Hulver's site || Best retirement strategy?

Best retirement strategy?

401k	7 votes - 36 %
Social Security	3 votes - 15 %
company pension	3 votes - 15 %
daughters	4 votes - 21 %
gold and other precious metals	3 votes - 15 %
Sanctuary	1 vote - 5 %
reverse mortgage	2 votes - 10 %
upload myself into the matrix	2 votes - 10 %
move to a socialist paradise	5 votes - 26 %
oil	1 vote - 5 %
guns	4 votes - 21 %
work until I drop	9 votes - 47 %
WIPO	1 vote - 5 %
Real Estate	3 votes - 15 %

19 Total Votes

How can you do the T and A | 31 comments (31 topical, 0 hidden) | Trackback

Best retirement strategy? Don't start from here... by dmg (2.00 / 0) #1 Tue May 22, 2007 at 04:14:25 PM EST

This is not financial advice.

Clearing debt ASAP is nearly always the best way forward.
All the stuff I've read on this says clear your debt as quickly as possible, then start investing in income producing assets. When you're young, put your money in higher risk growth instruments and as you get older migrate it into 'safer' investments.
There is no quick fix, but there may well be a slow fix - I'm counting on it!

Moving to a Socialist paradise may well be an option for you too, if your Germanic ancestry is well documented. You can get your German/EU citizenship and partake of all the wonderful free stuff you get without paying for it. I'm quite serious about this, you never know when dual nationality could be a life saver...

And you wouldn't have to pay EU tax, because unlike the US, Europeans are not taxed on their global earnings.

--
STFU UP ALL OF YOU. I haven't seen this many assholes in all my life.

Not necessarily by ShadowNode (2.00 / 0) #9 Tue May 22, 2007 at 07:54:29 PM EST

If your debt is financed at a lower rate than you can reasonably expect get on your investments, you're better off paying it at whatever the contractual rate is.

[ Parent ]

No - ignores tax by Phage (2.00 / 0) #20 Wed May 23, 2007 at 10:04:10 AM EST

Returns on investments are taxable. So, if you reduce your debts at 10% you get the benefit of 10% tax-free. To get an equivalent return you would have to have a return of 10% plus your tax rate. In soviet UKia this would translate to ~14%.

The Czar of Accounting. No Nit Too Small To Pick
[ Parent ]

If your debt is at 10%, sure by ShadowNode (2.00 / 0) #25 Wed May 23, 2007 at 06:20:25 PM EST

You're probably better off investing in getting rid of that. My bank is posting mortgage rates of 5-6% at the moment, which is a different story.

[ Parent ]

Errr no by Phage (4.00 / 1) #28 Thu May 24, 2007 at 05:57:34 AM EST

The tax effect will occur at any rates. In order to make a profit,
Return on investment>interest rate on debt+tax rate payable.
In your example you will need a return of 5.5%(compunding)+(0.4*5.5%)= 7.7%. That return must also be risk-free and compunding annually.

The Czar of Accounting. No Nit Too Small To Pick
[ Parent ]

7.7% isn't hard... by ShadowNode (2.00 / 0) #29 Thu May 24, 2007 at 05:26:56 PM EST

As I said, you can generally expect a 10% per annum return on properly managed investments over the long term. Risk is a short term phenomenon provided investment is properly diversified.

Also, at least in Canada, it's much easier to mitigate taxes on capital gains than income, and they're lower to start with. Further (I think, IANAA) you can write off most interest, especially on a mortgage on your primary residence.

[ Parent ]

Only in USia by Phage (4.00 / 1) #30 Fri May 25, 2007 at 05:06:31 AM EST

You're right, but only the US. certainly in Aus and the Uk interest on a mortgage is only deductible for a business premise. Also the capital gain on the sale would also be taxed.

The Czar of Accounting. No Nit Too Small To Pick
[ Parent ]

: Canadia too by ShadowNode (2.00 / 0) #31 Fri May 25, 2007 at 05:32:40 AM EST

At least, I'm pretty sure it is, up to a point. Also, I believe you're not taxed on any gain if you immediately use it to buy another home.
Even so, the point remains. You can often do better investing rather than paying off a mortgage, depending on the rate.

[ Parent ]

Well. by dmg (2.00 / 0) #26 Wed May 23, 2007 at 08:31:04 PM EST

That's why I said "nearly always the best way forward". Funding speculative investements with borrowed money carries additional risk. You may as well suggest trading naked call options as a 'retirement strategy'. It might work, but the risks are high.
--
STFU UP ALL OF YOU. I haven't seen this many assholes in all my life.
[ Parent ]

: Different purposes by ShadowNode (2.00 / 0) #27 Wed May 23, 2007 at 09:51:42 PM EST

You can generally expect about a 10% return over the long term. So long as you're diversified, you don't bear much risk, though you will see short term fluctuations. Mortgages, on the other hand, provide a low risk income stream which does not fluctuate.
If you have a fixed income, you're right, you shouldn't be investing against a mortgage. If you can pay off the mortgage over time regardless, you shouldn't worry too much about paying it off early.

[ Parent ]

retirement plan by cam (4.00 / 1) #2 Tue May 22, 2007 at 04:18:24 PM EST

get rich before age 45.

cam
Freedom, liberty, equity and an Australian Republic

I have less than four years by georgeha (4.00 / 1) #3 Tue May 22, 2007 at 04:20:43 PM EST

I better get scratching on those instant win tickets.

[ Parent ]

originally the plan was by cam (2.00 / 0) #5 Tue May 22, 2007 at 04:56:51 PM EST

get rich before 35.

cam
Freedom, liberty, equity and an Australian Republic
[ Parent ]

: That's because you got it backwards by georgeha (4.00 / 3) #6 Tue May 22, 2007 at 04:57:47 PM EST

you buy the 'vette after you get rich.

[ Parent ]

Missing Poll Option: by greyrat (2.00 / 0) #4 Tue May 22, 2007 at 04:29:11 PM EST

Suicide at 65 -- or whatever retirement age is now...

: Logan's Run by wiredog (2.00 / 0) #7 Tue May 22, 2007 at 05:20:55 PM EST

Earth First!
_{(We can strip mine the rest later.)}
[ Parent ]

401k plus by StackyMcRacky (2.00 / 0) #8 Tue May 22, 2007 at 06:10:08 PM EST

generally living below our means, so we can throw everything extra into savings. also, we're working on a few non-corporate income strategies that can carry us until we die.

plus a bunch of other stuff that i can't think of right now. i have a whole lifelong financial strategy we're working on.

sort of WIPO by clover kicker (2.00 / 0) #10 Tue May 22, 2007 at 08:08:43 PM EST

I once asked a buddy if he was had put any money into the Canadian version of a 401K, and he said he prefers to invest in canned food and shotgun shells.

At the time his retirement plan was a big vegetable garden, a few hens, a couple of pigs, etc. etc.

: that sounds like a pretty good plan by garlic (2.00 / 0) #16 Wed May 23, 2007 at 09:47:13 AM EST

I approve of investments that you can eat.

[ Parent ]

401k is not a pension by lm (4.00 / 2) #11 Tue May 22, 2007 at 08:32:19 PM EST

If you've got a corporate pension, lowering your 401k contributions shouldn't do anything to lower your pension. And if you are making 401k contributions, the last thing you should be doing is directing the contributions to be invested in company stock. Further, if the corporate match is in company stock, you should be liquidating it at the first opportunity to put into something else.

My retirement plan is to depend on my children to support me in my old age and, if that fails, to rob banks until I get caught.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic

Right by georgeha (2.00 / 0) #14 Tue May 22, 2007 at 10:32:48 PM EST

I have the 401k, which my corp matches halfways to 4%, and a zillion ways to invest (company stock, internally managed stock funds, bond funds, mixed funds, externally managed funds), and a pension, but will my pension fund be solvent in 20 years? How good is a Bethlehem steel pension these days.

I try to keep my company stock to around 25%, which works for me.

[ Parent ]

The former Bethlehem Steel pension is doing okay by lm (4.00 / 1) #21 Wed May 23, 2007 at 11:17:56 AM EST

Bought out by the federally funded PGBC, I believe that those who are vested in the pension get about 90% of what they would have had not Bethlehem gone TU. The real pain that the pensioners are feeling, though, is the loss of medical coverage with the bankruptcy court allowed the company to abort.

Actually, pensions are relatively secure so long as the company is funding it adequately at present and has done so in the past. Most of the pension crises are coming about because companies have spent entire profitable decades underfunding their pensions and then when business goes south, the shortfall starts to get noticed.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]

So the Bethlehem pension is funded by the by georgeha (2.00 / 0) #23 Wed May 23, 2007 at 11:57:22 AM EST

same government that is guaranteeing Social Security?

I'm hoping my pension is safely funded, our corp credit rating has improved, and I've never heard any dicey reports of pension mismanagement.

[ Parent ]

: Not entirely by lm (2.00 / 0) #24 Wed May 23, 2007 at 12:10:33 PM EST

The shortfall between what the PBGC received from the former Bethlehem fund (and interest earned on investing those funds) and what the PBGC has agreed to pay out to former Bethlehem pensioners is funded by the feds.
Relying on the government doesn't frighten me all that much for two reasons. The first is that if the US government goes bankrupt, being poor will be the least of the worries of most people save those who live in a handful of states with demonstrably competent state governments. The second is that Social Security and Medicare, for the most part, are actually competently run programs. They certainly aren't perfect but they also illustrate that government run programs can work and work reasonably well.
There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]

WIPO: Live off the fatta tha lan' by Greener (4.00 / 2) #12 Tue May 22, 2007 at 08:53:37 PM EST

Tell me about the rabbits, George

I invest in The Singularity by dn (2.00 / 0) #13 Tue May 22, 2007 at 10:25:14 PM EST

When the robots take over, I'm gonna be one of them!

I ♥
TOXIC
WASTE

All good points by Phage (2.00 / 0) #15 Wed May 23, 2007 at 04:12:48 AM EST

I'm a bit hazy on the US system.
As your local CPA I can tell you that dmg had a good post (!?).

Pay off debt.
Invest in tax efficient funds. Check your local regs.
Diversify.
Import 500Kg of Class A stuff.

Also why is real estate not on your poll ? Long term low-risk and can provide both an income stream and capital gain.

The Czar of Accounting. No Nit Too Small To Pick

because he had an LM like experience. by garlic (2.00 / 0) #17 Wed May 23, 2007 at 09:50:00 AM EST

[ Parent ]

: He's allergic to construction ? by Phage (2.00 / 0) #18 Wed May 23, 2007 at 09:58:34 AM EST

The Czar of Accounting. No Nit Too Small To Pick
[ Parent ]
: That's not really the same thing, though by lm (2.00 / 0) #22 Wed May 23, 2007 at 11:23:54 AM EST

Buying a single house to rent out for extra income compares to real estate investment in the same way that an interest bearing checking account compares to currency investing. A serious real estate investor will put up >100k as down payment for a >500k mortgage and either buy a multi-unit complex with or speculate on large land set to become the next suburban sub-division of paradise.
Of course as you get out of the heartland and out to the coasts the barrier to entry goes up. You probably need >500k to be serious real estate investor in NYC while in Ohio, 100k will get you started just fine.
There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]

I added real estate by georgeha (2.00 / 0) #19 Wed May 23, 2007 at 10:03:50 AM EST

though a reverse mortgage comes close, and I count myself lucky to walk away from our last house coming out about even. lm may do better than that, who knows.

[ Parent ]

How can you do the T and A | 31 comments (31 topical, 0 hidden) | Trackback


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