[TheCaptainPower]

The older I get, I am starting to think of the 401K as a horrible retirement vehicle.

I just don't understand how people are going to retire with just their 401K savings, I think its going to be hard unless you really bank it.

Let's say for example you retire with $200K (average balance is around $60K), what can you do with it?

1% CD? $200 a month?

Reits? 4-6 percent, with potential huge losses in principal (2008-2009)

I've been working for a decade now and I am ONLY up to around $85K. My company only offers expensive mutual funds instead of ETF's, and if they didn't match me 6%, I'd hardly care to contribute.

I'm considering when I retire buying a property outside of NYC in cash from my 401K, and living frugally.

What else can you do?

For my own private savings I am up to around $400 a month passive income. $100K in a CD, and $5K in lending club. And my job offers a small pension.

How is anyone going to retire?

I'm assuming if I live frugally I will be OK. I also want to stay in the U.S.

[iknowexactly]

This is more general than for the OP, who already is planning LT.

First of all forget doom n gloom unless you want to move to a shack in idaho (not that bad an option). sounds like you're planning long-term already so you don't have that virus.

I'm over 50 and have been hearing doom-and-gloom and "shtf" scenarios since the 1960's. And my father born in the teens of the 1900s said he'd been hearing the same thing forever as well.

Many of the smartest people in the world are trying to keep things running, it's hard to believe it, but some of them are even smarter than you and me. And yes, they know about currency inflation, they know about feminism, they know about Islamic maniacs and radical Israeli settlers. They fuck up bad every 100 years, and let a guy like Hitler loose, but then they were smart enough to liquidate him in a few years. Stalin took longer but he was mostly murdering his own people.

everything's always "really close to collapse, finally" especially when the dude is selling a book on how to avoid it.

it's all to sell media, even in WW2 (!) and the 60's when they were shooting down students in Kent State U in the USA if you could avoid getting killed in the wars you could make money.

I bet although ww2 was urgent enough to drag young men out of their lives, it wasn't urgent enough to stop landlords from collecting rent.

researching my dissertation i found people were renting land for crop growing 4000 years ago in egypt.
income property, unless the commies take over your country, is a good safe bet. but you have to SYSTEMATICALLY SAVE MONEY.

it took about 500 years I think to devalue the roman empire's currency. that's an excellent planning horizon for you since i doubt you'll live more than 100-200 years.

rich people in the 1930's did the same shit rich people do now-- save money, send their kids to good schools and go to the beach and laugh at the hysterical masses.

1) start early
2) be consistent

I had a 100k job, but by the time I got it i was 50, so I didn't have time to save enough.

living cheap while i worked there 4 years how ever, I saved 40k. some months i saved 4k to my 401

bottom line, I would put half my assets in a state college town (guaranteed tenants) rental properties,
and half in very safe stocks with a little gold .

Edit: El Mech's buy your retirement home now is also a great idea. when your income is low you won't be paying a landlord.

look up 'dividend aristocrats" , get ones with good margins and moats, and DRIP

http://www.standardandpoors.com/indices/...--p-us----

http://www.dripinvestor.com/investing-basics.asp

[scotian]

(05-18-2013 10:43 AM)TheCaptainPower Wrote:  

The older I get, I am starting to think of the 401K as a horrible retirement vehicle.

I just don't understand how people are going to retire with just their 401K savings, I think its going to be hard unless you really bank it.

Let's say for example you retire with $200K (average balance is around $60K), what can you do with it?

1% CD? $200 a month?

Reits? 4-6 percent, with potential huge losses in principal (2008-2009)

I've been working for a decade now and I am ONLY up to around $85K. My company only offers expensive mutual funds instead of ETF's, and if they didn't match me 6%, I'd hardly care to contribute.

I'm considering when I retire buying a property outside of NYC in cash from my 401K, and living frugally.

What else can you do?

For my own private savings I am up to around $400 a month passive income. $100K in a CD, and $5K in lending club. And my job offers a small pension.

How is anyone going to retire?

I'm assuming if I live frugally I will be OK. I also want to stay in the U.S.

Its quite simple really, have kids, I know its blue pill, but its something that I personally plan to and look forward to doing, although I will likely plant my seeds in a country where taking care of old folks is a priority unlike many countries in the west.

[TheCaptainPower]

I plan on working a long time. I'd love to take some money out out my 401k and buy a place in cash in Florida or Texas, and then live off my investments.

I think people are in real denial if they think they are going to retire with just some meager 401K savings and social security...

[el mechanico]

Buy your retirement house now. Take a 15 year note and turn it over to a good property manager. In 15 years it will be paid off you can decide whether or not to keep it down the road and if you sell it you can live off some of the money or rent it for more income while traveling.

Florida is cheap now so hurry up.

[el mechanico]

Keep your cash Write off the interest.

[Parlay44]

You're not expected to retire. Just work until you die.
That's why they keep pushing the retirement age up.

By the time you're ready to retire inflation will trivialize
your savings and income to nothing. You'll be lucky if it
covers the cost of your nursing home.

And god forbid you get married.Talk to a financial adviser.

[WestCoast]

No one makes money by being a pussy. A CD is not going to do shit for you, at 1% you're losing money on inflation alone.

To liquidate your 401K you need to roll to a Roth IRA nd wait 4 years.

All this info is on blog in signature. You can PM exact financial details and think of smart work arounds. Also need to know of you were at the same job for the whole time.

Or go read my post on investing. Hahaha at all the guys talking about real estate bubbles again, that means they don't understand what the govt is doing.

People looking for guaranteed income, I guarantee they are broke.

[speeddemon]

Any combination of:

Dividend paying stocks

Bonds with more normal interest rates by 2015 (projected)

Kids with Asian values

Living below your means

Buying and managing your own land or real estate

The biggest mistake a guy can make is getting married & divorced to a girl in a much worse financial position than him (higher debt, lower income)

[speeddemon]

Edit: double post

[Tigerblood]

(05-18-2013 10:43 AM)TheCaptainPower Wrote:  

The older I get, I am starting to think of the 401K as a horrible retirement vehicle.

I just don't understand how people are going to retire with just their 401K savings, I think its going to be hard unless you really bank it.

Let's say for example you retire with $200K (average balance is around $60K), what can you do with it?

1% CD? $200 a month?

Reits? 4-6 percent, with potential huge losses in principal (2008-2009)

I've been working for a decade now and I am ONLY up to around $85K. My company only offers expensive mutual funds instead of ETF's, and if they didn't match me 6%, I'd hardly care to contribute.

I'm considering when I retire buying a property outside of NYC in cash from my 401K, and living frugally.

What else can you do?

For my own private savings I am up to around $400 a month passive income. $100K in a CD, and $5K in lending club. And my job offers a small pension.

How is anyone going to retire?

I'm assuming if I live frugally I will be OK. I also want to stay in the U.S.

They are terrible. The best thing to do is open a Roth-IRA, get a 10 year Brazilian bond (or any developing country you think is going to be able to pay back its creditors) and drop it in.

If you have balls, you can buy some puts on Barnes and Noble and other dead industries - they're practically guaranteed to work but you're betting on when.

[JayMillz]

I wouldn't depend on a defined contribution plan for retirement. It works well for the employer because it shifts the risk of managing your investments and retirement to you. If you don't have a defined contribution plan, which are much harder these days to obtain, I would use the 401k as just one part of my financial portfolio, but not rely solely on it. You also may want to do the analysis to determine if the benefits (e.g., tax-deferment, employer match, etc.) of a 401 k is the best option or are there other ways of saving and/or investing that work better for you.

[TheCaptainPower]

Let's say you have a successful career and you accumulate $700,000 in your 401K.

A dividend ETF is going to get you 3 percent? That is $21,000 a year.

You can't even afford to drive a car with that money.

I like the idea of buying my vacation home 10-15 years early...

[Jaydublin]

How long until the Gov dips into your 401k or forces you to buy a % of US Treasuries?

[WestCoast]

I am going to be straight with you, you are thinking like a middle class person.

401K is shit. Only get up to $10K in there then only contribute to company match.

Dividends are for people with cash already, you have to think more aggressively/intelligently.

Buying a home is foolish unless you are doing it for rental income (you won't live there), the ROI is poor.

So get your money out of cd's start looking for better investments. At minimum stick it into a 5-7% bond fund.

To retire faster you have to think much much bigger, think "how could I have retired five years ago"

I don't want to have to work by 32. Think big.

(05-18-2013 12:14 PM)TheCaptainPower Wrote:  

Let's say you have a successful career and you accumulate $700,000 in your 401K.

A dividend ETF is going to get you 3 percent? That is $21,000 a year.

You can't even afford to drive a car with that money.

I like the idea of buying my vacation home 10-15 years early...

[travolta]

(05-18-2013 12:25 PM)WestCoast Wrote:  

I am going to be straight with you, you are thinking like a middle class person.

This.

If you think like a commoner then you'll be a commoner and live a mediocre life.

[scotian]

(05-18-2013 12:25 PM)WestCoast Wrote:  

I am going to be straight with you, you are thinking like a middle class person.

401K is shit. Only get up to $10K in there then only contribute to company match.

Dividends are for people with cash already, you have to think more aggressively/intelligently.

Buying a home is foolish unless you are doing it for rental income (you won't live there), the ROI is poor.

So get your money out of cd's start looking for better investments. At minimum stick it into a 5-7% bond fund.

To retire faster you have to think much much bigger, think "how could I have retired five years ago"

I don't want to have to work by 32. Think big.

(05-18-2013 12:14 PM)TheCaptainPower Wrote:  

Let's say you have a successful career and you accumulate $700,000 in your 401K.

A dividend ETF is going to get you 3 percent? That is $21,000 a year.

You can't even afford to drive a car with that money.

I like the idea of buying my vacation home 10-15 years early...

If you retire before you're 40, what do you plan on doing with all of those extra years? I'll likely retire at 60, when I can (hopefully) pull out the pension that I'm currently contributing to. At the rate that I'm smoking and boozing now, I'll likely be dead when I'm in my 70s anyway, so how much money does one need to drink and shag himself to death in SE Asia for 10-15 years? I don't want to be 94 and having my kids wipe my ass and cart me around in a wheel chair.

[TheCaptainPower]

@WestCoast Thanks for advice, you are the go to guy for investments. Couple questions:

Bond Funds: If interest rates rise, isn't the principal going to get killed? Rates can't go any lower.

401k to Roth: Can I do this while working at same company? My 401k is held at Wells Fargo

Risks: I've become risk adverse. I lived through 2001 and 2008 crashes, and I've seen people end up in bad, bad, shape (my father was an accountant). My first goal was to hit 100K, and I have that now in a 3% CD. Everything past that I am looking to get aggressive.

I was looking at some miami condo's I could possibly rent out when I'm not there, and I really enjoyed Texas so I might consider there also. No way in hell I am retiring in tax hell NYC...

And on a personal note, if I can bang out a book a year I will hit age 62 with 32 published books : )

[WestCoast]

Scotian I think you are referring to conventional "retirement" where I can't do anything that makes money and must jerk off all day or help homeless people or else I don't count as "retired". That's BS.

What I mean by retire before 32 is "I don't have to work for anyone if I don't want to".

Fuck you money.

Make sense?

@ captain blog + investment thread here has all that stuff (also your boys even if they never sold through 08 would be up what 20% 10%+ returns and 2% annual dividend? Not being an emotional pussy = get rich)

[Aliblahba]

I could retire like a rockstar on 401k.

[samsamsam]

Unfortunately for most people saving is hard enough, let alone trying to create wealth that gives you the walk away money you need.

In order to get the walk away money, you need to do something along the lines of:
1) starting your own profitable business
2) Seek out large liquidity events

There are other approaches. And don't do the stock market thing or playing forex. Unless you know what you are doing, even those who know what they are doing, still get their asses handed to them. I am cool with stable companies and dividend stocks, I have some in my portfolio that I have had for years and the yields are great compared to the original purchase price. Looks into DRIPS - makes it automatic.

Most businesses fail, so I actually wouldn't focus on that unless you have some sure fire winner idea.

I would seek out large liquidity events with risk control. For example, in real estate (we can set aside whether it is a good time or not to invest) you can take control of an undervalued asset for very little money - while you control it you can flip it or seek financing/partners. How you find these deals, a lot of hard work and I won't go into the details because there are many approaches and at the end of the day you need to find one that works for you. It might sound risky but it isn't if you priced it properly. You make your money on the acquisition of control not hoping that it will go up in value but that you know you got it cheap.

If you have cash, you can just begin to buy and sell stuff using your liquidity. A lot of people in life buy other people's problems/pain and make money off of it. It may not be sexy but it makes money. I don't use my MBA much in my business other than when we need to put our bios in something. In my business there are a lot of people that don't have great educations but have lots of money. Craigslist is full of dumbasses who bought stuff and now regret it. Ebay is another good place, if you know a certain product. Make money off of being an expert at something - don't try to buy and sell everything. I screwed up once (not a lot of money) trying to buy watches and fixing them for resale. Most of the time I am screwing around with throw away money because my mind enjoys the challenge of finding value where others do not.

If you are super risk adverse, it limits what you can do. And definitely, don't go listening to scammers. It is funny when people who are super cautious open their wallets to scammers. By being super conservative you accept lower yields as part of the peace of mind you get. So don't give up that piece of mind by letting someone else churn you for fees or flat out steal from you.

Living below your means is a big way of obtaining freedom. I know a lot of people here wanna be ballers but most won't ever drive the $100,00+ supercars, set foot on a yacht, etc. I have never cared about that stuff, it doesn't impress me and I don't care to impress others. What has always mattered is knowing that I could walk.

One time an old boss told me - "I want you, samsamsam, to obtain just the right level of debt so that you work hard but it doesn't crush you." LOL, asshole. That is how countries enslave other countries, through debt.

I got custom made suits, I know the difference between suspenders and braces, my custom made shirts don't have a front pocket and I don't monogram. I have flown private jets-big whoop. My life is to be enjoyed for me and not for others. That is freedom. And I prefer to wear shorts to work. I hate putting on the monkey suit.

But back to OP, if your goal is to set up for the long term - El Mechanico's idea about buying your place now is not a bad idea. As long as you are not in a market that has recovered too quickly, Banks are playing games with shadow inventory and the fed is printing money like a bitch right now. But if you just want to lock as place down and don't care about the ups and downs of property values then getting in now isn't so bad with the low rates. Especially if you are in a place where to can renegotiate property taxes as value moves down. Having someone else pay for it and you acting as a backstop works. Better yet, get a 4 plex. You can live in one and rent the others when you move there for retirement. Anything 4 units or less is considered residential real estate so you can get 30 year fixed mortgages. 5+ is commercial.

Hop into some decent dividend stocks for some yield. Not a big fan of bonds eventually rates will start to rise at some point and that will hurt. At some point we will have inflation, so having a mortgage will be to your benefit because you can jack rent but have a fixed cost.

Sorry to open this conversation into a rant about financial freedom. Fuck, I gotta finish some work.

[TheCaptainPower]

Question is, if I buy something in Miami can I rent for positive cash flow?

In Brooklyn you cant...

[Dexter Morgan]

(05-18-2013 11:30 AM)WestCoast Wrote:  

Hahaha at all the guys talking about real estate bubbles again, that means they don't understand what the govt is doing.

LOL. Please explain how QE3 (or is it 3,000; I've lost count) is NOT potentially contributing to an asset bubble. I say potentially, because the macro-economic environment is a dynamic one and there are multiple factors. But generally speaking, inflating the money supply (or more accurately, the supply of credit) while simultaneously keeping the short end of the curve low forces people to seek yield elsewhere, and that usually results in inflated asset prices. As it did with housing in the early part of the century. I.e, we've seen this movie before! LOTS of people made the case that housing couldn't be over-inflated then, but anyone who could do a simple mean-variance analysis (and who knows the difference btwn a mean-reverting market and one that isn't) could have predicted what happened.

Now, I don't think asset values are anywhere near as inflated as they were in say 2006....we're more at 2002 levels. But "hahaha" and "doesn't understand what the government is doing"? Why don't you help us "understand" what the government is doing, and how it differs from what led to the real estate crash and the credit crash of the last decade. Because it looks like a similar expansion of the supply of credit to me! And every time I've seen an expansion of credit, I've seen a subsequent unwind of credit. As this is the largest expansion of the money supply in U.S. history (the Fed wasn't even allowed to buy the sort of assets it now buys until a few years ago), i'd like to know why a bubble in real estate couldn't happen again.

[Dexter Morgan]

(05-18-2013 01:20 PM)TheCaptainPower Wrote:  

Question is, if I buy something in Miami can I rent for positive cash flow?

In Brooklyn you cant...

Sometimes. I'd buy in an exclusive area like Key Biscayne and do vacation rentals. The advantage is that supply is limited - its a very exclusive area and only a few buildings allow vacation rentals; most have 3-6 month minimums. Also, its a family-oriented place and its expensive, and those two factors mean that you will generally get well-off families, not spring break kids who will trash your place. You'll mostly get families from South America, so you need to speak Spanish or have a manager/realtor who does. Compare to South Beach where 1) the prices are higher, 2) the competition is fierce, so rents aren't any higher and 3) you'll attract a lot of kids who may trash your place. I wouldn't invest there in a million years! A vacation home for personal use - yes. An investment property? NFW.

[samsamsam]

(05-18-2013 01:20 PM)TheCaptainPower Wrote:  

Question is, if I buy something in Miami can I rent for positive cash flow?

In Brooklyn you cant...

So much for work, lol...

I suggest some quick research will give you an idea.

Go to CL or some other rental site and check rents. Find an area that you would like to live some day.
Then do a search on properties in that area. I would use 20% down and calculate your mortgage payments. Don't forget insurance, prop taxes, repairs, management fee, reserves.

Do not buy a condo - you don't want the unknown pain of HOA fees rising. If you are looking into Miami I would figure out insurance premiums and the impact of potential annual 100 year storms.

If you wanna get all deep, you can check local average salaries and see if they can afford your rents. Also, it can determine if they could ever afford to buy something. Those who cannot afford to buy will have to rent. You can really spend hours crunching numbers.

And I hate Donald Trump but he said one thing I have always agreed with, "If you are ok with the worst outcome, then do the deal." Since you are not really expecting the worst to happen.

Call a Management company to get a feel of the market. And by all means visit.

These guys convinced a lot of people to buy during the last boom and hurt a lot of them. But as long as you know these guys are slick you can pull useful info to assist you in your due diligence. I am not sure if they pitching Miami property.

http://www.mrren.com/default/

For logic based analysis of the real estate market (mainly California stuff here) read this blog. http://www.doctorhousingbubble.com/ Anyone who doesn't like logic don't bother.

Best of luck.