AxelWolf
AxelWolf
Joined: Oct 10, 2012
  • Threads: 151
  • Posts: 20040
January 13th, 2015 at 11:14:31 PM permalink
Quote: RaleighCraps


I wonder if Axel offers a 401K program..............

its called having an opportunity for partnership.
♪♪Now you swear and kick and beg us That you're not a gamblin' man Then you find you're back in Vegas With a handle in your hand♪♪ Your black cards can make you money So you hide them when you're able In the land of casinos and money You must put them on the table♪♪ You go back Jack do it again roulette wheels turinin' 'round and 'round♪♪ You go back Jack do it again♪♪
AcesAndEights
AcesAndEights
Joined: Jan 5, 2012
  • Threads: 67
  • Posts: 4299
January 14th, 2015 at 7:00:01 AM permalink
Quote: kewlj

But now as a homeowner, I have come around to that way of thinking. I put 50% down on my home that I live in.


Wow! Props to you on that.

Quote:

Now, my second property was just a bad decision on my part. Maybe 'bad' isn't the right word, because I think and hope it may turn out ok, but it is a decision I regret.


It's good that you can admit that.

Quote:

It's a decision I didn't think through entirely and that's not the way an AP operates. I just saw this nearby property selling significantly under current value and grabbed it up (cash purchase also from what I now consider my total BR funds).


DOUBLE WOW! You've eliminated one of the big problems with thinking of real estate as an investment - using big leverage. 50% down on one home and 100% down on the other - that's a whole different ball game. I still wouldn't do it, but you've eliminated a big cash leak (interest).

Quote:

My plan was to turn around and put it right back on the market at a closer to market selling price. Problem with that is potential buyers can see that even though property is listed at or close to value, that is very recently sold for far less. The questions they immediately have are what is wrong with it that it sold so far below value and what now makes it worth more?


Hence one of the problems with real estate as an investment :).

Quote:

Luckily, I found a renter on another site that I participate on that some members that I know vouched for. He is an AP (for a living) so I worried about his finances, I know that's the kettle calling black...lol.


I don't fault you at all for being worried...you are one of the few exceptions as a successful disciplined AP. I imagine many "full time" APs live hand-to-mouth, and many who claim to be full-time APs aren't really. No reason not to be skeptical of him being able to pay the rent.

Quote:

He has been very reliable tenant and actually wants to purchase the property, so hopefully he will be in a position to do so at some point in the not too distant future and this rash and potential bad decision will have a happy ending. :)


That's awesome. I hope it all works out for you!
"So drink gamble eat f***, because one day you will be dust." -ontariodealer
Asswhoopermcdaddy
Asswhoopermcdaddy
Joined: Nov 30, 2009
  • Threads: 86
  • Posts: 555
January 14th, 2015 at 9:17:29 AM permalink
Quote: RaleighCraps

I am mid 50s, and just forced out from the only company I worked for, for 33 years. My analysis says I have enough to last 34 years if I make 3% each year. It won't be an extravagant retirement with lots of travel, but I can pay all my expenses and have a little bit of fun each month (won't be any more $2K buy-ins at craps though, unless I score some nice day trade wins).



Based on your age, the general rule of thumb is to have your bonds equal you age. So that means 55% bonds and 45% equity, assuming 55yrs old. That's a benchmark and many advisors will tweek around it based on their models. You are expected to work another 10-12 years to reach full retirement age. Many models incorporate that. Are you worried about a 10% loss now or a 10% loss 10-12yrs from? That would help drive how much you tweek your allocation.

In theory assuming you find another job, your asset mix stays roughly the same, especially if you don't plan on drawdowns in the near future. Also, its important to check the fees that your plan funds are invested in. These fees are generally lower than rolling over the funds into an IRA. Rollovers make sense if you want more investment discretion or the plan funds are crap. If you're happy with your investments, then its a matter of percentage allocation.
RaleighCraps
RaleighCraps
Joined: Feb 20, 2010
  • Threads: 79
  • Posts: 2501
January 14th, 2015 at 10:09:02 AM permalink
Quote: Asswhoopermcdaddy

Based on your age, the general rule of thumb is to have your bonds equal you age. So that means 55% bonds and 45% equity, assuming 55yrs old. That's a benchmark and many advisors will tweek around it based on their models. You are expected to work another 10-12 years to reach full retirement age. Many models incorporate that. Are you worried about a 10% loss now or a 10% loss 10-12yrs from? That would help drive how much you tweek your allocation.

In theory assuming you find another job, your asset mix stays roughly the same, especially if you don't plan on drawdowns in the near future. Also, its important to check the fees that your plan funds are invested in. These fees are generally lower than rolling over the funds into an IRA. Rollovers make sense if you want more investment discretion or the plan funds are crap. If you're happy with your investments, then its a matter of percentage allocation.



This is all very sound advice, and is consistent with most every article I read (and Money magazine). But, as my money is currently parked in short term interest funds, does it really make sense to redistribute to even a 50/50 equity/bond split?
Equities are so over priced it is not funny. The economy is not as rosy as the indicators are making it out to be. Bonds are going to get creamed when the interest rates rise, which they most likely will do this year. So why put money into an allocation that is likely to get spanked?
I could start easing into equities, in a dollar cost averaging way, but again, it would seem down is much more likely than up. We are into the 7th year of a bull run, which I believe is the longest run for the past 40 years or so.

I am worried about the 10% loss now. I have not had to look for a job in 33 years, and am not planning on looking now. If something comes along, I might take it, but as far as a resume, job applications, etc. not in the cards at this time.
So preservation of my existing funds is job #1.

My problem with the long term, allocate and mostly ignore path is with the examples that I have seen. What the market does in the first years of your time frame carries much more weight than the latter years. A big year one can carry you through 2 or 3 down years. Conversely, a bad year one can put you in a position of almost no chance of recovery. I want to see what a 50/50 portfolio that went into 2007 looks like today, assuming no added funding and reallocation each year to maintain the 50/50 mix.
Always borrow money from a pessimist; They don't expect to get paid back ! Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
AcesAndEights
AcesAndEights
Joined: Jan 5, 2012
  • Threads: 67
  • Posts: 4299
January 14th, 2015 at 10:41:55 AM permalink
Quote: RaleighCraps

This is all very sound advice, and is consistent with most every article I read (and Money magazine). But, as my money is currently parked in short term interest funds, does it really make sense to redistribute to even a 50/50 equity/bond split?
Equities are so over priced it is not funny. The economy is not as rosy as the indicators are making it out to be. Bonds are going to get creamed when the interest rates rise, which they most likely will do this year. So why put money into an allocation that is likely to get spanked?
I could start easing into equities, in a dollar cost averaging way, but again, it would seem down is much more likely than up. We are into the 7th year of a bull run, which I believe is the longest run for the past 40 years or so.

I am worried about the 10% loss now. I have not had to look for a job in 33 years, and am not planning on looking now. If something comes along, I might take it, but as far as a resume, job applications, etc. not in the cards at this time.
So preservation of my existing funds is job #1.

My problem with the long term, allocate and mostly ignore path is with the examples that I have seen. What the market does in the first years of your time frame carries much more weight than the latter years. A big year one can carry you through 2 or 3 down years. Conversely, a bad year one can put you in a position of almost no chance of recovery. I want to see what a 50/50 portfolio that went into 2007 looks like today, assuming no added funding and reallocation each year to maintain the 50/50 mix.


Raleigh, let me say that I don't envy you. I'm a young guy with years of work ahead of me, so a big crash right now is actually good for me. Despite having a bunch of money in the market already (including money I will likely use for a house down payment in the next 2-3 years), a big crash right now means I'm getting big money in at a lower price.

Anyway, no real advice here, just some commiseration. Actually, I do have some advice: if you're not going to work (which I fully support, retirement sounds awesome), look for ways to cut costs in your daily life. You don't have to be a pauper, but I'm sure there are cash leaks that you didn't really notice or care about when you had an income, but that you could easily live without. Lower your yearly "nut" and the investment returns suddenly become less important.
"So drink gamble eat f***, because one day you will be dust." -ontariodealer
AxelWolf
AxelWolf
Joined: Oct 10, 2012
  • Threads: 151
  • Posts: 20040
January 14th, 2015 at 10:42:43 AM permalink
I'm still waiting for someone to suggest Bitcoin.
♪♪Now you swear and kick and beg us That you're not a gamblin' man Then you find you're back in Vegas With a handle in your hand♪♪ Your black cards can make you money So you hide them when you're able In the land of casinos and money You must put them on the table♪♪ You go back Jack do it again roulette wheels turinin' 'round and 'round♪♪ You go back Jack do it again♪♪
RaleighCraps
RaleighCraps
Joined: Feb 20, 2010
  • Threads: 79
  • Posts: 2501
January 14th, 2015 at 10:57:18 AM permalink
Quote: AxelWolf

I'm still waiting for someone to suggest Bitcoin.



He's still under self suspension
Always borrow money from a pessimist; They don't expect to get paid back ! Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
AxelWolf
AxelWolf
Joined: Oct 10, 2012
  • Threads: 151
  • Posts: 20040
January 14th, 2015 at 11:34:26 AM permalink
Quote: RaleighCraps

He's still under self suspension

What did he buy them @?
♪♪Now you swear and kick and beg us That you're not a gamblin' man Then you find you're back in Vegas With a handle in your hand♪♪ Your black cards can make you money So you hide them when you're able In the land of casinos and money You must put them on the table♪♪ You go back Jack do it again roulette wheels turinin' 'round and 'round♪♪ You go back Jack do it again♪♪
RaleighCraps
RaleighCraps
Joined: Feb 20, 2010
  • Threads: 79
  • Posts: 2501
January 14th, 2015 at 12:26:25 PM permalink
I don't recall, but there was a thread or two on it here.
Always borrow money from a pessimist; They don't expect to get paid back ! Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
Asswhoopermcdaddy
Asswhoopermcdaddy
Joined: Nov 30, 2009
  • Threads: 86
  • Posts: 555
January 14th, 2015 at 12:55:11 PM permalink
Quote: RaleighCraps

This is all very sound advice, and is consistent with most every article I read (and Money magazine). But, as my money is currently parked in short term interest funds, does it really make sense to redistribute to even a 50/50 equity/bond split?
Equities are so over priced it is not funny. The economy is not as rosy as the indicators are making it out to be. Bonds are going to get creamed when the interest rates rise, which they most likely will do this year. So why put money into an allocation that is likely to get spanked?
I could start easing into equities, in a dollar cost averaging way, but again, it would seem down is much more likely than up. We are into the 7th year of a bull run, which I believe is the longest run for the past 40 years or so.

I am worried about the 10% loss now. I have not had to look for a job in 33 years, and am not planning on looking now. If something comes along, I might take it, but as far as a resume, job applications, etc. not in the cards at this time.
So preservation of my existing funds is job #1.

My problem with the long term, allocate and mostly ignore path is with the examples that I have seen. What the market does in the first years of your time frame carries much more weight than the latter years. A big year one can carry you through 2 or 3 down years. Conversely, a bad year one can put you in a position of almost no chance of recovery. I want to see what a 50/50 portfolio that went into 2007 looks like today, assuming no added funding and reallocation each year to maintain the 50/50 mix.



If you don't plan on working and preservation of capital and cash flow is now the number one priority, then your money market position is a fair representation of your risk profile. It is the right asset class, but the returns are crap. You probably earn .1% in interest which does nothing for you over the next 10-12 yrs. IMHO, if I were under those constraints, I would look for higher yields in preferred stock, mortgage reits, and intermediate corporate bonds.

Going back to work gives you a longer investment time frame. You benefit from the volatility if you hold fair and true in your allocation
To your question, a portfolio invested in 2007 under 50/50 would be up today and would have fully recovered losses. Interest, dividends, dollar cost averaging, and no rebalancing would put you in the green.

If you were to rebalance, don't do it at once. Do it slowly over time. Hope this helps.

  • Jump to: