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Old 07-10-2009, 08:17 PM   #101
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If you haven't already then you may want to read about Taleb's "black swan" portfolios. He basically buys Treasuries and then hopes to earn additional income by selling stock options.

You might also take a look at Milevsky's opinion on annuities in "Are You A Stock Or A Bond?"
thanks. Will do! I can tell you in advance that I am a bond however, off the charts. Our combined indexed federal pension income tomorrow is twice our living expenses, and we are still too scared to pull the trigger...gettin there though.
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Old 07-10-2009, 08:22 PM   #102
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Our combined indexed federal pension income tomorrow is twice our living expenses, and we are still too scared to pull the trigger...
Have you considered an exorcism?
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Old 07-10-2009, 08:24 PM   #103
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But are you guys really getting relatively safe 10-12% loans on 50% LTV places? That is some amazing stuff if so, and worth a little work to get things going.
mine got that way through "seasoning" (being around long enough to be paid down)

my understanding however that the general game has dried up and that good deals can not find lenders.

you need a mentor however who has scars, or you will get a lot of scars yourself, and you need to be comfortable with hand to hand combat, as it gets very personal.

maybe we should start a more formal thread on direct lending "how to" and traps, anecdotes.

there is also auto lending to consider. I just bought a new used car and the salesman told me that 75% of his deals are falling through because of lending pullback. The WSJ ran an article recently about installing remote locator/disablers in cars with loans to marginal candidates.
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Old 07-10-2009, 08:28 PM   #104
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Our combined indexed federal pension income tomorrow is twice our living expenses, and we are still too scared to pull the trigger...

Have you considered an exorcism?
reply: is there some sort of financial therapist that I can take DW to that will tell her we are ok to retire?
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Old 07-10-2009, 09:33 PM   #105
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...
you need a mentor however who has scars, or you will get a lot of scars yourself, and you need to be comfortable with hand to hand combat, as it gets very personal.

maybe we should start a more formal thread on direct lending "how to" and traps, anecdotes.
....
I've been adding to this thread as things develop:

Funding private loans

Don't seem to be many lenders here (maybe everyone is hewing to the "neither a borrower nor a lender be" instruction). Not that many landlords either - maybe landlords and lenders don't retire early. The thread would be improved by your input. I don't have that much experience yet - and nothing requiring armor and hand-to-hand combat skills!
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Old 07-10-2009, 10:47 PM   #106
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I've been adding to this thread as things develop:

Funding private loans

Don't seem to be many lenders here (maybe everyone is hewing to the "neither a borrower nor a lender be" instruction). Not that many landlords either - maybe landlords and lenders don't retire early. The thread would be improved by your input. I don't have that much experience yet - and nothing requiring armor and hand-to-hand combat skills!
Thanks for the link to that thread. Very interesting reading (seeing the successes and failures). Looks like the same old story all over again unfortunately - decent returns but not without risk.

I may dabble in this private lending at some point, but it still looks like work, and more stressful than just watching my portfolio go up or down on a quarterly basis. To each their own I suppose.
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Old 07-10-2009, 11:55 PM   #107
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did you do index funds, direct stock, buy and hold?

any tricks you would like to share?
Primarily index funds, held for a very long time. When 401Ks first became available, I started putting about 80% into an S&P 500 index fund. The S&P 500 was around 100 at the time. When I worked for companies that did matches, I pumped in enough to get every penny of matching funds.

When I changed jobs, I was able to roll the 401K forward to the new place's 401K, which were very good plans. The first employer was not so good. Really high expenses. The rest used Fidelity as the plan manager and had nice sets of Fidelity and Vanguard funds.

I tended to take pay raises and bonuses, and used them to first run the 401K contributions to the maximum, and then started after-tax investing. Towards the end I was living on about 60% of my paycheck, and had investment returns a bit in excess of my expenses. Time to FIRE...

I also followed the Motley Fool during the early years, before the shrill sales pitches took over, and when they still recommended mostly index funds. I put about 15% of my portfolio into a brokerage account, and tried my hand at picking stocks to hold for growth. I got lucky with a few, and held onto them for substantial growth. (AMGN, ATHM til management turned stupid, AMZN for a while, GOOG and a hefty helping of AAPL til late 2007) I also had some duds, like CRA, HGSI, C, and some reliable plodders like JPM and GS. For retirement I trimmed the individual stock holdings way back. To much risk for the reward, and I didn't want to be a slave to the ticker.

Pre-retirement prep included cutting back on the individual stocks, and shifting the allocation to more like 60% equities and 40% fixed. Equities are 70/30 US/International and the US equities are further split to 80/20 Total Market/Small Cap Value.

I used the recent market fluctuations to tax loss harvest and get my allocation set.
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Old 07-11-2009, 10:55 AM   #108
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Primarily index funds, held for a very long time. When 401Ks first became available, I started putting about 80% into an S&P 500 index fund. The S&P 500 was around 100 at the time. When I worked for companies that did matches, I pumped in enough to get every penny of matching funds.

When I changed jobs, I was able to roll the 401K forward to the new place's 401K, which were very good plans. The first employer was not so good. Really high expenses. The rest used Fidelity as the plan manager and had nice sets of Fidelity and Vanguard funds.

I tended to take pay raises and bonuses, and used them to first run the 401K contributions to the maximum, and then started after-tax investing. Towards the end I was living on about 60% of my paycheck, and had investment returns a bit in excess of my expenses. Time to FIRE...

I also followed the Motley Fool during the early years, before the shrill sales pitches took over, and when they still recommended mostly index funds. I put about 15% of my portfolio into a brokerage account, and tried my hand at picking stocks to hold for growth. I got lucky with a few, and held onto them for substantial growth. (AMGN, ATHM til management turned stupid, AMZN for a while, GOOG and a hefty helping of AAPL til late 2007) I also had some duds, like CRA, HGSI, C, and some reliable plodders like JPM and GS. For retirement I trimmed the individual stock holdings way back. To much risk for the reward, and I didn't want to be a slave to the ticker.

Pre-retirement prep included cutting back on the individual stocks, and shifting the allocation to more like 60% equities and 40% fixed. Equities are 70/30 US/International and the US equities are further split to 80/20 Total Market/Small Cap Value.

I used the recent market fluctuations to tax loss harvest and get my allocation set.
great execution. How do you spend your time FIRE'd?
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Old 07-11-2009, 11:02 AM   #109
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Thanks for the link to that thread. Very interesting reading (seeing the successes and failures). Looks like the same old story all over again unfortunately - decent returns but not without risk.

I may dabble in this private lending at some point, but it still looks like work, and more stressful than just watching my portfolio go up or down on a quarterly basis. To each their own I suppose.
sure, I do worry that the gas station will spring some sort of toxic leak or the commercial condo will develop some real world problem

the upside, and this is the good thing about real estate stuff, IS the lack of liquidity, which keeps one from fiddling with it when you get bored.

the only work, once you get someone who is in for the duration of the amortization, is calling the guys to get a new set of cheques once a year, them asking for a lower rate, me asking them to pay out, and then we do it again the following year.

the shorter term stuff can give you effectively 25% + yields due to the initiation fees being amortized over a short period.
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Old 07-11-2009, 02:19 PM   #110
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great execution. How do you spend your time FIRE'd?
Oh, the usual. Herding cats, annoying people on message boards...

I'm currently working on settling my mother's estate and trust. Combine that with the Great Medical Insurance Quest of 2009, and it feels like I have a full time job.

The good news is that both the estate work and the insurance quest are now in the endgame. I'm rewarding myself with cheap cruise tickets.

I want to lie shipwrecked and comatose,
Drinking fresh mango juice.
Goldfish shoals nibbling at my toes,
Fun, fun, fun in the sun, sun, sun,
Fun, fun, fun in the sun, sun, sun.
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Old 07-11-2009, 02:22 PM   #111
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I'm currently working on settling my mother's estate and trust.
That can be quite a monumental job. My brother was executor for my mother's estate, and the amount of work required was mind-boggling - - and that was only the part of which I was aware. I'll always be grateful to him for doing it, and for doing it wo conscientiously.
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Old 07-11-2009, 04:15 PM   #112
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I want to lie shipwrecked and comatose,
Drinking fresh mango juice.
Goldfish shoals nibbling at my toes,
Fun, fun, fun in the sun, sun, sun,
Fun, fun, fun in the sun, sun, sun.
That series got me through residency...

Red Dwarf: http://www.bbc.co.uk/dna/h2g2/A49204

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Old 07-11-2009, 07:16 PM   #113
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Oh, the usual. Herding cats, annoying people on message boards...

I'm currently working on settling my mother's estate and trust. Combine that with the Great Medical Insurance Quest of 2009, and it feels like I have a full time job.

The good news is that both the estate work and the insurance quest are now in the endgame. I'm rewarding myself with cheap cruise tickets.

I want to lie shipwrecked and comatose,
Drinking fresh mango juice.
Goldfish shoals nibbling at my toes,
Fun, fun, fun in the sun, sun, sun,
Fun, fun, fun in the sun, sun, sun.
I wonder if any Americans have looked into establishing Canadian tax residency by staying for 6 months plus a day (during the summer at a cottage on a lake for example!) in order to qualify for free medical insurance.

Some provinces have better care than others, and some have lower taxes than others.

I wonder if there is a business model therein for me to provide consulting on this for american FIRE's who have preconditions and are not old enough for medicare.

[after 5 minutes of research..one way to go is to move $US350K into Canadian assets in order to qualify for investor status permanent residency. All permanent residents get free health cards, and they dont check for preconditions. Some provinces have a 3 month waiting period, some no waiting period. You have to stay in the country 6 months of each year to keep your health card rights.]

on a separate topic, Plan C for me is to move lock stock and barrel to Florida. I was able to figure out how to get DW + me on medicare (resident aliens can pay for medicare after living in the US 5 years), but I have not been able to figure out how to get my 72 year old mom on US insurance of any kind...I am responsible for her general oversight and supervision so can't switch towns unless we move her too.
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Old 07-11-2009, 08:10 PM   #114
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That can be quite a monumental job. My brother was executor for my mother's estate, and the amount of work required was mind-boggling - - and that was only the part of which I was aware. I'll always be grateful to him for doing it, and for doing it wo conscientiously.
A retired obsessive-compulsive with fiduciary authority, a database, and a spreadsheet is probably an insurance company or bank's worst nightmare.

I just got a check for $3.46 from an insurance company that shortchanged the estate.

In reviewing accounts, I discovered that my poor mom had been leaking $4.00 a month from her checking account as an automatic debit for accidental death and dismemberment insurance on may dad, who had passed away 12 years ago. The bank and insurance company tried to blow it off, blaming each other. The bank put a 'stop payment' on the debit, but it mysteriously didn't work. (The insurance unit is part of the bank, but they don't want to admit it. Their stops won't block internal transfers.) Soooo... Now the bank and insurer are facing a fresh complaint via the Office of the Comptroller of the Currency. (The goal isn't to recover anything. I'll be closing the account in a few weeks. The goal is just to cost the bank/insurer more in expenses dealing with OCC than they took from Mom over the last 12 years. )
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Old 07-11-2009, 08:34 PM   #115
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A retired obsessive-compulsive with fiduciary authority, a database, and a spreadsheet is probably an insurance company or bank's worst nightmare.

I just got a check for $3.46 from an insurance company that shortchanged the estate.

In reviewing accounts, I discovered that my poor mom had been leaking $4.00 a month from her checking account as an automatic debit for accidental death and dismemberment insurance on may dad, who had passed away 12 years ago. The bank and insurance company tried to blow it off, blaming each other. The bank put a 'stop payment' on the debit, but it mysteriously didn't work. (The insurance unit is part of the bank, but they don't want to admit it. Their stops won't block internal transfers.) Soooo... Now the bank and insurer are facing a fresh complaint via the Office of the Comptroller of the Currency. (The goal isn't to recover anything. I'll be closing the account in a few weeks. The goal is just to cost the bank/insurer more in expenses dealing with OCC than they took from Mom over the last 12 years. )
Good for you!! I am glad to hear this. They shouldn't get away with taking your mother's money for 12 years like that.
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Old 07-11-2009, 08:44 PM   #116
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I guess it would be paranoia if it was not based on direct experience.

I am warming to the Vanguard concept after learning more about it.

By government guaranteed I just mean FDIC insured CDs (I am in Canada, so we call them CDIC insured). There is a nice transparent market for these up here (Rice Financial, for example) where banks and trusts compete with each other through a broker network. The "advisors" HATE these products.
Latter in this thread you say you are now worried about inflation, a fear many of us share. Let me add to your paranoia.

We are fortunate in being born in countries with stable government, and sophisticated banking system. So to us the thought the Uncle Sam or the Canadian government refuse to pay our bonds, or the CDIC/FDIC doesn't pay give us our money if our bank goes bankrupt seems far fetched.

Even a couple of years ago I would have said that chance of Uncle Sam or Canada reneging on its debt is so remote that wasn't worth considering. A few a things;the global financial crisis, the massive government spending and the research from these econ professor/bankers, have caused me to question my assumption.

As this lengthy paper This Time it is Different: A Panoramic View of Eight Centuries of Financial Crises shows, countries such has Canada and the US that haven't defaulted on their debt are the exception. Over time most European, Japan, many Asian, and virtually all Latin American,and African countries have defaulted/restructured on their debt, and of course countries like Russia pretty much dead beats every generation or two. Nor is this just an ancient history or only developing or 3rd world countries. We have seen Iceland basically default on their debt, and we are witnessing the world's 4th or 5th largest economy California restructure their debt right now.

There are two normal ways that sovereign countries, they restructure the debt forcing bond holders to take less money/lower interest rate and/or wait longer to get their money. (This is California approach) or they print so much money they inflated their way of the problems.

If you have a 5 year CD earning 4% and inflation moves to 12% (roughly the same as the late 70s, early 80s) for 5 years. Your 10K CD will be worth only $6591 in real dollar when you go to redeem it . Virtually the same loss as the S&P had last year.

I am off to Alaska and will be visiting Canada at the end week so unable to respond...
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Old 07-12-2009, 08:56 AM   #117
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this line of thinking is one reason I hesitate to pull the plug on retirement. [moderator edit]
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Old 07-14-2009, 09:45 PM   #118
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betcha the Vangard guys that "work for you" drive more expensive cars and live in bigger houses than most of their clients
Most of the Vanguard I employees I used to know were working stiff like you and me with the exception that they were required to wear nicer clothes for work. Maybe the higher managers make decent professional wages, and the few managed fund managers make good money, but the average Vanguard employees are just regular people.
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Old 07-14-2009, 09:51 PM   #119
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yes, I am now educated on the Vanguard exception.
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