How are you planing for retirement?

[Jim in Anchorage]

My biggest risk is loaning people money for real estate deals, I loan up to 50% LTV and I have to like the project before I loan/invest. I only look at projects in So Cal.

And you are asking for advice here?

[BillsFanNC]

The basics of personal finance and investing should be a mandatory course at the high school level. The bottom line is that the average american has a pathetic level of knowledge when it comes to these things. Up until about 10 years ago I was in the same boat. If you don't have the time or inclination to learn about the basics on your own, then you need to hire a professional like Chef Jim or taterhill to help you out. Blindly throwing money towards your retirement with no real investment plan can be disastrous to your wealth.

[Joe Miner]

The basics of personal finance and investing should be a mandatory course at the high school level. The bottom line is that the average american has a pathetic level of knowledge when it comes to these things. Up until about 10 years ago I was in the same boat. If you don't have the time or inclination to learn about the basics on your own, then you need to hire a professional like Chef Jim or taterhill to help you out. Blindly throwing money towards your retirement with no real investment plan can be disastrous to your wealth.

 

That's what I don't get.

 

I'm no expert by any means, and people would probably disagree with whether what I know constitutes the basics.

 

But not finding the time or having the inclination to learn or bother with it at all speaks volumes about a lot of people in this country.

 

This is not (or should not be) an unimportant or trivial subject that people have the luxury of ignoring.

[Chef Jim]

That's what I don't get.

 

I'm no expert by any means, and people would probably disagree with whether what I know constitutes the basics.

 

But not finding the time or having the inclination to learn or bother with it at all speaks volumes about a lot of people in this country.

 

This is not (or should not be) an unimportant or trivial subject that people have the luxury of ignoring.

 

People don't come to me for the basics. If all you learn are the basics you're typically further ahead than most but there is so much more to it than that.

[taterhill]

To most...the basics consist of looking at the ROR sheet for their 401k and moving their money into the fund that had the highest ROR last year.....AKA failure 101

[Chef Jim]

To most...the basics consist of looking at the ROR sheet for their 401k and moving their money into the fund that had the highest ROR last year.....AKA failure 101

 

Before I changed careers that was my 401k MO.

[Joe Miner]

People don't come to me for the basics. If all you learn are the basics you're typically further ahead than most but there is so much more to it than that.

 

Totally agree.

 

But I think we all agree that most/many people have no concept of the basics. And the attitude of not having the time or inclination to care to have the simplest of knowledge on the subject is astounding to me.

[Joe Miner]

To most...the basics consist of looking at the ROR sheet for their 401k and moving their money into the fund that had the highest ROR last year.....AKA failure 101

 

I would bet that to many people that would seem like 'advanced knowledge'.

 

Many people don't contribute at all.

 

Many that do contribute just "fire and forget" and never check it to determine how their original picks are doing.

[BillsFanNC]

I'm sure that millions of americans sold out of their 401k equity funds at or near the market bottom last year and still aren't back in with the DOW above 11,000 today. For those with a longer time horizon to retirement, last years market crash was an absolutely glorious buying opportunity, but many missed it due to the panic instilled by the financial media.

[DC Tom]

I'm sure that millions of americans sold out of their 401k equity funds at or near the market bottom last year and still aren't back in with the DOW above 11,000 today. For those with a longer time horizon to retirement, last years market crash was an absolutely glorious buying opportunity, but many missed it due to the panic instilled by the financial media.

 

My mother dumped all her IBM last March, based on the logic of "It's only going down." Three days later, my wife says to me "I just want to close my 401k account...It's not doing anything, I'm just losing money in it."

 

Those two timed the market bottom almost perfectly.

 

(And no, I didn't let my wife close her 401k).

[Chef Jim]

My mother dumped all her IBM last March, based on the logic of "It's only going down." Three days later, my wife says to me "I just want to close my 401k account...It's not doing anything, I'm just losing money in it."

 

Those two timed the market bottom almost perfectly.

 

(And no, I didn't let my wife close her 401k).

 

Investing is a long term deal. I have a client whose deceased husband worked for IBM. She has $500k of IBM stock with a cost basis of about $28k.

[Fezmid]

My mother dumped all her IBM last March, based on the logic of "It's only going down." Three days later, my wife says to me "I just want to close my 401k account...It's not doing anything, I'm just losing money in it."

 

Those two timed the market bottom almost perfectly.

 

(And no, I didn't let my wife close her 401k).

 

The crazy part is that even smart, well-educated people were falling for the media hype. My mother-in-law was one of those. She has a masters degree (MBA or Masters in Finance, can't remember), used to run the finances for Shop-Ko, and now teaches finance and accounting at college -- yet she was completely freaking out about the downturn of her retirement accounts. My wife and I were telling her that she hasn't lost ANYTHING yet -- she has the same number of shares as she did before the downturn -- and she knew that in her head, but all the fear and doom in the media was just making her a basket case because she "lost" 70% of her portfolio (or whatever the number was).

 

I have no idea if she sold at the bottom. I hope her brain won out over her feelings...

[DC Tom]

Investing is a long term deal. I have a client whose deceased husband worked for IBM. She has $500k of IBM stock with a cost basis of about $28k.

 

Sounds like my dad. IBM used to have a very generous employee stock plan. (Still may, as far as I know.)

[Chef Jim]

The crazy part is that even smart, well-educated people were falling for the media hype. My mother-in-law was one of those. She has a masters degree (MBA or Masters in Finance, can't remember), used to run the finances for Shop-Ko, and now teaches finance and accounting at college -- yet she was completely freaking out about the downturn of her retirement accounts. My wife and I were telling her that she hasn't lost ANYTHING yet -- she has the same number of shares as she did before the downturn -- and she knew that in her head, but all the fear and doom in the media was just making her a basket case because she "lost" 70% of her portfolio (or whatever the number was).

 

I have no idea if she sold at the bottom. I hope her brain won out over her feelings...

 

Regardless of your knowledge you get emotional over your money. I tell my wife all the time even I could use an advisor.

[Magox]

Regardless of your knowledge you get emotional over your money. I tell my wife all the time even I could use an advisor.

I was going to touch on this earlier, it's tough to communicate with people once emotions get in the way.

 

I constantly tell my clients that they have to try to remove their emotions from their financial decision making. People tend to bail out when markets are falling and love chasing prices as they are heading higher. That's why the little guy usually loses, because he can't withstand the big losses, while the big guy rides out the storm.

 

When we go through some severe pullbacks and my clients that are on margin are having second doubts, I usually tell them no matter what you do, if you believe in the fundamentals, don't sell out now, because if you do, there is a good chance you are selling near the bottom.

[Chef Jim]

I was going to touch on this earlier, it's tough to communicate with people once emotions get in the way.

 

I constantly tell my clients that they have to try to remove their emotions from their financial decision making. People tend to bail out when markets are falling and love chasing prices as they are heading higher. That's why the little guy usually loses, because he can't withstand the big losses, while the big guy rides out the storm.

 

When we go through some severe pullbacks and my clients that are on margin are having second doubts, I usually tell them no matter what you do, if you believe in the fundamentals, don't sell out now, because if you do, there is a good chance you are selling near the bottom.

 

The stock market is the only thing people run screaming from when it's on sale.

[meazza]

The basics of personal finance and investing should be a mandatory course at the high school level. The bottom line is that the average american has a pathetic level of knowledge when it comes to these things. Up until about 10 years ago I was in the same boat. If you don't have the time or inclination to learn about the basics on your own, then you need to hire a professional like Chef Jim or taterhill to help you out. Blindly throwing money towards your retirement with no real investment plan can be disastrous to your wealth.

 

 

Unfortunately you could also get ripped off by a professional. Unfortunately there are bad apples and they ruin it for those that are honest hardworking people.

 

I used to work for IA's (backoffice) and as there could be many good ones (i.e. TH and CJ), there are plenty of bad ones.

 

Getting a dishonest mechanic will cost you a few K in extra unwanted repairs but getting a bad IA could !@#$ you for life.

[meazza]

I'm sure that millions of americans sold out of their 401k equity funds at or near the market bottom last year and still aren't back in with the DOW above 11,000 today. For those with a longer time horizon to retirement, last years market crash was an absolutely glorious buying opportunity, but many missed it due to the panic instilled by the financial media.

 

Chicken or the egg?

[Magox]

Unfortunately you could also get ripped off by a professional. Unfortunately there are bad apples and they ruin it for those that are honest hardworking people.

 

I used to work for IA's (backoffice) and as there could be many good ones (i.e. TH and CJ), there are plenty of bad ones.

 

Getting a dishonest mechanic will cost you a few K in extra unwanted repairs but getting a bad IA could !@#$ you for life.

That's an interesting point you bring up. I despise shady brokers, and there are many of them, MANY!

[meazza]

I was going to touch on this earlier, it's tough to communicate with people once emotions get in the way.

 

I constantly tell my clients that they have to try to remove their emotions from their financial decision making. People tend to bail out when markets are falling and love chasing prices as they are heading higher. That's why the little guy usually loses, because he can't withstand the big losses, while the big guy rides out the storm.

 

When we go through some severe pullbacks and my clients that are on margin are having second doubts, I usually tell them no matter what you do, if you believe in the fundamentals, don't sell out now, because if you do, there is a good chance you are selling near the bottom.

 

It's hard to get emotional when you're playing with other peoples money and your risk is next to none (besides your job) and your possible gain is 2/20.