What to do with your cash

[wcv56]

Mutual funds shut down because of poor performance as much as Hedge funds.
Why put shackles on your money managers if they are so good. How is being able take advantage of market conditions like being all cash more risk than a mutual or bond fund. I use to use Ivy funds and a high wealth manager with a large investment firm, no cheaper than a hedge fund. Just because a fund says the fees are 1% does not mean they do not have added expense they charge to the fund.....
I have not had a loan since 1984 which was $1K and paid cash for the 4 residences I have owned. I hate debt seen it destroy to many wiser than me people in the past.

 

[wcv56]

I am invested in a oil/gas well partnership , is this to high risk also.
We only have about 80 operational wells at this time and drilling more come summer.
Maybe another Horizon huh, I guess I could rock to much in my rocking chair and tip over so I should stick to chairs with 4 legs only.

 

[nun]

Mutual funds shut down because of poor performance as much as Hedge funds..

I don't mean poor performance I mean insolvency caused by taking too much risk? Can you give me any major retail mutual funds that have collapsed? I can think of five hedge fund collapses without going to the web.

Why put shackles on your money managers if they are so good. How is being able take advantage of market conditions like being all cash more risk than a mutual or bond fund. I use to use Ivy funds and a high wealth manager with a large investment firm, no cheaper than a hedge fund. Just because a fund says the fees are 1% does not mean they do not have added expense they charge to the fund.....

Can you tell us more about you evaluation of risk and income requirements. Do you have a plan or any analysis of your risk vs income requirements.....not getting much from you on that topic. FYI 1% fee is enormous.

I have not had a loan since 1984 which was $1K and paid cash for the 4 residences I have owned. I hate debt seen it destroy to many wiser than me people in the past

slightly baffled by this last bit

 

[nun]

Oil, hedge funds.... They are definity a change from the 60/40 mutual fund portfolio which is too often quoted here

 

[wcv56]

Oil/gas well partnerships are not hedge funds and same is required be an accredited investor. Many of them out there, getting into the right one is the key. They can provide long term income 15 to 20 years but carry larger non liquid risk.

As I stated before the performance of my hedge funds cappig up 400% since inception Aug 2000, down years two 2008 -4.5% and 2009 -1%.

Other one inception Sept 2006 up 727% no down years YET,,,, up 28% so far in 2011.
Best year 2007 up 168%. Down market 2008 +80%.

Mutual funds that do poor normally sell off to another fund and intergrate so you don't hear of them as being failures but I am sure there is some info out there if you want to research. I have been in a few of them long time ago and several appear when really big hits to the markets happen. Check past dot.boom times of past and see how many mergers arise from them.

Tell me how your mutual funds that can only invest in a certain area a certain way is and must stay at least 80% invested at all times is not shackled. Anyways just pay your 4.5% mortgage off when you get the cash, I am going to make money and talk about the results.

 

[wcv56]

I pretty much keep cash that will last me a year or two but this down turn had me helping out about 5 people so cut me short. This is kind of the second time I retired since April 08. I can withdrawl from my funds with 90 day notice or work again.
I played KOG and NOG last July/Aug with my money market fund and made enough
to pay my last 6 months travel (up 70%) which I rarely do any of my own investing anymore.

Read the prospectus on mutual and CEF's to get the real cost of the funds operations
and not only the fee's charged for managing it. You might find a massaged cost of paying insurance, pension and other operational cost for employees asscoiated with the fund. How much do they charge the fund to buy and sell positions in it? Think there is
any commissions on them?

 

[nun]

Mutual funds that do poor normally sell off to another fund and intergrate so you don't hear of them as being failures but I am sure there is some info out there if you want to research. I have been in a few of them long time ago and several appear when really big hits to the markets happen. Check past dot.boom times of past and see how many mergers arise from them.

Tell me how your mutual funds that can only invest in a certain area a certain way is and must stay at least 80% invested at all times is not shackled. Anyways just pay your 4.5% mortgage off when you get the cash, I am going to make money and talk about the results.

Your methods are not my cup of tea, as they are high risk and high return, so you must need a lot of income, but I wish you well. You've described your impressive gains several times, but not much about how you evaluate risk and the returns you actually require to fund your retirement. Do you have a plan above "best bang for the buck"? I don't think there will be many takers for your approach, but we are a catholic group so your input will be welcome.

I don't know of any ER folks who have only one mutual fund, unless it is some retirement income fund of funds, and particular asset allocations and investments types are usually in a portfolio to give the desired income with the lowest risk. I don't need to generate the returns you get to retire as a 2% withdrawal rate will cover my expenses so low risk investments are all I need.

I'd really like some specifics on the mutual fund failures/mergers, and as you first mentioned them I think it's up to you to do the research and present some examples. Hedge funds that have failed include LTCM, Madoff, Marin and I believe a few hundred go under every year.

As far as mutual fund fees are concerned I am an index fund investor which by their nature have low costs. As long as the index fund value plus the expenses matches the index then there are no hidden costs.

 

[wcv56]

Beta .11
Sharpe ratio of my fund 1.08
S&P 500 .3556
U.S. markets total .40625

Higher the better.
S&P 500 return from 2000 thru 2010 12% accumulative ( that is a hum dinger)
mine is already stated.

Mutual fund failure info website
http://www.investopedia.com/articles/02/013002.asp

 

[nun]

Beta .11
Sharpe ratio of my fund 1.08
S&P 500 .3556
U.S. markets total .40625

Higher the better.
S&P 500 return from 2000 thru 2010 12% accumulative ( that is a hum dinger)
mine is already stated.

Mutual fund failure info website
Published Mutual Fund Returns Not Always What They Appear

Once again you don't connect the risk and return to your need for income and your link underlines the advantages of index funds which are very popular here.

"John Bogle, founder and former chairman of the Vanguard Group, often cited the survivor bias phenomenon as one of the reasons for favoring index funds, which don't play the survivorship game. Bogle is quoted as saying that "what we are really looking at here are "juiced" managed fund performance numbers, which create a misleading picture that actively managed funds are competitive with indexing."

I feel that you are making some basic investing mistakes, but you seem to have hit on a strategy that you are comfortable with and I applaud you for that. However, a little more exposition about how your strategy relates to your retirement plan would be useful, rather than just pasting numbers.

 

[brewer12345]

MMND, is that you?

 

[wcv56]

ETF's are fine if you want to babysit them thru good and bad times or just let them go as you please, like the -37% loss in 2008.
I think my fund managers are worth every penny they earn and high water mark keeps them enlightened to keep the returns positive. One waives the performance fees anyway and is the biggest investor in the fund he runs.

I don't use a % of withdrawl method or income producing portfolio.
When I see the need for cash I withdrawl from a fund for future expenses.
As I work now and then a year or two at a time which provides me with savings for around 3 years each year I work (much of it tax free). I am single and children are grown, parents live in one of my residence. I guess living overseas 30+ years, where I spend most of my off time lets me be nonchalant more than rigid.

How is that for a plan, make high returns or low losses paying top professionals to take care of it while I enjoy life when not working.

 

[wcv56]

Top Ten Hedge Funds make $28bn

http://www.ft.com/cms/s/0/24193cbe-4433-11e0-931d-00144feab49a.html#axzz1G62Wwbwl
If you’re curious as to just how well hedge funds perform for their clients then here is a recent article in the Financial Times Newspaper detailing the performance of the world’s top hedge funds run by high profile names as George Soros and John Paulson.

In just one comparison, the top 10 hedge funds made $28bn for clients in the second half of last year, $2bn more than the net profits of Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley, Barclays and HSBC combined. So given how well these banks have done recently this is no mean feat.

 

[HFWR]

Back on topic, CDs or short-term bond funds...

Not sure hedge funds are the answer to this particular question...

 

[nun]

Back on topic, CDs or short-term bond funds...

Not sure hedge funds are the answer to this particular question...

You forgot TIPS........

wcv56, I'm not doubting your success as a hedge fund investor, just the need to take on so much risk, but lets move on. Are you a US citizen? As a soon to be US expatriate myself I'm looking for tax advice, do you do your own taxes or pay someone to do them, I'm looking for someone with expatriate tax knowledge, can you recommend someone and I'm intrigued by your "tax free" wages....do you take the foreign earned income exclusion?

 

[wcv56]

I use an accountant who filed 15 years of taxes for me in 3 years without penalty.
Terrible fights with IRS but he was right every time, IRS didn't know their own rules
many times.
The average cost is around $3K for each year, 65 pages is average I would say.
Today the tax free amount is $91.5K if you work and file what you make. I work with
us companies and they almost always do a W-2. I keep all my money in the USA and use ATM's for withdrawls. I use Florida for home of record where I have a house.

Any earnings or interest from bank accounts is to be reported to include foreign bank accounts. Not sure IRS would ever know thou.

Lane Keeter (Little Rock Ar.) Ph 501-362-8281
This is a firm and I am not sure how many CPA's work there.

If you are going to just live overseas and not work nothing will really change for you as
far as taxes are concerned. You can try to do foreign market investments but not sure it would be worth trying to hide it, I don't and wouldn't. I don't mind paying taxes even though I have had some hefty tax bills in the past.

 

[nun]

Thanks, good info. It sounds like your accountant is doing the right stuff and filing FBAR etc, but just check that they are up to date with FATCA.

 

[wcv56]

He has helped me out chasing down K-1's and all as I am normally out of country.
2555 is used to report/file your overseas income. As I don't get taxed by the foreign countries I don't get into the credit for paying foreign country taxes if they have a
treaty with U.S.
I gave him power of attorney so he can sign my returns for me. He does have me look at them first and give him my approval on the filings.

 

[nun]

If you are going to just live overseas and not work nothing will really change for you as
far as taxes are concerned. You can try to do foreign market investments but not sure it would be worth trying to hide it, I don't and wouldn't. I don't mind paying taxes even though I have had some hefty tax bills in the past.

Foreign pooled investments ie mutual funds are not a good idea for US citizens, but individual foreign stocks are ok. I might work abroad, but I'll probably take a foreign tax credit as I'll be resident somewhere in the EU.

 

[wcv56]

I use the 330 days out of a 365 time frame for my filing.
Using a foreign residence filing has other requirements than staying out 330 days a year which can be from Mar thru Jan. I believe as foreign resident filing you can actually be in the USA more than 35 days a year. You can still own house or condo
in the U.S. and still be a foreign resident filer. If you work for foreign company not sure IRS would ever know you worked or had earnings.

I worked in Germany last Sept for a few weeks before I resigned and told them I was
taking a break. Single person tax 45%, VAT 19%, Fuel $7 a gallon, housing expensive also. The company would only give small bonus to compensate so I left.
They just ask me if I would work 2 years in another place, I said yes so just waiting
for offer letter.... Kind of bored traveling most of last 7 months allot of hotels, bars and golf courses.

 

[Alan]

If you work for foreign company not sure IRS would ever know you worked or had earnings.

I've only got experience with the UK, and if you work for a UK company, or draw a pension from a UK company you will be taxed in the UK unless you get a certificate from the US IRS declaring that you are paying US taxes. I then declare my UK income and pay US taxes. I certainly wouldn't want to risk tax evasion by not fully declaring my UK income.

 

[HF63]

How about using a fund like VASIX it holds ~ 20% stocks. I currently hold ~ 40% cash and it seems like a waste when compare to the yield on Cd's and money market funds. I wish that I could be a bank and borrow money at zero and lend it 4, 5 or 10%. The banks have a real nice milking machine!!!!