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Dec 17, 2003
Losing my whump
What would you have done differently and what are you contemplating?


I did my IRA asset allocation well before I became fully educated. The experts said REITS should be in a tax deferred fund due to their weak tax efficiency, so thats where I put them. In retrospect, I would like some or all of my REIT holdings in my taxable account for the dividend payout because my tax situation can tolerate a lot more current income. It would raise my dividend rate by about .25-.50% depending on how much REIT I held in the taxable account, and I'd like that.


Once short term interest rates are nearly done moving up (at least once the moves are priced in), say around 2%-2.25%, I may move some of my short bonds into interm, back into the wellesley income fund, or into california interm munis.

If equities were to take a punch in the nose, I might move some of that short bond into US equities.

I also like vanguards energy, and precious metals funds, but the energy is overpriced and I think the metals fund has a little way further to drop. I might buy 10% of energy if the price came off about 15-20%, and I may buy 3%-ish of the metals fund. I'm also considering several commodities funds for 5% but everyones piled into these and its driven the prices up.
I would have started a "real" savings plan well in
advance of deciding to retire, instead of spending money like there was no tomorrow. I would have worked smarter instead of harder when I owned my own business. I would have divorced my wife sooner.
I would have retired sooner.
As far as what I am contemplating now..............
social security :)

John Galt
- bought a house 3 years ago.
- put cash to work in higher yeilding short bond fund.
- kept cash in a higher yeilding bank instead of a MM fund.
- gone longer on the bond funds (I've had sig. $ in Vanguards ST corp for years!). Hindsight, it's 20/20.
- sold expensive funds that tend to track the SP500 closely.

- selling funds w/ expenses > .75%, moving them to Vanguard.

- Buying treasuries direct.
I am considering ER in 20 months. My current investment ratio is (not considering any pensions) 60% stock with 40% bonds/money market.

My tendency at this time is to go more conservative with future investments of Roth IRA and other spare cash so not to effect my plans. I will have to sell my home and buy something less expensve to ER. Since I only bought this home in March, that is why I need to wait 20 months unless a windfall comes my way.

I will ER with roughly 500,000 and will not touch pensions or SS for between 2 and 10 years. Did those of you who ERd with that amount of money or less find that you became more conservative as you got closer. I'd hate to miss out on stock gains, but would hate to lose capitol lalso and possibly delay ER.

Any suggestions?
Hello KB. I semieretired (which some folks say is not really retirement) in 1993. We (3 of us) had a net worth under $200,000. I expected always to work at something, at least until near SS (no pension). Once
I got older and could see I could last until SS, I got very
conservative (no equities) and cut the cord completely in 1998. Here is what put me over the top, in no particular order:

Interim consulting job which just dropped in my lap
Working spouse
Sold off non-producing real estate
Wound up the affairs of a small company I ran, which
turned out better than expected.
Cut my COL to 25% of preretirement.

Sounds easy. It wasn't.

John Galt

Hindsight being 20-20 - I would have DCA'd Dodge and Cox stock, or even Wellington - 1966-1977. Went max 100% S&P 500, 1977 -1983 in any tax sheltered plan availible(IRA,401k) - retired at 39 instead of 49 - Having always rented - and NEVER, NEVER owned real estate of any kind shape or form.

What am I doing now - standing there doing nothing - balanced index takes care of itself.

Hobby stocks - that's just putzing and I'm always doing that.

Inactivity - based on thirty years experience - has been my personal best investment technique.
I would have unloaded my whole portfolio in Microsoft when they went public. :)
Hey unclemick. Interesting to me that you have never
owned real estate as I have probably owned enough to
form a 51st state. Believe it or not, I can see the
argument for renting instead. Anyway, our politics seem pretty far apart also. Probably no connection :)

John Galt
No no John

I did/do own real estate - the first part of the post was -what would I have done different(with 20-20 hindsight I presume.)

AS for politics - the older I get, the more grumpy, cynical, and a tendency toward a pox on politics of both sides. I.e. accept things as they are and work the problem at hand with as much grace as possible (taxes,SS, local govt zoning, permits, car inspection, etc, etc).
With this question, I wasnt so concerned with hindsight, although my hindsight isnt even 20/20.

More what you would do differently with todays knowledge, but in a reasonable manner.

For example, with my reits in the ira, I put them there because that was 'conventional wisdom' to keep this non tax efficient vehicle from hammering you at tax time.

With the rider of "you should check out your own tax situation though, and if you arent going to be paying a lot and need a high stream of current income, then put it in your taxable account".
Conventional wisdom and that's where the money was availible to shift into REIT's in 98.

Because of low tax bracket - ended cobbling some Vg High Corp., adding to hobby stock REIT's, closed end conv bond fund together in the stretch to boost cash flow a little. Messy but it worked. Elegance isn't my strong point. After eleven years - one of these days - ala the stuff thread - I should 'clean up' the portfolio's.

Especially having passed 59 1/2 and closing in on SS in one year. Opportunity to simplify and realign knocks.
OH and here's the theory problem.

!5% taxable
85% Trad. IRA

Single - age 61. Lowest tax bracket
Sooo - do I reverse conventional wisdom - play the tax brackets, Roth some, shift my taxable more toward div growth. A good problem for long winter evenings - not the good old summertime. But you can see the games/trade offs to be considered.
What would you have done differently

That's really tough to say other than perhaps starting to invest more in my 20's.  I did have a decent little stash then but I blew a lot of it in going back to grad school when I was 29 and then on an engagement ring and subsequent wedding.  Hmmm, perhaps that was a good investment after all?  ;)

The problem with some of the bigger mistakes is that if I went back and "corrected" them then my current life might be quite a bit different and it becomes impossible to compare.  For example, if I had done something somewhat differently I would have had a couple hundred $K in the early 90's and I might not have gone to grad school and wouldn't have met my now wife.  Little changes can have big repercussions.

and what are you contemplating?

I am contemplating investing in timber.  Not a lot but perhaps 5% of my total portfolio.  I haven't done enough research yet to be sure that this a good idea and if it is what is the best way to do so.  It does appear to bring roughly the same returns as equities over the long run but it is has a low correlation to them.  Anybody here already doing so?  Anybody investigated this and have any pointers?

Some examples are:

Due diligence is in order - my first thought is never invest in any timberland instrument unless a Large university pension fund has money in it. Bear with my left handed INTJ thinking here - the ones that haven't thrown in the towel and got to indexing - have real estate sections that have invested in timberland for decades as part of their operations - unfortunately many are straight land purchases but some are partnerships to spread the risk.

For those of us with less resources - Plum Creek and now REIT Rayonier are on my watch list - don't own any.

Unfortunately - own a 5% interest in a "land development LLC"(Oregon) which under new management promises to leave the fricking spotted owls alone and not even think about cutting timber. Have 20 acres where the State of Mississippi keeps offering free classes on tree farming, free saplings to plant, timber harvesters keep offering to cut, and I let Weyerhaeuser put a road across to harvest their timber on both sides.

Timber as an asset counterbalancer is well known - but like commodities has been difficult to invest in conviently. Given my experience - going forward, REITs or a Weyerhaeuser or even an international wood products co. holding a lot of timber would be my choice. Timberland is in one of it's 'popular' phases right now. Procede with caution. Rayonier(as a hobby stock only) looks interesting.
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