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Kindle Notes & Highlights
cash value of your life insurance
Cash value of insurance. Does includes term? I'm assuming yes.
money market mutual fund
Research what this is. Looks like a us treasury investment.
The Rule of 72
Compounding rule divide 72 by yearly return. Ex: yearly return on nuesual sand 10%. 72/10 = 7.2 years for investment to double..
are investors, not speculators.
Do not be speculative investor. What makes a speculative investor?,
Pay Yourself First
Pay yourself first means to take money off your pay check and put into savings before spending it.
currently spending all of your income,
How much are we spending a month? Run report on ledger cli.
Shop for Used Items
Started doing this.
Buy 3 year old mid tier cars. Average savings of older cars are $2500. Invest that into vehicle with ~8% return rate and it will compound overtime.
Move Where the Cost of Living Is Cheaper
What if pay is also lower?
What about quality of life??
Roth IRAs
Does chichi have Roth IRA account?.
Summary: save money even a little bit helps. Calculate double rate using rule 72..
EE Bonds come with a minimum guaranteed yield of 3.526 percent if held for 20 years,
Long term it has a floor to double every 20 years.
Other Benefits of Savings Bonds
Saving bonds can be used for Luke's college education.
tax-deferred for up to 30 years.
Do not understand what this means
Government Agency Securities
This chapter is taking about mortgage bonds Freddie Mac and other ones these typeof bonds do best when interest are steady for a longer periods. of time
Find a bond fund that matches your investment time horizon.
Don’t time interest rate hikes.
Match your fund to your risk tolerance.
active management and indexing.
Types of mutual funds
offered by Vanguard
Vanguard mutual funds are actively managed and cheap.
Read the Prospectus.
Important to read one prospectus when discussing with Chichi,
Funds of Funds
Introduce my parents to the mutual funds.,
LifeStrategy
Vanguard funds targeting different life goals.
life-cycle funds of funds
What are the companies offering this?
ANNUITIES
Life insurance → term, variable, fixed
Vanguard and a few other companies do offer low-cost variable annuities with no sales charges or surrender fees.
Can I transfer my IUL from transamerica
(ETFs) are basically mutual funds that trade like stocks on an exchange.
What are ETFs?.
mutual funds, which are priced at net asset value (NAV) only once a day at the close of business
How are mutual funds are priced?
ETFs are priced continuously throughout the day,
How are ftfs are priced?
ETFs are not suited for investors who make a number of smaller purchases, such as with dollar-cost averaging, since they’d have to pay a commission on each purchase.
ETFs are market traded, they can trade at a slight premium or discount
The discrepancy not that large but we need to be aware it exist. Can ETFs be arbitraged?
investors who can make large, one-time purchases with the intention of holding them for a long period of time.
Who should buy ETFs?
one-time commission may well be more than offset by the reduced expenses incurred over a long period of time.
1. Buying ETFs in big chunks and holding is optimal to save on commissions
Vanguard offers their low-cost ETFs commission-free,
Anybody can buy ETFs from vanguard because they are commission free
$3,262 to buy the same basket of goods and services that she can buy for $1,000 today.
How does this compare to tech were price doesn't fluctuate that much.
20-year period for investors in the 33 percent and 35 percent tax brackets.
Low tax bracket is seemed towards tips. But tips might under perform is bought through a Broker
30-year market forecast,
Estimated Returns
As it says, table with estimated return for each investment vehicle.
Callan asset class performance charts at www.callan.com.
Resource to see RTM(revergence to the mean) in practice.
Next, let’s use
“The stockbroker services his clients in the same way that Bonnie and Clyde serviced banks.”
Brokers are interested making money for themselves us you.
70 percent chance of outperforming any given financial pro over an extended period of time.
Index funds and mutual funds outperforms most advisors.
passive investing
If you don’t know how to do something, ask. Talk to an expert or
Hh
Was this always the case? Is it due to bad financial policies or just a nature of investing advisors?
perceived investment crisis by taking action is usually a recipe for poor returns.
Do not try to time market. Last year is a good example of how things don’t necessarily makes sense in terms of market returns.
According to Dalbar, Inc. of Boston, from 1993 to 2012, the S&P Index 500 averaged a gain of 8.21 percent per year.
However, during that same 20-year period, the average equity fund investor had an average annual gain of only 4.25 percent.
The study found that the underperformance was due to investor behavior such as market timing and chasing hot funds.
Compared to s&p 500 actively managed fund returned only 4.5% vs 8.5% from index fund
Walter Mitty
who is this?
