Retirement / Financial advice

[HBWT]

Originally Posted by socaldmax

That is just a teaser for his book. There was a lot more to it, covered by 60 Minutes, you can see it on their website. Essentially, every brokerage house on Wall St had to send their trades through the same section of fiber optic cable to the stock exchanges in NJ. These trades were intercepted and the "flash boys" bought the stock milliseconds before, and resold milliseconds later at a slight profit on every single share. The amount of money stolen from all of the investors totaled hundreds of millions per day, possibly tens of billions per yr.

Is the U.S. stock market rigged? - CBS News


Here is Robert Kiyosaki quoting John Bogle of Vanguard Mutual funds explaining how mutual funds rip you off, I mean work. It's only 2:43, but the pertinent part starts at 1:30. This is the kind of honesty very, very few FPs will tell you because they're hoping to get you to invest in what they're selling.

Errrrr....no. The problem with these broad brush statements is the actual effect to you us almost zero. If you are invested in single stock accounts or day trading platforms, the chance of you being effected by the downlink trading is significant to the tune of a couple dollars per year. Yes they make millions but like any penny scam they are taking fractions of penny's to amount to a greater whole. It is bad, yes, are you loosing thousands, hundreds or even tens of dollars per year, no. Is the market rigged because of this, no.

It's like saying hedge funds are terrible and all they do is rip people off. Yes they may be poor investment choices but you have to be a qualified investor which I am sure there are very few on this board. So the actuality is far different from perception. The funny part about your statements is the mutual fund market unless actively managed (tactical) is not effected by downlink trading. So I guess mutual funds are good for closing small exposure to downlink trading but bad... I'm still trying to figure that part out.

Any 401k qualified mutual fund must be means tested annually to make sure they comply with about 200 SEC and FINRA regulations of fiduciary standards.

Let's all take advice from Rich Dad Poor Dad who has been questioned about his wealth management techniques and nonexistent evidence to support his wealth advice and he clearly states, "this is not wealth management advice, it is only a motivational tool to make you STaRT understanding money."That and he likes to charge 12,000 for a weekend seminar no find out more on why mutual funds are a rip off.

I got it, my new business plan! Make up total nonsense and charge people for weekend seminars. I am gonna be rich!

[TacomaSailor]

Just one more thought - DIVERSIFY - DIVERSIFY - DIVERSIFY

- spread your investments over sectors, countries, bond funds, equity funds, even REITs if that is your thing.

My wife and I each use six or seven, sometimes just five, funds during each investment cycle.

ME (about 20% of all our financial assets)
These funds are the source of our day-to-day cash to supplement SS & pensions.
- medium risk US growth fund 15% of money
- medium risk non-US fund 15% of money
- low risk income fund 25% of money
- very low risk income bond fund 30% of money
- no risk bond fund 15 % of money

My wife (about 80% of all our financial assets)
These are the funds that will pay for a nice house in about 10-years when we quit cruising.
- high risk US growth fund 15% of money
- high risk non-US growh fund 10% of money
- medium risk US growth fund 20% of money
- medium risk international growth fund 30% of money
- low risk US growth fund 15 % of money
- very high risk speculative new companies fund 10% of money

As others have said - DIVERSIFY!

During my youthful working days where I met with lot's of high powered financial types I erroneously thought I could beat the professional fund managers by investing (buying blocks of stock) in companies that were big in sectors I really knew well:

- oil
- IT
- computers
- financials

I did have some spectacular gains but also had some even more spectacular losses and more importantly, misses.

I, and my limited partners, cornered the world market in Simmetal bull sperm. 30 years later I can tell you it does not age well and has little market value.

I, and my limited partners, signed contracts with an enormous international oil company to deliver large quantities of a new and interesting oil well device. The device was well tested, well engineered, and manufactured. The delivery trucks with all the equipment "disappeared" into the night, never to be seen again. Our insurance agent, who never mailed the premiums to his company, disappeared at the same time and we defaulted on our contract. We were lucky not to be sued for failure to perform.

I was offered a chance to purchase a lot of stock in the very early days for a geeky software company that had just moved to Redmond, WA. At that time I was an international "expert" in the management and financial planning for the largest computer systems in the world. In fact, I had just done a study for a company on the future of Apple and IBM PCs.

I purchased a few hundred shares but sold them after a year or so because I saw no real future for the PC in big business.

I now am pretty sure that I understand that an expert in a couple fields of technology (me) is not the person who can successfully invest in our modern and enormous bond, equities, and securities market.

I am convinced that almost every investor will achieve far more asset growth by investing in mutual funds that match their needs and objectives. Let the pro's invest your money as described in their fund's prospectus.

Mutual funds with at least a 15-year history (two full business cycles) provide all kinds of performance data. You can use that historical data to pick the funds you want and rest easy that they will keep on performing, unlike my bulls and oil field equipment.

JMHO after 40+ years in the amatuer investment business.

[ericoh88]

Originally Posted by TacomaSailor

In my prior working life I did quite a bit of financial analysis for very large and complex computer systems. Additionally, I began serious investing in 1975 and, since I owned my company, I actively managed all my retirement accounts for 17 years.

It is hard to describe how complex many of the tax issues relevant to retirement, sale of homes, reinvestment of that income, (previously owning the home for rental makes it even more complicated), early withdrawal from retirement accounts, roll-over of retirement accounts and many others.

Additionally - the assumptions you make will determine the options you will see and therefore the decisions you can make. Those assumptions are really the heart of your decision making process.

I am an EXCEL whiz and have a graduate degree in statistics and computer science. I spent thousands for hours before and after retirement trying to find the single best and easiest answer to "what to do the house, money, IRAs, pensions, lump sum distributions?"

There are NO easy answers!

I built spreadsheets (one book has 15 sheets and over 5,000 rows of calculations) that model dozens of possible scenarios to consider and many dozens more tax consequences of those scenarios. There is actually no end to the possibilities.

Following are just some of the issues to consider

- early withdrawal (prior to 59.5 years old) penalites
- substantial and equal withdrawals
- alternative investment rates
- lease management fees
- expected inflation rates
- timing of market events (gains, losses, sideways movement)
- timing of withdrawals
- investment management fees
- access to your money from abroad
- timing of social security (this is really complicated)
- IRA roll-over options
- your tax rates

There is no single best answer. My wife (whose attitude about investing is 100% opposite of mine) and I have agreed to the following parameters for our retirement money management

- lower risk
- lower return
- manage our expenses to meet our ACTUAL investment results
- minimize investment management fees
- don't invest in anything that requires our attention more than once a year
- no real estate
- no tricky tax dodges (been there - done that - lost a lot of money)
- keep it simple
- don't look at investment results more than once a quarter

Have fun sailing!

Before you visit a financial guy - you need to prioritize your life expectancies as I show above.

Our priority is
- simple life
- don't think about money
- live within our means
- ALWAYS have more money than we need so we do not have to worry
- Therefore - we must NEED less which gets us back to - simple life

I like your simple approach . There are very few things that are worthwhile ie. going sailing with your partner is definitely one of them.

[ericoh88]

Originally Posted by a64pilot

I understand the dollar cost averaging thing, and believe avb3 is right, it's inflated and will eventually correct, just as housing did, one reason I don't want in.
Sounds silly, but when everyone thinks X is a good investment, it no longer is.
Real Estate on the other hand has corrected and is no longer on a high, land around here, and by land I mean 100+ acre just land you grow trees on is selling for close to the same price it did thirty or so years ago, of course it was inflated thirty or so years ago.
I have never figured out "neighborhoods" and lot pricing, in the right neighborhood, a .5 acre lot may go for 100K, but you can buy 20 acres right across the street for that amount?
Plus I think to get the wife out cruising, she has to have a home to come back to, just isn't prepared psychologically to give that sense of security up.

Ann I don't understand what you mean by having a conversation on a forum isn't proper, have I said something I shouldn't?
PM me please if I need guidence, I'd appreciate it especially if I'm inadvertently going somewhere I shouldn't.

Hi a64pilot

I like to share some limited encounters with some yachties that have been out on cruising life.

1. This couple from NY lived off income from selling CALL option. ie 60% a year. Don't ask me what is options. Still figuring out futures. They are now back in NY after completing circumnavigation.

2. A couple from seattle sold off all his rentals house due to tenant problems and his children did not want the hassle and now he is living month to month on his ss of usd 1k a month. Enough to feed himself but not enough to keep the boat in good shape. Well he has been out for 30 years now.

3. Couple from Canada living off pension from army and dividends from hius mutual funds.

4. This man build a 50 double ender in Hong Kong. I spend one month crewing with him . He had everything from big house, private plane and big office in LA. The mortgage interest change his fate and he lost everything and took off sailing with funds he saved up monthly . This is not from stocks, property or business deals. Just simple monthly cash savings.

IMHO, I like trading futures. Funny I make more money in property deals ie selling my properties which I was buying from foreclosure or auctioned by bank. In 2009 I did a deal by buying properties that the developer could not sell. Rent out rooms to foreign students and later sell the house to investors.

Sold off most of the fore closure properties that were bought since 2005.

Funny. I don't have a house. Only a 1986 traditional long keel boat big enough for two with no bank loans. Maybe a bigger boat like taswell 49 will be nice but I need to live within my means. Getting a boat ready for the long haul takes about 5 years. I find it easier to make a small boat very sea worthy with my limited monthly income.

There is no such thing as passive income. I belief in Active Management of my assets/business whether they are real estate or equities.

My plan for cruising to the South Pacific and towards New Zealand will be financed by rentals from the properties and some from trading futures.

I wake up every morning in my little boat happy looking forward to get to work on my checklist before I take the boat out again for many more short trips in Malaysia, Indonesia and Thailand.

BTW, in my previous life for a good 15 years, I was peddling life insurance and mutual funds. Today I have private bankers who are more interested in selling me more funds.

Good luck in your pursuit, a64pilot .

[Ex-Calif]

Originally Posted by TacomaSailor

Just one more thought - DIVERSIFY - DIVERSIFY - DIVERSIFY

I have a mayonnaise jar, a peanut butter jar and a coffee can under my bed.

Is that what they mean by diversify?

BTW - I am in my 50's and they are all empty -Is that a bad thing?

[ianjoub]

I am amused by what some considered 'diversified'. Having stocks spread across risk levels and bonds is NOT diversified. Having stocks, bonds, precious metals (physically), real estate, cash, and other liquid assets is diversified.

[a64pilot]

Wow,
I was looking for a KISS answer, but I guess like everything, there are no simple answers are there? I guess if it were simple, then everyone would retire with a good income.

[denverd0n]

Originally Posted by a64pilot

I was looking for a KISS answer, but I guess like everything, there are no simple answers are there? I guess if it were simple, then everyone would retire with a good income.

Sure, there's a KISS answer: Put all of your money into a bank savings account and hope that inflation doesn't wipe it out before you die.

Of course, if you actually want some decent returns on your money, then it becomes a bit more complicated.

[dannc]

Originally Posted by Ann T. Cate

With reference to Tacoma Sailor's post # 13, where he commented that his friend's wife felt secure that she had a place to come "home" to, near their kids:

This is a common theme we hear amongst cruisers, maybe 50%, 60% of cruisers over 45 years old. Usually, I think this desire is actually for a fantasy: the mental picture is of a safe haven where the kids will 'take care of me' when I need it. In actuality, that is only a dream, and while it might work out, it also might not.

...

Ann

To keep the house or sell the house is one of our big questions. I have had the boat bug since I was a kid and it big again around 2000 but we were buying land to build our dream house on as well as having kids so the boat idea got pushed away. The house was the last house we would own.

We live in a rural county and big development is starting up. Development that will double the county's population and that development will be five miles from the house. So we have all but decided to sell every acre and the house and just up and leave as soon as the kids are gone from the house and I can retire early.

We go back and forth about the house since we do not want to sell it. I designed the house and it is just perfect for us both now and in retirement. The only way we would rent the house would be to our kids, I have just seen too much trouble with rentals. The flip side with the kids is the question of where will they be in 10 years? When I was their age, in 10 years I moved to three states and in 15 years four states. Even in the states I lived in, I moved quite a bit. Who knows where the kids will be in 10-20 years. They say they want to stay where we are but there is no way for them or us to know.

But one thing is for sure, if we can still deal with living on a boat, we can get the boat somewhat near to any place they are likely to live. Or maybe that is a rationalization to get the boat.

I am danged lucky in that my wifey wants the boat as much, if not more, than I do.

Now if I would just play and WIN one of the two lotteries that have big payouts!

Later,
Dan

[onestepcsy37]

We sold the big house - didn't need it after all the kids moved out - and bought a townhouse in a great community. For cash. Many of the residents go away for six months and everything is still there when they come back. And the community mows my lawn...

[Prairie Chicken]

Sure, there's a KISS answer: Put all of your money into a bank savings account and hope that inflation doesn't wipe it out before you die.

Denver, there's no risk in that. You are guaranteed to lose money as a result of inflation. And it doesn't take that long. Inflation is 100% over about 33 years.

[Ex-Calif]

Originally Posted by a64pilot

Wow,
I was looking for a KISS answer, but I guess like everything, there are no simple answers are there? I guess if it were simple, then everyone would retire with a good income.

Well it's CF for Pete's sake - You expected a simple answer and consensus

Here's the best advice

http://www.cruisersforum.com/forums/...ml#post1624124

Post number 2...

Find a real person - Getting advice from the internet is just plain dumb - Oh yeah, sure for boats and stuff that doesn't matter - LOL...

But for financial and medical advice it really is the worst place...

Find a real person you trust - maybe an old retired person who is not eating dog food and living in a box perhaps...

[dannc]

I could have sworn someone mentioned in this thread to have money in overseas accounts but I can't find the text.

A month or so ago there was a report in the Wall Street Journal about overseas accounts that was danged scary.

A US citizen who has money in an overseas account, this can be a simple savings account, MUST report this money to the IRS each year, even though you do not own taxes. Failure to do so, allows a penalty up to 50% of the highest amount of money that was in the account, I assume in a given year.

This law has been on the books for year but only recently has the IRS started to enforce the law and they are catching and going after very small accounts even though the law was written to go after rich people hiding money overseas.

So, if you do have money overseas, make sure you tell the IRS, even if you do not have to pay Federal tax, they can still take your money.

Later,
Dan

[sailorboy1]

4 pages of boater financial answers. I guess it is true; boaters must be rich

[denverd0n]

Originally Posted by Ex-Calif

But for financial and medical advice it really is the worst place...

Legal advice, too. Financial, medical, and legal advice that you get on the internet is worth exactly what you pay for it... NOTHING!