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EdLaFave

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Everything posted by EdLaFave

  1. Teaching Loved Ones About Money

    I know virtually nothing about Twain, but that made me laugh out loud.
  2. Teaching Loved Ones About Money

    I spent a fair amount of time contemplating how to ‘properly’ teach kids things they may not necessarily want to know. I couldn’t find an answer that was particularly pleasing. I eventually settled on the idea that all you can do is make them aware that you have knowledge that you’re happy to share and then stand back as they ignore you and make mistakes. The notion of watching unforced errors frustrates me. The fact that nobody taught me anything about money was also quite frustrating. More power to you Tony, it sounds like a tricky job!
  3. 403b Annuity Salesman Perspective

    To anybody reading this... It is always in your best interest to be in a self-directed plan (meaning you make the decisions, not a so called "adviser"). Also, target date funds aren't just for people who don't know what they're doing, they're for everybody! Don't walk away with the impression that you're settling for an inferior product by using a target date fund or that investing is complicated. A target date fund is just a fund-of-funds that contains a Total US Market index fund, a Total US Bond Index Fund, a Total International Market index fund, and a Total International Bond Fund. It isn't rocket science, the target date fund automatically does the work necessary to keep the 4 funds in the right proportions to each other (one fund may fall while another rises and therefore they need to be brought back in balance). The target date fund also does the necessary work to automatically increase your bond percentage as you approach the retirement date so your portfolio becomes more safe. Target date funds are for people who know exactly what they're doing but want to pay an extra 0.08% per year so they don't have to do the management work that the target date fund does for you.
  4. 403b Annuity Salesman Perspective

    If you’re not in Security Benefit’s NEA DirectInvest then you shouldn’t be in Security Benefit. More generally, if you’re not in a self-directed plan (and even sometimes if you are) then you’re being ripped off.
  5. Potential crash?

    It looks like the market is down about 8% over the last week or so. Maybe this is the start of the next crash, maybe it'll level off, or maybe it'll quickly bounce back. My emotions are convinced we're witnessing the start of the next crash, but emotions have zero predictive power and must be entirely ignored. Remember from 11/30/2015 to 2/15/2016 when the market went down about 12 percent? Well by 4/22/2016 it jumped up 14% only to keep going up and up from there. So it is important you don't pull your money out and miss these really rapid ascents. ...or if it keeps dropping, maybe we'll use this thread to commiserate. Either way, I'll be maintaining my huge allocation to stocks no matter what. Best of luck to everybody!
  6. Potential crash?

    And just like that, over the past week or so, we're up about 7%. If any lurkers read this thread, acting on your emotions will cause you to fail as an investor. Had I listened to that crazy voice in my head (which, if I'm honest, is still screaming about an impending crash) then I would have missed out on that rapid upswing. We talk abut paying 1-2% in expense ratios as a killer, imagine regularly missing out on +7% swings in the market! The sooner we acknowledge that we have no way to predict or outsmart the market, the better off we'll be.
  7. This Index Card Says It ALL

    Ah, I'm literally cringing over here. I wish him luck too. On a tangentially related note, I love reading the Boglehead threads where the OP goes all in on a single stock, usually something flashy. It feels like half the people are pulling for the OP (I'm in that group) and the other half are cheering for abject failure. I think the last thread I read like that was from several years ago and the OP was going all in on Tesla. I suppose in hindsight, I am the dummy and they're set for life :)
  8. This Index Card Says It ALL

    Huge difference between stupidity and ignorance. Even more difference between ignorance and ignorance in a system that is designed to keep you ignorant.
  9. This Index Card Says It ALL

    That's tough. If you lost 65% does that imply you were in something other than total market index funds at the time? I don't remember either crash in the 2000s losing that much? Maybe 55% in 2008 and maybe 45% in early 2000s? I've spoken with people who were invested almost entirely in a single tech stock in the early 2000s and they're basically unwilling to invest in anything now. I plan to assess my asset allocation once we recover from the next crash (for psychological reasons). Then I plan to assess again well into retirement when I'm closer to death and my financial picture is more clear than it is today (for financial reasons). I've read the boglehead stuff (or maybe it was Swedroe) on risk...ability, willingness, and need. I'm not sure how useful that is because ability seems to negate need, essentially leaving you with just your willingness. For instance, if I was exceedingly rich late in life then need drops close to 0 while ability skyrockets. Nice. I wish I'd been that decisive (oh well, no big deal).
  10. This Index Card Says It ALL

    I agree. It is an allocation that's very similar to my own and one with a higher expected return! I like it. I had a fair amount of internal consternation between the cautious advice I was receiving (age in bonds, no drastic allocation changes, etc) and what I felt was best for me. It was a bit of a struggle to end up so stock heavy for me.
  11. This Index Card Says It ALL

    That is a pretty significant change. Obviously it is a personal decision, but if you'd like to share then I'm curious what precipitated such a shift? I began with a 25% allocation to bonds almost a decade ago. As the years went by and I started to understand myself and the markets better that allocation just kept dropping. A couple years ago I finally hit the point where my bonds are equal to exactly the size of my emergency fund, a fixed dollar amount rather than a percentage of the portfolio. If I get a year or two into a big crash and feel fine, then I may finally shift to 100% stocks. I don't have an IPS, but I did follow the general guidance to only make incremental changes to guard against emotional decisions. So it has been a really slow process for me. I'm curious how things went for you?
  12. This Index Card Says It ALL

    I'd like to make a few things very clear. #1, I am not attacking Ken personally. I am attacking the methods Ken and other 'advisers' like him use in order to take advantage of hard working people. In the thread I originally referenced I made that completely clear when I said: #2, Ken is selling something, whether to members of this board or to other people, he is selling something. In the thread I originally referenced, Ken was being pressed to reveal the actionable steps that his 'knowledge', 'facts', and 'simple math equation' dictates we take and he had this to say: #3, Buffet and Bogle are very clear when they tell investors to pick and maintain an asset allocation, buy total market index funds, and invest with each pay check whether the market is going up or down. Don't do something, just stand there! Our friend Ken has managed to take Buffet and Bogle quotes out of context, apply spin, and reach an entirely different conclusion. #4, I am in no way the arbiter of this board and I don't care whether Ken posts or not.
  13. This Index Card Says It ALL

    To anybody reading this thread, please study Ken F from the safety of your own home. He is a great example of what you'll face in real life when 'advisers' try to take advantage of you. Inoculate yourself now before the 'adviser' can turn up the pressure on you. There are no shortcuts in investing and if you decide not to buy into whatever folks like Ken are selling, they'll try to make you feel like a fool who rejects simple, indisputable math. Don't fall for it. Ken F used to go by the name KFord. Ken had a lot to say in a thread back on May 11th 2017. After listening for quite a bit, this was my conclusion with regards to Ken...a conclusion he had no meaningful argument against (because there is none):
  14. This Index Card Says It ALL

    Oh boy. You're dangerous to people's financial health.
  15. This Index Card Says It ALL

    What awful luck for retirees in 2000 who maybe just barely had “enough” to retire. Two huge crashes within 8 years of each other. Short of the Great Depression has any similar window been comparable/worse? Maybe the 70s? That is actually a real concern I have in evaluating when enough is enough while still balancing the fact that my time on this earth is finite.
  16. This Index Card Says It ALL

    In part to be a contrarian and in part because of my own psychology...during times of significant change, upwards or downwards, I simply can't turn off the metaphorical TV and I can't stop looking at my spreadsheet, which updates in real time. I just enjoy the show too much. The chaos is interesting. I'm amused listening to somebody explain why the market is down 2% at 1PM only to see the market up 2% by 3:30 PM. I love listening to how it affects people and what they plan to do (or not do) about it. It is a window into human psychology and the whole thing is just too fascinating to look away. ...I do however agree with the sentiment of the card. We should all measure returns in decades.
  17. Potential crash?

    Not quite a million. I can't remember how close we got, but we were pushing 800k. With all of the fun going on, it is now closer to 725k. The bogleheads gave me some input on this topic, but I still need to find the time to read the resources they linked me to in order to evaluate the quality of the guidance. I've definitely got my own model, but it sure is a big decision. It looks like we're approaching -10%. It may be a good time to start paying attention because if you've got a taxable account then you may be able to realize some losses and deduct them (3k/year) from your income taxes. A small conciliation prize provided by your declining investments.
  18. Potential crash?

    I'm open to the wisdom of the crowd and to understand how you come to your conclusions. Desired Income We'd like to be in a situation where (on average) our wealth grows each year after we pay for expenses. We aren't particularly interested in trying to time our deaths at dollar 0. On the other hand I'm not particularly interested in working longer only to marginally decrease the risk of running out of money. I believe we can live extremely comfortably on about 69k and I could bring that down to about 56k without experiencing too much discomfort if I had to. If things got a bit tougher and I still had a mortgage at that point then I could sell the way-to-expensive house, buy something way cheaper with the proceeds, and reduce yearly expenditures by roughly 18k. If I didn't have a mortgage then I could do the same, but pocket a few hundred thousand to increase the nest egg. So I have a lot of flexibility with expenses. My Wife My wife is on track to become a principal in a few years, which pays roughly 81k in Florida. For over a decade now she's been pretty firm about wanting to work into her 60s, maybe longer. Obviously external factors can always prevent that from happening. If I were to retire early, she would want to keep working and her income would allow our investments to grow untouched. If she were to work into her 60s the value of her pension would be about 44k (in today's dollars) when she retires and there wouldn't be a COLA. Me When I retire I want to feel comfortable that I don't need to earn another dollar. However, I may wind up working part time in my current industry (which would still be quite profitable) or my other interests may or may not end up generating income. The point here is that retirement doesn't mean I go away, it just means I do what I want when I want, which may or may not generate more income. So having said all of that, the big question is, how much of a nest egg do you think is necessary to achieve success as I've defined it?
  19. Potential crash?

    The last time I remember not having "short term fear" was sometime around late 2008 or mid 2009. My fear has steadily increased ever since. I never allow emotion to change my investing behavior, but I enjoy acknowledging my emotion as if it were coming from another person. I like to observe all of the incredibly foolish things, backed up by absolutely no evidence, that this 'other' person tells me to do. I sleep like a baby because long ago I resigned myself to the math that requires me to lose half my nest egg every so often. So I'm more than fine with the stock heavy portfolio, but I'll never believe anybody who claims to have not even noticed a crash (which this is not) in a stock heavy portfolio. In fact, there is even some sick part of me that will enjoy a crash. I guess its the same psychology behind cheering for your sports team to lose every game once they've proven they are going to have a bad year (or few years). I'm young in terms of age, but not in terms of (hopeful) retirement date. If we don't have a crash (soon) then I believe I'll have enough to retire in 2 years, but there is a lot of hesitancy there. Would I actually have enough to retire or has an overly exuberant bull market (just waiting to crash) merely given me the illusion that I have enough? It may be necessary to work through one crash and retire two years into the recovery? On the other side of the coin, if I had more bonds in my portfolio I'd have to work longer due to the lower expected returns. When we start talking about crashes and opportunities it gets a bit philosophical. I'm personally of the belief that crashes do not provide opportunities when compared to the imaginary alternative of a stock market that behaves rationally according to business fundamentals. "Opportunity" only exists because you were previously ripped off by unjustifiably expensive stocks. I'm of the opinion that bubbles and crashes merely increase uncertainty (not opportunity), making it more difficult to plan and therefore requiring you to work longer, "just to be safe." I don't think dollar cost averaging is advisable. If you've got a chunk of money sitting out of the market then you're reducing your expected returns by not investing it all at once because statistically speaking the stock market will be higher tomorrow than it is today. If you're fearful of risk then you should increase your bonds and put all the money in right away. Those considering dollar cost averaging often fall into a logic fallacy. Whether all of your money is in the stock market or in a checking account, every day we have to decide how much of our money should be in the market. However, it is only the person who just received a windfall of some kind who concludes their money should go from 0% in the market to 100% in the market over a period of time. Nobody ever sells out of the market only to immediately DCA back in. It also seems people use the term DCA to refer to the regular contributions you make from each paycheck, but I'd personally consider that to be a distinct activity that probably isn't worthy of having a fancy name.
  20. Potential crash?

    Yellen definitely said some things that we already knew, but hearing it from the chair of the Fed conceivably could have made people take it more seriously? Who knows? I can think of a few political reasons that make it unwise for Trump to take credit for the market after a decade of excellent returns. If the market does crash (especially after getting rid of Yellen, somebody who seems to be well regarded, after just one term) that'll actually be an interesting social experiment...do the folks who supported Trump because of the "economy" dump him during a crash or does the cult of personality, bordering on religion, protect Trump/Republicans from such a response. I'd prefer not to find out, but who knows?
  21. Potential crash?

    I never want to see a crash and although, when measured over a decade or so, the stock market tracks the underlying fundamentals fairly well...I’d prefer to live in a more rational world where the window is closer to a few months. BUT, if we’re going to have a crash in the next five years then I’d prefer to just get it over with right now. This would be my first crash with significant assets where I stand to lose hundreds of thousands of dollars. So it’ll be interesting to see if I’m as much of a cold calculating machine as I like to believe I am. ...I have no clue if the economy is sound. Isn’t it always sound right up until it suddenly isn’t?
  22. 403b Annuity Salesman Perspective

    I'm exhausted at the moment, but I'll have to check out the site.
  23. 403b Annuity Salesman Perspective

    It sounds like he already is, but I would tell your son he is lucky to have you teaching him this information and that he should listen intently. I wish families talked about money more and I certainly wish mine had. ...on a side note, better late than never, but a few months ago (maybe a year) we helped my grandma and her sister transition their retirement savings to index funds. It felt so rewarding to fire that awful adviser and because it was all in tax advantaged accounts it cost them nothing!
  24. 403b Annuity Salesman Perspective

    Thanks, but most of the success is attributable to random chance I happened to start programming in middle school because my parents bought a computer and a friend showed me how. My dad saw I liked it and in the most casual way, one time, mentioned that I should study Computer Science. So I did, without giving it any thought or even really knowing what "Computer Science" meant. In fact, the only thing I knew about programming was that I heard a lot of talk about jobs going to India and I had no idea how much the job even paid. Ultimately, it was pure luck that the job pays over 100k and I was fortunate that I didn't take on college debt only to enter a low-wage or shrinking industry like manufacturing. After graduation, which was luckily after the real estate crash, I bought a house that I wound up hating and sold 3 years later. I had no idea that virtually every dime of the mortgage payment in the early years went towards principal or the enormous fees you pay when you buy and sell. That was a very ignorant and costly decision (that could've been much worse had I been born 2 years earlier), again because I put in no research and just did what I thought I was supposed to do. I got ripped off for years by two separate financial companies and again on my own by buying high cost mutual funds. That lasted several years and I didn't put in a single bit of effort to learn anything, not even 1 google search. It was random chance that one of my co-workers had been ripped off with an annuity, told me the whole story, and told me about the virtue of index funds and the boglehead community. That is the only reason I have a solid portfolio today. ...I guess I say all of this because I don't want anybody to think my success is attributed to how 'awesome' I might be. Sure, I try to do a good job at 'life', but almost every success I have is attributable to luck and the people who came into my life and helped me.
  25. 403b Annuity Salesman Perspective

    This question has fascinated me for a long time because, assuming average growth and assuming the upcoming recession doesn't hit just yet, we're on course to, in two years, hit a million by 35 years old. We're "pound-foolish" in the sense that we bought a 500k house when a 180k house (or renting) would have done just fine. We're 'penny-foolish' in the sense that we literally eat out every single day. We go on vacations. So we aren't living an austere life filled with deprivation. There are a lot of families that make as much and sometimes significantly more than us, but they talk about maxing out their 401k as if it were an unachievable fantasy. They talk about the possibility of early retirement as if it were a pure delusion. There is never an answer as to where all the money goes and I simply can't imagine an answer that would explain the disparity in results...it doesn't seem like it should be possible. This of course is widespread...you see it on a teacher's income, I see it on an engineer's income, and I think we all read about it on the income level of the solidly rich. So I've always been fascinated by where people spend their money and to what degree (if any) it brings them happiness.
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