Where to Invest Money Right Now?

[garyfromterrace]

[QUOTE=ghosthop; How do you go about finding a very, very good financial advisor?[/QUOTE]
This is key for financial idiots (me and jm2e).
I "researched" (the interwebs, articles outlining same) what made a good FA and what credentials they should have. Probably took a month before I found a guy. He's been a gem. Full package, including ensuring our wills were current, outlining his strategy, calculating when we could retire given the budget we thought we needed per month etc etc.

He budgets in things like a new vehicle every 7 years or so and the timing on selling the house (in our 80's) and start renting. He also does all the investing/financial management to keep the money coming in every month. He's been averaging about 8% since we hired him 8 years ago. We love him.

[Mustonen]

Nothing underscores my complete ignorance of financial logistics more than this.



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He dives a little deep into lingo…. But imagine a pair of skis that is worth $1,000 and will be worth the equivalent of $1,000 for ten years, adjusting for inflation. This pair of skis gives you 2 powder days/year. You can always buy them…. Some days the ones being sold pay 1.5 powder days/year. Sometimes you’ll be able to buy a new pair that pay 3.5 days/year. No risk, but not crazy return either. Safe and boring. (There are skis you can buy with double the powder days, but no guarantee they’ll be worth anything when you want to sell even though they have a great warranty. There are skis you can buy with 10 times the powder days, but they have no warranty and can delam or break easily and then they’ll be worth nothing AND probably ruin a powder day or 3.)

If you buy a pair last year when they were paying 3 powder days/year and the best I can buy new right now is 2 powder days/year, I might be willing to pay 110 for them, or 110% of the equivalent to $1,000 in last year’s dollars, or $1,100 adjusted for inflation. I’ll collect my powder days reliably, and then in a year I can sell them to somebody else for whatever 3 powder days/year for the next 8 years is going for.

The analogy would probably be better if they were adjusted to likelihood of powder days instead of inflation, especially vis a vis climate change, but then you’d have to adjust the principal to something similar. Maybe ski days.

I’ll keep working on it.

[BobMc]

That’s a lot of words…

You buy a pair of powder skis, make an agreement with someone else that they get to use your skis on a powder day. They pay you a fee for that right. If it snows you lose the use of your skis, if it doesn’t snow you cruise groomers and keep the cash.

[Mustonen]

That’s a lot of words…

You buy a pair of powder skis, make an agreement with someone else that they get to use your skis on a powder day. They pay you a fee for that right. If it snows you lose the use of your skis, if it doesn’t snow you cruise groomers and keep the cash.

That’s probably more like a call option, but excellent reinforcement that everything can be distilled down into skiing and powder days.

[LeeLau]

That’s probably more like a call option, but excellent reinforcement that everything can be distilled down into skiing and powder days.

Definitely i was guilty of buzzwords. BUT there's a lot of coaching in the Stock Market thread . In that thread with the benefit of that coaching and a lot of self reading some people (Bob in particular) may have picked up some good financial habits that pay off for life.

Why people don't put the time to do this (as opposed to Netflix and chill for eg) bewilders

Edit. Not intended to call out anyone who asks questions. More a throwaway observation

[Danno]

I have a chunk of money that might be a down payment someday, but I may stay a renter for quite some time. I want the money to grow, but it's hard to invest it in more risky things when I have it in a savings acct earning 4.35%.

This isn't really a question, more just a musing observation.

[Name Redacted]

I have a chunk of money that might be a down payment someday, but I may stay a renter for quite some time. I want the money to grow, but it's hard to invest it in more risky things when I have it in a savings acct earning 4.35%.

This isn't really a question, more just a musing observation.

Wait, weren't you arguing against keeping an ER fund in a money market account a while back? But you can keep a "Chunk" of money, which I assume is far more than a typical ER fund, in a savings account allowing it to erode to inflation.

[Danno]

Wait, weren't you arguing against keeping an ER fund in a money market account a while back? But you can keep a "Chunk" of money, which I assume is far more than a typical ER fund, in a savings account allowing it to erode to inflation.

Apples to oranges; either you're being intentionally obtuse or you never understood my point or you just feel like arguing. I was against putting an ER in a money market for the sole purpose of safety and liquidity, without regard to return or any larger investment choices (accepting returns pretty close to zero just because it was an EF). My argument was you could take on slightly more risk -- not a lot -- and have that money grow. So I was not arguing against someone making investment decisions based on an evaluation of current conditions, just on someone parking money at zero or close to zero return with no investment thesis for that parking. 4.35% guaranteed is a good rate of return in an unsettled market where market returns have not generally been matching that. And my post today did not say I was going to leave it in there forever, just that in today's circumstances, it's hard to put that money elsewhere when 4.35% is risk free and at the moment I don't see many options that will pretty safely beat that.

[Name Redacted]

Apples to oranges; either you're being intentionally obtuse or you never understood my point or you just feel like arguing. I was against putting an EF in a money market for the sole purpose of safety and liquidity, without regard to return or any larger investment choices (accepting returns pretty close to zero just because it was an EF). My argument was you could take on slightly more risk -- not a lot -- and have that money grow. So I was not arguing against someone making investment decisions based on an evaluation of current conditions, just on someone parking money at zero or close to zero return with no investment thesis for that parking. 4.35% guaranteed is a good rate of return in an unsettled market where market returns have not generally been matching that. And my post today did not say I was going to leave it in there forever, just that in today's circumstances, it's hard to put that money elsewhere when 4.35% is risk free and at the moment I don't see many options that will pretty safely beat that.

No, the discussion wasn't saving at 0 interest it was about 4% from a money market account. You are talking about a larger sum, that is has less requirement for liquidity than an EF. I would at least buy CDs or low risk index funds or something. 4.35% isn't even that great when inflation has still exceeded that by at least 2% over the last year. You are losing far more money than my EF and disregarding return or any larger investment choices.

[Danno]

Not going to argue with you. You win. I'm wrong. You're right.

[skaredshtles]

Not going to argue with you. You win. I'm wrong. You're right.

Heh. Well played.

[LeeLau]

Heh. Well played.

Clearly happily married!

[Name Redacted]

Not going to argue with you. You win. I'm wrong. You're right.

Good talk

[Bunion 2020]

My FA has broached the topic of annuities.

65 retire in a little under 2 years. His proposal would cost me about 1/3 of my nut.

I don't think I need the peace of mind he is touting.

thoughts?

[4matic]

Ask what his commission on annuity is.

[Bunion 2020]

I will do that.

He is recommending the 3 bucket approach with an annuity as a part of the overall strategy. Given the male history in my family its 50/50 between living to 90 or dropping dead from a coronary at 75. I am more concerned about living decently until 80 than having a pile at 90.

[4matic]

What kind of annuity? Fixed, variable, indexed. These seemed interesting to me. https://www.immediateannuities.com/s...AaAkYqEALw_wcB

[Nobody Famous]

Situations like this cry out for a 2nd and a 3rd opinion!

I'm torn whether opinions on here count as a 2nd or 3rd, but still very helpful to hear, to read and to consider.

Since age is 65 do it now don't wait, medicare, SSN with drawls, pension payouts etc., etc based on your age.

P.S: Reminds me every few weeks I get some junk mailer "sign up, so and so is having a 'retirement seminar,'" they hold these in some township/municipal community room, local university lecture hall, or church meeting room. Seemingly conferring an aura of authenticity or official backing. Don't be fooled, if these retirement planners were good they wouldn't need to hold these fishing events to pull in new clients (like in weekend afternoon open houses, all the RE agents want is a list of names, phone nos. and email addresses).

[gravitylover]

What kind of annuity? Fixed, variable, indexed. These seemed interesting to me. https://www.immediateannuities.com/s...AaAkYqEALw_wcB

Thanks for that info. I think there's some stuff we can make use of.

[Bunion 2020]

I am guessing those are policies someone wants out of for some reason? Thx.

[rod9301]

I will do that.

He is recommending the 3 bucket approach with an annuity as a part of the overall strategy. Given the male history in my family its 50/50 between living to 90 or dropping dead from a coronary at 75. I am more concerned about living decently until 80 than having a pile at 90.

I would stay away from annuities. You are basically an unprotected creditor to the company. And think about it. If they promise you let's say 7 percent, they take your money and invest it in the stock market, or maybe bonds too. They can only pay if their investments make more then 7 percent.
So you're not diversifying at all.

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[Bunion 2020]

Examples: 180k upfront pays out around 125k over the span. Peace of mind is worth something, but to me it isn't worth that spread for the loss of liquid.

I posit that the same 125k invested in a spread of conservative dividend Etfs has a better upside potential, maybe there is more risk but if you are losing $$$ in that scenario something is wrong.

[4matic]

Consider taking a different outlook than upside potential vs downside risk. If you can put together a portfolio of ETF’s and bonds that yield enough to provide income needs downside capital risk doesn’t matter as much…as long as they pay and you don’t have to sell shares. Also, “multi asset” funds are relatively new as a popular fund class and they adjust to changing conditions. Mine has gone from a sub 2% yield to almost 4% with about the same equity exposure in less than a year. It’s like getting a pay raise.

[4matic]

I’m long PDI at a $22.30 average price and bought it at a terrible time. It bounces around and was at $21 a month ago. Now it’s $18 and yields 14%. But, it has paid $3.15 the last year. While the decline is disquieting they have never missed a dividend and if they pay out $3 a year over 7 years I got all my money back. They could cut the dividend and all sorts of problems but that’s the risk side of my income and I know the outcome potentials. Income is more important to me than capital appreciation and somewhat less capital preservation.

[rod9301]

I’m long PDI at a $22.30 average price and bought it at a terrible time. It bounces around and was at $21 a month ago. Now it’s $18 and yields 14%. But, it has paid $3.15 the last year. While the decline is disquieting they have never missed a dividend and if they pay out $3 a year over 7 years I got all my money back. They could cut the dividend and all sorts of problems but that’s the risk side of my income and I know the outcome potentials. Income is more important to me than capital appreciation and somewhat less capital preservation.

Dude, pdi went from 30 to 20 in the last 3 years. They are paying the dividend which destroys the shares value. They are not earning the dividend, so it's s loser.

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