My experience is the secret is being a world class saver and living below your income level. If I would to rank myself as an investor it would be a B- at best. I never bought the high flying stocks and missed timed some real estate purchases buying at the late 80s peak and selling at the start of COVID missing the run up since. As for a saver, I get an A+. Maxed out 401k and universal life and held onto dividend stocks for 40 years reinvesting all the dividends and not touching them. I just retired at 63 and are set for life without need to take risks.
This is not a blanket rule. I modeled paying off our 2.85% mortgage before retirement vs keeping it into early retirement. Paying off the mortgage early would delay our retirement by 18 months.
I agree with horanz , $350k mortgage at 3% and $400k in dividend etf + brokerage money market @5% = $2000/month and mortgage payment is $1664. No problem and if things go wrong I have it to pay off if I want. Everyone has a different risk tolerance so there’s no right answer. Agree totally about credit card debt, that’s a big no, no. But some months my credit card bill is as much as my mortgage, but no debt yet.
@horanz and @dsmith1934 are correct. Personal finance is just that ... personal. The decision to payoff a mortgage depends on your interest rate and risk tolerance. I retired in January at 56 with a $76k mortgage at 2.5%. I could paid off my mortgage today but I can earn more than 2.5% by investing the $76k over the next 3.5 years.
Why pay off sub 4% loans, you can use that money for living expenses to keep tax rates low, use low tax bracket to roll over 401k funds to roth, delay social security, invest it in stocks and bonds, less taxable income can = cheaper college for kids, cheaper health care coverage
My Dad took Social Security early at 62. As he got older, he ran out of money. I remember my Dad always had money the first 2 weeks of the month...and he was always broke the last 2 weeks of the month and waiting for the next Social Security check to come...and that's the way it is was for my Dad all the way up until he died at 83.
One of the great pleasures of being a good money manager is to give back to your community. We are approaching Winter here in Australia and there are over 800 homeless people in my home city who would benefit greatly from a kind hearted donation. I usually allocate 10% of my retirement savings to causes such as these. I was homeless once and I know what it feels like.
Another compelling video from my go-to channel for financial planning. Wouldn't it be great if Azuls channel was built into the school curriculum. What a difference it would make for some.
This is my absolute favorite video you've made. It took me years to arrive at and find each of those critically important points you share in this video. Thank you as always for your thoughts
People, generally, retire when they can. I could have deferred my retirement for seven years. It would have added about $2500 a month to my monthly pension (total of pension, IRA and Social Security). I decided I would rather enjoy the intervening six (6) years than have the additional mondy and not be able to enjoy it.
If your family has a medical history of dying earlier like that, then it can definitely make sense to take that into consideration. On the flip side, if people come from long living families, they'd want to consider that too, so they don't run out of money... The tricky part is to not react emotionally when making the decision. Get as much information as you can (family history, health, finances, etc) and make the right decision for you...
Most people don’t realise it, but the secret to retiring comfortably is finding a way to make returns while your money works for you. My dad, as I remember, started saving for retirement quite late, but I know he was making more than 10k returns from his investment monthly and it was completely passive.
Haha. Investing enthusiast? Not really. Our family got introduced to a financial advisor about four years before my dad retired. That was what changed things. I've been using the same now and I think my retirement income would be on the right track.
I'm intrigued by this. I've searched for financial advisors online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
Finding financial advisors like Melissa Terri Swayne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
There is a huge difference between designing something that manages flood or surface water over 100 years than a retirement strategy. I too have an engineering degree. It is far more difficult to redesign a dam or a nuclear reactor than to change your asset allocation. I am so happy to see that you pointed out this feature of the Monte Carlo analyses. I think you were recommending something by quartile or quintile and eliminating all risk. Great video! Thank you 🙏🏻.
I'd get a refund for your engineering degree. 100yr flood doesn't mean once in a 100yrs, it means there's a 1% probability of a flood happening in a given year.🙂
@@hanwagu9967 thank you for entirely missing my point and for the ridiculous advice. Try redesigning a reactor or a dam while it is operating; whereas you can transform your investment strategy in a day or year if you want to.
@@fcoon3 I'm not the one who doesn't understand what 100yr flood means, so if you are going to claim to hold an engineering degree and use an engineering analogy, you probably ought to know the fundamentals first. I also did not comment on your second point, since I agree with it.
I would say it's also hard knowing how well and efficient you can complete work at the highest pay of your career... knowing 1 more year of work is equal to 3-5 years or more of one of your kids working ... just how much more you could provide for them with that extra year... maybe that's 1, 2, 3 less years ur kids may have to work
Exactly. My son is building his home on a plot of land I own. I intend to work a few more years to help him and his family so they’re fully settled with a mortgage free home.
@@bills1995vette The way this housing market is? He is a hard working young man with a wife and three kids and happens to be contributing as well. Why shouldn’t I help when at his age I was able to own a home while earning less money? That’s impossible in this day and time.
well, according to Lally's et. al 2009 study, it takes an average 66 days of daily incorporation to form a habit. So, only 3 times in 6wks seems grossly insufficient to inculcate the idea.🤣
depends. If it is the only fund in the account and the only account you have, then in theory you wouldn't have to worry about reallocating since the fund does it for you. If you have other assets and other account types, you would want to consider the asset allocation of the fund when it changes to your overall portfolio.
@@michaelrivers380 keep in mind you need to look at what kind of target date fund (TDF)/lifecycle fund (LCF) to see costs and how the allocation goes. It may not suit your needs. It may be cheaper to simply do say a three fund portfolio yourself. You don't have any flexibility in allocation of tdf/lcf.
I am sorry but not only asset allocation is important. Just look at the performance of the nasdaq VS the 7 magnificent stocks during the last couple years.
I like the 4% rule for planning. But it assumes you do nothing for 30 years. I don't thing your average viewer trying to educate themselves will just do nothing and continue spending in a really bad year. I'm 48 and don't really want bonds at this age. I'm trying to pick up dividend paying REITS when I have extra money (outside 401k contributions)for protection in bad years O, ADC, etc. (maybe moving them into a ROTH so I don't get hosed on taxes from dividends?) Is this crazy or does it make some sense?
Vanguard will tell you to invest in their funds no matter the quality of the stocks you own because they make more money on them. If you know how to interpret financials and know the companies you invest in, you can do far better than any Vanguard fund.
I'll retire with a robust union DBP that when combined with gov't pension (CPP/OAP in Canada) that should supply what I need and about half of what I want to have in retirement. The 4% rule doesn't make sense for me. But I'm not sure just how much I can dip into my own investments, especially in the go go phase. 5%, 6% more?! Will I even need my own investments in the no go? Or will I need it even more due to inflation?
The 4% rule makes just as much sense for you as it does for anybody. The 4% rule is not about how much you spend. The 4% rule is about how much you withdraw (or take) from your investment portfolio. If you need your investments then you need to learn about safe withdrawal rates such as the 4% rule. If you don't need your investments because all your needs are covered by DBP and gov't pension, then you can take out whatever you want from your investments, and when your portfolio is gone it's gone and you still have your needs covered.
I have retired at 62 well, and am now a senior. Are you still practicing, as I am looking for a F.P. as I am very unhappy with the wealth management advisor that I have with a leading investment firm? Can I contact you?
Same here. Paying some ding bat 1percent to do something u can easily do with a little a investment of your time is crazy. I was always telling my advisor what funds I wanted to go with. He always agreed and I usually made out well. So eventually I ditched him and save thousands every year doing it on my own. No fees thru Schwab. Love it.
Financial advisors pre retirement: Don't try to time the market! You never know what is really the top or the bottom. Just keep doing what you are doing... Financial advisors post retirement: Whatever you do, you need to NOT sell when the market is low! Time the market! How do you know what "low" is? ... Next question... ;-)
That is why union pensions work, they "force" you to save when most people aren't. Then when you are older and your friends are talking about saving, you have the ability to add more. I was in a union and don't agree with them about a lot, but their model let me retire at 55 yo with 33.5 years of work.
I always think the stock market is overpriced, old fashion and think any PE more than 15 is overpriced, and yes stocks keep going up because there is no other option for return, just hate to pay more than something is worth just because people are going to bid them up. Same thing with comic books, crypto, gold, buying something just because people are going to bid the price up doesn't make sense to me, just can't do it.
@@MW-bz1qe Have mostly cash, only buy stocks during a correction, only buy bonds & CDs when interest rates are up and I feel like l am getting adequate return. Not forced to invest every month, I sit back, watch and wait like a predator.
That study as you described it does not make sense. What does asset allocation have to do with the returns of a stock fund? A stock fund is stock. There is no "asset allocation" in a stock fund, only stock selection. The study must have been comparing stock funds to balanced funds or some nonsense like that. Obviously different stock funds get different returns if they have different stock selection and if you go balanced fund of course you'll get results that depend on the asset allocation more than the stock selection.
The 100,000 Charlie refers to is now $1 million, $100,000 was a lot of money when Charlie was fairly young now it’s a joke.Even 250 is way too low for your analogy
It is sad that you are not looking closer into Bitcoin for your customers and followers. Bitcoin has outperformed all other assets in the past 15 years, since its existence. And you ignore it completely.
Thank you for bringing up this strategies, I always look up to your video for update. Things appear strange right now. The value of the dollar is declining due to inflation, but it is increasing in comparison to other currencies and commodities such as gold and real estate. People are flocking to the dollar because they believe it is safer. I'm worried that rising inflation will cause my 400k in retirement funds to lose value.I'm really happy for today. I finally got my profit of 170k with my little investment of 45k on this Stock investment with the help of Miss Clara Brandon after feeling so ecstatic and heavy minded that nothing good can come out of it
Die With Zero was a stupid book. If you're the target audience of that book, you're already following the practices. If you're not the target audience of the book, the book is simply a wealthy guy's ponderance on why he didn't have more fun in life. It could have been a 3-column article in The Times. 🙄
It's all night until you are f.i. just my opinion...can tell you of all the money I've ever spent my whole life to enjoy myself, wish I never spent any of it just to give my employer the middle finger a single year earlier.
My experience is the secret is being a world class saver and living below your income level. If I would to rank myself as an investor it would be a B- at best. I never bought the high flying stocks and missed timed some real estate purchases buying at the late 80s peak and selling at the start of COVID missing the run up since. As for a saver, I get an A+. Maxed out 401k and universal life and held onto dividend stocks for 40 years reinvesting all the dividends and not touching them. I just retired at 63 and are set for life without need to take risks.
No credit card or mortgage expenses is a must in order to consider early retirement regardless of allocations .
This is not a blanket rule. I modeled paying off our 2.85% mortgage before retirement vs keeping it into early retirement. Paying off the mortgage early would delay our retirement by 18 months.
I agree with horanz , $350k mortgage at 3% and $400k in dividend etf + brokerage money market @5% = $2000/month and mortgage payment is $1664. No problem and if things go wrong I have it to pay off if I want.
Everyone has a different risk tolerance so there’s no right answer.
Agree totally about credit card debt, that’s a big no, no. But some months my credit card bill is as much as my mortgage, but no debt yet.
I have a pension that easily covers my mortgage and I don’t plan to give up 2.65% interest rate. So it all depends.
@horanz and @dsmith1934 are correct. Personal finance is just that ... personal. The decision to payoff a mortgage depends on your interest rate and risk tolerance. I retired in January at 56 with a $76k mortgage at 2.5%. I could paid off my mortgage today but I can earn more than 2.5% by investing the $76k over the next 3.5 years.
Why pay off sub 4% loans, you can use that money for living expenses to keep tax rates low, use low tax bracket to roll over 401k funds to roth, delay social security, invest it in stocks and bonds, less taxable income can = cheaper college for kids, cheaper health care coverage
My Dad took Social Security early at 62. As he got older, he ran out of money. I remember my Dad always had money the first 2 weeks of the month...and he was always broke the last 2 weeks of the month and waiting for the next Social Security check to come...and that's the way it is was for my Dad all the way up until he died at 83.
Was that your Dads only source of income in retirement?
One of the great pleasures of being a good money manager is to give back to your community. We are approaching Winter here in Australia and there are over 800 homeless people in my home city who would benefit greatly from a kind hearted donation. I usually allocate 10% of my retirement savings to causes such as these. I was homeless once and I know what it feels like.
Another compelling video from my go-to channel for financial planning. Wouldn't it be great if Azuls channel was built into the school curriculum. What a difference it would make for some.
This is my absolute favorite video you've made. It took me years to arrive at and find each of those critically important points you share in this video. Thank you as always for your thoughts
People, generally, retire when they can.
I could have deferred my retirement for seven years. It would have added about $2500 a month to my monthly pension (total of pension, IRA and Social Security).
I decided I would rather enjoy the intervening six (6) years than have the additional mondy and not be able to enjoy it.
Keep on teaching Azul! We need to hear this stuff
A few of my relatives died because they got near retirement and unfortunately expired b4 they collected pensions/ social security 😢 NOT ME !!!
That would suck. Pitch in your whole life and not make it.
If your family has a medical history of dying earlier like that, then it can definitely make sense to take that into consideration.
On the flip side, if people come from long living families, they'd want to consider that too, so they don't run out of money...
The tricky part is to not react emotionally when making the decision. Get as much information as you can (family history, health, finances, etc) and make the right decision for you...
Most people don’t realise it, but the secret to retiring comfortably is finding a way to make returns while your money works for you. My dad, as I remember, started saving for retirement quite late, but I know he was making more than 10k returns from his investment monthly and it was completely passive.
This is really amazing though. I'm curious as to how he did it. Was it real estate? Or he was a market enthusiast?
Haha. Investing enthusiast? Not really. Our family got introduced to a financial advisor about four years before my dad retired. That was what changed things. I've been using the same now and I think my retirement income would be on the right track.
I'm intrigued by this. I've searched for financial advisors online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation?
Finding financial advisors like Melissa Terri Swayne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
There is a huge difference between designing something that manages flood or surface water over 100 years than a retirement strategy. I too have an engineering degree. It is far more difficult to redesign a dam or a nuclear reactor than to change your asset allocation. I am so happy to see that you pointed out this feature of the Monte Carlo analyses. I think you were recommending something by quartile or quintile and eliminating all risk. Great video! Thank you 🙏🏻.
I'd get a refund for your engineering degree. 100yr flood doesn't mean once in a 100yrs, it means there's a 1% probability of a flood happening in a given year.🙂
@@hanwagu9967 thank you for entirely missing my point and for the ridiculous advice. Try redesigning a reactor or a dam while it is operating; whereas you can transform your investment strategy in a day or year if you want to.
@@fcoon3 I'm not the one who doesn't understand what 100yr flood means, so if you are going to claim to hold an engineering degree and use an engineering analogy, you probably ought to know the fundamentals first. I also did not comment on your second point, since I agree with it.
Welcome Azul! Now i can start thinking about retiring early again!🎉🎉🎉
I would say it's also hard knowing how well and efficient you can complete work at the highest pay of your career... knowing 1 more year of work is equal to 3-5 years or more of one of your kids working ... just how much more you could provide for them with that extra year... maybe that's 1, 2, 3 less years ur kids may have to work
Exactly. My son is building his home on a plot of land I own. I intend to work a few more years to help him and his family so they’re fully settled with a mortgage free home.
Do kids even appreciate it these days.
Spend your money on yourself.
Supporting your adult kids and not retiring isn’t helping you or them. Teach them well and let them fly on their own.
@@bills1995vette The way this housing market is? He is a hard working young man with a wife and three kids and happens to be contributing as well. Why shouldn’t I help when at his age I was able to own a home while earning less money? That’s impossible in this day and time.
Thanks, great advice you provide.
Can you please do a video on "guard rail" withdrawal strategy and your thoughts?
Azul Man, we need some new stuff. We’ve heard the Charlie Munger ‘get your hands on $100,000’ quote like 3 times in 6 weeks.
Agreed
well, according to Lally's et. al 2009 study, it takes an average 66 days of daily incorporation to form a habit. So, only 3 times in 6wks seems grossly insufficient to inculcate the idea.🤣
Was thinking the same thing.
Should I worry about asset allocation if I have a target date fund?
depends. If it is the only fund in the account and the only account you have, then in theory you wouldn't have to worry about reallocating since the fund does it for you. If you have other assets and other account types, you would want to consider the asset allocation of the fund when it changes to your overall portfolio.
Thanks
@@michaelrivers380 keep in mind you need to look at what kind of target date fund (TDF)/lifecycle fund (LCF) to see costs and how the allocation goes. It may not suit your needs. It may be cheaper to simply do say a three fund portfolio yourself. You don't have any flexibility in allocation of tdf/lcf.
Thank you for your heartfelt advice.
Just to be clear, how long have you been a financial advisor?
Touché … ⚔️ Azul
LOL!
@@AzulWellswhat kind of answer is that?
Love your outfit!
Zero in bonds unless you want useless returns.
Famous last words?
Wrong and bad Advice. Yes, famous last words from a crash and burn retirement portfolio.
Bs
I am sorry but not only asset allocation is important. Just look at the performance of the nasdaq VS the 7 magnificent stocks during the last couple years.
I like the 4% rule for planning. But it assumes you do nothing for 30 years. I don't thing your average viewer trying to educate themselves will just do nothing and continue spending in a really bad year.
I'm 48 and don't really want bonds at this age. I'm trying to pick up dividend paying REITS when I have extra money (outside 401k contributions)for protection in bad years O, ADC, etc. (maybe moving them into a ROTH so I don't get hosed on taxes from dividends?) Is this crazy or does it make some sense?
Be careful of playing to buzz words, at age 48 through age 55 I was 100% stocks and for good reasons.
Vanguard will tell you to invest in their funds no matter the quality of the stocks you own because they make more money on them. If you know how to interpret financials and know the companies you invest in, you can do far better than any Vanguard fund.
They have some very low cost funds(etf's). Also have you heard about the Warren Buffett bet ? Look it up.
I'll retire with a robust union DBP that when combined with gov't pension (CPP/OAP in Canada) that should supply what I need and about half of what I want to have in retirement. The 4% rule doesn't make sense for me. But I'm not sure just how much I can dip into my own investments, especially in the go go phase. 5%, 6% more?! Will I even need my own investments in the no go? Or will I need it even more due to inflation?
The 4% rule makes just as much sense for you as it does for anybody.
The 4% rule is not about how much you spend. The 4% rule is about how much you withdraw (or take) from your investment portfolio.
If you need your investments then you need to learn about safe withdrawal rates such as the 4% rule. If you don't need your investments because all your needs are covered by DBP and gov't pension, then you can take out whatever you want from your investments, and when your portfolio is gone it's gone and you still have your needs covered.
You make more videos than I can watch.
In our early 60s....We use the RMD calculation for our annual withdrawl rate
I have retired at 62 well, and am now a senior. Are you still practicing, as I am looking for a F.P. as I am very unhappy with the wealth management advisor that I have with a leading investment firm? Can I contact you?
So, tell us how to handle the new tax laws proposed for 2025? Up to 60% for California.
You leave
Head to Florida
My investment dollars started to work much harder (higher ROI) after I fired my financial advisors.
Agreed. The equities I picked do much better than my advisors equites and funds. This is over a 30 year period.
Same here. Paying some ding bat 1percent to do something u can easily do with a little a investment of your time is crazy. I was always telling my advisor what funds I wanted to go with. He always agreed and I usually made out well. So eventually I ditched him and save thousands every year doing it on my own. No fees thru Schwab. Love it.
Fee only advisors? I would guess not, but maybe I am worng.
The difference between working only for you, and dividing the work between you and your advisors.
Financial advisors pre retirement: Don't try to time the market! You never know what is really the top or the bottom. Just keep doing what you are doing...
Financial advisors post retirement: Whatever you do, you need to NOT sell when the market is low! Time the market! How do you know what "low" is? ...
Next question...
;-)
that chart at 14:00 equates to a 30.7 year process.
That is why union pensions work, they "force" you to save when most people aren't. Then when you are older and your friends are talking about saving, you have the ability to add more. I was in a union and don't agree with them about a lot, but their model let me retire at 55 yo with 33.5 years of work.
@@omannthered I applaud you for sticking out to get a pension.
I always think the stock market is overpriced, old fashion and think any PE more than 15 is overpriced, and yes stocks keep going up because there is no other option for return, just hate to pay more than something is worth just because people are going to bid them up. Same thing with comic books, crypto, gold, buying something just because people are going to bid the price up doesn't make sense to me, just can't do it.
So what is a better plan ? Supply and demand will always ensure ppl will pay more for anything u may want .😊
@@MW-bz1qe Have mostly cash, only buy stocks during a correction, only buy bonds & CDs when interest rates are up and I feel like l am getting adequate return. Not forced to invest every month, I sit back, watch and wait like a predator.
That study as you described it does not make sense. What does asset allocation have to do with the returns of a stock fund? A stock fund is stock. There is no "asset allocation" in a stock fund, only stock selection. The study must have been comparing stock funds to balanced funds or some nonsense like that. Obviously different stock funds get different returns if they have different stock selection and if you go balanced fund of course you'll get results that depend on the asset allocation more than the stock selection.
Azul, where have you been all my life?
Hello Azul. I filled out a google form to contact you. Do you do paid financial analysis for folks? Thanks my good friend.
Little extreme on the blue eye color shift in the thumbnail.
Trying to power my way through the final 180k. I'm calling this whole journey, my decade of sacrifice. Im in year 9.
This feels like a repost and I've seen it at least 1-2 x....
The 100,000 Charlie refers to is now $1 million, $100,000 was a lot of money when Charlie was fairly young now it’s a joke.Even 250 is way too low for your analogy
$100k 1994 is around $210k today, so Azul's $250k is on the money.
It is sad that you are not looking closer into Bitcoin for your customers and followers. Bitcoin has outperformed all other assets in the past 15 years, since its existence. And you ignore it completely.
Benghen not Benson
He said it right the first time, but did say Benson later.
Maybe he had a brain fart saying Brinson rathre than Benghen? Brinson being one of authors of the study he referenced.
Thank you for bringing up this strategies, I always look up to your video for update. Things appear strange right now. The value of the dollar is declining due to inflation, but it is increasing in comparison to other currencies and commodities such as gold and real estate. People are flocking to the dollar because they believe it is safer. I'm worried that rising inflation will cause my 400k in retirement funds to lose value.I'm really happy for today. I finally got my profit of 170k with my little investment of 45k on this Stock investment with the help of Miss Clara Brandon after feeling so ecstatic and heavy minded that nothing good can come out of it
Azul, the scammers are out
Die With Zero was a stupid book. If you're the target audience of that book, you're already following the practices. If you're not the target audience of the book, the book is simply a wealthy guy's ponderance on why he didn't have more fun in life. It could have been a 3-column article in The Times. 🙄
It's all night until you are f.i. just my opinion...can tell you of all the money I've ever spent my whole life to enjoy myself, wish I never spent any of it just to give my employer the middle finger a single year earlier.
"we don't know what we don't know.". what a wise old sage, lol,....stop listening after that!