[DrVenture]

To the above comments I will add that, when the market starts dropping, most people are completely incapable of buying stocks. They become fearful and frozen in place. So they are afraid to add when it is high and going up, and even more afraid when the bottom drops out. They fear there is no bottom to the carnage.

[XutvJet]

Originally Posted by DrVenture

To the above comments I will add that, when the market starts dropping, most people are completely incapable of buying stocks. They become fearful and frozen in place. So they are afraid to add when it is high and going up, and even more afraid when the bottom drops out. They fear there is no bottom to the carnage.

I've weathered all the market collapses since 2000. During the 2008-2009 financial crisis, I lost 40%+ of the value of my portfolio. I kept it all in the same place and kept adding. By late 2010, my portfolio had gained all that loss back plus another 20%.

You can't freak out.

[zx10guy]

Originally Posted by Fredcohiba

I don’t remember who exactly, but some work colleague talked to me about this new savings vehicle called a 401k. He said I should contribute. I guess I thought he was smarter than me and therefore knew what he was talking about so I did as I was told. I’m sure glad I did.
I started saving into a 401k as soon as it was made available. Over the years I contributed more and more until at some point I reached a maximum amount allowed. Luckily, I was able to retire early.
I read statistics that show the average and median savings of 401K by age group and it just does not seem to me to be enough.
If I can give those younger than me some “old man advise”, it would be to talk to a professional financial planner or your HR/Payroll professionals and start a savings vehicle earlier rather that later. Take advantage of the company match if it is offered (its free money) and remember it’s also in pretax dollars. As an example, if you put $100 into a 401K plan, that might only represent a $60-80 reduction in your paycheck. Talk to your Payroll department to find out your actual values. If you do a percentage base deduction, every time you get a raise, so does your 401k.
Save early and often, your older self will thank you.

Doing pre-tax contributions into a 401k has another side benefit depending on how you look at it. It allows you to lower your AGI on income tax filings now with the bet that in the future you'll be in a lower tax bracket when you retire and drawing from your 401k/IRA.

I've been doing the max for years to lower my AGI when filing income taxes as it's one of the few options I have to decrease my tax burden now. I've only shifted my strategy to have my catch up contributions go into the Roth component of my 401k ahead of the impending rule changes where any catch up contributions have to be put into a Roth instrument.

[XutvJet]

Originally Posted by zx10guy

Doing pre-tax contributions into a 401k has another side benefit depending on how you look at it. It allows you to lower your AGI on income tax filings now with the bet that in the future you'll be in a lower tax bracket when you retire and drawing from your 401k/IRA.

I've been doing the max for years to lower my AGI when filing income taxes as it's one of the few options I have to decrease my tax burden now. I've only shifted my strategy to have my catch up contributions go into the Roth component of my 401k ahead of the impending rule changes where any catch up contributions have to be put into a Roth instrument.

The only time I'd advise against doing the max is if your 401K investment options aren't very good. There are many 401K plans out there riddled with mutual funds with high fee/expense ratios (ER) and other crappy investment options. Many less savvy investors see a high fee/ER and think it must mean the fund is well managed and will do better. It's been my experience being in actively managed funds in 401Ks and through my former broker at Morgan Stanley from 2000-2013 that actively managed funds tend to do way worse overall than something as simple as an SP500 index fund with nearly a zero fee/ER.

Investing is REALLY SIMPLE if your goal is to retire with $1M+.

- Start early

- Always take advantage of a company 401K assuming they do a match, invest up to at least the match

- Buy low fee funds like SP500 index funds, avoid single stocks and actively managed funds, at least until you've got good $500K+ portfolio.

- Stay in it for the long haul, don't freak out unless of course you're planning to retire within ~3 years.

[tracknut]

Originally Posted by zx10guy

Doing pre-tax contributions into a 401k has another side benefit depending on how you look at it. It allows you to lower your AGI on income tax filings now with the bet that in the future you'll be in a lower tax bracket when you retire and drawing from your 401k/IRA.

Agree, though of course this is very dependent on a person's financial situation. I have been doing exactly the opposite, drawing annually from my IRA since about age 55, to increase my current tax burden in an attempt to more level it off so I don't have a huge tax increase later on.

[RockCrusher]

Originally Posted by DrVenture

To the above comments I will add that, when the market starts dropping, most people are completely incapable of buying stocks. They become fearful and frozen in place. So they are afraid to add when it is high and going up, and even more afraid when the bottom drops out. They fear there is no bottom to the carnage.

Been a dollar cost averaging investor for years via my contributions to my 401(k)s.

But I had some cash on the sideline and when the UK voted to leave the EU and the (USA) market dropped -- admittedly not by that much -- I put $40K into the market (S&P 500 like index fund). Then the 2nd day the market had dropped a bit more I put in another $35K.

That was back in mid June of 2016. The S&P was at around 1960. Now it is 5526. That $75K has experienced an increase to $210K.

I believe it was Warren Buffet who said: "It's wise for investors to be fearful when others are greedy and to be greedy only when others are fearful."

[RockCrusher]

Originally Posted by XutvJet

I've weathered all the market collapses since 2000. During the 2008-2009 financial crisis, I lost 40%+ of the value of my portfolio. I kept it all in the same place and kept adding. By late 2010, my portfolio had gained all that loss back plus another 20%.

You can't freak out.

Good advice.

I didn't bail out of the market during the 2008-2009 financial crisis. My time horizon was some years in the future and I believed the market would (eventually) recover by the time I would start taking the money out.

To avoid increasing my anxiety I didn't really look that hard at my IRA/401(k) statements.

Fortunately I was working and kept contributing money to my 401(k) via dollar cost averaging so I was buying stocks at depressed valuations.

About a year to the day the market was back up to where it had been at the start of the crisis. And thankfully has done rather well since.

Some few years ago at a CA grocery store happened to get into a brief conversation with a woman. She told me she lost $1M in the 2008-2009 crisis. She cashed out and was out of the market as it recovered.

[Indytaper]

Retirement savings and investing are a high priority for me. I have maxed out my 401k contribution since I entered the professional work force at 22 years old, I am now 55 years old. Once I had discretionary money available I began investing (albeit a small amount) in stocks and mutual funds.

My retirement accounts, rollover 401k / IRA’s, and others, are professionally managed. I’ve added to my personal brokerage account over the years and have been fortunate with my choices and timing. Firm plans in place to retire at 58 years old. None of us know how long we will live, I want to make sure I can enjoy as much time retired as possible.

[Bc2005]

If you start out with a job by maxing out your 401k or 403b contributions, you will quickly get used to living off the remainder. Over the years you will usually find it even easier to never have that money for daily spending. Having it taken out of paychecks gives you dollar cost averaging without any effort.

And if you are more than 10 years (or maybe even 5 years) from retirement keep as little as possible in money market and bond funds. Equity funds ( including S&P index funds) always do better in the long run. Why keep a big chunk in funds that make only 5% in the long run, while a simple index fund will make double that in the long run? You just have to figure out your version of “the long run”.

[zx10guy]

Originally Posted by XutvJet

The only time I'd advise against doing the max is if your 401K investment options aren't very good. There are many 401K plans out there riddled with mutual funds with high fee/expense ratios (ER) and other crappy investment options. Many less savvy investors see a high fee/ER and think it must mean the fund is well managed and will do better. It's been my experience being in actively managed funds in 401Ks and through my former broker at Morgan Stanley from 2000-2013 that actively managed funds tend to do way worse overall than something as simple as an SP500 index fund with nearly a zero fee/ER.

Investing is REALLY SIMPLE if your goal is to retire with $1M+.

- Start early

- Always take advantage of a company 401K assuming they do a match, invest up to at least the match

- Buy low fee funds like SP500 index funds, avoid single stocks and actively managed funds, at least until you've got good $500K+ portfolio.

- Stay in it for the long haul, don't freak out unless of course you're planning to retire within ~3 years.

Yes. The fees of a managed fund are a consideration. But I would say the benefits of sheltering that money from having it be taxable either outweighs or offsets the fees. Also, whether the funds in a 401k plan don't perform as well as a simple index fund or not, it's still a net benefit to have that money in the market versus pissing it away paying the Feds.

My current employer's 401k has been doing well for me as my account has appreciated 14% year to date excluding yesterday's dip. Also, my employer has a Roth component to the 401k plan which I'm contributing to as I haven't been eligible to contribute to a Roth IRA for some time.

[vreihen16]

Originally Posted by zx10guy

Doing pre-tax contributions into a 401k has another side benefit depending on how you look at it. It allows you to lower your AGI on income tax filings now with the bet that in the future you'll be in a lower tax bracket when you retire and drawing from your 401k/IRA.

As my employer was legally required to point out, the pitfall of pre-tax anything is that it could lower your social security benefits. Not that the younger generation should plan for social security to still be solvent when they reach retirement age.....

[zx10guy]

Originally Posted by vreihen16

As my employer was legally required to point out, the pitfall of pre-tax anything is that it could lower your social security benefits. Not that the younger generation should plan for social security to still be solvent when they reach retirement age.....

Any social security I could get isn't guaranteed anyways with how messed up the Fed sponsored Ponzi scheme is. To keep the program solvent, there's been talk about slashing benefits payouts and maybe even moving the eligibility age further back.

For me, I guess I'm fortunate (or unfortunate depending on how you look at things) to be in a situation where I hit the max in what I'm required to pay into social security taxes every year. For me, getting my AGI down is paramount as I'm in that higher tax bracket where I'm screwed no matter how you slice it.

[T0RM3NT]

Originally Posted by vreihen16

As my employer was legally required to point out, the pitfall of pre-tax anything is that it could lower your social security benefits. Not that the younger generation should plan for social security to still be solvent when they reach retirement age.....

It depends on what aspect of social security we're speaking of, right? The two main are the Federal Old-Age and Survivors Insurance (OASI) Trust Fund and the Federal Disability Insurance (DI) Trust Fund. Or (OASDI) together. Which is in part why we are concerned with its solvency to begin with. It didn't start out with (DI)...from SSA.gov:

"Q4: Is it true that Social Security was originally just a retirement program?

A: Yes. Under the 1935 law, what we now think of as Social Security only paid retirement benefits to the primary worker. A 1939 change in the law added survivors benefits and benefits for the retiree's spouse and children. In 1956 disability benefits were added.

Keep in mind, however, that the Social Security Act itself was much broader than just the program which today we commonly describe as "Social Security." The original 1935 law contained the first national unemployment compensation program, aid to the states for various health and welfare programs, and the Aid to Dependent Children program."

The Congressional Research Service (CRS) states the following:

"Solvency
The CRS says projections show that the OASI fund will remain solvent until 2033, and the DI fund will remain solvent until 2098. That means that each is projected to be able to pay benefits scheduled under current law in full, and on time, up to those respective years.

These projections mark a decline but also progress in the last four years. In the report the CRS issued in early 2020, the CRS had projected that the OASI fund would remain solvent through 2034, one year longer than the current projection. However, the CRS also had projected that the DI fund would remain solved until 2052—so in four years, its expectation regarding how long it will be before the DI fund will become insolvent has improved and it now contends that insolvency is now 46 years farther away.

On a combined basis, the CRS says the trust funds will remain solvent until 2035. After 2035, the CRS says that continuing income will cover 83% of program costs, and 73% of those costs in 2098."

Just some information to consider for those retiring in the next 10 years.

[F32Fleet]

Originally Posted by IndyRed128i

If saving more for retirement ment delaying your dream car by years, would that be worth the sacrifice to you?

Absolutely worth it.

[M3insf]

I strongly recommend participating in company 401K as early as possible and max it out. It’s a bit hard at the beginning but you’ll adjust to having less disposable income. As many have mentioned, the power of compound interest is a great way to build wealth.
I didn’t care for dividend stocks when I was young, always looking for that home run stock. Got burnt a couple of times in the dot com and 2008 so I started investing in dividend paying stocks.

As I prepare to retire next year, the dividend stocks will provide $10k of monthly income in addition to SS.

[XutvJet]

Originally Posted by M3insf

I strongly recommend participating in company 401K as early as possible and max it out. It’s a bit hard at the beginning but you’ll adjust to having less disposable income. As many have mentioned, the power of compound interest is a great way to build wealth.
I didn’t care for dividend stocks when I was young, always looking for that home run stock. Got burnt a couple of times in the dot com and 2008 so I started investing in dividend paying stocks.

As I prepare to retire next year, the dividend stocks will provide $10k of monthly income in addition to SS.

What dividend stocks do you have that have that sort of monthly income potential? They do monthly dividends or quarterly?

[kscarrol]

Originally Posted by XutvJet

What dividend stocks do you have that have that sort of monthly income potential? They do monthly dividends or quarterly?

In my retirement I live off income (dividends) from investments. Keep in mind that dividends are usually paid quarterly, not monthly. Won’t go through my entire portfolio but stocks like AB (8.3% yield), ET (7.86%), GSK (3.7%)… there are quality companies out there paying solid dividends. You usually forgo growth/capital gains in favor of income but in my lower 60’s, that’s fine for me.

[M3insf]

As mentioned, dividend is paid quarterly. I tend to invest more in pharmaceutical, oil and telecom stocks such VOD, GSk, BMY, VZ, CVX. I am also looking a bit of growth as well. One of my favorite was ABBV which has grown a lot recently so dividend is down a bit but at one point it was around 5%. Recently acquired ATT stocks at $16 in anticipation of fed interest reduction. T is now $21 and paying 5% so there is a bit of growth and decent dividend. Reinvesting dividends also helps accumulate more shares and you have the effects of compounding.



To achieve this high dividend, it does take a sizable investment. I am a bit more conservative so I stay away from high dividend payout ratio stocks.

[kscarrol]

Originally Posted by M3insf

As mentioned, dividend is paid quarterly. I tend to invest more in pharmaceutical, oil and telecom stocks such VOD, GSk, BMY, VZ, CVX. I am also looking a bit of growth as well. One of my favorite was ABBV which has grown a lot recently so dividend is down a bit but at one point it was around 5%. Recently acquired ATT stocks at $16 in anticipation of fed interest reduction. T is now $21 and paying 5% so there is a bit of growth and decent dividend. Reinvesting dividends also helps accumulate more shares and you have the effects of compounding.



To achieve this high dividend, it does take a sizable investment. I am a bit more conservative so I stay away from high dividend payout ratio stocks.

This! Do not be tempted by a high yield alone, do your research.

[unluky]

Originally Posted by F32Fleet

Absolutely worth it.

LOL - this is 100% me. I keep a "fun" car around and have for the last 15-20 years (always a manual of course) but I have my list of cars I plan to own when all my goals have been met. Pay yourself first.

2 camps here - "fuck it, you might die early" and "I never wanna run out of money". I camp in #2 most of the time. LOL

[ASAP]

you definitely want to contribute at least as much to your 401k as your employer will match... above that is a bonus... remember, this is money that is tied until you are about 60... there are certain activities you will not be able to do at that age no matter how much you try to talk yourself into it

[ASAP]

Originally Posted by IndyRed128i

If saving more for retirement ment delaying your dream car by years, would that be worth the sacrifice to you?

the one caveat is... one day that dream car may no longer be around or you may not want it... for me, BMW is getting there as far as performance cars are concerned... once we go ev... it will be an appliance to me