Will you review this???

[bugs8]

Hello everyone! I mostly lurk but thought it was time to ask for advice again. I think I will listen this time. Brief history..some time ago I posted my story. Very long...anyways I asked for some advice on selling one of my properties. I got great advice but I didn't listen. I really could kick myself. Everyone advised me to sell one of the properties and I didn't. I seem to have a problem being frozen when it comes to these financial decisions. I'm getting older and really have to make some hard decisions and that's where all of you come in. Before I give my stats I can say that I did get "The four pillars of investing" for my birthday. Having a hard time getting into it but I'm trying.

BTw I am 49, female widow. No debt except home loan.

Housing/ Southern California
Rental - paid in full. Current value is approx $350,00.00 Rented out for $1625.00 per month. After expenses, taxes etc I net about $10,000.00 per year. I inhereted this property when my mom died 5 years ago.
Home - Balance owed $146,000.00 @ 6.25%. About 12 years left on loan.
Current value about $425,000.00

Invstements
Janus
jmcvx $14,495.0 Ira rollover from DDH
Cash MM $31,680.00 Ira rollover DDH This cash was J&J stock that I just sold.

Fidelity
my 401k
Low Stk Pr St $91,625.00
Intermed Bond $442.00
Contrafund $434.00
Intl Discovery $433.00
The last 3 funds are recent additons so that explains the little amount of $
CD $20,000.00
Working at a job that pays the bills $64,000.00 no raise in 5 years, no raise in sight. Feel a little down about the job market and no degree. Been here 28 years. Company doing OK.but not great.

So, please comment. I am eligible for DDH SS at 60. Don't know how much and couldn't find a way to figure the amount on the website.

[USK Coastie]

If it were me, I'd sell the rental and invest the proceeds after all taxes closing fees etc in low cost mutuals like Vanguard. let it ride until you're ready to retire. Continue with the 401K

[Zantastic]

I can really relate to you! I'm also in So Cal, I'm a year older, no spouse, no debt except home loan, overall assets about the same, and similarly frozen when it comes to making changes in my portfolio. My job situation isn't much different, either. Nice to meet you!

I would want to sell the rental, but then I'd feel overwhelmed with how to invest the proceeds in the current market. I'm very curious to see what types of funds people here will recommend to you.

I'm wondering if some of your hesitation to sell the rental could be related to grief over your mother's death? Just a thought

Good luck to you.

Zan

[innova]

Quick math..

The rental is netting you about 2.8% taxable yield at current rents / valuation. Not too great, especially when you consider the headaches of landlording.

Quote:

Invstements Janus jmcvx $14,495.0 Ira rollover from DDH Cash MM $31,680.00 Ira rollover DDH This cash was J&J stock that I just sold. Fidelity my 401k Low Stk Pr St $91,625.00 Intermed Bond $442.00 Contrafund $434.00 Intl Discovery $433.00 The last 3 funds are recent additons so that explains the little amount of $ CD $20,000.00

If you are through reading the 4 pillars book you'll know what I will say about your portfolio.. too much cash and too concentrated.

If it were me, my action steps would be:
1) Sell rental, pay off existing home (if you plan to stay), invest the rest in a Roth, then taxable account
2) Reallocate investments appropriate to your risk tolerance. A starting point would be:

30% US total market (VSTMX, VTI)
30% International total market (VFWIX, VEU) containing emerging markets
20% TIPS fund / etf
20% Short or intermediate US treasury fund

This would give you a 60/40 allocation, good for someone your age. You may wish to tweak to 70/30 if you're feeling more aggressive. I'd suggest low-cost index funds, as they outperform in the long term and you have at least 30 years investing ahead of you.

Getting investing right for taxes / location is important as well. In general:
1) 401k to match
2) Roth to max
3) 401k to max
4) taxable investing

You didn't mention a roth IRA - would strongly suggest taking full advantage if you are able. You should also consider retaining some funds as emergency funds or obtain a HELOC on your residence for that purpose if you don't have one already. Not everyone needs an emergency fund - I prefer to hold assets in the most tax-effective manner, so I would rather rely on a HELOC for emergencies and keep taxable cash deployed in the market where it is subject to lower cap-gains and dividend tax rates.

[Rambler]

I think there are some other questions to be answered before we can give much advice. First, are you OK with being a landlord? A 2.8% yield is not so bad if you expect the price to go back up (did it go down? how much? how long will it take to go back up?). When do you want to FIRE? Will you stay there or move to a less expensive location? Will you receive a pension from your job? if so, how much? Can you retire on it? How much longer do you have to stay to receive it? How about your skills? Could you sell them elsewhere at a higher price? Could you do that now or probably best to wait until market improves? Are you OK with doing $72,000 worth of work for $64,000 (that is the impact of inflation at 3% for the 5 years your salary has not changed)?

Finally, one word about int'l stock. While we should be careful to not try to time the market, we must be wise when we have large lump sums to invest. With the US$ so weak right now, I would hesitate to invest 30% into int'l stocks/funds. If/when the US$ come back to about where it was a year or so ago, then you could easily lose 15% to an exchange rate variance. The stock itself may go up...but you will have lost some/most/all of that gain due to exchange rate shifts. I would buy some internationals, but probably would not put that much in. Also, I would try to set my retirement goals (timing, age, when, where, what to do, expenses) before deciding the allocation. If you plan to work to 65, your initial AA may be different than if you plan to FIRE at 55. I do second the motion for a Roth. If you are able, invest in a Roth, to the max, after investing in your 401k enough to get your full employer match, even if it hurts a bit. I'm pretty sure you would be glad you did once you punch out.

Just some food for thought, FWIW.

R

[Moemg]

Quote:

Originally Posted by bugs8 So, please comment. I am eligible for DDH SS at 60. Don't know how much and couldn't find a way to figure the amount on the website.

I'm also a widow . Call the Social Security office and they will tell you what you can collect at 60. They are very helpful . Before you call SS make sure you have his birthdate , his date of death , the date of your marriage ,his & your SS numbers and the dates of any previous marriages . Hope this helps !

[innova]

Quote:

Finally, one word about int'l stock. While we should be careful to not try to time the market, we must be wise when we have large lump sums to invest. With the US$ so weak right now, I would hesitate to invest 30% into int'l stocks/funds. If/when the US$ come back to about where it was a year or so ago, then you could easily lose 15% to an exchange rate variance.

I respect what you are saying, but it really goes back to the 'should I lump-sum or DCA' argument. History will be on your side should you lump sum, but if you cannot do so for psychological reasons you should not.

What you appear to be saying is:
1) You would shift your int'l allocation based on your personal opinion of the relative value of the dollar to other world currencies, and
2) You have information that makes you believe the USD will regain its losses against a pool of other world currencies.

Both very dangerous assumptions. The problem here is that you may even be correct, but will it be in a month? A quarter? A year? This captures the very essence of the problems with market timing. I'm of the school of thought that says no actionable predictions can be made on information that 'everyone knows', so its best to decide what your position will be and establish it, only modifying it per your need/willingness/ability to take risk.