Lots of good points here. Ramsey has good ideas for people just getting started. He mentioned getting an financial advisor. I had there and they were just awful. The time came when I knew the last one was just terrible. He sold me Non Traded REITS and loaded Franklin funds. It has been 5 yrs now and the Non Traded REIT is stuck there , not able to sell it and went from 25 per share to 17 and 7% dividends to 4%. Five years and still under water. The Franklin funds were sold but I track them and I would likely be up 5%?? after 5yrs. I stayed with him for a little over a year and was gone. Did not even bother to return his call and to make matters worse my sone worked there and they fired him a while later. For what it's worth , there is a Pimco bond fund I have been happy with for about a year. The ticker is PONAX. It pays monthly and comes to a bit over 5% in dividends per year. The share price stays almost the same but goes up and down a bit. I put my temporary money in it like future tax money I saved for property taxes ETC and in a ROTH. I low 5% is not much but it only lost 10% in the crash 10 yrs ago and went back up pretty good. I am way ahead doing my own investments . Here is the catch. I could get rentals and do well. I have been a carpenter for 38 yrs. I could go work on properties for sweat equity , or I could stay at work for $45-50 per hr. I put in two bids on 2 rentals 6 yrs ago. I would have done better had I go those two houses. I went with stocks and some bonds. My income is about $18,000 per yr. Not bad, and almost completely tax free with ROTHS, 401's and qualified dividends that are low taxed, with my Municipal bonds that are tax free on the divies. I have 38 investments from $2,000 in Owens Corning to $100,000 in British Petroleum and everything else in between. Here is one catch though. I studied investing for about 5 yrs now , almost every night . I learned that it is very hard to beat a handful of index funds and a few bond funds. I make almost exactly what the market does but I do it with almost half the volatility. A good way to start is index funds if you are young, but not if you are over 50 or so cause the market is very high, but might go a lot higher. Safe dividend stocks like the Dividend Kings are a good bet. AT&T, Exxon Mobil, Walgreens, AO Smith, Kroger Foods are good companies that have raised their divies an awful long time, even through the crash. I hope to get to about $25,000 in divies in 4 yrs when I turn 60. I should get $1,700 form S.S. but lets say $1,500 and hope for $700 from my Carpenters pension. This gets me $50,000 a yr. I think I can do that forever cause I made only $40,000 last year and saved $18,000. I am cheap , love life on the cheap. Get a kick out of guys with $50,000 boats. My boat is 29 yrs old as of Saturday and I catch more walleyes that almost all of them hot shots. Also, I have no debt and house has been payed for 10 yrs. The Lord with contentment is great gain.
very insightful post, your tip on the pimco fund isn't a bad one. 5% isn't a bad gig if you can liquidate it easily. This is an interesting thread. I think it shows different people view retirement and what is enough totally differently. I think this depends on where you live and also what standard of living you want. There is no right or wrong answer. Its you and your own happiness.
For me enough is a check for $20k/month in passive income. I don't see how you are going to accomplish that in stocks and "good growth stock mutual funds" The dave ramsey miliionaires aren't coming to the table with that level of passive income. I would also ask that if anyone knows someone that has built a portfolio with stocks that reaches 20k/month and didn't use inheritance or some lucky lump sum to get there I would be highly interested in talking to them. I personally think those people don't exist. I think the dave ramsey millionaires are people that have a paid for house, have 120k in a 401k, colllect $1500 a month in social security. and collect a pension, which probably totals 5-6k in income /month and they are calling themselves retired with that.
The problem with dave's strategy on real estate is that its kinda a mediocre investment if you don't use financing to accelerate it. Lets say you have 300k in cash to buy a rental house. Your investment is only appreciating 3% a year, That only keeps pace with inflation. So your cash nest egg investment most likely never gains in net value relative to inflation. Instead if you buy 3, 300k houses. you are getting appreciation on 900k in assets. so instead of 9k/year in appreciation. you are going to be getting 27k in appreciation on the 300k investment, that is 9% right there!!! even if you broke even on rents. Also the other beauty of real estate is you are able to keep rolling up and never pay taxes on the appreciated value. AND there are other things you can do with depreciation, google cost segregation study if you are bored.
with stocks you are paying taxes on the gains, with real estate you are deferring those taxes if you do it correctly. with stocks you have no leveraged appreciation. Also in most cases when you invest in the stock market you are depending on appreciation of the stock, Depending on a value increase IMO is gambling. If done correctly you invest for cash flow with real estate. That way you don't depend on appreciation, instead that is the giant cherry on top when you go to sell.
