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newbie with retirement questions.

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newbie2017
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newbie with retirement questions.  Reply with quote  

Ok, so im 49 an single. I have roughly 50k in my ira with very conservative stocks. I know nothing of the stock market. I feel I have a competent broker that is very conservative. . I paid my 30yr off in 13 yrs...have about 225-240 in equity. No debt and I have saved 200k in cash sitting in a savings account earning currently .50% I have always felt cash is king......especially in this volatile world.

My investor wants me to take 50k out of savings and invest it into the safe stock he has the 50k in now. he tells me...i will like his advice when the dividends start paying off. It hasnt made much since hes had it in the last two years. My question is , what advice do some of you folks have as far as holding onto the cash vs investing it in todays world.

It has taking me along time to save that much at 30-40k a year job. Ive payed my dues and have lived without alot of things over the past decades to get to this point I do not want to make a big mistake here. Nervous to say the least.......any advice or opinions welcome. Thank you.
Post Tue Sep 05, 2017 9:03 pm
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oldguy
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quote:
always felt cash is king......especially in this volatile world.

My question is , what advice do some of you folks have as far as holding onto the cash vs investing it in todays world.


You've done very well, you have about $250,000 in cash & stocks and $225,000 in home equity, about $475,000.
I'm an elderly retiree, multu-millionaire. And I don't keep $250,000 in cash, I don't even have $50,000. You don't want to believe those Old Wives Tales like cash is king - you can never build wealth by letting your money lie dormant in a savings account. You need to have your money working for you.

But don't invest in that so-called "safe stock", there is no such thing, any company can fail. Instead, spread your money across many stocks, that way if one fails it will be only a small part of your wealth. One very good method is to buy the SP500 Index Fund, that fund owns 500 major corporations. And the fee is very low - that Fund has averaged 11%/yr for 50 or more years. Your money should double about every 7 years (the Rule of 72 - google it). So your $250k would be $500k in 7 years, then double again to a million in 14 years, and so on. The major no-load companies such as Fidelity and Vanguard both have SP500 Index Funds.
Post Tue Sep 05, 2017 11:21 pm
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oldguy
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BTW, you said that your investor's pick didn't do much for the last 2 years? The Dow Jones Average went from 16,000 to 21800 in the last 2 years, that is a 35% increase. I would say that s/he is a poor stock picker. You'd do much better by just buying the Average.
Post Wed Sep 06, 2017 4:06 pm
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HTXPassiveInvestor87
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I always like to start by asking, "what is the goal?" For most investors, they want to be able to sustain their standard of living, maybe slightly less, throughout retirement.

So the question is really, "is my current investment strategy likely to accomplish that goal?"

There are a lot of retirement analyzers out there to help get you on the right track. Here is an example, https://www.ifa.com/retirement-analyzer/.

Taking a long term perspective is crucial. Markets can be best described as random in the short term. They are going to go up and go down and yes, there will be an inevitable market contraction that will scare many investors away from stocks. But over the long term, markets have rewarded the disciplined investor with 10-11% average returns.

In my opinion, the best course of action is to buy, hold, and rebalance a globally diversified portfolio of index funds with a risk exposure that properly matches your individual risk capacity. Stay away from trying to pick the next best stock or timing the market. These strategies do not provide consistent positive payoffs. Cash is king only when you need immediate access to it. If you are planning for the long term, then cash is not the best investment choice.
Post Wed Sep 06, 2017 6:26 pm
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newbie2017
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This is my investors reply..............

I agree with it 100%. That's why we own the Franklin fund and I recommended you take some of your bank money and also put in the Franklin fund. It's more conservative than the pure stock funds and provides an excellent monthly dividend but still has exposure to the stock market Still like to take a little bit and cherry pick on some individual stocks like an energy company or a bank. I think this provides the best of both worlds

You have to remember that that's an average return for the year like this year's been good last year was flat and you have to be in the market when we sold FNB we made around 27% but we've never really been 100% invested in the market but that will change



i appreciate your feedback...the both of you. Im at a big disadvantage as im not a educated person. Just someone that is good saving money and worked hard, did with out. Someone could take advantage of me very easily with the market talk, advice....ect. Im very skeptical.
Post Thu Sep 07, 2017 2:50 pm
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oldguy
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I googled Franklin fund, they list just over 100 fund-types so you can choose growth, income, big companies, mid-size, small. Or sectors, eg, automobiles, electronics, banks, finance, energy, retail stores.

The Law of Investing - Risk and Return are Directly Proportional. So you need some risk to outpace inflation and build wealth. You must avoid "conservative' low risk investing - and you must avoid high risk investing or you could lose your capital. That leaves moderate risk investing. 10% to 11% is a good level for most of us. Avoid individual stocks, that is high risk. You might hit an occasional home run - but it won't help much because you can risk only small amounts. Eg, you might put $10k of your $250k into one stock - even if it doubles it won't lift your $250k by much. It is better to get 10% on your whole $250k, $25,000.


quote:
Still like to take a little bit and cherry pick on some individual stocks like an energy company or a bank. I think this provides the best of both worlds


Actually, cherry picking individual stocks is high risk, most brokers are confident that they can "beat the market" but they are wrong 85% of the time. Probably the WORST of both worlds.
Post Thu Sep 07, 2017 5:33 pm
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newbie2017
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Thank you gold guy. i will adjust accordingly.
Post Mon Sep 11, 2017 5:40 pm
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614Engineer
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OldGuy knows his stuff...

Congratulations - if you're humble enough to saying something like "I'm not educated" but disciplined enough to have amassed what you have, that is called wisdom. With a little new knowledge, you will be set! I'm humbled by your mentality.

If you have time (and well, it's about our future so...) I'd point out Tony Robbins' Money, Master the Game and John C. Bogle's The Little Book of Common Sense Investing.

With those two books you'll know more than almost every American and be able to handle any discussion with your broker.

Finance is like fitness... the market (ie information pile) gets bigger every year, because people can make money off it. You don't need 95% of the information out there... just the right 5%.
Post Tue Sep 12, 2017 4:05 pm
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newbie2017
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So with 200k liquid, 50k already invested with my broker. how much would you recommend taking from the savings and investing in this franklin fund. Remember im conservative lol
Post Tue Sep 12, 2017 4:58 pm
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oldguy
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quote:
taking from the savings and investing in this franklin fund.


I would recommend against that. Franklin Templeton sells mostly bundled mutual funds - that are Class A (high fees), they trade in annuities (way high fees), junk bonds (high frisk), and their products are largely income stocks/bonds (products that are not for growth).

John Templeton was a famous stock broker in the 1940s and 1950s, here is a bio -
http://www.investopedia.com/university/greatest/johntempleton.asp
He was a great stock picker and the company still bears his name. But obviously he is not there now.

IMO, a no-load fund company would be a better choice for you - you would select a pure unmanaged stock index fund and a pure low risk bond index fund. And then mix them to match your risk level. Start with 50% stock/50% bonds. If you want more risk, increase it to 60/40, if you want less risk, go to 40/60 - and so on.
Post Tue Sep 12, 2017 5:50 pm
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614Engineer
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Newbie... Warren Buffet also recommends S&P500 Index funds like Old Guy mentioned. Google it for more details.

High fee mutual funds (or anything high fee, over 1% annual total = "high fee") is bad. Essentially anything a broker recommends should be suspect, unless you are paying that person hourly and he makes no money off you annually which is very rare.

You can hire a fiduciary, someone legally required to do what is best for you, as a financial advisor (and is not also a broker, a loophole that some brokers have used). In my opinion that is the only type of financial advisor to have...
Post Tue Sep 12, 2017 6:30 pm
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newbie2017
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Talking to my financial guy....he says he agrees with the no load fund companies......IF the overall market wasnt at all time highs......


Im at a major disadvantage. Im truly a newbie with very very lil understanding on all of this. I just know how to go to work....work hard. Manage money and save it. I need a broker basically simply because im just not educated on the market , terms, differences...ect. I will try to take some time and read some of these books and google as mentioned. I really appreciate it gentleman. Its why im so conservative, not truly knowing what im doing...tough to trust a stranger with your stash.
Post Wed Sep 13, 2017 4:17 pm
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oldguy
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quote:
he says he agrees with the no load fund companies......IF the overall market wasnt at all time highs......


Today the market is 22,000 (the Dow30). In 16 years (Year 2033) it should be at about 101,000. In Year 2033, will you care (or remember) if you bought at 20,000, 22,000, or 24,000?

The Market cannot be timed in the shortterm, 1,2 3. years. Only longterm predictions - 20, 25, 30 years - have meaning. So, don't try to 'time' the market - simply buy when you are ready - if you wait for the market to go down so that you can get in, you almost certainly will pay a higher price later.
BTW, 'timing' is why 85% of brokers get it wrong, they continually think that they know a way to time the market so they never quit trying.
Post Wed Sep 13, 2017 6:24 pm
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newbie2017
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So old guy......what your saying is my guy isnt very good.....Sad
Post Wed Sep 13, 2017 6:43 pm
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oldguy
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quote:
...what your saying is my guy isnt very good...


lol - well, you said that his selections didn't make money during the last two years - but the general market went up about 35% in those two years? And now he wants to try to "time" the market?

But it's hard to place blame. You may have told him that you are very risk averse. You may have asked him to only buy very conservative stocks, only dividend stocks, etc - so he was unable to buy growth stocks for you? But he should have given you some information that explained 'risk' and risk management?
Post Wed Sep 13, 2017 11:30 pm
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