Investing for Owner Operators

[mike3fan]

with all this stimulating talk of profits,I am wondering what you guys do or what you would do as far as investing for the future/retirement?

I have been reading alot lately about index funds and am leaning that way.But I am largely oblivious to financial planning,any thoughts,not on my stupidity but on investing 8)

[allan5oh]

In todays environment it is very tough to invest.

Mutual funds are usually good, but unfortunately they usually have a large portion of financials in there.

[no_worries]

There's one overriding truism when it comes to investing for retirement; the sooner the better. Compounding makes time your biggest asset.

A myriad of studies have shown that a simple basket of diversified low-cost index funds and minimal activity, is your best bet. There are a ton of books that deal with different approaches to this strategy. If you just want to get a feel, try listening to Bob Brinker. He was on ABC Talk but Sirius yanked it. I think it might still be on XM.

A good retirement plan is not any more complex than starting early, sticking to it, and minimizing risk.

[mike3fan]

There's one overriding truism when it comes to investing for retirement; the sooner the better. Compounding makes time your biggest asset.

A myriad of studies have shown that a simple basket of diversified low-cost index funds and minimal activity, is your best bet. There are a ton of books that deal with different approaches to this strategy. If you just want to get a feel, try listening to Bob Brinker. He was on ABC Talk but Sirius yanked it. I think it might still be on XM.

A good retirement plan is not any more complex than starting early, sticking to it, and minimizing risk.

Ok that confirms what I have been reading,only problem is the starting early part,I only have 25 years before I turn 68.

the book I'm reading right now is The Smartest 401(k) Book you'll Ever Read http://www.amazon.com/Smartest-401k-...1690167&sr=8-1

[mdf1576]

Look into roth IRA's. In todays market. NO tax on distributions at retirement age. for no risk investing do a certificate IRA for around 5% return.

[no_worries]

25 years is still a long time. Remember, as someone who's self-employed, you have some vehicles that allow greater contributions than just a standard IRA. And once we get through this current mess, maybe we'll see some accelerated growth

[lowrange]

Look into roth IRA's. In todays market. NO tax on distributions at retirement age. for no risk investing do a certificate IRA for around 5% return.

The Roth tradeoff: No tax on distributions but I also believe no write off now. I'm sure someone will clean it up if I've messed it up.

[mike3fan]

25 years is still a long time. Remember, as someone who's self-employed, you have some vehicles that allow greater contributions than just a standard IRA. And once we get through this current mess, maybe we'll see some accelerated growth

I guess I'm gonna need one of those fancy pants advisors to help with all this

[Heavy Duty]

Money put in a Roth is after tax money.

IRA money is tax deductible, but not exempt from self employment tax.

[no_worries]

I guess I'm gonna need one of those fancy pants advisors to help with all this

Don't waste your money if you can avoid it. You're a smart guy, you can find the basic info (which is all 90% of the people need) pretty easily. You need to know two basic things.

1) What type of account to set up
2) How to invest in that account

If you can't afford to set aside more than $5000/year right now, keep it simple and go with a regular or Roth IRA. Go to Vanguard or Fidelity, their website will walk you through the setup. In fact, those sites have a lot of good information on the subject. Even if all you did was open an IRA and plunk your $5000 into a total stock market index or a money market, that's a good start. You can always adjust as you learn more.

HD's right. The great thing is that you can always move money from a standard IRA to a Roth later. So if you really need the deduction now, make the IRA contribution. Then maybe down the road you'll have a year where your taxable income is down for whatever reason and the tax ramifications make sense to convert all or part to a Roth (assuming the rules stay the same).

[mike3fan]

yeah thanks I have been all over that Vanguard site lately,really good info there,I want to just set something up that I can have taken out of my checking account every week and I think I have that part figured out.I think the Roth is the better deal,but I also want to get going on some of those index funds too.

[mike3fan]

I wish Steve would give me some of his fortune so I could get into the DFA fund,c'mon Steve all it takes is a min of 100k....

[BigDiesel]

I guess I'm gonna need one of those fancy pants advisors to help with all this

Don't waste your money if you can avoid it. You're a smart guy, you can find the basic info (which is all 90% of the people need) pretty easily. You need to know two basic things.

1) What type of account to set up
2) How to invest in that account

If you can't afford to set aside more than $5000/year right now, keep it simple and go with a regular or Roth IRA. Go to Vanguard or Fidelity, their website will walk you through the setup. In fact, those sites have a lot of good information on the subject. Even if all you did was open an IRA and plunk your $5000 into a total stock market index or a money market, that's a good start. You can always adjust as you learn more.

HD's right. The great thing is that you can always move money from a standard IRA to a Roth later. So if you really need the deduction now, make the IRA contribution. Then maybe down the road you'll have a year where your taxable income is down for whatever reason and the tax ramifications make sense to convert all or part to a Roth (assuming the rules stay the same).

This is a fantastic way to get started for the newbie investor. This way enables you to obtain a basic understanding of the " nuts and bolts " of investing., without a costly investment adviser. But as you are able to invest more, seek the advice of a Pro. We have been with Lincoln Financial for the past 10 years and are quite happy with our broker.

[no_worries]

But as you are able to invest more, seek the advice of a Pro.

That depends on what you're philosophy on the market is (once you've gained an understanding) and whether or not you believe a managed portfolio can consistently beat the market.

But in the end...

...and are quite happy with our broker.

...that is what matters most. The last thing you want to be doing is stressing out over your nest egg all the time.

[mike3fan]

I am wondering if it would be overkill to have a SEP-IRA and a Roth IRA?

My thinking is that I could theoretically invest up to 25% of my profits in the SEP-IRA which would be a tax deduction,with taxes due upon withdraws,and the the Roth I could invest up to $5k after tax money and then have some no taxed money mixed in with the other at the end.Thoughts?

I would still do a portfolio of low cost index funds.or better yet a retirement target fund.

[no_worries]

Roth vs. Regular IRA. It boils down to one question: In retirement, will your taxable income be higher or lower than it is now? If you're paying 20% in taxes now and you expect to only be paying 15% after retirement, it makes no sense to have money in a Roth.

With some analysis and planning you can some to a pretty reasonable estimation for retirement. The hardest part of the picture is not knowing what the tax and regulation picture will look like in 20+ years. Most planners take the position that, regardless of what happens down the road, having a chunk of income that isn't taxable is a good thing. They advocate maxing out your Roth first before moving to the next vehicle, such as a SEP. If you expect your earnings to be fairly consistent and you want the simplest approach, this is tough to beat.

I like that strategy I mentioned above because our taxable income fluctuates quite a bit. Fluctuations occur due to tax issues, like Rev mentioned in the other thread. For us, they also occur due to a variable work schedule. Some years we work steadily throughout the year. We've also been known to take an entire year off. In the higher income years we contribute to a standard IRA type (IRA, SEP, or Solo 401(k)) for the tax break. In years with lower taxable income, we make the contributions to the Roth, but also shift funds from the standard into the Roth. There is a pretty decent benefit from doing it this way but it can get a little complicated and requires both strong knowledge of your personal tax situation and a bit more planning.

In any case, there's no downside to having both a standard IRA and a Roth open to choose from.

[cowdoc]

I had a SEP-IRA before we incorporated and I really liked it. Of course you can have the same investments in any of them just a question of tax consequences. I highly recommend Vanguard DBS. You can invest in stocks,bonds,cd's, or mutual funds. You can invest in Vguard funds or a lot of other families @ noload.

[tracer]

I think saving money for retirement is a waste of time. The best way to retire is to create a business that brings in PASSIVE INCOME so that you don't have to work. As long as the income you receive is greater than your expenses, you can consider yourself retired. My personal plan is to have a couple of paid-off trucks with trailers, a couple of drivers, and find someone to manage the biz. Most wealthy people invest in 1) own business; and 2) real estate.

You know trucking, right? Why not invest in something you know?

[Orangetxguy]

I do my investing through Fidelity and Edward Jones.

[GTR SILVER]

what percentage of pay should one invest.. :?: :?: ..being a young (eh hmm) 47 what would be acceptable..... :idea: :idea: :arrow: :arrow: :?: :?: :!: 8)