Macro Economics and Personal Finance
- Thread starter panda
- Start date
panda
Well-known member
Paydawg,
The two fintech companies that I really like and would recommend for you are Wealth Front and Personal Captial. It seems like you are in the executive track and I am assuming that a larger percentage of your networth is in 401k matching account. It is late here in east coast time. I will find some time tomorrow to discuss some of the features and benefits in both Wealth Front and Personal Capital. I highly recommend that you try both. Personal Capital is free and it is the most powerful networth tool that I am aware of today.
WEALTH FRONT: link: www.wealthfront.com
PERSONAL CAPITAL link: www.personalcapital.com
The two fintech companies that I really like and would recommend for you are Wealth Front and Personal Captial. It seems like you are in the executive track and I am assuming that a larger percentage of your networth is in 401k matching account. It is late here in east coast time. I will find some time tomorrow to discuss some of the features and benefits in both Wealth Front and Personal Capital. I highly recommend that you try both. Personal Capital is free and it is the most powerful networth tool that I am aware of today.
WEALTH FRONT: link: www.wealthfront.com
PERSONAL CAPITAL link: www.personalcapital.com
I absolutely love the idea behind Personal Capital, but be prepared to get persistent calls from them to sell you on their financial advisor services (they cost 0.9% last time I tried it out). You can tell them to stop calling, but they reassign clients to different financial advisors so I found myself repeating the same story about how I don't need their help. That may be a small price to pay to get their "free" service.
For online financial advisors, Betterment offers a lower fee but haven't tried that myself. Same with Wealthfront.
My preference is to just stick with Vanguard. At least by staying there I get an adequate overview of my investments and I'm covered by online fraud protection (note that if you link your investment account to a third party you void the protection in most cases).
For online financial advisors, Betterment offers a lower fee but haven't tried that myself. Same with Wealthfront.
My preference is to just stick with Vanguard. At least by staying there I get an adequate overview of my investments and I'm covered by online fraud protection (note that if you link your investment account to a third party you void the protection in most cases).
panda
Well-known member
Take a look at this 10 Year Treasury Bond Channel. As you can see, yields have declined steadily since 1989, largely because of the falling inflation trends. When such yields get near the bottom of this channel, they tend to rise. And when they near the top, they tend to fall. It has been a pretty consistent pattern. Rates hit the bottom of this channel at 2% at the end of 2008. We saw another decline into late 2012, which finally bottomed at 1.38%. Since then, they've been rising off and on and just hit a new all-time low at 1.36% in early July 2016. It's likely that the current rise will match what we saw after the Taper Tantrum of 2013, when rates moved off of 1.38% to reach 2.98%. So I think it is very possible that we'll see rates hit the top of this channel in the next several month, touching around 3.0% to 3.1%. I believe that Yellen will raise rates come December 2016.
Why would this occur? The Fed and central banks have created this monster through a "something for nothing" highly leveraged trade from its zero short term rate policies, making speculation and leverage cheap, and by continuing to buy their own sovereign bonds and push yields down and values up. Hedge Funds and traders simply lever up and buy futures( commericials ) are record short and the dumb money large specs are net long. That signals a major shift in rates upward over the next several months. If this occurs, holding cash, cash flowing assets, and fixed income trade would be the sound investment strategy. The next opportunity I see is in the U.S. Dollar. I see the dollar rising strongly at least into mid 2017 compared to a basket of 2 major trading currencies.
Wait, so you are saying within a few months, rates are going to be 3 to 3.1 vs. where they are? What rate are you referring to? 10 year treasury, correct? No freaking way. I agree fed will raise rates in Q4, but that doesn't move anything anywhere close to 3% and I can't see how in any current scenario we could get to that point anytime soon (this is assuming you are talking 10 year UST).
I might be wrong, but I don't see how it is even economically feasible given the global economy and the fact that you have negative rates in a number of large economies. If we weren't such a global economy, I think we'd have seen a much quicker tempo to fed raises, but that isn't the case anymore. Our standalone economy absolutely supports higher rates, however, there are implications from the global perspective regarding us moving rates to that extent.
Note: I do agree with you on the $ doing nothing but getting stronger.
I might be wrong, but I don't see how it is even economically feasible given the global economy and the fact that you have negative rates in a number of large economies. If we weren't such a global economy, I think we'd have seen a much quicker tempo to fed raises, but that isn't the case anymore. Our standalone economy absolutely supports higher rates, however, there are implications from the global perspective regarding us moving rates to that extent.
Note: I do agree with you on the $ doing nothing but getting stronger.
usctrojancpa
Well-known member
The more the Fed raises rates, the lower the 10 year bond yields will go later. Once we get the recession that some think is overdue, we'll see 10 year rates below 1% and 30-year mortgages below 3%.
panda
Well-known member
Bullsback,
If you look at my chart above, you can see that short term we will hit 3% on the 10 year UST and will continue downward within the T-Bond channel. In terms of fixed income, I like the AAA corporate bonds. Let me explain... Between mid 1931 and late 1931, the highest quality long term government bonds spiked briefly from 3.15% to 4.3%. During that time, your government bonds would have temporarily gone down about 10% in value, but your interest would have remained the same. At the same time, AAA corporate bonds spiked from 4.4% to 5.45%, going down in value about 15% (and muni bonds jumped from 3.75% to 5.3%, going down more like 25%. Then, after those minor setbacks into late 1931, all such bonds appreciated strongly as rates fell to the lowest levels to that era, into 1940-1941.
Bonds values go up when interest rates fall (in this case from deflation in prices), and the longer the term of the bond, the more you gain. For bondholders in the 1930s and early 1940s, deflation became their friend, and the constant interest payments accumulated on top of that. The same will hold true during present time and it is good that you and I see eye to eye that the US Dollar will only get stronger from here. Once we move into a deflationary season from 2016 and beyond, total returns with interest on government bonds were 78% from 1930 - 1941. Thanks to their higher yields, returns on AAA corporate bonds were even better, at 118% for that same period.
Hopefully what I am saying makes sense to you.
If you look at my chart above, you can see that short term we will hit 3% on the 10 year UST and will continue downward within the T-Bond channel. In terms of fixed income, I like the AAA corporate bonds. Let me explain... Between mid 1931 and late 1931, the highest quality long term government bonds spiked briefly from 3.15% to 4.3%. During that time, your government bonds would have temporarily gone down about 10% in value, but your interest would have remained the same. At the same time, AAA corporate bonds spiked from 4.4% to 5.45%, going down in value about 15% (and muni bonds jumped from 3.75% to 5.3%, going down more like 25%. Then, after those minor setbacks into late 1931, all such bonds appreciated strongly as rates fell to the lowest levels to that era, into 1940-1941.
Bonds values go up when interest rates fall (in this case from deflation in prices), and the longer the term of the bond, the more you gain. For bondholders in the 1930s and early 1940s, deflation became their friend, and the constant interest payments accumulated on top of that. The same will hold true during present time and it is good that you and I see eye to eye that the US Dollar will only get stronger from here. Once we move into a deflationary season from 2016 and beyond, total returns with interest on government bonds were 78% from 1930 - 1941. Thanks to their higher yields, returns on AAA corporate bonds were even better, at 118% for that same period.
Hopefully what I am saying makes sense to you.
Bullsback said:
panda
Well-known member
I found this interesting article today on Yahoo Finance by Grant Cardone. What do guys think? Is it wise to maximize your 401K contribution with your employer?
Self-made millionaire: Don't put money in your 401(k)
Source:http://finance.yahoo.com/news/self-made-millionaire-dont-put-161146781.html
After graduating from college, Grant Cardone was broke and swimming in $40,000 of student debt, he writes in his new book, "Be Obsessed Or Be Average."
By 30, he'd made his first million. Since then, the 58-year-old has built five companies and a multi-million dollar fortune.
The self-made millionaire refuses to play by anyone else's rules, particularly when it comes to saving money.
"I would never, ever invest money in a 401(k)," Cardone tells CNBC. "Why would I go to work, have my employer give me another $6,000 a year, and then take that money and send it off to Wall Street, where I can't even touch it for 30 years? I wouldn't do that."
The popular retirement plans are "traps that prevent people from ever having enough," Cardone writes on his website. "The 401(k) is merely where you kiss your money away for 40 years hoping it grows up."
Rather than focusing on saving, focus on earning ? you can't save your way to millionaire status, he says.
"Wall Street is telling you to invest little bits, early. They don't believe in your ability to earn money," Cardone tells CNBC. "People need to show the ability to produce more revenue ? not invest it ? first. People get rich because they produce revenue, not because they make little investments over time."
And don't just focus on earning ? focus on earning big, says Cardone. "Keep stacking that paper until you have a hundred grand in the bank. I know this is very unrealistic for a lot of people, but the reason it's unrealistic is because you've been conditioned to think small."
Grant is promoting saving the money you earn, but counter to most advice, he says to put the money in a good old-fashioned savings account ? where your money is accessible at a moment's notice ? until you have at least $100,000. Then, you can start investing.
"Put your saved money into secured, sacred (untouchable) accounts," he writes on Entrepreneur. "Never use these accounts for anything, not even an emergency. ... To this day, at least twice a year, I am broke because I always invest my surpluses into ventures I cannot access."
It's important to note that the median retirement savings for all families in the U.S . is just $5,000, and the median for families with some savings is $60,000, according to the Economic Policy Institute (EPI). And many families have zero saved. Employer-sponsored retirement plans are meant to help address this and are a good option for many people. But of course, to Grant's point, they won't help you get rich quickly or invest in opportunities today.
He's not the only self-made millionaire to encourage this kind of thinking. After studying wealthy people for more than 25 years, self-made millionaire Steve Siebold found that rich people set their expectations high and aren't afraid to think big.
After all, as he writes in "How Rich People Think," "No one would ever strike it rich and live their dreams without huge expectations."
Self-made millionaire: Don't put money in your 401(k)
Source:http://finance.yahoo.com/news/self-made-millionaire-dont-put-161146781.html
After graduating from college, Grant Cardone was broke and swimming in $40,000 of student debt, he writes in his new book, "Be Obsessed Or Be Average."
By 30, he'd made his first million. Since then, the 58-year-old has built five companies and a multi-million dollar fortune.
The self-made millionaire refuses to play by anyone else's rules, particularly when it comes to saving money.
"I would never, ever invest money in a 401(k)," Cardone tells CNBC. "Why would I go to work, have my employer give me another $6,000 a year, and then take that money and send it off to Wall Street, where I can't even touch it for 30 years? I wouldn't do that."
The popular retirement plans are "traps that prevent people from ever having enough," Cardone writes on his website. "The 401(k) is merely where you kiss your money away for 40 years hoping it grows up."
Rather than focusing on saving, focus on earning ? you can't save your way to millionaire status, he says.
"Wall Street is telling you to invest little bits, early. They don't believe in your ability to earn money," Cardone tells CNBC. "People need to show the ability to produce more revenue ? not invest it ? first. People get rich because they produce revenue, not because they make little investments over time."
And don't just focus on earning ? focus on earning big, says Cardone. "Keep stacking that paper until you have a hundred grand in the bank. I know this is very unrealistic for a lot of people, but the reason it's unrealistic is because you've been conditioned to think small."
Grant is promoting saving the money you earn, but counter to most advice, he says to put the money in a good old-fashioned savings account ? where your money is accessible at a moment's notice ? until you have at least $100,000. Then, you can start investing.
"Put your saved money into secured, sacred (untouchable) accounts," he writes on Entrepreneur. "Never use these accounts for anything, not even an emergency. ... To this day, at least twice a year, I am broke because I always invest my surpluses into ventures I cannot access."
It's important to note that the median retirement savings for all families in the U.S . is just $5,000, and the median for families with some savings is $60,000, according to the Economic Policy Institute (EPI). And many families have zero saved. Employer-sponsored retirement plans are meant to help address this and are a good option for many people. But of course, to Grant's point, they won't help you get rich quickly or invest in opportunities today.
He's not the only self-made millionaire to encourage this kind of thinking. After studying wealthy people for more than 25 years, self-made millionaire Steve Siebold found that rich people set their expectations high and aren't afraid to think big.
After all, as he writes in "How Rich People Think," "No one would ever strike it rich and live their dreams without huge expectations."
I agree with you that when rates go down bond values go up, but I thought you were projecting rates to go up in your initial comments (unless I had misread / misinterpreted something when I read through). That is where I was fundementally confused and where I struggle. I can't see any reasonable scenario where rates go up (clearly something totally unexpected could happen, probably more driven by an environmental type issue (major national disasters / terrorist attacks / giant hackings / political unrest / war) very much in the near term.Panda said:
irvinehusky
New member
I would think for the majority of people, this person's advice regarding the 401K is very bad advice. Not all of us are going to build five companies to fund us for retirement. What if he failed in those businesses, what will he have then for retirement? Social Security? Ha.
"Why would I go to work, have my employer give me another $6,000 a year, and then take that money and send it off to Wall Street, where I can't even touch it for 30 years? I wouldn't do that."
- Well, if you didn't contribute to a 401K, you wouldn't be getting that $6000 (or whatever match) in the first place. That is free additional money that you wouldn't be getting if not for the 401K account. Also, isn't that the point? Making it a little hard to get to so you don't spend the retirement funds for BMWs and other silly stuff.
My company's 401K recently allowed 100% of the account balance to be put in a brokerage account where you can invest in anything that you can in a normal brokerage account. So, you can pretty much invest in anything and not get limited in what you can invest in. Con is you could lose it all in risky investments.
It used to be 25% and some years ago I asked if this could be changed to 100% (for people like me who want to actively manage their investments) and they laughed me off and said that would never happen because it was too risky. I do remember way back when I started, there was only four investment choices in my 401K; Two stock funds, a balanced fund and a GIC fund. I do agree that was limiting but I didn't know anything about investing so it probably was a good thing then. I think most 401K programs have grown up and gotten better since then.
"It's important to note that the median retirement savings for all families in the U.S . is just $5,000, and the median for families with some savings is $60,000, according to the Economic Policy Institute (EPI). And many families have zero saved. Employer-sponsored retirement plans are meant to help address this and are a good option for many people. But of course, to Grant's point, they won't help you get rich quickly or invest in opportunities today."
- Yikes, I see this often about how much people have saved up for retirement but I wonder how true this is? If it is anything close to being true that would be scary. There really isn't a get rich quickly scheme (legal one) for most of us.
"After all, as he writes in "How Rich People Think," "No one would ever strike it rich and live their dreams without huge expectations.""
That is probably true but that doesn't mean you can't have a 401K account for backup or other savings.
I can say without hesitation, over 30 years later, that I'm so glad I contributed the max to my 401K account. Now, I just need to make sure our government doesn't nationalize our 401K accounts. Not mine, anyway.
"Why would I go to work, have my employer give me another $6,000 a year, and then take that money and send it off to Wall Street, where I can't even touch it for 30 years? I wouldn't do that."
- Well, if you didn't contribute to a 401K, you wouldn't be getting that $6000 (or whatever match) in the first place. That is free additional money that you wouldn't be getting if not for the 401K account. Also, isn't that the point? Making it a little hard to get to so you don't spend the retirement funds for BMWs and other silly stuff.
My company's 401K recently allowed 100% of the account balance to be put in a brokerage account where you can invest in anything that you can in a normal brokerage account. So, you can pretty much invest in anything and not get limited in what you can invest in. Con is you could lose it all in risky investments.
It used to be 25% and some years ago I asked if this could be changed to 100% (for people like me who want to actively manage their investments) and they laughed me off and said that would never happen because it was too risky. I do remember way back when I started, there was only four investment choices in my 401K; Two stock funds, a balanced fund and a GIC fund. I do agree that was limiting but I didn't know anything about investing so it probably was a good thing then. I think most 401K programs have grown up and gotten better since then."It's important to note that the median retirement savings for all families in the U.S . is just $5,000, and the median for families with some savings is $60,000, according to the Economic Policy Institute (EPI). And many families have zero saved. Employer-sponsored retirement plans are meant to help address this and are a good option for many people. But of course, to Grant's point, they won't help you get rich quickly or invest in opportunities today."
- Yikes, I see this often about how much people have saved up for retirement but I wonder how true this is? If it is anything close to being true that would be scary. There really isn't a get rich quickly scheme (legal one) for most of us.
"After all, as he writes in "How Rich People Think," "No one would ever strike it rich and live their dreams without huge expectations.""
That is probably true but that doesn't mean you can't have a 401K account for backup or other savings.
I can say without hesitation, over 30 years later, that I'm so glad I contributed the max to my 401K account. Now, I just need to make sure our government doesn't nationalize our 401K accounts. Not mine, anyway.
^
Totally agree. You can't do a blanket statement and advice for everyone.
There is an assumption that people know how to invest. Don't touch the savings until $100k and then what. Back in the old days, could invest in tech stocks since everything was going up and then the bubble popped. Same with accumulating over leveraged properties.
401k is like forced savings and free money if company matches.
Kinda like saying, if I rent and can save $1k per month, I can accumulate a down payment for a house that much faster. Most people aren't that disciplined. Oh look, shiny new iPhone is out. I like those new Jordan's. Gotta deposit for that Tesla 3, etc.
Totally agree. You can't do a blanket statement and advice for everyone.
There is an assumption that people know how to invest. Don't touch the savings until $100k and then what. Back in the old days, could invest in tech stocks since everything was going up and then the bubble popped. Same with accumulating over leveraged properties.
401k is like forced savings and free money if company matches.
Kinda like saying, if I rent and can save $1k per month, I can accumulate a down payment for a house that much faster. Most people aren't that disciplined. Oh look, shiny new iPhone is out. I like those new Jordan's. Gotta deposit for that Tesla 3, etc.
irvinehomeowner
Well-known member
All the young people I know, I always tell them to invest in a 401k esp if there is employer match.
Just putting it in the right funds (conservative equity building) is enough but the ER match makes it so much better.
I was dumb, I actually started investing in mutual funds when I was in my 20s but stopped when I went from full time employment to self-employed consultant... that 10 years of non investing cost me tons of retirement cash.
Just putting it in the right funds (conservative equity building) is enough but the ER match makes it so much better.
I was dumb, I actually started investing in mutual funds when I was in my 20s but stopped when I went from full time employment to self-employed consultant... that 10 years of non investing cost me tons of retirement cash.
irvinebullhousing
Well-known member
Yeah, but you got those passive income from rental properties to offset it. Might be even a better move.
usctrojancpa
Well-known member
There are self directed IRAs that allow you to buy real estate (not sure how easy it is to get financing since the IRA holds the title to the home).
irvinebullhousing
Well-known member
Yeah I like to learn more about this routes. I like to direct some of my IRA funds there.
panda
Well-known member
Trojan,
That is really cool that you are starting your own mini LLC hedge fund with a partner. If you are serious of starting your own hedge fund you will need to get your security license Series 65. You can then register your company as the Registered Investment Advisor (RIA).
I also plan to launch my own Macro Global Hedge Fund with the following three investing strategies: Macro Trend Investing, FOREX, and Indian equities. The stock market I am most bullish about for the next two decades is India.
That is really cool that you are starting your own mini LLC hedge fund with a partner. If you are serious of starting your own hedge fund you will need to get your security license Series 65. You can then register your company as the Registered Investment Advisor (RIA).
I also plan to launch my own Macro Global Hedge Fund with the following three investing strategies: Macro Trend Investing, FOREX, and Indian equities. The stock market I am most bullish about for the next two decades is India.
USCTrojanCPA said:
panda
Well-known member
Understanding Self Directed IRA for Real Estate Investment Purchases Part I:
Real Estate is the most common investment made by a self directed retirement plan investors. IRAs may invest in all type of real estate, including: single family homes, duplex, apartment complexes, commercial properties, and even new construction and development. Real estate owned by a retirement plan must always be held for investment. and the IRA owner and disqualified persons i.e. sister, dad, family member, cannot live in or benefit from the property. Additionally, all income derived from the property should be paid directly to the IRA custodian for the benefit of the IRA, and all expenses for the property should be paid from the IRA, except when an IRA LLC is used.
When purchasing real estate with an IRA, the IRA must be listed on the contract as the buyer, and it is the custodian of the IRA and not the IRA owner who signs the contract to bind the IRA. For example, the buyer to the contract would be ABC Trust Company FBO John Smith IRA. Once the contract is ready to signed, the IRA owner will send it to his or her self directed IRA custodian to sign the contract for the IRA. In most instances, the custodian of the IRA will require the IRA owner to sign the contract as "read and approved" so that the custodian is certain that the IRA owner has read the IRA is buying the property and not the IRA owner, so all contracts must be signed by the IRA custodian, who is the only party that can legally bind the IRA.
It is possible for an IRA to obtain a loan in connection with its cash investment to purchase real estate. All funds due by the buyer and relating to the purchase of the property must be paid by the IRA, including: earnest money deposit or down payment, closing costs, inspection, and due diligence costs, and the final funds necessary to close the property. Since the IRA owner is a disqualified person to his or her own IRA, the IRA owner and any other disqualified person cannot make the earnest money deposit and cannot cover other expenses to the property with personal funds outside of the IRA.