This is addressed to the people who seemed to find my posts somewhat interesting and helpful:
What I'm asking now, and please don't respond with venomous rage, is wouldn't this be a very bad time to get an annuity and since we're in cash now should we perhaps wait and see if CDs go back up?
I think my question is - if we can't stomach gradually losing money to inflation can we afford to take a hit on principal?
Also, if you look at history, there have been periods - the 80's I believe, when you could have bought stocks and they wouldn't have come back for 20 years. Don't remember the exact figures.
If you think this is not a worthy topic of conversation, or that I shouldn't bring it up before reading 10 books please tell me without calling me names.
You're quite right, now is a tough time to buy an annuity. It's also a tough time to invest in CDs. But you don't seem willing to consider any alternatives.
Your post is typical of those who've come through a recession to realize that they're emotionally savaged by volatility. One way to overcome some of that anxiety is by educating yourself and by working through the process of figuring out what investment asset classes will help you sleep better at night.
There is inflation now (for the past 2 years) but before that, there were 5% CDs and zero inflation and perhaps a threat of disinflation. Do we have a good reason to believe that there won't be 5% CDs again soon? I don't think we've seen rates this low in many, many years, if ever.
It's not really as if everyone on the board, in unison, gave me a single path to take. Get an annuity (now? - not now). It was scary that all asset classes plummeted at the same time two years ago. Does anyone fear that the market is overvalued now and that interest rates have to go up which would make bonds lose value too?
We've refinanced real estate four times in the last few years, each time convinced that interest rates couldn't possibly go any lower. So much for that prescience. There will eventually be 5% CDs again. I don't particularly want to live in a world with 5% CDs because it means that the rate of inflation will be pushing at least 5%. However over the longer term, the last 30 years, inflation has averaged about 5% APY. Over the last century it's been about 3% APY. How long are you going to wait for the "right" interest rate?
True, if you're trying to trade bonds for capital gains then this might be a bad time to start that strategy. But if you're trying to earn more interest than you would from an FDIC-insured or NCUA-insured CD, then a short-term bond fund or even an index fund of corporate bonds would give you a higher yield. You'd be earning a higher interest rate than CDs and you wouldn't need to care what the bond's share price was because you'd be holding on to those shares for years, even decades, to earn the yield. If you educated yourself about the uses of bond index funds then you'd be able to take solace from that reasoning.
There are many paths to ER, and that's why no one is telling you the single best path to take. Oh, but wait a minute-- you are getting a lot of suggestions to educate yourself so that you can map out your own path. Maybe that's the "path" you should take.
Your post is also typical of those who, for whatever reason, keep asking questions in the same "I'm worried" vein without actually getting off their dead assets to help themselves. You keep asking us what you should do. We keep telling you to educate yourself, even if it's the horrific experience of picking up
just one of the books recommended on this thread.
Does how much we need to live figure into the discussion? Someone I know said a while back that she needed to put her money into more risky investments to "catch up". That didn't work out very well for her.
We live in a very expensive area and don't see ourselves moving for a few years - kid in high school and elderly parents somewhat nearby. That's another problem though... And Cobra runs out in a year. Has anyone thought about moving to Canada for health insurance? I looked it up online and couldn't figure out if we would qualify - we have just enough points but they don't really accept retirees and I don't think we want to be investors.
You're right, "doubling down" with more risk is not necessarily a winning strategy. Your expenses do factor into accumulating a portfolio big enough to support the withdrawal rate of those expenses.
Canada? Health insurance? You seem to be hitting on a number of new topics here without any attempt to actually implement any of the suggestions you've received on your earlier questions.
I'll say it one last time. Pick any one of the books recommended in this thread and stop posting until you've read it. Or go over to the Bogleheads.org Wiki and stop posting here long enough to read about asset allocation. Then come back and ask us a question about the reading you've done.
Educate yourself. A bunch of anonymous Internet strangers can't "help" you any other way. If you want someone to hold your hands and tell you that everything's gonna be all right, then go pay a financial advisor or an annuity salesman for that purpose. They do a very good job of it, because you're paying a high price for the service.
