“A penny saved is a penny earned.” -Benjamin Franklin
“The whole investing industry exists only by making commissions on trades and charging you fees for assets under management. Hence they encourage active trading/management funds and rarely let you see how you perform relative to an index fund (usually worse)” –Marion Boersma (grandpa)
Your fees are based on the amount of assets managed, which aligns our incentives with yours – when you do well, we do well. – Fisher Investments Uhh…what about when I do poorly? You still do well!
“You hear stories of secretaries at Microsoft being millionaires, their groundskeepers driving a Ferrari…I didn't want to be an innovator, I just wanted to make a quick, easy buck. I just wanted in” – Boiler Room
The time you spend investing in your occupation/career is probably your best most likely source of income Don't spend a lot of time becoming an expert on “maybes” / predicting what companies will do well, especially if it is close to random noise anyways!
Do something where you’re performing a real service for people. It’ll be a success. I like investment counseling. And I like helping others. It gives you pleasure you can’t get spending thousands of dollars. Sir John Templeton, May 1951
3 fund portfolio strategy Recommends a Revocable trust. Hyatt legal is $200/year compared to the $3K for the real cost.
Tax rates over time.
IRS Pubs are not considered a reliable source.
Want to make sure that the gross proceeds from the various 1099 documents is the correct amount or higher. Don't dare underreport proceeds on schedule d.
Fascinating series of posts.
By rolling ahead your bet, the odds start going against you! By making your bet size static or a static portion of your pot, you can keep the odds in your favor.
Assumes that buy and hold in one stock is a coin flip every day, which obviously it isn't. However maybe it's similar?!
|Real Life||Coin Flip Game||Outcome|
|Buy and Hold||Reinvest winnings each time||Losing game|
|Index Fund||Reinvest 1/N winnings across N stocks, is it rebalancing?||Maybe winning?|
|Traditional Portfolio||Rebalance winners and buy losers||Winning, barely|
|Best strategy||Fixed bet size, arithmetic!||But then your money would never grow…|
For whatever reason they're all different and have misunderstandings of the term “automatic investment”.
|Auto-Invest (for all accounts, has links to individual pages)||https://digital.fidelity.com/ftgw/digital/auto-invest|
|EFT Transfer Request||https://digital.fidelity.com/ftgw/digital/universal-tracker/|
Mostly points for Jeff Eischen.
Medium-term (5 year) goals:
You need seasoning. You need to grind through something for a while. Working at Intel and bringing in $100K per year while single is too easy. Why?
32:00 You need to have goals because you can only get so far by optimizing and subtracting unneeded costs. So what are you going to do with all of this money that you've saved?
39:30 Jeffrey likes FI and being frugal and investing wisely, but if you don't have a plan you'll be twitching in a coffee shop somewhere for lack of human contact!
Why not an active management approach? You're only picking an index fund because there are no fees?
Think income, not growth.
52:30-ish, “Get rid of optimize, optimize your happiness, leveraged, sustainable, marginal pleasure and money curve ”
Leveraging up and “buying” a home is not what I want to do…
Why is a small selling out of a position for means of income bad? Why are dividends so much better than stock buybacks / capital gains?
The dollars you invest today need to be more conservative than the later ones because you're going to get scared and sell out.
While a 0% loan for a year sounds great, it's a little different with credit cards.
Great old book based in London / UK about different perspectives on money and time.
As seen in Financial Risk Management for Dummies, by Aaron Brown of AQR Capital management.
I am enjoying your book so far! I have plenty more to read…
However, after thinking about the example in Chapter 1  (link to Google Books), I think your derivation of the expected return is incorrect. Let's run the idealized scenario of N = 250, 125 heads and 125 tails. We would expect the expected value to reflect this idealized scenario accurately, correct?
With the 20% / -18% return scenario, the expected value would be: 1.20^(125)*(1-0.18)^(125) = 0.984^125 = $.133. As expected from the trials.
With another scenario, a static dollar $.20 / $-.18 return, where the pot doesn't change: $.20*125 - $.18*125 + 1 = $3.50
But this isn't the same as the expected value ….? 1.01^250 = $12.03!
I'm confused now…
Really believes in a pre-nup big time and not getting married to avoid getting divorced.
Good book also by Howard Marks, although a little too high level for me.
Their goal isn't to outrun the winners, just matching the index is fine. However, they want to avoid all the downside recession risk that comes with the index. Sounds good to me.
Determining whether an investor is skilled (alpha) is not so easily determined after the fact! There were many other possible outcomes that could have but didn't happen. Did they just leverage up and take on more volatility/risk (beta)?
Also, investors that are bullish will look good in bullish markets, and look really bad in down markets. Same for vice versa. Just because someone calls the top doesn't mean they didn't have many false alarms before then.
Great explanation of risk by Howard Marks in “The Most Important Thing”. Probably a good writeup here: 2014-09-03-risk-revisited.pdf
Intel will not reimburse you for any frequent travel program points used
I always thought it was about how much I was worth. No more. I think you are a helluva lot richer without debt than with a massive net worth. I feel better about myself financially now than ever before. I always knew I owed somebody. Now that is gone and I can yell:
“I’M DEBT FREE!!!”
Multiply your returns!
Besides, financial portfolios can pay you a positive monthly cash flow. Houses cost money to keep. …
Finally, risk. Not only does leverage wildly exaggerate risk in any falling market, but the danger of putting all your net worth in one bucket these days is extreme. Real estate’s a sitting duck for more government taxation as it becomes a symbol of wealth (look at BC). Housing also turns illiquid when the market sours. Financial assets, in contrast, can be sold in seconds. The last thing you want going into retirement is a paid-off home that can’t be turned into cash flow to live on. So a one-asset plan’s a total crap shoot on what conditions may be when that holding must be punted.
Great article by patio11, kalzemeus software. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/
http://www.philosophicaleconomics.com/2016/01/movingaverage/, http://www.philosophicaleconomics.com/2016/01/gtt/, and https://earlyretirementnow.com/2018/04/25/market-timing-and-risk-management-part-2-momentum/.
Really nice video. How to win the loser's game.
Ford F-Series is best selling by far. Yikes. Source: http://www.wsj.com/mdc/public/page/2_3022-autosales.html
Smart accountant guy is noticing all the buildings falling over from poor construction, that has to mean something!
But Ray Dalio seems to think otherwise.
Smart beta (investing contrarian to a standard index based on different fundamental values) hasn't outperformed in the last 10 years only. The big growth and maybe popular companies just kept getting bigger. Interesting.
Contrarian contrarian (pro smart beta) view: https://www.greaterfool.ca/2019/04/13/divys/
Garth Turner. He confuses me.
Sounds gloom and doom one day, but the next he's saying things are great? Have to keep his worldview in context.
Advisor's Alpha is close to 3%, says Vanguard. https://adviceonlyfinancial.com/advisors-alpha-belongs-to-investor. Don't pay 1% for it! Get an advice-only advisor and pay yourself to do it.
Very clear their investment strategy. Didn't read it yet though. Probably
2pm Friday in Gresham.
Ronald G Ward, AAMS. 503-465-9390.
320 NW Burnside Rd Gresham, OR 97030
Some simple questions I'm curious about.
Quarterly market outlooks are “free”! Cool…
|American Fundamental INV f3|
|American New World F3(FNWFX)||Matches/beats index, recently has lower fee F3 fund|
|Bridge Builder Core Bond (BBTBX||Matches / beats index|
|Bridge Builder Core Plus Bond|
|Bridge Builder Intl Equity|
|Bridge Builder Large Growth|
|Bridge Builder Large Value|
|Bridge Builder Small / Mid Growth|
|Bridge Builder Small / Mid Value|
|Columbia Small Cap Value II 3|
|Dodge & Cox Income||Closely matches Vanguard's BIV. For some reason the benchmark is way down…|
|Dodge & Cox Intl Stock|
|EV Atlanta Capital SMID-Cap 1|
|Hartford World Bond Fund|
|Invesco Intl Growth R6||VWILX (but high min investment) sorta beats it|
|GPM US Govt' Money Market Capital|
|Mainstay Mackay High Yield Corp 1 (MHCAX)||Met or outperformed benchmark|
|MFS MA Investors Trust R6|
|Pimco Commodities Plus|
|TRP Equity Income|
|Virtus D&P Securities (REIT), assuming low fee one, PHRIX||Vanguard VNQ is comparable in performance.|
|Savings Account|| Closely matches Fed's overnight rate - 0.3%
Since it's short-term, isn't affected negatively by Fed increases
FDIC insured, so insurance on bank runs
|1-month Treasury ETF (SHV, BIL)|| More closely matches Fed rate, but has expense ratio of .15%
A lot easier than selling treasuries by hand back into the market
|Bonds||Since they're long-term, the yield goes down as Fed …. not sure|
|Stocks|| No clue what they'll do in short term.
However, over 10 experiments
Fascinating difference of opinion between ERN (concludes stocks) and Actuary on FIRE (concludes cash). Both can be expressed in the below table, which isn't very visual…
Another question! I claimed to write a program a while back for you that allowed people to get some knobs in working with the historical returns / Safe Withdrawal Rate data. While for short periods of investment time it's quite illuminating (and I should finish it just for that), one reason I lost some motivation to do it is because for long-term investing you have some evidence showing one can have hope of timing the business cycle market downturns/upturns!
Don't the market indicators severely lessen the relevance of the hands-off approaches to the SWR calculations (in a good way)? There are interesting bits to be sure, but in practice we can do better than that and making a full-blown calculator I still am digesting the still-helpful learnings from your simulations, but surely you aren't recommending shouldn't it be more like a 4 or 5% rule again?
Also, I'm curious on your opinion on using options to amplify the returns from knowing that market downturns/upturns are coming instead of just adjusting your asset allocation.
I kinda want to rank companies myself by different indicators, not just one column. Price to book value, current analyst sentiment, pe ratio, etc. As I learn more I can add more.
NOTE: ERN doesn't believe in everything he's saying. Interesting…https://earlyretirementnow.com/2018/06/13/good-and-bad-reasons-to-invest-in-individual-stocks/ https://www.choosefi.com/075-unfair-advantage-brian-feroldi/ ChooseFI podcast interview
For investors who have the time and inclination to research stocks, he'd recommend it. It can pay off!
If thousands of mutual fund managers and professional stock pickers with way more information, access, money, computers etc can't beat the index, what possible chance does an individual retail investor have? Yet, they are at a huge disadvantage?! Nice hook dude
MM (Money Managers) have different goals
No reimbursement fees. Also they're paid to get more NAV, not for returns.
Retail investors can go for the long term.
Advocates fundamental analysis of a stock over time, with a good amount of up front work to find the best potential companies. Do not look at the stock values over time as an investment decision, rather look at the fundamentals and add appropriately over time.
His personal returns over last 5 years were 155% vs. s&p 500 of 125%. Doesn't look that big (31% cagr vs. 25% cagr), but it adds up over time.
Keep in mind that 2/3 of Russell 3000 are losers, and 7% make up the winners / gains. So to match the market, 1/2 will be losers, 4/10 will do ok, and 1/10 will be a home run.
Wall Street tends to think for the next quarter. Volcanoes in Iceland affects Iceland air travel company short-term but shouldn't crater their stock. Same for subscribers flat for Netflix because of splitting their service, but neither really affected the long term business plan. Great buying opportunities.
Really likes stay-cations, especially with kids. Go to a hotel nearby with a heated pool. Experience something different, very cheaply!
Also feels connecting with local community (sports coach…some other examples) brings a ton of benefits. You'd think just doing the things you're really passionate about will be great, but it's insular. There's a lot more to the world to see!
Video I didn't watch yet. 10 secrets, blah blah https://www.youtube.com/watch?v=4a51wQAOGR4
Index funds do beat out 80% of managers, however it's an oversimplification of the market. You can pick stocks still by taking on more “risk” and researching companies and picking what you think to be good ones.
Went over cash flow quadrant and the mindsets of different investors, also a quadrant.
Reading through his latest book, which is a gripping account of the 2008 recession as well as the 1930s recession. I think he'll talk about the upcoming one too.
Partly caused by housing crisis, but a lot caused by the bets on those that were made easy by options? $500 trillion or something. Hmm…might need to re-read.
deleveraging problems has never worked when these problems were big. When austerity has been tried, even in persistent attempts to get out of debt, it has eventually been abandoned by all governments because it didn’t work, and it was too painful. That is because the decreased borrowing and spending (and consequences of these on employment and many other pain points) make this type of deleveraging as self-reinforcing on the downside as the increased debts and spending that cause bubbles is on the upside.
Would make an interesting statistical study. Use the backtesting website and … do some statistics! A good saturday project, along with re-deriving the “savings to years to retirement” thingy.
Easy option is to buy bonds. But…you can bet that the market will go down, which is more profitable.
There are mutual funds that just short the market. And make money when the S&P 500 goes down! Not sure who takes the other side of those trades, but … yeah. Weird.
Also, this guy:
Please don’t try to time the market.
But if you must, buy year long puts (leaps) on SPY or other heavily traded index fund ETFs. Go deep in the money, and the payout starts to look enough like short selling for most people’s needs.
I usually find options superior to inverse ETFs, and it gets you around the restrictions against short selling and/or margin.
Also the bogleheads wiki on churn in that stuff eating your returns. https://www.bogleheads.org/wiki/Inverse_and_leveraged_ETFs
If I want to do it, will need to read more. Maybe “How to make money selling stocks short”?
Mr. Martin tells the cold-calling brokers to send him their trading history and results and a copy of their income tax returns for the past few years. If they outperform Mr. Martin, then he'll take them. None of them end up doing it, probably because none of them can do it, much less will they send him their income
Darin likes them. However, I'm not so sure.
I can access it through Multnomah County library! However, need to do the right link…https://multcolib.org/resource/wall-street-journalÍ
How a 2% fee on 7% returns (say 1/3) eats away 2/3 of your returns over 50 years. It just happens…not sure entirely yet.. here's a plot though!
Also, basically Early Retirement is the new marxism. Except the middle class become the wealthy! https://www.actuaryonfire.com/essential-insights-karl-marx-personal-finance
Tesla was hot, but is down recently compared to even the s&p 500. During the recession, probably good to go with the Google/Amazon/Apple etc crowd, even though you don't really like them.
Citadel and others publish their overheads for each stock and day ordered: Can get to from FIF: https://fif.com/. https://s3.amazonaws.com/citadel-wordpress-prd102/wp-content/uploads/sites/2/2016/09/29212955/CDRG201805.txt
But what's this about price improvements?
Review of Interactive Brokers:
Interesting and fun to read book. Apparently accurate but not …. totally.
The best possible outcome from the publication of Flash Boys would not be a series of insider-trading prosecutions. Rather, it would be a decision made at the highest levels of banks like Goldman Sachs and Credit Suisse: If our clients want us to route their orders through IEX, then we’ll route their orders through IEX. That would involve the banks giving up precious revenue of their own, from their dark pools and the other methods by which they extract rents from high-frequency traders. But it would give Katsuyama the opportunity to prove his case, once and for all, that his technology really does give big investors much better execution.
If all went according to plan, the result would be less money for high-frequency traders, and more money for mutual funds, pension funds, insurance companies, hedge fund billionaires, and other big investors. Small investors would, realistically, see no difference at all. But most importantly, the market as a whole would be less skittish, less brittle, more robust. IEX, if it works, might just be the technology which could prevent a catastrophic global Flash Crash II.
Also: https://news.ycombinator.com/item?id=7580363, which is a news commentary on a pretty good amazon review. https://www.amazon.com/review/R3PJO6KJGRMWUE/ref%3Dcm_cr_pr_viewpnt#R3PJO6KJGRMWUE
Great introduction to what actually is going on in the stock market, probably.
I like how the father hates him running a blackjack operation in his apartment (acting as dealer making .4% house edge), but doesn't see through the ruse of him being a stockbroker, which is also a middleman commission thing with a higher return!
“These loaded folks in the midwest like hearing from a smooth talking New Yorker acting as a stockbroker for them”
Covered call strategy. Relies on you understanding a good price for the stock, like it says below.
Intel guy had similar opinions.
The naked puts are fun (and profitable). If the stock doesn’t decline to my buying point I keep the premium and if it does I get to own a piece of a business I wanted to own.
Sometimes—not often, but sometimes—I used options to either buy a stock by selling puts. Less often I used covered calls to generate additional income. These strategies are a double edged sword. A naked put might bring in additional revenue, but if the stock climbs higher your resources would have been better utilized owning the stock rather than getting cute in an attempt to pull an extra thousand or so in option premiums. Covered calls had the opposite problem. Sometimes a stock runs too far, too fast. But trying to figure out a top is nothing short of insanity. Covered calls can work, but you risk the stock climbing over the strike price.
Dad liked OptionsAlpha for explanations.
Why do orders not get filled even though the price is better?
Can you always reverse a contract, in either direction (buy or sell)? If so, why is a naked option bad?
What is SPX?
How does paper trading work? Why would my fake order not get filled?
Is there a free lunch in options? If
Is it a good way to do leveraged investing?
Why is selling options better than buying options? Seems like you can simplify it all to betting whether the stock will go up or down…
Basically are really smart folks rewarded for short term bets. Long term risk is held usually by american taxpayers who bail out said companies.
In a bigger picture, this leads to the Gervais Principle, where smart but lazy people work to use the system to their personal advantage but not the company's. And somehow they get promoted…
Great website to get historical data. https://tradingeconomics.com/united-states/households-debt-to-gdp, and FRED.
So, apparently you can invest your money into other funds, it's called BrokerageLink.
Nice end-user overview of fees from Bogleheads: https://www.bogleheads.org/forum/viewtopic.php?t=100431, a different guy: https://thefinancebuff.com/best-investment-options-with-fidelity-brokeragelink.html
Won't let me do after-tax <additional> 401k contributions, even though it's possible with the tool. https://www.reddit.com/r/personalfinance/comments/54aj4g/what_are_fidelity_401k_aftertax_contributions/
Also a great source of inspiration. Some quotable quotes:
Can opener example. Say you <already> have a manual can opener, it takes 30 seconds to open a can. Why would you work for 30 minutes so you can buy an electric one that takes the same amount of time to open the can?
Interesting articles it would be good to read…
Options, he actually recommends them?! https://earlyretirementnow.com/2016/10/05/passive-income-through-option-writing-part-2/
Can search individual bonds with Fidelity fixed income! (Vanguard has a lot less bonds for some reason)
You buy based on the distributions/returns, which the fund doesn't have to distribute. (Berkshire Hathaway doesn't return a dividend“, even though they definitely get dividends from the stocks they hold!) Eischen recommends Franklin Oregon Tax Free.
Default is average cost basis, but optimally you want to sell your highest cost shares to lower your capital gains tax amount. Surprised Vanguard doesn't do it this way by default, but maybe there's not a big benefit to it…
Also, what's interesting is the performance of VTSAX (total stock market) vs peers (what I would expect if most mutual fund managers are no better than monkeys throwing darts) http://beta.morningstar.com/funds/XNAS/VTSAX/betaquote.html
but VBTLX (total bond market) has a completely different chart (http://beta.morningstar.com/funds/XNAS/VBTLX/betaquote.html). What happened??
It's nice that
when the Fed raises interest rates to close out a long bull market, bonds lose their value (this doesn't look to be true) while stocks are appreciating. Then when stocks fall the Fed lowers interest rates and you've bought low and sold high for both sectors. Interesting.
Also, researched returns value vs. growth, seem the vary from business cycle to business cycle.
Fidelity mutual funds don't have the luxury of eliminating their capital gains. But their ETFs (or rather iShares it seems) do. So either keep untaxed funds in Fidelity or move to ETF/Vanguard. https://www.financial-planning.com/opinion/vanguard-vs-fidelitys-zero-funds-on-fees-expense-ratios-and-tax-efficiency
Written by Jesse Livermore: https://twitter.com/Jesse_Livermore
Great introduction into why index funds match the average actively invested dollar. TODO write summary for review and understanding.
For a total market fund (u.s. funds I guess, might want to branch out into international too) It automatically beats 50% of the market because only <actively managed> mutual funds are generally in the market and buying / selling and changing the stock price.
“The S&P 500 or Total Market Index Fund basically only track the top few 10s of companies (generally large growth) in the stock exchange because of their huge market capitalization relative to others”
Very well summarized in http://edmarkovich.blogspot.com/2016/08/when-everyone-invests-passively.html. Which is interesting because he had the complete opposite perspective three years earlier. This is a HN rebuttal to that post. https://news.ycombinator.com/item?id=6832595
For example, imagine that the active manager was information driven but cheap and free of human biases - like an algorithm that did analysis of a stock and valued in on just two factors: predicted dividend flow over the long term, and impact of passive investing flows on the price of the stock based on knowledge of the index and the overall pattern of cash flows in and out of the market. This should win over the passive guys in average - it uses 2 decent data points: one pertaining to actual income from the company and one pertaining to predictable market forces - while passive uses no data points. And the cost at the end of the day should be roughly similar.
This is what I always come back to. I could spend every waking hour of my free time doing this type of research, and likely beat my current positions by a few percentage points. Or, I could put that same effort into being the best engineer/manager I could be, and likely have much, much more capital to invest in the first place. It's a matter of efficiency.
<another person responding>
I like researching investments as a hobby. If I thought it was boring or tedious to pore through SEC filings I'd stick to 100% index funds.
You make a really good point though, and one that more people need to understand. You're almost always better off spending your time to improve your financial situation (save more money, get a raise, get a new job, etc) than you are trying to find an investment that'll provide a higher return.
Main sidebar link is to this article: https://www.wallstreetoasis.com/forums/on-the-job-with-simple-as%E2%80%A6-my-research-process
Positive spin is from Charlie Munger, Elementary Worldly Wisdom:
Can get it on morningstar, http://financials.morningstar.com/valuation/price-ratio.html?t=umpq. Also on Wolfram Alpha
|Will||Trust||Transfer on Death Plan||Donor-Advised Fund||Charitable Remainder Trust|
|Assets have to go through probate (court). $$ and time||All contents have to be withdrawn within 5 years?||Good|| Matt Cutts (Google) talks about it. Better than a foundation, apparently. https://www.mattcutts.com/blog/make-money-investing-tips/, and links to “excellent advice”: http://www.businessinsider.com/finally-some-excellent-investment-advice-2011-12. \\Deductible going in, untaxed going out. https://www.kitces.com/blog/rules-strategies-and-tactics-when-using-donor-advised-funds-for-charitable-giving/ |
Also Intel / Benevity will match as long as you provide receipt. https://soco.intel.com/message/5382165#5382165
Has anyone here opened a donor-advised fund (DAF)? I just learned about DAFs, but they seem like a no-brainer for anyone who does any regular charitable giving. My main interest would be in the ability to transfer in highly appreciated assets (such as old Intel stock with cost basis in the teens), liquidate them tax-free (!), make donations in cash (since many smaller non-profits can't receive stock donations), and take a deduction for the full current asset value.
| Untaxed. Pays you out of the trust >5%, gives remainder on death to charity.
Seems kinda a way to get out of high windfall taxes and spread out income but stick a charity label on it as you can deplete it before death. Weird
Writing a will
Guard thy treasure from loss by investing only where thy principal is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental.
Get married. Maybe have a house, but renting is also likely.
“Make love, make money, make a difference” – Imogen Heap
Something about how you can leave up to $5 million tax free to your heirs. But do the heirs pay taxes?
You can give $14K to each beneficiary a year tax free.
Looks like if you don't name a beneficiary, a few things happen:
Also a great 30 minute video is http://www.economicprinciples.org/ by Ray Dalio. And the Debt Cycles book which explains in extreme details what happpened in Germany hyperinflation, Great Depression, and 2008. https://www.principles.com/big-debt-crises/ (free PDF download somewhere)
The unintended consequences of those new regulations introduced as a result of the GFC, which have largely removed the market making role of investment banks from global equity markets, has coincided with the recent massive increase in market share of both ‘dumb’ index funds and ‘black box’ algorithmic funds to create a situation where equity market volumes have fallen sharply and individual stock volatility has risen dramatically. An initially badly executed order can now inadvertently create a price trend (because there is no longer the cushion to price moves which was in the past provided by market maker inventories) that, as algorithmic funds feast on it, can create a market event even if the initial order was a simple innocent error. Truly – to mix metaphors – butterflies flapping their wings now regularly create hurricanes that stop out fundamentally driven investors who cannot remain solvent longer than the market can remain irrational.
On hedge funds. Paper is Measuring Skill in the Mutual Fund Industry (currently at https://www.sec.gov/divisions/riskfin/seminar/berk020213.pdf)
Finally found some pictures, from https://www.ifa.sg/investors-always-buy-high-and-sell-low-regardless-asset-classes/ and ICI fact book.
Findings are basically that people buy on the upswing (catch the wave!) and sell on the downswing (sell before it goes down further!).
Instead you want to think … stay in for the long haul instead of long-term market timing???
Isn't the right way to pick the best performing mutual funds each year and ride them until they tank and then get your money out?
Mutual Fund Store Advisor: “Don't you want to pick the fund that does better than the stock market? Why settle for just the stock market returns?”
When you get closer to retirement age, it becomes a lot more heartbreaking to see your retirement “nest egg” get cut in half because of a stock market drop. And you're a year late to dropping those and getting something better, and you inevitably are late picking stocks up again when the market comes back up. “I guess that's buying high and selling low!”
If you just look at unemployment, it doesn't tell you whether you can get a job or not! There can still be lots of competition for jobs in high and low unemployment!
Doing dinopark tycoon again. OMSI has a nice one, Moneyville (https://omsi.edu/exhibitions/moneyville/activities.php). Also, VISA weirdly put money into an education website. Including how to pay off credit card debt, https://www.practicalmoneyskills.com/.
Routing numbers are below…
271081528. Can also get member number under Settings → Personal Information → Member Number (show), and then the checking account number under details:
Can only withdraw 6 times a month, so do a bulk transaction. Can freely deposit as much as you want though.
Check account number ending in *03 is for checking, *00 is savings. Yet, it still went through checking even though I did *00 >.<
Also, direct deposit posts at ~7am the day after HealthEquity payment comes through.
Vanguard has a really nice PDF on this. https://personal.vanguard.com/pdf/ISGKEY.pdf
Fidelity Growth mutual fund looks like it has good performance over time. http://www.morningstar.com/funds/XNAS/FDGRX/betaquote.html
MMM says 25K. Mom and Dad are 90K, with no kids. (backyard remodel, lots of surgeries this past year). So maybe 60K. Hmm…
WHO IS YOUR POLICER? What task master individual will hold you accountable for not being perfect on your indecision? You are currently deciding to not decide…
Apparently this is an April Fools joke for many people. But I do have some concerns that he brings up eloquently above and in Leaving the Cushy Job:
|It will be hard to have human contact|
|If I hit a development wall, all the good engineers are in companies, unavailable to help me|
|I don't feel good about not “doing my all” to either convert ppl to Christianity or save starving children in Africa||Ginger believes some verses also say to work to not depend on others (Paul, I think)|
|I'm not praying hard for guidance||Ok response: “God can handle it. He can use you right where you're at, and he'll move you somewhere else if He needs. He's God!” Not sure on this one|
And the reason I know this is because I know a lot of people that are financially independent that are 100% miserable. They’re lonely, they’re anxious, they’re fearful… but they’re free. Financial independence is not the end goal; happiness is the end goal. So we need to always keep that in mind. We just need to internalize that message. Happiness leads to freedom.
And to be honest, it’s not that expensive to become happy. When you can cultivate happiness in your life with really simple things that I write about like gratitude, getting rid of negatives from your life, decluttering all the physical things you don’t need, the mental baggage and the obligation—like I said, stop watching the news, just walk and meditate—those things don’t cost anything, but they’ll make you happy. Happiness is freedom. You have to practice. It’s a skill. Happiness is definitely a skill. It’s not something that we just blunder into for the most part.
Early retirement is a mirage when you’re physically and mentally capable of doing more. Humans are generally not built to derive sustainable happiness from sipping mojitos on a picturesque island somewhere in the pacific. Once you’ve tasted the sweetness of a dedicated purpose, it’s near impossible to be content just sitting on the sidelines.
Podcast from Mad Fientist: https://www.madfientist.com/tony-interview/
Q: Would you ever quit your day job and devote all your time to bigger / longer YouTube projects? Is that even feasible?
A: No. I'm actually pretty sucky at managing my time so if I had all day to work on projects I'm afraid I would mostly just hang out on TMZ.com. I find I'm much more productive when I'm constrained. Plus I like keeping the YouTube thing as a hobby and not as a primary thing for me psychologically. Coming up with ideas and creativity is such a delicate thing and I try to protect it like a little candle flame. Plus I really like my coworkers and our lunchtime conversations and the work we're doing. Financially, YouTube is more of a significant part of our family revenue but I just really love the balance we've got atm and chasing the money often seems to lead to inauthenticity imho.
A nice excerpt of an idealized view of Financial Independence from Mr. Money Mustache. I reference it because I expect my “goal markers” to change over time and it feels weird to pin it down to something. However, I do know that not everyone has MMM's drive to do something productive every day but instead hates themselves when they drag around all day philosophizing of what they *should* be doing :)
I also struggle with laziness and worry that I’m wasting my lucky place in the universe. My advice to people who are striving is to be sure to have a clear idea of what you want your life to be post-retirement. Have lists of things you want to do and accomplish because if you’re the type of person who has the discipline to retire early, you’re probably the type of person who won’t be happy as a couch potato.
What if work were something that you did only when it worked for you? If you could go at it with gusto on certain days, or even certain seasons or years, but then shift to other things for a while when your priorities changed? You might spend most of your 20s burning up the corporate ladder or being the workhorse that keeps a startup company in the black. But then your 30s might be mostly consumed by bringing up young children, your 40s might see you starting more companies or reclaiming your youth as a touring rocker, and your 50s and 60s are yet to be charted. Now that I've met a large number people who have actually followed this path, I can see that financial independence isn't so much about freedom from work. It is more about freedom to do your best work, without money getting in the way.
This is what I'm really describing when I talk about early retirement. It's not really retirement at all, but that's because I don't think anybody should truly retire in the old sense of the word — swearing off all forms of paid activity in favor of a dramatic increase in television watching and golf playing. Creation of new ideas, new enterprises, or new things is the biggest joy of being alive. Learning more about life, the world, and yourself and then trying to mix the ingredients together to the best of your ability is the happiest path you can take as a human. We're uniquely lucky to even have such an option available to us these days.
So in my own case I started just with the goal of being a parent, but then ended up starting a house-building company to pursue my lifelong love of building things. Then I learned that the daily stress and schedule of big, multi-person projects was still too much for me at the time, so it evolved into a boutique carpentry operation that still does local projects to this day. Other ventures have come and gone, but none of them were done because we needed the money. That is my definition of a modern retirement: the activities you pursue once you are done searching for money.
Like an old-time homesteader, I enjoy learning new skills as the opportunity comes up, because I find it's more satisfying to learn something than to outsource it to others, even if you can afford it. Housekeeping and haircutting, cooking and gardening, but also welding and plumbing, framing and roofing, heating and cooling, auto repair and strength training, drum playing and electronic dance music composition and beer brewing are just a few of the things I have had the joy of working on in this first decade of retirement.
Somewhere in there I also started a blog with the goal of reducing the rich world's resource consumption while suggesting that we could all have a lot more fun in the process. It was done mostly on a whim and only possible due to the free time available in the absence of a real job. But even this side gig has blown up into something much more fun than my original work career and is in fact what has brought you and me together at this very moment.
I looked them up in Mark Hulbert's financial newsletter thing, but it isn't there. http://hulbertratings.com/links/
Age discrimination / burn out are real threats to your career, plan on being done at 50 and hope you can be pleasantly surprised.
Be prepared to diversify out of employer stock. Know the tax consequences of options exercising.
You'll have more pricing power where there are more engineering jobs, but those tend to be high cost of living areas. Be prepared to appreciate how beautifully engineered a car is when it's still fulfilling its purpose at 10 years old, and how efficiently you can use floor space in a smaller house.
Have a project plan for your health and fitness and treat it as being as important as your job.
I am making a lot of money and able to do things with it, maybe even be financially independent / retire early and living off of the hard work of others. A few things worry me, and nothing other than greed excites me:
However, two things:
Mom: You don't want to have FI as a goal. ~There's no goal or purpose there. Spend more time with young people and grow yourself, learn about yourself and others.
Budgeting is for informing you to save for wedding/roof that are $20,000 each when you want to spend the money on other stuff each month. Not currently my problem, but apparently my Dad's problem
“Wealth effect”, define? Author calls it bad to have a wealth effect, where one increases risk if they start winning. Aka house effect.
The bubble forms because people don't care huh?
Illiquid at peak because nobody wants to buy
Demonstrable evidence of yearly or periodic trends in stock prices?
However, I skimmed through the rest of it and it's more biographical than analytical for most of the book.
Confirm that Jeremy is fiduciary?
Tell yourself “I am able to learn the system. I can figure it out myself”
It's always good to talk with other people, even spend $100-200 on it, but don't give them $1000 for something you can inform yourself on quickly by reading some books / making an excel spreadsheet.
We agree on most things
On reading Yahoo Finance, Wall Street Journal, etc:
Why don't I just do minimal and work on inventing / learning technology, as opposed to merely guessing and getting right about half the time and not beating the market?
Other advisor in parking lot that you probably won't talk to is Clark Gaines, former Intel guy. With Cetera advisor networks
Great meeting. He's fast and quick, as probably most advisors are.
Likes buying into houses.
Old clients with Edwards Jones were driven to watch their money grow. They were hollow inside. Started his own practice instead.
Believes in removing your emotions from it and hiring an outside person to keep you accountable. He has his own financial advisor that he calls to run through his trades. Maybe even has his account with the other guy!
I really want to nail the “my life has purpose” bit and less “I invested my money well”.
Indeed, rentals can beat the market, but with both more risk and more work required. You should put this thread in the Real Estate forum, I believe they'd cut down a lot of your assumptions regarding maintenance, home appreciation, vacancy, how to calculate projected income (I think they use a 50%-75% rule), taxes, and transaction costs. Also, as Northerly mentioned, you're comparing owning 20,000 companies worldwide with 0 leverage, to owning a single home, in a single country/state/city/town/neighborhood, with something like 400-500% leverage. This is inherently more risky.
Only minor changes needed to Social Security to get it back into black, compared to running out in 2033.
Selling house, any profits would normally be capital gains, but isn't under an exclusion of $250,000 per person. So, $500K per couple
He believes that stock market is coming to a correction soon. What allocation does he recommend?
To make the best use of both of our time, I intend to do things myself that I am able to do myself (financial planning, at a cost of $50/hour minimum) and ask you questions on an as-needed basis on more complicated things for a generous hourly fee (since 1% of assets under management is a lot of money!). Does that work? Do you have any counter-arguments? If it won't work, let's disagree amicably as opposed to a few meetings from now!
using index funds *for bonds* is absurd (not even any theoretical justification, but, think of it in common sense terms: it means you want to lend more money to the entities incurring the biggest debts — lend more and more to wastrels who keep getting deeper in debt — how does that make any sense at all?!). Get your bond exposure through actively managed ETFs like BOND, if not via bonds directly!
A tool used by companies to fundraise money / reward the original investors of the company?? Some companies don't distribute dividends so they can focus on growing instead of rewarding investors for sticking with them? For companies that pay dividends
Very different from stocks. “I will lend you this money at this percent interest and you will give me the principal back at the end”
Bonds are always taxed on their principal, but if they are government bonds the interest is generally federal income tax-free and state tax-free (if you live in the same state as the bond).
Also might be hard to sell them in the middle of a depression. Look into that…liquidity.
Could do it during Coronavirus, but for some reason emotionally don't want to deal with it.
Still don't quite feel comfortable. Lots of rules here: https://www.bogleheads.org/wiki/Tax_loss_harvesting#Fine_points_about_tax_loss_harvesting
If you buy and hold, you won't realize capital gains when you're working, as you don't need to sell funds to rebalance. Just make your new deposits into the underallocated fund!
Actively harvesting tax losses over an extended period reduces overall basis. During retirement we want the opposite. This is why we are actively raising our basis by harvesting capital gains, all part of our plan to never pay taxes again.
When basis is low, a greater percentage of our wealth is considered income when we spend it. As part of total income, it is subject to taxation and may impact healthcare subsidies and taxation of Social Security.
Does you no good if you have no earned income or < $85K ltcg/dividends. (Basically if you're retired).
Have to apply losses to gains that year, even if your tax bracket is 0% that year??
Still only $3K per year, but you can defer excess to future years. Bogleheads https://www.bogleheads.org/wiki/Tax_loss_harvesting and mad FI http://www.madfientist.com/tax-loss-harvesting/
Vs. Vanguard mutual funds, they mainly just let you trade intra-day, whereas mutual funds are only end of day. Otherwise the same. No worries. https://investor.vanguard.com/etf/etf-vs-mutual-fund
To understand heartbeats, it helps to know that they’re just a supersize version of something ETFs do every day. ETFs are funds whose shares trade all day on stock exchanges. Unlike mutual funds, ETFs aren’t sold directly to regular investors. Instead, they use banks and brokerage firms as middlemen. These large traders don’t transact in cash. They make an ETF bigger or smaller by adding portfolio stocks to it, or by taking them out. They call this activity “creating” and “redeeming” ETF shares. (All this is invisible to small investors, who just buy ETFs from brokers.)
Enter the Nixon-era tax law. In 1969, Congress decreed that mutual funds can hand over appreciated stocks to withdrawing investors without triggering a tax bill. Lawmakers never explained why they blessed the industry with this unique break, but back then, it didn’t seem like much of a giveaway. Mutual funds rarely took advantage of it, because their investors preferred cash payouts.
Fast forward to 1993, when American Stock Exchange executives devising the first U.S. exchange-traded fundrealized they could put that old tax rule to a new use. Say an ETF needs to get rid of a stock that went up. Selling it would trigger a taxable gain that would ultimately be paid by fund investors. But handing the stock off to a broker who’s making a withdrawal achieves the same goal, tax-free. Every time a broker redeems a stake in a fund, it’s another chance to avoid taxes. That loophole gives ETFs a tax advantage over mutual funds. It went from a footnote in the tax code to the cornerstone of a new industry.
Total return discrepancies…index_vs_etf.docx
Financial planner that came by said “there's a time for indexing and there's a time for active investing too. Even Jack Bogle lives by that!”
How does something return to the mean? Or optionally, what determines a stock price? Like, if Apple's stock has always tanked after a product release, wouldn't the buyers of the dropping stock “bring it back up” somehow?
Chapter was very underwhelming.
Why are taxes bad??
Perot … minimizes his tax bill (on 230 million) by investing heavily in tax-free municiples, tax-sheltered real estate, and stocks with unrealized gains
Place more active (including automatically balanced) funds in tax-advantaged accounts (IRAs/401K) so that you don't pay income and?? capital gains taxes every year.
What's the deal with tax-loss harvesting again? Not a great explanation in the book…
Benefit of a Roth IRA vs. a Traditional IRA: “Roth IRA savings are worth more. The reason is that the Roth IRA contains after-tax dollars, which are more valuable than the pre-tax dollars in a regular IRA”
I like this one. Simple for young people. https://networthify.com/calculator/earlyretirement. For older folks who have social security, don't necessarily want to have all of nest egg when retire, it's clumsy. Go with Personal Capital's instead https://home.personalcapital.com/page/login/app#/retirement-planner But better than a lot of other ones!
Why do they say one needs 30 years of (say) $30K per year ($1,000,000!) saved up by age 65 in order to retire?! You don't need it all at age 65 and the remainder will keep growing in the market!
Pretty cool game, you can play for free online. Some good / bad things
DIVERSIFY RIGHT AWAY: https://blog.wealthfront.com/sell-employee-stock/
Don't worry about the taxes. While most of the time the market keeps going up (especially after a recession), for the theoretical scenario of a small discount from purchase price, that discount will will affect the entire principal. Whereas the LTCG taxes only affect the profit. https://thefinancebuff.com/employee-stock-purchase-plan-espp-is.html
|0-1 year||1-2 years||2+ years|
|Name||IDK||Disqualifying Disposition||Qualifying Disposition|
|15% Discount||Counted as income, even with loss||Long-Term Capital gains!|
|Gains/Losses||Short Term Capital Gains||Long-Term Capital Gains|
However, if you do quicksale, you don't get the benefit of “long-term capital gains tax”, which is less than the “short-term capital gains tax”/ disqualifying disposition. Have to wait 1 year stock_purchase_plan_spp_tax_treatment.pdf
This is the main difference. Have to wait 2 years for qualified dispositions, independent of short or long term capital gains taxes.
Going with YNAB for now with a discount code. (http://www.youneedabudget.com/?aic=BS6FJ69)
I couldn't figure out Homebank. It seemed like a lot more buttons than necessary.
Sold the Spark EV to get a cheaper car. 2001 Ford Focus. Spent ohhh, 30 hours and $200-400 in repairs on it so far? Paid too much for it, $1600 vs $1000.
Biking to work!!! With an electric assist bike for now. Definitely worthwhile investment, although it squeaks a bit.
|$750||Rent + Food + Utilities|
|$80||Car Insurance (includes comprehensive coverage since on loan)|
|$90||Car Depreciation ($13000, depreciating by $1000 per year)|
|$0||0% Interest from car loan|
|$0!||School Loan Payment|
$10,000 for emergency fund in case laid off.
Pay tithe or something. Around $10K now.
|$350||Rent + Food|
Child: ~$300/month for first few years according to MMM (hand me downs from other ppl, cloth diapers, loving, probably parent at home too)
Nice recommendation calculator here: https://personal.vanguard.com/us/funds/tools/recommendation
How much does Intel match / invest in 401K?
Main point is that you'd be surprised how much house you can get for the same price as renting. However, you'd be surprised at how long it takes to recover that money during a downturn
Main point is rent payment vs payments towards closing costs, interest, and other stuff. Payment towards principal is just money you’re giving yourself back later.
In Nolan’s case, he is paying cheap rent with parents, so not an issue to worry about yet.
Only 3.1 million (1%) in USA, most are in high tech jobs on H-1B visas.
International students pay 2X here by default, stated by US government?! Anyways, they sell everything in India to get the degree and live very cheaply initially here to pay off money quickly. Since they are educated, they also save like crazy and are quite rich when they are done. Unlike most USA ppl, who either have to spend everything they earn or choose to live paycheck to paycheck because of their spending habits that have caught them.
He likes gold. Also, property in small towns in India that have grown tremendously since 2003.
The formula on wikipedia for Amortization_calculator doesn't work for me! For:
A = 1200 / month P = _____ (solve for this) I = .035 N = 12*15 = 180 P = A / (I + I / ((1+I)^N - 1)) = $34215.59??? The website I tried says this too. Going the normal way, P should be ~ $167,000.
(with your spouse). Best to talk about life direction and goals and how to make some sacrifices to reach them as opposed to “you spend too much on shoes!” and “you won't let me enjoy any money!” <real conversation by the way>
Rebecca Meissen recommends Your Money or Your Life (summary). but as always, the summary doesn't do it justice…I think because it's hard for me to think of applications to my life. Maybe I should work on that instead of relying on my “rational” brain to tell me whether I've actually applied something
At first I thought they were misguided on this, but they are basically talking about instead of paying someone to mow your lawn or putting in pipes, you can save some money (really life!) and do it yourself.
Theory of Coupons, it'd probably be good to look up sale theory too.
A guy that reviewed Your Money or your life recommended The Intelligent Investor. Says it's not too hard to find good investments, even stocks, if you put in a little bit of effort.
Trying out Gnucash for now.
Another option for larger business is sql-ledger