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post #106 of 159
Quote:
Originally Posted by Piobaire View Post
His statement concerned tax free distributions. Trad IRA doesn't fit the bill.

Oh, here's a tidbit too: Trad IRA are not always tax exempt on contribution. Depending on our AGI, you don't get to contribute to a ROTH and if you contribute to an IRA, it's post-tax dollars. Nice, huh?

I know silly. I was talking about his plural usage. Fortunatly, I don't have to worry about my AGI limiting my contributions , but I think you and my parents would get along really well.
post #107 of 159
Quote:
Originally Posted by ramuman View Post
I know silly. I was talking about his plural usage. Fortunatly, I don't have to worry about my AGI limiting my contributions , but I think you and my parents would get along really well.

Ouch. I'm not that old. I mean, it's not like I'm Rube.
post #108 of 159
Quote:
Originally Posted by Piobaire View Post
Ouch. I'm not that old. I mean, it's not like I'm Rube.
Well, I think all you've heard is that I'm 27 and finishing grad school. My parents could be 42 for all you know . In all seriousness, I meant your background about how you grew up and what you do now. My dad could talk all day about being that working stiff and worrying about being at an income/net worth level that taxes him in a manner he doesn't see befitting his lifestyle as defined by the tax code .
post #109 of 159
Hopefully before 30. But then again, I am anticipating getting a JD/MBA, which will set me back about 280,000 and take away four years of earnings...
post #110 of 159
Shut up all u small timers. Back to the battle of the bulge brackets!
post #111 of 159
When I was younger, 35. Then reality set in. Now its TBA
post #112 of 159
Probably never. And that doesn't really bother me.
post #113 of 159
Quote:
Originally Posted by kwilkinson View Post
Probably never. And that doesn't really bother me.
Not so fast. I think that there are more millionaires who were frugal and didn't set out to hit some sort of predetermined number than money crazed people (who can never have enough) who made their lives about money. I know quite a few people who made money (not necessarily huge money but who would qualify as having 1 million in assets) who did so by pursuing their passions and spending judiciously. You strike me as the kind of person who will save their money and regardless of income (which may one day be quite decent as a big FOH person), will be selective with how you spend it. I'm sure in the end you'll be better off than a lot of the douche bags here who think their glorified cubicle jobs are going to get them onto MTV cribs.
post #114 of 159
Quote:
Originally Posted by SField View Post
Not so fast.

I think that there are more millionaires who were frugal and didn't set out to hit some sort of predetermined number than money crazed people (who can never have enough) who made their lives about money.

I know quite a few people who made money (not necessarily huge money but who would qualify as having 1 million in assets) who did so by pursuing their passions and spending judiciously. You strike me as the kind of person who will save their money and regardless of income (which may one day be quite decent as a big FOH person), will be selective with how you spend it. I'm sure in the end you'll be better off than a lot of the douche bags here who think their glorified cubicle jobs are going to get them onto MTV cribs.

+1

nothing to add to this.
post #115 of 159
Quote:
Originally Posted by SField View Post
Not so fast.

I think that there are more millionaires who were frugal and didn't set out to hit some sort of predetermined number than money crazed people (who can never have enough) who made their lives about money.

I know quite a few people who made money (not necessarily huge money but who would qualify as having 1 million in assets) who did so by pursuing their passions and spending judiciously. You strike me as the kind of person who will save their money and regardless of income (which may one day be quite decent as a big FOH person), will be selective with how you spend it. I'm sure in the end you'll be better off than a lot of the douche bags here who think their glorified cubicle jobs are going to get them onto MTV cribs.

If you aim to retire in 30 years (and you're a young guy I believe, about 25? so it's more likely to be at least that for many reasons) then 1 million is worth about $450k in today's terms.

So if you want to retire on a pension of $22k per year in today's terms, you'll need to be a millionaire pension pot wise.

My point is most average income people now in their 20s who have prepared for their retirement, will be millionaires by retirement out of necessity.

If you add in making sure you pay off the mortgage on your last home before you retire - as would be wise so you have more income in retirement, that's further net worth.
post #116 of 159
Quote:
Originally Posted by Piobaire View Post
Thanks for correcting me. It has been a long time since I was concerned with ROTHs and thought only the contribution part was taken out tax free.

However, you used the plural, accounts. Are their others?

Roth 401k

I'm not currently going the roth route on the 401k...only on the IRA side. Maybe I should be doubling up on post-tax accounts until I am no longer eligible but since my employer match will go into a traditional 401k either way, I am just putting the full contribution there.
post #117 of 159
Quote:
Originally Posted by otc View Post
How does owning some rental property put you into the 1m range? You gotta first have/earn a million to buy a million in property (since you won't have time for it to appreciate so much).
Not necessarily, real estate benefits greatly from leverage. Not many other investments where you can borrow 80%+ of the capital... My plan is to purchase property 20% down on 15-year mortgages and have the rental payments cover the mortgage. Assuming a 6% appreciation (US historical average), a $210,000 house will be worth just over $500,000 after 15 years so you only need 2 houses to hit $1m in equity - or $84,000 in cash for downpayments. Spread out over 4 years that's $22,000 per year which is a realistic savings target without having to eat dog food. After 19 years you'd have $1m in equity with at least $2,000/month in income (assuming $1k/mo/house in rental income, with no appreciation). Let's assume that the housing market is dead for a generation and there's no appreciation for the next 15 years. There will still be renters (if not more renters as no-one is buying houses...), so you'd need to purchase 5 houses for $200,000 - requiring $200,000 in cash for the 5 down-payments of $40,000 - which will take 10 years if saving $20,000 per year. That's a maximum of 25 years to own the five houses free and clear for $1m in equity + at least $5,000 per month in income. I'm not trying to brag, nor claim that this is particularly easy or that I am going to dedicate my life to scrabbling out that money, or that $1m is going to make me super-rich... it does seem to be a reasonable, conservative plan for building enough wealth to be comfortable without having to work 100 hours a week for it and with enough time to enjoy it.
post #118 of 159
Quote:
Originally Posted by v0rtex View Post
Assuming a 6% appreciation (US historical average), a $210,000 house will be worth just over $500,000 after 15 years so you only need 2 houses to hit $1m in equity - or $84,000 in cash for downpayments. Spread out over 4 years that's $22,000 per year which is a realistic savings target without having to eat dog food. After 19 years you'd have $1m in equity with at least $2,000/month in income (assuming $1k/mo/house in rental income, with no appreciation).
Did you type this post in October 2007 ?
post #119 of 159
Quote:
Originally Posted by gdl203 View Post
Did you type this post in October 2007 ?
No, then I'd be using numbers like "I can put down $500 and pay only the interest, then flip it a month later, do that 10 times and make $1m" 6% is a historical average over the latter half of the 20th Century. Past patterns don't predict the future, which is why I also showed figures assuming 0 appreciation. In my area, $200k is a nice middle class house in good condition, in a decent neighborhood that someone earning an average income can afford. Barring a catastrophic drop in the rental market (unlikely, given that area population is projected to increase) or another bubble that will push purchase prices way over rental value (also unlikely, at least in this generation), real estate still appears to be one of the better ways to build long-term wealth when you're starting from scratch, as I am.
post #120 of 159
Quote:
Originally Posted by v0rtex View Post
Assuming a 6% appreciation (US historical average), a $210,000 house will be worth just over $500,000 after 15 years so you only need 2 houses to hit $1m in equity - or $84,000 in cash for downpayments. Spread out over 4 years that's $22,000 per year which is a realistic savings target without having to eat dog food. After 19 years you'd have $1m in equity with at least $2,000/month in income (assuming $1k/mo/house in rental income, with no appreciation).

.

OK so about $2000 dollars a month to cover 2 properties, interest only with about a 180k loan on.

Do you have the income spare to be able to pay an extra $2000 per month when there are void periods?

The recent average void period is one month per year in the UK, so you could take that from the rental income and reduce the net yield.

But one month is just the average - if you go several months, you need that $2000 a month of your own cash. I don't know many people with $2000 per month of truly disposable income!

People still forget that it's 360 thousand dollars of debt on their shoulders, just because they "have" something physical they can see. There is no diversification, and managing a property is like running a small business if you do it yourself.

Would you take out a $360k debt to buy a portfolio of shares, if those shares paid you "a rent" back? Very few people would, all things being equal as it's not something they can see and touch, despite (again assuming a fictional rent was paid to you) equities giving a great deal of diversification and being very liquid.
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