There are hundreds of thousands, if not millions of people now wondering how they’re gonna recoup recent losses generated by the latest goings on in the stock market. Their retirement plans have been just short of decimated, though I’m sure many if not most would say that word works for them.
I will be addressing their plight in detail in a series to be published next week — probably a three parter.
Allow me to give you some hope tonight.
Your retirement plan, however you’ve laid it out, is long term by definition. Unless your retirement was eminent, you have time to reassess, make any changes you think necessary, and spend the next ‘X’ years recovering.
Here are two facts with which you should reconcile. Mutual funds as a vehicle to retirement has been a giant FAIL for generations now. Also, the vast majority of folks who reach retirement age, do so with less than $100,000 on which to retire.
Might I suggest whatever they’ve been doing isn’t workin’ out for them?
More in the promised series. Have a good one.
Related posts:
- Thinkin’ In Terms Of Clichés Simply Doesn’t Cut It For Real Estate Investors
- San Diego Real Estate Investors Try To Avoid Saying ‘What Was I Thinkin” 5 Years From Now
- Taking Your Retirement Plan To Retirement — It’s About Not Letting The Bastards Win.
- Happy With How Your Retirement Is Shaping Up?
- When Does A Retirement Become A Fantasy Instead Of A Reality Waiting For The Right Time?
About BawldGuy
Good post, thought proving even at my old age *wink*. For your future posts will you speaking about you could help someone with $100k possibly turn it around and how long it would take (theoretically) to end up on a beach sipping Glenlivet?
Sorry, but I can’t agree mutual funds have been a complete failure. High quality mutual funds allowed my parents to accumulate a substantial retirement portfolio over a 20 year period of running a business. They actively managed their mutual fund investments, adding and subtracting funds over time, and they lived a comfortable and well insulated life in retirement without pensions.
Poor quality mutual funds, such as the S&P 500 focused funds in most 401(k)’s and similar plans, have failed to do the job. For example, the funds offered in my most recent employer’s 457 plan were generally awful. However, I contributed to the best of the offerings, moved money as the markets changed, and rolled the account over to an IRA when I left. I saved a ton on taxes and I came out of the plan with decent if not spectacular returns.
Active management of an equity portfolio, whether individual stocks or mutual funds, is critical to your success. If you are unable or unwilling to do this, your returns will be anemic at best.
Diversification and asset allocation are NOT applicable to captive portfolios in 401(k) plans and their relatives. Diversification within most of these plans benefits the company that manages the plan, not you. Plan managers have an inherent conflict of interest because of their financial relationships with the funds in your plan.
Real estate offers the opportunity to leverage your capital and grow your wealth. It offers fabulous tax advantages to most investors. Even in the current market, real estate has been my best performing investment by far. However, real estate is no different than any other investment asset in that it must be managed. I had many years of professional experience in real estate before I invested any of my own money.
There are no guarantees with any investment and things change over time. Whether you like managing investments or not, you must learn how to manage them and then you must do so, or you will be at the mercy of others. If you learn how to manage your investments, stocks and mutual funds as well as real estate can work to your advantage.
AI — First, it’s so nice to hear how your parents’ retirement turned out. They are obviously the exception to the rule.
The remainder of your comment is preachin’ to my favorite choir.
Managing your investments, even when they’re real estate in other regions is a must, even when it means managing the managers.
The only point on which we seem to go down different paths is your insistence on investors learning to manage everything themselves or returns will be anemic.
Hogwash.
All professionals in the investment field, real estate or otherwise aren’t mediocre wannabes, who’re uncaring leaches, enriching themselves at their clients’ expense.
You overstep when you insist anemic returns will result if they don’t do things your way. I don’t care to debate this with you, as I don’t have a problem with having an honest disagreement.
Have a good one.
Again, we can agree to disagree. I can point to many “Millionaire Next Door” examples I know that became wealthy through investing in stocks and mutual funds. They learned how to invest and succeeded at it. Some did it entirely on their own, and some did it with professional assistance. These folks were not interested in or capable of being a landlord but they still made a lot of money.
The same thing applies in real estate. You don’t have to fix toilets yourself, but you need to have a solid grasp of the basics of real estate to succeed. Unlike stocks, you can’t sit at a computer and click to do all the work. You must be able to distinguish between a good and a bad investment property, and you must select advisors and service providers who will help you achieve your goals.
Of course not every professional out there is bad, but as an investor, your job is to find and use the best ones. It’s very important to have these people if you invest in real estate. On that point, I’m sure we agree.
Actually AI, I think we agree on most points. It appears to me you’re pushing the exception as the rule. The average 60 year old American is celebrating their birthdays worth less than six figures sans home equity. That isn’t because they did so well on their own.
It’s not that I deny your examples’ existence, it’s that they’re not the rule by any stretch of the imagination. They’re the exceptions — a fact of life which isn’t arguable.
Professionals with integrity, solid work ethic, and superior expertise will always out perform the millionaire next door. That doesn’t diminish what you’ve proffered, or what those folks have accomplished as they’ve done extremely well in many cases.
They’re in the distinct minority, another point on which we no doubt agree.