Let's talk saving for retirement

[g6civcx]

Lately the stock market has been doing well. I knew it was doing well, but I didn't know how well it was doing until I started doing several projections last night.

If I invested $15,000 a year with pretax dollars into my retirement accounts, that's like $10,000 a year after taxes. My employer gives me $3,000 on top of that in matching.

My account is currently earning about 25% a year. That's really incredible. You can't match that anywhere. If the market keeps it up, which I highly highly doubt, my account would grow really really quikly. My money would double roughly every 2.5 years.

But let's say it continues to grow at 25% a year, and $18k gets added every year. Here's what my accont balance would be if this were the case.

3 years - $100K
4 years - $115K
5 years - $170K
6 years - $250K
7 years - $350K
8 years - $480K
9 years - $650K
10 years - $890K

That's amazing. I didn't believe it until I checked the numbers again. Basically your money can increase 1/4 each year if the market can keep up. and I'm only putting in $150K. It'll end up with almost $1 million after 10 years. I thought that was pretty damn amazing.

11 years - $1.2 million
12 years - $1.6 million
13 years - $2.1 million
14 years - $2.8 million
15 years - $3.7 million
16 years - $4.9 million
17 years - $6.5 million
18 years - $8.6 million
19 years - $11.3 million
20 years - $15 million

That is freaking ridiculous. Now I know it looks optimistic, but this is assuming the current market rates and the same amount of contribution for 20 years.

It may not end up that much, but you can get pretty close if you choose to start saving early.


I started saving a lot more this year. I just sold both of my houses and moved closer to the office. My rent is under $1,000 after my roommate's share. It was a step down but I can walk 10 minutes to work. If I drove back and forth, a tank of gas lasts me a month. Any longer and I'll have to start using fuel stabilizer.

But the important thing was I got rid of all my useless things, namely my cars. I didn't realize how much money I was blowing on them until I started adding them up. Let's just say it was an easy financial decision, but a tough personal decision to give them up.

FYI, I had an Evolution, a new RL, a TL, and an R6. I had to let them all go to free up the money. I kept my 240SX which is the cheapest car I had. My bike was the toughest to let go but it was sucking up money to maintain and insure it.


Right now my goal is to just keep the 240 running for as long as possibe. I had originally wanted to get paint, but given my current situation, I don't think it will be possible until next year. Oh well.

Right now, I invest as much as possible. Whatever I have left I use to pay debts. If I didn't have those student loans, I would have been much closer to the $100K mark right now. I financed 6 years of schooled myself.


If I didn't have debt, and didn't buy stupid things when I started working, I would have over $100K in savings already.


Some people don't think it's a wise idea to share dollar amount, but I think it's important because you don't realize how much you waste and how much you can save until you see it on paper. It really makes an impact on you mentally.

Yesterday a guy at work pulled up in his new Ferrari. I laughed because I don't care if he's a lawyer, he could put that $200K in savings and have $1 million in about 4 years. Then he can buy 5 Ferraris :eek:


Earnings are good in my account because of my employer benefits. They offer me low cost international funds, mostly European, African, and Asian. Lately, this funds has been returning in the high 20s%.


For comparison, my cowork who worked for 10 years only saved up $50k in her regular savings account earning 3%.

All you guys who have no debts and decent paying jobs, start investing your money instead of blowing them on JDM tyte car parts. Every little bit helps because it accumulates so quickly. A dollar here and a dollar there really does go a long way when you step back and let it grow.



Positive comments, please.

[Wykydtron]

Sir, I'm only 19 and I'm glad you posted this threads. I've never looked into saving for retirement but I heard discussions about instant wealth and financial growth. I really like the idea of becomeing an entrepreneurs, creating multiple streams of income, "A Dream + A Team + A Theme = Millionaire Streams," setting reasonable but challenging goals, and developing excellent work habits.

I think I will bookmark this thread and read over your post again and again, maybe do more research on this topic. Thanks for sparking intrest!

[Gnnr]

Ahh yes, the magic of interest. :D Check this method out too:

http://www.fool.com/teens/teens.htm

[n2motorsports]

great post, i began saving a few years ago. the key is to live comfortably, and if you save it, you can't spend it, and if you can't spend it, you'll just make due with what you have.

assuming a 25% rate of return is a bit high, i'd go with 11-15% just to account for all the market ups and downs.

many of you don't have 401k's yet but you can still take advantage of compounding interest. open an IRA. currently the annual max you can contribute is $4000 per year, that's $333/month. after 25 years of contributing 4000/year and with a 15% average return, you'll be at $978,000. in other words, that's 100,000 out of pocket over 25 years with 878,000 in interest. in 30 years your egg nest will be around 2 million... start saving.

[theicecreamdan]

this thread doesn't make me want to save money, it makes me want to finish school.

[LB.Motoring]

Yah, we have an Esop here at work, and it puts 50% of my yearly earnings back into an account which I will be dumping into a retirement fund for myself in 5 years.

[Phlip]

"Save"?
Bullshit, I say, I have remained single all these years in wait to "invest" my penis into a wealthy woman without many years left.
Bingo

[HalveBlue]

This thread doesn't make me want to save money. This thread want to make me learn how to hack financial systems and steal all your hard earned savings.

On a serious note, I've been thinking about this a lot lately. Being in the military I know we're offered a Thrift Savings Plan and that the government matches up to a certain amount. I don't know the exact details but lately I've really been thinking about it.

More than anything I don't want to end up like my dad. Don't get me wrong, he's a great guy; he has a PhD. But he never saved money. He lost his job when he was in his early 40's and has never found anything decent since then. He's in his late 50's now and has NOTHING to fall back on when he (if) he retires. So sad.

[Wei240]

trust me when i say you're not going to be able to sustain 25% annual growth and compounded annually with such growth, if you do, you should day trade because that's awesome

cons:
- problem with retirement accounts such as ira's, 401k's, etc, is that if you're in need of money, in a crunch, and you need to take out money, be ready to bend over, they'll penalize you like there's no tomorrow
- not everyone can just push aside money and dump a whole bunch into a retirement account because they just have so much money leftover

pros:
- but with that said, it is very advisable to invest into some type of retirement account, due to the tax implications/savings in something like roth ira or 401k can't be beat
- if you have a 401k and your employer matches, better get up on it or else you're losing free money, i find it ridiculous that some people don't do this
- it's a much better use of money in investing than getting jdm tyte parts, return on any type of investing is generally > 3% (look at ING, money market accounts are like 4.5%), cars, and car parts generally are negative returns, in other words, it's a money pit, unless you're restoring a classic/antique

[ManoNegra]

I too find my thinking transitioning into adulthood and thinking about saving and retirement. Good thread.

[ScottMan]

trust me when i say you're not going to be able to sustain 25% annual growth and compounded annually with such growth, if you do, you should day trade because that's awesome
True story. When I'm talking with clients I usually use an 8% projected rate of return (keep in mind you're going to be paying fund expenses) or 10% if they plan on being very aggressive. Then I show them a 12% projection and tell them this is the best case scenario. You're just not going to make 15%+ on average over 30 years.
cons:
- problem with retirement accounts such as ira's, 401k's, etc, is that if you're in need of money, in a crunch, and you need to take out money, be ready to bend over, they'll penalize you like there's no tomorrow
Most employer sponsored 401(k) plans have loans available so you can take money out to get you out of a bind, then pay it back to yourself. If you never pay it back obviously you'll owe ordinary income taxes on it plus the 10% penalty if you're under age 59 1/2.

Many plans also include hardship distributions or unforseeable emergency distributions in which you can avoid the early withdrawal penalty but pay ordinary income taxes. Obviously you have to prove you had a hardship or emergency if you're ever audited.
- not everyone can just push aside money and dump a whole bunch into a retirement account because they just have so much money leftover
Well of course not, but almost all my clients (heck, all of them making over minimum wage) tell me A. I wish I had started earlier. or B. I don't even miss the money when it comes out.

We all have money we could afford to put aside, and you'd be amazed how much you could feasibly put in without drastically effecting your quality of life.

pros:
- but with that said, it is very advisable to invest into some type of retirement account, due to the tax implications/savings in something like roth ira or 401k can't be beat
- if you have a 401k and your employer matches, better get up on it or else you're losing free money, i find it ridiculous that some people don't do this
- it's a much better use of money in investing than getting jdm tyte parts, return on any type of investing is generally > 3% (look at ING, money market accounts are like 4.5%), cars, and car parts generally are negative returns, in other words, it's a money pit, unless you're restoring a classic/antique
All true. :)

[Team Rootbeer]

hmmmmmm

not to much saving for me........why save? you could die tommorow, without enjoying what you had! but, ill save enough to retire i guess.

[FRpilot]

welcome to a lesson in tvm (time value of money).


some people go over the calculations see all the gains.. but its really hard to put aside a lot of your money unless you want to live like shit.. you want to have an equal compromise between savings and paying off your bills and living comfortably.. i mean.. you can be a cheap ass and save all your money and buy food at mckey dees for 30-40 years.. and in the end you'll be a millionaire.. but is it worth it to live a shit life like that?

i too have played with my financial calculator. calculating FV is really quick with it. you can even change 1 variable at a time and come up with new values..

but like the poster above says.. 25% is a really high return. 10%-15% is more reasonable and conservative. the market has its up and down years (recession, inflation, boom, etc) investing in IRA is a good choice since it's tax free for right now.. and if your employee offers equal contributions or something similar consider it as a bonus.

in addition.. investing in stock markets is a good idea. historically.. over the last 50+ years.. stock markets and bond markets show a considerable rate of return compared to savings accounts considering the market upturns and downturns. even bond market returns are higher than savings.

it depends on what kind of growth you want.. most investors are risk averse and will go with the safe bet. they will not invest more into something more risky for the same return.. for younger investors, they might want to choose something with more aggressive returns. this means riskier stocks but greater risk = greater return and often stocks that offer no dividends so the companies can reinvest and grow the company instead of paying it out. older investors need income.. and tend to choose to to buy stocks that offer more dividends so they have a flow of income. and still it would probably earn more than a savings account.

if know this is a thread about retirement savings.. but generally for investing... savings account are a terrible way to invest your money.. only have a checking account to have a way to withdraw money for your daily expenses.. CDs offer a little bit higher return and are safer but.. stock market is usually how you would want to invest.. its riskier but better returns. if you dont know what you are doing.. i would go to a financial advisor and ask him or her for help in diversifying your portfolio.

[drift freaq]

Ok I will toss into this.
First off avoid day trading, while it looks very profitable sometimes it can take your shit down as quickly as it did up. Long term stock investments are good. Though I will say your projections are rosy checked and extremely bullish. On average the rate of return is lower and sometimes you lose a bundle. I have stocks and I have a Roth IRA. Roth IRA's are good because your not taxed on the income generated by them when it comes to maturation time.
If you want to build credit quickly a CD can be very advantagous i.e. You can build a decent credit line in a year to two years with 5k in a CD.
Ditto on what was spoken above the stock market is not for kids, no offense intended. The people who make money in the stock market, are either very versed at investments and the ebb and flow of the market as well as futures, or they are professionals i.e. investment brokers and whatnot.
Do not just think your going to start buying stocks and making money its just not that simple. If your really fascinated and interested in the stock market I suggest you start getting up in the morning and watching the opening of the exchanges on CNBC, Dow,New York,Nasdaq. You should aslo watch the closes and follow the worlds different markets as well aka Nikkei, Hong Kong exchange, Englands exchange etc.....
Also classes in investment strategies would not hurt either.

[ScottMan]

if you dont know what you are doing.. i would go to a financial advisor and ask him or her for help in diversifying your portfolio.
Best advice in the thread. I will add (or subtract) from it though. Even if you think you know what you're doing, go see a financial advisor. I get so sick of having clients tell me their brother-in-law handles their investments. "Oh, is your brother-in-law an advisor or licensed in any way?" "Nah...he just watches all that CNN mumbo jumbo and knows what he's doing." Yeah...right. Ask him about Sharpe ratios, M&E expenses, etc. Go to a qualified financial advisor for a consultation and if he's a smart guy, try him out. Don't let your friends and family manage your money for you just because they watch CNBC. :duh:

I'm a financial advisor.

[Gnnr]

What!? CNBC not enough? But James Cramer on Mad Money is sooo funny, of course I know what I'm doing! lol.

[Phlip]

Whomever previously mentioned 401k was on point as well.
Keep in mind, as well as research, what your company will invest compared to your own contribution, with mind on how long before it is fully vested. I work for a company that I enter my situation fully vested, and they will match ever dollar I enter with 3 they enter, up to 3% of my salary invested by me. That means I give 3% and they give 9%. They ONLY pay out in January and if I was not fired for doing my job shittily. I have never been fired for anything, so I am expecting to see a huge jump in my 401k soon.

... if I leave the company, I will roll it over to the next company's

[usdm180sx]

I do financial and retirement planning and 25% is way too unrealistic. Historical stock market returns from the 1930's through today are around 10-12%.

1. Determine your comfort level. Diversify into a mix of funds that you are comfortable with.

2. Max out on your 401(k)

3. Determine your eligibility for a Roth IRA and MAX it out (Withdrawals from a Roth IRA are TAX FREE if done properly)

4. If you have to play the market, use money that you would use if you were going to Vegas (Picking stocks is just like going to Vegas)

5. And if you know of a "sure thing" it's probably illegal

[atom]

LOL @ 25%. That ain't gonna last. I wish, I could probably retire before I'm 50 at that rate, and thats assuming I never get a raise in the next 20 years.

I stay pretty conservative with my money, mostly because I know shit about investing. I just make the max contribution to my company's retirement plan and the rest goes into several index funds that my dad and uncle (he's a retired FA) helped me pick out. A small amount of fun money goes into an ING account. Done and done. As mentioned earlier though, if I ever run into a situation where I need to withdraw a large potion of my savings, I'm screwed.

[theicecreamdan]

ok... for a realistic question, what are some easily marketable degrees? I have decided to finish school in the next couple of years, but I still don't know what degree to get so I can make good money.

[atom]

Getting a degree based on money making prospects is probably the worst thing you could do. Base your choice on your interests.

I work in the software industry and a majority of the people I went to school with and keep in contact with don't even work in the tech industry. They got their CompSci degrees because at the time the tech boom was the hot shit and they thought it was going to be mega bucks. A lot of them honestly couldn't hack it and so they moved on/burnt out.

So you should be not only looking for a degree that is something you are truly interested in, you should think if you can actually see yourself working in that field 10-15 years down the line.

[drift freaq]

Best advice in the thread. I will add (or subtract) from it though. Even if you think you know what you're doing, go see a financial advisor. I get so sick of having clients tell me their brother-in-law handles their investments. "Oh, is your brother-in-law an advisor or licensed in any way?" "Nah...he just watches all that CNN mumbo jumbo and knows what he's doing." Yeah...right. Ask him about Sharpe ratios, M&E expenses, etc. Go to a qualified financial advisor for a consultation and if he's a smart guy, try him out. Don't let your friends and family manage your money for you just because they watch CNBC. :duh:

I'm a financial advisor.

I do agree with this, and by no means in my post did I advise people to just go out and watch CNBC and expect to know. Though I will say this. You sell some people short. Some people are very bright and quite capable of learning the stock market on their own and working with a broker. Nothing against you but I have seen financial adivisors send people to the poor house with bad recommendations. Financial advisors are not the end all save all. If you believe that about yourself your in trouble already. No one is infalliable in investments not even Donald Trump who lost his pants in the early 90's before regaining it back.
I advise people that are interested in it to watch and learn and CNBC is not a bad place to start. My father is quite successful in the stock market its been his hobby for 50 years. Now before you start going off with your I am financial advisor, I am god bullshit, let me say this. He has PHD in Physics. The computers we use to post on this forum exist because of his pioneering research and designs in the semiconductor world. Don't believe me? Search, if I decide to give you his name. My father does handle my investments along with his broker. Broker? Yes because a good broker does not just buy for you but gives you advise to go along with your decisions.
Now that said, before you feel completely threatened by my statements I will say that no, the average Joe does not know the market nor can they usually get their head around it. The whole Dot com boom debacle was partially a situation of to many of the average Joe being include in the picture. People were investing based on speculation with no bottom line profits being shown by a lot of the companies. When you got into a cab and the cab driver started talking about stocks you knew there was trouble.
The stock market, like I said is not for anyone, its for people who know it. Though do not discourage any of these people from watching CNBC and trying to learn. You never know one of them might wind up taking the right courses in school and taking your job. HAHAHHAHAHA In other words be proud of what you do but don't let it get to your head.

[ScottMan]

I do agree with this, and by no means in my post did I advise people to just go out and watch CNBC and expect to know. Though I will say this. You sell some people short. Some people are very bright and quite capable of learning the stock market on their own and working with a broker.
Of course. There are plenty of smart people out there that can learn the market, my problem is that most of those people, as smart as they are, don't know enough about the actual industry and many advisors can help them make more money totally independent of their actual investments. Simply by giving them info they didn't know because people outside of the industry are never going to get that info. There's nothing inherently genius about what I do. It's very easy, I'm just in-the-know about some things that aren't told to the lay person on purpose.
Nothing against you but I have seen financial adivisors send people to the poor house with bad recommendations. Financial advisors are not the end all save all. If you believe that about yourself your in trouble already. No one is infalliable in investments not even Donald Trump who lost his pants in the early 90's before regaining it back.
Well of course you've seen bad advisors. I would argue that most of those situations are not caused by stupid advisors, but by irresponsible or shady ones that put people in contracts or products that are not suitable for the client. I could make a ton more money if I screwed people over constantly. A ton more.

It's far too easy for us to make people money in the market (some money, in other words, not "sending people to the poorhouse") so when I hear you say that, I'm thinking you're speaking about shady advisors. You thought they were just stupid, but in reality they were screwing people for the most amount of commissions.
My father is quite successful in the stock market its been his hobby for 50 years. Now before you start going off with your I am financial advisor, I am god bullshit, let me say this. He has PHD in Physics.
Good for him. When did I go off about how I am god? Okay, he has a PHD in Physics. Tell me the bearing that has on this discussion?
The computers we use to post on this forum exist because of his pioneering research and designs in the semiconductor world. Don't believe me? Search, if I decide to give you his name. My father does handle my investments along with his broker. Broker? Yes because a good broker does not just buy for you but gives you advise to go along with your decisions.
Ahh, the old "he's a smart person, so he's smart about everything." This is my problem with lay investing. I'm a smart guy, I would guess you are too. Now, why can't you pioneer something in physics? Or build a better mouse trap, or anything else?

I know investing, and maybe a little bit about cars, that's it. I don't know physics, or beer brewing, or composing music. Just because I'm smart doesn't mean I know all. That's the point I have to make to most clients. I'm sure your father is very smart, and I'm glad he's made money in the market...he obviously doesn't need me. But why tell me he's a physics beast? So I know he's smart? :doh:

As for you seemingly having a fancy definition of a broker versus an advisor. I'm a financial advisor who has a broker/dealer so I can do all of that. Most brokers charge for investment advice where most financial advisors work with your entire financial picture, and give you investment advice for free. You can then go through them as your broker to purchase those investments.
Now that said, before you feel completely threatened by my statements I will say that no, the average Joe does not know the market nor can they usually get their head around it.
I'm not threatened. Baffled, but certainly not threatened. I've never been threatened by a client telling me they know more about investments than I do, or that their father-in-law does because he is a real estate attorney, or whatever else. Why? Because I see them lose money all day long and as much as I would love to laugh, it's far too pathetic, and frankly far too prevalent.

BTW, when did we get into a "my dad is bigger than your dad" argument? Okay, you win...my dad doesn't have a PHD. :confused:
The whole Dot com boom debacle was partially a situation of to many of the average Joe being include in the picture. People were investing based on speculation with no bottom line profits being shown by a lot of the companies. When you got into a cab and the cab driver started talking about stocks you knew there was trouble.
You can't blame people for investing based on speculation in 1998+. It wasn't so much speculation. You threw a dartboard at the tech funds and made 40%. That's just being smart with your money. The problem is Joe Blow didn't know when or where to move his money when things went bad, nor did he have an honest and proper advisor to tell him what to do with it.
The stock market, like I said is not for anyone, its for people who know it. Though do not discourage any of these people from watching CNBC and trying to learn. You never know one of them might wind up taking the right courses in school and taking your job. HAHAHHAHAHA In other words be proud of what you do but don't let it get to your head.
I was a political science major. I didn't know what an IRA was until I graduated. I've never said what I do takes a genius. Anyone could do this. They might not having the people skills to sell, but the concepts and principals of this stuff are very, very easy. Anyone can do that part of my job.

I'm not quite sure where you got the idea that I was letting my job get to my head, or that I was being arrogant in this thread. It seems you have a chip on your shoulder, care to share what's bothering you?

[drift freaq]

It's far too easy for us to make people money in the market (some money, in other words, not "sending people to the poorhouse") so when I hear you say that, I'm thinking you're speaking about shady advisors. You thought they were just stupid, but in reality they were screwing people for the most amount of commissions.

Good for him. When did I go off about how I am god? Okay, he has a PHD in Physics. Tell me the bearing that has on this discussion?

Ahh, the old "he's a smart person, so he's smart about everything." This is my problem with lay investing. I'm a smart guy, I would guess you are too. Now, why can't you pioneer something in physics? Or build a better mouse trap, or anything else?[QUOTE/]


I knew you could not keep your ego out of this. You have a lot to learn in life. You think that a smart person cannot do more than one thing? Your an idiot if you think that. I could have gone into physics, I chose not to. I could have been a lawyer and probably a quite good one at that. I chose not to. Why? I do what I do and I am quite happy at it. Does it mean I could not learn the stock market and become an excellent investor? No. If you believe that phallacy your proposing your smoking some good dope. I told you you sell people short and you just proved it. I would not take any of my investments to you based on what you just said previously.


[QUOTE=Scottman]
I know investing, and maybe a little bit about cars, that's it. I don't know physics, or beer brewing, or composing music. Just because I'm smart doesn't mean I know all. That's the point I have to make to most clients. I'm sure your father is very smart, and I'm glad he's made money in the market...he obviously doesn't need me. But why tell me he's a physics beast? So I know he's smart? :doh:

As for you seemingly having a fancy definition of a broker versus an advisor. I'm a financial advisor who has a broker/dealer so I can do all of that. Most brokers charge for investment advice where most financial advisors work with your entire financial picture, and give you investment advice for free. You can then go through them as your broker to purchase those investments.

I'm not threatened. Baffled, but certainly not threatened. I've never been threatened by a client telling me they know more about investments than I do, or that their father-in-law does because he is a real estate attorney, or whatever else. Why? Because I see them lose money all day long and as much as I would love to laugh, it's far too pathetic, and frankly far too prevalent.

BTW, when did we get into a "my dad is bigger than your dad" argument? Okay, you win...my dad doesn't have a PHD. :confused: [QUOTE/]


You missed my point and are not as smart as you would like to think of yourself.
The point about my father, was in fact the statement that a smart person can learn the market and become quite good at it. You act and I hope you don't really believe this for your own sake , like you know the market and people are lost without the likes of you attitude, is absolute crap.
P.S. I am not your client, nor would I ever want to be. hahahhahhha

[QUOTE=scottman]
You can't blame people for investing based on speculation in 1998+. It wasn't so much speculation. You threw a dartboard at the tech funds and made 40%. That's just being smart with your money. The problem is Joe Blow didn't know when or where to move his money when things went bad, nor did he have an honest and proper advisor to tell him what to do with it.
The stock market, like I said is not for anyone, its for people who know it.
I was a political science major. I didn't know what an IRA was until I graduated. I've never said what I do takes a genius. Anyone could do this. They might not having the people skills to sell, but the concepts and principals of this stuff are very, very easy. Anyone can do that part of my job.

I'm not quite sure where you got the idea that I was letting my job get to my head, or that I was being arrogant in this thread. It seems you have a chip on your shoulder, care to share what's bothering you?


Throwing a dart at tech funds is smart? Hahahaha , boy if believe that you are in trouble. You research the companies, follow their earnings reports, watch their stock ticker over the years. Go to investors meetings, pay attention to who is running the company and how good they are it. Then you start to make a decision on investing. Last thing in the world you ever do is jump on the bandwagon in the stock market and its exactly your dartboard mentality that caused a lot of problems and lost a lot of people money.
Chip on my shoulder? No. Problem? Yes with your blanket statement that pretty much told the people here that they could not learn the market, or that their family members were all clueless. That was an overly generalized statement. Now you come back and try and retract it, because I call crap on it . Now you will probably want to, or try to rebute, what I have just written. I would advise against it, because I have pretty much answered all your questions as to why I posted. There is no response needed. End of discussion.

[ScottMan]

I knew you could not keep your ego out of this. You have a lot to learn in life.
Do I know you? How do you know my ego or what I have to learn in life. I'm so weirded out by how this thread has done a 180 from educational to a flame war.
You think that a smart person cannot do more than one thing? Your an idiot if you think that. I could have gone into physics, I chose not to. I could have been a lawyer and probably a quite good one at that. I chose not to. Why? I do what I do and I am quite happy at it. Does it mean I could not learn the stock market and become an excellent investor? No. If you believe that phallacy your proposing your smoking some good dope. I told you you sell people short and you just proved it. I would not take any of my investments to you based on what you just said previously.
Again, show me where I said smart people can't do more than one thing. As I said, I see the ugly side of investing where a friend or family member, or even the client themselves thinks they can do it, then fails miserably. Of course I'm not talking specifically about your father, you, or anyone else. I'm just telling you what I've seen, what most advisors have seen and what the industry research shows. The majority of people cannot manage their own money.

All I brought up about your father is that you prove what clients always say to me. "No, he's not licensed, but he knows the market!" Well that may be, but the statistics are that that's just not true the majority of the time. Of course smart people can do a lot of things, but investing for retirement is not a hobby like so many other things that smart people can do well. You must be immersed in the business and industry to know the ins and outs because everyone is trying to screw you. So when you randomly bring up your father's resume I'm thinking "umm...this is exactly what I was talking about". Just because people are in MENSA doesn't mean they're great at investing.

Like I said in my earlier post, what I do takes almost zero intellect. Some of the most bonehead people in my company make the most money because they talk to people well, make them feel comfortable, and take good care of them. So knowing I said that, how can you say I have a huge ego? I'm literally telling you everyone can do my job, yet I have a huge ego?!
You missed my point and are not as smart as you would like to think of yourself.
The point about my father, was in fact the statement that a smart person can learn the market and become quite good at it. You act and I hope you don't really believe this for your own sake , like you know the market and people are lost without the likes of you attitude, is absolute crap.
P.S. I am not your client, nor would I ever want to be. hahahhahhha
I understood your point, which is why I addressed it. I'm not saying your father isn't great at the market, all I was saying is that the point you're making is the point everyone makes, and traditionally it's not true.

I hope I act like I know the market, I'm being paid to. I don't think people are lost without me but I think people need financial advisors. We're going around in circles. I thought I had addressed this but I'll say it again.

The lay person is ignorant to the workings of the investment industry. So if you bring your portfolio to me and say "I want no changes made to my asset allocation, but give me your opinion on specific funds, stocks, and bonds" I may be able to save you some money. That's all. I can tell you that that fund manager has a history of style drift or that historically Janus funds have raised fund expenses. Advisors can enlighten people to things they don't usually know, not because they're stupid, but because they don't have the time to be educated to them. They're working or taking care of the kids or whatever else.

Finance is one of the few jobs in the world that the lay person thinks they can do just as well as the professional. Think about it. I wouldn't try to do what you do, or your father does, or be a plumber, or anything else. Yet everyone thinks they can tackle the market and they don't need us. Sure, some people succeed, and that's a welcome slap in the face to me, but don't take my word for it...read the statistics. Most people just can't do it.
Throwing a dart at tech funds is smart? Hahahaha , boy if believe that you are in trouble. You research the companies, follow their earnings reports, watch their stock ticker over the years. Go to investors meetings, pay attention to who is running the company and how good they are it. Then you start to make a decision on investing. Last thing in the world you ever do is jump on the bandwagon in the stock market and its exactly your dartboard mentality that caused a lot of problems and lost a lot of people money.
Uggh...wow. You missed the point. I wasn't saying I throw a dart at a board, or that people should. Christ. I was saying with the market as bullish as it was before the crash, people couldn't lose. They might as well have thrown a dart at the board and they would've made tons of money. That gives people false confidence. That's all I was saying. Did you think I threw a dart at a board?

Of course I read flow charts, use MorningStar, etc. and all other things we do. I certainly don't go to investors' meetings, and hardly any broker or advisor would do that.
Chip on my shoulder? No. Problem? Yes with your blanket statement that pretty much told the people here that they could not learn the market, or that their family members were all clueless. That was an overly generalized statement.
If you got that out of what I said, fine. You seem to be reading pretty deeply into what I'm saying. I say "statistics show people can't manage their money" and you read "drift freaq and zilvia, your families are clueless". I say "you may want to speak to an advisor for the ins and outs of the business that are tough for a lay person to find out" and you read "you people are stupid and can't possibly learn the market so you should see one of us so we can show you how to tie your shoes". That's why I asked if you had a chip on your shoulder. It just seems like you've got it out for advisors or people in service work and whenever they say "hey, we might be able to help!" you think "oh, so you're saying we're stupid!"
Now you come back and try and retract it, because I call crap on it . Now you will probably want to, or try to rebute, what I have just written. I would advise against it, because I have pretty much answered all your questions as to why I posted. There is no response needed. End of discussion.
What did I retract, man? Tell me where I went back on what I said and keep in mind explaining myself and saying "drift freaq, you put words in my mouth" is not retracting.

As for me wanting to answer your post, you got me! Saying "I'm going to flame you and there's no reason to even answer because I've already beaten you!" is like saying "I'm going to hit you and if you hit me back you're a violent jerk."

It doesn't work like that in the real world, man. You know that.

Now, if the mods have a problem with this, fine. Please feel free to take whatever action needed against me. I feel like I've handled this with some maturity but if I need to be pinked for flaming or if I need to stop I'll be glad to.

[Cash]

Drift freaq, there's no need to take this personal. I don't see where Scott made any personal or general attacks on anyone. He quoted some statistics and personal experience which I'm sure he can back up. He also was just adding his opinion on smart investing, which as I recall, was the original purpose of this thread. When I graduate college and start working, I'll most likely let a financial advisor manage my savings. Why? Not because I don't feel like I'm smart enough to figure out the stock market. It's becuase it's just like any other service. It's there for us to use. It's silly not to use it when the average investor does better with a financial advisor than without one. And when all financial advisors have to pass a battery of certification tests, we can rest assured they know what they're doing. All we need to worry about is finding a financial advisor that's not shady and won't screw us over. I'm sure you'd agree that many people are smart enough to become electricians, but that doesn't mean they're going to take electrician classes at the technical college down the road at night so they can do all the electrical work in their house? Nobody has time to learn how to do everything, nevermind capability. Sometimes it's nice to just pay someone else to do it, especially when they have more training and experience. And on top of that, why would you not utilize the services of a financial advisor when you could be earning more money using your time doing the kind of work you're trained in, instead of trying to learn other trades and industries. You seem pretty well educated so I'd imagine you understand the concept of opportunity cost.

[Cash]

ok... for a realistic question, what are some easily marketable degrees? I have decided to finish school in the next couple of years, but I still don't know what degree to get so I can make good money.

ACCOUNTING ACCOUNTING ACCOUNTING!!

After the WorldCom and Enron scandals, tons of new auditing laws were passed. As a result, the demand for accountants shot up. My brother is finishing up his masters in accounting and he and all the other acct majors have the big four public accounting firms practically begging them to come work for them. He goes out to dinner atleast once a week to the nicest restaurants in Athens with recruiters who pay for everything. He's gone to Atlanta a few times and stayed at the Ritz Carolton during recruitment weekends. When they were in Atlanta one time they road around in a limo to do a scavenger hunt. Deloit, KPMG, PWC, etc. send him free stuff in the mail all the time. He went to the accounting career fair on campus and came back with so many tshirts and nalgene bottles, it was absurd.

On top of that, the average starting salary straight out of college with a bachelors in accounting is around $50,000. Also, accounting internships pay about $20 to $30 an hour. That's not too bad for a summer job.

I'm going to be applying to business school next month and am seriously considering majoring in accounting. I had been a little scared of accounting at first because all of the bad stories you hear around campus, but now that I'm about to be finished with my first semester of it, it's really not that bad.

[g6civcx]

Please, I did not intend this thread to get into an argument about investing. I simply wanted people to start thinking about saving. I'll address comments as appropriate.

Like I said above, 25% is really really optimistic, and I do not expect it to stay that high, but for the past several years, my funds have averaged in the mid 30s%. Before that they had negative gains. So everything evens out in the future.

A good estimate would be between 8-10% if you're conservative. You'll still get there. Just not as quickly.

Right now people who near their retirement are seeing a huge jump. Some estimate that they can retire several years earlier simply because of the high earnings the market is getting.


HalveBlue, I highly highly recommend you take the maximum advantage of your TSP. Your IRS limit for 2006 is $15K. Next year it will go up $500. Matching will depend on your agency, but generally it will be around 5%.

TSP is arguably better than other privately funded 401k because TSP's administration costs are very low. I believe it's between 40c and 60c per $1K. 60cents per $1K is a pretty damn good deal.

There was an article back comparing somebody who made a meager salary, but invested heftily in TSP vs a neuro surgeon who invest meagerly in a 401k. The first person retired with more money than the neuro surgeon because 401k charges were much much higher.

I would say invest the IRS maximum limit if you can as early in the calendar year as possible to get earnings for the rest of the year. At least max out the matching so you get the free money.


Again, 25% is very aggressive, but lately the market is doing well. I would expect it to cool off considerably after next year, depending upon our administration and other political factors.

I think the thread is doing well for the most part. Please contribute more positive comments.



Scott and drift freaq, I understand where each of you is coming from. I know that just because you took some certification exam, that doesn't mean you know anything. On the other hand, day-traders aren't exactly savvy either.

I have a degree in business management and finance. I let the mutual funds worry about retirement because I don't have the time or industry knowledge to do it on a daily basis.

That said, if you absolutely have to manage your own portfolio then at least invest in things that interest you. This means you're more likely to understand the industry and what's happening with your companies. Don't just buy random things because people tell you it's good.

+reps for everyone in this thread except for Phlip and icecreamdan. Phlip doesn't need it, and dan, you posted in the wrong thread. College majors are in my other thread. -rep for you!!! :D :D

[theicecreamdan]

Ok, then I guess I can have some investing questions, how much money does it really take to make an investment that will actually go somewhere someday?

[trsilvias13]

just remember even yeilding that high of a return, there is still inflation. Cost of houses around here (bay area) in the last few year shot up substantially.

But invest and say early, it will be worth it.

[Dousan_PG]

401k is the best thing a young person can do
i do 10% of my paycheck. company matches up to 6%
going to cut mine back to 6% thru the company and do the other 4% thur another finanicial instituation. dont want no enron action you know?
overall im quite pleased with where my 401k is right now. 5 years on the program. very much looking forward to retiredment and the 'good life'
hehehe

DO IT. dont procrastinate!

[g6civcx]

dan, every single dollar you can stash away will end up being big bucks by the time you retire. There really is no limit, but save as much as you possibly can.

Right now they're saying you can still retire with $1 million. By the time I retire, I'll need at least $2 million if not more. So even if you invest every cent you have, you will still need to invest more to get to your retirement goal.

Like PG said, 401k is your friend. Tax savings alone will bump the value of your contributions up so much. Everything else is just bonus. Do as much as you possibly can.

Right now I'm planning on saving about $15,000 a year and hoping to have enough leftover to live off and pay off debt. If I have anything leftover, I would pay off all my debt. That will take a while, but in the rare chance I do pay them off early, I'll invest the rest of the money in something else.

Everybody's strategy is different depending on what they want. I just need to build up the retirement account early so that it will grow.

[usdm180sx]

401k is the best thing a young person can do
i do 10% of my paycheck. company matches up to 6%
going to cut mine back to 6% thru the company and do the other 4% thur another finanicial instituation. dont want no enron action you know?
overall im quite pleased with where my 401k is right now. 5 years on the program. very much looking forward to retiredment and the 'good life'
hehehe

DO IT. dont procrastinate!

If your 401k plan offers other investment options that have decent returns it’s not necessary to invest outside your plan. Just be sure your asset allocation is diversified and not all of your contributions are going to your company’s stock. That way if your company goes under you won’t be screwed. Also rebalance your portfolio every quarter.

The only reason to invest outside your 401k plan would be to invest in a Roth IRA because eligible withdrawals from a Roth IRA are tax FREE.

[g6civcx]

If your 401k plan offers other investment options that have decent returns it’s not necessary to invest outside your plan. Just be sure your asset allocation is diversified and not all of your contributions are going to your company’s stock. That way if your company goes under you won’t be screwed. Also rebalance your portfolio every quarter.

The only reason to invest outside your 401k plan would be to invest in a Roth IRA because eligible withdrawals from a Roth IRA are tax FREE.

That's a good idea. Don't invest all your money in one company. Diversify your portfolio. Then as you get older, you get less aggressive with your portfolio. Pretty much everybody knows that.

I wish I had enough left over to invest in ROTH IRA. At least for the next 6 months I'm putting in 85% to make up for those years. The rest is going to pay off debt. It's going to be tight.