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Old 09-16-2008, 01:30 PM   #21
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Inflation IMO is a unnecessary worry........ and yes I have a "pension" and SS
So..... if inflation is no issue, are you willing to give up the COLA feature of your pension?
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Old 09-16-2008, 02:10 PM   #22
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I too suspect there are more than a few "cash only" folks on this board now.

Inflation IMO is a unnecessary worry. I "retired" in 1979 and have been, almost 100%, fixed income (mostly FDIC CD's) for almost 30 years. In the last 22 years my savings has increased 5 fold. Yes I have been adding to the total all along (IRA CD's, ROTH IRA CD's and regular CD's). No debts whatsoever and yes I have a "pension" and SS (again in two years at age 70). At that point my "income" will have increased 5 fold also from 1979 and now I do not have 4 kids at home (just DW and I).
There is more to this story, why not share it?

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Old 09-16-2008, 02:19 PM   #23
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I was going to start a new thread to whine about the stock market but someone did it for me.

I'm down, as of last night, about 11% YTD. So far, this amounts to about 3 years of "high budget" living expenses. Ouch!
Down 14% here YTD and down about 19% from the day I talked myself out of selling everything (on Halloween last year). I've seen nearly $100K on paper wiped out. And since I will have very little in the way of a pension coming, this is almost all I have to count on. Unfortunately, as a result I don't have the luxury to not be invested if I want to avoid getting killed by inflation.
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Old 09-16-2008, 02:22 PM   #24
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I too suspect there are more than a few "cash only" folks on this board now.

Inflation IMO is a unnecessary worry .... and yes I have a "pension" and SS (again in two years at age 70). .
For those of us who do not have SS and a pension -- and who either will not or have reason to question what they are supposed to receive years from now -- this seems a little Pollyannaish.

It's awfully easy to feel smug and secure when you do have COLA'd retirement income that meets your needs and doesn't require being invested with your own money -- or that your own retirement savings don't need to be as high because so much of your income needs are met elsewhere. Feel glad that you were born at the right time.

I don't want this to sound like sour grapes but the bottom line is that right now I think it's hard for people with secure retirement income from pensions and SS -- especially when the pension is COLA'd -- to really relate to the anxiety out there, and that their situation is not the norm for an increasing percentage of people, especially those who are younger.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 09-16-2008, 03:09 PM   #25
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Shabber2, I have an odd question.

What if Vanguard go bankrupt?

What would happen to our money?


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Sold majority at profits and they were mostly individual stocks from before I knew about asset allocation and diversification (MSFT, INTC, etc). My bond mix is:
Vanguard Interm-Term Treasury VFITX 50%
Vanguard Short-Term Treasury VFISX 30%
Vanguard Inflation-Protected VIPSX 20%

And me going back to equities will be:
Int'l Small Cap VINEX
Int'l Large Cap VDMIX
Int'l Large Value VTRIX
Int'l Small Value TIVFX
US Large Value VIVAX
US Micro Cap NAESX
US Small Value VISVX
S&P 500 VFINX
Emerging Markets VEIEX
Precious Metals USAGX

So "going back in", I will be 40% equities mix and 60% bonds mix overall. Basically because I am pretty risk averse and will give up some upside to sleep at night.
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Old 09-16-2008, 03:12 PM   #26
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Shabber2, I have an odd question.

What if Vanguard go bankrupt?

What would happen to our money?
Most likely, someone else would take over the custodianship of the money and the underlying securities held by the Vanguard funds. Just because a mutual fund family goes belly up doesn't mean that the underlying securities vanish or go to zero.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 09-16-2008, 03:17 PM   #27
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Thank you for the the reply. So if I have $100K at Bank of America Brokerage investing in Vanguard Stock and Fund (VTI, VUE), and Bank of America went belly up, is it safe to say the that $100K taxable account is somewhat safe?

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Most likely, someone else would take over the custodianship of the money and the underlying securities held by the Vanguard funds. Just because a mutual fund family goes belly up doesn't mean that the underlying securities vanish or go to zero.
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Old 09-16-2008, 03:17 PM   #28
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Dallas, check out this thread: Putting all your eggs in one brokerage firm
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Old 09-16-2008, 03:25 PM   #29
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What's a home taste like?

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Old 09-16-2008, 03:47 PM   #30
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Thanks REWahoo, I found this on MSN...if it help any newbie.

10 ways to protect your money now - MSN Money

Number 2 said it is up to $500K including $100K in cash, so if you have more then $500K, then spreading it to another brokerage firm for diversification is a good idea.


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Dallas, check out this thread: Putting all your eggs in one brokerage firm
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Old 09-16-2008, 04:34 PM   #31
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Number 2 said it is up to $500K including $100K in cash, so if you have more then $500K, then spreading it to another brokerage firm for diversification is a good idea.
Just a heads up: I recall reading somewhere on this forum recently that a money-market mutual fund is NOT considered to be cash.
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Old 09-16-2008, 04:38 PM   #32
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I hate myself for being nervous and pulling out my equities and going 90% bonds, but I am thinking this is timne to jump back in 60/40. Seems like we may see dow 10k, but that should be the extent of the damage.
Anyone else dancing with the devil?
Here's some historical words from one of Business Week's tech pundits. The column was written on the Sunday before Monday's 500-point drop:

Quote:
Does this mean we are only halfway through this carnage? From the Oct. 9, 2007, peak in the S&P 500 of 1565 to today's indicated open of 1215, amazingly, the S&P 500 has suffered only a 22% slide. This "baby bear" market compares quite favorably with the average 27% sell-off for all "garden variety" bear markets (declines of 20% to 40%) since World War II. Including the two "mega-meltdowns" (40%+ declines) of 1973-74 and 2000-02, the average decline has been closer to 32%. In other words, for the S&P 500 to approach "average" bear market levels, we need to experience another 5-to-10 percentage-point sell-off in prices.
The answer to the earlier question is that we probably are more than halfway through this overall bear market. Unless, of course we slip into another mega-meltdown. History says we won't, as these 40%+ declines are typically separated by 30 years—the one prior to 1973-74 occurred in the early 1940s. But history guarantees nothing, so I can only play the odds. As a result, I wouldn't try to be a hero and start a major buying campaign.
Stovall: Making Sense of the Meltdown
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Old 09-16-2008, 04:42 PM   #33
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I'm with you. I also retired early last year and I'm not a market timer. With a healthy "cash bucket" for expenses that will cover the next 2-3 years, along with the fact that I'll be eligible for SS in 15 months (even though I'll delay it till age 70), along with having no debt put's me (and you, I believe ) in a "sweet spot".
Ron, I'm a little confused. You are agreeing with Helena that you are debt free and completely out of the market forever. But in your later posts you mention your retirement portfolio a few times. What is your portfolio made up of, if not bonds and/or equities? CDs? MMs? Just trying to understand, because I still think there are major risks in being 100% in cash for a long period of time. I've got quite a nice retirement nest egg, but I don't think it would last me the ~50 years I need based on returns right at the inflation level.
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Old 09-16-2008, 07:13 PM   #34
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Ron, I'm a little confused. You are agreeing with Helena that you are debt free and completely out of the market forever. But in your later posts you mention your retirement portfolio a few times. What is your portfolio made up of, if not bonds and/or equities? CDs? MMs?
My mistake. The first two points refrenced (being retired, and debt free) are true. Talk about bad editing ...

Our "early retirement portfolio" consists of a 60/40 mix, with our "cash bucket" being part of that 40%. Since we are "pre-SS" (plan for DW at age 62, me at age 70) and my DW's two small pension payments don't start for another 4.5 years, we need to have more cash currently than we will at ages 65-70 when my/DW's SS will start, along with my wife's aforementioned pensions.

By the time we are at age 70 and "firing on all cylinders" as far as income goes, our portfolio will be adjusted to much more conserative on the equity (fund) side, in addition to having much less cash (e.g. MM's)

You are absolutely correct in stating that it's not good to have a cash heavy position, for the long term. Our target is to have 3-4 years in MM instruments (regardless of age) to supplement our current/future income sources. (I previously stated less than that, but remember, we're almost a year into a continued down market. I don't believe I'll be "harvesting" any gains to add to cash this year).

Regardless of where we are in retirement (as far as income in addition to our portfolio withdrawls) we will have more cash at ages 60-64, less in ages 65-69, and the least cash after the age of 70 (BTW, DW/me are the same age).

And no, I'm not a market timer. Before I retired, I made changes to my portfolio mix very infrequently (e.g. 12-18 months) and most times any new positioning was done with "new contributions" to my 401k/IRA's. In fact, my main changes (started a bit over 3 years ago) was to "harvest my gains" and set up the cash portion in preperation for my retirement cash/income needs.

Thanks for keeping me straight ...

- Ron
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Old 09-16-2008, 07:43 PM   #35
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Better than the office building I previously wor*ed in ...

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Old 09-16-2008, 07:56 PM   #36
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Hear, hear!

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Old 09-16-2008, 08:30 PM   #37
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I don't want this to sound like sour grapes but the bottom line is that right now I think it's hard for people with secure retirement income from pensions and SS -- especially when the pension is COLA'd -- to really relate to the anxiety out there, and that their situation is not the norm for an increasing percentage of people, especially those who are younger.

Absolutely !
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Old 09-16-2008, 09:27 PM   #38
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Old 09-16-2008, 09:40 PM   #39
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For those of us who do not have SS and a pension -- and who either will not or have reason to question what they are supposed to receive years from now -- this seems a little Pollyannaish.

It's awfully easy to feel smug and secure when you do have COLA'd retirement income that meets your needs and doesn't require being invested with your own money -- or that your own retirement savings don't need to be as high because so much of your income needs are met elsewhere. Feel glad that you were born at the right time.

I don't want this to sound like sour grapes but the bottom line is that right now I think it's hard for people with secure retirement income from pensions and SS -- especially when the pension is COLA'd -- to really relate to the anxiety out there, and that their situation is not the norm for an increasing percentage of people, especially those who are younger.
When my grandparents retired, they had two sources of retirement income - pension and SS.

When my parents retired, they had two sources of retirement income - pension and SS.

When I retired last year (age 59), I neither had a pension or SS. This is the same situation for my DW who will be retiring sometime in the next year (might be tomorrow, if she feels like it ).

Anyway, I'm one of the folks (like you) that does not have a pension (COLA'ed or otherwise) and while SS is probably going to happen for us, it is not assured (BTW, I won't be taking it till age 70, due to survivor benefits for my DW). Actually, SS for both of us is more of a "dessert" rather than the "main course".

We both started our respective Traditional IRA's in 1982, and our respective 401k's several years later, as they became available through our respective employers. In all IRA's, we each contributed the maximum allowed and for most years, I contributed the maximum to my 401k and in later years, I contributed beyond the federal limit, which was post tax and moved to a taxable MM when I retired (my DW remained at 15% of salary).

Since my DW decided to delay retirement (she was to go with me last year, but is not yet "emotionally ready), I was able to continue to fund my Roth IRA ($6k due to my age).

What I'm trying to say that I'm in the "bleeding edge" of the boomers under this "new system" of retirement (e.g. elimination of pensions and questionable SS). However, the "advantage" of knowing this (our respective pension programs were phased out in our early 30's, and our first retirement contributions started at age 33). However, even at that "late age" we've had 25+ years to make our own "pension program".

From what I see on this forum, there are a lot of folks that are starting to contribute at a much earlier age (even some in their teens - good for them).

Over the years, my DW/me have seen much "flux" in the market (and the value of our respective holdings), from the '87 "blip" along with the post 2K "meltdown". The result of these down periods was our good fortune. We paid much less and the value of those "cheap buys" enhanced the value of our portfolio (yes, even with the downturn of the past year).

Don't lose faith. As long as you make a plan which outlines what you will require in retirement, execute the plan faithfully (regardless of "market imperfections"), you will do OK.

Did I think this way 25+ years ago (when we started our plan)? Of course not. Did I think/plan on retiring before FRA for SS? Of course not. Was I "that smart". Of course not. However, I'm certainly glad that I made up a preliminary plan and stuck to it all these years.

- Ron
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Old 09-16-2008, 10:07 PM   #40
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Looks like walmart had another sale on quotation marks....
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