Move to safer investments

[VanWinkle]

I do this for a little peace of mind:

Google S&P 500 historical chart
Dow Jones historical chart

You'll get a grim graph currently. Click on "Max" and find comfort in long-term historical data. With your pointer, follow backward. It will show every day where the markets were. The dips these days are scary, but the big picture is comforting. We are considering investing in stock index funds with the bond market funds we just sold. And we'll be 65 this year.

Don't forget to stick with an asset allocation that works for you no matter what the stock market or bond market is doing. Good luck to you!!

VW

 

[marko]

I do this for a little peace of mind:

Google S&P 500 historical chart
Dow Jones historical chart

You'll get a grim graph currently. Click on "Max" and find comfort in long-term historical data. With your pointer, follow backward. It will show every day where the markets were. The dips these days are scary, but the big picture is comforting. .

Someone here once said: "Paste an historical graph of the Dow on the wall and then walk to the other end of the room and look at it from 15 feet away. ". I believe that the phrase "over time" is way underused when talking about the markets.

 

[Koolau]

Someone here once said: "Paste an historical graph of the Dow on the wall and then walk to the other end of the room and look at it from 15 feet away. ". I believe that the phrase "over time" is way underused when talking about the markets.

Agreed. Of course, in mid 70's (age, not calendar date) we have a lot less 'over time' to let things recover. YMMV

 

[W2R]

Agreed. Of course, in mid 70's (age, not calendar date) we have a lot less 'over time' to let things recover. YMMV

Yeah, but (sadly!) we have a lot fewer years in the future that we need to worry about paying for, as well!

 

[Koolau]

Yeah, but (sadly!) we have a lot fewer years in the future that we need to worry about paying for, as well!

Thanks (I think) for the reminder!

Yep, it's one of the few "advantages" of getting old. Heck, I'm now down to a 24 year time line on my FIRECalc and that assumes I'll live to 99!

 

[aja8888]

Yeah, but (sadly!) we have a lot fewer years in the future that we need to worry about paying for, as well!

Yes, my doc has told me I no longer need a colonoscopy or PSA test done since if I get cancer in those locations, I will be gone before it takes me out. Just think, less spending on medical stuff!

 

[youbet]

Agreed. Of course, in mid 70's (age, not calendar date) we have a lot less 'over time' to let things recover. YMMV

Hee..... hee.... Yep!

Also a mid-70's guy, I do find myself much more focused on the next few years than what might happen to the portfolio over the upcoming decades....... I do manage a substantial (to us) special needs trust I set up for my oldest grandson and still manage to focus on mid to long term results there. But for DW and I, thinking has moved towards the "if I buy this now, what will it look like in 2, 3, 4, or 5 years when I want to blow it on something.?"

Long term thinking paid off very well for DW and I over the years. Decades of periodic investments into a TSM fund looks brilliant today and considering our meager start, we're quite pleased. But, anything I'm eyeing as a longer term opportunity these days goes into the special needs trust for our 21 year old grandson.

 

[Koolau]

Yes, my doc has told me I no longer need a colonoscopy or PSA test done since if I get cancer in those locations, I will be gone before it takes me out. Just think, less spending on medical stuff!

Yep, my doc and I had "the talk" at my last yearly. I DID insist on doing the Cologard instead of simple occult blood test this time. I was due for colonoscopy and figured I wanted something "in between" the gold standard and the "also ran." YMMV

 

[levindb]

Yep, my doc and I had "the talk" at my last yearly. I DID insist on doing the Cologard instead of simple occult blood test this time. I was due for colonoscopy and figured I wanted something "in between" the gold standard and the "also ran." YMMV

I just had my colonoscopy last month at age 72. Although there were a few benign polyps, I was told to come back in 7 years and I will be on time. I had colon cancer at age 42, and I see no need for anything less than then gold standard. I am doing my financial planning assuming I will live to age 105, and I see no reason to select a lesser age for my medical planning.
Of course, YMMV

 

[GenXguy]

I'm actually moving more from "safe" investments to stock funds. But that's because of inflation and a change with my work retirement plan that made my "safe" investments not so safe. They had been earning 3% annually in a stable value fund for over a decade. Suddenly, over a year ago, this was changed to 1.46% (wasn't even notified, I discovered myself) and a few months back lowered further to 1.36% (again, no notification). So, that would have been a loser even to the inflation we were seeing over 2 years ago. But add in today's inflation, and it's few times worse. So, I'm slowly getting some moved over to stocks now that the market is down. I've only moved 10% so far. I think I'm still under 45% invested in stocks at this point when including all non-retirement and retirement savings/investments.

 

[Koolau]

I just had my colonoscopy last month at age 72. Although there were a few benign polyps, I was told to come back in 7 years and I will be on time. I had colon cancer at age 42, and I see no need for anything less than then gold standard. I am doing my financial planning assuming I will live to age 105, and I see no reason to select a lesser age for my medical planning.
Of course, YMMV

Yeah, I've never had so much as a blip in my 3 Colonoscopies. So, in theory, something else will get me before colon cancer. Having said that, I still want the Cologard at least once since it's been 10 years. I have enough "issues" that I'm only using 99 as my date of expiration.

 

[aja8888]

Yeah, I've never had so much as a blip in my 3 Colonoscopies. So, in theory, something else will get me before colon cancer.

Same here. Last one at 75+.

I've already outlived all my parents and uncles/aunts. I'm hoping for 90 and by then I probably won't be playing golf or doing a lot of physical activities that I do today. Something will get me, though.

 

[GenXguy]

I wonder if this isn't why so many folks doubt the official inflation numbers (as I do). Perhaps some of us refuse to substitute and OUR inflation is higher. Thanks for the numbers as they make a lot of sense.

I think a lot of us frugal members already made the substitutions to save many years ago. I already buy the non-brand name of many things, buy the lower cost bagged apples, buy the lower cost meat instead of the expensive cuts, etc. etc. I also substituted traveling with not traveling and eating out with almost never eating out. I substituted cable with an antenna. I substituted going out and spending money on recreation with lower cost hobbies like biking, walking, reading, research, watching movies, tinkering around the house, visiting people in the area. But these are things I had already been doing before the high inflation hit. Once you've already substituted, they're just being dishonest if they're knocking the inflation figures down every year as if you can do it all over again.

 

[NW-Bound]

I'm actually moving more from "safe" investments to stock funds. But that's because of inflation and a change with my work retirement plan that made my "safe" investments not so safe. They had been earning 3% annually in a stable value fund for over a decade. Suddenly, over a year ago, this was changed to 1.46% (wasn't even notified, I discovered myself) and a few months back lowered further to 1.36% (again, no notification). So, that would have been a loser even to the inflation we were seeing over 2 years ago. But add in today's inflation, and it's few times worse. So, I'm slowly getting some moved over to stocks now that the market is down. I've only moved 10% so far. I think I'm still under 45% invested in stocks at this point when including all non-retirement and retirement savings/investments.

You made me look at my wife's stable value fund.

YTD, it has returned 1.7%, or about 5.1% annualized. Still trailing inflation.

 

[daylatedollarshort]

I think a lot of us frugal members already made the substitutions to save many years ago. I already buy the non-brand name of many things, buy the lower cost bagged apples, buy the lower cost meat instead of the expensive cuts, etc. etc. I also substituted traveling with not traveling and eating out with almost never eating out. I substituted cable with an antenna. I substituted going out and spending money on recreation with lower cost hobbies like biking, walking, reading, research, watching movies, tinkering around the house, visiting people in the area. But these are things I had already been doing before the high inflation hit. Once you've already substituted, they're just being dishonest if they're knocking the inflation figures down every year as if you can do it all over again.

Many of us do some frugal things but I doubt few of us have everything at rock bottom costs or have done every substitution. Like being really frugal would be baking your own bread, making your own clothes, canning produce from the food forest you have now instead of your front lawn, taking the bus, getting a cargo bike, aquaponics, window farms and solar cooking and learning to do your own home repairs.

My potential list of expense improvements for this year includes things like solar panels, a heat pump, energy audit, trying solar cooking, utilizing the free senior center activities more, growing some of our food and making more freezer meals. Next year it might be xeriscaping, window farms, installing a gray water system and rain barrels. I have a long list of projects we could do to reduce expenses and every year we have time to do some but not all of them. Plus I get many good ideas all the time from forums like this so my list seems to always be growing.

 

[clifp]

Wife and I in June had 1.1 million invested. Stocks now down from then $200k should we hold still and forget about it or place in safer investments to minimize bigger losses if left alone. We are early retired and don’t put into our investment as we used to. We full time RV on a very low income of 40k until We’re 60yrs old in 6 yrs.
We work part time and have 100k in savings we pull from to get us there.
Your thoughts?

looking at some of your earlies posts, it seems like you put most (almost all?) other than the $100 of your money in stocks. This is always great in Bull Market, and frankly with bonds, yielding virtually nothing, the right choice.

Now that you have a $1 million the 15-20% drops in the market result in pretty expensive loses. This to me is a sign that you have an asset allocation that is riskier than you thought. There is a difference between market timing, and changing your asset allocation. I personally think it is reasonably likely we will see another 25-40% drop in equities in the next year or two. Bond yield are now 3%, which while not great is better than <2% I'd certainly recommend get iBonds, and you might also look at buying 3-5 year TIPs bonds which will lag inflation by <1%. 100K in cash, 100K in TIPs will give you 5 years of cash to give your stocks time to recover from a bear market/recession.

 

[Koolau]

You made me look at my wife's stable value fund.

YTD, it has returned 1.7%, or about 5.1% annualized. Still trailing inflation.

The good news is it will outperform when inflation backs off. I've had my SVF for 50 years and watched the ups and downs. Nominally, it never goes down (unless I take my RMD from it). Yes, the inflation loss is backed in, but eventually, should I live so long, it will look pretty good. YMMV

 

[GenXguy]

The good news is it will outperform when inflation backs off. I've had my SVF for 50 years and watched the ups and downs. Nominally, it never goes down (unless I take my RMD from it). Yes, the inflation loss is backed in, but eventually, should I live so long, it will look pretty good. YMMV

Is it a constant rate for the most part?

Mine had been constant, and didn't change for many years, a consistent 3%. I would have never moved so much of my retirement into it if I had known they would suddenly lower it to less than half what it had been paying. And if I hadn't moved those investments over from stock funds to the stable value fund back in July 2018, I would be way ahead now. But no, within a couple years or so of me getting 3% (after that being the rate for the SVF for over a decade), they slashed the rate. And then the high inflation on top of it. It was like the worst combination of bad things happening to me.

 

[Koolau]

Is it a constant rate for the most part?

Mine had been constant, and didn't change for many years, a consistent 3%. I would have never moved so much of my retirement into it if I had known they would suddenly lower it to less than half what it had been paying. And if I hadn't moved those investments over from stock funds to the stable value fund back in July 2018, I would be way ahead now. But no, within a couple years or so of me getting 3% (after that being the rate for the SVF for over a decade), they slashed the rate. And then the high inflation on top of it. It was like the worst combination of bad things happening to me.

Not an expert, but IIRC GIF/SVF are a collection of negotiated instruments (contracts) that are bond-like. As long as overall interest rates are fairly stable, the rate of return for a given SVF is fairly stable. If interest rates go up, then the new contracts are written for higher rates. It take a while for that to wash through to the bottom line. It works in reverse as interest rates begin to fall. On the way up, the rates don't keep up with inflation, but on the way down, the rates tend to fall more slowly than inflation. YMMV

 

[GenXguy]

Not an expert, but IIRC GIF/SVF are a collection of negotiated instruments (contracts) that are bond-like. As long as overall interest rates are fairly stable, the rate of return for a given SVF is fairly stable. If interest rates go up, then the new contracts are written for higher rates. It take a while for that to wash through to the bottom line. It works in reverse as interest rates begin to fall. On the way up, the rates don't keep up with inflation, but on the way down, the rates tend to fall more slowly than inflation. YMMV

Speaking of stable, mine was super stable for a decade. I remember back 11 or 12 years ago, it had been 4% and was lowered to 3%, but then it remained so until the sudden big drop in March or April 2021. This attached screenshot is from the end of 2020 that shows that constant 3% rate our fixed interest fund had been paying. It's actually shown as paying 1.65% now on the website, however, the fixed fund used to be excluded from the retirement plan management fees. My original documentation states that specifically that the fixed fund was excluded, and no admin fees ever showed up in my transactions or statements. Now, they take .29% management fee, so it's a net 1.36% return. They never mentioned this was changing, but I started seeing the admin fees in my transactions and statements quarterly, along with a drop in the balance, which was never the case before with the fixed fund. I complained, but AIG Valic just said (to my HR director) that the old fund wasn't available anymore and that admin fees were always charged but were hidden, which I knew wasn't true as I was getting the full 3% return before.

 

[Koolau]

My original documentation states that specifically that the fixed fund was excluded, and no admin fees ever showed up in my transactions or statements. Now, they take .29% management fee, so it's a net 1.36% return. They never mentioned this was changing, but I started seeing the admin fees in my transactions and statements quarterly, along with a drop in the balance, which was never the case before with the fixed fund. I complained, but AIG Valic just said (to my HR director) that the old fund wasn't available anymore and that admin fees were always charged but were hidden, which I knew wasn't true as I was getting the full 3% return before.

The real problem is that SVFs are typically only available within 401(k)s so if your SVF decides to add or change fees your choice is to stay and pay or move your money to another fund and lose your SVF.

 

[GenXguy]

The real problem is that SVFs are typically only available within 401(k)s so if your SVF decides to add or change fees your choice is to stay and pay or move your money to another fund and lose your SVF.

And that's what I'm trying to do now, but with stocks still high and overvalued with many more predicting massive drops in stocks, I don't want to move too much at once. I started with a 10% move last Thursday. If they had cut the return in half on the SVF prior to July 2018, I wouldn't have moved to the SVF to begin with and would be sitting so much better today (several hundred thousand dollars probably) because of the run up in stocks since then. And it's not even earning anywhere near inflation now, where it had been earning more than inflation. It's beyond frustrating.

 

[Koolau]

By the way, the word "stable" is not about performance (interest rate, in this case.) It is possible for the interest rate to be "unstable" as it has been of late. "Stable" refers to the "value" of the fund. IOW, there will be no wild swings in the value of the SVF as we see in the stock and bond markets of late.

 

[GenXguy]

By the way, the word "stable" is not about performance (interest rate, in this case.) It is possible for the interest rate to be "unstable" as it has been of late. "Stable" refers to the "value" of the fund. IOW, there will be no wild swings in the value of the SVF as we see in the stock and bond markets of late.

The "value" of the fund is definitely not stable. It's losing value quickly due to inflation, which is why I'm trying to time my moves out. It's unfortunate they put me in this situation by slashing the interest rate and starting to charge plan administration fees on it after 10+ years at 3% and no fees.

 

[jazz4cash]

I'm actually moving more from "safe" investments to stock funds. But that's because of inflation and a change with my work retirement plan that made my "safe" investments not so safe. They had been earning 3% annually in a stable value fund for over a decade. Suddenly, over a year ago, this was changed to 1.46% (wasn't even notified, I discovered myself) and a few months back lowered further to 1.36% (again, no notification). So, that would have been a loser even to the inflation we were seeing over 2 years ago. But add in today's inflation, and it's few times worse. So, I'm slowly getting some moved over to stocks now that the market is down. I've only moved 10% so far. I think I'm still under 45% invested in stocks at this point when including all non-retirement and retirement savings/investments.

1. You should not expect any notification that the rate on your stable value fund is changing.
2. The reduction in the rates does not mean the funds are “less safe”. If anything they are trying to maintain the risk level of the fund.