“Future stock market returns will be lower than the historical average.”
I’ve been hearing this on Bogleheads (and Vanguard Diehards) for decades, usually from a respected industry guru. The only suggestion to deal with it is to save more and prepare to work longer. I was already working and saving as much as I could anyway, so there was nothing actionable in this for me and no rational reason to worry about it. Turns out these dire forecasts are usually wrong anyway.
Pay off your mortgage before you retire. We did that, and then we bought a second home and decided to keep our beach house and use it as a hybrid vacation home / rental property. This made our quite simple financial picture much more complicated. I’m Ok with it now, but as I age we may decide to simplify the picture.
Dave Ramsey. Back in the day when we had some debt, he would rather you pay off everything before contributing towards retirement accts. Even staying out of the market for a couple years never made sense to me when you can accomplish both tasks at the same time. Time in the market is key!
To buy the latest “hot stock”. I always try to remember the adage that whenever we amateurs make a trade, on the other side is likely a much more experienced and knowledgeable institution or professional trader.
Keep a record of your expenses and budget. I always save at least 10% of my income. Usually much more than that, maxing my company’s 457 plan and funding a traditional IRA also (we need the tax break). It doesn’t matter how I choose to spend my money if I see my savings increase each month.
Our family has always used this method (as long as you don’t cover expenses by carrying credit card balances!). if you “Pay Yourself First,” such as by 10%, you can be frugal or self-indulgent with the rest of your spending and you’re near-certain to come out all right.
In my starving-college-student days, as I watched the 10% grow, I often daydreamed during hard times (while waiting for my next payday) about how I could spend money. I remember thinking I could totally empty my savings account and take the money to a steak house and overeat. This was in the 1960s, with limited savings options, and also a slow turn-around time to get my passbook to and from the S&L. So “daydreaming” was all I had time for—and that next paycheck would always have arrived before the account-emptying savings.
Our kids were encouraged/coerced, from earliest ages, to put away 50% of gifts, etc., and each of them reached adulthood with middle-six-digit portfolios.
“Found money” such as this, plus various rebates, means that wife and I still have a “sweep”brokerage account, just for stashing the kinds of monies that are too-small to mean anything individually, but add up. After making a six-digit house-remodel addition just before 2020, we have a sun-room plus master bedroom and master bath, that feels wonderful in rain or shine—and still leaves a six-figure account of remaining “found money,” ready for us to play with—
“Future stock market returns will be lower than the historical average.”
I’ve been hearing this on Bogleheads (and Vanguard Diehards) for decades, usually from a respected industry guru. The only suggestion to deal with it is to save more and prepare to work longer. I was already working and saving as much as I could anyway, so there was nothing actionable in this for me and no rational reason to worry about it. Turns out these dire forecasts are usually wrong anyway.
Pay off your mortgage before you retire. We did that, and then we bought a second home and decided to keep our beach house and use it as a hybrid vacation home / rental property. This made our quite simple financial picture much more complicated. I’m Ok with it now, but as I age we may decide to simplify the picture.
Dont own too much of one stock. We own a lot of BRK.
Dave Ramsey. Back in the day when we had some debt, he would rather you pay off everything before contributing towards retirement accts. Even staying out of the market for a couple years never made sense to me when you can accomplish both tasks at the same time.
Time in the market is key!
Good one, Catherine!
To buy the latest “hot stock”. I always try to remember the adage that whenever we amateurs make a trade, on the other side is likely a much more experienced and knowledgeable institution or professional trader.
You must own bonds because it will prevent you from selling all your stocks in a down market.
Rich Dad, Poor Dad.
budget……..I’m 78 and have never budgeted but have lived a great life within my means and invested enough to secure in my future whatever may come up
Keep a record of your expenses and budget. I always save at least 10% of my income. Usually much more than that, maxing my company’s 457 plan and funding a traditional IRA also (we need the tax break). It doesn’t matter how I choose to spend my money if I see my savings increase each month.
Our family has always used this method (as long as you don’t cover expenses by carrying credit card balances!). if you “Pay Yourself First,” such as by 10%, you can be frugal or self-indulgent with the rest of your spending and you’re near-certain to come out all right.
In my starving-college-student days, as I watched the 10% grow, I often daydreamed during hard times (while waiting for my next payday) about how I could spend money. I remember thinking I could totally empty my savings account and take the money to a steak house and overeat. This was in the 1960s, with limited savings options, and also a slow turn-around time to get my passbook to and from the S&L. So “daydreaming” was all I had time for—and that next paycheck would always have arrived before the account-emptying savings.
Our kids were encouraged/coerced, from earliest ages, to put away 50% of gifts, etc., and each of them reached adulthood with middle-six-digit portfolios.
“Found money” such as this, plus various rebates, means that wife and I still have a “sweep”brokerage account, just for stashing the kinds of monies that are too-small to mean anything individually, but add up. After making a six-digit house-remodel addition just before 2020, we have a sun-room plus master bedroom and master bath, that feels wonderful in rain or shine—and still leaves a six-figure account of remaining “found money,” ready for us to play with—
All without budgeting.
Regards,
(($; -)}™