My Money Blog
Target is offering a 10% off discount coupon for active duty military, veterans and their spouse and/or dependent children. Offer is valid for a single use at Target and Target.com through Nov 11th. A nice gesture of appreciation towards our military and their families. There are a few exclusions:
*Excludes alcohol, Bose, CVS clinic pharmacy, dairy milk, DSLR camera lenses, Elf on the Shelf, select games (Cards Against Humanity, Joking Hazard, Exploding Kittens, What Do You Meme, Bears vs. Babies), gift cards, Google products, GoPro, LEGO, LG OLED TV, Nintendo hardware Switch software, Playstation 4, prepaid cards, Sonos, Target Optical, Mobile contracts, Traeger, Tylenol, Weber, WellieWishers, Xbox One, Xbox One X.
You can find an exhaustive list of Veterans Day Free Meals and Discounts at The Military Wallet.
Is Taking All Your Money Out of the Stock Market Ever A Good Idea?
If you enjoy financial success stories from people with modest incomes, check out the Time Money article I Took All My Money Out of the Stock Market and It Feels Amazing. Yes, the title is a bit clickbaity, but it s still worth a read.
Rosalind Warren combined her personal savings with a modest inheritance, invested it in low-cost index funds, and left it alone for a long time. These are exactly the three things that the prudent DIY investor is supposed to do. (She even used Vanguard index funds. Future spokesperson?)
Here s how $10,000 invested in the mentioned Vanguard Balanced Index Fund would have done since its 1992 inception (via Morningstar):
The frugal librarian is now age 62 with a paid-off house, no debt, and a high six-figure nest egg. However, she differs from the prototypical retiree in that she recently sold off all her stocks:
I once figured out exactly how much money I would need to live on — not lavishly, but comfortably — for the rest of my life. I promised myself that once I had that amount, I would actually do just that — take my money out of the market and live on it for the rest of my life.
Last week, I reached that goal.
I’m 62. I’ve spent decades caring about the market. I counted on it to make me enough money so that I’d be able to cash in my chips and walk away when I hit retirement age.
And now? It’s time for this librarian to declare victory and get the hell out.
Having zero stock holdings is not something that would usually be recommended by professional financial planners. Most would recommend at least some small allocation to stocks. But you know what? If you read the entire article, Warren shows that she has done her research and appears to understand the angles. She s not stuffing the money in a mattress. She s not panicking or predicting a crash. She s shown that she can control her spending.
Her portfolio now consists of U.S. Treasuries, Treasury Inflation-Protected Securities (or TIPS bonds), and laddered CDs. First, this shows she knows that the biggest danger of not having any stocks is inflation. Second, it also shows she has the financial knowledge to counter that risk. If she s holding TIPS and laddering CDs with the top rates, her money should at least keep up with inflation (although she admits it won t grow much past that).
Even if her portfolio only manages to barely keep up with inflation and she lives another 33 years to age 95, simple math shows that she can still theoretically take out 3% a year (100% divided by 33). I don t know exactly what high six-figures means, but $800,000 times 3% = $24,000 per year. There is the possibility that she might need more money than that, but there s also the possibility that stocks perform even worse than her bonds/CD portfolio. She s also still working and not taking withdrawals yet.
I don t see any problem with not holding any stocks in this specific situation. Rosalind Warren has a steady job she intends to keep working at, the ability to defer Social Security until age 70 (maxing out her lifetime inflation-linked benefit), no debt, a paid-off house, and another $20,000 to $30,000 a year she can withdraw in the future. Equally important, not having to pay attention to market fluctuations gives her peace of mind. What do you think?