The Simple Path to Wealth
Fortunately, investing doesn’t have to be an all or nothing proposition. If you are willing to give up some performance, there are ways to smooth out the ride a bit. It is done with asset allocation, which we’ll discuss in Chapter 14.
JL Collins • The Simple Path to Wealth
Answered my last question only 3 paragraphs later.
Imagine you’ve been reading this book on a nice warm summer’s afternoon. Richly deserving of a reward, you crack open a bottle of your favorite brew and pour it into a nice chilled glass. If you’ve done this before you know that if you carefully pour it down the side you’ll wind up with a glass filled mostly with beer and a small foam head. Pour it
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The beer analogy.
It’s not hard. Stop thinking about what your money can buy. Start thinking about what your money can earn.
JL Collins • The Simple Path to Wealth
In 1935, for men the average was around 65, for women about 68. Since then, life expectancy in the U.S. has continued to expand. As of 2013, according to the World Health Organization, it is now ~77 for men and ~82 for women. From those numbers it’s easy to see that setting the age to collect Social Security at 65 was a pretty good bet for the syst
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We keep talking about the insolvency of Social Security but it would be worth looking into regressions in life expectancy caused by unhealthy modes of living. I have no idea what pace that regression is at or if that’s a country-wide trend, but it could be that the system is not insolvent if unhealthy folks start dying sooner.
Go here: http://ssa.gov/myaccount/. This is the Social Security website and, once you create an account for yourself, you’ll be able to track where you stand. You’ll also be able to check and make sure that the record of your earnings is accurate. This is very important as the size of your checks will be in part determined by how much you earned ov
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This means you must recognize the counterproductive psychology that causes bad investment decisions—such as panic selling—and correct it in yourself. In doing so, your investments will be far simpler and your results far stronger. To start you need to understand a few things about the stock market: 1. Market crashes are to be expected.
JL Collins • The Simple Path to Wealth
How long are you going to live? The longer you live, the more advantageous delaying is. The break even point between age 62-66 is around age 84. That is, if you live longer than 84 you will collect more in total by delaying your benefit until past age 66. If you think you’ll die before 84, you might want to take the money
JL Collins • The Simple Path to Wealth
Here’s what, in order, you have to ask yourself: When do I need the money? If you genuinely need the money right now, nothing else matters. But each month you delay, your monthly check gets bigger. Do you think Social Security will collapse and stop paying?
JL Collins • The Simple Path to Wealth
Make no mistake, once you reach 70 1/2 these withdrawals from your IRAs, 401(k)s, 403(b)s and the like are no longer optional. Fail to take your full distribution and you’ll be hit with a 50% penalty. Fail to withdraw enough and the government will take 50% of however much your shortfall is. That’s right, they will take half of your money. This is
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Being independently wealthy is every bit as much about limiting needs as it is about how much money you have. It has less to do with how much you earn—high-income earners often go broke while low-income earners get there—than what you value. Money can buy many things, none of which is more important than your financial independence.