How to invest 1.2 Million for ER?

[justin]

Quote:

Originally Posted by haha Under that circumstance, how secure would VVIAX be? Ha

My guess is that it would be significantly adversely affected. Although I'm sure a majority of the companies in VVIAX obtain a big chunk of profit/revenue from overseas. It would be a good time to have some international investments.

Sure, the whole world will be hurting if the US hits hard times, but I don't know that the US is the be-all-end-all in the global economy like it is sometimes made out to be.

[kcowan]

Why not look at convertible debentures? Sometimes you can end up a winner. We got lucky with a 2004 issue of a REIT offering 6.5% plus guaranteed conversion price of $25 and with the stock appreciating, we are getting our 6.5% plus a market value of 51% premium if we convert.

I cannot speak to dumping $1.2 million in the market all at once. I have more than that in the market but it has evolved over 5+ years. I undertstand why you would consider it would be intimidating.

If I were doing it again, I would go with some Vanguard for the easy stuff in equities and then do the fixed income myself with things like the convertibles and pref shares. Then I would create a "play money" portfolio and start buying high growth stocks.

[rmark]

This article might be useful

FPA Journal - Guidelines for Withdrawal Rates and Portfolio Safety During Retirement

[unclemick]

Quote:

Originally Posted by kcowan If I were doing it again, I would go with some Vanguard for the easy stuff in equities and then do the fixed income myself with things like the convertibles and pref shares. Then I would create a "play money" portfolio and start buying high growth stocks.

I may be older but the 'hormones' never die - if football and wild women don't fix the problem - those pesky hobby stocks will always sneak in there.

15% Norwegian widow stocks - for the dividends - Riiiight!

heh heh heh - one fund out of the can is all it takes with auto rebalance/auto deposit to MM or checking. No advisors, no thinking, just have faith - and for Heaven's sake - do not read any stupid books!

Pssst - I forgot to mention the kayaks - and no there's no secret initiation - but some training is recommended.

Simple is extremely tough to do - but it does work. Target Retirement 2015 at 5% variable = 60% of income(the variable part) non cola pension plus early SS the other 40%. The Norwegian widow is lagniappe.

[kcowan]

I have to admit that the high growth fun stuff has been worth it. Some of them eventually gain respectability and move over to the other side, e.g. AAPL, AMX, AMOV, ACH - while others just get dumped at a loss.

[unclemick]

AET Aetna, BWA Borg Warner, EMR Emerson Electric, NUE Nuccor, UNP Union Pacific.

Will they grow or blow - only the Norwegian widow knows and she ain't telling - she used her 'casino money' she keeps in a special old coffee can!

Just kidding. Plus I plan to shop a little more before the end of the month - see 'forever stock' thread.

heh heh heh - some things can't be cured - just endured.

[EddieG]

Quote:

Originally Posted by youbet Based on this statement, I think you would get some clarification by going to FIRECALC, entering your scenario and observing the ending portfolio value graph. Vary your AA inputs and resubmit a few times and note how the graph changes in terms of both average ending value and range of ending values. !

Firecalc:
This was entered at 40% Stocks or mutual funds. .20 expense ratio. For 45 years:

FIRECalc Results

Your plan is to spend $40,000 a year, or 3.33% of your starting portfolio.

FIRECalc looked at the 91 possible 45 year periods in the available data, starting with a portfolio of $1,200,000 and taking out $40,000 the first year of your retirement, and the same amount after adjustments for inflation each year thereafter.

(FIRECalc assumed your retirement portfolio is in investments that perform about like the US stock market as a whole. Mutual funds report each year how well they have performed relative to the stock market as a whole. Such information can help you see how relevant this information might be to your situation.)
The key result: a 94.5% Success Rate

For our purposes, failure means the portfolio was depleted before the end of the 45 years. FIRECalc found that 5 cycles failed, for a success rate of 94.5%.

[EddieG]

Quote:

Originally Posted by unclemick I may be older but the 'hormones' never die - if football and wild women don't fix the problem - those pesky hobby stocks will always sneak in there. 15% Norwegian widow stocks - for the dividends - Riiiight! heh heh heh - one fund out of the can is all it takes with auto rebalance/auto deposit to MM or checking. No advisors, no thinking, just have faith - and for Heaven's sake - do not read any stupid books! Pssst - I forgot to mention the kayaks - and no there's no secret initiation - but some training is recommended. Simple is extremely tough to do - but it does work. Target Retirement 2015 at 5% variable = 60% of income(the variable part) non cola pension plus early SS the other 40%. The Norwegian widow is lagniappe.

I may regret asking this, but what are "Norwegian widow stocks"?

Eddie

[brewer12345]

Quote:

Originally Posted by EddieG I may regret asking this, but what are "Norwegian widow stocks"? Eddie

UM translator sez: steady payors of growing dividends.

[unclemick]

Quote:

Originally Posted by brewer12345 UM translator sez: steady payors of growing dividends.

Yep That's it.

heh heh heh - back in the old days(1990's) used Moody's then Mergent's handbook of Dividend Achiever's - now(in recent yrs) they have been franchising their research on dividnd payers out - Blackrock comes to mind.

heh heh heh - plus others

[pedorrero]

You might consider dead lunatic investment advisor and Libertarian party candidate the late respected investment writer Harry Browne's "Permanent Portfolio" strategy (ca. 1988 : he'd have you put 25% (each) into T-bills, T-bonds, gold (bullion), and volatile common stocks; you re-balance annually. He claims you could get 5% a year real return on such a portfolio. (I don't know if the past two decades have borne this out -- I'd bet it has though.) The advantage (?) of this stategy is you're only 25% in equities. To me, having 50% in government paper is bad long-term inflation wise, but that was, to my knowledge, the final teaching of this old-line guru of the "hard money" movement of the 1970s. There is also a family of "Permanent Portfolio" funds you can research, although these differ significantly from what Browne advocated. Anybody who advocated buying gold or German Marks back about 1970 couldn't have been all wrong Nobody told me to buy Wal-mart either ... but I was only 7 years old then.

[unclemick]

1980's - my version(don't forget my Boglesque 500index is DCA'ing away in my 401k while I'm putzing) in IRA/taxable - Physical gold/silver/platinum coins, Putnam CEF foreign bonds, Vanguard Trustee's co-mingled International, Intermediate US Treasury, Vanguard 500Index, plus some timberland and a 10% joint venture in a Colorado gold mine and a rental duplex. Dumped the freeze dryed food in the 70's and we used the guns at the gravel pit for plinking - don't laugh I can name five off the top of my head who were avid collectors - a lugar guy, an old shotgun guy, and one you collected those various 'collector edition' gift boxed pistols. Don't forget the stocks are dead article came out circa 1982 - so 'collectors of various types' were viable investment strategies - wine and single malt scotch anyone?

Long story short(condensed version) - sold and ate the duplex proceeds/1 yr temp jobs while my 401k rollover in Vanguard compounded to fund about 80-90% of ER. All my other 1966 - 1992 investment brilliance was entertainment.

Thus I are a hard core Boglehead - mostly - except for hormones and I think the Norwegian widow is an absolute sweetie!

85% Target Retirement, 15% Norwegian widow stocks.

Your mileage may - AND I may change my mind.

heh heh heh

[wcv56]

I am not sure about others but many years of
using the basic stuff and doing my own investing
I found something for me to be on more or less cruise
control ( of course watching at least monthly).

As I have plans to retire soon at 52 with a bit more than
than 1.2 mil but not much, I found 3 managers I like.
I have my longer term bank/broker who manages 40%
which is also my money market cash living account
they watch it like a hawk and easy to travel around the world using ATM's.
Capitalistpig hedge fund 30%
Modern Capital Hedge fund 25%
IGNAX 5% that I have had for years ( PSPFX would be as good if not better without the front load).

I got in the Modern capital for less than the 500K
that is required adding more is 50K.
Cap Pig fund is 100K intial and adding is 10K minimum.

I figure that I done enough of working to get here and will concentrate on having fun and being a bit wise on spending.

No debt, help the parents and kids out a little.
27 years working in foreign countries out of last 32 years.
Owned 3bdrm house in Thailand but sold recently
bored with the place. Too Many Key-now ( cheap charlies flooding the place like a ghetto anymore with the locals having poor attitudes to foreigners also).

1st post

[wcv56]

tired to edit last post but learning the site still.
Single 3rd time ( 10 years now and counting).
Just bought house in East Tennessee for a home base!

[brewer12345]

wcv, how did you decide to invest in these specific hedge funds? How did you determine that they would offer good risk/reward and that they were not run by crooks?

[wcv56]

Modern Capital, the manager was on a investment forum I joined
so I/we use to talk. Was not hard after a few years to see the guy was
first class and the fund he started in 2004 which he talk to us about was really first class. He had great verifiable credintals also.

Capitalsitpig fund you can watch it on fox news every week.
Jonathan Hoenig is the manager. Both have certified accounting firms that will supply any info you need to verify the fund.

It is a bit hard unless you want to pay to get info on hedge funds
but there is alot of info out there.

[brewer12345]

I guess I am just not that trusting.

[wcv56]

don't blame you most of my mistakes have been with wives, friends and family concerning money.
Whatever makes you happy I guess.
I know what I like and like what I know now!.
Investing is not simple and just like everything is else not free
to do it well.

Cap pig
Historical Returns:

Fund
Dow
S&P 500
Nasdaq
Bonds
Hedge
2000
56.65%
-4.72%
-9.12%
-39.26%
13.37%
4.73%
2001
10.29%
-5.41%
-11.82%
-20.71%
6.74%
4.32%
2002
27.66%
-15.01%
-22.10%
-31.23%
11.56%
3.00%
2003
58.90%
28.28%
28.68%
50.77%
2.25%
14.36%
2004
6.39%
5.31%
10.88%
9.15%
3.50%
9.20%
2005
15.55%
1.71%
4.91%
2.12%
2.65%
5.90%
2006
8.12%
19.04%
15.79%
10.39%
3.49%
11.81%
2007
4.37%
13.30%
9.12%
12.46%
4.80%
7.03%
LOF:
384.62%
53.79%
20.38%
-25.40%
50.16%
83.84%

[wcv56]

(Fund ) is the cap pig returns! ( I bought it as he seems to be a great down market investor).

The list is in order of the returns top to bottom

[haha]

Quote:

Originally Posted by wcv56 Single 3rd time ( 10 years now and counting).

Seems like you could be a board guru on love, marriage and money and the interactions among same.

How about some cautionary tales from the trenches?

Ha