How's Your Investment Portfolio?

[TruthBTold]

Why are we calling them cuts? Taxes will go up for most folk.

Kevin Slater

 

Well, at least we got them away from lying and saying it is "tax reform." Now I guess the people will find it is tax cuts for everyone but them.

[JayCeeKy]

Why are we calling them cuts? Taxes will go up for most folk.

 

Calling this con job "Tax Cuts" is the ultimate Orwellian Mind Game. The Republican playbook says that, when the people don't fall for an obvious lie, re-package it into an even bigger lie, and repeat until the uneducated and "low info" voters finally start to repeat it themselves. Of course the patsies also need a daily dose of Fox De-Information to reinforce the lie. Presiding at every one of these economic travesties is "good Catholic boy" and Ayn Rand devotee, Paul Ryan, smiling at the camera, holding an important-looking binder, ready to lead the lemmings off a cliff - what a great American.

 

And Trump, Manafort, Flynn, Trump Jr, Kushner, et al. should be in jail, not running this country into ruin.

[LivingnLA]

Thank you so much! Investing has always felt so big and daunting. But I'll do my damnedest!

 

I'll tell you what I've told my kids. Feel free to do with these words whatever you wish.

 

1. Life isn't fair and the overwhelming wealth of resources are in the hands of very few.

2. Don't expect anyone or anything to ever care more about you and your future than yourself.

3. In terms of financial topics, know your expenses. Understand what you spend, where, and why.

4. Understand that your time has value. Remember to account for that value regardless of what you're doing. In other words, you have one life, time is the most valuable resource you have, use it wisely.

 

Regarding investments, understand your whole situation first. figure out your expenses and create a budget. There are loads of apps to choose from so make the most of your smart phone. Mint, Personal Capital, and Clarity are some decent places to start to understand your financial situation. Avoid apps like Acorn because the fees take too much of your money. If you already have a decent amount to invest, you might want to check out one of the algorithmic investors: Aspiration, Betterment, OpenInvest, Wealthfront, etc.

 

Save as much as you can without sacrificing too much now. If you want to manage your own investing--helps lower the fees--then you need to do some research. Unless you plan to spend considerable time & energy on managing your investments, start with some good low-cost index funds.

 

If you want to jump into stocks or other financial instruments, do your research!

 

Some "old school classics" that are worth reading to start your investment journey:

• The Intelligent Investor: The Definitive Book On Value Investing by Benjamin Graham, Jason Zweig and Warren Buffett
  
• One Up On Wall Street: How to use what you already know to make money in the market by Peter Lynch
  
• The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New by Jeremy Siegel
  
• Rule #1: The Simple Strategy For Successful Investing in Only 15 Minutes a Week! by Phil Town
  

[TruthBTold]

I have been dollar cost averaging money out of the market since last summer and gradually paying down my mortgage. I know that sounds conservative, but I've let my retirement accounts ride the wave upwards so I consider my approach towards risk is balanced. I've thought about rebalancing my retirement money though I'm not really sure which funds would be a safe haven to sweep some of my profit taking into.

 

My advice is to pre-pay as much on your mortgage as you reasonably can. I was forced to retire early and unfortunately had a mortgage left to pay off. That in conjunction with ever increasing insurance costs make things tighter than I would like. Not having one or the other would be a lot better.

[bigvalboy]

I'll tell you what I've told my kids. Feel free to do with these words whatever you wish.

 

1. Life isn't fair and the overwhelming wealth of resources are in the hands of very few.

2. Don't expect anyone or anything to ever care more about you and your future than yourself.

3. In terms of financial topics, know your expenses. Understand what you spend, where, and why.

4. Understand that your time has value. Remember to account for that value regardless of what you're doing. In other words, you have one life, time is the most valuable resource you have, use it wisely.

 

Regarding investments, understand your whole situation first. figure out your expenses and create a budget. There are loads of apps to choose from so make the most of your smart phone. Mint, Personal Capital, and Clarity are some decent places to start to understand your financial situation. Avoid apps like Acorn because the fees take too much of your money. If you already have a decent amount to invest, you might want to check out one of the algorithmic investors: Aspiration, Betterment, OpenInvest, Wealthfront, etc.

 

Save as much as you can without sacrificing too much now. If you want to manage your own investing--helps lower the fees--then you need to do some research. Unless you plan to spend considerable time & energy on managing your investments, start with some good low-cost index funds.

 

If you want to jump into stocks or other financial instruments, do your research!

 

Some "old school classics" that are worth reading to start your investment journey:

• The Intelligent Investor: The Definitive Book On Value Investing by Benjamin Graham, Jason Zweig and Warren Buffett
  
• One Up On Wall Street: How to use what you already know to make money in the market by Peter Lynch
  
• The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New by Jeremy Siegel
  
• Rule #1: The Simple Strategy For Successful Investing in Only 15 Minutes a Week! by Phil Town
  

 

Excellent...

[+ WilliamM]

Save as much as you can without sacrificing too much now.

 

If I had not budgeted for traveling to Australia (3 times), Europe, Japan in the 15 years before retiring, I probably would not have gone to Russia and Bosnia after retiring.

[Kenny]

Republicans are do this so that there is no choice but to cut non-discretionary programs in order to be able to payoff a portion of the debt. There will be no discretionary monies left. So, the Democrats will have the unfortunate and politically disastrous decision to cut Medicaid, Medicare, and Social Security. Just wait and see.

It's called "Starve the Beast," a Club for Growth [sic] strategy. And, no, Dems will never, ever do the cuts. In fact, Paul "Ayn Rand" Ryan is setting up now to try it. His reelection is not secure, and his dream (and sane people's nightmare) could slip away if he doesn't act now.

 

http://nymag.com/daily/intelligencer/2017/12/paul-ryan-is-trying-to-talk-trump-into-cutting-medicare.html

[gallahadesquire]

My advice is to pre-pay as much on your mortgage as you reasonably can. I was forced to retire early and unfortunately had a mortgage left to pay off. That in conjunction with ever increasing insurance costs make things tighter than I would like. Not having one or the other would be a lot better.

 

In 1988, I had a very "reasonable" mortgage at 9.625%. Ten years later, with 20 years left, I was renegotiating my mortgage. SOmething like $500 less a month, at 6.125%. Or, pay $200 more a month, and pay it off in ten years.

 

I did the latter. Not having to make house payments is a load off my mind.

[LivingnLA]

Excellent...

 

Thanks.

[LivingnLA]

If I had not budgeted for traveling to Australia (3 times), Europe, Japan in the 15 years before retiring, I probably would not have gone to Russia and Bosnia after retiring.

 

Exactly. Budgeting and planning make all the difference.

[+ WilliamM]

Exactly. Budgeting and planning make all the difference.

 

I am also an advocate of taking chances, especially for those younger than 40. Thinking constantly about saving money before my 40th birthday would have bored me to distraction.

[gallahadesquire]

In 1984, they told me:

 

"You can put money in a 403(b). You can deduct that from your current income, and let it sit, tax deferred, until you retire [in 2017]."

I was sold. They also decided to make it a match ... you're 8% was matched with 8% of theirs.

 

Goodness! How could I refuse?

 

At another job, I was "grandfathered" into a 403(b) at 15% of my salary, per annum.

 

"I have no need for friendship ... friendship causes pain ... it's laughter and it's loving I distain

I am a rock ... I am an island."

-- Simon and Garfunkle

[OCClient]

My advice is to pre-pay as much on your mortgage as you reasonably can. I was forced to retire early and unfortunately had a mortgage left to pay off. That in conjunction with ever increasing insurance costs make things tighter than I would like. Not having one or the other would be a lot better.

I figured best to have the mortgage paid off because sometime down the road I will retire and at that point I'd like it paid. One never makes money in the market if one never takes some money off the table at some point, which is what I've decided to do. It feels a relief. I still worry that my retirement accounts are at risk from what Greenspan used to call irrational exuberance. I don't get the market sentiment right now. I haven't heard much of a reason for it other than pointing to the election outcome which is a head scratcher for me.

[+ bigjoey]

I figured best to have the mortgage paid off because sometime down the road I will retire and at that point I'd like it paid. One never makes money in the market if one never takes some money off the table at some point, which is what I've decided to do. It feels a relief. I still worry that my retirement accounts are at risk from what Greenspan used to call irrational exuberance. I don't get the market sentiment right now. I haven't heard much of a reason for it other than pointing to the election outcome which is a head scratcher for me.

 

Read an article recently that had our stock market going up in part due to much foreign money coming into our market.

 

"Irrational exuberance" is correct: Tesla now has more market value than Ford which actually makes money!

 

QE by the Fed has inflated the market as money has no where to go due to the low interest rates.

[LivingnLA]

I am also an advocate of taking chances, especially for those younger than 40. Thinking constantly about saving money before my 40th birthday would have bored me to distraction.

 

Definitely. That's the advantage of youth. Time to take risks.

[LivingnLA]

Well, today was unexpected. We've sold out of our Bitcoin because the threshold I set was hit for awhile today. I'm incredibly pleased with our gains this year, which are now real because we've finally realized them.

 

This leads me to another "investment lesson:" gains (and losses for that matter) are not real until they're realized. In other words, you can be worth millions "on paper," but until you actually sell your positions and get the money, the gain isn't real. It's just a number on a screen.

Edited July 6, 2018 by LivingnLA

[LivingnLA]

I figured best to have the mortgage paid off because sometime down the road I will retire and at that point I'd like it paid. One never makes money in the market if one never takes some money off the table at some point, which is what I've decided to do. It feels a relief. I still worry that my retirement accounts are at risk from what Greenspan used to call irrational exuberance. I don't get the market sentiment right now. I haven't heard much of a reason for it other than pointing to the election outcome which is a head scratcher for me.

 

It's all about risk tolerance and yes, gains aren't real until they're realized by selling for more than was paid.

 

The market seems to be based on a few huge themes: significant influx of foreign investors, record-setting profits in many industries, a promised massive tax cut (worth about $6 trillion/10yrs right now), and the presumed repatriation at a special low-rate followed by large stock-buybacks & dividend hikes.

[TruthBTold]

I figured best to have the mortgage paid off because sometime down the road I will retire and at that point I'd like it paid. One never makes money in the market if one never takes some money off the table at some point, which is what I've decided to do. It feels a relief. I still worry that my retirement accounts are at risk from what Greenspan used to call irrational exuberance. I don't get the market sentiment right now. I haven't heard much of a reason for it other than pointing to the election outcome which is a head scratcher for me.

 

I am with you on this (particularly because you quote me). I just would feel much less pressure if I did not have the mortgage on a very fixed income. Particularly because the Congress is going to make life harder. However, my sister once told me about why having a mortgage is good because there are deductions for that. However I believe that is one of the things that is being debated in the current Tax Bill. So look into all that. But for me I just want it gone.

[Kenny]

However, my sister once told me about why having a mortgage is good because there are deductions for that. However I believe that is one of the things that is being debated in the current Tax Bill.

I've certainly benefited from the mortgage tax write-off, but it is now an unfair perk for wealthier Americans. At least in cities, which is where most Americans now live, the middle-class can no longer afford to buy a house. So they are cut out of the tax benefit. Only wealthier new-buyers get it.

 

That doesn't mean the benefit should be eradicated, since mortgages last for decades and middle-class buyers in the past are still using it. But, going forward, it needs to be re-thought, given how it underwrites existing wealth.

https://www.wired.com/2016/12/year-housing-middle-class-cant-afford-live-cities-anymore/

[TruthBTold]

I've certainly benefited from the mortgage tax write-off, but it is now an unfair perk for wealthier Americans. At least in cities, which is where most Americans now live, the middle-class can no longer afford to buy a house. So they are cut out of the tax benefit. Only wealthier new-buyers get it.

That doesn't mean the benefit should be eradicated, since mortgages last for decades and middle-class buyers in the past are still using it. But, going forward, it needs to be re-thought, given how it underwrites existing wealth.

https://www.wired.com/2016/12/year-housing-middle-class-cant-afford-live-cities-anymore/

 

One of the sad things is that, for instance, all the employees of the City of Chicago MUST live within its borders. As it is becoming more and more expensive to live in cities (and actually Chicago is one of the more reasonably priced) its employees may not be able to live there while being required to do so. So the workforce simply quits and goes elsewhere. I am not sure if San Francisco has a similar ordinance but I can't imagine how the employees do it.

[+ bigjoey]

I am with you on this (particularly because you quote me). I just would feel much less pressure if I did not have the mortgage on a very fixed income. Particularly because the Congress is going to make life harder. However, my sister once told me about why having a mortgage is good because there are deductions for that. However I believe that is one of the things that is being debated in the current Tax Bill. So look into all that. But for me I just want it gone.

 

the bill is not final but I heard:

1-existing mortgages will be grandfathered in so your deduction may continue

2-the interest on the first $500,000 of mortgage value will still be deductible; a $600,00 mortgage will still have the interest deduction o the first $500,000 and only lose the deduction on the $100,000 over that amount.

 

Stay tuned.

[MikeyGMin]

As part of my planning for an early retirement next year, I recently moved my 401k into a capped fund with downside protection. I feel like I've captured or at least protected part of the irrational gains of this year. The principal is protected up to a 10% loss but gains are capped at 42% over a five-year period. Any gains over 42% go to the company. Basically, their payment for that 10% protection. Obviously they are betting on doing better than the 42%.

 

The five-year term coincides nicely with when I will be able to withdraw from the 401K without penalty. I thought I would be very happy with gains of 8% per year, but I think I may not have factored in compounding appropriately.

 

It feels like there is less risk and still the possibility of decent return, but did I do something stupid?

[samhexum]

I'm with Elon Musk in being paranoid about AI

 

http://synd.imgsrv.uclick.com/comics/cl/2017/cl171228.gif

[+ sniper]

As part of my planning for an early retirement next year, I recently moved my 401k into a capped fund with downside protection. I feel like I've captured or at least protected part of the irrational gains of this year. The principal is protected up to a 10% loss but gains are capped at 42% over a five-year period. Any gains over 42% go to the company. Basically, their payment for that 10% protection. Obviously they are betting on doing better than the 42%.

 

The five-year term coincides nicely with when I will be able to withdraw from the 401K without penalty. I thought I would be very happy with gains of 8% per year, but I think I may not have factored in compounding appropriately.

 

It feels like there is less risk and still the possibility of decent return, but did I do something stupid?

 

Unclear. You might have been able to buy options that would protect the downside while still allowing you to keep more of the upside, but without seeing what the quote was, who can say.

[Kevin Slater]

but did I do something stupid?

 

Ask me in five years.

 

Kevin Slater