Investing in Our Future
Now that we’re married and I’m probably here to stay, at least for a few years, in the US… the Princess and I decided we needed to get a little more serious about investing our money wisely.
After much reading, three progressively-more-complex spreadsheet models and four interviews with a financial advisor I have come to trust to give me some facts to feed my growing understanding of the basics of 401k’s, retirement, and investment 101, I’ve come to the conclusion that what we need is a four step plan:
- Max out pre-tax savings in our 401k’s, including for 2007
- Continue to rent, but keep an eye on home ownership as prices stagnate/drop
- Reign in some of our discretionary spending to create more surplus income
- Invest that surplus income in tax-friendly ways, shooting for 7.5% net return, long term
You can never tell over the short term — the bottom could fall out of the stock market, or the dollar — but I believe that this secures our retirement at 59 on the 401k’s and creates the possibility of earlier retirement if the non-tax-deferred stuff really goes thru the roof before then. If not, we’ll at least be comfortable.
Our status on the four step plan is done for steps one and two, good progress on step three, and actively researching step four. In particular, my 401k was pitiful, I wasn’t even maxing out my employer contribution!
Comment by Gregoire — October 11, 2007 at 20:40
Bull shit. Jean-Luc always said: 1/3 in gold, 1/3 in real estate, 1/3 in stocks. And his advice was free!
I hope you’re going reign in discretionary spending after X-mas or that purchases for me are somehow above and beyond all this
Comment by Mathieu — October 12, 2007 at 7:38
Yes, and he did so well for himself… as for Xmas spending: careful review of our spending the last 6 months shows its the small(er) but regular items that really eat up a lot of moolah. Buying you a tie-dye T-shirt once in a while should not stand in the way of telling the Man to take his job and shove it.