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Old 05-28-2012, 09:28 AM   #21
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Originally Posted by Sarah in SC View Post
While I can appreciate that you want someone to just tell you what mutual funds to buy in order to be okay for retirement it just doesn't work that way. There is no secret list of funds that will go up, never lose money, and will offer the peace of mind you want.

The annuity may or may not be a good thing for you, depending on if you'd rather have a sure thing very small amount coming in each month than have that money at greater risk in exchange for a chance at a greater return.

There's a reason that folks keep saying to read and pick your own funds, and that's because no one else is going to care as much about your retirement and your money than you, whether the advice is free or something you paid dearly for, as in the case of the annuity.

The key to your retirement isn't picking the right fund, it is figuring out how to save more between now and then, either by finding a better-paying job or to trim expenses at your present salary. The key is adding money to your retirement accounts.
+1 (Great minds think alike )...

BTW, DW/me do have an annuity (e.g. SPIA) but it is not for everybody. It should only be considered under certain circumstances, and if it makes sense in your personal situation (as it has for us, over the last 5 years)...
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Old 05-28-2012, 09:37 AM   #22
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but Day Trading is one way to earn more.
I appreciate the willingness of board members to share their own experiences, and am glad this idea worked for someone. But you should remember that the vast majority of Day Traders lose most of their money. For most people this is a path to ruination.
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Old 05-28-2012, 09:44 AM   #23
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Originally Posted by Sarah in SC View Post
While I can appreciate that you want someone to just tell you what mutual funds to buy in order to be okay for retirement it just doesn't work that way. There is no secret list of funds that will go up, never lose money, and will offer the peace of mind you want.

There's a reason that folks keep saying to read and pick your own funds, and that's because no one else is going to care as much about your retirement and your money than you, whether the advice is free or something you paid dearly for, as in the case of the annuity.
Several of us have said this, let me put it another way to reinforce why you want to take control of your own decisions.

If you go with "anyone on this site you can look at my present funding allocations and advise me accordingly?" - when the market turns down and your portfolio loses value (as it inevitably will periodically), will you be perfectly OK with it? If not, who would you hold responsible, those of us who've tried to give you our best recommendations, or yourself?

The way I see it, my portfolio is my financial independence. Other than family, friends, health and the like - there's nothing more important to our security than managing the portfolio. So I'm willing to put in whatever time it takes to learn all I can about managing our money. And I would never trust someone else to make those decisions for me, especially strangers online no matter how well intended, experienced or educated. In the end, we have to live with our results, no one else.
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Old 05-28-2012, 09:56 AM   #24
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But you should remember that the vast majority of Day Traders lose most of their money. For most people this is a path to ruination.
+1.
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Old 05-28-2012, 10:30 AM   #25
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Hello Rose and welcome to the forum! I encourage you to read and reread the posts,too. Being a new investor, you always soak in more with each post. I am not as averse in investment strategies so I will shy away from that, but I will offer a few thoughts and some encouragement. 1) you jokingly mentioned will I have to work to 90? I take that as a possibility to you are open to continue working past full retirement age. You wrote you liked your job. Once you reach full retirement age you could draw your SS without penalty and continue working for a while. I mention this only to show a possibility to really ramp up your savings rate at the point, beyond your current ability. 2) You mention your reluctance to cancel your annuity. At the amount you have invested, it probably isn't life changing either way. However, since you are an investment rookie and have already paid for it, having some "stress free" retirement money you don't have to worry about isn't the worse thing in the world. 3) Cobbling together your SS benefit, annuity, small pension, working a few years after retirement while drawing SS,and ability to currently LBYM you might be closer to your goal than you think!
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Old 05-28-2012, 10:42 AM   #26
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I second Moemg's suggestion. While having a roommate is not for everybody, it is a great way to save money by splitting the cost of mortgage/rent and utility payments. I did this when I was single. Sharing an apartment, plus earning all the overtime I could scrounge, made the difference between getting by, and saving $$ for my goals. I didn't always love my roommates, nor they me, but I got along well enough with one that she was Maid of Honor at my wedding.

If you do decide to share lodgings: Be careful, and not too trusting, when looking for someone who will join you in your home. You could advertise at your church (if you are a churchgoer), at your workplace if permitted [which is how I found all my roomies], in the newspaper, or on Craigslist. Be extra-extra careful and picky with the last two options; always get, and check, references.

Take care,

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Hi Rose , Welcome ! You have had a hel- of a few years . Take a deep breath and figure out how you can cut back so you can save like crazy . I would consider a roommate and cutting all unnecessary spending . You also need to track your spending so you actually have a grasp on how much you need . Good Luck and I hope you get to retire !
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Old 05-28-2012, 12:01 PM   #27
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Hi Rose,

Similar to the advice you have already been given: Read and learn, there is so much info out there. Save as much as you can, that is AS important as where you invest.

Regarding the annuity, you said you are getting 3% guaranteed. While it is not the choice of most people for the majority of their portfolio, if I were you I would leave it there until I figured out what I would be doing with it. It's getting you alot more than any cash fund currently gets, so you could consider it your stable fund as you start to increase your portfolio in stocks. When your portfolio is larger, it won't be such a large portion and maybe you will be happy to have it there. Again, this is not the best place for it but I wouldn't jump and make any move on it until you are confident with where you will put it.

Being a single woman is tough financially, (I was there too and understand how tight finances can be), and I applaud you for your positive attitude and resolve. Have you read any basic personal finance books? I recommend Smart women finish rich by David Bach. Ignore the "rich" part, it just is sound, basic financial advice that you may find helpful.

I wish you all the best.
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Old 05-28-2012, 12:54 PM   #28
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Have you read any basic personal finance books? I recommend Smart women finish rich by David Bach. Ignore the "rich" part, it just is sound, basic financial advice that you may find helpful.
+1

the first financial book I read was "Smart Couples Finish Rich" also by David Bach - a graduation gift from my parents. He does a great job of getting key financial points across in an easy read. I can thank that book for laying the foundation of what became my almost obsessive draw towards maximizing savings (at least in comparison to almost all of my peers).
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Old 05-28-2012, 12:57 PM   #29
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I second Moemg's suggestion. While having a roommate is not for everybody, it is a great way to save money by splitting the cost of mortgage/rent and utility payments. I did this when I was single. Sharing an apartment, plus earning all the overtime I could scrounge, made the difference between getting by, and saving $$ for my goals. I didn't always love my roommates, nor they me, but I got along well enough with one that she was Maid of Honor at my wedding.

If you do decide to share lodgings: Be careful, and not too trusting, when looking for someone who will join you in your home. You could advertise at your church (if you are a churchgoer), at your workplace if permitted [which is how I found all my roomies], in the newspaper, or on Craigslist. Be extra-extra careful and picky with the last two options; always get, and check, references.

Take care,

Amethyst
I would probably get a roommate too, like Amethyst and Moemg said. I would choose one carefully. Amethyst idea sounds good to me.
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Old 05-28-2012, 01:16 PM   #30
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While having a roommate is not for everybody...
I tried to get one (female, age 20-30, with considerable "assets"), DW rejected the idea.

(Just to throw some humor on a very serious discussion ...)
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Old 05-28-2012, 01:55 PM   #31
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One of mine actually fit that description. I saw her again recently, and the assets had, shall we say...compounded over time, but were not quite as inflated as I remembered

A.

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I tried to get one (female, age 20-30, with considerable "assets"), DW rejected the idea.

(Just to throw some humor on a very serious discussion ...)
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Old 05-30-2012, 07:11 AM   #32
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Rose,

Welcome. +1 on Midpack's suggestion about your 401-K. Fidelities Freedom funds are a good fit for you for now at least while you are becoming more financially savy. You can move it into that fund by phone call or Internet. Your employer has paid a fee for your 401-K plan for the benefit of employees. Usually that comes with low fees in the fund choices for employees and the fees are clearly shown. You can also choose several levels of risk. The higher the fund year in the Freedom funds, the higher the risk. So if you want a more conservative fund, go with 2015 or 2010. You must have been sent information about your 401-K. Take advantage of what you already have easy access to.

Cass
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Old 05-30-2012, 08:48 AM   #33
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I know it is risky, especially after the 1st year but Day Trading is one way to earn more.
Yes, of course! "Become a day trader and get rich quick," I was JUST about to suggest that!

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Old 05-31-2012, 07:37 PM   #34
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I appreciate the willingness of board members to share their own experiences, and am glad this idea worked for someone. But you should remember that the vast majority of Day Traders lose most of their money. For most people this is a path to ruination.
Quite so.

From the sounds of her posts, it doesn't appear that Rose is financially sophisticated, and for her this strategy would probably amount to little more than 'investing' her savings in lottery tickets.
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Old 06-01-2012, 10:54 AM   #35
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Yes, of course! "Become a day trader and get rich quick," I was JUST about to suggest that!

Piece of cake. Just hit the right button... I mean the left one.

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Old 06-05-2012, 12:54 PM   #36
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+1

the first financial book I read was "Smart Couples Finish Rich" also by David Bach - a graduation gift from my parents. He does a great job of getting key financial points across in an easy read. I can thank that book for laying the foundation of what became my almost obsessive draw towards maximizing savings (at least in comparison to almost all of my peers).
Great book, even for single people.
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Old 06-05-2012, 01:39 PM   #37
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The key to your retirement isn't picking the right fund, it is figuring out how to save more between now and then, either by finding a better-paying job or to trim expenses at your present salary. The key is adding money to your retirement accounts.
Absolutely. Given the past 10 years of returns, nobody should rely on any investment doing better than beating inflation during the accumulation phase. If it does, then great, you can retire 1 or 2 or 5 years earlier. But the only reliable way to accumulate money is to save it.

My chosen method was to pretend that I was subject to a payroll deduction about which I could do nothing. Every pay-day, 10% or 20% of your salary "evaporates". It's a lot easier to resist the temptation to withdraw from a retirement account, that to take it from your checking account at the ATM and spend it. Once I started, every time I got a raise, at least half of that (and by the end, it was 100% of it) went to this "deduction". Boy, would I have voted for a candidate to reduce the overall rate I was "paying" by the end!
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Old 06-05-2012, 01:58 PM   #38
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I do not think you will have to work till you are 90 if you make some smart moves now and in the future. 3 bedrooms is a lot of living space for a single person. At some point in the future it may be too big for you to maintain anyway so why not look at financial ideas about getting rid of it now or at the very least getting a roommate to help with current expenses? EXCELLENT advice from Sarah and BigNick and others about concentrating on the savings more than on the specific investments. It looks to me like SS will be the biggest part of your retirement. The longer you wait to take it the better. Spend some time learning about benefits available for ex-spouses. it will probably work out best for you to take the ex-spouse benefit at age 66 and then take your own enhanced benefit at age 70. If you get enough saved over the next decade you very well may be able to retire at normal retirement age of 66.
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Old 06-05-2012, 02:46 PM   #39
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I do not think you will have to work till you are 90 if you make some smart moves now and in the future. 3 bedrooms is a lot of living space for a single person. At some point in the future it may be too big for you to maintain anyway so why not look at financial ideas about getting rid of it now or at the very least getting a roommate to help with current expenses? EXCELLENT advice from Sarah and BigNick and others about concentrating on the savings more than on the specific investments. It looks to me like SS will be the biggest part of your retirement. The longer you wait to take it the better. Spend some time learning about benefits available for ex-spouses. it will probably work out best for you to take the ex-spouse benefit at age 66 and then take your own enhanced benefit at age 70. If you get enough saved over the next decade you very well may be able to retire at normal retirement age of 66.
I was thinking along these same lines because I would be concerned about your current level of savings.

You have a mortgage debt on your house of $104,000 so while you say you have no other debt, you do have debt. You also have "costs" for that home. Have you considered how much it costs you to keep your house each year? I bet you would be surprised.

Add up your costs (home insurance, property tax, maintenance costs) and see what that is. I bet it is around $2,000 or more a year. That's over $20,000 more dollars in 10 years.

If you are struggling to save $150 month in your 401 K, think about how you might feel to save the total of your housing costs each year for the next 10 plus years with compounded growth on top of your current 401K contribution. It adds up over time.

You also don't mention how much equity you have in your home. If you sold, you could pull this out and save it as well. (with any luck in this market anyway).

Yes you will have to rent something but you will not have the overhead costs of home ownership. You may be subject to rent increases but you have the freedom to move if that happens.

Just some thoughts.

P.S. Like some others have said, I also would see what you can do to cancel that annuity. You may have to wait past the time frame for surrender charges or perhaps you take the guy that sold it to you to task because quite honestly from what you have written "having access to your money" should have been more important that locking that principle up for life...at this point. At least that is how I would have been thinking. You didn't have enough liquid assets for him to advise you in this manner. What if you had an emergency? You could really make a stink about this if you wanted to.
When did you buy it?
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Old 06-05-2012, 03:08 PM   #40
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Rose, welcome to this forum and kudos for weathering the storm(s). Life can be not so nice at times, but we have to just keep trying. Beats the alternative.

I joined this forum about 9 months ago when I retired. I have been married to my second wife almost 24 years, so I have an understanding of breakups, although I was younger then.

I have read all of the posts and here are some of my comments:

1. You do seem to want someone to tell you what to do, which of course, none of us can. Advice, counsel, sharing of stories, yes. In the end you must decide. That being said, right now I would say the greater importance should be on saving what you can (including investments) and lesser importance on where you put it. Putting it in one fund targeted to your time horizon makes as much sense as any. And try not to get down when your account loses money: as long as you have a time horizon to work with (and you have at least 9 years), look at it this way: when the market goes down, you are buying more shares in your investments. Eventually, that means you make up the loss and then some.

2. It would likely be costly to get out of your annuity, and 3% is not all that bad, especially if you consider that as a more conservative "fixed income" portion of your portfolio. $160 a month, when added to $1200 a month, plus what you will be able to withdraw from your investments, well, it all adds up.

3. You are putting 11% in your investments (plus your employer match). That aint earth shattering, but it isnt bad either.

4. There are lots of suggestions on how you can cut expenses: rent, take on roommates, etc. You are the best judge of what you want and what you can tolerate.

Bottom line is, be comfortable with whatever you choose. You do not have enough funds, like millions of Americans, to make a killing in whatever investments you do choose. Be comforted in knowing that you are putting money away each month, it is growing, and really, what else can you do.

I look forward to hearing your comments as time goes on. Good luck.

Larry
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