Roth Ira

[The Saltman]

Thanks for the advice fellas.

[liljah8303]

cash flow? you mean investment properties? or annuities?

Real estate, yes.

Capital gains is gambling any way you look at it. Also capital gains isn't much of an inflation fighter. The US govt can print money faster than we can save it.

First of all we must realize that money is just a game. I know it sounds crazy but in all reality the game we play should be played just like the game of Monopoly. If you have ever played (most people have) you know that the idea is to create cash flow.

Rich or poor, educated or uneducated, working or unemployed, we are all involved in the real game of cash flow. The difference is that some are playing the game, and some are pawns in the game.

Who does this sound like?

Student graduates heavily in debt, enters the job market, finds a "good" job, racks up more debt, and watches their cash flow to the govt via income taxes. The more they earn, the higher percentage they pay. To save money they eat at Mcdonalds, and cash flows to Mcdonalds. They deposit their paycheck in their bank, and the cash flows to the bank (fractional reserve banking). They buy a car and cash flows to the car company, finance company, oil industry, auto insurance, and of course the govt. Now they buy a house (which is a liability, not an asset) and cash flows out of their pocket for the mortgage, insurance, cable, water, electricity, and govt for property taxes. Every month cash flows to Wall Street to invest in mutual funds for retirement, and cash flows from mutual funds to fund managers in the form of commissions and fees. Later in life, when people are old and feeble, cash flows to the nursing home.

Most people understand its important to have cash flow coming in every month. The problem is they don't understand the difference b/t good cash flow strategies and average ones.

Good-Passive income

-Taxed low

-Have control

Average-Passive income

-Taxed High as possible

-Little to no control

Savings, Stocks, Pensions, Annuities would all be considered avg. But if you're okay with being avg then there is nothing wrong with this.

IMO cash flow investing requires more financial sophistication. Anyone can buy something or feed money into something and hope it goes up. Finding cash-flowing deals takes knowledge of both potential income and expenses, and how to project the performance of the investment on those variables.

[The Graduate]

@liljah8303

Curious, How much money are you talking to get started in something like what you are suggestin and does your idea include things like limited partnerships etc.

[pstall]

Real estate, yes.

Capital gains is gambling any way you look at it. Also capital gains isn't much of an inflation fighter. The US govt can print money faster than we can save it.

First of all we must realize that money is just a game. I know it sounds crazy but in all reality the game we play should be played just like the game of Monopoly. If you have ever played (most people have) you know that the idea is to create cash flow.

Rich or poor, educated or uneducated, working or unemployed, we are all involved in the real game of cash flow. The difference is that some are playing the game, and some are pawns in the game.

Who does this sound like?

Student graduates heavily in debt, enters the job market, finds a "good" job, racks up more debt, and watches their cash flow to the govt via income taxes. The more they earn, the higher percentage they pay. To save money they eat at Mcdonalds, and cash flows to Mcdonalds. They deposit their paycheck in their bank, and the cash flows to the bank (fractional reserve banking). They buy a car and cash flows to the car company, finance company, oil industry, auto insurance, and of course the govt. Now they buy a house (which is a liability, not an asset) and cash flows out of their pocket for the mortgage, insurance, cable, water, electricity, and govt for property taxes. Every month cash flows to Wall Street to invest in mutual funds for retirement, and cash flows from mutual funds to fund managers in the form of commissions and fees. Later in life, when people are old and feeble, cash flows to the nursing home.

Most people understand its important to have cash flow coming in every month. The problem is they don't understand the difference b/t good cash flow strategies and average ones.

Good-Passive income

-Taxed low

-Have control

Average-Passive income

-Taxed High as possible

-Little to no control

Savings, Stocks, Pensions, Annuities would all be considered avg. But if you're okay with being avg then there is nothing wrong with this.

IMO cash flow investing requires more financial sophistication. Anyone can buy something or feed money into something and hope it goes up. Finding cash-flowing deals takes knowledge of both potential income and expenses, and how to project the performance of the investment on those variables.

At the moment. What is lacking for most people are capital, credit and homework. Some folks have lots of capital, but no credit. They are savers. So no homework.

Others have good credit, but thats because they just pay bills and don't understand capital. No homework.

Rare is the one who has got all 3 going on.

I think one nice way to generate good income is micro loans. But alas, it's late and I'm not ready to get in all the myriad ways to make some money.

[Happy Panther]

As you follow the market over the next couple decades you will find that there are always folks calling for explosion or implosion. Luckily for them the are gaming a 50/50 bet.

You will also find the vagaries of the market are working on a much longer time-frame than humans like to think of.

When people tell you the market is about to crash it can only bait you into making short term decisions. Don't fall for it.

[The Graduate]

When people tell you the market is about to crash it can only bait you into making short term decisions. Don't fall for it.

The key here is to have a portfilio that contains a certain amount of cash in it to take advantage of buying opportunities in the event of a crash.

Going forward, I think it would be prudent to have the majority of investments in things that produce income as already mentioned. A small portion could be set aside for growth investments but I am cautious on that.

Expectations should play and important part as well. High returns with little risk are a thing of the past. Higher returns also mean higher risk.

[liljah8303]

@liljah8303

Curious, How much money are you talking to get started in something like what you are suggestin and does your idea include things like limited partnerships etc.

It depends on what youre getting into as it relates to how much money you would have to have to get started. There are foreclosures everywhere, just depends on how much you wanna spend. I usually am putting 20% down on investment properties.

See the banks cant make money if we dont borrow money. I realize that the restrictions are a little bit higher because of everything thats happened over the past few years(Owner Financing is an option). An old rule of money was to save it. Seeing how our money is no longer backed by gold, and is backed by debt, or "good faith" it doesnt make sense to save. One must learn to use debt as a tool. There is a such thing as a good debt vs a bad debt. Financial Education is key.

I do have partners, yes.

If one had 20 assets producing $300.00 cash flow a month, could that person not

A:) retire with 6,000 dollars a month, if not less.....

B:) Create more cash flow?

C:) Not have to worry about Hyper-inflation.

(If Hyp-Inflation were to happen, everyone who has "saved" their money is in big trouble) I.E. Zimbabwe loaf if bread cost 16 million Zimbabwe dollars.

[Davidson Deac II]

deac its about to be much worse than 08. sorry man

Don't agree at all, but we will see. Its always good to have a balanced portfolio though. If Greece and Portugal do eventually default, I think this will cause a big hit in the market, but after a few days, people will begin to realize that Greece and Portugal have smaller economies than South Carolina, and will relax.

[The Graduate]

It depends on what youre getting into as it relates to how much money you would have to have to get started. There are foreclosures everywhere, just depends on how much you wanna spend. I usually am putting 20% down on investment properties.

See the banks cant make money if we dont borrow money. I realize that the restrictions are a little bit higher because of everything thats happened over the past few years(Owner Financing is an option). An old rule of money was to save it. Seeing how our money is no longer backed by gold, and is backed by debt, or "good faith" it doesnt make sense to save. One must learn to use debt as a tool. There is a such thing as a good debt vs a bad debt. Financial Education is key.

I do have partners, yes.

If one had 20 assets producing $300.00 cash flow a month, could that person not

A:) retire with 6,000 dollars a month, if not less.....

B:) Create more cash flow?

C:) Not have to worry about Hyper-inflation.

(If Hyp-Inflation were to happen, everyone who has "saved" their money is in big trouble) I.E. Zimbabwe loaf if bread cost 16 million Zimbabwe dollars.

I follow you.

good debt vs bad debt - borrowing to finance things that will appreciate in value as opposed to borrowing to buy things that reduce in value. A mortgage to buy a home is good debt while borrowing to finance a vacation or a new car could be considered bad debt for example.

Government debt combined with household debt is going to make for slow going as far as growth in the economy is concerned for quite a few years. There will still be growth in some places but a person will be required to do their homework to find these areas.

It only makes sense at this point in my view to invest in companies that declare dividends or produce a stream of income. Growth in these types of investments will come from the reinvestment of dividends.

It sounds to me like you are an established and knowledgeable investor who has probaly been around the block a few times. Sometimes we don't fail to plan but the plan sure fails. There is nothing wrong with that. I simply mean that sometimes investments don't turn out the way we had hoped.

There are many people on this board that don't have your level of knowledge. Mutual funds or ETF's are a good place for them to start. An income fund that holds of diversified portfolio of income producing investments such as utilities, pipelines, real estate and dividend paying corporations would be ideal. These type of funds also contain Federal, State and Municipal bonds as well as corporate bonds.

I like to think of these funds as money machines. Dividends and distributions are paid monthly depending on the fund. You give yourself a raise each month with dividends reinvested because the dividends are used to purchase new shares. These new shares will pay a distribution the following month and so on.

[Happy Panther]

The key here is to have a portfilio that contains a certain amount of cash in it to take advantage of buying opportunities in the event of a crash.

Absolutely. In the next decade something will nosedive and will become a huge buying opportunity. It could be the dollar, stocks, housing, bonds, gold...I jumped on Oil after it went down $100 a barrell.

Hit 2 or three of these opportunities in the next few decades and your retirement account will thank you.

[Happy Panther]

It only makes sense at this point in my view to invest in companies that declare dividends or produce a stream of income. Growth in these types of investments will come from the reinvestment of dividends.

...

I like to think of these funds as money machines. Dividends and distributions are paid monthly depending on the fund. You give yourself a raise each month with dividends reinvested because the dividends are used to purchase new shares. These new shares will pay a distribution the following month and so on.

I would actually be moving out of dividend stocks and into growth stocks right now.

[Epistaxis]

I think the key is to determine what type of investor you are.

What is you risk tolerance?

If you are one of those people that gets their statement every month or quarterly and freaks out at the red, then maybe you should not look at it, or go with something very much more conservative.

Cover your bases with a 529 or similar savings for your child(rens) education.

Put money in to a savings account (very conservative).

have appropriate life insurance (cheap term) to cover you and your spouse.

have a living will/power of attorney set up in case of issues.

work to pay down your mortgage and never carry a credit card balance.

don't buy a ridiculous car.

don't buy a ridiculous house.

As to the mix for your Roth...keep it very diverse, with cash available for flexibilty/opportunity. When the market goes down, you can bemoan, or understand that you are invested for a LONG term and can consider funds to be "on sale". Take advantage.

Consider an annuity that guarantees at minimum 8% ROI as a supplement to your Roth.

The exact mix of your portfolio should be something you and your investment professional think best meets your GOALS. Define them. What are your priorities?

Education? Retirement age? Lifestyle? Philanthropy? Whatever.

Put in the time and if you are overwhelmed, get some help.

[thefuzz]

If you have credit, and are handy and don't mind working more than your 9-5 get into real estate.

As for what Epi just said, I like most of it except for the college thing. I will be taking out an almost 0% college loan for my kids, if I have any. If they screw up, it's their debt, if the finish like they should, I will pay it off at the end, and using that money to make more money over their 4 or 8 years.

[Happy Panther]

If you have credit, and are handy and don't mind working more than your 9-5 get into real estate.

As for what Epi just said, I like most of it except for the college thing. I will be taking out an almost 0% college loan for my kids, if I have any. If they screw up, it's their debt, if the finish like they should, I will pay it off at the end, and using that money to make more money over their 4 or 8 years.

Interesting but the tax breaks of a 529 plan should make better financial sense than taking out a loan.

Where can you get a ~0% loan?