Life After Mortgage.. Advice

Discussion in 'The Pub' started by rolsen, Jan 22, 2020.

  1. Crowder

    Crowder Dang Twangler Silver Supporting Member

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    The common disclaimer "Past results do not predict future returns" always has some truth in it, but probably moreso today than in quite a long time.
     
  2. hellbender

    hellbender Member

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    Naw, meth lab!
     
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  3. T92780

    T92780 Silver Supporting Member

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    Pretty good advice, but OP clearly noted "zero debt", so what you got now?
     
  4. Trotter

    Trotter Supporting Member

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    This. Open a brokerage account at Fidelity or Vanguard. It's easy, free and takes less than 5 mins.

    And may I recommend; low-cost, Total US Market Index Funds from Fidelity or Vanguard. Specifically, FSKAX or VTSAX

    1. Develop a workable plan
    2. Invest early and often
    3. Never bear too much or too little risk
    4. Diversify
    5. Never try to time the market
    6. Use index funds when possible
    7. Keep costs low
    8. Minimize taxes
    9. Invest with simplicity
    10. Stay the course

    https://www.bogleheads.org/wiki/Main_Page
     
    Last edited: Jan 24, 2020
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  5. T92780

    T92780 Silver Supporting Member

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    No debt and contributions maxed out with $24k a year burning a hole in pocket = start living = 5-star vacation/hotels in parts of world not yet seen. In a blink you'll be in 50's, etc... do it now while in prime of life and don't spend it on cars, etc.

     
  6. Madsen

    Madsen Member

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  7. Crowder

    Crowder Dang Twangler Silver Supporting Member

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    I want to offer a serious endorsement of this idea.

    As someone who does this for a living, I have seen way to many people who were struck with illness or tragedy right before it was time to really enjoy the fruits of their lifelong labors.

    I have a 61-year old client who is dying from ALS. Was planning to retire this year. Diagnosed in August, helpless now, won't make it to 2021.

    I have another client who never wanted to retire because he lost his wife and son in a car accident. When he's idle at home he has too much time to think about what he is missing. So he has preferred to work as long as possible. Finally at age 80 he was forced to stop.

    I'm usually the first one to chide people for using anecdotal evidence to shape their long-term thinking, but I've got several examples of this and it shapes my advice and my personal planning.

    Life is about living. Don't forget that.
     
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  8. killer blues

    killer blues Member

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    Look into a precious metals portfolio.
     
  9. Mbr0006

    Mbr0006 Supporting Member

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    Contingency planning, Estate Planning, Emergency Fund, Life Insurance, Disability. The stuff people don't like to talk about. It sounds like you've done a great job saving, if you haven't already I would ensure that you have that future protected.
     
  10. jvin248

    jvin248 Member

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    .

    Avoid the realestate game, you've got the right attitude -- it's a hassle and you are never in charge. You've got the banks, the city inspectors, the taxes (which only go up, they are not capped like a primary home), maintenance, and the tenants. It's also not the time to get in as this isn't the bottom of the real estate market anyway.

    Most fancy mutual fund managers often load up on S&P tracking funds and then play at the edges for their 'trick' -- that way they do not get too beat up if the market tanks because they are close to what the market was doing, and their grades are compared to the general market. They are trying to pay their rent/mortgage and don't need big swings in their bonus income from year to year.

    Vanguard has about the lowest management fee system. So park most of the cash there in the usual index funds, per your risk level. You might dribble your hoard in slowly every month for a year so if we have a lightning bolt strike on the market you are cost averaging your way in. Plus if it drops you've got tinder ready to go.

    Some part, and you'll need to figure out what percentage, put into your hunches and whims -- you might think gold is good right now, or hog futures, or old guitars (doh!), or whatever. No single wild investment should be more than 5% of your holdings. TD Ameritrade seems to have the best trading platform if you want to be a day or swing trader. Everyone is a stock wiz when the markets are going up, and they will tell you all about their little tricks. Be wary of the big fund managers on television telling you 'oh, you gotta get in on paper airplanes! I've been in that market for months and it's only going up!" because they are selling a story to get buyers so they can unload those stocks.

    Remember that any investment that goes down 50% ... needs 100% price appreciation just to get back to break even -- and that is really hard for most stocks/bonds/commodities.

    .
     
  11. Franklin

    Franklin Supporting Member

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    I've paid off my second mortgage at 48 yo. You will be amazed at how little difference there is (in having extra cash/savings) in not having that specific monthly bill.

    To be honest, there appeared to be some relief for a few months after paying it off. But after having a flooded basement and 8' of water destroy everything including our oil burning furnace it seems like we are still living paycheck to paycheck. I had to borrow $13k from my 401k to replace the furnace and over two years later I still can't afford to have the foundation dug up and the footing drains repaired!!
     
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  12. Franklin

    Franklin Supporting Member

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    Word! Maybe not 5 Star vacations, but definately go out there and live and buy a nice guitar(s). They don't depreciate like cars. I never got the expensive car thing, it must be about fashion. For me to want to spend near 6 figures on a car I would need limitless funds to justify it; like $50 million+ in the bank.
     
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  13. rolsen

    rolsen Member

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    At the risk of sounding out of touch, I agree the mortgage savings is not some wild bonanza of cash. For us it’s $1300 per month (that was just the principle/interest portion.. still have insurance and property taxes!).

    My wife was layed-off last year and the ‘size’ of that $1300 burden grew significantly. >60% of our household income was hers.

    No mortgage is less about today’s comfort than it is about mitigating tomorrow’s uncertainty.. this is why we diverted some resources in that direction.
     
  14. rolsen

    rolsen Member

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    We definitely make room for fun. We’ve traveled, but that’s a little limited with my wife’s new job, post lay off. Measly 2+ weeks of vacation, from the 5 she had before.

    For better or worse, I’ve restrained some desires. Always wanted a boat but the reality of amount of use vs cost does not pencil out. So, we have kayaks. I want an overland-ready truck/camper or 4x4 van for extended adventure trips, but my 10 yr old Subie Outback gets me mostly where I need.

    I’ve got some $50,000-$100,000 toy fantasies but that might not be the best thing right now.

    We want to retire at 55, 56.
     
  15. rstites

    rstites Member

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    For some it is about fashion, certainly. However, I always drive nice cars because I spend an hour in my car each day commuting (and that's not really too bad). I figure life is to short to deal with boring rides.

    I buy luxury cars second hand, so I let some other schmuck take the depreciation hit on it. I'll generally spend a little less on those cars second hand than a standard American/Japanese car would be new. I pay less in taxes and insurance, but I do have to pay for maintenance and upkeep. It's worked for me. YMMV.
     
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  16. rstites

    rstites Member

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    Definitely do some serious thinking about how you're funding that. You can't pull money from your IRA's until you're 59.5. You can't get medicare until you're 65, so you need to budget for health insurance for 10 years there without income.

    This means you need a ready source of income that is not locked into retirement accounts. It also means that you need to weigh the risk level of your investment differently than if you were aiming for a more traditional retirement age.
     
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  17. beckstriad

    beckstriad I'm frosting a cake with a paper knife Gold Supporting Member

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    Taxable account. Angel investing. Hard money loans. Enjoy it.
     
  18. Fishyfishfish

    Fishyfishfish Member

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  19. Franklin

    Franklin Supporting Member

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    I hear you. In fact my wife had to go find a job after we had that epic flooded basement. Somehow we were paying our $1,300/month with the payment coming right out of my pay to "How the %*^& can we afford Christmas present this year" BEFORE we had that flood that almost bankrupted us. Believe it or not, having a house paid off and no ccard/car payments makes you an undesirable lendee. I went to a bank to try and get a home equity loan for the basement repairs and they said "Yeah, sorry your credit sucks. We'll pass. Try getting a credit card or something to establish your credit". WTF?!??!? I was floored. I showed the guy that I paid off two houses. He said, "Yeah, but at the moment you have no debt"
     
  20. dspellman

    dspellman Member

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    Whole Life Insurance isn't.

    But if you're insurable, it's not a bad idea to look into the various Universal Life products, especially those that offer "living benefits." Some of these include riders for long term care, etc. Might also look into variable universal life products, which allow you to put cash value into the various indexes and funds. The money grows tax deferred and can be accessed income tax free. This is one of the areas where the wealthy pack cash, and because the premiums are variable, and because a good insurance agent can keep your insurance expense within the policy low, you can build immense reserves of cash value (while not inflating the actual death benefit). One note with universal life insurance products is that you can contribute to them (and even back-fill them if you haven't maxed out the premiums in the past) even when you're unable to contribute to Roth or other retirement products because you're either not working on a salary basis or because you make too much money. The average Pacific Life insurance client contributes $35K to his policy (you've seen the "whale" on every golf channel) yearly, and when overfunded, these things build cash value like a Ferrari builds speed. Having access to tax-deferred money through policy "wash" loans (again, ask your insurance guy) can make your retirement a lot easier.

    Other insurance products aimed at retirement (particularly if you're around 50 years old) are *some* variable annuities (find a good independent insurance guy). You're not going to want to annuitize these, probably ever, but you can access the money and see guaranteed growth of the money you'll be using in retirement (even if the cash value drops) at some pretty good rates. You'll pay taxes on the gains (any excess over your basis, or the unqualified money you've put in), but not on your original chunk.

    If I were sticking with random investments, I'd try to diversify (simply picking other stocks isn't diversification) into REITs, foreign debt, currency, etc. Your financial advisor should know this stuff. In particular you want investments that do NOT correlate with gains or losses in the stock market (or with each other) if you can avoid it. There are also funds out there that mitigate, manage or eliminate downturns, sometimes at the expense of some of the gains. By managing the drawdowns, you actually have overall actual gains that exceed those of most index funds.

    I'm not a fan of owning real estate that requires a lot of maintenance or dealing with rental clients. It's the traditional asian choice, of course, and you can do well with it, but it's never a "set and forget" type investment.

    I'd also look into transferring money into Roth IRAs from your 401ks, if possible. It's been called a "Backdoor Roth" contribution, and you'll pay taxes now on the money you're transferring (via 1035), but if you're at a point where you have a fairly low interest rate now, it's almost a no-brainer. You can *transfer* far more than you can contribute and this is important if you're not really working and can't make contributions or if you have income levels that reduce what you can contribute.
     

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