Retirement savings ....Yikes !

[JDgreen227]

I know several people quite well who mistakenly trusted the wrong "financial advisors" with their hard earned money, and found themselves duped by a Ponzi scheme. Makes me wonder about those people who are supposedly trained to be qualified to handle and invest the funds of others: WHY are they not required to post a bond and obtain loss insurance in the instance their money handling is ACTUALLY a scam and they are bilking the clients? I can understand them losing the funds entrusted to them because of poor investing, but it should be reasonably easy to prove they were acting in good faith, versus intentionally trying to scam investors.

 

[MossRoad]

46 as of this year, I still don't know the "secret" timing, though.

The secret is you can't time the market.
The other secret is dollar-cost averaging.

 

[KTurner]

I know several people quite well who mistakenly trusted the wrong "financial advisors" with their hard earned money, and found themselves duped by a Ponzi scheme. Makes me wonder about those people who are supposedly trained to be qualified to handle and invest the funds of others: WHY are they not required to post a bond and obtain loss insurance in the instance their money handling is ACTUALLY a scam and they are bilking the clients? I can understand them losing the funds entrusted to them because of poor investing, but it should be reasonably easy to prove they were acting in good faith, versus intentionally trying to scam investors.

Well, the criminals, the ponzi scheme operators, don't really feel it necessary to follow laws... And if the con is smooth enough to talk someone into a ponzi scheme, they would be smooth enough to talk their way around any law about posting bond, if their victim even knew enough to ask about a bond.

Keith

 

[MossRoad]

I guess I am missing something. Mathematically if you get 5% return compounding over 8 years you only yield under 50% not 100%. It would take over 14 years to double your money at 5%? I am not saying your wrong but I seem to be me missing something in the figuring.

I am referring to the post just before the one I quoted. The chart was too long to repost.

What is it?

I never mentiond 5%. Someone else asked me where I could get a safe investment that returns 5%. I couldn't answer that question. And I wouldn't settle for 5%.

What I said was we strive to double our net worth every 7-8 years. We do that by investing in our 401Ks, Roth IRAs, savings accounts, increasing the value of our home, our land, etc...

Think of it this way... Let's say your have 100k in an IRA. You have it invested in several mutual funds of varying risk that average a total return of 10%. You contribute 5k of your own money to the IRA each year. So, that first year, you end up with 115K. That's 15 percent increas in value.
Second year, you get 11.5K in interest + your 5K contribution for 16.5K increase bringing total to 131.5K at end of year two.
Third year, you get 13,1K in interest + your 5K contribution for 18.5K increase bringing totat to 149K at end of year three.
Fourth year, 14.9K + 5K = 19.9K increase = 168.9 at year 4 end.
Fifth year, 16.8K + 5K = 21.8K increase = 185.7 at year 5 end.
Sixth year, 18.6K + 5 K = 23.6K increase = 204K at year 6 end.
You just doubled your net worth in 6 years making 10% interest and contributing 5K of your own money each year.
Make a little less than 10% and it takes longer.
Make a little better than that and you have really good years.

The key is to run your numbers often. Check the performance of your mutual funds twice a year. Don't move money around a lot trying to time the performance of your mutual funds. Its just as hard as trying to time the market. Don't knee jerk react to events. You'll get out of the market too late and get back in too late, missing the peak profits and locking in your peak losses.

Of course, all of that is just my opinion. I am not a financial advisor and I did not sleep at a holiday inn last night. Make your decisions at your own risk... etc....:laughing:

 

[KTurner]

The secret is you can't time the market.
The other secret is dollar-cost averaging.

Also - avoid commissions and taxes (legally, of course). If you're getting hit with a 5% commission, then a 7 or 8 percent return isn't even keeping up with inflation.

Keith

 

[MossRoad]

Good simple formula. I guess I was doing it right. MossRoad I think wrote he was getting 5% return and doubling his money every 7-8 years. Didn't make sense. I thought I was doing it wrong, I guess not.

Thanks

As I mentioned, that wasn't me talking about 5% returns. That wouldn't cut it for me. Maybe I will think differently when I'm retired, but as long as my brain is working and we keep living well below our means, I'm staying in riskier investments that earn much more than that. I know I can weather bumps of even 30% losses like happend in 2008.

 

[aczlan]

I am amazed at what some folks support. Does your pastor really need a million dollar house? A private plane?

I agree, IMO they should be over a small enough congregation that they know everyone so that people will be more likely to turn to them for help vs a huge church where you have to have a Jumbotron setup to see the pastor.

I can understand that a educated, professional minister making enough to live very comfortably, but a rockstar lifestyle ?

I can understand that, but prefer our system where there is a minister (who we call a Bishop) and two councilors who serve (unpaid) for ~5 years and keep their "day jobs" after the 5 years, they return to being a member of the congregation. Ofter one of the councilors is asked to serve as the next Bishop, but that is not always the case. Note that they dont generally need to prepare a sermon each week, 2-3 members of the congregation are asked to prepare a 5-15 minute talk each week on an particular theme or based off of a scripture.

Our pastor is bi-vocational...
I produce monthly reports on every cent that is spent and where it goes...
If folks have issues as to where it is spent they can address those issues to the pastor or deacons...
Not all churches are corrupt and none are perfect...
We try to serve the needs of our members and community giving a lot of benevolence to folk in need and our widows...
The only paid staff are the pastor, lawn keeper, and custodian...

Sounds like a good place to worship. As has been said "trust, but verify".

Aaron Z

 

[BuzzardA91]

As I mentioned, that wasn't me talking about 5% returns. That wouldn't cut it for me. Maybe I will think differently when I'm retired, but as long as my brain is working and we keep living well below our means, I'm staying in riskier investments that earn much more than that. I know I can weather bumps of even 30% losses like happend in 2008.

Sounds good. 30% loss, ugh. Glad you recovered. I just misread the 5% I guess and thought I was figuring it wrong. Agreed, doubling up every 7-8 years would be great.

 

[KTurner]

Pain mounts for big depositors in two main Cyprus banks - FRANCE 24

Since some think we are using the EC as our model for the future we in the USA may once again need to have a concern about our money in the bank as being safe. The current talk to taking a cut of 401K, etc self managed retirement for federal government to spend should be a concern in the USA today for the holders of such retirement funds.

And the latest news on this, "raid on uninsured Laiki depositors is expected to raise 4.2 billion euros" by freezing deposits above 100K euros.

Keith

 

[keegs]

I never mentiond 5%. Someone else asked me where I could get a safe investment that returns 5%. I couldn't answer that question. And I wouldn't settle for 5%.

What I said was we strive to double our net worth every 7-8 years. We do that by investing in our 401Ks, Roth IRAs, savings accounts, increasing the value of our home, our land, etc...

Think of it this way... Let's say your have 100k in an IRA. You have it invested in several mutual funds of varying risk that average a total return of 10%. You contribute 5k of your own money to the IRA each year. So, that first year, you end up with 115K. That's 15 percent increas in value.
Second year, you get 11.5K in interest + your 5K contribution for 16.5K increase bringing total to 131.5K at end of year two.
Third year, you get 13,1K in interest + your 5K contribution for 18.5K increase bringing totat to 149K at end of year three.
Fourth year, 14.9K + 5K = 19.9K increase = 168.9 at year 4 end.
Fifth year, 16.8K + 5K = 21.8K increase = 185.7 at year 5 end.
Sixth year, 18.6K + 5 K = 23.6K increase = 204K at year 6 end.
You just doubled your net worth in 6 years making 10% interest and contributing 5K of your own money each year.
Make a little less than 10% and it takes longer.
Make a little better than that and you have really good years.

The key is to run your numbers often. Check the performance of your mutual funds twice a year. Don't move money around a lot trying to time the performance of your mutual funds. Its just as hard as trying to time the market. Don't knee jerk react to events. You'll get out of the market too late and get back in too late, missing the peak profits and locking in your peak losses.

Of course, all of that is just my opinion. I am not a financial advisor and I did not sleep at a holiday inn last night. Make your decisions at your own risk... etc....:laughing:

You can put your money in a broad index fund like the S&P 500 which historically averages around 7% (including an average 2% dividend). The fees are much lower (usually < .2%) compared to a managed fund and if your situation doesn't include a tax advantaged account, cap gains are typically much lower, as a managed account involves allot more trading.

Can you tell I'm a Boglehead ....