This question is thought of and asked thousands of times from individuals to financial media outlets. How much savings is enough for me to retire? Well I have a simple solution for all of you right here on this great website. The idea for this particular post came to me when I was having a random discussion with a co-worker about food. A light bulb came on in my head and I thought I can solve this simple question easily. The answer is very personal to you because each person’s financial portfolio is different. What makes sense to me might not correlate with your investing strategy, because of this investing tends to be viewed as complicated. But do not fret as there are no wrong answers here today.
Category: Retirement
The Best States for Retirees
If you knew which were the best states for retirees, would that information sway you to live in one of those states? Recently such a list was released by CNN Money with some analytical help from the BankRate guys, they ran an article based on the 10 best states to retire. This list of states will give all the readers who wish to retire the best bang for their dollars. The criteria in the research was based on cost of living, (obviously) climate, crime rate, access to healthcare, and Taxes.
Now mind you some of these states are land locked and in extremely cold areas of the United States, but then have low crime rates. In contrast the states in warmer locals and near the beaches have high crime rates coupled with low taxes. The first poison you have to decide above all else is how the heck can you save enough to retire, then you can pick and choose all the dirty little things that you can live with and or without in these great states. Like being far away from the ocean, high crime, low freezing temperatures, and low taxes.
Millionaires
Hey did you know that many millionaires in the United States hold positions as executives / managers or teachers? Survey results show that about 35% of millionaires obtained their wealth working for these two professions. These lucky millionaires didn’t invent the IPAD or the post it or the PC. The majority of these millionaires lived frugally and saved a large portion of their income. The survey results are featured in the millionaire corner blog article listed in the link below. The average time frame that those millionaires achieved this status is 17 years, maybe give or take a few years as results like these are skewed.
The Ups and Downs of Life
This idea just came to me like a bolt of lightning and I thought why not talk about some of the good things and bad things that have taken place in life throughout the years. I tend to remember only the major things that have happened to me as a normal person should, and why not share them with all of you as a way to reveal a little more about myself. I will attempt to keep things in a financial aspect, but I might sneak in a few that are not about money.
Life does not revolve around money, but this website is based on perfecting good money management behaviors. So I will list both life goals and money goals.
The Ups of Life and Money:
1. I graduated from 2 Universities – Bachelor’s / Master’s Degrees in Hand.
2. The day I received my Toastmaster’s Competent Communicator for completing 10 speeches.
3. My first non spam approved comment on my blog. (Whoo Hoo)
4. Holding the free and clear title for my cars, thus having them paid for. (Three times)
5. Finally achieving credit card Debt Free Status. (Peace Out Chase and Citi)
The Downs of Life and Money:
1. School Loan Debt for my Master’s
2. Not Investing enough in the 2008 – 2009 market crash. (Could have made a killing)
3. Buying an overpriced gas guzzler for 32K when my income was only 45K.
4. Not finding Dave Ramsey / PF Blog World sooner.
5. Accumulating a bunch of useless stuff. (Wasting income on nothing)
OK I had to think a bit about the downs in life as it is always harder to remember bad things. I tend to sway on the optimistic side of life. Do you always think about the good things or bad things? By doing this you guys now have a greater sense of who I am and what I have accomplished to a small degree. I hope to keep adding to the ups in life in the near future but wish to avoid all the downs.
I wish we all could eliminate or avoid the downs in life, but it makes us in someway better individuals as it builds up character. After a down event you come out stronger in overcoming obstacles in life. Do you agree? Also sometimes a down event leads to a major up event in life. For example rags to riches stories of somebody getting laid off and then starting a crazy money making business. I have read a few of those over the years.
Have you recently gotten over a down event in your life? I hope you get motivated to make your own ups and downs list. If I can recall any more ups and downs later I will do a part two to this post.
Stay safe everybody in the East Coast as a major storm is headed into my neck of the woods.
Rich Uncle EL
Pic credited to Jay Fine.
Save 30% for Retirement
If you are one of the lucky few who can save a large portion of your income applaud yourself, because it is a great opportunity for you to set yourself up for the future. But many of you are thinking how can anybody save that much with all the numerous bills in our lives? I have known personally a few people who actually save 30% for retirement and still been able to live life happily. Granted their situation might have been better than the average person and it might take you a while to inch up to that savings level, but believe me you can do it to.
Listed the below are the reasons I feel individuals with certain money scenarios can manage to save 30% or more for retirement or emergency savings. See below for a list of examples how one can save 30% for retirement.
Richer by 288 Times
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| Have a 150 grand lying around? |
Can you believe this? The Super rich have 288 times more savings than the normal American. Compound that by 4% and you have a pretty decent interest income. I must say I didn’t fully agree with all the hoopla surrounding the top 1% and all the wall street protesters, but the facts are very clear and right in front of our noses. The Super rich are richer by 288 times the median income. How can the top 1% be so abundantly prosperous and the average person not be? The economic system if taken to extremes will not sustain another meltdown.
Did you know that the system is based on good faith and that most of your money is not all accounted for in banks or brokerage firms. Let me explain a little further for those of you who do not know. Most financial institutions use about 80-90 % of your money to lend out to others or to re-invest again for their future gain. If the system were to collapse it could be the end of monetary policy as we know it. The actual figure the computer displays out to you and millions others just like you, is a figment of your imagination because guess what, you’re actual money is the mortgage of some other person and the bank is the administrator of your assets and another person’s debt.
I am not telling you all this so that you can run over to the bank tomorrow and hit the eject button on your money, but to get you to think a little bit about what is actually occurring behind the scenes. Things are not as rosey as the media is making it seem. One day it’s OMG we might go into another recession and the next day the media is all about how great of an economy we have. They can not seem to make up their minds or just maybe the powers from above and the ultra rich are making the media outlets run the happy go lucky stories so that a political / monetary uprising do not occur.
Richer by 288 X the median Average article: Net Worth Article
So if you can sit down and digest the article you just read in the link above about the super rich and the income disparity affecting our nation, How do you feel? Do you now feel a bit of compassion for the wall street protesters? Do you even care that somebody has 288 times more savings than you do?
RichUncle EL
Pic above is credited to Icon Airplane Co. Toys of the Super Rich!
Asset Allocation
Why is asset allocation important? Basically you are dedicated to a specific breakdown of financial sectors that you may or may not have knowledge what the breakdown should be. The possibilities are endless when it comes to the asset breakdown for your retirement accounts. Finding the right asset allocation is crucial to how your investing performs.
But it all comes down:
- What you want to invest in
- How much Risk you wish to take
- Why your age may favor a specific breakdown
- How comfortable you are with making adjustments
For years many investment gurus preached that the younger you are the higher your percentage of funds should be in U.S. Stock sector but now I think that is not the right way to invest. The volatility now a days is getting way to out of control for even the professionals to grasp.
What can you do to put yourself in the best possible path for your funds? Understand the importance of doing asset allocations based on you’re percentages and fund prices. (If you are into spreadsheets and tracking prices you will benefit from the ups and downs of the market)
When I say for you to make these allocations, I am referring to your 401K or similar plan which may include IRA plans as well. The reason I say this is because these types for accounts usually do not charge you fees for making moves / shifts between funds. Now let’s discuss the % breakdowns by age range.
Asset Allocation by Age:
20-30s: 70% U.S. Total Stock Fund, 15% International Fund, 15% Bond Fund
40-50s: 50% U.S. Total Stock Fund, 30% Bond Fund, 20% International Fund
60-70s: 40%U.S. Total Stock Fund, 40% Bond Fund, 20% International Fund
Clearly as you get older you want to start to move the risk away in retirement accounts by reducing your % in the U.S. equity markets and moving it to bonds, income producing assets, and cash. This will assure you will be better protected if there is a dramatic market collapse like in 2008. These diversification tactics coupled with the lower costing index funds like Vanguard funds you will have a greater chance of hitting your retirement magic number sooner than later.
Then you can be preoccupied with what to wear to the beach because you have just reached the financially free stage of your life. Now the fun begins.
Asset allocation definition as per Investopedia
Rich Uncle EL
Top 10 things that Impede Money Growth
Top Ten List:
1-Not having a budget
2-Having a shopping addiction
3-Spending more than you earn
4-Having a Gambling problem
5-Not changing bad money habits
6-Being addicted to vices (alcohol, cigarettes, drugs)
7-Having a small vision mind frame
8-Not investing in a retirement plan
9-Debt
10-Keeping up with the Joneses
All of these things will stop any inkling or possibility of growing your piggy bank. Money as I have mentioned before is a vehicle that needs to be steered in the right direction. A wise man once told me to see the big picture of everything and also that the little things in life add up to make a big difference. For example I know some people who do not invest or increase gradually their 401K employers retirement account because they feel that somehow the government will restrict full access to this money in the future. That is in my opinion somebody not seeing the vision compared to a financially minded person. Granted we can not predict the future but I can bet that the people will not let the government just raid our retirement accounts. (Social Security is another topic and could get crossed out of the retirement equation in a decade if they do not fix the system.)
If you notice the list above you will see all the negative barriers that we sometimes place on ourselves for various reasons. If you can successfully go through each list item and not be affected by any of the ten things then you are definitely winning in the money game. Just to get a bit personal and disclose to all of you the list items I have overcome as I used to mismanage my money for a few years. I am guilty of list items 1, 2, 9, 10, but now I am cured. The problem I remember I had was that I didn’t really feel like nothing was wrong with me because if I spent money most of the time I saved money on the flip side, thus being in denial. I was always a saver even though I was a shopaholic of watches and sneakers. Two wrongs don’t make a right and I had four wrongs.
If you could be so kind, let us know what list items you have been plagued by or guilty of and have been cured of in a comment below.
Watch your Money !
RichUncle EL