CONFUSED BUT TRYING TO UNDERSTAND

[AJL]

Seems to me, about 10 years ago that statistics were stated that approx. 35% of americans do not reach the retirement age?? Good point then trying to retire before either death sneaks up on you or your health gives way. Being the son of a coal miner (hand loaded for 25+ years), I saw the man I always thought invincible, muscle on muscle with hands of steel, slowly turn into a fragile shell of a person. The only saving grace was that he was eligible for black lung benefits along with social security!! Some others were not so lucky, striving to exist every day on next to nothing, making $300 dollars last the whole month (remember the hard cheese that you used to get from surplus food?, and the powdered milk?) The good old days - haven't yet figured out why they called them "good"?. I really don't mind working for a living, its just the fact that I think when one wakes up in the morning that it would be nice to "choose" not to go in to work if you don't want to!! And - not to "have" to listen to someone tell you "what to do"!! Some days its all I can do to curb by tongue or walk out, but I usually regain my senses and tell myself that I must keep a positive attitude. By the way, I did come across an article where a woman posted a message for people to send her money so she could retire. Most people responded in the negative and told her to "get a job you lazy bum"!! But you know, there were a bunch of people that actually sent her money on that scam!!!! Only in America!!
ummmmmh! If 5000 persons sent me $100 dollars each, I could retire tomorrow and I would send you all postcards from Mexico!! Oh, that was last night's dream I had!! Sorry.
Anyway, back to reality. I'm going to take a little advice from everyone and put some of these ideas to work this week!!
ps: I told Greg, our shop guy about this web site and when I mentioned early retirement he replied-"I like the sound of this already!!!" So I think I may have him hooked also. He's 53 and the "penny stock king" here!! And thanks for reinforcing my mutual fund picks so far, I hope they continue doing well and hope that all of you are doing well also. Right now I have my nose to the glass watching all of you "living the good life" on the other side. Thanks again.

 

[justin]

AJL,

The majority of my portfolio is in American Funds such as those you mentioned: agthx, awshx, anwpx. They all look pretty good. The biggest thing you should look at when evaluating a mutual fund is the expense ratio, sometimes abbreviated ER. You can find these ER's for these funds at finance.yahoo.com or morningstar.com or at the fund's own website (americanfunds.com). For example, agthx has an ER of 0.70%. That means for a $10,000 investment in agthx, the fund will pay $70 per year in fees. The 12b-1 fee is a part of the ER, and is 0.25% for agthx. The 12b-1 fee compensates your financial adviser each year. On that $10,000 investment, your adviser gets $25/yr. American Funds also has a front end load of up to 5.75% when you buy their funds. Your advisor has a vested interest in recommending funds that will compensate him. A company like Vanguard (highly admired here) charges no front end sales load and does not charge a 12b-1 fee. The usual expense ratio at Vanguard is more like 0.2-0.4% for many of their funds.

I can't recall whether it was John Bogle or William Bernstein (both highly admired here) that said American Funds was a good fund company if you're going to go with actively managed load funds.

After reading a number of books on investment strategy by Bernstein and Bogle, I decided it was time to switch to Vanguard. They have been easy to work with.

I'd recommend reading up - I'd recommend Four Pillars of Investing and the more complicated Intelligent Asset Allocator both by William Bernstein. Common Sense on Mutual Funds by John Bogle is also a good read. You'll see some overlap in those three books, so skimming may be appropriate for some parts. I checked all three out from the library or through the library's interlibrary loan program. Or buy them at Amazon.com or somewhere online. I'd say the $50 you'd spend on all three would be a great investment if you can't get them free from the library.

The Millionaire Next Door by Thomas J. Stanley and William D. Danko will give you some insight and motivation into getting wealthier. It may also provide for interesting material to discuss with your wife regarding saving money and budgeting.

It looks like you know some about the stock market and investing. And you have accumulating a significant amount, and you are continuing to fund your IRA's on an ongoing basis. That is a great start.

Other than that, I'd second many of the earlier posters here. Good luck, and remember you still have a number of years to invest. Between social security, odd jobs, and investment income, you should do ok during retirement. It won't be "early" necessarily, but better late than never, as they say.