I do not think many thought we would be where we are today, 18 months ago. My guess is in 18 months from now most of us are not going to think that that is where we were headed then either. Good or bad. So it is a crap shoot.
But I think as Dewhorse suggested. It might be less than ideal.

The vanguard chart Rogue posted is similar to what we have done approaching retirement. Even so, I would not be shocked in a worse case scenario that we could loose 25% of our account. If you had a 80% stock and 20% bond mix it would be devastating to an account.
Then again if the Dow hits 40k than that is a completely different scenario.

But remember, I am talking about more than the stock market. I am talking about $5 gallon gas on its way to $8 a gallon.

Or, lets say you have $1000 cash in your safe. In six month that $1000 could buy half of what the same $1000 of cash could of bought 24 months earlier. The possibility is real.


In my opinion we need to be thinking about more than just the stock market.

I understand that everyone is most comfortable doing what has served them well to this point. The better choices you have made. Put's you in a better situation now. I agree that continues to be a smart approach. But looking ahead things might require some different thinking. Maybe not dramatically different, But different none the less.

Unless you earn more than is allowed, the Roth IRA is brilliant. I know most of you know this but clearly there is some confusion, a Roth IRA can literally be held in almost any vehicle. Mutual funds, stocks, precious metals, real estate, etc.

The savings rate of the average American is abysmal. That being said, Rogues chart, actually Vanguards, is basically correct. Even with only 200k in retirement savings as a 65 year old if they stay invested in the market they risk losing a significant chunk of their retirement in a time where they can’t recoup their loss. If the individual in question isn’t pulling back to a more conservative portfolio they are taking a gamble.

As to original post. I’m doing the same thing I’ve done since I was a young man. Keep debt to a minimum, for me that means the 7 more years it will take to pay off mortgage. That’s it. Never put more on credit card than I can pay off monthly. I haven’t paid interest on a credit card in decades. Use every tax sheltered vehicle at my disposal. That used to mean IRA’s, then Roth IRA’s, then max contribution to 401k. After that we budgeted extra money to just cash reserves and general stock market investments. I keep a healthy emergency cash reserve for anything unexpected. If things go to hell our discretionary spending can plummet.

In the big picture somebody has always predicted doom and impending gloom my entire life. ORC you have already made it clear you are older than us so you could repeat what I just said with an extra couple decades in there as well. It’s the old “I’ve predicted 27 of the last 4 recessions”. If it truly got as bad as you can imagine it won’t matter if you have gold bars under the kitchen sink. Who are you going to trade them with? In reality you should have your financial house in order because most likely nothing will happen or it will be part of the cycle and we will come out of it eventually. Have a supply of durable goods, food, medicine, enough guns/ammo to protect your family not enough to conduct a Central American war.

Bottom line. Do what you should have been doing your whole life. Nothing drastic. Just good common sense, which isn’t very common anymore.

quote:

Originally posted by pedropcola:
Unless you earn more than is allowed, the Roth IRA is brilliant.

It also has an additional benefit, besides the lack of future taxes, compared to a Traditional IRA or 401k: No mandatory distributions starting at a certain age.

So if you don't need the money, because of a pension or other income that fully covers your expenses, you aren't required to take any of it out. You can just let it all ride and continue to grow, until you do need some of it, or until it passes to your heirs.

quote:

Originally posted by pedropcola:
In the big picture somebody has always predicted doom and impending gloom my entire life. ... It’s the old “I’ve predicted 27 of the last 4 recessions”.

quote:

Originally posted by Scoutmaster:

quote:

Originally posted by darthfuster:
We have. Been buying realestate and things of real enduring value. We think holding on to cash is a losing proposition.

Go to Vegas, they will help you with your cash.

Lol. I gambled 10.00 in nickels once

FWIW, income tax rates may never be as low as they are this year. Then again, there could be retroactive tax rate increases.

Individual pension funds are a big pile of cash the politicians are eying. There are rumblings from some leftwing politicians that are proposing the government take over private pensions and starting a national pension for all.

Much will depend on how far left our country goes.

Remember President Roosevelt seized all American's gold deposits in the 1930's by executive order. Gold per ounce was handed over in exchange for a $20.00 federal reserve note.

Think about that, and the fact the Supreme Court ruled this was legal for the government to seize it.

So whatever actions we may take, such as precious metals, retirement funds etc. will be subject to the whims of our future government.

Based on what we are seeing now - I believe the propensity for our country to go ALL the way left is very real right now. And I suspect that when this happens, it won't just be pensions that get seized/nationalized. Someone is going to have pay this multi-trillion dollar bill that will come due soon and it won't be anyone in Washington.

Gold, Silver, Bitcoin...are my "savings", investments will be in Emerging Markets outside of the U.S. and some U.S. stocks after they have hit near bottom. Many U.S. stocks are grossly over valued.

I would love to own several multi unit rental properties, but I have kids in college for the next few years and my money is too tied up.

To start we are in Contract now to buy a house and moving to a tax free reddish state next month. Will stay here till June to let kids finish zoom school I suppose. Will sell this house in CA. We’re buying a house 3x the size of this house with 2.5 acres. And property taxes will still be less. Will sell the departure house in CA this spring I’m pretty confident I can get a free rent back from any buyer here. With net proceeds I will be doing ok. I work for a bank and employee mortgage is a pretty stupid rate even 30 fixed and if I quit the day after it funds it can’t change so not tied to employment just a perk. Not keen to pay down a below market 30 fixed. Especially if inflation comes in the future.

The state tax savings alone will be 1k a month when compared to what I paid in CA last year.

I’ll keep maxing out Roth retirement options and taxable stock investments and hopefully buy some rental property with the. If and when higher fed tax rates show up we will deal with it then.

quote:

Originally posted by jcsabolt2:
Gold, Silver, Bitcoin...are my "savings", investments will be in Emerging Markets outside of the U.S. and some U.S. stocks after they have hit near bottom. Many U.S. stocks are grossly over valued.

I would love to own several multi unit rental properties, but I have kids in college for the next few years and my money is too tied up.

This is our plan also. We aren't in a position to qualify for a commercial property loan, and while troubled properties do exist, prices are still at historical highs due for a reset.

The earlier comment that $1,000 in cash today will buy $500 in goods tomorrow, is a near certainty. The length of time to get to that point is in question, but I certainly think it is soonish.

So for the most part, we're buying those goods, today. Food that will still be good, tools, equipment, and other work necessities that will need updating or upgrading in the near future, we're doing that now. Gold, Silver and to a point even bitcoin are investments for the future, but as others have pointed out in other threads the premium and cost of moving gold and silver in and out of fiat doesn't typically make sense. Our gold and silver "stash" are for other purposes. I would consider it insurance, and nothing more. Ammunition, stable foods, perhaps even updated vehicles, those are better places to park cash IMO. My situation isn't like many, but it might be like some. Securing the way I make money, and establishing new avenues of making money are our goals. We're continually looking for ways to trim expenses, but not to the point where we girdle our flexibility and earning potential. I'm nowhere near retirement, and my retirement model isn't a savings based model. IMO savings is for short term security, and catastrophic recovery only.

My goal is to pay off my house and continue investing 15% into a Roth IRA. I'm sitting pretty on enough firearms, ammo, and gold/silver to last me a while. Sticking to my budget has been difficult, but the stimulus money is going straight to my mortgage. Should be gravy once I get it paid off.

quote:

Originally posted by SIG4EVA:
My goal is to pay off my house... I'm sitting pretty on enough firearms, ammo, and gold/silver to last me a while.

That's where I'm at right now. After my bills and budget items, and my set savings and retirement contributions, I currently am throwing basically all my excess funds at paying off my house. I already make the equivalent of nearly two full extra payment every year directly to principal. I intend to reach at least 4 full extra payments per year within the next few years, which will knock the house out in basically half the time. Once the house is paid off, all those extra funds (from the now-extinct mortgage payment plus the excess I was putting towards it) will then be able to go towards additional non-retirement investing, and potentially some additional passive income generation options.

quote:

Originally posted by old rugged cross:


Please explain what you have done, plan to do or make suggestions of what one can consider doing.

Here is what I do:

I rebalance my portfolio annually.
I make sure that the allocation is set so that large swings will not prevent me from sleeping.
If you can't sleep when the market drops, I don't think your allocation is right. I only adjust annually and make contributions throughout the year per the plan I create at review time.

I do have to periodically remind myself not to react to large swings. You have to stay the course. The internet is full of people who think they can predict what is about to happen. If anyone tries to convince you that they have knowledge about what the market is going to do, ask them to see their predictions from 2018 about 1Q20.

I make a plan based on what I am comfortable with, stick to it, and live my life without having to worry about making moves because of any world events.

--K

quote:

Originally posted by MelissaDallas:
My mother is 78 and she and my Dad saved and sacrificed and invested a lot of money. My sister and I are okay, but it just burns me up that an increase in capital gains and estate taxes may take a substantial portion of what they worked for away from us.

Your basis will be the value of their portfolio when they die, and you inherit it, not what they paid for it. Capital gains will be minimal if you liquidate at that point. Secondly, the estate tax limit is 11.58 million. If you are married, it is double that. Are you planning on receiving more than $23M?


---K

quote:

Originally posted by Kranky:

quote:

Originally posted by MelissaDallas:
My mother is 78 and she and my Dad saved and sacrificed and invested a lot of money. My sister and I are okay, but it just burns me up that an increase in capital gains and estate taxes may take a substantial portion of what they worked for away from us.

Your basis will be the value of their portfolio when they die, and you inherit it, not what they paid for it. Capital gains will be minimal if you liquidate at that point. Secondly, the estate tax limit is 11.58 million. If you are married, it is double that. Are you planning on receiving more than $23M?


---K

I know what the estate tax exemptions and capital gains rates are now, but that doesn’t mean that in the future those won’t be significantly changed in the war on the “rich.” I expect that progressives will want to go after significantly bigger portions of estates.

For now general belt tightening and to use cash for more transactions. Tired of balances that come as a bit of a surprise. Long term plans... still in theoretical thought processes there.

There should be a popular uprising to "Defund Government".

The local governments should be held accountable for their recent actions and cut their budgets accordingly- Instead of jacking up taxes and fees.

You can only take so much money from the last few productive people.

Maxing IRA, maxing ROTH, maxing HSA, probably opening another retirement account (self employed) where I can start putting additional tax deferred monies away.

I'll save monthly as I do, but I owe some money on a work vehicle at a very low rate. Otherwise I'm debt free.

quote:

Originally posted by braillediver:
There should be a popular uprising to "Defund Government".

The local governments should be held accountable for their recent actions and cut their budgets accordingly- Instead of jacking up taxes and fees.

You can only take so much money from the last few productive people.

It is not uncommon that increasing tax and fee rates, to "balance the budget" or "fill the deficit", does the opposite. Such often will drive away business so that the actual $$ collected goes down. And often politicians increase spending along with increasing taxes and fees, so there is a double hit on digging the deficit hole deeper.

But not to worry, the $1.9T stimulus bill includes some bailouts for liberal state and local govt's with growing deficits.