What's your number? Why?

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Abe
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Re: What's your number? Why?

Post by Abe » Fri Mar 08, 2013 2:27 pm

Johm221122 wrote:
InvestorNewb wrote:
Abe wrote:I have never discussed my personal business with anyone, but since I'm posting anonymously, why not. My networth is around 6 million. I don't feel like I have enough and don't think I ever will. I don't think I ever earned more than $50,000. per year and even then, it was just for a short period of time. My investment income exceeded my earned income a long time ago. I'm sure my living expenses are well under $40.000. per year although I don't keep up with it. I don't really know how I got to where I am except to say that I have always worked hard, saved and invested. If I had to come up with a number, I would say I would like to have 10 million. I can't really say why. I guess it's just a psychological thing.
Congrats on reaching this amount!

Can you share more about the steps you took to get there? i.e. what % of your salary did you save? are you a lifelong index investor? how old are you? Thx.
I'm very interested also. Give us the details, this is a great accomplishment
John
I am reluctant to post personal information because there are some who like to criticize and ridicule, but since a couple of people asked how I got where I am, I guess I will. I don't think my story would be something that anyone could or would even want to duplicate. Many years ago right after I finished high school, I got into the money lending business by accident. My father had a small neighborhood business that was losing money. He died, so I started running the business simply because that was my only choice. I won't go into why it was my only choice except to say that I had a disability that prevented me from getting a job. Over time, I discovered that I had a knack for the business, and I began to turn it around. We did credit business and some of the customers would occasionally ask to borrow money so I started loaning them money. This eventually evolved into a lucrative business in itself. I eventually accumulated more money than I wanted to loan unsecured. I didn't know anything about traditional investments, so I looked for ways to invest in things that I knew something about, which was loaning money. I would buy houses and mobile homes cheap, then resale them at higher prices and I would finance the sales giving me high yields. I later found out this was something called creating paper. This led me to buying used mobile home paper from dealers and buying mortgages at discounts. I didn't start investing in traditional investments like stocks, bonds and mutual funds until later, which led me here to the Boglehead site. To answer the questions asked by InvestorNewb and John, I don't think I ever had any kind of organized plan, at least not in writing. I did have goals from the very beginning and I still do. I can remember when I wanted to save $5,000. I though that was a lot of money. I just kept increasing my goals. Your question about what percentage of my income I saved, I can't really say because I don't know. I just lived very frugally and anything left after living expenses, I invested. I never spent any money after it was invested. You asked about my age. I am 69 years old. I live in a very economically depressed area, so if it can be done here, I don't see why it can't be done someplace else. The most important things I think anyone needs to do in order to get ahead are to save, invest and compound, in that order. I never had a job as far as working for someone else, but that probably worked out for the best. Life works in mysterious ways. I hope this is not too boring a story, but it's the truth.
Last edited by Abe on Fri Mar 08, 2013 2:51 pm, edited 2 times in total.
Slow and steady wins the race.

feh
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Re: What's your number? Why?

Post by feh » Fri Mar 08, 2013 2:28 pm

$1.6M is my number. At that point, depending on my age, I should be able to semi-retire. The plan is to get there by the time our son graduates from HS, then move some place less expensive and warmer. :)

We're approaching $1.2M as of today.

antiqueman
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Re: What's your number? Why?

Post by antiqueman » Fri Mar 08, 2013 2:52 pm

This question is to Rick Ferri.


Rick I note your comment about (1) determining ones expenses in retirement (2) subtracting expected social security from the expenses and then multipling times 20. I thought "The Rule" was 30 times expenses. Why do you suggest the number of only 20 times. Has it been your experience from your clients that they only need 20 times expenses in addition to social security?


Thanks.

jwa
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Re: What's your number? Why?

Post by jwa » Fri Mar 08, 2013 3:16 pm

antiqueman wrote:This question is to Rick Ferri.


Rick I note your comment about (1) determining ones expenses in retirement (2) subtracting expected social security from the expenses and then multipling times 20. I thought "The Rule" was 30 times expenses. Why do you suggest the number of only 20 times. Has it been your experience from your clients that they only need 20 times expenses in addition to social security?


Thanks.
I'm not Rick and I'm not as smart as him but I'll take a stab at it. Dr. Bernstein in his recent ebook stated 20 to 25 times expenses after deducting pension, social security and I believe he included annuity income as well. This ties in with what Rick is saying. Also, I believe Dr. Bernstein is speaking to a 30 year type of retirement starting in one's 60's. If you are an early retiree I would suspect that 30 might be a good number. Maybe more? Then again I really don't know for sure so at this juncture I will let someone more knowledgeable than me shed light on it.

umfundi
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Re: What's your number? Why?

Post by umfundi » Fri Mar 08, 2013 3:40 pm

jwa wrote:Dr. Bernstein in his recent ebook stated 20 to 25 times expenses after deducting pension, social security and I believe he included annuity income as well. This ties in with what Rick is saying. Also, I believe Dr. Bernstein is speaking to a 30 year type of retirement starting in one's 60's. If you are an early retiree I would suspect that 30 might be a good number. Maybe more? Then again I really don't know for sure so at this juncture I will let someone more knowledgeable than me shed light on it.
If 4% is a rule of thumb, that's 25x. I'd recommend laying out a timeline. You'll find your needs may fluctuate a lot. If you retire early, you may have to wait to access a pension. Before age 59.5 there may be issues with tapping retirement accounts. When will you take SS? What about health care before and after age 65 (Medicare)? Make a similar timeline for a spouse / partner who may not be the same age.

The issue, particularly if you delay SS, is that your needs will be higher early. 6% for 10 years and then 2% thereafter is not the same as a constant 4%. It can be a lot more dangerous.

That said, I am not "someone more knowledgeable". I am someone with an opinion.

Keith
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The Casualty
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Re: What's your number? Why?

Post by The Casualty » Fri Mar 08, 2013 4:16 pm

My number was $1.5M and no debt or mortgage. Despite the financial crisis which I thought would never end, we continued to save and invest. I checked our accounts at Fidelity and Vanguard yesterday, we have almost $2.2M thanks to the recent rally. I cut back our equity allocation from 67% to approx. 53%, the rest is mostly in cash (CD @2.5%) and 9% in bonds, FTBFX and VFIIX. I plan to stay in the 50/50 range for now, my Wife retired at 62 this year with a pension of $59K a year, health care for both of us, and she chose to take her SS early. I'm 57 next month, I had planned to retire at 55 but I can't seem to pull the trigger. I'd like to hold out on SS until 70 but I'm considering moving to the Big Island, Hawaii in 2014. The most I ever made was $70K, the median salary for the last decade has been approx. $63K. My Wife was making about $150K at her peak. We don't have any kid's (by choice) and we live a modest life.

We aren't terribly sophisticated investors, we didn't have any guidance when we started investing in the early 90's. I think the DOW was around 3,300 or so when I bought my first fund, VFIIX. I still own it. My biggest fear is now that I have it, can I make the right decisions going forward so that we can both obtain our dream of living in Hawaii. I'm in Kansas now, I don't want to die here. :D

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Re: What's your number? Why?

Post by Garco » Fri Mar 08, 2013 4:26 pm

ResNullius wrote:
irwinmfletcher wrote:I am always surprised in these threads how many plan to have multiple millions (over $2 mil) by 40. By my math even saving $50,000 a year starting at 22 (no easy feat) and earning 7% a year won't get you there by 40 assuming you start with $0.

Perhaps we have an inordinate number of NYC investment bankers and Silicon Valley entrepreuer Bogleheads?
There are a lot of doctors on this Board.
And some advanced-stage-of-career professors.... (:-)

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Re: What's your number? Why?

Post by reggiesimpson » Fri Mar 08, 2013 4:46 pm

Abe..........The most important things I think anyone needs to do in order to get ahead are to save, invest and compound, in that order. I never had a job as far as working for someone else, but that probably worked out for the best. Life works in mysterious ways. I hope this is not too boring a story, but it's the truth.
Last edited by Abe on Fri Mar 08, 2013 3:51 pm, edited 2 times in total.
Abe

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Sounds like you were a Boglehead a long time ago....................and still are.
Last edited by reggiesimpson on Fri Mar 08, 2013 4:49 pm, edited 2 times in total.

Steve K
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Re: What's your number? Why?

Post by Steve K » Fri Mar 08, 2013 4:47 pm

My goal number is 2.5m, anything over 2m will meet my retirement needs and wants. Hoping, planning, and on track to be there within 6 years.

ResNullius
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Re: What's your number? Why?

Post by ResNullius » Fri Mar 08, 2013 5:08 pm

Steve K wrote:My goal number is 2.5m, anything over 2m will meet my retirement needs and wants. Hoping, planning, and on track to be there within 6 years.
Sail on, and good luck.

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Re: What's your number? Why?

Post by travellight » Fri Mar 08, 2013 5:09 pm

I enjoyed your story,Abe. Congrats!

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Abe
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Re: What's your number? Why?

Post by Abe » Fri Mar 08, 2013 5:20 pm

reggiesimpson wrote:Abe..........The most important things I think anyone needs to do in order to get ahead are to save, invest and compound, in that order. I never had a job as far as working for someone else, but that probably worked out for the best. Life works in mysterious ways. I hope this is not too boring a story, but it's the truth.
Last edited by Abe on Fri Mar 08, 2013 3:51 pm, edited 2 times in total.
Abe

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Sounds like you were a Boglehead a long time ago....................and still are.
Yes, I guess I had the Boglehead philosophy from the very beginning even though back then the Bogleheads were not even in existence. I just applied the principles a different way.
Slow and steady wins the race.

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Re: What's your number? Why?

Post by VictoriaF » Fri Mar 08, 2013 5:44 pm

Abe wrote:Yes, I guess I had the Boglehead philosophy from the very beginning even though back then the Bogleheads were not even in existence. I just applied the principles a different way.
I am still puzzled by something you wrote. You don't spend more than $40k/year and yet you feel that $6m is not enough. Is this a psychological quirk or there is logic behind it? A part of being a Boglehead is knowing when to quit.

Victoria
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ilovedogs
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Re: What's your number? Why?

Post by ilovedogs » Fri Mar 08, 2013 6:01 pm

My number is 4 million, but I expect this number to decrease as I get older. I think I will have a much better idea of things and more comfort with less as I see what I want to do. I know because I saw it happen that I can lose 30% in a drop in the market, so I shoot for higher than my comfort level. I do not count Social Security yet but will in a few years. I do not count inheritances because they will come in my late 70's or older and I can't picture living a lifestyle that that money will change..

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Rick Ferri
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Re: What's your number? Why?

Post by Rick Ferri » Fri Mar 08, 2013 6:03 pm

antiqueman wrote:This question is to Rick Ferri.


Rick I note your comment about (1) determining ones expenses in retirement (2) subtracting expected social security from the expenses and then multipling times 20. I thought "The Rule" was 30 times expenses. Why do you suggest the number of only 20 times. Has it been your experience from your clients that they only need 20 times expenses in addition to social security?


Thanks.
They actually need less due to decreased spending in the later retirement years.

20x unmatched expenses is a good rule-of-thumb for a 65 year old couple who isn't concerned about leaving every last dime to their children. Adjust accordingly.

Rick Ferri
The views expressed by Rick Ferri are strictly his own as a private investor and author and do not reflect the views of any entity or other persons.

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Abe
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Re: What's your number? Why?

Post by Abe » Fri Mar 08, 2013 6:08 pm

VictoriaF wrote:
Abe wrote:Yes, I guess I had the Boglehead philosophy from the very beginning even though back then the Bogleheads were not even in existence. I just applied the principles a different way.
I am still puzzled by something you wrote. You don't spend more than $40k/year and yet you feel that $6m is not enough. Is this a psychological quirk or there is logic behind it? A part of being a Boglehead is knowing when to quit.

Victoria
To tell you the truth, I don't know why I am that way. It may be a psychological quirk becauseI don't think I could ever get enough money. I don't care anything about going out to eat, traveling or most of the things other people like to do. I have always been that way. Taking care of business and making money are the things that I like to do. It is like a hobby to me. I don't see much point in trying to change. It's just the way I am. I don't think I ever will quit.
Slow and steady wins the race.

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Re: What's your number? Why?

Post by 1210sda » Fri Mar 08, 2013 6:08 pm

travellight wrote:I enjoyed your story,Abe. Congrats!
Ditto

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Re: What's your number? Why?

Post by mickeyd » Fri Mar 08, 2013 6:34 pm

I have never had a number.

My goal was always to save/invest as much as possible over a long period of time. 40 years later I look like a financial genius due to several pensions, tax advantaged indexed investments, paid for house/cars and a comfortable taxable stash.

I love it when a no-plan plan comes together. :beer
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Re: What's your number? Why?

Post by hicabob » Fri Mar 08, 2013 6:42 pm

Abe wrote:
VictoriaF wrote:
Abe wrote:Yes, I guess I had the Boglehead philosophy from the very beginning even though back then the Bogleheads were not even in existence. I just applied the principles a different way.
I am still puzzled by something you wrote. You don't spend more than $40k/year and yet you feel that $6m is not enough. Is this a psychological quirk or there is logic behind it? A part of being a Boglehead is knowing when to quit.

Victoria
To tell you the truth, I don't know why I am that way. It may be a psychological quirk becauseI don't think I could ever get enough money. I don't care anything about going out to eat, traveling or most of the things other people like to do. I have always been that way. Taking care of business and making money are the things that I like to do. It is like a hobby to me. I don't see much point in trying to change. It's just the way I am. I don't think I ever will quit.
A Warren Buffet type!

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Abe
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Re: What's your number? Why?

Post by Abe » Fri Mar 08, 2013 6:46 pm

hicabob wrote:
Abe wrote:
VictoriaF wrote:
Abe wrote:Yes, I guess I had the Boglehead philosophy from the very beginning even though back then the Bogleheads were not even in existence. I just applied the principles a different way.
I am still puzzled by something you wrote. You don't spend more than $40k/year and yet you feel that $6m is not enough. Is this a psychological quirk or there is logic behind it? A part of being a Boglehead is knowing when to quit.

Victoria
To tell you the truth, I don't know why I am that way. It may be a psychological quirk becauseI don't think I could ever get enough money. I don't care anything about going out to eat, traveling or most of the things other people like to do. I have always been that way. Taking care of business and making money are the things that I like to do. It is like a hobby to me. I don't see much point in trying to change. It's just the way I am. I don't think I ever will quit.
A Warren Buffet type!
I wish :happy
Slow and steady wins the race.

Randomize
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Re: What's your number? Why?

Post by Randomize » Fri Mar 08, 2013 7:04 pm

$1m in today's dollars, assuming my pension and social security are still around in 30 years. If not, early retirement can wait a couple years.

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Re: What's your number? Why?

Post by Babakhani » Fri Mar 08, 2013 7:06 pm

umfundi wrote:
RenoJay wrote:$10,000,000. Nice round number with lots of digits.
You have a plan to get there?
Keith
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Re: What's your number? Why?

Post by market timer » Fri Mar 08, 2013 9:44 pm

Abe wrote:I don't think my story would be something that anyone could or would even want to duplicate.
Thanks for sharing, Abe. I would be very interested in duplicating the part of your story where you get rich by lending. Did you ever manage investments for others, or was this always your own capital? Do you have any recommendations for books or other resources for learning the details of creating paper? I'm about to buy my first investment property, and would be interested in learning about this as a potential sale option.

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Re: What's your number? Why?

Post by Wolkenspiel » Fri Mar 08, 2013 9:45 pm

ResNullius wrote:
irwinmfletcher wrote:I am always surprised in these threads how many plan to have multiple millions (over $2 mil) by 40. By my math even saving $50,000 a year starting at 22 (no easy feat) and earning 7% a year won't get you there by 40 assuming you start with $0.

Perhaps we have an inordinate number of NYC investment bankers and Silicon Valley entrepreuer Bogleheads?
There are a lot of doctors on this Board.
Well, didn't we hear that doctors are no better off than high school teachers ? :?

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Re: What's your number? Why?

Post by kamo » Fri Mar 08, 2013 11:02 pm

1210sda wrote:
travellight wrote:I enjoyed your story,Abe. Congrats!
Ditto
Ditto Ditto
He who knows he has enough is rich. Lao-Tzu

pastafarian
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Re: What's your number? Why?

Post by pastafarian » Fri Mar 08, 2013 11:10 pm

42. Why?

It's the Answer to the Ultimate Question of Life, The Universe, and Everything. :wink:

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Re: What's your number? Why?

Post by Bacchus01 » Fri Mar 08, 2013 11:55 pm

irwinmfletcher wrote:"I make way more than the "average" Dr. and will be around $1.5M at age 40. However, I have 3 kids who I would spend every penny on and a wife who has been at home for the ast 8 years. Take those things awayand I'd be well over $3M by 40."


Bacchus--

what is your specialty? That is still impressive at any level. We're about the same age--maybe I should I had gone to med school instead of law school!


I'm not a doctor. I'm in the business world.

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Re: What's your number? Why?

Post by stilts1007 » Sat Mar 09, 2013 1:12 am

It has been great to read everyone's responses on here and see the various ways people calculate the "number" (or not). After reading through, it makes me feel OK at age 29 to not really have one. Especially with the uncertainty of expenses that children throw into the mix if we decide have them.
It seems kind of funny, that by the time you get close enough to retirement to really have a good handle on the "number," it's too late to really do that much about it. For now, it's stay the course.

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Re: What's your number? Why?

Post by InvestorNewb » Sat Mar 09, 2013 7:35 am

Abe wrote:
Johm221122 wrote:
InvestorNewb wrote:
Abe wrote:I have never discussed my personal business with anyone, but since I'm posting anonymously, why not. My networth is around 6 million. I don't feel like I have enough and don't think I ever will. I don't think I ever earned more than $50,000. per year and even then, it was just for a short period of time. My investment income exceeded my earned income a long time ago. I'm sure my living expenses are well under $40.000. per year although I don't keep up with it. I don't really know how I got to where I am except to say that I have always worked hard, saved and invested. If I had to come up with a number, I would say I would like to have 10 million. I can't really say why. I guess it's just a psychological thing.
Congrats on reaching this amount!

Can you share more about the steps you took to get there? i.e. what % of your salary did you save? are you a lifelong index investor? how old are you? Thx.
I'm very interested also. Give us the details, this is a great accomplishment
John
I am reluctant to post personal information because there are some who like to criticize and ridicule, but since a couple of people asked how I got where I am, I guess I will. I don't think my story would be something that anyone could or would even want to duplicate. Many years ago right after I finished high school, I got into the money lending business by accident. My father had a small neighborhood business that was losing money. He died, so I started running the business simply because that was my only choice. I won't go into why it was my only choice except to say that I had a disability that prevented me from getting a job. Over time, I discovered that I had a knack for the business, and I began to turn it around. We did credit business and some of the customers would occasionally ask to borrow money so I started loaning them money. This eventually evolved into a lucrative business in itself. I eventually accumulated more money than I wanted to loan unsecured. I didn't know anything about traditional investments, so I looked for ways to invest in things that I knew something about, which was loaning money. I would buy houses and mobile homes cheap, then resale them at higher prices and I would finance the sales giving me high yields. I later found out this was something called creating paper. This led me to buying used mobile home paper from dealers and buying mortgages at discounts. I didn't start investing in traditional investments like stocks, bonds and mutual funds until later, which led me here to the Boglehead site. To answer the questions asked by InvestorNewb and John, I don't think I ever had any kind of organized plan, at least not in writing. I did have goals from the very beginning and I still do. I can remember when I wanted to save $5,000. I though that was a lot of money. I just kept increasing my goals. Your question about what percentage of my income I saved, I can't really say because I don't know. I just lived very frugally and anything left after living expenses, I invested. I never spent any money after it was invested. You asked about my age. I am 69 years old. I live in a very economically depressed area, so if it can be done here, I don't see why it can't be done someplace else. The most important things I think anyone needs to do in order to get ahead are to save, invest and compound, in that order. I never had a job as far as working for someone else, but that probably worked out for the best. Life works in mysterious ways. I hope this is not too boring a story, but it's the truth.
Thanks for sharing. It certainly did work out for the best and that's awesome to hear.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

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Re: What's your number? Why?

Post by reggiesimpson » Sat Mar 09, 2013 10:43 am

am still puzzled by something you wrote. You don't spend more than $40k/year and yet you feel that $6m is not enough. Is this a psychological quirk or there is logic behind it? A part of being a Boglehead is knowing when to quit.

Victoria


To tell you the truth, I don't know why I am that way. It may be a psychological quirk becauseI don't think I could ever get enough money. I don't care anything about going out to eat, traveling or most of the things other people like to do. I have always been that way. Taking care of business and making money are the things that I like to do. It is like a hobby to me. I don't see much point in trying to change. It's just the way I am. I don't think I ever will quit.


Abe........I earned my number in a different fashion than you but with the same "guiding" principles. My "quirk" was a definite physiological pain in the gut that was only alleviated by acquiring more money. It has turned into a habit/hobby and i still pursue it to this day (age adjusted). My wife recently asked me what would make me happy? I laughed and immediately said "make another million".

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Peter Foley
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Re: What's your number? Why?

Post by Peter Foley » Sat Mar 09, 2013 11:58 am

Abe - great story - thanks for sharing.

A topic for another thread - What is your opinion of micro-lending? Would you characterize any of the lending you did in such fashion? Do you think someone can earn a reasonable return on micro lending?

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Abe
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Re: What's your number? Why?

Post by Abe » Sat Mar 09, 2013 12:11 pm

market timer wrote:
Abe wrote:I don't think my story would be something that anyone could or would even want to duplicate.
Thanks for sharing, Abe. I would be very interested in duplicating the part of your story where you get rich by lending. Did you ever manage investments for others, or was this always your own capital? Do you have any recommendations for books or other resources for learning the details of creating paper? I'm about to buy my first investment property, and would be interested in learning about this as a potential sale option.
Thank you for your interest Market timer. To answer you questions: I never managed investments for others, I always used my own money. First, let me say that buying discounted mortgages and creating paper are a completely different animal than Boglehead type investing. I know a lot of people here would consider it too risky, but to me, risk has a lot to do with how much one knows. The more you know, the less the risk, especially in the paper business. Just my opinion. If you are interested in trying this, I would recommend learning as much as possible first and then maybe trying one little deal to see how you like it. There are two sites where you can get information. One is Jimmy Napiers website and the other is The Paper Sourse.

http://www.jimmynapier.com/investindebt.php

http://papersourceonline.com/about-us/

Many years ago I started out reading and studying Jimmy Napiers book, "Invest in Debt". The book will show you how to use the financial calculator. You can order his book from his website ($24.00 free shipping) but I see it is cheaper from Amazon $15.00. If you read some of the reviews on Amazon, you will get some idea of the content. Along with the book you will need to get a financial calculator. Jimmy uses the Texas Instrument BA-II calculator which you can get from Walmart for around $28.00 the last time I looked. Those are the only two things you need to get started. Jimmy comes off as a folksy country boy but he is very smart. The book is self published and not very well written gramatically, but the information is what you want. Even if you don't get into this, the book is worth getting just to get exposed to the concepts. Getting that book and learning the concepts was one of the best things I ever did.

Creating paper is similar to buying a mortgage at a discount. When you buy a mortgage at discount, it is almost always an owner financed mortgage. If the loan balance is say $30,000, you might buy it at $20.000. The $10,000.00 spread is what allows you to get a higher yield than just the interest rate on the loan. You can compute the exact yield with the financial calculator. Creating paper works the same way except you would actually buy the house yourself for $20,000 and resale it for $30,000. You still have a 30 thousand mortgage that you only invested 20 thousand in. I liked to use mobile homes when creating paper because I could buy them cheap. People need housing and they also need financing. A lot of these people can not get traditional financing, but some of them are good reliable people who have jobs.

Again, I want to caution you not to jump into this. I have made a considerable amount of money doing it, but it is not for everybody. You need to know what you are doing. I would be happy to help you any way I can.
Slow and steady wins the race.

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Abe
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Re: What's your number? Why?

Post by Abe » Sat Mar 09, 2013 12:41 pm

Peter Foley wrote:Abe - great story - thanks for sharing.

A topic for another thread - What is your opinion of micro-lending? Would you characterize any of the lending you did in such fashion? Do you think someone can earn a reasonable return on micro lending?
I really don't know what micro-lending is. I started out making unsecured loans to people who I was already doing business with, so I knew something about them.
I didn't plan to do it, it just evolved out of necessity.

If micro-lending is where you loan money through some website, and you don't even know the borrowers, I would not want to do that for two reasons. The first reason is you cannot get a high enough return for the amount of risk you take. The second reason is because I would not make an unsecured loan to someone that I don't even know. As far as interest on these types of loans, we are talking about anywhere from 15% to 20% per month and most of these loans would be paid back within a month. A lot of people will say that is an extremely high interest rate, but a lot of these loans never get paid back. You can lose your shirt doing this. I would not recommend making unsecured loans for most people.
Slow and steady wins the race.

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Abe
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Re: What's your number? Why?

Post by Abe » Sat Mar 09, 2013 1:05 pm

reggiesimpson wrote:am still puzzled by something you wrote. You don't spend more than $40k/year and yet you feel that $6m is not enough. Is this a psychological quirk or there is logic behind it? A part of being a Boglehead is knowing when to quit.

Victoria


To tell you the truth, I don't know why I am that way. It may be a psychological quirk becauseI don't think I could ever get enough money. I don't care anything about going out to eat, traveling or most of the things other people like to do. I have always been that way. Taking care of business and making money are the things that I like to do. It is like a hobby to me. I don't see much point in trying to change. It's just the way I am. I don't think I ever will quit.


Abe........I earned my number in a different fashion than you but with the same "guiding" principles. My "quirk" was a definite physiological pain in the gut that was only alleviated by acquiring more money. It has turned into a habit/hobby and i still pursue it to this day (age adjusted). My wife recently asked me what would make me happy? I laughed and immediately said "make another million".
Thank you for your post reggiesimpson. I will respond to your post, but I will not post anymore on this thread about this subject because it is off topic and not very good manners. I did in fact have something happen in my life that may have influnced my behavior later. When I was going through school, I had a very hard time. I didn't find out until later that I had dyslexia. Back then, they didn't know anything about dyslexia, at least not where I went to school. Everybody knew who the dumb one was, that sort of thing. By the time I graduated from high school, I had such a low self esteem I couldn't even function in life. That was the reason I couldn't get a job. My wife is a very astute person and she is the one who figured all this out. She told me, and it may be true, that I have to prove myself to others. She said the way I do that is making money. The more money I get, the higher my self esteem. It may be true. I don't know. I should not be baring my soul to the world like this, but it does seem to help writing about it. I hope I am not rediculed, but maybe it will help someone else in similar circumstances.
Slow and steady wins the race.

reggiesimpson
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Re: What's your number? Why?

Post by reggiesimpson » Sat Mar 09, 2013 1:25 pm

Thank you for your post reggiesimpson. I will respond to your post, but I will not post anymore on this thread about this subject because it is off topic and not very good manners. I did in fact have something happen in my life that may have influnced my behavior later. When I was going through school, I had a very hard time. I didn't find out until later that I had dyslexia. Back then, they didn't know anything about dyslexia, at least not where I went to school. Everybody knew who the dumb one was, that sort of thing. By the time I graduated from high school, I had such a low self esteem I couldn't even function in life. That was the reason I couldn't get a job. My wife is a very astute person and she is the one who figured all this out. She told me, and it may be true, that I have to prove myself to others. She said the way I do that is making money. The more money I get, the higher my self esteem. It may be true. I don't know. I should not be baring my soul to the world like this, but it does seem to help writing about it. I hope I am not rediculed, but maybe it will help someone else in similar circumstances.
Interesting how ones childhood experiences impact ones course in life. I am an immigrant and when i arrived here with my folks ( age 14) i ended up in a wealthy school district by fate. I was easily the poorest kid in the school but I like to think that handicap served me well (you too i see). It was a very painful experience and i still burn from it. But there isnt a day that goes by that i dont thank my deceased Father for getting us to this country and creating the opportunity to have such a great life. Its all been very worthwhile. The pain be damned.
Good luck.

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steadyeddy
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Re: What's your number? Why?

Post by steadyeddy » Sat Mar 09, 2013 3:48 pm

I would be very surprised if most of us didn't experience at least a small trauma to make sure save so relatively compulsively. For me, money is more about giving myself options than achieving retirement or any other particular purchase. It's a psychological baby blanket in a chaotic world, and this will make decumulation a bit stressful.

Being young makes picking "my number" impossible, but it's not hard to pick a prudent savings percentage based on my current life circumstances. Inflation makes an enormous difference over 40 years. Career trajectory makes a larger difference still. And I'm not going to let divorce, children, illness, or catastrophe into my mental equation (see baby blanket above). If my career and savings rate are stagnant, and inflation is zero, I'll invest about $900,000 over my career. If my career and savings rate are stagnant, and inflation is zero, then this will be enough to maintain my lifestyle with a paid off home.

I expect my number will be much larger in nominal dollars with career growth and inflation over 40 years, but nobody knows what that will be. I only hope that by the time a Big Mac costs twice as much, my investments will have at least doubled to keep pace. If they quadruple instead, then perhaps my career will not last 40 more years after all. If they fail to grow with inflation, then I'll begin to downshift my lifestyle during my working years to reflect this erosion is socioeconomic status. If the CEO of my company calls me tomorrow and asks to trade jobs then I'll provide all flights and accommodations at the Four Seasons Maui for Bogleheads 13.*

*Offer applies only if the CEO calls me on Sunday, March 10th. :twisted:

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Abe
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Re: What's your number? Why?

Post by Abe » Sat Mar 09, 2013 4:52 pm

Peter Foley wrote:Abe - great story - thanks for sharing.

A topic for another thread - What is your opinion of micro-lending? Would you characterize any of the lending you did in such fashion? Do you think someone can earn a reasonable return on micro lending?
Peter: After responding to your post the first time (I didn't know what micro-lending was), I did some research and found that micro-lending is loaning money to poor people trying to get started in very small business in third world countries. If this is what you meant by micro-lending, then yes I would do that in an instant. I would not do it for the profit but just for the satisfaction of knowing I had a part in helping these people get on their feet. I think that is a good thing.
Slow and steady wins the race.

AQ
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Re: What's your number? Why?

Post by AQ » Sat Mar 09, 2013 5:08 pm

I have about 4mm but I'm not sure if that is enough, or how much more I need. 10 would be more than enough but I may never get there :happy It's fairly easy to figure out my needs and expenses but the problem is not sure how much I need to budget for health care. Currently it's paid my employer and it amounts to 28K (starting this year, W2 has this info).

If I retire today, anyone has a ballpark number for the health insurance? No need to be precise since I'd love to get an estimate on what my number should be.. Basically the question is: for a couple in early 50 with signifcant medical history (cancer survivor), but right now it's in remission, how much do we need to budget for, if we go to retirement now and pay everything ourselves?

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lthenderson
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Re: What's your number? Why?

Post by lthenderson » Sat Mar 09, 2013 6:53 pm

When I was fresh out of college and started my first 401k, my number was a million dollars. But back then, my idea was that I would work until I was 65 and then spend lavishly until death. Now at age 39 however, my idea of retirement has changed a lot. Instead of working until 65, I now want to only work for 'the man' as long as I have too and then I want to be independent meaning I can work where I please for how long I please. As luck would have it, I lost my job last summer but not before I had saved up $1 million in stock options which I will cash out over the next five years. Providing the company continues on the pace that it has been, that $1 million should be worth about $1.5 million in total by the time I get it all switched over to a Vanguard self directed IRA account.

Unfortunately, most of that money is in tax-deferred accounts so I have a ways to go before I can touch it without penalties. Fortunately my wife has a job that she loves and makes more money now than we both did together in our earlier years. So now my idea of retirement is to continue to save what we can in taxable accounts so that we can retire early and carry us until we are old enough to spend the tax deferred accounts without penalties or it is large enough that I can get at it using a 72(t) and the payments are big enough to substain us in the lifestyle we desire.

What is that exact number? I don't know. My wife wants to keep working and I now am exploring my options on what to do from age 39 until such time when I decide to fully retire. I am confident now that I will have enough money to retire and live how I want to live. Now I just need to figure out at what age that will happen.

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stemikger
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Re: What's your number? Why?

Post by stemikger » Sat Mar 09, 2013 7:04 pm

AQ wrote:I have about 4mm but I'm not sure if that is enough, or how much more I need. 10 would be more than enough but I may never get there :happy It's fairly easy to figure out my needs and expenses but the problem is not sure how much I need to budget for health care. Currently it's paid my employer and it amounts to 28K (starting this year, W2 has this info).

If I retire today, anyone has a ballpark number for the health insurance? No need to be precise since I'd love to get an estimate on what my number should be.. Basically the question is: for a couple in early 50 with signifcant medical history (cancer survivor), but right now it's in remission, how much do we need to budget for, if we go to retirement now and pay everything ourselves?
Starting January 1, 2013 The Affordable Care Act ("Obamacare") is going to offer State Exchanges along with the National Option, so you should have many choices. Go to healthcare.gov it lays it all out with a timeline. No more worries if you have a pre-existing conditions and they can't charge you higher because you had cancer. Things should be a lot easier as far as healtchare going forward for anyone with a pre-existing condition. Good Luck.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

umfundi
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Re: What's your number? Why?

Post by umfundi » Sat Mar 09, 2013 7:08 pm

and then I want to be independent
Amen. That was my goal too. Not to retire early, but to have saved enough early enough to have options and choices.

In my day, the handcuffs were there: If you did not have 30 years of service or 83 points (age + years of service) your pension and retirement health care were significantly less.

I made it by age 50, but stayed till 58.

Keith
Déjà Vu is not a prediction

livesoft
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Re: What's your number? Why?

Post by livesoft » Sat Mar 09, 2013 7:15 pm

Alrighty, who has chosen a Number with a plan for a contingency of Gray Divorce?
This signature message sponsored by sscritic: Learn to fish.

umfundi
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Re: What's your number? Why?

Post by umfundi » Sat Mar 09, 2013 7:42 pm

livesoft wrote:Alrighty, who has chosen a Number with a plan for a contingency of Gray Divorce?
Twice your previous number? Or, half your previous expectations.

Keith
Déjà Vu is not a prediction

cherijoh
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Re: What's your number? Why?

Post by cherijoh » Sat Mar 09, 2013 7:59 pm

bobcat2 wrote: The point here isn't that you have to buy a real life annuity at retirement, you don't. It is instead that a real life annuity is the best way to price your retirement. For example, if your retirement plan calls for your portfolio to generate $30,000 per year in retirement income, then the size of your portfolio at retirement needs to be approximately what it would cost to buy a $30,000 real life annuity at your retirement age. The best estimate of that is the current price of such an annuity at your retirement age, perhaps adjusted upward slightly to account for expected growth in life expectancy by the time you reach retirement. Notice that the size of such a portfolio will vary over time because of changes in real interest rates, life expectancy at your retirement age, and inflation expectations. Just setting a target level of portfolio wealth at retirement takes none of these very important aspects of being able to meet your retirement income goal into account. In other words the level of either nominal or real wealth needed to finance a $30,000 real retirement income stream is not going to be a constant between now and your retirement date.

BobK
I like this approach but haven't had good luck finding the current price of an annuity to pay X thosands of dollars at a specified date in the future. Any suggestions on where to get such a quote?

C

umfundi
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Re: What's your number? Why?

Post by umfundi » Sat Mar 09, 2013 8:09 pm

cherijoh wrote:I like this approach but haven't had good luck finding the current price of an annuity to pay X thosands of dollars at a specified date in the future. Any suggestions on where to get such a quote?

C
www.immediateannuities.com

If you want answers to more complex questions (like inflation indexing), call Vanguard.
Déjà Vu is not a prediction

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nedsaid
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Re: What's your number? Why?

Post by nedsaid » Sat Mar 09, 2013 11:01 pm

It is hard to say what my number is. Who knows what my life circumstances will be at retirement or what the investment markets will be like at that time.

We have to be flexible in our thinking. The number might be a whole lot different upon retirement than what I think it is now.

It is like what Don Rumsfeld once said, "You go to war with the Army you have." In the same way, we all retire with the retirement funds we have and the circumstances we have. Make the best decisions you can in the interim and be as prepared as you can be. With discipline and with a plan, you will be vastly better off than those without discipline and without a plan.
A fool and his money are good for business.

scrabbler1
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Re: What's your number? Why?

Post by scrabbler1 » Sat Mar 09, 2013 11:36 pm

I retired in late 2008 at age 45. Single, no kids.

In the years leading up to my early retirement, my plan split my retirement into two pieces. The first was from age 45 to age ~60, at which time I would begin having unfettered access to my "reinforcements" such as my IRA, my frozen company pension, and Social Security. To get me from age 45 to age 60, I would have to get by on only my taxable accounts.

When I first ran my numbers through Fidelity's Retirement Income Planner (I am a Fido client), the charts and graphs looked very good for me. The overall plan was still falling into place, both on the investment income and expense sides. But I did have one magic number, the one I will use to answer this topic's question. This number was what I needed the value of my company's stock to be worth in order to generate most of the income I would need in my early retirement. That value was $300,000. It hit that number in the middle of 2008 although it dropped slightly below that at the end of September as the markets began tumbling. Still, close enough to ER and I have never looked back. :)

epilnk
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Re: What's your number? Why?

Post by epilnk » Sun Mar 10, 2013 2:52 am

My number is 33x expenses. Which vary.

FillorKill
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Re: What's your number? Why?

Post by FillorKill » Sun Mar 10, 2013 6:49 am

livesoft wrote:Alrighty, who has chosen a Number with a plan for a contingency of Gray Divorce?
Have you? My plan includes various lifestyle contingencies and would sail-past that with little financial consequence.

Edit to add: Including what we consider 'reasonable' contingencies made sense along the way. There are just too many to be completely covered so the more likely possibilities received attention. One of the primary considerations is that we have a few family members that may need assistance in various ways over the coming years and we can't sit back and do nothing about it should the need arise. I can't imagine we don't go the distance together but if something were to happen I can't tolerate the idea of being financially devastated at the same time. That is unthinkable.

Zephyr120
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Re: What's your number? Why?

Post by Zephyr120 » Sun Mar 10, 2013 8:08 am

"I retired in late 2008 at age 45. Single, no kids."

That was my plan too, then I got married at 48 and have an adopted son ;-)

I have two numbers: 1) $1,184,000 -- why? Top prize for one of the Poker tournaments ;-)
2) 70 (age)

Actually, I'm quite close to both goals.

What I focus on is not a number that confers that "all will be OK in retirement," but the tactics needed to adjust my spending in retirement in response to market conditions. Those tactics need to adjust to both good markets (with philanthropy) and bad markets (tightening our belts). Rough calculations suggest that annual income during retirement will exceed expenses by about $10,000. There are enough unknowns - medical expenses, son's education plans after college, etc., life expectancy - that a fixed number seems absurd to me.

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