Are there any rich people here?

My one job was 105 hours last week. Do tell, how do you have time for two?

All the best,
Andrew.

 

Actually 3
I managed (2) 24/7 businesses for 42 years. In the beginning I would eat all 3 meals at my desk. Start at 7AM home by 10 or 11 and then look for real estate investments until 11 or 12. Then get called in to the office in the middle of the night 3 or 4 times a week, Including weekends. Family business is an alarm company and my father (turned 91 yesterday) was the classic person who could start a business, but had a lot of trouble managing it. The second 24/7 business is the over 100 high end rental units that I own. In both cases I was the only go to guy for at least 20 years until the businesses were big enough to hire managers that would be on call. The third business is rebuilding airplanes which I started in 1987. At least this one had a manager from day one, but I still had to do all the accounting, hiring, payroll, insurance, etc.
The hard work allowed me to purchase a Lamborghini Countach in 1987 at age 26 and a P-51 Mustang in 1989. And most importantly my first Ferrari in 1984. I still have all three.

It was my plan all along and it worked. Unfortunately I do not know of a single person locally willing to do the same.

 

I don't get why money managers charge a percentage of the value of the investment. Too much greed. Just charge your time at a reasonable hourly rate. Show a timecard and what the client gets for their money. Taking a portion of a man's wealth seems dishonest. What if mechanics charged a value of the car to perform a service, or a doctor? This stinks like the realtor scams. Too much greed in this world. If you take a man's wealth you should pay it back if the investment losses money so you have real skin in the game.

 

Like the guys who go to a one day insurance licensing class, can now call themselves “financial experts”, and are set loose on the public selling Indexed Annuities for large upfront commissions. FYI, you’ll also encounter these folks in your bank lobby.

I see a lot of people recommending the S&P index and going it alone. When that thing was down 58% in 2008, how many unsophisticated folks out there do you think held on ? If the answer was everybody, the index wouldn’t have been down 58% !

I personally watched a very sophisticated Duke graduate, successful Investment Banker, cash out at the bottom in his 60s.

 

Sadly, that’s the capitulation trade required since *somebody* has to exist along each portion of the curve.

 

Wow, I wasn't expecting the OP to post that. I thought it was going to be a 20 something year old wanting a get rich quick plan to buy a Ferrari and not someone with two of them already and two homes.

If it was me (it's not so this is just my view), I would dump the house with the higher running cost as I have zero interest in being a landlord to deal with renting it out. With my luck I would get junk tenants that would damage the property and wipe out any profits...even in this housing market that sucks for sellers in most places I would sell. If you can rent it out no issue that's cool. Then I would take the cash and put it in a target date index fund like a 2035 fund based on your age, which is bond heavy at this point, but still some exposure to equities. I don't bother with individual stocks personally. I just don't care enough to waste my time with that as I'm too busy with other things in life and have no insider info to know really what's up.

As far as the cars, I don't know what type of Fcars you have. Assuming they are similar in price and carrying costs, I would keep the more sentimental one as you're on this forum and a car enthusiast and I wouldn't dump my entire hobby unless you're over cars now. You have to enjoy life into retirement while you're still able to drive and enjoy the car(s) because you may not be able to physically do it sooner or later. Ideally the less sentimental car is the more valuable one so you could sell it off for more cash. Then I would dump some of those funds into the same 2035 target date fund and keep some in a money market fund (currently 4%+) as emergency (12 months to be conservative) assuming you don't have that either already.

There's a lot more to do like catchup retirement contributions, backdoor Roth/conversions, etc, but you can read about those elsewhere. Advice is worth what you pay so mine is worthless.

P.S. I liked the earlier definition of rich by another poster. Mine is similar, but I define rich as you can retire today and maintain current lifestyle indefinitely PLUS any unexpected costs including any medical expenses purely off interest/dividend income alone. So that last part basically means I can never retire as I can't afford indefinite long-term medical care out of pocket in the case of a horrible medical issue if it were to happen. :/ I've seen and been involved with that aspect of healthcare and it's emotionally and financially devastating for almost everyone.

 

I would suggest paying for a subscription, and posting this question in B&I. I think you'd get better and more interesting answers there.

 

The good news is you could be much worse off at this point in your life.

At the very least, sell one of the Ferraris, open a Roth IRA, deposit the max into it every year and buy shares of either QQQ or SPY.

Dollar-cost average (invest incrementally over time) the rest into a regular IRA by buying shares of either QQQ or SPY as well. Don't ever sell until you need to in retirement. Have only what you need in a savings account in case of an emergency and no more.

 

do you know what your expected SS will be? Go to the site and look it up. I bet you will be surprised. next, what is your monthly personal burn rate? Maybe $10k? Less? Base your decisions around producing what ever that amount is from passive income sources. Look at the S&P over the last 20 years....look into Vangaurd index funds, google Bogleheads 3 fund portfolio. Cut your personal over head fast and put that cash to work. I bet you are financially better off than you think...

 

Investing for retirement isn't rocket science.

1. You should have a detailed budget and an accounting of where you actually spend your money. I have more money than I can spend yet I have a spreadsheet going back at least 15 years that lists where I've spent my money in great detail. Doing this is easier if you limit your cash expenditures and mostly use credit cards, checks, and/or direct bank debits so you have good records. I've managed to accumulate 4 times as much money as when I retired yet don't deny myself anything.

2. Live below your current means, don't finance anything (if you can't pay cash or charge it, you can't afford it). Never carry a credit card balance, pay it in full every month without fail. My only exception is a mortgage, assuming the rate is lower than your expected investment returns.

3. Avoid talking to any advisor who isn't a fiduciary and avoid insurance salesmen (annuity guys) at all costs. The only advisors I have ever used, I negotiated a flat fee, not a percentage of my portfolio. Otherwise you're just giving earnings away to someone who is usually just a middle man for some bigger firm.

4. Active portfolio managers are just there to take a big bite out of your potential earnings and do not beat the market indexes with any regularity (which means they often do far worse). High quality, low cost index fund(s) are the best route for a non-savvy investor. Vanguard is my provider of choice as they have the lowest fees around.

5. Diversification while highly touted is a bit over-rated in my opinion. if you follow some simple investing guidelines, all does it reduce your long-term gains for some short-term peace of mind.

6. The simplest approach is allocating your money with the 3-bucket method:

a. Bucket 1 holds money for immediate expenses covering you for 1-3 years of living. This should be no risk money, like in a bank account, short-term CDs, money market account, etc. Need to have a budget to figure the appropriate size of this bucket. As this money gets depleted, you replenish it from Bucket 2 investments. You shouldn't need to do this often, maybe once or twice a year. Expected rate of return here is minimal.

b. Bucket 2 should cover perceived expenses for years 3 through 10 and be moderate risk investments. You want investments that have relatively moderate risk ratings dividend paying stocks, bonds, etc). As this money gets depleted, you replenish it from Bucket 3 investments. I shoot for about a 5% rate of return. lower risk because the investments have less time to recover from a down-turn.

c. Bucket 3 is for log-term investing and can be much more aggressive like growth stocks, real estate, etc). I shoot for about a 10% return here. These investments may have down years but you have plenty of time for them to recover before you need the funds.

7. Never sell in a down market because you're afraid its going to go down further. All you will have done is locked in your losses and pretty much guaranteed you will miss the beginning of the rally when the market when it goes back up. The S&P has averaged 9-11% through any 10-year period regardless of the down-turns. Just have to be willing to wait for it to recover.

 

For context, we are a middle class family about to retire....

The bucket strategy is a great way to avoid sequence of returns risk, which can decimate your account if the market goes way negative in the first 3 years of retirement. So I would recommend 3 years of needed income in bucket 1. There was a time 5-7 years ago where we had 100% in our aggressive pre-tax accounts (great when you are in your 20s-mid 50s) and were cash poor, so we have been trying to build cash reserves.

Our bucket 1 funds are all getting 3-4% which is a solid return (when we first started trying to generate cash, a 1 year CD was paying 0.1%....ouch) considering the flexibility.

On a % basis, our split of invested assets are around:

Bucket 1 - 17%
Bucket 2 - 15% (in a target date retirement fund)
Bucket 3 - 68%

So while we have gotten a better mix than when we 100% Bucket 3, still have some work to do. Maybe 60% in Bucket 3 would be a good holding point.....as we really want to live on interest and not touch principal.

Unlike the poster above, we will replenish Bucket 1 with Bucket 3 money as the returns will generate more profit. Bucket 2 is really a luxury that I can only see tapping if market growth is 0 or -1% in a given year, as Bucket 2 should be like 0 to +2% in that scenario.

OK, going to watch Farmageddon...thank God it is finally football season.