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PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)
- Thread starter Smack Tripper
- Start date
JohnfrmCleveland
Footballguy
Here's something to think about that might get you guys on the same page: when you invest in the stock market and make money, where do the profits come from?It isn't way down my list. It is a serious issue that isn't getting enough coverage due to the complexity/opacity of the alternative investment and pension industries.Great job explaining why you chose to post about something way down on the list of reasons why pensions are in trouble.Predictable. The next time I read a response from you where you don't erroneously attribute what I think will be the first.
You're obviously not interested in discussing it and explaining it or myself to you would be a waste of time.
Well, it should be. Pension funds were running into trouble long before alternatives were even on their radar. 2 and 20 out of a minority portion of their allocation is not a major factor in their shortfalls, and that's not even accounting for any benefits.It isn't way down my list. It is a serious issue that isn't getting enough coverage due to the complexity/opacity of the alternative investment and pension industries.Great job explaining why you chose to post about something way down on the list of reasons why pensions are in trouble.Predictable. The next time I read a response from you where you don't erroneously attribute what I think will be the first.
You're obviously not interested in discussing it and explaining it or myself to you would be a waste of time.
The increasing allocations in alternative investments is a symptom, not the disease.
KCitons
Footballguy
Doctor Detroit
Please remove your headgear
Was poking around this week looking for some 401k allocation strategy stuff and ran across this.
Not anything we haven't discussed before but I like the approach this guy takes, I think this is pretty easy to understand material for the casual investor. I'm definitely a samurai, and my asset allocation is 85/15 which he says falls in-line with that approach. Winning?
Not anything we haven't discussed before but I like the approach this guy takes, I think this is pretty easy to understand material for the casual investor. I'm definitely a samurai, and my asset allocation is 85/15 which he says falls in-line with that approach. Winning?
urbanhack
Fight The Power!
Magic?Here's something to think about that might get you guys on the same page: when you invest in the stock market and make money, where do the profits come from?It isn't way down my list. It is a serious issue that isn't getting enough coverage due to the complexity/opacity of the alternative investment and pension industries.Great job explaining why you chose to post about something way down on the list of reasons why pensions are in trouble.Predictable. The next time I read a response from you where you don't erroneously attribute what I think will be the first.
You're obviously not interested in discussing it and explaining it or myself to you would be a waste of time.
Random
Footballguy
Interesting. I'd say I'm a samurai, but I'm still at 60/40 in my 401K. Maybe 70/30 including IRAs.
JohnfrmCleveland
Footballguy
No, but (except for dividends) it doesn't come from company profits, either.Magic?Here's something to think about that might get you guys on the same page: when you invest in the stock market and make money, where do the profits come from?It isn't way down my list. It is a serious issue that isn't getting enough coverage due to the complexity/opacity of the alternative investment and pension industries.Great job explaining why you chose to post about something way down on the list of reasons why pensions are in trouble.Predictable. The next time I read a response from you where you don't erroneously attribute what I think will be the first.
You're obviously not interested in discussing it and explaining it or myself to you would be a waste of time.
urbanhack
Fight The Power!
Well of course not!!No, but (except for dividends) it doesn't come from company profits, either.Magic?Here's something to think about that might get you guys on the same page: when you invest in the stock market and make money, where do the profits come from?It isn't way down my list. It is a serious issue that isn't getting enough coverage due to the complexity/opacity of the alternative investment and pension industries.Great job explaining why you chose to post about something way down on the list of reasons why pensions are in trouble.Predictable. The next time I read a response from you where you don't erroneously attribute what I think will be the first.
You're obviously not interested in discussing it and explaining it or myself to you would be a waste of time.
JohnfrmCleveland
Footballguy
So, doesn't it bother you that the price of stocks is so untethered from company performance?Well of course not!!No, but (except for dividends) it doesn't come from company profits, either.Magic?Here's something to think about that might get you guys on the same page: when you invest in the stock market and make money, where do the profits come from?It isn't way down my list. It is a serious issue that isn't getting enough coverage due to the complexity/opacity of the alternative investment and pension industries.Great job explaining why you chose to post about something way down on the list of reasons why pensions are in trouble.Predictable. The next time I read a response from you where you don't erroneously attribute what I think will be the first.
You're obviously not interested in discussing it and explaining it or myself to you would be a waste of time.
Agree with you completely. The baby boomer generation got the benefit of the huge stock market run for the last 30 years. Around 1980 when the boomers were entering the work arena/already established, the S&P 500 was at 100ish. So, any money they socked away is now worth 19 times what it was now that they are retiring or already retired. Yes, there were bumps along the way, but considering inflation, house prices and the stock market, they have a lot of wealth that is going to be transitioning to their kids now through the next 20+ years. I think estate taxes will be a big change and corporate taxes.
I am not pro-taxes, but I agree that I think that a national sales tax/variation of that and removal of the corporate income taxes will be coming soon as companies continue to move offshore just to avoid taxes yet still "earn" most of their money in the US. If it brought the investment/jobs back here, I think I could be for it to remove those loopholes.
Sand
Footballguy
Very reasonable discussion of asset allocation. I'd also recommend The Ivy Portfolio. It goes a bit deeper, but gives you some ideas on how to fine tune. I don't recommend financial books lightly as there are about a zillion pieces of crap out there. This is by Mebane Faber, though, one of the very few financial gurus who really knows his stuff and provides very high quality advice. (And by very few I mean a list like Buffett, Faber, Munger, and Gross).
Sand
Footballguy
Where do you get the silly notion that the price of stocks is untethered from performance?
urbanhack
Fight The Power!
Of course it does, I was being sarcastic. The stock market is the biggest sham and pyramid scheme in the history of the country.So, doesn't it bother you that the price of stocks is so untethered from company performance?Well of course not!!No, but (except for dividends) it doesn't come from company profits, either.Magic?Here's something to think about that might get you guys on the same page: when you invest in the stock market and make money, where do the profits come from?It isn't way down my list. It is a serious issue that isn't getting enough coverage due to the complexity/opacity of the alternative investment and pension industries.Great job explaining why you chose to post about something way down on the list of reasons why pensions are in trouble.Predictable. The next time I read a response from you where you don't erroneously attribute what I think will be the first.
You're obviously not interested in discussing it and explaining it or myself to you would be a waste of time.
urbanhack
Fight The Power!
Sand
Footballguy
Ben Graham: "With that perspective in mind, the stock owner should not be too concerned with erratic fluctuations in stock prices, since in the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine"
JohnfrmCleveland
Footballguy
Because the gains from speculation should go up or down depending more on the amount of money investors have on hand than on company performance, or the economy's overall performance. The stock market fluctuates far more than our economy does. So while one stock might outperform another stock based on good reasoning, the overall investment in stocks isn't based on anything reasonable at all. The stock market is just a convenient place for the rich to gamble. It truly is a bit of a Ponzi scheme, because profits (outside of dividends) rely on new investment coming in and bumping up prices.
mquinnjr
Footballguy
Think of quarterly/annual P&L performance for a publicly traded company as you would weekly stats for FF. Market prices in FF leagues drop and rise based upon past performance and overall situation for a player. The stock market and corporate earnings are the equivalent of player stats + situation for FF. Being a FF board, thinking this explanation can be made to loosely work.
Sand
Footballguy
I don't have time to go into a deep debate on this, so I'll just throw a bomb and run.
This is a set of ridiculous statements.
So you're keeping all your money under your mattress?
Why does it bother you so much? Yes, there is speculation with stocks and at the end of the day, the value of a particular stock is what people think it's worth and what price point they are willing to buy and sell it at. Although there isn't an exact calculation to figure out this value, it is sort of tied to a company's performance over time. If a company if consistently making money and growing its assets....guess what.....its value will increase.
JohnfrmCleveland
Footballguy
Understood - that's why I said that one stock might outperform another stock for good reasons, within the overall pool of money. But the amount of money invested in the stock market overall has little to do with anything except the amount of money sitting around with nothing better to do.
JohnfrmCleveland
Footballguy
No, of course not - we're part of the pyramid, too.
Here is why it bothers me (a little, not a lot): a lot of people's retirement funds depend on stock prices. Also, there is still a movement in this country to replace Social Security with private investment. Now think about what would happen if the government made the switch, and all the money currency going to FICA taxes suddenly went into the market. Prices would go nuts, would they not? And not for any better reason than there is more money being invested - it would have nothing to do with the economy's performance. It would be 99% Ponzi profit, if not 100%. Some people would take their money out at a good time, but their gains would be coming from the investment dollars of somebody younger. That means that somebody else loses.
Anyway, it's something to think about. When you invest, you might think you're in control of your horse, but your horse is riding an elephant, and you really don't have much control over your situation at all.
Sand
Footballguy
You can't prove this, nor does the data support this historically. We had a rising P/E curve for the markets in WWII up until the war ended and then it fell off (labor should have come back into this country after WWII and boosted the markets). The opposite happened in WWI, BTW. We had a massive spike in market P/E in 2000 with no magic infusion of funds. There are lots of factors that go into the market, but to say it is 99% Ponzi is, frankly,JohnfrmCleveland said:
.In fact, a reasonable argument can be made that such a reintroduction of private cash would boost interest rates, which would cool the markets.
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JohnfrmCleveland
Footballguy
Why would that post-WWII labor boost the markets? Those guys didn't have any money yet. And when they got it, they were buying houses and stuff for their families, not stock.You can't prove this, nor does the data support this historically. We had a rising P/E curve for the markets in WWII up until the war ended and then it fell off (labor should have come back into this country after WWII and boosted the markets). The opposite happened in WWI, BTW. We had a massive spike in market P/E in 2000 with no magic infusion of funds. There are lots of factors that go into the market, but to say it is 99% Ponzi is, frankly,JohnfrmCleveland said:
In fact, a reasonable argument can be made that such a reintroduction of private cash would boost interest rates, which would cool the markets.
In 2000, we had the dot-com phenomenon, which definitely wasn't based on earnings. People were buying up any internet-related stock they could find. Then it crashed - some think because of Clinton's surplus, because those guys were paying real dollars in taxes based on paper gains.
If you buy stock for $1000, then sell it for $1100, where has your profit come from? From new money introduced into the market, money that people aren't spending on goods or services. The market doesn't go up on good news alone - it goes up when stocks are trading at higher prices, which means it is dependent on new money coming in. If there is lots of savings sitting around, the stock market is strong. But if your bank suddenly offered a 5% return on your savings account, a whole bunch of dollars would leave the stock market in a hurry, as people would move their money to banks. And that would have nothing to do with the overall economy, it's just a lower volume of cash in the market.
A reintroduction of private cash from savings should lower interest rates, because there would be excess money looking for a return.
Unlike goods and services, which expand to meet demand, there are a limited number of shares of stock. So more money will equal higher prices. If SS was privatized and all of that FICA money was shunted into stocks, yes, I really think that prices would go up accordingly.
Sand
Footballguy
An infusion of cash introduces all kinds of spending, not just investing. Good and services become more in demand, thus inflationary. This is why we worry about printing money and inflation.
The savings rate of this country is tough to move up. I'd argue that allowing FICA money to be spent into the markets would also lower the savings rate outside such vehicles and cause demand for goods and services to increase.
Anyway, back to investing talk.
Doctor Detroit
Please remove your headgear
Can't you nerds talk about this in some macro economics thread? No one gives a ####!
Sand
Footballguy
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Doctor Detroit
Please remove your headgear
A bankrate.com study:
36% of Americans have not saved $1 toward retirement
24% of Americans aged 50-64, have not saved $1 toward retirement
Every day more than 9000 Americans turn 65. Nice job Baby Boomers, you're killing it.
36% of Americans have not saved $1 toward retirement
24% of Americans aged 50-64, have not saved $1 toward retirement
Every day more than 9000 Americans turn 65. Nice job Baby Boomers, you're killing it.
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Balco
Footballguy
Oof, Totally inexcusable. For the vast majority of americans, saving 10% of salary is very achievable.A bankrate.com study:
36% of Americans have not saved $1 toward retirement
24% of Americans aged 50-64, have not saved $1 toward retirement
Every day more than 9000 Americans turn 65. Nice job Baby Boomers, you're killing it.
Sand
Footballguy
There will always be people who simply don't plan for the future, or just tell their future selves to #### off. That's what SS is for, right?Oof, Totally inexcusable. For the vast majority of americans, saving 10% of salary is very achievable.A bankrate.com study:
36% of Americans have not saved $1 toward retirement
24% of Americans aged 50-64, have not saved $1 toward retirement
Every day more than 9000 Americans turn 65. Nice job Baby Boomers, you're killing it.
Dentist
***Official FBG Dentist***
correct. Actually those stats weren't surprising to me.. you're talking about the bottom 1/3rd of society... these are people who don't work jobs that have retirement programs and couldn't tell you the difference between a Roth and a MothThere will always be people who simply don't plan for the future, or just tell their future selves to #### off. That's what SS is for, right?Oof, Totally inexcusable. For the vast majority of americans, saving 10% of salary is very achievable.A bankrate.com study:
36% of Americans have not saved $1 toward retirement
24% of Americans aged 50-64, have not saved $1 toward retirement
Every day more than 9000 Americans turn 65. Nice job Baby Boomers, you're killing it.
Furthermore there are plenty of people that definitely tell their future selves to f off and who prefer to enjoy what little extra money they have when they are in their 20-40's and certainly have no thought of leaving any type of legacy.
It's somewhat sad seeing those people in their old age having to move in with family, getting horrible medical treatment, losing their teeth, and basically having really horrible golden years... but we are in America and people are free to dig their own grave.
Fortunately we do have social security and medicare so that at least these people aren't out begging in the streets.
Sand
Footballguy
The surest retirement gamble - where you decide to retire. According to this study there is a 35% difference between states in buying power. Looks like you have to be Chet to survive well in DC. I feel fortunate to live in one of the cheapest states.
Doctor Detroit
Please remove your headgear
If I stay in this area, I will move the day after I retire. This is absolutely a key component in the calculation and something I have always considered. Thing is the real estate is so good in this area and it's not likely to get any worse, that I'm going to be able to buy three houses in another state for the amount I get for the one I live in now. I don't necessarily consider that when I'm looking at retirement assets, but it's going to put me way the hell over the top.
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Doctor Detroit
Please remove your headgear
So a savings tip.
I have two stealth accounts which I take money out of my check before I get it.
One pays for my cabin and for my nieces' private school. I always have a nice balance in this mostly because I refuse to even get an ATM card for it. So to withdrawal money my Dad has access to get money for my nieces and I take bulk sums when I visit my cabin. There are bank branches near me now, but when I lived in Texas and overseas I had no access at all. Even now I have to actually physically go to the bank to withdrawal money, and that is such a pain. So I rarely do it, and that important money stays relatively safe.
So why not implement that sort of idea again? Two weeks ago I decided to start a bar/game fund. Basically this is money I spend at the bar and at sporting events, which I think needs its own account. So I am trying to train myself to only use this account for games and bar trips, but does not include tickets. $40 a pay period seems fair, let's start there and see how it goes. Debit/ATM card with this one though, and I have to wait until there is some balance there before I begin biblically using it.
But I was the person who hid money under the carpet when I was a kid, for no real reason. I think having depression era grandparents rubbed off on me, although they wouldn't take kindly to my credit card balances over the past 11 or so years. Those days are over though, I've entered the cash for goods portion of my life now.
I have two stealth accounts which I take money out of my check before I get it.
One pays for my cabin and for my nieces' private school. I always have a nice balance in this mostly because I refuse to even get an ATM card for it. So to withdrawal money my Dad has access to get money for my nieces and I take bulk sums when I visit my cabin. There are bank branches near me now, but when I lived in Texas and overseas I had no access at all. Even now I have to actually physically go to the bank to withdrawal money, and that is such a pain. So I rarely do it, and that important money stays relatively safe.
So why not implement that sort of idea again? Two weeks ago I decided to start a bar/game fund. Basically this is money I spend at the bar and at sporting events, which I think needs its own account. So I am trying to train myself to only use this account for games and bar trips, but does not include tickets. $40 a pay period seems fair, let's start there and see how it goes. Debit/ATM card with this one though, and I have to wait until there is some balance there before I begin biblically using it.
But I was the person who hid money under the carpet when I was a kid, for no real reason. I think having depression era grandparents rubbed off on me, although they wouldn't take kindly to my credit card balances over the past 11 or so years. Those days are over though, I've entered the cash for goods portion of my life now.
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moleculo
Footballguy
Dave Ramsey approves.So a savings tip.
I have two stealth accounts which I take money out of my check before I get it.
One pays for my cabin and for my nieces' private school. I always have a nice balance in this mostly because I refuse to even get an ATM card for it. So to withdrawal money my Dad has access to get money for my nieces and I take bulk sums when I visit my cabin. There are bank branches near me now, but when I lived in Texas and overseas I had no access at all. Even now I have to actually physically go to the bank to withdrawal money, and that is such a pain. So I rarely do it, and that important money stays relatively safe.
So why not implement that sort of idea again? Two weeks ago I decided to start a bar/game fund. Basically this is money I spend at the bar and at sporting events, which I think needs its own account. So I am trying to train myself to only use this account for games and bar trips, but does not include tickets. $40 a pay period seems fair, let's start there and see how it goes. Debit/ATM card with this one though, and I have to wait until there is some balance there before I begin biblically using it.
But I was the person who hid money under the carpet when I was a kid, for no real reason. I think having depression era grandparents rubbed off on me, although they wouldn't take kindly to my credit card balances over the past 11 or so years. Those days are over though, I've entered the cash for goods portion of my life now.
My wife and I, when we are on-track, have moved back to an all-cash system for groceries and misc. shopping money. All budget items (utilities, mortgage, insurance, etc + gas because cash for gas is a pain in the ###) goes from one account on auto bill pay. For everything else - we pull a set amount of cash out once every two weeks and only spend that. If you can't afford it with the money in your wallet, don't buy it. Makes a big difference, but tough to reconcile on-line shopping.
moleculo
Footballguy
also, I hear ya on depression era grandparents. IMO that's something kids these days are missing. My grandma used to save the plastic containers her margarine came in and used it like tupperware. She was fairly wealthy, but used to buy day-old donuts. Cheap as the day was long, but died a wealthy woman despite not being a woman of means.
To this day, I get a guilty twinge when I toss something out that could possibly be useful somewhere else, but then my wife calls me a pack-rat or a hoarder and that's the end of that.
To this day, I get a guilty twinge when I toss something out that could possibly be useful somewhere else, but then my wife calls me a pack-rat or a hoarder and that's the end of that.
Doctor Detroit
Please remove your headgear
I'm not much for on-line shopping although I do religiously order Gorditas from Amazon, lol.Dave Ramsey approves.So a savings tip.
I have two stealth accounts which I take money out of my check before I get it.
One pays for my cabin and for my nieces' private school. I always have a nice balance in this mostly because I refuse to even get an ATM card for it. So to withdrawal money my Dad has access to get money for my nieces and I take bulk sums when I visit my cabin. There are bank branches near me now, but when I lived in Texas and overseas I had no access at all. Even now I have to actually physically go to the bank to withdrawal money, and that is such a pain. So I rarely do it, and that important money stays relatively safe.
So why not implement that sort of idea again? Two weeks ago I decided to start a bar/game fund. Basically this is money I spend at the bar and at sporting events, which I think needs its own account. So I am trying to train myself to only use this account for games and bar trips, but does not include tickets. $40 a pay period seems fair, let's start there and see how it goes. Debit/ATM card with this one though, and I have to wait until there is some balance there before I begin biblically using it.
But I was the person who hid money under the carpet when I was a kid, for no real reason. I think having depression era grandparents rubbed off on me, although they wouldn't take kindly to my credit card balances over the past 11 or so years. Those days are over though, I've entered the cash for goods portion of my life now.
My wife and I, when we are on-track, have moved back to an all-cash system for groceries and misc. shopping money. All budget items (utilities, mortgage, insurance, etc + gas because cash for gas is a pain in the ###) goes from one account on auto bill pay. For everything else - we pull a set amount of cash out once every two weeks and only spend that. If you can't afford it with the money in your wallet, don't buy it. Makes a big difference, but tough to reconcile on-line shopping.
I like Ramsey, I think he has great content and is mostly helpful to those who listen to him. I don't agree with his politics, although he rarely brings them up, and I don't care for the protestant religious connection to his ideas. I also disagree that you should put off contributing to retirement if your company matches, to me FREE MONEY is the #1 element of true financial freedom.
That said, he delivers solid guidance and theoretically it makes a lot of sense in approach. I think finding your own way with the help of free information out there is the way to go, and I recommend Ramsey or Money Girl to anyone who just doesn't get this financial stuff. I get it, I have always managed my bills and money and have done it well. But like others credit cards and new cars have sidetracked me. I'm not the guy that needs the latest and greatest either, and we don't eat out more than five times a month. I would consider myself somewhat frugal, and since I make a pretty good living, I should be in a great spot.
But I'm not. Two mortgages hurt but both are worth it IMO, my primary residence is a good spot and my cabin is my retirement home. Pay it forward, I'll make a good profit on my primary residence also. Where do I spend? Events, sporting and otherwise. Travel, yeah...I like to travel. What Ramsey has made me realize is that I HAVE TO live within my means, and that's what I'm doing now. Why? Because I want to be loaded to give it all away to various wildlife foundations. That's a reasonable goal, I'll always be able to eat, have a roof over my head, and own the essentials because I started saving for retirement when I was in my early 20s. Now in my early 40s, I want to build wealth so I can give all this away to make the planet a better place.
Weird? Maybe.
Doctor Detroit
Please remove your headgear
My paternal grandparents never gave me anything, never got X-mas stuff from them or anything. They had 25 grandchildren though (I am the oldest), so they had to pick and choose their spots. In the summer my Grandpa would come and get me to work on some home project he had going. Deck, fence, basement caulking, etc. I'd get $10 ($25 or so in today's money) for 5-6 hours of work, and I;d get a deli sandwich for lunch. Great deal for everyone.
My maternal grandparents were older and they gave more because I was the 2nd youngest grandchild, but they also made me work every time I went to see them. I mean I learned that I had to work from these people, which I think is something lost in today's handout world.
My paternal Grandma is still alive at 94 and she's as mean as I could ever hope to be. She always reminds me of the ####ty job me and grandpa did staining the deck that one summer, but I learned more from these people than I ever learned from my parents. Thanks to them, they raised a pretty good boy in Dr Detroit.
Doctor Detroit
Please remove your headgear
I agree that the cap should be raised (along with the retirement ages) but you the higher wage earners would definitely cause a ruckus if it jumped to 175k.Doctor Detroit said:I know it'll be gone, but you can estimate your Social Security here.
Also I had no idea the Social Security salary cap was only $117k, I thought it was actually more like $175k. Seems like if they just slowly bumped that up, the system would be fine.
Buddy Ball 2K3
Footballguy
I have so many different accounts that my wife has given up asking how we are doing.So a savings tip.
I have two stealth accounts which I take money out of my check before I get it.
One pays for my cabin and for my nieces' private school. I always have a nice balance in this mostly because I refuse to even get an ATM card for it. So to withdrawal money my Dad has access to get money for my nieces and I take bulk sums when I visit my cabin. There are bank branches near me now, but when I lived in Texas and overseas I had no access at all. Even now I have to actually physically go to the bank to withdrawal money, and that is such a pain. So I rarely do it, and that important money stays relatively safe.
So why not implement that sort of idea again? Two weeks ago I decided to start a bar/game fund. Basically this is money I spend at the bar and at sporting events, which I think needs its own account. So I am trying to train myself to only use this account for games and bar trips, but does not include tickets. $40 a pay period seems fair, let's start there and see how it goes. Debit/ATM card with this one though, and I have to wait until there is some balance there before I begin biblically using it.
But I was the person who hid money under the carpet when I was a kid, for no real reason. I think having depression era grandparents rubbed off on me, although they wouldn't take kindly to my credit card balances over the past 11 or so years. Those days are over though, I've entered the cash for goods portion of my life now.
2 - Work sponsored retirement funds
2 - Niece/Nephew Saving accounts (1 at Betterment and 1 at Etrade)
5 - Checking accounts: mortgage, travel, home improvements, monthly expenses & fun spending
4 - Personal Savings accounts: Emergency fund, investment funds (this is used to make purchases when the markets take large dips) retirement cash, & retirement home
2 - Investment accounts (Vanguard & Etrade)
I have all of our money automatically split each pay day and we dont miss a beat. It may seem a bit much but the only people it caused any extra work for was the HR department at the wife's work.
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culdeus
Footballguy
Interesting paper on another way to solve the retirement problem.
Q & A http://www.marketwatch.com/story/time-to-get-rid-of-all-those-401k-plans-2014-08-28?siteid=yhoof2
Full paper http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2450471
Q & A http://www.marketwatch.com/story/time-to-get-rid-of-all-those-401k-plans-2014-08-28?siteid=yhoof2
Full paper http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2450471
Sand
Footballguy
Read as: socialist utopian ivory tower professor devises way for a top down government controlled retirement system over and above the one that we already have.
Doctor Detroit
Please remove your headgear
There has been a lot of chatter lately about how the stock market is overpriced, can't go higher, blah, blah, blah. Vanguard recently ran hundreds of thousands of market scenarios in developing a module to try and predict returns over the next ten years.
What they came up with was the most probable outcome is a 7.7% gain in the broad index over the next ten years. The chances of that happening were nearly 50/50. The high end of the curve was 17.5% and the low end was -2%. Thought that was pretty interesting.
What they came up with was the most probable outcome is a 7.7% gain in the broad index over the next ten years. The chances of that happening were nearly 50/50. The high end of the curve was 17.5% and the low end was -2%. Thought that was pretty interesting.
mquinnjr
Footballguy
I get so frustrated when people I know say they don't want to invest in the Wall Street casino after 08. It's 6 years later, and you simply cannot afford to sit on the sidelines because of a paper tiger dip like 08 if you're like 25-30 years for even being able to touch the funds.
Yes, the market will go up, and down. Your Vanguard model proves, if your horizon is long enough, you can absorb them without realized impact and have a reasonable 8ish % annual return expectation over the entire time horizon.
Doctor Detroit
Please remove your headgear
This guy I work with who I know makes about 1/3 more than I do (and I make a decent living), told me he just cashed out all his stocks and is 100% U.S. Treasuries. He's less than ten years from retirement but he's a federal agent and is forced to retire at 55, meaning he'll be more than able to produce more income if he so desires. I tried to tell him gradually moving in and out of stuff and understanding risk versus age is what is important, and very few people actually time the market correctly.
I get so frustrated when people I know say they don't want to invest in the Wall Street casino after 08. It's 6 years later, and you simply cannot afford to sit on the sidelines because of a paper tiger dip like 08 if you're like 25-30 years for even being able to touch the funds.
Yes, the market will go up, and down. Your Vanguard model proves, if your horizon is long enough, you can absorb them without realized impact and have a reasonable 8ish % annual return expectation over the entire time horizon.
Well he said that he had made 8% this year while everyone else was up much less, because he always times the market. I basically just told him he was a genius and left it at that. He probably has a lot more money than I do, so what do I know? None of my business, and if he feels better about his approach than he would doing it like me, cool.
Dollar/cost averaging is the way to go IMO, buying or selling in bulk and in cycles of your choosing simply won't work forever. When the market goes down, you buy more and when the market is up you begin to get into the magic of compounding.
