not try to get rich quick, slow and steady wins the race.
4. Understand yourself and what will make you sleep well at night.

Most important, start early. Compounded return over say 30 years is like magic. Money making more money.

[Captain Graham]

Originally Posted by valhalla360

"Easy" can be very wrong.

Even at more modest 2-3% inflation, over 20-30yrs, it can make a huge difference in the outcome, so it's silly to leave it out.

You hear this all the time from folks pushing you to wait until 70 to pull social security but they never factor in inflation or ROI. If you get a decent return on the money you can leave invested by taking SS early, there often is no break even point no matter how long you live...and it's surprisingly low rate of return.

I agree with the bucket strategy but 2 buckets is plenty to benefit from the higher returns in the market without getting slammed by a downturn.

To the side issue: Paying a "professional" money manager....Show me a manager who has outperformed the market consistently for 20-30yrs and we can talk. Sure they may get lucky from time to time but reality is no one is regularly beating the market. Take the time to learn and keep your expenses low and don't play the day trader...I'll give you 100-1 odds you beat the professionally managed portfolio when expenses are accounted for.

I only assumed no inflation to make it easier to explain the withdrawal strategy.
When reviewing the details inflation is very important.