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Roth Ira

The Saltman

By The Saltman,
in Huddle Lounge

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Camdemonium Newbie

Camdemonium

Posted
Posted

Saltman, one thing to note, over 75% of NFL players are bankrupt within 2 years of retiring from the NFL.

They are looking for that "cash flow" NOW and not thinking about the future. The Doggy Daycare seems like a great idea now, but what about 20 years? Why buy a car dealership when it's a grind everyday and you have limited capital? That cash flow looks great in year 1 but what about year 5-10?

Looking for cash flow is good, but assuming you have enough cash to live on now you need to prepare for the future when you won't have that normal cash flow that you have now. You need to set yourself up to have a cash flow in 40 years, not 2.

My .02.

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The Graduate Newbie

The Graduate

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Posted

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

I have both but more into the types of funds that produce income. See Below.

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.

The points you raise is so true. This is why it is important for the indivual to have an understanding of what his/her portfolio is doing and if it will meet the objectives it is intended for.

This is a suggestion for a very conservative portfolio and will let you sleep at night. A properly diversified portfolio will actually leave you hoping the market does go for a dump but only for the short term. ha ha.

One thing that has to be determined is how much equity vs fixed income do you want in your portfolio. A simple way to do this is, Take your age and subtract it from 100.

For example, a 35 year old

100 - 35 is 65. That person could have 65% equity and 35 % fixed income.

a 50 year old would have 50% equity and 50 % fixed income.

The fixed income portion would include mainly CDs but could have some bond (Government and Corporate) along with mortgage funds. The equity portion would contain a percentage of cash for buying opportunites along with a few different funds. Funds that produce income usually contain a portion of dividend paying equities, real estate trusts, pipelines and utility companies etc. The growth portion in the equity side of the portfolio could be satisfied by using an index fund that invests in the S & P 500 or any other niche market area, technology, for example.

Review and rebalance your portfolio yearly. This model is not a get rich quick plan. It is designed to be a conservative portfolio that should do better over time and give a better return than strictly CDs or money market funds.

It would also be prudent to have a certain amount of cash available on the income side should interest rates rise. There is an inverse relationship between interest rates and bond/mortgage funds. The price of a bond goes down when interest rise and goes up when interest rates go down. That is nothing to worry about in the short term. Things eventually balance themselves out for other reasons.

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thefuzz Mentor

thefuzz

Posted
Posted

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?

Student loans.

The money that I would be putting into the 529 would be going into a different tax shelter. The loan would be in the students name, and my business would pay said graduate after they get out the amount of the monthly payment.

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The Graduate Newbie

The Graduate

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Posted

anybody got some good books to recommend on the subject?

Check out,

liljah8303, Post #24 Robert Kiosakis' book Rich Dad Poor Dad google and lots of info will come up.

pstall in Post #26

http://www.amazon.com/Street-Journal.../dp/0684869020

Click on the link and that will take you Amazon where you can find reviews from individuals who have read or bought this book.

I would suggest sending liljah a PM for further info on Kiosakis's book and what it takes to get started.

Some libraries may not have much of a selection in this area but you never know unless you look. Any major book store will have several books on investing for beginners or investing in mutal funds.

This link here will give you an idea of the various funds and what to look for. Read this first and you may find something like Investing for Dummies is too simple.

http://www.sec.gov/investor/pubs/inwsmf.htm.

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mmmbeans Newbie

mmmbeans

Posted
Posted

Check out,

liljah8303, Post #24 Robert Kiosakis' book Rich Dad Poor Dad google and lots of info will come up.

pstall in Post #26

http://www.amazon.com/Street-Journal.../dp/0684869020

Click on the link and that will take you Amazon where you can find reviews from individuals who have read or bought this book.

I would suggest sending liljah a PM for further info on Kiosakis's book and what it takes to get started.

Some libraries may not have much of a selection in this area but you never know unless you look. Any major book store will have several books on investing for beginners or investing in mutal funds.

This link here will give you an idea of the various funds and what to look for. Read this first and you may find something like Investing for Dummies is too simple.

http://www.sec.gov/investor/pubs/inwsmf.htm.

thanks, i've read both of those... looking for something a little more involved.

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The Graduate Newbie

The Graduate

Posted
Posted

i have been selecting my own equities (along with a mixture of funds,) but i fear that I'm not informed enough to do so. I'll definitely check that out. thanks.

Just a thought for you when looking at various companies.

Energy costs and gas prices are only going to go up as time goes on. People are going to be replacing furnaces, air conditioners and windows for energy efficient ones. Companies that make these products might be worth having a look at.

Also railways. As fuel prices rise, trucking companies are going to feel the pinch and more and more things will be shipped across the country via rail. Commuter trains and companies that manufacture transit buses would also be worth having a look at. More and more peeps will be leaving their cars at home and going to work by train or bus. This isn't going to happen over night but I don't think it is unrealistic not to see those times are coming.

New environmental regulations will help these events happen as well.

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liljah8303 Newbie

liljah8303

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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.

Your house is not a good debt. If you have a mortgage it takes money out of your pocket every month. Therefore it would be a bad debt, or liability.

The word appreciate means capital gains. Hoping for something to appreciate is gambling.

Asset-Puts money in your pocket weekly, monthly, quarterly and annually.

Liability-Takes money out of your pocket weekly, monthly, quarterly, and annually.

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