Living in retirement: Seven things I wish I could tell my 35-year-old self(theglobeandmail.com)
theglobeandmail.com
Living in retirement: Seven things I wish I could tell my 35-year-old self
http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/living-in-retirement-seven-things-i-wish-i-could-tell-my-35-year-old-self/article16429873/#dashboard/follows/
27 comments
1. Isn't covered in the article, but not rushing to get married may help with #1. Don't build on something reckless unless there's a solid underlying base to the relationship. Many people get married because it feels like a logical next step in a partnership that isn't so rubbish that you live apart. That said, building up a relationship early can be financially helpful, spending on one house, both working to tackle one initial mortgage, etc.
3. I think the point about social capital is good. A good combination would be a job with a side-venture (say, photography) that you can build a profile with regardless of what else you do.
6. I don't think that point of theirs should translate to spending excessively on a live-for-the-moment property. Rather than buying a $1m property, there can be significant advantages in buying a $600k property and two $200k apartments to rent out, given that you leverage your tenants while the properties appreciate.
3. I think the point about social capital is good. A good combination would be a job with a side-venture (say, photography) that you can build a profile with regardless of what else you do.
6. I don't think that point of theirs should translate to spending excessively on a live-for-the-moment property. Rather than buying a $1m property, there can be significant advantages in buying a $600k property and two $200k apartments to rent out, given that you leverage your tenants while the properties appreciate.
1. Prenup or common-law (in some countries/states) can be a FAR safer contract and generally far more fair and ethical to both parties.
Any person, be it man or woman, should seriously screw off if they can't respect you enough that they expect you to be half as capable as you once were every time you marry.
Put simply, your finances should not define your marriage.
Any person, be it man or woman, should seriously screw off if they can't respect you enough that they expect you to be half as capable as you once were every time you marry.
Put simply, your finances should not define your marriage.
2. because the financial planning for children will run into needing to save for retirement more dramatically if you have children later (think: kids going to college when you're 50) I'm not sure he's right about the whole more degrees and more expensive thing.
Agreed that 3 4 6 come from a position of entitlement - being born in an era where those things existed (possibly at the expense of future generations prosperity).
If you have the knowledge to judge financial advisers, you don't need one. If you don't have that ability, you won't be able to tell whether they're any good until XX years down the track, upon which point you'll probably judge them on your returns. And even then, there's a good chance you'll just make a judgement based on random chance/survivorship bias.
Love this.
Agreed that 3 4 6 come from a position of entitlement - being born in an era where those things existed (possibly at the expense of future generations prosperity).
If you have the knowledge to judge financial advisers, you don't need one. If you don't have that ability, you won't be able to tell whether they're any good until XX years down the track, upon which point you'll probably judge them on your returns. And even then, there's a good chance you'll just make a judgement based on random chance/survivorship bias.
Love this.
College, in North America, is something that you "have to have" (according to popular thought) and is for-profit, so there's incentive to increase the cost. The costs have catastrophically ballooned just since I went and I'm in my 30s. While I don't think those costs can continue to increase indefinitely, they're certainly bound to rise further.
keep in mind though that if the advice is being doled out to, say a 20-something, then the period in question is +10 (to get to a 30-something +20 or so to get the kid to college) or a net +30 years from now. I think it's certainly possible higher education bubble will pop before 30 years are up.
Add to that, that the physical and mental strain which having children will put on you is better absorbed at a young, but not too young age (if you actually take care of the children, as opposed to offloading the work on your SO).
I (on purpose) started having children at under 30, which is quite uncommon among the university-educated here in Germany. And indeed, I'm glad I did it.
It is certain that I left money and career opportunities on the table. Nonetheless, I retained some "free time" due to the fact that I could sustain the strain of sleeping less and working more. I am quite sceptical that I'd be able to pull it off once I'm going on 40.
Also, having children earlier leaves you more time to "bounce back". Want to go on that six week trip overseas? Better wait until the children are in their late teens. But will you then be 50 or 60?
I (on purpose) started having children at under 30, which is quite uncommon among the university-educated here in Germany. And indeed, I'm glad I did it.
It is certain that I left money and career opportunities on the table. Nonetheless, I retained some "free time" due to the fact that I could sustain the strain of sleeping less and working more. I am quite sceptical that I'd be able to pull it off once I'm going on 40.
Also, having children earlier leaves you more time to "bounce back". Want to go on that six week trip overseas? Better wait until the children are in their late teens. But will you then be 50 or 60?
Hahahahahhaa! So you think your defined-benefit pension is proof against losses, eh?
Well, it can protect you from a lot, that's for sure. But as a rule, pension costs have been rising for decades, and were underfunded even before the economy and tax revenues tanked. In this narrow column I can only highlight a few small pieces of hilarity, like pension plans borrowing cash to invest in real estate to the tune of a $1B loss (Calpers - http://online.wsj.com/news/articles/SB122947172015212225 - use a Google HTTP referer to read the full article). Or the plan where you borrow from your pension plan TO PAY FOR YOUR PENSION PLAN -- http://www.nytimes.com/2012/02/28/nyregion/to-pay-new-york-p...
So yeah, you've got a lot of clout, but you'd better hope that your city, state, or other relevant agency stays afloat or you're at risk of getting dinged a lot like an ordinary hard-working unentitled American.
(At least with a 401(k) or IRA, you know what assets you have and actually own them yourself -- moreover, if you worked somewhere small enough, they might be more diversified than your municipality's future tax revenue.)
Well, it can protect you from a lot, that's for sure. But as a rule, pension costs have been rising for decades, and were underfunded even before the economy and tax revenues tanked. In this narrow column I can only highlight a few small pieces of hilarity, like pension plans borrowing cash to invest in real estate to the tune of a $1B loss (Calpers - http://online.wsj.com/news/articles/SB122947172015212225 - use a Google HTTP referer to read the full article). Or the plan where you borrow from your pension plan TO PAY FOR YOUR PENSION PLAN -- http://www.nytimes.com/2012/02/28/nyregion/to-pay-new-york-p...
So yeah, you've got a lot of clout, but you'd better hope that your city, state, or other relevant agency stays afloat or you're at risk of getting dinged a lot like an ordinary hard-working unentitled American.
(At least with a 401(k) or IRA, you know what assets you have and actually own them yourself -- moreover, if you worked somewhere small enough, they might be more diversified than your municipality's future tax revenue.)
The best part is about real estate. Ask my grandma and it's great! Ask people my age and they've lost their entire fortunes, declared bankruptcy and some are still on payment plans for real estate worth 1/2 they paid for it.
Pensions, real estate, and even the stock market is not guaranteed. The best advise is to stay diversified and don't rely on one thing unless you founded it and can keep it relevant.
Pensions, real estate, and even the stock market is not guaranteed. The best advise is to stay diversified and don't rely on one thing unless you founded it and can keep it relevant.
The best part about the property-vs-other investments is that if you look at it without the bubbles (read: still not NOW) then property values (as a whole) in North America rise almost lock-step with inflation. Even the simplest of index funds FAR outperforms.
The article is written by a Canadian in a Canadian newspaper. The situation in Canada is quite different from the one in the States. Defined benefit pension plans for public civil servants (including teachers) are quite safe in Canada.
translation:
this time it's different
this time it's different
I'm amazed at how prophetic that book [0] is. I wish it would be required reading for every Congresscritter, SCOTUS judge, every member of every federal agency, and all the other cogs in the executive branch ... but I fear they would simply see all the proven mistakes as a blueprint of what to do, only "smarter" this time.
----------------------------------------
[0] http://www.amazon.com/This-Time-Different-Centuries-Financia... This Time Is Different: Eight Centuries of Financial Folly It basically takes centuries of data and shows how world leaders tend to make the same mistakes, causing crises, and then follow the wrong solutions to said crises.
More: http://www.reinhartandrogoff.com/
----------------------------------------
[0] http://www.amazon.com/This-Time-Different-Centuries-Financia... This Time Is Different: Eight Centuries of Financial Folly It basically takes centuries of data and shows how world leaders tend to make the same mistakes, causing crises, and then follow the wrong solutions to said crises.
More: http://www.reinhartandrogoff.com/
I was going to say the same thing. Those defined-benefit pension plans sure worked out for the municipal workers in Detroit!
> with a 401(k) or IRA, you [...] actually own them yourself
It seems to me you don't quite own assets in a 401k. You cede some rights to Uncle Sam.
I feel there's enough political risk to socking money away in such accounts to be wary. In the event of a fiscal crisis they're juicy targets.
It seems to me you don't quite own assets in a 401k. You cede some rights to Uncle Sam.
I feel there's enough political risk to socking money away in such accounts to be wary. In the event of a fiscal crisis they're juicy targets.
What rights am I ceding?
Not arguing for the OP, but you're waging that taxes in the future won't be hugely different than they are now.
You essentially have to ask the government for permission to do anything with funds in a 401k/IRA. It's not a normal holding. It's already an impractical pain to make various kinds of investments with such funds; the accounts are pretty much all set up for US traded equities and nothing else. But the real kicker is you don't even have some sort of lifetime guarantee on the restrictions. I could easily see them making it altogether illegal to hold foreign assets, for example. The worst case scenario is some Cyprus style haircut.
I think one of the problems with advice from people near retirement is that they think about life decisions that would have benefitted them at their current age. So for example, being 65, they wish their younger self had saved on going out to eat, buying nice clothes, etc. so that their current happiness would be higher than it is. What they don't account for is that their younger self would've been less happy at that time. Perhaps their younger self would've burned out if not for "wasting" some money buying some happiness in the present.
This is a good point, for sure - especially when it comes to personal financial planning. It is also the reason why I think every country should have a proper social safety net in place if they can afford it.
Also, the world is just different now. Where it made fiscal sense to invest before isn't necessarily the same as where it makes sense now.
So, basically, live a really boring 30-40 years, so you can enjoy 20-30 years in declining health.
I'll get right on that.
I'll get right on that.
I use to think like you. Problem is there really is quite large economic disparity between the elderly and the young. If you don't save for retirement you will be broke or damn near it when you reach retirement age.
Also, I think you can have it all. It's relatively easy to pursue your interests and passions while saving for retirement.
I believe his last point highlights the exact reason, outside of pure passion, you should always be pursuing the things that interest you.
One can live an exciting life as long as one has enough money for retirement, has interests outside of their immediate friends and significant others, and stays committed to their significant other. I believe his suggestion to take a government job was just encouraging one to find a way to get paid past retirement age.
Also, I think you can have it all. It's relatively easy to pursue your interests and passions while saving for retirement.
I believe his last point highlights the exact reason, outside of pure passion, you should always be pursuing the things that interest you.
One can live an exciting life as long as one has enough money for retirement, has interests outside of their immediate friends and significant others, and stays committed to their significant other. I believe his suggestion to take a government job was just encouraging one to find a way to get paid past retirement age.
>Also, I think you can have it all. It's relatively easy to pursue your interests and passions while saving for retirement.
Not if you're making minimum wage. I know I am being a jerk but far too many people don't realize there is a sphere of existence outside their own.
Not if you're making minimum wage. I know I am being a jerk but far too many people don't realize there is a sphere of existence outside their own.
Very true and this likely accounts for the economic disparity I'm talking about.
This was one person's advice to their younger self. I guess we can all take away something from it, picking and choosing what sounds reasonable to us. I walked away from that article not thinking "boring life" at all but inspired to think more about what I was doing and trying to stick to a plan to take me where I want to go.
I don't have or plan to have a government job and I got lucky that separating from a previous marriage and splitting the house actually worked very well for me financially. I plan to sell and move to a nicer house when the market suits, and I plan not to put aside money for my son's education but to get him involved in tech and entrepreneurship early so he has broad and flexible options, or can freelance as a teenager to start investing. But despite all that, the ideal of a persistent career with social capital is smart. And the note about affordable interests having real benefits resonated with me too.
I don't have or plan to have a government job and I got lucky that separating from a previous marriage and splitting the house actually worked very well for me financially. I plan to sell and move to a nicer house when the market suits, and I plan not to put aside money for my son's education but to get him involved in tech and entrepreneurship early so he has broad and flexible options, or can freelance as a teenager to start investing. But despite all that, the ideal of a persistent career with social capital is smart. And the note about affordable interests having real benefits resonated with me too.
His first tip, only get married once and stay married, is a pretty good one.
Because knowing that the other person is going to snap/leave one day is completely determinable. Forgive me for my disbelief.
You can't imagine a scenario where your spouse may find something irritating, but for whatever reason choose to not mention it. Then, after years of daily annoyance, one day decides that it's too much and presents you with an "I thought it would get better, but...."?
Making a blanket statement that one should know how someone else feels is ignoring that the other person may be actively trying to suppress/hide it.
Making a blanket statement that one should know how someone else feels is ignoring that the other person may be actively trying to suppress/hide it.
I was being sarcastic. People change constantly. You can no more predict your future with someone than you can anything else.
LOL, really. She should've known when she was younger, that she shouldn't have gotten married to the guy that she would eventually divorce. Very good hindsight/20:20 advice though.
Depends how you read it.
Don't get divorced because divorce is expensive... not such good advice. Choose the right partner and don't settle so that you don't get divorced... good advice.
Don't get divorced because divorce is expensive... not such good advice. Choose the right partner and don't settle so that you don't get divorced... good advice.
Another way to say this is that staying married to the wrong person is extremely expensive in its own way.
Her. The author is a her. Here's her Twitter page:
https://twitter.com/JoyceWayne1951
https://twitter.com/JoyceWayne1951
Staying married is not entirely under your control, since your spouse can file for divorce even if you think your marriage is doing well. Unfortunately, the only way of being certain that you'll never get divorced is to never get married.
"Choosing the right partner" is good, but people change and grow apart and grow bored and meet other people who they might like better than their spouses. The "right partner" when you're in your twenties may not be the right partner twenty or thirty years later.
"Choosing the right partner" is good, but people change and grow apart and grow bored and meet other people who they might like better than their spouses. The "right partner" when you're in your twenties may not be the right partner twenty or thirty years later.
The author is a woman and statistically one could argue control over divorce in the modern west is with the woman. Among the college educated 90% of divorces are filed by women. More generally it's 70%, but some argue that when the husband files he's very often not doing it of his own accord.
There are large numbers of divorced boomer women going into old age alone and poor figuring out they made a huge mistake.
So for a female audience this is probably important advice.
There are large numbers of divorced boomer women going into old age alone and poor figuring out they made a huge mistake.
So for a female audience this is probably important advice.
That's like saying 'don't crash' is good driving advice.
You really won't miss that % you put into a 401k in real time... unless you aren't doing it, and your future self shall be missing it dearly.
hahaha, genius...
Everyone I know has repeatedly lost loads of money in the stock market, but not one person I know has lost money buying real estate in large urban centres in Canada.
Based on what the real estate market looks like right now in Vancouver, Calgary and Toronto, he will soon know many people who have lost money in real estate.
Right now the Canadian real estate market is where the US market was in 2007.
Based on what the real estate market looks like right now in Vancouver, Calgary and Toronto, he will soon know many people who have lost money in real estate.
Right now the Canadian real estate market is where the US market was in 2007.
Prices might be plenty crazy but there are important differences.
- The ability to move to dozens of other large cities. The three you named are the 3 largest english speaking cities. People are basically stuck in those cities for lack other large cities to move to.
- Large projected population growth means plenty of people to prop up prices.
- You can't walk away from mortgage debt the way you can in the US.
- Lending rules are more strict and CMHC is a crown corp so it isn't going to go bust.
You're a sucker if you save instead of buying property in Canada - and I include myself in the sucker category.
- The ability to move to dozens of other large cities. The three you named are the 3 largest english speaking cities. People are basically stuck in those cities for lack other large cities to move to.
- Large projected population growth means plenty of people to prop up prices.
- You can't walk away from mortgage debt the way you can in the US.
- Lending rules are more strict and CMHC is a crown corp so it isn't going to go bust.
You're a sucker if you save instead of buying property in Canada - and I include myself in the sucker category.
[deleted]
If you look at the indicators, Canada is in a worse situation than the US back during the peak of the real estate bubble: debt levels, housing inventory, etc.
http://www.greaterfool.ca/wp-content/uploads/2014/01/chart.p...
Also remember that Canada doesn't have 30 year terms to their mortgages. Most people have 5 year terms. When rates go from 3% to 6% (which is still historically low) you'll see a lot of people who won't be able to afford their payments. At least in the US you're locked in for 30 years which can reduce the likelihood of not being able to afford your payments.
The other issue is that some lenders are enforcing an 80% loan to value ratio. In other words, when you get to the end of your 5 year term and you only have 15% equity in your home (because of a drop in value), the lender may demand the other 5% (in cash) or else you don't get financing.
And in terms of lending standards, yes, Canada tightened those up, but for a while you could buy a house with 0% down and a 40 year amortization period. That did nothing but push prices even higher.
I'm not saying Canada will see a exact repeat of what happened in the US, but a correction will come and it won't be pretty.
http://www.greaterfool.ca/wp-content/uploads/2014/01/chart.p...
Also remember that Canada doesn't have 30 year terms to their mortgages. Most people have 5 year terms. When rates go from 3% to 6% (which is still historically low) you'll see a lot of people who won't be able to afford their payments. At least in the US you're locked in for 30 years which can reduce the likelihood of not being able to afford your payments.
The other issue is that some lenders are enforcing an 80% loan to value ratio. In other words, when you get to the end of your 5 year term and you only have 15% equity in your home (because of a drop in value), the lender may demand the other 5% (in cash) or else you don't get financing.
And in terms of lending standards, yes, Canada tightened those up, but for a while you could buy a house with 0% down and a 40 year amortization period. That did nothing but push prices even higher.
I'm not saying Canada will see a exact repeat of what happened in the US, but a correction will come and it won't be pretty.
I've been hearing that the Canadian real estate market is where the US market was in 2007 since ... 2007! I keep hearing about the imminent condo crash in Toronto for years. As someone in his mid-30s looking to settle down, I don't know how many years I can afford to put it off. Prices have gone up 40% since 2008. Before I could afford a 2 bedroom condo ... now, I'm thinking about getting a 1 bedroom one :(
I suggest you read this blog: http://www.greaterfool.ca
Why do you feel a need to buy a house? You can always rent and right now renting is far cheaper in Toronto than buying if you include buying and selling costs (realtor commissions, land transfer taxes).
Why do you feel a need to buy a house? You can always rent and right now renting is far cheaper in Toronto than buying if you include buying and selling costs (realtor commissions, land transfer taxes).
This is awful advice.
1. Neither getting married nor getting divorced should be done for financial reasons. Get married because you love someone and want to spend the rest of your life with them, and get divorced because that is no longer true.
2. Children before 35 is good advice. Especially for women, but for men as well. You want to be able to enjoy life with your children, and not be too old to enjoy life with your grandchildren. And sure, be financially stable, but this is not a financial decision at heart.
3. Ugh. Or, you know, choose a few different careers and try them all out. And live within your means at all times.
4. Worst idea. Defined benefit pensions can be reduced or taken away.
5. Learn how to invest on your own (low-cost index funds even). This will be some of the most highly-paid work you will ever do in your entire life. A usual advisor's fee of 1% annually will cost you hundreds of thousands of dollars over your lifetime. https://personal.vanguard.com/us/insights/investingtruths/in...
6. Or, you know, buy the smallest house you can be happy in near where you work. Real estate is a terrible investment that matches pace with inflation in the long run. The stock market returns 7% above inflation annually in the long run, and has never lost money over any 15-year period.
7. Yeah, that's actually good advice.
The key to retiring early is to learn about hedonic adaptation, stop spending money on things that don't make you happy, save a very large percentage of your income (Wife and I earn $100k, save 65%). If you save just half your salary, you can easily retire at 40.
If I'm lucky, when I retire, I'll be having a real-time conversation with my 35-year-old self.
1. Neither getting married nor getting divorced should be done for financial reasons. Get married because you love someone and want to spend the rest of your life with them, and get divorced because that is no longer true.
2. Children before 35 is good advice. Especially for women, but for men as well. You want to be able to enjoy life with your children, and not be too old to enjoy life with your grandchildren. And sure, be financially stable, but this is not a financial decision at heart.
3. Ugh. Or, you know, choose a few different careers and try them all out. And live within your means at all times.
4. Worst idea. Defined benefit pensions can be reduced or taken away.
5. Learn how to invest on your own (low-cost index funds even). This will be some of the most highly-paid work you will ever do in your entire life. A usual advisor's fee of 1% annually will cost you hundreds of thousands of dollars over your lifetime. https://personal.vanguard.com/us/insights/investingtruths/in...
6. Or, you know, buy the smallest house you can be happy in near where you work. Real estate is a terrible investment that matches pace with inflation in the long run. The stock market returns 7% above inflation annually in the long run, and has never lost money over any 15-year period.
7. Yeah, that's actually good advice.
The key to retiring early is to learn about hedonic adaptation, stop spending money on things that don't make you happy, save a very large percentage of your income (Wife and I earn $100k, save 65%). If you save just half your salary, you can easily retire at 40.
If I'm lucky, when I retire, I'll be having a real-time conversation with my 35-year-old self.
>stop spending money on things that don't make you happy,
First you must learn what doesn't make you happy. It might not be what you think.
http://www.sciencedirect.com/science/article/pii/S1057740811...
Drawing on empirical research, we propose eight principles designed to help consumers get more happiness for their money. Specifically, we suggest that consumers should
(1) buy more experiences and fewer material goods;
(2) use their money to benefit others rather than themselves;
(3) buy many small pleasures rather than fewer large ones;
(4) eschew extended warranties and other forms of overpriced insurance;
(5) delay consumption;
(6) consider how peripheral features of their purchases may affect their day-to-day lives;
(7) beware of comparison shopping; and
(8) pay close attention to the happiness of others.
https://www.happier.com/article/c46eeac85cc741b39e0e39d15d4e...
First you must learn what doesn't make you happy. It might not be what you think.
http://www.sciencedirect.com/science/article/pii/S1057740811...
Drawing on empirical research, we propose eight principles designed to help consumers get more happiness for their money. Specifically, we suggest that consumers should
(1) buy more experiences and fewer material goods;
(2) use their money to benefit others rather than themselves;
(3) buy many small pleasures rather than fewer large ones;
(4) eschew extended warranties and other forms of overpriced insurance;
(5) delay consumption;
(6) consider how peripheral features of their purchases may affect their day-to-day lives;
(7) beware of comparison shopping; and
(8) pay close attention to the happiness of others.
https://www.happier.com/article/c46eeac85cc741b39e0e39d15d4e...
>Everyone I know has repeatedly lost loads of money in the stock market, but not one person I know has lost money buying real estate in large urban centres in Canada.
Canadians are very optimistic on owning houses. Too bad the market needs to crash before anyone under 30 can afford anything decent.
Canadians are very optimistic on owning houses. Too bad the market needs to crash before anyone under 30 can afford anything decent.
In Canada, we are so much more intelligent then our American counter-parts. Everyone up here knows that real estate is the best investment you can do, and that you will never loose money.
The U.S housing market ? In Canada, nobody has heard of what happened in 2007 down there. When they do, well, we are so much better then Americans, our real-estate is bullet proof.
Sorry for the sarcasm, years of frustration trying to explain to people why I'm not interested in buying a condo at 25.
The U.S housing market ? In Canada, nobody has heard of what happened in 2007 down there. When they do, well, we are so much better then Americans, our real-estate is bullet proof.
Sorry for the sarcasm, years of frustration trying to explain to people why I'm not interested in buying a condo at 25.
I'm highly skeptical about how much of this will be relevant for us (20 somethings) - when we retire. So much has changed significantly since this guy was 35. Most public pension systems such as the ones here in Europe likely wont even have enough money in them to pay our pensions..
Also - the extreme risk averse attitude is quite a turn off. I'm not saying everyone should invest in Dogecoin and Tesla - but taking some high reward risks can't be the worst idea..
Also - the extreme risk averse attitude is quite a turn off. I'm not saying everyone should invest in Dogecoin and Tesla - but taking some high reward risks can't be the worst idea..
I'm 40 and much of it isn't relevant to me already.
Does anyone else find this advice really depressing? It sounds like such a boring mundane life. I'm sure there is some good advice here but I can't help but feel a bit turned off by it.
I think it is important to have an emergency fund and some savings and to know how to spend within your means. However, I also think you can live a better life if instead of worrying so much about how to save money, you figure out how to make more money by creating value and figuring out how to sell it.
I believe a very smart person once said:
"When you grow up you tend to get told the world is the way it is and your life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money. That's a very limited life... "
I think it is important to have an emergency fund and some savings and to know how to spend within your means. However, I also think you can live a better life if instead of worrying so much about how to save money, you figure out how to make more money by creating value and figuring out how to sell it.
I believe a very smart person once said:
"When you grow up you tend to get told the world is the way it is and your life is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money. That's a very limited life... "
> Does anyone else find this advice really depressing
Yep, but the great part is you can ignore it all and do what you want with your life.
I quit my job and spent 2 years driving a Jeep from Alaska->Argentina. Just because I wanted to.
Yep, but the great part is you can ignore it all and do what you want with your life.
I quit my job and spent 2 years driving a Jeep from Alaska->Argentina. Just because I wanted to.
That sounds awesome! How did you deal with the Darien Gap? Ferry?
Shipping container. http://theroadchoseme.com/shipping-across-the-darien-gap-pt-...
Something really sad about this, because it boils down to: do not take any risks.
I live in Australia, work in Superannuation (aka Pension plans). Looking at the data, there will be a whole heap of suffering for people who did not take this advice when they were younger. Poverty is one thing. Poverty and old age is very bad. Add ill-health, and you will have absolute misery.
True, but you don't need a pension plan to save money and invest... It's just one strategy - albiet the most cozy one.
There is of course voluntary euthanasia as an alternative to a poverty ill-health future. I strongly suspect that it will become more socially acceptable as the pensions crisis etc. unfolds.
And then of course there's the Billy Conolly idea.. which went something along the lines of:
"I'm just waiting to hear I've got a terminal illness... I'll be the one behind the fence with the sheep and a syringe full of heroin" ;)
And then of course there's the Billy Conolly idea.. which went something along the lines of:
"I'm just waiting to hear I've got a terminal illness... I'll be the one behind the fence with the sheep and a syringe full of heroin" ;)
Yeah exactly. Work as a public servant? Retire at 62? Yawn.
He didn't mention the good stuff, if I were to guess: the joy of seeing his kids grow up. Falling in love. Teaching students to the best of his ability. Becoming an expert in his field. It sounds to me as if he has had a great life so far and just looks forward to more to come, and has a few minor regrets that aren't severe like, don't go to jail, don't do hardcore drugs, etc.
Reads to me more like "avoid big risks with your retirement"
Ask the union workers in Detroit about their defined benefit pension plans. Bad advice given that these plans can and do get renegotiated when the sponsor's finances make them unsustainable.
TFA says precisely that and mentions public pension plans as a more secure option. In fact, he phrases his statement to imply that he believes the "bait and switch" approach to pensions is inevitable in the private market.
> Public service is the only environment where defined benefit pensions will remain fully funded.
> Public service is the only environment where defined benefit pensions will remain fully funded.
I'm talking about the public employees in Detroit today, not the auto workers. Detroit is bankrupt; they will get 10-20% of their benefits at most.
I don't think this will be true long term. The pensions agreed to are actually unfundable and eventually something will be done about it.
Question for all the folks who have negative reactions to the authors thoughts.
What's your advice for a accumulating 2-3 million by the time you are ready to retire? That's my number because I want to 'retire' from regular, year round employment when I am 55. And I still want to be able to afford healthcare, a nice meal out and few weeks vacation somewhere fun. Your number may be different though cause individual taste vary. That number is roughly what my wife and I will need if we want to informally exit the workforce in out mid-fifties.
It seems like the point that is being missed is this: if you want a comfortable retirement you need a plan/strategy and you need to reliably, consistently execute on it. The earlier you start to do this the better. The author offers an opinion for something that would have worked for them. Ymmv but if you think you will just wake up with the means to 'retire' and move onto a different phase in your life when the world moves on and the ecosystem changes without planning, executing and routinely re-evaluations your progress, please re-consider.
What's your advice for a accumulating 2-3 million by the time you are ready to retire? That's my number because I want to 'retire' from regular, year round employment when I am 55. And I still want to be able to afford healthcare, a nice meal out and few weeks vacation somewhere fun. Your number may be different though cause individual taste vary. That number is roughly what my wife and I will need if we want to informally exit the workforce in out mid-fifties.
It seems like the point that is being missed is this: if you want a comfortable retirement you need a plan/strategy and you need to reliably, consistently execute on it. The earlier you start to do this the better. The author offers an opinion for something that would have worked for them. Ymmv but if you think you will just wake up with the means to 'retire' and move onto a different phase in your life when the world moves on and the ecosystem changes without planning, executing and routinely re-evaluations your progress, please re-consider.
I'll give you an example:
You're 23. Retiring with $3,000,000 at a 4% withdrawal rate would give you an annual "salary" of $120k. You make $80k right now, in order to save that much by 55, you would need to contribute ~30% of your gross income to retirement, assuming an 8% return, 5% annual salary increase and no employer match.
If you work to 65, the required contribution ratio goes down considerably.
The math is a little more complicated than in my example since I assumed all retirement savings are pre-tax but there's really no substitute for spending less than you earn.
You're 23. Retiring with $3,000,000 at a 4% withdrawal rate would give you an annual "salary" of $120k. You make $80k right now, in order to save that much by 55, you would need to contribute ~30% of your gross income to retirement, assuming an 8% return, 5% annual salary increase and no employer match.
If you work to 65, the required contribution ratio goes down considerably.
The math is a little more complicated than in my example since I assumed all retirement savings are pre-tax but there's really no substitute for spending less than you earn.
>You make $80k right now, in order to save that much by 55, you would need to contribute ~30% of your gross income to retirement, assuming an 8% return, 5% annual salary increase and no employer match.
That would be $24,000 in just the first year, well over the federal limit for 401(k) contributions. For 2014: $17,500 ($23,000 if age 50 or older)
http://taxes.about.com/od/retirementtaxes/qt/401k-contributi...
That would be $24,000 in just the first year, well over the federal limit for 401(k) contributions. For 2014: $17,500 ($23,000 if age 50 or older)
http://taxes.about.com/od/retirementtaxes/qt/401k-contributi...
That's why I said the math was actually more complicated than in my example. ;)
In reality, you'd want to max out your 401k and IRA options while also setting money aside in savings or regular brokerage accounts.
In reality, you'd want to max out your 401k and IRA options while also setting money aside in savings or regular brokerage accounts.
That's one way, I hope it works for you. There are other ways to get to our correct number.
What I am asking is, why so negative for one persons way, offered freely. We all have a different path. Mine could still not lead me where I think it will. But it's more likely to get me close if I am methodical (boring but fun in its own way) and consistent (repetitive like refactoring that annoying method and throwing a unit test onto it for good measure) in checking the roths -and 401k's twice a year, buying and selling my house when it make sense to and not panicking when the market takes a shit.
For all the naysayers about the articles specifics are you really not planning for later on, when thing change as the inevitably do? Instead if tearing down what kinda sorta worked for the random old person - why not discuss other, more relevant strategies for your place and times. What works for one person surely will not work for another but if you don't explore all the options and how will you learn what works for you? How will you learn from the past? Are you willing to repeat it just to tear someone down who is not perfect?
What I am asking is, why so negative for one persons way, offered freely. We all have a different path. Mine could still not lead me where I think it will. But it's more likely to get me close if I am methodical (boring but fun in its own way) and consistent (repetitive like refactoring that annoying method and throwing a unit test onto it for good measure) in checking the roths -and 401k's twice a year, buying and selling my house when it make sense to and not panicking when the market takes a shit.
For all the naysayers about the articles specifics are you really not planning for later on, when thing change as the inevitably do? Instead if tearing down what kinda sorta worked for the random old person - why not discuss other, more relevant strategies for your place and times. What works for one person surely will not work for another but if you don't explore all the options and how will you learn what works for you? How will you learn from the past? Are you willing to repeat it just to tear someone down who is not perfect?
I'm in my late 20's. And a good deal of advice in this post is pretty good.
>>Everyone I know has repeatedly lost loads of money in the stock market, but not one person I know has lost money buying real estate in large urban centres in Canada.
Actually if you look at it real estate is the best deal you can get. No one, not one single person who bought lots of real estate I know has ever repented buying it. Fortunes have been multiplied by 10, some times even 20 only because some one bought a great deal of real estate in the city outskirts and watch prices multiply in multiples of 10's when the city grew. Same with rent. Rent is the best and safest form of passive income. Here in India, there are people who get obscene amounts of rents, then use the same rents to generate more of it.
In most Indian cities, real estate crashes rarely happen. Even if they do, they turn out to be local minima's and within 2-3 years the rush for property accumulation starts again.
Next, comes Gold of course. Of the things that I learned from people who buy real estate is- Buying Gold is buying real estate in trickles. The trick is to keep a proper balance of gold investment. And a real estate loan which you can afford to pay and is not beyond your means. The reason you need the loan is the inflation here is close to 9%. While your property value will appreciate your loan will only lose its value due to inflation, plus when you have enough gold you can dispose it off to pay of the real estate loan and move to buy the next property.
>>Everyone I know has repeatedly lost loads of money in the stock market, but not one person I know has lost money buying real estate in large urban centres in Canada.
Actually if you look at it real estate is the best deal you can get. No one, not one single person who bought lots of real estate I know has ever repented buying it. Fortunes have been multiplied by 10, some times even 20 only because some one bought a great deal of real estate in the city outskirts and watch prices multiply in multiples of 10's when the city grew. Same with rent. Rent is the best and safest form of passive income. Here in India, there are people who get obscene amounts of rents, then use the same rents to generate more of it.
In most Indian cities, real estate crashes rarely happen. Even if they do, they turn out to be local minima's and within 2-3 years the rush for property accumulation starts again.
Next, comes Gold of course. Of the things that I learned from people who buy real estate is- Buying Gold is buying real estate in trickles. The trick is to keep a proper balance of gold investment. And a real estate loan which you can afford to pay and is not beyond your means. The reason you need the loan is the inflation here is close to 9%. While your property value will appreciate your loan will only lose its value due to inflation, plus when you have enough gold you can dispose it off to pay of the real estate loan and move to buy the next property.
>Rent is the best and safest form of passive income.
HAHAHAHAHHAHHAAAAA!!!!!!!!!!!!!!!!!!
No it isn't. Renting it a LOT of work and it isn't for everyone. You have to find good tenants, but that is a crapshoot. Everytime someone moves out you gotta spend time getting the place ready for the next people, advertising it, then showing it. If your tenant stops paying you have to evict them, but that takes time and you lose money in the meantime. Then when you finally get them out of there, you can sue them for back rent and win a judgment, but if they don't have any money to pay you with, you aren't getting it. Once in a while you got a tenant who leave the place a BIG HUGE MESS that you can't even imagine, that's a few week job. Then you gotta deal with things like being woken up in the middle of the night when people have locked themselves out. If something breaks, it might costs thousands of dollars to fix. If you don't have DIY skills and time, then the cost of labor is going to kill you.
If you are renting to more wealthy people, these things might not come up as often.
If you had LOTS of money, a property manager, staff, then it might be different, but not in any way risk free.
I have family who were doing a REAL lot of work just to break even at property rentals. Then ran into the above issues.
HAHAHAHAHHAHHAAAAA!!!!!!!!!!!!!!!!!!
No it isn't. Renting it a LOT of work and it isn't for everyone. You have to find good tenants, but that is a crapshoot. Everytime someone moves out you gotta spend time getting the place ready for the next people, advertising it, then showing it. If your tenant stops paying you have to evict them, but that takes time and you lose money in the meantime. Then when you finally get them out of there, you can sue them for back rent and win a judgment, but if they don't have any money to pay you with, you aren't getting it. Once in a while you got a tenant who leave the place a BIG HUGE MESS that you can't even imagine, that's a few week job. Then you gotta deal with things like being woken up in the middle of the night when people have locked themselves out. If something breaks, it might costs thousands of dollars to fix. If you don't have DIY skills and time, then the cost of labor is going to kill you.
If you are renting to more wealthy people, these things might not come up as often.
If you had LOTS of money, a property manager, staff, then it might be different, but not in any way risk free.
I have family who were doing a REAL lot of work just to break even at property rentals. Then ran into the above issues.
So you think the average indian home price in india which at present is much more than US or Canada is going to be 10x more in the next decade?… Go read about Japan, their investing/saving culture is similar to India and their home prices are still recovering from the crash in 1991
I wish I had time to write about my experiences as I’m 10 years away from successfully retiring but I have to say, you 20+ year old readers really need to listen to what this guy is saying.
Don’t follow his advice to a tee but read in between the lines and understand the meaning.
At least do this, print his post out and re-read it when your approaching 40 as it will have a different meaning and when your 50 years old, you will think this guy was a prophet.
Don’t follow his advice to a tee but read in between the lines and understand the meaning.
At least do this, print his post out and re-read it when your approaching 40 as it will have a different meaning and when your 50 years old, you will think this guy was a prophet.
I agree, though I am probably closer to 30 years form retiring.
I _hate_ the specific advice in the article (find a job with a pension? My parents have done well with this, but I trust most companies that would hire me about as far as I can throw their annual report), but the "between the lines" idea that we should "find stable things that you can enjoy for a long time" is both not obvious and important.
I _hate_ the specific advice in the article (find a job with a pension? My parents have done well with this, but I trust most companies that would hire me about as far as I can throw their annual report), but the "between the lines" idea that we should "find stable things that you can enjoy for a long time" is both not obvious and important.
Such classic Ontario advice: Follow the prescribed path without question or deviation.
For anyone that doesn't buy into it, I suggest you head West. People are genuinely shocked at the difference in attitude when they get here. Almost everyone refers to it as Onterrible, for very good reason.
For anyone that doesn't buy into it, I suggest you head West. People are genuinely shocked at the difference in attitude when they get here. Almost everyone refers to it as Onterrible, for very good reason.
Alberta today is much like Ontario was in the 1960s. It has a relatively young population, it is economically driven by medium industry, is highly suburbanized, and wholly dependent upon cars for even the most basic of transportation.
While this can be a feasible lifestyle in the short term, it is not sustainable in the long term. Ontario started feeling the crunch from its similar lack of sustainability in the 1990s, and is still feeling it today. Alberta will likely run into the same situation in a decade or two.
It will be particularly severe if there's a large-scale movement away from gasoline-fueled vehicles at some point. With fossil fuel energy prices rising, it's becoming more and more likely that this will happen sooner rather than later. While there may be short term gains because of rising petroleum prices, they won't last. The economic harm caused by the province's nearly complete dependence upon its petroleum industry should be quite obvious. We've seen the devastation that even short downturns in the sector have caused in the past, and it's not pretty.
Without inexpensive personal transport, large swaths of Calgary will be nearly uninhabitable due to its high degree of sprawl. Edmonton will only be slightly better off. While a province like Quebec has ample and well-established hydroelectric facilities that would prove essential for a move toward electric vehicles, and dense major cities that pre-date the rise of automobiles, Alberta will not be in such a position.
In general, Alberta has nowhere near the economic, industrial and resource diversity of Ontario, Quebec and British Columbia. Agriculture and tourism are basically its only other options, and they're nowhere near sufficient to sustain the current way of life there.
Alberta's boom times may be better than those of the other provinces, but its busts have historically been far worse. When the next bust comes, it will likely be particularly painful, and the influx of people to Alberta will quickly reverse itself. Any prolonged downturn lasting more than a few years could very well see those remaining in Alberta revert back toward a mainly agrarian economy. It will be far more like Manitoba than it will be like British Columbia, and I don't think that many Albertans today (and especially ones who arrived more recently) would put up with that.
I'd be very hesitant about putting all of my eggs in the Alberta basket.
While this can be a feasible lifestyle in the short term, it is not sustainable in the long term. Ontario started feeling the crunch from its similar lack of sustainability in the 1990s, and is still feeling it today. Alberta will likely run into the same situation in a decade or two.
It will be particularly severe if there's a large-scale movement away from gasoline-fueled vehicles at some point. With fossil fuel energy prices rising, it's becoming more and more likely that this will happen sooner rather than later. While there may be short term gains because of rising petroleum prices, they won't last. The economic harm caused by the province's nearly complete dependence upon its petroleum industry should be quite obvious. We've seen the devastation that even short downturns in the sector have caused in the past, and it's not pretty.
Without inexpensive personal transport, large swaths of Calgary will be nearly uninhabitable due to its high degree of sprawl. Edmonton will only be slightly better off. While a province like Quebec has ample and well-established hydroelectric facilities that would prove essential for a move toward electric vehicles, and dense major cities that pre-date the rise of automobiles, Alberta will not be in such a position.
In general, Alberta has nowhere near the economic, industrial and resource diversity of Ontario, Quebec and British Columbia. Agriculture and tourism are basically its only other options, and they're nowhere near sufficient to sustain the current way of life there.
Alberta's boom times may be better than those of the other provinces, but its busts have historically been far worse. When the next bust comes, it will likely be particularly painful, and the influx of people to Alberta will quickly reverse itself. Any prolonged downturn lasting more than a few years could very well see those remaining in Alberta revert back toward a mainly agrarian economy. It will be far more like Manitoba than it will be like British Columbia, and I don't think that many Albertans today (and especially ones who arrived more recently) would put up with that.
I'd be very hesitant about putting all of my eggs in the Alberta basket.
Who said anything about Alberta?
Sure, I lived there for a while, but when I talk about the west and the attitudes that people have, I'm talking about BC, and now I'm in the Yukon.
Life out here is different because you're encouraged to live the life you want to live, not the life that everyone else thinks you should live.
Sure, I lived there for a while, but when I talk about the west and the attitudes that people have, I'm talking about BC, and now I'm in the Yukon.
Life out here is different because you're encouraged to live the life you want to live, not the life that everyone else thinks you should live.
You did, although perhaps inadvertently.
You may want to watch your terminology in the future. In central and eastern Canada, the term "West" exclusively means Alberta (although Saskatchewan is now sometimes included, too, due to its recent Alberta-like petroleum boom).
British Columbia, while geographically more to the west than Alberta, is typically just called "British Columbia". The Yukon is not considered to be "West", either. It's referred to as "up north" or "the territories".
You may want to watch your terminology in the future. In central and eastern Canada, the term "West" exclusively means Alberta (although Saskatchewan is now sometimes included, too, due to its recent Alberta-like petroleum boom).
British Columbia, while geographically more to the west than Alberta, is typically just called "British Columbia". The Yukon is not considered to be "West", either. It's referred to as "up north" or "the territories".
> You did, although perhaps inadvertently.
No, I didn't.
It's funny you would give me a lecture about the terminology used for the place I live in.
What I'm saying is, if you want a life that isn't so rigid and formal and prone to the kind of reactions you've given me, head out to BC/Yukon. You'll be shocked, impressed and you'll wonder why you didn't do it sooner.
No, I didn't.
It's funny you would give me a lecture about the terminology used for the place I live in.
What I'm saying is, if you want a life that isn't so rigid and formal and prone to the kind of reactions you've given me, head out to BC/Yukon. You'll be shocked, impressed and you'll wonder why you didn't do it sooner.
I'm not lecturing you about anything. I'm merely telling you how the terminology you used is very ambiguous. Now, that may not be the case in the specific village that you may be from. But in general, when you're east of Manitoba, the term "West" specifically refers to Alberta, and to a lesser extent Saskatchewan. It does not refer to British Columbia, which, as I indicated earlier, is referred to as "British Columbia" or "B.C.".
You can rely on real estate if you know the government will continue to subsidize its appreciation. But if you expect that it will eventually prove to be unsustainable and must be ended, the returns might not be so rosy.
And defined benefit pensions are only as secure as whatever is trapping those who must pay for it. If your company manages to free itself from the union or the taxpayers refuse to pay you, it could be painful.
Oh, yes, things never change, I know. Its never happened before in the history of mankind. But there's always a first time.
And defined benefit pensions are only as secure as whatever is trapping those who must pay for it. If your company manages to free itself from the union or the taxpayers refuse to pay you, it could be painful.
Oh, yes, things never change, I know. Its never happened before in the history of mankind. But there's always a first time.
Could the older members of the HN community pitch in and give a couple points of wisdom they acquired over the years (Would probably more useful than everyone just bashing the article)?
I stopped reading in number 4. Those are advices to a self from the past. Even in that improbable case, is worthless to follow the plan. Applying the plan to someone today, with a different background, needs, etc. Nonsense.
"Live with the same person, because divorce is expensive..." I don't want to live on this planet any more...
"Live with the same person, because divorce is expensive..." I don't want to live on this planet any more...
The problem with the stock market isn't that you might lose money, the problem is that share prices are largely driven by perception rather than substance. At the extremes it makes sense, in that a company that runs out of money is worthless and a company that makes 14bn profit a quarter is worth something. For the rest it is like popular culture / fashion.
The other problem with stocks is that if everyone is saving for the future via retirement funds then the market is inherently going to be over inflated and further illogical.
The other problem with stocks is that if everyone is saving for the future via retirement funds then the market is inherently going to be over inflated and further illogical.
Longevity risk is the biggest time bomb i know of in current financial and societal practice. The state of the art is a 90% chance of not running out of money (and most people are saving well below even getting to there).
In 40 years we are going to wish we created better risk pools and things like blind tontines or individually purchasable defined benefit pensions.
In 40 years we are going to wish we created better risk pools and things like blind tontines or individually purchasable defined benefit pensions.
Get a government job... wtf
So much cynicism in these comments. As a 27-year-old, I found myself nodding at almost everything stated by the author. Perhaps I don't fall into the same category as most other HNers.
1. Stay married to the same person.
I married my wife right out of college (age 22) and we were and still are serious about the "til death do us part" bit. We realize that a strong marriage is something that takes hard work on a daily basis. Are there cases where this just isn't the best route to take? Absolutely (e.g. abusive relationships, unfaithful relationships, etc).
2. If you’re going to have children do it before 35.
Our daughter is now 14 months old and we have a 529 set up for her. I'll definitely be pushing for an in-state public school.
3. Choose a career you can imagine doing for 35 years and stick with it.
I love being a software engineer and I can't imagine working at a different company than I do now. I'm constantly challenged and learning new things while being part of an amazing team.
4. Secure a job with a defined benefit pension, ideally one with a union that protects you from the wiles of a topsy-turvy job market.
This is where I diverge, albeit not necessarily by choice. I contribute to my 401k which my employer contributes a generous amount. I am not a member of a union.
5. Find a financial advisor you can trust.
This is one area where I've procrastinated. I've read a lot of personal finance books and blogs, so I'm not entirely ignorant, but I do need to find a competent professional to look after my finances.
6. Buy the best house you can afford.
I didn't quite follow this advice, as we decided to buy a house below our means, but it is in a great area, brand new and plenty of space (2100 sqft). I don't view buying a home as some sort of investment (i.e. I went in to it not expecting any significant return), but we bought towards the bottom of the market with an amazing interest rate. On top of that, we're paying almost the same exact monthly payment as we did on our apartment that was 1200sqft while putting equity into something. It does help that we're out in the burbs.
7. Years before you retire, develop long-standing interests that are not outrageously costly and that don’t depend on your job or your family.
I think this is great advice.
Many comments are saying this results in a really boring life during peak years, but I don't see that. We eat out at great restaurants, have travelled internationally, are involved in our community, actively engage in hobbies individually and together, spends a large amount of time with friends and family, etc. I suppose it's just a matter of different strokes...
1. Stay married to the same person.
I married my wife right out of college (age 22) and we were and still are serious about the "til death do us part" bit. We realize that a strong marriage is something that takes hard work on a daily basis. Are there cases where this just isn't the best route to take? Absolutely (e.g. abusive relationships, unfaithful relationships, etc).
2. If you’re going to have children do it before 35.
Our daughter is now 14 months old and we have a 529 set up for her. I'll definitely be pushing for an in-state public school.
3. Choose a career you can imagine doing for 35 years and stick with it.
I love being a software engineer and I can't imagine working at a different company than I do now. I'm constantly challenged and learning new things while being part of an amazing team.
4. Secure a job with a defined benefit pension, ideally one with a union that protects you from the wiles of a topsy-turvy job market.
This is where I diverge, albeit not necessarily by choice. I contribute to my 401k which my employer contributes a generous amount. I am not a member of a union.
5. Find a financial advisor you can trust.
This is one area where I've procrastinated. I've read a lot of personal finance books and blogs, so I'm not entirely ignorant, but I do need to find a competent professional to look after my finances.
6. Buy the best house you can afford.
I didn't quite follow this advice, as we decided to buy a house below our means, but it is in a great area, brand new and plenty of space (2100 sqft). I don't view buying a home as some sort of investment (i.e. I went in to it not expecting any significant return), but we bought towards the bottom of the market with an amazing interest rate. On top of that, we're paying almost the same exact monthly payment as we did on our apartment that was 1200sqft while putting equity into something. It does help that we're out in the burbs.
7. Years before you retire, develop long-standing interests that are not outrageously costly and that don’t depend on your job or your family.
I think this is great advice.
Many comments are saying this results in a really boring life during peak years, but I don't see that. We eat out at great restaurants, have travelled internationally, are involved in our community, actively engage in hobbies individually and together, spends a large amount of time with friends and family, etc. I suppose it's just a matter of different strokes...
The advice is terrible. Most of it is a function of the luck and circumstances of his own life and requires you predict the future.
1. "Marry someone you'll never want to divorce." No shit.
2. "Plan your child rearing years around how long you expect to live." No idea how long I'll live.
3. "Choose a career that will remain lucrative and relevant." Most of our "careers" are going to be eaten by software.
4. "Get a pension plan that will never become insolvent." Good luck.
5. "Find a trustworthy and competent person in an area you have no expertise in, and hand your future to them." Impossible and irresponsible.
6. "Buy a house where there will be no real estate market crash." On average real estate prices track inflation, the last 30 years is an anomaly.
7. "Rule out any hobbies that will be expensive in 40 years." Getting into computers as a hobby 40 years ago would have seemed insanely expensive. Like robotics or 3d printing today.
As you can tell unless you can predict the future most of the advice here is empty and hinges on the past being just like the future, and not anyone's past but this guy's past.
1. "Marry someone you'll never want to divorce." No shit.
2. "Plan your child rearing years around how long you expect to live." No idea how long I'll live.
3. "Choose a career that will remain lucrative and relevant." Most of our "careers" are going to be eaten by software.
4. "Get a pension plan that will never become insolvent." Good luck.
5. "Find a trustworthy and competent person in an area you have no expertise in, and hand your future to them." Impossible and irresponsible.
6. "Buy a house where there will be no real estate market crash." On average real estate prices track inflation, the last 30 years is an anomaly.
7. "Rule out any hobbies that will be expensive in 40 years." Getting into computers as a hobby 40 years ago would have seemed insanely expensive. Like robotics or 3d printing today.
As you can tell unless you can predict the future most of the advice here is empty and hinges on the past being just like the future, and not anyone's past but this guy's past.
[deleted]
> 5. Find a financial advisor you can trust.
> This is one area where I've procrastinated. I've read a lot of personal finance books and blogs, so I'm not entirely ignorant, but I do need to find a competent professional to look after my finances.
The problem is most financial advisors are just salespeople. They don't have your best interests at stake, they're just looking to get you into whatever product gets them the best commission.
Personal finance is not complicated, at least for those of us of average means. Max out your tax-advantaged accounts and keep costs low. Invest early, invest often and stay the course through a crisis.
A financial advisor will load you up with mutual funds charging >1% annual expenses. Vanguard index funds are as low as 0.05% and historically are more likely to outperform a given actively-managed mutual fund. Over your lifetime, that's a difference of hundreds of thousands of dollars in costs.
John Bogle, founder of Vanguard, says "buy the entire market and hold it forever." You don't need an advisor to do that.
> This is one area where I've procrastinated. I've read a lot of personal finance books and blogs, so I'm not entirely ignorant, but I do need to find a competent professional to look after my finances.
The problem is most financial advisors are just salespeople. They don't have your best interests at stake, they're just looking to get you into whatever product gets them the best commission.
Personal finance is not complicated, at least for those of us of average means. Max out your tax-advantaged accounts and keep costs low. Invest early, invest often and stay the course through a crisis.
A financial advisor will load you up with mutual funds charging >1% annual expenses. Vanguard index funds are as low as 0.05% and historically are more likely to outperform a given actively-managed mutual fund. Over your lifetime, that's a difference of hundreds of thousands of dollars in costs.
John Bogle, founder of Vanguard, says "buy the entire market and hold it forever." You don't need an advisor to do that.
This is EXACTLY how most people in India think. This is pretty much conventional wisdom here.
And the last one would be...
8. Have no regrets in life, so you don't end up making a list of things you wish you did differently.
um why is this on the front page ?
1. No real arguments against the general idea. Divorce is expensive. Duh. Of course, no one gets married thinking they'll get divorce, so its pretty pointless advice. And once in a marriage, the real question is then the opportunity cost of staying in the marriage vs getting out. Sanity is worth a lot of money.
2. Children before 35? This never really got explained. Why? Its true that there's a biological clock, especially for women, but its also true that those who have children later in life generally have better life outcomes. Obviously save money if you can...(and i'm not even starting on the "why do you need to have children at all" question?)
3. Stick with 1 job/career. If you were from 1950, i'd probably give the same advice too. Now in 20XX, i'd say be skilled, be flexible, be mobile, don't give up, beware of cementing yourself into a career/job that might not exist in 5-10 years.
4. Defined benefit pensions. For us later generations, they are a thing of the past. If you do manage to land one, don't assume it will actually be there for you when you retire. A financial/political/demographic crisis is a bitch. Defined pensions can't pay money that isn't there.
5. Find a financial adviser you can trust. This is just populist nonsense. Not because financial activities are not important, but because its not possible. If you have the knowledge to judge financial advisers, you don't need one. If you don't have that ability, you won't be able to tell whether they're any good until XX years down the track, upon which point you'll probably judge them on your returns. And even then, there's a good chance you'll just make a judgement based on random chance/survivorship bias.
6. Buy the best house you afford, in a neighborhood you adore. Stay there. --See translation: I'm a baby boomer living in a country that hasn't had a housing crash.(...yet).
7. Develop long-standing interests that are not outrageously costly. Can't argue with that.