I’m glad you brought up that reality. For a young mariner starting out and thinking about funding a retirement on 401k and social security benefits, the best investment they can make is living in an affordable part of the country, rather than the pricey major metropolitan centers. If your company has liberal travel benefits, making your home in or near SF or LA or Seattle can be a mistake. It means money will be tight for you, perhaps for the first 20 years of your career, because of a maxed-out mortgage.
Our boats dock in Seattle, but most of the mariners live in Montana, Wyoming, and as far as Maine. Their houses appreciate, maybe not so fast as they do in Seattle, but enough they’ll make a tidy profit when they sell them years down the road. Meanwhile they can afford to invest in the 401k with a 37% match. The few guys living in the Seattle area often can’t afford the mortgage AND max out on 401k. Finances are too tight.
On top of all the other good investment advice here, one bit is: live in Lawrence, Kansas.
Credit Unions are the best place to get a credit card. Interest rates are quite reasonable, less than half what the banks charge.
If you have high interest credit card debt, try to refinance it with a balance transfer to a new credit union card.
The biggest use of funds from P2P (Peer to Peer) lending is refinancing high interest credit card debt. Some might consider refinancing P2P.
The best way to make money is simply to stop spending on things that you don’t really need.
One of the biggest mistakes that a lot of guys make is buying a $60,000 truck that gets 12mpg with high interest dealer financing, and is expensive to register and insure. If you want to make money and get ahead in life, buy a modest new car with good mileage (e.g. Toyota Prius) financed by your credit union, or pay cash for cheap clunkers.
If everyone went by the 10% rule on vehicle purchases they’d be a lot better off financially. New car dealers would rather not think about such heresy.
10% of your annual net income should be the max you spend on a vehicle. Vehicles are not an investment that appreciate in value most of the time.
That mirrors my approach to cars. I don’t pay more than trade in value. I only pay cash. I only buy liability insurance, no full coverage. I look for cars that have some problem that looks bad, but is easy to fix. I prefer to buy trucks that are pre-dented. No point in buying a truck that is too good to put to work
Well most mariners make more than “crap wages” even in thier 20’s. And if starting a family is a priority for someone, go ahead. Doesn’t mean they can’t live debt free and save 15% of thier income.
As they say in every prospectus, “past returns are no guarantee of future results”. There are viable candidates in the running for president that are advocating policies that are very likely to result in major market downside. A trade war also fits this criteria but I can’t believe that it will be allowed to crash the market within a year of the election.
Either way, I’m 75% cash at the moment so that should tell you my confidence in the short term.
GEEZE…This ain’t rocket science. Spend less than you make and invest on a regular schedule. Never be a slave to a house or a vehicle.
My absolute best investment was my divorce lawyer from my first marriage. She’s gone on to destroy 2 other guys lives.
My present wife of 32 years is a regimented saver. We both drew early pension 10 years ago at 56. We’re now drawing S/S. we still haven’t drawn on our portfolios. I guess it’s time for a new flats boat or motor home. Retirement does NOT suck…
Back in the 90s I was working for a tanker company around the time the company cut the officer’s pay by 28%: deck and engine. The exception being the Masters, whose pay cut was less than 5%. I remember one Captain who lived in Connecticut, in the vicinity of the stockbrokers belt, who was always whining about how he was barely making ends meet. Meanwhile I was the Chief Mate, cleaning tanks and loading and discharging like a S.O.B. for about what I had made as a 2nd Mate but since I lived about 500 miles south of the Captain I had the satisfaction of getting to live like a king at home, due to the lower cost of living! Words to ponder!
Sure bets are sucker bets. You won’t go wrong with the S & P 500.
However we are overdue for a correction in all markets. Understand how that works and don’t panic. In the recession of 08/09 most paper
Losses were recovered in 14 months. I would recommend management by one of the big fund managers. We can repair a crap storm but we don’t know markets.
I listened to Warren Buffet years ago and avoided paying fees to anyone managing my money. Vanguard total world stock fund and total world bond funds beat most money managers. S&P index funds beat most hedge funds. Your age minus 110 is the new rule of thumb for equity percent, the balance in bonds.
just wanted to give you big thanks for that book recommendation, it really is full of good advice. best part was what you said as well, asking other mentors for advice… i have got some great advice from a few people i respect who have done very well in real estate and money management… i think i will buy a second property up in the Georgia mountains that i can leave with a management outfit to pimp it out for vacation rentals… spend half my life offshore anyway so dont need a place that i need to be very involved in for a few more year until i retire… thanks again…
Injunear had the best advice. Don’t spend more than you make. An old Bosun told me when I was very young, pay yourself first, and save ten cents of every dollar you make. How you invest that has many possible avenues, but the fact you are committed to saving at a young age is a giant step forward. Time is your friend. Other posters recommended a 6 month emergency fund, darn good advice. Also, if you use credit cards, pay the balance off every month. Don’t get in that trap that can suck you dry on high interest. If your company offers stock,take the matching if available, but NEVER exceed more than 10% of your portfolio, they go down, so do you, BIG TIME. I have a mixed portfolio of real estate, stocks, mutual funds, and yes…cd’s. At any particular time one would do better (or worse) than the other. Stay diversified,it’s one brick at a time. Hope this advice helps.
Spot on. Been a landlord over 3 very modest properties in Pensacola FL area since 1990. Finally liquidating and upgrading to a more valuable piece shortly. Doing a 1031 rea estate exchange to avoid being sodomized by capital gains and depreciation recapture and medicare taxes. My parents were refugee peasants from Europe and the only way they got ahead was saving, growing half they ate and buying/renting houses. They passed those genes to me. Millennials are buying but after crawling out of mom’s basement are renting, they take the route of least resistance but I digress, so the market is set for a huge permanent rental market. If the communists take control of course, the assets will be taxed and seized and the landlords shot but it will have been a good run.
Your refugee peasant parents were taken in by the USA and allowed to save and produce you. That you bitch about having to pay capital gain taxes and look for loopholes to avoid paying those taxes to the country that took them in and gave them a chance to produce you and gave you the opportunity to make what you have is greed personified. I will hazard a guess and say they could not afford private school for you and you went to public school and you maybe even got reduced lunch while there. You may have gone back and forth to school on a bus paid for by those that pay their share for living in this country. You traveled on public roads and enjoyed police and fire protections paid for by responsible citizens. We all owe the country that gave us an opportunity to succeed. I have paid my share of capital gain taxes and I’'m happy to do so, I wish I made enough to pay a billion dollars a year because imagine how rich I would be. I am disgusted by those who feel they owe their country nothing. I am especially disgusted by those that brag about taking advantage of the system while they enrich themselves after the USA took in their refugee parents. You have adopted the worst part of what it means to a citizen of the USA, the irresponsible ungrateful entitled leeches.
Well 1tengineer you have once again your capacity for sensitivity and revulsion for terms such as sodomy. As you are obviously a man of letters and a very sensitive seafarer who takes such offence in my use of sodomy despite the current norms of sexual confusion which professes no distaste to acts such as sodomy I am truly amazed. Obviously you have also not heard the phrase that the three great traditions of the British Navy is Rum Sodomy and the Lash. But Alas being a first generation leech and ungrateful unwashed son of immigrants who has given nothing back to this nation despite the partial resume I iterated, I can only surmise that it is my lack of full comprehension of the English language which is my second language despite being native born, that must be at fault. That or the fact that your confused leftist cerebrum is unable to process my statements. So once again comrade, I served 36 years both as enlisted and officer both regular and reserve in the U.S. military, I went out of my way to serve on ships supplying our forces in the sand box and continue to do so, and yes I am more grateful and fortunate than words can describe that I was born and raised and am a citizen of this nation. Again my parents and me have paid every penny we owed in taxes and by trying to upgrade to more expensive and valuable investments bit in real estate and equities I end up paying far more taxes than if I had sat on my ass and not invested anything. You revealed you were in the 40% tax bracket when you were working, which I have never reached, and you should be proud of that, but how my attempt to better myself by delaying paying cap gains and depreciation recapture marks me as a leech is quite puzzling and insulting, but so be it.
We took an early retirement class a while back & the instructor pointed out that short term capital gains taxes are probably the lowest they will ever be again. Under the current Tax Cut & Jobs Act of 2017 short term capital gains is you regular income tax rate but in 2025 they go back up. Several Democrat candidates for POTUS promised they will go up sooner if they are elected. So depending on how much you expect to earn in retirement & how long you have until then, you might want to consider paying the capital gains now. The U.S has a lot of debt & a “tax the middle-class & rich” to the max generation coming down the pipeline. With all the class warfare rhetoric flying around I wouldn’t be surprised if I see 50%+ capital gains tax in my lifetime. It’s been that high before. We already converted some of our tax protected investments to other things & will continue to do so a little at a time each year as long as we have the 2017 tax cuts in place.
I have been using 1031 exchanges for 30 years. It’s a great way to defer capital gains tax and build your portfolio until after you are dead. 1031 exchanges are not limited to real estate, they can also be used for commercial boats, construction and logging equipment, etc.
The tax code favors lower income people with kids and wealthy people. A disproportionate share of income tax is collected from folks like us. We don’t have all the special tax breaks that the rich do, but it’s crazy not to use the tax breaks that are available to us, like section 1031.