Retirement investing...
- Thread starter Ws6
- Start date
I don't give financial advice. There is lots of it on the web if you spend the time. I will talk about one of your picks though.
Permrock is the old Boaz energy. They own lots of properties in the shale fields, which is why they can pay out 12% dividend. The problem with shale wells is they don't produce for very long - some a year, some 5. So without investing more in drilling more holes, you run out of oil and gas. Possibly there drilling more holes - but at 12% dividend I don't see how.
This is why companies like Pioneer sold to XOM, and Chevron bought Hess - both on the cheap. They look good now, but its not forever.
I am not saying I wouldn't own PRT, but I wouldn't plan on 12% for the rest of my life. Or even the rest of this year possibly?
There are dividend stocks that legitimately pay more than treasuries. If your looking for income you might wish to search there. But when an equity is paying 12% and no one is buying, there is usually a reason.
Permrock is the old Boaz energy. They own lots of properties in the shale fields, which is why they can pay out 12% dividend. The problem with shale wells is they don't produce for very long - some a year, some 5. So without investing more in drilling more holes, you run out of oil and gas. Possibly there drilling more holes - but at 12% dividend I don't see how.
This is why companies like Pioneer sold to XOM, and Chevron bought Hess - both on the cheap. They look good now, but its not forever.
I am not saying I wouldn't own PRT, but I wouldn't plan on 12% for the rest of my life. Or even the rest of this year possibly?
There are dividend stocks that legitimately pay more than treasuries. If your looking for income you might wish to search there. But when an equity is paying 12% and no one is buying, there is usually a reason.
I’m not sure I understand the black walnut analogy. Because at this point, you don’t know what a black walnut is yet. You’re not even really sure how to get into the forest.
So, let’s look at the very big picture. Let’s define the forest.
You want to retire. You need to figure out how much money you need every year in retirement. That’s the first part.
Paying off your house reduces the amount of money you need every year, and that may, or may not, be the best way to proceed. I have a 3% mortgage, for example, paying off my mortgage is a foolish use of money - because I get a much better return in almost every other investment. So I don’t plan on a paid off mortgage.
So, let’s take your $50,000 a year as being sufficient for retirement.
There are several potentialsources of income in retirement, one is Social Security. Two would be some sort of defined benefit plan pension. Since you haven’t mentioned that, we’re going to assume that you don’t have that. Then three would be money that you get from residuals in a business perhaps. You haven’t mentioned that so we’re gonna assume you don’t have that either.
The fourth would be the income proceeds from a portfolio.
You say you plan to retire “as soon as possible“ well, without knowing your age and what year that is, it’s impossible to determine the Social Security that you would receive. You’re not gonna receive it when you’re 45 years old, for example.
Back to your $50,000 a year, first you need to figure out what year you’re targeting, and what you’re gonna get in Social Security. Then you’re going to build out the difference between your Social Security and your desired $50,000 using the proceeds from a portfolio.
You can invest in dividend stocks, through dividend mutual fund, but that may, or may not, be a wise investment given your age, time horizon, and risk tolerance.
The fact that the net asset value on a dividend mutual fund fluctuates, may be too risky for you. You may need something different than that, you may want to balance your portfolio across several asset classes, including fixed income, dividend, paying stocks, and growth stocks.
So, first we need to figure out what your risk tolerance is, do you absolutely have to have that income every year? and do you have to to know that the balance of your portfolio won’t go up or down with the market?
The general rule of thumb is that you can safely withdraw about 4% of a balanced portfolio every year, and have a good chance that the portfolio will last long enough to see you through, and that accounts from market down terms, inflation, prices, world, events, and that sort of thing.
So, once you know, the difference between the Social Security that you’re gonna get, and your $50,000 a year, it’s real simple. You take that number, let’s call it 36,000, and figure out how big the portfolio needs to be to generate that number at 4%. In this example, it’s $900,000. Not $500,000.
So, conceptually, is putting all of your stocks in a dividend paying mutual fund a great plan for retirement? No, not really, because there are too many other considerations to say that that is good, or not good.
Conceptually, you need to figure out how much you’re gonna get from other sources, and build the portfolio to make up the difference.
I am going to toss this out here because its related.
Social security pays a minimum. If you worked 30 years, and collected 4 credits a year - the minimum payout is like $1000/ month. Each credit this year I think is around $1800. So if you make $7200 per year, you get 4 credits. These are all very rough numbers so check into them for yourself - I don't know the nuances.
If I wanted to quit working early, I would likely try to find a part time gig that got me 4 credits a year until I had 30 years of qualifying credits - if I wasn't there already. Not only would it get you SS (which were assuming still exists in the future), but gives you something to do once in a while, and you earn a bit more to spend at the current time.
Social security pays a minimum. If you worked 30 years, and collected 4 credits a year - the minimum payout is like $1000/ month. Each credit this year I think is around $1800. So if you make $7200 per year, you get 4 credits. These are all very rough numbers so check into them for yourself - I don't know the nuances.
If I wanted to quit working early, I would likely try to find a part time gig that got me 4 credits a year until I had 30 years of qualifying credits - if I wasn't there already. Not only would it get you SS (which were assuming still exists in the future), but gives you something to do once in a while, and you earn a bit more to spend at the current time.
I don't know your age, where you live, nothing......and really not investment advice, but you need to have more than $500K. Keep working, investing saving. Skip EVERYTHING and SAVE. Get a 2nd job, sell stuff, work harder.
You wanted and you asked for it. Do it.
You wanted and you asked for it. Do it.
I thought it was 35 years to get rid of any zeros in the SS numbers game... I suppose if one is ok with not maxing that out (they run the numbers, and don't need it) then that works.
To me, for most people, working 35-40 years is a given. Retiring before 60 is pretty hard stuff--requires putting a lot of money outside of tax advantaged vehicles, and a lot of financial discipline. And quite a bit of planning.
Yes, but we are all adults. If someone on here "ruins my life" with a post, I can promise they didn't.
-39
-Midwest, USA
-Currently $100k in VFIAX individual brokerage.
-I want mobility and will sacrifice to have it, and don't trust HR or corporate one bit so my job has zero to do with anything financial retirement wise unless you could SS. Screw their 401k or whatever. Say what you want about it, that's my take. I don't trust them one bit and know they'd find a way to screw me there some magical somehow.
-I'm a minimalist. I go all in on what matters to me, but own little else beyond necessity.
I agree. I thought I'd be dead by 60, but that's maybe not going to happen, so I'm trying to be proactive at this juncture.
Completely disagree.
There are many members here who have successfully invested, and it’s up to the person reading to determine whether the advice they’re getting is good, or bad, comes from experience, or is just Internet hogwash.
Frankly, it’s the same with oil, or car maintenance, or anything else we discuss in this site. Some posters clearly know what they’re talking about. Some posters clearly do not.
However, religion, sex, and politics, are all contentious topics. Decades ago, a guide for naval officers said that those were not appropriate topics for polite dinner conversation.
And so it remains the rule on BITOG. The previous owner, and the current owner, desire for the site to be a place of polite, professional conversation. That means we take the contentious topics out. No exceptions. Those topics create bad behavior, and it is the bad behavior we are interested in avoiding.
Bad investing advice, just like bad car maintenance advice, or bad advice on oil, or bad advice on firearms, tools, filters, airplanes, or any other topic on this site can be expensive.
We do not moderate content, only behavior.
Caveat emptor.
Maybe. I've no clue how to even get into their 401k, etc. I guess I could call their broker or something, but that's just money I can't have access to without major penalty. Supposedly they match 3 or 4 percent or something.
That's the real crux of it. Every cent I give them is a cent I can't have until I'm 60.
I intend to leave everything in vfiax until I leave the workforce. Dividend funds suck for accruing wealth, in my novice opinion.
I can't tax harvest with it, so its maybe a wash, there?
I just want my company nowhere near it.
I'll call their brokerage and find out. I think they use Fidelity.
It may be my money, but it's connected to them and that makes me nervous. They fire me or I quite, what then? Oh...I take it with me...supposedly...maybe...if they do things right...nah. I'm good.
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