<p>^ “… or lost.”</p>
<p>I’ve related this story before on CC. In early April '09, at the market bottom, I was walking the neighborhood with the other dog owners. Conversation turned to the market, and one lady said “Oh yes, I opened my quarterly statement and saw how much my 401K had gone down. I immediately moved everything to cash.”</p>
<p>Lost indeed, in every sense of the word.</p>
<p>^ Oh, my … “lost”. . indeed …</p>
<p>My whole point is that the stock market is a long term investment vehicle and for that reason is a great strategy for investing for retirement (a decades long process), but only for those who have a risk tolerance that can gut it out thru downturns. Save in a diversified manner. Have the courage to buy and hold thru downturns. I have been steadily buying at incredible sale prices all through the downturn and I didn’t sell during the downturn. By the time I am 70, I expect to be doing well enough to comfortably pay utilities and buy groceries. 
Doesn’t take much to run me, thankfully …</p>
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<p>Chart of the $INDU from 1900 to the present month.</p>
<p>[Dow</a> Jones Industrial Average (1900 - Present Monthly) - Charting Tools - StockCharts.com](<a href=“http://stockcharts.com/charts/historical/djia1900.html]Dow”>http://stockcharts.com/charts/historical/djia1900.html)</p>
<p>If you look carefully at the chart, you’ll see three major bull markets, one major decline and one plateau - this is for long holding periods. Run your eyes over the charts and imagine your results over the long-run. In many cases, the luck of your age has more to do with your results over a long-term buy-and-hold approach.</p>
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<p>Diversification reduces volatility. Most of the time. We’ve had syncronized up-markets and down-markets due to global factors where diversification didn’t matter that much. Diversification also reduces potential returns.</p>
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<p>My approach is to buy with a stop to control losses. I also use a trailing stop. The idea is to sell the tops and buy the bottoms. Professionals use stops. Retail investors usually trade at the wrong time.</p>
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<p>Our government and central bank have been giving away massive amounts of money for the last two years. They do this from time to time and it’s not a bad idea to have your cup out when they drop it from helicopters. Most people just think that it is raining. I’m just wondering how high they get the markets before it drags the retail investor in.</p>
<p>“Don’t plan to fully retire until mind or body gives out”</p>
<p>Work until you keel over is definitely not a life plan for me. H and I have lots of stuff we’d like to do that cost nothing but time, so time is what I’m saving for. My plan is to stockpile for what I need, need very little, and enjoy life while i’m able.</p>
<p>Edit: we paid for college out of pocket whle continuing to save. We didn’t live on beans alone, but we were very frugal.</p>
<p>@garland: paying for college out of pocket and continuing to save for the future is EXACTLY what we will do also. </p>
<p>As far as fully retiring, I plan for the worst and hope for the best. </p>
<p>@BCEagle91: Sounds like you have a strategy that works for you. Good on ya.</p>
<p>OP/OT</p>
<p>A longtimeprime ago I read or was told that; For retirement, a person has an entire working lifetime to accumulate retirement funds that will last the remainder of your years. However, for college costs, if you considered funding, will take 18 years to accomplish the funding. College funding is nothing more than retirement funding but on a shortened time scale. </p>
<p>Basically that advice is correct but in personal hindsight, not entirely correct. Conventional thought is that you should be aggressive in the beginning and more protective of the funds as you approach using this wealth. So at birth, you can be aggressive for 18 years? No, Because at year 19 you’re going to start tapping into the college funds, and some of this hard earned money and gains had better be in less aggressive pot. On-the-other-hand, If you’re able to get attractive student loans, your college cost accumulation and amortization could be drawn out another 25+ years beyond the initial 22 year (47) . Contrast this to a unfortunate working life of 25-65 (40). :shocked: :)</p>
<p>For those who care about my eligible DS. </p>
<p>We placed him on the 47 year college plan. He is however, net debt free, MTM even in October 2008. :)</p>
<p>Another point, the college fund needed is only a small percentage of what is required for a fully funded retirement savings account and it is on a fixed schedule with no real play. So we funded college before retirement and then when that was checked off, during the kids middle school years, we switched to savings for retirement above the company matching 401K option. I worked in a high paying, not fun profession until that point and boy was I glad when I finally didn’t have to sell my soul for a big paycheck anymore.
Also, there is way more creativity, in both financial vehicles and other assets, available for amassing enough to comfortably live on after you retire. By the time you have to or need to or want to stop working you ideally have more options in terms of selling your home and trading up or down, selling other assets and investments.
So it worked out to save for college as a first priority and then for retirement as long as you are young enough and/or able to work enough years to have that plan work out. It also presupposes that your greatest earnings will be in the early-mid part of your career, but that may be when the fire in your belly is roaring strong anyway, I know I could not work at that pace at this point in my life.</p>
<p>Well, since we’ve turned the OP into an(other) investment thread …</p>
<p>I’ve had no luck at all communicating any investment approach other than “buy and hold equities … and yeah five percent international large caps would be OK, if kept in a mutual fund.” My gold bug friends say the same thing about trying to explain their favored investment. Otherwise smart people trip all over themselves at simple questions: “OK, you use asset allocation and rebalance annually … what makes annually better than other time periods?”</p>
<p>Retirement first for us. A financially savvy friend pointed out to first-salaried-job me that I could start shovelling money into a tax-advantaged retirement fund. That was the first big savings habit to take hold. Kids didn’t come into the picture for years after that, so there was no competition between savings priorities. </p>
<p>The spouse and I attended UCs, and initially planned for our children to be able to afford a UC or CSU. Private college costs weren’t something that we thought of as directly affecting us. If we’d attended privates ourselves, or if we were considering that for our children back then, it would have affected our college and retirement savings strategy.</p>
<p>We did retirement first at age 30. Now 60+. Most years maxed out 401k and IRA.
We did college savings at age 36, DS just born, who is now 25.</p>
<p>We opted for shoot-the-moon for college savings. In early 2001, we were 100% tuition for private tuition, 4 years. By 2003 when DS, sophomore college, we were 50% of tuition, 4 years. It was in late 2003, I decided that we’d gotta bypass the Moon and go for Mars.
By 2006. We hit Mars. :)</p>
<p>As for retirement savings, We were on track in 2008. Job loss, 60+ , and investment properties being illiquid, are forcing us to either reduce our expections (which isn’t much) or go for Mars. I’ve opted for Mars. DW doesn’t want to hear it or know about it. You know what, 30 years of retirement savings in a balanced portfolio, still is not enough. The safe portions of the mutuals, AIG, Citi, FNM, GE, their bonds, and AA Bonds were the riskiest. I am so pead, the bastions of capitalism screwed us. </p>
<p>up, Up and AWAY
:)</p>
<p>OP: It really doesn’t matter. Your fooling yourself it you think one funding priority is better than another. </p>
<p>DS had better find a GF with a dowery :)</p>
<p>Long Prime,</p>
<p>She’s beautiful, intelligent, debt free, but moving to Europe after graduation in May.</p>
<p>I like to plan even if most of the time things don’t work out exactly as planned. Still when we came to US to work, the first thing I did was to start contributing to my 401K.
The first thing DW wanted was a private school for DD, second a home.
So we did all that.
I contributed to my 401K for 20 years.
I paid down my house mortgage in 10 years.
I paid for private pre-school thru 12th grade education for DD and presently paying $50K+ towards her college.
Result: Even though I paid for more years into my 401K the total amount is far less than what I will pay for DD education and the amount paid towards house separately.</p>
<p>Once DD was in middle school, I started planning for prep HS($30K to 35K) and then college($50K to $60K) both astoundingly costly preposition. We decided to first reduce the mortgage prior to HS to equate the expenses of HS + Mortgage = College.</p>
<p>Once DD decided to become full paying @ $50K+ college, we decided to pay off the mortgage prior to DD college so as to be able to pay the college expenses from the current pay without dipping into our retirement accounts and without compromising on paying towards retirement.</p>
<p>I’m now planning for post DD college life. I hope DD to be done with her education (at least a MS) before I turn 50 so that I can spend rest of my youth (prior to retire) travelling all over the world tasting food and wine across different cultures.</p>
<p>I started the 401K back in the either the late 80s or early 90s. The incentive was the employer match into the 401K plan - free money, as long as you didn’t lose it with your investments.</p>
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<p>That’s not in my control. In 90s all the companies I worked had offered employer match. All the companies I worked in the last decade didn’t, still I max out on all my yearly contributions. My 401K dropped 45% in 2007-08, I didn’t panic because if I had it would have all gone. I’ve recovered a lot since then but it is still not same.
So stock market is not in my control.</p>
<p>What I was trying to convey that it is certainly better to start saving towards retirement early but if one want then they can’t do it starting late in their 40s or 50s. </p>
<p>I think we need to plan for the worst and hope for the best.</p>
<p>Our strategy: Waited to get married; waited to have kids; waiting for kids to grow up!</p>
<p>We’re trying the out of pocket pay-as-you-go plan too, and luckily, DD went for the big scholarship rather than the big name. DS will probably not have as many choices unless his times get much better. I just hope that DH and I stay healthy for a long time, and he can work until DS graduates. We have saved, but I hope that both kids make wise college choices and graduate debt-free, and we can have enough to live on without them pitching in.</p>
<p>I was doing the retirement saving in my 20s and 30s; DH was the major income earner and we were paying student loans. When he got into the gov’t he started doing the 401(k) at full tilt to catch up. He also gets a pension. </p>
<p>We are doing college through current income, the kids have skin in the game, and while they are both in school, some FA. Haven’t had to borrow yet, though we expect at some point that will be necessary. Our house pays off four years after S2 graduates. College costs are several multiples of our mortgage (yeah for buying older, modest house), so we figure when those two items are off the table, we should be in good shape. When the kids are out of school I will really ratchet up my 401(k).</p>
<p>OP, we have done the retirement contribs no matter what. We assumed we’d fund college from current income and home equity and have been living frugally enough for years that we could make it work. Fantasy thinking at its finest, but it has worked out. The guys also knew they were responsible for a chunk, too – it is not that hard for a student to put in $7,500+/year from Staffords, summer jobs and a small on-campus job. </p>
<p>My retirement funds are invested in a variety of mutual funds, somewhat conservative, but I sleep well at night. Did not sell anything when the market crashed. We did not have college funds in the market, having been burned with the very small college accounts we established when the guys were young.</p>
<p>Our perspective towards funding college and retirement is to look at it as a series of lifestyle decisions made over the past 25+ years. It may not be exciting, but we weren’t frantic about how to accomplish these sometimes conflicting goals because the timeline was long enough to absorb cr*p in the market, take advantage of very good timing in buying our house and refinancing, and dealing w/the loss of my income for several years and accompanying medical expenses due to illness.</p>
<p>ETA: We are also well-insured. If anything happened to either one of us, college and mortgage would be covered. I like being able to sleep at night. :)</p>
<p>gloworm:</p>
<p>If you’ve been reading on my search for potential list of GF for DS.
<p>:)</p>
<p>We have not really been too methodical. We maxed our IRA contributions early in our marriage. We also bought some zero coupon bonds that would pay 4 years tuition to our flagship U when the kids were infants. Fast forward to now, S was able to get good merit aid so that his OOS private U wasn’t THAT much more than in-state flagship U. We continued paying H’s 401K & my part-time jobs helped us pay U expenses out of current income. We are also paying my max Roth IRA. </p>
<p>D attended CC for 3 semesters & then transferred to expensive OOS private U–fortunately we have mostly been able to pay from current income, especially now that S has graduated & has gotten a full-time job that he SHOULD be starting SOON (meanwhile he’s living at home & helping with decluttering & home improvements)!</p>
<p>Things should work out OK & we will be able to use the Coverdell IRA we started for S & D to pay D’s fall tuition for 2011 (giving it a bit more time to recover). Really looking forward to D graduating in May 2012! :)</p>
<p>We are very fortunate that H’s federal job will provide health benefits & a pension with survivor benefit for me that should keep us comfortable, since we’ve always lived below our income. :)</p>
<p>Government employee here, so one of the lucky few that still has a defined benefit pension to look forward to (assuming NYS is able to pay it, and quite frankly I am getting more and more anxious about that, because I have very little other retirement savings/investment as my pension is anticipated to be a very nice one…). That has enabled us to concentrate on saving for D’s college. I consider us very fortunate in that regard. If NYS goes broke and can’t pay my pension, we will end up in very deep water in our old age…</p>