Retire 1 Year

[cute fuzzy bunny]

That depends on each specific tax situation. For someone taxed at a high rate, you are correct.

Since I've paid no state or federal income tax for the last 3 years, and our current tax year 'married filing jointly' will result in our paying a rate of 15%, bond dividend payments in a taxable account arent much of an issue to me.

Its important to remember that we have several vastly different categories of people here: those who are "pure ER's" that are living 100% off investments, those who are "pure traditional retirees" who qualify for things such as social security, "composites" who are living partially off their investments but have an income stream of some sort, and the folks who are still working and saving towards ER.

Investment strategies, tax strategies, and perspectives are going to vary wildly from one group to the next.

 

[azanon]

Good point; I "realized" over 80K in income this year so what i said would apply to me, but yeah, not to everyone.

 

[cute fuzzy bunny]

I'd like that realization

Actually I "made" more than that last year, but I have to say I sort of miss getting paycheck stubs. I'm living vicariously through my wifes pay stubs and thoroughly enjoying nearly free full medical and dental benefits...

I'm considering changing from my stodgy bond heavy strategy to the "one other thing" strategy I mentioned above where I'll go stock heavy and keep a moderate cash buffer, plus my wifes income. A paycheck changes things considerably. Plus I'm concerned about bonds in the short to intermediate term. If Bill Gross would stop screaming that the sky is going to fall any day now, I'd feel better.

Now if stocks would just stop being too expensive...

 

[haha]

(edit) I look forward to the day real estate isnt my #1 asset class.  So far it still is.  My house which i bought just over a year ago is worth just over 150K.

Azanon, you have me curious. Don't you live in Pugetopolis? Where in heck did you find a house for $150,000?

Mikey

 

[johnblake]

Right, 'it depends'.

I'm 'pure ER'. no paycheck, no SS, no pension. I'm invested conservatively because I don't need significant growth, but don't want major losses either.

I just did my taxes, and the bonds are pushing me into the 25% bracket, that's why I'm considering moving more into the IRA. I look at my entire portfolio in the aggregate.

Given Jonas has $2.5 mil I expect he'll need to consider taxes. That's why it may make sense to use Munis (expecially state specific) and stock index funds instead of a balanced fund.

Jonas, if you have a significant % of assets in company stock that is your biggest risk. I've seen many people who could have retired on co. stock but never diversified and were burned by corrections in the late 80s and 90s. (These were good companies, not enrons and worldcoms.)

 

[brewer12345]

Real estate?  The last "specific" figure i recall reading is from Gordon Williamson's "low risk investing"... or maybe it was another site or book.   I recall 6.4% being quoted a few years ago.  I imagine the strong runup of late in real estate over the past 5 years maybe could have pushed that "century" percentage to over 7%.

"Real Estate" is a generic term encompassing so many things; mortgage investment, property management, real estate development, REITs, etc.  Sure there are those that have personally made far greater than 12% in "real estate".  Then again, there are those that bought 10K worth of Dell in 1990 and sold it in 1999... my point being obvious.

I agree, there probably isnt some very accurate average real estate returns over the past century as there is with a market index.  But i'm feel confident real estate as a long term investment focus will continue to underperform stocks over a very long term.

Sorry, not good enough. "I am confident", "I seem to remember" etc. simply do not cut it. In God we trust, all others show data.

I'm not arguing that everyone should run out and buy real estate. However, I don't think we can glibly say that stocks have been better historically with any kind of confidence, especially when one takes into consideration that leverage and tax benefits make up a lot of the return in most RE investments, and that is hard to see by just observing RE prices (which we can't).

 

[farmerEd]

>>Then again, there are those that bought 10K worth of Dell in 1990 and sold it in 1999

I started my own IT consulting business in late 1991. The first thing I bought was a very high-end Dell computer...I think it cost around $8000 at the time.

12 years later I was able to retire at 37 after putting in years and years of 60-70-80 hour weeks....I would have been better off had I just taken that $8000 and bought stock in Dell instead of the machine and sat around for the next decade!

 

[MJ]

I would have been better off had I just taken that $8000 and bought stock in Dell instead of the machine and sat around for the next decade!

Ah, if only you had bought that $3.99 (plus tax) Nasdaq crystal ball 12 years ago.