Went to see our financial guy (I have a financial guy? Well, my family has a financial guy, and he was willing to set aside an hour for me and Linda.)
Thing is, I've always had more faith in my ability to turn 1.00 into 2.00 in my store, than handing it to 'financial guys...."
Or I've needed whatever money I had just to survive.
But whatever money I've made in this store beyond living expenses, is locked up in inventory, which may or may not be retrievable.
Linda and I had a small IRA in the '90's, which we closed and paid huge penalties and taxes. But it was that, or give up the store. It's awfully late to be starting a new one, but better late than never, and if I make a maximum contribution in both IRA's every year for the next 10 to 15 years, it might actually become something.
The irony is that in the last decade, the money we might have put in (1997) would currently be worth about what we can put in now. A lost decade.
Of course, the big thing about IRA's is that they more or less save you about 1/3rd of your contribution in taxes, so it's like turning a 6k contribution into an automatic 8k in returns.
We finally got a couple of new IRA's started a couple of years ago. We missed last year. One of the reasons I wanted a lease early was so I could possibly have a contribution this year. (If I had had to move, it would've cost an enormous amount of money, which my aborted idea of a second store showed me, not to mention the risk of falling sales until people found us again....)
I've been holding a lump sum in savings just to cover checks in the store. It's been a great luxury; I don't have to worry that if I miss a deposit that I'll bounce a check.
On the other hand, my budget is currently working and has been working for a couple of years now, and I've rarely dipped into it. I also have a line of credit with my bank, so that's also enough....(there is an annoyance in that to replenish the line of credit, I can't do it over the phone but have to actually go into the bank.)
So I'm sitting in the store on Friday, watching the stock market reach 1997 levels, and I'm thinking maybe this is time to get an IRA contribution in, both for 2008 taxes and because....well, the stocks are certainly cheaper than they were a couple of years ago.
Of course, every time I hear that kind of reasoning on house prices, I wince, because I can go every day to the Bend Economy Bulletin Board and see that 99.9% of the prices have been dropping for a couple years, and are still showing no signs of bottom.
I figure you could wait until at least 10% of the prices go up, or 20%. You're not likely to miss the bottom by much. I figure for every 6 months you wait, you might be saving 5 years worth of principle payments.
So...what if the same is true on stocks? Who's to say the stock market won't drop to 5000 or lower?
Well, the deciding factor is the saving in taxes.
And strangely, it'll make me more disciplined in saving at the store.
RDC mentioned averaging, and that sounded like a good idea. (watching the stock market drop another 200 points (currently) reinforces that idea.)
So I tell my financial guy what I want to do, and he launches into an explanation of what they planned to do, and what has happened, and so on.
Weird thing. I understood everything he was saying. I could even embellish it, and I could see a couple of holes in his reasoning. But mostly, I was reassured that he knew what he was doing, and I knew I wasn't going to be watching every move, and they've handled my Dad's trust well over the years, so I told him to go ahead.
I also found out that after 59.5 years of age, one can withdraw without penalties; so we can also make a full contribution to Linda's IRA and the money would be accessible.
And he reassured us that, in any case, the money is only 3 days from being liquid.
So I'm doing the full amount for both accounts, which will pretty much wipe out my savings -- but I've got a couple of months to see how I can do replenishing that before I have to make the final decision on Linda's.
All very interesting to me, though probably everyday stuff to RDC and Jesse and all those other market guys.
Thing is, I've always had more faith in my ability to turn 1.00 into 2.00 in my store, than handing it to 'financial guys...."
Or I've needed whatever money I had just to survive.
But whatever money I've made in this store beyond living expenses, is locked up in inventory, which may or may not be retrievable.
Linda and I had a small IRA in the '90's, which we closed and paid huge penalties and taxes. But it was that, or give up the store. It's awfully late to be starting a new one, but better late than never, and if I make a maximum contribution in both IRA's every year for the next 10 to 15 years, it might actually become something.
The irony is that in the last decade, the money we might have put in (1997) would currently be worth about what we can put in now. A lost decade.
Of course, the big thing about IRA's is that they more or less save you about 1/3rd of your contribution in taxes, so it's like turning a 6k contribution into an automatic 8k in returns.
We finally got a couple of new IRA's started a couple of years ago. We missed last year. One of the reasons I wanted a lease early was so I could possibly have a contribution this year. (If I had had to move, it would've cost an enormous amount of money, which my aborted idea of a second store showed me, not to mention the risk of falling sales until people found us again....)
I've been holding a lump sum in savings just to cover checks in the store. It's been a great luxury; I don't have to worry that if I miss a deposit that I'll bounce a check.
On the other hand, my budget is currently working and has been working for a couple of years now, and I've rarely dipped into it. I also have a line of credit with my bank, so that's also enough....(there is an annoyance in that to replenish the line of credit, I can't do it over the phone but have to actually go into the bank.)
So I'm sitting in the store on Friday, watching the stock market reach 1997 levels, and I'm thinking maybe this is time to get an IRA contribution in, both for 2008 taxes and because....well, the stocks are certainly cheaper than they were a couple of years ago.
Of course, every time I hear that kind of reasoning on house prices, I wince, because I can go every day to the Bend Economy Bulletin Board and see that 99.9% of the prices have been dropping for a couple years, and are still showing no signs of bottom.
I figure you could wait until at least 10% of the prices go up, or 20%. You're not likely to miss the bottom by much. I figure for every 6 months you wait, you might be saving 5 years worth of principle payments.
So...what if the same is true on stocks? Who's to say the stock market won't drop to 5000 or lower?
Well, the deciding factor is the saving in taxes.
And strangely, it'll make me more disciplined in saving at the store.
RDC mentioned averaging, and that sounded like a good idea. (watching the stock market drop another 200 points (currently) reinforces that idea.)
So I tell my financial guy what I want to do, and he launches into an explanation of what they planned to do, and what has happened, and so on.
Weird thing. I understood everything he was saying. I could even embellish it, and I could see a couple of holes in his reasoning. But mostly, I was reassured that he knew what he was doing, and I knew I wasn't going to be watching every move, and they've handled my Dad's trust well over the years, so I told him to go ahead.
I also found out that after 59.5 years of age, one can withdraw without penalties; so we can also make a full contribution to Linda's IRA and the money would be accessible.
And he reassured us that, in any case, the money is only 3 days from being liquid.
So I'm doing the full amount for both accounts, which will pretty much wipe out my savings -- but I've got a couple of months to see how I can do replenishing that before I have to make the final decision on Linda's.
All very interesting to me, though probably everyday stuff to RDC and Jesse and all those other market guys.