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At what age do you hope to retire/Personal Finance and Investing Thread

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Online  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 14, 2018, 11:48 AM Post
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nodakfan17 said:
Next, they’ll try to sell you life insurance you probably don’t need.


lol

That is 100% true!


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 14, 2018, 11:59 AM Post
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turborickey said:
nodakfan17 said:
Next, they’ll try to sell you life insurance you probably don’t need.


lol

That is 100% true!

I’m actually a big fan of life insurance, including some of the whole and UL products that many bloggers warn against (but I think they’re oversold).

I worked for a large life insurance company earlier in my career and the commission paid to the agents for selling a policy was usually equivalent to the the first year’s premium. They might only make $100 on a standard term policy, but could make $1000 for a whole life policy with the same coverage amount. I’m not suggesting whole life insurance is bad. I’m just saying the incentive structure is too out of whack to trust the recommendation of most advisors.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 15, 2018, 1:55 PM Post
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He DID mention life insurance at the end of our meeting! Lol

I have a small amount through my employer (3x salary). Not sure what makes sense beyond that.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 15, 2018, 1:57 PM Post
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MrTPlush said:
What Snapper said. Don't overthink simple retirement investing. I agree that once you get closer some type of low fee advising isn't a bad idea, but you seem to have a target date fund which should change as you get closer itself. (which personally I don't like target fund accounts 20+ years from retirement...but that is just me)


What is your concern with a target fund? I think I’m currently ~50-52% domestic stocks, 30-32% foreign stocks, and the rest divided up amongst bonds and whatever else (you’d probably know better than I). You thinking 90+% stocks this far out?


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 7:56 AM Post
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I don't know what his issues are, but they are by nature fairly conservative, which is largely pointless for someone in their 20s. I personally don't think bonds are worth involved with until 35. I would rather take the risk with equities in my youth. My 401k was 100% equities until 35, I had a small amount of bonds in my Roth.


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Online  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 8:39 AM Post
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PlayerHader said:
MrTPlush said:
What Snapper said. Don't overthink simple retirement investing. I agree that once you get closer some type of low fee advising isn't a bad idea, but you seem to have a target date fund which should change as you get closer itself. (which personally I don't like target fund accounts 20+ years from retirement...but that is just me)


What is your concern with a target fund? I think I’m currently ~50-52% domestic stocks, 30-32% foreign stocks, and the rest divided up amongst bonds and whatever else (you’d probably know better than I). You thinking 90+% stocks this far out?


As Old Snapper said I think they are pretty conservative. It wants a fully diversified portfolio with huge chunks in low return areas decades out. Personally I don't like that as historically it costs you about 2% annual return if you instead had it in domestic stocks.

I also have a hard time getting behind international stocks in early years too. Historically the index that follows international stock markets has been comparable to government bonds. 2.23% in the last 10 years for the MSCI EAFE.

Of course you aren't exactly in the early years and the 20 years to go area is where many think people should start to diversify and consider the risk they are taking. If you are okay with risk 90/10 is a popular pick 20+ years out.

If you show interest in your retirement account etc. I think you can do better outside of a target date fund if you do some basic research.


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Online  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 10:29 AM Post
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As someone who is a little older than many of you (I'm 54), the one thing I will advise is to start saving as soon as you can. As soon as you enter the workforce, just set up a way to sock away a percentage of your income. Do it so it comes right out of your paycheck so you never see the money.

Due to circumstances, my wife and I didn't start saving until later (around 30), and it forced us to do catchup on investing later in life. A little more discipline earlier would have made a big difference. Luckily, we do well now and I am happy with where we are heading in our saving and investing.

But start saving early. It really helps.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 10:47 AM Post
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PlayerHader said:
He DID mention life insurance at the end of our meeting! Lol

I have a small amount through my employer (3x salary). Not sure what makes sense beyond that.


Really is personal preference. Some people want enough to continue their income for x amount of years (until retirement, or until kids are done with school, etc). Some want it to pay off all debts, including the house, so the family is left with a clean slate. Some just want the cost of the funeral covered. Start with what you'd like your insurance to accomplish and then an insurance agent can help you figure out what amount would cover that.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 11:31 AM Post
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I think an adviser can be useful in regards to tax and estate planning. But I would never get one for investment advice particularly one that received a commission for any trades you make.

"Dustin Pedroia doesn't have the strength or bat speed to hit major-league pitching consistently, and he has no power......He probably has a future as a backup infielder if he can stop rolling over to third base and shortstop." Keith Law, 2006


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 11:56 AM Post
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There’s nothing wrong with target date funds.

If there’s a knock on them, it’s that they come with an extra layer of fees (since most are a fund of funds) and they’re really ‘one size fits most’ not ‘one size fits all.’ But if you’re contributing to a target date fund at a healthy clip, you’re probably setting yourself up for a successful retirement.

I personally don’t use them because they aren’t aggressive enough for my risk tolerance. I already have a fixed income component in the form of a small pension and cash value life insurance, so I prefer my 401(k) to be 100% equities.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 12:03 PM Post
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homer said:
I think an adviser can be useful in regards to tax and estate planning. But I would never get one for investment advice particularly one that received a commission for any trades you make.

My thoughts exactly.

Save as much as you can using low-cost equity index mutual funds then pay to consult a JD / CPA around age 50 to discuss a distribution strategy. This is appropriate for most people.

Wallus - just curious, do you consult an accountant or attorney when managing your rental income?


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 12:27 PM Post
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Another knock on Target Date Funds, is that you lower your risk more and more as you get close to retirement. But remember, you're hoping you will then be alive for 20-30 years. So you still probably can handle some equity risk to increase your potential for return over those years, and the last 10 years of retirement. Of course not everyone is the same when it comes to risk tolerance, so make sure you do what's best for you.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 2:47 PM Post
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I'm going to look into this. I'll have to look closer at what Fidelity has to offer. I have a pension, my wife has a Roth that she is funding quite well. I think I can be a bit riskier...

Just confirmed...Right now I'm 51% domestic, 35% foreign stocks, 7% bonds, 7% short term (not sure what this means).

Anyone have more insight on domestic vs foreign stocks?


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 2:54 PM Post
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Location: Madison, WI
Just wanted to say thanks to everyone who's shared in here, good conversation. I don't have much to contribute as I'm in the fairly early stages of it all, but good insight from many to read along on and think about.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 2:57 PM Post
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tmwiese55 said:
Just wanted to say thanks to everyone who's shared in here, good conversation. I don't have much to contribute as I'm in the fairly early stages of it all, but good insight from many to read along on and think about.


Same. Thanks to everyone who has contributed, especially those offering insight to the string of questions I have posted recently.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 17, 2018, 3:43 PM Post
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PlayerHader said:
I'm going to look into this. I'll have to look closer at what Fidelity has to offer. I have a pension, my wife has a Roth that she is funding quite well. I think I can be a bit riskier...

Just confirmed...Right now I'm 51% domestic, 35% foreign stocks, 7% bonds, 7% short term (not sure what this means).

Anyone have more insight on domestic vs foreign stocks?


Without seeing it, I would guess "short term" refers to short term bonds, the other 7% bonds would be intermediate/ long term bonds.

35% foreign stock seems like a lot. Just MY own personal preference, I don't have any foreign stock anymore. Not implying it's wrong to have any. Years ago, it made more sense to diversify that way. These days, all the world markets more or less work in tandem. It's rare that the US markets are down and other major world markets are up.

So I figure it's enough work to try to stay on top of individual domestic stocks and markets, why invest in something else. I differentiate between income stocks and growth stocks, way more important that domestic vs foreign. But again, that's just my opinion. For example, the difference between a domestic growth stock and an income stock is far more important to understand and balance. If I had 65% domestic growth and 35% foreign growth, I don't consider that diversified.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 18, 2018, 8:10 AM Post
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Should I just transfer to a fund indexed to the S&P 500? I'm not looking to actively move this thing around a ton. In a few years I might remove a little bit of risk, but I'm still relatively early int he process (even at 33 years old).


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 18, 2018, 8:35 AM Post
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That's what I would do. Just buy S&P 500 tracking funds. The target date funds are fine, in fact I would recommend them to someone just getting their feet wet. If and when you learn more about things, you can simply look at what those funds are comprised of and buy them yourself at a lower fee. The knock is that they won't automatically rebalance to the allocation you want, but you can do that yourself.

Vanguard made this easier to do recently by lowering the minimums to $3k for their admiral shares (it was $10k per fund). At Vanguard you can also see what funds are in the target date funds. I'm not sure how it works at Fidelity, but that is another high quality institution with your best interests in mind.

Using a target date vs. not isn't going to cripple your retirement. But for a portfolio building for 30 years the fee associated with it can be a difference of several tens of thousands. Not something that likely matter materially, but you can see why someone active in finance would not want to just give away $30k.


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 18, 2018, 9:00 AM Post
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PlayerHader said:
Should I just transfer to a fund indexed to the S&P 500? I'm not looking to actively move this thing around a ton. In a few years I might remove a little bit of risk, but I'm still relatively early int he process (even at 33 years old).


I'm 46 and my 401K is 100% in S&P index funds. I'm actually looking to move my Roth into an equal weighted index fund...waiting for money to transfer right now.

"Dustin Pedroia doesn't have the strength or bat speed to hit major-league pitching consistently, and he has no power......He probably has a future as a backup infielder if he can stop rolling over to third base and shortstop." Keith Law, 2006


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Offline  Re: At what age do you hope to retire/Personal Finance and Investing Thread
Posted: December 18, 2018, 9:56 AM Post
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I would suggest looking into Charles Schwab. I've used them for over 30 years now, and customer service has been outstanding. I also like the fact they have physical offices to visit, which I rarely need but nice to have. I even have our checking account there, mainly so I can log on and see everything in one place. But another nice perk is they refund all ATM fees no matter what the ATM network is. (I remember once I needed $20 and ATM fee was $8.50.)

As others have said, most of my money is in S&P 500 tracking funds. Schwab has their own funds now, as they all do, fees are extremely low on their own ETFs.


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