I appreciate the advice and the caution urged on both your parts, although I find the sarcasm unsolicited, and frankly, a bit offensive. It seems a bit out of character based on my observations of your other postings and I'm not sure where it comes from. It's a bit disappointing.
I believe in this case the scenario I'm describing is one of those, "you'd have to be there" type deals. I have to re-iterate: I am not naieve. I'm well aware of the risks inherent in deals which are too good to be true. By no means can I ever call my investment 0 risk, but it's not nearly as fragile as people would like to think it. Yes, we can point out numerous examples of companies which offered investors amazing returns that folded without notice.
I don't plan to put all my eggs in this basket long-term. Right now it comprises more than half of my current assets (yes I realize a vehicle is not normally an asset, however I've considered liquidating the vehicle and downsizing should I look into purchasing property in the next 12 months).
Thanks again for the advice, and no hard feelings. I enjoy reading your posts, I just think your approach was a bit unfair.
I think 14,000+ posts gives you plenty of room to draw any conclusions you want, as many others have done before. And if you can't tolerate a little [-]criticism[/-] harsh sunlight on your faith in that investment then perhaps you're going to have to think about your objectivity. What were you expecting a bunch of Internet strangers to do-- roll over and cheer for your winning the genetic lottery? But anyway, now that I have your attention...
We have a lot of posters who jump into a discussion of their investments without adequately assessing their tolerance for risk (usually volatility risk but in your case an extremely healthy dose of single-"stock"/investment risk) and without deciding on an asset allocation. You haven't decided what you're going to depend on for your ER and you haven't decided how you're going to get there-- other than making big bets on an investment that, as far as we can tell from the details provided, is extremely speculative. Your ER portfolio lacks an AA plan and by gosh it certainly lacks diversification. You've had no trouble projecting your ER plans at returns of +12% APY. What happens to your ER plans if the returns fall to +1%? What about -100%? Are you willing to live with those consequences, or are you going to continue to explain to a pack of battle-scarred skeptics why that couldn't possibly happen because this time it's really really different?
I speak with some experience. Spouse and I recently let Berkshire Hathaway grow to 36% of our ER portfolio and over half of our kid's college portfolio. It had been that way for three or four years. Finally one of the board's other long-term posters grabbed me by the ears and said "Are you nuts? Do you have enough money yet, and are you willing to risk the loss?" At that point I realized that we might be just a tad overweighted and we spent most of February cutting back. The college fund is now in short-term CDs and our Berkshire allocation is back down to 23%. I owe that guy a [-]set of plane tickets to Hawaii and free surfing lessons[/-] huge debt of gratitude for refocusing my attention.
I've spent the last year learning about angel investing. I've seen dozens of presentations that were screened from hundreds of candidates, and most of the surviving pitches still made the audience want to run away fast. The one or two worth additional research turned out to have significant failure issues. Nationally, one out of every three startups goes bankrupt even after all the smart guys have done their due diligence and put their faith in management. That's why the smart guys diversify among 10 or 15 different companies-- so that they're not wiped out by events beyond the control of management, no matter how trustworthy. You might want to suspend the "Yeah, buts" for a while, set aside your family faith for a few weeks, and do the due diligence. Ask yourself if a steely-eyed angel investor or VC would want to put $100K-$5M in your family's investment plan. And even if you do have the next Berkshire Hathaway, anything over a 15% asset allocation is asking for heartache.
If you've really been paying attention to the board's posters then you'd learn from our mistakes. There are several financial advisors here whose clients start out by saying "Holy $%&^, I have 90% of my net worth in the company stock, help!!" The advisors suggest diversifying and then they have to listen to hours of carefully worded explanations on why that just won't do. Usually in that situation the diversification issue inevitably resolves itself...
At least two other ERs on this board continued to rebalance/diversify their ER portfolios as their company stock (or options or other investments) screamed up in value. They lost millions by selling early. They were widely recognized as pathetic loser idiots-- until those stocks lost up to 80% of their value and wiped out the other paper millionaires. Today those early sellers are rich ER'd pathetic loser idiots.
Some of the ERs on this board, me among them, have been investors for longer than you've been alive. You could learn a lot from them if you suspend the rebuttals and work through the thought process. You went to the trouble of posting it, you had your attention called to some issues, and it's up to you to decide whether you're wasting your time or not. The quality of your assessment is not going to affect our lifestyles one way or the other.
Anyhow, now that I've gotten that out of the way - at the 28% tax bracket would I find larger 401k contributions to be more beneficial than a Roth IRA? I'd have to calculate just how much to invest into the 401k to drop down to the 25% bracket, but I think it'd be a pretty considerable amount.
Conventional wisdom is that a 401(k) is worth investing up to the company match, and then only further if the funds have low expenses. After the match you'd max out the IRAs (Roth or conventional, whatever you qualify for). After that, a low-cost 401(k) might be worth additional pre-tax money... or as you've pointed out, savings might be better off in a low-cost index fund.
As for the car loan... eh... we buy 'em used with cash and drive 'em into the ground. Seems to be a lot less hassle. It's hard to grab hold of "positive equity" from a depreciating hunk of metal & plastic.