The Finance/Retirement Thread

Took a beating this past October on the IRA, lost all 2018 gains, but the principal balance didn’t get hit. As we get closer to retirement I’m becoming risk averse, so I put everything into T-Bills. Low risk, low reward (2% max gain) FDIC insured. With that move I have a bit of $$$ allocated to invest after the supposed market correction happens in 2020, hoping for a substantial return on a low buying spree and a timed sell. Second home will be paid off in 3-5 years (that will be our primary retirement home). We are going to sell the home we’re in now and buy a rental property to assist with income generation. That’s about it.

Any financial wizards out there? Your input is welcome.
 
MikeDelta said:
Took a beating this past October on the IRA, lost all 2018 gains, but the principal balance didn’t get hit. As we get closer to retirement I’m becoming risk averse, so I put everything into T-Bills. Low risk, low reward (2% max gain) FDIC insured. With that move I have a bit of $$$ allocated to invest after the supposed market correction happens in 2020, hoping for a substantial return on a low buying spree and a timed sell. Second home will be paid off in 3-5 years (that will be our primary retirement home). We are going to sell the home we’re in now and buy a rental property to assist with income generation. That’s about it.

Any financial wizards out there? Your input is welcome.
Click to expand...

All of the October through December losses had been re-realized as gains by March. I would look more at how do I protect my assets downside vs limiting my upside. If you have a financial adviser, I would talk about hedging options using longer dated options (12-18 months out) in securities that are more illiquid but correlate to downside S&P(almost everything). It would cost 1% of your portfolio and if the market made that move again your 1% would hedge your downside and give you some upside. But, if that doesn't happen, you can kiss that 1% goodbye. Depends on what you are looking for. If your financial adviser does not know options or hedging strategies DO NOT GO ANYWHERE NEAR THIS! If you are doing this yourself look at changing up your allocation to income generation, just switch the percents up.

I think earning the T-bill is great for your money market funds, I would look at bond allocations to get a little more return than Tbills. I still think everyone should have some exposure to equities, but as you get closer to retirement it should be about preservation of capital. So equity exposure could rotate from smaller cap (alpha generation) to Dividend Growth strategies (income generation). Just something to think about.
 
As I'm not close to retirement and have enough liquid assets for a major down payment on a house when we're ready, I'm not really worried about short market corrections when you dollar cost average. Just keep investing in funds, have smart discussions with your advisor on where to move next. Now, if you're closer to retirement and the market is high, it's smarter to shift your investment portfolio more towards T-bills and bonds etc.

For anyone who's 25 and somehow ends up with an inheritance...I'd suggest you throw a lot of that at Amazon and Southwest Air.
 
Isiah6:8 said:
All of the October through December losses had been re-realized as gains by March. I would look more at how do I protect my assets downside vs limiting my upside. If you have a financial adviser, I would talk about hedging options using longer dated options (12-18 months out) in securities that are more illiquid but correlate to downside S&P(almost everything). It would cost 1% of your portfolio and if the market made that move again your 1% would hedge your downside and give you some upside. But, if that doesn't happen, you can kiss that 1% goodbye. Depends on what you are looking for. If your financial adviser does not know options or hedging strategies DO NOT GO ANYWHERE NEAR THIS! If you are doing this yourself look at changing up your allocation to income generation, just switch the percents up.

I think earning the T-bill is great for your money market funds, I would look at bond allocations to get a little more return than Tbills. I still think everyone should have some exposure to equities, but as you get closer to retirement it should be about preservation of capital. So equity exposure could rotate from smaller cap (alpha generation) to Dividend Growth strategies (income generation). Just something to think about.
Click to expand...

Thanks. That is where my head is at. I’m with Merrill Lynch now and I’ll ask my advisor about hedging strategies. We’re all about preservation, but I also don’t want to leave $$$ on the table by being too risk averse.
 
MikeDelta said:
Thanks. That is where my head is at. I’m with Merrill Lynch now and I’ll ask my advisor about hedging strategies. We’re all about preservation, but I also don’t want to leave $$$ on the table by being too risk averse.
Click to expand...

They might suggest the best hedge for you is to re-allocate your investment strategy, or you might find out that is already in motion. That is also solid. Just let them know you are worried about risk and repeat the last line, they will make sure you are set correctly.
 
Isiah6:8 said:
They might suggest the best hedge for you is to re-allocate your investment strategy, or you might find out that is already in motion. That is also solid. Just let them know you are worried about risk and repeat the last line, they will make sure you are set correctly.
Click to expand...

Thank you for taking some time on this. Appreciate it.
 
Isiah6:8 said:
They might suggest the best hedge for you is to re-allocate your investment strategy, or you might find out that is already in motion. That is also solid. Just let them know you are worried about risk and repeat the last line, they will make sure you are set correctly.
Click to expand...

I’m very interested to see how the current “inverted yield curve” rights itself and what the Fed will do.

Deutsche Bank’s sudden layoffs are...interesting.
 
lindy said:
I’m very interested to see how the current “inverted yield curve” rights itself and what the Fed will do.

Deutsche Bank’s sudden layoffs are...interesting.
Click to expand...

I am with you on that one. I don't know what the Fed will do, but I have long wondered if these hike/cuts have anything other than a media effect in all reality. Over simplifying: Does +/- 50bps really get people moving to buy homes or do things they wouldn't, in my opinion, no. I think the only thing they monitor is given how many variable rate mortgages there are in the market, they monitor the threshold on the upper end which would crush the average American on payments and so we will not see rates hit those late 2000s levels. Will be interesting for sure.

Agreed. Their research had split off a bit into Alex Brown and there was lots of conversation that this was a long time coming although appears 18k people didnt know that so I am sure there is some "Yeah we all saw this coming because if we say we didn't someone might think we are stupid" which plagues finance. The fact they are doing some of these changes almost a decade after their counterparts is very interesting. I think the notion of telling everyone you were the GS of Europe and being that, are two different things. I have to imagine their IB is costing them so much money because they don't ever seem to bring anything solid to market which is why they have slipped to top 20 IB shops for deals. 18k people hitting the job market will be tough to pickup people depending on internal bloat, although I think they timed it well given unemployment in Europe hit a cycle low at 7.5 in May which is about what it was in 2007. Big hits should be NYC and London, here in Chicago they have a big presence but they are more asset management and internal fund real estate sales, not sales or banking. My guess is BNP will take most of their PB biz away since they want that, who knows though. Just some random thoughts before I hop on a call here at 3. I have never really done much business with them so hard for me to gauge any of this. I think sell side sales and trading is a very tough business to be in, I would not want to be on a desk on that side of things.
 
I'm all for raising the retirement age. That will help the solvency of the SS fund. As it stands right now, by 2030 there will only be enough available for 80% payout rates. Raise it now on the boomers before they all retire.
 
I just started a new job, went from hourly (with optional 401k but a pretty good pension) to salary. Salary is great: Duke contributes to 401k/403b 8.9% of first $64k, up to 13.2% of total salary, irrespective if the employee contributes anything.
 
9% of pre tax pay into nominated superannuation account is our standard retirement plan in Australia. With extra tax free payments being able to be contributed if you desire.
Our main issue is that people tend to accumulate superannuation funds as they bounce from job to job, which means doubling, tripling etc of fees. Employers like to use the same fund for all of their employees, although you can and should tell them to get bent and use your own fund, or roll all previous funds into the employers new fund.
 
got back from some training, one segment was taught by Amtrak Police, spoke to one of the guys about their job, pay and such. Their retirement is 30 years, but they retire at 100%, if married it's 50% on top of that and free medical. I always knew railroad guys had a good retirement, but...get this.....if you are married and divorce, the wife gets her %50 percent, but doesn't touch your pension....no matter how many times you get divorced.
 

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