Just turned 47. I still have time. But, the older I get, the faster time gets – so it seems.
Practically a teenager. Lots of time. Keep putting in new money with your dollar cost averaging and you’ll be looking good.
anchorman, I feel the same. With the exception of low cost mutual funds, I pay no fees. (except trading fees) I have become much more conservative since my younger days, but still have a few that one may call aggressive. Not enough to make me cry if they go south, nor throw a party if they go north. Preservation of capital is crucial even at a young age, which I am not. When the company I worked for started offering a 401k., I still put at least 10% into a money market fund regardless what the other funds were doing. I have told this story to many young sailors I have met about the old Bosun that taught me how to splice wire. Save 10 cents of every dollar you make, you will not be here teaching young folks how to do a liverpool eye splice. I am not rich, nor poor. I am much better off listening to that bosun and a certain Captain Berryman as a young man. May they both RIP.
That was very good advice. Maxing out a health savings account, beginning at a young age should be thrown in that same bucket.
2 Likes
Have instructed both of my sons in that same regard. Health savings accounts are relatively new in the the last decade or two… My youngest was the most vulnerable, and has a semi-matching program in his work. It has worked quite well for him. And yes, the key is youth. You have time to learn and recover from past markets or mistakes. Just start early, my sons are hardheaded as hell, as am I, but they did listen to me in that regard. My bride and I bought stocks for them with the gift to minors act way back when. They still have them. And yes, they were strong companies that paid and raised dividends over all these years. Dumb luck I guess.
As you get older and closer to retirement, it is advised that you move away from riskier investments. I have little choice but to let my account sit and recover. I can’t swap deck chairs on the Titanic at this point. I have opened an Etrade account just to plunk a few bucks into airline and other travel sectors. They will eventually recover.
Which airlines?
All the majors. They will most likely get their bailout. I hope it comes with stipulations this time because they took their recent tax breaks and used them for stock buy backs. That was a bitchslap to the taxpayer.
1 Like
(nodding) There is likely to be further discounting. I know that Warren Buffet has bought Delta. The Motley Fool used to like Southwest, but that was before the 737 Max probs.
1 Like
Everything is on sale folks. Pick carefully, you will be rewarded by buying well run companies that the consumer depends on in a regular basis. This flu shit will go away in due time and the media will go on to the next thing, whatever that may be. Is this flu bad juju, hell yes. Will we get through this shit? Hell yes.
1 Like
In 2000 +/- United Airlines was trading around $100 a share. In late '01 early '02 it was under a buck, UAL was working with their creditors in bankruptcy. I knew their union employees were a big share holder & went against a brokers advice & put $1,000 into UAL. I hoped one day UAL would go back to its former glory & my $1k would be $100,000!!! Well, in 2003 all those old shares disappeared & the new UL issued all new UAL shares. Except for the $1,000 lesson about not betting on losers on the 8th count, it was a complete lose for me. Nowadays if I bet on a loser they have to have a up moving 200 day SMA (simple moving average) & a large FCF (free cash flow). Since the latest crash, almost everything will have a diving SMA so I’m only betting on historic dividend paying winners with a lot of cash or ETF’s.
Since I first signed into a 401k at 19 years old I always put some into the money market option but honestly didn’t know why except for the mantra of diversification. Even during the '08 crash I kept plowing 401k contribution into a diversified selections of stocks, bonds & cash similar accounts. Inexperienced me thought I should continue to do that because in a down market my account balances wouldn’t fall as hard & I would be safer. Now, after reading scores of financial books, managing large sums of money, listening to countless hours of podcasts & attending financial education classes I think very differently. In hindsight, I realize it doesn’t matter what my account balances were in 2008. What matters is what my account balances will be when I retire. I see diversification as a means to take advantage of opportunities when they arise. I wish I would have spent my 401k money market cash on about anything in '08-'09. By the time I figured out what the real reason for holding cash was we were already a couple of years into a 11 year bull market. I’m a couple of years behind anchorman in age & very happy I had cash to spend after everything dropped 20% from their highs. I don’t care that it wasn’t at the bottom exactly & wouldn’t be surprised if we have another recession or 2 before I start living off that money in 5-10 years.
Again, no guru here. Have never had any luck with airline or maritime type stocks , including my own company. The exception was a previously mentioned stock that I have held for over a decade, and has payed quite well. Cramer on many occasions has said stay away from those type of investments… He has had guests from a few shipping companies and was not polite in his questions. Frontline , Topships, and Maritrans worked for a while, but took a giant turd later on. I focus on well run reputable blue chip and semi blue chip dividend paying companies now. Particularly if the payout is less than 70% and the dividend has room to grow.
Sand Pebble, it is always good to keep a cushion, and powder dry. You seem to be an investor and are trying to achieve what we all want in the later years of life to be independent, regardless of what the government decides what to do with us young folks. Keep at it, you will be fine. I have been old enough for a few years to take social security, but don’t need it yet. I retired when I was 48, thanks to those gentlemen that mentored me I met as a young man that gave me some guidance when I was single and a complete knucklehead with more money than sense… Pass your knowledge to your younger shipmates, they will thank you later.
I don’t know how much knowledge I have to share but I have given away more copies of used Dave Ramsay books than I can remember. At least 15 or 20 I would guess. His “Financial Peace University” has caused me to have thousands of sound nights of sleep. I have been thanked over & over by people who received a used Ramsay book from me. Ramsay’s & George Clason knowledge for sure, mine not so much.
Concerning this current global crisis that we are going through. By some freak occurence I am filling for a month elsewhere & I’m not on my normal ship that I have been working for the last 3 years. It was only supposed to be a few weeks to a month but with all the quarantines it might be a lot longer. I’m working with a new bunch of guys 35 yrs old & younger & I know I have been a good reassuring influence on them. We talk about the coronavirus, empty streets, empty stores & the quarantines that their families back home are going through. The concern & fear is obvious. About every other day I remind them that us older guys were afraid & uncertain about the future after the 9-11 attacks but most of us came through it stronger & smarter. The same in '08-'09 when we thought the world economy was going to collapse & the possibility of a 1930’s style Great Depression was a real possibility. If any of you older guys are working with some younger guys or have scared shipmates who only see doom & gloom ahead remind them that the world has always had these crises. Some even in our lifetime & we always pull through. All this shit that we are going through will only make us tougher & smarter. It might be new to us but it ain’t new. We have done it before. Tell them to turn off the news feed for a little while & binge watch “Band of Brothers” instead. If those normal average guys can do that we can do this. After this coronavirus world crisis is over our Millenial Generation will be as tough as nails.
2 Likes
I hardly talk about the market or investing to most people anymore. I just got tired of the boglehead cult of “it’s time in the market, not timing the market”. Retail investers and 401k owners get slaughtered in events like we had the last month. Captial preservation is the #1 duty. There is no point in worrying about catching the upswing if you lost 30-50% in a correction. It takes 100% gain to offset a 50% loss.
People say “you can’t time the market”, so just stay in during massive easily spotted down turns?..WTF???
Many things are now below the levels of when Trump got elected and “had the best market ever”.Here is an example. FSDAX is BELOW the price it was in Nov 2016.
Having 5 years of gains wiped out in 1-2 weeks doesn’t sound like a smart plan to mean. These drops occurred over the course of days. One could’ve easily parked in cash to wait out the crazyness.
The 401k idea that you always must put money in, buy and hold or BTFD (buy the dip) only puts your hard earned money in the hands of the banksters and Wall Street guys that are much better at the game. Don’t be a sucker.
2 Likes
Agree 100%. When the 401K system was implemented I asked, " Who dreamed up this crap? I contribute and my employer contribute and in most cases that replaces a pensions plan. OK… but why does my employer decide I must choose only certain mutual funds? Why can’t I buy a US Treasury Bond or an individual stock?" Then I found out this 401K stuff was invented to give people like doctors and other professionals a chance to get a tax break. In exchange Wall St gets to manage the money for a fee which in total is in the billions of dollars… If has now morphed into a restrictive retirement scheme that gives individuals few choices but makes a lot of Wall St quite happy.
If your employer offers a good mix of funds and one chooses wisely you should be OK if you live long enough BUT as Mr Dollar said,you need to make a 100% in the future to regain your 50% loss. Had you been allowed to park your money in a cash account you would be much better off but Wall St doesn’t make money on individual cash accounts and Wall St makes the rules.
I’ve participated in four 401k plans in my career & all of them had an ultraconservative dollar for dollar fund option. The latest one even made an average 1-2% return & my earlier ones seemed to at least break even in good & bad times. So it is possible to break even (minus inflation) with a 401k plan with no effort at all. But I think we would need a professional or a program to run fund mixed scenarios to see if a strictly cash 401k portfolio would be better than a diversified stocks/bonds/cash mix over a long period of time. I would like to see the results.
I read somewhere (probably a comment on zerohedge, lol) that legally, all 401k style retirement plans MUST offer at least one cash/stable (aka safe) fund option. Every 401k I’ve been offered by employees has had some type of money market secure fund. Of course this is the LAW, but it doesn’t mean it is always followed.
I love how I see “admin fee” and “book keeping fee” deducted from my 401k. I’ve been lucky in the past in that I quit companies and could roll the few choice 401k $$$ into my self-directed IRA that I can trade on.
But the lack of fund choice in 401k isn’t the main issue I’m talking about. During growth, most of the funds do pretty well. THE PROBLEM is that people are “passive” and don’t pay attention and spend 3minutes making some mouse clicks to move their $$$ from the growth funds to the stable fund and avoid the 30-50% loss (also known as the last 5+ years of growth).
And even worse, these people like to lecture others on how “you can’t time a market”. Whatever goofball, I tried to help. Just like the big guys on wall street, I’ll gladly take your money.
1 Like
There’s gobs of emperical evidence on the subject of market timing. Easy takeaway: women outperform men because they don’t mess with stuff. If you had ALL of your money in stocks, I feel for you. But everyone has their own risk tolerance and personal situation.
(sighs heavily)
There is nothing inherently wrong with a 401(k). If A particular plan has shortcomings, (i.e. bad fund choices or the lack of a self-directed option) then it sucks to be you. But you have ways of making it better. You can petition the plan administrator or push for changes in the law. Not easy, I know. But they exist. What about the inherent advantages of a 401(k)?
Money invested in your 401(k) reduces your taxable income and therefore your tax liability. The gains grow tax-free. If you trade the account you don’t encounter taxable events. And if you are still fortunate enough to have an employer-match, typically fifty cents to the dollar, that’s a 50% return on your investment. Right off the bat. Risk-free. There is a problem however.
There is a dearth of financial education in the U.S., and people are extremely ignorant. A person is not born knowing this stuff and it’s complicated. It’s not rocket science but it does require learning. This leaves two options. You can either put the time and effort into learning it yourself, or you can pay someone to help you. If you just shoot from the hip and hope for the best, should you expect to see a good result?
2 Likes