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What is your investment strategy?


Kirk W

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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.

 

 

I like both Jack's and Vladimir's posts info, concise, and well - common sense in lots of areas.

 

I'll add an opinion, a bit country to Vladimir's, on mortgages. But, it depends upon two key things: 1) The financial maturity to now squander funds. 2) Probably the most important, having the ability to live while 'in debt'. Those two things mentioned, for some it might be better to not pay down your extremely low interest mortgage. Instead, put that money into investments. Roth IRA's were mentioned, and if available, Roth 401K's are another way to go. Especially if you are not maxing 401K/Roth 401K's, and over 50 catch up.

 

My wife and I have had a long ongoing difference of opinion on this. She would have felt better not being 'in debt' with our two mortgages. She let me make the decision, and we retained out mortgages while going into retirement. (We'll eventually sale a now investment/rental property, but not for another 3-5 years.) Instead, since we maxing both of our Roth 401K's and both of our over 50 catch up, I added the funds that would have gone into paying down the mortgages, into our brokerage account. About 65% in various mutuals, 20% in ETF's, and the balance in under 7 individual stocks established in DRIPS.

 

My view, was as long as we had the ability to pay the mortgages from our investments, and retirement funds, I'd rather have those funds working for us. It's worked for us, but we were disciplined enough to not squander the funds. (And, we have family and friends, that are still working today, because they did not either pay down their mortgages to retire them early - and instead of investing the funds they took exotic vacations, always had fancy new expensive cars/trucks/boats/plane, etc.

 

We too lived very comfortably, but also well below our income. Much of this was due to my parents both being raised during the depression (My Dad was 45 when I was born, Mom was 37. My wife grew up with a single income enlisted mans Navy income. Her Mom used to hide the paper towels, for when guests came over to the apartment... Very tight budget.), so we both had that in our upbringings.

 

Good thread, and Kirk thanks for starting it. I've sent a link to my mid 30's daughter, and her wife who is in her early 40's - both whom are wanting to start becoming a bit more finically responsible:)! And, we've made it clear to them both, that our goal is to write the last check to zero out our balances, to cover sprinkling us around at the end:)!

 

Best to all,

Smitty

Be safe, have fun,

Smitty

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

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Not sure it has been mentioned before, but multiple streams of income might be something worth consideration. We have smaller pensions from three sources, social security, an 401K/IRA account, and a 457B (county employee 401 type plan).

 

Two of the pension plans and social security have adjustments for cost of living. The other pension plan does not have a cost of living adjustment which means inflation will eat away at the buying power.

 

We are hoping overtime the 401K/IRA/457B accounts will maintain the principal balance and grow at the rate of inflation even after we remove 4% annually.

 

I consider our financial plan diversified, and less risky, with these six forms of retirement income.

 

Comments are welcome!

 

By the way, Firecalc is wonderful financial calculator where you can input all your retirement data and find out, based on history, if your money will last during retirement. You can save the data you input by saving the screen you are on as a favorite in the browser.

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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  • 2 weeks later...

We don't have any advice to give to others who have put so much more thought and time, than us, into investing and financial planning. And in spite of a hard look for information on how to estimate what we think of as the "fair or true" value of our retirement investment funds (stock, bonds, other) we have found very little. (One friend told us that if you look for something that doesn't exist then you are unlikely to find it!) In other words, when calculating how much to withdraw from your investment funds by using a 4% or 5% withdrawal rate, what value do you use for your funds total value? Is it the current value? Problem with that is it seems about every 5 years or so you go from thinking you are rich and then poor as the stock and bond markets swing from giddy highs to heart stopping lows and drag much of your investments right along for the ride. Thus using current value takes your annual withdrawal income along for those swooping rides too.

 

We don't want to struggle through the experience of switching our annual budget from one extreme to another. So we have decided to use a "simple moving average" of our investment funds as they fluctuate between their most recent low and high values. In other words, for us, our most recent low value was in the 2nd quarter of 2009 and the most recent high was in December 2014. So we are using the average of those two values as our "fair" value to determine the withdrawal amount for 2015 and future years, until either the high value gets higher or a new low value comes in the future. (We have a second step to this calculation which comes into play if the current value falls below the "fair" value we have calculated above, but that is not necessary to detail here.)

 

We don't want to pretend that this strategy is something magical or some new financial planning insight. It is simply one way (our way, for now) to try to take into account the wild swings in portfolio values due to the wild highs and lows of stocks and bonds in the current period that some economists think is being dangerously influenced by questionable financial actions of our Federal Reserve and other central banks.

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Before I "retired" I faced the same quandary you are describing. How to account for down markets. I used a simple strategy. I devalued my portfolio by 30% and used that number as my available funds. Then did a withdrawal strategy based on that. While that may not work for everyone and is pretty conservative, it did work for us and gave us "peace of mind".

 

Granted, on a serious market "tank" you may see more than a 30% decline. But that is why I keep 2-3 years of living expenses in VERY liquid funds. To ride that out - hopefully. One might say I am wasting an investment opportunity by not having those funds "working" for me. But I sleep good at night.

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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"How to account for down markets. I used a simple strategy.I devalued my portfolio by 30% and used that number as my available funds. Then did a withdrawal strategy based on that.

 

 

Jack - loved that comment. I was thinking planning to take 4% out of the fund annually, to be adjusted for inflation, was a typical way to preserve the principal balance through the up and downs of the market. Seems your approach would add extra safety. We will be sitting down with our account manager and shifting to a strategy (maybe 60% stock, 40% bond or similar) based on what he thinks will provide the 4% in as safe a way as possible.

 

I sent an email to a couple of younger folks I know directing them to this forum topic. Hope they come along and add a few comments and ask questions.

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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Our approach was to withdraw the minimum amount needed to maintain our lifestyle, no matter what the market was doing up to the time when we began to make the IRS required minimum withdrawals. Based upon the previous history of our spending, we would take out enough to prepay things like insurance policies in advance and avoid withdrawals during the year unless they were critical. We began our RV life with a cash balance available which could pay all of our expenses for 3 months and we used that as a buffer for monthly expenses, and if it was short at the annual time of paying insurance and such, we would withdraw enough to rebuild that cash reserve to the 3 month level, again based upon our previous spending history. It worked out for us, but our monthly income was very predictable since it was most from a fixed amount pension and later included SS.

 

At no time did we base our budget on the amount of our investments, but we did our best to adjust our spending to protect that nest egg. While that did work for us, there is no sure thing in financial markets. I have never been comfortable basing our planned budget on investment income which is to come in the future.

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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"How to account for down markets. I used a simple strategy.I devalued my portfolio by 30% and used that number as my available funds. Then did a withdrawal strategy based on that.

 

 

Jack - loved that comment. I was thinking planning to take 4% out of the fund annually, to be adjusted for inflation, was a typical way to preserve the principal balance through the up and downs of the market. Seems your approach would add extra safety. We will be sitting down with our account manager and shifting to a strategy (maybe 60% stock, 40% bond or similar) based on what he thinks will provide the 4% in as safe a way as possible.

 

I sent an email to a couple of younger folks I know directing them to this forum topic. Hope they come along and add a few comments and ask questions.

Be aware that my situation was a little different than most. I "retired" at 48 and had to live on my non-IRA funds for a relatively long time. While I wanted to maintain growth I also could not run out. Thus the very conservative reserve in both the base withdrawal pool, and the cash reserve. This was intended to protect from down market periods, and did so from 2000 to the present day. Of course there are numerous other equally effective ways of doing this.....I'm not advocating my method, but it worked well for me.

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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I may have a little different take on this. We're now at the age that with a conservative withdrawal each month from our investments we won't outlive what we have. In fact we've both discussed increasing our withdrawals since it's not likely we'll live to 100. And even if we did we wouldn't be in the same lifestyle, plus with our long term care plans that wouldn't be a factor. Our kids are a lot better off than we were at their age, and I drummed into their heads to have a plan for their retirement. So they know there's not going to be much when we go, if anything. I didn't work all those years not to be able to use what we invested. I have too much living to do to worry about how much I'll have left at the end.

Fulltiming since 2010

2000 Dutch Star

2009 Saturn Vue

Myrtle Beach, SC

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I may have a little different take on this. We're now at the age that with a conservative withdrawal each month from our investments we won't outlive what we have. In fact we've both discussed increasing our withdrawals since it's not likely we'll live to 100.

I'm not sure what your age may be, but we consider ourselves to be in similar circumstance. All of our boys are well established and in successful careers so do not need money from us. We have now passed the age of required withdrawals but thus far our fund growth annually has exceeded those required withdrawals and so the fund has continued to grow, but more slowly. We took very little out before we reached that age, other than the mentioned amount to buy our home-base. Now we are beginning to consider just how many years we should project our funds to be spread over in order to use the majority of the money ourselves. Both of my parents lived past 90 but Pam is already older than either of her parents at death. We prefer to use most of these funds while there are still two of us to share the experiences.

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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  • 4 weeks later...

I'm not sure what your age may be, but we consider ourselves to be in similar circumstance. All of our boys are well established and in successful careers so do not need money from us.

I fall into your position but I have not always saved for retirement. First it was saving for my daughters education with a portion going to retirement starting at 41 years of age. I didn't my daughters to have a financial burden upon education completion. When I was 52, college expenses (daughters also required to work some for personal allowance) were the light at the end of the tunnel. It was time for maximum saving for retirement (except for two wedding). My wife worked only occasionally part time so she helped save a lot. The bottom line I did require my girls to get a good education (Elementary Education and Engineering) which could allow them to assist us in rough times as part of my retirement. Now my daughters are stay at home moms raising my 5 grandchildren living a somewhat conservative spending plan.

Now I have been retired 11 years and haven't worked any in last 4 years and I think I may survive even a 50% dip in my investment (allows for rather high inflation) before going to my daughters.

That was my plan and I'm sticking to it.

Clay

Clay & Marcie Too old to play in the snow

Diesel pusher and previously 2 FW and small Class C

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