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Old 03-23-2011, 11:11 AM   #101
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Quality of the company is easy: you want a big, well-capitalized, Aa3 or better rating and preferably a mutual company. Not much more too it.
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Old 03-23-2011, 11:15 AM   #102
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Does how much we need to live figure into the discussion? Someone I know said a while back that she needed to put her money into more risky investments to "catch up". That didn't work out very well for her.

We live in a very expensive area and don't see ourselves moving for a few years - kid in high school and elderly parents somewhat nearby. That's another problem though... And Cobra runs out in a year. Has anyone thought about moving to Canada for health insurance? I looked it up online and couldn't figure out if we would qualify - we have just enough points but they don't really accept retirees and I don't think we want to be investors.
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Old 03-23-2011, 11:31 AM   #103
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<snip>but the gist was that higher interest rates do not have as large an impact on annuity payouts as most of us assume. <snip>
Exactly what I was thinking. It seems to me that the payout from a SPIA would be some function of possibly four things: 1) the size of the lump, 2) the term of the SPIA, 3) projected returns from investing the lump over the term of the SPIA, and 4) expense recovery and profit. Can current interest rates at the time the SPIA is started have that much effect? Asking because I don't know.
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Old 03-23-2011, 11:46 AM   #104
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For me, the investment decisions were easy when we were in the recession. I believe in both rational and irrational markets.

In the downturn, emotionally and financially wrenching for many, The majority of investors voted with their money and bailed. I thought that people were overreacting and put money in and concentrated instead of diversifying. In this case, timing worked. We went up to a near retirement number on our nest egg.

Now, I am asking myself the same type of questions as Amz1, What's coming? and more importantly, What should I do about it. My crystal ball is darkly cloudy, and I don't like what I am seeing. I've sold emerging markets, and am questioning where and how much to get out of US stocks. CDs have matured and are sitting in credit unions, in checking accounts which oddly has much better interest rates than CDs or savings accounts.

On the plus side, I've had a sales call from a Fidelity rep. We have a small account there, and he made a pitch for more of our investments. What I got out of it is a Monte Carlo simulator that includes foreign and emerging market sectors. FireCalc is great for what it does and I really like the multiple thread display to get a strong feel for the most likely outcomes, but miss not having foreign and emerging sectors to include in the simulations. I hope to get an asset allocation that I will trust out of this.
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Old 03-23-2011, 12:09 PM   #105
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Originally Posted by amazon1 View Post
This is addressed to the people who seemed to find my posts somewhat interesting and helpful:
What I'm asking now, and please don't respond with venomous rage, is wouldn't this be a very bad time to get an annuity and since we're in cash now should we perhaps wait and see if CDs go back up?
I think my question is - if we can't stomach gradually losing money to inflation can we afford to take a hit on principal?
Also, if you look at history, there have been periods - the 80's I believe, when you could have bought stocks and they wouldn't have come back for 20 years. Don't remember the exact figures.
If you think this is not a worthy topic of conversation, or that I shouldn't bring it up before reading 10 books please tell me without calling me names.
You're quite right, now is a tough time to buy an annuity. It's also a tough time to invest in CDs. But you don't seem willing to consider any alternatives.

Your post is typical of those who've come through a recession to realize that they're emotionally savaged by volatility. One way to overcome some of that anxiety is by educating yourself and by working through the process of figuring out what investment asset classes will help you sleep better at night.

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There is inflation now (for the past 2 years) but before that, there were 5% CDs and zero inflation and perhaps a threat of disinflation. Do we have a good reason to believe that there won't be 5% CDs again soon? I don't think we've seen rates this low in many, many years, if ever.
It's not really as if everyone on the board, in unison, gave me a single path to take. Get an annuity (now? - not now). It was scary that all asset classes plummeted at the same time two years ago. Does anyone fear that the market is overvalued now and that interest rates have to go up which would make bonds lose value too?
We've refinanced real estate four times in the last few years, each time convinced that interest rates couldn't possibly go any lower. So much for that prescience. There will eventually be 5% CDs again. I don't particularly want to live in a world with 5% CDs because it means that the rate of inflation will be pushing at least 5%. However over the longer term, the last 30 years, inflation has averaged about 5% APY. Over the last century it's been about 3% APY. How long are you going to wait for the "right" interest rate?

True, if you're trying to trade bonds for capital gains then this might be a bad time to start that strategy. But if you're trying to earn more interest than you would from an FDIC-insured or NCUA-insured CD, then a short-term bond fund or even an index fund of corporate bonds would give you a higher yield. You'd be earning a higher interest rate than CDs and you wouldn't need to care what the bond's share price was because you'd be holding on to those shares for years, even decades, to earn the yield. If you educated yourself about the uses of bond index funds then you'd be able to take solace from that reasoning.

There are many paths to ER, and that's why no one is telling you the single best path to take. Oh, but wait a minute-- you are getting a lot of suggestions to educate yourself so that you can map out your own path. Maybe that's the "path" you should take.

Your post is also typical of those who, for whatever reason, keep asking questions in the same "I'm worried" vein without actually getting off their dead assets to help themselves. You keep asking us what you should do. We keep telling you to educate yourself, even if it's the horrific experience of picking up just one of the books recommended on this thread.

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Originally Posted by amazon1 View Post
Does how much we need to live figure into the discussion? Someone I know said a while back that she needed to put her money into more risky investments to "catch up". That didn't work out very well for her.
We live in a very expensive area and don't see ourselves moving for a few years - kid in high school and elderly parents somewhat nearby. That's another problem though... And Cobra runs out in a year. Has anyone thought about moving to Canada for health insurance? I looked it up online and couldn't figure out if we would qualify - we have just enough points but they don't really accept retirees and I don't think we want to be investors.
You're right, "doubling down" with more risk is not necessarily a winning strategy. Your expenses do factor into accumulating a portfolio big enough to support the withdrawal rate of those expenses.

Canada? Health insurance? You seem to be hitting on a number of new topics here without any attempt to actually implement any of the suggestions you've received on your earlier questions.

I'll say it one last time. Pick any one of the books recommended in this thread and stop posting until you've read it. Or go over to the Bogleheads.org Wiki and stop posting here long enough to read about asset allocation. Then come back and ask us a question about the reading you've done.

Educate yourself. A bunch of anonymous Internet strangers can't "help" you any other way. If you want someone to hold your hands and tell you that everything's gonna be all right, then go pay a financial advisor or an annuity salesman for that purpose. They do a very good job of it, because you're paying a high price for the service.
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Old 03-23-2011, 12:24 PM   #106
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The response before yours was, "I'm asking many of the same questions as AMZ1". I'll take that as a reason to keep posting. I believe I can post even if I don't read a particular book and change my investment strategy to follow one (all?) suggestions offered here. Please correct me if that is against the rules of this board. I don't have to read 10 different books to believe that stocks or bonds or annuities may not be right right now. We had 5% CDs and zero interest rates a couple of years ago. Why would we need inflation to be higher than CD interest rates going forward? Interest rates have generally been a few percentage points higher than inflation. Why lock into bonds at even 2 - 3% now and then hold them until maturity, if I think interest rates will go up?

But really, I don't think one or two individuals should make ultimatums - take our advice with your money or stay off the board.
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Old 03-23-2011, 12:35 PM   #107
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The response before yours was, "I'm asking many of the same questions as AMZ1". I'll take that as a reason to keep posting. I believe I can post even if I don't read a particular book and change my investment strategy to follow one (all?) suggestions offered here. Please correct me if that is against the rules of this board. I don't have to read 10 different books to believe that stocks or bonds or annuities may not be right right now. We had 5% CDs and zero interest rates a couple of years ago. Why would we need inflation to be higher than CD interest rates going forward? Interest rates have generally been a few percentage points higher than inflation. Why lock into bonds at even 2 - 3% now and then hold them until maturity, if I think interest rates will go up?

But really, I don't think one or two individuals should make ultimatums - take our advice with your money or stay off the board.
H0cu5, you are not fooling anyone just by changing your writing style.
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Old 03-23-2011, 01:03 PM   #108
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Amazon1, as members here we have all read and become familiar with our Forum's Community Rules and have agreed to abide by them. I assume you have done so as well. These Community Rules include the following passage:

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Most of us are here because we enjoy interacting with and reading the interactions of the friends we have made on this forum and making new friends on the forum, even though few have met or ever will meet face to face. It's an unusual community brought together by our interest in early retirement, a topic often misunderstood or awkward to discuss with others, even family. Although brought together by that common interest, we talk about a good many things, as does any such group.

Friends don't always agree on everything or even on most things. They can agree to disagree. When that happens, they try to keep their discussions logical and free from name calling and so forth, or more often they just spend their time on other topics. They don't take every opportunity to express their disagreement, incite argument, insult each other, and fan flames. When they are incapable of avoiding this sort of thing, they become much more disruptive than welcome.

Most of us, while we welcome perspectives on all sides of any issue, would not invite a frequently and apparently intentionally disruptive or rude person to a gathering of friends at our homes, nor to any other gathering of friends that they are hosting.
Let's all try to cool off and take this passage to heart, and carry on a friendly, civil discussion if desired without inciting argument and fanning flames or becomning more disruptive than welcome. Thanks!
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Old 03-23-2011, 01:26 PM   #109
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Was this directed at me? If so, I joined today after finding some answers to a question I had regarding HSAs. Just another person interested, in my case, in staying retired. I'm not shilling for anyone.

By the way what is MMND?
What kind of answer did you find out about HSA's after you have been retired for 3 years? Did you find out a way you could use one. ? cuz as I see it you can't. But it was a quick seemingly rational reason to be here. Sorry if the HSA doesn't work out for you but maybe you have found a way. Plz share.
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Old 03-23-2011, 01:28 PM   #110
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Exactly what I was thinking. It seems to me that the payout from a SPIA would be some function of possibly four things: 1) the size of the lump, 2) the term of the SPIA, 3) projected returns from investing the lump over the term of the SPIA, and 4) expense recovery and profit. Can current interest rates at the time the SPIA is started have that much effect? Asking because I don't know.
Rustward...I don't know about others..but what I meant to be referencing (whether I did or not)....is that the annuity companies write the contract and lock you into a percentage payout each year and it seems to depend on the current interest rate environment. For ex: Before the financial crisis and interest rates plummeted...you could find companies that would guarantee you a 7% yearly payout on your accumulated bucket. You can't find that now. Probably lucky to find 4%. I am not in the business so perhaps someone that is could shed some light on this. Two years ago...after the crisis...I was quoted a 5% yearly payout...down from the previously quoted 7%.
I wouldn't think one would want to be in an annuity paying you only 3% to 4% of your "bucket...when the new ones might offer....5% to 7%. So I suppose with current interest rates so low...one can assume they will go up...and the annuity companies will adjust upwards as well..
I'm talking about variable annuities here....not immediate...
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Old 03-23-2011, 01:38 PM   #111
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The response before yours was, "I'm asking many of the same questions as AMZ1". I'll take that as a reason to keep posting.
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H0cu5, you are not fooling anyone just by changing your writing style.
Yup, that last post raised it to the proof level. It is hard to understand how anyone can get pleasure out of being such a d**khead.
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Old 03-23-2011, 01:38 PM   #112
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Amazon1, as members here we have all read and become familiar with our Forum's Community Rules and have agreed to abide by them.
OK, I must confess I haven't read and become familiar with all the community rules and would flunk any quiz given on the subject

I do agree to abide by them though
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Old 03-23-2011, 01:40 PM   #113
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Yup, that last post raised it to the proof level. It is hard to understand how anyone can get pleasure out of being such a d**khead.
It may be hard to understand, but I would bet good money that just about all of us have worked with (or even *shudder* reported to) induhviduals like this.
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Old 03-23-2011, 01:46 PM   #114
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W2R - was calling me that following community rules?
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Old 03-23-2011, 01:53 PM   #115
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If you need guaranteed money for x amount of years, say 5 years, you can buy a 5 year SPIA that is gone after 5 years, but will get you pretty high payouts for those 5 years. Sounds like you want a COLA'd guaranteed pension type return for the rest of your lives. You can't buy one of those.......sounds like you have most of your money in MM and cash and CD's anyways, so just hang tight and educate yourself.........
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Old 03-23-2011, 01:57 PM   #116
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Someone agreed with me so even though someone else didn't agree with me, I felt welcome to post again. That was the gist of my remark. For that, I'm piled on and cursed at.
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Old 03-23-2011, 01:59 PM   #117
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Someone needs to tell Porky it's time for his closeup...
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Old 03-23-2011, 02:05 PM   #118
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Someone agreed with me so even though someone else didn't agree with me, I felt welcome to post again. That was the gist of my remark. For that, I'm piled on and cursed at.
And all you've done is ignored the good advice you've been given...............Porky will be along shortly to help............
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Old 03-23-2011, 02:07 PM   #119
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I'm talking about variable annuities here....not immediate...
Well, were talking about SPIAs -- immediate. Guess this probably deserves a thread of its own. This thread may be ending anyway.
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Old 03-23-2011, 02:10 PM   #120
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I think this thread has run its course and nothing new is going to appear.

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