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Old 03-22-2011, 09:11 AM   #21
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I guess the answer to that is that my husband manages the accounts and he's lazy.
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Old 03-22-2011, 09:14 AM   #22
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I "cashed out" as well...and luckily before the massive drop. Only lost about 5% from Dow 14000 high. Got back in around Dow 8500 and rode it to 12,391 or so. Have to admit with the recent global disruptions, I cashed out again 2 days after the Japan earthquake and tsunami. Am rethinking my ...ability to "stay in the market".
Had only about 35% of what I have in there to begin with with the rest in CD's and cash.......thinking...I could put it in the market and not think about it....since the point was to let that percentage grow to keep up with inflation.
Now am thinking about using the Vanquard funds and doing it myself rather than paying a broker for this percentage of it.
I have a tendency to think in "5 year" or "10 year" buckets and developing a strategy for each bucket. For example: 5 years is in cash, next 5 years is in CDs' (this would total 10 years) for a total safety net of 15 years. The rest in the market split between bonds and equities.
But I still recently cashed out..even with that strategy. My problem is similar to yours in that I have an "amount" that I want to have by the end of 2013 when I officially retire. I can get there WITHOUT being in the market and taking on the risk....so what do I do? And what do I do once I get there to make sure my money keeps up with inflation.? There is a difference between "keeping up with inflation" and actually having your money work for you..such that it is making more money. To do that takes some level of risk.
My head knows that. My head is also risk averse.
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Old 03-22-2011, 09:19 AM   #23
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Also, do you think it's worth worrying about not keeping more than the FDIC insured amount in any individual bank? Does anyone divide their money among banks because of that?
I do...and yes...I think it is wise to do that. You can keep quite a bit in the same bank with the various levels of how you can title the accounts. One can have $500K or more in one bank....but you have made sure you use a combination of single, joint, beneficiary, POD accounts....etc.

You can call the FDIC...and go over the title on the accounts and they will tell you if you are within the FDIC limits.

Also.....make sure you have current and valid signature cards at the bank. If your signature cards are not on file...the FDIC is under no obligation to pay you back. I did not know that....and went thru the steps of making certain the signature cards were on file..and got copies of them for my own files...just in case.
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Old 03-22-2011, 09:32 AM   #24
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I would have done what you did but I had to contend with my husband and his advisor. I remember yelling, when the DOW was 14,000 - "There's no upside!" but my husband believes in all the platitudes - "I'm in it for the long run" etc.

I remember my father-in-law saying after the plunge in 1987 - that's it, I'm out for good. He then went back in and ended up losing everything (but that's another story).
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Old 03-22-2011, 09:38 AM   #25
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I would have done what you did but I had to contend with my husband and his advisor. I remember yelling, when the DOW was 14,000 - "There's no upside!" but my husband believes in all the platitudes - "I'm in it for the long run" etc.

I remember my father-in-law saying after the plunge in 1987 - that's it, I'm out for good. He then went back in and ended up losing everything (but that's another story).
How is your son doing in the markets?
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Old 03-22-2011, 09:42 AM   #26
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I guess the answer to that is that my husband manages the accounts and he's lazy.
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I would have done what you did but I had to contend with my husband and his advisor. I remember yelling, when the DOW was 14,000 - "There's no upside!" but my husband believes in all the platitudes - "I'm in it for the long run" etc.
I don't know what to make of your posts -- they are contradictory. Does your husband really manage all of your accounts? If so, as a buy and hold guy who "believes all the platitudes" he would not have sold at 7000? Or did you badger him out of his sensible approach and precipitate the crisis? If he had actually held fast while you screamed you would be in pretty darn good shape today. If you drove him out maybe you should actually turn the reins over to him, tell him to stick to his guns and turn off the TV.
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Old 03-22-2011, 09:45 AM   #27
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Things did go back up in the last 2 years but why? A lot of it is manipulation - keeping interest rates artificially low propped up the stock market and probably real estate too. There are more people (including the government) who are debtors than people trying to live off of savings and the interests (no pun intended) of the big banks lie in low interest rates so that's what we have.

Just because things went up again doesn't mean they should have or will stay up. We're still in a recession, nothing's really getting better and now we have oil shocks and the Japan situation to worry about but the market is still staying up.
Some people aren't cut out for the ups and downs of the market. It appears as though you are in that category. Doubt there is anything we can say to help beyond what's been said by Ha, brewer and a few others.
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Old 03-22-2011, 09:49 AM   #28
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Husband manages accounts and I badgered him to get out. I think we lost a lot of money by pulling out then but we got the bulk of our money after that and we may end up ahead by not losing money in the future. Haha - our son is 16 - not sure where the confusion is there.
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Old 03-22-2011, 09:54 AM   #29
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I don't know what to make of your posts -- they are contradictory. Does your husband really manage all of your accounts? If so, as a buy and hold guy who "believes all the platitudes" he would not have sold at 7000? Or did you badger him out of his sensible approach and precipitate the crisis? If he had actually held fast while you screamed you would be in pretty darn good shape today. If you drove him out maybe you should actually turn the reins over to him, tell him to stick to his guns and turn off the TV.
ummm.all easy to say in hindsite.
I remember...at DOW 7000 even the platitudes of the financial planners were broken. You have to admit even they were in shock...particularly at Fannie and Freddie. One told me if they fail...then we are all in trouble. I was able to get my daughters Fannie notes out in May before they caved in. Of course the broker laughed at me when I said "I think Fannie and Freddie are going to fail".

Also at Dow 7000..they were "calling" for Dow 4000. I know people that cashed out at Dow 7000 hoping to not loose almost 50% more of what they had.

Are there lessons...in what happened. Absolutely. If you weren't "out" before it crashed...better to hold on.

I suppose my mantra...is preserve capital at all cost. Not so different from Warren Buffets' "Never loose money" statement.
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Old 03-22-2011, 09:59 AM   #30
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Wondering why everyone else thinks 3.5% is a good benchmark in these times.
I believe you took this from my response to OP in the "New Yorker: rich by most standards, but can I really FIRE?" thread, who stated "Very, very, (very) conservative investor. Hate stocks. With interest rates this crazy low, can't find a safe investment to generate income necessary to live in this area with 3 kids, particularly after inflation."

I estimated that OP in that thread could get 3.5% return. My thought (unstated in that thread) was that OP could invest in high-quality bonds and government securities and avoid equities. Vanguard Short Term Investment Grade Fund - Admiral (VFSUX) has a 5 year return of 5%. Other bond funds have similar returns. Obviously, these are not risk free, guaranteed returns.

If OP in this thread is looking for no risk at all, then find FDIC insured bank accounts. I think I would trust in the federal credit of the United States, at least over the next few years.
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Old 03-22-2011, 10:00 AM   #31
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Husband manages accounts and I badgered him to get out. I think we lost a lot of money by pulling out then but we got the bulk of our money after that and we may end up ahead by not losing money in the future.
If your husband stuck to his guns you would be better off today. But you are assuming you saved your husband's and your bacon because there is worse to come. OK, if so, stay the heck out. Buy an annuity or laddered CDs.

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ummm.all easy to say in hindsite.
I remember...at DOW 7000 even the platitudes of the financial planners were broken. You have to admit even they were in shock...

I suppose my mantra...is preserve capital at all cost. Not so different from Warren Buffets' "Never loose money" statement.
The planners are always in shock when there is a big drop - 1987, 2000, 2008. Why is that some sort of signal to bail? -- it was a bad signal each time.

Warren Buffet says personal investors should buy and hold low cost index funds. Like Amazon, if you are going to panic when things get bad you should not be in the market.
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Old 03-22-2011, 10:09 AM   #32
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Just because things went up again doesn't mean they should have or will stay up. We're still in a recession, nothing's really getting better and now we have oil shocks and the Japan situation to worry about but the market is still staying up.
Granted, there are lots of headwinds out there, but the economy is growing, thus no recession, corporate profits are good, lots of cash on corporate balance sheets, unemployment is falling, albeit slowly.

Cash is "safe" in the short run, but very unlikely to keep up with inflation in the long run. How about 33% cash, 33% short-term bonds, and 33% stocks?
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Old 03-22-2011, 10:13 AM   #33
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Amfox - what's the Admiral fund 1-year return? Is the 5% including rates a couple of years ago when you could get 5% on no-risk CDs?
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Old 03-22-2011, 10:16 AM   #34
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Corporate profits are good because they've laid-off so many people. The 80% of people who still have jobs have gone back to spending like they have nothing to worry about. I don't really know if this "recovery" has legs. When states and municipalities start laying off teachers, etc. en masse, we could have a double dip.
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Old 03-22-2011, 10:28 AM   #35
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I'm afraid my troll-o-meter has started to twitch here.
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Old 03-22-2011, 10:32 AM   #36
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Corporate profits are good because they've laid-off so many people. The 80% of people who still have jobs have gone back to spending like they have nothing to worry about. I don't really know if this "recovery" has legs. When states and municipalities start laying off teachers, etc. en masse, we could have a double dip.
So let me get this straight, you are worried about inflation, don't want to take any risk, let your lazy husband manage the money, but end all those posts with an economic report straight from MSNBC? That's funny, but not ha-ha funny..........
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Old 03-22-2011, 10:33 AM   #37
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Corporate profits are good because they've laid-off so many people. The 80% of people who still have jobs have gone back to spending like they have nothing to worry about. I don't really know if this "recovery" has legs. When states and municipalities start laying off teachers, etc. en masse, we could have a double dip.
Some would call this "creative destruction"...

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Old 03-22-2011, 10:45 AM   #38
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So let me get this straight, you are worried about inflation, don't want to take any risk, let your lazy husband manage the money, but end all those posts with an economic report straight from MSNBC? That's funny, but not ha-ha funny..........
Oh, I think its pretty funny. We just need to get her some valium and maybe a shiny hat.
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Old 03-22-2011, 11:03 AM   #39
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Amfox - what's the Admiral fund 1-year return? Is the 5% including rates a couple of years ago when you could get 5% on no-risk CDs?
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Corporate profits are good because they've laid-off so many people. The 80% of people who still have jobs have gone back to spending like they have nothing to worry about. I don't really know if this "recovery" has legs. When states and municipalities start laying off teachers, etc. en masse, we could have a double dip.
You seem to be focusing on a series of individual events that cause you stress and make you feel that the stock market isn't an appropriate place to invest.

Several posters have recommended that you educate yourself on ways to either cope with the market's random walk or to avoid it altogether. You haven't appeared to express any interest in the books or websites that would help.

If you're not going to educate yourself then you'll continue to bounce from one economic concern to another, never finding any reason to invest. If education seems "too hard" then at least look at the Bogleheads.org practice of putting some of your assets in a total stock market index fund, some in a total bond market index fund, and some in cash. Then you can get on with your life without having to be hypervigilant every time an economist utters some dire prediction.

"Yeah but now isn't the time to invest in those" is the wrong answer. There's never a good time to invest. It's always fraught with concern. You need to find a way to keep those concerns from getting in the way of your ability to find a way to invest that overcomes the real concerns of emotional distress and the years of inflation that will occur during your retirement.

Otherwise you surely do need to spend your time investigating annuities and financial managers who will relieve you of the burden and the responsibility.

If you're not pursuing the resources to help you educate yourself then you're likely to encounter fewer posters on this board willing to offer assistance & support... and more posters who are skeptical that they're being spammed/trolled. This board gets a lot of the spam & trolls.
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Old 03-22-2011, 11:11 AM   #40
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I understand your fear but as others have pointed out the best weapon to combat fear is knowledge. Check out the Bogleheads;

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good luck!
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