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  1. #1
    Join Date
    Sep 2007
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    How does your long term savings look?

    I've made a concerted effort the last few years to save money for retirement. I'm not that old but, I went to school for 6 years, maintained my student debt through summer jobs and then paid it off within 2 years through my current job, so I don't really carry that burden. Housing is too expensive and I like having the flexibility to be able to move for work, so I haven't gone down the path of buying a house and having all of that. My vehicle payment could be paid off now, but I'm trying to build up some credit. But, that being said, I missed probably 10 years of saving for retirement because of obtaining my education, not having a great jobs before that, and just overly being young and not responsible, so I feel like I'm still behind the gun with it.

    One thing that is quite shocking, though, is how many people I know and meet that don't have any savings. Nothing, and alot of them are older than me, usually with families.

    So I'm curious, how does your long term savings look and if there is any advice for some of us to learn from? Keep in mind, everyone's situations are different, some of us are from different countries, and the context of different time, economic periods are relevant. Discuss.


    The Lost Boys of PSD

  2. #2
    Join Date
    Jul 2010
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    57,254
    Nothing separates wealth more in this country than home ownership. I would go aggressively down that path and remove rent as soon as you can realistically. Paying off a home after 30 years is an important asset to have (ideally faster if you can).

    Me, I'm self-employed. I don't really save any money (other than some mutual funds), I take any savings and continuously invest in my two companies. One is a wealth builder (real estate) and the other is an income producer (fitness clubs). I'd like to get a third business that is more of a combination at some point, likely a franchise that is also fairly risk adverse.

    My long term savings is sitting in the real estate business, where I have a buy and hold strategy on rental properties.

    Be proud that you've been aggressive with debt. Now take that same attitude and effort and put it toward saving up for a down payment on a house or a mult-family for you to live in. Make sure your credit is at least 650. And if you can, maybe take a portion and invest it into mutual funds of some kind.

  3. #3
    Join Date
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    Quote Originally Posted by Jeffy25 View Post
    Nothing separates wealth more in this country than home ownership. I would go aggressively down that path and remove rent as soon as you can realistically. Paying off a home after 30 years is an important asset to have (ideally faster if you can).

    Me, I'm self-employed. I don't really save any money (other than some mutual funds), I take any savings and continuously invest in my two companies. One is a wealth builder (real estate) and the other is an income producer (fitness clubs). I'd like to get a third business that is more of a combination at some point, likely a franchise that is also fairly risk adverse.

    My long term savings is sitting in the real estate business, where I have a buy and hold strategy on rental properties.

    Be proud that you've been aggressive with debt. Now take that same attitude and effort and put it toward saving up for a down payment on a house or a mult-family for you to live in. Make sure your credit is at least 650. And if you can, maybe take a portion and invest it into mutual funds of some kind.
    The problem is where I live is that housing is kind of a tough market because the oil industry crashed and has no forecast of going back up. So while buying low is attractive, I really don't see a time where it will go back up and I fear being saddled with real estate that is stagnated. I've definitely thought about it though.

    Good advice though Jeffy. How would you approach a bad housing market?


    The Lost Boys of PSD

  4. #4
    Join Date
    Jul 2010
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    57,254
    Quote Originally Posted by statquo View Post
    The problem is where I live is that housing is kind of a tough market because the oil industry crashed and has no forecast of going back up. So while buying low is attractive, I really don't see a time where it will go back up and I fear being saddled with real estate that is stagnated. I've definitely thought about it though.

    Good advice though Jeffy. How would you approach a bad housing market?
    I presume you are obligated to be in that market (i.e. your job is there, thus you have to live nearby)?
    Then I would find the one area in the market you feel growth has potential, and then buy as low as possible in that neighborhood.

    There are a lot of trends that you can monitor to determine it. But the good thing about a bottom market is you won't likely lose much, but it might be long for you to ever be able to sell. But if you can buy something for close to your monthly rent, you aren't really hurting yourself, and you can gain equity in the property as you pay down the loan instead of just passing rent to somebody else.

    I'm from a fairly low income, rural town. So I bought houses in the same area and they are remarkably stable. So when the market corrects after being so bullish, nothing changes to their values or their rents. But that also means there isn't any real growth unless that town has a huge change (which I don't see happening). But they are nice and conservative investments.

  5. #5
    Join Date
    Sep 2012
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    Quote Originally Posted by statquo View Post
    I've made a concerted effort the last few years to save money for retirement. I'm not that old but, I went to school for 6 years, maintained my student debt through summer jobs and then paid it off within 2 years through my current job, so I don't really carry that burden. Housing is too expensive and I like having the flexibility to be able to move for work, so I haven't gone down the path of buying a house and having all of that. My vehicle payment could be paid off now, but I'm trying to build up some credit. But, that being said, I missed probably 10 years of saving for retirement because of obtaining my education, not having a great jobs before that, and just overly being young and not responsible, so I feel like I'm still behind the gun with it.

    One thing that is quite shocking, though, is how many people I know and meet that don't have any savings. Nothing, and alot of them are older than me, usually with families.

    So I'm curious, how does your long term savings look and if there is any advice for some of us to learn from? Keep in mind, everyone's situations are different, some of us are from different countries, and the context of different time, economic periods are relevant. Discuss.
    Steady investment into mutual funds will grow, (dollar cost averaging) max your 401k and matching.

    Buying in a down market as Jeffy suggest is a smart option, you won't really lose, rent is 100% gone, if the market drops worse case you don't get all your rent back. But plan on staying for a few years so the selling buying costs don't eat up your growth. ( If you spend 30k in rent before you move and you sell your house at a 15k loss you are still up 15k in cash (assuming you rent and mortgage are about the same), the difference is you see the loss all at once instead of once a month)

    Now is a good time to buy, visit a lender and get pre qualified so you know what you can afford to buy, or what you need to do to be able to buy in the future. If you don't think you qualify ask them to do a soft credit check so it doesn't show as an inquiry.

    You can turn it into a rental if you move or sell it later. Generally a mortgage should not be more than 28% of your income. Do the math and see if it makes sense. Don't buy a mobile home.

    I will retire with a low 6 figure income plus whatever I get from my business after I leave, from my 401k and my brokerage accounts, What I withdraw will last past my death.
    "He's getting the best job in baseball."

    Bruce Bochy sent a clear message to whoever will be the Giants' next manager
    🙌
    https://bit.ly/2ndI9eG

  6. #6
    Join Date
    Jul 2010
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    57,254
    Quote Originally Posted by SfgiantsJD3 View Post
    Steady investment into mutual funds will grow, (dollar cost averaging) max your 401k and matching.
    Yes, for reference.

    My advisor says you should expect to double your money every 10 years in the stock market, and to double your money every 30 years in real estate.

    The difference for me, I like tangible brick and mortar investments. And you can borrow against the real estate.

    So if you have $100K saved.

    You can buy a $500K house and borrow $400K and remove your rent.

    If 5% interest over 30 years, after 10 years, you owe $324K
    If you put that $100K into the market, you should expect to have $200K under that rule.

    And after 20 years, you should expect to owe $185K on the house, and have $400K in the market.

    And after 30 years, you should owe $0 on the house, and it be worth $1M, and you have $800K in the market (assuming these rules)

    So your equity doesn't quite outpace the market, but you do eliminate your need for housing in the process, and the value of the home should increase.

    But again, this is all pretty rough, and obviously it's market dependent.

    But basically, the value of the real estate is that you can leverage the debt.

    Now is a good time to buy, visit a lender and get pre qualified so you know what you can afford to buy, or what you need to do to be able to buy in the future. If you don't think you qualify ask them to do a soft credit check so it doesn't show as an inquiry.
    Absolutely do this. Start shopping.

    Find out the income required, the credit required, the down payment required. Start looking at open houses, find out what it would take. Start your due diligence.

  7. #7
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    Sep 2012
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    Quote Originally Posted by Jeffy25 View Post
    Yes, for reference.

    My advisor says you should expect to double your money every 10 years in the stock market, and to double your money every 30 years in real estate.
    Sounds like he was using a simplification of the rule of 72, if you want to double your investment every 10 years 10/72 =.072 (7.2%) yield required.

    It is more a interest based calculation than an investment in equities calculation, equities can appreciate in value and pay dividends so if you reinvest the dividends it compounds the growth. If you are under 50 you probably should be focusing on growth more than income and as you near retirement move into equities that pay dividends and bonds.

    I am 68 and my brokerage accounts are 75% in equities, 20% bonds and 5% cash. My 401k is about 45/45/10. I also have cash accounts for anything that comes up and that's not counted as an investment.

    I plan to re-balance my risk /get out of the market between April and October of 2020 depending on what the pulse of the economy and election feels like.


    Quote Originally Posted by Jeffy25 View Post
    The difference for me, I like tangible brick and mortar investments. And you can borrow against the real estate.
    You can borrow against brokerage accounts and any other liquid accounts, you just don't get the advantage of depreciation or interest deduction if its a rental or second home unless you use the funds to acquire real estate in which case get a real estate loan where the security is other assets instead of the property.


    Quote Originally Posted by Jeffy25 View Post
    So if you have $100K saved.

    You can buy a $500K house and borrow $400K and remove your rent.

    If 5% interest over 30 years, after 10 years, you owe $324K
    If you put that $100K into the market, you should expect to have $200K under that rule.

    And after 20 years, you should expect to owe $185K on the house, and have $400K in the market.

    And after 30 years, you should owe $0 on the house, and it be worth $1M, and you have $800K in the market (assuming these rules)

    So your equity doesn't quite outpace the market, but you do eliminate your need for housing in the process, and the value of the home should increase.

    But again, this is all pretty rough, and obviously it's market dependent.

    But basically, the value of the real estate is that you can leverage the debt.
    There is also value in depreciation, tax deductions for mortgage interest and rental income is not subject to FICA or medicare tax.
    Overtime we need a broad base of assets. They all provide different benefits and risks.
    "He's getting the best job in baseball."

    Bruce Bochy sent a clear message to whoever will be the Giants' next manager
    🙌
    https://bit.ly/2ndI9eG

  8. #8
    Join Date
    Sep 2012
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    6,277
    Made a pretty big Giannis MVP bet so hoping that works out.
    POOP

  9. #9
    Join Date
    Jul 2008
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    Richmond, VA
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    I'd say my situation is rather interesting and wouldn't mind hearing other's thoughts on it.

    I don't have any liquid savings that I can dive into easily, but rather I have a good size of investments that where inheritance from my Grandfather, Grandmother, and Dad. The upside is they are HUGE. But the downside to all of this is most of the stocks that were setup in a way that's really hard for me to draw on it all that easily. I can borrow against it through my investment company, but I try not to do it. I do have a very small portion that is my personal investment part that I could cash out and use.

    But I have issues in the pat that if I start doing that, it's easy to fall in the trap to just pay debts off and buy things, then the next thing I know, there's little left and I have to pay huge penalties on it. So I've hit a spot where I try to live on what I make, and really use what I have invested as a complete "oh ****" savings.

  10. #10
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    Quote Originally Posted by warfelg View Post
    I'd say my situation is rather interesting and wouldn't mind hearing other's thoughts on it.

    I don't have any liquid savings that I can dive into easily, but rather I have a good size of investments that where inheritance from my Grandfather, Grandmother, and Dad. The upside is they are HUGE. But the downside to all of this is most of the stocks that were setup in a way that's really hard for me to draw on it all that easily. I can borrow against it through my investment company, but I try not to do it. I do have a very small portion that is my personal investment part that I could cash out and use.

    But I have issues in the pat that if I start doing that, it's easy to fall in the trap to just pay debts off and buy things, then the next thing I know, there's little left and I have to pay huge penalties on it. So I've hit a spot where I try to live on what I make, and really use what I have invested as a complete "oh ****" savings.
    Is this held in trust until your 35 or 40? That is pretty common, otherwise I would be curious what type of investment that cleared probate are restricted (huge makes me assume it went through probate).
    "He's getting the best job in baseball."

    Bruce Bochy sent a clear message to whoever will be the Giants' next manager
    🙌
    https://bit.ly/2ndI9eG

  11. #11
    Join Date
    Jan 2020
    Posts
    2
    You did the right thing by planning the budget. Many people have made loans. And over time, they don't know how to deal with them. When faced with a pension, the situation is even more complicated

  12. #12
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    Quote Originally Posted by warfelg View Post
    I'd say my situation is rather interesting and wouldn't mind hearing other's thoughts on it.

    I don't have any liquid savings that I can dive into easily, but rather I have a good size of investments that where inheritance from my Grandfather, Grandmother, and Dad. The upside is they are HUGE. But the downside to all of this is most of the stocks that were setup in a way that's really hard for me to draw on it all that easily. I can borrow against it through my investment company, but I try not to do it. I do have a very small portion that is my personal investment part that I could cash out and use.

    But I have issues in the pat that if I start doing that, it's easy to fall in the trap to just pay debts off and buy things, then the next thing I know, there's little left and I have to pay huge penalties on it. So I've hit a spot where I try to live on what I make, and really use what I have invested as a complete "oh ****" savings.
    Is your money all invested in equities and not split in some percentages of cash /bonds/equities?
    Forgetting you don't have access to the shares, there should be some diversification and a least an annual review on direction
    "He's getting the best job in baseball."

    Bruce Bochy sent a clear message to whoever will be the Giants' next manager
    🙌
    https://bit.ly/2ndI9eG

  13. #13
    Join Date
    Aug 2004
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    A few years back I took a couple of IRAís.have been saving the max on my 401K plan and try to save at least 500 bucks a month.

    Hoping I can retire by age 60, only 15 years of work left for me.

  14. #14
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    Mar 2020
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    If you are looking for a profitable loan, then quick money is especially important for you, the offer of these guys quick money loan is attractive and interesting, because at the moment there are very few such offers.

  15. #15
    Join Date
    Dec 2008
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    Where the smog meets the shore
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    I started saving late. We took a debt free approach. Paid off every dime of debt before saving. It meant a few harsh years. No eating out (not even fast food), lots of rice and beans, no splurges, no bars, no movies, no cable, went down to one car, maybe one xmas present to each other capped at $20, etc. Totally worth it. Every dime went to college debt, car payments and some racked up credit debit from when we made very little and had to charge gas and food with empty bank accounts.

    Then only bought a car when ours were dead dead. Bought used and only with savings so it was all cash.

    Then without debt Saved saved saved and finally own a home. Some very good pay increases and bonuses along the way so it was easier than the typical worker I suppose.

    Anyway, been putting the max into a 401k for about 8 years now.

    Watching it over the last few weeks has been painful so I stopped. Last I looked it was a 25% loss on 401k, about the same in IRA.

    Buying zoom stock early in the crisis was about the only decent gain Iíve had.

    Not sure what to do at this point. Even gold has a confusing value in the market right now which is a really really bad sign.


    Sent from my iPhone using Tapatalk

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