RETIREMENT AND AIRPLANE OWNERSHIP

[donkaye]

1 hour ago, TTaylor said:

I have a mix of investments including real estate.  I sleep better knowing if the market goes to pieces I still have rental income as well. 

The stock market is great if you can control the investment and are a part of management, an owner, or you can just invest and wait 40 years without ever becoming upset with the ups and downs.  I didn't have the personality to do that.  Luckily, with real estate you can't look at its value every day and you can't get out of it quickly if you get scared for some reason, so the investment is damped from emotion.

In my area my typical house was purchased for about $31,000 with $4,000 down, rented for $250 and made $25/mo cashflow.  Today, 45 years later, that house is valued near $2,000,000, is free and clear, and rents for $3,850/mo.  I think that makes the return on initial investment infinite and the cashflow will go on for the rest of my life.  Some would say take the money and leverage it into a greater return on current value.  At my age the risk isn't worth it.

The additional really good news is that while all of this was happening with very little input from me, I was having a great time flight instructing and going places in my Mooney.

I wish good investing for "not retirement", but older age to all my Mooney and non Mooney friends.

[Bob_Belville]

25 minutes ago, donkaye said:

The stock market is great if you can control the investment and are a part of management, an owner, or you can just invest and wait 40 years without ever becoming upset with the ups and downs.  I didn't have the personality to do that.  Luckily, with real estate you can't look at its value every day and you can't get out of it quickly if you get scared for some reason, so the investment is damped from emotion.

In my area my typical house was purchased for about $31,000 with $4,000 down, rented for $250 and made $25/mo cashflow.  Today, 45 years later, that house is valued near $2,000,000, is free and clear, and rents for $3,850/mo.  I think that makes the return on initial investment infinite and the cashflow will go on for the rest of my life.  Some would say take the money and leverage it into a greater return on current value.  At my age the risk isn't worth it.

The additional really good news is that while all of this was happening with very little input from me, I was having a great time flight instructing and going places in my Mooney.

I wish good investing for "not retirement", but older age to all my Mooney and non Mooney friends.

Don, I'm sure you realize that your micro climate real estate market is not what most investors in rental property around the country experience. Were you living in Flint Michigan for the last 50 years your ROI would be very different.

OTOH, my ongoing investment in AAPL in September 2000 is independent of where I live. And when I pick a stock that doesn't return 90:1 as the AAPL has, unlike real estate, I can sell it on my Android phone in a millisecond and move on. 

[Andy95W]

22 hours ago, kortopates said:

I retired early from my career about 4.5 years ago. I am still below retirement age. But doing so enabled me to pursue my love of aviation full time and am surely not bored.

If this is the standard, then I retired 18 years ago at age 34.  Didn't have a pot to piss in then, of course, but doing better now.  Hard to say whether I've really worked since then, though.  Still just pursuing my hobby, really.

[peevee]

6 hours ago, Marauder said:

Aren't you supposed to be on the CAPA site? I wouldn't bother with these metal plane owners. 

eh, probably. I can't afford to hang with the COPA guys.

I think I'm selling the plane and giving up flying either way at this point.

[donkaye]

1 hour ago, Bob_Belville said:

OTOH, my ongoing investment in AAPL in September 2000 is independent of where I live. And when I pick a stock that doesn't return 90:1 as the AAPL has, unlike real estate, I can sell it on my Android phone in a millisecond and move on. 

Bob, that is really ironic that you should mention Apple, because that company is the reason that a lot of the real estate has gone up so much.  In a fluke of luck Apple built its "Spaceship" a block away from many of those houses I bought long ago.  Regarding RE in other parts of the country, the only thing that those people wouldn't have experienced was the large value increase.  But, as I mentioned I don't care about that increase.  All I care about is the cashflow that lets me support my airplane .  Those other people would still have increased rents, free and clear property, and substantial cashflow for the rest of their lives on each property--without working and without the emotional roller coaster ride of many other types of investments.

[Bob_Belville]

3 minutes ago, donkaye said:

Bob, that is really ironic that you should mention Apple, because that company is the reason that a lot of the real estate has gone up so much.  In a fluke of luck Apple built its "Spaceship" a block away from many of those houses I bought long ago.  Regarding RE in other parts of the country, the only thing that those people wouldn't have experienced was the large value increase.  But, as I mentioned I don't care about that increase.  All I care about is the cashflow that lets me support my airplane .  Those other people would still have increased rents, free and clear property, and substantial cashflow for the rest of their lives on each property--without working.

We both were lucky. ISTM the key to being financially prepared is being pretty disciplined to live well within our means and to start saving early and to continue saving. 

[KLRDMD]

On 1/10/2018 at 5:04 PM, clh said:

I am like EricJ.  Retired 5 years ago at 52.  Was one of the best things I did. 

I absolutely love what I do; I have the best job in the world. At this point I have no plans for retirement and have always said the day it is no longer fun is the day I quit. I just don't see that happening, at least in the foreseeable future.

[carusoam]

Long term thinking seems to make things more predictable.

0) Live within your means... (Bob’s last line, Probably is Best at the front of this continuation...)

1) Wether it is the stock market or the real estate market or Bond market (remember those?).

2) Everyone is different, with respect to their plan A and plan B.

3) Plan C is the SS program that is terribly small and has a less than predictable future.

4) I have heard the 'harder I work the luckier I will be..' probably came from my parents. Used it for motivation as a sales guy...

5) Following up on stock market gains.  The last ten years doesn't cut it in terms of long term thinking... that would miss out including for the Great Recession...

6) Fortunately, the idea is solid, and taking it back to the years before the Great Depression.... the same analysis can be done on the S&P 500... with the same end result... 10% per year...

7) The compounding interest idea is also solid for growing the nest egg. This brings up the calculation of how long it will take to double my investment? That's the rule of 72... the number of years for the investment to double is the same as 72/interest rate... 7.2 years if your investment actually grows at 10% per year... there is a financial calculation to support that simple math. Bankrate.com has all that...

8) Expect That There will be tough years thrown in...

• Health issues can become a serious challenge.
• Needing an engine OH can be a real drag.

9) Seek professional advice...

• flight instruction
• financial instruction
• maintenance instruction
• health instruction
• physical training instruction

10) As a few people have pointed out.  Diversification is important.  Don't put all of your eggs in one basket. In other words... AAPL has been good, but So was Enron and Washington Mutual.... One MSer pointed out ETFs for this a couple of years ago... Check on QQQ for that type of analysis.  Think Y2K for balance, the dot bomb era.  It never gets easy....  having all of your condos on one beach could be a similar challenge.... they sell insurance for that...

11) reminder... keep your spouse happy, especially if she is still working...

Ideas I think I read on MS.  Most of them in this thread...

Best regards,

-a-

[Bob_Belville]

5 minutes ago, carusoam said:

 Diversification is important.  Don't put all of your eggs in one basket. In other words... AAPL has been good, but So was Enron and Washington Mutual.

-a-

Surely you did not expect me to talk about the stock I watched go down...

If the only stock that I had owned was AAPL I would be having my valet type my posts on GulfstreamSpace.

[Jim Peace]

15 minutes ago, carusoam said:

Diversification is important.  Don't put all of your eggs in one basket.

I agree with most of what you wrote but diversification is to protect money.  Nobody in this world has ever gotten super wealthy by diversifying.  Maybe Buffet but he is a one off,,,,like 10 standard deviations from the norm......

[clh]

20 minutes ago, KLRDMD said:

I absolutely love what I do; I have the best job in the world. At this point I have no plans for retirement and have always said the day it is no longer fun is the day I quit. I just don't see that happening, at least in the foreseeable future.

Don't get me wrong,  I really enjoyed my work, but there came a time that it just made sense to go ahead and retire.   I guess, I was lucky enough to do a job that was rewarding both technically and financially.   

[Jeff_S]

My philosophy has always been to pay cash for toys, and leverage debt where it makes sense like some sort of tax benefit or the debt can be applied to making more money.  So my Mooney is paid for, but I do have a slight mortgage on the house and the investment villa at Amelia Island.  The rest is in a diversified portfolio that would let me clear out the debt immediately if needed, but otherwise keep providing growth and income.  The new tax laws may cause many of us to re-evaluate some of these positions depending on personal situations.

I'm not retiring, but I do feel fortunate to have worked my way into the ability to "turn a new page" and start doing things more for myself and my own interests. I started my "career" by saying "f--- it" and becoming a ski instructor right after college. I didn't care about money, I just wanted to ski and be in the wide open. Then the "real world" beckoned and I obliged by getting into business; no regrets, as it's allowed me to ultimately achieve some other major goals. But now I'm back to the "f--- it" mentality and ready to start pursuing some other dreams that have been kicking around in my head.

One of these will hopefully take advantage of my MooneySpace connections and friends in the Southeast as I am working with the airport authority here at Amelia on some new "amenities".  Time will tell if that comes to pass...!

[steingar]

15 hours ago, neilpilot said:

Actually the stock market return over the past 10 years exceeded 10%. A 30 year investment in the Dow is worth 6 times what you would have invested.

That's what that rat bastard said when I signed off on the alternate retirement deal all those years ago.  I'm at 20 and I'm not doing a whole lot better than what I put in.  The downs have been pretty disastrous over the last few years.

[Wayne Cease]

That's what that rat bastard said when I signed off on the alternate retirement deal all those years ago.  I'm at 20 and I'm not doing a whole lot better than what I put in.  The downs have been pretty disastrous over the last few years.

Ugh. Sorry to hear that. I manage our investments. Not because I'm a super financial expert, but that I don't trust others to have my best interests at heart. I've had experience with that.

Our investments have done very well.

You have to stay engaged or have someone you trust will have your best interests in mind and not theirs; fiduciary duty.


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[steingar]

24 minutes ago, Wayne Cease said:

Ugh. Sorry to hear that. I manage our investments. Not because I'm a super financial expert, but that I don't trust others to have my best interests at heart. I've had experience with that.

Our investments have done very well.

You have to stay engaged or have someone you trust will have your best interests in mind and not theirs; fiduciary duty.

And therein is the real problem.  I am a decent scientist, but pretty stupid when it comes to investments.  That's why I pay someone to have my fiduciary interests in mind.  Whether they have nor not I don't know, but had Done 10% a year I wouldn't be sweating retirement.

[ArtVandelay]

Those other people would still have increased rents, free and clear property, and substantial cashflow for the rest of their lives on each property--without working and without the emotional roller coaster ride of many other types of investments.

Not necessarily...
You didn’t have to worry about your occupancy rate. Rental property doesn’t make much if no one is renting, and cash flow is negative.
If you were located in the rust belt or parts of the northeast you would have a problem. The plant closes, or military base is shut down, not to mention a bad tenant or accident happens on the property. And being a landlord is a job, being a shareholder is not.
Just like the stock market you have risks...you make it sound like it guaranteed easy money.

[ArtVandelay]

So are properties held longer than one year.  Don’t get me wrong.    I do play the dogs of the Dow every year, but I like cashflowing properties I can see, touch, and feel that I can write down depreciation to further lower taxable income.   

But the rental income is taxed at normal rates, and don’t you have to recapture depreciation or some such thing?

[MyNameIsNobody]

Head scratcher to the original poster that compares Co-Ownership with being a Walmart greeter...(I actually enjoy people watching at “The WalMart”...but I digress.

I look forward to adding another Co-Owner to the party.  Fixed expenses go down and the plane gets flown vs. sitting in the hanger.  All good.  The key is to have people you enjoy, respect and trust.  

My plane costs $200 a month and an additional $30/hour for use wet.  I plan to continue to own and fly in retirement.  Speaking of...(correction in the market?  This last year has been very pleasant.)  There is certainly some reality out there on the horizon...You pension guys are living the dream.  Real estate management?  You have to be a special person or be able to hire that special person to want to have that life every day.  No thank you, I will just continue to be a Corporate lackey until I am not.  God bless a working productive saving analytical spouse.  They are worth their weight in gold....or platinum.

Good luck getting “there”.  Retirement, hopefully not a finish line, but an opportunity to be on vacation every damn day.  Enjoy.

[Browncbr1]

22 minutes ago, teejayevans said:

But the rental income is taxed at normal rates, and don’t you have to recapture depreciation or some such thing?

no, you don't recapture depreciation.  usually, once a property is fully depreciated, a savvy investor would 1031 exchange for another like/kind property to start the depreciation process over and defer capital gains.  Usually depreciation will write down rental income so much, that the effective tax on the rental income is minimal or even zero in some cases.

[Bob_Belville]

56 minutes ago, Wayne Cease said:

 I manage our investments. Not because I'm a super financial expert, but that I don't trust others to have my best interests at heart. I've had experience with that.

You have to stay engaged or have someone you trust will have your best interests in mind and not theirs; fiduciary duty.
 

Amen! The greatest aide to investing has been the ability to monitor and manage our own portfolios and the advent of inexpensive trades. TDAmeritrade, Fidelity, et al. 

I can recall having my broker call me to get my approval to sell one electric utility and to buy another one. The only one who benefited was the broker who made $400 in commissions moving a few thousand dollars of my money around. 

[Marauder]

18 minutes ago, rogerl said:

Interesting that so many have grappled with this issue.  Here's another experience:

I set myself up for getting dumped from the latest (high) wage slave job at 54.  Expected, but somewhat shocking nonetheless, as one who had consistently dodged RIF's layoffs and collapses my entire career by being "one who can actually write the code".

Financially set up by being frugal, consistently working and consulting in the .com era, yet the very conservatism begetting frugality kept me from being as aggressive as I could have been on investments, so no tbm900 for you!

Thought that starting an avionics business (take advantage of the 2020 mandate, part 23 rewrite opportunities, etc.) might be the ticket to "the hobby that becomes the means".  Enrolled in the local community college AVMT program to get that A&P certificate, thinking that the math degree 30-odd years ago at "tech" would make AVMT a cakewalk ... well yes and no.  "Old(er) guy" in class, ok can deal with that.  Significantly harder than I thought, but my standard was "100%" on everything (contrast with my long ago erratic performance that averaged out ... average).  One semester at that, learning a huge amount like what the limitations of what an A&P can actually do are, and minutiae concerning rivets, corrosion, metals, aviation documents etc etc.  Really interesting.  Limitations.  Like how many years of experience working under an IA it takes to get your own IA, and there's really no way around that one.  Like how little aviation mechanics actually get paid ($35 an hour would be considered a consulting gig!) (this is a crime considering what the toyota dealer charges you for putting in a new radiator, what with the rigor, depth of knowlege and liabilities of an A&P/IA, but I digress).

That and the hurdles to starting a business that is super highly regulated, difficult to site, impossible to finance ... it was just a bridge to far for my decidely non-muskian temperament (professional begging for government subsidy just does not suit me).

Finished that semester (of course 4.0), passed the "mock" general A&P exam portion, and promptly dropped out of the program to take a job at one of the national labs to help in national security effort.  One of the few places that will hire an "old(er) guy" in a young man's field.  Dealing with it, but 9 to 5'ing is what it is.

Looked around for airpark properties for a while, then in talking with the wife realized that keeping a plane like the O in the style to which it is accustomed, while keeping us up in the style to which we are accustomed, was not going to work out for us in the 25 to 40 year early retirement scenario; so what's the point.

Realized, that for me, the equation is simple:  working == owning the O

When the day comes that I don't want to exist on an external schedule I'm thinking hang gliding.  Of course, one bad landing and those old man knees will buckle quicker than a old mooney's nose gear on hot landing porpoise.

For now, gotta run to go fly.  The piper comes to collect next Tuesday (MLK holiday and all), but will make the best of it for now.

I too looked into funding an avionics shop and approached one of the local avionics shops to explore what it would take (right now, there is a significant resource gap between the shops being able to balance the installs and repair activities). When I got to the regulatory piece, it became clear this would become a major endeavor and the ROI on it would be a challenge. 

[carusoam]

Falling behind in my reading....but...

Diversifying is also used with financial professionals....  as in don't put your nest egg all in one place. Or with one person... no matter what size your egg is.

Really goofy on the outside looking in.  But, mr. Madoff made a clear example how a good person can go awry on the inside, in an undetectable way...

Even strong financial organizations will structure their prices to get the most of your egg under their control. The discount gets larger, the more you invest with them...

If I only have two small eggs, they won't go in one basket...

I’m only a PP, not a Finance Guy...

We have Finance guys around here and accountant/tax guys too...  

Best regards,

-a-

[Mooneymite]

1 hour ago, Bob_Belville said:

I can recall having my broker call me to get my approval to sell one electric utility and to buy another one. The only one who benefited was the broker who made $400 in commissions moving a few thousand dollars of my money around. 

There's a reason he's called a "broker".  You will be broker after he gets done than you were before.

I've mis-managed my own portfolio for years and I've done better than all my friends with "professional managers".

[ArtVandelay]

Ugh. Sorry to hear that. I manage our investments. Not because I'm a super financial expert, but that I don't trust others to have my best interests at heart. I've had experience with that.

Our investments have done very well.

You have to stay engaged or have someone you trust will have your best interests in mind and not theirs; fiduciary duty.

Ditto, it’s not quantum physics, but you do have to remove emotion and not panic when the markets drop.

[Bravoman]

2 hours ago, teejayevans said:

Ditto, it’s not quantum physics, but you do have to remove emotion and not panic when the markets drop.

 That is one of the beautiful things about the stock market today as far as I am concerned. Particularly since the great recession, when the Dow Jones industrial average got to as low as 6500, the mentality has been that when there is a dip it is nothing to be particularly concerned about but rather a buying opportunity.  There has been no greater money making opportunity than the stock market  since 2008. 

Edited January 12, 2018 by Bravoman