I don't know if anyone would be interested, but I would be: that is an FI buddy. I am about 10 years from FI, but would appreciate both feedback on my plan and contributing to anothers plan (looking at spreadsheets, arguing about rates of return, discussing inflation). Possibly hopefully checking in on a quarterly basis and reviewing plans and accomplishments.However, the downside of course is that it involves finances and privacy. Therefore discretion would have to be the rule.Let me know if you might be interested (on private email). If there is lots of interest maybe people could pair off. I'd be most interested in someone about 10 years away as well so there is a similar basis for conversation- I really don't care to see who is "beating whom" on a monetary scale, but on a "distance from goal" scale I am interesting in maximizing return with minimizing risk. (aren't we all)
Greetings, yttire, I am actually publically replying because I would be EXTREMELY interested in becoming an FI buddy. I am perhaps also 10 years away from retirement and I too could not give a fig about who is beating whom - only about insights into what it takes to maximize returns.Here's the deal, though. I am a rank beginner. So rank, in fact, that it might be like a sports pro teaming up with a newbie, and that would be potentially less fun than if there were a more even match in terms of experience. Willingness to learn, I can supply plenty of, along with motivation. But I do imagine that it would be something of a drag to be in the "willing to teach" mode and finding that it could take a lot of teaching.So I make my interest known in public in the event that this may yet be interesting to you - or to SOMEONE - who is at a similar point to me: 10 years out, have some retirement savings but has been letting them languish for lack of awareness of where else to put them apart from mutual funds and has a willingness to learn about other ways of investing to pump up profits (and accept some level of loss when it occurs).Please let me know, whether you, or whether anyone would like to start a conversation about getting started. Thanks!xraymd
<<Here's the deal, though. I am a rank beginner. So rank, in fact, that it might be like a sports pro teaming up with a newbie, and that would be potentially less fun than if there were a more even match in terms of experience. Willingness to learn, I can supply plenty of, along with motivation. But I do imagine that it would be something of a drag to be in the "willing to teach" mode and finding that it could take a lot of teaching.>> Xray, you have shown a LOT of wisdom, good sense and compassion on the topics of saving and investing. Any one who has a chance to share in that wisdom will be a lucky person. Seattle Pioneer
Greetings, SP, thank you for your endorsement! My invitation remains extended to anyone interested, at any time. I am reachable via email by replying to this post (or any of my posts) by checking the E-Mail this Reply to the Author box beneath the reply composition box (and UNCHECKING the Post this Reply to the Boards box if the respondent wishes to keep the reply private).For only too long I have been occupied (preoccupied?) with the debt elimination side of finances. But that is coming to a close within the near future and I am now keenly interested in getting myself informed about the investment side. I do save the maximum possible from my income (and in 2004 for the first time became ineligible to contribute to a Roth) but these savings are streaming to a handful of mutual funds and I'd like to make more active decisions. That is not to say the mutual funds are the WRONG choice but they are not an especially informed choice and I'd like to change that.Despite being in a long-term relationship, I am not married and I intend to approach retirement investing as a single person. But I have no barrier to learning about investing from the realm of being a married person (which someday my fiance and I may decide to become). Our finances are not combined and living in a community property state makes me want to understand THOROUGHLY any economic ramification regarding marriage - we have been together 7 years but there has been no hurry as children are not involved. I would also say that we started off with rather divergent views of reckoning with savings and debt and had a rather different starting (and potential) net worth. But I've seen true convergence over time and now believe we are on the same page regarding both destination and strategy. I'm 48 and my fiance is 57 but I don't think retirement will be reached for either of us much before 10 years regardless of our ages. I'm perhaps a year out from complete debt elimination (though not yet including the mortgage, which I pay since the house is in my name) - and he is perhaps two years out. But he is now maxxing his Roth as well as his 401(k) (according to his salary) and I am maxxing my 401(k) according to the top annual limit allowed. Next year I will become eligible for the catch-up contribution in addition.So there's a bit more info in case anyone wishes to respond - and there is no deadline, either. In case anyone is wondering why my fiance is not my retirement investment buddy: indeed he is. But I presently know more about financial management than he does and I myself feel undereducated and inexperienced, plus I have a bit more latitude than he does to recover from a financial downturn. So I welcome independent and impartial participation. Thanks!xraymd
I like the idea of FI buddies but the reality may be too challenging. At the point that someone is ten years or less from retirement, hundreds of decisions have been made and a myriad of circumstances taken into account. I can't imagine that one could ever find another FI seeker that had much in common with their situation. Two beginners could team up pretty well I think. But at T-10 Years you'd better have your act together already.For xray, I think you need to get on the same financial page as your SO so that you are both working together. One of the secrets to my modest success is having DW working together with me on our common goal. Also, I think that divorce is the single biggest FI risk. Kids can be factored in, but cutting your life savings in half is a serious setback. Make your partnering decisions very wisely.nmckay
(looking at spreadsheets, arguing about rates of return, discussing inflation)While I'm still 20 years or so out, I would suggest that in general each part of FI could be discussed individually, without putting your finances into the public. IE, one discussion about interest rates, one discussion about how to easily calculate returns, etc. I would enjoy hearing what others use as their methods of calculation.I think the idea of an FI buddy is still good, but for those of us who aren't ready to drop a stack of spreadsheets down, it would be nice to hear what you have have to say.
<<For only too long I have been occupied (preoccupied?) with the debt elimination side of finances. But that is coming to a close within the near future and I am now keenly interested in getting myself informed about the investment side. I do save the maximum possible from my income (and in 2004 for the first time became ineligible to contribute to a Roth) but these savings are streaming to a handful of mutual funds and I'd like to make more active decisions. That is not to say the mutual funds are the WRONG choice but they are not an especially informed choice and I'd like to change that.>> From reading the LBYM, Credit Card and this discusiion board, I've found it very common for people who succeed in paying down their debt to be somewhat lost and confused when the debt is gone. What to do with all that cash flow all of a sudden? Investing savings is a whole different set of skills and attitudes from those needed to pay down debt, admirable as that is. So making that transition from paying off debt to acquiring imvestment assets is a skill that people need to make a point of learning.It's wonderful to see that you are already making that transition, and have an eye out for learning the skills needed to manage that accumulating wealth. Mutual funds are an excellent way to begin investing money, and index funds invested in the S&P 500 are often recommended as a usually low cost (low fee) way to invest in a nice portfolio of stocks.If you want something where you would be more directly involved, you might consider DRIPs --- Dividend Reinvestment Pregrams. These are stock purchase plans offered by large corporations that allow you to buy shares of stock at low cost, and sometimes at no cost ---and to reinvest dividends if you wish. Sometimes you can buy the first share of stock with these plans, in some companies you'd have to buy your initial share or shares through a broker.I have a half dozen DRIPS I invest in each month, including Exxon Mobil, BP (oil), Piedmont Natural Gas, Washington Mutual (bank), Equifax, Home Depot. If you buy DRIPS, it's important to keep good records of your stock purchases, so you will be able to deduct your cash investments against your profits when you sell. I have a separate hanging file for each stock, with a two hole binder clip in it. Each time I receive a statement, I use a two hole punch on it and add it to the file. Simple, but you need a system that will work for years. Some of my stocks go back more than twenty years.Anyway --- perhaps this is an idea you would want to consider. It can be an easy, low cost (that is, low FEE) way to invest. Seattle Pioneer
For xray, I think you need to get on the same financial page as your SO so that you are both working together. One of the secrets to my modest success is having DW working together with me on our common goal. Also, I think that divorce is the single biggest FI risk. Kids can be factored in, but cutting your life savings in half is a serious setback. Make your partnering decisions very wisely.Greetings, nmckay, what you say is so very true. I am a cautious sort and that is one very big reason why I have never yet married. I understand your cautions perfectly.Where I am now with my fiance, after 7 years, is where you are with your DW: working together. We originally had very different approaches to attending to money. Frankly I border on the anal, and some would say obsessive, about tracking where money goes and how to account for it. He, on the other hand, had the IDEA that he wished to be intelligent about money but never previously viscerally understood how to keep watch over it. So we did indeed have similar goals - though different approaches towards what it took to meet those goals. From early on, he gave me latitude to start tracking his finances. And I have watched him, on his own, begin to make rational decisions on where to allocate resources. So I feel far more confident and secure that we are heading in the same direction. Given my natural caution, I have needed proof positive that he has become a steward of his own finances and over the past few years I have received it reliably.I must agree that one's partnering decisions need to be made wisely, with eyes wide open. It's been fascinating to me to see where we each started from: I come from a family with parents who grew up in modest circumstances (actually HUMBLE circumstances where my father is concerned) and what has driven my parents economically was a deep desire to transcend those circumstances. My dad made early career decisions regarding self-employment because he innately understood that he would do the best job for himself and for the family if he were in control of his career destiny, since he had a plan AND the track record to carry it out (he was a teacher who took on part time work in an upscale furniture store and realized from that he had a natural aptitude for business and sales plus was a quick study at learning the intricacies of high end furniture construction). He became a manufacturer's representative for a dozen factories who needed their furniture products sold to dealers and my father determined that the market was strongest in contract (i.e. industrial) sales, though he did himself become a dealer and sold to architects designing high end residential properties. Long story short, he was an intensely successful small businessman with an executive staff of one (himself!) plus a loyal secretary to assist him with the support work. He was also naturally savvy about investments and recognized growth opportunites in our community early enough to purchase land awaiting commercial development. So, while never a multimillionare, he and my mom (who agreed with his financial strategies) did well enough to be now comfortably retired. And what's more, he inculcated in me the idea that every dollar entering my keep must have a portion set aside for the future me I would inevitably become - so a savings habit was a normal part of my childhood. I know you are wondering why he did not pass on his investment savvy to me, and I would answer that in a sense, he has, but I have always been one to grasp minute detail and don't clearly see the forest when I have been so thoroughly studying the trees! Unlike my dad who was gifted with understanding the overview and taking action on what he recognized. So that's why I am now here - wanting to learn how to see investing with an eagle's eye.My fiance, on the other hand, came from a well-to-do family where his grandfather was a wildly successful entertainment attorney and whose father was a nearly-as-wildly successful trademark attorney but neither of whom understood what in the heck to do with their prodigious incomes and never passed on any financial horse sense to him. What they did pass on was their phenomenal intellect and their gift for understanding high principles - but he was left to flounder and figure out for himself the laws of money. He is not a spendthrift and does not make wanton purchases but it has been much harder for him to get how to parcel out money and before meeting me had never quite conceived of how to set it aside methodically. That has been changed for many years now and he subscribes to my goals - really, our joint goals - for a secure retirement, but I know he relies on me to call the bulk of the financial shots. He certainly likes the results of having me be the watchdog to be sure that debt is paid off in the swiftest, least expensive fashion and he is happy to fund his Roth and his 401(k) to their maximum before considering any other of his income his to distribute. I may have more initiative to find out the principles of money and investing, and to sleuth out the soundest financial maneuvers but he will be willing to learn what I discover, and to put it into practice.I am delighted to hear that you and your DW are of one mind regarding financial security. I fully agree that both partners need to support one another on that crucial common goal!xraymd
Greetings, SP, thanks for your incomparable advice. I had all but forgotten about DRIPs and I even grew up in the shadows of NAIC (in Royal Oak, Michigan). It comes back to me that it may even be possible to acquire an initial share of companies who offer DRIPs through them at little or no cost (if I am a member) and I need to look into this again.Way back when I was a little girl, my dad started a DRIP for me with Detroit Edison. I rememeber learning fractions by studying what percentage of a share my reinvested dividends were buying! And that accumulation served me well when I needed to fund a portion of the cost for attending medical school - by selling the shares some 30 years later I realized a tidy profit and had to pay NO CAPITAL GAINS TAX because I was at a low water mark incomewise and the long term capital gains tax did not even reach the threshold of what I would have needed to owe to be liable for the tax (as I recall). Of course, there were some other machinations due to being a shareholder in my dad's S corporation (I remember those 1120-S forms and Schedule E) but the lesson learned is that there was a time to hold and a time to sell, and I was taught to sell when it would have the least consequence to me when all impacts were considered, taxes among them. And the act of selling the stock enabled me to avoid owing more towards student loans than I would otherwise have owed. So all financial actions have tie lines!But the bottom line is that it has been probably 10 years since I had any stock via a DRIP and that is indeed an EXCELLENT place to start. Thank you so much for bringing this to my attention.xraymd
If you want something where you would be more directly involved, you might consider DRIPs --- Dividend Reinvestment Pregrams. These are stock purchase plans offered by large corporations that allow you to buy shares of stock at low cost, and sometimes at no cost ---and to reinvest dividends if you wish. Sometimes you can buy the first share of stock with these plans, in some companies you'd have to buy your initial share or shares through a broker. I just wanted to kick in my belief in the path that SP has outlined, especially for a beginner - I have stayed a beginner for over ten years now with my Drips. There are some really good resources. Personally I have found the MoneyPaper useful as a source for ideas and a way to buy into plans that do not allow a direct purchase(and a cheaper way into some that do). Drips are also a nice hidden savings device as the dividends start to pile up and they disappear before they are seen as cash(reinvested that is)and personally that is over 5 Grand a year in invisible savings for me at this point(though there are taxes you do see.
Greetings, lowstudent - and everyone - is there any innate reason why DRIPs should or should not be part of already tax-advantaged savings (such as a Roth)?And, along those lines, is there a quick summary of what types of investments would be redundant to put into, say, a Roth? (Something I can think of might be certain municipal bonds which have no tax liability in and of themselves.)xraymd
"Greetings, lowstudent - and everyone - is there any innate reason why DRIPs should or should not be part of already tax-advantaged savings (such as a Roth)?" Taxes are kind of an individual issue. However, the nature of Drips makes a 1 year holding period pretty normal which means you are facing a 15% tax on your drips except the most recent buys at a maximum. It is a gamble that rates will be that low at withdrawal if withdrawal is retirment. I tend to leave my cash investments in my IRA 401k (lots of stock but that is where cash above emergnce fund is kept)but I do not qualify for Roths, so I will be getting taxed at the back end. Since this amount would not be taxed at the LT/lower cap gains/dividend rate I would likely pay a higher tax at withdrawal from a non-Roth. Rules are of course different for a Roth Muni bonds of course are crazy in a Roth. Anything else you are beating the taxes on, your Mutual funds because of their rapid trading are pretty good choices in a Roth (short term gains) as well as your trading account. 15% on Divs and long term cap gains make my Drips tax advantaged so Traditional Ira and 401k are my last choice for these as 15% is as bearable as it gets.
Greetings, lowstudent - and everyone - is there any innate reason why DRIPs should or should not be part of already tax-advantaged savings (such as a Roth)?The analysis of this question is complex and depends on what sort of investing you are doing. And the standard advice - that you should invest conservatively in retirement account and more aggressively in other accounts - is approximately backward. You want the investing where the tax advantage will do you the most good, to be in the retirement accounts. The detailed breakdown depends to some degree on assumptions about relative current and future tax rates. I did one a while back, let's see if I can find it... ah, here it is: http://boards.fool.com/Message.asp?mid=19947077
<<Drips are also a nice hidden savings device as the dividends start to pile up and they disappear before they are seen as cash(reinvested that is)and personally that is over 5 Grand a year in invisible savings for me at this point(though there are taxes you do see. >> With the discounted income tax on most corporate dividends, this is a cheap way to obtain income these days. Yet another reason to invest! Seattle Pioneer
And, along those lines, is there a quick summary of what types of investments would be redundant to put into, say, a Roth? (Something I can think of might be certain municipal bonds which have no tax liability in and of themselves.)Or conversely, what is best placed in an IRA? REITs, for example. (Unless your income is actually really low -- but I know that's no longer the case for you.) All dividend payers, if the tax rules revert to previous incarnations -- again, unless your income is really low.jmc, really low income but w/ a recent inheritence (so I've "read up" on investments & have been able to invest!)
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