My dad has a milestone birthday in 4 years. We're Welsh and we're both somewhat avid golfers and we've always talked about visiting the motherland. I want to splurge and take him on a week long golf vacation. I've budgeted $3K for flights, $3K for golf/hotel package, and $1K for spending money. I've begun socking away money for it recently.

I don't know shit about investing, but I'm sure you folks do -- and I've never taken a European vacation, but I'm sure you folks have. What are my best options for a long-term, decent-yielding savings account or something along those lines?

Your advice is greatly appreciated!

[Edited on June 16, 2012 at 10:18 AM. Reason : m]

6/16/2012 10:16:22 AM

On a side note. If your plan falls through with the Europe trip, I would try something along the lines of trips to several big golf tournaments or maybe attend all the majors.

I like your original plan though, just thought about doing something similar to what i mentioned above in the future with my pops. Fun part would be taking several trips instead of one long one.

6/16/2012 10:27:32 AM

the other option is a Pebble Beach/Monterey vacation:

2 nights at the Inn at Spanish Bay in a standard room based on double occupancy;
3 nights at the Hyatt Regency Monterey in a standard room based on double occupancy;
1 round including cart at Pebble Beach Links;
1 round including cart at Spyglass;
1 round including cart at Del Monte;
1 round including cart at Pasatiempo

$2700/person

flight would be much cheaper obviously

6/16/2012 10:33:26 AM

Europe is going to be more fun than fucking monterey

[Edited on June 16, 2012 at 10:36 AM. Reason : .]

6/16/2012 10:36:04 AM

so, back to the savings advice...

the trip is 46 months away, so I guess I could just put $150/month under the mattress. but there's got to be a better way!

[Edited on June 16, 2012 at 10:39 AM. Reason : d]

6/16/2012 10:37:59 AM

look at miles rewards cards and build up enough points to pay for plane tickets through every day spending? For example, spend $3K in 4 months with Citi AA Advantage and you get 50K miles...thats enough to get one person to England and back at non-peak times.

You could also get a hotel rewards card and earn enough points to pay for the hotel or, at least, cut the cost in half with everyday spending. For example the SPG CC gives you a 30K points (I think) after spending a certain amount. I dont know if Starwood has a hotel where you want to stay but there are others out there (Hilton, Marriot, etc.).

IMO this is the easiest way to "save" for a vacation without actually having to put money away (besides spending money).

6/16/2012 11:18:17 AM

this just seemed way too appropriate

http://www.youtube.com/watch?v=3xvUkHqEDX4

6/16/2012 2:00:29 PM

gg

i forgot to mention that he's a genealogy nut as well. i'm 100% sure we're Welsh and we have a castle in the north country to prove it

6/16/2012 2:19:11 PM

"Two tickets to Llanfairpwllgwyngyllgogerychwyrndrobwllllantysiliogogogoch, please"

6/16/2012 2:31:32 PM

kinda funny saying "europe" when referring to wales. UK is hardly "europe"

6/16/2012 5:27:05 PM

thanks for the insight. this thread is off to a great start!

6/16/2012 5:30:41 PM

^^



The only people on the planet who even would find it to be arguable that the UK is not European are you and a few people in the UK who loathe the rest of Europe.

Get real, dude...the UK is European; they just aren't part of the EU...but hell, they're more European than many EU member states.

6/16/2012 6:27:35 PM

Put money in a 3-year CD.

6/16/2012 7:40:16 PM

^Yeah I've heard that if you're saving money for less than five years to put it in a low risk account like a CD or money market.

Also the credit card idea is solid. Just funnel all your spending through a rewards card and take advantage of opening bonuses and in four years you'll for sure be able to get the flight taken care of.

6/16/2012 8:07:09 PM

Yeah it is located in Europe...kinda Historically yeah. So are Turkey and Russia in some regards. Most of the things people identify that make Europe "fun" don't apply to the UK. So i was just throwing that out there in reference to the anti-pebble beach post. UK may be in Europe and nobody would argue that as an asnwer to "where is the UK?" but you don't go around saying "I'm going on a trip to europe" or "i can't wait to get to europe" or "europe is so much fun" when talking about Wales. Most UK people don't loathe Europe but consider themselves separate and refer to europeans as europeans btw.

[Edited on June 16, 2012 at 8:17 PM. Reason : bte]

6/16/2012 8:14:52 PM

buy GER.

6/16/2012 8:54:38 PM

Gastroesophageal Reflux?
Gas Exchange Ratio?

6/16/2012 9:37:50 PM

Quote :

"the UK is European; they just aren't part of the EU"

They may use a different currency then everyone else in the EU, but the UK is definitely in the EU.

6/16/2012 9:45:17 PM

LEO the lion goes GER

Loses Electron = Oxidation
Gains Electron = Reduction

6/16/2012 9:45:37 PM

Why is this such a hard theory? Why does it have to be done any differently? Do you have any savings or investments as of right now?

6/16/2012 10:16:18 PM

^^^ whoops, you're right. don't know why i had in my mind that they were not EU.

^ pretty much. there's no real magic bullet. with such a short timetable, there's not really even a winning strategy. you could put money in a CD, but that's assuming you have money upfront for this that you want to earn a return on while you're saving it. Money markets aren't yielding much at the moment (CDs aren't either, for that matter). Really, it's just going to be a matter of saving a considerable amount of money quickly.

...and while this might be a buzzkill, if you don't have a significant amount of money (say, several times over what this trip will cost) put away in an IRA and either 401k or other savings for retirement, you probably should ditch the European vacation idea (let alone paying your dad's way) and concentrate on getting your own finances on track for someday not having to work.

[Edited on June 17, 2012 at 1:29 AM. Reason : ]

[Edited on June 17, 2012 at 1:30 AM. Reason : short-ish term CDs or money market are prob what you want.]

6/17/2012 1:23:20 AM

If you (or your spouse) aren't already filling a Roth each year, start one and put this money in it.

If you go on the trip, you can withdraw all contributions (not gains) without penalty or tax for any reason.

Knowing it's in a retirement account will probably make you more thrifty with it, and you will have whatever tax-free return on that money while you save it.

6/17/2012 2:07:16 AM

you only live once

6/17/2012 7:39:46 AM

exactly, and you don't want to spend the last 20 years of it in a singlewide trailer, eating ramen noodles, and working as the wal-mart greeter until you die.

[Edited on June 17, 2012 at 12:40 PM. Reason : $10k put away right now will be $100k (even in today's dollars) by retirement age]

6/17/2012 12:22:10 PM

I'm retiring to panama where I can live in luxury for the same price as a single wide and ramen every night.

[Edited on June 17, 2012 at 12:42 PM. Reason : hffg]

6/17/2012 12:41:21 PM

that's also an option, but i don't want to be painted into a corner

6/17/2012 12:42:18 PM

Well yeah. At current pace and a moderate rate of return ivan retire at age 55 with approximately my current salary per year until I'm dead. If I hold off a few more years the picture gets even rosier. Living in a place like Panama would just make it possible to retire or semi-retire even sooner.

6/17/2012 12:51:23 PM

I don't think he made the thread for lifetime investing advice guys.

But like everyone's said, most of the really safe set short term investment instruments are currently providing a return of almost nothing.

6/17/2012 1:27:55 PM

yeah. i'll figure out retirement over the next 35ish years

I just want some tips for online savings accounts or something like that where I can get $100 or so direct deposited from each paycheck and maybe earn a little interest over the next 46 months

6/17/2012 1:31:32 PM

of course he didn't, but i have known him since we were freshmen at NCSU in 1998, and I'm trying to give him good advice, since he says "I don't know shit about investing, but I'm sure you folks do".

My advice regarding saving up for a $10,000 vacation is to not spend $10,000 on a vacation unless your finances and retirement savings are already solid. I don't know shit about his finances; I'm just guessing that since he says "I don't know shit about investing", that we need to start from step-0.

^ Tim, just do a money market or something. It isn't going to give any meaningful amount of interest over such a short timespan, and the return right now sucks, but there are no good high-yielding options for money that you will need so soon.

...but dude, if you don't have a significant amount of money set aside for retirement (like tens of thousands of dollars), you are already behind, and it gets exponentially more difficult to catch up the longer you wait. You will not figure out retirement over the next 35 years if you don't start soon; it will become mathematically impossible unless you start getting paid a couple hundred grand per year and save most of it.

first things first--put $417/month into a Roth IRA to max it out every year. That should be the absolute bare minimum. Actually, the absolute bare minimum should be that plus contributing to a 401k to the extent that your employer matches it, if that's an option for you.


Let's run the #s: Just putting $417/month into a Roth IRA (and starting with zero) will give you just under $600k in 35 years, assuming a 6% rate of return. I used 6% to account for an average of 9% return over the next 35 years (probably optimistic, as you will need to become more conservative in your investments as you get closer to retirement), minus 3% for inflation to keep things in today's dollars.

That sounds like a lot, but that is pocket change. The rule of thumb is to plan on living off of 4% annually of that amount. Hell, let's be generous and make it 5%--it increases the odds of you running out of money before you die, but it's still within the realm of reason. That gives you $30,000/year to live on when you retire. Now, granted, that's tax-free, but whatever, you don't pay income taxes on $30k/year, anyway, so it's pretty much irrelevant. You will also have a few bucks in social security coming in, but that wouldn't be that much even right now, and I would expect the benefit by the time we retire to be even less. In other words, you could live a lower-middle to maybe middle-middle class lifestyle in retirement if you started maxing a Roth IRA right now.

Wait just 2 years, with all the same parameters, and that same nest egg shrinks to $520k. Even an aggressive 5% of that per year then becomes a measly $26k/year to live on in retirement.

[Edited on June 17, 2012 at 1:55 PM. Reason : ]

6/17/2012 1:35:36 PM

Quote :

"$10k put away right now will be $100k (even in today's dollars) by retirement age"

if you are lucky and even then in reality 100k 40 years from now will only purchase what 10k purchased today if that so you are really running on a treadmill in that regard.

Enjoy the money now it is much more likely that you will eventually make enough to comfortably invest someday or either be able to sell your home which you may have or will eventually buy. No need living a shit life just for a future that may or may not come. Worst case scenario you will live with your middle aged kids and help them out.

6/17/2012 1:45:48 PM

Honestly, if you're looking short term, no risk you might as well just put it in a standard savings account unless you can find some flexible CD options. It's not something i've really looked at personally, but you can probably find one paying 2-3% vs. 1% or less in a standard savings account.

6/17/2012 1:46:01 PM

Quote :

"even then in reality 100k 40 years from now will only purchase what 10k purchased today if that so you are really running on a treadmill in that regard. "

no, goddammit, that's what "in today's dollars" means. $100k in today's dollars...I already accounted for it by assuming a 3-3.5% lesser rate of effective return.

6/17/2012 1:57:34 PM

Oh, and add me to the group that says get and uses mileage credit card, but only if you're responsible enough to pay the balance monthly!

6/17/2012 2:40:02 PM

^I'd vouch for that as well depending on your financial situation. I get skymiles through my work hotel stays, credit card rewards, and 2-3 domestic flights a year. Hell it took almost 3 years but Ive got more than enough for a trip to Japan and over 2 weeks worth of hotel nights for my honeymoon.

It doesnt seem very rewarding in the short term but Duke is right if your other finances arent in order first.

6/17/2012 2:52:10 PM

Quote :

"if you are lucky and even then in reality 100k 40 years from now will only purchase what 10k purchased today if that so you are really running on a treadmill in that regard. "

Ignoring the fact, you completely misread Duke's post, that is still off by a wide margin.

6/17/2012 7:37:21 PM

Quote :

"Enjoy the money now it is much more likely that you will eventually make enough to comfortably invest someday or either be able to sell your home which you may have or will eventually buy. No need living a shit life just for a future that may or may not come. Worst case scenario you will live with your middle aged kids and help them out."

-It won't matter how much you may or may not make in the future; you will be fucked if you wait until middle age to start investing (unless you no-shit stumble into a major windfall or start making hundreds of thousands per year). The important ingredient is time; you can either start early or work until you die (or close to it).

-Nobody said anything about living a "shit life". I certainly don't live a "shit life". I'm saying to put first things first--figure out how much you need to be saving to be on-track for where you want to be financially, then spend the rest however you damn well please.

-Leeching off your kids because you fucked it away for decades on end and have no other options, and you know they'd feel bad about telling you to go live underneath the bridge, is not only a shitty retirement plan, but would make you a shitty person and a shitty parent.

[Edited on June 17, 2012 at 8:29 PM. Reason : ]

6/17/2012 8:29:12 PM

Heh, I told my parents I'd put them in a home before they lived with me, but luckily they have their financial shit together.

6/17/2012 8:49:39 PM

It happens a lot more than you think and its not exactly leeching with the cost of childcare. Besides, spending time with grandkids is like the #1 reason to retire early anyhow.

6/17/2012 10:20:19 PM

It is leeching. No one forces you to have children for which you must care.

6/17/2012 11:01:45 PM

I just think its sad how some people miss out on things they would like to do just so they might have a lot of money when they are 70.

The saddest part is you might not even be alive at that point and your parents certainly won't be around. Think long and hard about that because before you know it life will be different. Your parents will be too old to go, you may become unhealthy. Enjoy today while you can because you never know what tomorrow holds.

I say enjoy time with your parents while you can and enjoy time with yourself to the fullest while you are young and mobile. You may or may not be able to do these sorts of trips when you are old even if you are still around at that imaginary point. Imagine a 70 year old and a 95 year old dad trying to do this vacation. Not possible.

So what if you end up poor the last few years of your life. Worst case scenario you will have all of the great times to remember and share with your children/grandchildren and to me, thats probably the greatest joy of being old.

^i was not talking about raising your kids, i was saying that having your parents help with your kids saves a lot of money and helps the kids. 14 year old babysitter or grandparent? hmmm

6/20/2012 6:10:57 AM

My mistake, although I still disagree with dropping 10K on a vaca for the dad if you don't have at least several times that in savings/investments.

6/20/2012 2:54:35 PM

Quote :

"Also the credit card idea is solid. Just funnel all your spending through a rewards card and take advantage of opening bonuses and in four years you'll for sure be able to get the flight taken care of."

This. There are millions of credit card offers with big mileage bonuses for signing up. Hell, I got 150k AA miles in signup bonuses last fall. That's more than enough for a round-trip first class ticket to Europe.

Spread that over 4 years and you can probably get your whole vacation for free.

6/20/2012 3:07:01 PM