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What is your investment strategy?


Kirk W

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As we seem to be gaining new members and many of them are younger and perhaps still working, I thought that a discussion of investment strategies might be useful to many of our readers. For us, the strategy has gradually changed over the years as we increased in age and that probably should be a contributing factor for anyone to consider. It is probably less problematic for any of us who are retired but may be a very important part of a successful plan for those who are far from retirement age.

 

We have now reached the age where we are required to take from our IRA's and 401k's so our strategy is mostly one of making things last, but what about those who are trying to build funds to enable retirement, to supplement some type of retirement, or who are young enough that retirement is far in the future? While I doubt that there are many real financial experts on these forums, I do think that it might prove helpful to our members to share some ideas and even some information about what has worked or failed in the past. While history is no proof of success in the future, it usually is a good tool for anticipating what may happen next.

 

As I look back today I can see things which we did that worked and some things that didn't work but we did manage to retire from the work life at 57 and have so far managed to live comfortably by our standards and to look to a reasonably secure future. My best guess is that we had some good advice, some good decisions and some dumb luck, but over all we seem to be reasonably secure. What advice do you have for those who are just starting the RV lifestyle or who are anticipating doing so? What can they do to increase the probability of a bright financial future?

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

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Kirk, interesting topic,

 

We are planning for our future in an RV, anticipating to hit the road in as early as four years. If I'm reading the topic correctly, the purpose is to discuss investment strategy in the near term rather than long range. I'll make an attempt at starting it off with this;

 

When considering life on the road as a fulltimer, our strategy began with taking an inventory of our financial position which included anticipated, or lack of, income at the time we go fulltime in an RV. For myself and wife, this is when we plan to become semi retired. Then I searched out the advise of others on how much we should anticipate as the costs once we hit the road for our style of travel. We plan to workamp and volunteer as needed. By the way, the costs you posted on your web page was one of two I decided to use to form our initial budget.

 

The last step was to compare our anticipated income against the anticipated cost to find out what we where short. Then figure out how much of our shortage will come from workamping/volunteering for a spot and how much will come out of our long-term investments.

 

We have several investments, pensions, social security to consider. I am currently using 2.5% as an annual rate of inflation to figure into the budget. I'm anticipating paying federal and state income tax and taking out 4% annually from long-term investments which I hope at the time are earning 7%.

 

I'm of the opinion "investing" can be done three ways using leverage. We can leverage assets such as rental homes. We can leverage our cash through IRAs and such. We can leverage human labor through owning businesses or working for someone. So the topic of investing is a wide one.

 

We are debt free other than our home mortgage which will be paid off in the next few years. I maxed out our 401K plan at work to take advantage of the matching contribution. I also maxed out what we could put in a separate retirement plan at work. I had been placing extra cash into a credit union account but changed that due to low interest rates. We already have an emergency fund which is equal to three months take home pay. Rather than putting extra into the savings account I'm applying it to our home mortgage because the interest rate we pay for the mortgage, although low, is still three times what we can get from a safe savings account. And we don't have enough tax deductions to fill long form returns, so the tax credit for a home mortgage is not a consideration for us.

 

I'll leave it at that for now, just in case I missed the point of the topic. I hope others post replies so I can learn from them and compare ideas.

 

I should add I'm 52 year of age and will be "retiring" early at age 56.

Mark from Missouri

Our Future in an RV

2018 Ram 3500 Laramie Dually LB 6.7L HO Diesel Aisin Transmission 4x4 3.73 Gears

2019 Vanleigh Vilano 320GK 35’ fifth wheel 16,000-pound GVWR

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"My best guess is that we had some good advice, some good decisions and some dumb luck, but over all we seem to be reasonably secure."

 

That sentence also applies to me. My grandkids think I was a genius investor to be where I am today. But the truth is it was as much luck as intelligence. My advice to them and any in the younger crowd is that its most important to develop the habit of setting aside some savings while you go through your peak earning years. I think its less critical where you invest those savings than just continuing to set aside something from every pay check.

Let me say first that through a combination of good education, hard work and being in the right place at the right time, I had 2 very successful career positions. My 1st career with Bell Labs of the old Ma Bell version of AT&T lasted 14 yrs until the Gov decided to break up ATT into pieces and I took a voluntary layoff with a deferred pension and a cash payout. I also got to convert all the old ATT stock I had accumulated into the 7 new Bell Operating Companies. I moved to Colorado and ran a small business teaching rock climbing, white water kayaking, hang gliding and leading mountaineering expeditions. After a few years I went back to a real job that would allow me to travel and started as a Project Engineer with a small but growing industrial construction company based in Colorado. I held almost every management position within that company up to Vice President before retiring 25 yrs later, at 60. (60 was the earliest age we were allowed to cash in our company stock)

 

Personally I used 3 paths to enable my early retirement:

1) In both careers, I always maxed out the allowable IRA and 401K deductions each year. sometimes with matching contributions from my employer. these IRA/401K savings were kept in balanced mutual fund accounts. I was never comfortable or interested in picking stocks and felt that was too risky for these funds that I considered the foundation of my future retirement.

2) I always had an interest in real estate and through most of my adult life one of my hobbies was buying and selling properties. In my 2nd career, when I was managing large industrial construction projects all over the western US I got to live in many different states and rather than use temp rentals or RV's I would buy a house to live in and make improvements to it during the year or so I was onsite. Then turn it into a rental or sell it depending on the market when I left town. I also used some of my speculative savings to buy large tracts of raw land in rural areas where I saw potential for future development. My biggest score was when the new Hoover Dam bypass bridge was opened, I resold 1000 acres of desert land along hwy 93 for 30 times what I paid for it, to some Las Vegas real estate developers.

3) In the construction industry it was customary to receive a large bonus after successful completion of a project. I used most of that bonus money to buy stock in the company I worked for. We were a privately held company that sold private stock only to management employees, to avoid SEC regulation. These are always a bit risky but as an insider I had access to the companies financials and balance sheet, and knew we were making huge annual profits. I also knew the key management very well and had faith in their decisions to grow the company. In the 25 yrs I spent with this company we went from doing $25 million a yr to over $2 billion a yr. The stock was now worth over 20 times what I paid for it; and 6 months after I retired we were bought out by Kiewit, which almost doubled my remaining stock value. again a little bit of good planning and decisions early on, followed by some pure good luck.

In retirement my strategy is simply to not loose what I've spent a lot of hard working yrs to accumulate. I'm very conservative since I've got enough to live comfortably to whatever age I make it. After 3.5 yrs of fulltiming, I got back into real estate and now own 4 part time seasonal homes where I park the RV's when not on the road.

Jim

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I "retired" at 48. My "plan" was to retire at 45. I missed it, but not by much.

 

Jim has some excellent points.

 

1) ALWAYS max out anything "free" - like matching 401K money from your company.

2) ALWAYS live below your means. We saved money from the time I entered the fulltime work force. While we did not "suffer" much, we never lived up to our incomes. I typically saved at least half my gross income. I was able to do that because I made a pretty good salary. Saving money and living without debt gives you options. No matter what income level you have you should strive to do that.

3) Like others, I did not typically invest in individual stocks.On average I don't think an individual non-professional investor does as well that way as investing in mutual funds (or similar vehicles). I used professional management through our retirement program (Fidelity), and on my taxable investments through Merrill Lynch. Both did well for me, even in down markets. But I use a GOOD financial advisor and I pay attention to things.

4) I never viewed our houses as investments - ONLY as places to live. When others were speculating in building McMansions for their "future", we were saving money and living debt free - including no mortgage for most of that time.

5) We have only owned three new vehicles in our lifetimes. One was an Acura Legend Coupe, which was my toy. Second was an F550 I bought the first year they were available; for fulltiming. Last was the smart we now own. Buying new vehicles is not "fiscally sound" use of money, in general.

6) We always lived a pretty "simple" life. While we had some "stuff" we never had anywhere near what most folks do. Which makes watching the "tiny house" shows these days interesting....

7) Diversify. No one knows what is going to fail next. You might get some warning, but most people do not have the ability to act on the warning. Diversify and sleep well.

8) Keep at least a years worth of cash available that will maintain your current lifestyle and pay ALL your bills. We always kept at least 3 years cash. It allowed us to do things that not having the flexibility would have prevented.

9) Never view a "job" as a lifelong thing. While these days it is pretty much a given that there is no job "security", remember that a Company is just that....and they have ZERO loyalty to you as an individual. While there are some rare exceptions, having that expectation will orient you properly. Do your job and do it well. But the company is NOT your family. Don't view it as if it is.

Jack & Danielle Mayer #60376 Lifetime Member
Living on the road since 2000

PLEASE no PM's. Email me. jackdanmayer AT gmail
2016 DRV Houston 44' 5er (we still have it)
2022 New Horizons 43' 5er
2016 Itasca 27N 28' motorhome 
2019 Volvo 860, D13 455/1850, 236" wb, I-Shift, battery-based APU
No truck at the moment - we use one of our demo units
2016 smart Passion, piggyback on the truck
-------------------------------------------------------------------------
See our website for info on New Horizons 5th wheels, HDTs as tow vehicles, communications on the road, and use of solar power
www.jackdanmayer.com
Principal in RVH Lifestyles. RVH-Lifestyles.com

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Basics that worked for us:

 

> Layout a strategy. Hire a Financial Advisor, I recommend paying for this service, as opposed to buying products from the FA.

> Pay yourselves first, and trim your budget to be able to.

- Maximize 401K's and or Roth 401K's (I recommend a mix of both, as they both have features that allow you more flexibility to minimize taxes in retirement.)

-Do Over 50 Catch-up

> Real estate has been a good investment for us, but, I like real estate and have been Owner Builder on several properties. Others may not like this. On the real estate front, if in the early years, especially without children in the mix yet. Try buying a four unit apartment building, live in one of the units until you save up enough to purchase a different place. Keeping the four unit apartment to both hopefully appreciate, and also generate income.

- On investments, choose funds with low expense ratios.

> If not 'into' investing, don't be afraid of Target Age fund, targeting the age that you hope to retire.

> Take a few online courses, or go to a few seminars, to learn about stock and bonds investing. Even if not comfortable with individual investing, the more you understand about investing in general, the better you can manage and prepare for the the future.

 

Slow but steady wins the race, but you must start the race, in order to finish... I know so many young professionals that don't even invest enough to get a company match - leaving money on the table. I advise them that overtime they get a salary increase, say 3%, bump up their 401K (Or automatic transfer to a Roth IRA or IRA, or Trading Account, if no 401K or Roth 40K is offered.) by 2%, and keep the 1%. I also recommend 'funds from heaven', and or tax returns, or say a bonus - keep 25% for fun and rewarding themselves, and invest 75% into a fund or a stock.

 

Key here, is getting started and staying consistent in 'paying yourself' first...

 

And, read back on this forum - as many good posts about investing in general. The long one, Are You Still In?, is one that I thought was very informative.

 

Best to all,

Smitty

Be safe, have fun,

Smitty

04 CC Allure "RooII" - Our "E" ride for life!

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The number one ( #1 ) piece of advice I give to younger friends & family... is to start having 10% of their income deposited into a 401K/403b.IRA account. And do this regardless of any matching... or any pension. After started, maintaining this strategy is simple.

 

After that piece of advice, I then recommend just where & how to manage such.

Jim

2007 Dolphin

  • Safe-T-Plus Steering Bar

Our Blog: Click Here

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I agree with the comments about investing in individual stocks should, for the most part, be left up to the professionals. Dollar cost averaging into good mutual funds is the slow and steady way. That's what I did. Currently, I invest through a company where their mutual funds are expensive to buy up front and the annual expenses are high compared to some other companies. However, the investment comes with a very well trained advisor. I can drive to his office and talk with him for what ever amount of time necessary and the funds typically outperform similar funds that have lower annual expenses. I'm considering the pros and cons of moving to a company/mutual funds who charge lower expenses if and when we decide to move to safer types of mutual funds. For example if we move to an indexed fund. Sorry, don't mean to make this boring with technical terms. Again, in retirement my goal is to average a 7% return as safe a possible. Interested in your opinions on the subject.

 

Jack Mayer brought up the topic of working at a job should not be viewed as a lifelong thing. I hope younger people are fortunate to find a company they can spend a career with. The Chairman of the telecommunications company I worked for gave me a great piece of advise also. He said find a job you would do without pay. You will enjoy the job and do well. I later changed jobs!

 

Catastrophic changes in employment could derail even the best laid savings plans. Fortunately I found a job I love and is somewhat recession proof. It also offers a pension just like employers did when I entered the corporate workforce in 1982. Unfortunately, younger folks have to depend on 401K investments and maybe stock options in place of pensions. So the advice on maxing those out is well said.

 

I don't mean to take this off topic, however I once noted Jack Mayer had a couple of RV lots he rents out. Read that months ago and always intended to ask him for advise on using them as a place to park our money from the sale of our sticks and bricks. Suppose that's on topic because it has to do with investing.

Mark from Missouri

Our Future in an RV

2018 Ram 3500 Laramie Dually LB 6.7L HO Diesel Aisin Transmission 4x4 3.73 Gears

2019 Vanleigh Vilano 320GK 35’ fifth wheel 16,000-pound GVWR

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I should have also share, that yes we too had dumb luck on one nice individual stock. Where we invested in the people - not the company itself. I cried when writing the check to Uncle Sam on that cap gain, but better to pay a large amount to taxes - then to have a good profit offset:)!

 

We also had a few dumb moves on my part, where we watched large amount of two specific stocks value drop, and keep dropping, and keep dropping, and in one case - went bankrupt... (This helped me become very disciplined, where for the last 15+ years, I've always had an exit point planned to harvest all of an investment, or enough to pull out what I put in. This has saved me from 'riding a stock, or worse, purchasing more on the way down'. But at the same time, if I had kept my original investment in Tesla, I'd have had a seven figure profit at the current stock price. So, no magic answer on this...)

 

And for us, the individual stocks we invest in, have always been non retirement required. They were ways for us to make some short or long term gains, to fund special areas. (RV purchase; RV remodel; Home upgrades: Our retirement victory tour to Alaska, etc.) Both of our 401K's and both of our Roth 401K's, have always been our retirement ticket, and investment in us, for early retirement.

 

It's OK to make mistakes along the way, as long as you learn from them. And, as you get closer and closer to retirement scale back on the opportunities for damaging mistakes. For example, we purchased a house across the street from us at a time where we were too close to be doing so. It was very distressed, and we spent $140K + bringing it an the landscaping back up to snuff. We took this risk, because we also place a view easement on the property, where we own the airspace above 20', to keep anyone from building up in front of us in the future. (We have a few of Mission Bay and the Pacific Ocean from our home, and wanted to retain it.) We were lucky, as were had a return on investment of 22% on this property, while also getting the air space easement. Play forward two years, as the heavy foreclosures and 'flipping' craze kicked in, and I looked real carefully at retiring then, to go 'flip' homes. (I had the experience, and had several friends and family members asking to chip into this investment with seed money, as a limited partners. We'd had used other people's money, and the agreement was that I would harvest 20% of the gains, with the rest being spread based upon amount invested. I was 54 at that time, and knew we wanted to retire before I hit 60. I felt the horizon was too short, for me to pass up the sure deal of my Roth 401K's, Over 50 catch-up, and we were seeing good bonuses at this time where I worked - so I passed.) This story was shared to show that even though it might have made us quite a bit more funds, I feel it is important and prudent to put on the risks brakes as you get closer to retirement. It's hard to make it back up, when you have a short time horizon.

 

Best to all, follow your head, and get into saving mode!!!! That is the one sentence short version:)!

Smitty

Be safe, have fun,

Smitty

04 CC Allure "RooII" - Our "E" ride for life!

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I don't mean to take this off topic, however I once noted Jack Mayer had a couple of RV lots he rents out. Read that months ago and always intended to ask him for advise on using them as a place to park our money from the sale of our sticks and bricks. Suppose that's on topic because it has to do with investing.

RV lots are not really a good investment. Unless you are lucky. I have four lots that I do rent out and make money on, overall. But not much. Would the money be better invested elsewhere? Yes, probably. But I use them for a minor diversification. Had the market not crashed in the 2008 era the potential for the lots was better than it is now. But you do not win them all. I'm actually putting some major improvements into three of the lots right now. Hopefully that will help sell them. The money for the improvements came from rental income.

Jack & Danielle Mayer #60376 Lifetime Member
Living on the road since 2000

PLEASE no PM's. Email me. jackdanmayer AT gmail
2016 DRV Houston 44' 5er (we still have it)
2022 New Horizons 43' 5er
2016 Itasca 27N 28' motorhome 
2019 Volvo 860, D13 455/1850, 236" wb, I-Shift, battery-based APU
No truck at the moment - we use one of our demo units
2016 smart Passion, piggyback on the truck
-------------------------------------------------------------------------
See our website for info on New Horizons 5th wheels, HDTs as tow vehicles, communications on the road, and use of solar power
www.jackdanmayer.com
Principal in RVH Lifestyles. RVH-Lifestyles.com

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All great advise and stories of success. We to invested wisely and saved as much as possible while we were working. That's the

key to long term accumulation of wealth. Now we did not short change ourselves along the way but were diligent about investing and saving.

 

I hear all the time from friends that they don't have enough money to save. That's just a cop out in my book. Your smart enough to work every day for someone else...put some thought early on and focus on your ultimate plan for your future.

 

So, when the economy went south, we devised a plan to quit work (approx. 25 yrs corporate life)and travel full time. Not hard you say...but we did it with two teens in tow. So we home schooled and started to sell all our stuff and home. It took almost 3 years, but determination and stick to it attitude panned out.

 

So nothing is insurmountable...so one of my best questions to our financial planner was 'how much money do I need to save for

retirement?' He always said $4,000,000...stop laughing...I know that is most likely unattainable to most...me to!!!

 

So I set out to try and get to half that and call it good. So getting there is difficult...we think real estate and maxing out

401K and IRA's is key.

 

I get all the time people say they can't live without their stuff and down size to an RV. Another cop out...we fit all we needed from a 4000 sq ft home into a 44 ft toy hauler. It can be done. You just have to get over the stuff thing.

 

Great topic and comments.

Tom and Marci Gimmarro

2006 Monaco Dynasty Diamond IV

www.roamingfree2010.blogspot.com

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This is a wonderful idea Kirk and a thread that could also benefit those of us now wondering what to do next as we liquidize our assets to go FT in the hope of trying to direct them into a less personal hands on approach, but get a return higher than the rate of inflation and hopefully still enable some growth above our cost of living expenses. That's where we are at now as we are getting more and more into cash holdings and in such a low rate environment wondering where to invest them as risk free as possible but not being so risk adverse as to lose value due to inflation and draw downs.

 

To young folks I think it's important to stress that with all the good intentions in the world things don't always go according to plan and to have some flexibility if things take a slightly different route from your original intentions, as well they can. In my late teens and twenties, in all honesty societal and peer pressure caused me to struggle to avoid carrying credit card debt and vehicle loans (was the start of the now society very apparent today), however I was brought up very Victorian whereby you keep something aside for a rainy day, save for anything you want never buying with credit, stock up on tinned foods in case of a war you know the background of our forefathers. I'm smiling now actually thinking of all the predictions of the world's banking and ATMs coming to a crash at the turn over into the new millennium of 2000 year = remember all the doom and gloom predictions leading up to that?

 

Fortunately for me this old school influence and teachings, ended up having a stronger pull than all the borrow money, buy now pay later ads that started to filtrate through mass advertising/impressions.

 

For us Real Estate has been by far the main builder for our retirement future. Yep, we've bought one that is still only worth slightly over what we agreed purchase price in Apr 2006, as possession didn't occur until July 2008 when the wheels fell well and truly off that bus! However, we have seen the rents more than double in that same period so it has gained on the roundabouts what we lost initially on the swings so to speak. Advice there to newbie real estate investors, is don't back yourself into a corner where you need to sell, learn from your experiences, and most importantly remember "patience is your friend" (Read Jack's comment re RV Lots, that ironically has just come down as I was typing this - we would personally never buy a condo apartment again based on this first and only one time experience of that type).

 

So in a nutshell, our investments have all initally stemmed from buying and selling real estate; buying some lots and building to resell for a profit, buying regular residential single family homes and renting out for a positive cash flow putting 20% down and using OPM (Other people's money ie; Bank) to finance the rest but avoid high ratio insurance costs if we'd put down less than that. Finally realizing by the time I hit 30 we don't borrow money or carry a credit card balance for anything whatsoever, other than OPM for increasing our property investment portfolio. Most major real estate regret we've ever made was selling properties and never buying them, with the exception of the condo apartment referenced above, but that still has positive cash flowed very nicely albeit not increased much in value in itself. Over the past 30 years we've seen rental rates increase exponentially from struggling in the early days to cover overheads, which has enabled accelerated pay down of loans, and being able to invest into some stocks and shares here and there.

 

For Canadians, and appreciate that the USA has other terminology for similar investment vehicles, we max out our TFSA (Tax Free Savings Accounts), being self employed we haven't contributed much to our RRSP (Registered Retirement Savings Plan) running ourselves through a numbered company for tax advantages. We also self direct our trading accounts, that came about after losing an arm and a leg in fees and bad management with Standard Life and Manulife advisors in the 90's putting us in high MER and loaded mutual funds. Our experience here is "no one ever cares more about your money than you will, so make sure you thoroughly understand what you are investing in or being advised to do so". For us we personally won't touch mutual funds any more with higher than 'x' amount MER (Management Expense Ratio). Hubby and I intend to keep on maxing out on our TFSA's as we have advised our children to do so until they stop it. Any returns earned on this money are totally tax free and don't count negatively to any government payments we are due when we hit 65 and in my case 67 in the future.

 

Being in our early and late 50's now, hubby and I can share to younger folks planning well ahead of the game. We've all been in your shoes albeit I sometimes think our children never think we were their age once upon a time (LOL):

 

Start Early with savings. Pay Yourself First = put away a small amount and increase it each and every year or as you get pay increases. Live Below Your Means (LBYM) - question do I need it or do I want it and truly understand what appreciation you will have for your spent dollars on something a few months/years down the road, versus not having got "instant gratification" at the time you purchased and instead having socked it away towards savings.

 

Read and Learn all you can about planning for your retirement, but equally get balance between living for today and planning for tomorrow. Too many folks are either one extreme or the other, and things will and do change over the years. On one hand we are only young once, today is a gift and there's no guarantee of tomorrow, so don't waste your youth just looking forward to someday in decades time that may or may not arrive for some folks! On the other hand, if you don't plan for tomorrow logically and sensibly, you might find as many have, that as you get older you won't have the options of changing careers because you want to or you've had enough, reducing work hours earlier due to illness, disabilities, body wear and tear or just because you want to enjoy a younger retirement. Balance in most things in life are the hardest things to achieve, and it's no different in this regards, so Live for Today but Plan for Tomorrow.

 

Trade Offs or as we say for every positive there is usually a negative. We invested a little more of our time, had a little more worry by taking some risks others wouldn't have - in other words we stepped often outside of our comfort zones at the front end to build our futures dealing with revenue properties, building houses hoping they'd sell or rent out, held down 3 jobs during our late teens and early twenties to build for our future. We traded our time for money at the front end for sure. Of course all these risks and stresses became less over time with experience and facing the dragon wasn't as bad as we expected. Also with time and patience things grew and improved and we had more flexibility, to lower rents for example or rent instead of selling a new build, should the market move against us.

Rome wasn't built in a day, but the journey of a thousand miles begins with just the first step. Reduce your overheads, pay yourself first and before buying anything ask yourself "Do I want it, or do I need it". Ultimately whatever any of us decide to do is up to us as individuals but we can learn if we chose from others a few years ahead of us.

 

So with that last thought, what would/did you veterans ahead of us do with your investments, to ensure a more carefree, worry free exit out the driveway with it growing a little and covering your expenses until SS, Pensions etc kicked in. For sure we know we'll still need to subsidize the government payments with some of our own savings until we expire so it's important we don't spend down all our savings. Looking forwards to reading many replies on this thread and thanks again Kirk for starting an interesting useful topic.

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There are several common thoughts throughout this thread which are sound advice to those younger folks in particular who read these forums. Start early, and today is the best time for anyone not yet saving for retirement. If you have any sort of match on the job for any savings plan(401k, etc.), put in at least enough to get the maximum contribution from your employer. For younger people the Roth IRA can be a good vehicle but any of us close to the retirement date, it may cost too much in taxes to be a sound move to change funds from a regular IRA into a Roth, but at least check out the numbers.

 

It might also be good to offer some thoughts to those who are going on the road while still employed, or operating a business. We have several members of these forums who are self-employed and who I am pretty sure have a plan for setting aside funds for a future retirement, so if any of you, Technomadia, Nick Russell, Geeks on Tour, or several others it might be very helpful if you would share some of your plan with others. While we did make some changes to our strategies as we prepared to go on the road, I was retiring from a 32 year career with one company so it was quite different from what our younger members are dealing with.

 

When we were working with Boy Scouts I became Scoutmaster for a troop of underprivileged boys and those years taught me a lesson that has proven to be invaluable. The degree of financial security which a family enjoys is much more a question of financial management of one's income than it is of the amount of income. The key to happiness and financial well being is not making enough money to live well but rather it is learning to live well on the income which you have.

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

            images?q=tbn:ANd9GcQqFswi_bvvojaMvanTWAI

 

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Kirk said something important above.....that I'll comment on.

 

No matter how much you make, saving a portion of it is very important. I have relatives that do not make a lot of money, and claim they "can't save anything". But I also know people that make far less and save a good portion of their paycheck. Savings is a habit that needs to be established. Anyone, on any income can save something - IF they want to.

 

On the Roth topic - I could not establish a Roth when I worked - I fell outside the guidelines. But once I started workamping I was well within the guidelines and established a Roth IRA. Each year I shift money into that Roth corresponding to the amount I made workamping. And on that account I have invested it pretty aggressively. After 15 years of working at just around minimum wage and not working a lot of hours that fund now has close to 90K in it. The magic of compounding, and a regular savings program. Of course I'm not taking anything out of it either - which definitely helps :)

Jack & Danielle Mayer #60376 Lifetime Member
Living on the road since 2000

PLEASE no PM's. Email me. jackdanmayer AT gmail
2016 DRV Houston 44' 5er (we still have it)
2022 New Horizons 43' 5er
2016 Itasca 27N 28' motorhome 
2019 Volvo 860, D13 455/1850, 236" wb, I-Shift, battery-based APU
No truck at the moment - we use one of our demo units
2016 smart Passion, piggyback on the truck
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Jack: Thanks for the reply regarding owning RV rental lots. Like the part about using it for diversification and could see a tax benefit to rolling the income back into the lot, if that's a goal. I hope you do well with selling them. I would have to think with all these folks retiring, you may have hit it at the right time.

 

Kirk: I've got a few thoughts in reply to your suggestion to discuss operating a business. I'm interested in what others have to say about running a business on the road.

 

I started a small business, had employees and sold it after 10 years. I'm of the opinion the highest source of personal income could come from a business, especially if you leverage other's labor (that sound bad) by providing jobs (that sounds better). To be successful your work ethic better be well disciplined. Prepare for long hours, not having time off when you want it and if you hire employees, the human resources side of the job is the most challenging part. Lots of work to do upfront. If you do it right, the rewards come later.

 

I'd like to know the chances of success or failure when starting a business while on the road. It's hard enough to do when you are not moving around all the time in an RV. My business was construction contracting with an 80% failure rate in the first five years. After that it was smooth sailing. If I was to invest in a business that I wanted to keep while on the road I'd likely start it before I took off in an RV. But I'm one of those "safe" entrepreneurs.

 

I used to love mountain biking. So I joined the bike squad with the police department I worked for. Ruined the hobby for me. After riding up to 30 miles a day I had no desire to climb on my bike at home. I wonder what potential there is of ruining ones joy of Rving if you make a business out of it?

Mark from Missouri

Our Future in an RV

2018 Ram 3500 Laramie Dually LB 6.7L HO Diesel Aisin Transmission 4x4 3.73 Gears

2019 Vanleigh Vilano 320GK 35’ fifth wheel 16,000-pound GVWR

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At age 60 soon, I have done pretty well with the savings items mentioned. I am looking more and more at expense ratios which are not always something the investment company I am with looks at (they are involved with my employer for part time job via computer). There is usually a load cost when buying funds as well. So when I sell my home I am not sure where to put my proceeds. With the advisor, or a target fund through someone like Fidelity (expense ratio of .6 ) I am sure everyone has a different opinion. I just hate paying those expense that don't always seem to be straightforward. I have had a free consultation with a fee based advisor. They want to manage funds at 1%.

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I just hate paying those expense that don't always seem to be straightforward. I have had a free consultation with a fee based advisor. They want to manage funds at 1%.

One thing which I think those who are selling a home need to keep in mind is that those funds, when invested will not be tax sheltered like your IRA or 401k. But that can be either good or bad as the proceeds are not normally taxable but the income from them is. But there is more to think about on this than one might first suspect.

 

When we went on the road we put the proceeds from sale of our house into an investment account and when money was needed, like to replace our towed vehicle, we took those funds from the proceeds account to leave our tax sheltered funds intact. The thought was that by using these funds which were subject to tax we would pay less over the long run. But as it turned out that was a major mistake.

 

Had we left the house proceeds alone the income from it was fairly small due to the slower economy and so the tax liability on them was also very small, meaning that it would have cost little to keep those funds intact and use money from the tax sheltered accounts in their place. Because we didn't do that, when we eventually bought our present home-base we used mostly money from the IRA/401k funds and so they became taxable. We bought our home for cash and more than half came from tax shelters and the result was that our home cost was increased by the income tax on the funds to buy it, while the remainder of the home sale proceeds was not tax liable.

 

The increased income we drew out to purchase our home was such that it caused us to also be required to pay income tax on the maximum amount of our SS as well where we pay no tax on our SS normally at our income level. The funds needed to pay for the house were treated as "ordinary income" for tax purposes and the net increase in income tax resulting from our home purchase was nearly $15K! We would have been much better off to have left the proceeds of our home sale intact for the purchase of our present one because of the income tax factor.

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

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Fee based management can be beneficial IF and ONLY IF they outperform what you would have gotten from "low fee" funds. That is why I have always run a "shadow" investment portfolio to compare against my fee-based funds performance. I have both - fee and no fee accounts. In the past 30 years the fee-based management accounts have "killed" my Vangard "low fee" funds. Not every year, but on average my advisors do pretty good at earning their fee. Your results may and will vary....and you HAVE to keep your eye on things and provide guidance. JMO, take it for what it is worth.

Jack & Danielle Mayer #60376 Lifetime Member
Living on the road since 2000

PLEASE no PM's. Email me. jackdanmayer AT gmail
2016 DRV Houston 44' 5er (we still have it)
2022 New Horizons 43' 5er
2016 Itasca 27N 28' motorhome 
2019 Volvo 860, D13 455/1850, 236" wb, I-Shift, battery-based APU
No truck at the moment - we use one of our demo units
2016 smart Passion, piggyback on the truck
-------------------------------------------------------------------------
See our website for info on New Horizons 5th wheels, HDTs as tow vehicles, communications on the road, and use of solar power
www.jackdanmayer.com
Principal in RVH Lifestyles. RVH-Lifestyles.com

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Kirk, read your post a couple of times regarding what you did with the proceeds after selling your house. Not completely sure if you were recommending placing the money in a tax deferred account or not? I now the IRS rules are the first $500,000 in capital gains for a married couple is not taxable. (publication 523).

 

I know we can earn about $15,400 of earned income each while on Social Security without have the benefit reduced. In our case we should not have a problem keeping it under $15,400 unless our taxable investments do better than planned (I hope :))​.

 

I'm thinking we might do better putting the proceeds from our home sale in a couple diversified places. Not sure exactly what. Figure maybe a portion where we can get at it easily and another long-term investment other than the stock market where we already have a sizable chunk. Open to suggestions!

 

I was hoping a few people would post about starting a business on the road. Especially if it not a full time business, but something you can use to defer income in a safe with the IRS kind of way.

 

I put it all out there on my blog page in terms of our financial plan. One thing that is missing is what to do with the remaining proceeds of our home sale. Fortunately, I use a CPA now and can lean on her a little.

 

I'm learning a lot from you guys, thanks for the discussion.

Mark from Missouri

Our Future in an RV

2018 Ram 3500 Laramie Dually LB 6.7L HO Diesel Aisin Transmission 4x4 3.73 Gears

2019 Vanleigh Vilano 320GK 35’ fifth wheel 16,000-pound GVWR

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Kirk, read your post a couple of times regarding what you did with the proceeds after selling your house. Not completely sure if you were recommending placing the money in a tax deferred account or not? I now the IRS rules are the first $500,000 in capital gains for a married couple is not taxable. (publication 523).

I'll try again.... The tax issue was not for the proceeds of the home sale. You do not have the option of putting that money into a tax sheltered fund, so when we invested it, all of the income from it was taxable, unlike the growth of our IRA/401k funds. For that reason, as we would travel when extra money beyond our monthly income was needed, for example to replace the CR-V that we towed, we used the money from the fund containing our home sale proceeds since it was subject to taxes.

 

At the time we considered that to be a wise decision to use money which was not in a tax shelter. But the catch came when health issues made it necessary to have a home-base again, we had used up a significant amount of the proceeds from the sale of our previous home, so it required us to use a pretty significant chunk of money from our IRA. As a result, we had to pay income tax on about half of the money spent on the new house, which would not have been the case if we had saved the money from our previous house sale and withdrawn smaller amounts of money from the IRA which would have been subject to tax but because the amount was much smaller the effect would not have put us into a position of paying income tax on our SS income, which the house money did because it was more than 3 times as large. For that reason we paid much more income tax when we purchased our home than would have been the case if we had paid on a series of smaller amounts from the IRA to save the non-sheltered fund to buy the house with.

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

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Kirk, you bring up a good point. All of which is even more reason to finnance the house purchase. At less than 3.5% these days it would likely be worth it rather than pay taxes at probably a much higher rate on the IRA withdrawals. We are likwly to buy a property in North Ranch this winter - and I've worked the numbers both ways. For us it is far better to finance it. I realize some people - including me - hate to have debt, but it simply makes no sense to not finance the property purchase.

Jack & Danielle Mayer #60376 Lifetime Member
Living on the road since 2000

PLEASE no PM's. Email me. jackdanmayer AT gmail
2016 DRV Houston 44' 5er (we still have it)
2022 New Horizons 43' 5er
2016 Itasca 27N 28' motorhome 
2019 Volvo 860, D13 455/1850, 236" wb, I-Shift, battery-based APU
No truck at the moment - we use one of our demo units
2016 smart Passion, piggyback on the truck
-------------------------------------------------------------------------
See our website for info on New Horizons 5th wheels, HDTs as tow vehicles, communications on the road, and use of solar power
www.jackdanmayer.com
Principal in RVH Lifestyles. RVH-Lifestyles.com

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Once again such good information. Perhaps, some of this excellent information could show up in regular articles in the Escapees magazine. So much experience being shared. Thank you.

 

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I absolutely agree with Jack in the case of a home purchase from tax sheltered funds. Our situation was somewhat mitigated by the fact that our community is a cooperative community, much like the Escapee Co-ops and so mortgages are not easily gotten. Because of the financing difficulty the seller was not getting a lot of action on his property sale and that caused him to accept a cash price that was enough lower than most similar properties in the area that we still saved in spite of the income tax effect, but the savings was mostly eaten up by that tax payment. It helped some in that I called the IRS customer service and they actually ran the numbers using my tax history for both a single withdrawal and for two phased withdrawal over two years so that I knew what it would cost and which way would be best, but it was still significantly more than if we had not used up the proceeds of the previous home sale.

 

Do not be afraid to call the IRS customer service with such questions as they are very helpful and they do not rat on you to the enforcement folks but simply give you the actual numbers to consider. They don't give advice, just information.

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

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It was just in the news recently that an IRS audit (of the IRS ironically) showed that 37% of people who called the IRS (last year?) got through without getting hung up on. There may be more to that than the headline report I saw, such as counting the people give who up waiting and hang up on the IRS, but the news story made it sound like it was the IRS doing the hanging up.

 

Not saying not to call, but you may need to try a few times.

 

Jim

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2001 Volvo 770, Detroit 60 Series, Gen 2 Autoshift

Passenger assist elevator to enter cab - for when we need it, or sell it?

'05 Travel Supreme Select 40 RLQSO 5th wheel

2016 smart car

 

We started full timing on December 1st 2014

Travel is fatal to prejudice, bigotry, and narrow-mindedness - Mark Twain
Not all that wander are lost - J. R. R. Tolkien

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I "retired" at 48. My "plan" was to retire at 45. I missed it, but not by much.

 

Jim has some excellent points.

 

1) ALWAYS max out anything "free" - like matching 401K money from your company.

2) ALWAYS live below your means. We saved money from the time I entered the fulltime work force. While we did not "suffer" much, we never lived up to our incomes. I typically saved at least half my gross income. I was able to do that because I made a pretty good salary. Saving money and living without debt gives you options. No matter what income level you have you should strive to do that.

3) Like others, I did not typically invest in individual stocks.On average I don't think an individual non-professional investor does as well that way as investing in mutual funds (or similar vehicles). I used professional management through our retirement program (Fidelity), and on my taxable investments through Merrill Lynch. Both did well for me, even in down markets. But I use a GOOD financial advisor and I pay attention to things.

4) I never viewed our houses as investments - ONLY as places to live. When others were speculating in building McMansions for their "future", we were saving money and living debt free - including no mortgage for most of that time.

5) We have only owned three new vehicles in our lifetimes. One was an Acura Legend Coupe, which was my toy. Second was an F550 I bought the first year they were available; for fulltiming. Last was the smart we now own. Buying new vehicles is not "fiscally sound" use of money, in general.

6) We always lived a pretty "simple" life. While we had some "stuff" we never had anywhere near what most folks do. Which makes watching the "tiny house" shows these days interesting....

7) Diversify. No one knows what is going to fail next. You might get some warning, but most people do not have the ability to act on the warning. Diversify and sleep well.

8) Keep at least a years worth of cash available that will maintain your current lifestyle and pay ALL your bills. We always kept at least 3 years cash. It allowed us to do things that not having the flexibility would have prevented.

9) Never view a "job" as a lifelong thing. While these days it is pretty much a given that there is no job "security", remember that a Company is just that....and they have ZERO loyalty to you as an individual. While there are some rare exceptions, having that expectation will orient you properly. Do your job and do it well. But the company is NOT your family. Don't view it as if it is.

 

 

What Jack said....plus.

 

Get out of debt and stay out of debt. Pay off your mortgage ASAP. Given todays interest rates it is tempting to mortgage. In that case, pay the next month principal payment with this month payment. DO THIS WHEN YOU FIRST GET THE MORTGAGE!!!

 

Split your IRA's between ROTH and Traditional if that option is open to you. We did the Traditional since our income was low, but boy do I now regret not doing a Roth.

 

Start a small business. Really the only significant tax breaks available are those for small business. It will also provide income in retirement.

 

Keep your certifications and skills when you retire. Forget the part about starting over in retirement in a different profession. Your current profession at retirement will always pay the highest!! Always gives you the option to raise money on your terms.

 

Get a plan to spend all that money you saved!!! Stick to your plan and spend it!! What's the point of saving money in retirement?? I am working real hard on this one.

 

Pay attention to taxes, domiciles and other "legal" matters. You will make more money on the tax code than your investments.

Vladimr Steblina

Retired Forester...exploring the public lands.

usbackroads.blogspot.com

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