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(Time)   How much money you should have saved by ages 15, 25, 35, and 50. In this economy, though?   (moneyland.time.com) divider line 256
    More: PSA, Oregon Trail  
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26336 clicks; posted to Main » on 01 Oct 2012 at 3:01 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



256 Comments   (+0 »)
   
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2012-09-30 11:53:36 PM
"Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?
 
2012-10-01 12:01:38 AM
These charts got completely destroyed in the 2008 meltdown. I know people who lost over 100K off their 401(k) in 3 months. Not to mention equity off property bought years before.

In short, steady state investment sounds nice til we let the criminals run the investment firms.
 
2012-10-01 12:06:42 AM

itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?


This demonstrates everything that is wrong with rhetorical economists (especially Randians). less than 10% of the population makes "$100,000 after taxes". And far far more than half do not make enough that they can afford to sock away half for retirement.

It grossly oversimplifies a process that has no basis in reality. It's all pie in the sky bullshiat that doesn't help anyone.
 
2012-10-01 12:20:48 AM
Well, I'm boned.
 
2012-10-01 12:23:48 AM
I don't "save" money. I get paid, bike to Amscot to pay off whatever I owe in a payday loan, and come back the next day to get a payday loan to get to the next one.

I consider this a relatively wealthy period in my life.
 
2012-10-01 12:45:47 AM

itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?


Yeah, I clicked on the article forgetting that people have disparate incomes and retirement goals. But 10 percent starting in your 20s is pretty reasonable.

Unpopular opinion: More people should screw around in the stock market. Don't just buy mutual funds. Set aside a little to play around with.
 
2012-10-01 12:51:47 AM
Don't have kids. Don't go on vacation. Don't eat out. Don't buy nice things. Don't spend on entertainment. Don't have a nice car. No cable. No toys. No birthdays. No tithing.

Can you imagine our economy if everyone actually lived by the advice in the article? I'm pretty sure I won't need my exact salary when I retire and additionally I'd like to enjoy at least a bit of my life.

/YOLO?
 
2012-10-01 12:56:10 AM
I'm 27 and this is the first time that I earn enough to invest substantially. I'm ridiculously thrifty but every time I manage to save a few thousand dollars, I was laid off for several months. I simply could not get ahead.

Now - I have the option to: start a family, plan for retirement, or invest in my home. I don't have the option to do more than one of those things.

Fark you article.
 
2012-10-01 01:03:27 AM

Bontesla: I'm 27 and this is the first time that I earn enough to invest substantially. I'm ridiculously thrifty but every time I manage to save a few thousand dollars, I was laid off for several months. I simply could not get ahead.

Now - I have the option to: start a family, plan for retirement, or invest in my home. I don't have the option to do more than one of those things.

Fark you article.


Lawyer, right? Power to you, the economy is rough on new attorneys.
 
2012-10-01 01:26:40 AM
Tell this to the companies that kept sending my jobs out of the country.
 
2012-10-01 01:57:27 AM

Ambivalence: This demonstrates everything that is wrong with rhetorical economists (especially Randians). less than 10% of the population makes "$100,000 after taxes". And far far more than half do not make enough that they can afford to sock away half for retirement.

It grossly oversimplifies a process that has no basis in reality. It's all pie in the sky bullshiat that doesn't help anyone.


Well, it helps people making over $100,000 after taxes. I mean, if I had 100k after taxes, I'd be able to put half of it in the bank, burn half the remainder on entertainment, and STILL be able to float my current lifestyle with more than a quarter left over to buy diamonds and shiat.
 
2012-10-01 01:59:57 AM

Generation_D: In short, steady state investment sounds nice til we let the criminals run the investment firms.


Criminals who have contempt for their own investors, too.
 
2012-10-01 02:06:26 AM
TFA: Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000

and we're done here.
 
2012-10-01 02:13:52 AM

azmoviez: Don't have kids. Don't go on vacation. Don't eat out. Don't buy nice things. Don't spend on entertainment. Don't have a nice car. No cable. No toys. No birthdays. No tithing.

Can you imagine our economy if everyone actually lived by the advice in the article? I'm pretty sure I won't need my exact salary when I retire and additionally I'd like to enjoy at least a bit of my life.

/YOLO?


I do all that and I still barely get by (although admittedly with a cheap vodka and expensive weed habit). Then again, I have a wonderful stress-free job and there's still a million PS2 games on ebay for 2 bucks I haven't played, so it's not like I suffer. I see people making $100,000 a year with kids, watching them age and get up every morning and I don't envy their money, at least not now. In 20 years, I bet I will envy it very much.
 
2012-10-01 02:45:43 AM

Generation_D: These charts got completely destroyed in the 2008 meltdown. I know people who lost over 100K off their 401(k) in 3 months. Not to mention equity off property bought years before.

In short, steady state investment sounds nice til we let the criminals run the investment firms.


heh. Try giving everyone a house, even if they can't afford if, and having them bankrupt the system. But surprise surprise, we clawed our way out of that. It didn't make economic sense, and trade in the derivative securities also made no sense.

Add to that the onset of President Redistribution. People still haven't financially recovered after four years, like you said. They were four lost years.
 
2012-10-01 02:47:11 AM
And hope they don't wreck Capitalism. Or you'll have to figure out something else, good luck.
 
2012-10-01 03:04:46 AM
If I already live off of McDonalds, I don't think I have to save to live off of McDonalds when I retire.
 
2012-10-01 03:06:15 AM

IronTom: And hope they don't wreck Capitalism. Or


things might work.
 
2012-10-01 03:13:32 AM
Isn't this what pension funds are for, seriously?

Me putting 16,9 % of my income (required by law, btw) into a pension fund, WILL enable me to retire at 67 getting paid pretty much what I do now.
 
2012-10-01 03:13:40 AM
OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?
 
2012-10-01 03:14:16 AM
This is from the Forbes article linked to in TFA:

Here are the guideposts:

At age 35, you should have saved an amount equal to your annual salary.
At age 45, you should have saved three times your annual salary.
At 55, you should have five times your salary.
When you retire at age 67, you should have eight times your annual pay.


That's actually a lot more informative, and happily, I'm on track.
 
2012-10-01 03:14:27 AM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25per year interest rate just isn't cutting it, frankly. What should I read? How do I start?


FTFM
 
2012-10-01 03:15:22 AM
Came to see a bunch of sniveling, whining, and excuses about why all of your financial instability is everyone else's fault but your own.

Leaving satisfied.

/I could have sworn I read an article recently about a schoolteacher who made herself a millionaire on her own
//oh yeah, that was here
///but wait, that's IMPOSSIBLE!
////exactly why people like you will always, always work for people like me
 
2012-10-01 03:20:32 AM
If I am making $100,000 after taxes every year then I do not have any problems.

doglover: I mean, if I had 100k after taxes, I'd be able to put half of it in the bank, burn half the remainder on entertainment, and STILL be able to float my current lifestyle with more than a quarter left over to buy diamonds and shiat pearls.


i497.photobucket.com
 
2012-10-01 03:20:42 AM
noneyourbase: I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

Do you already know which mutual fund(s) you'd like to invest in, or are you looking for a full-service brokerage that will provide you with financial advice?
 
2012-10-01 03:21:04 AM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


Sharebuilder?
 
2012-10-01 03:21:40 AM

xl5150: Came to see a bunch of sniveling, whining, and excuses about why all of your financial instability is everyone else's fault but your own.

Leaving satisfied.

/I could have sworn I read an article recently about a schoolteacher who made herself a millionaire on her own
//oh yeah, that was here
///but wait, that's IMPOSSIBLE!
////exactly why people like you will always, always work for people like me


Came here to see some douche assert themselves in an inappropriate context.

You sure did shiat on those people who left comments that sort of fit your criteria for your ego boost.

Best of luck in all your endeavors!
 
2012-10-01 03:22:24 AM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


I've gotten a decent return off of Betterment. It's designed for people who don't really know anything about mutual funds or investing. You put the money in, tell them how much risk/potential reward you want to expose yourself to, and they take care of the rest for a minimal fee. They periodically readjust your portfolio so it never gets overbalanced. It's not a get-rich-quick scheme, but you will do better than your savings account over time.
 
2012-10-01 03:22:31 AM

noneyourbase: noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25per year interest rate just isn't cutting it, frankly. What should I read? How do I start?

FTFM


I think you should start with a book that describes the difference between $ and %.

Secondly, don't save. That's for suckers. Spend yoru money as soon as you get it. Then, later in life, all the chumps will keep you afloat. Freeload, baby! It's the american way. That's what social safety nets are all about, transferring wealth from the responsible to the profligate.
 
2012-10-01 03:22:36 AM
itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.
 
2012-10-01 03:23:06 AM
I'm just barely able to send 7% of each paycheck to my company 401K. And I just started receiving rumblings about some kind of breakup of the company, which will mean no income and no contributions for a long time.

Investing for retirement sounded easier when I was under 25.
 
2012-10-01 03:24:48 AM
P.S. From the article:

"If a wagon train averages 10 miles a day for the first half of the Oregon Trail, how fast does it have to travel the second half to average 20 miles a day for the entire journey?"

The knee-jerk response is, naturally, 30 miles a day. But, as you might imagine, that wouldn't be worth writing about and isn't even close to correct. The blog continues:

"If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days. But if you averaged 10 miles a day traveling the first 1,000 miles, you would have already used up 100 days. You would then have to travel the second thousand miles instantly to overcome your slow start."

That might be apparent to a mathematician.


My knee-jerk response was that the problem presented had none of the information necessary to answer it. Something I'd imagine would be as apparent to a mathematician as some random blogger.
 
2012-10-01 03:25:42 AM

xl5150: noneyourbase: I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

Do you already know which mutual fund(s) you'd like to invest in, or are you looking for a full-service brokerage that will provide you with financial advice?


Dad uses Fidelity for his mutual funds, but he won't really sit down and talk to me about it - I think he's concerned that I'll get burned. I figure there's no time like the present to learn.

Crudbucket: noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

I've gotten a decent return off of Betterment. It's designed for people who don't really know anything about mutual funds or investing. You put the money in, tell them how much risk/potential reward you want to expose yourself to, and they take care of the rest for a minimal fee. They periodically readjust your portfolio so it never gets overbalanced. It's not a get-rich-quick scheme, but you will do better than your savings account over time.


FizixJunkee: noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

Sharebuilder?


Hey, thanks - I'll look into these!
 
2012-10-01 03:29:28 AM
noneyourbase: Dad uses Fidelity for his mutual funds, but he won't really sit down and talk to me about it - I think he's concerned that I'll get burned. I figure there's no time like the present to learn.

So do you know what mutual funds you'd like to invest in? Or are you looking for guidance on that? There are different brokerages that are better for the two different situations. Someone mentioned Sharebuilder. That would be ok if you already know that you want to dump all your money into the VFINX. If you're looking for a place that will actually advise you on where to put your money, the recommendation would be different.
 
2012-10-01 03:31:48 AM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


I'm a grad student, too (though I'm married, in my early 30s, have a kid, and live in a high cost-of-living area).

Does your school have a 403(b)/pension thing available to grad students? Don't laugh if yours doesn't; some universities do. That is to say, some schools where grad students are unionized offer retirement "benefits" for their grad students and post docs.

Up above, I recommended Sharebuilder, which is how I got started saving ($4 trades...I invested a lot in index funds when I was a n00b). If you dig around on the internet, you might be able to find various promotion codes (like, invest $50, get $25 on us for free!).

Also, you can open up an Orange account (with ING, if I recall correctly); they also have promotions that will entice you to invest with them. Whatever you choose, go with something that has minimal fees and lots of investment options.

As an aside, when the other Junkee and I were first married, we were both students living in Arizona. Despite making under $40,000/year between the two of us, we managed to save $14,000 our first year together. Our savings has since steadily (though slowly) climbed past the 6-figure mark, even though we lived on a single mediocre income for three years, had a kid, etc. It can be done, but it's not always easy if you don't make a lot of money.
 
2012-10-01 03:33:18 AM

noneyourbase: Hey, thanks - I'll look into these!



I use a company called First Command. It's a similar setup to what Betterment was described as. You give them your level of risk and goals, and they put it into an account that stays balanced. Seems like they generally equal or beat the stock market average, but I could be wrong about that. I know I've made back everything I lost during the recession. They started out catering to military families only, but in the past few years they've expanded to include anyone. Money for my college tuition came from a family member's First Command accounts, so I trust them.
 
2012-10-01 03:36:14 AM

unlikely: TFA: Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000

and we're done here.


^^^^^^^^^^^^^^^^^^^^^^^^
 
2012-10-01 03:36:35 AM
It should go without saying that if your company offers matching funds to your 401(k) contributions, you should always max that out first before looking for some place else to put your money. My last company matched 50% of my contributions, up to 6% of my salary. Well, you can't beat a guaranteed 50% return on your investment before you even factor in the return you get from the investments themselves.
 
2012-10-01 03:37:39 AM

Krieghund: This is from the Forbes article linked to in TFA:

Here are the guideposts:

At age 35, you should have saved an amount equal to your annual salary.
At age 45, you should have saved three times your annual salary.
At 55, you should have five times your salary.
When you retire at age 67, you should have eight times your annual pay.

That's actually a lot more informative, and happily, I'm on track.


So if your annual salary is the poverty line.........
 
2012-10-01 03:37:57 AM
Hmm, investment advice... buy low, sell high. Before that, just do your homework and figure out what not to buy, and for what you do buy, when to sell it.
 
2012-10-01 03:38:21 AM
My plan is to keep spending that extra 50K a year on really good wine, whisky and foie gras so that I'll die happy about 65.
 
2012-10-01 03:39:06 AM
1) Pay yourself first, be it only 10% of your take home pay.
2) Invest your money in the "Dogs of the Dow" that's the blue chips that pay good dividends.
3) Take the dividends and plow them back into more stocks
4) Consider this money already spent and gone, DON'T TOUCH OR BORROW FROM!
5) The stocks will feed on themselves and grow (slowly at first) but accelerates as time goes by.
6) Stay the course !
 
2012-10-01 03:39:58 AM
1. Let me just say that I think this article is bunk.
2. That said, I'm proud to report that we've managed to reach this milestone a few years early:

At age 35, you should have saved an amount equal to your annual salary.

Rather than devote the next few years of my life to theoretical condensed matter physics, perhaps I should do a dissertation on optimal investment strategies that pay no mind to the conventional wisdom that spews from most economists' mouths?
 
2012-10-01 03:41:14 AM

fusillade762: Well, I'm boned.


Yup, me too. That's why I'm investing heavily in alcohol. 'Cause fark it, that's why.
 
2012-10-01 03:42:10 AM
ive saved nothing. figure i'll be dead or in jail by retirement.
 
2012-10-01 03:42:59 AM

xl5150: noneyourbase: Dad uses Fidelity for his mutual funds, but he won't really sit down and talk to me about it - I think he's concerned that I'll get burned. I figure there's no time like the present to learn.

So do you know what mutual funds you'd like to invest in? Or are you looking for guidance on that? There are different brokerages that are better for the two different situations. Someone mentioned Sharebuilder. That would be ok if you already know that you want to dump all your money into the VFINX. If you're looking for a place that will actually advise you on where to put your money, the recommendation would be different.


Oh, geez, I'm just exploring now - no specifics. I suppose I'm willing to take on a bit more risk. I'll be in grad school for a while, so my income is pretty stable.

FizixJunkee: Does your school have a 403(b)/pension thing available to grad students? Don't laugh if yours doesn't; some universities do. That is to say, some schools where grad students are unionized offer retirement "benefits" for their grad students and post docs.


Not sure - I'll have to look into it. A quick google search says it's only for non student employees, but I think I may dig a little deeper.

shower_in_my_socks: noneyourbase: Hey, thanks - I'll look into these!


I use a company called First Command. It's a similar setup to what Betterment was described as. You give them your level of risk and goals, and they put it into an account that stays balanced. Seems like they generally equal or beat the stock market average, but I could be wrong about that. I know I've made back everything I lost during the recession. They started out catering to military families only, but in the past few years they've expanded to include anyone. Money for my college tuition came from a family member's First Command accounts, so I trust them.


Thanks - I'm starting to make a list here.
 
2012-10-01 03:43:53 AM

xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.


That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?
 
2012-10-01 03:44:45 AM
Helium tank and a plastic bag is my retirement plan, might have to cash it in before 65 though.
 
2012-10-01 03:46:54 AM
Wouldn't it be easier to just give people a deadline for offing themselves?
 
2012-10-01 03:47:07 AM

cyberspacedout: Hmm, investment advice... buy low, sell high. Before that, just do your homework and figure out what not to buy, and for what you do buy, when to sell it.


cig-mkr: 1) Pay yourself first, be it only 10% of your take home pay.
2) Invest your money in the "Dogs of the Dow" that's the blue chips that pay good dividends.
3) Take the dividends and plow them back into more stocks
4) Consider this money already spent and gone, DON'T TOUCH OR BORROW FROM!
5) The stocks will feed on themselves and grow (slowly at first) but accelerates as time goes by.
6) Stay the course !


Sound advise, particularly point 4.
(for those on the poverty line, are they still punished
for attempting to accrue savings,
as they were in the 80s?)

Also: to add - avoid ponzi schemes. if the rate of return looks too good to be true,
you're already getting in on the bottom. run far away.
 
2012-10-01 03:48:25 AM
The "1 in 3" Americans relying on the lottery as their best bet at retirement stat never ceases to amaze me, even though your odds of winning a big lottery jackpot are statistically ZERO.
 
2012-10-01 03:49:03 AM

sidcart42: P.S. From the article:

"If a wagon train averages 10 miles a day for the first half of the Oregon Trail, how fast does it have to travel the second half to average 20 miles a day for the entire journey?"

The knee-jerk response is, naturally, 30 miles a day. But, as you might imagine, that wouldn't be worth writing about and isn't even close to correct. The blog continues:

"If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days. But if you averaged 10 miles a day traveling the first 1,000 miles, you would have already used up 100 days. You would then have to travel the second thousand miles instantly to overcome your slow start."

That might be apparent to a mathematician.


My knee-jerk response was that the problem presented had none of the information necessary to answer it. Something I'd imagine would be as apparent to a mathematician as some random blogger.


//not sure if serious
 
2012-10-01 03:50:24 AM

sidcart42: P.S. From the article:

"If a wagon train averages 10 miles a day for the first half of the Oregon Trail, how fast does it have to travel the second half to average 20 miles a day for the entire journey?"

The knee-jerk response is, naturally, 30 miles a day. But, as you might imagine, that wouldn't be worth writing about and isn't even close to correct. The blog continues:

"If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days. But if you averaged 10 miles a day traveling the first 1,000 miles, you would have already used up 100 days. You would then have to travel the second thousand miles instantly to overcome your slow start."

That might be apparent to a mathematician.


My knee-jerk response was that the problem presented had none of the information necessary to answer it. Something I'd imagine would be as apparent to a mathematician as some random blogger.


It had everything you needed to answer it.

If you spend If you want to average some velocity, but you travel at half that speed for half the trail, you will have consumed your total time. Velocity is Distance over Time If your target velocity is X/Y but you travel at 0.5 of X/ Y for 0.5 Y you take X time. A modestly intelligent 7th grader should be able to answer that.
 
2012-10-01 03:50:31 AM

Krieghund: This is from the Forbes article linked to in TFA:

Here are the guideposts:

At age 35, you should have saved an amount equal to your annual salary.
At age 45, you should have saved three times your annual salary.
At 55, you should have five times your salary.
When you retire at age 67, you should have eight times your annual pay.

That's actually a lot more informative, and happily, I'm on track.


I'm supposed to have something like 250k saved in the next five years?
Oh, man. I am so screwed.
I guess it's a good thing my body is starting to give me the big 'fark you'. I'll hand what I have saved to a hospital and be dead by 60.
 
2012-10-01 03:50:32 AM
shower_in_my_socks: The "1 in 3" Americans relying on the lottery as their best bet at retirement stat never ceases to amaze me, even though your odds of winning a big lottery jackpot are statistically ZERO.

No, the odds are 50/50. You either win or you don't.
 
2012-10-01 03:53:00 AM

ExperianScaresCthulhu: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?


Being born rich or having a wealthy relative that'll set you up are things outside of your control. Developing a skillset with higher earning potential is, for the most part, within your control.
 
2012-10-01 03:55:51 AM

xl5150: Came to see a bunch of sniveling, whining, and excuses about why all of your financial instability is everyone else's fault but your own.

Leaving satisfied.

/I could have sworn I read an article recently about a schoolteacher who made herself a millionaire on her own
//oh yeah, that was here
///but wait, that's IMPOSSIBLE!
////exactly why people like you will always, always work for people like me


Let the people working for you know how little you think of them and let's see what happens to you.
 
2012-10-01 03:56:12 AM

WMittensRomney: Wouldn't it be easier to just give people a deadline for offing themselves?


i291.photobucket.com

RENEW!!!! RENEW!!!
 
2012-10-01 04:01:18 AM

doglover: Ambivalence: This demonstrates everything that is wrong with rhetorical economists (especially Randians). less than 10% of the population makes "$100,000 after taxes". And far far more than half do not make enough that they can afford to sock away half for retirement.

It grossly oversimplifies a process that has no basis in reality. It's all pie in the sky bullshiat that doesn't help anyone.

Well, it helps people making over $100,000 after taxes. I mean, if I had 100k after taxes, I'd be able to put half of it in the bank, burn half the remainder on entertainment, and STILL be able to float my current lifestyle with more than a quarter left over to buy diamonds and shiat.


and create jobs. don't forget to create jobs.
 
2012-10-01 04:02:51 AM

Crudbucket: ExperianScaresCthulhu: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?

Being born rich or having a wealthy relative that'll set you up are things outside of your control. Developing a skillset with higher earning potential is, for the most part, within your control.


I would argue that it's really not. If you don't have the money to go to school, or a current job that demands enough time that you're unable to to to school, or some sort of home situation (sick relative, special needs family member...) that prevents you from having said time or money, it's not really in your control at all.

That's the situation people are finding themselves in. Stuck in their station in life, unable to advance because the job they have to sustain themselves doesn't pay enough nor give enough leeway to allow it.
 
2012-10-01 04:03:40 AM

itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?


You should have thought of that before you...hm, can't really say.
 
2012-10-01 04:05:15 AM

JackalRabbit: doglover: Ambivalence: This demonstrates everything that is wrong with rhetorical economists (especially Randians). less than 10% of the population makes "$100,000 after taxes". And far far more than half do not make enough that they can afford to sock away half for retirement.

It grossly oversimplifies a process that has no basis in reality. It's all pie in the sky bullshiat that doesn't help anyone.

Well, it helps people making over $100,000 after taxes. I mean, if I had 100k after taxes, I'd be able to put half of it in the bank, burn half the remainder on entertainment, and STILL be able to float my current lifestyle with more than a quarter left over to buy diamonds and shiat.

and create jobs. don't forget to create jobs.


d3n8a8pro7vhmx.cloudfront.net
 
2012-10-01 04:06:15 AM

ExperianScaresCthulhu: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?


There's actually a really easy step to take - cohabitate. During my first job, I made about 30,000 after taxes. I found a large townhouse, and went on Craigslist to find roommates. When you split your rent 2 or 3 ways, it's amazing how much extra money you end up having lying around at the end of each month. I managed to pay off my car in 1 year, and still save a few thousand dollars out of an already small income. If you have a family, you'll have to go with something bigger, probably a 4-5 bedroom single family home, and you'll have to look for roommates that are OK with that (might look at other families in similar circumstances), but it's worth the trouble.

Cohabitating isn't glamorous, but it saves you SO MUCH MONEY. My roommate and I now both are looking at 6 figures a year, and we have no intention to get our own places. We also have no intention of changing our lifestyles simply because we can afford it. Just because you have money, doesn't mean you have to spend it. If I live the same lifestyle at 6 figures as I did at 5 figures, I can save huge amounts per year. Suck up your pride, restrain your urge to be a typical American and spend on things you don't need, and save oodles of money.

If it helps motivate you, imaging retiring early. That's my goal...early retirement. Keeps my willpower strong.
 
2012-10-01 04:08:15 AM

gravebayne2: ive saved nothing. figure i'll be dead or in jail by retirement.


please, can you help me? i need investment advice.
 
2012-10-01 04:11:25 AM
browntimmy: Let the people working for you know how little you think of them and let's see what happens to you.

Oooooh, what are they going to do? Quit and look elsewhere for a $7-an-hour job? When your job can also be done by a monkey, you don't get the luxury of dignity. You have to take what you can get because you're unskilled.

I mentioned on a thread recently that I'd fired my personal assistant. It happened on Labor Day, so the irony makes it stick out in my mind. He asked me for a raise so I fired him. Within a few days I had a new personal assistant who is just as good as the old guy and I'm paying him $50 less a week. That's just how it works when there are a lot of other people out there who can do your job as well as you can and they're willing to do it for less money. I think I did a good job of letting the people working for me know how I feel there, and you can see how it worked out for me--I have an additional $50 in my pocket each week. Not too shabby.

I know you unskilled workers always look toward that scene in Fight Club where the unskilled workers give the big speech to the upper-class guy about how they do all the dirty work and how he shouldn't mess with them. Well, guess what--that's a movie. We live in the real world, and in real life, when there are many more people able and willing to do the exact unskilled job that you're performing, then you don't get to biatch about it because it's easy to replace you.
 
2012-10-01 04:11:31 AM
well...
 
2012-10-01 04:13:01 AM

JackalRabbit: gravebayne2: ive saved nothing. figure i'll be dead or in jail by retirement.

please, can you help me? i need investment advice.


Bang as many women as you can. don't bother with condoms. the more babies they pop out, the more proof you got laid.

Oh money? don't bother. when you're homeless and millions behind on child support, just tell those rich snooty folk "yeah. i hit that. and her sister. and her mom." Their money can't buy that kind of fun.
 
2012-10-01 04:13:58 AM
And then suddenly it was a troll thread.
 
2012-10-01 04:14:02 AM

Shadowknight: Crudbucket: ExperianScaresCthulhu: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?

Being born rich or having a wealthy relative that'll set you up are things outside of your control. Developing a skillset with higher earning potential is, for the most part, within your control.

I would argue that it's really not. If you don't have the money to go to school, or a current job that demands enough time that you're unable to to to school, or some sort of home situation (sick relative, special needs family member...) that prevents you from having said time or money, it's not really in your control at all.

That's the situation people are finding themselves in. Stuck in their station in life, unable to advance because the job they have to sustain themselves doesn't pay enough nor give enough leeway to allow it.


Some people may legitimately be trapped in their situation, but I don't think that's a sizeable portion of the population. The bigger group is people who either aren't aware of all the options open to them or are unwilling to make the temporary lifestyle changes needed to advance themselves. I have a friend from my Army days who is the same age as me, has the exact same training and certification as me, does the exact same work as me, and makes $70,000 less than me because he decided to re-enlist instead of getting out and becoming a contractor. I'm not suggesting that everyone has that same opportunity, just that they get a type of tunnel vision or are too busy "keeping up with the Joneses" to consider all their options.
 
2012-10-01 04:14:51 AM
Write a book about how writing a book can make you millions and sell it to people who believe they can learn to become millionaires by reading a book by somebody who claims to have become a millionaire by writing a simple book about how to become a millionaire.

Works every time.

\bonus. It doesn't matter what you write because the type of people who buy such books don't actually read them.
 
2012-10-01 04:20:22 AM

J Noble Daggett: Write a book about how writing a book can make you millions and sell it to people who believe they can learn to become millionaires by reading a book by somebody who claims to have become a millionaire by writing a simple book about how to become a millionaire.

Works every time.

\bonus. It doesn't matter what you write because the type of people who buy such books don't actually read them.


are you ridiculing my coffee table?
 
2012-10-01 04:20:56 AM

Crudbucket: ExperianScaresCthulhu: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?

Being born rich or having a wealthy relative that'll set you up are things outside of your control. Developing a skillset with higher earning potential is, for the most part, within your control.


Itsdan's question was related to how the advice in the article doesn't fit people who make $50,000 or less a year. Itsdan asked about how the advice could be tailored to fit that very large group of people.

xl5150's advice, to me, was not only negative but counterproductive. xl5150's advice, at its heart, said that those who make under $50,000 should not be expected to be able to save. xl5150's advice said that there is no hope, and that the only way to save is to make more money before you can be in a position to save.

Is that truly the right advice, though? To tell someone that they have to be in a position where they have disposable income, and things are not so tight, before they can hope to save or be expected to save? That's what I mean by advising someone to have a rich uncle or a dead relative. That is not advice for the hear and now.

The true value of saving comes in being able to apply the concept and discipline of saving regardless of what income level you are at. Articles like the one above have been around for years and they are not meant for the average person. They are meant for the person who already has disposable income. The stock market is a game, after all. At the end of the day, especially with speculating, it's a leisure activity. It can even be looked upon as a type of lottery. It is a game of chance. It's one with better odds than Mega Millions, but given how it's really used it's no worse (or better) than Catholic Bingo Night or old school Numbers or Lemonade Stand.

By that I mean, being a stockholder who has an interest in a company because of how much money it can bring in to you is different from being a stockholder because you have an interest in a company's products/services. But it's mostly played for the former, not the latter. It's a game.

Back to what I was saying, more articles for persons with less disposable income getting into the saving game.

Unless the lesson of Bush's rebates holds true at the heart of articles like this: somebody has to spend, spend, spend. Somebody has to be encouraged to spend, spend, spend. Who is that group of people going to be?
 
2012-10-01 04:21:20 AM

J Noble Daggett: Write a book about how writing a book can make you millions and sell it to people who believe they can learn to become millionaires by reading a book by somebody who claims to have become a millionaire by writing a simple book about how to become a millionaire.

Works every time.

\bonus. It doesn't matter what you write because the type of people who buy such books don't actually read them.


And apparently they buy a shiatload of them. I think the average repurchase for self-help books on any given topic is like 18 per buyer.
 
2012-10-01 04:21:21 AM
All money is good for in an emergency is something to help start a fire, and that's assuming you aren't just carrying your debit card.

I think there is a real definable problem with creating a currency that is so devoid of actual real world value it can be used to define the value of anything. It has become the single most obvious goal in the quest for success for almost all of humanity and yet at it's core it is nothing. Money also allows for negative values, debts, burdens that anyone with a student loan or large credit card bill can understand are financially life crushing.

Trading real world materials and skills for money reminds me of trading money for tokens at the arcade, if you've bought a ton of tokens you better hope the arcade stays in business long enough for you to spend them.
 
2012-10-01 04:22:45 AM
So what you're saying is that the average person is farked and the future consists of the majority of the population being incapable of retiring?

200 million homeless people in their late 60's wandering around because they didn't save a years worth of their current salary by the time they were 35?

I want to make a lot of money so I can write a column about how no one else did it right because they didn't invest in some other company. That will motivate people. That will really drive people into understanding what they value or even the concept of it.
 
2012-10-01 04:23:24 AM

sidcart42: My knee-jerk response was that the problem presented had none of the information necessary to answer it.


You just proved the author's point.
 
2012-10-01 04:30:36 AM

Emposter: Cohabitating isn't glamorous, but it saves you SO MUCH MONEY.


I know you've never had a bad roommate.
 
2012-10-01 04:30:38 AM

ExperianScaresCthulhu: xl5150's advice, to me, was not only negative but counterproductive. xl5150's advice, at its heart, said that those who make under $50,000 should not be expected to be able to save. xl5150's advice said that there is no hope, and that the only way to save is to make more money before you can be in a position to save.

Is that truly the right advice, though? To tell someone that they have to be in a position where they have disposable income, and things are not so tight, before they can hope to save or be expected to save? That's what I mean by advising someone to have a rich uncle or a dead relative. That is not advice for the hear and now.


You can either make more money or spend less. For people in the (let's say) $30,000+ income range, there are probably a few things you can do to cut your spending and put the money into savings instead. That'll differ for each individual's situation.

If you're making less than that, you're probably barely getting by as is. Your budget is down to the bone already, there's not going to be anything you can cut in favor of savings. You might be getting by day-to-day, but you can't easily build a future off that. In that situation, you've gotta find some way to expand your skillset or get into a position to make more money. Or rely on welfare.
 
2012-10-01 04:30:42 AM

Crudbucket: Shadowknight: Crudbucket: ExperianScaresCthulhu: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?

Being born rich or having a wealthy relative that'll set you up are things outside of your control. Developing a skillset with higher earning potential is, for the most part, within your control.

I would argue that it's really not. If you don't have the money to go to school, or a current job that demands enough time that you're unable to to to school, or some sort of home situation (sick relative, special needs family member...) that prevents you from having said time or money, it's not really in your control at all.

That's the situation people are finding themselves in. Stuck in their station in life, unable to advance because the job they have to sustain themselves doesn't pay enough nor give enough leeway to allow it.

Some people may legitimately be trapped in their situation, but I don't think that's a sizeable portion of the population. The bigger group is people who either aren't aware of all the options open to them or are unwilling to make the temporary lifestyle changes needed to advance themselves. I have a friend from my Army days who is the same age as me, has the exact same training and certification as me, does the exact same work as me, and makes $70,000 less than me because he decided to re-enlist instead of getting out and becoming a contractor. I'm not suggesting that everyone has that same opportunity, just that they get a type of tunnel vision or are too busy "keeping up w ...


And all itsdan was asking was that those options be opened up and revealed.
'Make more money' is cynical advice.
A person making $50,000 needs advice tailored to their situation.
They can not apply the advice given to someone making $100,000.

The same goes double for someone making $25,000 a year.
The same is critical for someone at the poverty line.

As for your friend in the military................ people who have military experience under their belt
are a whole different continent away from the advice which can be given to people
who do not have military experience under their belt............. likewise, people who get in and get out
need different advice than people who are in it as a career.

If your friend is making $70,000 less than you, it's not really because of re-enlistment.

How many more business contacts and how much better at networking are you, than your friend?
Contracting is a word of mouth game, not a merit game.
 
2012-10-01 04:31:26 AM
My advice, marry rich. Not that I did. She does have a nice chunk of family money. It works out though because I'm currently working my ass off so she can get a Master's with a locked in employment path.

But I love her and I don't want to spend too much of her money, so I'm eating lots of Hot Pockets.
 
2012-10-01 04:42:31 AM

doglover: Emposter: Cohabitating isn't glamorous, but it saves you SO MUCH MONEY.

I know you've never had a bad roommate.


But when you have a good one, you need to take advantage of it.


To xl5150 and itdan, related to the above: Saw an article where a woman was badly in debt. She was able
to get out of that debt by devoting all of her income towards the debt without
accruing any additional debts. She was happy and feeling pretty proud of
herself that she didn't have to declare bankruptcy.

She was able to devote all that income because her husband paid for
- the mortgage
- the utilities
- her car

Saw another article where a woman was able to save all of her income
and pay cash for her dream home after several years of saving. Lot of back patting.
She was able to devote all that income to saving because

- she lived with her mother and had no mortgage or utility payments.

Saw a third article, a couple was in debt, and got out of it after several years by devoting the majority of their income to savings. They were able to do it because

- they found government jobs
- the article specifically mentioned native american programs they were able to take advantage of

None of these people got out of their situation because they followed xl5150s advice about developing new skillsets. They *did* get out of a hellhole because someone else provided a safety net for them, to allow them to pick themselves up on their own time. With discipline they were able to do it... but they were only allowed to develop that discipline because someone else picked up the slack temporarily.

People do get out of bad situations and can learn to save. They just have to be in a position to be able to save. That doesn't take a new skillset. It takes a safety net. Once you no longer need the safety net, you have (hopefully) learned saving skills which will last the rest of your life as you continue your discipline.
 
2012-10-01 04:44:03 AM

Emposter: ExperianScaresCthulhu: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?

There's actually a really easy step to take - cohabitate. During my first job, I made about 30,000 after taxes. I found a large townhouse, and went on Craigslist to find roommates. When you split your rent 2 or 3 ways, it's amazing how much extra money you end up having lying around at the end of each month. I managed to pay off my car in 1 year, and still save a few thousand dollars out of an already small income. If you have a family, you'll have to go with something bigger, probably a 4-5 bedroom single family home, and you'll have to look for roommates that are OK with that (might look at other families in similar circumstances), but it's worth the trouble.

Cohabitating isn't glamorous, but it saves you SO MUCH MONEY. My roommate and I now both are looking at 6 figures a year, and we have no intention to get our own places. We also have no intention of changing our lifestyles simply because we can afford it. Just because you have money, doesn't mean you have to spend it. If I live the same lifestyle at 6 figures as I did at 5 figures, I can save huge amounts per year. Suck up your pride, restrain your urge to be a typical American and spend on things you don't need, and save oodles of money.

If it helps motivate you, imaging retiring early. That's my goal...early retirement. Keeps my willpower strong.


Yah, let's not enjoy life and save money instead! Fark living with roommates, I need my space. I may not be saving OODLES of money, but at least I enjoy myself. As far as retiring early, why? As a teacher I get every summer off and by the time it's over I'm happy to go back to work. Work centers you more than anything else, especially if you actually enjoy doing it. Yes, for the most part I enjoy work. It sucks sometimes, but everything sucks sometimes.
 
2012-10-01 04:44:09 AM

ExperianScaresCthulhu: But when you have a good one, you need to take advantage of it.


When you have a good one.

Not every heroin addict is Jason Mewes.
 
2012-10-01 04:44:17 AM
Unless you have some kind of wonderful sexy job, nobody saves sh*t.

That's part of the problem with our society. We are by and large living day by day, paycheck to paycheck.
 
2012-10-01 04:55:05 AM
The big problem with all this type of advice is that the assumption is that at age 65 you're going to stop making a dime and start spending everything you had put away. It doesn't have to be this way. I plan on working and earning money indefinitely. You can run a small house-based business, write a book or teach English while on that 6-month vacation to Africa. Just do something productive. There's no rule that says you have to move to FLA, wear geezer clothes and hang around for the early bird special til the day you keel over.
 
2012-10-01 05:14:45 AM
Save 43.2% of my annual income. Riiiiiiiiiight!

Is this a joke, or a troll or something?
 
2012-10-01 05:22:17 AM
"...For those who start late, though, retirement security is an uphill climb. Here's Forbes' analysis of how a late start affects your required savings rate:

(MORE: The Mormon in Mitt)

Start at age 15, and you need to save 8% of annual income for life...." 


What.
 
2012-10-01 05:28:17 AM

xl5150: Came to see a bunch of sniveling, whining, and excuses about why all of your financial instability is everyone else's fault but your own.

Leaving satisfied.

/I could have sworn I read an article recently about a schoolteacher who made herself a millionaire on her own
//oh yeah, that was here
///but wait, that's IMPOSSIBLE!
////exactly why people like you will always, always work for people like me


Weird. Maybe I was one of the comments that caused you so much pleasure? Cause I said I liked my job and am pretty happy even though I don't make a lot of money but I know one day it will bite me in the ass?

Did that comment make you feel better than me? Really? Did it? Cause it would interest me to see what sort of person would think like that. Certainly no one I'd want to be around but would like to study from a distance, like an insect. Please tell me more about yourself, fascinating creature.
 
2012-10-01 05:35:05 AM
I don't have a lot of adice on saving, but one thing I did learn (at a loss of $30K) is do NOT just put your money in a 401k or IRA and expect some nucklehead to earn you money with it. Once they have your money, they don't give a good goddam. Harass the shiat out of them and keep an eye on what you have.

/scum
//all financial planners
 
2012-10-01 05:36:43 AM

Bigdogdaddy: I don't have a lot of adice on saving, but one thing I did learn (at a loss of $30K) is do NOT just put your money in a 401k or IRA and expect some nucklehead to earn you money with it. Once they have your money, they don't give a good goddam. Harass the shiat out of them and keep an eye on what you have.

/scum
//all financial planners


advice...damn...
 
2012-10-01 05:39:17 AM

sidcart42: P.S. From the article:

"If a wagon train averages 10 miles a day for the first half of the Oregon Trail, how fast does it have to travel the second half to average 20 miles a day for the entire journey?"

The knee-jerk response is, naturally, 30 miles a day. But, as you might imagine, that wouldn't be worth writing about and isn't even close to correct. The blog continues:

"If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days. But if you averaged 10 miles a day traveling the first 1,000 miles, you would have already used up 100 days. You would then have to travel the second thousand miles instantly to overcome your slow start."

That might be apparent to a mathematician.


My knee-jerk response was that the problem presented had none of the information necessary to answer it. Something I'd imagine would be as apparent to a mathematician as some random blogger.


also the statement "If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days" is entirely incorrect

averages ... How do they work?
 
2012-10-01 05:42:17 AM

xl5150: noneyourbase: I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

Do you already know which mutual fund(s) you'd like to invest in, or are you looking for a full-service brokerage that will provide you with financial advice?


I just want to look good naked.
 
2012-10-01 05:42:26 AM
Don't fall for that stock or mutual fund crap. Here is the voodoo they give you: "just keep handing us your money, and ONE DAY the magic of COMPOUND INTEREST will start happening!" Well, I've been saving for about twenty years and, added up, still have little more than what I put into it. Can't wait for my money to start doubling every 5 years, or whatever their so-called math promises.

Keep waiting for that compounding, all that'll happen is you take a pounding.
 
2012-10-01 05:48:35 AM

zepillin: sidcart42: P.S. From the article:

"If a wagon train averages 10 miles a day for the first half of the Oregon Trail, how fast does it have to travel the second half to average 20 miles a day for the entire journey?"
. . .

also the statement "If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days" is entirely incorrect

averages ... How do they work?


The statement is not incorrect. There is a convention at work that is well explained at the top.
Average for trip = total distance / total time
 
2012-10-01 05:49:17 AM

The Southern Dandy: Save 43.2% of my annual income. Riiiiiiiiiight!

Is this a joke, or a troll or something?


The assumptions behind that 43.2% are significant:
--you're 40 years old and haven't saved a dime yet
--you will retire at 67 and not earn another dime after that
--you will live on [~85% of your pre-retirement income] annually after retirement
--you will continue to live for 25 years after retirement
(--and a bunch of other assumptions about vehicles and rate of return and so on)
 
2012-10-01 05:53:06 AM
Articles like these just annoy me. So the guy sat down, banged out a couple of formulas in excel to and said "whoo hoo! I have all I need for my article deadline".

The only problem is that it's the most incredibly simplistic model possible. They admit as much in the article from the previous week that they link to.

Inevitably the biggest issue I have whenever I hear one of these "what you need to retire is to do 'x' " formulas is that some big Assumptions are being made which usually can't be true. Most of them are that things will stay constant over your lifetime - income growth year over year, contribution, investment returns, employer matching, etc.

I saw a good article some time ago, I think it was the columnist Scott Burns, that pointed out that the ultimate damage done by a downturn / disruption event like 2008 varies considerably based on when it happens to you in your working life and other factors like the time between such events. I.e. it can take a lot of time / good investments to recover from, and should it happen at the wrong time in your life, you're really going to hurt. And it's not just the stock market and investment returns. In most people's working lives there will be some periods of good times income-wise, some ok times, and a few big setbacks such as divorce, downsizing, illness, or some other situation where either the income isn't there to save and invest. Even if you get back on the savings track after a big disruption, it can take a years to get back on the original trajectory to those retirement targets. So really, what would be of more use is a prediction model that tries to account for the irregularities of life, and maybe show some sort of 'probability outcome ranges'

And don't get me started about their 5.5% annual return assumption, or what inflation and wage growth really are vs the govt numbers. I'm so glad to read that most farkers have been saving 20% since age 15, but most of the people I know aren't so luc... er.. smar.. er.. fortunate.

I'm not saying don't save... savings and living within your means will always always trump not doing so, and the more the better. I'm just saying that father away your retirement is, the less confidence there is that any remotely accurate prediction can be made of what your fiscal situation will be then.

And all that is not even considering any possible big external disruptive events like currency devaluation/ massive inflation/ significant tax changes/ retirement fund going under (CALPERs?)/ a Bernie Madoff at your investment house and so on.

Life's a gamble.. but it also occasionally gives you winning hands too.
 
2012-10-01 05:54:20 AM

Emposter: ExperianScaresCthulhu: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?

There's actually a really easy step to take - cohabitate. During my first job, I made about 30,000 after taxes. I found a large townhouse, and went on Craigslist to find roommates. When you split your rent 2 or 3 ways, it's amazing how much extra money you end up having lying around at the end of each month. I managed to pay off my car in 1 year, and still save a few thousand dollars out of an already small income. If you have a family, you'll have to go with something bigger, probably a 4-5 bedroom single family home, and you'll have to look for roommates that are OK with that (might look at other families in similar circumstances), but it's worth the trouble.

Cohabitating isn't glamorous, but it saves you SO MUCH MONEY. My roommate and I now both are looking at 6 figures a year, and we have no intention to get our own places. We also have no intention of changing our lifestyles simply because we can afford it. Just because you have money, doesn't mean you have to spend it. If I live the same lifestyle at 6 figures as I did at 5 figures, I can save huge amounts per year. Suck up your pride, restrain your urge to be a typical American and spend on things you don't need, and save oodles of money.

If it helps motivate you, imaging retiring early. That's my goal...early retirement. Keeps my willpower strong.


You are absolutely correct. The issue is that most people live at or above their means. Buying too expensive of clothes, cars, and houses. Either putting themselves in debt and paying interest which goes to the 'evil 1%' or never saving anything. Look back in the 1950s the average house was 1000 sq ft compared with 2,200 in 2000, and that is before all the luxuries people fill there homes with. I'd say at least half of the 99% literally hand money to the 1% in the form of interest and most of that is on stuff they don't need.

I don't have a roommate but I do OWN (no mortgage) a 1,200 sq ft home, I have an 18 month old phone, eat most of my meals at home ($1.50 breakfast, $1.50 lunch, $5.00 dinner). Don't buy many luxuries with the exception of items of better quality and longer life, for example $200 dress shoes vs $50 bargain ones. In a normal month I'll net at least a 1/3 of my take home salary, not including the 5% of my pay that is direct to my 401K. If anything I live on less now than I did when I made half as much (eating out less and generally smarter in purchases).

I can basically only roll my eyes when someone who works for me making about 1/2 my income will buy a pair of iPhone 5s for his wife and him and then a Coach purse for her, meanwhile my boss who makes twice what I do will wait until he can get an iPhone on Craigslist for $100 and wouldn't conceive of ever buying his wife anything in the realm of a Coach purse. Not everyone can afford luxuries and trying to live like someone on TV when you aren't making that kind of money puts you in debt which in reality allows you to buy less down the road.
 
2012-10-01 06:04:17 AM
Remember the good times in the 80's and 90's making 70% interest. Today with zero % interest by the Feds. Forget it, just plan on going to prison for your retirement.
 
2012-10-01 06:13:43 AM

Ambivalence: itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?

This demonstrates everything that is wrong with rhetorical economists (especially Randians). less than 10% of the population makes "$100,000 after taxes". And far far more than half do not make enough that they can afford to sock away half for retirement.

It grossly oversimplifies a process that has no basis in reality. It's all pie in the sky bullshiat that doesn't help anyone.


Especially for people who don't understand the word example. The author was using 100k as a round number for simplification, but apparently not simple enough for you.

If you make 50k, chop the example numbers in half. You won't be retiring at a lifestyle level of 50k. Is that too obvious?
 
2012-10-01 06:20:33 AM
Here's the reality checks.
Do you have parents? You may wind up supporting them. More often than not, kids do, especially if you don't hail from a very wealthy family. If you have special reasons to hate them or are simply an ungrateful jerk, this does not apply.

Do you have kids? The cord is often not cut at 18, or 25. Things happen.
Corollary: Would you like to leave them something? Or do you plan to die broke like a posthumously famous artist?

Bottom line. If you view your current earnings as something to live off of, you're foolish. Horribly foolish.
 
2012-10-01 06:24:27 AM
I don't understand how people claim they "can't" save money if they make 30k plus. I will grant leeway for those who are genuinely hovering around the poverty line because that's a tough situation.

I am really curious as to how everyone manages to not have any money what so ever to put into a savings/retirement account? I have a mid 40s/year job with 80k in student loans, live by myself and own things that I would consider luxuries (tablet pc, gaming pc, ps3, internet service, etc.) as well as a 401k that is currently at about 90% of my yearly salary at the age of 31 (modest mid 40k range).

I also am capable of putting away 100 bucks a month into a rainy day/bill payoff type fund that also serves as overdraft for my checking account which I am currently using due to bills incurred from being hospitalized for 2 weeks in August.

I've still got a lot of student debt and am far from comfortable but I really don't understand how people are in such a terrible place financially that they have absolutely zero money to put away for themselves. I really would just like to hear people's stories as most people I know who claim "no money" also are wearing a new pair of shoes every time I see them or spend 300 bucks a month on eating out or buy every new blu ray released or whatever their pleasure is. Just curious I guess.
 
2012-10-01 06:26:10 AM
I can't save any money because my greedy, selfish coont of a mother is too good to work for a living and instead expects to mooch off of me for the rest of her life, and I am far too polite to slit her throat in her sleep.
 
2012-10-01 06:33:19 AM

wademh: sidcart42: P.S. From the article:

"If a wagon train averages 10 miles a day for the first half of the Oregon Trail, how fast does it have to travel the second half to average 20 miles a day for the entire journey?"

The knee-jerk response is, naturally, 30 miles a day. But, as you might imagine, that wouldn't be worth writing about and isn't even close to correct. The blog continues:

"If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days. But if you averaged 10 miles a day traveling the first 1,000 miles, you would have already used up 100 days. You would then have to travel the second thousand miles instantly to overcome your slow start."

That might be apparent to a mathematician.


My knee-jerk response was that the problem presented had none of the information necessary to answer it. Something I'd imagine would be as apparent to a mathematician as some random blogger.

It had everything you needed to answer it.

If you spend If you want to average some velocity, but you travel at half that speed for half the trail, you will have consumed your total time. Velocity is Distance over Time If your target velocity is X/Y but you travel at 0.5 of X/ Y for 0.5 Y you take X time. A modestly intelligent 7th grader should be able to answer that.


dude there is no total time to consume
the time to complete the action and actualize a desired result is in no way fixed
am I missing something here?
 
2012-10-01 06:34:18 AM

Bigdogdaddy: I don't have a lot of adice on saving, but one thing I did learn (at a loss of $30K) is do NOT just put your money in a 401k or IRA and expect some nucklehead to earn you money with it. Once they have your money, they don't give a good goddam. Harass the shiat out of them and keep an eye on what you have.

/scum
//all financial planners


Let me guess, you sold at the bottom and locked in your losses against the advise of your financial planner.
 
2012-10-01 06:36:35 AM

RexTalionis: Bontesla: I'm 27 and this is the first time that I earn enough to invest substantially. I'm ridiculously thrifty but every time I manage to save a few thousand dollars, I was laid off for several months. I simply could not get ahead.

Now - I have the option to: start a family, plan for retirement, or invest in my home. I don't have the option to do more than one of those things.

Fark you article.

Lawyer, right? Power to you, the economy is rough on new attorneys.


Cost Analyst, actually. I started out as a minimum wage paralegal because I was pre-law but ultimately decided against it. I ended up working for a company that compensated very poorly (despite 13 promotions, I was making literally half of what other cost analysts make). But without that experience - I never would have landed my current job and it's my dream job.
 
2012-10-01 06:44:00 AM
never mind
i got it
I'm stupid

the comparison still seems weird to me
 
2012-10-01 06:46:33 AM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


I opened a Roth account with Charles Schwab. When you purchase stocks - they kill you with transaction fees (at almost 9 bucks a pop, it's one of the more expensive options). However, I wasn't charged a single fee for any of my mutual funds and they're performing quite well.

Schwab is great for stock and bond selections - they have both domestic and foreign options. Their filtering and search system is pretty terrific. It was free to create my account and I haven't paid any annual fees.

But their reporting tools exclude the transactional fees so they tend to overstate your actual profits. A simple Excel sheet helps me calculate my actual profits and allows me to calculate how many stocks I need to purchase to cover the $20 I will spend in order to cover the transaction fees (I always assume a conservative increase of 5% at its highest point).
 
2012-10-01 06:46:45 AM
i had a nice 401k till my divorce. it got lost.
then i rebuilt it, and then had to go back to court. lost it again.

3 years ago i moved to switzerland and got on board my company's fantastic pension scheme, and dribble into the US IRA a bit at a time. Saves about 2k a month. Socked away as much as the other two pt together.

here i get 80% of my salary if i get laid off for up to a year, i dont worry as much about what happens if i get laid off. this means i dont keep as much cash on hand because getting 7k unemployment a month were it to occur here in zurich vs 450 a week in California is a slight difference.

isnt it awesome how the american system has put all the burden of everything onto the workers?

You get fired? too bad. no liveable unemployment for you, you lazy socialist.
You wanna retire didnt save with discipline on your own in a crazy unstable american stock market? Too bad, you lazy socialist.
 
2012-10-01 06:47:48 AM
what can people do to save in their current situation?

There's actually a really easy step to take - cohabitate. During my first job, I made about 30,000 after taxes. I found a large townhouse, and went on Craigslist to find roommates. When you split your rent 2 or 3 ways, it's amazing how much extra money you end up having lying around at the end of each month. I managed to pay off my car in 1 year, and still save a few thousand dollars out of an already small income. If you have a family, you'll have to go with something bigger, probably a 4-5 bedroom single family home, and you'll have to look for roommates that are OK with that (might look at other families in similar circumstances), but it's worth the trouble.

Cohabitating isn't glamorous, but it saves you SO MUCH MONEY. Suck up your pride, restrain your urge to be a typical American and spend on things you don't need, and save oodles of money.


THIS. Used to be the norm, back in the day: renting a room when you were just starting out in life, renting out extra rooms when you needed income. DIL and son are renting an extra house we own. We save $$ by not paying management fees, they get a nicer place to live than they could ever afford on their own. It's a 5 bedroom house, so they rented out 2 of the extra bedrooms, and that pays their entire rent to US, leaving them only utilities, (and they are ahead in that too, as their "room rental" pays towards utilities, too). The kids have paid off every debt they owed, finished grad school, saved well over their combined incomes, and now that they have great jobs, refuse to kick out the renters, because they are now their 'house family'. I recommend it to everyone.
 
2012-10-01 06:48:27 AM
I work at a factory that actually has a very skilled labor force that they cannot Readily replace and they know that. They take pretty good care of us considering. Promote from within before hiring from outside for high paying salary jobs and have pretty decent benefits, and we have extensive retirement and investment plans available to us. They make sure we know at every quarterly benefits meeting to take advantage of the match up to 6 percent on 401k and stock options.
 
2012-10-01 06:52:53 AM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


buy a bunch of guns.

guns are awesome investments. they never lose value. i have a rifle and militaria collection (helmets bayonets swords uniforms a few medals..) and the value of this stuff has WAY out performed the 401k. And if you get a divorce your ex wont want it. :)
 
2012-10-01 06:55:25 AM
I invested in Magic: The Gathering cards from pre-4th Edition, rare video games and consoles and Marvel comics from 1988 to before.

Apparently, I was smarter than those doorknobs on Wall Street.
 
2012-10-01 07:07:33 AM

zepillin:
dude there is no total time to consume
the time to complete the action and actualize a desired result is in no way fixed
am I missing something here?


Apparently. You are given some constraints. You have to travel some distance, call it X in some time, call it T.

You have to travel it at some velocity V. The convention is that the average travel speed (V) is X/T.
You can travel faster or slower some days but ultimately you have to get there in time T.

You are told that you travelled the first half of the distance at 0.5V. This allows you to calculate home much time you have taken so far on your trip. You have travelled 1/2 X at 1/2 V.
The answer should be obvious but let me make it more obvious. If you travelled at half of the target velocity for the whole distance, you obviously would have taken twice the target time. You only travelled have the distance though so instead of twice the target time you have consumed .... the whole target time.
 
2012-10-01 07:09:15 AM

Bontesla: I'm 27 and this is the first time that I earn enough to invest substantially. I'm ridiculously thrifty but every time I manage to save a few thousand dollars, I was laid off for several months. I simply could not get ahead.

Now - I have the option to: start a family, plan for retirement, or invest in my home. I don't have the option to do more than one of those things.

Fark you article.


Same here, I'm 31 and finally make enough to put in to a 401K (let alone have a job good enough to match a contribution) and I finally opened a savings account. Before I was active duty Army (and not smart with money) then in college and then graduated right as the economy took a nosedive. I was almost homeless, saving 20% of my income was not an option. I'm doing better now but I don't plan on retiring unless I get a federal job with a retirement plan.
 
2012-10-01 07:11:33 AM
I was hoping Obama would implement those death panels so I wouldn't have to save for retirement.
 
2012-10-01 07:12:15 AM
Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor!

/oblig
 
2012-10-01 07:17:49 AM
Remember, it's a Long Con.
Got to keep the goalposts motorized and keep that carrot stick fresh and long.

In a country where half the people make $35K or less, how reasonable, realistic, or even practical is this?
Here's a hint: IT'S BULL SHIAT. There's your answer.

You've been robbed and bamboozled, people.
 
2012-10-01 07:17:55 AM

noneyourbase: noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25per year interest rate just isn't cutting it, frankly. What should I read? How do I start?

FTFM


look into no-load, indexed mutual funds.

/Bill Silber called index funds a financial innovation that has actually benefited society
 
2012-10-01 07:25:36 AM
I'm not on track. But I'm not enthused about retiring at 65 or 67. Most of my family dies at 70. Why save save save just for 3 years of golden years.
 
2012-10-01 07:27:44 AM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


70% of mutual funds underperform the S&P 500 (and charge much more for the privilege.) Just buy a cheap (in terms of management fees) index fund and call it a day. VTI would be a good choice, as it gives you broad exposure to pretty much everything. Try setting up a Sharebuilder account and just throwing in whatever you can realistically afford out of each paycheck. Have it set to buy a chunk whenever you have $400 in the account so the commissions are minimal.
 
2012-10-01 07:29:23 AM
noneyourbase
OK, wise Farkers -
I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

Read A Random Down Wall Street 
Open an Account at any brokerage. If you don't have the minimum (say $2500), look around for a brokerage that will waive the minimum for students.
Buy an index fund.
 
2012-10-01 07:29:33 AM
My 401k is with Vanguard. Those guys are always making these wild assumptions and using savings models that encourage you to invest more with them (they call it saving). Vanguard shaves quite a lucrative cut off all your investments (around 2.5% per fund), so the more you invest, the more they make. If you lose, they win. If you win, they win bigger. So when it comes time to gamble, they gamble big.

With your money.

/Don't worry muppet, they have your best interests at heart.
 
2012-10-01 07:31:19 AM

Lt_Ryan: trying to live like someone on TV


You could have just written that and have nailed The American Problem.
Life isn't teevee. But most of us think it is.
 
2012-10-01 07:35:53 AM
So if you live like a pauper, you can retire like one too!

30 years of tickle down rules!
 
2012-10-01 07:36:16 AM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


Start by not getting financial advice from an internet message board. I would especially avoid putting all of your money into firearms, but then again I'm an anonymous poster just like everybody else.
 
2012-10-01 07:38:43 AM
My retirement plan. Three quarters of the way there, if I may boast.

√ Birth
√ School
√ Work
Death

/if boasting is not allowed, please disregard
 
2012-10-01 07:42:45 AM

BMFPitt: noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

70% of mutual funds underperform the S&P 500 (and charge much more for the privilege.) Just buy a cheap (in terms of management fees) index fund and call it a day. VTI would be a good choice, as it gives you broad exposure to pretty much everything. Try setting up a Sharebuilder account and just throwing in whatever you can realistically afford out of each paycheck. Have it set to buy a chunk whenever you have $400 in the account so the commissions are minimal.


This is generally good advice, but you want to get some exposure outside the US and at your age you should be overweight the riskier sectors of the world economy, think small capitalization stocks (Russell 2000 index) and emerging/frontier markets. An allocation to commodities and junk bonds wouldn't be a a bad idea either.
 
2012-10-01 07:47:26 AM

BlackDebbie: I don't understand how people claim they "can't" save money if they make 30k plus. I will grant leeway for those who are genuinely hovering around the poverty line because that's a tough situation.

I am really curious as to how everyone manages to not have any money what so ever to put into a savings/retirement account? I have a mid 40s/year job with 80k in student loans, live by myself and own things that I would consider luxuries (tablet pc, gaming pc, ps3, internet service, etc.) as well as a 401k that is currently at about 90% of my yearly salary at the age of 31 (modest mid 40k range).

I also am capable of putting away 100 bucks a month into a rainy day/bill payoff type fund that also serves as overdraft for my checking account which I am currently using due to bills incurred from being hospitalized for 2 weeks in August.

I've still got a lot of student debt and am far from comfortable but I really don't understand how people are in such a terrible place financially that they have absolutely zero money to put away for themselves. I really would just like to hear people's stories as most people I know who claim "no money" also are wearing a new pair of shoes every time I see them or spend 300 bucks a month on eating out or buy every new blu ray released or whatever their pleasure is. Just curious I guess.


Well, I can give you an old friend's story for example, what you'll make of it I don't know.

He had income and student loans and lifestyle similar to yours, was being fairly sensible and had some savings (more the rainy-day variety than retirement funds I believe). But then his employer went under, he depleted savings and got into credit card debt while unemployed, got a new job and spent his money trying to get out from under the credit cards while the car broke down and his pet incurred nasty vet bills, then got laid off and with minimal savings was in worse shape than the first time out of work. Rinse and repeat. Health problems and shiatty insurance didn't help. Nor did living in an expensive city. Is more or less back to even, I gather, but it's pretty late in the game now.

/after all, you're capable and fortunate and still in negative territory
 
2012-10-01 07:49:01 AM

stuhayes2010: I'm not on track. But I'm not enthused about retiring at 65 or 67. Most of my family dies at 70. Why save save save just for 3 years of golden years.


I think I've had less than five people in my family tree that have lived to retirement age. We die very young. And given my plethora of health problems (I actually should have died five years ago), I'm more of the "quality over quantity" type.

But really, proving my doctors wrong each year is worth more than any dollar amount.

/never mind that I can't work
 
2012-10-01 07:49:41 AM

xl5150: browntimmy: Let the people working for you know how little you think of them and let's see what happens to you.

Oooooh, what are they going to do? Quit and look elsewhere for a $7-an-hour job? When your job can also be done by a monkey, you don't get the luxury of dignity. You have to take what you can get because you're unskilled.

I mentioned on a thread recently that I'd fired my personal assistant. It happened on Labor Day, so the irony makes it stick out in my mind. He asked me for a raise so I fired him. Within a few days I had a new personal assistant who is just as good as the old guy and I'm paying him $50 less a week. That's just how it works when there are a lot of other people out there who can do your job as well as you can and they're willing to do it for less money. I think I did a good job of letting the people working for me know how I feel there, and you can see how it worked out for me--I have an additional $50 in my pocket each week. Not too shabby.

I know you unskilled workers always look toward that scene in Fight Club where the unskilled workers give the big speech to the upper-class guy about how they do all the dirty work and how he shouldn't mess with them. Well, guess what--that's a movie. We live in the real world, and in real life, when there are many more people able and willing to do the exact unskilled job that you're performing, then you don't get to biatch about it because it's easy to replace you.


I didn't realize trolling paid so well, that you could hire an assistant. I would suggest that you make sure to save up all you can, from the quality of your work, you will need that money to pay for your Keystone light supply.
 
2012-10-01 07:54:32 AM

Generation_D: These charts got completely destroyed in the 2008 meltdown. I know people who lost over 100K off their 401(k) in 3 months. Not to mention equity off property bought years before.

In short, steady state investment sounds nice til we let the criminals run the investment firms.


This happened to me. ( well, slightly under $100K). I also got laid off that year, after 15 years of solid, full-time employment.

/ still haven't forgiven the Bush administration for f**king things up domestically...
 
2012-10-01 07:58:34 AM
That might be apparent to a mathematician.

Anyone with a high school education should be able to figure it out. Should.

Start at age 15, and you need to save 8% of annual income for life.

Dude, when I was a teenager I was still mowing lawns and washing cars. I don't think saving ANY of the several hundred bucks I'd earn in any given year would've made much of a long-term difference. And what sort of investment returns are they assuming here? Do they account for the fact that the banks halve your net worth every decade?

The point isn't so much the precise nature of the savings rates cited, but how delaying even as little as five years changes the calculus.

Note to thread: Don't listen to someone who has no idea what calculus is.

Tat'dGreaser: I'm doing better now but I don't plan on retiring


I hear that a lot. Here's some advice. Just before you start a workday, have a strong buddy whack your knees -- both of them, as hard as he can -- with a metal bat. Repeat until you hear your kneecaps crack. Then one more blow to the back of the head. Bonus if you black out. As soon as you come around, immediately go do your 9-to-5 or 8-to-6 or 7AM-to-midnight or whatever. No painkillers; that's cheating. If you think that sucks, you're not ready to work when you're old. Retirement isn't a choice. Before FDR's Social Security Act, with very few lucky exceptions, old people would die miserably in inescapable poverty because they were unable to work. The body and mind start to break down until you can't get hired at any price.

stiletto_the_wise: Don't fall for that stock or mutual fund crap. Here is the voodoo they give you: "just keep handing us your money, and ONE DAY the magic of COMPOUND INTEREST will start happening!" Well, I've been saving for about twenty years and, added up, still have little more than what I put into it.


Same here. They do absolutely nothing to protect you from those downturns that wipe out your investment accounts. If anything, those downturns are when they soak you so they can get out with their own bags of money. Don't be seduced by the word "professional". You wouldn't hire a "professional" thief to watch your hard-earned money, but that's basically what you do when you buy a managed fund.

My generic advice -- keep it simple. Don't try to outsmart a rigged game. Sure there are ways to invest like a pro, but if you're not going to do your own gallbladder surgery, don't try to get rich by pretending you have expertise. Sure you can make a lot of money quickly, but you can also LOSE a lot of money quickly. Recently I saw a guy try to make $200k out of $1500 in a few weeks by day trading. He blogged about it. Lost 2/3 of what he started with on his first day. Good luck with that.

Without hands-on financial coaching, I can only advise people to plan and stick to a budget, pay off your debts, and if you have money left over, use a very simple "counterflow" strategy. When you hear the media rave about how the price of X (could be almost anything but real estate was the last one) will "go up forever" and there are reality TV shows being contracted by the truckload on how to get rich instantly by playing in X market, GET THE FARK OUT and buy gold (unless "X" IS gold, in which case proceed to the next step). When the market collapses and people start talking about the End of America and Worst Recession Evar, get out of gold and throw everything back in the index fund until the blind optimism returns. This way you really only need to update your portfolio about twice a decade with plenty of warning, and you'll do a lot better than if you try to get fancy. Just don't try to finesse the timing. It's better to switch early and lose 5-10% over the course of a few months than lose 50-80% of everything you own if you wait too long. This is pretty much how Wall Street cleans out retirement accounts.
 
2012-10-01 07:59:12 AM
Silly poor people!
MONEY IS FOR RICH PEOPLE!!!
 
2012-10-01 08:03:33 AM
An illness in my family has wiped out every last penny of my savings. I'll have to go with the work-till-I-die retirement plan.
 
2012-10-01 08:10:05 AM
if i don't have enough money to retire when i'm 70, i'll just rob a few banks or something. if i get away with it then i'll be set for retirement. if they catch me they'll send me to jail, but i'll be 70 years old so what do i care?
 
2012-10-01 08:10:14 AM
I like how Mitt Romney has a $100 million IRA fund.

That's a hell of a retirement cushion. He may even be able to squeak by on that in his old age.
 
2012-10-01 08:12:37 AM

Private_Citizen: My 401k is with Vanguard. Those guys are always making these wild assumptions and using savings models that encourage you to invest more with them (they call it saving). Vanguard shaves quite a lucrative cut off all your investments (around 2.5% per fund), so the more you invest, the more they make. If you lose, they win. If you win, they win bigger. So when it comes time to gamble, they gamble big.

With your money.

/Don't worry muppet, they have your best interests at heart.


Did someone say muppet?
 
2012-10-01 08:13:54 AM

itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?


Hire yourself out as a servant to the wealthy during retirement for a glass of water and crust of bread.
 
2012-10-01 08:16:46 AM

xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.


Yep, because there are just so many $100,000 a year jobs floating around out there, right? I mean, if everyone just wasn't so lazy, we could all be millionaires!

You're a farking tool.
 
2012-10-01 08:17:32 AM

FishyFred: itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?

Yeah, I clicked on the article forgetting that people have disparate incomes and retirement goals. But 10 percent starting in your 20s is pretty reasonable.

Unpopular opinion: More people should screw around in the stock market. Don't just buy mutual funds. Set aside a little to play around with.


.

It's unpopular because its stupid. The vast vast vast majority of people have no clue about how to judge a companies worth or where it is going, and they certainly have almost no control of emotional impulses.
 
2012-10-01 08:20:44 AM
Im just going to enjoy life, and die young and happy.
 
2012-10-01 08:28:21 AM

evilbryan: xl5150: browntimmy: Let the people working for you know how little you think of them and let's see what happens to you.

Oooooh, what are they going to do? Quit and look elsewhere for a $7-an-hour job? When your job can also be done by a monkey, you don't get the luxury of dignity. You have to take what you can get because you're unskilled.

I mentioned on a thread recently that I'd fired my personal assistant. It happened on Labor Day, so the irony makes it stick out in my mind. He asked me for a raise so I fired him. Within a few days I had a new personal assistant who is just as good as the old guy and I'm paying him $50 less a week. That's just how it works when there are a lot of other people out there who can do your job as well as you can and they're willing to do it for less money. I think I did a good job of letting the people working for me know how I feel there, and you can see how it worked out for me--I have an additional $50 in my pocket each week. Not too shabby.

I know you unskilled workers always look toward that scene in Fight Club where the unskilled workers give the big speech to the upper-class guy about how they do all the dirty work and how he shouldn't mess with them. Well, guess what--that's a movie. We live in the real world, and in real life, when there are many more people able and willing to do the exact unskilled job that you're performing, then you don't get to biatch about it because it's easy to replace you.

I didn't realize trolling paid so well, that you could hire an assistant. I would suggest that you make sure to save up all you can, from the quality of your work, you will need that money to pay for your Keystone light supply.


I'd be willing to bet his 'personal assistant' is his mommy bringing him cookies and milk.
 
2012-10-01 08:31:36 AM
They face an almost impossible task and are destined to downsize their expectations.
And if you have no expectations after the bankers sodomized your accounts well, what then?

crickets

Or, like Mom, save ever spare nickel you can and retire at 65 then die TWO years later from lung cancer.
Thank you, Tobacco Industry

Drink? Smoke? Don't bother saving too too much unless you want to pass it on to your heirs.
 
2012-10-01 08:31:58 AM
1) get raped up the ass every day at work
2) don't smoke smokings bad
3) don't binge drink
 
2012-10-01 08:32:00 AM
"Saving 100% of your lifestyle sounds impossible, but it is not if you earn shiat-loads. If you don't earn shiat-loads, then yes, it's impossible."

/FTFY
 
2012-10-01 08:41:39 AM
Todays MSNBC Money page note. "as gloom pervades economic outlook"


Face it. If you are fairly young in the workforce


....you're gonna retire poor
 
2012-10-01 08:43:32 AM
From the Dilbert guy:

Everything you need to know about financial planning*

Make a will.
Pay off your credit cards.
Get term life insurance if you have a family to support.
Fund your 401(k) to the maximum.
Fund your IRA to the maximum.
Buy a house if you want to live in a house and you can afford it.
Put six months' expenses in a money market fund.
Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement.

If any of this confuses you, or you have something special going on (retirement, college planning, tax issues) hire a fee-based financial planner, not one who charges a percentage of your portfolio.
 
2012-10-01 08:48:36 AM

StrangeQ: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

Yep, because there are just so many $100,000 a year jobs floating around out there, right? I mean, if everyone just wasn't so lazy, we could all be millionaires!

You're a farking tool.


actually, there are. there are loads of jobs like this in the bay area and in los angeles, in technology.

learn to be a project manager if you cant code. Start as a web producer at 65-80k, learn the ropes, get promoted once or twice and jump a few companies and give yourself a 10k raise each time.
 
2012-10-01 08:50:22 AM

dragonchild: Dude, when I was a teenager I was still mowing lawns and washing cars. I don't think saving ANY of the several hundred bucks I'd earn in any given year would've made much of a long-term difference. And what sort of investment returns are they assuming here? Do they account for the fact that the banks halve your net worth every decade?


It's the power of COMPOUND INTEREST!!! See, starting at age 8, You take $500 a year and put it into a savings account that gives a return of say a modest 8% (some market accounts give 10-15%! !!). After 40 years you will have $150,000!! It's so easy, it's a wonder everyone doesn't do it.
 
2012-10-01 08:57:43 AM

xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.


Only a minority will make it, so try to be in the minority, and fark everybody else, right? I want the country to be okay. How do we do that?
 
2012-10-01 08:57:52 AM

unlikely: TFA: Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000

and we're done here.


You cut it off a few words too early.

"If you earn $100,000 after taxes"

That presumes a gross income of probably $150,000+. Is this a Time article, or something clipped from Barron's? Because I don't think Time mag knows its audience here. 

/I can do $100k gross annually. Still ain't got shiat.
 
2012-10-01 09:00:29 AM
I think so much of it comes down to a few big years. I had one in 2000. I may have another this year (a few things have to fall into place).

If that is the case, then even though I've been putting >10% into a 401k for 16 years, I will not be where I want to be.

And we are frugal... 7 year old cars, coupons like crazy. We don't go out much, etc.
 
2012-10-01 09:00:50 AM

1nsanilicious: The vast vast vast majority of people have no clue about how to judge a companies worth or where it is going


You're correct, but given the way you phrased that, I don't think you understand why.

A number of investors predicted the real estate bubble when it was first forming. I'll admit I didn't at the time, but it wasn't difficult for anyone who does basic financial research as part of their day-to-day operations. Despite that, many of them couldn't profit off its fall because they couldn't time its collapse. It lasted a full decade longer than it ever should've, and that's assessing it as a bona fide derp-bubble. The market can stay irrational far longer than anyone can stay solvent. The "vast vast vast majority" include most paid investors who are trusted with hundreds of billions of assets and dump them into markets they don't understand. They are the market. When everyone chases the same investments, the price far exceeds the value due to simple supply/demand mechanics -- the system is rational; the people in it aren't. For most people, even "professional" investors, the real estate bubble was just the "serious" version of Beanie Babies. They're not going to invest in stuffed animals because they wear suits and ties, but their line of thinking was JUST as stupid.

The moral of the story is, your wage-earner is a sucker. Amateurs succeed or fail by their luck. "Pros" don't have any better idea of what's going on. The guys who make money year after year, the gurus of the market, the Warren Buffets. . . they don't just understand economics. They understand human nature to be an irrational pack of idiots and bet accordingly.

To put it another way, trying to master the markets by studying finance is like trying to coach a football team by just reading the rulebook.
 
2012-10-01 09:01:44 AM

cig-mkr: 1) Pay yourself first, be it only 10% of your take home pay.
2) Invest your money in the "Dogs of the Dow" that's the blue chips that pay good dividends.
3) Take the dividends and plow them back into more stocks
4) Consider this money already spent and gone, DON'T TOUCH OR BORROW FROM!
5) The stocks will feed on themselves and grow (slowly at first) but accelerates as time goes by.
6) Stay the course !


Dogs of the Dow does not mean what you think it means
 
2012-10-01 09:04:53 AM

enderthexenocide: if i don't have enough money to retire when i'm 70, i'll just rob a few banks or something. if i get away with it then i'll be set for retirement. if they catch me they'll send me to jail, but i'll be 70 years old so what do i care?


Why even bother playing the odds you'll get caught? Just buy a crotch rocket with a credit card and take up stunt biking at 70, no helmet. You probably won't survive your first jump, but at least you go out on your own terms.
 
2012-10-01 09:09:55 AM
What's this "save" word you speak of?

Kids, don't buy a house just because you can afford it. Rent as long as you are saving.

In fact, I'd even say you don't need to own a house. Owning a home can be overrated. Just rent; you're paying for shelter anyway.

And a mortgage is a ripoff.

/can't listen to my own advice in retrospect
 
2012-10-01 09:17:18 AM

xl5150: shower_in_my_socks: The "1 in 3" Americans relying on the lottery as their best bet at retirement stat never ceases to amaze me, even though your odds of winning a big lottery jackpot are statistically ZERO.

No, the odds are 50/50. You either win or you don't.


About half the people who have ever lived are alive today, therefore my chance of living forever is 50%.
 
2012-10-01 09:22:34 AM
I have been dropping 10% of my income into an IRA for a long time now. It's my on hand savings that really suffers over the past couple of years. Every time I start to get ahead, my wife needs 2k worth of dental work, or I have to drop 8k on a new roof for the house. I guess I should feel blessed that I can at least do that though.
 
2012-10-01 09:26:07 AM

Sudo_Make_Me_A_Sandwich: Get term life insurance if you have a family to support.


I'm surprised to see this here, but I think it's good info. My husband and my son both have term life. VERY useful.
 
2012-10-01 09:27:05 AM

Generation_D: These charts got completely destroyed in the 2008 meltdown. I know people who lost over 100K off their 401(k) in 3 months. Not to mention equity off property bought years before.

In short, steady state investment sounds nice til we let the criminals run the investment firms.


Yeah, but if you did NOTHING, you're whole again. You lost a couple of years of investing gains, but you're back up to where you were and even up a little from 2008.
 
2012-10-01 09:28:17 AM
The linked article says at35, I should my annual salary saved.

I'm on track! Never would have guessed that, but since I've been putting money in 401ks for 14 years now, it kinda makes sense. That plus home equity, my investment account and stock options, I'm actually ahead. Which is good because everyone lives to be 102+ in my family.
 
2012-10-01 09:30:54 AM
Well, if you have less money than you'd like at retirement you could always move to a country with lower costs of living instead of trying to continue your same lifestyle in America...
 
2012-10-01 09:38:41 AM

Headso: Well, if you have less money than you'd like at retirement you could always move to a country with lower costs of living instead of trying to continue your same lifestyle in America...


why another country why not another state
 
2012-10-01 09:41:38 AM

xl5150: shower_in_my_socks: The "1 in 3" Americans relying on the lottery as their best bet at retirement stat never ceases to amaze me, even though your odds of winning a big lottery jackpot are statistically ZERO.

No, the odds are 50/50. You either win or you don't.


No, the outcomes are "either you win or you don't." The probability of those outcomes is anything but 50/50. For example, the odds on Power Ball are:
You win: 0.0000006%
You lose: 99.9999994%

/but hey, you can't win if you don't play.
 
2012-10-01 09:50:29 AM
I like how they snuck this into the article... Subliminal messaging...

For those who start late, though, retirement security is an uphill climb. Here's Forbes' analysis of how a late start affects your required savings rate:

(MORE: The Mormon in Mitt)

Start at age 15, and you need to save 8% of annual income for life.
 
2012-10-01 09:52:20 AM
I like how these articles never take life events (vacations, illness, college, etc) into account. Like we're all just supposed to walk to work, come home to eat a dinner of ramen, go to bed, and then start over again everyday.

My wife and I are both 29, living off my (shiatty) salary while she's in nursing school. After all expenses (mortgage, insurance, etc), we have like $600/ month left in savings. Is it really realistic to have, at minimum, my salary saved in the next 6 years?
 
2012-10-01 09:55:13 AM
Step 1: be lucky in one of several different ways.

There is no step 2.
 
2012-10-01 09:59:44 AM

Private_Citizen: xl5150: shower_in_my_socks: The "1 in 3" Americans relying on the lottery as their best bet at retirement stat never ceases to amaze me, even though your odds of winning a big lottery jackpot are statistically ZERO.

No, the odds are 50/50. You either win or you don't.

No, the outcomes are "either you win or you don't." The probability of those outcomes is anything but 50/50. For example, the odds on Power Ball are:
You win: 0.0000006%
You lose: 99.9999994%

/but hey, you can't win if you don't play.


I only play when the jackpot is over $100 million,otherwise why play.
 
2012-10-01 10:00:49 AM

itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?


www.leveledmag.com
 
2012-10-01 10:07:52 AM

Public Savant: Isn't this what pension funds are for, seriously?

Me putting 16,9 % of my income (required by law, btw) into a pension fund, WILL enable me to retire at 67 getting paid pretty much what I do now.


An amount that, after inflation, will be about three fiddy.
 
2012-10-01 10:15:20 AM

Generation_D: These charts got completely destroyed in the 2008 meltdown. I know people who lost over 100K off their 401(k) in 3 months. Not to mention equity off property bought years before.

In short, steady state investment sounds nice til we let the criminals run the investment firms.


Do you know how I know that you don't know where the Dow and Nasdaq are today.
 
2012-10-01 10:18:39 AM

bearcats1983: I like how these articles never take life events (vacations, illness, college, etc) into account. Like we're all just supposed to walk to work, come home to eat a dinner of ramen, go to bed, and then start over again everyday.

My wife and I are both 29, living off my (shiatty) salary while she's in nursing school. After all expenses (mortgage, insurance, etc), we have like $600/ month left in savings. Is it really realistic to have, at minimum, my salary saved in the next 6 years?


$600/mo in savings? That's more than $43K over six years, plus whatever that money earns for you over the next few years--and within that six years she'll presumably finish school, and your salary will likely increase...etc...

Nothing is certain and catastrophes can happen and all that, but yeah, that goal seems pretty realistic.

/assuming your "shiatty salary" isn't $100K or something
 
2012-10-01 10:20:34 AM
So our economic system basically boils down to: 1) Work as hard as you can until you are physically unable. 2) Live an austere life and save as much as you can in the meantime 3)If you have avoided layoffs, chronic health issues, currency collapse, or financial fraud, retire and live in moderate comfort until you quietly die. Our system virtually assures suffering unless we walk a narrow path AND get lucky enough to avoid the predators. But don't you dare question it, because built in there is a one in ten million chance that you can strike it rich and then none of the same economic realities will apply to you anymore.

If we were any more of disposable cogs, they would just cut the bullshiat and start tattooing bar codes onto our foreheads.
 
2012-10-01 10:20:56 AM

ExperianScaresCthulhu: xl5150: itsdan: And if you make $50,000 or less to begin with, as most people do?

Then you should be working at making yourself more marketable so that you can develop a skillset in which you can charge more for your services.

That's all well and good. Like advising people to make sure they're born to parents who already have money and can give them a leg up and a head start. Or advising people to make sure they're in the will of a rich relative.

But in the meanwhile, what can people do to save in their current situation?


Spend less money

Stop whining about how you need all the stuff you buy.
 
2012-10-01 10:21:22 AM

dragonchild: The point isn't so much the precise nature of the savings rates cited, but how delaying even as little as five years changes the calculus.

Note to thread: Don't listen to someone who has no idea what calculus is.



There's plenty wrong with the article, but the author's correct there. "Calculus" isn't just derivatives and integrals. In a more basic sense, it can refer simply to the calculations and methods used when working through a problem. If I decide to paint my garage with two coats of paint instead of just one, I can legitimately say that my decision changes the calculus of determining how much time, money and materials the job is going to take, even though the actual mathematics involved doesn't go beyond simple algebra.
 
2012-10-01 10:22:21 AM

sid244: Private_Citizen: xl5150: shower_in_my_socks: The "1 in 3" Americans relying on the lottery as their best bet at retirement stat never ceases to amaze me, even though your odds of winning a big lottery jackpot are statistically ZERO.

No, the odds are 50/50. You either win or you don't.

No, the outcomes are "either you win or you don't." The probability of those outcomes is anything but 50/50. For example, the odds on Power Ball are:
You win: 0.0000006%
You lose: 99.9999994%

/but hey, you can't win if you don't play.

I only play when the jackpot is over $100 million,otherwise why play.


You've hit on one of the most important and least understood parts of gambling: Return.

When a casino advertises 96% return on slots, what they mean is: if you win the 100-1 payout, you beat 104.2-1 odds. Your payout is just slightly less than the odds, so that over the long run, more of your cash is kept.

By that measurement, the lottery is pretty poor return until the pot reaches epic proportions. When you're beating 175 million to 1 odds, and the payout on a $100 million pot is around $67.5Mil, your return is about 38.5%.

The attraction is the payout .vs the cost to play. $67.5 million for a $2 ticket? Sounds awesome til you see the odds.

/I've always wanted to offer a dice game to the gullible. They pick their favorite number 1-6, then try to roll that number on three 6 sided dice. If they succeed, I pay them $100. Cost to play is only a buck.
 
2012-10-01 10:23:38 AM

zepillin: sidcart42: P.S. From the article:

"If a wagon train averages 10 miles a day for the first half of the Oregon Trail, how fast does it have to travel the second half to average 20 miles a day for the entire journey?"

The knee-jerk response is, naturally, 30 miles a day. But, as you might imagine, that wouldn't be worth writing about and isn't even close to correct. The blog continues:

"If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days. But if you averaged 10 miles a day traveling the first 1,000 miles, you would have already used up 100 days. You would then have to travel the second thousand miles instantly to overcome your slow start."

That might be apparent to a mathematician.


My knee-jerk response was that the problem presented had none of the information necessary to answer it. Something I'd imagine would be as apparent to a mathematician as some random blogger.

also the statement "If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days" is entirely incorrect

averages ... How do they work?


You are wrong.
Do the math.
 
2012-10-01 10:25:36 AM
The people biatching about their salary that have a totalfark tag next to their name are funny.
 
2012-10-01 10:27:28 AM

tenpoundsofcheese: Generation_D: These charts got completely destroyed in the 2008 meltdown. I know people who lost over 100K off their 401(k) in 3 months. Not to mention equity off property bought years before.

In short, steady state investment sounds nice til we let the criminals run the investment firms.

Do you know how I know that you don't know where the Dow and Nasdaq are today.


Exactly. Look at the performance of the S&P 500 over the past century. Even with periodic downturns, there hasn't been a 40-year period where you wouldn't average at least 9-10% annual growth by just throwing your money into a fund indexed off of the S&P 500 and forgetting about it. That's even if your 40-year investment period ended in late 2008 when the market was in the toilet.

Sure, you can do a lot better than 9-10%, but "buy and hold" is still a perfectly-legitimate investment strategy if you're talking about long-term investing.
 
2012-10-01 10:29:25 AM
Crap, I forgot Power Ball is now $2 per play. Return on a $100mil (advertised) pot would be about 19.3%.
 
2012-10-01 10:29:32 AM
Didn't real all the comments to see if it had been addressed prior, but....

They don't account for home-wrecking inflation either. That $50/yr retirement means crap to a 15 year old in 2062, when you spend every dime of it for a can of Chef Boyardee Ravioli and some creek water.

If you make $100k/yr, you should be living in a van down by the river so you can sock away all of it that isn't absolutely necessary for survival. That's the ONLY way you may weather another recession, inflation, future wars, market crashes, etc.

It's really going to suck when you hit 65 and you're worth absolutely nothing because the USD to Yuan conversion rate in the future will be like the Iranian Rial to USD now.
 
2012-10-01 10:31:23 AM

itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?


Then reduce your expenses to $25k or less.

That's the point of it, not the arbitrary number that they picked to demonstrate it. If you want to retire you have to save. If you don't make enough to save while maintaining your lifestyle, then you're going to have to adjust that lifestyle. Amazing that!

Societies "expected" lifestyle for people of all age ranges has drastically changed over the last 50 years. We also have a whole lot more debt and less savings. Wonder if maybe the two are related...

/ and if you say living on $25k can't be done for a family... my parents raised me and my brother on around that inflation-adjusted amount.
 
2012-10-01 10:32:40 AM
But saving is hard, waaaaaah! I can't afford it, so I won't bother trying! Whatever.

Everyone should be saving for retirement, even if you can't save much. I have had my Roth and 401k set up to be direct deposited every payday since my first day on the job. I don't miss the money because it is like it was never there. I did this even when I was poor. IMO, investments are a necessary monthly expense. It is just like your rent or car payment which must be taken care of before spending on any of the fun stuff, always.
 
2012-10-01 10:37:13 AM

Private_Citizen: Crap, I forgot Power Ball is now $2 per play. Return on a $100mil (advertised) pot would be about 19.3%.


Someone here posted a link to a Powerball simulator last week that allows you to auto-pick several thousand "plays" per minute, and would track your winnings for all winning combinations, not just hitting the big jackpot. After several thousand plays, the average return on a dollar spent stabilized at around eight cents and didn't really move after that. Of course, hitting "the big one" would make it profitable, but even a few of the smaller jackpots didn't raise the average return very much or for very long.
 
2012-10-01 10:39:41 AM
In other words, we're all powerf*cked.

The right wing war on the middle class did its job.

401k plans were intended to be supplementary to pensions, not a replacement. And sure, people can save on their own...but where's the corresponding compensation bump that should have come with the pension phase out?

The middle class got raped.
 
2012-10-01 10:43:47 AM

ScottRiqui: Private_Citizen: Crap, I forgot Power Ball is now $2 per play. Return on a $100mil (advertised) pot would be about 19.3%.

Someone here posted a link to a Powerball simulator last week that allows you to auto-pick several thousand "plays" per minute, and would track your winnings for all winning combinations, not just hitting the big jackpot. After several thousand plays, the average return on a dollar spent stabilized at around eight cents and didn't really move after that. Of course, hitting "the big one" would make it profitable, but even a few of the smaller jackpots didn't raise the average return very much or for very long.


Nope. It's not a sound investment (which is obvious). However, even knowing the odds, I can be fun to throw down a dollar or two and fantasize.

I just feel for the people who play the lottery for real - and there are more of them than is comfortable to admit.
 
2012-10-01 10:43:54 AM

azmoviez: Don't have kids. Don't go on vacation. Don't eat out. Don't buy nice things. Don't spend on entertainment. Don't have a nice car. No cable. No toys. No birthdays. No tithing.

Can you imagine our economy if everyone actually lived by the advice in the article?


That's the dirty little secret, here: it only works if not everyone does it. Which is why it's not a sustainable long term solution for our society.
 
2012-10-01 10:45:30 AM

SacriliciousBeerSwiller: In other words, we're all powerf*cked.

The right wing war on the middle class did its job.

401k plans were intended to be supplementary to pensions, not a replacement. And sure, people can save on their own...but where's the corresponding compensation bump that should have come with the pension phase out?

The middle class got raped.


^This.
 
2012-10-01 10:47:44 AM
You have to remember, if you make under $50k, advertisers don't want you cluttering up the readership numbers. Go noodle a catfish or something. This article is none of your business.
 
2012-10-01 10:50:13 AM

glmorrs1: I'd be willing to bet his 'personal assistant' is his mommy bringing him cookies and milk.


Here is xl5150 and his assistant hard at work in his office:
v027o.popscreen.com
 
2012-10-01 10:54:09 AM

SacriliciousBeerSwiller: 401k plans were intended to be supplementary to pensions, not a replacement.


[citation needed].

Remember, not all employers offer pensions. Not sure where the basis of this program was tied into being a supplement. I am pretty sure that it was formed to also be a pretty good stand-alone program.
 
2012-10-01 10:56:44 AM

xl5150: I mentioned on a thread recently that I'd fired my personal assistant. It happened on Labor Day, so the irony makes it stick out in my mind. He asked me for a raise so I fired him. Within a few days I had a new personal assistant who is just as good as the old guy and I'm paying him $50 less a week. That's just how it works when there are a lot of other people out there who can do your job as well as you can and they're willing to do it for less money. I think I did a good job of letting the people working for me know how I feel there, and you can see how it worked out for me--I have an additional $50 in my pocket each week. Not too shabby.


Prole speech detected.

6/10
 
2012-10-01 11:00:13 AM
saved?
 
2012-10-01 11:02:52 AM

The Envoy: glmorrs1: I'd be willing to bet his 'personal assistant' is his mommy bringing him cookies and milk.

Here is xl5150 and his assistant hard at work in his office:
[v027o.popscreen.com image 626x480]


Yep. He's a joke. I work with real employers. "Job Creators," if you will. Not a single one would talk about employees that way, because they know that employees are the lifeblood of an organization.

This guy is more than likely the youngest son of a wealthy family (possibly asian family, xl5150? I'm sensing some daddy/filial piety issues), born and raised in an affluent neighborhood in Southern California, who now owns a cart in the mall selling iphone accessories. His parents are ashamed of him-- GUARANTEED. 

The bad news is that he'll never have to worry about money. The good news is that he'll always be a failure in every other respect.
 
2012-10-01 11:04:43 AM

cochlear: Used to be the norm, back in the day: renting a room when you were just starting out in life, renting out extra rooms when you needed income.


I did this (the first) well into my thirties. Thing is, I suspect more and more of us are going to be just starting out until we're dead or in whatever low-end long term care facility Medicaid will still cover.
 
2012-10-01 11:05:57 AM

Generation_D: These charts got completely destroyed in the 2008 meltdown. I know people who lost over 100K off their 401(k) in 3 months. Not to mention equity off property bought years before.

In short, steady state investment sounds nice til we let the criminals run the investment firms.


Did they withdrawal all the money at that time? If no they did not lose 100k.learn how investment works.
 
2012-10-01 11:06:13 AM
Good Luck and Thanks For All The Fish
 
2012-10-01 11:19:23 AM
Don't forget, you want to have at least 6 months saved as a safety cushion above and beyond retirement



Good luck, farkers.
 
2012-10-01 11:19:35 AM
I AM SO SCREWED!

/cries in a corner
 
2012-10-01 11:24:59 AM

xl5150: shower_in_my_socks: The "1 in 3" Americans relying on the lottery as their best bet at retirement stat never ceases to amaze me, even though your odds of winning a big lottery jackpot are statistically ZERO.

-

No, the odds are 50/50. You either win or you don't.


Pffft.
 
2012-10-01 11:30:20 AM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


It looks like you've been here since 2005.

Did you listen when 3 years ago we told you to invest in the Stock Market?
 
2012-10-01 11:31:36 AM
Saving is really easy. Suppose you're 30 today, and you want to live on the equivilant of $50,000 a year when you retire. Keep in mind that even modest inflation will mean that in you'll need $200,000 real dollars a year when you retire in 2052.

So, you just needed to start saving $16,000 a year back in 1997 when you were 15, or start saving $40,000 a year today. And, you'd better hope that inflation doesnt go to high, of the stockarket doesn't crash, and you'll be fine.

Good luck! Remember, only the loser victim 47% need a social safety net!
 
2012-10-01 11:45:14 AM

BMFPitt: noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

70% of mutual funds underperform the S&P 500 (and charge much more for the privilege.) Just buy a cheap (in terms of management fees) index fund and call it a day. VTI would be a good choice, as it gives you broad exposure to pretty much everything. Try setting up a Sharebuilder account and just throwing in whatever you can realistically afford out of each paycheck. Have it set to buy a chunk whenever you have $400 in the account so the commissions are minimal.


^ This was exactly what I suggested upthread.
 
2012-10-01 11:52:13 AM

dragonchild: Retirement isn't a choice. Before FDR's Social Security Act, with very few lucky exceptions, old people would die miserably in inescapable poverty because they were unable to work. The body and mind start to break down until you can't get hired at any price.


This is so true. You may have the intention of working forever, but your brain and body may not be able to. Plus, employers aren't always eager to hire and retain older employees, so getting and keeping a job in those golden years is not always feasible.
 
2012-10-01 11:57:40 AM

johnnyrocket: I like how Mitt Romney has a $100 million IRA fund.

That's a hell of a retirement cushion. He may even be able to squeak by on that in his old age.


Did you read the relevant Vanity Fair article from a couple months ago? Romney took advantage of a lot of loopholes to get his IRA up that high.

Let me quote:

Mysteries also arise when one looks at Romney's individual retirement account at Bain Capital. When Romney was there, from 1984 to 1999, taxpayers were allowed to put just $2,000 per year into an I.R.A., and $30,000 annually into a different kind of plan he may have used. Given these annual contribution ceilings, how can his I.R.A. possibly contain up to $102 million, as his financial disclosures now suggest?

linkamabopper
 
2012-10-01 12:17:00 PM

Krieghund: This is from the Forbes article linked to in TFA:

Here are the guideposts:

At age 35, you should have saved an amount equal to your annual salary.
At age 45, you should have saved three times your annual salary.
At 55, you should have five times your salary.
When you retire at age 67, you should have eight times your annual pay.

That's actually a lot more informative, and happily, I'm on track.


So, if I quit my job and work for minimum wage at McDonalds when I'm 55, I'll be way ahead?

I only joke about it to dull the pain of being way behind. :-(
 
2012-10-01 12:23:44 PM

Ambivalence: itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?

This demonstrates everything that is wrong with rhetorical economists (especially Randians). less than 10% of the population makes "$100,000 after taxes". And far far more than half do not make enough that they can afford to sock away half for retirement.

It grossly oversimplifies a process that has no basis in reality. It's all pie in the sky bullshiat that doesn't help anyone.


I felt the same with all the models presented in finance class. "If owner of XYZ Cogs keeps $16k in cash a year but the owner of OCD Cogs deposits only $5k in a savings account yielding 7% annually..."

WTF, who the hell gets 7% annually?
 
2012-10-01 12:30:48 PM

Private_Citizen: sid244: Private_Citizen: xl5150: shower_in_my_socks: The "1 in 3" Americans relying on the lottery as their best bet at retirement stat never ceases to amaze me, even though your odds of winning a big lottery jackpot are statistically ZERO.

No, the odds are 50/50. You either win or you don't.

No, the outcomes are "either you win or you don't." The probability of those outcomes is anything but 50/50. For example, the odds on Power Ball are:
You win: 0.0000006%
You lose: 99.9999994%

/but hey, you can't win if you don't play.

I only play when the jackpot is over $100 million,otherwise why play.

You've hit on one of the most important and least understood parts of gambling: Return.

When a casino advertises 96% return on slots, what they mean is: if you win the 100-1 payout, you beat 104.2-1 odds. Your payout is just slightly less than the odds, so that over the long run, more of your cash is kept.

By that measurement, the lottery is pretty poor return until the pot reaches epic proportions. When you're beating 175 million to 1 odds, and the payout on a $100 million pot is around $67.5Mil, your return is about 38.5%.

The attraction is the payout .vs the cost to play. $67.5 million for a $2 ticket? Sounds awesome til you see the odds.

/I've always wanted to offer a dice game to the gullible. They pick their favorite number 1-6, then try to roll that number on three 6 sided dice. If they succeed, I pay them $100. Cost to play is only a buck.


I forgot to mention that on the night of a drawing, I find a thunderstorm, go to a golf course close to said thunderstorm, and hold an umbrella in one hand and the lottery ticket in the other to see which happens first.

Plus, I only consider winning, if I won the jackpot. Winning $3 on a $6 isn't exactly "winning". 

/Scratch offs FTW
//And remember the money goes towards education....right?
 
2012-10-01 12:33:25 PM
I wanted to bring up DRIPs.

I think a lot of people have never heard of them, and it's a GREAT way for people that have limited resources to start investing.

MANY blue chip companies have DRIP programs- they allow you to buy shares of stock DIRECTLY from the company, hence no brokerage fees or transaction fees.

I am talking seriously profitable businesses here- Intel, Dell, Proctor & Gamble, Home Depot, Pfizer, Merck, Halliburton (LOL), Exxon, Nike, Tyson, Staples... The list goes on and on.

Your BFF stockbroker will NEVER tell you about this program. It essentially makes him overpriced and obsolete.

How it works- Some of the companies require an initial investment of $500-$1000, but you can start investing in some companies at only $50. Instead of mailing you a dividend check every quarter, they re invest your money into buying new shares.

It's a really good way to start investing without having much disposable income; Almost everyone can spare a $50 here and there.

dripcentral.com has some good info on it.
 
2012-10-01 12:47:28 PM

noneyourbase: noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25per year interest rate just isn't cutting it, frankly. What should I read? How do I start?

FTFM


Borrow this from the library (you'll save money right there):

Personal Finance for Dummies

This helped me a lot. It will give you the basics on a lot of financial topics. I know you should eliminate credit card debt and build up a 3-6 month emergency fund before investing in anything. You can also go to bankrate.com and find out if there's an online savings account that will do better than $0.25/yr. I am currently pissed at HSBC for cutting their rate down to 0.4% and am shopping for a new high-interest savings account.

Not sure what the game plan is for people with student loans because I had paid mine off before getting the fiscal responsibility bug. But since you can't wipe that out with a bankruptcy, I bet PFfD has some advice on it.
 
2012-10-01 01:10:20 PM

winsecure: cig-mkr: 1) Pay yourself first, be it only 10% of your take home pay.
2) Invest your money in the "Dogs of the Dow" that's the blue chips that pay good dividends.
3) Take the dividends and plow them back into more stocks
4) Consider this money already spent and gone, DON'T TOUCH OR BORROW FROM!
5) The stocks will feed on themselves and grow (slowly at first) but accelerates as time goes by.
6) Stay the course !

Dogs of the Dow does not mean what you think it means


That;s the way I see this.
http://en.wikipedia.org/wiki/The_Dogs_of_the_DowLink
 
2012-10-01 01:14:25 PM
I've recovered from my immediate troubles from 2008 but my 401k took a beating that put me 10 years behind on retirement savings.
 
2012-10-01 01:25:25 PM

Soulcatcher: I wanted to bring up DRIPs.


DRIPs are pretty much an outdated (and expensive!) mechanism these days. Not to mention they're a great way to take on uncompensated risk because you're concentrated on a single stock.

Various mutual fund companies have broad-market, low-cost funds that invest in thousands of companies with low cost of entry and also allow small monthly contributions and reinvestment of dividends. Total cost is far less and you're not taking uncompensated risk that can be avoided from diversifying.

You personally might find it best to stay in your DRIPs due to unrealized capital gains, but for people just getting started they're no longer the best or even a good option.
 
2012-10-01 01:25:40 PM
About a year ago, someone here mentioned that it was a good idea to invest in Smith & Wesson. SWHC Oh, well.
 
2012-10-01 01:29:12 PM

BeSerious: Im just going to enjoy life, and die young and happy.


The world is full of things that I "should have done" and I find out NOW that I've done almost none of them. Well, I do take good care of myself. That costs almost nothing, and so it gets done. Many other things will never get done now, it is too late. So it goes.
 
2012-10-01 01:52:36 PM
My portfolio is sandwich heavy.
 
2012-10-01 02:12:36 PM

xl5150: Came to see a bunch of sniveling, whining, and excuses about why all of your financial instability is everyone else's fault but your own.

Leaving satisfied.

/I could have sworn I read an article recently about a schoolteacher who made herself a millionaire on her own
//oh yeah, that was here
///but wait, that's IMPOSSIBLE!
////exactly why people like you will always, always work for people like me


Successfully self-employed now, I thank God I don't have to work for a self-righteous asshole like you.
 
2012-10-01 02:58:26 PM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


Read this:

ecx.images-amazon.com

And/or this:

ecx.images-amazon.com

Lurk on the Bogleheads forum. There's a wiki, and a reference library/recommended reading list.

IMO, Fidelity's fine, as long as you stick to the cheapo Spartan funds.

Don't overthink it.
 
2012-10-01 02:59:05 PM
I never quite understood the people who decide to save up money for retirement, yet also have student loans, car payments, and/or mortgages. I don't buy it for a second that average Joe can do better than his lenders.

I'm broke as shiat because I know I wouldn't ever make a higher interest rate on any investment than I am already losing on my loans. It seems foolish to do anything else, so I'm paying them off first. I'm living very modestly at about the 75th percentile for national personal income, but am I "on track" to retire? Not a chance. From where I'm sitting, it looks like I'm fifty thousand dollars below worthless, and I don't even own anything. It'd be so much worse if I had a house or a family to support.

As for the article, "if you earn $100,000 after taxes" includes about 5% of individuals over 25 in this country. Is this advice even relevant?
 
2012-10-01 03:13:48 PM

Private_Citizen: My 401k is with Vanguard. Those guys are always making these wild assumptions and using savings models that encourage you to invest more with them (they call it saving). Vanguard shaves quite a lucrative cut off all your investments (around 2.5% per fund), so the more you invest, the more they make. If you lose, they win. If you win, they win bigger. So when it comes time to gamble, they gamble big.

With your money.

/Don't worry muppet, they have your best interests at heart.


I also invest with Vanguard. The reason I do so is that they are the least rapacious of the various investment houses.

What Vanguard funds are you buying that have a 2.5% expense ratio? Are you misplacing a couple decimal points? Because I think the most expensive fund they have is Vanguard Emerging Markets Select Stock Fund (VMMSX) with an expense ratio of 0.89%.

Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) has an expense ratio of 0.18%. The Admiral shares (which require a $10k investment) have an ER of 0.06%.

It could be that the 2.5% haircut is being taken by the plan administrator, which is not necessarily Vanguard.
 
2012-10-01 03:41:32 PM

Ambivalence: itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?

This demonstrates everything that is wrong with rhetorical economists (especially Randians). less than 10% of the population makes "$100,000 after taxes". And far far more than half do not make enough that they can afford to sock away half for retirement.

It grossly oversimplifies a process that has no basis in reality. It's all pie in the sky bullshiat that doesn't help anyone.


The gross oversimplification is start early.
 
2012-10-01 03:42:14 PM

bacongood: My portfolio is sandwich heavy.


maybe u should buy ARBA or CMRC
 
2012-10-01 03:46:25 PM

PallMall: That $50/yr retirement means crap to a 15 year old in 2062, when you spend every dime of it for a can of Chef Boyardee Ravioli and some creek water.


They typically talk about terms in 'today's dollars'.
 
2012-10-01 04:05:15 PM

Parthenogenetic: Private_Citizen: My 401k is with Vanguard. Those guys are always making these wild assumptions and using savings models that encourage you to invest more with them (they call it saving). Vanguard shaves quite a lucrative cut off all your investments (around 2.5% per fund), so the more you invest, the more they make. If you lose, they win. If you win, they win bigger. So when it comes time to gamble, they gamble big.

With your money.

/Don't worry muppet, they have your best interests at heart.

I also invest with Vanguard. The reason I do so is that they are the least rapacious of the various investment houses.

What Vanguard funds are you buying that have a 2.5% expense ratio? Are you misplacing a couple decimal points? Because I think the most expensive fund they have is Vanguard Emerging Markets Select Stock Fund (VMMSX) with an expense ratio of 0.89%.

Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) has an expense ratio of 0.18%. The Admiral shares (which require a $10k investment) have an ER of 0.06%.

It could be that the 2.5% haircut is being taken by the plan administrator, which is not necessarily Vanguard.


But when all has been said and done, is your van really any safer?
 
2012-10-01 04:45:49 PM

stappawho: PallMall: That $50/yr retirement means crap to a 15 year old in 2062, when you spend every dime of it for a can of Chef Boyardee Ravioli and some creek water.

They typically talk about terms in 'today's dollars'.


Then they should mention that $50k/yr retirement IN TODAY'S DOLLARS is about $10k/yr given that average wages were under $5k/yr 50 years ago.
 
2012-10-01 05:11:23 PM
Don't worry, you guys. Saving for retirement is totally easy, just follow my 7-step plan:

1) Get somebody else to pay for you to go to college so you don't have to take out any loans
2) Get a really great, high-paying job when you get out of college
3) Don't become involved in anything that results in legal proceedings, like divorce
4) Don't buy a house
5) Don't have kids
6) Don't ever lose your job
7) Don't develop any health problems that cost lots of money to treat

See? Easy.
 
2012-10-01 05:45:38 PM
Listen to Parthenogenetic, he knows what he talks about.
 
2012-10-01 06:27:49 PM

Father_Jack: i had a nice 401k till my divorce. it got lost.
then i rebuilt it, and then had to go back to court. lost it again.

3 years ago i moved to switzerland and got on board my company's fantastic pension scheme, and dribble into the US IRA a bit at a time. Saves about 2k a month. Socked away as much as the other two pt together.

here i get 80% of my salary if i get laid off for up to a year, i dont worry as much about what happens if i get laid off. this means i dont keep as much cash on hand because getting 7k unemployment a month were it to occur here in zurich vs 450 a week in California is a slight difference.

isnt it awesome how the american system has put all the burden of everything onto the workers?

You get fired? too bad. no liveable unemployment for you, you lazy socialist.
You wanna retire didnt save with discipline on your own in a crazy unstable american stock market? Too bad, you lazy socialist.


The EU goes broke from bailing out Greece, too bad you lazy socialist.
 
2012-10-01 06:30:55 PM

Khanmots: Soulcatcher: I wanted to bring up DRIPs.

DRIPs are pretty much an outdated (and expensive!) mechanism these days. Not to mention they're a great way to take on uncompensated risk because you're concentrated on a single stock.

Various mutual fund companies have broad-market, low-cost funds that invest in thousands of companies with low cost of entry and also allow small monthly contributions and reinvestment of dividends. Total cost is far less and you're not taking uncompensated risk that can be avoided from diversifying.

You personally might find it best to stay in your DRIPs due to unrealized capital gains, but for people just getting started they're no longer the best or even a good option.


The total cost is far less than ZERO?

What color is the sky on your planet?
 
2012-10-01 06:42:54 PM

Parthenogenetic: Private_Citizen: My 401k is with Vanguard. Those guys are always making these wild assumptions and using savings models that encourage you to invest more with them (they call it saving). Vanguard shaves quite a lucrative cut off all your investments (around 2.5% per fund), so the more you invest, the more they make. If you lose, they win. If you win, they win bigger. So when it comes time to gamble, they gamble big.

With your money.

/Don't worry muppet, they have your best interests at heart.

I also invest with Vanguard. The reason I do so is that they are the least rapacious of the various investment houses.

What Vanguard funds are you buying that have a 2.5% expense ratio? Are you misplacing a couple decimal points? Because I think the most expensive fund they have is Vanguard Emerging Markets Select Stock Fund (VMMSX) with an expense ratio of 0.89%.

Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) has an expense ratio of 0.18%. The Admiral shares (which require a $10k investment) have an ER of 0.06%.

It could be that the 2.5% haircut is being taken by the plan administrator, which is not necessarily Vanguard.


Vanguard handles my 401K too, and I pay only extremely nominal fees. Besides the 2008 reaming we all got, they have done a pretty decent job for me.

Of course I expect to work until the day my heart seizes up and I drop dead, but I'm more saving for my kids, so at least they'll have a chance to have a bit of money to bank or invest in other ways.

When my Dad died all he left me were some Benchley, Thurber, and Perlman books.

Greatest Dad ever, but not too swift in the financial planning area.
 
2012-10-01 07:18:57 PM

Soulcatcher: Khanmots: Soulcatcher: I wanted to bring up DRIPs.

DRIPs are pretty much an outdated (and expensive!) mechanism these days. Not to mention they're a great way to take on uncompensated risk because you're concentrated on a single stock.

Various mutual fund companies have broad-market, low-cost funds that invest in thousands of companies with low cost of entry and also allow small monthly contributions and reinvestment of dividends. Total cost is far less and you're not taking uncompensated risk that can be avoided from diversifying.

You personally might find it best to stay in your DRIPs due to unrealized capital gains, but for people just getting started they're no longer the best or even a good option.

The total cost is far less than ZERO?

What color is the sky on your planet?


Many DRIPs have yearly fees associated with them. A $30 yearly fee makes a big difference for someone with a small portfolio. There may well be zero-fee DRIPs out there, but I'm guessing there's games played in the bid-ask spread when they price the shares you buy. In any case however, the *big* problem with them is the lack of diversification. Research shows that historically a minimum of 30 different stocks have been needed to be decently diversified with recent research showing that correlations have been rising and you likely need a new minimum of twice that. Managing 60 different DRIPs is going to be a PITA.
 
2012-10-01 07:21:27 PM
"If a wagon train averages 10 miles a day for the first half of the Oregon Trail, how fast does it have to travel the second half to average 20 miles a day for the entire journey?"

The knee-jerk response is, naturally, 30 miles a day. But, as you might imagine, that wouldn't be worth writing about and isn't even close to correct. The blog continues:

"If the trail is 2,000 miles long, to average 20 miles a day you would have to travel the entire trail in 100 days. But if you averaged 10 miles a day traveling the first 1,000 miles, you would have already used up 100 days. You would then have to travel the second thousand miles instantly to overcome your slow start."


The problem with this example is that it is totally irrelevant to the problem of how to save money. If you try to apply the same reasoning it just doesn't fit. For one, you can't travel instantatenously from one place to another, but you can instantaneously make up for lost time in your investment plan. The other thing is that you are not saving dollars per hour, you are saving dollars. If you try to apply the same setup to a financial problem, you get something like

'if you want to save $2000, and if you average 10 dollars a day up to the first 1000$, how fast would you have to save after that to save at $20/day?'

nobody would even ask that question.
 
2012-10-01 07:43:46 PM

JackalRabbit: gravebayne2: ive saved nothing. figure i'll be dead or in jail by retirement.

please, can you help me? i need investment advice.


Yes, I'm glad you asked. First, you need to choose your long term goal. Remember, this can be different for different people! Not everyone wants to go to jail, and conversely, a lot of the people who go to jail don't want to end up in an early grave! You need to choose what you value, and then make lifestyle choices accordingly.

For example, don't want to end up in jail? Consider alcohol dependency, rather than becoming addicted to substances that are illegal or harder to acquire. Better yet, become an overeater, or stop exercising altogether. Choose to avoid health insurance and costly routine checkups and go to the doctor only for acute emergencies that you want to resolve; put the money you save towards the habits that feed your long, slow, legal decline.

These methods of developing solitary, low level mental illness will frequently be accompanied by physical health problems that can kill you; they also are all legal, and help you reach your long term goal of dying before your old age, rather than ending up in jail. For more on this, as well as a list of tips for your chosen long term options, subscribe to my retirement investment newsletter, "Jail or Dead: It's Up To You"

/Retirement planners hate this man; learn how you can plan your old age needs in 10 days
 
2012-10-01 07:53:24 PM

Khanmots: Soulcatcher: I wanted to bring up DRIPs.

DRIPs are pretty much an outdated (and expensive!) mechanism these days. Not to mention they're a great way to take on uncompensated risk because you're concentrated on a single stock.

Various mutual fund companies have broad-market, low-cost funds that invest in thousands of companies with low cost of entry and also allow small monthly contributions and reinvestment of dividends. Total cost is far less and you're not taking uncompensated risk that can be avoided from diversifying.

You personally might find it best to stay in your DRIPs due to unrealized capital gains, but for people just getting started they're no longer the best or even a good option.


I mentioned DRIPs in the context of, not only, novice investors, but also people that don't have much money to spare but want to actually start investing a little at a time as they can afford it.

So...

You are suggesting that these people will be better off signing up with a brokerage house with all their fees and hidden costs, as opposed to just buying shares of stock directly from the company for free?

There are thousands of companies that have DRIP programs. Where did I once say put ALL of your money into one stock?

My point is, with traditional "savings" accounts that yield pretty much NOTHING anymore- how can you go wrong in investing in Campbell's Soup or Procter & Gamble with NO fees? These companies are a very safe bet. They will be dancing on your grave and making money for me forever

This isn't a get rich quick scheme. It's just a way to break into the stock market with a few $$s.
 
2012-10-01 07:57:20 PM

BlackDebbie: I don't understand how people claim they "can't" save money if they make 30k plus. I will grant leeway for those who are genuinely hovering around the poverty line because that's a tough situation.

I am really curious as to how everyone manages to not have any money what so ever to put into a savings/retirement account? I have a mid 40s/year job with 80k in student loans, live by myself and own things that I would consider luxuries (tablet pc, gaming pc, ps3, internet service, etc.) as well as a 401k that is currently at about 90% of my yearly salary at the age of 31 (modest mid 40k range).

I also am capable of putting away 100 bucks a month into a rainy day/bill payoff type fund that also serves as overdraft for my checking account which I am currently using due to bills incurred from being hospitalized for 2 weeks in August.

I've still got a lot of student debt and am far from comfortable but I really don't understand how people are in such a terrible place financially that they have absolutely zero money to put away for themselves. I really would just like to hear people's stories as most people I know who claim "no money" also are wearing a new pair of shoes every time I see them or spend 300 bucks a month on eating out or buy every new blu ray released or whatever their pleasure is. Just curious I guess.


They have investments that have gone wrong or chronic, expensive health problems, I would guess. Possibly children, but I don't have any so I don't know. But they could also be mostly sane and just bad with money, I guess.
 
2012-10-01 08:15:36 PM

Khanmots: Soulcatcher: Khanmots: Soulcatcher: I wanted to bring up DRIPs.

DRIPs are pretty much an outdated (and expensive!) mechanism these days. Not to mention they're a great way to take on uncompensated risk because you're concentrated on a single stock.

Various mutual fund companies have broad-market, low-cost funds that invest in thousands of companies with low cost of entry and also allow small monthly contributions and reinvestment of dividends. Total cost is far less and you're not taking uncompensated risk that can be avoided from diversifying.

You personally might find it best to stay in your DRIPs due to unrealized capital gains, but for people just getting started they're no longer the best or even a good option.

The total cost is far less than ZERO?

What color is the sky on your planet?

Many DRIPs have yearly fees associated with them. A $30 yearly fee makes a big difference for someone with a small portfolio. There may well be zero-fee DRIPs out there, but I'm guessing there's games played in the bid-ask spread when they price the shares you buy. In any case however, the *big* problem with them is the lack of diversification. Research shows that historically a minimum of 30 different stocks have been needed to be decently diversified with recent research showing that correlations have been rising and you likely need a new minimum of twice that. Managing 60 different DRIPs is going to be a PITA.


None of the DRIPs that I have has any kind of annual fee.

Go fish.
 
2012-10-01 08:21:41 PM

Soulcatcher: Khanmots: Soulcatcher: Khanmots: Soulcatcher: I wanted to bring up DRIPs.

DRIPs are pretty much an outdated (and expensive!) mechanism these days. Not to mention they're a great way to take on uncompensated risk because you're concentrated on a single stock.

Various mutual fund companies have broad-market, low-cost funds that invest in thousands of companies with low cost of entry and also allow small monthly contributions and reinvestment of dividends. Total cost is far less and you're not taking uncompensated risk that can be avoided from diversifying.

You personally might find it best to stay in your DRIPs due to unrealized capital gains, but for people just getting started they're no longer the best or even a good option.

The total cost is far less than ZERO?

What color is the sky on your planet?

Many DRIPs have yearly fees associated with them. A $30 yearly fee makes a big difference for someone with a small portfolio. There may well be zero-fee DRIPs out there, but I'm guessing there's games played in the bid-ask spread when they price the shares you buy. In any case however, the *big* problem with them is the lack of diversification. Research shows that historically a minimum of 30 different stocks have been needed to be decently diversified with recent research showing that correlations have been rising and you likely need a new minimum of twice that. Managing 60 different DRIPs is going to be a PITA.

None of the DRIPs that I have has any kind of annual fee.

Go fish.


Yes, I am confused by what kind of DRIPs some people have. I have an E*Trade account, and for stocks that are eligible for a DRIP, there's a button that says, "Enroll in DRIP." You click on it, and 5 minutes later you get a message saying, "You have been enrolled in DRIP." The end.
 
2012-10-01 08:22:31 PM
Dividends are nice not only for reinvesting, but also as a good source of cash flow. I pretty much live off dividends, at least for my day-to-day expenses. They're taxed lower than capital gains as well, so it's a nice way to keep cash flowing in.
 
2012-10-01 08:22:46 PM
LOL

/grammar fail.

Good night good people of Fark!
 
2012-10-01 08:39:36 PM

doglover: Well, it helps people making over $100,000 after taxes. I mean, if I had 100k after taxes, I'd be able to put half of it in the bank, burn half the remainder on entertainment, and STILL be able to float my current lifestyle with more than a quarter left over to buy diamonds and shiat


ya know how I can tell you are American educated ?
 
2012-10-01 08:44:29 PM

noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?


Use ETFs, they have lower fees than mutual funds. Vti is a good, brainless one, and then find some that focus on emerging/foreign markets, bonds, small cap companies etc based on your risk tolerance/age/etc.
Vanguard has very low fees on its ETFs, and I think Schwab reduced its fees on ETFs recently.
 
2012-10-01 08:45:34 PM

Soulcatcher: I mentioned DRIPs in the context of, not only, novice investors, but also people that don't have much money to spare but want to actually start investing a little at a time as they can afford it.

So...

You are suggesting that these people will be better off signing up with a brokerage house with all their fees and hidden costs, as opposed to just buying shares of stock directly from the company for free?

There are thousands of companies that have DRIP programs. Where did I once say put ALL of your money into one stock?


No, I'm suggesting that they setup an account at a mutual fund company and buy shares of that companies total market or combination total stock / total bond fund that has the equity/bond ratio they want. Then their first $1000 is very widely diversified, they're not paying any transaction costs or yearly fees. They also aren't either horribly undiversified and subject to the risk of the one (or two) companies utterly tanking, or managing 100 different DRIP accounts each with some silly amount like $10 per account and adding $0.50 to each one each month.


My point is, with traditional "savings" accounts that yield pretty much NOTHING anymore- how can you go wrong in investing in Campbell's Soup or Procter & Gamble with NO fees? These companies are a very safe bet. They will be dancing on your grave and making money for me forever

How'd that work out for the people that owned shares of GM?

Equities have risk. Big blue chips may have slightly less, but they are in no way risk-free. This is why you diversify.
 
2012-10-01 08:52:40 PM

Envee: noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

Use ETFs, they have lower fees than mutual funds. Vti is a good, brainless one, and then find some that focus on emerging/foreign markets, bonds, small cap companies etc based on your risk tolerance/age/etc.
Vanguard has very low fees on its ETFs, and I think Schwab reduced its fees on ETFs recently.


Careful. I have VTI and it is frustrating. I feel like it loses more on bad days and gains less on good days compared to VTSMX.

But I've only owned it for a couple months.
 
2012-10-01 10:14:56 PM

FishyFred: Envee: noneyourbase: OK, wise Farkers -

I'm a grad student. I'd like to open a mutual fund, because the $0.25 interest rate just isn't cutting it, frankly. What should I read? How do I start?

Use ETFs, they have lower fees than mutual funds. Vti is a good, brainless one, and then find some that focus on emerging/foreign markets, bonds, small cap companies etc based on your risk tolerance/age/etc.
Vanguard has very low fees on its ETFs, and I think Schwab reduced its fees on ETFs recently.

Careful. I have VTI and it is frustrating. I feel like it loses more on bad days and gains less on good days compared to VTSMX.

But I've only owned it for a couple months.


John Bogle, the founder of Vanguard shares your skepticism regarding ETFs. The market price of a mutual fund is calculated once a day, based upon the Net Asset Value of its holdings at the end of the trading day. (That's not to say traders can't game the system - Putnam, among many others, got nailed for this.)

ETFs trade throughout the day, and the market price of the ETF can vary considerably, sometimes trading at a significant premium or discount to the NAV. If you're a trader, this is a great feature. If you're a buy and hold investor, not so much.

The expense ratio of an ETF is often lower than a comparable index fund. This is offset by the brokerage fees you pay to buy or sell ETF shares. If you're a long term buy and hold investor, it may be less costly to own an ETF. You *might* pay less in capital gains distributions than you would with a comparable mutual fund. You can set a stop-loss limit on ETF shares. And you can short ETF shares.

Pay attention to how the ETF is constructed. Just because it's an ETF doesn't mean it's necessarily tax efficient, or makes sense to own as an investment (just like an index fund - I've seen index funds based upon the S&P 500 that have an expense ratio of 1.5%. This is a total ripoff, as Vanguard has broad market index funds with expense ratios of one tenth that rate).

Vanguard ETFs are kind of weird, because they are actually different share classes of their equivalent mutual funds. If you can't afford the minimums for Admiral shares of a Vanguard mutual fund (which have lower expense ratios than the Investor class shares), the ETF shares of that fund will usually be pretty close to the Admiral share expense ratios, not counting the brokerage fees.

If you're interested in learning more about ETFs, try reading this:

ecx.images-amazon.com
 
2012-10-01 10:17:59 PM

crazyeddie: The Envoy: glmorrs1: I'd be willing to bet his 'personal assistant' is his mommy bringing him cookies and milk.

Here is xl5150 and his assistant hard at work in his office:
[v027o.popscreen.com image 626x480]

Yep. He's a joke. I work with real employers. "Job Creators," if you will. Not a single one would talk about employees that way, because they know that employees are the lifeblood of an organization.

This guy is more than likely the youngest son of a wealthy family (possibly asian family, xl5150? I'm sensing some daddy/filial piety issues), born and raised in an affluent neighborhood in Southern California, who now owns a cart in the mall selling iphone accessories. His parents are ashamed of him-- GUARANTEED. 

The bad news is that he'll never have to worry about money. The good news is that he'll always be a failure in every other respect.


I'm not sure if I'm allowed to post these type of links here, so google his login.

/Slightly interesting...
 
2012-10-01 10:39:03 PM

Khanmots: Soulcatcher: My point is, with traditional "savings" accounts that yield pretty much NOTHING anymore- how can you go wrong in investing in Campbell's Soup or Procter & Gamble with NO fees? These companies are a very safe bet. They will be dancing on your grave and making money for me forever

How'd that work out for the people that owned shares of GM?

Equities have risk. Big blue chips may have slightly less, but they are in no way risk-free. This is why you diversify.


Yep. The same could be said for Eastman Kodak, which used to be a Dow Jones Industrial Average component and is now moribund. Or Woolworth.

Take a look at historical DJIA components.

Let's say you start investing in your 20's or 30's, and work until you're 65. That leaves you an investment horizon of about 30-40 years or so.

Look at the Dow components of about 40 years ago. Most of them are still around, but some of them are kaput, and some of them have suffered a decline in their fortunes.

Now bear in mind that these are among the largest, most successful companies of their day. They wouldn't be Dow components, otherwise. Companies' fortunes rise and fall all the time, even the biggest, safest ones.

Diversify, diversify, diversify. Don't put all your eggs in one basket, even a big, safe one.

How much diversification is enough? Good question.

The 15-Stock Diversification Myth

Diversification with Individual Stocks

Diversification in Portfolios of Individual Stocks: 100 Stocks Are Not Enough

But Warren Buffett doesn't diversify, and he's done great! That'd work for you too, if you had Warren Buffett's stock picking prowess. Warren Buffett says dinks like you and me are better off in low-cost index funds.

If you are a Master Of The Universe working for Goldman Sachs or Bain Capital, then yes you should strive to reap the rewards of your alpha. The rest of us maximize our chances of success with low-cost, diversified investments - which means index funds.
 
2012-10-01 10:57:38 PM
I like these rules. They're pretty useful.

Unfortunately, real life isn't so neat.

Divorce, job loss, or illness/injury can make a mess out of even the best plan.
 
2012-10-02 07:32:48 AM

Private_Citizen: By that measurement, the lottery is pretty poor return until the pot reaches epic proportions. When you're beating 175 million to 1 odds, and the payout on a $100 million pot is around $67.5Mil, your return is about 38.5%.

The attraction is the payout .vs the cost to play. $67.5 million for a $2 ticket? Sounds awesome til you see the odds.


Long odds or not but people do win and as one of my math professors years ago stated when he figured out how to win at the lottery: You only need 1 ticket and you can't win if you don't play. One of the popular lottos here is 14 million to 1 odds. My father, who bought the occasional ticket when the jackpots got high, got 5 out of 6 numbers once. He was a 1 in 44 chance away from $10 million tax free. If anything it was worth so you have another tale to tell at the bar about the one that got away.
 
2012-10-02 12:21:36 PM

itsdan: "Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000 after taxes, you must limit your lifestyle to $50,000 and save the remainder. This strategy will allow you to retire at age 65 with a lifestyle of $50,000."

And if you make $50,000 or less to begin with, as most people do?


Then you ratchet down your expenses and save $25,000.

No IPad4 for you, my long eared fellow.....
 
2012-10-02 12:25:51 PM

Generation_D: These charts got completely destroyed in the 2008 meltdown. I know people who lost over 100K off their 401(k) in 3 months. Not to mention equity off property bought years before.

In short, steady state investment sounds nice til we let the criminals run the investment firms.


the response to that is to not let some other douchebag invest your money. Choose your own investments. It's a bit hard to find someone routing you into an investment that only benefits the firm that way.
 
2012-10-02 12:30:48 PM

Ambivalence: This demonstrates everything that is wrong with rhetorical economists (especially Randians). less than 10% of the population makes "$100,000 after taxes". And far far more than half do not make enough that they can afford to sock away half for retirement.


Its quite easy to save half. You simply don't spend half your money.
Maybe it means you dont go out and buy the new iPad4, etc, or move to a smaller place.
It depends on what you want more, living comfortably **now**, or when you are a dottering old fark.
 
2012-10-02 12:51:05 PM
Live with mom and dad or rent a room. Take all your after tax income until you are 30 and invest it .
Then, never save another dime.

You can then buy what you want for the rest of your life, while all your money compounds itself and you can retire with a wad of cash.

Sure, it sucks. but at 30 you are still on the market and not old and busted yet.
and you will be much more attractive to all the ladies than the dudes that took two cruises a year and partied hard.
 
2012-10-02 12:54:52 PM

ExperianScaresCthulhu: unlikely: TFA: Saving 100% of your lifestyle sounds impossible, but it is not. If you earn $100,000

and we're done here.

^^^^^^^^^^^^^^^^^^^^^^^^


You realize, of course, that you missed the point.

Don't get all bitter at the number the author used. It doesn't matter if he used 10,000 or 500,000. The point is to save half of your money. Its not like you are paying any federal taxes anyway. So set aside some money, as if you were contributing, and save that money up.
 
2012-10-02 01:13:15 PM

blipponaut: Yah, let's not enjoy life and save money instead! Fark living with roommates, I need my space. I may not be saving OODLES of money, but at least I enjoy myself. As far as retiring early, why? As a teacher I get every summer off and by the time it's over I'm happy to go back to work. Work centers you more than anything else, especially if you actually enjoy doing it. Yes, for the most part I enjoy work. It sucks sometimes, but everything sucks sometimes.


Grasshopper? Why you no save?
www.google.com
 
2012-10-02 01:32:34 PM

Smelly Pirate Hooker: Don't worry, you guys. Saving for retirement is totally easy, just follow my 7-step plan:

1) Get somebody else to pay for you to go to college so you don't have to take out any loans
2) Get a really great, high-paying job when you get out of college
3) Don't become involved in anything that results in legal proceedings, like divorce
4) Don't buy a house
5) Don't have kids
6) Don't ever lose your job
7) Don't develop any health problems that cost lots of money to treat

See? Easy.


1.Study and hit the books, get a scholarship because of your diligence.
1a. Get a degree that is marketable, not something like art or history. There is nothing wrong with those fields, but don't expect to make big money. This results in.....
2. Get well paying job. Save up money until you are 30.
3. If you get married, don't be a douche and you are less likely to be divorced. Even if you do, your evil spouse can not touch your money from number 2.
4. Buy a house if you want. But I'd wait for the kids.
5. Kids, they are ok, Easier to pay for since you waiting to sprout your fruit.
6. Losing your job only is hard if you did not do 1a. If you company randomly goes out of business and you have a marketable skill, it is no problem to find another job.
7. Bad Poo happens. Not much one can do about it. Since you saved up (#2), your house is paid off and your kids have enough to go to college. No worries.

Or..... cry about how something unexpected isn't your fault and someone else needs to help you out.
 
2012-10-02 01:40:56 PM

The Southern Dandy: Save 43.2% of my annual income. Riiiiiiiiiight!

Is this a joke, or a troll or something?


They are saying if you dont frkking save and you are that old, then you will need to save that percentage until you retire. So better to start when you are young. As you can see, going on two cruises a year until you are 40
will make for a very uncomfortable second half of life.
 
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