Great advice. Currently that's the best advice I can echo a thousand times this !!!

Don't try to guess where the market is going but rather take whatever the market gives you. I also say don't forget foreign stocks (that's half the stock market).

I'm like 50:25:25 US stocks :International stocks :Bonds

Every dog has it's day. Some day emerging market will be top, some day bonds will be top, some days international will be top some day (currently US is top). No one is king forever. You don't want to get into international after its run up so you have to always be in so you capture the run up.

You don't ever need bonds until you do. I mean in 2008 you'd wish you had bonds. So don't wait until you wish you had them, just have them.

IMO simplicity is the easiest and best way.

Timing the market is hard/impossible.

Even the experts are wrong *lots of times* Buffett lost major bank jsut like me when the last correction came down, but just like me don't panic and sell when it's doom and gloom, if you have money (bonds) you can rebalance after a correction / recession and IMO that last recession was a once or twice in a lifetime *buying opportunity* too many far too many people did just the wrong thing and sold out in the teeth of the recession.

Just get a simple asset allocation and stick wiht it.

Bonds are controversial at this time (but to me they are like a necessary evil) look at this book $6 on Amazon: why bother with bonds?

https://www.amazon.com/Why-Bother-Bonds-All-Weather-Independence/dp/0985800402

Stocks are for making money, bonds are for keeping money. Almost like in war you need armored calvery and airforce to take ground but you need infantry to hold ground. Stocks are the big movers like tanks and fighter jets, bonds are the steady eddy like ground troops.

The bond market is actually larger than the stock market so (likely) it's viewed as necessary by a lot of people.

Benjamin Graham the father of modern investing theory and greatly influential on Warren Buffett said ideally you should have between 25 and 75% of assets in stocks meaning have no less than 25% in bonds (or cash).

Bonds are in a tough place, not paying much more than Stocks do on dividends but they behave differently than stocks and you shouldn't have all your eggs in one basket you should have something that zigs when the stock market zags.

If the interest rate goes up bond values go down but yield goes up so its a net equal. bonds are not going to make you mega bags of money like Amazon has for some, but it will help you sleep when the stock market goes to hell.

If you are super young like 30-40's may not need bonds but as you accumulate wealth and get old like me 50s + a few things happen, less years ahead to work and make up for big losses and you actually have *real money* when I was young 6-figures was a lot but in reality it's not. I could have lots 60% of a 6-figure nest egg and made up for it in short time. If you are lucky you have 7-figures saved you really don't want to loose 60% (believe me you don't) and you may not have enough working years ahead to recoup such a huge loss.

Here are two pictures I like to illustrate stocks and bonds:

image (resized).jpgimage (resized).jpg

I disagree for myself. I believe I do better than an advisor who takes money out for his advice and may have ulterior motives to recommend some thing that pay better but probably are no better than low cost index funds.

I believe advisers are looking out for themselves (first) and when you said life insurance, that's a big money maker for these guys. Believe me, there is a reason these guys where fancy suits and drive nice cars it's not because they are looking for low cost investments. Funny book title on investment "Where are customers yachts?" About how advisors are not working for free far from it.

Read this about financial advisers-->> http://www.fool.com/investing/general/2014/02/21/where-are-the-customers-yachts.aspx

Financial advisors are to me like weathermen, they don't know anything about where the market is headed and yet they will take a cut no matter if they are right or wrong.

I blindfolded monkey with a dartboard is just as good at predicting stock market as a paid professional.

Life insurance (whole life) and annuities are huge profits for salesman/advisors. Term life is what you want.

https://momanddadmoney.com/why-whole-life-insurance-is-a-bad-investment/

As others have said there is no substitute for saving, living below your means, start early save as much as you can don't stop, don't react to short term or headline news.

Also believe me, the talking heads are wrong half of the time, everyone said Brexit was killing the stock market, they said a Trump win was killing the stock market.

Wtf they are no different than weathermen, nowhere else can a person be wrong all the time yet still keep their jobs.

Ok as for financial advisors they're nothing special. I'd dare say I can self teach myself all I need to know. I pay my own fees so it's all gravy. My current Vanguard funds total ER fees is 0.09% when the industry average is 1.2% or something. I save (don't want to say how many thousands of dollars on fees and expenses).

Lots of good books and web forums: https://www.bogleheads.org/forum/index.php is my favorite.

Too many books for me to say what's best, but 'Four Pillars of financial Wisdom' is a good book for beginners.

Term life does *not* stop around 55

Plus you don't need insurance for your whole life, if you have enough assets for your survivors to live off of, why would you buy insurance?

Life insurance IMO is useful when your survivors would need to replace your income, once retired it's practically useless IMO

Once retired, my expenses are paid from my savings nest egg + SS

In the spirit of this thread however I don't recommend this to newcomers or novice. I still recommend low cost index fund balanced asset allocation including bonds that's my advice.

But if you want to know what I do with my fun money or what I'd describe as picking up $100 bills I see on the street. This is my dirty little secret (warning don't try this unless you have brass balls), this is only for mid-high net worth individuals although you could easily try it for a small gain, small downside play. But in order to make serious money you need to have some good money behind you.

This is what's called option trading specifically selling low out of the money puts.

Selling low out of the money puts.

This works best after a sell off like we had at the beginning of the year and it revolves in the belief that stocks typically go up (see my chart in page one).

Options are sold for a specific stock, a specific price, and expire at a specific time. It's very structured to the minute and to the decimal point.

You would need a margin account (or a cash reserve) and set up an option trading platform with your brokerage account.

Let me give an example (made up example).

Options are sold or bought as block of 100 shares. So one option contract = 100 shares of a stock. So if you were to sell an option for Google $800/share you'd need to be able to buy 100 X $800 = $80K

Typically you'd only need 10% of that as margin requirement

Let's not worry about Google because that's a big number, but often I'll sell a small price stock buy sell multiple options such as 5 contracts of Apple which would be 500 shares.

Also let's say this money is in a taxable account, the gain is taxed at short term gain. The tax is owed in the year the option expires or is closed (bought back) not in the year you sell it.

They say 95% of option contracts expire worthless (don't execute) which is what you want.

But if they do execute you are forced (compelled) to buy the stocks at the given price.

Here's an example.

Let's say (made up numbers) MO is trading at $52/share and its January 20 2016

I can sell a put for 5 contracts (500 shares) of MO low out of the money (that means less than the current price) let's just say that MO $50 for March 20 2016 is priced at $1.05

That would pay me $525 (less $12 commission) so it's $513 paid directly to me.

That's a fixed 90 days that I need to wait. If MO stays above $50 the contract expires and I just keep the $513 (less taxes when tax time comes).

If MO drops any below $50 I will be assigned 500 shares at a price of $50/share or $25K outlay. But I made $500 so it's really $24,500 outlay. Or in effect I'd pay $49/share net. That's 2% gain for 90 days.

This is a play on MO which I figure I'd like to have anyway but this way I get paid to have the option that I only need to buy it if it goes on sale.

I only sell puts on stocks that I'd like to buy and I sell low out of the money puts so if they do execute I'd get them on sale.

The problem is if the stock crashes let's say MO drops to $40 I'm still on the hook buying at $50 but it's no worse than if I had bought the stock long and had it decrease in value.

Often if a stock goes up I can safely sell more puts on the same stock but at a higher price or a longer duration safe I the notion that my original option contract is not going to execute.

It may sound complex and it's not a miracle get rich quick scheme but it's quite easy for me to pick up several hundred dollar per trade.

Sigh

You're in a sense pre-paying tax. Or in other words instead of paying tax you are paying the insurance company. There's no free lunch.

Also, you can certainly give money away to kids before you die and even when you die there are generous limits on what's considered high net worth. $5.4M is tax free or 10.8M for married couple.

Additionally you can give $14K per person per year, so if you are married and you have two married children you could give tax free 14x2x4 or $112K per year tax free before you die plus more if you include other relatives.

image (resized).png

Only by accident (fat fingers) a couple times I wanted to sell an option but by accident bought the option. Gawd, then I need to do a Chinese fire drill. Sell that option back and sell another option that I really wanted in the first place.

I am not understanding buying options period. Maybe my mind is not wired correct or maybe I'm just drawn to the safest (safest!!!!!!) option contracts. Selling low out of the money puts IMO has low risk worse case I need to buy stocks on deep sale. I was forced to buy 500 CAT this year when it was $60 now it's $95.

I have sold calls such as Apple but usually don't like to because it's in my taxable account so I'd be forced to sell a gang of shares at a HUGE gain. Meaning my tax bill would make your eyes water.

If I sell a high out of the money call on stocks I own that don't execute its double bubble I get both the option contract price plus the dividend.

But I'm scared of being locked into selling at a fixed price, in case Apple invents the cure to cancer I don't want to be locked into a fixed gain.

I'm dealing with household names. CAT, AAPL, XOM, MO, PG, INTC, IBM etc...

These guys trade tightly and I'll sell at limit price start higher than bid ask and work down a penny or so until it executes.

Ok I'm thinking Joe 6-pack doesn't need estate planning or whole life. If you figure the life insurance is illiquid, high priced, may be at risk of the insurance company goes under. I'm not saying it's garbage just to me better if I take my monthly premium and invest in ETFs probably (likely) way less fees for the broker, insurance salesman and financial advisors.

I mean everyone needs to eat, these guys don't sell you insurance unless they are making money on it.

I'd say rate hike was set in stone for a while (barring something like a planet killing asteroid being discovered).

Do you ever buy options? I can't understand the concept. Maybe it's one step beyond. Like chess, while to me selling options is more like tik tax toe.

Ahh war stories or the one that got away?

Back in 2013 I had sold a put for Apple $385 this was before the 7 split. The absolute low point was going to be a bit below this so it was $38.5K would have executed. But I didn't have funds and I didn't want to take out a margin loan (I don't know why ) so I bought the contract back to close.

Would have been a cost basis of $55 now the stock is trading at $114/share.

Almost as soon as I did that bought the contract to close the stock started shooting up.

Yes, selling calls is also a low risk play I mean if you already own the stocks particularly if you want to sell them anyway. Keep the dividend and option premium and stock gain triple play. So long as it doesn't go too high where you lose out on profit.

Think I don't buy options because I'm cheap, rather get paid for nothing than pay something in the hope something happens.

That's interesting. I'm kind of cheap so all those little turds to buy back cost me another commission and I'm selling a lot of options for low gains like $300-600 a trade so I don't want to pay thousands back in the remainders of the option plus the commissions.

I can see that. There's a saying picking up pennies in front of a steamroller.

Think I'll either quit while I'm ahead or cut way back on what I've been doing.

It's easy to think this is a harmless vocation until bad things happen, however I'd wonder what the worst thing that has happend in my lifetime aka the Great Recession. If I'd have been stuck with dirt cheap stocks Citi for $3/share etc,, would this have been so bad?

Are you an insurance salesman?

I probably will scale back and just dabble in a few stocks that I don't mind owning outright.

In order to make real money I'd need to sell boatloads of options.

Works out good this year, but uncertain when my luck will run out.

Just because you don't collect insurance money doesn't mean it's not necessary. I have no idea if I'll be one of the less than 3% who collect.

You neglect the cost difference, term insurance is a few dollars a day whole life is more than a few dollars a day.

Invest the difference between term and whole life police in stocks and bonds over your life compound and reinvest dividends you'll be way ahead than whole life where the insurance company takes a cut. In essence you are paying a small insurance rate and the rest is investments where the house and the dealer both taking a cut.

This is beyond a doubt.

Not even a debate Term = for the win !!!

more like $4-500 a pop. But 5-10 trades per month.

I'm not quitting my day job this is more like walking around money.

to give you a true idea of some of my options

Tesla is a $200 stock (give or take) but it's volatile has been as high as $269 and as low as $141 this year. Well when it was trending down I sold various puts for values between $50/share and $120/share with a return of between $.68 and $3/contract

that means if I sold 5 contracts at $3 I'd have got $1500 cash in my pocket (but I'd be on the hook for 500 x $120/share $60K in Tesla) should Tesla drop below $120.

In the example of $50/share that was way low return but I sold 10 contracts that's $.68 x 1000 shares = $680 dollars for being on the hook for $50K in shares (but at the unlikely event that the price drops to $50) than that would be down to just 18% of it's yearly high.

So while the return was very low for being on the hook for $50K in shares, I figured the likelihood of Tesla going below $50 which was something like $100 lower than when I sold it was highly unlikely. Heck they have 400K orders for their new car. Even if they don't make a ton on each car they will be highly unlikely to go that low in a matter of a few months. That would be like saying Avengers pin will be worth $1000 on January 20 of next year. It could happen but how likely will it be?

These contracts will expire in 33 days but I wrote them months ago so I have been carrying these contracts for months. The longer out you write them the more money you get. So if you could write three 60 day contracts at $1/each you might get $3 for a 180 day contract.

I've sold AAPL contracts for $60 or $70/share for in the neighborhood of $1 for maybe 100 - 120 day contract. The likelihood of AAPL getting cut down to $60/share is to me very unlikely. I also have sold contracts for AAPL $110 which is far more likely for greater return (but shorter time frame) but I am not scared of buying AAPL at $110

you may be correct, they don't make any money (but then nether did Amazon for a long while) but yet their brand name is worth a lot.

I am not disagreeing with your assessment of their books, I am saying the likelihood of a stock like Tesla (this is not Enron, this is a real company that makes outstanding products that sell for BIG TICKET price), the likelihood of them going from $200 down to $50 in the next 3-6 months is very low.

I know personally 6-8 people who own a Tesla S or X and myself and another friend would possibly buy a Model 3 in a year or two, they are not going out of business.

I am not saying that I like how they raise capital by selling more shares or taking debt. But I assure you if they are sold it will be for good money. I am talking Apple or Google or someone could easily buy them for their cars / self driving technology. I mean could Google spend tens of Billions and make their own cars or could they just buy Tesla?

Also, self driving is not a fad, this is like the internet. 20 years from now our grand kids might hardly know how to drive because they will have a lot more self driving technology.

You are looking at them as like another car company like GM who needs to sell 20 million cars to make a good profit, but software, batteries and patents are probably where they will make bank.

MO has done great for me as I got it $17-20 range maybe 5-6 years ago and now it's $66 plus it's paying $2.4/share.

APPL has also been great for me.

I don't advise to own individual stocks but these are left over shares from when I used to trade individual stocks but they have gone up so well it's costs me much taxes to unload them.

I've had my losses for sure if you aren't losing you aren't in the market.

But going back to the big picture, stocks tend to go up. Sure there's bumps and hiccups now and then but generally up.

I hear so many people say the got out of Stocks because of this or that or even worse, after a huge loss and are playing with cash that does nothing for them.

You are correct.

Advisors can be good or bad. The fee based advisor you describe sounds perfect and the old advisor sounds like the bad kind I was thinking about.

Generally if the advisor is making money off the amount of your portfolio and also making money off the funds they advise you to buy (via kick backs 12b fees and such) that's bad. These are the guys with the fancy power point presentations, and the expensive suites and haircuts (etc..)

Vanguard is the best there is. Maybe there are other companies as good or nearly as good but generally I feel confident in saying Vanguard is looking out for their customers (they have a structure where the customers are also the owners of the company).

--
https://about.vanguard.com/what-sets-vanguard-apart/why-ownership-matters/

At Vanguard, there are no outside owners, and therefore, no conflicting loyalties. The company is owned by its funds, which in turn are owned by their shareholders—including you, if you're a Vanguard fund investor. Our unique client-owned structure allows us to return profits to our fund shareholders in the form of lower expenses. Low costs help our clients keep more of their returns, which can help them earn more money over time.

--

I see it every few months Vanguard will cut it's ER on more and more of it's funds. As they get bigger, they pass the savings on to me and you.

My ER (expense ratio) of my all Vanguard funds (average) is $8 for each $10K invested. Typically or in active managed funds that number would be like $120 for every $10K invested.

This is why I tell *everyone* just buy some index funds low cost Vanguard is great. S&P500 or Total Stock Market fund and just keep adding to it. Don't jump in and out.

There is a good case when you can sell stocks in the index fund its called Tax Loss Harvesting (TLH) which means you can sell to lock in your capital loss to offset cap gains or even offset earned income. But you don't sell and sit out of the market, you sell and IMMEDIATELY buy a substantially similar but not identical other ETF. TLH is the closest thing there is to a free lunch.

Plus (IMO) for everyone on the good side of a trade there is someone on the bad side of the trade. For example someone said DIS for $17 / share or when I bought MO for $18 / share. There were the other jokers who sold them to us. So it's not a winning game. It's like Texas Hold-em as played in a casino where someone wins and someone loses and the house gets a rake of each transaction.

Also people (both layman and professionals) are notoriously wrong in their predictions. I can't tell you how many times Buffett lost money on trades, IBM or APPL (the latest acquisitions) he bought just before steep corrections in those stocks. I'm not saying he was wrong on either of those stocks far from it but his timing was off. BUffett's team lost 15% on IBM ($2B loss on $13B). And he has an army of people with high degrees who do nothing but look at the market 24 hrs a day 7 days a week.

Jim Cramer he's wrong as often as he's right. He's like a broken clock. 2012 Jim Cramer sent out a message to urgent exit both BBY and HP and 8 months later both were up 115-120%

Plus, layman are notoriously (miserably) wrong in their 'market timing' it's like they often go out of their way to be wrong. The market has returned 6-8% historically but investors have gained like 1-2% because they're often jumping in and out.

My friend sold 20% of his stocks after Trump won so he'd have plenty of money to grab stocks on the cheap as the market was going down 10% don't you know?

I know people who jumped into cash after/ during the Great Recession. Ok smarty pants how's that working out for you as we've had one of the longest bull markets in history.

I posted this before, but I can post it again the stock market goes up. It's not a straight line (day to day) but over 200+ years it's going up. IBM has been around more than 100 years they don't stay in buisness by losing money. Coke has like 40% of the soft drink market share in the world, people drink soft drinks. People smoke cigarettes you can cry all you want how bad they are for you or how the taxes or lawsuits will make them more and more expensive but guess what people smoke and they're going to be smoking for as long as we are alive.

Companies are in buisness to make money and the surest way to make money is to grab a piece of the world / US economy.

Looks like $1 invested in US stock market 1802 would be worth $700K today. Ok they didn't have ETFs back then so it's not like you could have bought $1 of the US stock market and have it autocorrect as companies like Microsoft and IBM etc,, joined the US economy. But today that is exactly was a broad base ETF will do for you.
image (resized).jpg

Perhaps I misspoke, it's not as simple as a poker game where one side wins and one side loses because the stocks change in value along the way and pay dividends. It'd be like in a poker game you bet $50 blue chip but when you turn it in its worth $60 and btw it gave you $1 in dividends.

But on each trade there is a party on each side. One guy sold Apple when it was $12 and one guy bought it. The person who sold it didn't think it would be worth 20x more in a decade, and they could have actually have made money on Apple maybe they bought it for $11 but the point being both sides take their chances and generally in hindsight you can see who made out and who lost.

As I said way back, Bonds are another asset class. Controversial? I don't know, I don't know. I will say that while bonds are not sexy you don't brag to your friends about how you just got a $300 interest payment from your bond. But to be honest stocks and bonds go together like peanutbutter and jelly. Or like bacon and eggs. I suppose you can have one without the other but they are complementary.

I'm recommending 20-40% bonds. Myself I have 25% bonds. I don't like them, they are not fun and they can lose money. But IMO you need them like when you mom said eat your carrots. It's not fun but it's good for you.

Because Bonds are not correlated with stocks, and because we don't know when the next bad time in stocks will be. It could be today it could be in 10 years I don't know. People were buying stocks in 1987 the week before it crashed 22% in just one day. Who knew?

Here's a good chart

image (resized).png

Black Monday look it up https://en.m.wikipedia.org/wiki/Black_Monday_(1987)

45% loss in one month.
image (resized).png
image (resized).png

Yes bond prices go down BUT yield goes up.

So when you had $100k in bonds and were getting paid $2k interest, now your bonds (or I the future) may be worth $80K but you are getting $4K in interest.

Note I just made up those figures but the point is, bond prices don't go down without something else going up. It's like a squishy water balloon you squeeze one place and another gets bigger.

And with individual bonds you will get back your determined price if you hold it to maturity and with bond funds your fund may hold thousands of bonds and as they mature or are sold they'll be replaced with cheaper and/or higher yield bonds.

Suppose you had a 10 year $1k bond that paid you $50/year for 10 years. Hold it to maturity and you get $50 X 10 plus $1000. But low and behold next week bonds come out 10 year $1K and its paying you $70/year. Your old bond is still worth the same $50 X 10 plus $1000 but if you wanted to sell it, no one would give you face value because they can get a fancy new bond paying higher interest. They'll give you $900 for you bond. So they get it at a discount and while they still get $50/year that's a higher interest rate because they bought it at a discount.

It's simple but not simple for people to understand and I'm talking high quality or treasury bonds that have never defaulted they are backed by the full faith and credit of the US government and they have never defaulted that's why China and Japan and and retired folks and most of the world buys them. High quality corporate bonds are also safe but not quite as safe as US treasury bonds.

I was reading on this, the author said Bonds were like brakes on your car stocks were the engine. You don't really want a car with all engine, you need some brakes or you could crash.

I own my one home and a second vacation home (no rental) and the rest is Stocks and Bonds. No annuities, no whole life, no rental property.

However I do own a separate class of stocks REITS which are pseudo real estate, they are required to return most of their income every year. It's like being a real estate owner but not having to get calls at night because the toilet doesn't flush.

Note you don't need REITS because they are included in total stock market funds, but if you want a bit extra you can buy a percentage (tilt) but please keep it in a tax shelter because it gives a lot more dividends than typical stocks.

Forgot to mention my pinball collection that are going to be worth bank when I get old and no longer want to play. I'm long on pinball machines.

I'm a company guy, I mean if you ask me what I own just assume it's Vanguard. I own VNQ and don't really know how it does or doesn't do against its peers. Fact is that's the only REIT offered in my retirement account but if I was self directed I'd just have that as well.

What happened is Bonds have been paying poor yields for way long so people bought something that was giveing higher yield typically Reits or high dividend stocks like tobacco stocks.

This raises the PE of Reits raises the share price but lowers the dividend payout.

As bonds rise yield likely people will sell Reits and their share price will go down and yield will go up but payouts probably stay the same.

Is real estate hard to manage? Taxes, tenants, insurance, upkeep etc,, seems like a full time job. I have enough on my plate keeping two non-rental houses up and running.

I don't have time to go into detail but people thinking that bonds will crash are misunderstanding what bonds are.

Stocks crash as I showed above as much as 40% loss in a single month.

Bonds are not stocks

Books and books have been written on the subject of investing I hope you all can further your understanding beyond these few posts on Pinside

Here is one survey on bond returns

http://personal.fidelity.com/products/pdf/perspective-potential-downside-bonds.pdf

IMO it takes money to make money, you need to make (income) more than you spend this is a critical first step.

I've made a lot of money on AAPL but this was related to how much money I had at my disposal to invest at that time. I mean it was after 10 years of investing before I was able to buy a large sum of APPL.

I had been saving/investing for years and years and was at a good point when I got into APPL and have trippled at least. My point is if I had trippled $3000 that's no big deal but if I trippled a much larger stake then we're talking about real money.

But don't be disappointed if you don't have a lot to invest now, most people start out small and over time a small sum plus additional money can snowball.

It takes both initial investment but also keep adding to it that's the key.

The snowball is a good analogy, baby steps and such, Rome wasn't built in a day etc..

But as I said it takes two things first a profession or job that you can earn a decent income leading to the second part saving and investing.

Don't overlook a good job offen needing a good college degree or even graduate school.

Invest in your future because if you don't look out for yourself no one else is going to.

Always try to save invest even if it's just a small amount because it adds up, don't think about getting rich quick but rather the more likely thing is get rich slowly.

People who lose money IMO from two reasons

1) fees charged by investment advisors or brokers etc...

2) trying to beat the market or time the market or both.

People think they have a hot tip or think the market is going to crash or take off so the jump in and out.

Really most investors know very little that isn't known by everyone else and isn't baked into the market already.

Studies show the average investor is notoriously bad at timing the market almost like they pick the exact worst time to move in or out of stocks or bonds.

Every jump in and out costs money, plus you risk missing out on a big day or week run up, you want to be in before the run up but often people wait until they see signs or good news on the product pipeline but that's already too late, you missed the big bump.

Every dog has its day, one day may be technology sector while banks are in the toilet. That doesn't mean you should be only in tech and out of banks because one day the worm is going to turn and you'd wish you had bank stocks or energy or whatever.

Just realize you don't really know anything that going to happen in a day or week and no one else does either.

I recommend buying a broad base low cost ETF or mutual fund and just keep adding as you can and take whatever the market gives you.

I couldn't have said it better myself

Here is a good treatment

A) no money to invest
B) bad decision making

https://www.google.com/amp/s/asymmetryobservations.com/2016/09/14/investors-feel-and-do-the-wrong-thing-at-the-wrong-time/amp/?client=safari

I recall back in the dot com bubble before the crash, every day there were news articles and advertisements (cab driver giving investment advice), billboards you name it. Everyone was screaming and scrambling to get into the market, the higher it got the more people wanted to invest. It was bound to get over sold and crash but often the selling got carried away or good stocks got thrown out with the bad and people sold at rock bottom or capitulated at the exact time they should have held on or bought stocks.

There is always someone buying the day before the crash and always people selling at the absolute bottom of the market.

point is, you really can't time the market. You said study and time when to get out and back in, this is (IMO) a false premise. Like I said Buffett's team bought IBM and promptly lost 15% in a few weeks/months (or whatever figure it was). Don't you think old Warren (or his army of stock pickers) studied the company top to bottom. but the fact is he doesn't care because he buys companies or stocks that he wants to own. He doesn't particularly know what the stock will do next week or next month but he kind of knows what he expects to happen over a long time period.

Fact is (IMO) there is no use trying to timing the market.

Who knew black Monday was going to happen? Hindsight is 20:20. My point is and the philosophy is that the timing is impossible and if you miss out on just a few of the totally good up days it's kind of a big deal. Also did Black Monday really matter (assuming you just held on)? DOW is now almost 10x higher than it was before that epic crash not counting all the dividends over 30 years.

*Most* investors don't get market average *because* they jump in and out, they try to time the market. 'Oh Brexit let me get out' of the market, 'oh Trump won let me get out of the market'. Point is, I do great just adding to whatever I have, if the market tanks I just buy more. if the market goes up I just buy more. Overall I get the average price of the stocks (good and bad) and I get the overall market gain.

Now that's not to say I don't rather buy on a DOWN day and sell on an UP day if I want to sell. But to me the only thing that is sure fired free lunch is tax loss harvesting (TLH) and specifically for myself since I have a very large taxable account and I have the highest tax rate possible. So I really get a bang out of that, some people might find it's not really worth the effort but to me, it's golden.

IMO look at those news letters and you can put them in the bottom of the bird cage for all I care. I bet they are wrong quite a lot. So they make money selling investor rags, if they were so smart would they sell the info? No I think they'd make money trading stocks rather than selling advice.

There is a phone number to call to get locks of the week in Football (etc..) you'd think if those locks of the week were so great, why aren't all the bettors ridding around in Rolls Royces? I'll give you 1 guess, it's because those tip hotlines are a lode of bunk and they sell you tips because thats a way for them to make money, if there was a real lock (I mean a REAL LOCK) they would not advertise it because it would run the line up, and etc.. same goes for stock market tips.

Unless you have inside information (which is real illegal) you have nothing that all the big traders don't already have. Professional fund managers can't hardly beat the market (some do lots don't). Sure you'll have a Berkshire Hathaway and Fidelity Magellan type run but no way to know before it happens and those runs don't last forever.

It takes money to make money.
Prov. In order to make money, you must first have some money to invest. I've been reading a lot of books about how to become wealthy, and they all make it depressingly clear that it takes money to make money.

step 1: make more than you spend
step 2: invest that money
step 3: repeat until you have the desired amount of money to retire
step 4: easy street

thanks for the thoughtful reply, this subject is something complex not really a subject that lends itself to 300 word replies. And Imo there is more than one way to skin a cat.

I would say if you are astute and have a gift you can beat the odds. But like the story of lake Wobegon where all the kids are above average. It's just a joke. It's likely that I am average or below average. I can't really beat the market (maybe by good luck) so I just feel the best advice is to buy (S&P500 or Total Market index) and hold + add to that. In such a way you get all the winners. If there is a little company that will go like INTC or MSFT in the next 1-20 years you will own it and you will get the gain without having to pick it ahead of time.

Also, as shown the markets move up (is this a doubt?). I mean over time it's like 6-7% for stocks and maybe it won't be that good but I'm predicting that there will be an upward movement. So for example even if you had stocks before the worst crash they will (they do) recover. The great depression, the Great Recession, the dot com bubble, the black Monday crash they all were real and in the moment were a loss but over time they are replaced with gains.

Recall when DOW 1000 was a big thing? 1972
DOW 2000? 1987

the point is we are approaching 20,000 thats 10x or 20x higher

that's not even counting dividends.

Note. I hate DOW as its something they keep messing with add this drop that and it's a stock price weighted index which makes zero sense to me. I hate DOW 30 but it's something people talk about. Don't even talk to me as if that's a serious index. I am talking about Total Stock Market or even S&P500 which comprises like 100%-85% of the US stock market.

I posted the chart twice in this thread going back 200 years the US stock market has gone up 6-8% a year and maybe inflation was 2-3% (IDK) but the point is if you can ride out the ups and downs you are probably better off just buy. and forget.

the strongest determinants of success are thus

1) how much money you invest (this is the Sine qua non) thats Latin for without which nothing. This is the alpha and omega of investing.
2) time (TIME) (***Time***) Time heals all wounds, time is money, time is of the essence, Rome wasn't built in a day. I mean work + time = results.

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3-10) all other factors such as stock picking or sector rotation or chart analysis or fundamentals or TLH etc....

instead of a pinball forum, I suggest you ask on a dedicated investing forum like https://www.bogleheads.org/forum/index.php

no disrespect to the folks here on Pinside, but this is a pinball forum. It'd like my going to a food forum and asking an investing question.

I guarantee you that the people on Boglehead forum are 1000% more informed and there are real people who write books and blogs and articles on the subject of investing particularly saving for retirement.

but there is no way to predict when to get out or get back into the market. It's unknown. You can get out take your winnings and then see another 20% rise and then when are you going to get back in? It could be sever years or never before the market is below it's current level.

I mean we are talking about a market high, but you know (?) that market highs can stick.

Can you please stop making stuff up? Stocks and bonds don't move in tandem.

I'd suggest anone reading these posts take them with a huge grain of salt because there is so much false information it's nauseating.

https://www.thebalance.com/stocks-and-bonds-calendar-year-performance-1980-2013-417028

stocks and bonds are non correlated assets.

I don't see it.

Are you relying on a Wall Street Journal article, or what actually happened?
1452893104841 (resized).jpg

did you look at the link that I posted right before your post?

2008
S&P 500 -37% return
Agg Bond +5.2% return

42% difference in return, I'd hardly call that moving in tandum

the lowest return (during that survey 34 year history) for Agg bond fund was -2.9% (1994)

Stocks and Bonds are non correlated assets. If you are looking at intraday moves you are not going to see that but they no not move in tandem. This is the primary reason to own Bonds.

The year cumulative one year loss for stocks was less than the peak high to peak low loss. But most people had bought their stock positions at far lower than peak price so real term loss was not that great (not paper loss) and if you didn't sell out you didn't have a real (realized loss).

Bonds greatly diversifies an investment portfolio.

I'd also like to point out that investing should be viewed over a period of time. If you absolutely can not lose money that you need in a short time than Stocks are not for that money.

However if you are investing for retirement which might be 10-30 years in the future and retirement might last 10-30 years that's long timeframe.

Buy and hold (put money in when you are able) reinvent dividends. I have not seen any long ish time period where you lose money in the market.

I know no one who has lost money in the stock market unless he bought a particular stock or tried to jump in and out (people really have the worst timing) which is why I cringe when I read all this market timing advice on this thread.

Also this again points to TIME being a key ingredient of investing and don't look at one short period of time because that's not the whole game. It'd be like watching a football game and seeing a blocked FG just one play and then thinking you know what will happen for the rest of the game either before or after that one play.

High net worth = $1M+++++

Not counting your primary residence

That's what I'd say.

Your primary residence is an asset but not in the same way as other assets are.

About Joe Robby

How much would it have cost to have $200M+ in whole life insurance? Do you know?

They need (probably) half that up front or installments. (I'm just guessing because I don't own whole life, but a crapton goes to commission and insurance company profits, if they sell it it's because they make money).

I'm not saying you're not correct I was just responding to who is considered HNW investors and I checked they say $1M liquid assets make you HNW.

I was just guessing but when I actually looked it up there are 10M people in the US with $1M+

Sorry for my wild ass guess before.

don't be discouraged if you don't have 6-figure or 7-figure assets, just do the best you can and you don't need to get rich all at once, most people get rich slowly (over decades). Ive been saving (for reals) for 19 years. I go back and look at what I had when I was 10 or 15 years ago and it was not great. But it starts to snowball after a while.

Yes, true, I don't really understand what is involved.

I still have a problem with the concept of death tax but I don't want to get into the tax code as that would be a political discussion.

But I don't feel sorry for the Robbie family or the Jack Kent Cook family (etc.)

1) they didn't really do anything to earn the money (in theory). They just happened to be born into wealth.
2) they are still fabulously rich. I mean they inherit tens to hundreds of millions. So they can't keep their Billion dollar football team, that's hard for me to feel bad about their problems.

If you you have say $4M and wanted to live only off the dividends/interest you'd be able to take off around 2-2.5% or $200K (or so), but you would not be spending enough. You could easily spend 3-3.5% maybe as much as 4%(spending down some of the principle) as because when you get older you won't have as long to live. You won't have 30+ years to live when you are 75 years old.

Plus (as predicted you're savings will grow if you don't spend anything but dividends - if you hold a good portion of stocks). And as you go along if you find it's getting tighter you can cut back. You don't need to plan for 35+ years because you can correct the spending as you go along. And typically you will spend less as you become elderly. Your medical bills may be more but you won't buy as many cars and you won't travel as much etc.. as you become elderly.

people spend less as they get older. They don't need to pay as much to commute to work, work clothes, etc. People will have likely paid for their house by they time they are 60-70 and all the furniture big ticket items. My parents are 78-84 and they don't spend much at all. I am not saying you or I will live like my parents but we likely won't be spending as much when we are 75 as we do now.

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Anyway here is a great website for playing around with scenarios.

http://firecalc.com/

this is quite a powerful website. You can just punch in three sets of numbers (years in retirement, savings, and spending) and it will give your probability of success. But there are other pages (tabs at the top) you can explore more detailed or different spending methods and if you will get SS income etc..

Pins will be a lot cheaper in the future.

Actually at 75-85 I probably won't have the strength to move pins around.

All my put options expired (that's good) so I really caught a break. I believe I went overboard last two years so I'm going to make a strong effort to limit my exposure.

I think my strategy is like taking candy from a baby but only when stock prices are low these all time high prices are not ideal for selling low out of the money puts.

I wouldn't recommend it to average joe investors because it can blow up in your face but when it works it works.
image (resized).jpeg

Just one was going to execute on me Jan 20 2017 it was GE $31 and GE was $30.50 so I bought that back at $.50 x5 contracts for $250 net made $70 on the trade (instead of $320) but I can always sell an even lower out of the money put like GE $29 and get that back.

It's the times when you are deep in the money that buying them back is just as bad as being assigned the shares..

Last year's early Jan 2016 swoon, I was assigned a crap-ton of stocks but they were at low prices so they all went up, this is not always the case though.

VZ got trimmed today, it's a good payer at 4.5% dividend? Anyone buying?

Out to October $40 strike is $.70

I only sell puts.

That means, I sell (insurance) to someone who owns the underlying shares.

If the stocks don't go below my strike price, I am golden. If the stock does go below my strike price, I am compelled to buy the stocks (unless I buy the put back at a loss)

as said above 1 option = 100 shares.

So if you looked at VZ now at $50/share. And look at October (it's always the Friday after the third Thursday unless you sell weekly option). So if you look at VZ October $40 you could sell it for $.7 a contract (or $70 for 100 shares) you keep that money no matter, if VZ stays above $40 a share the option expires. If VZ drops below $40 you must buy it at $40.

In my example, it's pretty worthless to sell one option (it's too tiny) so you could sell 5 contracts but then you would be willing to buy 500 shares of VZ (at $40) or $20,000.

I admit that's a pretty wimpy return, but the odds of it executing are small, so likely 98-99% chance it will become void.

Now if VZ starts to fall like if it gets to $45 or $42 that October Put will go up in value because it's more likely to get in the money.

Now as time goes by and there is less time, and if VZ stays at $50 the price of the contract will get less.

Anyway it works ok if you don't mind buying the stock, but would rather pay a discount. My example with VZ you would be buying the stock at $39.3 (I took out the $.7 you get paid up front) so VZ would need to drop $10.7 or around 20% more to get there.

You can't just trade options like you can stocks, because you need to set up a margin account and be approved for option trading. Also mind the transaction cost. If I pay $10 for each trade, I can't trade small contracts or the commission will be a substantial portion of the trade. I don't trade a bit unless it's $300 minimum that way the commission is less of a percentage.

The closer days pay less because they have less days to decay. Long time pays better but you could get caught in a bad series of events and be forced to buy the stock (think Chipotle where they might have been cruising along at $600-700 and now they are at $400).

Also I tend to think big names like APPL, DIS, XOM and VZ are better than small companies because (I think) they will be around for a long time (IBM has been around for over 100 years) so if I am forced to buy them I don't mind too much.

With bonds (imo) I'd rather have a bond fund (usually an index bond fund etf) can't see the point in buying individual bonds.

This is so true with my options since the market went up well on my stocks, some were so far out of the money like Tesla $100 or APPL $70 that I was able to sell additional options like APPL $90 $95 $100 $105 $110 $115. Also I was able to sell farther out options. I was essentially free roll because I *was sure* my low options were safe.

I made around 150 option traded last year and bought back 5.

That's not typical 2015 I sold less options but bought back 10 and had another 10 execute on me.

Other years I could be sitting in my bad options if the market went down.

Really my strategy while safer than a lot of option strategys is not recommended for the great majority of people.

here's the point. No one knows what's even happening today for example let alone the next several years.

One thing I'd like to point out to whoever gets out and waits for a pull back, recall that at one point DOW was 10,000 and puled back maybe did several times, maybe DOW will go back below 17K (I really don't know) but at some point the milestone will stick. What happens if DOW never goes under 17K or under 20K. Then you have x many years with zero growth and you'll be buying back into the market at 21K or 30K (or whatever).

If (this is key) if you don't need the money for long term than it's far better to just leave it on the market. If you need the money in a short period of time like for a downpayment for a house then you don't want to be exposed to risk of loss.

I am investing for retirement, so that is over 10 years in the future and I could be retired another 30 years that's 40 years timeframe. There will be ups and downs over that time. I posted a chart twice before showing stocks go up over time, there has never been a 10 or 20 year period where stocks have not posted positive return. Cash is actually negative after inflation.

Most gains come on just a few very big days. You don't want to miss the big day/week. If you are out of the market waiting to see a positive turn around you are likely to miss some really big days.

Finally, taxes are just as bad as loss in the market. What do I mean by that? (In a taxable accounts). Suppose you had a $20K gain and wanted to cash out. You'd likely pay (say 25%+ taxes) that is just as bad as a $5K loss. So if someone jumps out and in, they need to make another 25%to break even if they had paid taxes.

My friend said he sold some stocks after the election so he would have extra cash to pick up the cheap stocks after the sell off he was sure would happen. I'm saying to him, look at my CAT, look at my DIS stock (etc.) glad I didn't sell.

I've read several books on investing, **KEY POINT ** most stock gains are made by holding on to the stocks long term in other words stoks appreciation + dividends. Trading (that is buying and selling to make profit) does not make a lot of money because many people lose on trades as often as they win.

One quote I always liked was Benjamin Graham who was influential on Warren Buffett (and is considered the father of modern investing theory). He said in the short term the stock market is a voting machine (IOW a popularity contest) but in the long term the market is a weighing machine (IOW companies will pay out what they make so a very profitable company will pay it's owners/shareholders).

Dividends are a major source of income even in a down market. People may look at the market price, DOW or S&P and try to compare that to another time but thats not counting the positive dividend payments and selling out (may) miss the dividends.

LoL

The sky is falling, bet you were on red alert when stocks fell 10% last January? The S&P500 finished last year up 10%. DOW up 13%.

Stocks fluctuate if you don't know you're in the wrong thread.

Anyone looking for what not to do, is don't be fooled by noise means stuff that has nothing to do with the market yet effects the market such as this latest news story.

Does that have *anything* to do with his much Coke sells in a year or how many people use Verizon or buy iPhone etc..

Stock prices are related to future earnings nothing more, a travel ban has zero relevance to stock earnings.

IMG_2811 (resized).JPG

There is no guarantee whatsoever.

There is no such thing as a free lunch.

Question: What is the money for? Do you need it in a few weeks or a few months or a few years or a few decades?

The point is, if you don't want to have any risk (no chance of losing money) you can't really invest in the stock market.

But if you want to make money, Stock market (long term) has never lost money. There has been only ONE 10 year period in history where a ten year investment has lost money. The *average* 10 year return has been ~10%

what does that mean? Well if you invested just before Black Monday 1987 you could have 'lost' 33% in a matter of weeks. Yet if you had kept invested you would super well ahead after time. The DOW (an imperfect measurement because it doesn't include dividends which are around 2% a year) but the DOW is currently around 10x higher than it was in 1987.

So in other words, you could have invested everything right before the crash (the worst one day crash in history 22% down in one day and maybe 30-35% down in a 1-2 week period. So even if you picked the worst time to invest in 1987 you would still be 10x higher today. (I am estimating it's probably a lot more with 40 years of dividends).

So if you are investing for a long period like 10+ years in the future (the studies show) that it's best to get in as soon as possible since average return is positive. Returns are not sequential IOW if Stocks return 8% a year that doesn't mean 8% every year it could be

12%
-8%
30%
1%
-3%
9%
5%
etc..

you would only get the average if you were constantly invested.

Studies show it's better to just put it all in ASAP. But a lot of people don't want to because the stocks could go down and would rather dollar cost average like put in x amount every week for the next 20 weeks or whatever. Just keep in mind it goes both ways, stocks could also go up so if you wait it could be DOW 22,000 in 20 weeks and you would be buying less shares. Or it could be DOW 18,000 and you would look like a genius. But no one really knows.

Bottom line if you can't lose the money or don't want to lose any money the stock market is not the best. So if you are saving for a house down payment probably don't put the money in stock market. If you are saving for retirement 10-30 years from now then (I say) best to put the money to work.

dollar cost averaging vs lump sum

I'm interested to see Apple earnings today.

I have a feeling iPhone numbers may not be great but MacBook Pro will be huge.

Are you saying it didn't sell well?

I know they were bakordered to hell around the holidays as was Series 2 Watch

Apple reported $18B profit for the quarter on $78B sales.

You may be?

I bought a new MacBook Pro after trying a PC laptop.

While the PC was a lot cheaper the MacBook Pro is a lot nicer in every way.

IOW if you have the money or if money was not an issue The MacBook Pro is outstanding.

I'm talking 17'' mid level MacBook Pro is outstanding.

Win 10 is glitchy imo at least on the rig I was trying.

I didn't like that MacBook Pro don't have USBa port and I need all the adapters but I love the large trackpad and the screen in great.

Apple service segment alone (not hardware) made as much as Facebook last quarter yet FB is valued at half the price of entire Apple.

I'd say but people worry about phone sales (ie. Nokia, Blackberry etc..) but to me, it's also of a culture/cult with 1B user base and $250B offshore cash?

2% dividend is cool and it also is buying back $50B in shares (unsure of the number)

I already own too much of APPL so I am not buying at these prices.

I love Apple and it has been a huge hit for me, but APPL is 14% of all my stock so I am trying to diversify but I am not selling the bulk, but I would like to trim my position down to 10% at most.

My point, just because I love the stock and think it's good price, good upside. Just to myself it doesn't make sense to load up any more on Apple since I don't want too many eggs in one basket.

not picking on your assessment, I just wanted to go back to this point.

Apple in the holiday quarter sold $7.2 Billion in Mac computers that is the higher quarter they have EVER had. This despite the fact that worldwide PC sales are in decline.

I own a MacBook Pro 2016 and this is the first Mac PC I've bought. I have owned Win PCs for 25 years.

I don't say Mac/Apple computers are cheap, but I've read (and heard) a lot about how Macs last longer, have less issues (viruses) less tech support needed.

My personal experience with Win PC has been they start to degrade as time goes on, but even out of the box have a lot of driver issues, need to reboot and upgrade a lot and I think for the same specs run a bit slower than Mac.

I don't care for touchable screen apple in my computer, no fingerprints. Also, Apple wants you to buy a iPad if you want a surface type computer.

no DVD (ehh) I bought an external DVD for $25 but have yet to take it out of the box. I'm thinking why did I buy the DVD for?

No ports, eh that's a drag, but I can get over with it. Like if you say MM doesn't have a manual plunger, it's not really a key feature of the pin. I plug in a USB stick into an adapter and there is even USB sticks with two ends USBa and USCc if you need and going forward USBa will disappear as USBc takes over more fully.

If you are measuring the MacBook Pro and say it's go not HDMi port or no flash drive slot and think that means it's not a good laptop you are really not informed IMO.

It may be the same (ish) as you old Mackbook pro but it's probably half the weight. My wife has an older gen MacBook Pro and it's got DVD and 5 different slots. Guess what it's not anywhere near as nice as the new one. And she'd probably sell the old one and get a new one and just get a few dongles to support external peripherals. It's worth losing half the weight and getting a better display.

If you think MacBook Pro is a failure, sales or otherwise, I don't agree. I think people will pay premium price for them knowing full well it doesn't have DVD or USBa inputs.

I sold *some* Apple but only because I have way too much exposure to that single stock.

I'm going to buy some Verizon wich is the worst performing DOW stock this year

I really don't make decisions based on market noise. Verizon is a solid company, it's selling for cheaper price PE than ATT and it's got a solid dividend. I don't expect Verizon to go under and it's selling for 15% less than it's 52 week high. I don't like to buy stocks on good news days, I buy when it looks dreary. Whenever I want to buy GOOG, I do so after they loose $20 in a day or $50 in a month. I don't buy after they have a huge run up. Same with any stock, I prefer to buy on sale.

That said, I have some options on VZ that will force me to buy it weather I want to or not. However that was the same thing last year when I was forced to buy AAPL at $95 and it was not all sunshine and roses but the stock is well up.

Short term capital gain tax is your marginal tax rate as high as 39.6%

plus state tax (my state) 7%
Plus (potential) Medicare surtax 3.8%

That's 50% tax on short term gains

I'm not judging and don't know your tax rate, but something like 50% tax rate, I often wait until a position becomes long term (unless I have losses to offset the gain)

I'm by an large a long term investor, not a short time trader. Pay less commissions and less taxes.

My only vice is selling options which are counted as income or ST gains.

Could be worse

IMG_2867 (resized).PNG

That's why Led Zep and the Stones became tax exiles.

It does discourage *me* from working extra hard or overtime because my later dollars are not worth as much.

I feel blessed that I am able to make good money and don't mind paying taxes. But wish our tax system was not so top heavy when almost half don't pay anything not even a token amount.

Social Security is also weighed heavily against high earners, I could pay 5x as much in SS and only receive 2x as much in benefits.

I don't mind paying taxes and feel good to contribute but wish most was not wasted or given away. Wish it was a bit lower or there was a broader base of tax payers.

Could be books to read on the subject.

Basically, you will get some Social Security and this is one thing you can maximize i.e. Work at least 35 years and delay taking SS (if you can) until you are 70 (maybe you are not on board for this you could split the difference and delay until 69 or whatever) this calculation is supposed to be life expectancy neutral but if you end up on living longer than 85 years old you will come out ahead and lock in a higher payment. This may be controversial since you will forgo a few years of lower payments but if you end up living longer than 85 you will be happy and SS is indexed for inflation.

As for annuity you are taking a chance in that if you die early your heirs will not get the proceeds. Maybe if you want, spit the difference and annuity 25% of your savings (I don't know too much about this but just made up a middle number, you could do more or none at all its up to you). Then you'd have guaranteed income for life from some annuity and SS.

The rest (I'd recommend) keeping in 60:40 or 50:50 stock:bonds for as long as you live and take ~4% per year and it'll last you (maybe) 30 years and maybe longer maybe less but if you retire at 60-62 than 30 years is good enough.

Check out www.firecalc.com where you can plug in a lot of different variables and see how you will do and how much you might need to be financially independent.

Maybe you are being funny but you can not answer the question until you lock down what your have, how old you are, how much you save, are you married, any kids, any chance of divorce or future marriage or future kids a lot of questions and just giving two word answer to above questions is telling nothing and you'll get nothing. Garbage in garbage out.

If you plan on having kids figure to spend a lot more than you currently are spending.

To me holding out for SS until 70 is key.

I always say *if you can* than you should. A lot of folks simply can't wait because they haven't saved enough and so they need to take SS early. But if you can wait do so. It's like my dad is 89 and he's still health as ever.

As for annuity and leave some for later payout, why not just annuitize a small part and keep the rest free. IOW if you had $1M why not annuity 250k and keep the rest free. Once you tie up the money in an annuity you can't get it back or you will pay to break it out and annuities cost some for sales fee and insurance fees etc.. They are not magic. Some people like them some don't if you are unsure do some research and if you are still unsure just split the difference and do some not all.

IMO

Also please avoid taking advice from salesman they are looking out for one person and it isn't you. They will look out for you after they look out for themselves first.

How can you tell if a salesman is lying? His lips are moving.

Www.bogleheads.org

Ah,

I misspoke 4% plus inflation, meaning start at 4% but if next year inflation is 3% take a bit more etc. this won't exempt the nest egg you will take dome dividends but some off the principal as well, it's not for infinity but for 30 years plus or minus. If you want more than 30 years need to take like 3% plus inflation.

A fixed annuity will always pay the same so in 30 years when milk costs $9/gal you'll still be receiving the same payment as you did when you started. Probably in 15-20 years one dollar will buy half of what it buys now.

That's why maximum SS is key because it's automatically indexed for inflation.

Although subject to change, nothing about SS is fully guaranteed but it's kind of like a sacred cow. They probably will cut some and raise the age for younger workers or raise the tax withholding or all three.

Nice

I sold 3 for various dates but $660 got like $5-$8 each

LoL

If you look at www.firecalc.com

You will see there is a wide range of outcomes for any given set of starting portfolio and spending plan.

You can only control spending, you can't control (predict) rate of return or time of death.

An annuity can flatten out the spending uncertainty but costs you something for that insurance.

As always you will die sometime in the future, and you can't take it with you so you should be fine spending the principal.

I plan on spending 3.5-4% of principal adjusted for inflation.

Father Time is undefeated
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Me either, seems like you need to be wealthy to afford it but if you're wealthy enough you don't really need it.

Anyone have any ideas on beat up stocks like VZ or IBM

I figure VZ will stabilize its one of the dogs, sometimes dogs are better than high fliers because there's only so much lower they can go (unless the truly collapse) which I can't see VZ or IBM doing.

VZ is pushing close to 5% dividend. And truly makes money every month, my phone bill is a testament to that.

IBM while a long term dog still makes money off mainframe computers and is getting into cloud computing. It's contracting but has tremendously bought back shares. Have bought back 400M shares in the last 9 years. Has bought back more than half of the company in the last 20 years.

I like Amazon and Google better but so do everyone and their grandmother so they're (maybe) over bought.

yes, I'm also looking at the idea that a big company can go under like GM did.

VZ doesn't seem like that type of company, it's the leader in mobile phones in the US, and people pay hundreds of dollars every month for cell phones. I think partly a price war is cutting profits, I am not sure what the heck they are doing with AOL or Yahoo that seems like a colossal waste of money which could have been spent somehow other. I think they missed expectations by one penny and the markets freaked out.

I am not as confident of IBM they are like the Titanic which is hard to turn around, they are supposed to be changing direction, but can they change before they sink?

I know PE does not tell the entire story but
VZ is 16 (almost 5% div)
IBM is 13 (3.5% div)
S&P500 is almost 25

the question is this?

The insurance company *is* making money selling the insurance product, that's a fact. They won't be selling it if it was not a money maker.

I just looked up a quote. These policies are limited to $150/day or $200/day and usually 3-5 years (obviously you pay more for the longer options).

The price quote you pay is not set in stone (there can be future policy adjustments upwards as the years go by).

The net total is this (Example) suppose $200/day for 3 years max payout is $219K (if you need it). However some people will never need it. These policies may not go the full 3 years (if you die before the 3 years are up) and you might never ever use a cent of it. Suppose you have a heart attack or accidental death. I believe they waif 90 days before they take effect anyway.

The sample policy quote was $150/month at my age 51

Now suppose you take $150/month and invest it at average return 5%/year you'd have a total account of $150K after 33 years (my fathers age) and counting because neither he or my mother have yet to need LT care. If you save yourself you could use that money as needed when the time comes (if you ever need it).

A married couple would need to have 2 policies and so that's $300/mo which would give you a savings (if invested instead) nest egg of $300K after 33 years).

The insurance companies are looking at charts and know that *some* people will never need it ($$ goes to the insurance company). Some people will need only a portion of the 3 years ($$ goes to the insurance company) and some people will need all the money.

But overall net sum the insurance company will collect more than they pay out.

There is risk that the insurance company can go out of business (not likely but some risk?) there is the risk of the insurance premium going up over the years. Believe me I have disability insurance and it always goes up never down. I was reading one post where the insurance company wanted to raise the rated 50%. Once you are locked into he policy you need to pay for the rest of your life (I believe).

I'm not saying you never should get it, but if you are poor you can't afford it anyway (what poor person has an extra $150/mo sitting around?) and if you are wealthy you can invest on your own and you can pay as you go.

Please note, this is LT care insurance it does not pay for all your health bills and may not even cover all your LT care bills. It's 'LT care' such as in home or nursing home and only covers so much like $200/day (probably adjusted for inflation).

I am not saying don't save money or don't buy LT insurance. I am saying you may not need LT insurance if you invest $200-300/month in stock/bonds and you'd likely have multi-hundred thousands of dollars. <this is on top of your retirement savings of course>. I mean you'd either pay $150++ a month for an insurance policy or save/invest that money on your own.

I know people already save for retirement yada yada. The point I am making is that LT insurance costs a lot so if you pay the insurance company or if you put it into a savings account in your own name either way after 20-30-40 years you will have a lot.

I'm a doctor, I met a lady who was 92 and still drives and still works. Now if she was saving $150/mo for 40 years she'd be at $228K at 5% gain. I met a married couple both in their 90's and if they had saved for 40 years they'd be at half a million.

I know not everyone lives to 90+ but if you do and you you need to keep making these payments for your whole life to keep the policy in effect and who knows if you will ever need it and who knows if it will stay $150/mo or maybe it will be $500/mo in 20-30 years?

I can't put the future cost into my calculator because I don't know how much the policy will rise over the years.

anyway the point I am trying to make is that insurance companies make money so some people could pay in their whole life and never use it and that's money gone.

cool I have been getting my ass burned on VZ puts and MO puts, needed to buy 1000 VZ shares at higher than market value. my MO puts are also in the money. I could have bought them back at a loss but was deep in the money already, anyway I sold future calls on those shares for $700 and if that don't execute will continue to sell future calls and in meanwhile VZ now pays 5% dividends around $200/month.

I have made so much money on MO (that I own I mean they are 10 baggers if counting dividends)plus all the MO puts that I have been selling for the last 2-3 years that I don't really care that I am forced to buy some at above market price. It's like house money.

I made some bank on AMZN puts but have not bought them back, wondering if I just let them expire worthless. I mean they are AMZN $650 to $750 in the next 3-6 months.

Usually, I let my long puts ride and they expire worthless