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Financial advice aimed at smaller investors would be helpful. I had a call with New Harbor – PP’s recommended financial advisor. I liked them a lot but their minimum amount of investment is 50k. We’re not there yet but I’m not comfortable putting substantial assets (for us) in one of the Target Funds that all retirement plans recommend. And I don’t have the time, expertise and stomach for investing on my own. So I’m not sure what to do there.
….Does participating in traditional retirement plans make sense, or would it be better to take those contributions and invest in resiliency or precious metals? Maybe us non-boomers should start our own thread somewhere?
Desert Indigo –
It sounds like you’ve already covered the basics:
- emergency cash stash ($500-$3k) for natural disasters
- ‘rainy day’ savings fund (3+ months of income) in case of job loss/illness/etc
- pay off non-productive debts (loans, credit cards, etc)
- initial precious metals holdings as insurance against currency crisis
and are now working on building to an $amount that will offer diversification as well as upside/income potential.
Good for you. You’re already ahead of the vast majority of US households.
Now, there’s an old saying in investing: “the first million is the hardest“. That’s even more true for the first $100,000.
And it’s even harder for folks with a Peak Prosperity mindset, who are skeptical of today’s market overvaluations. Safe haven investments like precious metals and T-bills have vastly underperformed the S&P over the past decade.
But, to paraphrase John Hussman, it’s far better to grow slowly with safety than it is to grow fast but risk losing it all.
Which is why I prefer a slow-but-steady-wins-the-race approach for those focused on building their financial capital foundation.
I, myself, still follow that approach. Despite having a larger portfolio than you, I still approach investing very much as I did when I had a negative net worth after graduating business school, and wrestled to pay off my student loans:
- Be ruthlessly frugal. Every dollar saved is one less you have to work for.
- Invest for safety (at least, until the markets correct and valuation multiples return to historic norms). When building your savings foundation, don’t chase “growth” at the risk of losing a sizable chunk of your portfolio if the markets collapse. You’re working too hard to set yourself back like that.
- Focus on your savings rate vs your portfolio rate of return. You have full control over how much money you put towards savings each month. You have zero control over what the markets may do. Instead of depending on asset price appreciation to hit your goal, focus instead on what % of your income you can save each month, and then challenge yourself to beat that % next month. And any appreciation that comes from your growing portfolio of (conservatively-invested) savings will be ‘icing on the cake’.
Even with a ‘low risk’ portfolio of cash/T-bills and very conservative stock & bond funds, it gets easier as you approach your goal. Not only do you get better at saving with practice, but as your portfolio grows, even a small rate of return begins to add noticeable wind to your back.
As to retirement funds, if your employer is giving an attractive match, I generally recommend funding it up to the matching limit. And if you qualify for a Roth IRA, I recommend doing so — the tax-free compounding and withdrawal is a deal that’s hard to beat.
[For those about to jump down my throat: yes, I share your concerns that retirement accounts may get ‘raided’ during extreme times. I think we’ll have enough warning beforehand (as things will need to get quite bad) to act if need be. But, given those concerns, I don’t recommend keeping 100% of your financial capital in retirement funds.]
All this said, I’d encourage you to also consider investing for income (click here to read all my reasons why).
Real estate in particular offers a great vehicle for this for younger people like you, who can take full advantage of the coming decades to have the income generated by the property pay off the mortgage.
If you’re willing to hustle, there are real estate investors out there willing to give you equity in their deal in exchange for services — like scouting potential properties, helping with admin tasks like permit filing, managing investor communications, etc. That’s a great way to learn about the RE investing business and get deal upside without having to commit any money.
TLDR: my general 2 cents is to keep on plugging away and playing it safe until you have enough discretionary funds to take greater risks with. Discipline and compounding will get you to your goals given enough time.
As always, this is not personal financial advice/talk to your financial advisor before taking action/etc/etc…
Just letting folks know I’m hearing the reports of some (all?) people getting 404 errors when trying to edit.
I’ve alerted the IT team and will report back when I have an update.
Wow — ask and ye shall receive.
Thanks for all the feedback folks.
Clearly, there’s strong interest in both topics.
Here’s what I’ve decided to do.
For this Friday, I’m going to write about layoff risk. How it’s increasing at the macro level, signs your job may be at risk, how to reduce your vulnerability to a layoff, and what do asap should a pink slip appear on your desk.
AND, for next Wed, I’m going to produce a webinar on investing in the precious metals miners. It will bring back Brien Lundin, publisher of GoldNewsletter.com, the oldest-running analysis of PM miners; feature Rick Rule, Sprott’s renowned mining expert; and include, of course, Chris. We’ll take as much audience Q&A as possible during the webinar.
This webinar be free to all and will air live on Wed @ 7pm ET/4pm PT. You can register for it by clicking here.
As usual, everyone who registers will receive a replay video of the event once it’s over.
That’s about as close as I can come to pleasing everyone. Hope it’s sufficient for now.
Finviz (click here)
Gold just popped up $12/oz in the aftermarket. Something’s afoot.
Don’t know the cause yet, but am searching around for it…
Announcing this here, as I know Davefairtex is a fan:
We just recorded our latest PP podcast, with Martin Armstrong as the guest.
We’re editing and transcribing it now. The podcast should be live on the site by Monday.
From a recent Wag! survey:
Conducted by Wag!, a mobile dog-walking app, a survey of more than 2,000 pet parents found that 44% of respondents would rather turn to their dog for emotional support than talk about their feelings with a family member.
Dogs also appear to be the center of affection for many families as well, with 38% of respondents admitting that the family dog is the “person” they show the most love or attention to in their household. For reference, 31% of respondents said they show the most affection towards their own children and 23% reported giving their spouse or significant other the most attention / affection.
I have to admit that this dynamic is not uncommon at the Taggart household. During times when we’re grumpy with one another, we can always find common ground agreeing each of us loves the dog.
And if I’m processing challenging emotional thoughts? I take Boston to the beach. Her companionship grounds me and gets my mind ready to tackle my issue with an actual human.
Breakout charts courtesy of PP’s Today’s Markets page:
The gold price hasn’t been this high since 2013. If this spike can hold, the odds of gold rallying substantially higher are good.
Here was the set-up leading up to today’s breakout (source):
With the reverse head-and-shoulders neckline broken to the upside, there’s a lot of room above for gold to run.
When Chris and I talk with audiences on the topic of emergency preparedness — stored food, organized community support, planning for those in your family/neighborhood who will be unprepared in an emergency — we sometimes say tongue-in-cheek: “The fast track to become well-prepared is to join the Mormon Church”, as doing so would plug you into an existing organization efficiently structured around those priorities.
We can make a similar argument for emotional resilience. A fast track to greater happiness and well-being is to let a pet into your life 🙂
- This reply was modified 1 year, 3 months ago by Adam Taggart.
I do not dislike dogs at all, but prefer cats.
What effects do they have re: human companionship? Surely they are similar?
Yes, research shows cat-owners receive similar benefits — just not to as high a degree as reported by dog-owners (source here)
But this post isn’t intended to put forth a “dogs are better than cats (or any other pet)” argument.
If you have an animal companion who enriches your life and provides you with emotional and social benefits, celebrate them here!