Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 06-16-2016, 02:42 PM   #21
Recycles dryer sheets
BreathFree's Avatar
 
Join Date: Nov 2012
Location: Navarre
Posts: 101
Quote:
Originally Posted by Senator View Post
Considering I do not have any bonds, I liked and agree with the article. Rental income has been my salvation and ticket to FIRE.
I have rentals for the sole purpose of it being an alternative to stocks and bonds. I still own stocks and bonds, but I'm not trusting of them. I feel I am only in them because the general consensus is that is the way to go and history seems to support them as a means to FI.
__________________

__________________
BreathFree is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-16-2016, 03:07 PM   #22
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
Quote:
Originally Posted by BreathFree View Post
I have rentals for the sole purpose of it being an alternative to stocks and bonds. I still own stocks and bonds, but I'm not trusting of them. I feel I am only in them because the general consensus is that is the way to go and history seems to support them as a means to FI.
Yes, but you have to have the temperament and personality to deal with owning rentals. I have two friends who are doing quite well, one with rentals all over the U.S. I have no doubt they will succeed. OTOH, as you've probably experienced, there are some very smart and clever people engaged in the business, and it's easy to lose your shirt if you don't know what you're doing, particularly when using leverage. Southern California is been littered with crash and burn real estate investing stories.

I know enough about investing to know Warren Buffet is speaking about me when he mentions "know-nothing investors" who should stick with basic index funds. I do not trust my capabilities with fancy spreadsheets or any alternative investments. This is what is known as the "circle of competence", and mine is quite small. In fact, the more I read the more I realize how much Ill never know and how much trouble I could get into as a result. As such, I view owning rental properties as belonging in what Charlie Munger refers as the "too hard" pile, as in they are something I should leave alone. It's been said success in investing isn't so much about getting everything right as much as it's "not doing bonehead things." Stepping out of one's circle of competence is considered a bonehead thing.

Forbes and business publications like it exist for the sole purpose of funneling reader eyeballs to advertisers. It's good to remember that when coming across bogus articles like this one.
__________________

__________________
Options is offline   Reply With Quote
Old 06-16-2016, 05:48 PM   #23
Recycles dryer sheets
BreathFree's Avatar
 
Join Date: Nov 2012
Location: Navarre
Posts: 101
Quote:
Originally Posted by Options View Post
Yes, but you have to have the temperament and personality to deal with owning rentals.
I agree 100%. I did not mean to imply everyone should own rentals. Rentals were just a way for me personally to diversify some of my investments away from the stock market. If there was a more passive way to do that, with a similar risk profile, some inflation protection, and monthly income, I would be all for it. I have no pension, and annuities, to me anyway, seem impossible to value since future inflation is an unknown.
__________________
BreathFree is offline   Reply With Quote
Old 06-16-2016, 06:43 PM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,369
Quote:
Originally Posted by BreathFree View Post
I agree 100%. I did not mean to imply everyone should own rentals. Rentals were just a way for me personally to diversify some of my investments away from the stock market. If there was a more passive way to do that, with a similar risk profile, some inflation protection, and monthly income, I would be all for it. I have no pension, and annuities, to me anyway, seem impossible to value since future inflation is an unknown.


I respect anyone who can become a landlord. Definitely great benefits to a successfully ran rental program. I just felt sorry for some landlords. Ones I have known always getting ripped off or taken advantage of with some sorry story. Pay your rent first, why is that such a difficult concept for some renters? I had one tough as nails friend back in the day... After a few passes, he would knock on the door and tell them either he was going to get his rent money from them, or from the insurance company with their dead body in it. They always paid after that line...Because I think he meant it too.


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 06-16-2016, 06:48 PM   #25
Full time employment: Posting here.
 
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 815
My son is in process of evicting his tenant who stopped paying rent in December. I say in the process, because although the court evicted her at the end of April, she had not gotten out. The sheriff locked her out the first week of June. She broke in last night, messed the place up, made food, and evidently got stoned. So here he sits with a ton of repair bills, somewhere in the neighborhood of $9000 and cannot get her to stay out. According to friends and a nephew who have rentals, he needs to plywood all doors and windows in order to discourage her from being there which wI'll dray rentire out again. He has called the police on her but unless she's inside they can do nothing.

Had a business after 'retiring' but self employment is more laborious than working for someone else

I'll stick to stocks
__________________
gayl is online now   Reply With Quote
Old 06-16-2016, 06:54 PM   #26
Thinks s/he gets paid by the post
euro's Avatar
 
Join Date: Oct 2015
Posts: 1,099
Quote:
Originally Posted by FlyBoy5 View Post
Yep. I am mad that I spent the 180 seconds reading it when I could have been more productive watching this:



Bottom line: Diversify and stay off of Forbes.com


__________________
euro is offline   Reply With Quote
Old 06-17-2016, 07:39 AM   #27
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 189
Quote:
Originally Posted by Options View Post
See also this on Jim Cramer (yet another "authoritative" huckster's hype peeled back revealing a track record of bad advice):

Mad Money. Questionable Ethics.



The same could be said for the author of this Forbes article (as well s Jane Bryant Quinn's latest fluff piece about planning to celebrate your 101st birthday). Read MSM business rubbish with care. Better yet, don't read it all.
I'm gonna guess you never read her book "How to Make Your Money Last: The Indispensable Retirement Guide"
__________________
alaska55 is offline   Reply With Quote
Old 06-17-2016, 12:29 PM   #28
Thinks s/he gets paid by the post
Cobra9777's Avatar
 
Join Date: Jul 2012
Location: Texas
Posts: 1,132
I didn't read the article. In fact, I never read anything on Forbes because they won't let me past the "Quote of the Day" page without disabling my ad-blocker. Not gonna happen. Anyway... doesn't sound like I missed much.

I sold a chunk of my bond fund allocation several years ago and bought two rental houses. When I first retired, I was going to expand to 5 houses with leverage, but eventually decided that would be too much like work. Handling the two is no big deal and I've been very happy with the steady cashflow stream, preferential tax treatment, and appreciation in value.

I still own plenty of stock, and more bonds than real estate. Essentially, I'm a conventional buy-and-hold index guy, but I do think there is a role for alternatives. I'd never go 50% though. And I'd never invest in alternatives I know nothing about, like medical accounts receivable.
__________________
Retired at 52 in July 2013. On to better things...
AA: 55% stock, 15% real estate, 27% bonds, 3% cash
WR: 2.0% SI: 2 pensions, some rental income, SS later
Cobra9777 is offline   Reply With Quote
Old 06-20-2016, 08:12 PM   #29
Full time employment: Posting here.
 
Join Date: Jun 2016
Posts: 931
Quote:
Originally Posted by Options View Post
Predictions = noise (typical Forbes/MSM business section click bait). Thankfully, I landed on the last page of the "article" so I didn't waste any time out of my life reading the first two pages.

This"advice" is downright dangerous to most investors:



Active investors crash and burn, and only particular individuals have the temperament/personality to "start a business" or "invest in real estate". This "advice" is thrown out so casually like it's as easy to do any of these things as buying a pair of shoes. The best investors are the most conservative, thorough, and stick only to what they know (see Buffet/Charlie Munger's "too hard" pile concept). Perhaps returns will be lower going forward, but this in no way means taking on undue risk.

I'm too lazy to dig up the endless studies/research showing the above Forbes "suggestions" are just plain wrong for most investors (aside from being based on faulty forecasting and subject to behavioral bias). Google it.
I did both: started a business and invested in RE. You should meet me someday. I am nothing special. It just takes the willingness to do it. I read somewhere that most men don't take too many risks, they take too few.
__________________
COcheesehead is offline   Reply With Quote
Old 06-21-2016, 11:40 AM   #30
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
Quote:
Originally Posted by alaska55 View Post
I'm gonna guess you never read her book "How to Make Your Money Last: The Indispensable Retirement Guide"
Normally, I shudder at the thought of reading any book with the word "indispensable" in the title. However, it's on order at the library as Taylor Larimore recommends it and that's always enough for me (the degree to which I skim the book remains to be seen, however). After a while, all these "new, definitive, latest and greatest" books on retirement investing, be it in the accumulation or decumulation phase, get old. At some point, you just create a well thought out, well-crafted plan and stick to it. The secret is sticking to your plan, not in changing it everytime someone says 50 is the new 40.

Quote:
Originally Posted by COcheesehead View Post
I did both: started a business and invested in RE. You should meet me someday. I am nothing special. It just takes the willingness to do it. I read somewhere that most men don't take too many risks, they take too few.
You have to get real about this stuff. Whether you feel you're "special enough" to invest in something of no consequence, and in fact is extremely dangerous (overconfidence bias, among others). There's a huge difference between someone born with what is known as entrepreneurial intelligence and another who is simply "starting a business" because an author in Forbes thinks doing so will make up for stock returns possibly being lower in the future (again: predictions = noise). Same goes for investing in real estate.

If you read venture capitalists, you will see a common thread is they make a very big distinction between investing in companies started by CEO's who are missionaries versus mercenaries. They want to invest in the Mark Zuckerbergs of the world, who are interested in building businesses because they don't feel they were born to do anything else. These people have the persistence, doggedness, and other qualities to push through when others will quit and fail. OTOH, someone who starts a business because "starting a business is the new 60/40 PF" is an excellent example of a mercenary, with the predictability of the success and longevity of that business matched perfectly.

Investing in real estate because "investing in real estate is the new 60/40" is another fool's errand. It's been said investing in real estate is much like running a business, and if you've got what it takes, by all means go for it. As I've said, I have friends who have been highly successful in their RE investing. OTOH, here in Southern California where everybody "wants to be rich", the real estate investing graveyard is running out of room for most others.

As to taking risks in life, investing is never the place to take foolish risks. As I've posted before, success in investing is not so much getting everything right (as in guessing whether 60/40 is "dead", or this time it really, truly, absolutely is different), but in not doing what are known as "bone-headed" things. Taking undue risk in investing is a bone-headed thing.
__________________
Options is offline   Reply With Quote
Old 06-21-2016, 02:17 PM   #31
Full time employment: Posting here.
 
Join Date: Jun 2016
Posts: 931
Starting a business can be something as simple as opening an eBay store. Something I am sure anyone on this forum could do. We all have expertise in something, if we stop and think about it. I started a manufacturing business 20 years ago based on a sliver of knowledge, but on the side my wife and I sell mostly used bike parts and camera equipment on eBay. Over the last 15 years we've made nearly $90,000. Not a ton of money, but enough to take a nice vacation every year.
__________________
COcheesehead is offline   Reply With Quote
Old 06-21-2016, 02:53 PM   #32
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 4,708
Quote:
Originally Posted by COcheesehead View Post
Starting a business can be something as simple as opening an eBay store. Something I am sure anyone on this forum could do. We all have expertise in something, if we stop and think about it. I started a manufacturing business 20 years ago based on a sliver of knowledge, but on the side my wife and I sell mostly used bike parts and camera equipment on eBay. Over the last 15 years we've made nearly $90,000. Not a ton of money, but enough to take a nice vacation every year.
The danger which you avoided is starting an expensive business.

The person who starts a business that costs a lot to start, so borrows $200,000 or uses their own cash, or starts a business that costs a lot to run per month while waiting for customers to appear, and then it fails.

Much better to start a business for $5,000 and try it for a year or 2 and if it fails you only lost $5,000.
__________________
Sunset is online now   Reply With Quote
Old 06-21-2016, 03:03 PM   #33
Full time employment: Posting here.
 
Join Date: Jun 2016
Posts: 931
Quote:
Originally Posted by Sunset View Post
The danger which you avoided is starting an expensive business.

The person who starts a business that costs a lot to start, so borrows $200,000 or uses their own cash, or starts a business that costs a lot to run per month while waiting for customers to appear, and then it fails.

Much better to start a business for $5,000 and try it for a year or 2 and if it fails you only lost $5,000.
I am not sure anyone is going to get a $200k loan to start a business unless it comes from family or friends.

I wrote a personal check for $32,000 when I started my company 20 years ago. That represented about a third of my networth. That original $32k has blossomed into many, many times that. Nothing ventured, nothing gained.
__________________
COcheesehead is offline   Reply With Quote
Old 06-21-2016, 05:08 PM   #34
gone traveling
 
Join Date: Sep 2013
Posts: 1,248
Quote:
Originally Posted by REWahoo View Post
That's what stood out to me as well. I'm surprised he didn't suggest buying Himalayan yak cheese futures.
+1

This article is written by "this time its different" kind of guy.

But I find it is always the same. I would prefer 60/40 over his suggestions.
__________________
eta2020 is offline   Reply With Quote
Old 06-22-2016, 12:30 AM   #35
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 4,708
Quote:
Originally Posted by COcheesehead View Post
I am not sure anyone is going to get a $200k loan to start a business unless it comes from family or friends.
......
But those are exactly the worst kind of loans, with a bank you can tell them to forget about it, as you declare bankruptcy.

With family you still have to repay them, or crawl under a rock...
__________________
Sunset is online now   Reply With Quote
Old 06-22-2016, 06:31 AM   #36
Full time employment: Posting here.
 
Join Date: Jun 2016
Posts: 931
Quote:
Originally Posted by Sunset View Post
But those are exactly the worst kind of loans, with a bank you can tell them to forget about it, as you declare bankruptcy.

With family you still have to repay them, or crawl under a rock...
My point was a bank would never do that loan or if they did, you wouldn't want the terms.
__________________
COcheesehead is offline   Reply With Quote
Old 06-22-2016, 08:46 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,369
Quote:
Originally Posted by COcheesehead View Post
My point was a bank would never do that loan or if they did, you wouldn't want the terms.


CO, I imagine many are skeptical based on the risk, and I am certainly one of those and have been my entire life. But if everyone "worked for the man" there would be no work, as there ultimately has to be someone out there willing to stick their neck out over a chopping block that ultimately provides jobs for others. I salute you for taking that risk!


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 06-23-2016, 05:47 AM   #38
Thinks s/he gets paid by the post
 
Join Date: Dec 2015
Posts: 1,085
Running a business does not equal retirement. Retirement is being free of all of that stuff.

It is, at best, a career change.

I've seen more than one well funded retirement nest egg decimated by a late-in-life decision to "retire" and start a business of my own. If 60/40 is risky, starting a business that will really make a difference in a retirees income level is really really risky.
__________________
HadEnuff is offline   Reply With Quote
Old 06-23-2016, 05:54 AM   #39
Thinks s/he gets paid by the post
 
Join Date: Dec 2015
Posts: 1,085
I don't necessarily think the 60-40 AA is "too risky". What I think is risky depends upon what number you plug in for your expected rate of return, for the number of years you are likely to live and need that rate of return in order to succeed.

As others on this board have done, look at that 60 (equities) and imagine a worst-case scenario of, say, a 40% drop, with a decade long flat period, and can you survive that.

I couldn't get into the Forbes article, but did it acknowledge that whatever might cause the failure of the 60-40AA, might have an even more disastrous impact on the business one has created to "mitigate" the risk of the 60-40 portfolio?
__________________

__________________
HadEnuff is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Forbes Article on SS Options DFW_M5 FIRE and Money 17 04-27-2012 04:36 PM
Forbes article: Super Rich and Super Cheap free4now Other topics 3 11-29-2007 12:20 AM
Ben Stein's Recommended Portfolio -- Comments? Achiever51 FIRE and Money 8 06-16-2007 09:10 AM
Forbes: Recession dead ahead boont FIRE and Money 25 06-08-2006 06:42 PM
Comments on Portfolio Allocation veritasophia FIRE and Money 18 04-14-2006 06:08 PM

 

 
All times are GMT -6. The time now is 11:27 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.