Category Archives: Risk Tolerance

Investing in NFTs: Can You Buy NFTs in your Self-Directed IRA?

Investment Strategy, Risk Tolerance,

This post was contributed to Leisure Freak by content creator & digital strategist Akanksha Malik.

Although traditional investment options still exist in the stock market, there are many more new types of investments being utilized. One of these new investment options is Non-Fungible Tokens (or NFTs) which are quickly emerging as an investment choice for many investors.

NFTs are a relatively new way to invest in cryptocurrencies where each token is uniquely identifiable by its owning party. While this can lead to some confusion, there is still much more information on how self-directed IRAs can go forward with investing in NFTs, such as how they can transfer tokens and how they go about buying them, selling them and even storing them. In this article, we are going to discuss the same.  

Investing in NFTs: Can You Buy NFTs in your Self-Directed IRA?

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What is an NFT?

An NFT is an asset that is supported by a blockchain and can be traded like a traditional stock. The name stands for Non-Fungible Token and describes the idea that each token is unique and has value, unlike traditional stocks.

NFTs are similar to cryptocurrencies, but they’re not decentralized, meaning no one is in charge of keeping them safe, secure or reliable. Instead, NFTs are secured by the blockchain ledger that keeps track of all transactions made with them.

Example: A digital artwork can be stored in a smart contract on the Ethereum blockchain and will be transferred to someone if they pay with Ether (the currency used for Ethereum transactions).

NFTs are different from other cryptocurrencies because they’re non-fungible — meaning each asset has its own unique characteristics and cannot be exchanged with another. An NFT can’t be sold or traded like a stock because it’s an individualized piece of art or physical object that doesn’t have monetary value outside of its rarity and uniqueness.

NFTs are becoming more popular among investors because they offer several advantages over traditional investments like stocks and bonds. One of the main advantages is security — NFTs are almost impossible to counterfeit because they rely on a decentralized blockchain ledger system for storing information about each piece of art.

If someone tries to alter or fake one of these pieces, all of the information about that piece will be changed in response — making it impossible for anyone else to duplicate this work without access to every single piece of data about it.

What is a Self-Directed IRA (SDIRA)? 

A self-directed individual retirement account (IRA) is a type of retirement account offered by most financial institutions. This type of investment account is designed to help you invest your money in the manner that best fits your personal goals and financial situation.

You can set up an IRA anytime, and it doesn’t require any details on your income to open it. You can choose how much you want to contribute, what types of investments you want to make, and when you want those investments to be made.

A self-directed IRA allows investors to make all investment decisions on their own. They are also able to direct their own investments through buying, selling and redeeming shares within the account. A self-directed IRA can even allow for a tax deduction for certain types of assets like stocks and bonds.

Can You Buy NFTs with Your SDIRA? 

The short answer is maybe. This is because there are essentially no rules in place for self-directed IRAs to invest in digital assets. You can use a Crypto IRA to invest in cryptocurrency; however, there are some important things to keep in mind before investing in NFTs.

First, NFTs are a gray area right now as the IRS hasn’t yet issued specific guidance on NFTs, nobody knows for sure if they will count as collectibles. As such, you should consult with your legal advisor before purchasing any NFTs or other digital assets, as they may not be eligible to be held within your IRA account.

Second, it’s important to note that since NFTs are considered property rather than securities or collectibles — meaning they don’t meet the criteria required for traditional IRAs. It’s difficult to determine whether or not you can hold them within an IRA account without violating the IRS rules against prohibited transactions. 

Takeaway

It isn’t recommended to hold NFTs in your self-directed individual retirement account because the risk of having NFTs in your SDIRA is the same as holding any unallowed collectable. When you put your NFTs in an IRA, the IRS considers the value of that item to be distributed to you in the tax year that you made the investment. Therefore, instead of holding an NFT in your SDIRA, you should consider buying it with your separate funds. 

Much Thanks to Akanksha Malik for sharing her knowledge of investing in NFTs with Leisure Freak readers. A subject that I’m sure many have had little exposure to, including myself. Knowledge is always important and keeping up with the latest investment developments in this world is a big part of that.

Investing in NFTsAuthor Bio:

Akanksha Malik is a content creator & digital strategist at Mesha – India’s largest investing club & online community where the world’s best investors gather to share ideas, discover fellow investors, invest in NFTs & crypto, and compete in challenges for real money. She develops content to share her knowledge and insights helping her readers stay updated with the latest in fintech & investments, as well as cryptocurrency trends and upcoming NFT opportunities. Apart from being passionate about her work, Akanksha loves exploring architectural sites and different local dishes during her travels.

Disclaimer- Leisure Freak is in no way advising readers to invest in cryptocurrencies. Invest at your own risk. Crypto is a high risk investment scheme. This article is for information purposes only. 

How I Overcame Being A Retirement Scaredy Cat

Retirement Doubt, Retirement Plan, Risk Tolerance,

Recession, political jackassery, market insanity, pandemic, inflation, supply chain, extreme weather, war, the list goes on. It seems there’s always an outside crisis beyond our control. Turning even rational and money wise people into a retirement scaredy cat with worries about the negative impacts to retirement success. 

After decades working and performing to earn income, fearful thoughts about retirement are natural. It doesn’t only come into play when making the decision to retire. It can creep in during retirement, causing us to pull back from well planned and wanted retirement experiences. Here’s what calms my inner retirement scaredy cat.

How I Overcame Being A Retirement Scaredy Cat

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Shooing Away The Retirement Scaredy Cat  

I was all set for an early retirement at age 50, but then the great recession set in. My numbers were diminished and barely worked out through the retirement calculator, causing hesitation in my pulling the retirement trigger.

It took me another year to finally jump. It was time that I needed to figure things out and find a way to overcome my retirement fears. As the years have passed since my sacred retirement day, I’ve come to rely on what gave me the courage to retire during a recession to shoo away the retirement scaredy cat whenever it sneaks in.

Developing and then believing in my good money habits.

People who are savvy about personal finance have an advantage. Good money habits are actually skills to navigate through volatile financial times. Realizing that I wasn’t just retiring to let life and my finances run on autopilot is one of my biggest fear erasing assets. I’ve already a proven track record of having a solid relationship with money to get to this point of retirement. Something that even when there is chaos beyond my control around me, I could rely on it to guide me successfully through it.  

Understanding what I was retiring to was far better than what I was retiring from.

I didn’t give up something I valued more than my retirement. Knowing that whatever unforeseen risks were involved, it is worth it. Some early retirement scaredy cat thoughts were centered on walking away from a long held career and paychecks that took decades to develop and hard work to achieve. 

I did have to give myself this pep talk many times before ditching the rat race. I found that this mental nag quickly decreased after retiring and actually experiencing how to live without a job title. The knowledge that I value my retirement also aids in my desire to remain retired on my terms and keeps me focused on everything it takes to have a successful retirement.   

Figuring out if things went to hell financially that my scorched earth minimum retirement budget wasn’t all that bad.

Setting and living within a well planned retirement budget includes covering essential costs, but also a lot of what makes retirement the reward we hope it to be. Setting cashflow threshold triggers for budgetary counter measures delivered anti retirement scaredy cat assurance. 

Budgets require monitoring and any hints of cash flow or earnings shortfalls means cutting back BEFORE things become critical. Setting and seeing the minimum survival budget during any serious downturn along with aligning the portfolio to support it can provide fear crushing retirement confidence. I always feel that even my worst day living on a restricted survival budget would be  better than my best day wasting my precious time working in a job I’d rather not be doing.

Realizing that the worst that can happen is unretiring and chasing dollars again with a job.

I had always planned on being open to taking on paid retirement opportunities if they checked off my want to learn and do boxes. So it wasn’t a big stretch to accept that the worst that could happen is my having to temporarily accept working again based on salary. 

What I didn’t know before I retired was that when you are in a retirement mindset, working can be enjoyable. My retirement gigs that focused on interests and passions have shown me that. Even taking on a part-time gig that brings in a small cash flow increase could plug any budget holes to likely solve a crisis caused retirement funding shortfall.

Having a phased financial plan for retirement: All on my own, Medicare, and later Social Security.

I used to write technical requirements as an engineer. It was easier to comprehend and understand when details were displayed in organized chunks. It made sense to do the same with my retirement funding plan. Breaking down the necessary financial requirements for the years being 100% on my own before I could receive my long earned Medicare and Social Security benefits. This chunking helped to easier visualize retirement funding success and tame retirement fears. 

The plan also included all of the likely activities and possible paid opportunities that I would be more likely to have in the earlier years than the later years. It recognizes that aging plays a role in retirement spending and activities of interest. This approach makes it easier to track funding success and make adjustments as time passes in retirement. 

 

There are many ways to calm the inner retirement scaredy cat. The one thing that always enters my mind when it silently creeps in is the reality of time. Spending our valuable time is unavoidable and we are only given so much of it. It’s of unknown quantity other than knowing that it decreases daily. Sometimes that is all we might need to tell the retirement scaredy cat to scat, this isn’t your home.

A Closing In On Retirement Dilemma: Stay Put Or Chase New Opportunity

Financial Independence, Retirement Plan, Risk Tolerance,

It’s something that many future retirees may encounter when within a couple of years of freedom. The closing in on retirement dilemma of whether to stay put in the job or move on to what might be a better opportunity. Something that may even shorten the remaining retirement time frame if the earnings are better. I had this quandary when I was a year or so away from my targeted retirement goals. In my case the decision was made for me. Just in time before I might have regretted what I was about to do.

A Closing In On Retirement Dilemma: Stay Put Or Chase New Opportunity

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The Common Closing In On Retirement Dilemma – Move On or Ride It Out

We’ve all heard the saying, the grass is always greener on the other side. If there was ever a time to pay attention to that idiom, it’s when we’re closing in on retirement. The trick is to spend a little time examining the other side with a clean pair of glasses. We need to see if it’s really better. Sometimes we are looking through an emotionally smudged lense. In my case it was a close call and I ended up staying put until hitting my retirement target. 

During my final year I was tempted by a lucrative offer to jump ship and I was about to accept it. Luckily for me they decided that their business was going to downsize days before things were finalized and fortunately the cat was still bagged. Both the project and the offered position were cancelled. Days later word got out about all of their coming layoffs. How different my retirement timeline would have played out had I made the move and that company’s decision was made after it was too late for me to reverse course. 

It was a quick eye opener and I instead stuck it out where I was until my early retirement time. Months after I retired I started on some rewarding paid retirement job adventures. I can see how different those experiences would have been had I started them before I was retirement ready. 

Here’s how it went with me. Something to provide a few thoughts to go through before making a decision to either make or avoid a pre-retirement job move.

What’s exactly motivating the urge to jump ship when almost home?

How do we really feel about the job?

It’s easy to become impatient when getting close to our retirement date. Things at work that have always irritated us will only amplify. I had plenty of them over the decades in my first career. My “closing in on retirement dilemma” of whether to stick it out of skate off was primarily motivated by the constant post company merger executive’s insults. Insults that were both financially and policy driven against those of us who actually did their jobs. 

Since we are close to the finish, we should focus on the light at the end of the tunnel. We have to assess and ask ourselves whether we like the company, people, immediate management, work, environment, conditions, pay, etc. If the answer is yes for the majority, maybe sticking it out might be the logical decision. If not, nobody should have to stay in an intolerable situation if a better opportunity presents itself. 

The power of seeing prospects of more money

A sprinkle of impatience and a pinch of greed may be all it takes to believe we’re seeing retirement sooner than planned or going with a bigger sendoff. Who wouldn’t want that? There’s always the temptation to chase after more money. If the runway to retirement is long enough, then this is a powerful motivation and maybe a good move because pitfalls would be most likely-short-term in the entire time-frame scheme of things. If it’s a short retirement runway with a higher impact of error, maybe not so much. 

To temper my enthusiasm and emotions so that I could logically think my way through, I reminded myself that my current salary, although less than what was being dangled in a new opportunity, still provided a near retirement date. It helped, but I was still swayed by dollar signs.

Applicable Lessons Learned Comparing My First Career With My Retirement Jobs

Nothing is guaranteed

I admit I was shook when everything collapsed as it did while trying to solve my closing in on retirement dilemma. Timing of the new company’s coming reductions was in my favor. But it would have been devastating had it come a week or two later. I would have been left desperate to find another position and most likely adding delay to my retirement plans. 

As good as a new offer looks, there’s no guarantee that it will be fulfilled or last. Sure, the same goes for our existing positions. But at least with time on the job there is usually a severance benefit if let go. If in the final stretch to retirement that may be enough to get us there. We must always remember that all of it is a delicate dance. Business has its priorities, and we should have and guard our own priorities.

All the workplace annoyances

When we’re in a long-time career we can think annoyances are isolated to only where we’re working. Surely there isn’t the same propensity for shenanigans and insult as there is here? The reality is that this happens everywhere. 

How I got through the last stretch to retirement was to figure out how to better avoid the irritating people and policies. With no motivation or ambition for advancement in my soon to retire mentality, I just focused on doing the parts of my job that I did best. I then leveraged their game using their annoying new rules to my advantage while holding my nose to get to my primary goal: Leaving on my terms when I was ready.

After I retired I started some great retirement gigs. I saw the same irritating nonsense going on that I saw before, but what wasn’t the same was me. I didn’t need to be there, I wanted to be there. Having the power to walk away anytime and having zero financial threat for failing to please a company idiot changed everything. It’s easy to tolerate the side stuff when the employment power dynamic is flipped in your favor. 

Money isn’t everything

I was tempted in my final stretch to retirement by what looked like an exciting project with what was a different growing company along with a big raise. The near miss made me think hard about what might have happened. 

I tried to stay objective by reminding myself that money wasn’t my primary motivation in the overall scheme of things. Early retirement on my terms was. That’s what’s at risk if things go wrong. If money was all I cared about, I certainly wouldn’t be on track for an early retirement just down the road, I’d instead just stay working to pad my net worth. No thanks!

Even so, I still fell for money’s lure in my last stretch before retirement. My near miss experience did teach me how to better prioritize and prepare myself for my enjoyable retirement jobs that came later. I had won the game by reaching my financial goals and could truly only accept work that I had interest in doing. Best of all, without having to meet any financial obligations or goals, I only had to do it for as long as I wanted to. There’s truly a huge difference between needing to work, and wanting to work. Taking on a new opportunity while closing in retirement would certainly fall into needing to work.

I found my retirement gigs much more enjoyable and the money earned was just the cherry on top. I also realized that money wasn’t proportional to job enjoyment. My first gig was lower paying than my career. My second retirement gig paid more than my long career. Another paid way less than than all of them. I enjoyed them equally and way more than my long-time career. 

How hard are we really willing to work during our last leg of employment servitude?

When we have been in a position for a long time we may be working hard but it is known, understood, learned, and productive work. Our work and reputation has already been earned. A new position means we will most likely have to reprove ourselves. There’s the stress of learning new job duties. But also learning the new company culture, processes, determining people to align with and those to avoid, etc. All with the pressure to succeed because we still have retirement date goals that are within reach if we pull it off.

Some may find it appealing to just coast on their long-time job through their final stretch to retirement. That wasn’t me, although I often wished it was. There probably wouldn’t have been any closing in on retirement dilemma to work through. While in my long-time career I was ambitious, taking on new responsibilities, and attempting to increase my knowledge and skills. What I found later during my retirement gigs is it was a lot easier to do in a company and position I had been in for years. 

Once I entered into new retirement opportunities within similar technical fields, I experienced just how challenging and stressful it is to feel that I was performing sufficiently. That feeling of inadequacy would have been excruciating if done worrying about survival to make my retirement date goal. In my post-retirement experience that specific new job pressure wasn’t an issue. I just needed to satisfy my own feelings of adequacy. It takes a while to retrain our brain to overcome all of the stress that can come with a new job. I will say that all got easier to menatlly get through with each new paid retirement opportunity I took on.

Risk is always there

In some cases it doesn’t matter how well we perform or how solid our plan is. There’s always the risk of outside forces overturning everything we have worked towards. Just as in my close call when business and economic conditions abruptly changed. It can happen whether we stay put or chase a new opportunity.

That near miss and my retirement work experience showed me that the biggest hedge against expendability by these outside forces is reaching our personal finance goals. Something to focus on when experiencing a closing in on retirement dilemma of whether a late career move is the way to go. If the odds look great to make a move or the risk reward is worth it then do it. If not or not sure, then stick it out until the odds are more in your favor or when you can freely chase opportunities post FIRE.

It will always be a tough dilemma

I know that I underestimated how competitive and ruthless the working world can be. After dealing with and managing levels of it in my long-time career, I failed to think it could be even tougher starting somewhere new. I wasn’t a starry eyed fool. It’s more about being lulled into complacency after decades at the same company and then receiving a good opportunity pitch. 

Everyone will have to decide for themselves whether to stay put or chase a new opportunity in the final stretch to retirement. Sometimes the stars will align and an opportunity is too good to pass up. For others the prudent move might be avoiding any rocking of the boat that got them there. Regardless of how impatient and annoyed we are during the last stretch along the lines of the saying, better the devil you know. 

FIRE Choke? How I Accounted For The Risks Of Early Retirement

Retire Early, Retirement Doubt, Risk Tolerance, ,

FIRE is hard to accomplish, not impossible. For many the dream of financial independence and retiring early is extremely alluring. Enough to motivate us to accomplish the necessary personal finance goals and overcome the hurdles of a system that wasn’t intended to allow escape from. It is something to be proud of and celebrated. Then just as it’s right in front of us we can find ourselves unable to pull the trigger, we FIRE choke. Fear of taking that last step is common. 

I wasn’t blind to the many risks of early retirement and covered it in my plan. Yet I still experienced anxiety from the enormity of my retirement move. It’s all too easy to focus on the celebrated sunny day images of early retirement and overlook or underestimate the probability of storms. That is until it’s all on the line at crunch time.

FIRE Choke? How I Accounted For The Risks Of Early Retirement

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Avoid FIRE Choke: Dealing With The Risks Of Early Retirement 

The risks of early retirement are real. They must be recognized and accounted for in any early retirement plan. Even if we’re fortunate enough to never actually experience them, without understanding how we would counter them can cause expending too much energy and time worrying about “what if”. 

I had delayed my early retirement by a year because the recession came right as I hit my goals. It ruthlessly moved my target further away from me and set me back. But later when all signs pointed to being good to go, my recent memory of the recession’s last minute target devastation caused me a little battle with FIRE choke. It would have been much more paralyzing had I not accounted for all the risks we’re warned about. 

Market Risk

Investing over the long-term usually favors the investor. Retiring early means relying on our portfolio over a much longer period of time. But using a retirement calculator that accounts for multiple historical return cycles isn’t a guarantee that we won’t enter a risky run at the wrong time or for a devastating prolonged period of time. It was something I had to mentally deal with.

My counter to relieve some of the market risks of early retirement was with diversification and rebalancing allocations as necessary. I had the stock to bond ratios to support my investment risk tolerance. Along with enough cash to get through any bumpy markets. After my recession experience I wanted a recession hardened portfolio. Now 11 years into my early retirement I have to say it has worked flawlessly. The portfolio also proved less worrisome when I saw during the pandemic market drop that my portfolio allocations did their job. 

My tip- To reduce the market risk worries of early retirement pick a portfolio allocation, diversification, and cash holding strategy within your risk tolerance that relies on data. Don’t bounce around based on emotions. Especially those driven by fear or greed. I’ve heard too many stories of folks jumping in and out of their strategy and causing damage to both their portfolio and retirement.

Health Insurance- Medical Costs

Medical cost is something that causes many to FIRE Choke. Retiring early before Medicare eligibility can make retirement healthcare pricey. I had earned a retirement health insurance benefit. My short-term healthcare was covered. But my company had been merged with those that had an adversarial attitude toward earlier earned benefit promises. Although benefit cuts made before I retired were worrisome enough, I had to counter concerns about how much worse it could get over time. I retired 14 years before I would be Medicare age. When I retired the ACA was being worked on, nowhere near passing into law. 

With my early retirement at the end of 2009 I had a monthly health insurance premium for my wife and I of $475 with $25 copays. Now in 2021 I pay $1472 with a midrange deductible before an 80/20 payout begins. If it becomes too unaffordable my “plan B” is to structure my income to use the ACA.

My tip- What I did to calm the risks of early retirement medical cost concerns was to double my medical budget of insurance premiums plus out of pocket costs when running my numbers through the retirement calculator. In hindsight my doubleling was not enough to cover my full pre-medicare 14 year period. I recommend using a projected budget that uses double current healthcare costs for the 1rst 7 years of early retirement. Then trippel it for any remaining years before Medicare. See how your retirement calculation works out for the years before Medicare and after.

Remember, it’s just long-term projections in a calculator

I had to plug in a higher withdrawal amount into the FIRECalc calculator than I was planning on using. What I was looking for was my retirement funding success rate. I ended up initially with a higher portfolio withdrawal rate than the recommended 4% but post Medicare it will be lower. 

No More Paychecks Syndrome

The one joy of employment is getting a paycheck. Then doing our thing of managing the budget plus putting some aside to pay ourselves. Knowing that paychecks end when we walk off the job can mess with our head. I planned to get around this by having my IRA account holder directly deposit a monthly check into my bank account. 

My tip- Create your own paycheck scheme. I went from bi-weekly work paychecks to once a month distributions for my bucket strategized IRA. I had the retirement distribution deposited into a savings account and I then make bi-monthly paycheck transfers from that. 

Thoughts Of Needing More Money

One of the risks of early retirement is not having enough money. Even when the numbers check out it’s easy to succumb to thinking to maybe playing it safe and accumulate even more. This is a common FIRE Choke. Putting retirement off for another year or longer of portfolio padding. Both the fear of running out of money or being greedy and thinking more is always better than anything else can cause us to choke and derail retirement plans at the last moment. 

My tip – Retiring on our terms means picking the day we toss the job for the adventure of retirement freedom and owning our own time. When the thoughts of needing more creeped into my mind, I reminded myself that time is finite and not guaranteed. My father in-law shared through his own experience that retiring early is like leaving the casino when ahead. I used that metaphor to quiet the more money seduction.

Be Mentally Ready

Most importantly is planning to be mentally ready to retire and walk away from the only life you have known. It might not be the life you enjoy, but it’s the devil you know. Even if all the other bases are covered, not being mentally ready means none of it will matter. FIRE Choke is then inevitable. Even if we were to power past that, there would be no mental peace about the decision to retire early if our head isn’t right. There are plenty of nonfinancial aspects that we need to account for to avoid mentally regretting our early retirement decision.

My tip- Plan to deal with separating your identity from what you did for a job, expanding your social life, defining an ever changing purpose, and transitioning from saver to spender of your portfolio. Much of this requires being aware of it before retirement. But most will have to be fine tuned on the fly after entering retirement. So finally, give yourself time to work through it. 

 

There are many reasons why we may question our decision to retire early once the goals have been met and our plan looks solid. Dealing with issues that range from fear to greed are common. We just need to be aware of them and address them logically. If we can’t account for them in a reasonable way and there’s still mental reluctance then maybe it really isn’t our time to take the leap. There’s no shame in that. Afterall, we’re the ones that have to live with ourselves and the outcome of our decisions. 

The Pros & Cons of Investing in Physical Gold

Investment Strategy, Risk Tolerance

It is no secret that gold has been historically valued from ancient times until today. Just by describing why people appreciate it, you will already see the pros of this precious metal.

People used gold in trading for a long time, and today, people are storing metal as a valuable investment.

A lot of us agree with experts and investors that it is an excellent store of value. We can buy gold and save it like typical savings but in a more secure and higher-rising-value form.

The Pros & Cons of Investing in Physical Gold

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What can I use Gold for?

You can buy gold now and slowly add more of the metal until you grow your collection. Then, when you retire, you can sell it for cash and live a beautiful vacay life. Or, you can pass it on to your heir. Your recipient can keep the collection and add more to it or exchange it for money to use for education or business.

However, there is a reason why experts say that not only your Portfolio but also your precious metals inventory should be diversified. While gold is well-rounded and can even protect you from inflation, there are things that it cannot do for you.

There are situations that this metal cannot help you. While they are minimal, it’s still valuable and useful knowledge for you to learn the disadvantages.

Here are the PROs and CONs of your gold investment.

On Value.

PRO: Everyone values gold organically.

Gold is treated by society like it treats religion, and because of this, governments and institutions put value in it. For millennia, humanity’s attraction to this precious metal is evidently significant. We have been using it as a symbol of wealth, power, and status.

There are gold items that you can collect that are valued more by their sentiment and historical merit like commemorative coins. Some gold items indeed have raised values because of their added novelty.

CON: It can lose its novelty.

Nobody knows when this will happen, but when it does, gold owners will suffer loss. Humanity’s millennia-spanning crush on gold is emotion-based. Once we have a leap in knowledge, we might see it for its practicality. However, experts believe this will not happen just yet. We can still trade gold for centuries to come. Good for us, this con’s possibility is almost impossible to happen.

On Utility

PRO: Aurum has many uses.

Aside from being jewelry, medals, and statues, which are more novel uses, gold is used in dentistry, electronics, and computers.

It is the best filling for cavities because it doesn’t corrode and doesn’t react when mixed with other metals. Its ductility makes it very easy to shape, and nobody is allergic to it.

Gold is one of the best conductors. It can be used in small portions for smartphones, TVs, and GPS devices. It also helps in the speeding up of data transfer in computers.

CON: It’s too expensive to use practically.

It is impractical to use Aurum in technological industries simply because it is too expensive for its working value. Companies have no reason to use gold substantially when there are cheaper alternatives like silver and copper.

Just take, for example, the use of gold in food. It isn’t added to the fancy dish because it makes it taste better or more nutritious. The gold flake topping is just there to make the food look “fancier,” and so it can sell at a higher price.

For now, the use of gold for investment is mostly based on people’s “placed” value in it. It is expensive because we think so and not because we know it is useful.

Gold Exchange Traded Funds (ETF)

PRO: You can own gold digitally.

You can sign up and exchange your money for digital gold. There are online companies with physical reserves of Aurum, and you can own a part of that stock. When the market situation is perfect, you can buy more shares for lower values or sell your stocks for an excellent profit.

CON: You don’t actually own that gold.

When you sign-up for an ETF, you have shallow control. You have no access to the physical reserve, and all you have in your hands is a sheet of paper.

If the company you are partnering with fails in its system, you can say goodbye to your stocks.

Physical gold

PRO: You have full control of your gold.

When you collect gold physically, you have your investment in your hands, and you have full control of it.

You can add to it, sell part of it, and do anything that you find will bring your financial advantage at once. 

This is the classic no-frills proven way of owning gold, and many experts endorse this way of investing more than any method.

CON: Security costs.

Owning high-value items in your house is a risk for crime. You will have to fortify your storage with all the security technology that you need to mitigate theft.

Security devices can be costly, but you have to buy them, or else you risk your investment and the lives of your family and you.

Should I invest in Gold?

Yes. Yes, you should. Most of the cons of gold are just threats to the security of value, control, and storage, and they can all be mitigated by investing the right way.

Experts highly recommend that you own physical gold. And the good news is that there are sites that make it easy and safe for you.

You can own gold with a touch of a finger and, even more than that, you can have other items like silver, platinum, and copper in all forms. You can get precious metals in the form of Bullion, coins, numismatic, commemorative, bars, rounds, fractional coins, and others.

Find the right subscription for you. There are sites offering Bullion boxes or monthly mystery crates that are pre-curated by experts. With this service, you will be able to grow a collection that will give you many opportunities to profit.

This informative post was contributed to Leisure Freak by Charles Stevens of Bullion Box. 

Author bio- Charles Stevens, Chief Operating Officer of Bullion Box Subscriptions.Charles oversees operations at Bullion Box Subscription, an industry-leading precious metal retailer, curating gold, platinum and silver bullion and coins.

Leisure Freak received no payment for this contributed article nor any commissions if readers decide to use Bullion Box services.

How Trading Can Help Contribute to Early Retirement 

Investment Strategy, Risk Tolerance

Early retirement is without doubt not happening overnight. Jump starting this process can entail quite a few challenges and among those, a reduction in your monthly income, at least in the beginning. Developing a reliable long-term income strategy is therefore essential for a successful early retirement. 

The main problem we are all facing is that, with the passing of time, we will lose the purchasing power of our savings if we don’t put them to work. But what if we could find a profitable way to turn our savings into more? Learning the foundations governing the financial word is key to ensuring our purchasing power over time and to generate an extra source of income to increase the value of our portfolio.

Added to discovering the beauties and complexities of the financial market, we would have a more comprehensive view on what is happening to our current economy following the Covid-19 outbreak, and have the opportunity to expand our horizons both personally and professionally.

What is Trading?

Trading is the activity in which transactions, such as the buying and selling of stocks, commodities, currency pairs and other instruments, are carried out with the goal of profiting from the financial market. 

To maximize their returns, traders engage in multiple small operations daily to collect steady profits over time. There are a variety of trading styles based on time availability, making trading extremely flexible and versatile. 

By having complete control over the operations and the strategies behind them, the opportunities to secure a profit are endless in this market. Dedicating even a fraction of time to this activity, can guarantee a second income source to contribute to early retirement. The advantages? Trading can be carried out comfortably from your home computer, at any time of the day and for however long it suits you. 

How to Start Trading?

Diving into this new activity can seem frightening and challenging but with the right attitude and training, even something as complicated as trading can be broken down and made easy to understand. A leading academy comes to mind when deciding to enter this word with no foundation whatsoever: Trading from Zero.

Trading From Zero is an online trading academy focused on bringing together all aspects of theoretical and practical knowledge with the goal of empowering individuals to be autonomous in the decision-making processes and have the ability to freely trade in the market without the need for intermediaries.

By learning the foundations and the tools used to face the markets in combination with the work of our professional traders, you will have all the knowledge necessary to make more conscious investing decisions and increase your chances of retiring early. Put simply, by learning how to trade, you can generate an extra income to retire early.

The Trading From Zero Team prides itself for being constantly learning and always updated in terms of knowledge and operations, significantly facilitating student’s learning process. The combination of detailed theoretical classes with the exceptional practical component, makes the entire course very valuable in terms of quality and usefulness.

How Trading Can Help Contribute to Early Retirement 

Trading From Zero Course Outline

Beginner’s Course

This is an intensive 4-week course to lay the foundations of trading. No prior knowledge or experience is required. The course’s 10 live theoretical classes explore concepts such as the difference between operating through a third party and on your own, all there is to know about technical analysis, what are the most commonly used trading styles and much more. There is an entire section dedicated to time management that has proven very useful for early retirees as well.  

There is also the possibility to download a free demo software where all the knowledge gathered can be put into practice. In case any sessions are missed, all the classes can be viewed on the website along with additional materials and practice exercises. Access to content is lifelong. To take advantage of an 86% discount on the course for Leisure Freak readers, click here. 

Can you Live from trading?

It’s certainly possible.

Depending on your risk profile, your training and your time availability, you have the chance to reach financial freedom and retire early.  

Trading From Zero can offer you clear theoretical classes along with the essential practical experience. Our courses are led by professionals who stand by each and every student at any time, so that everyone has the chance to learn first-hand the effort and discipline required to ensure a serious and professional management.

Learning to invest in the stock market today, and living from trading tomorrow, is possible and can become your reality as long as you receive the necessary preparation.

This article on how trading can help in early retirement was written by a friend and Leisure Freak reader Federica Longi who is currently working at Trading from Zero in Madrid, Spain.

Leisure Freak received no payment for posting this article nor any commissions when readers enroll in Trading from Zero courses. Post author Federica Longi and Trading from Zero has graciously offered a large discount to Leisure Freak readers who choose to enroll in their trading course. The discount applies by using the special “click here” link in Beginner’s Course section of the article provided above.

Why I’m Fascinated With Dividend Investing

Income Streams, Investment Strategy, Retirement Plan, Risk Tolerance

I’ve been fascinated with dividend investing for many years. It goes back long before I started my journey to financial independence and early retirement. It seems so simple. You buy a company stock that is stable and has dividend history on their side. A stock that figures for a potential future of continued business with dividend and stock growth. They then return to their investors a dividend that can either be reinvested to buy more of their stock or distributed as cash. My wife and I have financially benefited from dividend investing. We have dividend stocks in Mutual Funds and ETFs¹ within our portfolio. We have also benefited from growing wealth with reinvestment and harvesting distributions by owning individual stocks within our retirement accounts.

Why I'm Fascinated With Dividend Investing

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Some Folks Aren’t As Fascinated With Dividend Investing As I Am

Dividend focused investing doesn’t thrill everyone. A quick internet search will reveal opinions where fans of dividend investing will explain how they build their wealth and even divulge their monthly passive dividend income. You can also find just as many who aren’t fans of dividend investing who will explain why growth stock investing is the best and the only way to invest. 

The real appeal I see with dividend investing is that we have options to how dividends can be used depending on our financial situation. At least that’s my argument for using dividend focused investing as part of our retirement portfolio strategy. For those dividend investing naysayers who tell me to just buy some bonds, well I do have bonds as part of my portfolio diversification² strategy. They just don’t do it for me like dividend paying stocks do. Bonds feel like a loan I’ve made, one that can be paid off early. Once mature I get my money back but then other bonds have to be bought to replace them. Dividend investing feels much different. I like owning a piece of the company.

My Story With Dividends

Using dividends to pay down debt

All of my 401K match was in company stock in the first 20 years of my career. That was before my company was eaten by a growth company. There was no option to reinvest so every year I would receive an end of year dividend distribution. What I did was add it to my house payment and applied it to my mortgage principal to pay off my mortgage faster. It equated to about 3 months in additional principal payment. It was a painless way to reduce what I would end up paying in mortgage interest. Which at the time was at the going rate of 8%. Wow!

Reinvested dividends to increase wealth until needed for retirement

Today my wife enjoys a quarterly distributed dividend in her early retirement from her old ESOP. It is part of her retirement funding. The dividends come from owning her employer’s stock. Existing share to dividend yield is 5%. Over her career she had her investment split where 50% was invested in their Class A shares which reinvests dividends and 50% in their Class B shares that distributes quarterly dividends. 

After 20 years of equal amounts invested, the dividend reinvested Class A shares fund has 71% more in it than the Class B side of the account. It shows that even with a stable value stock that’s unlikely to rocket in share price appreciation, reinvested dividends do work through compounding to increase overall wealth until electing to use dividend distributions as part of a retirement income strategy.

A friend’s investment move that feeds my fascination with dividend investing

A company executive that I worked with told me something regarding dividend investing that seared into my brain. It was March 2009 and I lamented my portfolio losses right when I was planning to retire early. He had pulled out of investments in 2008, several months before the market found its bottom. He was planning to retire in 3 years while in his lower 60s. He told me that he just moved $800,000 of cash holdings to be split between AT&T (T) and Verizon (VZ). At that time their stock price to dividend yield was about 8%. It was a risky move, even with understanding the telecom industry we were part of, but he told me: 

I don’t care if these stocks ever rise another dollar. I am locking in at an 8% return. I will reinvest the dividends until I retire and then take distributions to use for retirement income. 

Both stocks have climbed since then³. A quick look at AT&T shows it was $25.XX a share around that time and recently traded at $33.70, about a 30% increase. Its current dividend yield is in the 6% range. Verizon was trading then at $28.XX, now $57.37, a 101% increase. It’s current dividend yield is 4.26%. Was he lucky? Genius? Stupid? Risky? Whenever I tell this story I hear it all. Personally, I wouldn’t risk going all-in with a large sum like that on two dividend paying stocks, especially within a single industry segment, even if I had an equal amount to invest elsewhere. 

But here’s the overall message that I took from him. 

What imprinted on my brain is the concept of being satisfied with locking into a return based on the share price to dividend yield percentage you buy in at. That is of course as long as the dividend payout is sustainable, which is always the question. With this mindset, any stock price appreciation is just gravy. In a way, dividend investing with this mindset is like having an annuity that you can sell out of at the stock’s share price whenever you feel you should, need to, or want to. 

What To Consider When Buying Dividend Stocks 

Sustainable Dividend

A key aspect of dividend investing is owning stocks in healthy companies that can sustain the dividend it pays for years going forward. This takes analysis of the industry, company prospects, direction, management, financial strengths, etc. 

Dividend Payout Ratio

How safe is the dividend? Look at the payout ratio, the percentage of company income the company pays out in dividends. Having too high a percentage could spell trouble. There isn’t much left for the company’s retained earnings to promote growth. A lower percentage can mean there is sustainability and room for dividend and/or stock growth but may be too little to meet our goals.  

Avoid High Yield Seduction

Don’t be blindly seduced by high yield dividends. Safe, sustainable, and reasonable are the goals. Some high yield dividend stocks are risky. If the numbers don’t add up for the business or industry sector there is a chance the company will have to cut its dividend in the future. If that happens the market can sour on the company, causing the stock price to significantly drop too. Meaning we not only lose the high yield dividend we were chasing but also experience a loss in share value. 

Diversification

Keeping a diversified portfolio is still the goal. It’s ill advised to go all-in with a single dividend paying stock or even stocks within a single industry. The amount of dividend stocks we add to our portfolio should fit within the portfolio’s overall diversification strategy. One that’s aligned with our risk tolerance and goals. 

Buying Dividend Stocks

A Common Method of Dividend Investing is Buying an ETF 

Exchange Traded Funds are bought and sold like stocks. The single ETF contains many company stocks but is traded as one under its own stock trade symbol. They aggregate the various company dividend yields. Buying an ETF takes away all the required company stock analysis of dividend investing out of the equation as they are invested across entire indexes. 

Some high dividend yield ETFs emphasize holding large-cap equity stocks that are forecasted to have above-average dividend yields. They may have aggregated ETF dividend yields in the 3.3% range. Others provide a convenient way to track the performance of company stocks having a record of growing their dividends with ETF aggregated dividend yields around 1.85%. 

Seems simple enough. Go to any of a number of brokers who offer Dividend focused ETFs, select the index or type that meets your needs, and happily collect or reinvest your dividends. However, what we gain in convenience and possibly lower risk we lose in stock holding selection. That and the possibility of getting better stock appreciation and yields that better meet our individual goals if we had a more targeted investment approach. ETFs are a low cost but broadly spread out investment choice. Not that there’s anything wrong with that.

Buying and Owning Individual Dividend Paying Company Stocks
DIY Stock Purchases

If we’re able to do all of the company analysis ourselves, then picking individual dividend stocks to build our dividend investment portfolio is another option. This way we can concentrate on the companies and industries we believe have long term sustainable dividends and the business potential for possible stock and dividend growth. We could also craft a higher dividend yield portfolio.

Once decided on the companies, diversified investment strategy, and dividend yields that meet our goals, just open a brokerage account. Choose an online low cost brokerage like Ally Invest where each stock trade is a flat $4.95. These types of online brokerages allow for dividend reinvestment or distribution. But if planning smaller monthly deposits, take into consideration that low flat trade fee could add up if we’re constantly buying various stocks to build up our diversified dividend investment portfolio.

With this approach we will have to manage our portfolio ourselves. Looking for signs of future company dividend distress, business pressures that can affect stock value, etc. Also needed is yearly portfolio rebalancing* analysis and making any necessary trades to bring it in line with the overall diversification strategy.

CFP Managed Portfolio

Including a dividend investment strategy through a Certified Financial Planner (CFP) is another option. They can work with us on the company stock analysis and diversification strategy. There will be obvious CFP type fees to pay. Depending on our portfolio size those frees can range from 1% to 2% or more plus any brokerage trade fees. 

It does however mean that their knowledge and systems are in place to handle our rebalancing. They are also able to setup a dividend investment portfolio aligned with our goals and within our risk tolerance.

Online Robo Advisors Specializing In Dividend Investment Stock Ownership

There is a newer robo stock dividend investment option. Instead of our having to do all the important stock and sector analysis ourselves, they take care of that and offer dividend focused stock ownership. Rather than having a broad stroke index investing strategy as with ETFs, or paying a CFP’s high fees, they can build a dividend investment portfolio owning company stocks that is focused and tailored to our goals. Also one that’s within our risk tolerance, all without the higher CFP type fees. 

Like any stock investment, dividend investing has risks 

The rules of the investment universe are always with us. Even with complete and proper analysis, there’s no guarantee that investors will get the same results of a stock’s history, its expected returns, or dividend rate going forward. There’s no guarantee stock investors won’t lose money either. Investors should always consider the risks of any investment being made and remember the general rules of investing- Higher expected returns usually comes with expected higher risk. 

Having a diversified portfolio within the investor’s risk tolerance that’s aligned with their unique financial situation is always advised. That investment balance includes considering the allocation of both growth and value (dividend) stocks. 

_________________________________________________

  •  1.Mutual Funds and Exchange Traded Funds (ETF’s) are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company can be obtained from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.
  • 2.Asset allocation and diversification do not guarantee a profit or protect against a loss in a declining market. They are methods used to help manage investment risk.
  • 3.Past performance is no guarantee of future results.  The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.
  • 4.Rebalancing/Reallocating can entail transaction costs and tax consequences that should be considered when determining a rebalancing/reallocation strategy.

 

Enjoying Retirement With A Pension? Beware, Treasury Opens Door For Trouble

Funding Retirement, Pension, Retirement Plan, Risk Tolerance, , , ,

Fortunate are those who can enjoy retirement with an employer monthly pension check. Especially from a fully funded pension plan. After years of dedicated service to an employer, the hard-won guaranteed retirement income for life is a valuable asset to have. Even if you don’t have a pension, you probably know a loved one that does.

Something happened on March 6, 2019 without any big announcement or fanfare – The TRUMp administration Treasury rolled back a retiree protection that had been put in place to head off abuse and scheduled to be cemented into policy. They ended rules preventing companies from buying out their retired employees monthly pension with lump-sum offers. Now the door is open for trouble down the road for contacted retirees who fail to properly evaluate and act when confronted with a pension buyout offer.

Enjoying Retirement With A Pension? Beware, Treasury Opens Door For Trouble

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Retirement With A Pension Is Now a Rare Benefit To Have

Companies have been cutting and ending pension benefits for decades. The pension promises to long-time employees are often broken, from benefit qualifying rule changes to bankruptcy reorganization. But even those who have retired with their earned monthly pension can be caught up with corporate efforts to reduce keeping up their end of the bargain. With today’s corporate environment and leadership dynamics, corporations just don’t want pension obligations on their books.

The corporate tool used to shed existing pensioners from their books was to off-load them to an insurance company through what is called pension de-risking. Instead of retirees having a monthly pension guaranteed by the PBGC, with de-risking they were moved to an insurance annuity with their limited annuity protections. But now corporations will have another available tool to rid themselves of pensions, they can make offers to buyout existing retiree pensions with what may appear to be a generous lump-sum. But is it really all that generous?

Why Does Offering Lump-Sum Pension Buyouts Open The Door For Trouble?

What’s the big deal? Many who have a pension benefit are allowed to make a decision at retirement time whether to take a lump-sum or the monthly annuity. They are often not equal, with one having a greater value than the other. There are a lot of considerations that depend on your unique situation to make that decision, like longevity and personal financial discipline.

Those same considerations are necessary for anyone contacted during their retirement with a pension buyout offer. But not everyone was given that annuity vs lump-sum option when they first retired and may be caught off guard. Being contacted now mid-retirement may be the first taste of this critical decision.  

What Needs To Be Considered

First, don’t be fooled by what looks like a huge lump-sum number. Fixed guaranteed monthly retirement income is a luxury that’s expensive to replace. The number offered is most likely insufficient to be fully equal to the real value of your monthly pension. Not to be cynical, but we need to consider that the lump-sum pension buyout offer isn’t out of love for the retiree. Also, especially with this administration, nothing is done by government unless- One, it is politically advantageous, or Two, it was heavily lobbied for by corporate special interest. This pension protection roll-back smells like number Two is smeared all over it. With that in mind….

Check The Lump-Sum Buyout Amount Through An Annuity Calculator

The lump-sum offer is supposed to replace your monthly pension. See if it is by checking an annuity calculator to verify if it could replace your full pension payment amount. Not that you want to take the lump-sum buyout to replace it with an annuity. But instead to see just how close the lump-sum amount is to being able to do so. Use your pre-tax / pre other deduction full pension payment amount. Include in your annuity comparison extras your pension may have like a survivor benefit, inflation protection, etc. The idea is to figure out if the lump-sum amount is really a good buyout offer that fits your unique retirement needs or quickly see if it’s a low-ball attempt to be rid of you.

Retirement Health Insurance

If you have a retirement health insurance benefit, then your premium is most likely deducted pre-tax from your pension check. Accepting the lump-sum buyout offer means your insurance premium would now have to be paid with after tax money from other sources. It might be very difficult to qualify for the schedule A medical tax deduction at tax filing time. Depending on how much you pay this may be something to take into consideration.

Get An Idea About Your Pension Health

As a retiree you most likely get a yearly update about your pension plan financials. Whether your pension plan is fully funded or underfunded, it may play into your decision. If it is underfunded and headed for failure it is guaranteed by the PBGC. You might want to see what the maximum PBGC payout amounts are for your situation if it was to ever go into default. Do some research to understand where the plan stands and where you stand if the worst should ever happen to the pension plan.

Run The Lump-Sum Amount Through A Retirement Calculator

A big lump-sum might look like a fantastic offer but will it be enough to continue funding your retirement?  You must roll the money into an IRA to defer being immediately taxed. It’s then part of your overall portfolio. Run your numbers through a retirement calculator to make sure it can even meet your needs for as long as you are on the planet.

Self Assess Your Risk Tolerance

Accepting the lump-sum buyout offer means increasing risk in your retirement funding. That’s the whole point of companies making these offers in the first place. It’s all about moving the risk from them to the retiree. There can be rewards with an invested lump-sum if market conditions are favorable. But the opposite happens during market and economic downturns. Decide if that is something you can or want to handle in retirement.

Evaluate Your Health and Longevity

If your health is failing then you might be tempted by a lump-sum buyout to leave something more behind for your heirs. There are also long-term care considerations. If you have no long-term care plan, your State may treat monthly pensions differently than lump-sum assets held in an IRA when it comes to Medicaid.

Talk With A Trusted Certified Financial Planner

Consult with a CFP before making any moves. They can weigh in on the offer and provide insight into other things that should be considered. They can show you the best portfolio diversification strategy to use. You can also see whether your risk tolerance favors either staying in the annuity or taking the lump-sum buyout offer. After all, you want to enjoy your retirement, not worry about your finances.

 

Don’t blindly believe a slickly worded pension buyout offer or any hard-sell limited time offer pressure. Do your research and consult with a CFP professional. The last thing anyone wants to do when contacted out of the blue with a pension buyout is to later end up regretting their decision.

How Much Cash Is In Your Portfolio? Why I Increased Retirement Cash Holdings

Bucket Strategy, Funding Retirement, Investment Strategy, Protect Assets, Risk Tolerance, Saving Money,

I decided I wanted to cash in a few chips and take some of my profits off of the table. I sold off investments and increased retirement cash holdings in my portfolio. Not just a little bit either. I’m on my way to 20% of my portfolio being cash. My decision had nothing to do with in-depth analysis of the yield curve or stock price to earnings (PE) ratios. Nor inflation threats or claims a lack of available workers may drag down this country’s latest economic growth predictions. Not to mention the possible negative economical impact of trade wars. Nope, it’s simply because of the convergence of my age, life expectancy, and the numbers to cover my nut with less on the table. It’s personal.

Increased Retirement Cash Holdings

Increasing Retirement Cash Holdings – What’s the Right Portfolio Percentage?

We all know we have to accept investment risk if we want decent returns. You have to play to win. Nobody can exactly predict or time the market. Major drops happen when they happen. That means we have to stay in through thick and thin.

Investment history suggests that over the long-term the balance of risk vs returns is generally favorable to the investor. Especially when we are practicing dollar cost average investing through both good and bad markets. But that all turns more into a gamble as the investor’s age vs longevity ratio tightens and we are no longer feeding the portfolio with earned income but instead depending on the portfolio to fund our retirement lifestyle. Market recovery time becomes more critical. A 5 year recovery period is a bigger percentage of your remaining life when you’re 60 than when you’re 45.

Portfolio Rebalance and Re-Running the Numbers

When I retired at the age of 51 I kept a small amount of my net worth in cash. I have different expectations now that I will hit the age of 60 later this year and can almost see my Social Security full retirement age ahead of me. I know how fast my years in early retirement have flown by thus far and will soon no longer be considered an early retiree.

For the most part I use the 110 minus age declining equity glidepath approach to rebalancing my portfolio. Subtract your age from 110 and that is the equity portfolio percentage to consider having. Logically that leaves the rest to bonds and cash. I use 110 instead of 100 for my declining equity glidepath rebalance calculation because Social Security will eventually play a role in the non-equity side of retirement funding. The calculation doesn’t explain how much cash is appropriate in the non equity side of the portfolio. Opinions seem to always be critical of holding too much cash. As far as I am concerned, when you have experienced a good run and have enough, it’s time to set aside some of your winnings.

I settled on 4 years retirement funding in cash plus a $25K emergency fund. My retirement withdrawal strategy uses a bucket approach and the cash is in my IRA’s bucket #1 and a savings account. My portfolio allocation looks like this:

  • 18.5% Cash/Cash Investments
  • 29.5% Bonds Fixed Income
  • 48% Equities
  • 4% Alternatives

To determine how much cash I wanted I simply understood my overall goals.

  1. Not have to worry or sell equities during a rotten market.
  2. Have my portfolio last as long as I do.

Increased Retirement Cash Holdings looks good

I then ran the numbers through the retirement calculator-FireCalc. I used 35 years of funding, 45% equity investment position, social security provided estimate amount, bumped up my yearly spending amount by $10K to counter higher cash holdings with its lower returns, and let her rip. The results looked great!

Full Proof? Hardly

Cash doesn’t offer anything in earning interest today and I have no idea how hard inflation will hit. Will interest earnings climb enough to offset inflation? Who knows. I also don’t know what will happen with social security, the markets, or the price of tweets in the White House. However, I am comfortable with this level of cash holdings even going to 20%. This is a decent time to take profits and I will continue rebalancing as long as the market continues to climb. I feel that the FireCalc calculation padding I used in my income numbers and longevity (I seriously doubt I will live to 95) that my odds look really good. Aside from all the financial considerations there is also the mental benefits to my increased cash move.  

High Retirement Cash Holdings – Cowardly or Courageous?

I do have a healthy fear of another market crash and multi-year recovery. There have been enough of them in my years of investing to know there will be more. I am making some optimistic assumptions when there are plenty of unknowns going forward. But what’s new there, there’s always unknowns when it comes to investing and retirement. I do count on adjusting things as needed.

I don’t see pulling a higher amount of cash to the side as either cowardly or courageous. This is simply wanting to hedge my bets and have options. I can cease selling any assets or taking IRA withdrawals in a down market and take advantage of opportunities to buy investments when they arise.

 

As far as I can see, taking profits after a historically long running Bull Market to have higher retirement cash holdings provides both downside protection and upside opportunity. At least in my personal situation. What is the perfect percentage of cash holdings to have in one’s retirement portfolio? How much cash is in your portfolio?

Cryptocurrency: Rocket Fuel for Your Retirement Fund?

Investment Strategy, Risk Tolerance,

The risks and the gains of Bitcoin are becoming increasingly well-known as this previously under-the-radar cryptocurrency hits the mainstream, with everywhere from specialized exchanges down to your local pizza place now trading in it. But if income tax is making a hole in your retirement funds, then this unregulated, untaxed market – even with all its attendant risks – may begin to look attractive.  Earning Bitcoin is becoming more of an option for growing your overall portfolio, not something to go all-in with. But what are the best ways to make it pay? Here are some of the easiest:

CryptoCurrency: Rocket Fuel for Your Retirement Fund?

Join a mining pool

 

Traditionally, the way to earn with Bitcoin was through ‘mining’ – solving sophisticated mathematical algorithms to create new ledger blocks. However, those days are probably over now. You will need to invest in a Bitcoin mining pool to get access these days, as the current algorithms are too complex to be processed on a home PC and require specialist hardware that harnesses the processing power of many computers. A Bitcoin mining calculator can help you work out how profitable this might be.

 

Create a faucet

 

Bitcoin ‘faucets’ are basically websites that give away micro amounts of the currency to their users, and earn revenue through hosting advertising. The business model is referral-based, generating high-volume traffic to create more ad clicks. This can be done ‘out of the box’ with no experience in coding needed, just a domain name and website creator, plus a micro wallet payment processor service like FaucetHub. Once built, monetize the site through a provider like Google Adwords or spend time building affiliate revenue streams, where you make a small percentage of commission on referrals.

 

Invest in funds

 

It’s now possible to invest in funds that themselves invest in bitcoin. Values are increasing and have been known to double in a matter of months. So although there are definite risks, there are also significant gains to be made by doing this. With a finite supply and tightly regulated production, in theory, Bitcoin should always gain in value over time. There are other cryptocurrencies backed by global conglomerates to invest in such as Ethereum  and you can even set up an ethereum IRA online.

 

Become a Bitcoin lender

 

Becoming a lender is another way to get a slice of the Bitcoin action. Buy up some currency from an exchange, and then lend to another party with interest.  Lend either with no collateral and higher returns or secured against something for a lower interest rate. However, this should be approached with caution due to the lack of market regulation. Cryptocurrency is not part of any insurance scheme or regulated by any official bodies.

 

Accept payments in Bitcoin

 

The other channel is to add Bitcoin to accepted payment methods for whatever goods or services you can sell. But obviously, this depends on being able to effectively market whatever you need to in order to create the wealth. Bitcoin has brought with it some new entrepreneurial opportunities as it removes a lot of the barriers to conducting global business by virtue of its totally digital format.

 

Although its newness makes it a fairly high-risk option, Bitcoin is becoming increasingly mainstream. For a savvy investor, meaning knowing when to get in and get out, there may be opportunities there to make swift gains.

Can cryptocurrency be rocket fuel for your retirement fund? I still have a lot of research to do before I can honestly answer that. But with knowledge comes opportunity and understanding whether something is too risky to invest in.

 

Disclaimer- Leisure Freak is in no way advising readers to invest in cryptocurrencies. Invest at your own risk. Crypto is a high risk investment scheme. This article is for information purposes only.