Financial Planning for Young People - Add your thoughts

[AlexMerced]

http://www.youtube.com/watch?v=pBuHJJRP5ic

[oyarde]

Alright , Alex , do I have to watch the video ? or do you have something I can just read ;)

[AlexMerced]

Alright , Alex , do I have to watch the video ? or do you have something I can just read ;)

I haven't typed anything yet, I suck at proofreading or avoiding run-on sentences so videos helps cut through the clutter. When I write people just forget the content and begin getting all hyper about my page long sentences :p.

But the basic idea is:

- Same 6 months expenses (to protect you in the short term)
- Get a Whole Life Policy and Disability Insurance (to protect you in the long term)
- Then take all the risk you want in the market with the rest.

With those who worry about the dollar, the savings and insurance policies can be bought abroad denominated in other currencies

[thoughtomator]

Financial planning for young males:

1) Don't get married
2) Don't get anyone pregnant

[oyarde]

I haven't typed anything yet, I suck at proofreading or avoiding run-on sentences so videos helps cut through the clutter. When I write people just forget the content and begin getting all hyper about my page long sentences :p.

But the basic idea is:

- Same 6 months expenses (to protect you in the short term)
- Get a Whole Life Policy and Disability Insurance (to protect you in the long term)
- Then take all the risk you want in the market with the rest.

With those who worry about the dollar, the savings and insurance policies can be bought abroad denominated in other currencies I can see why people would worry about the currencies ....

[AlexMerced]

I can see why people would worry about the currencies ....

of course, doesn't mean you shouldn't have some savings incase you find youself suddenly unemployed and a life insurance policy if you suddenly find your self dead.

[onlyrp]

Financial planning for young males:

1) Don't get married
2) Don't get anyone pregnant

Very good advice. That literally saves you hundreds a month in the next 10 years, hundreds of thousands in the next 30.

[oyarde]

of course, doesn't mean you shouldn't have some savings incase you find youself suddenly unemployed and a life insurance policy if you suddenly find your self dead.I carry 121k in life ins , 5k off it expires when I reach 65 , the rest pays if " I suddenly find myself dead " , By the way Alex , thanks , that was a bummer trying to picture that :)

[oyarde]

of course, doesn't mean you shouldn't have some savings incase you find youself suddenly unemployed and a life insurance policy if you suddenly find your self dead. I keep a stash of 4k specifically , and only to be touched if I was to lose my job. I have a little silver and a very few , very valuable coins I can unload at my local coin dealer for near ask price too , if I absolutely had to. I carry an extra couple of bucks a month on my house insurance for full replacement value in case of theft on my tools , weapons and coins . Remember this , even ten bucks a week into a savings account adds up year to year nicely.

[oyarde]

I haven't typed anything yet, I suck at proofreading or avoiding run-on sentences so videos helps cut through the clutter. When I write people just forget the content and begin getting all hyper about my page long sentences :p.

But the basic idea is:

- Same 6 months expenses (to protect you in the short term)
- Get a Whole Life Policy and Disability Insurance (to protect you in the long term)
- Then take all the risk you want in the market with the rest.

With those who worry about the dollar, the savings and insurance policies can be bought abroad denominated in other currencies I forgot , I have carried a disabilty policy that pays 65 % of my gross for the past 22 years , I see you have that . I would be a little concerned about buying a life policy abroad without going through the whole thing and figuring out all the legalities .

[oyarde]

Theoretically , if a person is disabled and carries disability ins , unless they have a very large income , the amount of that , and Social Security disability if they applied would be more than they were making before .It is a strange world.

[risk_reward]

Whole life is a scam. Never buy whole life. Never!

[AlexMerced]

I carry 121k in life ins , 5k off it expires when I reach 65 , the rest pays if " I suddenly find myself dead " , By the way Alex , thanks , that was a bummer trying to picture that :)

That sounds like term life insurance, what i'm advocating is whole life, which is permanent and has a cash value you can use when you need it that'll grow quite exponentially around retirement time.

[AlexMerced]

Theoretically , if a person is disabled and carries disability ins , unless they have a very large income , the amount of that , and Social Security disability if they applied would be more than they were making before .It is a strange world.

thus why I say it's something the young should do?

[AlexMerced]

Whole life is a scam. Never buy whole life. Never!

depends who you buy from, it isn't a get rich quick product, but you know you loved ones or future ones are protected to an extent and you got a level o forced savings as well.

Not a huge money maker, but to the average person with bad saving habits it does a lot.

THe problem is people compare something o their best possible alternative not their most realistic alternative.

[oyarde]

That sounds like term life insurance, what i'm advocating is whole life, which is permanent and has a cash value you can use when you need it that'll grow quite exponentially around retirement time. Three different policies , the 5 k is a seperate policy I was required to purchase , one time payment ,up front as a 23 yr old when I took out a loan. The loan was less than that, the other policies are 25k and 91 k , I do not pay for the 25k policy , my employer does , I pay , roughly 43 dollars a quarter for the other policy , it also comes with a savings account that pays higher interest than any I am familiar with , it was a perk from a previous job that I kept when I left.

[oyarde]

I was never interested in in whole life for myself , but did carry a type of policy for two of my children that they could cash in @ 21 , to be used towards university expenses if needed.

[oyarde]

thus why I say it's something the young should do? Good point , and , it is probably the . consistenty , cheapest policy of anything , I have ever carried , probably less than 17 bucks a month and sometimes cheaper.

[JacobSzumniak]

Stock Market Ftw. Im 19 a college student and am going to pay off my school loans before I even finish college flipping penny stocks.

[onlyrp]

Stock Market Ftw. Im 19 a college student and am going to pay off my school loans before I even finish college flipping penny stocks.

I hope you never lose money and if you do, only lose your own money. Some people get too greedy too quick, I hope you are not one of them.

[Zippyjuan]

Cash value (Whole) life insurance policies are not always a good deal- especially if you are young and healthy. More info: http://www.smartmoney.com/plan/insurance/term-or-whole-life-8011/


Whole life insurance is expensive: You're paying not only for insurance but also for the investment portion. That extra cost might almost be worth it if these policies were a good investment vehicle. But usually they aren't. Insurance agents like to call these policies retirement plans, emphasizing the "forced savings" inherent in forking over the premiums each month "for retirement."

Leaving aside the fact that there are many better ways to save for retirement, these policies come with high fees and commissions, which sometimes lop off as much as three percentage points from the annual return. On top of that, there are up-front (but hidden) commissions that are typically 100% of your first year's premium. Worse, it's often impossible to tell what the return on the investment will be, and how much of what you pay in goes toward the insurance and how much toward the investment.

Also unless you have a family or people dependent on your income you may not need life insurance at all. Health insurance can be more valuable (though more expensive). You don't want to insure what you can afford yourself so mainly would want something which would cover a catastrophic incident like emergency room or extended hospital stays.

Generally- live below your means. If you get a raise, try not to let your expenses rise with it. Given the employment situation today, that six months emergency fund may want to be even a year (enough that you can pay your bills during that time should you find yourself out of work for whatever reason). Your emergency fund should be fairly liquid- not in stocks or precious metals or the like. If you have debt, work them down- beginning with whatever has the highest interest rate (not necessarily highest balance) first- that is costing you the most money.

(Note to JacobSzumniak: Don't be using any money you can't afford to lose. It is possible to make money on penny stocks but it is also just as easy to lose money on them- there is usually a reason the prices on them are so low. When figuring your "profits" be sure to include the cost of each transaction and taxes on any gains. Good luck!)

[AlexMerced]

Cash value (Whole) life insurance policies are not always a good deal- especially if you are young and healthy. More info: http://www.smartmoney.com/plan/insurance/term-or-whole-life-8011/


Also unless you have a family or people dependent on your income you may not need life insurance at all. Health insurance can be more valuable (though more expensive). You don't want to insure what you can afford yourself so mainly would want something which would cover a catastrophic incident like emergency room or extended hospital stays.

Generally- live below your means. If you get a raise, try not to let your expenses rise with it. Given the employment situation today, that six months emergency fund may want to be even a year (enough that you can pay your bills during that time should you find yourself out of work for whatever reason). Your emergency fund should be fairly liquid- not in stocks or precious metals or the like. If you have debt, work them down- beginning with whatever has the highest interest rate (not necessarily highest balance) first- that is costing you the most money.

(Note to JacobSzumniak: Don't be using any money you can't afford to lose. It is possible to make money on penny stocks but it is also just as easy to lose money on them- there is usually a reason the prices on them are so low. When figuring your "profits" be sure to include the cost of each transaction and taxes on any gains. Good luck!)

I don't disagree with you, it's why I sy everyone should do their due dilligence when looking for a provider. But I do assume most people here are planning to have families some day, and a 6% or more annual dividend on my insurance policy doesn't seem like a bad deal for me especially since.

I got my policy at the age of 26, so the premium I'm paying vs my benefit is pretty awesome which is why I'm suggesting it to younger people who can afford it, the older you get the less worth it it gets.

If you can make a bunch of money flipping penny stocks, that's great, but that's not a prudent plan for anyone or suitable for most.

I'm talking about building solid foundation to take risk on top of.

[WilliamC]

Theoretically , if a person is disabled and carries disability ins , unless they have a very large income , the amount of that , and Social Security disability if they applied would be more than they were making before .It is a strange world.

Friend of mine had a brain tumor removed about 10 years ago, wasn't malignant so he doesn't have to worry about reacurrance.

He was pulling in >250K per year and had topped out disability insurance, and the surgery left him blind in one eye and he had a small stroke during recovery in his frontal lobes.

Today he is totally disabled but pulls in, from SS and his insurance, close to $6,000 per month tax free. Not bad

He gets around ok, to look at him you would think he's just a bit drunk or slow but he's physically in decent shape (other medical issues like diabetes and such though).

Alas the stroke seems to have hit him in the part of his brain that helps regulate self-discipline, and now he has problems managing his finances. He spends every dime he makes and more and is always broke whereas he used to spend a lot but was real good at keeping control of his game and had a great work ethic.

So yes, long-term disability insurance is a good thing to have if you are in a profession where you can get it fairly cheap.

[oyarde]

I agree , if you have an employer that offers it , it will likely be reasonable , and , if so , I would take it.

[AlexMerced]

Friend of mine had a brain tumor removed about 10 years ago, wasn't malignant so he doesn't have to worry about reacurrance.

He was pulling in >250K per year and had topped out disability insurance, and the surgery left him blind in one eye and he had a small stroke during recovery in his frontal lobes.

Today he is totally disabled but pulls in, from SS and his insurance, close to $6,000 per month tax free. Not bad

He gets around ok, to look at him you would think he's just a bit drunk or slow but he's physically in decent shape (other medical issues like diabetes and such though).

Alas the stroke seems to have hit him in the part of his brain that helps regulate self-discipline, and now he has problems managing his finances. He spends every dime he makes and more and is always broke whereas he used to spend a lot but was real good at keeping control of his game and had a great work ethic.

So yes, long-term disability insurance is a good thing to have if you are in a profession where you can get it fairly cheap.

stories like that illustrate my point by making this thread

[rockerrockstar]

I think the Debt Snowball method is a good one for getting out of credit card debt. Pay the smallest debts first then the next smallest. That way you get rewarded quicker for paying things off. It is a mental thing that helps keep you focuses on paying things off. Look it up if you don't know what I am talking about.

I agree about living below your means and saving up some cushion just in case of unemployment. I would suggest saving a minimum of six month of expenses too. With the economy we have had a year is a much safer goal. You are correct in thinking a person may not qualify for unemployment.

[oyarde]

By the way , Alex , I like the " Champion for Freedom " thing , :) , well done . Once you make your first million , if , I am still alive , drop me a line and I will give you a place to send a semi annual check to my Foundation. I may need you as a boardmember when I retire. God Bless .

[oyarde]

stories like that illustrate my point by making this thread Yes , Yes & Yes.

[AlexMerced]

By the way , Alex , I like the " Champion for Freedom " thing , :) , well done . Once you make your first million , if , I am still alive , drop me a line and I will give you a place to send a semi annual check to my Foundation. I may need you as a boardmember when I retire. God Bless .

lol, that will be the day (when I have a million bucks, not sure what I would do with it), although I'm always willing to help out any foundations promoting Libertarianism, Capitalism, or other awesome causes

[tbone717]

Alex, I like the advice. Personally, I would recommend building that 6 month nest egg to a one year nest egg progressively. Start with 6 months, and then over the course of time add to that so that it becomes one-year's worth. Have you addressed income producing assets like rental properties, etc? I have a few friends that could retire today (we are all in our 40's) and just live off the rental income they receive.