Retirement - Managing your money

[valhalla360]

Originally Posted by MicHughV

For the most part ....buying dividend producing stocks is a good idea.

Most people are not too savvy about investing in the stock market and tend to leave this to some or another mutual fund manager, stock broker, etc.
These fund managers don't work for free and syphon of a good bit of " your" money every year.

Most people are better off not buying individual stocks.

Better to buy a low expense mutual fund. This usually means an index fund.

There has never been an investment advisor or fund manager who has consistently beat the market over a long period of time.

[valhalla360]

Originally Posted by goboatingnow

God no social security pension is in unbeatable it would cost millions of contributions over30 years to build a compatible pension. Not to mention the other benefits thst also accrue. Tbd free public transport is worth thousands a year alone

How big is your pension?

Considering $1mil will generate around $40-50k indefinitely, are they really giving you a six figure pension?

Public transit in most European cities is pretty cheap to begin with. We've gotten monthly tickets for under $200 but that's a different subject from social security.

[MicHughV]

Most people are better off not buying individual stocks.

True, picking stocks is not like throwing darts, it requires some due diligence, so I appreciate what you say, in that this is not everybody's forte.

It's not something you start at age 65 either. It's something you should've started at age 45 or earlier, and that's the reality of it all.

To have a decent sized retirement portfolio requires an early and disciplined start.

Prior to the advent of the internet and other online trading sources, one had little recourse, but to use mutual fund managers and stock brokers.

I went that route initially...made some money...and also lost some money, but the thing that really irked me was the various "commission" fees. With not much investment money available in those early years, "commission" fees took a big bite out of profits.

With the advent of the internet, an opportunity arose to do my own trading. Various online "investment" clubs, etc, much like this forum, provided a wealth of information.

As I've mentioned before, it requires some work on the part of the individual. I know several retiree's that depend on their respective mutual fund managers as they don't really know or understand what is involved. They will get a monthly, or quarterly statement and the only thing that interests them is the amount on the bottom.

But that is only one side of the coin. Many people are up to their eyeballs in credit card debt, and not just one card, but several.
My #1 advice is always, get out of debt first. Do whatever it takes to pay off all bills.

Being debt free is a rarity these days. Credit card interest rates are totally insane. People pay a monthly minimum, only to see their debt go up as they can't match the insane monthly interest.

Do whatever you can to get out of debt. Period !!!
With no debt to service, it's remarkable on how little one needs to enjoy life.

[Captain Graham]

Originally Posted by MicHughV

Do whatever you can to get out of debt. Period !!!
With no debt to service, it's remarkable on how little one needs to enjoy life.

I completely agree.

When we were paying off our home we decided to pay it off early by putting extra money towards the payment.
Some of our friends said don't pay it off early, put any extra money into the stock market you will make money.
We were tempted but decided to keep paying off my home and we are so glad that we did.

Today we are debt free except for the last of our kids college loans and they should be paid off in 2-3 years.
My wife and I decided a long time ago, we would work a little longer to help give out kids a good start in life and that included paying for their college.
We are lucky that we can, there is no shame if you cannot or do not want to.
Everyone makes their own decision.

One very good side benefit to paying off our kids loans is we have learned to live very cheaply and this will help us in retirement.

[MicHughV]

Yep, kids college can be a big draw on the wallet.

I was introduced to the 529 College Savings plan some years back for my daughter.

This allows you to put tax free money into this account...a mutual fund by any other name.

It doesn't take much to get it going....$50-100 a month....by the time your kids hit college age, it will be a tidy sum.

[Captain Graham]

Originally Posted by Captain Graham

Some free easy to use tools I like are
if you need help using these tools youtube has many videos that will help.

Portfolio Visualizer - Main Page lists all the tools
https://www.portfoliovisualizer.com/

Back test specific stock or mutual fund portfolios based on history.
I use this 3 ways
1. Compare single mutual funds vs a S&P index fund to find good solid mutual funds that do better then the S&P
2. Compare different portfolios against each other.
3. I like to pick the year 2000 as the starting point to see how well they handle a big bear market.
https://www.portfoliovisualizer.com/backtest-portfolio

Monte Carlo simulation - Tests withdrawal strategies.
Please read up on Monte Carlo simulations before using it.
https://www.portfoliovisualizer.com/...rlo-simulation

Here is a video explaining how to use the Portfolio Visualizer back test to compare different stock, mutual funds, etc.

https://www.youtube.com/watch?v=J1Ca3vKOR_M

[Captain Graham]

Originally Posted by Captain Graham

Here is a good video explaining how dividends work.
Basically if a stock issues a $1 per share dividend the stock price drops by $1 per share.
So dividends does reduce your portfolio the same way that selling shares does.

Here is another video explaining how investing in dividend stocks work.

https://www.youtube.com/watch?v=wLsP3mpaq-4

[ngmayo]

Originally Posted by Captain Graham

Here is a video explaining how to use the Portfolio Visualizer back test to compare different stock, mutual funds, etc.

I really like his bucket philosophy with the 2 year timeframe mentioned earlier in this thread. I actually have come up with a similar philosophy before seeing this. Also appreciate him putting what he does out there. However, The index fund he chose was a total market fund including lower value funds. As such, the American funds he chose don't beat the S&P index fund such as SPY for most of his examples. The S&P is more the gold standard for comparison.

[Shanachie]

Figuring out financial advice is like trying to thread your way through a reef with no chart.


Everyone on the Internet is working an angle or trying to show how smart they are. Everyone in the finance business is trying to get 2 percent a year of your assets for very little work.


What to do? In the U.S., Ask Warren Buffett.


He says put your long-term money in a total stock market fund or the S&P 500. Keep enough money aside, in a money-market fund or similar, to cover living expenses for a year or two.


Add to it every month when you're working, good or bad. When the market dips, the fund is on sale and will eventually climb back. Not so with individual stocks.


I've been doing this for 35 years. It has worked for me. I think my total return has averaged somewhere between 8 and 9 percent a year.



Don't buy individual stocks. You are not smarter than the sharks on Wall Street. They will eat your savings for lunch. They know much more than you do.


Most business news is just hustlers trying to get you to buy in on their latest scheme.



By buying a diversified fund, you are betting that the economy will continue to grow. Nothing more.

[MicHughV]

It's really quite simple.

#1 thing is to get out of debt....credit cards, mortgages, car payments, etc.
Those monthly interest rates can eat you alive.

#2. Invest in dividend paying stocks. Stock prices will go up and down, but the dividend is typically fixed, though many are increased from time to time.
While a stock can go down, over time, most go up, so besides the dividend, you can also expect to see some capital gains.

Many stocks pay a fairly healthy dividend.

As an example...Altria (MO) pays a dividend of around 8.4%, which is pretty darn good. It's been paying a solid dividend for ages.

There are many more, do some research and google "dividend paying stocks". Many of these have a long record of paying dividends.

A diverse portfolio is ideal, but not so many that you can't keep track of them.

With dividend paying stocks, there is no need to watch the market every day. Where the day to day stock price is.... should be immaterial, as long as that dividend rolls in every quarter.

A lot of people are under a misunderstanding about stocks, expecting to see capital gain increases from day one. That's not how it works. It's a long term plan, which is why the dividend paying stocks should be a priority.

#3. Shop around for a decent health plan. Many options here.

If you're collecting SS, that's the cream on the pudding.

Many retiree's take up a hobby that they turn into cash machine.

Finally, if you are bored....get a part time job. 100's of these exist. You pick the days.
Besides the income, it keeps your mind active and you get to meet a lot on interesting people.......

When you have no debt, it's surprising how little it takes to put gas in the car, groceries, etc.

[Captain Graham]

Originally Posted by MicHughV

It's really quite simple.

#1 thing is to get out of debt....credit cards, mortgages, car payments, etc.
Those monthly interest rates can eat you alive.

#2. Invest in dividend paying stocks. Stock prices will go up and down, but the dividend is typically fixed, though many are increased from time to time.
While a stock can go down, over time, most go up, so besides the dividend, you can also expect to see some capital gains.

Many stocks pay a fairly healthy dividend.

As an example...Altria (MO) pays a dividend of around 8.4%, which is pretty darn good. It's been paying a solid dividend for ages.

There are many more, do some research and google "dividend paying stocks". Many of these have a long record of paying dividends.

A diverse portfolio is ideal, but not so many that you can't keep track of them.

With dividend paying stocks, there is no need to watch the market every day. Where the day to day stock price is.... should be immaterial, as long as that dividend rolls in every quarter.

A lot of people are under a misunderstanding about stocks, expecting to see capital gain increases from day one. That's not how it works. It's a long term plan, which is why the dividend paying stocks should be a priority.

#3. Shop around for a decent health plan. Many options here.

If you're collecting SS, that's the cream on the pudding.

Many retiree's take up a hobby that they turn into cash machine.

Finally, if you are bored....get a part time job. 100's of these exist. You pick the days.
Besides the income, it keeps your mind active and you get to meet a lot on interesting people.......

When you have no debt, it's surprising how little it takes to put gas in the car, groceries, etc.

I just checked your stock pick.

Using the link below and comparing it to the S&P 500 for the past 5 years the results are very poor.
Assuming start in 2018 with $10,000 and all the dividends the results are
1. VOO (Vanguard S&P 500 ETF) $10,000 would be worth $16,617 (66% Increase)
2, MO (Altria Group) $10,000 would only be worth $9,015 (-10% drop)

https://www.portfoliovisualizer.com/...nalysisResults

[Uricanejack]

My advice,

Invent a time machine.
Go back 40 years.
Join the Teamsters. And their pensions plan.
It’s guaranteed and will be bailed out by the government.

[Captain Graham]

Originally Posted by Uricanejack

My advice,

Invent a time machine.
Go back 40 years.
Join the Teamsters. And their pensions plan.
It’s guaranteed and will be bailed out by the government.

Or go back 40 years invest $500 per month in the overall stock market not individual stocks and you would have $3,995,027.
Investing in the stock market (US Economy) has been and will remain to be the greatest wealth building tool of all time people just need to use it.
https://www.portfoliovisualizer.com/...nalysisResults

[Joli]

Don't make withdrawals during down markets.

[dannc]

Originally Posted by Joli

Don't make withdrawals during down markets.

To go along with that advice, don't panic and sell your stock during a down turn in the market.

I knew retired people who panicked in one of the bad down turns around 1990 and sold all of their stock. They went from having a paper loss to a real loss with no way to recover.

Later,
Dan