Democratic Underground Latest Greatest Lobby Journals Search Options Help Login
Google

Hubby has a new job and I need some food for thought on 401K investments

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Topic Forums » Economy Donate to DU
 
NMDemDist2 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 02:56 PM
Original message
Hubby has a new job and I need some food for thought on 401K investments
I am watching the USDollar rocket downward but hate to leave 'free money' on the table

should we max out on the 401k match? put it in a European fund perhaps?

what are you doing with your retirement investments these days?

yes, we are debt free except a car payment that will end in 16 months.
Printer Friendly | Permalink |  | Top
Jackpine Radical Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 02:58 PM
Response to Original message
1. Personally, I've got most of my modest retirement $$ in CDs.
I'm scared shitless of the market right now.
Printer Friendly | Permalink |  | Top
 
Warpy Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 05:17 PM
Response to Reply #1
9. Insured CDs are a great place to stash modest funds
because they'll generate interest and the insurance makes sure the principal won't evaporate into the never never land of a crashed market.

However, a 401K plan generally has matching funds applied to it. Anyone who is offered such a plan should contribute to it carefully, doubling their money in the short term and hoping they are allowed reasonable choices where to stash it.
Printer Friendly | Permalink |  | Top
 
Jackpine Radical Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 05:24 PM
Response to Reply #9
10. I agree. Fortunately, I have a defined-benefit plan
and did some IRAs in the years when my income was low enough, but didn't have to deal with 401Ks
Printer Friendly | Permalink |  | Top
 
Blue_In_AK Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 03:00 PM
Response to Original message
2. We have IRAs
Edited on Sun Jan-06-08 03:01 PM by Blue_In_AK
(my husband is retired) and we've lost about $25,000 in the last two months. I don't know what kind of advice to give you. We're kind of stuck because if we take the money out, we have to pay taxes on it. If we leave it, we're probably going to lose more until after the election, according to our broker. He seems to imply that this is all George Bush and the administration's fault, and I couldn't agree with him more. He assures us that things will get better next year. I hope he's right.
Printer Friendly | Permalink |  | Top
 
Callalily Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 03:03 PM
Response to Original message
3. I am debt free too for
the exception of a car payment (very new). I suggest you talk to a financial adviser. I have one who is marvelous. She not only advises me on my 401(k) from previous places but also on my 403(k) at my current employment. I'd give you the name of my financial adviser if you care. I know you're in a different area, and may want to deal with someone closer. I trust mine explicitly, for numerous reasons that I don't want to share here.

Obviously, stocks at not the place to invest right now. At least not a shit-load of your money!

Printer Friendly | Permalink |  | Top
 
AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-08-08 04:22 PM
Response to Reply #3
24. I have been very fortunate this time....
I got in to the overseas market 4 years ago (when prices were low) and I have indexed funds, so I need sun glasses when I open my 403B statement. I think I will let this amount ride and stopped contributing. I recently started a Roth-and that will be my vehicle for a while.

I am very fortunate to have a defined benefit pension plan so I am doing well. I am eligible to retire with full benefits in 4-5 years. I hope to be debt free in 2-3 years and cannot wait. That will truly allow me to catch up on my retirement savings. I have a fairly secure job I like and am only 53 so I can work for some time at my job and squirrel away for my retirement..

This is the second time I have built up my retirement. I went through some hard times earlier and had to use my retirement saving (it was a true starvation case) but I was young enough to retool myself and I made a good choice. I do not take my blessings for granted.
Printer Friendly | Permalink |  | Top
 
iamjoy Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 03:25 PM
Response to Original message
4. Yes, Enroll
First of all, if you don't contribute at least enough to max out on the match - you are leaving money on the table.

Second, remember a 401(k), like any retirment investment is LONG TERM. Unless you are over 45, Do not look at the market over the past couple of years, look at it over the past twenty.

Third, you can get a financial advisor or decide on your own how much "risk" you are willing to take. In general, a fund with the highest potential for losses also has the greatest potential for gains. You should see if your employer or plan adminstrator, etc. offers financial advise or online tools to help you decide what is best for you.
Printer Friendly | Permalink |  | Top
 
NMDemDist2 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 03:34 PM
Response to Reply #4
5. he'll be 50 this year so we can do 'catch up' IRAs too n/t
Printer Friendly | Permalink |  | Top
 
A HERETIC I AM Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 06:06 PM
Response to Reply #5
11. IRS Publication 590 talks about IRA contribution limits and deductibility.
Edited on Sun Jan-06-08 06:09 PM by A HERETIC I AM
Publication 590 That is the 2007 edition. There are some minor changes for 2008.

For 2008 the contribution limit to a traditional IRA goes up from $4000 to $5000 and the "catch-up", for those over 50 years old is $1000 making the max contribution for a head of household over 50 years old $6000 in 2008.

Since he will be participating in a company plan, how much of his contributions to an IRA account will be deductible from your taxes depends on your/his filing status, whether or not you, as the spouse participate in a similar plan at your work and your Modified Adjusted Gross Income.

This Investopedia page goes into detail on those provisions.

If there is no real benefit to the deduction for contributions to a traditional IRA, you and your husband should consider using a Roth IRA instead. Roth's are contributed to with money that has already been taxed, grows tax deferred and is withdrawn tax-free. The catch-up contribution provision applies to the Roth IRA also.

Keep in mind that IRAs are merely accounts. What and how you invest inside the account is entirely up to you. You can be as conservative as you like and invest in a Money Market fund and you can be as speculative as you like and buy and sell Put and Call Options (providing you meet certain criteria - a possible account minimum balance, for instance). You can invest in Mutual Funds, Exchange Traded Funds, Unit Investment Trusts, Annuities, Common Stocks, Preferred Stocks, Corporate Bonds, Treasury Bonds, CD's etc. etc. You can have the money actively managed or passively managed.

A 401(K) however, typically limits the participant to less than 40 different choices, almost always Mutual Funds and so called "Fund of Funds". Some plans offer publicly available funds from the well known fund families and some offer only institutional shares. Some offer a combination of both. Many publicly traded companies offer their own stock to be purchased inside such plans as well. But overloading on company stock is rarely a good idea. Remember Enron.
Printer Friendly | Permalink |  | Top
 
SlowDownFast Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 04:02 PM
Response to Original message
6. Inverse ETF's and funds.
If you believe the general market is going to tank for awhile and still want to profit: short it.

Examples:

BEARX

Rydex Inverse Funds (RYCZX,RYWJX RYCBX, etc....goto http://www.rydexfunds.com/ourproducts/fund_profiles.shtml for complete list)

ProFunds,Proshares Inverse (UWPSX,SRS,SKF,QID, etc....goto http://www.proshares.com/funds and http://www.profunds.com/# for more info)

I just made 9% return on Friday shorting the NASDAQ with QID.

Just beware, some of these funds are leveraged 200% to the performance of whatever market they are inversing, so if the market rebounds (IMO, I don't see any major recovery anytime soon), you'll get hit.

more Bear market funds: http://mutualfunds.about.com/cs/strategies/l/blbear.htm

Then, of course, there are gold mining ETF's and gold mutual funds.
GOLD STOCKS AND THE GREAT CRASH OF 1929 REVISITED:
http://www.gold-eagle.com/editorials/great_crash.html

Shift out of dollars and into Cando and Swiss T Bills.

Or get out of the market altogether and buy physical gold/silver.

JMVHO.

Printer Friendly | Permalink |  | Top
 
A HERETIC I AM Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 05:08 PM
Response to Reply #6
7. It is highly unlikely her husbands 401(K) that has those kinds of investment options.
In fact, it is doubtful her husbands 401(K) will allow or even provide anything remotely close to what you suggest.
Printer Friendly | Permalink |  | Top
 
Warpy Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jan-06-08 05:14 PM
Response to Original message
8. The meltdown will be worldwide and Europe and Euros
will not be immune. In fact, the Euro is now overvalued while the dollar is very slightly undervalued. I predict, however, that the dollar will continue to fall until we get the GOP out and quite possibly for a short time thereafter.

I tend to favor stocks of companies that actually produce something in terms of manufacture, raw materials, or real services. I tend to avoid companies whose "product" is dedicated to generating paper profits for the already rich, although I did buy into one "boutique" mutual fund last year to the tune of a seventh of my total inheritance. They're doing quite well. I did research the hell out of them, though, to make sure their profits weren't coming from a bunch of derivative jockeys making wild bets. In fact, their holdings look a lot like my own holdings.

Old conventional wisdom pointed to mutual funds as the best places for modest investors. This might still be the case, but selection is extremely important. Had I too much for CDs but not enough to play the market on my own, I'd probably go for one of the "socially responsible" funds like Calvert, Dreyfus Third Century or Working Assets. There are others out there, and a comparison of online prospectuses and holdings should be your guide.

I'm afraid of a lot of mutuals out there because I'm terribly afraid they've goosed their profits through hedge funds and CDO purchases. Online research again is your best friend.

You should also consider diversifying your holdings into bonds, some of which are tax free, or even into T bills.

The one thing you shouldn't do is stuff the money into a mattress. Yes, investment is taking a chance, but even if the investment loses face value, wise ones generate income in terms of interest and dividends. Money in a mattress just sits there losing value as inflation continues, waiting for a thief to come along and find it.
Printer Friendly | Permalink |  | Top
 
NMDemDist2 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-07-08 08:07 AM
Response to Reply #8
12. the mattress was hubby's plan LOL
We'll probably keep 2-3 months cash on hand in the fire safe but I'll over rule him otherwise

;)
Printer Friendly | Permalink |  | Top
 
gravity Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-07-08 02:20 PM
Response to Original message
13. Diversify
You should be investing in the long term, and buying a assortment of funds is the best way to capitalize on the unexpecting changes in the future, while minimizing your risks.

International funds are good, but don't forget the US stocks either. The economy looks bad right now, but things will get better in the US five years from now, so its good to have some exposure. Maybe 50% international and 50% in the US. That way you will be hedged against fluctuations with the dollar, good or bad. Also buy some fixed income funds which are good esepcially towards retirement to preserve some of your capital.

If you want to add a little kick to your portfolio, place a small percentage into an emerging markets fund.

But if you still are unsure what to do, see a financial advisor, because the riskiest thing you can do is invest without knowing what you are doing.
Printer Friendly | Permalink |  | Top
 
NMDemDist2 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-07-08 05:54 PM
Response to Reply #13
16. we are 10years (or less) from retirement
we need to load up as much as possible for the next few years
Printer Friendly | Permalink |  | Top
 
Common Sense Party Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-08-08 01:26 AM
Response to Reply #16
20. By "load up," I hope you mean you want to save/invest as much
as you possibly can.

I hope you DON'T mean you want to take a big risk and swing for the fences, trying to only invest in the sectors that are going to be "hot" in the next market cycle.

I hope it's not the latter, because that is a recipe for disaster. The most experienced "gurus" on Wall Street have NO idea what's DEFINITELY going to be the next hot sector, and neither does any amateur genius on an internet message board.

I know too many people who put all their eggs in the technology basket in the late 1990s, right BEFORE they were wanting to retire, and it killed their whole portfolio. The experts were saying the tech sector was going to keep going up indefinitely. It was a "new economy." The experts were dead wrong. So were a lot of amateurs.

Yes, you should save and invest as much as possible between now and when you retire. But I think you should diversity it and not take on too much risk.

Thus endeth my 2 cents. /rant
Printer Friendly | Permalink |  | Top
 
AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-07-08 04:46 PM
Response to Original message
14. Here are some pretty vanilla ideas on pensions and investments...
If you are leaving a company, take the 401k with you and roll it into a 401k that you can control(many companies invest in their own stock). Would you really invest in a company that was stupid enough to let you go?

Invest in your company's 401K but only to the max that they will match. That is free money so take it-that is as maxed out on those suckers as you should get (and that is less than what is allowed, I know). Remember, this money will be locked up for a long time and taxed once you draw it out- I don't know about you but my butt twitches when other folks have control of my money.

After I get my company's free money-I would invest in a Roth IRA. The taxes are low now but you know they will continue to go up, especially to pay for dumb ass Bush's follies. You can withdraw from a Roth easier than a regular IRA and it can be tax free when withdrawing your contribution amount. I also like the Health IRA's for later in life-but that is a later thing.

So you have the company matched money and the your Roth. When you invest-look for companies that have a long track record-thirty years at least. Any mutual fund company can get lucky and have a good year. I want to see a pattern of profits.

I would have an emergency fund of 6 months to a year of expenses in a money market account or a CD-something fairly liquid. I would also have a small portion (repeat small portion) in a riskier investment-even if you are retired-you still need some growth in your portfolio.

But your best investment....does 19%-35% sound good. Well that is what credit card companies charge you. Imagine paying down your cards and pocketing THAT money kind of money. By living within your means and getting out of debt-you can save all kinds of money.

I am lucky to have a defined benefit pension with health insurance. On top of which I have a 403B and a Roth. I am working on the debt thing but that too is turning around. We (hubby and I) are looking foreword to a nice retirement God willing. I saved money during the stock market crash in the 80's but lost it during the economic Depression in the late 90's. I lost a bit during the Dot Com Bust, but have done better this time around (to date anyway). You can still be a saver and end up with nothing in certain circumstances. So there are no guarantees. But those that plan better recover better I think. Good luck.
Printer Friendly | Permalink |  | Top
 
NMDemDist2 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-07-08 05:52 PM
Response to Reply #14
15. I mentioned in the OP we are debt free
and plan to stay that way (except one more car in a few years, but plan not to go over a two year note)

luckily the 401k isn't in company stock, it's through a large well funded mutual fund company
Printer Friendly | Permalink |  | Top
 
crazymans economics Donating Member (77 posts) Send PM | Profile | Ignore Mon Jan-07-08 07:57 PM
Response to Reply #15
17. Stay out of the markets
They're a negative-sum game. And mutual funds as much of a risk that favors the Fat Cats.
Printer Friendly | Permalink |  | Top
 
A HERETIC I AM Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-07-08 11:55 PM
Response to Reply #14
18. There are a couple of items that are not entirely accurate in your post, Anne
I am not trying to be critical here, just to strive for clarity and accuracy. I would think you agree that is a good thing.
In your first sentence you state;
If you are leaving a company, take the 401k with you and roll it into a 401k that you can control(many companies invest in their own stock). Would you really invest in a company that was stupid enough to let you go?
When you said a "401k that you can control" did you mean an IRA? While it is possible to transfer assets from one 401(K) plan to another, they ALL give you roughly the same amount of control. Even if you separate from a company, you still have the ability to direct the investments in the plan at the old employer. It is rarely the case that rolling a 401K from a previous employer into a 401(K) plan at a current one is a good idea, primarily because of the generally limited investment choices available in such plans. If you leave a company, it is almost always better to roll your 401(K) into an IRA account. You will gain a massive amount of investment flexibility when you do so. Secondly, people leave companies for many different reasons and if the previous company did offer stock as an investment option, there could be plenty of reasons to hold on to it if it is prudent to do so. Perhaps the company has a strong track record and the stock has great potential for the future. Perhaps the company is closely held but plans to or is likely to list their shares. (UPS Is a good example of such a case in recent history) But if the company has no plans to or is unlikely to go public, it changes things. (Most firms don't say so publicly anyway until very close to the IPO) There would be no point in rolling company shares if the shares are not listed or traded on an exchange as there is no public market for them. In that case one would have to liquidate them and roll the cash value. There are many, many companies that offer shares of company stock for purchase in 401(K) plans that are not publicly traded. Penske Truck Leasing and Publix Supermarkets are but two examples of major companies that do that very thing.

You go on to say;
Invest in your company's 401K but only to the max that they will match. That is free money so take it-that is as maxed out on those suckers as you should get (and that is less than what is allowed, I know). Remember, this money will be locked up for a long time and taxed once you draw it out- I don't know about you but my butt twitches when other folks have control of my money.
I think the first sentence bears further clarification. When an employer elects to offer a matching contribution in these types of plans, the match is a percentage of what the individual contributes. In other words, if it is a 50% match, for every $1.00 you contribute the company puts in $.50. They are able to stipulate how much of a percentage of the base salary will qualify for such a match and above that they may not match. (I think that is the very accurate point you were making) But the actual limit (in 2008) is $15,500 for the money you contribute and since the OP mentioned her husband will turn 50 this year, he would be allowed to contribute an additional $5000. If the company matches all the way up to this level, the accumulated contribution balance would be $30,750 after the first year of participation. Another example would be if the base salary was - say $100,000 and the company matches 50% up to a cap of 4%. That would mean that if he puts in four grand, the company would add two thousand more but the participant can contribute all the way up to $15,500 making the total for the year $17,500. The higher allowable contribution limit of these plans is one of their most attractive features. Traditional & Roth IRA's have a much lower max contribution - $5,000 for 2008 with a $1000 over 50 catch-up. People should do their best to sock away as much as they possibly can in tax deferred accounts.
As far as it being "locked up" for a long time, there are many plans that allow so-called "in-service withdrawals" where the participant can take a portion of the 401(K) balance and roll it into an IRA while he/she is still employed. And again, it might be administered by someone else but the participant still has the ability to direct the investments. AZDem's husband will be able to allocate conservatively or he can be fairly aggressive and he can change that allocation at any time. (401(K)'s allow for re-allocation but many have limits on the number of no cost trades a person can make a year. To find out how many are allowed, check with the plan administrator or read the documents provided when enrolled)

We are fortunate on DU to have as a fellow member someone who actually works as an administrator of 401(K) plans - so - Common Sense Party - if you read this and I have gotten anything wrong, please, PLEASE CORRECT ME.


After I get my company's free money-I would invest in a Roth IRA. - (snip)- You can withdraw from a Roth easier than a regular IRA and it can be tax free when withdrawing your contribution amount. I also like the Health IRA's for later in life-but that is a later thing.
Using a Roth account is an excellent idea but the statement regarding ease of withdrawal is not really true. They are both accessed in much the same way - by taking a withdrawal. It's just that with a Traditional IRA, tax withholding usually occurs, but that is voluntary, not required. You say taking money from the Roth can be tax free. Actually it WILL be tax free as long the individual is over 59 1/2 years old and the account has been established for 5 years. Health IRA's or "Health Savings Accounts" are also an excellent idea. So too is Long Term Care Insurance. Both of these things should be seriously considered by everyone.

The only other point I would make concerns this;
I would have an emergency fund of 6 months to a year of expenses in a money market account or a CD-something fairly liquid. I would also have a small portion (repeat small portion) in a riskier investment-even if you are retired-you still need some growth in your portfolio.
Investors should know that CD's are not always "liquid" and that they can and often do have penalties for early redemption. CD's that have no penalty provision are known as "putable" CD's (Meaning you can "put" the note back to the issuer and demand payment before maturity) and they are fairly rare, but can be found. As far as a "small portion" of a portfolio in a riskier investment - there are plenty of ways to achieve decent rates of growth while at the same time providing for yield. Diversification is the key.
Printer Friendly | Permalink |  | Top
 
Common Sense Party Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-08-08 01:12 AM
Response to Reply #18
19. All accurate and I agree with everything. I would add...
1) Some 401(k) plans now allow Roth 401 contributions, which would theoretically allow an individual to put all $15,500 of salary deductions (or $20,500 if 50 or older) into an after-tax Roth bucket, where if you abide by the same two rules as the Roth IRA, you can withdraw the money income-tax free. For those in lower tax brackets, those who don't need a tax deduction now, and those with a long time before they need to tap the money, the Roth 401 might make good sense, if your plan allows. $15,500 is a great deal more than $5000 (max on a Roth IRA), so that might be attractive. (The company match goes into the pre-tax, traditional side, not into the Roth bucket.) Check to see if your plan has added this option in the last two years. If not, ask them if they will.

2) I would agree with some posters that after contributing enough to the 401 to get the full company match, my next priority would be eliminating any unsecured debt. That's my own personal feeling. Pay off the debts, and then crank up the retirement saving.

I agree on the CDs. I also agree that it IS important to have 3 to 6 months' expenses in something relatively liquid, for any emergencies that might arise. A combination of money market funds and short-term CDs usually work.
Printer Friendly | Permalink |  | Top
 
AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-08-08 02:27 PM
Response to Reply #18
21. My reply was titled....
Edited on Tue Jan-08-08 02:30 PM by AnneD
pretty vanilla for a reason. I didn't want to go into specifics because I don't know all the specifics. And there may be folks here that specialize in retirement planning (and therefore have a vested interest or bias) but this is not the best place for advice-ideas maybe but not advice. I did not want to over analyze in my response. It is just general rules, not specifics. And I stand by my advise. It has done me well through some very difficult times and I sleep better at night.

The first rule of retirement planing and wealth building in general is manage your own money. I stand by my advice to take your money with you when you leave a company. There are other circumstances when you might leave it in(and that I wouldn't know because I do not know our friend's entire circumstances-but I am talking in general terms). It isn't a good idea to leave your money with your company's 401K. I would not leave it there as a rule. Also some companies restrict employees choices in mutual fund companies etc. That can cost you in fees etc down the road on top of what might be a lousy return. You want to have as much latitude in your choices-so take your money with you is a good rule of thumb as you can roll it over as you wish.

On the matching-I said contribute to get the matching. That is found money and companies match differently. I have worked for health care companies and they are notoriously cheap on their matching limits and the percent they give despite their big profits. I think I was specific enough. Just match to get their contribution-period. You can chunk more money in your 401k after a certain age but a 401K may not be the place to do it. Roth IRA's and the new HSA's (Health Savings Accounts) are frequently a better deal. Your 401K's will be subject to taxes and penalties for early with drawls and taxed even when you withdraw when you are suppose to. Since you put in Roth money AFTER taxes, it can be a better place to park your money as it has the advantages I mentioned. I know some 401's and 403's might let you borrow against them and can seem liquid, but that defeats the whole purpose of a retirement nest egg. This is money that is suppose to be untouched. An emergency fund is for things like this-not retirement. A farmer does not eat his seed corn and that is what retirement is-seed corn. You can eat your crops that your grow from your seed corn and you can set some of your crop aside for seed corn-but you never ever eat your seed corn (preserve your capital).

As far as withdrawing Roth's and the taxes, I checked this article

http://en.wikipedia.org/wiki/Roth_IRA

Withdrawing from a Roth seems easier and less burdensome tax wise than the 401'a and 403's. You can always get your principle-just not your interest earned before 59and 1/2. That seem pretty easy to me and sure beats keeping the money tied up until you are in your 70's.

Now, as far as keeping and emergency fund in a money market or a CD-either are good and they are both liquid. Remember-this is an EMERGENCY fund. An emergency fund can be sudden (2week-6mos notice) unemployment to needing a set of tires after you run over some nails to an increase in your property taxes that you know will be coming in the next year. This is not an access it anytime you want a cheese burger and don't have the cash in your pocket emergency account.

Maybe I am wrong, but I think a person that is debt free-like our friend-is probably smart enough to have a pass book savings or a minimum account balance to cover minor liquidity problems. CD's come in a variety of lengths and interest rates and are very safe AND LIQUID enough for some things. Money market accounts are also liquid but just make sure they are federally insured. I look for the best interest rate and the time limits before I decide what is best for me. Once I am debt free, I may have both a money market and some CD's for short term cash. At my age now-I have a long enough investment horizon that I don't use CD's much now-but it remains an option. As a side note... I remember when interest rates first started dropping, my mom looked pretty smart because she stuck her money in CD's when the interest rates were high and her friend that put money in stocks during a bull market lost money in the Stock Market crash in the 80's. Yeah, they made money on paper and lost real cash-but she got the real thing plus from the bank when the CD's matured. She was getting the highest interest in town for some time on her simple CD's. The bank was happy when those things matured.:spray:

And my last statement is true. The great the risk-the higher the yield. As one gets older-you want to maintain your principle, but folks sometimes forget and put it ALL in conservative and miss out on opportunities to grow extra money. We don't know how long we will live so we want to keep generating interest on our principal. You are right that one should diversify and that's why I suggested to use a small portion for the riskier stuff as a way to remind folks to diversify don't ossify.

But the best advice I can give anyone is...if the person advising you cannot explain an investment clearly to you and answer your question-no matter how simple they are-lose them. Don't let them make you feel 'inferior' for asking questions. And watch out for them flattering you too. Remember-they are to give you advice, NOT TELL YOU WHAT TO DO. They are your counsel-not your daddy.






Printer Friendly | Permalink |  | Top
 
A HERETIC I AM Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-08-08 02:51 PM
Response to Reply #21
22. As I said, I wasnt being critical, just striving for clarity, that's all.
Cheers. :toast:
Printer Friendly | Permalink |  | Top
 
AnneD Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jan-08-08 03:51 PM
Response to Reply #22
23. I thought I was being clear....
without getting bogged down in specifics. There are economists and then there are accountants.
Drink up Shriners :cheers:
Printer Friendly | Permalink |  | Top
 
crazymans economics Donating Member (77 posts) Send PM | Profile | Ignore Thu Jan-10-08 06:34 PM
Response to Original message
25. Stay out of the markets
The markets are a negative-sum game. Recognize that any returns you have come at the expense of other investors. So, while some will brag about high-level returns, remember that people are losing their retirement or pensions to fund those returns.

Ask any investment adviser for a performance report outlining how many of their clients have made money and how much, and how many of their clients have lost money and how much. You won't get a report, because they're not required to keep that information.

The only consistency is that the markets thrive on the volatility because it creates motion, and motion creates fees and commissions for brokers and exchanges, and decreases wealth for the investors.

You also need to understand that without hard assets, what you have is published value and perceived value, which are the greatest illusions of actual wealth. There is a $300 TRILLION paper shuffle going on in derivatives trading alone, and no real money there. If you're left holding the bag, your 401 k will be worthless.

"Crazyman'$ Economics" will discuss all of this and more when it's released in March.


Printer Friendly | Permalink |  | Top
 
A HERETIC I AM Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-10-08 06:51 PM
Response to Reply #25
26. Well, if nothing else, your book should be entertaining.
I anticipate its release with great eagerness.

If this is the level of enlightened financial commentary we can expect;
The markets are a negative-sum game. Recognize that any returns you have come at the expense of other investors. So, while some will brag about high-level returns, remember that people are losing their retirement or pensions to fund those returns.
that book'l be a knee slappin' hoot!

So, Crazyman, what is your long term strategy? A pillowcase? Shoebox? Ziplock fulla cash buried under the woodshed?

"Stay out of the markets"

Well, one thing is for sure. The stock market is very effective at removing money from the stupid and giving it to the smart. Which are you?
Printer Friendly | Permalink |  | Top
 
crazymans economics Donating Member (77 posts) Send PM | Profile | Ignore Thu Jan-10-08 07:55 PM
Response to Reply #26
27. Interesting analysis
Heretic,

I anticipated that you would respond, but frankly I am a little disappointed.

Broad sideswipes and condescending dismissals, along with the closing "zinger" intended as a smarmy attempt to discredit me? I expected more from someone of your obvious intellect.

I actually was interested in seeing if you would be interested in reading the initial draft of the book and offering an informed critique. You seem to have quite a bit of insight. You're not going to like it, because it would affect your livelihood if people understood the true nature of the markets. But at least we could have additional feedback.

But, you're no different than anyone else who can't argue the facts. You make snide remarks and passive dismissals to sidestep the arguments. It's not in your best interest for the book to be successful.

The book will either make guys like you squirm, or will pass in the night, and people like you can continue removing money from the "stupid" as you claim. Either way, I'll sleep soundly at night for exposing you. And you? Blaine Lourd claims most high-level money managers are alcoholics/drug addicts because they can't live with what they do.

And rest assured, I'm not interested in advising people where to put their money, just the dangers of trusting people like you with their retirement. And I may be Crazy, but I'm not stupid.



Printer Friendly | Permalink |  | Top
 
A HERETIC I AM Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-10-08 10:46 PM
Response to Reply #27
29. So what exactly is it you think I do for a living?
Edited on Thu Jan-10-08 11:35 PM by A HERETIC I AM
Broad sideswipes and condescending dismissals, along with the closing "zinger" intended as a smarmy attempt to discredit me? I expected more from someone of your obvious intellect.
It wasn't a "zinger". It was a question, that's all. I don't need to try and discredit you, nor do I have any desire to do so. You'll succeed or fail based on the merits of your arguments. So far, your arguments, as far as I can gather, boil down to "Stay out of the markets cause they are rigged against the little guy". If you are able to put forward cogent, rational arguments to back up that claim, I am more than willing to listen. So far however, you have yet to impress me. You already have followers I am sure, but no one that is truly rational, thinks logically and has even a modicum of understanding how the securities markets operate is going to take your suggestion to "Stay out of the markets" seriously.

I actually was interested in seeing if you would be interested in reading the initial draft of the book and offering an informed critique.
Sure, I'd be interested in reading it but I don't know how "informed" my critique might be. I have said many times that I am by no means an Economist, nor am I an analyst. There are plenty of DU'rs that have financial and economic credentials that make my paltry knowledge look worse than elementary by comparison. ProfessorGAC is a perfect example. He is a bona fide Economics Professor. Perhaps he would be interested in commenting on your draft. From reading his posts over the years, I can assure you, he knows what the hell he is talking about. Lucky Luciano is another. Lucky has stated several times in posts that he works on the Options Trading desk in a major bank in New York City. Lucky knows more about Equities and Options trading than I could hope to know over my lifetime. Seek him out if you REALLY want an informed critique. Or Common Sense Party. He has stated publicly that he works as a consultant on several large 401(K) plans. He has substantial financial credentials that range from an intimate knowledge of Mutual Funds to managing multi million dollar corporate retirement plans. But don't be surprised if either or all of those gentlemen shoot you down like an F16 against a Zero.

You seem to have quite a bit of insight. You're not going to like it, because it would affect your livelihood if people understood the true nature of the markets. But at least we could have additional feedback.
1st, thanks for the compliment. I merely read a lot. 2nd, Why would I not like it? You think that something you write might affect my livelihood? Pardon me but please, get over yourself. You have absolutely no idea what I do for a living. None. I have never publicly stated exactly what it is I do so your insinuation that what you might write may have some deleterious effect on my salary is absurd. There are hundreds and hundreds of authors over the years who have written economics and stock market related screeds. Thousands, even. Guess what? The money keeps flowing into the markets. Oh well, huh? You are not going to stem that tide one iota. Even if you were able to, it won't have any effect on me.

But, you're no different than anyone else who can't argue the facts. You make snide remarks and passive dismissals to sidestep the arguments. It's not in your best interest for the book to be successful.
Kindly present some fact that you think I might disagree with that is logical and actually factual and we'll see. But I am no longer going to respond to your posts that suggest people get out of the market. Primarily because such suggestions are not worth responding to. But quite the contrary on the success of your book. I sincerely hope it sells ten million copies! Truly. I hope for success for everyone, including you. It is my sincere hope that your book is so successful that you'll make so much money from it, you will seek out professional help in managing it. In fact, I'm willing to wager that the first year you have to file a 1040 that has 6 zeros on the AGI line, you'll be at a Certified Financial Planner's door so fast you will leave skid marks.

The book will either make guys like you squirm, or will pass in the night, and people like you can continue removing money from the "stupid" as you claim. Either way, I'll sleep soundly at night for exposing you. And you? Blaine Lourd claims most high-level money managers are alcoholics/drug addicts because they can't live with what they do.
"Guys like you"? Again, what exactly do you think I do? You think I am a "High Level Money Manager"? Pardon me while I :spray: One thing is for certain; I do NOT remove money from the stupid. The stupid are quite capable of doing that without my help. And you will sleep soundly for exposing me? Exposing me as what? Someone who strives to inject thorough, honest, researched, objective information on an economics forum? Show me one post - ONE SINGLE POST I have made that directly recommends a specific investment to another DU'r, suggests a specific asset allocation strategy or promotes a particular asset class over another. Go ahead, try out the "Search" feature. You will not find such a post, so go ahead and expose away. There are PLENTY of others that DO make such recommendations though, INCLUDING YOU. What gets me is people like you and others who feel they have some unique investing insight because they just so happened to buy a Vanguard fund at the the right time or sold Microsoft at $60 and bought it back at $22 and because they had that extraordinary luck, they feel compelled to impart their knowledge to others. A thorough reading of their posts will reveal that they more often than not have no clue what they are talking about. But put forward the concept of a cyclical sector weighting or asset allocation strategy combined with strategic and tactical investing and it is completely beyond them. Or that diversification and time IN the market is MORE IMPORTANT (and historically more profitable) than timING the market. It does not affect me personally if you and the others give direct and specific investing advice. But I am going to continue to warn readers of this forum and elsewhere that taking such advice on a message board IS A BAD IDEA and I am going to continue to point out inaccuracies, falsehoods and misinformation when I see it. It doesn't take a market genius to make 5% using CD's. A person is not a font of irreproachable financial knowledge merely because they bought a 7% coupon, 30 year corporate bond below par. Fine, I get the point that you feel people in the Investment and Brokerage business are bad people or somehow out to screw their clients. Yes. Of course. That explains why thousands and thousands of new investment accounts are opened every single day and many tens of millions of Americans continue to trust the major brokerages to manage their investments.

And rest assured, I'm not interested in advising people where to put their money, just the dangers of trusting people like you with their retirement. And I may be Crazy, but I'm not stupid.
Good. I'm glad to hear you aren't interested in advising people and I am glad you aren't stupid. But there you go again, assuming you know how I make my living and that people trust me with their retirement. I have a very specific, rational, logical, well thought out and, I should add, REGULATORY reason for being intentionally vague about my current occupation on a public message board. You can surmise all you want as to what precisely it is I do every day, and I might allude to it, but I will not state specifically. There are several people who might read this that know exactly what I do because I have communicated directly with them. As far as the rest of the readers of this, they, like you, can feel free to guess.

You want to know some of my history? Here
20 years driving over-the-road, most of it driving trucks like the one pictured, with well over 1.5 million accident free miles in all of the lower 48 states and 3 Canadian Provinces, coast to coast and top to bottom more times than I can count. I have slept in ice cold, rattle trap trucks with no heaters in shit-stained, urine soaked truck stops in West Bumfuck New Jersey and I have stayed in nice hotels on the company account. I proudly wear a 1994 Indianapolis 500 winning team ring on my right hand and have operated promotional displays at almost every single major (And dozens of minor) racing facilities in the US and Canada including 6 consecutive years at the Speedway. I have huffed boxes out of the back of a 53' dry van trailer that was 130 degrees inside in Brownsville Texas and I have loaded cars on a ten car stinger transporter during a blizzard in Detroit. I have fucking worked for a living and I have an intimate understanding of how difficult it is for many of my fellow Americans to scrape together a few extra bucks to put away for their future.

One reason I am intently interested in the subject of investing and the markets is because ineptness in investing has touched me PERSONALLY. I have watched for decades someone close to me throw good money after bad and squander what would have been close to a 3 million dollar fortune because of his own arrogance and stupidity. Constantly refusing to seek professional guidance and when it was sought, it was ignored, all of this to the ultimate detriment of someone else very close to me. The idea that the average person can beat a professional money manager on total return over time has been repeatedly demonstrated to be wrong.

Do what you think you must, there Crazyman. Have at it. But when you make wild claims or absurd statements, don't think you deserve a pass, merely because you have plans to release a book.

And no, you didn't touch a nerve. I always get wordy when I am drinking heavily and doing drugs before bed.
Printer Friendly | Permalink |  | Top
 
crazymans economics Donating Member (77 posts) Send PM | Profile | Ignore Fri Jan-11-08 12:28 AM
Response to Reply #29
30. Thank you
First of all, I sincerely apologize for my incorrect assumptions. We are both working men, and appeared to shift careers later in life.

I also respect your thorough response, it was the what I was expecting earlier.

I admit to being a bit touchy because I've been waived off by a dismissive hand, when people don't question what I have to say.

I'm new to this board and not up to speed on searching everyone's history of posting. I had been impressed with what you had written and lept to conclusions. Again, I apologize.

It appears as though we're both trying to get people to make rational choices about what to do with their money. The conclusions I have come up with have been years in the making, and after several false starts, hopefully about to come out in book form. I think all we want to do is to get the losers in the market to quit losing.

For the record, though, I worked at Eastern Airline as a baggage handler in Chicago for 32 years and lost my pension when they went bankrupt. (Believe me, I know about working in the elements) I started a business in my living room from nothing that grew into a multi-million dollar company. I own 700 acres of land and am looking to buy more. But I don't need a Financial Adviser. I learned to do the math and count my money.

Tell ya' what. I'll take back everything I said about you other than the insight and intelligent part (which I still believe), and you give the book a chance when it comes out (since I've done such a poor job laying out my arguments here, which is why I hired a writer to help me), and we'll start over.

Deal?
Printer Friendly | Permalink |  | Top
 
A HERETIC I AM Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-11-08 12:39 AM
Response to Reply #30
31. Deal.
And I was being sincere when I stated I hope your book has great success.

Cheers:toast:
Printer Friendly | Permalink |  | Top
 
NMDemDist2 Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-11-08 12:54 AM
Response to Reply #31
32. I freakin love DU and DUers
:yourock: both of you

:hi:
Printer Friendly | Permalink |  | Top
 
On the Road Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-10-08 10:08 PM
Response to Original message
28. No Question You Should Max it Out on the Match
That is a no-brainer. The investment options are a little more difficult. At least one of the options has to be conservative -- fixed interest, bonds, money market, etc. Capital preservation is key right now. A recession can affect internation just as much or more than the US, and there is no guarantee the dollar will keep sinking.

The other half of that strategy is a little harder: Waiting until the recession has been in place for six months to a year and gradually putting money back into the market. Hard to do, but that's probably the best plan.
Printer Friendly | Permalink |  | Top
 
Lasher Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jan-11-08 08:59 AM
Response to Original message
33. Max out on the 401(k), even beyond the company match if you can afford it.
Every dollar you contribute reduces your taxable income. And since that comes off the top this is a reduction in your highest marginal rate.

Consider putting about half in an international (non-US) stock mutual fund. Such an investment is not tied to the US dollar and there are growth opportunities elsewhere. Think about putting the other half in a S&P 500 indexed stock mutual fund, but you might want to wait about a year before jumping into that.

If you are feeling more conservative then put only half into stocks. The other half could go into a guranteed interest fund or some other low-risk option that is probably among your choices. I've got about half my savings in a money market fund that's paying about 5% right now.

I have considered a gold mutual fund but these stocks are high right now. You want to buy low and sell high. And yes, even gold sometimes goes down.
Printer Friendly | Permalink |  | Top
 
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Thu Oct 31st 2024, 06:30 PM
Response to Original message
Advertisements [?]
 Top

Home » Discuss » Topic Forums » Economy Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002 DCScripts.com
Software has been extensively modified by the DU administrators


Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC