Retirement savings question

[nmajdan]

This is for the financial advisors on the board, hoping there are some. If you are familiar with the SoonerSave program offered for State employees, beyond the $25/month provided by the employer, what are the benefits of that program compared to a traditional IRA?

[cleller]

I am NOT a financial adviser, but just looked over the Sooner Save website. As I guessed, its a deferred compensation program, similar to one I was involved with with my employer.
Personally, I really like deferred comp programs. You can have a set amount of your pay funneled (deferred) into the program before taxes are deducted from it. You then direct how it is invested-choosing between options in your plan, such as mutual funds. This way you can spread the money among different types of stock funds, bond funds, cash alternatives, etc. If you have not studied up on that kind of stuff, this could be the most challenging part, but I'm sure there are advisers available for help.
Its similar to a traditional IRA in the deductible aspect, except with deferred comp you are not hampered by the limits on your income to determine if you can deduct it or not. If you file jointly, the income limits for a traditional IRA can keep you from being able to deduct pretty quick, but I'm not sure what they are now.

Both differ from a Roth IRA in a couple of ways. With the Roth, you take your after-tax money and put it into the Roth. At age 59.5, you can start withdrawing the money, and whatever it has accrued tax free. For many people, this makes the Roth the first retirement vehicle to go after.
With Deferred Comp, the money goes in before taxes are paid. Thus, you pay fewer taxes now. When you can withdraw the money varies by plan, with many plans you can begin drawing the money out whenever you leave that employer. When you DO draw the money out, it is taxed as regular income. The idea is- hopefully when you retire you will be making less money, and be in a lower income tax bracket. Who knows how that will work out. If you'd like to retire before your are 59.5, deferred comp could be a big help. That's the other dig on a traditional IRA, you cannot get at it until 59.5. (OK, you can take out the principal earlier, I think, but now we are really getting confusing)

Obviously, if you are not sure how it all works, take advantage of whatever professional help you can get thru your employer.

If you're still pretty young, do yourself a favor and subscribe to Money, Kiplingers, Smart Money, etc to get familiar with all the retirement strategies. You'll be glad you did. The library is great, too. You've really got to plan and learn if you want to keep your money. No one will do it for you, and Uncle Sam will take it if you let them.

p.s. I just have to add- be fanatical about paying as few taxes and as little interest as you possibly can. That is giving away your cash that you worked for.

[Killerbees]

I am not a financial advisor either but.....

I think for now the old way of thinking, monthly contributions to 401ks iras etc are not the way to go until sanity returns and most companies are actually priced at true value. I cut my contributions to my 401k down to the min to get the full company match. My company matches 6% if I put up 6%. I still am not confident that I will ever see that money. The only reason I do it is to get that match and my plan allows me to invest directly in individual stocks so I can direct all of it away from real estate, banks and tech and put it into ag products, miners, oil companies and I can control what countries I invest in. I was up over 30% last year mainly due to silver,gold and ree miners and I am up only 5% so far this year mainly due to gold and silver selloffs but I will gladly take that every year with the way things are.


Unfortunately there is a real chance that the usd along with all other paper currencies are going to implode. Things are going to get much worse before they get better imo so when that happens it is no stretch to imagine waking up one morning and finding out that dear uncle sam has decided, for your own protection of course, to transfer all your retirement savings into us bonds. Oh they won't steal it of course, you will still have an account but instead of being invested in stocks it will be invested in savings bonds. This has already happened in other countries and a few politicians here have mentioned publicly that this is a great idea and to implement it inder the guise of protecting people from losing their retirement in the stock market.

I dunno if it will happen or not but I see no sign of anything getting fixed regardless of who gets elected they will be fighting a congress full of career politicians, so we will soon see a big economic collapse. The type of collapse that finally forces congress to make drastic changes, hopefully changes for the better.

I think the best thing to do is to look at your own situation and age and decide how best to use your disposable income to meet your needs when you retire without relying on social security, pension or ira/401k.

I realize I strayed somewhat from your question but it seems like cleller answered that superbly so I just tossed my .02 in.

[8timechamps]

I am a financial advisor, but I don't live in Oklahoma. Can you give me some information:

What is the max contribution annual?
Is there any kind of employer match?
What are the investment options?
When can you access the funds?

Other than it being a tax differed plan, is there any other pertinent information I should know? I'll help you the best I can.

[8timechamps]

I am not a financial advisor either but.....

I think for now the old way of thinking, monthly contributions to 401ks iras etc are not the way to go until sanity returns and most companies are actually priced at true value. I cut my contributions to my 401k down to the min to get the full company match. My company matches 6% if I put up 6%. I still am not confident that I will ever see that money. The only reason I do it is to get that match and my plan allows me to invest directly in individual stocks so I can direct all of it away from real estate, banks and tech and put it into ag products, miners, oil companies and I can control what countries I invest in. I was up over 30% last year mainly due to silver,gold and ree miners and I am up only 5% so far this year mainly due to gold and silver selloffs but I will gladly take that every year with the way things are.


Unfortunately there is a real chance that the usd along with all other paper currencies are going to implode. Things are going to get much worse before they get better imo so when that happens it is no stretch to imagine waking up one morning and finding out that dear uncle sam has decided, for your own protection of course, to transfer all your retirement savings into us bonds. Oh they won't steal it of course, you will still have an account but instead of being invested in stocks it will be invested in savings bonds. This has already happened in other countries and a few politicians here have mentioned publicly that this is a great idea and to implement it inder the guise of protecting people from losing their retirement in the stock market.

I dunno if it will happen or not but I see no sign of anything getting fixed regardless of who gets elected they will be fighting a congress full of career politicians, so we will soon see a big economic collapse. The type of collapse that finally forces congress to make drastic changes, hopefully changes for the better.

I think the best thing to do is to look at your own situation and age and decide how best to use your disposable income to meet your needs when you retire without relying on social security, pension or ira/401k.

I realize I strayed somewhat from your question but it seems like cleller answered that superbly so I just tossed my .02 in.

Couldn't disagree more. If you're not investing in your companies 401(k), you're passing on one of the very few tax benefits the federal/state governments allow. Just because you may not believe in the markets, is no reason to stay away from tax deferred savings plans. I've never seen a deferred savings plan that didn't offer investments for all risk categories.

Now, if you're a "doomsdayer", and think that civilization is going to implode, and we'll all rely on gold and shiny objects to barter with, carry on. Otherwise, passing on a tax deferred savings plan (especially with an employer match) is like saying "no thanks" to free money.

[Memtig14]

I think he said he was taking advantage of the employer 6% match.

[8timechamps]

I think he said he was taking advantage of the employer 6% match.

I wasn't questioning his post, just saying I didn't agree with "contributions to 401k, IRAs are not the way to go".

Most people aren't in a position to "not rely on their pension/401(k) and Social Security" in retirement, so I encourage everyone to maximize pre-tax contributions. Investments within those plans, that's an entirely different discussion.

[Killerbees]

Couldn't disagree more. If you're not investing in your companies 401(k), you're passing on one of the very few tax benefits the federal/state governments allow. Just because you may not believe in the markets, is no reason to stay away from tax deferred savings plans. I've never seen a deferred savings plan that didn't offer investments for all risk categories.

Now, if you're a "doomsdayer", and think that civilization is going to implode, and we'll all rely on gold and shiny objects to barter with, carry on. Otherwise, passing on a tax deferred savings plan (especially with an employer match) is like saying "no thanks" to free money.

I must not have explained myself well.

I did state that I am contributed the min amount to my 401k to get my employers maximum match. I agree its stupid not to at least do that.

My point is that instead of saving above and beyond that min amount and socking it away in a 401k you may be better served by investing it directly yourself. I chose to pay of my debt then invest directly into the market through a brokerage account. I strongly recommend doing this so you can remove exposure to some very risky sectors and direct that into more secure sectors. I would strongly recommend staying away from any real estate and banking exposure quickly followed by consumer tech stocks like apple, netflix, amazon and etc.

No my account isnt an IRA of any kind, yes I know I lose some to taxes. I am willing to pay that premium to have access to that money and to ensure that it remains my money. They are tax-deferred not tax free. I for one do not trust the government to keep their hands off of retirement funds or to not change the tax structure. Investing in 401ks is gambling on the future tax rates being the same or lower. Unless we seriously cut medicare, social security and welfare our taxes are going to go up.

Even if taxes are the same when you retire it is more of a case by case basis as to whether or not you will benefit from the tax deferment. If your making a few hundred thousand a year you will likely benefit, if you make less than 100k a year you will likely not. Contributions now lower your tax bracket and this lowers any deductions like mortgage interest, distributions later raise your tax bracket. From what I have read the net result does enough harm to lower income earners to make it impractical to have a 401k unless you have the company match.

Another point I have read but not really looked into is that soon we will begin seeing baby boomers reach the mandatory withdraw age of 70.5. After that what exactly do you think is going to happen to the stock market when 3,000,000 people a year are forced to sell their investments. What I read says to expect a long term bear market when that happens.

I never said that civilization is going to implode, but we are clearly headed for some very rough times. We will come out the other side intact and not in some Mad Max world. I have invested in gold and silver both, but that is about 25% of my exposure. I also invest in energy, base metals and ag stocks. Right now I am thinking about uranium. I do not own a hoard of gold and silver coins that I plan on using to buy food with when shtf. I do have a healthy supply of food, water and ammo for any disaster be it mother nature, aliens or zombies.

[8timechamps]

I must not have explained myself well.

I did state that I am contributed the min amount to my 401k to get my employers maximum match. I agree its stupid not to at least do that.

My point is that instead of saving above and beyond that min amount and socking it away in a 401k you may be better served by investing it directly yourself. I chose to pay of my debt then invest directly into the market through a brokerage account. I strongly recommend doing this so you can remove exposure to some very risky sectors and direct that into more secure sectors. I would strongly recommend staying away from any real estate and banking exposure quickly followed by consumer tech stocks like apple, netflix, amazon and etc.

For the average person, this may not be the best option. First, investing through a brokerage can be very costly. But, more importantly, if you're doing your own investing (i.e. ScottTrade), picking the right investments can be financial suicide. Now, if you feel confident and are in-tune with the economy, then you can make it work...but, most people don't have the time or ability to make sound investments on their own.




No my account isnt an IRA of any kind, yes I know I lose some to taxes. I am willing to pay that premium to have access to that money and to ensure that it remains my money. They are tax-deferred not tax free. I for one do not trust the government to keep their hands off of retirement funds or to not change the tax structure. Investing in 401ks is gambling on the future tax rates being the same or lower. Unless we seriously cut medicare, social security and welfare our taxes are going to go up.


If we're talking only about retirement savings, then readily having access to the funds shouldn't be an issue. If you're close to, or are retired, then that's a different story. As for future taxes, if that's a concern, there are alternatives (Roth IRA, Trusts, etc). However, trading the pre-tax benefit for the possibility that the tax code is going to be vastly different in the future isn't sound advice for most people. Of course, that's just my opinion.



Even if taxes are the same when you retire it is more of a case by case basis as to whether or not you will benefit from the tax deferment. If your making a few hundred thousand a year you will likely benefit, if you make less than 100k a year you will likely not. Contributions now lower your tax bracket and this lowers any deductions like mortgage interest, distributions later raise your tax bracket. From what I have read the net result does enough harm to lower income earners to make it impractical to have a 401k unless you have the company match.


I've never advised a client to invest in their company 401(k) to lower their tax bracket. That's rare, and like you said, unless you're making in excess of 200k, probably not an issue. The benefit is in the full pre-tax contribution and the tax-deferred growth (but, I think you already know that).



Another point I have read but not really looked into is that soon we will begin seeing baby boomers reach the mandatory withdraw age of 70.5. After that what exactly do you think is going to happen to the stock market when 3,000,000 people a year are forced to sell their investments. What I read says to expect a long term bear market when that happens.


There's no question that Social Security needs to be fixed. However, I don't think there is a long term bear market in the future. A lot of my retired clients have similar fears about the 3mm people a year being forced to sell, and while I think there is some validity in that, it's just not realistic. Most of the baby boomers I know have done well to prepare for retirement. A strange thing happens to people when they retire, they find that their expenses go down. I guess the best way to put it is that not every single person is going to sell all of their investments on the same day...most people will do it over their lifetime, or pass a majority of their wealth to the next generation. While the baby boomers are all retiring, the "millennium" generation is just entering the workforce, and they invest.



I never said that civilization is going to implode, but we are clearly headed for some very rough times. We will come out the other side intact and not in some Mad Max world. I have invested in gold and silver both, but that is about 25% of my exposure. I also invest in energy, base metals and ag stocks. Right now I am thinking about uranium. I do not own a hoard of gold and silver coins that I plan on using to buy food with when shtf. I do have a healthy supply of food, water and ammo for any disaster be it mother nature, aliens or zombies.

I wasn't specifically referring to you when I mentioned the "doomsdayers", sorry if it appeared that way. You seem to have a very good grasp on your situation and a good plan for your investments. However, the average person doesn't have the time/ability to invest the way you do. So, for the average person, pre-taxed, tax-deferred savings plan are the best bet, and like I said, what they invest in is an entirely different issue.

Precious metals have had an amazing run, and I don't see that stopping in the near future. Gold and silver have always had a place in my portfolio, and always will. So, I'm with you there.

I guess my point is that most people can benefit more from a tax-deferred savings plan and mutual funds, than doing it on their own in a taxable account. Make sense?

[Killerbees]

For the average person, this may not be the best option. First, investing through a brokerage can be very costly. But, more importantly, if you're doing your own investing (i.e. ScottTrade), picking the right investments can be financial suicide. Now, if you feel confident and are in-tune with the economy, then you can make it work...but, most people don't have the time or ability to make sound investments on their own.

I think if you look at the average person you will find that it is equally suicidal to invest in a 401k. They generally get a small brochure that points to the website for more detailed info. They go to the website and are presented with an array of mutual funds to invest in. So what generally happens is that they either spread it out across lots of them that look good or they pick the ones with the highest performance for the last few years. They have no idea what exposure they have to bonds, equities, commodities or what exposure they have to a given market sector or geographic region. Most dont understand the fees involved with the mutual fund or the 401k. I see no difference in that or blindly opening a etrade account and picking a few mutual funds out of the hat.

Unfortunately if you want to invest in the stock market, directly or through a 401k, you have to educate yourself and do the work to understand what you are doing, that or pay someone for their time and knowledge to do it for you. Anything short is a recipe for failure. Like anything else it takes work. The majority of people that have a 401k or ira treat it like some magical retirement fund that if they just contribute the amount the little calculator on the website says to do they will have x amount when they retire.



I wasn't specifically referring to you when I mentioned the "doomsdayers", sorry if it appeared that way. You seem to have a very good grasp on your situation and a good plan for your investments. However, the average person doesn't have the time/ability to invest the way you do. So, for the average person, pre-taxed, tax-deferred savings plan are the best bet, and like I said, what they invest in is an entirely different issue.

Again if they dont have the time or ability then they should hire someone to do it for them or they have no business investing it in the market and the best advice to give them would be to get out.



Precious metals have had an amazing run, and I don't see that stopping in the near future. Gold and silver have always had a place in my portfolio, and always will. So, I'm with you there.

I guess my point is that most people can benefit more from a tax-deferred savings plan and mutual funds, than doing it on their own in a taxable account. Make sense?

I think that unless you are fortunate enough to have an employer that offers a self-directed 401k then you are better off following 1 of 2 plans
1. Make minimum payments necessary to receive your employer max match then open you your own brokerage acct (make it an ira or roth ira if you so desire) deposit any disposable income you wish to invest and direct your own retirement savings.
2. Make minimum payments necessary to receive your employer max match and take the disposable income you wish to invest and go find a good financial adviser to handle your investment.

I do agree that taking advantage of untaxed growth in an IRA would obviously increase your savings but I am willing to pay that premium for the security of knowing that when the greedy politicians figure out a way to relieve everyone of their IRA/401ks that I will sleep tight.

I understand that most people you see have their stuff in order, but most people that see you are gonna have their stuff in order or they wouldn't be taking the initiative to see you in the first place. I imagine it must be tough trying to figure out what to say to the ones that aren't ready.

[8timechamps]

I understand that most people you see have their stuff in order, but most people that see you are gonna have their stuff in order or they wouldn't be taking the initiative to see you in the first place. I imagine it must be tough trying to figure out what to say to the ones that aren't ready.

For the most part, that's true. However, once in a while I'll get a referral (usually a younger relative), and it's a mess. I'm not complaining though.

Financial Advisors (brokerage firms) for the most part are greedy and not really in the business of the client's best interest. Everything you get through a broker has a fee (some you can see, some you can't)...and it's almost always what is driving the recommendation. I was like that early in my career, but I was fortunate to have a good market and a very good mentor that taught me the importance of taking care of my clients. Unfortunately, most brokers aren't that way.

Anyway, I think we're on the same page for the most part. The goal being the same: get to retirement with as much of your money as possible, while keeping the IRS finger out of the pie.

And having a good zombie apocalypse plan is good too.

[cleller]

After that little flurry, I have another tangent to go out on, which is financial advice.

I do all my own planning, and am comfortable with it, because I've always been very interested in the subject. I imagine if I turned it all over to a pro, I would do better, but I just feel it is my responsibility, and don't want to entrust it to anyone else.

With all the retirement vehicles, health savings accounts, etc out there, it is downright difficult to expect the average joe to be familiar with it all. A number of the personal finance magazines tout fee-only financial planners these days to get opinions from professionals who don't stand to profit from where you money is invested, you pay them strictly for advice.

I did have a meeting once with a Fidelity adviser, as Fidelity administered our deferred comp. He was very professional, reassured me everything looked OK, and did not try to steer me toward any other products. So, I have a favorable view of that type adviser. Like 8TimeChamps posted, some brokerage firms will put the sell on you, looking for commissions. I'll occasionally get a call from an adviser at TD Ameritrade, where I have some stuff. Very subtle, "call me if you have some trades, I'll waive the commission", don't know if this is charity, or trying to get a foot in the door.

I also kinda like the idea of the new "target" funds that Fidelity and Vanguard run. Pick your hoped for retirement date, put in the money and forget it. If you have an extremely pessimistic view of where the markets are headed in the next 10-20 years, it might not seem so simple, though.

[Killerbees]

Anyway, I think we're on the same page for the most part. The goal being the same: get to retirement with as much of your money as possible, while keeping the IRS finger out of the pie.

And having a good zombie apocalypse plan is good too.

Yep I do think that. I feel I am in pretty good shape, I have about 65k in a self directed 401k that I started 5 yrs ago when I hired on at my current employer and about 85k in 2 seperate brokerage accts and my only debt is a used truck I bought last year and few hundred dollars on a cc that the mrs uses. I am 36. I opened the second brokerage acct with optionhouse to start trading options. That has been a steep learning curve and takes an entirely different mindset than buying stocks. Much much more research.


After that little flurry, I have another tangent to go out on, which is financial advice.

I do all my own planning, and am comfortable with it, because I've always been very interested in the subject. I imagine if I turned it all over to a pro, I would do better, but I just feel it is my responsibility, and don't want to entrust it to anyone else.

With all the retirement vehicles, health savings accounts, etc out there, it is downright difficult to expect the average joe to be familiar with it all. A number of the personal finance magazines tout fee-only financial planners these days to get opinions from professionals who don't stand to profit from where you money is invested, you pay them strictly for advice.

I did have a meeting once with a Fidelity adviser, as Fidelity administered our deferred comp. He was very professional, reassured me everything looked OK, and did not try to steer me toward any other products. So, I have a favorable view of that type adviser. Like 8TimeChamps posted, some brokerage firms will put the sell on you, looking for commissions. I'll occasionally get a call from an adviser at TD Ameritrade, where I have some stuff. Very subtle, "call me if you have some trades, I'll waive the commission", don't know if this is charity, or trying to get a foot in the door.

I also kinda like the idea of the new "target" funds that Fidelity and Vanguard run. Pick your hoped for retirement date, put in the money and forget it. If you have an extremely pessimistic view of where the markets are headed in the next 10-20 years, it might not seem so simple, though.

Again I am not a financial adviser but I have helped a few people out with simple direction. One plan I have recommended to people that gives them a simple way to direct their investments without worrying too much is prpfx thed permanent portfolio fund. It divides the assets equally between stocks, cash, bonds and commodities. Its return is impressive over the years considering some of the crashes we have had. I would highly recommend looking into it further and if its not available to you then you can still employ the strategy and split your acct into different mutual funds that reflect the basic holding of prpfx.

[8timechamps]

After that little flurry, I have another tangent to go out on, which is financial advice.

I do all my own planning, and am comfortable with it, because I've always been very interested in the subject. I imagine if I turned it all over to a pro, I would do better, but I just feel it is my responsibility, and don't want to entrust it to anyone else.

With all the retirement vehicles, health savings accounts, etc out there, it is downright difficult to expect the average joe to be familiar with it all. A number of the personal finance magazines tout fee-only financial planners these days to get opinions from professionals who don't stand to profit from where you money is invested, you pay them strictly for advice.

I did have a meeting once with a Fidelity adviser, as Fidelity administered our deferred comp. He was very professional, reassured me everything looked OK, and did not try to steer me toward any other products. So, I have a favorable view of that type adviser. Like 8TimeChamps posted, some brokerage firms will put the sell on you, looking for commissions. I'll occasionally get a call from an adviser at TD Ameritrade, where I have some stuff. Very subtle, "call me if you have some trades, I'll waive the commission", don't know if this is charity, or trying to get a foot in the door.

I also kinda like the idea of the new "target" funds that Fidelity and Vanguard run. Pick your hoped for retirement date, put in the money and forget it. If you have an extremely pessimistic view of where the markets are headed in the next 10-20 years, it might not seem so simple, though.

If you're comfortable with the direction your investments are going, then you don't need a financial professional necessarily. And, you're right about the TD Ameritrade person. Chances are, they want to sell you on something...nobody just waives commissions because they are nice. If it's too good to be true...

Asset allocation funds are great for people that don't want to deal with their investments on really regular basis. Most fund companies offer them, and they range from conservative allocation to high risk. Most even re-balance monthly.

I am a fee-only planner. I also have completed my CFP (think of it like a masters for financial planning). My clients only pay for my advice and planning, I gain nothing whether they lose or make money. It puts me on the same side of the table as my client, and allows me to focus on what their best interests are. I would hate to just be starting out, trying to build my client book in today's financial world.

[8timechamps]

Yep I do think that. I feel I am in pretty good shape, I have about 65k in a self directed 401k that I started 5 yrs ago when I hired on at my current employer and about 85k in 2 seperate brokerage accts and my only debt is a used truck I bought last year and few hundred dollars on a cc that the mrs uses. I am 36. I opened the second brokerage acct with optionhouse to start trading options. That has been a steep learning curve and takes an entirely different mindset than buying stocks. Much much more research.



Again I am not a financial adviser but I have helped a few people out with simple direction. One plan I have recommended to people that gives them a simple way to direct their investments without worrying too much is prpfx thed permanent portfolio fund. It divides the assets equally between stocks, cash, bonds and commodities. Its return is impressive over the years considering some of the crashes we have had. I would highly recommend looking into it further and if its not available to you then you can still employ the strategy and split your acct into different mutual funds that reflect the basic holding of prpfx.

Sounds like you are doing well for your age. I love options. I had a client that had a huge holding in Bank of America back in 2004, they didn't want to sell any shares (because it was inherited), I kept telling them that that had to diversify. Finally, they agreed to write covered call options and use that cash to diversify. When B of A tanked, they had built up almost an equal amount in other areas. The shares were called before the drop, and they have been very happy since. It has a steep learning curve, but once you get it, you can do well with it.

[badger]

Warning: If you have a state pension, don't break the law.

The case study is mildly NSFW, but then again, it appears on many state media sites... just gloss over the reason why the guy got his pension taken away.

Link (http://www.tulsaworld.com/news/article.aspx?subjectid=14&articleid=20111026_14_A11_ULNSbn526768)

In a nutshell, the Tulsa area (creek county actually) had a judge that was...um... indecently exposing himself during court. He had felony charges, and as an end result, neither he nor his wife were entitled to about 23 years of pension payments from the state because of the (non-retroactive) 1981 statute that basically says you-broke-the-law-so-you're-not-entitled-to-8k-per-month-retirement-payments-you-dirty-old-man.

Several rounds of appeals upheld this ruling.

[cleller]

Sometimes I look back and wonder if I should have just stuck most in an index fund, some in Pimco Total Return, and a little in gold....Right now who knows?
My basic philosophy is that if you think the USA will prevail, just stick with the plan. If you think the USA will fail, you're probably gonna be screwed anyway.

I do have a compliment for the TD Ameritrade lady. I got a letter from the IRS; I had messed up my 2009 taxes with a cost basis blunder, and they thought I owed them a bundle. In my panic, I could not find any of the paperwork right away. I had saved this gal's number at TD Ameritrade, called her, and she had what I needed in the mail that day. Now I'm a loyal customer. Plus, they've never suggested anything, just kind of "we're here if you need us".

My real adviser was James B Stewart at the WSJ. I've really missed him since he moved to the NYT. He saved my bacon in about 2007 with an article questioning the stock market's stability, and suggesting it might be wise to scale back some.

[badger]

My real adviser was James B Stewart at the WSJ. I've really missed him since he moved to the NYT. He saved my bacon in about 2007 with an article questioning the stock market's stability, and suggesting it might be wise to scale back some.

People like them are the reason Madoff's fraud was finally exposed, too. All of this recent media that the Madoffs are doing (son and wife) pretty much said that the Ponzi scheme ended because everyone got weary of Wall Street and was massively withdrawing their investments everywhere, even from a so-called exclusive, safe, high-return option like Madoff. Thus, there was no more new money for Bernie to payoff old investors with... and it was all gone.

[SoonerTerry]

i stayed at a holiday inn last night

[pphilfran]

Start early

Dollar Cost Average

Diversify holdings

Rebalance your portfolio quarterly

[8timechamps]

Sometimes I look back and wonder if I should have just stuck most in an index fund, some in Pimco Total Return, and a little in gold....Right now who knows?
My basic philosophy is that if you think the USA will prevail, just stick with the plan. If you think the USA will fail, you're probably gonna be screwed anyway.

I do have a compliment for the TD Ameritrade lady. I got a letter from the IRS; I had messed up my 2009 taxes with a cost basis blunder, and they thought I owed them a bundle. In my panic, I could not find any of the paperwork right away. I had saved this gal's number at TD Ameritrade, called her, and she had what I needed in the mail that day. Now I'm a loyal customer. Plus, they've never suggested anything, just kind of "we're here if you need us".

My real adviser was James B Stewart at the WSJ. I've really missed him since he moved to the NYT. He saved my bacon in about 2007 with an article questioning the stock market's stability, and suggesting it might be wise to scale back some.

I wish I did a lot of things differently too, but that's hindsight for you. I've heard nothing but positive things about TD Ameritrade. Their business model is built for the investor that has a clue...so, they allow themselves the ability to have people available on an "as needed" basis.

I started, and worked 12 years for one of the big firms on Wall Street. They did a great job of training me, but in the end, they really wanted me to put their bottom line in front of everything else. So, I left. Now, I'm able to work the way I want with the clients I want. Don't get me wrong, a lot of people benefit from the big wire houses, it was just time for me to go.

[Killerbees]

My basic philosophy is that if you think the USA will prevail, just stick with the plan. If you think the USA will fail, you're probably gonna be screwed anyway.

I wouldn't bet on the USofA losing. I feel confident we will eventually get everything sorted out but its gonna be a rough ride. The USD on other hand I don't place so much confidence in. I believe that we are going to see big devaluations in the USD in coming years at the minimum and an outright collapse as a worse case scenario. Whether or not the end result is a gold backed currency or some type of new paper backed currency is anyones guess.

If you look at the euro/usd its been rangebound for five years now but if you look at either the euro or the usd compared to most any commodity and you will find that this ongoing debt crisis has eroded the purchasing power of both. That is real inflation as opposed to the absurd GDP and inflation numbers posted by our gov.

[cleller]

For years we've been hearing about how the Europeans take such good care of their populace, and how American is just stupid for not providing for cradle to grave health and welfare. Now it seems the Europeans could never afford what they were doing in the first place. Just those mean old Germans handled their money well. I guess most of Europe feels like the Germans still owe them, anyway.

8Timer: are TIPS ready to shine? I allocated some to a TIP fund 2-3 years ago, its been all over the place, but I leave it alone.

[8timechamps]

For years we've been hearing about how the Europeans take such good care of their populace, and how American is just stupid for not providing for cradle to grave health and welfare. Now it seems the Europeans could never afford what they were doing in the first place. Just those mean old Germans handled their money well. I guess most of Europe feels like the Germans still owe them, anyway.

8Timer: are TIPS ready to shine? I allocated some to a TIP fund 2-3 years ago, its been all over the place, but I leave it alone.

TIPS should be considered a long-term investment. Unless you own the TIP bond outright, it's going to be volatile (as volatile as bonds can be) in the short term (and I would still consider 3-5 years "short term" in regards to TIPS (or any other bond holding). If you're in a TIPS fund, then there will definitely be volatility in the short term (as the fund itself has no maturity date). I think having some of your investments in TIPS is a good move, and I would recommend that you sit tight. Over the long term, you'll beat inflation and will come out on top. If you're in the TIPS fund as a portion of your fixed income (or bond) allocation, then just treat it like any other bond and do what you've been doing...leave it alone and let it grow. It's not going to be "sexy", but in this economy it'll offer some kind of protection. And...I do think you'll see some upward movement in the next 12-18 months.

[pphilfran]

If you are under 40 you probably should have little exposure to bonds....unless you are risk averse...

[pphilfran]

Before anyone takes advice from a financial adviser you should know your risk tolerance...

If you have a cast iron stomach you probably can handle some risk....if you start pulling money out of the market because it declined 10 or 20% you have far too much exposure to the market...

[8timechamps]

If you are under 40 you probably should have little exposure to bonds....unless you are risk averse...

Why? A good diversified portfolio should always have an element of fixed income. Not to mention (as you posted), not everyone's risk tolerance is the same. I have a 32 year old client that is 70% fixed income, because she feels "safe", and I also have a 77 year old client that is about 10% fixed income. The key is (again, as you said) knowing your tolerance. But a well balanced portfolio should always have a fixed-income/bond component.

[pphilfran]

Why? A good diversified portfolio should always have an element of fixed income. Not to mention (as you posted), not everyone's risk tolerance is the same. I have a 32 year old client that is 70% fixed income, because she feels "safe", and I also have a 77 year old client that is about 10% fixed income. The key is (again, as you said) knowing your tolerance. But a well balanced portfolio should always have a fixed-income/bond component.

Just saying it is not for everyone....when you are young you should be taking more risk if you stomach the roller coaster ride...

Start early

Dollar Cost Average

Diversify holdings

Rebalance your portfolio quarterly

[8timechamps]

Just saying it is not for everyone....when you are young you should be taking more risk if you stomach the roller coaster ride...

Start early

Dollar Cost Average

Diversify holdings

Rebalance your portfolio quarterly

Very true.

[cleller]

I got into the TIPs fund shortly after the recession mess, thinking inflation was on the horizon. (Treasury Inflation Protected Securities) Its moved around more than I realized it would, but nothing worrisome. I was reading today that the Treasury was thinking of selling Floating Rate Notes, which one writer claims will be better than TIPS. I've got a very small amount in a bank loan floating rate fund, (Eaton Vance) but will have to research if the two work similarly, relation to TIPS, etc.

Europe really worries me. Fixed income is meager, bonds are skittish. Even worse, I have a too big a percentage sitting in money markets.

The last few weeks have been interesting, everything looked bleak, then a rally, now back to bleak. (for me) Really proves the point that jumping in out can make you miss the best days. I really wish I had taken some finance or economics classes at OU.

[8timechamps]

I got into the TIPs fund shortly after the recession mess, thinking inflation was on the horizon. (Treasury Inflation Protected Securities) Its moved around more than I realized it would, but nothing worrisome. I was reading today that the Treasury was thinking of selling Floating Rate Notes, which one writer claims will be better than TIPS. I've got a very small amount in a bank loan floating rate fund, (Eaton Vance) but will have to research if the two work similarly, relation to TIPS, etc.

Europe really worries me. Fixed income is meager, bonds are skittish. Even worse, I have a too big a percentage sitting in money markets.

The last few weeks have been interesting, everything looked bleak, then a rally, now back to bleak. (for me) Really proves the point that jumping in out can make you miss the best days. I really wish I had taken some finance or economics classes at OU.

I don't think the Fed's floating rate notes will be much different (in terms of performance) than the tips. Anytime you're in a bond fund, you're going to see more fluctuation than if you were in an individual bond. Sometimes good, sometimes not so much.

As for the money markets, that used to be a really good way to sit on the sidelines, nowadays, I'm not sure it's worth it. If you have the ability (and readily available funds), look into variable rate preferred stocks, or even short term CDs...a lot of banks are offering fairly good rates on short term CDs (to attract more clients). It'll take a little more of your time, but you'll realize a better return while remaining in a relatively safe investment.

[Killerbees]

Why? A good diversified portfolio should always have an element of fixed income. Not to mention (as you posted), not everyone's risk tolerance is the same. I have a 32 year old client that is 70% fixed income, because she feels "safe", and I also have a 77 year old client that is about 10% fixed income. The key is (again, as you said) knowing your tolerance. But a well balanced portfolio should always have a fixed-income/bond component.

I can't remember which book I read but it was about asset allocation and it had a big section on risk. The author made a very convincing argument about how taking on some risk actually lowers your risk by adding diversity in exposure. I have actually seen that in several books but not in as much detail.

I take the warren buffet approach, diversification is worsification, but I always recommend it to others who aren't so actively managing their assets



Europe really worries me. Fixed income is meager, bonds are skittish. Even worse, I have a too big a percentage sitting in money markets.

Money in a money market acct isn't as safe as it used to be after all the mess rolling out of the MF Global fiasco. If a primary dealer got caught using clients cash (the biggest of no nos) then who knows how many others are doing the same from time to time. We all know that they are still leveraged to the hilt and have massive exposure to the Euro crisis. What's worse is that they readily admitted to the worst crime possible but then refused to open the books and hand over other info. What could they possibly be hiding if they already fessed up? I guess the better question would be who are they trying to protect if its obviously not themselves?

Its going to be a long tike before anyone sees their money out of those accts from this deal. Hopefully they will get the gov to step in with that fund they have for money market accts sort of like the fdic does for bank accts. Even then I bet there are limits to how much you get reimbursed.

[8timechamps]

I can't remember which book I read but it was about asset allocation and it had a big section on risk. The author made a very convincing argument about how taking on some risk actually lowers your risk by adding diversity in exposure. I have actually seen that in several books but not in as much detail.

I take the warren buffet approach, diversification is worsification, but I always recommend it to others who aren't so actively managing their assets

The thing about any asset allocation is that it's a very personally specific thing. As I mentioned above, the youngest client on my books is one of my most conservative clients. It took almost two years for her to move out of 100% fixed income. It took a lot of hand holding, but as she saw the benefit, it became easier for her. She's still overexposed in fixed income investments (for her age and goals), but that's how she wants it.

For Warren Buffet to be anti-diversification is funny to me. Look no further than the holdings of Berkshire Hathaway to see just how diversified he really is. Plus, at his level of wealth, it would take a global economic meltdown of the highest order for him to be anywhere near a financial crisis. Nonetheless, Buffet has been/and remains one of the most intelligent investors in history.

[Killerbees]

For Warren Buffet to be anti-diversification is funny to me. Look no further than the holdings of Berkshire Hathaway to see just how diversified he really is. Plus, at his level of wealth, it would take a global economic meltdown of the highest order for him to be anywhere near a financial crisis. Nonetheless, Buffet has been/and remains one of the most intelligent investors in history.

I think warren has several quotes saying to the effect that diversification is a hedge against stupidity. I think mainly his thinking was to build wealth you need to understand the market your investing in an concentrate your holdings into a few areas but to hold wealth you diversify. I haven't read up much about his start but I wouldn't be suprised to find out that he built his wealth that way.

[8timechamps]

I think warren has several quotes saying to the effect that diversification is a hedge against stupidity. I think mainly his thinking was to build wealth you need to understand the market your investing in an concentrate your holdings into a few areas but to hold wealth you diversify. I haven't read up much about his start but I wouldn't be suprised to find out that he built his wealth that way.

If you like Buffet, and have the ability, you should buy a share or two of Berkshire Hathaway just to go to the shareholders meeting in Omaha. It's worth it just to hear him speak. Buy the B shares (it's trading around $78/share) as opposed to the A Shares (trading around $118,000/share).