Retirement Investing

[The Skipper]

Does anyone have any recomendations about establishing a retirement income stream?

My investments are US based and I'd like to get 5% with some growth.

[Firefan]

With a 5% return target + growth to at least keep up with inflation a balanced portfolio (say 50% equities and equity like products and 50% bonds/fixed income) should be an acceptable approach.

With equity like products I am refering to the risk and return level meaning reits (VNQ) and maybe a commodities fund (PCRIX).

Vanguard also have some funds already doing the balancing for you such as Wellesly(sp?) and a balanced index fund (VBINX).

Another Vanguard products is the Equity and income fund VEIPX with a dividend focused approach. DVY is an index ETF also with a dividend approach. Both yield about 3%+.

A high yield from stocks combined with bond/fixed income returns should ensure a healthly buffer in "bad times" as you would have to sell less in a (stock) down market.

Just my 2 cents! Cheers!

[chownah]

A little over a year ago I bought some 60 month CD's from Washington Mutual and got over 4.5%. By now they might be around 5%...if you check them out you can get a rate better than what they advertise by just asking for a little boost. These CD's are considered to be bank accounts and so they are gov't insured so you can have $100,000 dollars worth total of all your CD's at Wa Mu. If you've got more than that then start looking somewhere else for good rates or just live with the fact that you are only insured to 100k.

[galt67]

You might consider the following asset allocation, developed by investment writer Harry Browne:

25% MM Fund

25% Growth stocks

25% Gold (bullion, NOT stocks)

25% L/T Treasury bonds

This is a relatively low volatility portfolio that's averaged over 9% during the past 30 years.

And with ETFs now available, all the above can purchased cheaply.

[Firefan]

Not a bad portfolio for sure and a mutual fund based on it also exists: PRPFX. As galt mentions one can also do it yourself with ETFs - probably slightly cheaper expense ratio.

The portfolio DOES in my opinion lag some international exposure both for equity and fixed income - and also I think that a diversified commodities (not equities) fund such as PCRIX would be a candidate for at least part of the gold exposure.

Cheers!

You might consider the following asset allocation, developed by investment writer Harry Browne:

25% MM Fund

25% Growth stocks

25% Gold (bullion, NOT stocks)

25% L/T Treasury bonds

This is a relatively low volatility portfolio that's averaged over 9% during the past 30 years.

And with ETFs now available, all the above can purchased cheaply.

[Mr. Farang]

A different option to look into would be to invest some of your porfolio in real estate and find a suitable "reverse mortgage", as many elderly people in the US are doing these days who would prefer cash while they are living v. (their heirs) owing expensive real estate when they have departed.

Edited August 30, 2005 by Mr. Farang

[Gary A]

Look for global mutual funds that have a five star Morningstar rating with high return and low risk ratings and funds that have averaged a 10 percent return over five years. Look at the Van Kampen funds and a Templeton fund TEDIX symbol.

[Khun Jean]

I did my share on the stockmarkets and derivatives market. Can be very rewarding. I liked doing it but now have chosen for realestate as this is a much more relaxed type of investment. By the way, the bank invests the most. That is always the best, using a banks money to make money.

I have a few appartments. Even with a large part mortgage i still have a good return.

I invested cash money about 50.000 euro. Total mortgage is 390.000 for which i pay monthly 2400 euro (This can be lower and it will soon with the current interest rates). I receive 3100 euro every month. The mortgages get paid, and i have 700 left. These are appartments which have service costs paid seperately by the tenants. This will take care of insurance and maintenance of the buildings.

I am 41, mortgages end on my 65 birthday. At that time i will have 3 appartements fully paid by the tenants. At that time they will have an estimeted value of around 600-700.000 euro maybe even more. Along the way i receive a monthly "income" which is a bonus upon my normal income.

The 2400 i pay now will gradually go lower because the debt will get smaller every year. Next year the monthly bill will go down do 1800, because of a new fixed term against a lower percentage. The rental prices will go up every year. The ROI will get better and better every year. Now it is 50.000 invested( 5 years ago) and after paying all the bills i have 8.400 euro left per year. That is more than 16%!

Next year i will receive 15.600. That is 31%!!

Only problem is if you have a bad tenant. Happened to me last june. Broke of the contract and found new tenants within a few weeks.

A broker takes care to keep the appartements occupied. Sofar so good. I missed only 4 months in the last five years, because of 1 bad tenant and doing some little refurbishments.

I like this investment because it has a real value that is very solid and slowly rising which counters inflation. These properties are in Amsterdam and on the Coast of the Netherlands where there is not much room for new developments, older houses are wanted and because many people can not get a mortgage renting is in demand.

I have no idea about realestate other than the Netherlands and Thailand. But nobody is stopping you to buy property in the Netherlands.

[Rainmon]

I like FIDELITY NEW MARKETS INCOME FUND it has an average 10 year return of 15.98%

I also use Pro Funds to buy no load no transaction sector, index, bond and inverse funds for hedging:

www.profunds.com

plus they have a leveraged 30 yr US bond fund:

Profunds U.S. Government Plus Profund seeks to match the results that correspond to 125% of the daily performance of the most recently issued 30-year U.S. Treasury Bond

symbol: GVPIX

[bakachan]

Does anyone have any recomendations about establishing a retirement income stream?

My investments are US based and I'd like to get 5% with some growth.

<{POST_SNAPBACK}>

5% return should be able to be had with just cd's. you can build a cd ladder that

takes advantage of a rising rate environment that we're now in. you dont want to be stuck with 5% if rates are climbing even higher so you buy cd of varying maturity. ide suggest checking with bankrate.com for the best rates in the us.

if your nest egg is just enough to retire on ide stay away from stocks and mutual

funds. commissions are what 10% out the door on mutal fund purchases? screw that.

If im retired and i have a finite amount of money in the bank I TRUST NOONE

except myself and the fdic.

there is only one exception to no stocks that i would even consider and thats

the cd's that their rate of return is linked to the stock indices. The beauty of this is, you are guaranteed no loss to your initial investment if the index you have chosen is in the red and if the index is up thats your return on the cd.

i would have loved to have bought some 30 yr bonds back in the 80's when

interest rates were hovering around 18%

[The Skipper]

Thanks for some excellent suggestions. Alot to consider.

I didn't realize the CDs were doing so well.

What about dividend paying stocks?

[bakachan]

What about dividend paying stocks?

<{POST_SNAPBACK}>

good question. you got me to wondering. yahoo finance has a stock screening

tool yahoo stock screenerand you can enter a range of dividend yields. i chose 5% to 50%

this is what i came up with.

A screenshot of highest paying dividends. The grandaddy of them all is FRO

Its one of the oil supertanker companies. Pulling up the 5 yr chart on FRO gives

me a nose bleed. The question you've got to ask yourself is what are the

risks associated with transporting supertankers full of flammable oil

That 46% yield sure is tempting tho

Edited September 1, 2005 by bakachan

[chownah]

Thanks for some excellent suggestions. Alot to consider.

I didn't realize the CDs were doing so well.

What about dividend paying stocks?

<{POST_SNAPBACK}>

I have heard that in the US a good dividend paying stock sector is Utilities...I believe I have heard that their dividends usually don't change much and they are realatively stable.....BUT I DON'T KNOW FOR SURE .....just an idea that you should check out further.

[Firefan]

Reason I mentioned VEIPX and DVY is that I believe that div paying stocks are a clever part of of retirement portfolio. Both pick dividend stocks with resonable financial nos and future growth potential.

If one starts running after the highest yielding stocks or funds out there you are naturally taking on MUCH more risk that I think a retirement portfolio should do. Not saying it can not be done with a bit of the money - but not with the main part.

Any stock paying more than 4-5% div in the current enviroment should be analyzed very carefully as to why/how the div is so high. The divs might literally be "eating" the business (selling assets Etc.) or gearing might be used (higher risk).

Cheers!

Edited September 1, 2005 by Firefan

[craigt3365]

Bakachan: I hear ya on the CDs. USAA is paying 5.36 APY on a super jumbo, 84 month CD. I wouldn't do it as the length is too long...and rates are heading up for sure...but it made me happy to finally see CD rates bust the 5% range. Can't wait to see where they are by January! Laddering is a great way to go. No risk, no worrying, no thinking about your investments as you down a cool one at your favorite pub. I lost my ass in the last stock market crash.

[Rainmon]

Thanks for some excellent suggestions. Alot to consider.

I didn't realize the CDs were doing so well.

What about dividend paying stocks?

<{POST_SNAPBACK}>

I think doing stock screening and research on this subject is time consuming and confusing, why not just buy income equity, bond and a few sector funds (let the experts manage them for you). Plus, USA interest rates are not rising as fast as everyone thinks, rates should remain flat for the next 6-12 months (I am in Pro-Funds Raising Rates Fund to hedge some of my long bond fund positions and watch interest rates very closely).

If you dollar cost average in, you won't be hurt on short term reverses (plus you can use these as buying opportunities) in the bond and equity markets.

I also like FireFan's pick PIMCO Commodity Real Return Fund and would include it with a 5-10% allocation, here is the symbol for it: PCRDX

Plus I like to have some international funds as the dollar will continue to weaken, these will go higher:

UJPIX

up 24% since Nov 04 UltraJapan ProFund seeks daily investment results, that correspond to twice the daily performance of the Nikkei 225 Stock Average.

EUROX

up 34% since Oct 04 U.S. Global Investors Eastern European Fund seeks long-term growth of capital. The fund normally invests at least 65% of assets in equities of companies located in the emerging markets of eastern Europe.

FNMIX

average annual return 16% (for the last ten yrs), Fidelity New Markets Income. I am dollar cost averaging 50-60% of my portfolio into this fund.

Markets are fluid and change based on fundamentals, interest rates and political situations, but, for the long term, I think picking a few international funds, a few sectors (PIMCO Commodity Real Return Fund, Biotech, Health Care and Tech), an equity dividend/income fund and the above 3 funds is a safe mix.

[TRIPxCORE]

This is a tricky question the OP has asked and personally, I don't think you should be letting a bunch of guys on a forum tell you what to do with your retirement but since you asked, I'll throw in my two cents.

CD rates are still not that good although they are the safest investment around IMO. Virtually no chance of losing any of your principal.

Depending on what you believe, the US equity market is not the place to be right now. Rather, international is the best place to be. I have about 90% of my money in international bonds and funds derived in other currencies, namely Japanese Yen. For a few reasons, the near-term outlook for the US is bad, according to my research. Here are the reasons:

1. Two huge budget deficits which keep on growing. In order to finance these deficits, the US MUST HAVE billions of dollars of foreign investment coming in all the time. The main investors in US debt are foreign central banks which have bought so many dollars already, they are about ready to stop and diversify. When they do, the US is in deep-sh*t, and they will stop soon.

2. Real Estate market is in a bubble, which even Alan Greenspan has confirmed this, and the only thing up for debate here is how bad this bubble will pop. Real Estate in the US is similar in fashion right now to what the stock market was in 2000. Remember "irrational exuberance"? This point leads to reason # 3.....

3. Due to so many people being rich from their homes, rich on paper mind you, not in real terms, many people have taken 2nd and 3rd mortgages out on their homes in order to buy a bunch of useless sh*t. Now these people are in debt up to their eyeballs and when their home prices come down and they are stuck paying a $400,000 mortgage for a home only worth $300,000, bankruptcies will become a national pastime which is bad for the economy.

4. Energy prices are pretty much going to continue unabated and add this with everything else going on, the US is in for a tough ride ahead.

IMO, I would stay out of the US market and go international. I am not the only one saying this either. Warren Buffet, George Soros, Bill Gross and now even Alan Greenspan to an extent are jumping on this bandwagon. Like these guys or not, their past performances in the markets lead my to believe them over anyone. Good luck!

[Rainmon]

I agree with TRIPxCORE, you might also consult a financial consultant (but if you have time, you can learn how to invest on your own).

I like no transaction fee, no load mutual funds so there are no transaction costs or commissions.

I like the international markets too, that is why I am moving a large percentage of my portfolio in Fidelity New Markets Income Fund. The fund normally invests at least 80% of assets in debt securities issued by companies and governments in emerging markets in Latin America, and, to a lesser extent, Asia, Africa, and emerging European nations.

[bakachan]

1.  Two huge budget deficits which keep on growing.  In order to finance these deficits, the US MUST HAVE billions of dollars of foreign investment coming in all the time.  The main investors in US debt are foreign central banks which have bought so many dollars already, they are about ready to stop and diversify.  When they do, the US is in deep-sh*t, and they will stop soon.

<{POST_SNAPBACK}>

exporters like japan and china are buying our debt to keep their currencies

down relative to the dollar so their exports are cheap to us. this in turn keeps short term interest rates down. if they do slow down in buying our debt, our interest rates will tick up. Add to the mix a govt burning up all those dollars to support a huge deficit and less money coming in from abroad and thats the recipe for even higher

rates.

i agree 100% with you on the housing bubble. they keep saying prices are sticky

on the way down but its gotten way out of hand. i'm putting my place on the market

shortly since its doubled in price in just 3 yrs.

I remember the early 1990's and some markets got hammered 40-50%. I worked for the (rtc) resolution trust the govt set up to dispose of all the portfolios that failed s&l's banks. It was an eye opener looking in those files. I don't foresee bank failures

on that scale but I think its going to be nasty correction.

my real estate investement would be the first thing ide be looking at if i was

getting ready to retire.

sell high and rent low

Edited September 1, 2005 by bakachan

[Rainmon]

reports on CNBC are saying Greenspan is now meeting with Pres Busch on the economic impact from Hurricane Katrina (this is a really bad situation, 9 refineries are down the ports are closed and the whole city of New Orleans is totally underwater), everyone is speculating the fed will pause on raising int rates at least until 06...

[bakachan]

Only problem is if you have a bad tenant.

<{POST_SNAPBACK}>

ive been in the rental business in the past and have had no luck with tenants.

nowdays you've got better tools for sorting out bad tenants which makes the

job easier.

but managing from thailand? i dont know how you guys do it. especially if the

tenants know your're very far away.

the only way ide manage from afar is if i owned rentals in high deman places

like new york or london where the tenants know they screw up its hard

to find another flat.

rental management co's take a big piece of the pie but they occasionally

drive by the property to see if its still standing and they havent moved in

their extended family.

more power to you if you can handle the worry.

[Khun ?]

Some of you need to look at the funds you recommend such as ones with and I

in them. That means institutional $2 mil minimum investment.

Look at some loomis sayles bond funds NEFZX ( I believe that is one) Oppenheimer bond funds international of course but remember some of the bond funds can be high risky if you have to sell at the wrong time so try to keep with high quality..

I have PCRAX ( PCRDX is the no load version). PSPFX is a good natural resources fund or MSB, and NZT as I just added.

I have been buying UTF BGR and GGN for dividends and long term stability and hedge against the U.S. economy. Get some muni funds to many to list but here is a couple I bought and some times when I look at them I wonder why but they have been doing fine and have decent long term history.... MUA NUV PMG MAF

www.etfconnect.com

this place has hundreds of dividend paying CEF's, ETF's and the likes.

I would not be looking for a whole lot of growth when in retirement if you need the income and will find very little that is not risky that pays above 5%

most money market funds of cash are in the 3% and you can get $1 mil or more FDIC insured ( they spread it out over different banks as each bank can only insure $100K per customer/account). DVY has been an excellent fund for divy and growth is you can live off a after tax return of 2% for long term it has done good.

Best is to get a good manager abck home. I am putting some of my money in capitlistpig hedge fund up 309% since 2000. Don't mess with the offshore funds they are not very well regulated and you have to pay taxes anyways and they are quite the pain getting to your money( I know from experience). They are way to expensive and not very well managed for the most part. Most of them are nothing more than salesman that get good commissions off your investments without giving a hoot how your returns will be. Frontend loaded to the max and will also cost you to get out of them..... They have so much small print almost impossible to understand what is what.

Half the people in Thailand will make money with your money but then why didn't they do it with their own money, then they wouldn't be trying to do it with your money.

Good Luck... keep your money at home where things are more regulated.

[Firefan]

Khun: institutional funds like PCRIX can often be had via a broker for a MUCH smaller minimum. I hold both PCRIX and PFUIX but certainly not $2M in each...

As for CDs I agree that it can be part of the fixed income part I mentioned - but to put all retirement funds in it will stop the growth that the original poster also wanted (AND NEED).

I also overweight non-US and especially emerging markets.

Some good advise here guys! Cheers!

[Khun ?]

Good Idea check with your broker on the I shares, mine would not sell them to me.

Could be some brokers own the shares and sell from their portion.

I have had my brokerage firm for many years and for tax reason and several other reason don't want to change even though they are a bit expensive on some things. My banking and all is done at one place and being a traveling person

it gets straight with one e-mail or phone call. Never have they let me down.

Lost credit card just call them and within a few days a new one delivered to my hotel in Thailand FED EX no charge.

[daxbr]

4% 10 months CD here:

http://www.worldsavings.com/servlet/wsavings/home/home.html

[Spaniel]

You might want to log on to www.moringstar.com and check out several of their message boards. For starters try the Investing in Retirement board and the Vanguard Diehards board. They have many others and you shoud be able to get lots of good info from them.

CD rates are on the rise and you can get around 4.5 % on a one year CD. The problem with opening a CD while living here in Thailand is you must have a stateside address unless you are a US military retiree and have access to the APO. I opened up two CD's recently and had to use my brothers address in the USA. You can open them on line and mail them the check from here but must use a stateside address on the application.

Another poster mentioned Vanguard funds and they would also be a good choice particularly the Wellsley or Wellington funds. Both are balanced funds so you probably wont be making big bucks but thkeir attraction is safety.

www.vanguard.com

www.fideity.com

www.money-rates.com (for CD rates)

Good Luck

[Teach]

Well Skipper after all this advice I guess your head must be spinning what with UTA's and ABC's and blah blah blah

Firstly the question should be how old are you or more acurately - when would you like to retire???????

If you would like substantial income from a secure investment try this:

6 year term ( no dividends)

Invest every year to establish an annual stream

Physical asset with title (land based)

Guaranteed minimum return 300% equating to 23%pa

underwritten guarantee of 60% return on investment equating to 13%pa

Secondary market available for early redemption

Investment guaranteed by insurance

Investment guaranteed by 100% buffer

Money back guarantee

No mind boggling terms

No crash course in Investment terminology

Tax free returns

Thailand based asset

and while your investment is growing, you're living your life - not spending 12 hours a day monitoring your stock.

...and the stock price of this company just went up 50% in the last two days.

This is a no brainer, available to anyone who can see beyond stocks, shares and bonds (which have been in the RED for the last 5 years) as the only way to gain capital growth.

So in laymans terms:

You put US$5000 in this year, you get US$15000 in 2011

US$5000 in 2006 - US$15000 in 2012

and so on.

Teach

[Firefan]

Teach I do not get all the stuff you mention about insurances and guarentees - is it 23% OR 13%/year guarenteed? And by WHO?

Also; it sounds too good to be true, and that is when my spider-sense normally kicks in!

But tell us more! Cheers!

(Ps. I wish that the stock price went DOWN - not up, as I have not bought yet... Like W. Buffett I like my investments on SALE)

Well Skipper after all this advice I guess your head must be spinning what with UTA's and ABC's and blah blah blah

Firstly the question should be how old are you or more acurately - when would you like to retire???????

If you would like substantial income from a secure investment try this:

6 year term ( no dividends)

Invest every year to establish an annual stream

Physical asset with title (land based)

Guaranteed minimum return 300% equating to 23%pa

underwritten guarantee of 60% return on investment equating to 13%pa

Secondary market available for early redemption

Investment guaranteed by insurance

Investment guaranteed by 100% buffer

Money back guarantee

No mind boggling terms

No crash course in Investment terminology

Tax free returns

Thailand based asset

and while your investment is growing, you're living your life - not spending 12 hours a day monitoring your stock.

...and the stock price of this company just went up 50% in the last two days.

This is a no brainer, available to anyone who can see beyond stocks, shares and bonds (which have been in the RED for the last 5 years) as the only way to gain capital growth.

So in laymans terms:

You put US$5000 in this year, you get US$15000 in 2011

US$5000 in 2006 - US$15000 in 2012

and so on.

Teach

Edited September 6, 2005 by Firefan

[m2003]

Hi

You may find this useful

i've recently invested in a fund that offers 8-12% growth, but also it is a capital guarented fund so your original investment is safe should something go wrong

the fund is called All Star Capital Protection Fund Number 1, with capital protection provided by a large austraillian bank called MacQuaries and its Administrations Are Kleinwort Benson, i found out about the fund from my financial advisor but the website is www.allstar-funds.com.

Bye

Martin

[Butterfly]

Hi

You may find this useful

i've recently invested in a fund that offers 8-12% growth, but also it is a capital guarented fund so your original investment is safe should something go wrong

the fund is called All Star Capital Protection Fund Number 1, with capital protection provided by a large austraillian bank called MacQuaries and its Administrations Are Kleinwort Benson, i found out about the fund from my financial advisor but the website is www.allstar-funds.com.

Bye

Martin

<{POST_SNAPBACK}>

humm,

FireFan, what do you think ?