Posted on 01/31/2014 8:58:25 PM PST by Rural_Michigan
I spend a lot of time browsing FR, and have noticed a lot of FReepers have a lot of knowledge/opinions pertaining to finances. There also appears to be a good number of Freepers who are about retirement age with a good conservative viewpoint. Taking into consideration current events and the steady devaluation of the dollar, my question to the experienced Freepers out there is this:
Let's say you're 25, are debt free, make no car payments, earn O-2 pay and are unmarried. You don't have any retirement accounts but are apprehensive of starting an IRA or contributing to a Thrift Savings Plan because of general mistrust of the government and banks as well as the global economic system. You think metals are worthwhile, and buy small amounts of silver on an irregular basis. Other than that, all your savings goes into a savings account.
What would you do to prepare for retirement?
You don’t need a “Qualified” retirement account(s), those just are supposedly “tax advantaged” Most people to retire comfortably (and save for a rainy day) use “nonqualifed” money, be it savings, stocks/mutual funds, collectibles.
You might want to diversify your physical holdings, like coins or other precious metals. If you don’t trust brokerages etc, then it seems your best hope is physical custody, but then you have security issues. Otherwise, look into some diversified mutual funds.
Buy a good safe I guess and don’t tell anyone that you even have a safe. No sense tipping off anyone, even family, that you have other assets. JMHO off the cuff.
When I was in my mid-40s, I started a couple of annuities. One was an IRA and the other was a Mutual Fund.
Hindsight: I wish I had bought stocks for some of the major companies instead of the mutual funds. For MFs, you don’t really see much gain, as you don’t actually own the stocks. Had I, for example, bought Walmart, it has split several times and would be worth much more than the comparable amount invested in mutual funds. Of course, the advantage with mutual funds is that ‘their experts’ do the investing and you supposedly reap the results.
The IRA locked in a guaranteed annual return, which was a joke amount, at the time. General interest rates for bank money markets were around 8%, and the IRA guaranteed a return of 4%. Laughably low at the time. However, since interest has dropped to near zero on regular bank savings and CDs, that 4% looks pretty good now.
==
Stay single.
Seriously, what do you want out of retirement? I'm going to go into it a pauper, a property owning pauper, but cash poor. I do have a wonderful daughter, son-in-law, and grandkids. I'll do ok. I won't travel. Some things will be difficult. But at the end, family will hold my hand as I slip this mortal coil.
So? What do you see yourself doing in retirement?
Thank you for your service, LT.
/johnny
Pay chart shows you’re making about $3,800 a month base pay as an O-2, is that correct?
Also:
Stay debt free.
Keep 8 month to a year pay in cash.
Diversify the rest. Gold, silver, ammo, guns. (if it all goes REALLY bad, guns and ammo are worth more than gold)
I am 50, retired USAF, and in addition to the above I also have stocks, IRA’s and savings in case society manages to keep it together.
Best advice I can give anyone is to live well below your income level and have a plan, for everything.
Learn how to live Amish.
No games, no BS. Get yourself enough silver in case you have a local economy going on, but beyond that put whatever resources you have in achieving the above.
What is coming will make the Great Depression look like a Sunday picnic, and we will all be lucky to live thru it.
depends how much federal income taxes u pay ... if it is a lot ... there is no reason not to fund a qualified plan thru work or max your Deductible IRA contribution. U got til 4-15-14 for 2013.
You'll be saving for your future while at the same time letting Uncle Sam use your money for his important projects.
Goldbug ping.
At you age, if you can put money away pre-tax, into a thrift saving, 401k or 403B type account, it’s definitely worth it, because you are deferring the taxes, and you can still diversify within the accounts.
For regular amounts, putting money into stock type mutual funds is OK, because you average out the market’s ups and downs. Once you would actually have a larger chunk, then you would want to be more careful to diversify your “larger chunk”, but could continue to contribute into a stock mutual fund — don’t go for the high risk, just some “ordinary” stock fund with a decent record.
The world is always on the brink and it always seems it’s in the near horizon, but we never know.
I have known some people who were your age some 30-40 years ago and some did keep putting money away and did accumulate a nice chunk, and also know some who felt as you do and didn’t. Those who did are very well off now. Those who didn’t, not so much, but can’t go back in time...
Especially since you have no debt and are single, this is the time to save as much as you can, and max out your possible pre-tax savings. then if you can, do save after tax also and let this money accumulate and grow for the next 30-40 years.
Nobody knows about the future... But you can’t invest in the future with out taking a risk. If I were you, I would be diversified. Some in the market, some in metal, and some in real estate. Probably a 1/3 split...
I'm set. I've got all the skillsets for mid 1800s life. And I've done it for a couple of years.
/johnny
“When I was in my mid-40s, I started a couple of annuities. ‘
The problem was the annuities, they are NOT worth it, because they get you with the “guaranteed” return and payout, but it costs you much more than it’s worth.
There are many good mutual funds you can invest in within a 401K type account, or IRA or after tax.
Annuities usually don’t use the best funds and the “guarantee” eats up a lot of your return.
Are you more worried about the return ON your principle or the return OF your principle? The reason I ask is that If you are concerned about a US bail in, you should consider non traditional investments such as over funding a whole life insurance policy. That would allow you borrow against your policy for mid and major purchases (car bank, etc). The concept is the one presented by bank on yourself. http://www.bankonyourself.com/#sthash.ExoyBe7V.dpuf
Not normally the investment that I would recommend but it is a good defensive strategy against confiscation of wealth.
A more middling strategy would be to invest in hard assets such as land, oil wells, metals, etc. Another option would be to accumulate some wealth and then invest in a business that provides a 10% return but is based on human needs such as food, shelter, etc.
A more aggressive approach would be to have your money into markets with stocks, bonds mutual funds. If you are not a very knowledgeable investor, then stick with index funds.
If you think that the economy is going to flat out collapse, buy a reloading machine, primers, brass and means to produce bullets and start reloading by the thousands. Of course, that would mean that you would have to have a location to secure the materials and the finished product. Great trading material HOWEVER, not a very liquid means of holding on to cash and would require you to have an ATF license to sell to cash out.
Read Dave Ramesy’s books and follow his advice. It’s the most common sense and disciplined method of savings, which is key to wealth creation. Open an IRA and contribute as much as you can. Read what financial experts are suggesting for diversification and follow their strategies, but always maintain a diverse mix of cash, individual stocks, and mutual funds or ETFs. Since no one can predict the future, the name of the game is to not put too many eggs in one basket. You’re a long-term investor, not a day trader, so you’ll have to develop the stomach for ups and downs, and feel confidence in the equity investments you make (i.e. buy blue chip solid performers, not fads or trendy stocks in unproven areas.
Assuming you’ll be managing your own account, get comfortable with reading and following finance trends so you can make adjustments accordingly. Even in a recession, people still drink beer, but once you start following financial trends you might find that buying shares of BUD produces better yields than, say, Wal-Mart.
Still, you’re doing to “lose money” some weeks/months (like now) but you’ll make money onbalance, e.g. the value of your portfolio will grow over time. Even since 2007 the market has grown very significantly because it is, in essence, the best reflection of the strength of America and the resiliency and productivity of it’s people. Good luck!
I’d follow your “go Amish” advice, but I like my girls with some make up — understated, but some. G-d help me.
My advice is to live like you are an E-5. Use the overage to pay any debts first.
Then start a Roth IRA index fund. Then buy physical metals every month, a little at a time. Keep about 2-3 months salary in savings for emergencies.
Then, when you get O-3, start spending a little on yourself.
LT -
Having been there, done that..
1. Find a financial advisor you can trust.
2. Educate yourself on investing. Learn how to evaluate potential investments and their suitability for you
3. Determine your level of comfort with risk.
4. Determine how much time you’re willing to dedicate. Mutual funds may be better if you aren’t inclined/able to evaluate/monitor the investments.
5. Open an IRA (Traditional or Roth).
6. Take advantage of the TSP option (pre-tax deductions lowers the gross income subject to taxes). Didn’t have this when I was at that point in my Active career, but did pretty well with it in my Reserve career.
7. Diversify, diversify, diversify.
8. Focus on hitting singles and doubles rather than swinging for the fences. Boring is good.
9. Avoid myRA’s like the plague. You are obviously capable of determining and selecting investments suitable to your goals.
And thank you for your service!
When I was young, I didn’t participate in company offered stock options, after all I was going to live forever. When I was young I didn’t contribute to my 401K, because, after all I was going to live forever.
Now that I’m old ... what the hell was I thinking!!
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