Retirement - Managing your money

[Captain Graham]

Originally Posted by Lucky Luke 1

Oct 2023 hasn't happened yet.

LOL - Well some say I am ahead of my time.
Good catch below is the fix

FYI Some information about the S&P 500

High was about 4766 in late dec 2021
Recent low was about 3583 in early Oct 2022
Today is about 4189 on May 22 2023

So the market dropped -1183 points in 10 months
But is has gained back + 577 points or about 1/2 in 8 months.

It seems like a very normal bear market.

[Captain Graham]

Originally Posted by s/v Jedi

Investing in stock isn’t difficult: take money you don’t need and buy some trackers like Nasdaq100, S&P500 etc. and that’s it, don’t touch it when you don’t know what you’re doing.

For a little more action, force yourself to sell some when it’s high (sell everything over a certain amount of value, i.e. if the position is $53k sell $3k worth) and buy when it’s low ($44k buy $6k worth).
Looking back, this mostly is for feeling good because the actual extra performance is little. Buy and hold is easy.

I don’t think a CD is good. What if fiat currency finally gives up the ghost after all the printing of money? What if civil unrest creates crazy inflation? You see it evaporate with your hands tied. I want to be able to move it, buy, sell etc.

Real real estate is good, especially if you get an income out of it. AirBnB, get someone to run it.

This is good advice when you are working and adding to you retirement savings account.

Do you have any advice for when you retire and are withdrawing money from your retirement account and protecting yourself from a 30% bear market.

So far we have talked about
1. The bucket strategy
2. The 4 % rule
3. Building a larger nest egg 30% larger
4. Investing in dividend stocks and spending only the dividends.
5. Investing in fixed income like t-bonds, cds etc.
6. Investing in rental property

All of these have pros and cons.

[Captain Graham]

The way I see when you invest in rental property you can do the following
1. Pay cash but that would lock up a large amount of your retirement funds
2. Take out a mortgage but that would put you in debt and I do not want to be in debt while I am retired not to mention the payments will eat into your profits.

In general I also do not like investing in rental property because of the headaches involved in being a landlord.
Renters who damage the place, do not pay on time, roof needing to be fixed etc.
Yes I know you can hire someone to take care of these things but if you have to pay people to manage your rental, pay a bank for the loan how much money is left.

So for me I will not be investing in rental property.

[OldManMirage]

I am a fan of dividend funds. My goal - as much as possible - is to have more dividends than I need. Or to put it another way - to spend less than what it generates. Bad times, high inflation are obstacles of course. But all you can do is all you can do.

Hope for the best, plan for the worst and live as simply as you can.

[danstanford]

Originally Posted by OldManMirage

I am a fan of dividend funds. My goal - as much as possible - is to have more dividends than I need. Or to put it another way - to spend less than what it generates. Bad times, high inflation are obstacles of course. But all you can do is all you can do.

Hope for the best, plan for the worst and live as simply as you can.

I have a Buddy who strongly agrees with you and who has the majority of his portfolio in stocks delivering dividends and from these he provides his living. I did some study and learned that the price of a stock drops by the dividend amount as soon as it is issued based on the fact that the company is worth that much less.

Is this a concern or does the stock price rebound quickly after the drop?

Dan

[Captain Graham]

Originally Posted by danstanford

I have a Buddy who strongly agrees with you and who has the majority of his portfolio in stocks delivering dividends and from these he provides his living. I did some study and learned that the price of a stock drops by the dividend amount as soon as it is issued based on the fact that the company is worth that much less.

Is this a concern or does the stock price rebound quickly after the drop?

Dan

Post # 97 has 2 videos explaining how dividends stocks work

In general a dividend fund like SCHD is a value fund because it invests in value stocks with good dividends.
Growth funds are looking for high growth (stock price) and does not focus on dividends.

In the long run growth funds will out perform value or dividend funds, but growth funds have larger swings both up and down.

So if you get spooked when we are in a bear market maybe a fund like SCHD is for you, but if you don't get spooked then investing in growth funds might be best.

To answer your question does the stock price rebound after a dividend it depends if you are in a bull of bear market.

[MicHughV]

Here is the bottom line.

Successful smart investing requires a substantial amount of time, due diligence, research and daily monitoring.

While you can retain a personal financial planner, broker, etc, they will not do near as good a job as you will as it's not their money on the line, and you'll be charged a fee for their time, regardless of whether they make money for you or not.

It takes time and effort to learn the ropes so to speak and odds are you will take some losses during your learning curve. Eventually though, you'll sort it all out.

Making 10-15% annual return on your investments is pretty darn good going and is a realistic and obtainable target. Much more, is throwing the dice.

You'll hear stories about how some or other person made millions, etc, but take this with a grain of salt.

Here is my # 1 tip for any prospective investor, which is...get out of debt first !!!
No mortgages, no car payments, and lordy, no credit card payments....nothing....zilch....zero.

If you have debt of any kind, this needs to be a #1 priority. Whatever it takes, do it !!

Learn to be a cash buyer. Don't have the dough...don't buy it...simple !!!

Nothing wrong with using a credit card, with this one proviso, pay it off every month.
A variety of " reminders" are available so that you will not forget this monthly chore.

Once out of debt, you can start looking for investment opportunities.

[Captain Graham]

Originally Posted by MicHughV

Here is the bottom line.

Successful smart investing requires a substantial amount of time, due diligence, research and daily monitoring.

While you can retain a personal financial planner, broker, etc, they will not do near as good a job as you will as it's not their money on the line, and you'll be charged a fee for their time, regardless of whether they make money for you or not.

It takes time and effort to learn the ropes so to speak and odds are you will take some losses during your learning curve. Eventually though, you'll sort it all out.

Making 10-15% annual return on your investments is pretty darn good going and is a realistic and obtainable target. Much more, is throwing the dice.

You'll hear stories about how some or other person made millions, etc, but take this with a grain of salt.

Here is my # 1 tip for any prospective investor, which is...get out of debt first !!!
No mortgages, no car payments, and lordy, no credit card payments....nothing....zilch....zero.

If you have debt of any kind, this needs to be a #1 priority. Whatever it takes, do it !!

Learn to be a cash buyer. Don't have the dough...don't buy it...simple !!!

Nothing wrong with using a credit card, with this one proviso, pay it off every month.
A variety of " reminders" are available so that you will not forget this monthly chore.

Once out of debt, you can start looking for investment opportunities.

This is good advice when you are working and adding to you retirement savings account.

Do you have any advice for when you retire and are withdrawing money from your retirement account and protecting yourself from a 30% bear market.

So far we have talked about
1. The bucket strategy
2. The 4 % rule
3. Building a larger nest egg 30% larger
4. Investing in dividend stocks and spending only the dividends.
5. Investing in fixed income like t-bonds, cds etc.
6. Investing in rental property

All of these have pros and cons.

[Lucky Luke 1]

Originally Posted by Captain Graham

The way I see when you invest in rental property you can do the following
1. Pay cash but that would lock up a large amount of your retirement funds
2. Take out a mortgage but that would put you in debt and I do not want to be in debt while I am retired not to mention the payments will eat into your profits.

In general I also do not like investing in rental property because of the headaches involved in being a landlord.
Renters who damage the place, do not pay on time, roof needing to be fixed etc.
Yes I know you can hire someone to take care of these things but if you have to pay people to manage your rental, pay a bank for the loan how much money is left.

So for me I will not be investing in rental property.

I think it might depend also on the country you reside in and the tax implications. I'm in Australia.
I was a real estate investor with two rental properties and my PPR (principal place of residence). After selling the investment properties i then found myself as a Real estate agent and property manager.
Real estate has some huge plus's and most wealthy investors hold RE and Stocks.
Real estate doubles every 7 to 10 years historically so has a return of over 10%.
Rents generally move with inflation so the yearly rental return trends upwards.
Mortgage repayments (if any), management fees, repairs, insurances etc are all tax deductible. The property can also be deprecated. So the tax advantages can be huge. Also cities and suburbs spread out over time and they are not making anymore land so RE is a "safe" commodity. Often land can be subdivided at a later date for extra return.
RE is a real and tangible asset that you can see and touch.

RE has a lot of positives.

[Lucky Luke 1]

I'd like to share my current plans.

I'm 53.
I work part time and have done since i was about 40 when i semi retired. = I don't earn very much per week and work for myself.
Have approx. 110k in an industry Super fund. (Its like a mutual fund that all working Australians have) which returns approx. 8-9 % the last 20 years. I'm adding about 2-4k a year to that. I can access that at 60 years old if I need to but will probably wait till I'm 65-67 so the balance of that should be 200-250'ish k.
I have a home which is worth about 800K which i owe 70K on.
I have 30k in cash savings earning about 4% which will probably get spent on a boat in the next year...
No other loans apart from the mortgage as of next month when the wife's car is paid off. No credit card debt.

Plan is to knock out the mortgage in the next 3 years. 2 would be better. Currently paying off 20k per year.
Sell the house when i own it or soon after and turn it into 2 units- One for us to live in and rent the other out for weekly income (approx. $350-$400 a week at current market values). Maybe even extend to a 3rd unit and have a small mortgage.


That's my current plan.

Social security/Pension (ie old person pension) kicks in at 67 so maybe look at tax implications closer to then and if i need to sell the investment unit/s and place in Superannuation to get a full pension if possible that can be topped up from withdrawing superannuation at 5-6%.

[TrentePieds]

Might add to what Lucky Luke sez in #129:

Good tenant management is a direct function of good tenant selection!

TP

[Lucky Luke 1]

Originally Posted by TrentePieds

Might add to what Lucky Luke sez in #129:

Good tenant management is a direct function of good tenant selection!

TP

Very true.
Also bad houses attract bad tenants. I did bond cleans for awhile and its amazing how the same home can attract bad tenants over and over again.

Tenants as a general rule don't do gardening- so don't have lush expansive gardens or expect them to maintain them.

[s/v Jedi]

Originally Posted by MicHughV

Here is the bottom line.

Successful smart investing requires a substantial amount of time, due diligence, research and daily monitoring.

While you can retain a personal financial planner, broker, etc, they will not do near as good a job as you will as it's not their money on the line, and you'll be charged a fee for their time, regardless of whether they make money for you or not.

It takes time and effort to learn the ropes so to speak and odds are you will take some losses during your learning curve. Eventually though, you'll sort it all out.

Making 10-15% annual return on your investments is pretty darn good going and is a realistic and obtainable target. Much more, is throwing the dice.

You'll hear stories about how some or other person made millions, etc, but take this with a grain of salt.

Here is my # 1 tip for any prospective investor, which is...get out of debt first !!!
No mortgages, no car payments, and lordy, no credit card payments....nothing....zilch....zero.

If you have debt of any kind, this needs to be a #1 priority. Whatever it takes, do it !!

Learn to be a cash buyer. Don't have the dough...don't buy it...simple !!!

Nothing wrong with using a credit card, with this one proviso, pay it off every month.
A variety of " reminders" are available so that you will not forget this monthly chore.

Once out of debt, you can start looking for investment opportunities.

Completely agree. I was not expecting people to suggest taking a mortgage to buy a property to rent out with the complaint that there’s not enough of the income left after the bank takes their share. That isn’t investing in rental income property, it is speculation with borrowed money.

The reason for such suggestions is that they do not have enough accumulated money to do this strategy. When you do have the funds, you put it in the property, where it’s supposedly safe from inflation and gains value, while you live from the rental income minus the property management cost.

[s/v Jedi]

Originally Posted by Captain Graham

This is good advice when you are working and adding to you retirement savings account.

Do you have any advice for when you retire and are withdrawing money from your retirement account and protecting yourself from a 30% bear market.

So far we have talked about
1. The bucket strategy
2. The 4 % rule
3. Building a larger nest egg 30% larger
4. Investing in dividend stocks and spending only the dividends.
5. Investing in fixed income like t-bonds, cds etc.
6. Investing in rental property

All of these have pros and cons.

You repeat this every time but I don’t think you read our comments correctly. I am retired and I am withdrawing money for the past 21 years.

To answer your question, a lot more info is required, like how much is your retirement account and how much debt is there etc.

Also, what is “protection from a 30% bear market”? You mean you want to profit from it?

[MicHughV]

Well, here is my situation.

I quit working a very long time ago. Never really worked all that much to begin with, and living on a boat for most of my life, I have learned to get by with very little.

Couldn't even afford to buy a boat back then, so had to build one.

In my early cruising years, if I had $10 in mah pocket, I considered myself rich. I earned a meagre living by fishing and diving.

During this time, I lucked out into a (for me) high paying project. I had no clue what to do with this unexpected windfall, but I was introduced to a guy who talked me into saving and investing what little I had.

It was good advice. My initial savings account was pitifully small, but over time, it grew. I added to it, steadfastly, over the months and years, small amounts here and there.

It took a lot of discipline. Shall I have another beer or should I put that $5 away. In that time, I also learned to start my own investment programs.

Today, with the internet, investing is relatively simple for anyone, if you take the time to study it.

So today, seeing as that I have no debt of any kind, my day to day expenses are relatively little. Being as that I don't commute to work, a tank of gas in my truck can last me a month, so really it is mostly food expenses and the odd item here and there.

My portfolio is quite diversified, but amongst my holdings I have several stocks I purchased for their dividend payout. Whether the stock price goes up or down is mostly irrelevant to me, as long as they spit out their quarterly dividend. There are quite a few options out there in this regard.

Some many years ago, I started a 529 plan for my daughter's college education. This has proved to be sufficient to see her thru' 4 years of college with some change left over.

For most retired people, health insurance is a big one. Here I will admit to some luck. My wife, 17 years my junior, currently works and has extremely good health insurance which covers us all.

Starting an investment program at an early age is certainly the smart thing to do, but few do. Starting later in life, requires more discipline and more money.

But it is surprising how much you can do with very little. I've had a blast. Travelled all over the globe, countless adventures, mishaps and everything in between. Have managed to do this all on very little.

I have friends that make a stupendous amount of money, they have all the toys, big house, fancy car, etc, but are up to their eyeballs in debt, and despite having all that income live no better than I do and are working like a slave to do it.

I've met many like minded people that also enjoy much with little.

It's a personal thing. What I do, may not suit others, etc, so one must look inward and define what is important to you.

But the key is really to start putting away some $$ every month into a suitable plan. $10 quickly grows to $100 which in turn grows to $1,000 and so on.