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Author Topic: Long Term Financial Planning Strategy (401k, stocks, savings...)  (Read 1913 times)

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Offline kr3900b

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Long Term Financial Planning Strategy (401k, stocks, savings...)
« on: February 24, 2013, 08:16:29 PM »
So it's quite a sign of the times where we are medically able to raise this topic but I'm wondering if anyone has any suggested resources or ideas on financial planning for the future. I do think we face different issues than a negative person (I.e. inability to obtain new life insurance policies, high medication and health expenses, shorter expected life span than negative people, etc) but I do realize that anyone could be hit by a bus any day and that there's only so much you can plan...

Still I am fortunate enough to be in a position where I can do significant financial planning as I'm in my early 30s. I watch Suze Orman regularly and try to take her advice along with other financial planners but the HIV positive aspect constantly makes me question. For example, with my 401k, should I contribute more and get the most out of the rising stock market like any investor would while reducing my current tax liabilities or should I be thinking it may be very unlikely that I'll ever be able to access those $$$ and I should be saving that money in other ways.

I don't mean to come off as a brat as I know there are many more serious issues we all face but there's part of me that gains sanity in thinking that the future is full of great experiences to be had, should I have the means to do so :)

I'd appreciate any advice you have on future planning.

Offline Jeff G

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #1 on: February 24, 2013, 08:33:57 PM »
So it's quite a sign of the times where we are medically able to raise this topic but I'm wondering if anyone has any suggested resources or ideas on financial planning for the future. I do think we face different issues than a negative person (I.e. inability to obtain new life insurance policies, high medication and health expenses, shorter expected life span than negative people, etc) but I do realize that anyone could be hit by a bus any day and that there's only so much you can plan...

Still I am fortunate enough to be in a position where I can do significant financial planning as I'm in my early 30s. I watch Suze Orman regularly and try to take her advice along with other financial planners but the HIV positive aspect constantly makes me question. For example, with my 401k, should I contribute more and get the most out of the rising stock market like any investor would while reducing my current tax liabilities or should I be thinking it may be very unlikely that I'll ever be able to access those $$$ and I should be saving that money in other ways.

I don't mean to come off as a brat as I know there are many more serious issues we all face but there's part of me that gains sanity in thinking that the future is full of great experiences to be had, should I have the means to do so :)

I'd appreciate any advice you have on future planning.

Its not bratty , its prudent and probably should be discussed more by us all these days .

I'm of the mind that most people shouldn't try to invest on their own by picking stocks and should get the services of a financial adviser that comes recommended by people you know and trust .

I was extremely leery of trusting my financial future to a stranger even if the stranger came with a good recommendation . I felt it was blind trust to let someone handle something for me I didn't understand but now I feel that I made the right decision and realize that its complicated and better left to the experts unless you are an expert yourself . Saving is a good idea at any age but If you guys in your 20's and 30's begin to invest and save early you will be astounded what your retirement can add up too with the help of a financial adviser who can maximize what ever you are able to invest or save .   

Offline kr3900b

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #2 on: February 24, 2013, 09:06:31 PM »
Thanks Jeff - totally agree on your point regarding the role of an advisor. I guess my questions are more around the savings strategy. For example, should there be differences in the investing strategy between a positive person and negative person? I'm not very familiar with what support is available once a positive person retires and no longer has employer benefits like health and life insurance.  Should I not depend on my 401k savings to support my needs as someone positive? Should I plan to retire as early as I can, like 59 1/2 years old when 401k savings can be withdrawn without penalty or do I follow standard advice of waiting until my later 60s? Lots of variables I know but would love to hear yours and others' experience on this.

Offline Jeff G

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #3 on: February 24, 2013, 09:15:51 PM »
Thanks Jeff - totally agree on your point regarding the role of an advisor. I guess my questions are more around the savings strategy. For example, should there be differences in the investing strategy between a positive person and negative person? I'm not very familiar with what support is available once a positive person retires and no longer has employer benefits like health and life insurance.  Should I not depend on my 401k savings to support my needs as someone positive? Should I plan to retire as early as I can, like 59 1/2 years old when 401k savings can be withdrawn without penalty or do I follow standard advice of waiting until my later 60s? Lots of variables I know but would love to hear yours and others' experience on this.

There is no other way to say it , I disclosed to my financial advisor . We discussed all the things that matter now or could potentially matter at a later time and he tailored a plan for me that fit .

I guess you never know until you consult with an adviser and the good thing is they don't charge a fee for the consultation . It cant hurt to check it out . 

Offline OneTampa

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #4 on: February 24, 2013, 10:50:26 PM »
So it's quite a sign of the times where we are medically able to raise this topic but I'm wondering if anyone has any suggested resources or ideas on financial planning for the future. I do think we face different issues than a negative person (I.e. inability to obtain new life insurance policies, high medication and health expenses, shorter expected life span than negative people, etc) but I do realize that anyone could be hit by a bus any day and that there's only so much you can plan...

Still I am fortunate enough to be in a position where I can do significant financial planning as I'm in my early 30s. I watch Suze Orman regularly and try to take her advice along with other financial planners but the HIV positive aspect constantly makes me question. For example, with my 401k, should I contribute more and get the most out of the rising stock market like any investor would while reducing my current tax liabilities or should I be thinking it may be very unlikely that I'll ever be able to access those $$$ and I should be saving that money in other ways.

I don't mean to come off as a brat as I know there are many more serious issues we all face but there's part of me that gains sanity in thinking that the future is full of great experiences to be had, should I have the means to do so :)

I'd appreciate any advice you have on future planning.

This is a very relevant subject now that the landscape has changed and many of us can look to planning for retirement.

Here is a link to a discussion thread I started on this matter about  1 1/2 years ago: http://forums.poz.com/index.php?topic=40130.msg500539#msg500539

I am currently between permanent jobs and interviewing (while freelancing for now).  I anticipate retiring at about 66.  I have also talked with my financial advisor.  He is a good guy and is helping me with my plans.
« Last Edit: February 24, 2013, 10:57:28 PM by OneTampa »
"He is my oldest child. The shy and retiring one over there with the Haitian headdress serving pescaíto frito."

Offline pittman

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #5 on: March 01, 2013, 11:29:01 PM »
Perhaps I can offer another way to think about the subject, as I have given it some  thought as well.  While saving strategies are about mitigating risk, I think you are focused on the wrong risks.

First off, kudos to you for already thinking about retirement while still in your 30s , great decision. My first advise is to plan as if you will live a normal life span.  I think that is wise for several reasons-
First of which is that you may very well end up living a normal lifespan!  While being HIV+ impacts lifespan, when effectively under control its impact is comparable to a myriad of other health factors.  How often do you see those around you saying "hey, I'm carrying an extra 20 lbs around my middle, I better retire sooner or save less". I don't even know smokers that think that way and that has a worse impact than controlled HIV.  Your genetics, and your efforts at staying in reasonable shape, and living a healthy lifestyle can put you on an even playing field with most around you.

Second, people often under estimate how much they need to save to live comfortably in retirement. So save as if you will be old and wrinkly. 

Third, its too soon to know if you will want to retire early. If you save aggressively now, then when you get in your 50's you will have the choice. Only then you will know much more, such as your current health, how much you managed to save, and what the current cost of living is. Besides, I have seen folks get forced into involuntary retirement before hey were ready due to economic events.  Also, a big factor on your (or anyone's) retirement age is likely to be when you will have health care coverage. If you retire too soon, then you are on your own for securing private health insurance as medicare would not yet be available to you.

As far as investments strategy, a financial planner can be helpful, but avoid one paid on commission who makes money when you buy products from them.  If your employer offers any 401k/403b matches, then first put in enough to get the full match. If you can do more, then consider an IRA and additional 401k/403b savings. If available, consider the newer mutual funds that are retirement date driven, that gradually move the investments to more conservative positions the closer you get to retirement.

Consider putting some of your savings in accounts that will be tax free at retirement, such as a Roth IRA.  You will have greater flexibility to control what taxes you will pay.  A lot of employers are now pushing the high-deductible health plans, with health savings accounts. I switched to one. Previously I was on an expensive HMO. While my deductible and copays were low(ish), my premiums were high, nearly 4500 a year.  Now I pay a small fraction of that in premiums, but I must pay the first $1200 out of pocket, and then 20% of my costs until I reach my  annual maximum of $2000, after which everything is covered, including copays. But here is the thing, I can put up to $3250 into a savings account tax free to use for my out of pocket costs. AND any I don't use I get to save for future expenses. As long as the expenses are health related, I never pay tax on that money, even in retirement. So for now, I can actually just put the money in the account, never touch it while I continue to pay my max out of pocket. This way I am building a tax free retirement fund that I can use for medical expenses, and my (admittedly) expensive health care costs are still less than they were a year or two ago.   I think that since I always max out my annual out of pocket costs, this strategy is the one specific one I do because of my HIV.  I am building a health care next egg I can dip into for meds and other health expenses if I find myself between jobs.

I realize not everyone can afford to save as much, but I just put these out there for ideas.

Offline MitchMiller

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #6 on: March 16, 2013, 04:04:03 AM »
If you're planning on following Suze O's strategy, you better start saving now.  She is really conservative and would have most people work until they are at max retirement age. 

I would say get started now because the more you have invested, the more returns you will make.  The whole idea around conservative investing is that a huge chunk of the savings is accumulated in the last six or seven years before retirement because that's when the next egg should be large enough to really begin compounding returns year over year.  It's really hard to build a nest egg when you start saving at 45 or 50.

My only advice that goes contrary to a lot of advisors is that you should rarely buy and hold.  Markets go up and down and funds have good years and bad. Always be following the markets and be ready to take profits and move your money where is earns the best returns based on your tolerance for risk.  I followed the buy and hold in mutual funds and ended up with paltry returns when averaged over 20 years or so.  I would have been much better off to be actively reallocating between different types of funds on an ongoing basis.  Still hoping to retire at 58, but a lot depends on some risky investments that need to pay off.

« Last Edit: March 16, 2013, 04:09:56 AM by MitchMiller »

Offline SoSadTooBad

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #7 on: March 17, 2013, 05:12:29 PM »
I agree with Pittman - you should plan to save and invest assuming a normal life span.  I've had the discussion with my financial advisor in the generic sense - "I have a chronic condition that may shorten my lifespan, and may result in higher than normal medical expenses later in life..."   Their advice does not change in that case - they still focus on risk tolerance, financial goals and expectations in retirement.   You can add me to the camp that does work with a fee-based financial advisor - they were referred to me by a close friend, and they have achieved (reasonable) results that are beyond what I was doing myself. 

Offline Blixer

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #8 on: March 19, 2013, 07:21:31 PM »
I agree that Pittman offers some good advice.  I think his thought about the Roth IRA or similar instrument is a great one.  Each person's situation is different, but I've seen some good results by doing a mixture between pre-tax investments and post-tax investments.  Of course, if your employer has a match into a 401K or similar, then that's free money and you should be all over that.

If you go with a financial adviser, I also support the idea of not going with someone who is commissioned.  No matter how hard they try, they will be influenced to a degree by what makes them money.

If you are confident enough to work with mutual funds on your own, there are some very good funds through low cost providers such as Vanguard and Janus and others.  They also offer access to some financial advisers on a "for fee" basis.

I've also been a fan of the pick good funds and buy and hold.  My brother has tried to some market timing by moving to cash when he thinks the market is going down and back into mutual funds when he thinks the market is moving up.  In the end, my "buy and hold" has out paced his results significantly.

The sooner you start, the better.  And the advice recently given to a friend of mine who went to see a certified financial planner was that the biggest key is to avoid debt.  The planner told them that debt is what keeps more people from their retirement goals than anything else.
David
Diagnosed 1/9/06
8/27/2007 CD4 598, 29%, VL 58 (72 wks)
11/19/2007 CD4 609, 30%, VL < 50 (84 wks)
2/11/2008 CD4 439, 27%, VL <50 (96 wks)
5/5/2008 CD4 535, 28%, VL <50 (108 wks)
10/20/2008 CD4 680, 28%, VL <50 (132 wks)
Changed to Atripla in 2012
1/14/2013 CD4 855, 35%, VL <40

Offline Buckmark

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #9 on: March 20, 2013, 04:17:23 PM »
Lots of good advice in this thread, but I do take exception to this advice provided by MitchMiller.

My only advice that goes contrary to a lot of advisors is that you should rarely buy and hold.  Markets go up and down and funds have good years and bad. Always be following the markets and be ready to take profits and move your money where is earns the best returns based on your tolerance for risk.  I followed the buy and hold in mutual funds and ended up with paltry returns when averaged over 20 years or so.  I would have been much better off to be actively reallocating between different types of funds on an ongoing basis.  Still hoping to retire at 58, but a lot depends on some risky investments that need to pay off.

How many people have time to "always" follow the market, understand macro / micro economic trends, comprehend the impact of political / government foibles, predict natural disasters, and other events that affect the market?  Even experts who try to do this, i.e. "time the market", rarely have better success over the long-term than those buying and holding indexed financial instruments that reflect various portions of the broader market.   It's easy to look back and say "if only I had sold this at one point in time, or bought that at another point in time".  But that is essentially being a Monday-morning quarterback.  At those points in time, you didn't have the knowledge that you do right now.

To me, what is more important is being broadly diversified across various sectors of the market, accommodating as much risk as you feel comfortable with.   A "passively-managed" indexed financial instruments (mutual funds, or exchange-traded funds) over time has just as good chance of performing as well as an actively managed portfolio / fund.

There is tons of data to back this up, here is but one article:

http://www.forbes.com/sites/rickferri/2012/08/20/index-fund-portfolios-reign-superior/

If you are trading your own securities, you better be prepared to put in the time and due diligence to be sure you know what you are doing.  Most people don't have time or expertise for that.  And, since the data shows you aren't likely to outperform the market anyway, you can save yourself a lot of time.

Lastly, be vigilant about investment costs and fees of any funds, ETFs, stocks or bonds your purchase.  Over time, higher investment costs can reduce your returns significantly.  That gives another advantage to  indexed securities, though even there fees can vary widely.

Good Luck!

Henry

"Life in Lubbock, Texas, taught me two things:
     One is that God loves you and you're going to burn in hell.
     The other is that sex is the most awful, filthy thing on earth and you should save it for someone you love."
- Butch Hancock, Musician, The Flatlanders

Offline MitchMiller

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #10 on: March 23, 2013, 03:15:22 AM »
You are right that it does take time to monitor your investments, especially if you're trading individual stocks.  For me, it's a hobby that I really enjoy... the one and only true high stakes internet casino, where the rush of a 50 - 100K profit on a trade can't be beat... !  .. as long as you can stomach the 100K loss and take it all in stride and stay at the blackjack table!  A couple weeks ago, first time in 20 years of this that I took a double whammy on two stocks on the same day... down 85K. Like last year when I started out the year losing 72K (BANG)... but pulled in 250K realized profits by the end of the year (thank you ARNA)... needing a repeat this year! 

For buy and hold investing, the only thing I would then add is that you should be always investing in relatively equal amounts (or as an equal percentage of income) on a regular basis to cost average across the ups and downs of the market.  A lot of people really screwed themselves by panicking in 2008 and pulling all their money out when they should have been going all in.  I put all I could scrape together in the market for the first 18 months after the start of the crash and that paid off quite well. 


Offline Jeff G

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #11 on: March 23, 2013, 09:51:10 AM »
The best advice for the vast majority of people is to leave the buying and selling of stocks , bonds and security's to the experts . If you are not an experienced day trader this falls well under the don't try this at home rule .

My dad told me that he intended to leave me some stocks and bonds when his time came , he also told me not to be a schmuck and try to manage it myself ... thanks dad , you were right .

Offline wolfter

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Re: Long Term Financial Planning Strategy (401k, stocks, savings...)
« Reply #12 on: March 23, 2013, 10:15:14 AM »
Even as a federal budget analyst, I always relied on professionals to handle my retirement investments.  Now if I can just live long enough to see the fruits of these decisions, I'll hopefully be set for retirement.

Wolfie
Complacency is the enemy.  ;)  Challenge yourself daily for maximum  return on investment.

 


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