Good point. I think a good measure of management is how you do in a tough market. It appears that everyone’s a genius when time are good.
Possibly slightly off topic, but going back to the “college bad” concept. Obviously, most all entreperneurs and real-estate investors love the spewage of Robert Kiyosaki, et. al. about college “bad”, j.o.b. “bad”, blah, blah, blah. However, consider this. The next time you post here, think about that techie that went to trade school and is working his “terrible” job so that you can keep posting. Think about your tax account in April and how it was so “bad” that they went to college, got their accounting degree, and are doing your taxes. Think about you lawyer the next time you draw up a new contract/document and about how “bad” it was that he got his law degree and he is working at his j.o.b. The next time you need an eviction notice served, be sure and tell the constable that he is living a terrible life because he got his criminal law degree and he is working that nosed-turned-up-by-investors j.o.b. If you ever have one of your real-estate investments catch on fire, be sure to thank the firemen that put it out with a good lecture about how the “should” quit their jobs and become real-estate investors instead. Tell your property managers that the Business Management degree they got was a waste of their life.
There are some people that I never want to become real-estate investors. I want the kid at McDonald’s to keep serving me Big Macs. I want his boss to never quit that j.o.b. so that that McDonald’s can keep running. I want the waitress to keep working her j.o.b. and make my table nice and clean at the restaurant I reserve to present my real-estate investing plan to future private lenders. I want the farmer to keep milking those cows, the truck driver to keep delivering milk to Wal-Mart, the local Wal-Mart owner to keep getting rich off the late-night stackers so that I can buy another gallon of milk. I want the technician at the electric company and ISP company to keep making his boss money so that I can have my internet. I want the customer service rep at my cell phone company to keep submitting to my demands so that I can make free nationwide calls to real-estate investors in all 50 states. I not only want, but need my banker and bank teller, to set up the documenting and wiring services to close my real-estate deals from a financial aspect.
I could go on and on for pages on this topic. There’s a LOT more people that I want, and need, to keep working their j.o.b.'s and completing their college degrees so that I can be a successful real-estate investor. I find it quite short-sighted and snobbish that many entreperneurs and real-estate investors think that they got it all figured out and everybody else is something less. I probably just offended multiple people here, but, get over it. Go contribute to a 401(k) or something, and know that I love you all! :angel
Dean
Dean,
I agree with you. All this silliness about J.O.B.'s (I don’t know why they use 3 periods when spelling jobs) is just more guru nonsense. That is also true of getting a college degree, although I haven’t seen a lot of real estate investors against college degrees.
The truth is that the vast majority of people who try to start a real estate business fail in a short period of time. So, these people certainly end up doing something else. Real estate investing is not the be-all and end-all of life - it’s just one of a million ways to make money.
Mike
I’m taking the other side of this 401k debate…401k’s are ideal for the person who needs to have the money forcibly taken out fo their check in order to save…The penalties are good so every spend thrift American doesn’t take the money out every time Cadillac makes a new Escalade…I’m unsure about these unmanaged 401k’s everyone is speaking of…We have a tremendous amount of diversification choices available to us and my wife’s law firm as well…We both have been contributing the max for our entire careers…401k’s are essential to building wealth because its a forced savings and you simply become accustomed to having less money…Tax deferred isn’t a bad thing either…As for this fee based argument unless you work for a small company you should have a wide choice of funds…Many of the funds I have seen the fees are very low…Every fund has some kind of expense…My wife’s 401k can buy anything it wants…Stock,etf’s etc…I’m still puzzled why everyone is against 401k’s…Saving regardless how its done is good…
Who said going to college was a bad idea???
I remember writing that parents who bury themselves in DEBT late in life inorder to send Junior to college is a bad idea. I remember writing that it probably wasn’t a great idea for a 20 year old kid to rack up $100,000 in student loans getting a degree in something worthless. I DO remember saying that maybe BUYING a house during a real estate COLLAPSE might be a VERY GOOD way to partially fund a college education!! That house could PAY a good chunk of the tuition and they’ll still own the home once Junior graduates. Let’s say Junior decides to (God forbid) become a PLUMBER. What better way to help him get started than maybe trade some updates on that house in return for a sweet deal on rent for a limited time (either way he’s going to SCHOOL). It doesn’t matter…the point is… You DON’T have to do it the way EVERYONE ELSE does!!!
Following the herd… LEADS TO THE SLAUGHTER HOUSE!!!
The point of the entire post was how many Americans just “BUY IN” to all the BS that they see the HERD doing.
Hey, don’t get me wrong…If you have a 7 figure net worth and Junior can get into Havard??? SEND HIM/HER!! If your a Carpenter and your kid WANTS to become a Pharmacist??? DO WHAT EVER YOU HAVE TO INORDER TO SEND HIM TO COLLEGE for THAT degree. He’ll make a GREAT living right out of school, get 100 job offers, make $100K his first year, and will NEVER worry about having a JOB.
As far as 401K’s…here we have the greatest BS story of them all.
I do agree that as a forced saving account, there IS a benefit. But the REALITY is, the vast majority of Americans are NOT professional traders, and have absolutely NO IDEA how to pick a mutual fund out of the 1000’s of choices they are given.
We now have more MUTUAL FUNDS than stocks listed on the NYSE!!
Maybe some people are unaware of this…ORIGINALLY Mutual funds were designed so people who knew nothing, WOULDN’T HAVE TO PICK from 1000’s of individual stocks to diversify a portfolio. What do we know have??? More mutual funds than listed stocks (NYSE) :banghead
I fully expected people here to be rabidly opposed to this opinion on 401k’s. This is the EXACT same reaction people had almost 3 years ago when I said we would experience the worst financial crisis in our lifetimes and we’d have a real estate collapse. People DO NOT like hearing that something they THOUGHT was a safe investment ISN’T. What??? Isn’t safe?? It ain’t SAFE if you are retiring THIS YEAR… is it??? Guess what??? Those people are NOT retiring this year. And if history is any example…they won’t get back to EVEN for another 5 to 8 years!!
Here’s the bottom line…
401K’s WILL NOT provide ANYWHERE NEAR enough money for the MAJORITY of.people who will COUNT ON THEM for their retirement. This will occur at the EXACT time Social Security benefits get SLASHED because it is now operating the same way a PONZI scheme is run…IN the classic PONZI scheme “investors” are promised a good return. At the start it WORKS because more deposits come IN than withdrawals go OUT. At some point the withdrawals increase and the whole house of cards comes down because the ONLY money there IS the NEW DEPOSITS. IN 10 years there will be 2 people WORKING (or contributing) for 10 people COLLECTING!!! THAT is the definition of a ponzi scheme.
Do what you want…MY POINT is…I PRAY that NO ONE with a 401K is COUNTING on that and Social security of a LIVEABLE retirement.
If your RookieNYC, your all set…picking mutual funds for someone like him is like shooting fish in a barrel. Unfortunately he is the POLAR OPPOSITE of most Americans.
Why should we care???
WHO do you think will BAIL OUT this system when people realize that it hasn’t worked???
I try to get people to THINK…From the PM’s I get I KNOW it’s working.
Some people GET IT, some people will NEVER get it. I build on the one’s who do. This was done for me when I first started out. I had a BRILLIANT mentor…He looked at the world through a completely contrarian set of eyes. His lessons have made me more money than I EVER thought possible. The thing I remember most vividly was how WRONG I thought this guy was at first. Then, over time, I started to pick up on the little things he would casually mention in a conversation.
I’ll admit it…I followed his advice initially, because I knew if I DIDN’T the lessons would be over, and I had NO ONE else even CLOSE to this guy as far as success went. AS my savings grew he would give me more advice. (no sense giving advice to a nit wit who can’t even save money)
Over time a very common idea emerged…
The majority of PEOPLE are CATTLE…They do what the other cattle are doing because IT’S FEELS SAFE!!! Even if the other cattle get slaughtered, they STILL have the “WE’RE ALL SUFFERING TOGETHER” mentality.
Think I’m kidding??? Look below for some great examples of the CATTLE DRIVE mentality…
SUV’s…the herd didn’t learn a thing form the 1970’s oil crisis, so we repeated it AGAIN!!!
…Hey Jim, remember those gas hogs we drove in the 70’s???
Yea, man… that Ole 442 I had got about 10 miles to the gallon, I don’t miss that!! But…gas was cheap then!!!
Hey…didn’t you just get a new car???
Yep…ESCALADE!!! I LOVE IT!!
How’d that end??? Here’s another…
Hey…keep this to yourself…I just got in on a new HEDGE FUND… It’s making a KILLING…their opening a NEW ONE, but you gotta get in NOW. These guy’s are making money hand over fist…even Clinton’s DAUGHTER just got hired by a firm!!! (The DAY I heard this, I KNEW we had hit a top) http://www.msnbc.msn.com/id/15549672/
How’d that end???
Oil is heading to $200/barrel.
I just saw a TV news spot last night about all the CATTLE who signed Heating oil contracts at $4.00/gallon and can’t get out.
Now where are we??? Oil’s in free fall and the "Pro’s are saying it’s NOW going to $50/barrel. (thank you USO Jan 09 puts!!!)
Think what you want…I do very well swimming against the current.
I don’t recall saying anything bad about a job or college education. The point was more of a lack of control due to proper financial education regarding investments/401k. Just look at the people who had 401k’s in Enron. I believe the majority of people have a skewed vision of financial education. I hear people complaining all the time about the cost of gas, oil, groceries etc… These are the same people with a Starbucks coffe sitting in the cupholder of the new car that they trade in every 2 yrs. They waste so much money that they consider necessities. These hard times and my desire to improve my financial situation has prompted me to take a hard look at what I do with my money & time. I’ve made a lot of small changes in my spending and have realized that my standard of living has’nt changed much. But my savings and financial education has grown a lot in 6 months. I’ve been able to save 50% of my weekly “expenses” that I thought I needed. I’m on track to be debt free within 7 - 8 yrs. Its a simple cascading approach where you pay off one item and them apply that pmt. to the next until you’re debt free. As long as the majority of people spend more and save/invest less, there will be people who NEED jobs. I have a full time job in healthcare that I love. I hope to get to the point where I don’t NEED it. I have a plan and the motivation to carry it out. Without a change in my thoughts and actions, this would not be possible. This change started with DIFFERENT financial education than I was taught. It was the book “Rich Dad Poor Dad” that got me thinking along these lines. I don’t agree with the high priced seminars, but the cost of books is cheap (and free at the library). One book leads to another. Not every book is great but I certainly learn something and that’s worth the $15 or $20 that I pay. This site has been a great help also. Its amazing the things I’ve learned.
Don’t get too excited, Jake. Did you go invest in your 401(k) like I advised? haha! j/k
Anyways, I’m still partial for 401(k)‘s, too. 401’s are based in the stock market and that thing has continued for well over 100 years. Granted, many, many people have burnt and died by the stock market, but, obviously, the thing keeps chuggin’ and pluggin’. I do agree that 401’s are the lazy man’s (and woman’s) way to “invest”. That is probably the fundamental problem with all the problems happening, and that keep happening: laziness. Human beings are lazy creatures by nature. Americans get drunk off it. If there is an easy way out, I’ll, er, um, I mean they’ll take it. Everytime. When laziness comes back to bite them in the @ss, they all expect someone else to bail them out. In swoops the government. I can totally see your point about 401(k)'s eventually becoming nothing more than a Ponzi scheme. Social Security is almost already there.
I’m going to make a little prediction of my own and say that 401(k)'s will be the next big financial bailout in the coming years.
However, the big question is - ok, so what then? DON’T INVEST IN 401(K)'S!!! Fine. So what do you suggest? Just sit the money under a mattress? A bank CD? A savings account? Buried treasure? Honestly, from time to time, I do toy around with the idea of funding Singapore pirates. :guns The reason that I still contribute to my 401(k) is that I’m lazy and don’t have the time, nor the desire, to investigate stocks as thuroughly as need be to make those investments effective. I’m busy enough as it is with trying to figure out real-estate! I don’t put everything in my 401’s and IRA’s, but I put some there. As I start getting more versed in the ways of real-estate investing, I start to move money away from 401’s and into real-estate. In the mean time, I hope that I can trust the fund managers enough that they do have the time and desire to investigate stocks to invest effectively enough to satisfy me. Currently, I am buying more heavily into 401’s and plan on selling a year or two before the coming 401(k) “bubble” collapse that I predicted. I’m hoping that by then, I’ll have figured out real-estate enough that I can use that in place of 401/IRA. Maybe, by then, I’ll even be versed enough in stock investing to micromanage it myself. Till then, I rely on people like Jake for individual stock picks. So, get ready, Jake! If you erode my 401 screw up my portfolio, I’m suing!! Hahaha! :biglaugh
Dean
Good Doctor,
I’ve read your posts, your one of the few WHO GET IT!!! This was directed at people who THINK their money is being MANAGED…
IT ISN’T…
YOU…pick the funds that money goes into…there is NO mechanism for INCENTIVE based results. The guy picking those funds is…
JOE 6 PAK!!!
We all know JOE…
He just lost his house to a sub-prime loan, his job left town and now is done in CHINA, he has $8000 in credit card debt like 43% of households!! He’s about 40lbs overweight, has diabetes (or has it and doesn’t know yet) Can’t get a car loan, and is watching his 401K fall like a rock…
So here’s the QUESTION???
With ALL that on his plate…you think this guy is going to sit down and be able to PICK THE RIGHT MUTUAL FUNDS???
No…he isn’t…and here’s what I’d be VERY WORRIED about if I were you… If this market takes another dive it will trigger the single GREATEST ECONOMIC INDICATOR OF ALL TIME…
The Firefighter Economic Indicator!!!
Here’s how I use it…
I work with about 400 guys from very diverse backgrounds…We have believe it or not a new DOCTOR, a Geologist, Civil Engineers, more plumbers, carpenters, electricians, ect than a hi-rise construction project. Plus a TON of others…I WATCH THESE GUYS VERY CLOSELY.
This summer the FF economic indicator signaled a TOP in oil prices!!
How you ask???
I watched one after another, sell their F-250 turbo Deisel, C3500 4X4’s and every other gas guzzler on the planet…what did they buy???
HONDA CIVICS and TOYOTA COROLLAS. I that point the indicator told ME that DEMAND for OIL was going to drop. The boutght Jan 09 USO $70 puts. when oil was at $140/barrel. I even sent Rookie a PM mentioning the trade. Long story short…Those options are currently up 9 TIMES what I paid for them.
So what does the FF economic indicator stand at currently…
Well all the boys are doing EXACTLY what YOUR talking about doing…
BUYING MORE STOCK and a HUGE DISCOUNT!!!
THAT doesn’t bode well for stocks…these guy’s all DUMPED tech stocks AT THE BOTTOM, They got out of stcoks all together AT THE BOTTOM, the were all buying PRE-CONSTRUCTION FLORIDA CONDOS in 2005-06 and telling me I was MISSING THE OPPORTUNITY OF A LIFETIME!!
When the next leg down in stocks hit…and it will soon…THEN…they will pull EVERY CENT they have out of stocks and out it into BONDS…at that INSTANT we will be at the BOTTOM in stocks and the PEAK in bonds.
I’ve watched this indicator ofr 13 years…NOTHING…and I’m as serious as a heart attack here…NOTHING comes close!!!
You’ll see…
From exactly 2 yrs, 360 days ago:
http://www.fool.com/personal-finance/retirement/2005/10/26/real-estate-bubble-you-bet.aspx
An interesting combo of real-estate and markets, with some things to watch for in the future. Quite similar to what others have posted in this thread.
Good article. I bet the author was labeled a “Doom & Gloomer”. But the reasoning is very sound.
You should have set up a self-directed 401k from the beginning and invest in real estate tax deferred. Control your own money.
Well it’s my wife’s 401k that she started about 13 yrs. ago.
You got to ride this one out. If I were you I would just let the stocks and mutual funds that have previously been purchased just be. Going forward I would probably continue to buy into the same fund if the underlying stocks are from solid companies. If not, diversify future purchases.