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Thread: Stocks and "the market"

  1. #91
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    Quote Originally Posted by Jerome Stanek View Post
    Remember that as of the !st of this new year the Mandatory withdrawal will be 72 years old not 70.5
    And depending on your income and tax situation, it may be better to start drawing out IRA money early in fixed annual amounts. Talk to your accountant about it if you haven't done the math. I've been drawing from my IRA since I was 55.

  2. #92
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    Quote Originally Posted by Edwin Santos View Post
    Inflation? What's that?

    Seriously though, inflation is a bit of a chameleon. On the one hand it has been a long long time since we've seen meaningful inflation as reported in the CPI figures. Like since the early 80s. On the other hand, we've seen so much asset price escalation for things like real property, higher ticket durable goods like vehicles. But for everyday items and disposable consumer goods, many things are not really any more expensive than they were decades ago. I think this is in large part due to the diffuse benefits of global trade and low cost manufacturing in places like China. And then tech items and electronics have actually deflated in price, significantly. To your point though, future purchasing power of your money is an important thing to be aware of.

    Like I commented earlier, it is unfortunate that so many people who have not been in a position to invest or benefit from asset appreciation in some other way have been left behind due to their wealth either stagnating, or moving backwards in relative "real" terms.

    Interestingly even though we haven't had a lot of "official" inflation, gold has been a very good speculative investment since 2000.
    However timing is everything. If you bought gold in 1980, you would still be waiting to break even.
    On the other hand, if you had invested $10,000 in Microsoft in 1989 and either forgot about it or had the discipline to not touch it, today you would have over $2.5M, a return of almost 25,000%. And the best part is after writing the initial check to buy it in 1989, you would never have to write another check again. A real estate investment will usually involve writing checks perpetually until the day you sell it, and even then the selling costs will usually be about 5-7% of the total sale price. The selling cost of the Microsoft stock would be about $10 in exchange costs at a no trade fee broker like Schwab.
    Some of the price escalation you mention is a real driver of inflation.

    A low inflation rate is kind of like the story of a frog in a pot on the stove. A little every year can occur without notice:

    Inflation 2006-2019.png

    This is from > https://inflationdata.com/Inflation/...Inflation.aspx

    The rate is from the same month a year earlier.

    Here it is calculated:

    Infation calculator.png

    This was from > https://data.bls.gov/cgi-bin/cpicalc...1&year2=202001

    It looks like the money folks stashed in their mattresses lost a chunk of value.

    Just like so many other things, if you decide to buy when the price is taking off like a rocket, you likely waited too long:

    Gold Chart.png

    In many markets, timing is everything.

    Quote Originally Posted by Ole Anderson View Post
    Anybody here bold enough to get into the market as it bottomed out in 2008, not knowing if it was going to totally crash?
    In early 2008 about a years salary worth of my retirement investment account was used to purchase 'time served' with the agency governing my retirement system. It increased my retirement payment by about 11%. So my defined retirement has paid this back since leaving service. My retirement was also in 2008. My investment account has been mostly untouched. We did make a withdrawal to fix a couple of roofs. It is better than double the size than it was in 2008 before withdrawing for the new roofs in 2016.

    Having investments in diverse funds with professional management is somewhat safer for the average person than trying to pick your own investments unless you are an investment guru.

    jtk
    Last edited by Jim Koepke; 02-13-2020 at 2:01 PM. Reason: clarifications
    "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."
    - Sir Winston Churchill (1874-1965)

  3. #93
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    Nope, bought a house during the 30% off sale that was running around then.

  4. #94
    Quote Originally Posted by Ole Anderson View Post
    Anybody here bold enough to get into the market as it bottomed out in 2008, not knowing if it was going to totally crash?
    No, before my time (before I had anything to invest). But I'm sitting on the sidelines waiting for the next crash - which I feel should be soon. Although I don't doubt the money printing that's been going on over the past 20 years ,and escalating, may continue to push assets ever higher before that happens.

    Cheers, Dom

  5. #95
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    Quote Originally Posted by Art Mann View Post
    If you think real estate investments are less risky than stocks, you need to do a little more research yourself. The same is true of private investment funds.
    That's okay Art. I smile every month with the automatic deposits. Research your investments. Nothing but Life Settlements is risk free but wise investments in the right places pay well. 10-12% return. Nuff said.

  6. #96
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    I have been doing my research and investing in stocks for close to 40 years now. For every dollar I paid in social security, I invested about a dollar in the stock market. As a result, I was able to retire 11 years ago at age 54 and my investments pay several times what I get from social security. I paid in the maximum SS for many years. I don't know what the average yield has been over my lifetime but stock investments were better than I could get through any other investment vehicle. I have tried them all.

    As far as I can tell, "Life Settlements" amounts to selling your life insurance policy, which is not the same thing as investing. I have a paid up life insurance policy too which pays me dividends yearly. It is in the 6-8% range. That is the only reason I keep it. Life insurance is risky too if you buy it from the wrong company. So are annuities. Nothing is certain in this world except that refraining from investing somewhere will guarantee that inflation will consume you purchasing power.

  7. #97
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    Sure it is. I'm on the buying side not the selling side. It is most definitely investing. Money from a group of investors is pooled and then policies purchased for much less than face value. This isn't buying someones 100,000 dollar policy. These are 1,000,000 and up policies. The yields are better than anything else you will find. Your happy with what works for you and I'm happy with what works for me.

  8. #98
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    Quote Originally Posted by Ronald Blue View Post
    Nothing but Life Settlements is risk free
    Not understanding the risks is not the same as 'risk free'.

  9. #99
    Quote Originally Posted by Ronald Blue View Post
    That's okay Art. I smile every month with the automatic deposits. Research your investments. Nothing but Life Settlements is risk free but wise investments in the right places pay well. 10-12% return. Nuff said.
    Bernie Madoff promised `12% returns risk-free. Now he's in the Big House. The viability/reliability of insurance companies for invested quantities past a certain point is questionable, long-term, even if you do completely understand the terms (which are designed to be inscrutable, and few do.) Nothing is guaranteed.

    I would rather invest in things that I understand (to paraphrase Warren Buffet.) The S&P 500 and index funds thereon are well-understood (also to paraphrase Warren Buffet.)

  10. #100
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    Research it. Life insurance companies have to have 100% of their liabilities in reserve. See if you can find where a life insurance company couldn't pay there obligations. It's a strictly regulated industry. Much more so than banks. The hitch for most is the requirements of being accredited. That trips up most people.

  11. #101
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    Maybe I don't understand what you mean but that statement seems nonsensical. Suppose I buy a single premium whole life policy of $100,000 and pay $10,000 for it. That is a reasonable scenario. The insurance company incurs a $100,000 liability and only has $10,000 to cover it. Are you claiming that the insurance company has to come up with an additional $90,000 to cover the liability? How do they ever make any money?

  12. #102
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    He is buying paid up policies from other people based on their life expectancy. Not buying policies on himself.

  13. #103
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    The owner of the policy is selling it not the insurance company. Only the owner of the policy can sell it not the underwriter. The premiums are taken over by the investment group. It has no impact on the insurance companies liability. If it was as you say a $100,000 policy then it is still a $100,000 policy.

  14. #104
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    Quote Originally Posted by Nicholas Lawrence View Post
    He is buying paid up policies from other people based on their life expectancy. Not buying policies on himself.
    Actually they aren't paid up but that is factored into the equation.

  15. #105
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    So then the insurance companies don't have to have 100% of their liabilities in reserve. I already knew that but was just wondering why you said something so irrational.

    Insurance companies do the same thing with their assets that a mutual fund does with its assets. They invest them in stocks, bonds and a host of other investment vehicles. If you choose a good insurance company to deal with, then you are pretty safe. If you buy an insurance policy written on someone by an unsound insurance company then your investment is risky. There is no such thing as a risk free investment and the riskier it is, the more up side potential there is. The market is incredibly efficient.

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