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Old 01-04-2013, 05:23 PM   #1
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Hello to a most refreshing forum!

So I happened across this site today during a web search and was so thoroughly impressed by the thoughtful & honest responses to various posts I felt compelled to join.

As I'm sure with most here, I am seeking a bit of advice, but a bit about myself first. I'm 37, married to my wonderful wife of 17 years and we have 2 children together, 7 & 4. For income, I work full time (10 hr/days + 3 hr commute), run a small home improvement business on weekends and some nights, manage a small rental apartment on our property & do my best to track investments. Although I used to be rather free spending (I still am a bit), since my first child was born (2005), I've managed to amass roughly $200k in cash & $50k in a rolled over 401k from a previous employer. My current employer does not offer health or retirement benefits but I earn a decent salary considering my level of education (some college). My wife does work part time although this salary only covers child care costs & health insurance. We have no debt other than our home on which we owe ~$180k, valued at roughly $300.

I dabble in the market and have actually done very well in picking specific stocks, in fact other than the first trade I ever placed, I have never lost money in the market. Though it was dumb luck, I happened to be in all cash & CD's during the 2009 crash and did fairly well during the rebound. The problem is I am extremely risk averse and do not invest significant amounts of money to start with and usually take gains much earlier than I should. This wasn't much of a problem when CD's were paying 5+% but simple savings accounts & CD's no longer seem a viable option. The market seems to have run much to far since the crash to warrant investments at this point but I fear inflation eroding all the work I've done to date.

In closing, I suppose my query would be are there any safe investment vehicles for modest returns (at least on par with inflation) that I may possibly be overlooking or are we to the point that risking everything in the markets is the only option?

Thanks in advance for reading and I look forward to any input!
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Old 01-04-2013, 05:43 PM   #2
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Welcome! I'm relatively new here, and I agree that this is an awesome forum.

Congrats on your accomplishments so far! Given your low risk tolerance, why not consider paying off your house? You can then invest your excess and future disposable cash without fear of losing your roof, which should help increase your risk tolerance level.
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Old 01-04-2013, 05:56 PM   #3
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In my opinion dividend bearing stocks that have a long history of paying dividends without fail may be the safest bet for income. (At the present time.) You don't have to worry about the stock price going up and down. Dividends are by share.
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Old 01-04-2013, 05:57 PM   #4
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Hello, and welcome to the Early Retirement Forum!

As to your question, the safer the investment, the less the reward. Many of us choose to have some stocks or equity funds, some bonds or bond funds, and some cash despite the low interest rates.
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Old 01-04-2013, 06:03 PM   #5
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Numbers,
Welcome to the forum, I know you'll find a lot of good information here.
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In closing, I suppose my query would be are there any safe investment vehicles for modest returns (at least on par with inflation) that I may possibly be overlooking or are we to the point that risking everything in the markets is the only option?
Sorry, I can't offer any great insights. Most folks here are looking for the same thing, at least for a portion of their portfolio. IMO bonds and bond funds are hardly worth the trouble in the present low-rate environment. I'd suggest that stocks purchased in a broad index mutual fund are your best bet for the long term. Despite the good year in 2012 and the new market highs in some areas, they still aren't terribly overvalued in historic terms. Also, even if the share prices go down, many will still pay dividends and these can be just about equal to what bonds are paying now anyway. Stocks have a history of keeping pace when inflation heats up (within limits), so over the long term that will be a plus.

Another option is investing in your side business of real estate. Maybe another rental property would do you more good than any passive investment. You're already in the biz, know the pitfalls and benefits, and are apparently willing to dedicate the time needed to make it work. And, if you can leverage your cash with a responsible amount of fixed rate financing for your properties at today's low rates, you'll be sitting pretty when inflation returns. And it will. Obviously, by this logic I would argue against paying off your home early.

Again, welcome.
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Old 01-04-2013, 06:08 PM   #6
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Hi Numbers, welcome aboard!
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Old 01-04-2013, 06:16 PM   #7
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Welcome Numbers !!
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Old 01-04-2013, 06:22 PM   #8
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Of course once you leave the safety of CD's and bank accounts, there is nothing much left but risk.
That said, you may want to check out bank loan funds. While they are a bit "junky," they do have their benefits as they rise when interest rates rise, something I suspect we are going to see sometime soon.
My fav in this category is FFRHX which is one of the least junky. It currently yields about 3.6%.
A bank loan ETF is BKLN which kicks out about 4.93%.
Eventually you will want(need) to get some exposure to stocks, but I'd certainly wait until we shake off our current over bought condition. I'm certain someone will ring a bell when it's time.

Welcome to the forum!
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Old 01-04-2013, 09:21 PM   #9
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Quote:
Originally Posted by Numbers View Post
...I am extremely risk averse.... I fear inflation eroding all the work I've done to date....are there any safe investment vehicles for modest returns ....
You and you wife sound like hard working & sensible people. I think you can have a great future. You're relatively young so time is on your side. My advice is to educate yourself about investing. In my opinion the bogleheads have the best strategy for success. Check this out: Getting Started - Bogleheads
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Old 01-05-2013, 06:10 AM   #10
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Welcome to the forum, Numbers.
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Old 01-05-2013, 06:15 AM   #11
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Welcome back, Obgyn - hope your trip was great. Happy New YEar !
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Old 01-05-2013, 06:38 AM   #12
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Thank you for your warm welcome back, Richard. Just flew back last night. Yes - the trip was great. But I have been missing this website. Best wishes for 2013.
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Welcome back, Obgyn - hope your trip was great. Happy New YEar !
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