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IRA Max. Growth Next 5 Years
Old 06-15-2007, 01:39 PM   #1
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IRA Max. Growth Next 5 Years

I'm a 51 year old small business owner of 12 years. I currently have approx. $250,000 in my IRA with 65% in cash@4.85% from stock sale proceeds and 35% in a strong co. stock paying historically strong dividends that I spent 16 years in their employment so I'm comfortable with that.I've been waiting on the market correction to buy back in, but it hasn't happened yet!

My question,which I know has 1000's of variables, is how would you invest this for maximum return over the next 5 years, while limiting risk?I know that's an oxymoron! I can't afford to be too agressive as I don't have a pension and due to business conditions, I'll probably not be able to contribute to this in the near future. I have no debt.

So, I'm hoping to get some opinions from the vast knowledge that I enjoy reading on this site everyday.

Thanks
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Old 06-15-2007, 02:34 PM   #2
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35% in a strong co. stock paying historically strong dividends that I spent 16 years in their employment so I'm comfortable with that.

Sounds familiar. I usta work for Enron. I'd suggest more diversification.
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Old 06-15-2007, 03:00 PM   #3
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There is no such thing as low risk. Investing is about managing risks. In your case your biggest risk is how long you'll need to draw the money and inflation.

To lower principal risk, I would spread the 35% position in stock to much smaller positions in many other companies. Either buy a mutual fund, or have a 1% position in 35 companies.

I would move the cash to something with more oomf. I might suggest permanent portfolio (PRPFX) or a balanced fund. These would generate a higher return than the ~4% you are getting now (which may not even beat inflation).
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Old 06-15-2007, 04:00 PM   #4
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How long has this money been in such a low-interest cash account (MMfunds pay about 5.1+% nowadays)? When did you sell those stocks?

Did you miss the 'near' correction last June? The dip in February? The dip in May? What number will it take to get you to invest?
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Old 06-15-2007, 04:41 PM   #5
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How long has this money been in such a low-interest cash account (MMfunds pay about 5.1+% nowadays)? When did you sell those stocks?

Did you miss the 'near' correction last June? The dip in February? The dip in May? What number will it take to get you to invest?
Cash parked approx. 6 months. it will take more than a near correction or a dip for me to buy back in. I have no interest buying in at historical highs. I may have to move the cash to a MM, but I want to be able to buy when the correction comes, and it will come. Nothing justifies the Dow numbers of today. Below 13000 will interest me.
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Old 06-15-2007, 08:45 PM   #6
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No debt is a good place to be but you're only 51 and with no pension $250,000 is not going to get you very far.

You are taking on way too much risk with the single company stock and the inflation risk of holding that much cash making such a low return.

You need to do some reading and get an AA you can be comfortable with. The portfolio you have now is very risky. The market has an upward bias, the sidelines can be a dangerous place.
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Old 06-15-2007, 08:52 PM   #7
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You'll be sorry .... or you won't. It won't be because you are dumb or smart, but lucky or unlucky. About 20 times on this board, I've seen the statistic about where you would not want to be if you missed the top 10, 20, 30 days of the market.

It might help to know why you liquidated in the 1st place. Did something change to make the investments unattractive? Or did you just think that the market was too high and you were bailing? If that is the case ... IMO you are going to have to get lucky...

In either case, if it were me, I would either dca back in or more probably jump in with two feet (which is what I just did on this miniscule dip) with the funds from my individual stock liquidation (into an ETF).

...just my 2 cents worth ... and not worth much more than that...
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