Save and Invest?

I am a very comfortably retired 72 year old that has always believed in savings/investing and above all, diversification. That diversification includes real estate and yes even cash value life insurance. One approach to the exclusion of all the others is foolhardy in my opinion. I presently own two paid for homes, one in New Zealand and one in California. My only debt is my Frequent Flyer Card which is paid off each month. During my working years I took advantage of all the tax favored plans from the old Keogh Plans, IRA's & 401 K., investing mostly in a mix of common stock. I bought a rental property, single premium deferred annuity, cash value life insurance (how some people turn up their noses at insurance and annuities, tsk, tsk) Now, some would say "Yeah, but if you had consolidated into just---------------you would have done a lot better" Fact is, I did just fine on eveything and the important thing is that I consistently saved and invested and lived within my means and was able to retire early and live the good life.

======================================= MODERATOR'S COMMENT: Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted.

This group is trying to become Financially Independent. If we had already done that we would not be involved here. We are pooling our knowledge with the hope of improving our results.

Most of the famous people you named are trying to make a buck out of what they say by being well paid for their opinions. The "vested interest" should be listened to but judged accordingly. Warren Buffet has amassed enormous personal wealth and enormous wealth for the corporation he leads by using financial instruments. Donald Trump has done it by working in real estate. For us ordinary people in the middle of the Standard Statistical Curve it will be more like whatever works for each of us.

My personal outlook is that financial instruments are much easier. Real Estate at this level means buying "a" house and trying to fix it up or wait for the market to rise and sell and then do it again. It is like a pet. The house (and the wrecking crew called 'tenants') and the pet have to be taken care of every day of the world. No slack and it is never over. Financial instruments can be maneuvered so that they can be left alone for a week while you take a vacation or the money contribution because of a situation can be stopped for a year or two. Try not feeding the dog or the canary or paying the mortgage for 5 or 6 months. Then look at the consequences of not having bought another round of stock during a dip in the market- like not taking advantage of the great opportunities in the market in the last few weeks if you had other things that took your money this quarter?

In my own case it has been mostly a practical impossibility to provide for a distant future, just like probably 85% of the Statistical Curve membership, until the last year or two. In my first year in the market I had a 19.5% gain- mostly luck- but still well ahead of a CD or a bank savings account, and worlds better than a ton of credit card fees. If I had been able to start this project at any age under 50 it would have by now put me in your Financially Independent category.

I believe I have. Started saving in a 401(k) as soon as I was eligible to do so, which was 1978. My girlfriend at the time did the same.

She's now my wife. She retired from full-time employment in 1998, I in

In retrospect, our asset allocation was too naive. She kept her 401(k) entirely in fixed income; I kept mine entirely in employer stock. Fortunately, said employer stock didn't tank until *after* I had wised up and diversified. And did it ever tank! I think it lost more than 80% of its value. But I was mostly out of it by then, and the rest of the portfolio did just fine. And between us we wound up with a not-too-unreasonable balance. So we had a couple of lucky breaks to make up for our naive asset allocation.

Of course there could be another Great Depression, or any number of other things could go wrong. But except for a downturn of that magnitude, I would say that we're now financially independent. In particular, we back-tested our current plans over the past 10 years, including the 48% drop in the S&P

I have.

The wife turned 36 yesterday and I'm 38 in a few months.

Neither of us has to work. We could both quit working today and not change our lifestyles one iota for the remainder of our lives.

We've set our "go to hell date" as my 45th birthday. She'll be 43 and I'll be 45. Barring a total economic melt-down, neither of us will work a day past my 45th.

Tradional "investments" -- you seem to split them into (1) real estate and (2) stocks/bonds/equities/market/etc have not done it for us. We're heavily invested in both and neither is sufficient for the goal of 'financial independence' for us for at least another 15 years or so. Current projections for us show that we would reach your goal of 'financial independence' on those investments by some time between the ages of 50 and 55. I have full confidence that they can, though. We've run the numbers and it *will* work. I'll have to get back to youin 15 years on that one to let you know if the projections and assumptions held up.

No -- what's done it for us is the business world. Dollar for dollar, their is no greater reward (both in monetary and non-monetary terms) than starting and running your own business.

I own and run a successful software development shop with 9 employees. I own a large percentage of an independent claims adusting firm with 11 adjusters on staff. My wife owns and run a property management firm and hangs out her shingle a few months a year for tax preparation (she's a CPA) -- oh, and she's got a part-time gig (3 days a week) job writing financial reporting software for the local telco.

For me, the greatest, quickest, most rewarding way to obtain 'financial independence' is running a successful business or three.

For most, though, it's the quickest way to bankruptcy. Far more fail and end in financial ruin than succeed.

Don't get me wrong. I *love* my stocks and my rental homes. They are, for the large part (at least in my short lifespan) reliable, predictable producers of wealth that are very ... hands-off ... passive(?) Running the businesses takes work. Hard work like most have likely never seen in their lives. There is something to be said for just writing a check or making an electronic payment into a fund and watching it grow without having to trade any actual labor for that growth.

I am a relatively young guy who has achieved this "financial independence" target. The reason is: 1/ I had a relatively well paid, tax-free job for 9 years (1997-2006); 2/ I saved most of the income I got from the job (my personal savings rate was 70 to 80 percent of my salary); and 3/ I invested relatively well, mostly in commercial real estate in my home country (which has a market value more than 3 times higher than when I bought it five years ago). Right now, the rental income from this property is more than enough to cover any reasonable expenses I may have.

Regarding debts, even if I'm now debt-free , I don't think that this is an optimal situation. In my view, some debt -such as low-interest, tax deductible mortgage debt- makes perfect sense if you use that money to invest in high-yield assets, such as value stocks IF the debt service does not generate a cash flow problem.

relatively soon in life are relatively simple: 1/ get the best education you can, that way you can get a good, well-paid job; 2/ do not overspend, and try to save as much as you can; and 3/ invest wisely, which means buy only assets that are undervalued at the moment you buy it. The third part is probably the most difficult to achieve, because to do this -buy undervalued assets- you need some careful analysis, patience, and some luck.

Sgt.Sausage wrote: [...]

Try this link, it's been around a long time but still a good read in case you've never seen it before. It is not spam.

"How to Become As Rich As Bill Gates"

-Mark Bole

"The Henchman" wrote

Stating how they came to be well-off.

I do not begrudge anyone keeping private info to him- or herself.

As far as I am concerned, MIFP remains helpful to many even without the minutiae of how people here came to be well-off.

I don't have a problem with admitting that the way I came to be "well-off" had nothing to do with financial planning; after spending most of my adult life in grad school or working low-paying jobs in academia, I lucked out when a tiny, struggling startup company I worked for was bought out for $$$ by a much larger company. So, in contrast to many people here, who've built up wealth by socking money away in a 401(k) and/or IRA over a period of many years, my financial concerns are more focused on how to invest a big lump-sum payment and minimize taxes on my investments going forward. I can't very well go back and make up for all those years when I didn't have a 401(k) plan to contribute to and/or was saving money to buy a house instead of maxing out an IRA every year, anyway.... ;-)

-Sandra the cynic

Seems to me you want to keep this forum for the elite and wealthy or am I reading this wrong?

But what I don't understand is why you expect people here to be well off, or do you expect people to be well-off before they offer advice to questions? It's up to the individual readers or seekers of advice to try and verify on their own from other sources of information as well.

"The Henchman" wrote

Please see the post that started this thread. Note that the part of it to which I responded is directed to those who "can claim success" in "financial planning," and so forth.

To clarify perfectly: Some queries and some responses are for the well off; some are for the not well off; some are for somewhere in between. I support all these. Understand?

Actually, if you'll look at the post that started this thread, the OP was asking for anyone who has enough to no longer work to respond. You don't have to be well off to have had enough success to no longer work.

We are more blue collar than white, although technically really neither. My husband retired from a local government job with a pension which replaces something less than 50% of his last wage. While getting ourselves to retirement at younger ages than most, we lived on considerably less than we earned and watched every penny. We invested the remainder in available 457,

Elizabeth Richardson

"Elizabeth Richardson" wrote

One definition of "well off" is having had enough success to no longer work, AFAIC.

We're splitting hairs and testing the moderators.

I agree. It's all a matter of preferences:given the same income -say,

Therefore, the point is that each person (at least, those lucky enough to make enough money to have a real choice) should make a choice early in their lives: do you prefer to have a Mercedes 600, a big house full of expensive furniture, expensive vacations to Seychelles, and then work till you are 65? Or do you prefer to just work to cover your needs ( maybe indulging from time to time in some not-so- expensive little luxuries), save/invest the rest of your income, and then retire early?

snipped-for-privacy@gmail.com wrote: [...]

OK so far.

Your definition is not very well crafted to satisfy your desire to "judge", or measure (my interpretation of your goal), the success of financial planning strategies.

First, if someone has positive net worth, then by definition they have enough assets to satisfy all liabilities. So that part of your definition provides nothing useful.

Then, you use the term "perpetuate" without stating how long you mean.

Finally, you seem to imply that "full-time employment" is some kind of objective, quantitative dimensional scale. You can have full time employment at minimum wage, and full-time employment at nearly a million dollars/year. In both categories, some are struggling financially, and some could quit their jobs tomorrow without a second thought.

Or to put it another way, the typical homeless person has attained "financial independence", using your proposed definition.

My constructive suggestion is that you read up on the charter for this group

-Mark Bole

I have not achieved financial independance at age 34, but I'd like to think I'm much closer now than I was even 2 years ago.

Boards like this help "validate" a line of thinking, help shed insight on how complicated some decisions are, and they also help reassure those of us which are "going it alone" without a financial advisor.