401k advice

[Coronita]

like flu and others that have amassed sizable retirement portfolios… if they had invested that money in real estate during the late 90's instead of their 401, how would things be different for them today?

Drunkle,

 

Some of us have :). But you forget also that the ability to "invest" in real estate back in the 90ies wasn't what we have seen these days, at least to my recollection. If my memory serves me, the entire easy qualifying thing was a product of recent times. I doubt (could be wrong) someone working for 2-3 years would have the capability those days to buy two homes, as some of us were already stretching with one. Also if you could, it probably would require considerable risk, which frankly is beyond what I could have tolerated. I guess also 401k was something simple to do…hence part of my laziness shows. I just wish I picked better funds. 7% returns kinda stinks in my books.

 

You also forget that Real-estate in for the longest time went no-where. What you are seeing in price appreciation is no different from the dot-com boom and bust. Your argument was the same argument that many people just jumping into the stock market during the dot-com boom was saying about the stock market on the way up. If only I had put all my money in the stock market instead of investing in RE in the late 80ies and 90ies, I would have done considerably better. Things are always clear in hindsight.

 

But, the thing that was good about all my companies that i worked at, no one offered an option to invest in your own company's stock, or worse buy stocks on the free exchange. I think that is a recipe for disaster, as I'm sure Enron and Countrywide employees are finding out.

For the record, I plan on buying investment property when it makes sense. For that I'm sitting on the sideline right now. I own a primary that's most likely going to depreciate moving forward. But for me and my wife, we figure we can afford this, we still are doing ok toward financial independence, and you only live once, so neither of us are really losing sleep if the primary home drops $100k-$200k+. Doesn't make financial sense, but as so many people have pointed out, a lot of decisions don't make any financial sense. And if things fall beyond that in my neck of woods, we would probably buy another place at that point to dollar-cost-average 🙂

 

 

 

[Coronita]

like flu and others that have amassed sizable retirement portfolios… if they had invested that money in real estate during the late 90's instead of their 401, how would things be different for them today?

Drunkle,

 

Some of us have :). But you forget also that the ability to "invest" in real estate back in the 90ies wasn't what we have seen these days, at least to my recollection. If my memory serves me, the entire easy qualifying thing was a product of recent times. I doubt (could be wrong) someone working for 2-3 years would have the capability those days to buy two homes, as some of us were already stretching with one. Also if you could, it probably would require considerable risk, which frankly is beyond what I could have tolerated. I guess also 401k was something simple to do…hence part of my laziness shows. I just wish I picked better funds. 7% returns kinda stinks in my books.

 

You also forget that Real-estate in for the longest time went no-where. What you are seeing in price appreciation is no different from the dot-com boom and bust. Your argument was the same argument that many people just jumping into the stock market during the dot-com boom was saying about the stock market on the way up. If only I had put all my money in the stock market instead of investing in RE in the late 80ies and 90ies, I would have done considerably better. Things are always clear in hindsight.

 

But, the thing that was good about all my companies that i worked at, no one offered an option to invest in your own company's stock, or worse buy stocks on the free exchange. I think that is a recipe for disaster, as I'm sure Enron and Countrywide employees are finding out.

For the record, I plan on buying investment property when it makes sense. For that I'm sitting on the sideline right now. I own a primary that's most likely going to depreciate moving forward. But for me and my wife, we figure we can afford this, we still are doing ok toward financial independence, and you only live once, so neither of us are really losing sleep if the primary home drops $100k-$200k+. Doesn't make financial sense, but as so many people have pointed out, a lot of decisions don't make any financial sense. And if things fall beyond that in my neck of woods, we would probably buy another place at that point to dollar-cost-average 🙂

 

 

 

[drunkle]

flu:

one of the things, assumptions in this thread has been the ability to sock away that much money. those like yourself who can do that probably are doing the right thing, at least in terms of available options (and like i said, i have no idea what other “conservative” and “safe” options there are). investing in real estate just came off the top of my head as an alternative, i have no idea why (housing blog? what? where am i…)… but with regards to re investing, i was thinking of the income potential and not the bubble potential. with 150k socked away, i would think that you could have qualified to buy investment props back in the day if you had kept liquidity…

you mention your company offerings; that colors my view significantly as my company offerings are slim and none; no co match (anymore) and limited fund options.

despite your primary losing equity, “doubling up” on re by investing at a good time at a good price will surely help recoup… as well as providing long term income. a long term analysis of re investment would be interesting to compare with long term retirement fund returns…

actually, something else comes to mind. the web and non porn content back in the day was slim. if the information on re cycles, prices, inflation, ad nausem were readily available and you were savy to that info, it may have made a difference… since we have the info and tools now, today at the tip of our fingers, i think we see alot more laymen like yourself and myself considering re as an investment option…

[drunkle]

flu:

one of the things, assumptions in this thread has been the ability to sock away that much money. those like yourself who can do that probably are doing the right thing, at least in terms of available options (and like i said, i have no idea what other “conservative” and “safe” options there are). investing in real estate just came off the top of my head as an alternative, i have no idea why (housing blog? what? where am i…)… but with regards to re investing, i was thinking of the income potential and not the bubble potential. with 150k socked away, i would think that you could have qualified to buy investment props back in the day if you had kept liquidity…

you mention your company offerings; that colors my view significantly as my company offerings are slim and none; no co match (anymore) and limited fund options.

despite your primary losing equity, “doubling up” on re by investing at a good time at a good price will surely help recoup… as well as providing long term income. a long term analysis of re investment would be interesting to compare with long term retirement fund returns…

actually, something else comes to mind. the web and non porn content back in the day was slim. if the information on re cycles, prices, inflation, ad nausem were readily available and you were savy to that info, it may have made a difference… since we have the info and tools now, today at the tip of our fingers, i think we see alot more laymen like yourself and myself considering re as an investment option…

[drunkle]

flu:

one of the things, assumptions in this thread has been the ability to sock away that much money. those like yourself who can do that probably are doing the right thing, at least in terms of available options (and like i said, i have no idea what other “conservative” and “safe” options there are). investing in real estate just came off the top of my head as an alternative, i have no idea why (housing blog? what? where am i…)… but with regards to re investing, i was thinking of the income potential and not the bubble potential. with 150k socked away, i would think that you could have qualified to buy investment props back in the day if you had kept liquidity…

you mention your company offerings; that colors my view significantly as my company offerings are slim and none; no co match (anymore) and limited fund options.

despite your primary losing equity, “doubling up” on re by investing at a good time at a good price will surely help recoup… as well as providing long term income. a long term analysis of re investment would be interesting to compare with long term retirement fund returns…

actually, something else comes to mind. the web and non porn content back in the day was slim. if the information on re cycles, prices, inflation, ad nausem were readily available and you were savy to that info, it may have made a difference… since we have the info and tools now, today at the tip of our fingers, i think we see alot more laymen like yourself and myself considering re as an investment option…

[drunkle]

flu:

one of the things, assumptions in this thread has been the ability to sock away that much money. those like yourself who can do that probably are doing the right thing, at least in terms of available options (and like i said, i have no idea what other “conservative” and “safe” options there are). investing in real estate just came off the top of my head as an alternative, i have no idea why (housing blog? what? where am i…)… but with regards to re investing, i was thinking of the income potential and not the bubble potential. with 150k socked away, i would think that you could have qualified to buy investment props back in the day if you had kept liquidity…

you mention your company offerings; that colors my view significantly as my company offerings are slim and none; no co match (anymore) and limited fund options.

despite your primary losing equity, “doubling up” on re by investing at a good time at a good price will surely help recoup… as well as providing long term income. a long term analysis of re investment would be interesting to compare with long term retirement fund returns…

actually, something else comes to mind. the web and non porn content back in the day was slim. if the information on re cycles, prices, inflation, ad nausem were readily available and you were savy to that info, it may have made a difference… since we have the info and tools now, today at the tip of our fingers, i think we see alot more laymen like yourself and myself considering re as an investment option…

[drunkle]

flu:

one of the things, assumptions in this thread has been the ability to sock away that much money. those like yourself who can do that probably are doing the right thing, at least in terms of available options (and like i said, i have no idea what other “conservative” and “safe” options there are). investing in real estate just came off the top of my head as an alternative, i have no idea why (housing blog? what? where am i…)… but with regards to re investing, i was thinking of the income potential and not the bubble potential. with 150k socked away, i would think that you could have qualified to buy investment props back in the day if you had kept liquidity…

you mention your company offerings; that colors my view significantly as my company offerings are slim and none; no co match (anymore) and limited fund options.

despite your primary losing equity, “doubling up” on re by investing at a good time at a good price will surely help recoup… as well as providing long term income. a long term analysis of re investment would be interesting to compare with long term retirement fund returns…

actually, something else comes to mind. the web and non porn content back in the day was slim. if the information on re cycles, prices, inflation, ad nausem were readily available and you were savy to that info, it may have made a difference… since we have the info and tools now, today at the tip of our fingers, i think we see alot more laymen like yourself and myself considering re as an investment option…

[cooperthedog]

RatherOp:

No better than an excel spreadsheet. I don’t see the Monte Carlo simulation anywhere in here?

Why would you expect to see a MC simulation?

There are only three basic scenarios; taxable, ROTH, & std. 401k.

The rate of return is constant, and available to all scenarios, and adjusting its value uniformly would not affect the tax outcomes.

Adjusting the input tax rates would not affect the relationship between the taxable and ROTH scenarios, since they are the same, and since the ROTH is tax free on earnings and distributions, it will ALWAYS be better than using a taxable account.

Logically, this leaves the uncertainty between the ROTH and the std. 401k (two remaining scenarios). Since we know that there is parity between the two, if using the same input and output tax rates, what value is added by simulating various tax rates?

Now if we we’re comparing multiple variables in each scenario (e.g. differing rates of return for each – depending on available investment vehicles, the use & extent of leverage, early distributions and penalties, changes in tax laws, etc.), then running a MC simulation may be of benefit.

[cooperthedog]

RatherOp:

No better than an excel spreadsheet. I don’t see the Monte Carlo simulation anywhere in here?

Why would you expect to see a MC simulation?

There are only three basic scenarios; taxable, ROTH, & std. 401k.

The rate of return is constant, and available to all scenarios, and adjusting its value uniformly would not affect the tax outcomes.

Adjusting the input tax rates would not affect the relationship between the taxable and ROTH scenarios, since they are the same, and since the ROTH is tax free on earnings and distributions, it will ALWAYS be better than using a taxable account.

Logically, this leaves the uncertainty between the ROTH and the std. 401k (two remaining scenarios). Since we know that there is parity between the two, if using the same input and output tax rates, what value is added by simulating various tax rates?

Now if we we’re comparing multiple variables in each scenario (e.g. differing rates of return for each – depending on available investment vehicles, the use & extent of leverage, early distributions and penalties, changes in tax laws, etc.), then running a MC simulation may be of benefit.

[cooperthedog]

RatherOp:

No better than an excel spreadsheet. I don’t see the Monte Carlo simulation anywhere in here?

Why would you expect to see a MC simulation?

There are only three basic scenarios; taxable, ROTH, & std. 401k.

The rate of return is constant, and available to all scenarios, and adjusting its value uniformly would not affect the tax outcomes.

Adjusting the input tax rates would not affect the relationship between the taxable and ROTH scenarios, since they are the same, and since the ROTH is tax free on earnings and distributions, it will ALWAYS be better than using a taxable account.

Logically, this leaves the uncertainty between the ROTH and the std. 401k (two remaining scenarios). Since we know that there is parity between the two, if using the same input and output tax rates, what value is added by simulating various tax rates?

Now if we we’re comparing multiple variables in each scenario (e.g. differing rates of return for each – depending on available investment vehicles, the use & extent of leverage, early distributions and penalties, changes in tax laws, etc.), then running a MC simulation may be of benefit.

[cooperthedog]

RatherOp:

No better than an excel spreadsheet. I don’t see the Monte Carlo simulation anywhere in here?

Why would you expect to see a MC simulation?

There are only three basic scenarios; taxable, ROTH, & std. 401k.

The rate of return is constant, and available to all scenarios, and adjusting its value uniformly would not affect the tax outcomes.

Adjusting the input tax rates would not affect the relationship between the taxable and ROTH scenarios, since they are the same, and since the ROTH is tax free on earnings and distributions, it will ALWAYS be better than using a taxable account.

Logically, this leaves the uncertainty between the ROTH and the std. 401k (two remaining scenarios). Since we know that there is parity between the two, if using the same input and output tax rates, what value is added by simulating various tax rates?

Now if we we’re comparing multiple variables in each scenario (e.g. differing rates of return for each – depending on available investment vehicles, the use & extent of leverage, early distributions and penalties, changes in tax laws, etc.), then running a MC simulation may be of benefit.

[cooperthedog]

RatherOp:

No better than an excel spreadsheet. I don’t see the Monte Carlo simulation anywhere in here?

Why would you expect to see a MC simulation?

There are only three basic scenarios; taxable, ROTH, & std. 401k.

The rate of return is constant, and available to all scenarios, and adjusting its value uniformly would not affect the tax outcomes.

Adjusting the input tax rates would not affect the relationship between the taxable and ROTH scenarios, since they are the same, and since the ROTH is tax free on earnings and distributions, it will ALWAYS be better than using a taxable account.

Logically, this leaves the uncertainty between the ROTH and the std. 401k (two remaining scenarios). Since we know that there is parity between the two, if using the same input and output tax rates, what value is added by simulating various tax rates?

Now if we we’re comparing multiple variables in each scenario (e.g. differing rates of return for each – depending on available investment vehicles, the use & extent of leverage, early distributions and penalties, changes in tax laws, etc.), then running a MC simulation may be of benefit.

[Coronita]

Why would you expect to see a MC simulation?

 

Actually, speaking of which. Does anyone know where I can get an MC simulator for cheap? I suppose I could sort of dig one out of open source, but I've tried a few and they run too slow.

 

[Coronita]

Why would you expect to see a MC simulation?

 

Actually, speaking of which. Does anyone know where I can get an MC simulator for cheap? I suppose I could sort of dig one out of open source, but I've tried a few and they run too slow.

 

[Coronita]

Why would you expect to see a MC simulation?

 

Actually, speaking of which. Does anyone know where I can get an MC simulator for cheap? I suppose I could sort of dig one out of open source, but I've tried a few and they run too slow.

 

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