[CMG241]

Originally Posted by scootertrash

If you don't currently own a house, think about investing in one. It beats paying rent.
The time is great to buy. Low prices and low interest rates.
Interest is tax deductable.
If you keep the house as your primary residence for at least 2 years, you don't pay capital gains tax on the profit when you sell.
Buy for the location, not the house, to maximize resale.
I'm no expert in investing, but I've always made out well buying and selling houses as a longer-term investment. (maybe I have just been lucky?)

tell that to those that paid top dollar 3 years ago! its an investment with all the same risks.

[ChrisNoF4i]

Ya dude. A house is not an investment - it's shelter. These are the times we live in.

p.s. - I want my free money NOW. I don't want some money grubbin' whore taking it when I die.

[Shortermemory]

Don't get into or buy any kind of Life Insurance until you have a handle on your debt. The first thing you should do is set up an emergency fund which will cover 3-6 months of living expenses.

Then start paying off your debt from smallest to largest. Paying the minimum on all but the smallest debts. Hack away with large payments at the smallest debt and gradually work upwards to the largest.

I have learned the HARD way that debt is VERY bad. I have never been in trouble but when I did my first budget it scared the hell out of me. It took me a while to understand what I had done and what I needed to do!

I quickly found there is NO good debt. If you must invest find a MF with a long track record that makes 10-15%.

If you are confused then check with Dave Ramsay (financial advisor) that has also written many books on managing money. He has changed my outlook for the future and on everything I ever have done in the past. He can be heard on XM 165 3PM to 7PM weekdays too.

Take it slow and READ everything you can before you start shelling out $$$$ to Financial Dudes.

[Manny]

I am again considering a whole life plan AS an adjunct to my current portfolio. It would represent part of my conservative cash/bonds section.

In certain situations the money goes in tax free, grows tax free, and can be taken out tax free as a loan at basically 1% that never needs to be paid back as the money can get deducted from the death benefit, allowing me to use it for kids education or my own use along with my IRA when the time comes...not convinced yet but still doing some research.

[Bhavesh]

bump...any updates?

[jnm988]

Hmmm... I haven't seen this thread before, but my job has to do with estate/legacy/financial planning. I also do quite a bit of trading, portfolio analysis and the lot, so if anyone has specific questions, I'd be happy to help.

[RyanNicholson]

I didn't end up doing the whole life policy...it probably isn't a horrible idea but I'm not really in a place to be putting money aside that I can't get at if I have to, just wasn't comfortable with the idea of it.

[jnm988]

Originally Posted by RyanNicholson

I didn't end up doing the whole life policy...it probably isn't a horrible idea but I'm not really in a place to be putting money aside that I can't get at if I have to, just wasn't comfortable with the idea of it.

Yeah... In general, Insurance is the foundation of all good savings plans, but disability insurance is more important than life insurance, especially if you're the sole provider for your family. Life insurance is not something we ever use as an 'investment'. Typically we use it to do what's called an asset swap, but that's more for estate planning situations.

Like I said, I'm pretty good at what I do, so if you do need to invest some money, let me know.

[seth505]

I will add to this, calling all smart investment people...
as far as 401K goes, if my company matches til 6% should I definitely put in 6% or is there more to read into? I don't think by upping to 8% or something will do all that much for me...or am I wrong? Thanks in advance

[Manny]

Originally Posted by seth505

I will add to this, calling all smart investment people...
as far as 401K goes, if my company matches til 6% should I definitely put in 6% or is there more to read into? I don't think by upping to 8% or something will do all that much for me...or am I wrong? Thanks in advance

Put in as much as you can and take whatever they will give you. The way things are going we are going to need ALOT to retire....

[seth505]

good point...thanks

[jnm988]

Originally Posted by Manny

Put in as much as you can and take whatever they will give you. The way things are going we are going to need ALOT to retire....

+1 if you can afford it. I put 20% of my salary into my 401k, plus maxing out an IRA. Compounding is your best friend, the earlier you start and the more you save, the better off you'll be.

[seth505]

20% of your salary? Sweet Jesus, maybe if I made 200K I would do that

[Cheese-GSXR]

Originally Posted by seth505

I will add to this, calling all smart investment people...
as far as 401K goes, if my company matches til 6% should I definitely put in 6% or is there more to read into? I don't think by upping to 8% or something will do all that much for me...or am I wrong? Thanks in advance

It's always best to put in the maximum matchable amount (6% in your case). Since it's matched, you receive an immediate return (match rate) on the investment even before putting the money to work in the market.

Anything extra you can put in when you're young will build a hefty principle early so you can back off later (mid 40s) and start spending it. Assuming you've made a bunch of years worth of deposits and had modest returns you should have a healthy nest egg in the $500K range by middle age. At that point, deposits don't make as much of a difference since the earnings on the principle will be far above any monthly deposit you'd make (excluding the matched amount which is still your best investment return).

BTW this is only for 401K investments other than your own company's stock. Different diversification steps need to be taken when dealing with employer profit sharing and stock options.

Originally Posted by jnm988

+1 if you can afford it. I put 20% of my salary into my 401k, plus maxing out an IRA. Compounding is your best friend, the earlier you start and the more you save, the better off you'll be.

Just curious, isn't your IRA already maxed out if you're contributing 20% to a 401K?

[BMFR6]

Originally Posted by Cheese-GSXR

Just curious, isn't your IRA already maxed out if you're contributing 20% to a 401K?

nope. income plays a factor and type of ira plays a factor.

if you are contributing to a traditional ira, the tax break you are going to get is going to be adjusted down for high income individuals.

if you are contributing to a roth there is no immediate tax break, it comes when you retire. but if you make over X amount of money, you can't contribute to a roth.

i'm sure jmn can fill in the amounts for me and point out more specifics as she works with it day in and day out and i havent been on that side of the business in a while.

[Phate]

You can only make up to 100k if you are single or 159k if married and open/do a roth plan. For the most part you will see a roth for a younger person who is not making a ton of money now (so their tax bracket is relatively low) but anticipate a much higher tax bracket later in life. Thats not 100% all the time but a basic thing to look at.

Unfortunately I just took my financial exams so I know all of these retirement plan Q/A's pretty well. There are about 400 different ways to go about starting to invest and all of them can work for certain people in certain situations. Honestly if you are just starting into the market right now I wouldnt try and go stock picking, I would stick to low fee MF's and ETF's and maxing out the retirement plans. Thats my very humble opinion but like I said there are a ton of ways to make things work as long as you have a well laid out and defined plan. Cheers.

[jnm988]

Originally Posted by Cheese-GSXR

Just curious, isn't your IRA already maxed out if you're contributing 20% to a 401K?

No.... Anyone can contribute to an IRA, regardless of how much they're putting in their 401k. The only thing that's effected by the 401k is whether its deductible.

The nice thing is... Fidelity matches 7%, plus we get a 10% dump for profit sharing every year, so I'm saving 37% in my 401k

[Cheese-GSXR]

Originally Posted by jnm988

No.... Anyone can contribute to an IRA, regardless of how much they're putting in their 401k. The only thing that's effected by the 401k is whether its deductible.

That's pretty much what I meant. So if you're not getting tax benefits, why not put it into a traditional investment account so you can draw from it without penalties?

I'm not bashing retirement plans by any means, as I already stated maxing out the matching portion of a 401K plan is an awesome move. I'm just not a fan of financially struggling through your 40s and 50s to retire rich at 60. You can set money aside in other investment vehicles so you can live comfortably drawing from them in your 40s and 50s and still retire comfortably at 60. What I'm trying to say in too many words is that trapping all your "extra" money in a retirement plan isn't always a great solution either.

[jnm988]

Originally Posted by Cheese-GSXR

That's pretty much what I meant. So if you're not getting tax benefits, why not put it into a traditional investment account so you can draw from it without penalties?

Because I Don't want to pay capital gains and tax on interest. I returned 28% on my 401k last year. If that were a taxable account, I'd have netted about 16%. It eats your gains. The next step is actually a tax deferred annuity. There's a 25k minimum though, so I'm waiting until I have enough to start one

[Cheese-GSXR]

Originally Posted by jnm988

Because I Don't want to pay capital gains and tax on interest. I returned 28% on my 401k last year. If that were a taxable account, I'd have netted about 16%. It eats your gains. The next step is actually a tax deferred annuity. There's a 25k minimum though, so I'm waiting until I have enough to start one

Tax deferred isn't tax free. If you pay the taxes now, you can spend it now. That's all I'm saying. Again, don't over-invest in retirement. Meaning, yes, it's possible to put too much of your income into funds that can't be touched until retirement. To put it in terms that relate to you, is it really worth putting every penny into retirement accounts so that when you retire you'll be able to afford 20 refrigerators a month when it'd be really helpful to be able to afford just 1 this month?

[jnm988]

Originally Posted by Cheese-GSXR

Tax deferred isn't tax free. If you pay the taxes now, you can spend it now. That's all I'm saying. Again, don't over-invest in retirement. Meaning, yes, it's possible to put too much of your income into funds that can't be touched until retirement. To put it in terms that relate to you, is it really worth putting every penny into retirement accounts so that when you retire you'll be able to afford 20 refrigerators a month when it'd be really helpful to be able to afford just 1 this month?

I've found a balance. My IRA is deductible anyway, my AGI is pretty low after all of my deductions, especially the 401k.

... financial planning is kind of what I do for a living