Has Investing to Live Become Harder?

[rjohnla]

BTW, thanks everyone for input on this and another post. I will spend some time going over the replies. And I appreciate all the homework you have assigned me.....

Question, know of any investment clubs where people are subscribed to this site? Hear clubs do well, less you get 'group think', don't see much of that here.

I willy typo knots.

 

[W2R]

No problem living comfortably off my investments. Since that is what the majority of retirees here are doing, I too am a bit mystified.

 

[rjohnla]

That's what my parents and grandparents (depression era) did. Seems we can't now. Just read USG unfunded liabilities. Average net worth in US = $5k. We have to watch SS (read USG is thinking of 'means testing' for SS [rant/excuse me: it's our money....] and increasing retirement age to I think 72), taxes on those deferred 401k's, etc. Haves pay for have not's?

Just one idea, if you will, have some cash outside US. IRS does not like it, they'll send you lots of forms. But that is real international diversification. You may be subject to US jurisdiction, but the cash is subject to the jurisdiction of the country it's in - Switzerland, Singapore, are good. Great liability protection with the Swiss. Gov. will not allow repatriation under duress. Has to go to Swiss courts.

 

[MichaelB]

No problem living comfortably off my investments. Since that is what the majority of retirees here are doing, I too am a bit mystified.

+1

 

[brewer12345]

That's what my parents and grandparents (depression era) did. Seems we can't now. Just read USG unfunded liabilities. Average net worth in US = $5k. We have to watch SS (read USG is thinking of 'means testing' for SS [rant/excuse me: it's our money....]and increasing retirement age to I think 72), taxes on those deferred 401k's, etc. Haves pay for have not's?

I have ammo, stored water and non-perishable food for those contingencies. All out of tinfoil, though.

 

[rjohnla]

Brewer, I'm with you, and have tin foil. You can have some.

 

[imoldernu]

Am not sure what I would do today.
We made our commitment many years ago, to CD's and later on IBond's...
A different time, a different world... In the 1980's and early 1990's the safe (FDIC) investments were paying from 5% to 11%... The structure of Ibonds is such that a base rate (early 2000's) was 2 to 3% with a return formula of as much as 7+%. The individual purchase limit was $30K/year per person...
At this point our hope is that the security of US Government Guaranty will protect us, and that the inflation index of IBonds will keep us fairly close in the event of rapid inflation. We are currently receiving about 5 1/2%... Nothing to get rich on, but we do sleep well at night.

As a poor cousin here, I couldn't and wouldn't give advice for the future. Longer term, with a 40 year horizon, I think I'd be at least partially in land. As my rich farmer friend says... they're not making much of it any more.

 

[nun]

We have to watch SS (read USG is thinking of 'means testing' for SS [rant/excuse me: it's our money....]and increasing retirement age to I think 72), taxes on those deferred 401k's, etc. Haves pay for have not's?

Hmm....at the risk of Porky since when was there an account at SSA with your name on it? And yes, SS is there for the "Haves to pay for the have nots", it's been expanded to cover most people who work since it's inception, but didn't start out that way. Also the low waged get a proportionally higher benefit from SS than the higher waged.

I'm diversified when it comes to SS too as I will qualify for both US and UK versions of it....in fact recent UK reforms mean that my payments will be higher under new legislation.

 

[aja8888]

Like my Japanese friend told me one time when he was a boy interned during WWII: "I just keep my head down and keep thinning the cabbage......."

 

[braumeister]

Brewer, I'm with you, and have tin foil. You can have some.

Time to get on board?
LME, Aluminum Is Seen Trading Steady $1760, Bullish Trend | Investing.com

We're living in this world; we have to adjust ourselves to it, not the other way around.

 

[rjohnla]

Nun, Have a SS card with name/account on it and access to my SSA account on-line. I think of it as my money.

 

[rjohnla]

You know I'm guessing most of us are boomers? We'll keep the right polls in place to get what is ours. We're a big block of votes. A Light at end of tunnel?

 

[calmloki]

Man proposes, God disposes. It is a real hoot reading my back of envelope income streams from years past. Loans pay off, people declare bankruptcy, Penfed drops their certificate rate. rentals become more or less profitable, credit cards start paying me. Uncle Mick has the answer quoting some sport captain. Agile mobile hostile:

Alonzo Smith "Jake" Gaither (April 11, 1903 – February 18, 1994) was the head football coach at Florida A&M University (FAMU) for 25 years, and amassed one of the best winning records of any college football coach.

 

[brewer12345]

You know I'm guessing most of us are boomers? We'll keep the right polls in place to get what is ours. We're a big block of votes. A Light at end of tunnel?

Not me. I am sure you buggers will hold the rest of us by the ankles and shake to make sure SS and medicare get paid for.

 

[nun]

Nun, Have a SS card with name/account on it and access to my SSA account on-line. I think of it as my money.

You have no account balance or control over your payments. He Government has your taxes and determines how much you get in SS, it's not a DC plan.

 

[imoldernu]

...about land... I really never looked at the actual value of my friend's cropland in Illinois...
He bought in the 1930's and 40's at from$200 to $500 per acre... and continued to add. He now has 2000+ acres... I just took a peek at this site, 2012 USDA government value for land and found that Illinois acreage rose by nearly 18% between 2011 and 2012 alone, to $6700/acre.
http://usda01.library.cornell.edu/usda/nass/AgriLandVa/2010s/2012/AgriLandVa-08-03-2012.pdf
Not bad for a guy who didn't graduate high school. BTW... also a WWII Congressional Medal of Honor recipient.

 

[LOL!]

I think it is much easier to invest [to live] than in the past. Much, much easier and much, much cheaper.

The newer index funds and ETFs make things easier and cheaper. It wasn't too long ago that one could NOT buy an index fund for foreign small-caps, could NOT buy an index fund for emerging markets small caps, could NOT buy an index fund for TIPS, could NOT buy an index fund for …. Well, you get the idea.

Online discount brokers now charge zero for trades and many give rebates. If one is paying any commissions, then they simply are not investing with their brains. The internet has levelled the rigged playing field. Even HFT shouldn't affect one at all.

Everyone now should know about behavioral finance avoiding those traps such as loss aversion, anchoring, etc.

One's brokers have to keep track of cost basis, too, and one can download tax info into TurboTax.

Need a chart? In the old days, one might have to draw it by hand. Nowadays, it's a mouse click.

One doesn't even need to use a spreadsheet either since one's broker has all the presentation one needs. Tools like Fidelity GPS, Morningstar Portfolio X-ray, and Vanguard Portfolio Watch have got you all covered.

And one more good thing: Lots and lots of financial porn keeps the suckers in the game and you can take advantage of them.

 

[rjohnla]

You are right. (I and I guess others) will really come down with a 'throw the bums out' mentality. You know they pass problems to next generation, anything to keep seat.

But it is my money, they took it out of my paycheck, I really want it back.

Now if possible, I'll opt out of SS.

 

[rjohnla]

Brewer, No, has to be much more smooth, we'll send a bill. Seriously, I think if over 55 you'll be grandfathered.

 

[brewer12345]

Brewer, No, has to be much more smooth, we'll send a bill. Seriously, I think if over 55 you'll be grandfathered.

Payroll taxes are a problem for other people, I am retired. I am also under 55 by a wide margin, so I expect to get the shaft on SS.

 

[rjohnla]

LOL - you are right if the person knows where to get AND what it means. Unfortunately, many people usually through no fault of their own, don't have a clue about finances. The last person I reported to lost 95% of his 401k. Can you believe it, they called him and said he was the only investor left in the fund. Wiped out a very nice person's retirement. He just invested in emerging tech, as US he thought is good at that.

add: Personal finance should be mandatory in HS & College, that might help, but a lot of people are either afraid of it or don't like it, so back to 40's broker days for them.

 

[rjohnla]

Wow Brewer your avatar? suggests otherwise. Thought you were older than me - 57. Well keep your fingers crossed they won't get around to it until 2018 mid-term elections, and the age increase will be for much younger. You didn't retire at 20 did you? Well if do did, congrats.

 

[brewer12345]

Wow Brewer your avatar? suggests otherwise. Thought you were older than me - 57. Well keep your fingers crossed they won't get around to it until 2018 mid-term elections, and the age increase will be for much younger. You didn't retire at 20 did you? Well if do did, congrats.

My avatar is the Good Soldier Svejk, a classic character from Czech literature: The Good Soldier Švejk - Wikipedia, the free encyclopedia He is the classic "little man in the machine" figure who manages to thumb his nose at his superiors and get away with it. My hero.

I retired at 40 earlier this year. So far, so good.

 

[rjohnla]

Brewer, thanks for the explanation. I just thought you liked beer? 40 WAY TO GO - literally.

 

[clifp]

Some ER members provided some good advice in another thread, I think it's about done now, see: Hi, New & wanting to retire early

Wanted to switch topics: Has Investing Become Harder?

My Background: BA, Finance, MBA, Int'l Fin. There's a catch though, I graduated in 1986. I've followed it finance, economics, etc., ever since. But don't work in the financial industry.

Question please: Can ER's get a decent return at low risk somewhere? Something more than 1% saving account. How about buy the markets with EFT's? Annuities while appealing have custodial risk which concerns me.

Sometime around 2012, several of us (ages 50s to 70s) came to conclusion that this was the most challenging investment environment of our lifes. The combination of record low interest rates, a fairly value stock market, and the threat of having to reverse the huge amount of money injected in the system by central banks made it very difficult.

More than year later, not much has changed stocks have gone from fairly valued to over valued, while the 1% increase in interest rates have made bonds go from crazily overvalued to merely overvalued. The Fed has tapered but is still injecting money into the system.

Truth be told there has never been a low risk, high reward investment ever. On the other hand I do remember most times in my life that something (growth stocks, value stocks, international stocks, junk bond, TIPS, real estate etc.) looked attractive.