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This 4×6 index card has all the financial advice you’ll ever need

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Re: This 4×6 index card has all the financial advice you’ll ever need

#251
post #249

Earlier quoted context omitted.

I got better than anything else I could have invested in. That's what matters to me.

You did that over a period that was a decidedly bull market, though. Presumably sokoloff's question was intended to point out that very similar strategies (trying to pick "winners") is likely to underperform the market in bear conditions, sometimes very badly. I knew a lot of people who thought they were hot stuff day traders back in 1998 too. Spoiler: they weren't.

I went in in August 2007, when the DOW was at 14700 or so. I watched my portfolio dip from $27K to $18K. Everyone I knew was going cash. I didn't. I trimmed the sails, turned into the wind, and learned. There's no better learning that reading everything you can about the market when the market is doing back-to-back triple-digit drops in the 8000's, with your money in the game. I sold some pigs, bought some as they were going down. The best pickings were on the floor, BK at the corner, and people had written them off. I got lucky that I was buying when everyone was scared, but I didn't buy because the stock was low, I bought because I knew the companies had customers, long term contracts, good manufacturing know-how, good management, and made products their customers wanted. At that point, I reinvested another $25K in securities, from when the DOW was around 7500, and gold was shooting up, to about 10,000. After that, it was all growth, reinvestment of dividends, etc. I pulled $10K out in December 2012 (down payment on car), and had $61K in the portfolio after. This week, not really doing anything, it's at $99K. Yes, it's a wave, but like in surfing, you gotta be in the water to catch it. I have holdings in about 60 companies. My last trade was selling $1600 of Honda stock and buying $500 of Fedex and $600 of Toro, both adding to existing positions.

Re: This 4×6 index card has all the financial advice you’ll ever need

#252

Earlier quoted context omitted.

Wouldn't save 20% of your income cover that? It's just a management detail after that (i.e. leave some of that 20% liquid for emergencies).

I said you should have enough liquidity to get you through a year-long crisis. If you're saving 20% of your income, you're probably. However, unless you have especially nasty rates on student loans, paying them off shouldn't come before accumulating some fairly liquid savings. The same probably goes for paying extra on the principal on your mortgage and maxing out retirement plans.

I was going exclusively by what was on the notecard. :)

Re: This 4×6 index card has all the financial advice you’ll ever need

#253

Earlier quoted context omitted.

It's different than REIT, not necessarily universally "good". One obvious difference is with a house you get a collateral for a huge low-cost leverage, that in some cases might be easier to settle if things go South (e.g. shortsale). Another one is rent you save/collect from someone else.

To me, rent just seems like a form of dividend payment, which is of course not unique to property ownership.

I know someone who bought a 4 plex here in Dayton for $50k in cash, and earns 500 per unit ie 2k per month or 24k per year. Paid for the investment in 2 years, and is now earning 24k per year residual and bought another property for 78k.

Renting is a good investment if you can handle sourcing tenants and outsourcing or handling maintenance issues.

Re: This 4×6 index card has all the financial advice you’ll ever need

#254

Earlier quoted context omitted.

That's not being poor. Try earning federal minimum wage and providing for 2-3 people. You cut the crap out early. But your car that you need to get to work still breaks down. Your SNAP (don't know what they are? you've never been poor) benefits still run out too soon. And you and your kids still get sick.

That notwithstanding, what advice would you naysayers like to see on this card for poor people? Is there anything that simply knowing is going to help them? This card contains all the major points of advice a poor person can use about finance. Whether that is enough to save them is a completely different question. Raising it is not a valid criticism of this card.

For poor people, there's basiclayy

#1 Convince all the rich people to do the last item on the card from the original article

#2 Try to get your kids to do something different than you, if you're earning $20k/year with no savings, no spouse and have kids it's probably too late for you to save anyway

Re: This 4×6 index card has all the financial advice you’ll ever need

#255
post #184

Earlier quoted context omitted.

Budget to save before you outlay your discretionary income. You might have to redefine discretionary to include car (if public transport suffices for your job), cable, etc. Don't lay out your budget and set aside $x for entertainment (eating out, etc). Savings will always suffer. Set aside desired savings first and then work with what's left.

Hear hear. I can't repeat this point enough. You have to force yourself to save, first. If you spend on everything else first and figure you'll save "the rest", something will always come up. If you set it aside before other categories, it will ... be set aside! As a corollary, just writing (and following) a basic budget does wonders. I've talked to a lot of people who said it was like getting a raise. You have regul…

Another point is to never assume that getting a raise will solve your saving problem. It won't.

Re: This 4×6 index card has all the financial advice you’ll ever need

#256

Almost all of this is excellent advice, except for one point: "save 20% of your money". That's a bare minimum, which will let you retire after about 37 years of working. Bump it to 35% and you'll retire after 25 years. Bump it to 50% and retire in 17. Bump it to two-thirds and retire in 10 years. That's one of the most important factors in your personal finances: not how much you make off your investments, not whethe…

Why would you want to retire in 10 years? Isn't that like saying you hate your work? I enjoy my work, and am working to make it more enjoyable. The idea that I would try to live like a pauper so I could retire in 10 years and not do anything seems kind of strange.

If I retired, I would just find another job or career to make stuff.

Re: This 4×6 index card has all the financial advice you’ll ever need

#257
post #201

Earlier quoted context omitted.

The math is covered here: http://earlyretirementextreme.com/ Basically the thought is that 20-25 years of living expenses will generate enough income for you to early retire on. If you make 100k (post tax) with a 20% savings rate, you save 20k, and have living expenses of 80k. Ignoring future compound growth, for each year you work, you save 1/4 a year of living expenses. If you go the other extreme, and have 66% sav…

I'll have to read the book for more but the math you explain seems incomplete. The earlier I retire, the more would be my expected number of years in retirement (assuming a given life expectancy). If in one scenario my retirement is 40 years away and I need to save for 20 more years, then in he other scenario where I retire in ten years, I need to save for fifty! That's a factor of 2.5 in this example! Ignoring growt…

I think the idea is that if you have a large pile of money and take out a small portion of it each year to live on, due to growth the money will last indefinitely.

So if you have 25 years of living expenses and each year take out 1 year of living expenses, that is 4% of your money. If you earn ~4% a year then your account balance stays the same.

The 4% number matches the 4% rule: http://www.investopedia.com/terms/f/four-percent-rule.asp

Of course after the great recession now the common wisdom is that the 4% rule can't be trusted: http://online.wsj.com/article/SB1000142412788732416230457830...

Personally I think it would be foolish to plan on retiring with only 20 years of living expenses. However some people also plan on holding a part time job at least in early retirement.

Re: This 4×6 index card has all the financial advice you’ll ever need

#258
post #117

Earlier quoted context omitted.

"When you're talking about being retired for fifty years" Yeah. We aren't. This whole thread spawned because the claim was that you can retire in 10 years if you save 66% of your income.

>Yeah. We aren't. This whole thread spawned because the claim was that you can retire in 10 years if you save 66% of your income. I don't understand. Retiring after 10 years means you'll be retired for around 50 years, doesn't it?

If you lose your nest egg in year 10 because the market takes a dump, guess what? You're not retired anymore.

It's why real-life retired people don't put their entire savings in the stock market. Retirement funds tend to have most of your money in fixed-rate securities by the time you actually quit working.

Re: This 4×6 index card has all the financial advice you’ll ever need

#259

Almost all of this is excellent advice, except for one point: "save 20% of your money". That's a bare minimum, which will let you retire after about 37 years of working. Bump it to 35% and you'll retire after 25 years. Bump it to 50% and retire in 17. Bump it to two-thirds and retire in 10 years. That's one of the most important factors in your personal finances: not how much you make off your investments, not whethe…

Why would you want to retire in 10 years? Isn't that like saying you hate your work? I enjoy my work, and am working to make it more enjoyable. The idea that I would try to live like a pauper so I could retire in 10 years and not do anything seems kind of strange. If I retired, I would just find another job or career to make stuff.

Just because you have enough savings to retire doesn't mean you have to retire; it just means you have the option to. And "retire" doesn't mean you have to stop doing interesting work, either. You could keep working an existing job that you enjoy knowing that it's completely optional for you, or you could spend 100% of your time doing work that doesn't necessarily pay (e.g. a startup, or working on random Open Source projects that tickle your fancy).

Re: This 4×6 index card has all the financial advice you’ll ever need

#260
post #28

Earlier quoted context omitted.

> Bump it to two-thirds and retire in 10 years. Expand it by 100 and you would be already retired before you would were even born! I guess the point of the advice is to be realistic. > The only more important factor is "never borrow money", and in particular "never carry a balance on a credit card". Well, lots of people have started companies or saved themselves from starvation by maxing a credit card.

The idea that >20% savings rates are not "realistic" is a serious mindset problem. Almost anyone on Hacker News with a paying job (i.e. not an early-stage no-funding startup) should easily be able to save much more than that. Sure, saving two-thirds of your income might be out of reach, and even the 20% advice is better than most sites that often say 5-10%, but consider carefully whether you can increase it and retir…

>The idea that >20% savings rates are not "realistic" is a serious mindset problem. Almost anyone on Hacker News with a paying job (i.e. not an early-stage no-funding startup) should easily be able to save much more than that.

You know that 50% or so of HN readers are not in the US, right? Some have to do with $300-$1000 a month (or less), with the same costs for food and costlier computers, clothes etc -- oh, and 3x the price of gas. And renting some small-ish appartment.

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