Sold out of the market last Aug.

[ShustS6512]

I've become very conservative; retiring next year (age60) but earning 0%. Any thoughts on investing at this point.

 

[REWahoo]

I've become very conservative; retiring next year (age60) but earning 0%. Any thoughts on investing at this point.

Become a little less conservative.

 

[Sirka]

Keep some stocks

Become a little less conservative.

+1
All in or out is too hard to do! Keep some stocks with dividends as your base. I raised cash from 9% to 27% in March and it reduced the up and down volatility of the portfolio so far. But I will start going back in this fall, when we get back from vacation

 

[Birdie Num Nums]

Even though "Dr. Doom" says his 'Perfect Storm' Is Unfolding Now?

 

[REWahoo]

Someone is always saying the world is coming to an end. Someday they will be right...

 

[MasterBlaster]

Someone is always saying the world is coming to an end. Someday they will be right...

It depends on the what the meaning of the word is "is". Or some other Clintonism.

 

[MasterBlaster]

I've become very conservative; retiring next year (age60) but earning 0%. Any thoughts on investing at this point.

I would say buy more ammo and cases of pork and beans.

 

[walkinwood]

While the perfect storm may be coming, does he know what it will do to your portfolio? I don't think so. The stock market may view it as a positive - get it all out and done with so growth can resume - instead of this drip drip torture that has the economy in limbo.

 

[pb4uski]

I've become very conservative; retiring next year (age60) but earning 0%. Any thoughts on investing at this point.

Become a little less conservative.

+1 with REWahoo

I hate to be the bearer of bad news Shust, but you're probably actually losing rather than earning 0%.

You start out the year with $100 and earn zero and end the year with $100; however, because of inflation at the end of the year it costs $102 to buy what one could buy for $100 at the beginning of the year. So in terms of what you can buy, you have actually lost 2% rather than earned 0%.

 

[Animorph]

If prices are lower than when you sold, buy some now. Buy more when it's -10% and -20% from where you sold. Otherwise I'd buy opportunistically and with a DCA-ish plan to make sure you get in eventually. I think you have a couple years at least before you really have to worry about losing your opportunity, but you never know. If you went all cash last August you might want to let Europe unfold a little more before buying back in.

Can you get to 40/60 stocks/bonds without needing to jump out again? Sounds like you might want to stay pretty conservative.

 

[Bestwifeever]

You could just start plugging your nest egg into a Vanguard Target or Fidelity Freedom fund--they are appropriately conservative for one's age and they are autobalanced to become more conservative as time goes on. But they still earn more than 0 percent.

 

[obgyn65]

How can you earn 0% ? Even CDs are at 1-3%.

I've become very conservative; retiring next year (age60) but earning 0%. Any thoughts on investing at this point.

 

[clifp]

I've become very conservative; retiring next year (age60) but earning 0%. Any thoughts on investing at this point.

Depending on when you sold in Aug you lost out on 4-15%. Not good but not the end of the world. You'll see from reading this forum and the FAQs that people have a wide variety of risk tolerances. Generally speaking at least a 25% exposure to stocks is recommended and historically has kept retirement portfolio from being eroded by inflation.

 

[Spanky]

How can you earn 0% ? Even CDs are at 1-3%.

Most likely from money market funds.

 

[rescueme]

Depending on when you sold in Aug you lost out on 4-15%. Not good but not the end of the world. You'll see from reading this forum and the FAQs that people have a wide variety of risk tolerances.

I agree with this statement.

Being that I retired in early 2007 - a bit over five years ago (at age 59) I also had reservations about what I was about to do, especially since I had no pension nor plan to take SS till age 70 (primarily for the benefit of my DW).

I learned a bit along the way while in retirement, and not all at once. For one thing (and I know a lot of folks will not agree with me, but that's OK - it's my life), I executed an SPIA with a portion (10% of our combined investment value, at the time) to provide a base income, similar to a pension - or SS.

Secondly, I learned not to take profits (either "cash in" or re-allocate) based upon a calandar date as I had done for many years while in the accumulation phase. Now if an indivudial fund shows a profit of +5%, I'll "cash out" and add it to my cash bucket, to meet current retirement expenses. We have the opinion that cash is not an investment, but rather an income source, and treat it as such. I know a lot of folks on this (and other) forums look to handle their retirement income in a different manner and try to maximize their cash "return", but we're fortunate not to have to take that risk.

That cash bucket is set to hold between 3-4 years in cash (MM). If I reach the max through sale of gains, I'll re-allocate in other funds. If not, I'll just reallocate to those funds that have not been doing too well over the last year or so (e.g. the "dogs").

In retirement, I don't need to "beat the market", since I/we have already reached "our number" (if we didn't, we would still be employed). However, there is a different mindset in retirement to ensure that cashflow (the most important data point, IMHO) and retirement account longivity remain solid.

Just my opinion, and my/our situation, FWIW...

 

[Milton]

Even though "Dr. Doom" says his 'Perfect Storm' Is Unfolding Now?

Market timing is a pretty difficult strategy to execute successfully.

 

[Spanky]

In retirement, I don't need to "beat the market" ..

True, but a certain rate of return will still be required to maintain a certain level of withdrawal rate.

 

[ShokWaveRider]

I've become very conservative; retiring next year (age60) but earning 0%. Any thoughts on investing at this point.

I for one empathize, I am very concerned of losing any or part of our nest egg. and seem to get chastised a little for it.

SWR

 

[rescueme]

True, but a certain rate of return will still be required to maintain a certain level of withdrawal rate.

Since you referenced my post, just let me say that WD rate is not a major factor in our retirement.

As I said in my OP, I (and DW, who retired a few months ago) are living "off our investments" - me for 5+ years, DW for 3+ months.

While we are drawing much more than the oft referenced "magic 4%", we don't have a problem.

Why? Simply because we still have 4-5 retirement income sources to come "on-line" in the next few years, consisting of two small pensions for DW, my 50% SS claim against her in less than two years, and my SS (at age 70), in just over five years.

At the time our "total retirement income" comes on-line (in just over five years, when I turn 70), we will be at a WD rate of just under 2%.

Any perceived withdrawl rate does not apply to the current time, but to the overall retirement plan. If you concentrate on the immediate, you have a bit of "risk" of leaving more than required upon your (joint) passing - if that is a concern of yours.

No plan should just look at today, but consider the varances of many years into the future, IMHO.

 

[RockyMtn]

I've become very conservative; retiring next year (age60) but earning 0%. Any thoughts on investing at this point.

Hate to tell you this but you are not earning 0%. You are actually losing money because of the effects of inflation.

 

[MasterBlaster]

How can you earn 0% ? Even CDs are at 1-3%.

Perhaps the OP was referring to the real return after taxes and inflation. In that case CD's (and many bonds) are losers even though they have a nominal yield.

 

[Running_Man]

It is very reasonable in my view to be concerned. Banks being willing to lend at 3.5% for 30 years on homes owned by our little group of posters is unheard of to begin with. This does not happen in a normal environment, so portraying historical averages to this point in time is very perilous. However, being able to forecast as to whether economies will go in a second leg of severe slowdown, an inflationary spiral or muddle along for 10 - 15 years is very difficult to predict. Doing nothing only plans for one of the scenarios and so I have taken a cash flow view of my retirement, about 2 years from now.

I am using in my plans a modified version of the permanent portfolio which is 25% t-bills 25 % long term bonds 25% stocks and 25% precious metals. I view it from an income stream perspective instead of a value perspective.

I determined my retirement income should come from 25% Tbills 25% stock dividends and 25% from long term bonds and 25% from pension/Spousal SS. I am offsetting this total portfolio with a precious metals portfolio with a goal of 8% of the value of my retirement portfolio when I retire and aim to keep that value of gold adjusting in the future for inflation by either buying with excess income from investments or else selling for other investing. -- 80K for each 1MM, adjusting the 80K annually for inflation)

The T-bills I am planning on amortization over a 35 year period so I will have 420K for each 1K of monthly income from T-Bills taking 1/35 of the value of my T-bills the first year 1/34 the second year etc.

Long bonds at present are a problem, no way I would invest in long term bonds at under 4% as 3% is a minimal inflation factor I plan for and current 30 yr yield of 2.6% only covers severe deflation fears. For now if I was setting up this portion of my portfolio (I was fortunate to have invested my Bond portfolio in 30 yr US treasuries in March and April of 2011) I would instead split that portion of the portfolio into fifths with one 5th in 5year notes one 5th in 3 year one with in 2 year one fifth in 1 yr and one fifth in treasures to invest in either 5 years one year from now or in 30 year treasuries if the 30 year pushes back over 4% somehow in the coming year, making a decision each year to either invest in 5 years or 30 yr TBONDS.

For the stocks, I would recommend you begin to get back in 1-2 percent each month, I invest in individual stocks, buying only dividend paying stocks to provide income and all my stocks have to have a history of growing their dividends. My present portfolio of stocks consist of 10 individual companies (CHV,T,MCD,MO,VVC,AMGN,ACN,NS,PEP,KO) and FAX an Australian/Asian foreign bond fund for some foreign bond exposure, in total yielding 4% whose dividends grew in the last year by a little over 7%, and my goal is to maintain stock investments with a growing income base that when added to the TBond income equals an inflation adjusted income. In many ways I find this much more conservative in nature than investing in a Vanguard mutual fund or EFT, as I have very set rules on my investing that have worked for dividend receipts and market pricing should not overly effect my portfolio.

I also have an equivalent portion of income coming from pension/spousal SS and have not included my SS in my spending plans. For my comfortable spending I will need the income from 3 of these 4 sources, 2 of the sources (since at present the annual income is planned to be equivalent from each source) will provide for a liveable retirement.

Good luck to you in whatever you decide, you need to create a plan in any case or else you will just flounder in retirement and circumstances will dictate your actions instead of you.

 

[pb4uski]

I've become very conservative; retiring next year (age60) but earning 0%. Any thoughts on investing at this point.

You probably need to study and think about asset allocation and how much risk you are willing to accept, understanding that your current strategy has significant risk of the spending power of your nestegg being eroded by inflation to the tune of 3% a year on average (0% investment return - 3% average inflation = -3% real rate of return). If you look at Firecalc or others your WR would need to be extremely low for that strategy to be sustainable.

If you do decide to wade into equities, there is an approach called value averaging that is marginally better than dollar cost averaging and in effects "forces" you to buy more when equities are relatively low and buy less equities when they are relatively high.

 

[clifp]

Some comments on Running Man's post.

I am not a gold fan so I never think of the permanent portfolio. That being said historically it is great portfolio for those looking to preserve wealth in the face of economic uncertainty. You wouldn't get rich with this portfolio but if you are already pretty wealth, this is probably the best way of ensure you don't end up poor.

Running Man is not a frequent poster, but I read his posts with great care. For a very simple reason back in 2007 not only did he predict the coming financial crisis. Unlike most doom and gloomers he provided a cogent analysis of what was going to happen and why. Partly because he was a new poster, and mostly because I am such a fan of stocks I ignored his warning. Events in 2008 unfolded more or less as he predicted. Even partially heeding his advice would have saved me many hundreds of thousand (not selling all my stocks just dialing back on my aggressiveness)

I have also come to respect his ability to analyze individual stocks. Again the stocks he owns aren't going to make you rich, just keep you from getting poor. The advantage of choosing conservative dividend stocks like he vs an index fund is you don't own any of the Zynga, Groupons etc who's real value could be near $0.
So for newer members who aren't comfortable with sticking 1/2 your money or more in a stock mutual fund or ETF and are looking at a way of sleeping better a night, pay attention. His approach to retirement is different than most of the forum regulars, and while it isn't for me (too conservative) for the folks with lower risk tolerance it is probably an excellent approach and vastly better than all cash.

 

[Bikerdude]

A very wise investor, Benjamin Graham I believe, once said that investors should never be less than 25% in equities. I believe the S&P500 pays about a 2.5% dividend.