Investment Question - RV-Dreams Community Forum

thebearII · RV-Dreams Family Member

Investment Question

Speedhitch · RV-Dreams Family Member

I....by no means....can tell you what to do with your investments...I can, however tell you what Sherri and I did to assure us a place in the sun. We took part of the money we got from our house sale and paid off our new truck and new 5th wheel...which we consider to be a 7 year depreciating investment. In other words in 7 years we will have to think about replacing these items. If we had left the money in our stock market accounts...we would have seen them take a giant drop over the last 2 years. So buy investing in our future we will enjoy the fruits of our labor for the next 7 years putting me at age 70. Now the remainder of our money from the house and all our other investments we have placed in Money Markets and CD's which hopfully will show us some insurance for future needs well into our 8o's less we lose it at the casino. NON of this money will be use to live off of this is just insurance for future needs. After 9-11 I have not been a real advocate of the stock market. Oh we hear long term...but I past long term years ago. Sherri and I have invested in us NOW and we will enjoy what we have NOW. As all my friends told me yesterday tomorrow has no guarantees and you must live for the moment, however short or long it may be...live your life and die with no regreats.

We wish you the best life has to offer.

Joe and Sherri

-- Edited by Speedhitch at 12:17, 2008-09-17

Tim & Robyn · RV-Dreams Family Member

I think I would find myself a *good* financial counselor before I did anything. 2-3% interest on money market/CD isn't much. I don't know what the inflation rate is right now, but with that and after taxes you might wind up losing money.

Even with the market down right now, you haven't lost anything unless you sell it, or are already taking withdrawals for living expenses.

Having said that, I must say that I am not a savvy investor.... everything we have is in a 401k and an IRA.

Sonia · RV-Dreams Family Member

What is going on right now is extremely frightening. I've been watching FoxNews and Fox Business News to see what folks who know more than I are recommending. Putting money in a 2-3% savings account is considered a VERY good thing right now. Suze Orman said on CNN last night she has 99% of her money in municipal bonds.

This is a time to do a great deal of research and to take the most conservative action, unless you have money to lose. The billionaires are having a picnic right now buying falling stocks. I can't afford any losses.

DaveSam · RV-Dreams Family Member

I have mine spread out among bonds, money market, stocks, saving accounts and fixed idexed annuities. At least with fixed indexed annuities the principle is guaranteed even though the gains won't be as high as investments could be, but the loss isn't there either.

thebearII · RV-Dreams Family Member

Thanks for the feedback so far. I spoke with my financial planner yesterday and he advised to just stay where I am and wait it out.

Wish I could trust the advice he gave... just not sure that is the right move with the way things are going.

Ann and Steve · RV-Dreams Family Member

          I've been a position trader for the past three years and have learned, the hard way, not to panic. When you see the DOW drop 400+ points in one day, you're seeing panic selling. And that action isn't just us little guys, it's the big investors, hedge fund managers, mutual funds managers, and, quite importantly, the automated systems that see a dip and automatically start dumping their portfolios.

          The best thing to do is to review your investments. Make sure you are diversified and double-then-triple check what you're holding. Got AT&T or ABM? They're good companies getting slammed by the Big Sell. Do your homework and keep the companies that have a future. They'll be back. Most people have 401K or self-purchased, mutual funds and don't know what the holdings are in those accounts. Do you know what percentage of your 401K is sitting in AIG?

          Unfortunately, when big movements happen, it's always us little investors who didn't get the email in time. I've lost money by being a "day late" but since I don't work on Wall Street, I usually don't get back to my computer until the damage has already been done. I used to panic and sell quickly, only to see my previously-owned stock rebound.

          One last thing. Investment advisors aren't all that they're cracked up to be. I've had two such "advisors" in the past who, I learned later to my chagrin, really didn't understand what makes the market move. They pointed me to what their brokers were selling that day and I'm still trying to recover from their blunders. Remember, don't panic and good luck.

snowman8 · RV-Dreams Family Member

As Robin Williams said in "GOOD MORNING VIET NAM" "This is NOT GOING TO LOOK GOOD ON MY RESUME!!!!"

193 working days left till retirement and BAM! This has to go on......Ever since this started I've been watching everything real close. Fortunately, I have another 10 years until I can touch my 401k w/o penalty. Yeah, watching the losses is enough to pop another cork (usually Cab or Zin biggrin

) but my shares volume keep rising, and that's good.

There's a radio station out here on the Left Coast that has a really good financial person I get to listen to on occasion, he put it very simply for us simpler folks that want to play "Big Money" Monopoly.....When Wall Street sells, they're putting stock on sale, but people get worried and sell, sell, sell. Yet When MERVYNS puts their stock on sale, we BUY BUY BUY!

I really don't think that the U.S. economy is got their "CLOSING DOORS FOREVER" sign out yet, so I would say, if you can afford to BUY BUY BUY. because I believe in the US of USA. Historically Small business has been what brings back the economy, sit tight, grit your teeth (because it really isn't a loss unless you try to sell) and pray it doesn't take too long.

My Mom did the above years ago with a stock and panicked...had to listen to how much she would have had, IF she hadn't sold. wink

And they say kids don't pay attention to their parents......

Doncat · RV-Dreams Family Member

I think moving money from the your 401s and mutual funds right now is violating the principle of "buy low, sell high". I believe the market will recover, the question is how long is it going to take? I am 55 and cannot take my money from investments without penalty for another 5 years thereabouts. Will the markets be recovered enough by then that I can "sell high"? I can only hope.......

phyllen · RV-Dreams Family Member

I am turning 65 in a few weeks, Leonard turns 60 in Jan. We retire 1/31/09. Talked to our financial advisor on Friday. He called to see how we are weathering this storm. We have 45% in cash and secure funds and 55% in stocks. We are not making lots on our annuities and according to paper, lost lots in stocks.

Even though we are retirement age, we will continue to need funds for many more years to come. So - we both are still investing every week through payroll deduction and will until the day we retire. And we letting our 55% alone for now. It will rebound. We just hope we live long enough to see it.

Phyllis

Jim · RV-Dreams Family Member

I'll tell you what I'm doing to navigate this investment storm. But first I must say that anything that I have to say here is not meant as investment advice or a recomendation. It is simply a style of investing that has worked well for me (up to this point).

I write options on my stock portfolio as a means to generate additional income. Both "put options" and "covered call options". When the stocks drop in price I am forced to buy more shares as the puts expire "in the money". But that's okay because the only stocks I buy are those that I consider to be high quality, dividend paying stocks, that will survive this downturn and I'm happy to have more of them at a lower cost basis.

Over the past several months I have certainly seen a large paper loss but I have also been accumulating more and more shares of companies that I think are good long term investments. The only downside I see in this is if the economic downturn lives longer than I do.

I would appreciate any comments from anyone out there that is familiar with this style of investing.

Readytogo · RV-Dreams Family Member

We have an IRA and 401K. In both we have Mutual Funds and some stock. We are approx 9 yrs until we can touch them. I think this is the time to buy and not sell. The stock market will turn around. I just hope sooner than later.

pierreandcolleen · RV-Dreams Family Member

I am still 30 years from the magical age of 65 so I am just going to keep my money where it is for now (mutual funds and stocks). I am thinking about investing some more while the prices are low.

Ann and Steve · RV-Dreams Family Member

A lot of you ask the continuing question -- buy, sell, hold [stocks, funds, etc]. My question back is "Do you know what you're looking at?" Jim R (up a few posts) is an options trader and seems to know what he's doing. I've looked at options and quickly decided that I don't know enough to pull it off. A bunch of you seem to be looking at your investments from the "outside." You have 401K's or mutual funds or individual stocks but, do you really know what you own? If you don't know whether to buy, sell, or hold, (and, Howard, you can holler at me), I recommend the book by Jim Cramer, "Sane Investing in an Insane World." It's been around for quite a while and, while dry in some spots, addresses a lot of the lingering questions that all of you are posting on RV-Dreams. His book is my bible. His "bottom line", a phrase he uses a lot, is to do lots of homework. You can't buy a stock or mutual fund because it sounds good or has a catchy advertisement on TV. You have to know about the company or the multiple companies in a mutual fund. What are their earnings, what industry are they in, are they affected by the current economic downturn? Then you have to learn such things as profit and operating margins, P/E ratios, debt-to-equity, and a whole host of other things to allow you to make good decisions. Does this take time? You bet. I studied for a full year just to understand, maybe, 20% of how the market works. Am I an investing genius? Hardly. My little portfolio is down about $22K but seems to have stabilized. Will it recover? I truely believe it will because Jim [Cramer] taught me how to do my homework and pick good companies, not to panic, and to be patient. Unfortunately, at the age of 60, my patience is wearing thin. Pierre and Coleen, you're going to be rich but that wealth won't be free and won't be easy. You can turn your money over to an "expert" or start learning and take control of your financial future, on you own. Best of luck.

-- Edited by Ann and Steve at 11:24, 2008-10-26

bjoyce · RV-Dreams Family Member

When I was just out of college I stopped and visited an old family friend. He was quite good at stock investing and gave me one piece of advice I have always remembered, "If a stock broker was good at picking stocks they would not be a stock broker." I know no "expert" I trust to turn my money over to. It just takes study and you can't panic. The advice I got those many years ago is still true.

sonny · RV-Dreams Community Member

I think "don't panic" is key words right now. Our financial advisor has suggested that we sit tight and wait it out; things will turn around 6 mos. to a year. Haven't lost anything unless you cash it out, everything on paper. Unless you need the money to live, I think it is best to just let it be, or maybe even cautiously buy into some of the stocks that have a great track record of recovery. Warren Buffett is buying up everything out there right now.

Jim · RV-Dreams Family Member

There are many people in the investment community saying "don't panic, wait this out, the markets will return". I agree with them. The markets will stabalize and will return to a growth trend at some point in the future.  But I think you have to look a little further into it than that.

I think when most people say "the market will come back", what they are really saying is my portfolio will come back to the level it was at prior to the market crash. And without adding to their portfolios at these lower levels (dollar cost averaging) they will have a lot longer to wait.

It wasn't just one segment of our economy that has experienced a correction, such as tech, housing, or industrial. This has been, and is, a broad based collapse of not only our entire economy but that of most industrialized countries of the world. In the past year the stock markets of the world have seen trillions of dollars in investment capital evaporate.

So when we say markets will come back, what we are saying is buyers will return to the stock markets of the world. They will in fact return but they will return with trillions less dollars (or yen, or euro, etc) to invest. So for people who are waiting to see their portfolios return to the levels that they were at 18 months ago. . . I think they will have a long time to wait.  This is not the end of the world. We will all survive this. But those that will see their portfolios return to past levels of worth the fastest will be those that continued to purchase equities at lower levels to bring down the cost basis of their portfolios.

Well, there you have it. . . my two cents worth smile

Jim

-- Edited by Jim at 05:23, 2008-10-27

davidsan · RV-Dreams Community Member

After the Technology crash in the 2000-2002 period, I revised my investment planning using a Three Bucket strategy insuring that I always made money from one of the buckets no matter what. This downturn is a good opportunity to see how well it works.

1) Bucket One contains Treasury bonds secured by the Federal Government. I chose I Bonds because they keep pace with inflation and pay interest for 30 years.
As of November, our IBonds (which I purchased several years ago with a fixed rate of 3) are paying an annual rate of 7.9% with a yield of 5.7%. (Refer to www.treasurydirect.gov for more information).  In prior years, one could buy up to $30,000 per person per calendar year. Unfortunately, this has been reduced to $5000 a year per person at this time.

This is the lifeline that keeps us afloat no matter what may happen in the world and minimizes our financial worries as we experience the richness of "Living the Dream". Hopefully we'll never have to tap into this bucket for a very long time.

2) Bucket Two contains one balanced mutual fund consisting of approximately 50% Bonds and 50% Large company stock. In doing our research we were looking for a fund that never lost money over a thirty year period. The closest we could come was the Dodge and Cox Balanced Fund that lost money only twice and averaged about 11% gain annually over those 30 years.  It is actively managed by a team of five experts who have been with the fund for many years.

So....how's it doing this year? Down an amazing 43%. This is a vivid example of just how challenging this downturn is. Obviously, it has caught the brightest of our financial world offguard and unprepared.

3) Bucket Three contains Special Situation Vanguard Index Funds (which has the lowest fees among most mutual funds). Several years ago I chose three funds: Emerging Markets, Energy, and Precious Metals. Until this year they returned approximately 30-40% a year (over the past four-five years). This year? Down an amazing 45-55% for each fund.

We started out with a third of our retirement funds in each bucket. Now we are adjusting more into the IBonds (50-60%) and less (20-25% each) into the other two buckets as we grow older.  Our ace in the hole is I return to teaching ESL/EFL (Teaching English as a Second Language) when we want to add to our funding...and as a means of giving back and contribution. In the past few years we have taught at major universities in Mexico, Turkey and Jordan. Otherwise, we are on the road full time with our motorhome exploring the USA and Canada. Because I really enjoy investing, I do not use a Financial Planner. At 72, our main source for living expenses comes from Social Security. Our budget runs about $2500 a month. So far we have rarely dipped into our Three Buckets. Hope this helps! Davidsan smile

-- Edited by davidsan at 00:30, 2008-12-09

-- Edited by davidsan at 00:31, 2008-12-09