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Recognized Social Butterfly

Re: What's the best way to stash away a rainy day fund?

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Message 11 of 29

retiredtraveler wrote:

"....Actually no, I enjoy watching my numbers and being able to move money to savings.  I work in finance and I think that people need to learn alot more about handling their money......".

 

Yeah. We 'numbers people' like looking at this stuff. The OP and your comments can be summarized simply as: if you can't educate the masses on finances, use some 'trick' psychology to get them saving.

 

   I've never understood the disinterest in handling one's finances. It really, totally, eludes me.  


I consider this one of my weak areas, but it's not because I'm not interested.  I just don't get it all, regardless of how much reading I do.  I save in multiple places hoping that if one goes belly up, the rest will be safer.  


For example, how much to allocate to stocks?  Julius Westheimer (RIP), used to preach we should subtract our age from 120 and keep that percentage in the stock market.  For me that would be 70%.  But that seems too conservative, even for the likes of me.   I have about 83%.  (I'm 50 and want to retire at 68). 

 

Then, what about diversification?   Should we have domestic stocks, foreign? Small cap, large cap, index?  Bonds?  Real estate funds?   I have no clue.  I have diversified, again, because I'm too chicken to keep all my eggs in one basket.  Smiley Very Happy

 

 

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Trusted Social Butterfly

Re: What's the best way to stash away a rainy day fund?

1,044 Views
Message 12 of 29

NerdyMom wrote:

".... I just don't get it all, regardless of how much reading I do.....

For example, how much to allocate to stocks?......  I have about 83%.  (I'm 50 and want to retire at 68). 

Then, what about diversification?   Should we have domestic stocks, foreign? Small cap, large cap, index?  Bonds?  Real estate funds?....".

 

You're asking the right questions. But, of course, everyone will give you a different answer. There is plenty of info on general principles of allocation and diversity, but then another article comes along and says the 'general principles' are poppycock. 

   There is one rule that I really like --- don't know the originator. Someone said that you invest so you can sleep at night. If you're not sleeping, you need to change your strategy.

    The other thing is that you have to monitor the your investments, at the least, annually. Should you have domestic, foreign, small, large, etc.? Depends on the macro-economics and markets that can change over a years time. Requires time, effort, and more reading to see what is happening domestically and foreign. 

  Diversification is argued a great deal. A lot of articles talk about too many people holding too many funds. And often, because they don't understand what the fund invests in (and don't spend the time looking at their biggest holdings which can easily be found), they have overlapping investments and are not truly diversified. 

   You're relatively young, so general rule is go or stocks and be aggressive. You need a 10-year horizon on that, in case the markets tank. So you slowly, annually, get less aggressive.

  I'm the one breaking the rules, as usual. I'm all in junk bonds (I'm 67, and don't do stocks any longer). I've been told, and read, for years, that this is a poor idea, there would be a bond bubble, and the end was near. I've been doing this almost10 years now. I knew there would not be a bubble. Why? I study and actually understand macroeconomic data. I invest on those numbers, not market data.

  Works for me.


 


Just think. The world was built by the lowest bidder.
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Treasured Social Butterfly

Re: What's the best way to stash away a rainy day fund?

1,023 Views
Message 13 of 29

retiredtraveler wrote:

"....Actually no, I enjoy watching my numbers and being able to move money to savings.  I work in finance and I think that people need to learn alot more about handling their money......".

 

Yeah. We 'numbers people' like looking at this stuff. The OP and your comments can be summarized simply as: if you can't educate the masses on finances, use some 'trick' psychology to get them saving.

 

   I've never understood the disinterest in handling one's finances. It really, totally, eludes me.  


I am by far no expert but it definitely has my attention!

 

 

Life's a Journey, not a Destination" Aerosmith
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Conversationalist

Re: What's the best way to stash away a rainy day fund?

901 Views
Message 14 of 29

What has always worked for me is "buy what you need, not what you want." I was raised that way by depression-era parents...how many times have we seen parents buying their kids all kinds of "stuff" on a regular basis. It's a way of life for a major part of the country...and the kids end up becoming adults that require guidance on how to save. If you grow up watching what you spend, saving becomes second nature.

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Treasured Social Butterfly

Re: What's the best way to stash away a rainy day fund?

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Message 15 of 29

dmthies wrote:

What has always worked for me is "buy what you need, not what you want." I was raised that way by depression-era parents...how many times have we seen parents buying their kids all kinds of "stuff" on a regular basis. It's a way of life for a major part of the country...and the kids end up becoming adults that require guidance on how to save. If you grow up watching what you spend, saving becomes second nature.


I can relate to that.   I do however spend on travel and other things important to me as life is short and I enjoy working!  LOL

 

 

Life's a Journey, not a Destination" Aerosmith
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Trusted Social Butterfly

Re: What's the best way to stash away a rainy day fund?

886 Views
Message 16 of 29

 "...I do however spend on travel and other things important to me as life is short and I a enjoy working!...".

 

Nothing more important than traveling --- it's money well spent, imho......


Just think. The world was built by the lowest bidder.
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Conversationalist

Re: What's the best way to stash away a rainy day fund?

879 Views
Message 17 of 29

Think of it as "lifetime planning" rather than "retirement planning."  Makes it more immediate and not perhaps decades away in the future:

 

This is from an article I was quoted in about "retraining your brain" to save:  https://www.forbes.com/sites/learnvest/2014/03/27/save-more-retirement/#2876ef2b49ae 

 

Jan Cullinane, author, The Single Woman's Guide to Retirement (AARP/Wiley)  

 

 

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Info Seeker

Re: What's the best way to stash away a rainy day fund?

871 Views
Message 18 of 29

Start early, start small, be consistent, it is cumulative. You are the beneficiary. 

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Info Seeker

Re: What's the best way to stash away a rainy day fund?

826 Views
Message 19 of 29

Put $10 a week  away in an account.  That would be about $500 a year. Do not touch just keep adding.

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Conversationalist

Re: What's the best way to stash away a rainy day fund?

813 Views
Message 20 of 29

Rainy day means retirement for me.  I'm retired and ok because I always maxed out my 401K and IRA.

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