Thank you for your great blog.I am in the process of reading it all.

Our money is in CD’s now and we were thinking of paying off our mortage($45K) because the cd’s our money is in right now aren’t paying much. Our mortgage is at 5%. This seems to us like a good move as I spend time learning about investing? Once we pay that off we can start investing 50% of our takehome.

Can you recommend three books on the subject of investing? Just finished Millionaire Next Door, Rich Dad, and How to survive w/o a Salary.

Thx in adv.

If the market goes down and you need to sell equities or bonds to raise cash, rather than selling your most recently or least depreciated shares, sell the ones that have lost the most money. The capital loss will offset ordinary income as well as any capital gains or dividends, thus reducing your tax bill

I’ve just started reading your blog; it’s a very nice source of ideas and it tells me that I’m not alone in my crazy wish to retire early.

Anyway, there’s an HTML bug in the “30 day makeover” link list: The closing double quote for the HREF attribute for day 10 is missing, so the day 10 link doesn’t show up and the day 11 link doesn’t work.

I’m looking forward to reading more of your articles!

Could you say more about what you mean by
“there will be no taxes in the future”?

I know ERE living expenses are low, but
it seems to me that if half or more of your
ERE savings are in taxable brokerage accounts
and you prefer dividend paying stocks
(averaging 5% or so), you will have no
choice but to pay the taxes once your
dividend stream exceeds the threshold.
This is just a guess, but I doubt an EREer
would have many deductions, either, aside from the standard.

Should an EREer plan to get out of these
stocks and go to tax free bonds or something
when they actually retire?

-FF

At the moment I can’t bear the thought of losing any of my remaining $33K that’s parked in a 3.5% savings account at our local credit union. (Could have something to do with having lost a substantial sum in a risky venture recently – ugh!) At least my house is paid for, an investment I’m very glad I made. I’m just too scared to risk anything else, given how hard I worked for that money.

An 87-year-old friend of mine who survived the Great Depression advised me to avoid the stock market entirely, as he has all his life. A retired journalist and professor, he and his wife have lived very simply and kept all their funds in a safe, insured savings account. They’ve done just fine. Isn’t this an acceptable, albeit “conservative,” ERE strategy?

Another thought is I consider the family farm a form of emergency savings due to the energy, food and other forms of productions conducted on the land every year. While not liquid in any manner, it is a dividend driven type of investment from my simple perspective.

By fixed income allocation I mean mostly domestic government bonds or certificates of deposit. You could still get yields of as high as 5% annually on CD’s.

I do agree that corporate bonds could trade like equities in worst case scenarios.

I also agree that over the past decade world markets have mostly experienced high correlations between each other. For dividend investing purposes however, buying mostly global Us based stocks should really do the trick for getting international exposure. I recently found that the top 10 stocks in the S&P 500 ( which could also be representative for the majority of the dividend aristocrats as well) generate as much as 40% of their profits from abroad..

Also, I’m wondering whether diversification is the same silver bullet it used to be. Markets are global and quite interconnected thanks to the wonders of modern financial engineering. As a result, when one falls, they all fall and vice a versa.

I like the idea of a Roth IRA since I’m shooting for retirement in my 50s. Tax free earnings and the ability to get the contributions out tax free will hopefully get me to 59 1/2 when I can start withdrawing the earnings or tapping the 401(k) plan.

In other words, I have four years worth of expenses in twelve 12-month CDs, a CD matures each month and I roll it over into another 12-month CD. No matter what happens with my equity holdings, I should have enough to weather any storm, assuming my equities recover within four years… This current market storm is a great (and scary) example

However I think even ERErs need an “emergency fund” in case they lose their job income, at least until passive income exceeds expenses. Anyone can be laid off or temporarily disabled.