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educate me 401-k

  1. #801
    Soul Rider Paul_E_D's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post


    Give me a break.

    All investments have risk. Investing in stocks is no different than real-estate in this respect. Neither is foolproof. Neither is a sure thing. Both have histories showing highs and lows. Neither of those histories predicts a damned thing about the future.

    IMO investing in broad-based, scatter gun indexes like VTSAX couples your investment performance to the health of the overall US economy. Since my family, neighbors, community, job, grocer and just about everything else I deal with on a daily basis is also tied to the health of that same economy.. I am okay with that relationship. I'm in it for the long haul and will take todays bull market just the same as tomorrow's bear. Drawing income in a bear market is perfectly doable. All it takes is some leg work and pre-planning. Move investments you need NOW into less volatile assets, like cash. Leave the $ you don't need for a long time in more aggressive investments and ignore their short-term performance. Control spending. Maintain discipline.

    By the way I think you have your head up your ass if you think your rents will survive a significant down-turn in the economy.

    If hell bent on investing in real-estate one can still participate in a 401k and just direct it all into something like VGSIX. 401k and this new shiny real-estate thing you've discovered are not mutually exclusive concepts. Quite frankly if inclined I think you may even be able to do more targeted real-estate investments through self directed IRAs if you tried hard enough.

    Passing on the free-money offered via the employer match and the more free-money offered by the tax shelter seems really short-sighted.
    Why must you be such a jerk? Seriously. Ease up. Don't respond to my posts anymore. Thanks

    Edit: I should say, save the personal judgements and insults. We are chatting about retirement ideas. It's not a competition.

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    Last edited by Paul_E_D; 01-18-18 at 02:29 PM.
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    Re: educate me 401-k

    Hello winter.

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    Re: educate me 401-k

    Colder than a witch's titty in here.

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    Re: educate me 401-k

    Quote Originally Posted by Paul_E_D View Post
    But if at the time when you need income from it we are in a long bear market it won't seem easy.
    Fair point if you need it for income and this happens, but that IMO would be poor planning anyway. Knowing when you'll need income allows you to set up the various buckets (cash, bonds, mutual funds, individual stocks) you'll need to get through any bear stretch - the majority of which last no more than 12 months. Only the worst historical bear markets have lasted for 15, 18, 20+ months. Having buckets for the first 24 months of your income needs will almost always cover you.

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    Re: educate me 401-k

    Quote Originally Posted by loudbeard View Post
    Colder than a witch's titty in here.
    Colder than a whores' heart!

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  6. #806
    Your Father csmutty's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by gixxer72 View Post
    Colder than a whores' heart!
    Whores have hearts? Shit. I learned something today!

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    Re: educate me 401-k

    I took this pic in Australia

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  8. #808
    World Trackday Champion xxaarraa's Avatar
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    Re: educate me 401-k

    I think you and Paul both have valid points and there is no need to butt heads. Benefits of diversity in net worth is as fundamental a truth as any. Some thoughts on your thoughts below.

    Quote Originally Posted by nhbubba View Post
    .....Investing in stocks is no different than real-estate in this respect. Neither is foolproof. Neither is a sure thing......
    Except investing in real estate is an easier set of variables to figure out (especially true in metropolis like greater Boston, NY, Chicago etc.) and take advantage of, while the stock market is more of a true gamble for the average person. Precisely why there is an entire class of people (financial advisors, RIAs etc.) that are tied to investing in the markets, while real estate investing is more simple.

    Quote Originally Posted by nhbubba View Post
    Both have histories showing highs and lows. Neither of those histories predicts a damned thing about the future.
    See my post a few pages back on why its not always true that the market always grows, or always corrects. Long term market gains are fundamentally predicated on a few things being true about the economy. It has held so far in the US economy, but may not always.

    Quote Originally Posted by nhbubba View Post
    ...By the way I think you have your head up your ass if you think your rents will survive a significant down-turn in the economy.
    Rental income will surely survive better than money in market in a downturn. When incomes go down because you lost your job in a recession, or when your brokerage account took a huge hit because the market tanked evaporating your savings, mortgage and housing starts also go down and the renter population increases. Always been that way.

    Quote Originally Posted by nhbubba View Post
    If hell bent on investing in real-estate one can still participate in a 401k and just direct it all into something like VGSIX.
    I do not know a whole lot about these vehicles, and you may well be right.

    Quote Originally Posted by nhbubba View Post
    Passing on the free-money offered via the employer match and the more free-money offered by the tax shelter seems really short-sighted.
    Agreed 100%. Another reason why there is no need for you and Paul to argue. Both are good. Try and play both cards if you can.

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    Last edited by xxaarraa; 01-18-18 at 07:09 PM.
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    Re: educate me 401-k

    Quote Originally Posted by Paul_E_D View Post
    It's not a competition.
    Thatís some funny stuff...

    America
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    Money

    Not a competition?

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  10. #810
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    The head up your ass bit was out of line. I apologize for that.

    Paul, you have a unique way of getting under my skin. I think there's some irony in that you find my comments judgmental and insulting. But I posted the comments and that's on me. You and I are both likely guilty of some of the same idiocy in orthogonal ways. I will make a special effort to not respond to your comments anymore.

    I'm a firm believer in passive investing. Set and forget. Lots of tools out there for doing so and the costs are pretty reasonable. Very low time/effort. The risks are real. They need to be understood and accepted. No argument at all.

    I'd never suggest that real-estate investing isn't a great way to build wealth and assets; it undeniably is. But I do believe there are real costs both in terms of capital and time/effort. And real risks too, as with anything in life.
    I picked Tony's brain about this a bit down in WV and I have to say I'm really impressed with the success he had. I rode down to NC/WV with a guy named Frank a couple years ago who was also in that game and was also successful. Both highly admirable. I hope you see the same kind of successes.

    There's no competition here. Do your thing.

    That said, I stand by my comments in this thread. Saving for the future is becoming more and more important. 401ks are one of the best (and last!) tools available for that, regardless of what you choose to invest that savings in. I don't think any of us should be discouraging anyone from utilizing that tool. We need to learn to live within our means and treat savings as an expense; a cost of living. Lest we get to the point where we can't physically work anymore and have nothing saved. A "yolo" attitude now will likely mean cat-food dinners @ 70. I fear a lot of Americans are headed that way.

    I'll STFU now..

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    Re: educate me 401-k

    I've been on the sideline toying with the idea of rentals for years but always hesitant to pull the trigger. Especially in CT where the laws generally favor the tenant. For every success story I personally hear there's a half dozen horror ones. Anyone ever have a bad tenant, excessive property issues, negative cash flow, etc?

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  12. #812
    Soul Rider Paul_E_D's Avatar
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    Re: educate me 401-k

    I'm new to the game, but not yet. There have been issues, but if you have the patience to handle them well, and take care of your tenants, then 90 percent of the time, they don't want to be any bother.

    I have the whole 4 bucket thing going on. It's not easy for me to sit and wait for someday, and especially hard if it means squirreling away all my extra income and sacrificing life today for a retirement. Maybe if I made more money, I wouldn't have bothered. I jumped in the rental game to gain "passive" income that would allow me to pursue all my passions while I'm still young and healthy enough to excel. I wish I had done it sooner. It's a good fit for me so far, and a real game changer.

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  13. #813
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by xxaarraa View Post
    Except investing in real estate is an easier set of variables to figure out (especially true in metropolis like greater Boston, NY, Chicago etc.) and take advantage of, while the stock market is more of a true gamble for the average person. Precisely why there is an entire class of people (financial advisors, RIAs etc.) that are tied to investing in the markets, while real estate investing is more simple.
    This part I can't reconcile. Is there no requirement that investors evaluate properties and tenants? Does one not need to manage the property? How are those tasks intrinsically "easier" for "average" people to do vs researching market investments? In fact isn't a real-estate investment a market investment of it's own?

    In my mind financial advisors are largely analogous to real-estate management firms. Both make the investments easier, more approachable for people not willing to put in the time or effort researching. And both come with a cost.

    Financial advisors are not mandatory for investing in stocks or mutual funds. There is a broad spectrum of ways to invest including entirely self-directed day-trading, robo-investing, indexes, target date funds, actively managed funds, private equity firms and a gazillion other options in between. To my mind this is comparable to the spectrum from buying a multi-family in Worcester to REIT indexes.

    I don't follow why real-estate is somehow less of a "gamble". All investments have risks. Do they not?


    Quote Originally Posted by xxaarraa View Post
    It has held so far in the US economy, but may not always.
    Quote Originally Posted by xxaarraa View Post
    Always been that way.
    I sense irony here.

    I can show you >100 years of stock price histories that indicate that the US economy has "always" grown at about 6% per year, on average. Always.

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  14. #814
    Your Father csmutty's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    This part I can't reconcile. Is there no requirement that investors evaluate properties and tenants? Does one not need to manage the property? How are those tasks intrinsically "easier" for "average" people to do vs researching market investments? In fact isn't a real-estate investment a market investment of it's own?

    In my mind financial advisors are largely analogous to real-estate management firms. Both make the investments easier, more approachable for people not willing to put in the time or effort researching. And both come with a cost.

    Financial advisors are not mandatory for investing in stocks or mutual funds. There is a broad spectrum of ways to invest including entirely self-directed day-trading, robo-investing, indexes, target date funds, actively managed funds, private equity firms and a gazillion other options in between. To my mind this is comparable to the spectrum from buying a multi-family in Worcester to REIT indexes.

    I don't follow why real-estate is somehow less of a "gamble". All investments have risks. Do they not?





    I sense irony here.

    I can show you >100 years of stock price histories that indicate that the US economy has "always" grown at about 6% per year, on average. Always.
    Statistics show past trends. Just because in 40 rolls of the die a 3 hasn't been rolled doesn't increase the chance of a 3 occurring. The chance that it could happen is still 1/6.

    Same thing with the market. The chance that a huge crash could occur and tank the market for 40 years is possible. Whatever the chance of that happening is isn't changed by the success of the last 100 years.

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    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Exactly my point. (It's possible my sarcasm was lost; I tried to use the right font!)
    What makes the real-estate market immune from this same risk?

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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    Exactly my point. (It's possible my sarcasm was lost; I tried to use the right font!)
    What makes the real-estate market immune from this same risk?
    Nothing is immune from risk. Real estate risks: market bubbles, bad tenants, uninsured loss of property.

    With financial market investments, you get a little disclosure: Brokerage products: Not FDIC Insured - No Bank Guarantee - May Lose Value.

    Bonds are more secure, but don't return much.

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    Re: educate me 401-k

    There is no immunity.

    I can recognize the attractiveness of being able to get a handle on some of the influences on your investment in a landlord situation. You have more direct control on factors that influence your income, and more methods to impact your potential return on investment.


    Paul, I would like to talk with you about this. One day.

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    Re: educate me 401-k

    Quote Originally Posted by csmutty View Post
    The chance that a huge crash could occur and tank the market for 40 years is possible. Whatever the chance of that happening is isn't changed by the success of the last 100 years.
    While that's "possible" that's not how the market works. Look at every crash, nothing was "tanked" for 40 years, and in the more recent corrections with the *modern* financial markets, if you simply held (presuming a well diversified portfolio)... guess what, you recouped or even made gains. I know through the ~08 stuff, I saw 8-11% returns annually in the down years, this and recent years has been 20+% When the next correction hits, you just need to keep in mind those stupid gains of recent years and realize you aren't losing your investments, their current value just dipped. If you have good investments, a large chunk of that is going to be made up of large, stable companies with solid books that aren't going anywhere. And people need shit in the bad times too, folks always gonna need diapers, food, and when it's bad? liquor.

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    Last edited by scottieducati; 01-19-18 at 09:46 AM.

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    Re: educate me 401-k

    Agreed. It is fundamentally different. You can roll up your sleeves, improve your property, offer nicer apts and better service than the competition and minimize losses, or even make money when the rental market in general is suffering. One thing that seems true is that it is easy to rent nice apts that have responsive landlords. I own a lot of stocks (and bonds), but I cannot influence their performance in any way. I think they are both good, and having both strengthens your hand.

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    Re: educate me 401-k

    Quote Originally Posted by scottieducati View Post
    Nothing is immune from risk. Real estate risks: market bubbles, .
    as a Land surveyor/Land Use consultant, I work very closely with real estate investors, and I have had plenty of opportunities, but the risk has been to great for me to invest personally. I've even had developers that wanted to pay for my services by bartering real estate. (when they want to do that, the market is usually on a down cycle)

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  21. #821
    World Trackday Champion xxaarraa's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    This part I can't reconcile. Is there no requirement that investors evaluate properties and tenants? Does one not need to manage the property? How are those tasks intrinsically "easier" for "average" people to do vs researching market investments?
    All true, you need to do all of the above. The difference is that doing the above is relatively easy to figure out compared to figuring out the market. Hence my point about simpler set of variables.

    - Evaluating properties is an art yes, but in a town like Boston where the fundamentals of the economy are strong and there is always a healthy engine that generates highly qualified young people who want to stick around, its not rocket science to pick the neighborhoods that are more or less certain to be good renter's markets. Its also fairly straightforward to pick where the next condo wave is going to catch. My point earlier about rental income withstanding downturns better than money in market is absolutely true.
    - Evaluating tenants is a matter of looking at credit reports, calling ex-landlords and sitting down and meeting them face to face.
    - Managing the property is definitely work yes. No money is easy money. But walking to the local hardware store and making connections with the handyman they recommend, figuring out how to evaluate tradesmen off of angie's list, making sure you get more than one quote for any job, etc. are all common sense activities.

    Everything I described above can be done by an average person way easier than evaluating and understanding the market. The market is just a more sophisticated game with higher entry qualifications than real estate.

    Quote Originally Posted by nhbubba View Post
    I can show you >100 years of stock price histories that indicate that the US economy has "always" grown at about 6% per year, on average. Always.
    The fundamental premise that the market always bounces back as long as you hold your wits and be patient is only true if two things hold about the larger economy:

    - Age demographics of the country's population is in favor. i.e., you have more young people working and creating savings than old people drawing on savings. Europe and Japan are in terminal decline because their population ratio has been out of whack forever. An aging population also reduces the risks the country's economy takes, IP created etc. Old people just aren't very good for growth, when they worry more about their arthritis than taking risks.

    - Societal and cultural influences that are anti-capitalism and socialist populism are kept in check. Working hard, hustling, making as much money as you can, consuming, wanting more - these are essential to maintaining growth. "Greed is good" is great for the market. When a culture starts to vilify success, accumulation of wealth and rich people, it starts to show. France is a great example.

    A) above has been true about the last 100 years. Hence your point about the market having grown every year is true. Will it always continue to be the case? NO. If birth rates and immigration rates fall and the country as a whole gets old, the market will not grow.

    B) above has largely been true about the last 100 years. Hence your point about the market growing holds. In the future though, this is likely to be the bigger threat to the US. Populism and anti-capitalism is more likely to take hold in my mind, than A. And when that does, the market will not continue to grow.

    Can we all just agree that saving money in any form is a good thing? Not sure why we need to argue that one sex position is better than the other. It's all action!

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    Last edited by xxaarraa; 01-19-18 at 10:08 AM.
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  22. #822
    Super Moderator TheIglu's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by xxaarraa View Post
    Not sure why we need to argue that one sex position is better than the other. It's all action!
    Action is good, until you are the one getting fucked.

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  23. #823
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by xxaarraa View Post
    All true, you need to do all of the above. The difference is that doing the above is relatively easy to figure out compared to figuring out the market. Hence my point about simpler set of variables.

    - Evaluating properties is an art yes, but in a town like Boston where the fundamentals of the economy are strong and there is always a healthy engine that generates highly qualified young people who want to stick around, its not rocket science to pick the neighborhoods that are more or less certain to be good renter's markets. Its also fairly straightforward to pick where the next condo wave is going to catch. My point earlier about rental income withstanding downturns better than money in market is absolutely true.
    - Evaluating tenants is a matter of looking at credit reports, calling ex-landlords and sitting down and meeting them face to face.
    - Managing the property is definitely work yes. No money is easy money. But walking to the local hardware store and making connections with the handyman they recommend, figuring out how to evaluate tradesmen off of angie's list, making sure you get more than one quote for any job, etc. are all common sense activities.

    Everything I described above can be done by an average person way easier than evaluating and understanding the market. The market is just a more sophisticated game with higher entry qualifications than real estate.
    I'm going to go ahead and disagree. None of this list seems "simple" in my eyes. All of it sounds like work. Some of it downright unpleasant work, namely dealing with people.

    But we've beat this horse hard enough. I'm either completely wrong or not getting my point across. In the end it does not matter.

    Quote Originally Posted by xxaarraa View Post
    Can we all just agree that saving money in any form is a good thing?
    Yes. Gladly.

    As long as we also all agree that all investments have risks and past performance does not predict future returns for any kind of investment. None of these are foolproof. Oh, how I wish it were so.

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  24. #824
    World Trackday Champion xxaarraa's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    As long as we also all agree that all investments have risks and past performance does not predict future returns for any kind of investment. None of these are foolproof. Oh, how I wish it were so.
    Yes, wholeheartedly agree. It feels weird that agreement has been reached on NESR.

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    Quote Originally Posted by Ductard View Post
    Personally, I would just call up Shell and see which bike they have specified for Rotella.
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