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birb_cromble  16d ago (text post)   752 thread views

Weekly Finance Thread - 2027-06-27

A weekly thread to discuss financial matters - from personal all the way up to global.

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When she was 14 and got her first summer job I told my kid I would match her retirement contributions dollar for dollar. Every paycheck she would dump the whole thing in an IRA and I would put the same amount in her savings account. This continued, although past high school it's been more that she uses my CC to handle gas, etc and contributes the max she can to retirement vehicles. I interpret this as my plan having worked. She has enough money in retirement accounts to see the benefit and she follows the "pay myself first" plan.

Assume you are set. What do you do for your young, single adult children to keep them motivated toward their own success but also set them up? I want to see if I am missing anything.

Make sure she's invested those retirement funds in something reasonable.

I'm going to second the credit card comment. Not having a credit history made things a lot harder for me when I went out on my own. If you can help set that up, it will be a boon.

She's been an added user on our accounts since forever so her credit history is older than she is. When she turned 18 USAA locked us parents out of her minor accounts and extended a credit card offer to her. Her credit union approved her for a cc a couple months ago. That gives her 2 credit accounts on her own and getting gradually old enough that it will be ok even if she decides to unlink from my credit history.

I read that credit cards are especially important for kids that didn't end up with student loans (she got scholarships) to build credit history.

When she turned 18 USAA locked us parents out of her minor accounts and extended a credit card offer to her.

What's your opinion of USAA in this regard? I use them for their insurance offerings, but I've found that Navy Fed tends to be better for the online banking & credit card offerings.

I was really pleased with how USAA managed the minor - to - adult transition.

I keep a small bank acct and a cc with USAA because I have had them forever. They were also one of the few banks that would issue my 5th grader a cc on my acct (she was going on a school trip out of the country and I wanted her to have an emergency card). Other banks, including BofA and NASA FCU required an older minimum age. I appreciate being able to talk to a real human to get things sorted out and I feel like they work with me rather than against me. Financially, I agree that Navy Fed is generally better - that's my daughter's daily driver. I will always use USAA for our home, auto, and umbrella insurance. They have been fantastic to us.

My father mostly made "set-up" offers/deals: "Get a full ride to college? We'll buy you a car since we're not helping with student loans." "Ready to move out with a full-time job? Security deposit and your first month's rent is on me."

Other than that, it was mostly just advice. My father wasn't the most knowledgeable of planning for retirement (he never really needed to early on, having had an excellent pension), so his only advice in that regard was "get the company match. Prioritize that over anything else you plan to do, it's free money."

it's been more that she uses my CC to handle gas, etc

One thing to consider is having her open her own credit card, possibly secured, with you contributing payments/reimbursement for certain expenses. Get that credit score building up early.

When planning for retirement, is there a useful heuristic for when it makes sense to pull back on contributing to your 401(k) and stashing money in a taxable brokerage account instead?

Right now I'm operating on a premise that looks something like this.

  • Assume my retirement spending base is the equivalent of the highest inflation-adjusted year I have on record.
  • Assume $15,000/year (inflation adjusted) for private insurance until I can get Medicare at 65.
  • Assume Medicare will exist when I'm 65.
  • Assume social security will not be available on retirement.
  • Assume the market between now and my death at 95 will have 5th percentile performance (ie: dogshit)
  • Assume my tax advantaged accounts will be accessible without penalty at 59.5.
  • Add a small yearly buffer as a safety factor.

My thought right now is that I should keep contributing to the 401(k) until I have enough saved so that I can survive entirely on my tax advantaged accounts from 59.5 to 95, based on those assumptions.

Is this reasonable? I've had "you must contribute to your 401(k) or you will die starving in a ditch" pounded into my head for so long that it seems almost blasphemous to even consider alternatives.

As an American, you should at the very least seriously consider a geographical arbitrage exit strategy.

Of course, it's not always feasible due to family and friends, cultural barries, etc. But the retirement math in the US is much different than that in Italy/France, let alone somewhere like Brazil/Paraguay, so I would consider it.

Yeah I moved to Malaysia and my effective COL is about a third of what it'd be in Australia for comparable lifestyle. I'd be juuust covering FIRE in Australia but considerable buffer here.

How did you get in on a permanent basis? Was the process difficult?

Spousal visa for me. I met my wife in Australia but she's a Malaysian citizen. I've got friends using the MM2H golden visa which is solid if you're not looking to work in the country but requires a solid 6 figure investment to get.

Your mileage may vary but the first year or so in the country I was able to chain 3 month entry visas without flagging anything. All I had to do was leave every 8 weeks or so, stay out for a couple days then get a fresh 3 months on return.

Lucky you! :)

I looked briefly at the MM2H thing. Do they require you to buy real estate if you go for that? I'm also wondering if the rest of the money you put in a Malaysian bank account can be invested in any way or does it just have to sit there.

If you have the time, I'd appreciate hearing more about the country. Upsides and downsides.

I haven't done a MM2H deep dive personally but have been looking into it for my parents. You can use up to half of the money you put in the bank towards a mortgage down payment towards the property. They do require a property purchase but the value required for the deposit and the property varies by state.

Allegedly they don't track the state-residence requirement for the Borneo states MM2H particularly rigorously and people do get away with buying over there and spending most of their time on the peninsula. Not that there's anything wrong or particularly rudimentary with Kuching or Kota Kinabalu they're just a bit small and boring.

What do you want to know? I've lived here about 2 years now. IMO best deal in the world in terms of COL and real estate. The culture/politics a bit funny but rarely infringe on me.

What do you want to know?

Since you ask!, I have lots of questions! :)

How much would a 1 or 2 bedroom apartment or small/medium size house cost in a livable area? How many percent down payment do they require in those regions?

Is built-in A/C the standard? How bad does the heat and humidity get? And the air quality?

How's the social scene for a white westerner? Would you expect them to make friends with locals, or just expats, or neither? Would he have a decent chance at marrying someone there?

Do you face discrimination as a foreigner? Will you ever feel accepted as one of them? Do you feel legally secure in your residency?

Are the federal and municipal governments relatively sane and stable?

How do you suppose the country will deal with the coming decades of developments, climate change, geopolitical turmoil, etc?

Have you had to use the (private) healthcare system for anything serious? How did it go? Were you able to get insurance without issues?

Is there anything that would happen to you and yours there that would require you to go back to Australia?

I've heard that the food culture is great there. Would you find it easy to find healthy food, allergy specific food, specialty products like gluten free food or lactose free food?

What do you wish someone had told you about before you moved there?

The MM2H minimum property will get you something very liveable. I paid approx 1m MYR (250k USD) for a 5br in a gated community in an upper middle class 'local' area in outer KL. Expat centric areas tend to trend higher and the minimum buy in Selangor is 2M but that'll get you something exceedingly liveable. 10% is required down payment.

I prettymuch haven't been anywhere without good AC. Unless you're somehow managing to move into a 50 year old house in a shitty area, there'll be AC. Air quality is fine. Humidity can be annoying during the spikes but generally polite society avoids going outside midday.

Social scene is good. I mostly rely on BJJ for my non-family socialization and it's very strong and English speaking. My personal social circle is mostly local/Malaysian Chinese but I'm like 40 mins away from the peak expat region. Dating culture is quite conservative but also foreigner friendly if you're dating to marry and seem to have your shit together. Generally the 30% or so Chinese are more inclined. The 50% or so Muslim Malay population are friendly but you'd be expected to convert to Islam to get married (On paper at the very least, mileage may vary depending on girl/family) since there is legally no such thing as non-Muslim Malay. It's not Thailand/ideal for sex tourism but it's also not ultra conservative.

As a white foreigner I feel pretty solid. Malaysian internal racism stuff tends to focus more on skirmishes between the local Indians/Chinese/Malays. There's definitely prejudice against the abundant unskilled foreign worker population from India, Indonesia, Bangladesh etcetera. Rohingya get a lot of complaints in the media, but I've never experienced anything I'd consider anti-white.

I'm on a spousal visa and have no real intention of ever working in the country. I don't feel 100% firm in never getting kicked out but I would be highly surprised. The politics have had a lot of reform/cleaning up since the massive embezzlement scandals about 10-15 years ago. There's very strong positive discrimination for Malays in government and govt adjacent business, but they're nice enough and don't tend to be receptive to particularly radical Islam. The Chinese have had friction historically due to being overwhelmingly economically successful inside the country, but there's never been sufficient political will to do anything dramatic like in Thailand or Indonesia.

I think Malaysia is in a good position to take advantage of the world pivoting more towards China. Singapore has reached capacity for non-financial investment and the bordering region of Malaysia is picking up a ton of overflow. I'm more bullish on Malaysia for the next 50 years than Australia.

Only real healthcare engagement was birth of my youngest child. Cheaper (approx half) and higher service than Australia. I'm looking at moving my parents over presently as they're getting elderly and cost of in-home care is considerably lower here, though I don't know enough about the trade-offs if somebody's got a particularly intense/difficult to treat condition.

Can't imagine relocating back to Australia in foreseeable future unless the country randomly collapses or avoiding a war or something.

Food culture is good, usually pretty comparable to Australian cafe culture. Grocery availability is good but haven't had to deal with any particular sensitivities on my part.

I'd done 2 month long trips before pulling the trigger so I felt pretty solid before moving. IMO if you're on the fence about Asia just look at chaining 2 weeks in Vietnam, Malaysia, Thailand and get a feel for each of them.

More comments

How do you get around the language barrier? Did you learn the language, or do you stick to areas where English is common?

Malaysia and Singapore are essentially English-speaking countries, especially if you stick to the places (Kuala Lumpur/Selangor, Penang, Ipoh, Melaka, Johor Bahru, Kota Kinabalu) that any tourist or Expat realistically is going to.

From my experiences in Asia I'd say that Singapore, Malaysia, Bali (Rest of Indonesia not so much) and Phillippines you can easily get by with only English. Thailand has a shocking drop off when you stray away from tourism professionals, which has always shocked and confused me considering how big Tourism is as an industry. Japan, China, Korea, Vietnam and Taiwan more of a struggle when you go off the beaten path. Paradoxically I do find China one of the easier ones to navigate after comprehending their phone-app system since you can do tons without actually talking to people + their native translation apps are very good.

In big metros and in the population under 40 years old English is prettymuch universal in Malaysia. Fluent, first/second language level.

I've picked up 3.5/10 Mandarin (since my wife is Malaysian Chinese) and like 2.5/10 Bahasa Malay (Considerably easier to learn than Mandarin but I really don't have many opportunities to actually use it) over the course of a year and a half here, but aside from elderly family members of my wife and my nanny essentially everybody else I interact with has 7+/10 English

the retirement math in the US is much different than that in Italy/France, let alone somewhere like Brazil/Paraguay

It's interesting you mention France, since I think tax treaties with the US make them a pretty good option.

I recall a thread on Bogleheads which argued that France was quite possibly the best place to retire for Americans b/c of tax treaties and their generous treatment of retirement account withdrawals:

https://www.bogleheads.org/forum/viewtopic.php?t=383390

Sounds right. I believe France is one of the few that respects Roth and HSA tax-advantaged status.

It is not a coincidence! Since, for Americans, the US taxes your income no matter where you are, that is something you have to pay attention to.

The thing is, you're going to die somewhere and if you are one of the only 5% of people still with enough money to support themselves when they get old, guess what the tax on your pension is going to be? It's like being a prepper after Hurricane Katrina.

Spending money now at least guarantees you'll get something for it, and that something won't be an extra year being cranky and yelling for somebody to change your urine bag.

It's like being a prepper after Hurricane Katrina.

Well Hurricane Rita hit only three weeks later, though I don't know what the fiscal analogy there is.

I have strong memories of reading first-hand accounts by preppers after Katrina explaining that they were forced by government officials to give up their stockpiles to feed hungry people nearby, which I interpret as 'in times of hardship, it's better to be in a weakish position with the vast majority than put yourself in a position where you are visibly richer and safer'.

I can't now find those accounts and Google is telling me that this is misinformation, so either my recollections are wrong (entirely possible, I read this years ago) or the internet is being curated again. Assign low epistemic confidence.

Maybe it is misremembering of very real stories of cops going house to house to seize guns (in totally unlawful and unconstitutional way) and American gun owners obeying.

It was rather sordid and blackpilling episode, like the whole Katrina story, and it is understandable no one wants to be reminded of it.

The analogy is that if you are known as prepper, when SHTF your hoarded supplies become number one target in your neighborhood. You have guns? Well, your desperate neighbors have guns too and nothing to lose.

This is why OPSEC is the most crucial element of survival success in such situations.

Absolutely bonkers take in a finance thread. Obviously there are scenarios you can't hedge against with conventional financial instruments, but there are also a lot of scenarios you can. Edit, to lump everything into one comment/thread: you think furniture and jewelry will somehow hold value when VT won't? Fine china and furniture haven't even held their value now, boomer estate sales being unable to give the stuff away when it represented a sizable outlay at time of purchase is a minor twitter cliche.

(In any case, I for one would a hell of a lot rather have more time and autonomy than more stuff. I suppose the short time horizon strategy is to retire earlier and with less saved, so fair enough.).

OP includes the premise that social security is going to be gone when he reaches retirement. I am not optimising for 'what financial instrument will hold up best if the US goes into recession'. I am optimising for, 'what can I do/buy to make my life as happy and comfortable as possible without standing out from the crowd in times of severe financial hardship'.

Ultimately, in my opinion, if the US ends up being divided into the 20% of people who have full savings for retirement, the 20% who have partial savings, and the 60% who have nothing, then the US is going to go full socialist at lightning speed. It will not be a good time to have lots of money in an accessible pot that the government knows about, no matter how sophisticated the contents of that pot. Britain has already gone through multiple rounds of reneging on benefits and discounts and tax deductability on pensions, because pensions are big lumps of money and there are lots of voters in the UK who don't think they have enough money.

In short, however sophisticated your financial instruments are, it won't matter if the US institutes a wealth tax. I still remember all the breathless enthusiasm about how crypto was going to break Americans free of the government's stranglehold on the money supply, and make taxation impossible because the government won't know how much BitCoin is in your anonymous wallet or what income is going into it or what you're spending it on. Needless to say, none of that has happened, because the government got one whiff of that kind of thing and now mandates full exchange reporting of all transactions, plus using analytics to match activity to users. Anybody who handles crypto anywhere that touches the US is dead meat; there is nowhere you can put value that won't go the same way.

(There is also simply the issue that as you get older and wealthier, more and more people and industries have an incentive to sponge on you. From family to carers to hearing aid providers, everyone knows that the elderly are the easiest segment of society to milk.)

Fine china and furniture are things I recommend not because they keep their financial value but because they keep their actual value. Having bought them, they will stay basically as nice and useful and pleasant to use for the next 50 years. Likewise, the government cannot tax your memories, nor your social circle. If you are interested in time and autonomy then I would suggest attempting to arrange for sabbaticals now rather than saving up for retirement under circumstances that you do not yet know.

As a small point of order, I don't think social security will be gone - I just think it won't be 100% of what should be available, and I'd rather ignore it entirely than try to predict what the real percentage will be.

Fair. This is overlapping partially with my thoughts to the effect that, given the future is more radically uncertain than usual, and I don't have enough money to meaningfully aim for FIRE or something like that, it would be wise to obtain things now that have long-term utility in the event my salary drops sharply. So I've been thinking about what those might be.

Spending money now at least guarantees you'll get something for it

That's part of the problem; I'm not really sure what something I would get. I'm pretty happy living a simple life. I'd rather do what I can to secure my current life as much as possible, rather than do anything fancier.

kids?

No kids. Partner can't have any.

Antique / good furniture is a gimme - long-lived, beautiful, utilitarian. Similarly good china, good cutlery. A nice bathroom. Appliances, tools, robovacs. Jewellery can be a pleasant way to store value in a way that's more visual than a stock certificate. A good fountain pen.

Social clubs/events likewise. (Note that this is a do as I say, not as I do, kind of situation :P). The kind of hobbies that require some equipment. I have friends who fly Cessnas and that seems awesome. Balloonists often co-buy balloons.

Travel isn't a bad way of spending money. You can get too into it, but IMO occasionally going to a nice hotel and getting a couple of tours is still a pretty good way of seeing 'oh, that's what is like...'. I can't be arsed with all the budget backpacking stuff, I'm far too soft for that.

Beware good china and cutlery that can't go in the dishwasher. Heaven preserve us from such "gimmes".

Jewellery can be a pleasant way to store value in a way that's more visual than a stock certificate.

Jewelry is generally quite a terrible store of value. Frequently you can only get scrap value back when you try to resell it.

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