Investing 102

[GregWeld]

An interesting REAL LIFE story on a couple that retired early and their advice....



https://www.cnbc.com/2017/10/20/earl...aboolainternal




I haven't posted here for quite awhile..... 500 pages pretty much has covered it all. Hope all are doing well and their investments have grown and their dividends are piling up!

Giddy up!!

[WSSix]

Overall, I'm doing fine. Today though, I'm getting kicked hard for owning AT&T.

[SSLance]

You and me both Trey... In fact been getting kicked hard for owning just about everything but thankfully I've had lots of other things on my mind to keep me from thinking about it.

Haven't made a holdings change in I'm not sure how long, just reinvesting divvys and going on with life for the summer.

[GregWeld]

Originally Posted by WSSix

Overall, I'm doing fine. Today though, I'm getting kicked hard for owning AT&T.

Funny --- not funny as in laughing -- but I have always had a bit of the Peter Lynch investing theory --- I owned 10,000 of Verizon and AT&T -- and sold the AT&T because their coverage got lousy -- and I switched all of our phones (6 of them) to Verizon...

Far superior coverage where I live and travel.... and so far - so good. VZ is up and T has sucked.

Lucky me!

[WSSix]

I've always thought Verizon had the better coverage. I liked both as investments and still do so I'll continue to hold them both. It's just going to take a little before T gets pretty again. I'm not worried at this point.

[glassman]

Originally Posted by GregWeld

Funny --- not funny as in laughing -- but I have always had a bit of the Peter Lynch investing theory --- I owned 10,000 of Verizon and AT&T -- and sold the AT&T because their coverage got lousy -- and I switched all of our phones (6 of them) to Verizon...

Far superior coverage where I live and travel.... and so far - so good. VZ is up and T has sucked.

Lucky me!

forgot about that main point with Lynch regarding att vs verizon. i hate att and sprint, verizon is the only one that works for me for work. funny, i dont own it yet but its on the list.

Chipotle cant seem to make a come back either yet i love their product...

Also too, many a question for Greg, regarding the video, is 3-4% a usual number for draw on liveable wages base on your gross worth?

[GregWeld]

Originally Posted by glassman

forgot about that main point with Lynch regarding att vs verizon. i hate att and sprint, verizon is the only one that works for me for work. funny, i dont own it yet but its on the list.

Chipotle cant seem to make a come back either yet i love their product...

Also too, many a question for Greg, regarding the video, is 3-4% a usual number for draw on liveable wages base on your gross worth?

I have zero idea for an answer for that question..... What I try to do is EARN 5% on my investments --- some pay more some pay less..... But my net worth/income far exceed "normal" --- and we have zero in fixed expenses.... our actual outflow is HUGE -- but it's just because of the way we live -- versus what we HAVE to pay to live. My only point being --- that I haven't had to experience that type draw down -- nor have I had to have that conversation with any of my financial people.

I think that people are living far longer than they used to ---- so many basic assumptions about finances are being tossed out the window. I don't think it's unusual for people to live 30 years in retirement..... Maybe not both but one or the other of a couple anyway.

Here's what I usually say to people..... to get them to think "correctly". If you're coming up to retirement - and you're struggling to live on $200,000 a year..... how much money do you think you're going to need to live retired!!!! I figure I make about $50,000 annually PER MILLION DOLLARS invested.... so that person is going to need $3+ million and be collecting maximum social security etc. Even if you think you'll only need $75,000 in retirement income -- you're going to have to have at least 1 1/2 million..... because the dividends are taxed -- so 20% taxes -- and you're earning 5% -- that's only going to NET $40K a year in spendable income.

However --- it you're drawing down your principal at 4% a year --- and then you have less and less each year to earn you income.... sounds like a real bad plan to me! Let's throw in a decade of crappy market growth -- or stalled out real estate prices.... and you're burning your capital?? Yeah -- just NO! You want to be really old and broke? I sure as hell don't want to be figuring like that.

I've found that expenses GROW.... they don't shrink. My insurance is way up -- our taxes go up -- cars are expensive -- trips are 10 X what I used to spend 20 years ago mostly because they're longer! WTF -- you don't have to get back to work on Monday! Clothing is expensive... and then there's always that pesky health issue and all of that associated out of pocket expense.

[glassman]

Originally Posted by GregWeld

I have zero idea for an answer for that question..... What I try to do is EARN 5% on my investments --- some pay more some pay less..... But my net worth/income far exceed "normal" --- and we have zero in fixed expenses.... our actual outflow is HUGE -- but it's just because of the way we live -- versus what we HAVE to pay to live. My only point being --- that I haven't had to experience that type draw down -- nor have I had to have that conversation with any of my financial people.

I think that people are living far longer than they used to ---- so many basic assumptions about finances are being tossed out the window. I don't think it's unusual for people to live 30 years in retirement..... Maybe not both but one or the other of a couple anyway.

Here's what I usually say to people..... to get them to think "correctly". If you're coming up to retirement - and you're struggling to live on $200,000 a year..... how much money do you think you're going to need to live retired!!!! I figure I make about $50,000 annually PER MILLION DOLLARS invested.... so that person is going to need $3+ million and be collecting maximum social security etc. Even if you think you'll only need $75,000 in retirement income -- you're going to have to have at least 1 1/2 million..... because the dividends are taxed -- so 20% taxes -- and you're earning 5% -- that's only going to NET $40K a year in spendable income.

However --- it you're drawing down your principal at 4% a year --- and then you have less and less each year to earn you income.... sounds like a real bad plan to me! Let's throw in a decade of crappy market growth -- or stalled out real estate prices.... and you're burning your capital?? Yeah -- just NO! You want to be really old and broke? I sure as hell don't want to be figuring like that.

I've found that expenses GROW.... they don't shrink. My insurance is way up -- our taxes go up -- cars are expensive -- trips are 10 X what I used to spend 20 years ago mostly because they're longer! WTF -- you don't have to get back to work on Monday! Clothing is expensive... and then there's always that pesky health issue and all of that associated out of pocket expense.

Thanx Greg good info, 3 happens to be my “goal” number. But yeah, inflation is just an unknown variable, best to be prepared as possible

[Vegas69]

I certainly hope to leave my family in great financial shape when I'm gone, but I'll have no problem living off the money I spent my whole life accumulating if need be.

Personally, the older I get, the simpler I like to live. I like choices, not shackles. Living WELL below your means is a good place to start and a hell of a good way to grow wealth rapidly. I find it amazing how fast you can grow wealth when you live below your means and invest heavily every month. My wife and I have tripled our net worth in only 5 years carrying little to no debt and investing in real estate, IRA's, 403b's, and individual stocks.

We are certainly blessed and grateful that we made major changes around 35 to our spending habits and strategy. It's put us well ahead of where I dreamed I'd be at 40. I think it becomes harder as we age to change our ways and let's be honest, passion and energy can begin to wane. Those long hours get tougher to handle as you realize you'd rather be with your kids, racing, or taking a nap than pushing so damn hard all the time.

Dave Ramsey says: Live like no-one else now, so you can live like no-one else later.

I think you have to have a period in your life where you really hunker down and stock it away to set yourself up and take advantage of that great magician, compound interest. I still think it's important to save a large chunk of your income every month. We save 15% of our gross income, personally. You can only do that if you live well below your means or increase your income to offset your expenses. We've done both.

[GregWeld]

I hope everyone owns Amazon (AMZN) and Microsoft (MSFT) and Google - now under that asinine name of Alphabet - and with two different stock symbols Goog and GoogL (sorry -- so stupid and confusing).

I own a whopping 200 shares of AMZN.... zero of the other two.

If we were smart we would have bought Steve McQueen's Rolex years ago -- someone just paid 17.8 million for it at auction. (seriously are you kidding me!). His house here, with acreage (500), was struggling to find a buyer in the $7.4MM range.