45 and wondering if I should stop investing altogether?

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ChampagneOfBeers
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45 and wondering if I should stop investing altogether?

Post by ChampagneOfBeers »

Hello; first post...Any advice appreciated...hopefully not too informal; I'm a tech writer and it is the weekend...

So have a ready please...what would you do? Overall question...continue saving in 401k to max it out? Or save the bare minimum company match, and use the extra money to do the things you always wanted to do (vacations/motorcycle), but never could all along because of saving to get to this point...

Here goes...

I'm 45. I've worked full time uninterrupted since 1986. I have made over $95,000 a year since 1996; many years reaching $145,000 with bonus. Used to live in major metropolitan dot.com area, with new IT technologies was able to move to very inexpensive place to live (Southern US). Have a $275,000 house that is paid off. Only remaining debt is a $13,000 car loan on brand new vehicle. Have $435,000 in 401k. Have $70,000 in cash. We plan on living in our house the rest of our lives, we love the area.

Life really couldn't be better.

Now the strange parts, well maybe not so strange to everyone else on a financial board. I got to this point by day trading in my 401k and earlier money, on the side while working regular job. I learned to trade in grad school in mid 90s. Easy then. I was blessed with the 2008 financial meltdown, because I had been burnt with loosing on some bad tech stocks in early 2000s (I lost big in early 2000s - but rebuilt); I was lucky and got out (regular investments and converted 401k to money market) before the big 2008 meltdown. I paid off our house with the regular investment proceeds. When the market completely tanked, I rolled 401k back into investments at market low. It was around $160,000 at low, now back to $435,000. Europe is scaring the crud out of me now.

So now we have a good emergency cash supply, a good 401k (following appropriate ratios for my age), and a paid off house, and no debt. My issue is I don't know what to do with myself financially. It's not about me, it's about my family; and making sure they are ok; which they are! We have two teenagers that are great kids, but respectfully not the smartest. We have been married for over twenty years, the joke is I have the brains and the compulsion on money, and my wife has the looks. She is beautiful and our daughters are too, but they aren't super smart. I'm not being mean, it is just reality. Beautiful but not good at math :>. I'm saying this respectfully of them because they are both going to realistically be going to a community college and then take a trade, like my wife; their high school grades are terrible...but oh well that is part of life. They are like my wife, beautiful, but won't be corporate executives; that's the joke in our house - I have all the brains for them. They are my life. I'm saying that as a joke that they agree with, if it wasn't for them I might be in a mental institution (I have severe OCD (two meds); that's how I was able to get us financially to the point we are). Well enough of all this rambling. A few more note have good life insurance on me and health good. I'm bringing all this up because college is paid for essentially, my kids are going to be with us for another decade, I completely accept that and look forward to that. The same opportunities available to me with my job are not going to be available to them unless the economy completely reinvents itself.

So I've paid for about as much as I can for stuff now, and going forward...now what? I want to, but have to, work...

So sorry for the bizarre post, I hope you don't think this too strange.

My question to you is what YOU would do with your life from here out, with investing, and the whole world economy, given these conditions.

I have saved, saved, saved; maxed 401k as far back as I can remember, and still do...but is it worth it? WHY?

Should I stop investing, and just enjoy life, go spend on realistic things we want; instead of continuing to max out a 401k.

I don't know where the world is going financially and in a way am really tired of thinking about it; especially when getting up at 4:00 AM to determine the trades for the day.

Right now I love my job, but am essentially working for health insurance. I am planning on working as long as I can, if I can keep a job I enjoy).

Hope this makes sense and not too informal.
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mhc
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Re: 45 and wondering if I should stop investing altogether?

Post by mhc »

Welcome to the forum.

I would say keep investing. Of course there are much easier strategies than day trading. The philosophy promoted on this forum is very easy, low maintenance, and pretty boring. It frees you up to enjoy life.

If you stopped investing today, how would you pay for your retirement? Personally, I don't want to work the rest of my life or eat dog food in retirement. I find I can enjoy life quite nicely without having to spend a lot of money. I try to live below my means and save a lot.

Right now you have about $500k. With a withdrawal rate of 4% you would have a good chance of having $20k a year. Add in $30k for SS. Could you retire on $50k pre-tax a year? If so, maybe you could stop investing. But what if SS falls apart by the time you are ready to retire or the market collapses. Would you be fine with $20k/yr?

Continue to save at some point becomes a hedge against future unknown events.

I would recommend you taking a hard look at your life today and how you plan to finance the rest of your life. Only you can decide if it is worthwhile to continue saving.
retiredjg
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Re: 45 and wondering if I should stop investing altogether?

Post by retiredjg »

Welcome to the forum! It does not appear to me that you have enough money to stop adding money to the 401k and IRAs. Can't recommend the day trading though. Check out a different philosophy and get your life back.

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chaz
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Re: 45 and wondering if I should stop investing altogether?

Post by chaz »

Balance between investing over next 20 years at a lower rate and take vacations, etc. to enjoy life.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
Holden_Caulfield
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Re: 45 and wondering if I should stop investing altogether?

Post by Holden_Caulfield »

Why does it have to be one or the other? Scale back your investing while enjoying life. But you definitely shouldn't stop investing, you don't have enough for retirement.
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ruralavalon
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Re: 45 and wondering if I should stop investing altogether?

Post by ruralavalon »

Welcome to the forum :) .
ChampagneOfBeers wrote:So now we have a good emergency cash supply, a good 401k (following appropriate ratios for my age), and a paid off house, and no debt.
. . . .
Have a $275,000 house that is paid off. Only remaining debt is a $13,000 car loan on brand new vehicle. Have $435,000 in 401k. Have $70,000 in cash. We plan on living in our house the rest of our lives, we love the area.
. . . .
Right now I love my job, but am essentially working for health insurance. I am planning on working as long as I can, if I can keep a job I enjoy.
Congratulations, you have a paid off house, minimal debt, love your job, love your family, love your home and where you live, and have $500k in investable savings. Thats a very good place to be at 45, and quite an accomplishment.

It does not look like you now have enough to fund a comfortable retirement. Have you estimated what your exppenses in retirement might be? What are your current living expenses?

So I do strongly suggest that you continue to save and invest, this time using total market type index investing which will consume much less of your time and effort. Please see: http://www.norstad.org/finance/total.html ; and Wiki article link: Three-fund portfolio . Once you get your investment portfolio set up, it will take almost no time and effort to manage, leaving you more time for family and enjoying life.

You also might want to read The New Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get on with Your Life - by Bill Schultheis. http://www.amazon.com/gp/product/B002UX ... B002UXRZ7Q . Very simplistic, but drives home the point that you can do both.

It is possible to do both, continue to save and invest for retirement, and at the same time begin to spend more on vacations and enjoying life. I just recently retired last year at age 66, but began at age 49 (following a severe and disabling stroke) to spend some time and money on nice vacations (see my avatar, the view from our favorite vacation spot on Maui), etc., while continuing to save and invest.

I hope that this helps.
Last edited by ruralavalon on Sat Jun 16, 2012 1:26 pm, edited 2 times in total.
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ks289
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Re: 45 and wondering if I should stop investing altogether?

Post by ks289 »

Welcome!
You've done well to amass what you have and put your family on firm footing.

I would echo the earlier posts about your investing strategy, but that really wasn't the focus of your question. Also, i was not sure whether you meant stop trading and park it in lower risk investments or rather as I read it - I believe your question was whether to save to the max or cut it back to just get the employer match (and continue to trade).

Since you plan on continuing to work and generate positive cash flow (presumably to 65 or so) I see why you may feel that the $435K could quadruple over the next 20 years (assuming decent returns of 7.2% annually) to $1.74M, a substantial nest egg to retire on....possibly giving you the ability to have $100K/y when you include social security. You would hardly need to save any additional funds to reach a good target.

My concern with cutting back on saving in your situation is the fact that you employ a fairly.........volatile investing approach. I would personally feel safer continuing to save to the max if I experienced the highs and lows as much as you have.

Good luck!
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grap0013
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Re: 45 and wondering if I should stop investing altogether?

Post by grap0013 »

ChampagneOfBeers wrote:I'm 45. I've worked full time uninterrupted since 1986. I have made over $95,000 a year since 1996; many years reaching $145,000 with bonus. Used to live in major metropolitan dot.com area, with new IT technologies was able to move to very inexpensive place to live (Southern US). Have a $275,000 house that is paid off. Only remaining debt is a $13,000 car loan on brand new vehicle. Have $435,000 in 401k. Have $70,000 in cash.
Have you ever actually calculated your annualized rate of return accurately vs. a diversified basket of index funds. You might be surprised by what you find. How much money was in your 401K by 1995?

I ran a few numbers. If you started out with $0 in 1996 and maxed out 401K at $9500 (max in 1996) with a typical employer match of 50% up to 6% and got a modest 6% annualized return you end up with about 400K. That's assuming you started with $0 and maxed 401K inflation adjusted yearly contributions. I think like most people, you have vastly overestimated your returns and your investing ability. For all your hard work you might actually have underperformed :oops: a simple 3 fund portfolio of total stock market index, total international stock index, and total bond market index. That's negative dollars per hour!

Let's put a positive spin and say if you were able to eek out an extra 1% annualized return you gained an extra 33K to get a little closer to your above number of 435K. So for instance, if you spent 5 hrs/week for 16 years trying to juice your returns here's what it looks like. 5 hrs/week X 52 weeks X 16 years = 4160 hrs! $33,000/4160 = $7.93 dollars/hr.

Sleep in and enjoy the stress free financial life of being a boglehead!!
There are no guarantees, only probabilities.
livesoft
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Re: 45 and wondering if I should stop investing altogether?

Post by livesoft »

You asked what would I do? I'd keep working and investing until I had $2.5 million in investments, then come back and ask again. $0.5 million is not enough.
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Topic Author
ChampagneOfBeers
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Re: 45 and wondering if I should stop investing altogether?

Post by ChampagneOfBeers »

Hello Everyone!

Great Forum! Thanks so much for the timely replies; already.

Lots of thinking to do this weekend.

Taking your comments to thought.

Thanks for taking the time to comment.
Nukeboilermaker
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Re: 45 and wondering if I should stop investing altogether?

Post by Nukeboilermaker »

I'm a youngster here but my mom is a technical writer as well (has had her own business for ~15 years now) and might have a few suggestions.

First off what is the likelyhood of you and your beautiful wife downsizing once you retire? This could result in a significant cash increase to live off of and delay withdrawing on retirement investments.

With the amount you have saved why not scale back on your liquid savings (non retirement) and use those funds to support enjoying some travel and hobbies? (I.e. Maintain tax advantaged retirement savings)

Another option is to scale back a small amount on retirement savings and budget a specific amount for a decent vacation each year. I would Discourage against stopping significantly or all together because not only will this stunt your nest egg, but you will get used to living on a higher life style and then likely need to withdrawal on your nest egg at a faster rate to maintain your lifestyle.

As a tech writer have you started the networking necessary to do contract work once you retire? This can allow you to retire early by working a few projects a year.
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momar
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Re: 45 and wondering if I should stop investing altogether?

Post by momar »

You say you earn almost 145k in a good year, your house is paid off, you live in a low cost of living area, and your daughters will go to a reasonably priced community college.

Why aren't you able to max out your 401k AND have plenty of fun?
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep
underthefloorboards
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Re: 45 and wondering if I should stop investing altogether?

Post by underthefloorboards »

I will give you the best advice anyone here will give you.
This crossroads you are in is a golden opportunity for your entire family.

To recap, you were able to time the market and crush the market.
Your OCD helped you research and make the right moves.

You are at a place where you need a breather with your savings.
You're "bored" of being frugal and doing the right thing.

Well, after 20 years, it's finally time for you to spend on something frivolous.

1) This will show your family there are REWARDS to saving and investing.
For 20 years, they've dealt with your penny pinching.
Well, now comes the punch line.
Spend on something they can't even believe you can afford.
Drive home in an ass kicking BMW. Now, YOU are the baller they see on TV.

Too many misers never see the other side of the coin of frugality.
The joy of finally spending on something you like.
Something that is truly superior in every way.

Get something that is "the best money can buy".
Buy a luxury car that will last you 15 years (still frugal).

Take a ridiculously expensive and exotic vacation with the entire family. (This mentioned this in your post)
Have the entire family research it. TripAdvisor, etc. Get your girls into it.


2) It will show you that spending has limited joy.
What this does it put you back on the path of frugality.
Last edited by underthefloorboards on Sat Jun 16, 2012 6:40 pm, edited 1 time in total.
NateW
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Re: 45 and wondering if I should stop investing altogether?

Post by NateW »

"My question to you is what YOU would do with your life from here out, with investing, and the whole world economy, given these conditions. "

I would follow the advice on the Bogleheads board from here on out, because you may not be so luckey from now on and the stakes are higher. Get an investment plan and a realistic asset allocation for your willingness to take risk and for your time horizon and needs. You have a lot more to lose now. Congratulations for getting where you are today, though.

--Nate
funnymoney
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Re: 45 and wondering if I should stop investing altogether?

Post by funnymoney »

If you REALLY are thinking about a motorcycle, make sure you have FABULOUS long term disability insurance or you can be broke in no time. When my spouse was in neuro-ICU following a medically induced stroke, you could not believe the number of motorcyclists we saw. I was shocked. Now they were cycling in and out (one way or another) of the ICU with gawdawful neurological injuries.

We have 2 bright, capable sons who have always been risk takers and work as firemen/ paramedics. Given what they have seen, neither has ever driven a motorcycle.

Just sayin'.

Funnym0ney
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bru
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Re: 45 and wondering if I should stop investing altogether?

Post by bru »

Earning what you did you only have $435K saved? Are there other assets you haven't mentioned?
Mill
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Re: 45 and wondering if I should stop investing altogether?

Post by Mill »

If I were you, and assuming you like your job, Id keep showing up at it, and keep putting money into your 401(k)..just for alittle while longer. The hard parts over and soon youll be free, but youre only 45 now and every bit helps until you really really cant take it anymore. Remember you only live once. You worked hard to earn and save what you have, so if it will fund your retirement now, Id say go for it.
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VictoriaF
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Re: 45 and wondering if I should stop investing altogether?

Post by VictoriaF »

bru wrote:Earning what you did you only have $435K saved? Are there other assets you haven't mentioned?
The $435k represents the value of the assets recovered after the loss in the 2001 technical bubble burst. The OP does not take into account the asset growth he would have experienced if he were using passive investments instead of market timing.

I suspect that when the OP is asking if he "should stop investing" he is asking if he "should stop active investing." The answer is:
1. There are other ways to invest than active investing and market timing.
2. The members of this Forum mostly invest in low-cost broad-based index funds.
3. Passive investing is cheaper, less risky, and less time consuming than active investing.
4. If the OP is to benefit from this Forum's collective knowledge and support he should adopt the meaning of "investing" as understood in this Forum (and which is different from the meaning conveyed in the mainstream financial books and news).

Victoria
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Topic Author
ChampagneOfBeers
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Re: 45 and wondering if I should stop investing altogether?

Post by ChampagneOfBeers »

Hi All

This really is a great site and I appreciate all the comments. I will look at the more detailed replies on finance later and run the numbers on the details/links provided. Given that it's Saturday evening after a long week, just some first round notes on a few comments I noticed.

So far; from your comments….I really think my problem is I day trade active stocks on my 401k account through work – and I need to go on autopilot…

Really appreciate everyone's comments...keep the info/links/comments rolling...

/////////////////////////////////

Original note above under the "--->"; my reply is ****

/////////////////////////////////


--->"Could you retire on $50k pre-tax a year?"

****Eventually I think I could, 20 years from now, $50k in today's dollars. My folks have been retired for 15 years; they did well in the market and have pension; they don't spend anywhere near what their retirement allotment is. Their advice from retirement was to spend most of our now and work as long as possible. My dad, who has been retired for 15 years, tells me I'm over preparing. Maybe he's planning on leaving us a big inheritance :>

/////////////////////////////////

--->"I'd keep working and investing until I had $2.5 million in investments"

****Wow…that seems like a ton of money, respectfully. So are we saying we need $2.5M at 65 years old? If that's how much we truly need, I am just going to work indefinitely and save as much as I can…

/////////////////////////////////

--->"As a tech writer have you started the networking necessary to do contract work once you retire?"

****Yes I think I have a good network and I always plan on working, even part time volunteering as long as I can. My folks retired and stopped working; I don't think that's concept all that healthy. People need to stay engaged. I think the key is to slow down at the right pace but to stay active.

/////////////////////////////////

--->"Why aren't you able to max out your 401k AND have plenty of fun?"

****Yes, but having fun and also working is tough; great job but long hours (international time zone support). Not a lot of energy after working 65/70 hour weeks. Could do those hours just fine from age 25 to 40, but last five years have really been tough. Might be raising teenagers too :>

/////////////////////////////////

--->"Your OCD helped you research and make the right moves."

****Indeed, absolutely. OCD is completely misunderstood. It can be a crippling detriment but also a blessing. I've been told I can see patterns in data other people can't see. But if something doesn't go so well on a project, I'll kill myself trying to figure it out, sometimes staying up 24 hours straight. The key is noticing when one will have an “event” (react negative to a condition/stress) and learn a coping mechanism. If I’m freaked out on a project that is going bad, I’ll purposely work out (circuit train/lift weights at gym) until I literally can’t walk. Then I’ll sleep for eight hours and everything is fine.

/////////////////////////////////

--->"Drive home in an ass kicking BMW."

****Classic! You must be psychic I have a 1997 328i, original owner 227,250 miles; my grad school graduation car...still my commuter car, my daughter doesn't like it at all though amazingly (she's getting ready to start driving...oh well, her loss :>

/////////////////////////////////

--->"If you REALLY are thinking about a motorcycle, make sure you have FABULOUS long term disability insurance"

****COMPLETELY agreed :>A friend at work has been in three wrecks and still rides. I would love to have one but overall not sure if I'm ready to take the risk, especially with still raising kids.

/////////////////////////////////

--->"Earning what you did you only have $435K saved? Are there other assets you haven't mentioned?"

****The house is paid off, plus I have $70k cash. We take two decent vacations a year, plus had to pay off undergraduate and graduate school over all these years. I was wiped out by a series of bad tech stock investments in early 2000s; 401k was down to I believe $160,000.

/////////////////////////////////

Thanks again for all the info so far...
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bottlecap
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Re: 45 and wondering if I should stop investing altogether?

Post by bottlecap »

$50k in twenty years will be worth maybe $25 or $30k. So you need maybe $100k in twenty years. So you'll need $2 to 2.5 million at retirement. You dont have enough savings to get there of you don't believe the market is going to do very well.

Can you scale back on your hours perhaps by going out on your own? I don't blame you not wanting to work so much at this point, but not saving doesn't solve that problem. Take some time, take a vacation, do what you need to do, but I wouldn't blow it out - you've done well, but you really can't afford to go crazy.

This sounds quite a bit like a midlife crisis. Don't do anything that will jeopardize what you've achieved up to this point unless, you're sure about it. I'd sit back and evaluate your feelings to find out what it is you truly want or think you're missing.

Good luck,

JT
letsgobobby
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Re: 45 and wondering if I should stop investing altogether?

Post by letsgobobby »

Go four fund, cut your savings rate by a third, see how it feels for a year...
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burt
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Re: 45 and wondering if I should stop investing altogether?

Post by burt »

Keep saving vigorously, until you hit the amount needed to maintain your desired standard of living. Maybe that's age 50 or 55 ?
Now you have options. Retire early or if your job is bearable, keep working and enjoy the gravy.

burt
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Re: 45 and wondering if I should stop investing altogether?

Post by Call_Me_Op »

ChampagneOfBeers wrote:Hello; first post...Any advice appreciated...hopefully not too informal; I'm a tech writer and it is the weekend...

So have a ready please...what would you do? Overall question...continue saving in 401k to max it out? Or save the bare minimum company match, and use the extra money to do the things you always wanted to do (vacations/motorcycle), but never could all along because of saving to get to this point...

Here goes...

I'm 45. I've worked full time uninterrupted since 1986. I have made over $95,000 a year since 1996; many years reaching $145,000 with bonus. Used to live in major metropolitan dot.com area, with new IT technologies was able to move to very inexpensive place to live (Southern US). Have a $275,000 house that is paid off. Only remaining debt is a $13,000 car loan on brand new vehicle. Have $435,000 in 401k. Have $70,000 in cash. We plan on living in our house the rest of our lives, we love the area.

Life really couldn't be better.

Now the strange parts, well maybe not so strange to everyone else on a financial board. I got to this point by day trading in my 401k and earlier money, on the side while working regular job. I learned to trade in grad school in mid 90s. Easy then. I was blessed with the 2008 financial meltdown, because I had been burnt with loosing on some bad tech stocks in early 2000s (I lost big in early 2000s - but rebuilt); I was lucky and got out (regular investments and converted 401k to money market) before the big 2008 meltdown. I paid off our house with the regular investment proceeds. When the market completely tanked, I rolled 401k back into investments at market low. It was around $160,000 at low, now back to $435,000. Europe is scaring the crud out of me now.

So now we have a good emergency cash supply, a good 401k (following appropriate ratios for my age), and a paid off house, and no debt. My issue is I don't know what to do with myself financially. It's not about me, it's about my family; and making sure they are ok; which they are! We have two teenagers that are great kids, but respectfully not the smartest. We have been married for over twenty years, the joke is I have the brains and the compulsion on money, and my wife has the looks. She is beautiful and our daughters are too, but they aren't super smart. I'm not being mean, it is just reality. Beautiful but not good at math :>. I'm saying this respectfully of them because they are both going to realistically be going to a community college and then take a trade, like my wife; their high school grades are terrible...but oh well that is part of life. They are like my wife, beautiful, but won't be corporate executives; that's the joke in our house - I have all the brains for them. They are my life. I'm saying that as a joke that they agree with, if it wasn't for them I might be in a mental institution (I have severe OCD (two meds); that's how I was able to get us financially to the point we are). Well enough of all this rambling. A few more note have good life insurance on me and health good. I'm bringing all this up because college is paid for essentially, my kids are going to be with us for another decade, I completely accept that and look forward to that. The same opportunities available to me with my job are not going to be available to them unless the economy completely reinvents itself.

So I've paid for about as much as I can for stuff now, and going forward...now what? I want to, but have to, work...

So sorry for the bizarre post, I hope you don't think this too strange.

My question to you is what YOU would do with your life from here out, with investing, and the whole world economy, given these conditions.

I have saved, saved, saved; maxed 401k as far back as I can remember, and still do...but is it worth it? WHY?

Should I stop investing, and just enjoy life, go spend on realistic things we want; instead of continuing to max out a 401k.

I don't know where the world is going financially and in a way am really tired of thinking about it; especially when getting up at 4:00 AM to determine the trades for the day.

Right now I love my job, but am essentially working for health insurance. I am planning on working as long as I can, if I can keep a job I enjoy).

Hope this makes sense and not too informal.
I can't really figure out exactly what is stressing you so much. The world is and always has been uncertain. I think you should continue to work but invest going forward in a passive strategy as recommended on this board.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
underthefloorboards
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Re: 45 and wondering if I should stop investing altogether?

Post by underthefloorboards »

Should I stop investing, and just enjoy life, go spend on realistic things we want; instead of continuing to max out a 401k.
What are these things you feel you've been denying yourself? (You've already got a BMW and take 2 vacations a year)
Again, I think you need a new splurge before you resume your frugal lifestyle. One needs to pace themeselves.
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grap0013
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Re: 45 and wondering if I should stop investing altogether?

Post by grap0013 »

livesoft wrote:You asked what would I do? I'd keep working and investing until I had $2.5 million in investments, then come back and ask again. $0.5 million is not enough.
+1

You are not even close to having enough to stop investing.
There are no guarantees, only probabilities.
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ChampagneOfBeers
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Re: 45 and wondering if I should stop investing altogether?

Post by ChampagneOfBeers »

I am very impressed with everyone’s participation and reference material. The one thing I haven’t seen from everyone’s comments, so maybe this is my issue, is a level of paranoia on the world markets. So it seems from the replies the underlying tone is I need to continue to invest. I appreciate the comments and detail, but what remains is just this massive gut feeling of gloom-and-doom; not for my own little corner-of-the world, but all of our worlds.

What concerns me: is the world economy really, really broken this time; for good, for about another two decades. I have the feeling, in the most simple of terms that right now is the best things are going to get. I think I’m hesitant about investing, or just wanting to not participate long-term is because there really isn’t anything to feel good about with the market. The Euro is going to break up, that might might take a few years, couple this to Asia/China:…btw someone passed me a link showing vast malls in China, with absolutely no one at all shopping…along with mile after mile of apartment complexes that people can’t actually afford to live: http://www.youtube.com/watch?v=pbDeS_mXMnM.

So where is the good news and where will it be over the next twenty years, something actually that a person can feel good about putting money into to? My original post was brought on about the straightforward, simple idea of: should I really max out my 401k to current $17,000 a year: for the next twenty years (until I’m 65), when it just seems there is, more than ever, a unavoidable high probability of several international financial/markets resets/meltdowns.

It just feels like, in the end, at 65, I might look back and say was it really all worth saving all those years, and for what? No one can predict the future with the world economy, or the economy of our country: it just seems like there is nothing to look forward – so should we all just spend it now?

Thanks for the advice. Not sure if this is a mid-life crisis :> or just general “blah” about the world economy in general.
RobG
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Re: 45 and wondering if I should stop investing altogether?

Post by RobG »

I had to make sure that wasn't me posting since I'm 45 and have similar numbers. $17,000 is 3% of your current investments and you can lose that in a bad day, 10x that in a bad year... It makes you wonder if it is worth it to dribble in more money... but the year I made $140k I saved $70k! So it can still make a difference. I still save as much as I can. If I was to do anything different going forward I might put more in my taxable account and then if something fun came up -- like a nice property on a beach -- I might buy that. It isn't a great investment, but better than a car or expensive vacation.

i-bonds are a relative good deal right now if you are worried about the world economy.

rg
Stay thrifty my friends.
letsgobobby
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Re: 45 and wondering if I should stop investing altogether?

Post by letsgobobby »

ChampagneOfBeers wrote:I am very impressed with everyone’s participation and reference material. The one thing I haven’t seen from everyone’s comments, so maybe this is my issue, is a level of paranoia on the world markets. So it seems from the replies the underlying tone is I need to continue to invest. I appreciate the comments and detail, but what remains is just this massive gut feeling of gloom-and-doom; not for my own little corner-of-the world, but all of our worlds.

What concerns me: is the world economy really, really broken this time; for good, for about another two decades. I have the feeling, in the most simple of terms that right now is the best things are going to get. I think I’m hesitant about investing, or just wanting to not participate long-term is because there really isn’t anything to feel good about with the market. The Euro is going to break up, that might might take a few years, couple this to Asia/China:…btw someone passed me a link showing vast malls in China, with absolutely no one at all shopping…along with mile after mile of apartment complexes that people can’t actually afford to live: http://www.youtube.com/watch?v=pbDeS_mXMnM.

So where is the good news and where will it be over the next twenty years, something actually that a person can feel good about putting money into to? My original post was brought on about the straightforward, simple idea of: should I really max out my 401k to current $17,000 a year: for the next twenty years (until I’m 65), when it just seems there is, more than ever, a unavoidable high probability of several international financial/markets resets/meltdowns.

It just feels like, in the end, at 65, I might look back and say was it really all worth saving all those years, and for what? No one can predict the future with the world economy, or the economy of our country: it just seems like there is nothing to look forward – so should we all just spend it now?

Thanks for the advice. Not sure if this is a mid-life crisis :> or just general “blah” about the world economy in general.
on the other side of the trade, I'm more optimistic than I've been in 3 years. Everything you fear is reflected in the current, very low prices for stocks, especially Europe. Very appealing. So you see, neither you nor I can predict the future. If you stop investing now, the only thing you know is that you won't have enough to last. So that seems like the worst choice.
bb
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Re: 45 and wondering if I should stop investing altogether?

Post by bb »

I am sure lots of others will chime in on determining your risk tolerance, ability vs need
to take risk, etc. Risk is fine when it is a theoretical concept. In reality it can make
you ill when you see your equity balance drop by 50%.

Do you worry to death every time you cross the road that you might get run over? Or when
you go for a drive in your car that you will get in a fatal accident? I assume the answer is
No - but then again I assume if ask you would admit it is a possibility.

Accept that the world ALWAYS looks like it is going to hell in a handbasket.

Figure out how much money you either can have in stocks or need to have in stocks
so that you can sleep at night assuming some % decline in the next bear market
(which will happen - see you have certainty).

Stop day trading - it's making you crazy.

Brian
underthefloorboards
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Re: 45 and wondering if I should stop investing altogether?

Post by underthefloorboards »

You are talking about "timing the markets".
The theme of this forum is "stay invested at all times"
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market timer
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Re: 45 and wondering if I should stop investing altogether?

Post by market timer »

ChampagneOfBeers wrote:What concerns me: is the world economy really, really broken this time; for good, for about another two decades. I have the feeling, in the most simple of terms that right now is the best things are going to get. I think I’m hesitant about investing, or just wanting to not participate long-term is because there really isn’t anything to feel good about with the market.
This concerns me as well. Bond yields are telling us not to expect much growth in the future. In fact, yields are so low that it is not realistic to expect one's portfolio to increase in real terms in retirement while paying for living expenses. This makes early retirement prohibitively expensive. I think the most effective solution is to keep fixed expenses low. Don't buy a massive house with debt. Don't create expectations in your family of an affluent lifestyle. Do not enable children to pursue lives of leisure. Find cheap hobbies. Find a job you can do until you are 70, even if it means taking a pay cut now. Stay healthy.
j920
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Re: 45 and wondering if I should stop investing altogether?

Post by j920 »

ChampagneOfBeers wrote:We have two teenagers that are great kids, but respectfully not the smartest. We have been married for over twenty years, the joke is I have the brains and the compulsion on money, and my wife has the looks. She is beautiful and our daughters are too, but they aren't super smart. I'm not being mean, it is just reality. Beautiful but not good at math :>. I'm saying this respectfully of them because they are both going to realistically be going to a community college and then take a trade, like my wife; their high school grades are terrible...but oh well that is part of life. They are like my wife, beautiful, but won't be corporate executives; that's the joke in our house - I have all the brains for them. They are my life. I'm saying that as a joke that they agree with, if it wasn't for them I might be in a mental institution (I have severe OCD (two meds); that's how I was able to get us financially to the point we are).
Could you elaborate? I don't think you spent enough time bashing your daughters. :oops:

And I would keep contributing as much as I could if I were in your position.
underthefloorboards
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Re: 45 and wondering if I should stop investing altogether?

Post by underthefloorboards »

j920 wrote:Could you elaborate? I don't think you spent enough time bashing your daughters. :oops:
And I would keep contributing as much as I could if I were in your position.
I found his candid, unbiased, and objective assessment of his daughters' ability and intellect wildly refreshing.
I wish there were more parents like him.

You Are Not Special
http://www.youtube.com/watch?v=_lfxYhtf8o4
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ChampagneOfBeers
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Re: 45 and wondering if I should stop investing altogether?

Post by ChampagneOfBeers »

:>

I'm not definitely not bashing anyone; we (our whole family) is being realistic.

They know their capabilities, and we 100% accept them for who they are: good, caring people, but not academic scholars.

I likewise find the commencement message on youtube above, spot on, also.

The problem with our society is everyone somehow thinks we will win ahead of the herd and are apart from the crowd.

I regretfully think the future for the United States is we all need to make the best out of a bad situation that slowly going to get worst.

I'm definitely lowering my future expectations towards the market in general.
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Re: 45 and wondering if I should stop investing altogether?

Post by momar »

If you think the markets won't return what they have, and things will be tougher in the future, why would you save less? Diminished returns in the future and leaner times would seem to call for increasing your savings rate.

Or do you think your 70 year old self will look back fondly on that $100 bottle of wine when he is eating cat food?

Exaggerated, yes, but the point remains.

That said, I do also understand the impulse the make hay while you can.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep
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Re: 45 and wondering if I should stop investing altogether?

Post by Kevin M »

It may be worthwhile for you to study some financial history. You may discover that things now aren't as bad as they seem, and that usually capitalism seems to work out for the best.

A good book that covers this is The Four Pillars of Investing, by William Bernstein (an understanding of financial history is one of the four pillars). I highly recommend it. A more recent, shorter book by WB that also covers it in less depth is The Investor's Manifesto.

There are always things to be concerned about. Capital markets have survived and grown through many bad situations (not all capital markets in all situations of course).

Kevin
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ripete
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Re: 45 and wondering if I should stop investing altogether?

Post by ripete »

Forgive me. I haven't read all the posts here, so I may be repeating others' advice.
Firstly, it sounds as if you are simply a bit burned out by day trading. Getting up at the wee hours on a consistent basis is no way to run your life. It's not good for you, nor for you wife and children, in the long run.
As a day trader, you have to be cognizant of every little bump in the road on a daily basis. Too much stress and strain.
Better to pull the stick back, look at the world from 50,000 feet up, instead of two inches away. And the answer for that is contained on these boards, as people will tell you how to invest with Vanguard (or any other mutual fund, the principle is the same). Point is, you're 45, and you should enjoy your life, not stress out too much over the dollar on a daily basis.
Now, as far as your retirement goes, keep investing. Just as you were fortunate to get out the last time, you might not be so fortunate next time. And there will be a next time. There's always a next time. That's why you keep saving.
But don't do anything to excess. That goes for saving, having fun, or anything. Strike a balance with all the parts of your life, so that you'll be able to enjoy your life now, your beautiful wife and children, and enjoy yourselves for the future.
At 45, there's so much living to do that it's not a good strategy to say I'll stop saving for retirement.
Things change. Jobs are lost. Houses need repairs. Tornados strike. Yes, a bit dramatic here, but you get my point. Control what you can control, but not in an obsessive way (sorry, I understand this may be part and parcel of who you are). Try to step back a little bit. Bob Brinker has a term for retirement called 'critical mass'. It's basically a number that you attain that says you can be more cautious with your investments because you've reached a 'magic number' that seems to cover your expenses going forward. But remember the following: the dollar is fiat currency, that is, currency that is declared by a government to have a value. They can increase or decrease the value of that currency by their policies. And we have no way of knowing where their policies may lead us. Certainly, we're paying more and more now as they decreased the purchasing power of the dollar. Just go to the store and compare prices in your mind from a few years ago. And this is by no means unusual. When I was a kid, the local paper was a nickel (now it's a buck), pizza was 15cents a slice (now it's 2.25), and so on. You get my point. What looks like a good number today may look ridiculously small 20 years from now, and then you've still got to live (hopefully) for another 30 years. Take all this into account, please. Hope these words help a little. Hope I'm not being too preachy here.
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Watty
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Re: 45 and wondering if I should stop investing altogether?

Post by Watty »

In addition to all the other problems with day trading a big potential problem is if something happens to you then your portfolio will be difficult for your family to manage.

In addition to possibly making bad trades they will be at risk of going with a financial "advisor" who could legally charge them all sorts of fees and make it impossible to them to survive well on the funds that are left.

Likewise when you get older you may start to lose your investing skills but not realize it until you have made big mistakes. I have heard of several situations where someone with early undiagnosed Alzheimer's lost a lot of their life savings before people were able to realize what was going on and intervene.

I also think that you are underestimating your wife and daughters ability to learn enough manage investments. It doesn't have to be very complex. There have been posters here in the past who obviously had limited education and no financial background but some of them have been able to get into simple portfolios of low index funds or targeted retirement funds and learned what a reasonable amount is to save or spend each year. Some of them are probably investing better now using these simple strategies than many people with much more education.
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Re: 45 and wondering if I should stop investing altogether?

Post by Tuxx »

You probably have earned over $2M and have less than $500K in assets.

Do I need to say more?
RobG
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Re: 45 and wondering if I should stop investing altogether?

Post by RobG »

Tuxx wrote:You probably have earned over $2M and have less than $500K in assets.

Do I need to say more?
Actually, less would have been preferable. FWIW, you forgot to include his paid-off house. I'd say he's doing far better than most.
Stay thrifty my friends.
Tuxx
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Re: 45 and wondering if I should stop investing altogether?

Post by Tuxx »

Don't count the house. You have to live somewhere and .... have you tried to sell a house for what you thought it was worth lately?

Actually in my way of thinking it is not wise to pay off a morgage when interest rates are at all time lows when you can build a nice dividend portfolio yielding 5%+ using megacaps.

The reason for my tone is he wants to stop investing now. Would love to know where the other $1.2M+ went to (with your math). That is $76,563+ per year. That is more than a lot of people spend in 3 years. His own words - he lives in an inexpensive city. Spending $6380 with no mortgage payment - WOW!
Nukeboilermaker
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Re: 45 and wondering if I should stop investing altogether?

Post by Nukeboilermaker »

Something to keep in mind he hasn't lived in the low cost of living the entire timeframe. However I would agree that in the simple number discussion of his posts, it appears he could very well be realistically extending himself on a monthly basis.

One of the reasons I save so much is it has a two fold effect: 1st it gives me my income in the future so I can eventually retire. 2nd it reduces my current available income which helps guide me on a sustainable budget and lifestyle so I can properly withdrawal my retirement income and hopefully enjoy finer things in life at that time. When I explained it this way to my wife she was on board wih the investing plan I suggested. The reduction in mortgage and other expenses should be where additional funds comes from for fun (also bonuses, raises, budgeted fun $, etc) not a significant reduction in saving for later to spend more.

If the OP views it this way he will realize that not continueing to invest/saving has a double negative effect. It reduces his future income and increases his current spending and lifestyle which will likely be unsustainable in retirement.
Last edited by Nukeboilermaker on Mon Jun 18, 2012 7:16 am, edited 1 time in total.
awval999
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Re: 45 and wondering if I should stop investing altogether?

Post by awval999 »

Tuxx wrote:Don't count the house. You have to live somewhere and .... have you tried to sell a house for what you thought it was worth lately?

Actually in my way of thinking it is not wise to pay off a morgage when interest rates are at all time lows when you can build a nice dividend portfolio yielding 5%+ using megacaps.

The reason for my tone is he wants to stop investing now. Would love to know where the other $1.2M+ went to (with your math). That is $76,563+ per year. That is more than a lot of people spend in 3 years. His own words - he lives in an inexpensive city. Spending $6380 with no mortgage payment - WOW!
Wow.

You do realize he has a family. And life is not about acquiring the most Vanguard Index Funds possible, right?
Tuxx
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Re: 45 and wondering if I should stop investing altogether?

Post by Tuxx »

Which is why you don't count the house.

Outside of retirement he has $70K and he wants to stop investing.

Think about the family, indeed.
trademil
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Re: 45 and wondering if I should stop investing altogether?

Post by trademil »

bb wrote: Accept that the world ALWAYS looks like it is going to hell in a handbasket.
Is it really so?
I'm young, so I can't really say, but does any of the older folks here can remember any period of time when the general atmosphere was optimistic? (and not momentarily, but for a substantial amount of time)?
Grt2bOutdoors
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Re: 45 and wondering if I should stop investing altogether?

Post by Grt2bOutdoors »

ChampagneOfBeers wrote:I am very impressed with everyone’s participation and reference material. The one thing I haven’t seen from everyone’s comments, so maybe this is my issue, is a level of paranoia on the world markets. So it seems from the replies the underlying tone is I need to continue to invest. I appreciate the comments and detail, but what remains is just this massive gut feeling of gloom-and-doom; not for my own little corner-of-the world, but all of our worlds.

What concerns me: is the world economy really, really broken this time; for good, for about another two decades. I have the feeling, in the most simple of terms that right now is the best things are going to get. I think I’m hesitant about investing, or just wanting to not participate long-term is because there really isn’t anything to feel good about with the market. The Euro is going to break up, that might might take a few years, couple this to Asia/China:…btw someone passed me a link showing vast malls in China, with absolutely no one at all shopping…along with mile after mile of apartment complexes that people can’t actually afford to live: http://www.youtube.com/watch?v=pbDeS_mXMnM.

So where is the good news and where will it be over the next twenty years, something actually that a person can feel good about putting money into to? My original post was brought on about the straightforward, simple idea of: should I really max out my 401k to current $17,000 a year: for the next twenty years (until I’m 65), when it just seems there is, more than ever, a unavoidable high probability of several international financial/markets resets/meltdowns.

It just feels like, in the end, at 65, I might look back and say was it really all worth saving all those years, and for what? No one can predict the future with the world economy, or the economy of our country: it just seems like there is nothing to look forward – so should we all just spend it now?

Thanks for the advice. Not sure if this is a mid-life crisis :> or just general “blah” about the world economy in general.
The Euro as the dollar is a medium of exchange, that is the true function of money. Now, given your scenario above, if the Euro goes away, another form of money will need to be used, but trade will not stop. You fail to realize, people still need to eat, bathe, buy clothes since last I looked no one was shearing sheep and making their own cotton/wool, visit doctors, use hospitals. Basically, civilization will go on. Under your scenario, the end of the world is upon us. Which is the more likely of the two - the majority consensus or the doomsday approach? Do you see the IBM's, Microsofts, Apples, Coke's, Pepsi's, ExxonMobil, Royal Dutch Shell, Glaxo, Novartis, etc. stop investing in Europe and the rest of the world because of the Euro? Stop reading the news, keep investing - no one knows when the highs and lows have been reached. Do you have an IPS? What does it say? Does it say or sing to you "It's the end of the world as we know it"?.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: 45 and wondering if I should stop investing altogether?

Post by Grt2bOutdoors »

Tuxx wrote:Don't count the house. You have to live somewhere and .... have you tried to sell a house for what you thought it was worth lately?

Actually in my way of thinking it is not wise to pay off a morgage when interest rates are at all time lows when you can build a nice dividend portfolio yielding 5%+ using megacaps.

The reason for my tone is he wants to stop investing now. Would love to know where the other $1.2M+ went to (with your math). That is $76,563+ per year. That is more than a lot of people spend in 3 years. His own words - he lives in an inexpensive city. Spending $6380 with no mortgage payment - WOW!
Which megacaps are yielding 5%+ that aren't teetering on a risky balance sheet, short of a commodity focused company?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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ChampagneOfBeers
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Re: 45 and wondering if I should stop investing altogether?

Post by ChampagneOfBeers »

Hi All

Regarding: "You probably have earned over $2M and have less than $500K in assets."

Very, very, true indeed. Not everyone makes great trades. I'm one of them. Anyone that doesn't admit to fouled up trades and says they day-trade aren't telling the whole truth on their portfolio.

This is the whole point of this thread I guess; to either keep on investing, in 401k specifically (with no day-trading), given the world economy over the next two decades.

I've been burnt by some day trading in first tech bubble (early 2000s). In 2008 we paid off our home. So I brought my account back; I have proved to myself I am capable. But I think it's time to walk away from active trading.

I was heavily day trading in the spring of that year (2008). I woke up early one morning, I believe March/April of 2008 (I should go look at the trading statements); I swear I literally heard a voice that said "GET OUT"; so I got completely out of the market with my (non 401k) day-trade account. Lehman hit in September, and I decided I would not get back in with the day-trading account (outside 401k), but instead pay the house off. Since I was successful in the past on day trading outside of 401k, I started day trading <inside> 401k at that time. That's what all this is about - trying to essentially "shake" that behavior (believe me it has become a daily compulsion).

We haven't lived high-off-the-hog, I agree with you that earning over $2M in the past ~16 years and mow have less than $500K in assets, is not the prettiest of pictures, but I can say we have lived very realistically, one car is 15 years old. If I did not hear the "GET OUT" voice in spring of 2008, the house would have not been paid off.

All I'm saying with this thread is I've pretty conservative with money - nothing crazy as far as expenses, not even weekend golf spending - and yes we are raising two kids (but no crazy spending their either), and I've read the posts/links on wikipedia on Bogleheads and I think I get it...but I still have tons of reading to do. For anyone with kids (now teenagers) - I hope you agree how expensive it can be to raise kids.

After watching the whole world watch what happens with Greece elections this weekend, coupled to the Euro, coupled to every sneeze the financial markets reacts to with the world in general, coupled to the general ever increasing indebtedness state of our Country, I think I'm going to take the simpleton philosophy and just contribute 10% of my salary to general managed 401k from here on out; live life, and try to turn off my checking of the market throughout the day. That is going to be tough...the checking, checking, checking...

Some great posts on this thread, I appreciate it.

I think the most important thing is to enjoy life and health now. It sounds like there is enough time in retirement to spend even more time than I have in the past, looking at the trade-of-the-day.

It seems if I don't enjoy life and health now, and keep on compulsiveness at getting up for 4am trades for the day, from now until I retire - I know I'll look back and wonder what exactly happened with my life. I think that is starting to happen now, just by writing this thread . . . life is passing by. The key is enjoying it and accepting the future might not be as planned, because no one can predict it.
Tuxx
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Re: 45 and wondering if I should stop investing altogether?

Post by Tuxx »

Thanks for having an open mind.

Don't get down on yourself. You have made some good moves to put yourself in a better position.

Where do you have the $70K in cash? Are you making that work for you? Pennies and nickles approach.
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ChampagneOfBeers
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Re: 45 and wondering if I should stop investing altogether?

Post by ChampagneOfBeers »

Last but not least, the other thing I'm using for a simple financial model is my family generation that is retired before me now.

My dad's has four brothers, my mother has three sisters. All retired.

I don't know how much each and every one has retired, but the overall repeating theme, which my dad keeps on telling me from his experience.

He tells me I won't need as much as I think I'll need, especially if we move someone even less expensive. Right now they are living in a 50+ retirement community, he says they are spending 1/3rd of how much they allotted for in retirement.

He says he's too tired to spend his money :> - which seems to be the repeating theme for my whole allotment of aunts and uncles. Nothing against older folks (heck I'm starting to feel that way), but my aunts and uncles seem to spend much of their time in their late 60s / early 70s: cleaning house, planting, watching TV, drinking beer out of the porch, and just generally hanging out with each other. To me it sounds pretty great, but not super expensive. I guess it all depends on what you want out of retirement when you get there.

My mom says: spend it now, because when you get to be 67, you won't have the energy to spend it.

Would love to hear from older folks that are retired on the above. PS: this is not a slam on anyone retired. I have much respect for my own family's elders, and all that have made it to retirement.
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