saving up for a rainy day/retirement/big purchase

[rockriver]

lowdowns thread on 87 crash brought this subject to mind.

how do we, or should we invest for the future...

it is a delicate subject and the word "nunya" comes to mind..
nunya is code for "none of your business"

so, if you respond, we will assume that you are telling us about your uncle, distant relative or the guy down the road.

here's one story about an associate who lives afar off!
grew up poor. went off to war as a teenager. went to college with some help from uncle sam.
got a job in a factory with a defined benefit plan. joined the military national guard as a weekend warrior.
was frugal with spending. bought house near a big highway. had a bunch of kids. but saved a little money on a regular basis. wife did a little "public work" on occasion.
slowly began to invest in stocks.
401k at work... he advised that a lot of co-workers chose not to participate. they wanted every penny now.
co-workers had no understanding of saving now for a rainy day.
slowly, with a group of other friends, started buying some rental property.
after several decades the house sold for nice increase as it was near the big highway and development came its way.
...
results:
factory retirement plan - not great, but was steady money during retirement. no COLA
401k -factory eventually started a plan but late in associates career. small balance.
military retirement - small but grew slowly because of Cost of Living Adjustment
social security - small but grew slowly COLA
personal - lost and won in the stock market. mixed results. got better as the decades went by.
- the real estate paid off better than the stock market.
wife had no retirement fund. no inheritance. associate helped pay for funeral and final expenses of his mother in law when she died.

tell us a story that will help us learn. remember the nunya principle.

[Lowdown3]

25 years or more till real "retirement" age here, but have made a ton of mistakes with money over the years and had to clean up the messes.

Getting and staying out of debt is probably the biggest thing that affects people's "success" with money. It isn't really about having a beau coup sum, it's about managing what you have really well.

About 9 years ago now we finished getting out of debt. Took several years, had a false start aka backslidden at one point. Finally just had to get pi$$ed about the deal and totally commit to getting it done. The enemy of perfection is good enough type of deal. Human nature says that once people: 1. Lose a few lbs. (but not all they need to) 2. Get a little ahead on their finances. 3. Get a little bit of preps going- they tend to get the "good enough" mindset. Also known as "well we are better off than the Jones that live paycheck to paycheck" or "Yeah I still have 50 lbs. to lose but Ted is still 100 lbs. over weight." Reality- why do you give a crap about the Jones or Ted??? You shouldn't. It's just an excuse for you not going all the way with it.

So commit yourself to it, that's what it really takes.

Preparing and saving/investing are kind of the same animal. We put up rice and beans for a time when food is scarce. We should put money back for the times when we can't work- and that's not just when we are elderly. Having the ability to stay flexible brings many rewards. I was able to be there as older relatives needed help or died. That sort of thing reaps more rewards than money.

My boss is a jerk :) so I don't have a 401K, but I do have a Roth IRA, and everyone should have a Roth. Tax free later in life is a good option. Sure they can take that away, as everything, but it's the best going right now. Limited to $5,500. yearly. If you have more than that to invest put it in a taxable account. You may need to dip into your investments at some point.

Keep a good portion of your investments in cash. That means a money market aka "sweep" account some firms call it. The huge market drops are where you can use some of that cash.

I'm doing roughly 10% speculative investments, well over 50% in cash currently and the rest in income producing stocks- REITs, dividends producing stocks some of which are upwards of 13% on dividends. The speculative investments include things like buying precious metal mining stocks when they are low (like right now). These include companies like Avino Gold and Silver mines (ASM) , Golden Minerals (AUMN), Eldorado Gold (EGO), all but EGO I've traded a handful of times over the years taking small gains off the table. Not looking for huge flips, but considering 5,000 shares moving $.10 equals a $500. profit.

While the market is high, the PM mining stocks typically suck, and that's usually the time to buy them. ASM had topped over $3. a share just a year and half ago and only about six months after we purchased some at $.72- we had cleared out most before the high however.

Risky, sure. But you have to take some risks.

Dividend stocks and some of the REITS are paying 8 to upwards of 13% some get beat up pretty well during the housing bubble, when interest rates spike, etc. ARR a quality REIT we've owned for years, was under $20. early this year, it's topped over $27. a couple times since, and it pays out $.19 per share every month like clockwork. Annaly (NLY) pays out 9.93% yearly income paid quarterly. Oil related stocks like USA Compression which simply owns infrastructure that pushes natural gas down the line has paid 12-14% quarterly. Buying any of these on dips are the way to go. Keeping just a percentage of your funds in high dividend stocks like these allows you to keep a good portion in cash and still get a small (3-4%) return on your total investment. The cash is sitting waiting for big drops so you can buy in at a discount. The ideal situation would be that also when that happens your PM mining stocks are going up also, and you can cash out of some of them while they are up and buy more dividend producing stocks while they are cheaper.

Works out better in theory than in practice, but gives you a little better control of your own finances. Don't rush into anything, set up a sample "portfolio" of stocks and watch them regularly. Check out their historical prices during major downturns. Put in buy orders at drastic discounts compared to today's prices. Many platforms like etrade allow "good for 60 days" orders. You will likely not be able to buy at the bottom but if your cheap AND patient you can usually buy at a discount this way.

Put the stocks you track on your phone and check them daily. Usually the dividend/distribution type stocks will have a good drop around the time of a distribution, and you can buy them slightly cheaper than- but missing the current distribution.

You can't relay totally on speculation- i.e, prices moving upwards. Getting a little back via a dividend is a good way to mitigate your risks.

If the market crashes completely/TEOTWAWKI, your not going to have the money anyways. That's why you don't worry about "protecting your money" before you can adequately protect/provide for your family first.