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I’m already very good at my job, and I have no interest in another one. I want my money to work for me for a change. Money managers cannot beat this “ETF that buys over valued companies” fund.

  • Now you have $918,000 so your $15k withdrawal on the down year puts you down to $903k.
  • That graph shows the market is still somewhat “expensive”, but it doesn’t let me predict the future enough to forego stocks altogether.
  • I have 30 paid holidays that I can actually take.
  • My mortgage will be at 1.2% interest until it’s paid off completely.

But what if it never drops anywhere close to that low? It could bump along like it is, continuing to pay bitcoin brokers canada dividends and eventually go up. Or it could roar up to 2000s valuations and stay there for a decade.

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You’ll average an 8% return over the decades, while Buffett will average 20%. Think of it this way, compare two stocks where one pays a 2% dividend and appreciates 5% the other one doesn’t pay a dividend but appreciates 7% a year. If you were to just sell 2% of your holdings of the second stock, the net result would be basically the same, ignoring tax consequences. I only have 2 cents instead of nickels to spare so my thoughts are short. Who cares if the market plateaus at this level for 5 to 50 years?

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If we did need to sell, it would mean things have gone terribly wrong. It would mean we lost the ability to cover our expenses with only ONE of our paychecks. Then burned through our cash buffer and emergency savings. At that Software development Blog point I would not be concerned about selling for a loss – I would be desperate for the money. Build that cash buffer first, then the e-savings, then invest. Only take the risk in the stock market when you can afford it.

I have friends in their 20s who are so afraid of investing in mutual funds because of the perceived risk, when they don’t understand that it is riskier in the long run to NOT invest money. That graph shows the market is still somewhat “expensive”, but it doesn’t let me predict the future enough to forego stocks altogether. Expensive stocks just mean you’ll get lower average returns – not negative ones. Retired people or people with a sizable stash should definitely be invested at least partly in some blue chips or other dividend-producing stocks.

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I would bet its the latter, but I honestly don’t know. VTI has done badly compared to the Shanghai Composite index over the past 10 years, therefore Chinese stocks will continue to outperform US stocks over the long term. Seems to me like learning to live frugally and inspiring others to do the same has the same effect as a very large, widespread boycott. I meant to respond to this earlier, but for whatever reason my post didn’t post as a reply. The article you linked to points out that a 65 year old who can never work again should be cautious with their savings.

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You no more need to know the exact value of your stock portfolio than you need to know how much your house went up in value today. Leading online trading solutions for traders, investors and advisors, with direct global access to stocks, options, futures, currencies, bonds and funds. Transparent, low commissions and financing rates and support for best execution… I’d agree indexing has its disadvantages, but it is also better than a novice investor getting into penny stocks or not investing at all. Also using WB’s contrarian advice is tough for plenty of people.

There is something to be said for having your market exposure be in the currency of your expenses. The US has a lot going for it – an odd combination of open-season capitalism with just enough regulation to keep things from falling into totally crony-corruption inefficiency. A big, entrepreneurial population, massive capital infrastructure and a huge chunk of great land with plenty of it empty.

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My advice to readers learning investing is the same. Yep, retirement is a bit of a Schrodinger’s Cat. You don’t know what type of retirement it will be until you jump in and try it. This is why flexibility is key, and why the 4% rule has to be taken as a single piece of information in a sea of research about investing and retirement. I’m 36 so I think I’m ok to work for a few years. You might be right, I may not have enough right now but I might have enough to stop contributing and just let it ride whilst I work part time.

All that is being discussed here is buying stocks when they are at fair and low prices, and buying other things when they are overpriced. What I mean by “long term” PE is the “cyclically adjusted” P/E ratio, also known as the “Shiller PE” or CAPE” ratio. It is an average of the P/E ratio over the past 10 years. This is what is extremely predictive of future returns—not any single snapshot of P/E during any single moment.

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But if you read my blog you will see I tried for intsance Australia and learned some hard lessons investting far away….. The stocks that are in my portfolio are the stocks that I hold in my personal account. Some of them are there, for now, more than 10 years. Once a year I do short summaries of my positions, the posts are called “My xx stocks for 20xx”.

Regardless of any specific single data point, when you add up many macroeconomic indicators, to me they are pointing to a relatively flat stock market for the next 5-10 years. Hey Mr MMM; I wonder what could you advise to a brazilian mustachian. Have a look at BOVESPA Index… things can get really, really bad sometimes downhere, even dividends, are not being paid. I definitely see this this downturn as a normal and somewhat welcome occurence. I’m glad I started keeping some of my money in cash last year. Goes against your advice, but even Warren Buffet agrees that cash is the best hedge and noone should have 100% of their money invested this far into a bull market.

What you are suggesting is called timing the markets. Many studies prove that we suck at timing the market. Accordingly, there are a lot more $20 bills on the floor than there should be. But the herd mentality encouraged by both governments and financial media tend to prevent people from seeing them. To be honest I’m not certain I know what “trolling” means, since it’s used in so many different ways.

Looking at real estate, you get inflation (2-3%) plus rents . I like the Midwest, where I think that I can do better. I do not recommend real estate to those starting out and MMM has several posts on his experience. However, if you can find a good rent and area and you have a serious stash it may be worth considering. There is this pesky thing called reversion to the mean to think about.

Corporate earnings have not been growing at the same blistering pace they were a couple years ago, things seem to be slowing down. I would caveat that it all depends on your situation. If you have been plunking away a good chunk into a 401k religiously every month for a few years or a decade or two, then yeah, this is pretty good advice. Be honest with yourself and see that a majority of your readership would be much worse off than yourself if they were to lose 50% or more of their stock value over a year and a half. History shows we are irrational and sell low and by high.

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The new money I have generated for investing is piling up in cash again, waiting for the next opportunity. It is true, for instance, that Buffet recommends that the average passive tickmill review investor simply buy and hold index funds. But he also spends much of his time advocating against buying overpriced stocks. So obviously, these two ideas are not mutually exclusive.

Go ahead and click on any titles that intrigue you, and I hope to see you around here more often. If you think you are hardcore enough to handle Maximum Mustache, feel free to start at the first article and read your way up to the present using the links at the bottom of each article. Warren Buffet has setup BRK-A/BRK-B to be the latter, he simply reinvests the dividends for you, instead of forcing you to do a DRIP . Never sell principal unless you absolutely need to do so to survive. Live on your dividends and Social Security, or get a job.

There are great asset classes other than US equities, and some of them may be fairly valued when U.S. equities aren’t. But how great of a long-term value they are depends greatly on their purchase price. It just doesn’t sound very Mustachian to me to buy US stocks when they are overpriced. The Stock Series by my pal Jim Collins goes through the philosophy of index fund investing at a leisurely pace with plenty of interesting stories and folksy wisdom. There are many funds that accomplish this, but my default choice is Vanguard’s VTI. You can buy it by getting a Vanguard account, or from any brokerage account . Now you have $1.07M, so even after the $15k withdrawal (now only 1.4% of your account!) you’re still up over fifty grand.

And even if the markets suck for a few years , over the long term, you should get everything back and then some. At least it worked out for me from March of 2009, September 2001, the y2k issue, the dot com bust of the late 90’s, the real estate bubble burst of the 80’s, etc. etc. Main investments come from recurring investments out of my salary. Already make well more than I spend which is the main step anyway .

Although the margins, ROE, RIC are very low and the demand for wine has been decresing in important markets, like china. I invested in a company that semms to be bargain, although I would like to have your opinion. I am a value investor and I have been following your blog. Despite panic, I still don’t touch German utilities. As I have written extensively, there are so many problems that there is a large risk that they turn out as typicalvalue traps.

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Great post by the mad fientist, that was really interesting. I think I may choose to ‘retire’ earlier than expected, but still mess around working hours a week so that I don’t have to spend down the portfolio, and let it just grow. Or like I decided, I will get more enjoyment out of the money by taking at 62 rather than 70 as my health is much better now than what I expect it will be in my 70’s. Right now I am drawing at 62 and maintaining a part time job to fill in as supplemental income so as to not have to make major withdraws from retirement at this time.

1,932 (today’s close for the S&P 500) doesn’t constitute anything close to “a sale on stocks.” When the S&P falls below 1,000, that will be a sale. But, with the MMM and FI way, you are buying time and freedom. For most people in cubicle-land, those are very valuable items.

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