Can you elaborate a little, or do you have any good reads on the topic? I already had deposit and retirement accounts at USAA before moving to China, so the process of opening/funding a brokerage account was painless. I just haven't brought myself to actually buy anything :X
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How to Invest for Retirement
- Thread starter Piecake
- Start date
Can you elaborate a little, or do you have any good reads on the topic? I already had deposit and retirement accounts at USAA before moving to China, so the process of opening/funding a brokerage account was painless. I just haven't brought myself to actually buy anything :X
He means you shouldn't be buying Chinese index funds from a Chinese financial institution (or buying a Hong Kong mutual fund, etc.). Opening an account that is considered in the U.S. is okay.
Darren870
Member
What numble said. Basically its hard to invest when you are overseas as an American. You can invest your money you put into the USAA account, just not in an IRA or Roth IRA once you leave the US. If you left halfway through 2015 you could technically put some money in the IRA/Roth this year since you wouldn't be able to claim the full tax benefits on Foreign income.
Which reminds me, I need to call my accountant again.
Or you could be like the thousand upon thousand other Americans I've met that live overseas. Simply not give a shit and don't do your taxes. Oh how desperately I want to do that....sooooooooooooo bad.
greatestjediever
Member
Hey guys, just switched employers recently and am in a position to start investing for my retirement.
Is the Fidelity Spartan 500 Index SPTN 500 INDEX INST (FXSIX) a solid place to put my 401 (k) in?
My employer's are matching up 4%, so I figure I'd put 4% in there and then try to max out my ROTH. Not sure whether to do it through my employer or via Vanguard since I notice it being referenced so often here. Should I just do it through my company and also max out my ROTH using the Spartan index?
Is the Fidelity Spartan 500 Index SPTN 500 INDEX INST (FXSIX) a solid place to put my 401 (k) in?
My employer's are matching up 4%, so I figure I'd put 4% in there and then try to max out my ROTH. Not sure whether to do it through my employer or via Vanguard since I notice it being referenced so often here. Should I just do it through my company and also max out my ROTH using the Spartan index?
Yes, that is a good fund. Do you have the option of their Total Market Index fund? If not, then go with the FXSIX; it's what all of my employer retirement investments are in as well. Ideally you'd have exposure to mid and small caps as well, but the S&P500 is still a very good, well diversified fund. Were you going to go all into equities, or some bonds as well?
If you are starting from scratch on IRA contributions, most would recommend going with Vanguard, due in part to their ownership structure. But if you would like to have all of your retirement accounts in one place, you can get pretty much the same options and costs with Fidelity. Really one or the other comes down to preference, you'll be fine either way. (I went with Fidelity so as to simplify our investments.)
In the ROTH you'll have more choices, so it's probably better to go with the total market index rather than just the S&P500 (and your preferred mix of any bond or international funds).
greatestjediever
Member
Hmm I don't think I do.
For large caps, my options are:
FEIKX
MSEQX
FXSIX
For mid-caps, my options are:
FLPKK
FLMVX
MPEGX
For small-cap my options are:
RSPYX
FSSVX
For international, my options are:
AAIEX
FDIKX
MGEMX
FSIVX
I have options for several blended fund investments and a few bond investments like:
MIP CL1
PTTRX
FXSTX
My Fidelity site breaks down average returns at 1 yr, 3 yr, 5 yr and 10 yr, how they compare to the bench during that time period, as well as their gross expense ratio. I'm assuming I want to look for the ones with the lowest expense ratio, while doing the best against the bench over the longest course of time?
I'm not sure how I'm supposed to split up my investments among large-cap, mid-cap, small-cap, international and bonds. I'm still in my early 30s, so I figure I'm a long way from retirement so should I be going mostly aggressive? Like medium-high risk with high average returns over the past 10 years? I'm guessing like 80% in equities and maybe 20% bonds?
Sorry for all the questions, I'm pretty out of my depth here.
Edit: interestingly, when I went to setup my percentage of investments, I tried to do it individually by investment vehicle, instead of having all of them invested the same way. My ROTH (basic, rollover, catchup) options were exactly the same as the others, and didn't have any total market index options.
Given those options, I would only consider investing in:
Large Cap - FXSIX
Small Cap - FSSVX
International - FSIVX
Bonds - FXSTX
The other funds feature expense ratios (costs) that are too high.
Of these, the bulk of your investments should go into FXSIX (S&P500 index). It's really a question of how you want to diversify around that fund, using any of the other three. There it really gets down to personal preference and risk comfort levels.
The most aggressive thing to do would be to put all of it into that fund, or a combination of that fund and 10% into small cap. If you go bonds, you probably don't want to go over 20% at this point, given your age.
International stocks have been a source of much discussion in the thread, and in general. Many argue that US stocks are sufficiently diversified already, and since large US companies make a big chunk of their earnings overseas, you are getting exposure to ex-US markets just by investing in the US markets. Others argue that since half the global market is outside the US, half of your holdings should be in international funds. I do own international shares (the same index listed above), but I'm still on the fence about its value. Given you are just starting out, I'd focus on the US for now and add them later if you want.
Some options using that mix, though obviously there are lots of ways to go:
Since you are just starting out, it might make sense to start with 1-2 funds, and add others to your portfolio over time to rebalance, and as you gain experience / comfort with what you are doing. If I had to suggest one thing given your experience level and age, it would be 80/20 stocks/bonds, using just the S&P500 index and the bond index.
Large Cap - FXSIX
Small Cap - FSSVX
International - FSIVX
Bonds - FXSTX
The other funds feature expense ratios (costs) that are too high.
Of these, the bulk of your investments should go into FXSIX (S&P500 index). It's really a question of how you want to diversify around that fund, using any of the other three. There it really gets down to personal preference and risk comfort levels.
The most aggressive thing to do would be to put all of it into that fund, or a combination of that fund and 10% into small cap. If you go bonds, you probably don't want to go over 20% at this point, given your age.
International stocks have been a source of much discussion in the thread, and in general. Many argue that US stocks are sufficiently diversified already, and since large US companies make a big chunk of their earnings overseas, you are getting exposure to ex-US markets just by investing in the US markets. Others argue that since half the global market is outside the US, half of your holdings should be in international funds. I do own international shares (the same index listed above), but I'm still on the fence about its value. Given you are just starting out, I'd focus on the US for now and add them later if you want.
Some options using that mix, though obviously there are lots of ways to go:
- Most aggressive and simple: 100% S&P500 index.
- Still aggressive but more balanced: 90% S&P500, 10% small cap index.
- Simple mix, more conservative/balanced: 80% S&P500 index, 20% bonds
- Reasonably conservative/balanced: 70% S&P500 index, 10% small cap index, 20% bonds.
Since you are just starting out, it might make sense to start with 1-2 funds, and add others to your portfolio over time to rebalance, and as you gain experience / comfort with what you are doing. If I had to suggest one thing given your experience level and age, it would be 80/20 stocks/bonds, using just the S&P500 index and the bond index.
greatestjediever
Member
Thanks for the advice! It was really helpful. I actually went with the 80%/20% split for S&P500 Index and the Spartan Bond Index. I was debating between that and just going 100% in the S&P500 Index, but I'll probably sit right here for the time being and see how things go.
Many thanks again for the help!
Many thanks again for the help!
As long as you are rebalancing, it is a good idea to put a little in bonds even if you want a super aggressive portfolio. Having a small bond holding provides you some ballast so you can buy low / sell high when you rebalance. It makes sense if you anticipate market volatility, which certainly seems to be the way things are going at present between Greece and the potential for interest rate increases in the US.
I am going to start reading this thread but have some general questions:
Is the advice only retirement focused or does it cover get "rich"/make $ along the way also?
I am a very frugal person but don't have much capital to begin with.
Also for the last 5yrs, like 95% of my money has gone to paying off my six figure student loan debt. Is this stupid? I am 33 and have $12 in savings.
Is the advice only retirement focused or does it cover get "rich"/make $ along the way also?
I am a very frugal person but don't have much capital to begin with.
Also for the last 5yrs, like 95% of my money has gone to paying off my six figure student loan debt. Is this stupid? I am 33 and have $12 in savings.
SO i recently got my first job in my profession/career.. signed up for 401k etc etc.. seems like a god damn scam to be honest. they take your money to invest in these private companies.. What happens when the economy tanks and these companies go under? I'm not an economist or a historian, but I think i've seen this play out once or twice before.. Am I crazy for thinking like this? My wife is an accountant and she just laughs at me when I talk like this.. everyone else seems to be perfectly comfortable investing in this shit..
greatestjediever
Member
Since I'm new to this, market volatility would encourage moving away from equities into bonds, right? Also, rate increases will increase the value of new bonds, but would decrease the value of old bonds right? So if I'm seeing an impending rate increase, wouldn't I want to move my money out of bonds until after the rate increase?
That's why you invest in index/mutual funds which have holdings in hundreds or thousands of companies. Every major company in the world isn't going under, and if they do, your retirement balance will be the least of your worries.
The only other option is hoarding cash which is a guaranteed loss because of inflation. Or do bonds and have minimal gains.
Randolph Freelander
Member
This thread is mainly for long term, retirement-oriented investing. For more short term or non-retirement needs, there are other threads for that. You might consider checking this Stocks thread, for example.
As for your student loans, what are your interest rates, and have you been foregoing potential employer matches to a 401K program? If you are gainfully employed and your employer offers a 401K match, you will at least want to take advantage of that. The match is free money that will far and away exceed any interest (dollar for dollar) on your loans. After the match, then you have a choice to make. Your student loan interest rates are surely lower than the historical market rate of return, but the loan rate is guaranteed and market returns are not. At the very least, secure your employer match, if offered. Then I'd say evaluate your risk tolerance and choose if you want to invest more, betting on market returns exceeding your interest rate, or go for the psychological win of paying down your debt faster.
People following Dave Ramsey would say pay down your debt first. I say Ramsey is a loon.
If there is a single piece of advice that is most valuable for a new investor it is this: Don't try to time the market. You are competing against professional investors who have more information than you do, and current equity and bond pricing (to an extent) already reflects this.
Academic research shows that people who micromanage their holdings do worse on average than people who leave their holdings alone. This is because it is incredibly difficult not to be biased by past performance, and so you tend to buy high and sell low when you have high asset turnover. If you are thinking "that won't impact me, I'm a dispassionate genius", keep in mind that most hedge fund managers fail to beat the indexes, so even the pros with lots of market knowledge usually don't win.
The best way to manage your investments is to set out a plan in advance (i.e. I want this percent of my holdings in stocks vs bonds at age X). It's OK to alter this plan based on life events, but not due to market conditions. Invest in the broadest possible index funds, and don't touch them except to rebalance according to your investment plan. When it comes to long-term investing, less (micromanagement) is more (money).
The easiest way to achieve the strategy I described is to put your money in an autobalancing fund like Vanguard's Target Retirement or LifeStrategy funds if you have access to them. There are some disadvantages to this approach; I consider them minor enough that I still think this is the way to go for most people if they have access to those funds, but some other posters in this thread disagree and prefer to recreate the funds themselves.
TangoAlphaLima
Member
Beans & rice, rice & beans.
I will say that the one caveat to mention with student loans is that they are, in one respect, essentially the worst kind of loan possible, as they are almost impossible to discharge. Meaning you're most likely stuck with them for life, even if you suffer a pretty serious hardship for one reason or another.
I agree with Randolph about the employer match, though. That's just free money you're turning down if it's available. But other than that, I'd probably focus 100% of my efforts on building an emergency savings fund first (about 6 months of expenses), followed by paying off all that remaining debt.
Train of Midnight
Banned
Kinda crazy that my 401k can dip almost 1k overnight and I'm just like "Meh, it'll come back". I dont even have that big of a portfolio yet, that's 1/30th my whole pot.
For someone else to just wake up and lose 1k overnight that's life-ending.
Stocks are nuts. Capitalism is weird. But hopefully shit will still be ok in like 4 decades when I retire.
For someone else to just wake up and lose 1k overnight that's life-ending.
Stocks are nuts. Capitalism is weird. But hopefully shit will still be ok in like 4 decades when I retire.
PflargBlarg
Member
Honestly yeah, you're a little bit crazy, but being skeptical isn't a bad thing!
Just know that this is how the economy has worked for hundreds of years and it's been fine. It would definitely be crazy if you were only invested in 2 or 3 companies. Even the big ones that seem like they're not going anywhere anytime soon could always fail. Diversify across companies and sectors and you'll be fine.
greatestjediever
Member
Eek, sorry I should have positioned that as a hypothetical. Your advice makes total sense and I don't plan on micromanaging my accounts, I was just trying to piece how all these financial events and milestones fit together, since these terms are thrown around often and I generally don't understand how they all fit together.
The reason to diversify into index funds is, one (or even many) companies going under won't make an appreciable impact on your portfolio. By owning the entire market, you are only taking on the risk of the market as a while, not of one individual company which may or may not go under.
Markets go up and down. The long term trend, however, is up. If you are investing regularly and for the long term, you will ride along that trajectory also.
Wellington
BAAAALLLINNN'
I currently split my 401k into two pots - 85% into the Fidelity 2045 Freedom Target Retirement fund (FIOFX) and 15% into the FXSIX that has been discussed before. The composition of FIOFX currently has 9.93% in bonds, so I am increasing my stock holdings percentage by holding the separate fund. Yes I have read Y2Kev, Cyan, and SomewhatGroovy's advice linked at the top of the thread, but I can handle the potential volatility.
Besides diversifying, I think the most important factor that you need to realize is that gains and loses only occurs when you sell. If you are retiring in 30 years and the market tanks hardcore in 10 years, does it really matter to you? If you are smart, it shouldnt. You definitely should not sell then because there is no reason to sell. Once you get closer to retirement the risk of economic tank increases, but you should be increasing your exposure to bonds as you get older as well. That will reduce that risk.
Sadly, the only way to afford retirement is to invest. There is no way to make the money that you need for retirement without investing unless you earn a very high salary. If you avoid the market all together you will actually lose money due to inflation and if you invest in all bonds or other conservative investments then you won't make a high enough interest rate to afford retirement unless you make a ton of money.
PflargBlarg
Member
Remember everybody, the issues aren't just relegated to the USA, this is a very geographically diverse problem.
http://www.theglobeandmail.com/glob...lier-than-planned-poll-shows/article25219041/
Here's a key excerpt.
I can only imagine that government pensions are going to make up an even larger amount in the future since private pensions are very rare these days. And those are pretty sad percentages for retirement accounts.
http://www.theglobeandmail.com/glob...lier-than-planned-poll-shows/article25219041/
Here's a key excerpt.
I can only imagine that government pensions are going to make up an even larger amount in the future since private pensions are very rare these days. And those are pretty sad percentages for retirement accounts.
I think the part about many Canadians being forced to retire early is very important. I never really understood how some people can say that their retirement plan is to work until they die. I mean, sometimes that isnt your choice.
But yea, I have no idea how Britain's retirement system is like, but I would imagine that they are also likely going to need to be investing a lot more to meet their retirement needs with the re-election of Cameron. I remember hearing that he is doubling down on the spending cuts. Could be wrong on that though.
Darren870
Member
Yea, Australia is really good with this. They started the superannuation scheme in the 90's which employers are required by law to put a percentage of the individuals salary into a retirement account. Basically a 401k without the matching.
It started at 3% in 1992 and now its at 9.5%. It suppose to be up to increase to 12% in the next 10 years.
You are still encouraged to contribute to your Super and get tax benefits if you do as well. They really want to push it off the government and onto the individual. Which I 100% agree with.
It started at 3% in 1992 and now its at 9.5%. It suppose to be up to increase to 12% in the next 10 years.
You are still encouraged to contribute to your Super and get tax benefits if you do as well. They really want to push it off the government and onto the individual. Which I 100% agree with.
TheExecutive
Member
So I have been studying everything from fundamental analysis to technical analysis for a few hours a day for a few months. My end goal is to make sound decisions with stocks based on as much data as possible.
Investopedia has a lot of basic tutorials and articles that I have been learning off of and taking notes on. Are there other sites that have a wealth of information about stocks and investing? I already chewed through the Fidelity learning center.
Investopedia has a lot of basic tutorials and articles that I have been learning off of and taking notes on. Are there other sites that have a wealth of information about stocks and investing? I already chewed through the Fidelity learning center.
TheExecutive
Member
You would have to be crazy to invest in that market for retirement. Maybe less than 5% of your total portfolio would be acceptable but yeah it's pretty much a huge gambling hall.
Wellington
BAAAALLLINNN'
What is your goal for gathering all of this information?
Oh I'm not even talking about retirement. Just holding anything there period.
Am I right to prioritise my investment fund over my student loan debt?
In the UK, I pay off my loan based on a percentage of my total income as long as it's over a certain amount. So, I'm not totally ignoring my loan.
I put a lump sum of £15240 into an ISA (the most I can do this year within the tax free allowance). But I was wondering if there's any reason I should prioritise my student loan. The interest rate is currently 1.5%, but can max out at 2.5%, so I expect to make more from my investments than I'd pay in loan interest.
In the UK, I pay off my loan based on a percentage of my total income as long as it's over a certain amount. So, I'm not totally ignoring my loan.
I put a lump sum of £15240 into an ISA (the most I can do this year within the tax free allowance). But I was wondering if there's any reason I should prioritise my student loan. The interest rate is currently 1.5%, but can max out at 2.5%, so I expect to make more from my investments than I'd pay in loan interest.
EarsOfASnake
Member
I don't pay more than the minimum, the interest is so low it's almost a non issue and as you said it's possible to get a better return elsewhere.
Randolph Freelander
Member
I agree with MikeDub. That's a low interest debt. You are right to prioritize it below retirement investing.
Randolph Freelander
Member
No.
In short durations, the market will have ups and downs, but retirement investing is for the long haul. If you're in the right fund or set of funds, it wouldn't matter if your $1600 investment was down $1000 so far (seriously, that would have happened* to you by March of 2009 if you invested in October of 2007), as that's just temporary and your retirement is 30 years out (and your October 2007 investment would be significantly up right now).
Vanguard's target fund is a low expense blend of the domestic and international stock markets, and domestic and international bonds. It's well diversified. If you're comfortable with the allocations (particularly if the bonds help you feel better, considering your risk tolerance), there's no need to move out of it unless you simply want to execute a different strategy, one with more or less risk.
----
*Slight correction, since I like running numbers. $1600 invested in VTIVX (target 2045) on October 9, 2007 would have fallen to $772.91 by March 9, 2009. Today, it would be worth $2262.91. A more aggressive fund with no bonds (VTSAX, total market) would have seen $1600 fall to $714.64 but then recover to $2588.06 today. (This is based on adjusted close prices on 10/9/2007, 3/9/2009, and 7/7/2015 taken from Yahoo Finance, and not reflective of any dividends that may have been paid out and reinvested.)
fierce1289
Member
Hey guys wanted some advice! My company matches $0.50 for every $1.00 I put into my 401k after 3 years. So if I am putting in 6% they are adding 3% pretty much.
I have a ton of student loans I have been paying down as quick as possible. I have knocked out 2 of my loans over 7% interest but still have a bunch sitting at 6.55%. Should I contribute to my 401k or an IRA or continue to kill off my student loans as much as possible till I get into the small loans with 3-4% interest on them to start investing?
I have a ton of student loans I have been paying down as quick as possible. I have knocked out 2 of my loans over 7% interest but still have a bunch sitting at 6.55%. Should I contribute to my 401k or an IRA or continue to kill off my student loans as much as possible till I get into the small loans with 3-4% interest on them to start investing?
Randolph Freelander
Member
That employer match is free money, that's a 50% return immediately on your dollars. 50% > 6.55%. My advice? Get that match. After that, then you can prioritize your 6.55% loans if you wish, though market returns will generally be higher than that over the long term, but there's no guarantees (certainly in the short term) and the spread is close enough.
Thanks. At some point I might want to move it to a lesser conservative fund considering the IRA is on top of my 401k which already gets 8% of my income plus another 3% match (and has been around six years longer than my Roth IRA). I guess I just wanted the reassurance that $8 after six months doesn't mean I'm in a worthless fund.
fierce1289
Member
Thank you for the advice!
Randolph Freelander
Member
3 years is an awfully long time wait for a match. Many (most?) employers will at least offer a match after 1 year (or even sooner), though you might need to wait longer for that match to fully vest. Read and re-read the information on that.
As for what to do in the near term, the 6.55% is high enough that I'd want it gone sooner rather than later, though I also like the idea of forming the habit of saving and investing as a default action. Stock market returns in the 20th century averaged 10% per year. 2000-2010 was not up to those standards, thanks in part to slumps from 2000 into 2003 and then the financial collapse that ran from 2007 to 2009. But the rebound from that has been astonishing.
Historical returns would suggest that even the 6.55% interest would be lower priority than market investing, but again historical returns are not guaranteed, and short term slumps might go the complete opposite direction.
I say pay the loan, but flip priorities as soon as the match is available.
Randolph Freelander
Member
Yes, you're fine. The Vanguard 2045 is a good fund that will take the edge off the market a tiny bit due to its bond holdings, but note that those bond holdings will increase over time as you get closer to the 2045 date and the fund becomes less and less risk tolerant. Along the way, your lows will not be as low, your highs will not be as high, but its general trajectory will be that of the overall market.
TheExecutive
Member
Well, the goal is to create wealth and be knowledgable enough to manage my own money.
TheExecutive
Member
Thanks, I will check it out.
Well, the thing about index investing for the long term is that you don't need to know anything about fundamental or technical analysis at all. If you are following the market with index funds it is kinda pointless. Hell, I havent even bothered to check my portfolio and the SP500 since I did my taxes in like April.
If that appeals to you, you can read this thread for the reasons why index investing is a good way to go, and other sights, like bogleheads wiki will give you a more detailed explanation.
A brief follow up to some discussion from a couple months ago, when the Listen Money Matters podcast was posted, featuring Mister Money Mustache. What resonated with me was the goal of living on half of your take home, and the philosophy of reducing consumption spending.
The last two months my wife and I have made a concerted effort to cut back on some consumption spending and double down on paying down the house. Trimming back impulse buys, cutting down on eating out, avoiding sit down places when we do eat out, holding off on home projects for a while (spacing them out). Eating out was actually a small reduction, but it was lots and lots of little things, and in the case of home projects, a few big ones.
In May we ended the month with over $1,000 more in checking that we usually did. And in June, we ended with about $700 more (some cyclical expenses came up in June). We split that into our Roth IRA's and paying down the house faster. I think, if we keep this up, the house will be paid off in 3 years, which feel enormously liberating just to type out.
I wanted to mention it as this thread has gone for a few years now and it's greatly informed my retirement and savings philosophy and approach. But in this instance it's also impacted some lifestyle choices and altered my retirement trajectory a bit along the way. Thanks for all the great discussion.
The last two months my wife and I have made a concerted effort to cut back on some consumption spending and double down on paying down the house. Trimming back impulse buys, cutting down on eating out, avoiding sit down places when we do eat out, holding off on home projects for a while (spacing them out). Eating out was actually a small reduction, but it was lots and lots of little things, and in the case of home projects, a few big ones.
In May we ended the month with over $1,000 more in checking that we usually did. And in June, we ended with about $700 more (some cyclical expenses came up in June). We split that into our Roth IRA's and paying down the house faster. I think, if we keep this up, the house will be paid off in 3 years, which feel enormously liberating just to type out.
I wanted to mention it as this thread has gone for a few years now and it's greatly informed my retirement and savings philosophy and approach. But in this instance it's also impacted some lifestyle choices and altered my retirement trajectory a bit along the way. Thanks for all the great discussion.
So I've sort of hit a mental dilemma. I've been pretty addicted to saving for the last couple of years. My Roth IRA will be maxed this month or next (probably next so I don't have to shuffle things around in YNAB), I contribute 4% to my 403b with 5.5% extra in matching, and I put any leftover in a personal investment account, but that's not necessarily going to be used for retirement. No matter what I do, those amounts will always be the minimum I put in for retirement, yearly.
Anyway, I'm starting to think I've become really boring/dull. It's not affecting my relationship with my SO or anything, but my attitude lately is to almost cringe at spending money on fun.
How irresponsible would it be to spend a relatively large sum of money (no loans) on something I want? I sold all of my "toys" over the last couple of years (motorcycle, 4 wheeler, RZR got totaled). I like having a vehicle of sorts to work on, but I have nothing to satisfy that craving anymore. I was thinking about a jetski+flyboard, but as far as usage goes, it would probably only get used once a month at best during warm seasons, and that's probably being generous. Obviously it would get used a lot during short periods of time on vacations, though.
I'm not sure if I'm looking for people to talk me into spending money on myself or out of it...I guess I'm just curious if anyone has ever been in a similar situation and what they did about it.
edit: I'm 29 by the way. I'm just worried I'll waste my younger years watching my portfolio grow.
Anyway, I'm starting to think I've become really boring/dull. It's not affecting my relationship with my SO or anything, but my attitude lately is to almost cringe at spending money on fun.
How irresponsible would it be to spend a relatively large sum of money (no loans) on something I want? I sold all of my "toys" over the last couple of years (motorcycle, 4 wheeler, RZR got totaled). I like having a vehicle of sorts to work on, but I have nothing to satisfy that craving anymore. I was thinking about a jetski+flyboard, but as far as usage goes, it would probably only get used once a month at best during warm seasons, and that's probably being generous. Obviously it would get used a lot during short periods of time on vacations, though.
I'm not sure if I'm looking for people to talk me into spending money on myself or out of it...I guess I'm just curious if anyone has ever been in a similar situation and what they did about it.
edit: I'm 29 by the way. I'm just worried I'll waste my younger years watching my portfolio grow.
A brief follow up to some discussion from a couple months ago, when the Listen Money Matters podcast was posted, featuring Mister Money Mustache. What resonated with me was the goal of living on half of your take home, and the philosophy of reducing consumption spending.
The last two months my wife and I have made a concerted effort to cut back on some consumption spending and double down on paying down the house. Trimming back impulse buys, cutting down on eating out, avoiding sit down places when we do eat out, holding off on home projects for a while (spacing them out). Eating out was actually a small reduction, but it was lots and lots of little things, and in the case of home projects, a few big ones.
In May we ended the month with over $1,000 more in checking that we usually did. And in June, we ended with about $700 more (some cyclical expenses came up in June). We split that into our Roth IRA's and paying down the house faster. I think, if we keep this up, the house will be paid off in 3 years, which feel enormously liberating just to type out.
I wanted to mention it as this thread has gone for a few years now and it's greatly informed my retirement and savings philosophy and approach. But in this instance it's also impacted some lifestyle choices and altered my retirement trajectory a bit along the way. Thanks for all the great discussion.
Nice! Glad it is going well for you.
Well, I would first look up habituation and the hedonic treadmill, and if you are going to buy something or spend a lot of money, don't spend it on something that you will get easily habituated to. A nice car is a classic example. It will be fun for like a month, but it will stop giving you extra happiness after that.
Therefore, I would probably go for experiences over things. Like trips or items that make you do new things and develop new hobbies.
So yea, going by that, a jetski flyboard might not be a bad idea. It is a new hobby, and I doubt you would get habituated to it since you would do it rather infrequently, and it sounds fun.
anonymous_abc
Member
I would rather just rent an even more fancy boat every other months, you'll probably end up way ahead and won't have to worry at all about maintenance, insurance, etc.
A brief follow up to some discussion from a couple months ago, when the Listen Money Matters podcast was posted, featuring Mister Money Mustache. What resonated with me was the goal of living on half of your take home, and the philosophy of reducing consumption spending.
The last two months my wife and I have made a concerted effort to cut back on some consumption spending and double down on paying down the house. Trimming back impulse buys, cutting down on eating out, avoiding sit down places when we do eat out, holding off on home projects for a while (spacing them out). Eating out was actually a small reduction, but it was lots and lots of little things, and in the case of home projects, a few big ones.
In May we ended the month with over $1,000 more in checking that we usually did. And in June, we ended with about $700 more (some cyclical expenses came up in June). We split that into our Roth IRA's and paying down the house faster. I think, if we keep this up, the house will be paid off in 3 years, which feel enormously liberating just to type out.
I wanted to mention it as this thread has gone for a few years now and it's greatly informed my retirement and savings philosophy and approach. But in this instance it's also impacted some lifestyle choices and altered my retirement trajectory a bit along the way. Thanks for all the great discussion.
We've reached the point that we have almost maxed out all our savings potential and now it's just a waiting game. xD
I've gotten my partner almost fully on board. we jointly invest 49% of our take home pay every month. Add to that about 10% of other semi-retirement related insurances and we feel pretty good about our savings rate.