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surfgeezer

surfgeezer
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  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    U- I guess it is my experience as a landlord. To me THE difficult thing about stocks was trying to capture the price movements, conversely the risky part about debt is simply making sure you have enough good payers.


    In my experience it is actually much easier to asses who can and will pay you rather than try and predict what earnings the herd will escalate price with. It amazes me that people think they are "safer" with no debt, but lower real Income and then compound that by getting very low yield on names that everyone knows and hoping the past history of good price appreciation will make up for the low yield component of Total Return.


    The "rents" I receive from stocks are just way more stable than trying to worry over price. I would not want to be in the other boat of worrying about appreciation. Seems like an ulcer to me. But to each their own.


    Low Income, to handle life's expected bumps, is what I would worry about. That is what seems risky to me. I like a nice solid cushion on the Income over the appreciated "value" all day long. But again I have been concentrating on Income over value my whole life because of my known medical issues.
    Apr 20 08:55 PM | Likes Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    Agree SA is better if politics can be set aside.
    I would just remind that SS is in fact something you have prepaid for out of every pay check since you started working. I have no more problem taking money from them than my car Insurance if I was in an accident, It does not matter to me what my Income is.
    Apr 19 07:29 PM | 3 Likes Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    KA, I agree in managing the ordinary taxable %. Individual tax brackets matter on a lot of levels. In my Roth I am very heavy with BDC's and Reit's because A- Not taxed, B- again the yield is spendable and way more predictable than price, but I am close to 59.
    Again, however my plan is not to spend the Roth money, just convert my Taxable to very little savings while letting the Roth be the Emergency. An effective lifestyle bump. We want to travel while our bodies still work fairly well.
    Apr 19 07:12 PM | 1 Like Like |Link to Comment
  • The Perils Of Pauline And The Power Of Monetary Policy [View article]
    Liked the discussion on schooling and subsidies. I like the idea of public education, we all have to learn how to get along and is learned better in the sandbox at a young age with people that are not necessarily the same socio economic or religion as us. That is America's strength. If schooling does not meet the standards of the "wealthy", the level of schooling needs to be increased, that simple. Allowing them to just opt out and finance their kids only is not a sustainable model. I do like the German model of testing early to find strengths and interests early and helping in the fostering of those.

    My two bits is getting gov more involved with forcing some of the technology changes that are slowly revolutionizing schooling. Tough on the Dems who love seniority over production and the Repubs that think luck of gene pool is a right.


    I just helped a teacher friend get a grant to help get her lower Income class Ipads in the classroom. It was both a grueling process ( voting on the net everyday for a month ) and strictly private funding. Zero reason these technological benefits should not be doing for education what they have done for business. Cutting costs and boosting efficiency.
    Apr 19 01:26 AM | 1 Like Like |Link to Comment
  • The Perils Of Pauline And The Power Of Monetary Policy [View article]
    Well we have a enough for a general meeting, I agree.


    With the caveat that tax policy should not just be a General cut. Unfortunately politics will always also come because I believe every tax cut or gov spending program needs to be looked at thru the prism of International competitiveness. Few others. "Fairness" the least useful as far as policy, but unfortunately the most useful for getting political $.
    THE, Serious real problem.
    Apr 19 01:07 AM | 1 Like Like |Link to Comment
  • The Perils Of Pauline And The Power Of Monetary Policy [View article]
    Yep and, unlike our states, they can not easily move money over borders in a unified way, balancing out the internal flows with external flows-ie Germany gets most the export money coming into the Euro zone.
    Apr 19 12:54 AM | Likes Like |Link to Comment
  • The Importance Of Non-Correlated Assets [View article]
    Well, I agree in principal, but disagree on execution.
    First it is not diversification if all your Income producers can be bought and sold on Wall St. I don't care what you label them.
    I use Income based Real Estate, but their are many others not traded like Royalty Payments that truly diversify. Lack of liquidity is not a bad thing as far as Income payers and diversity are concerned. Liquidity means herd pricing, hard to get around that fact. I do use the Wall St traded Royalty based, only because I like using their leverage to supplement the Income.

    I have a real problem with "What is more important is that eventually both stocks and bonds will change coarse and head lower. I do not know when that will be, and honestly doubt anyone does, but it will eventually happen"
    simply because Yes, by definition the things in the Market will of course change price. It is a given and a strength, not a weakness IMHO of free markets.


    I would use caution however in saying that means the real Income will change.
    Bond ladders for example are HIGHLY doubtful to lose Real Income with almost the most minimal due diligence. I would even say MOST things in the market are in the same boat. Prices do what the herd thinks, occasionally the herd is even right. Mostly the real Income is not hurt, they are trying to outguess price moves.
    To each his own, but words matter and I worry the uninformed get to influenced by Wall St price change matters the most thinking. It is designed to drive the fear/greed trading that is Wall St's bread and butter.
    Apr 19 12:00 AM | 1 Like Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    Simple. MUCH larger Income.
    He is now in the business of building Income.
    No real tax rates were discussed, but Occam's razor makes it easy. Very few Qualified, "normal" C corporations provide that kind of Income or Income growth to go with the, usually slightly, better tax rates of Qualified. They rely on Wall St to sell the price change that MIGHT ensue from keeping most of the profits.
    Most people do not get they are in fact giving up real Income to get hoped for price change. The mandated payouts of REIT's, BDC's simply put the tax burden ( they don't pay ) on you. Good deal IMHO. You get their leverage and Income benefits.
    Apr 18 11:43 PM | 2 Likes Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    Agree, but would just add if removing from IRA, put in ROTH. And I believe in harvesting anything that has a low yield without large expected Income gains. Heck with the price guessing for wealth, time to get Real on the Income.


    Income now is simply something he, rather than his boss, gets to be in charge of. That goes for taxes also.
    Apr 18 10:10 PM | 1 Like Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    Read BDC Buzz and learn Closed End Funds's. You get to use their cheap leverage and probably don't care about taxes. When taxes become something you need to manage ( a good indication you are doing something right ) you can be more discriminatory.


    Learn and understand compounding. It is the tool you need to use, but do not be tempted to rely on price change using leverage. That is what caused the recession. Flippers with leverage got killed, Landlords did not. If you understand the whys, use the leverage. 20 years from now you will be bragging about the extraordinary rates that were available.
    Compounding takes two things- Time and yield. You have time, get the yield and real yield is secure and growing so make sure you get how to check on your Income payers ability to pay you.
    Apr 18 10:00 PM | 2 Likes Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    Wow, took some perseverance ( LOL spell check almost made a Freudian error with perverseness, now not sure which is right! ). Commented on way down, so I will skip some stuff. Just wanted to say good luck and welcome to the club. It has been really fun for me, but I already established I am perverse! LOL. Like you have a mix and diversification. Think yield is low, but that is based on my situation.

    Quick numbers for Projected Income just from using current div for a year on each position, that I think are a big deal in my taxable-
    MLPs tax deferred 34.17%
    Muni tax free-28.76%
    Qualified- 18.12%
    Ordinary- 18.96%

    Ordinary is slightly higher than the Interest costs from my Loans on my Real Estate that boost my stocks Income. In my mind they are netted zero, but Uncle Sam has the Interest on the rentals. Whatever, the rents more than cover it also as the rent is what determined the loan, not the value of the property. Again everything Income, not price based. Notice the coverage ratio from the Income on the leverage, it matters.

    My Loan is 2.08X the amount of savings currently working in stocks. Fixed for 30, 3.75%. No covenants.
    3/31 was the last time I bothered checking price crap, but Income was 7.73% on NAV, 8.35% on my Cash ( I do not add in cost of DRIP shares, It is net cash from real buys and sells and yes that is different that what the broker says, but it is my biz, my metrics ), 10.61% on the total amount of money I have working ( meaning savings + borrowings ), and importantly 31.94% on my savings. Let me repeat that- 31.94% real Income with zero sales. That is Real paid to me Income assuming only that my payouts do not change and I do not buy and sell, has increased every year and I take about half the flow back out of my Account every year for Interest and lifestyle. It is fact up 5.2% since the beginning of year and I have not yet added the new EEP the options bought today because it has not settled.

    I also use leverage on top of that by using Options on my Margin allowance of half my NAV. In effect, using the amount I am approved to borrow, but not actually borrowing yet, to secure the "secured" portion of the Puts. I use options to sell Puts on my cash cows that other investors do not want in their herd ( herd a price noise and it spooked them, I assume). I do the due, so I like sales on Income.
    The Income from Divs, Distribs, and Premiums all go into a cash pool that buys stuff on sale using the options. My non option-able get DRIP turned on and off depending on their yields or my cash needs. So my cash pool stays just full enough for my known withdrawals and upcoming buys, pretty much every month. Got some EEP for 27.96$ today ( 30$-2.04 Premium ). Only thing this month, rolled some others. I look for a high Total Yield ( meaning yield plus yield growth ) selling below 200 day moving average or above a normal yield. I like at least a double digit Total.

    Good luck.
    Apr 18 06:00 PM | 1 Like Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    G- understand " Protecting Capital" has, and I really should Capitalize that, a cost of Real Income.


    It is flat baloney to believe any other way. Yes we all choose that mix, but it IS a mix.


    Protecting Capital is no longer in my list of worries. the recession and my rentals did that for me. The price that other people will pay me for my rentals had zero effect on the actual rents. It is much ado about nothing. But then I am more concerned with my actual lifestyle than my current "wealth".
    I do look at my Capital allocations and see where I get Income from, where I should direct new Income, SOMETIMES, MAYBE reallocate it by selling and buying. But mostly tune out the crap of Wall St.


    It helps I also use options to play price guessing. I make money and get cheap yield growth from people buying "price protection" and obsessing on price. It is not a thing I ignore. It is, IMHO, a serious advantage that Income Investors have over Wealth builders. I just want to be sure which side of that advantage I use.
    Apr 18 05:07 PM | 1 Like Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    Well ca, consider yourself lucky. Life gave an early whz up.


    You need to grow your taxable passive income at the earliest age possible- as fast as possible.


    Again, because it matters-You need to grow your taxable passive income at the earliest age possible- as fast as possible.


    The more your money works the less you have to. Do NOT forget that.


    I gave up running crews years before I retired precisely because my passive Income allowed it. Used to kill my ex Foreman, a young kid I had as an apprentice with no house deduction, every time he handed me my check. I took more home and he put up with the whining. LOL, and that was on the check, not counting the passive that was mostly deferred taxes.
    Apr 18 04:54 PM | 2 Likes Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    Kolpin- Mike's right, see what the brokers min, but I doubt any. Just wanted to add, you are selling yourself short if you are getting less than a 3% yield. By math, converting only 3% is hopefully less than yield so account would in fact go up.
    Apr 18 04:45 PM | 1 Like Like |Link to Comment
  • Unplanned Early Retirement, Part 1 - Strategy, Stability, And Moving Forward [View article]
    up- We are much alike, with me ahead? ( Not sure where THAT race ends-LOL). I've been done since 2000, wife in 2011. Both like you- small defined pensions, but medical. I also had a defined amount Annuity that I rolled into a self directed IRA during 2009 because NY Life would not tell me what it was invested in. Converted half that to a ROTH in 2010.


    Been a fantastic journey, and in fact my new "unexpected" job is managing the money. I like the schedule I set for myself. Finding out I am a very nice boss, although now that the wife is home the work load has picked up! LOL. Who woulda thunk a construction lunk head liked reading 10Ks and earnings reports. Agree with KA, read- ALOT.


    That said, "The question is, how do I bridge the gap financially?"
    There are many tools available. Do not expect to get all the answers from Wall St based people. Like we have said read many sources, I ended up finishing my old college credits and getting an AS in Biz. IMHO this article sums up Income Investing well-
    http://abt.cm/1oNwUzh


    Because I use Income, not price change, I also recommend leverage. Lots of people will say get rid of all debt. I disagree. Getting rid of consumption debt, and increase Investment debt by definition builds Income. I only borrow if I can get significant, increasing yield spread. Leverage also means price change unreal $ differences will be higher, but do not think of yourself as much richer or poorer. That is a very dangerous path, but Wall St loves to pump it. Income is what the deal is. Wall St likes you to buy and sell, Real Income growth does not require that. I retired because we had barely enough Pension and Rental Income. The rentals were borrowed money, I treat stocks the exact same way.


    To finish, it is easy to determine what you need. What do you spend?. For us, bills pretty much all flow through the checking account. Add it up for last year. Divide it by 12. There ya go. Good way to see some of the sillyness anyway.
    Apr 18 04:32 PM | 1 Like Like |Link to Comment
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