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Desperately needing advice
Old 11-16-2017, 02:31 PM   #1
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Desperately needing advice

I am hoping someone can give me some guidance in saving and investing for retirement. I am not very educated with investing and have major trust issues with my money in other people’s hands.

I have not had very much success in saving money in employer 401K's and simple IRA's as about every 8 to 10 years in my working life, market crashes and recessions have taken large portions of my savings go poof. I was never able to save much early in life due to various reasons and now I am 51 and very worried about being able to retire.

I currently have an employer sponsored simple IRA that matches 50 cents per dollar up to 3% with of all places Edward Jones. The current balance is 58K and is invested very conservatively. I am currently making the maximum contribution of 15,500 annually to this plan.

I also have a pension (I think) thru the union I once was in at prudential that has a balance of 26K, no contribution are being made.

I also have (2) 401K's with 18k and 3k balances, that are partially invested, the 18K 401K has 9k invested in PONDX the remaning balance is sitting in cash.

And lastly here is the 900lb gorilla, I have 183K sitting in a savings account making me a whopping .005%

Between my disabled wife and I we currently make 140K a year and are putting 30K a year in our savings account along with the 15.5K going into my simple IRA.

As I stated in the beginning of my topic, I have major trust issues with investment firms and money managers, seems all my investing life, I have been ripped off and lied to many times and with the market crashes and recessions, I have lost a fair amount of money to warrant my feelings.

I would like to retire at 62 if I can, I think I can pull this off if I don’t have any more 40 to 60 % losses along the way, but I need some guidance in what I should do and where I should put my money that will be safe from losing my principle and make a decent return.

It’s looking like between my wife and I, we will make about 31k from SS, and I think we will need about 75k a year in retirement to live ok, so with simple math, anyone can see, I have a problem.
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Old 11-16-2017, 02:58 PM   #2
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The way I stomach stock market downturns is to keep a certain percentage of assets in a cash bucket. The cash bucket covers near term spending needs. By knowing my spending is covered for a couple years I can outwait a downturn and give the market, and my stocks, a chance to recover.
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Old 11-16-2017, 03:04 PM   #3
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Welcome Ranman.

Well, to start with, the markets have obviously recovered from all past recessions and crashes as of today... so if you have seen savings go poof the most likely cause is that you made the wrong moves at the wrong times... but that is neither here nor there so there is not much sense dwelling on it.

On your 900-lb gorilla... at a minimum you should get that money into an online back account. They are totally liquid, FDIC insured and currently pay about 1.2%+/-.
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Old 11-16-2017, 03:08 PM   #4
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OP - while you contemplate what you are going to do, immediately open an www.ally.com bank account savings account and stick your money in there so you can earn 1.25%.

OP - while you may be suspicious, I fear you are your own worst enemy when it comes to money matters.
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Old 11-16-2017, 03:15 PM   #5
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Arm yourself with knowledge. Make it routine to post and visit to this forum and don't be deterred. People helped me in all sorts of ways, even if it was against my strong will at times. You are doing things right but could be saving a little more with your income, unless your expenses are high for reasons perhaps I don't understand. For instance I earn roughly the same as you, I have two kids and I am saving just a little bit more than you are.

Take the emotion out of investing by knowing what you don't know.
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Old 11-16-2017, 03:19 PM   #6
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welcome! you came to the right forum
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Old 11-16-2017, 03:26 PM   #7
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I could have written a lot of what you said in December of 2008. But I didn't sell, and I started educating myself.

One of the most important things I had to learn was "safe" savings (ie, bank account) means you are losing money against inflation. You have to play a little to win. But from your post it sounds like each time your trust was proven, you moved and sold, locking in those losses. You're not alone, many people have done that many times.

Read up on "lazy" portfolios, solid asset allocations for low-risk appetites, and then also get a solid handle on your actual expenses. You won't fix things overnight, but you can change directions and get the most out of what you have.
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Old 11-16-2017, 03:37 PM   #8
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Looks like you won't be too far off your goal in 11 years, provided you maintain or increase the current savings rate - which seems very good @ 32.5% of gross wages. I understand your feelings about the beatings in the market in the last 17 years, but PB4 is correct that the market has always come back. Having said that, I still wouldn't suggest a big move into the market today. Perhaps you can start funneling new money into a diversified portfolio and as others have suggested, find a more rewarding safe place for your current stash. You are going to need some investment gains to hit your number, plus you will need ongoing gains to enable your withdrawal rate once the party starts.
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Old 11-16-2017, 03:43 PM   #9
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OP, if you lost large portions of your savings to market crashes and recessions it is because you sold your investments at the bottom, unless you were in something that just went completely belly up. In either case you made the two or three of biggest mistakes you can make:
1. Not diverse enough in your investments

2. Not properly allocated between equities and fixed income vehicles
and/or
3. Panicking and selling out at the bottom instead of rebalancing your Asset Allocation (yes, buy buying more at the bottom).

If you were diversely invested, in something like an S&P 500 index fund, then it would have recovered after the crash & burn of '07-'08, and if you'd rebalanced your AA, you'd have all of that money you "lost", and more.

Now, there is nothing you can do about '07-'08 now, BUT, you can learn from your mistakes and get it right this time.

there are lots of threads here on index funds vs. individual stock picking, and "timing the market" vs. setting an AA and rebalancing. Read as many as you need to until you understand them.
Have your read "The Four Pillars of Investing" by William Bernstein? if not, you should.

Do you have to keep that money with Edward Jones? If so, have them get you into a no load mutual fund (if indeed they will) and don't let them buy and sell you to death.

You can do this, but you have to educate yourself, and not rely on guys like EJ.
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Old 11-16-2017, 03:47 PM   #10
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Quote:
Originally Posted by Sunset View Post
OP - while you contemplate what you are going to do, immediately open an www.ally.com bank account savings account and stick your money in there so you can earn 1.25%.
Ally also has a penalty free for early WD, 1.50%, 1 year CD. Can't beat it.
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Old 11-16-2017, 04:57 PM   #11
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Quote:
Originally Posted by Ranman View Post
...I have not had very much success in saving money in employer 401K's and simple IRA's as about every 8 to 10 years in my working life, market crashes and recessions have taken large portions of my savings go poof....

...As I stated in the beginning of my topic, I have major trust issues with investment firms and money managers, seems all my investing life, I have been ripped off and lied to many times and with the market crashes and recessions, I have lost a fair amount of money to warrant my feelings.
I am not wanting to pile onto any pain you feel, but when I see statements like above, I always want to hear more about the details that got you there. When we here news say "the market is at an all time high", many do not digest the fact that basically this means any investment made anytime in said market now stands at a gain regardless of crashes, recessions, wars, global turmoil, political upheavals, etc.

This consideration allowed me at a young age to understand that unless the market NEVER AGAIN in my investing time horizon (30 years) reaches an all time high I could not lose money if I rode it out and did not try and time the market.
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Old 11-16-2017, 06:24 PM   #12
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Ranman, I would just encourage you to read a lot on this forum . Educate yourself. You can do it.
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Old 11-16-2017, 06:44 PM   #13
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Ranman,

You have the time and the income to rescue your retirement. You can invest your money in the safest way, and likely never make your goal as you will lose to inflation every year. You can pick a conservative Allocation to stocks and bonds that will control your losses and beat inflation. I would not do anything fast, take a few months to read and get educated on how it works. It will save you a lot of money to just have your investments in index funds at Vanguard, Fidelity, or Schwab. If you like an office to visit, then Fidelity or Schwab is your best choice.

Do not make a rash decision and invest all of your cash until you understand how to minimize losses and maximize the gains within your risk tolerance.

My recommendation for reading would be The Little Book of Common Sense investing. It is short and sweet, but helps you learn alot of what you need to know.

Feel free to ask more questions here as well.

Best to you,

VW
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Old 11-16-2017, 06:50 PM   #14
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Ranman, some good starting comments are presented here. I suggest you reply to some of these to keep the dialogue going in your preferred direction.

Sometimes threads die for lack of attention by the OP.
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Old 11-16-2017, 07:23 PM   #15
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Welcome to the board, Ranman. Read as much as you are able. Ask questions freely. You'll find many people willing to guide you in the right direction. There are some really smart people who post here.
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Old 11-16-2017, 07:31 PM   #16
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Ranman,

Self-education is the key. Becoming a successful investor, without an expensive advisor, is easy. Study & put into practice these 10 rules (each with a 5 minute video). They're from the Bogleheads (followers of Jack Bogle, founder of Vanguard & index funds).

https://www.bogleheads.org/wiki/Vide...ent_philosophy
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Old 11-16-2017, 08:38 PM   #17
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Welcome to the forum. You have lots of good encouraging words. What sticks out to me the most is you apparently had paper losses, which you sold out and locked into permanent losses. As suggested, if you had ridden it out, you would have not only recovered the paper loss, but would have paper increase. Again, on paper it is just a number, until you actually sell and lock that in.

You may have very low risk tolerance, that's OK. We are all different. The big problem is to find investments that will beat inflation. While at the same time meeting your risk tolerance. This effectively means you do need to have some equities. It can't be sitting in savings accounts. Just keep reading a lot on here, your best investment at this time is in your education and knowledge.
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Old 11-16-2017, 09:33 PM   #18
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Thank you for the reply's and the advice thus far.


I must come clean in regards to my knowledge of the market, I know quite a bit about making dumb mistakes, bad choices and illogical hunches on when and what to buy and sell, oh, and my favorite bit of knowledge I possess is panic and selling, after the bottom has fallen out.


How I have arrived in the position that I am currently in, is directly related to my vast knowledge as listed above, which created the bulk of my money sitting in savings accounts, not making anything and losing value to inflation due to the constant doom and gloom in the news about the sky is going to fall at any moment and it will be worse than 08 – 09, which has made me nervous to utilize my superior skills and get completely vested back into the market.


I have hesitated on CD's due to the return being so low, and utilizing my illogical hunch that rates will raise and not wanting to be locked in for 2 to 5 years for less than 3%, because a better rate may be around the corner. But we all know how that is going so far.


I do have 51k of my 183k in savings account with Goldman Sacks Bank (formally GE Online Bank) making 1.45%, to correct my earlier statement, but even that is not going to keep up with inflation.


I know the track I have been on for the last 8 years is not going to get me where I need to be and I have lots of ground to make up. I guess what I was hoping for by posting here was someone would have some magical advice of hey, been there done that, you need to put money here on x,y and z, let it ride and don't worry about the market roller coaster, and for x amount of investment you should make about y ( please do not suggest an annuity to me).


I do have some ideas of what to put my money in, from lurking around this forum and others a bit, but what I am not sure of is the following, and please correct me if I am wrong.


I already have a his and her's 401K, we started putting in 6500 each year in hers as a tax deduction, which from what I understand is the maximum amount for her, and because I contribute the maximum amount at my employers simple IRA of 15,500 , I am not allowed any additional tax differed contributions to my 401k.


I could open a ROTH, but from what I understand the maximum I can contribute into that is also 6500, which would take many years to move over 100k from my savings account.


I could open just a standard brokerage account and move 100K +, but I am not sure what tax problems I would run into by doing that, and what the tax burden would be, and I would rather not increase my taxes any more, 25% tax bracket with a disabled wife on SSDI is enough.


I'm just not sure how to go about getting back on track without making bad tax moves, or triggering a IRS audit.


And after my experience with firms like EJ, I would rather not pay someone to do what I can do equally as well, make bad returns and lose my money.
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Old 11-16-2017, 09:54 PM   #19
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I don't think what you invest in is as important as getting your emotions under control when it comes to investing. You either read and gain the confidence you need to "stay the course" or you pay someone else to control your money and then sell it all when you tell them.

You are saving 28,500 per year which is a good savings rate, but you can't squander the opportunity. A taxable account at a low cost fund provider would be your next step if you want to beat inflation. You will keep the taxable account heavy in Stocks to reduce the tax drag with dividends taxed at a reduced rate. Your fixed income(bonds/CDS/money market funds) will go in you IRAs.

You will have to put some effort into this if you really want success.

Again, best of luck to you,

VW
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Old 11-16-2017, 10:52 PM   #20
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So here is the magical advice.... in your IRAs and taxable accounts... move it all to Vanguard and invest it in Wellington... a ~60/40 managed fund with a solid track record and reinvest all dividends.... same thing with new money... and let it alone.

No tax problems investing that $100k in Wellington either other than dividends of probably $2-3k a year and much of those will be qualified dividends and taxed at a lower rate than your earnings from working.
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