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Kretz

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Not looking to pry into anything private but I'm just wondering what sort of returns older (retired) guys are getting with any lowish risk investments they may have.

I'm wondering if 5% is a realistic return in today's economic climate or whether that is too optimistic? :mo money:

Would be most obliged for any information. Low or High &/or Average %ages would be great. Thank You!

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Well I have my retirement and personal investments with Edward Jones, the mutual funds are a mix of stocks and bonds with a very conservative mix that is heavy on bonds, so far this year with all of the ups and downs on the market I have netted about 6.5%, I also have a lump that I keep in a short term CD fund that matures every 3 months, each time it matures my broker looks for the best 3 month rate, I had a 2.2% rate last quarter, this quarter it is 1.9%, The mutual funds are not insured, so as the market fluctuates so do the values of my funds, higher returns come with higher risk of loss, the CDs are locked in for the 3 month period and are insured by the FDIC. I think in this market getting a safe steady 5% return is probably not doable, but with some amount of risk you can do it.

I just talked with my broker yesterday he advised me as he always does to stay the course and look at the long term not short term market swings, but if it all goes to crap in a basket, I can sell the stocks and bonds in the IRAs and buy CDs to protect what I have left while keeping it inside an IRA an avoiding paying federal taxes on a big lump all at once. It is bound to be a wild ride in the next several months as the trade issues heat up and England exits the EU.

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I just talked with my broker yesterday he advised me as he always does to stay the course and look at the long term not short term market swings,

 

He's serving you well. IMO, most people don't have a stomach tough enough to watch the daily gyrations of the market and stick to their plan. A good advisor will talk you off the ledge and get you to turn off the news if you cannot handle it. I know people who will never be able to retire because they bailed out in 2008 and then missed the best bull market ever.

 

In response to the original post: I don't think 5% is realistic. You can put together a mix of good dividend stocks that will give you more than 4% without a lot of volatility or risk, but long term they won't return what the broad market will.

 

We're recently retired (I'm 58, she's 59) and our assets fall largely into three pots:

 

  1. Growth. This is money that we won't need for at least ten years, if ever. It's in low cost index funds (S&P 500, Dividend aristocrats, Russell 2000). This group yields a little less than 2%.
  2. Dividend. This is the money we'll need in 5-10 years. It's in utilities, energy extraction and distribution, commodities and telecommunications. This package is currently yielding about 4.5% which has come up a bit recently as the share prices have fallen.
  3. Cash. This is money we expect to need in the next 5 years. It's in the money market and yields about 2% currently.

 

Right now we (probably) have too much in cash. We recently rolled my wife's 403(b) into an IRA and given the market heights I'm gradually investing that into the growth pot.

 

I'm personally not a fan of CDs. You have to tie your money up long term for less return than a money market fund pays. I understand that CDs are risk free, but the money market is very low risk and the only people who have ever lost money there panicked in 2007-2008 and lost 2% or so.

 

Bottom line is you need a plan that meets your specific needs while allowing you to sleep well at night. If you're not up to that yourself get a fee based advisor who can help you build the plan and then encourages you to stick with it during the rough patches.

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In my mind you'll be losing money investing in bonds and cash securities. If inflation is 3 percent and if your taking out 4 percent for living expense your money is not growing.

I am an aggressive invester. I have 99 percent in stocks in the US and around the world. My return for the first half of this year was a little over 20 percent. What the second half brings in anybodys guess.

I believe in order to grow your money you should have at least 70 percent in stocks.

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Well I have my retirement and personal investments with Edward Jones, the mutual funds are a mix of stocks and bonds with a very conservative mix that is heavy on bonds, so far this year with all of the ups and downs on the market I have netted about 6.5%, I also have a lump that I keep in a short term CD fund that matures every 3 months, each time it matures my broker looks for the best 3 month rate, I had a 2.2% rate last quarter, this quarter it is 1.9%, The mutual funds are not insured, so as the market fluctuates so do the values of my funds, higher returns come with higher risk of loss, the CDs are locked in for the 3 month period and are insured by the FDIC. I think in this market getting a safe steady 5% return is probably not doable, but with some amount of risk you can do it.

I just talked with my broker yesterday he advised me as he always does to stay the course and look at the long term not short term market swings, but if it all goes to crap in a basket, I can sell the stocks and bonds in the IRAs and buy CDs to protect what I have left while keeping it inside an IRA an avoiding paying federal taxes on a big lump all at once. It is bound to be a wild ride in the next several months as the trade issues heat up and England exits the EU.

 

 

Like Steve, I'm with Edward Jones. My portfolio isn't as conservative as Steve's so when the market fluctuates, as it has this year, I lose or gain more. The downside is I lose if the market dumps. The upside is I make more return on the money overall. I'm at 14% for past 2 years. I'm living off the interest and dividends as my goal is to die and leave the kids the money. So I'm cash poor!

 

If you want the average returns for the current year to date, or past returns...look that up on Internet. Bloomberg is one I use.

 

My portfolio is a mix of equities (stocks), equity funds and bond funds. Most of my heavy hitters return high dividends. Valero is one I like. It's dividend is around 4.8%. I bought it 4 years ago. It's like a yoyo now but still giving the dividends. MFC is another. A Canadian company dealing in insurance and more. Nice dividend. BTW, I re-invest all dividends and interest. Meaning, I buy more stock in the company using the dividend/interest money. That's on automatic. That's how I've been able to grow the portfolio. And stay long...don't panic when the poop hits the fan. it will come back! In fact, when the fan gets clogged with brown stuff, that's when you should buy more!

 

I like Edward Jones. The company will not churn your account. They are conservative as heck. If there is an office near you, just go in and yak with someone. Tell them what your goals are then ask their recommendations. Won't cost you anything...and no..I don't get anything for making the suggestion.

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In my mind you'll be losing money investing in bonds and cash securities. If inflation is 3 percent and if your taking out 4 percent for living expense your money is not growing.

I am an aggressive invester. I have 99 percent in stocks in the US and around the world. My return for the first half of this year was a little over 20 percent. What the second half brings in anybodys guess.

I believe in order to grow your money you should have at least 70 percent in stocks.

 

I agree with you 100%. But if you need the money in the near future this may not be the way to go. If the market tanks 50% and you have to spend it all there is nothing left for growth or the future. This is why my money is invested based on when I need it: 10 years +, 5 - 10 years or less than 5 years.

 

This has been a difficult transition for me. Like you I've generally been 100% equities and it's been very profitable for 30 years. Heck, in 2008 I was rummaging around in the couch for extra change to buy more during the big sale. Now though, a 50% haircut would be nearly catastrophic so I'm willing to live with a guaranteed inflation indexed loss on the money market investments. I'm essentially buying insurance.

 

BTW, you can make money in bonds by not holding them to maturity. If interest rates fall the bond price moves up and you can sell it at a profit. Apparently this is why people are willing to buy bonds with a negative yield, if interest rates drop the bond can be sold at a profit. Of course if interest rates rise the value of the bond drops although the down side is limited if you're willing to hold the bond to maturity. Not a game I'm interested in playing.

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Gentlemen thank you for your replies! I asked because we had an investment (Mutual Fund) taken out in 2004, it absolutely tanked in 2008 & we lost a lot (on paper) at the time, the original investment was around 40% of our portfolio (in that one fund!). My adviser has apologized many times, not especially for the investment (he felt it was sound) but for the amount that he recommended we put into it.

Long story short we had to draw on it twice (at a substantial loss) for living expenses (2014 & 2016) what was left has now finally grown to be slightly more than our original investment. So in total we've "made" a quite spectacular 40% on the OE, (most of that in the last 5-6 years) BUT if I average that out over the 15 years (since inception in 2004) it averages 2.6% per year. So maybe just kept place with inflation! Anyway at least we didn't lose it all (like so many) so we are grateful for that, anyway we decided to "cash it in" & are now looking at what may be available going forward.

We do have other investments but our adviser now seems to have gone so conservative that there seems to be no "growth" (eg another MF that we were recommended has made around 2.6% but in TWO years!) so that's why I was asking what sort of returns people are currently getting.

Again thank you all for your help.

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I wasn't able to put much into retirement the until I was a little over 40 for various reasons (other than my house) so at the moment I'm more aggressive on the strategy. My 401K is with Schwab and I'm sitting at about 13% growth this calendar year. Mostly in their Large company and International groups. I went very conservative under the previous Admin as I just didn't agree with their Policies and still took a little beating :Avatars_Gee_George:. I knew this Admin would be aggressive and figured I'd do the same. It has paid off as I'm up over 25% since Jan 2017. The one thing we did over the last 20 years though is buy a house and then upgraded both square footage and location as we needed to move (Cleveland, OH and now in Houston, TX). This was in lieu of a retirement account for a while. That's put us in an area where the houses are selling like hotcakes and the current valuation just put me up almost 100K in 5 years. Looking to buy much more modestly, some rural land somewhere and put a small house on it. Then when the time comes I'll lease out the house we have now. Currently lesser homes in our neighborhood are getting 2500 - 2700 monthly and netting over 2000 a month, mostly transient oil execs. Leasing it out will add to our available monthly funds. I'm 53 at the moment and have some time left so I will be a little more aggressive than some on the investing. Will the House thing work out? Only time and the market will tell.

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Gentlemen thank you for your replies! I asked because we had an investment (Mutual Fund) taken out in 2004, it absolutely tanked in 2008 & we lost a lot (on paper) at the time, the original investment was around 40% of our portfolio (in that one fund!). My adviser has apologized many times, not especially for the investment (he felt it was sound) but for the amount that he recommended we put into it.

Long story short we had to draw on it twice (at a substantial loss) for living expenses (2014 & 2016) what was left has now finally grown to be slightly more than our original investment. So in total we've "made" a quite spectacular 40% on the OE, (most of that in the last 5-6 years) BUT if I average that out over the 15 years (since inception in 2004) it averages 2.6% per year. So maybe just kept place with inflation! Anyway at least we didn't lose it all (like so many) so we are grateful for that, anyway we decided to "cash it in" & are now looking at what may be available going forward.

We do have other investments but our adviser now seems to have gone so conservative that there seems to be no "growth" (eg another MF that we were recommended has made around 2.6% but in TWO years!) so that's why I was asking what sort of returns people are currently getting.

Again thank you all for your help.

 

It's not clear if your 2.6% is net of what you withdrew in 2014 and 2016.

 

S&P annualized return (not inflation adjusted) with dividends reinvested:

June 2004 - June 2014 = 7.728%

June 2004 - June 2016 = 7.369%

June 2004 - June 2019 = 8.608%

August 2004 - August 2019 = 8.747%

 

If you took a loss in 2014 or 2016 on money invested in 2004 it was a very poor investment.

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It's not clear if your 2.6% is net of what you withdrew in 2014 and 2016.

 

S&P annualized return (not inflation adjusted) with dividends reinvested:

June 2004 - June 2014 = 7.728%

June 2004 - June 2016 = 7.369%

June 2004 - June 2019 = 8.608%

August 2004 - August 2019 = 8.747%

 

If you took a loss in 2014 or 2016 on money invested in 2004 it was a very poor investment.

 

The total we "made" includes the money we had to withdraw in 2014/16. So effectively the "cash in total" (now) plus the (2014/16) withdraw. Gave us a total return of 2.6%pa on our original investment. So yes! I agree totally, a pretty poor investment! Of course I see today after cashing in yesterday the fund has leapt some 4.5% today!

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