anyone familiar with retirement/investment accounts?

[98HOEONSIXEZ 10+ year member]

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[98HOEONSIXEZ 10+ year member]

yeah the sooner you start investing into your retirement account the best!you cant make up for time invested!

 

[timaishu 10+ year member]

I have an investment account.

I have 13 and a half thousand in a CD latter with 6 month increments over 2 years.

I dont plan to touch it till I retire or buy a house.

 

[Flipx99 5,000+ posts]

I know you wernt talking about my losses. There is a direct correlation between stocks and bonds and i odnt think my post stated that they are uncorrelated at least that wasnt what i entended. Heres an example of what i meant. (note im not taking credit for writing this but it reflects what i was trying to say in my previous post)
Bonds are issued with a stated interest rate, say 8%. and do not change over the life of the bond. That means they pay $80 of interest annually no matter what.

If the general interest rates RISE in the market, then some other company will have to offer 9% bonds to attract investors. These new investors are going to get $90 annually in interest. In order for your 8% bonds to be attractive to another investor they will want to pay less for it. i.e. your bond has gone down in value to $889 ($80 / 9%) from the $1,000 you paid for it.

Of course if interest rates move down, then the opposite is true. People will be willing to pay more than $1,000 to get $80 of interest. They will be willing to pay $1,142 for your $1,000 bond if rates drop to 7% ( $80 / 7%). Your bond went up in value as interest rates went down.

Stocks are just the opposite b/c the changing interest rate reflects how expensive it is for a company to borrow money to grow or expand. If it costs a company less(lower interest rates) to borrow money, then they become more profitable and consequently their stock price goes up.

so you see if you have investments in stocks and bonds when you gain money on one end you loose it on the other. So far the gain on one end has outweighed the loss on the other and historically our retirement plan has gained an average of 13% annually by investing in stocks and bonds

What, if any, analysis have you done to determine this? How does said portfolio adjust to systemic shifts?

Notice what happened in September 2008, prices on stocks fell, prices on bonds fell....wtf? Well, they are influeced NOT ONLY by interest rates, but with other market activity as well.

The problem with your analysis (not specifically yours, I have read this in many "Finance for the Mentally Handicapped" books before, is that it assumes a normal probablity distribution. Empiricle analysis tends to show that returns are skewed.

That relationship is much much more complex. Your assumption is that stocks and bonds are uncorrelated. But you forgot to specifiy what bonds...Stock and bonds for the same company are quite correlated, whereas stock and bonds for mortgage backed securities are not. Finally, your bond analysis leaves out this little feature called duration. The sensitivity of bond prices to interest rates is also linked to the maturity of said bonds, not just the interest rates. In your example, a 10 year bond would experience a greater appreciation than a 2 year note. The math is also slightly incorrect.

Also, ask GM bond holders how certain those interest payments are. "No matter what"? Seems suspect to me

Right now, it's the mattress or the freezer, cash is king.Just before the recovery Flip will tell us when to jump back

into the market. Right Flip??? Alright maybe not.

Ha! I said I am going back in around September. It will be a trader's market all summer. However, in my retirement plans, I dollar-cost-average so I am less concerned. I won't continue trading options until volatility is reduced. The VIX is still too high for my tastes.

I was reading through a suze orman book and she said if you start investing at 25, $300 a month until your 40. Which would add up to $54000 at an average gain of 8% (I Know right lol) you would retire at 59 1/2 with 1 Million and some change.
If you waited till your 40 and invested $700 a month till your 59 1/2 youd only retire with $440k or so.

If you want the exact numbers Ill look em up but thats pretty much what I remember.

Since you were asking where to invest, well 8% out of anything right now is a long shot but maybe you can find a good money market or buy some CDs

I

I was watching good morning America and they had a report on there saying that 43% of retired Americans at the age of 55 only have about $53000 saved fore retirement. If yu want to retire and live as you do right now you need to invest 25 times your monthly income. So if you make say $1000 a month you need to invest a total of $25000 of coarse i take it that is investing in safer things than the stock market

I think is a little more too it than that. //content.invisioncic.com/y282845/emoticons/wink.gif.608e3ea05f1a9f98611af0861652f8fb.gif

 

[Flipx99 5,000+ posts]

I have an investment account.
I have 13 and a half thousand in a CD latter with 6 month increments over 2 years.

I dont plan to touch it till I retire or buy a house.

CD ladders, but yes. I like this strategy. A small return, but quit liquid. I have less in CDs, but they are over 3 month periods instead of 6 months. I am forecasting an inverted yield curve next year.

 

[timaishu 10+ year member]

I phrased it kinda weird.

I have four CD accounts each with about $3400. The latter is in increments of 6 months. You know 6,12,18,24.

I wish I did this earlier. Interest rates **** major *** right now. I originally had all the money lumped in one 3 month cd account. I originally had an interest rate of 4.5%.. For only a 3 month term

Now its like 1.2% or so for my 2 year CD. //content.invisioncic.com/y282845/emoticons/crying.gif.ec0ebefe590df0251476573bc49e46d8.gif

 

[Flipx99 5,000+ posts]

I phrased it kinda weird.
I have four CD accounts each with about $3400. The latter is in increments of 6 months. You know 6,12,18,24.

I wish I did this earlier. Interest rates **** major *** right now. I originally had all the money lumped in one 3 month cd account. I originally had an interest rate of 4.5%.. For only a 3 month term

Now its like 1.2% or so for my 2 year CD. //content.invisioncic.com/y282845/emoticons/crying.gif.ec0ebefe590df0251476573bc49e46d8.gif

It's a good strategy, no doubt. I'd leave it alone.

Mine is staggered in 3 month increments. That way if I lost my job or something to that nature, I could get to my money a bit quicker. The liquidity (ease in which I can access my money) is more important than the 50-100 basis points for opting for a 6 month over a 3.

 

[Flipx99 5,000+ posts]

If the yield curve inverts, you would actually want to be in short term investments.

 

[Bigrick31 10+ year member]

What, if any, analysis have you done to determine this? How does said portfolio adjust to systemic shifts?
Notice what happened in September 2008, prices on stocks fell, prices on bonds fell....wtf? Well, they are influeced NOT ONLY by interest rates, but with other market activity as well.

The problem with your analysis (not specifically yours, I have read this in many "Finance for the Mentally Handicapped" books before, is that it assumes a normal probablity distribution. Empiricle analysis tends to show that returns are skewed.

That relationship is much much more complex. Your assumption is that stocks and bonds are uncorrelated. But you forgot to specifiy what bonds...Stock and bonds for the same company are quite correlated, whereas stock and bonds for mortgage backed securities are not. Finally, your bond analysis leaves out this little feature called duration. The sensitivity of bond prices to interest rates is also linked to the maturity of said bonds, not just the interest rates. In your example, a 10 year bond would experience a greater appreciation than a 2 year note. The math is also slightly incorrect.

Yes that is assuming normal market conditions. Ill agree it is more complex and right now both stocks and bonds have fallen. But under normal circumstances (non recession) this is a basic analysis of how things work though there is way more complexity to it than that. But i would like to learn more about investments because we have the option of taking out money into our own hands and moving it around ourselves or let Fidelity do it for us.

Ive been lucky and have contributed about $1800 a year into my retirement since age 19. Because im in a union our contractors pay into our retirement a said dollar amount for each hour we work. When im finished with my apprenticeship i can add an additional $5 per hour into my retirement on top of what the contractor pays. This account isnt my only form of savings for retirement we also get an annuity which currently pays you $172 a month for each credit year (1500 hours) worked working for 35 years id accumulate a pay out of a little over $6000 a month (cant recall if its taxable or not) on top of what i have in my retirement account Which will hopefully be over $1 million by the time i retire. So if you were to start your own retirement account at age 18 and get a job that offers you another retirement you can live quite comfortably and in most cases more extravagantly when you retire than you could when you were working.

 

[Flipx99 5,000+ posts]

Yes that is assuming normal market conditions. Ill agree it is more complex and right now both stocks and bonds have fallen. But under normal circumstances (non recession) this is a basic analysis of how things work though there is way more complexity to it than that.
Ive been lucky and have contributed about $1800 a year into my retirement since age 19. Because im in a union our contractors pay into our retirement a said dollar amount for each hour we work. When im finished with my apprenticeship i can add an additional $5 per hour into my retirement on top of what the contractor pays. This account isnt my only form of savings for retirement we also get an annuity which currently pays you $172 a month for each credit year (1500 hours) worked working for 35 years id accumulate a pay out of a little over $6000 a month (cant recall if its taxable or not) on top of what i have in my retirement account Which will hopefully be over $1 million by the time i retire. So if you were to start your own retirement account at age 18 and get a job that offers you another retirement you can live quite comfortably and in most cases more extravagantly when you retire than you could when you were working.

1. Not normal market conditions, a normal distribution. It's a statistics term.

2. It's not that complex, we have been there before. However, in those times, common people were involved/interested in markets.

3. You will pay taxes on your annuity, but it sounds like a decent deal....$172/mo for each year isn't a bad deal at all. I'd suspect they would convert that into a defined contribution (think 401(k)) plan in the future.

4. The multi-retirement approach is the best. I have a 401(k), Roth IRA, Pension Plan, and I piddle around with options trading. Not to mention social security. It will be there when I retire (I am 25). In what capacity, I don't know.

 

[Rmsanger 10+ year member]

CD ladders, but yes. I like this strategy. A small return, but quit liquid. I have less in CDs, but they are over 3 month periods instead of 6 months. I am forecasting an inverted yield curve next year.

Not quite sure about the yield curve being inverted but it will probably approach being flat. It will be interesting to see how inflation expectations will be priced into the 5+ years portion of the curve. I'm concerned about near-term inflation / interest rates rising. Definately wouldn't suggest anyone to lockin a long-term fixed rate security now.

 

[Flipx99 5,000+ posts]

Not quite sure about the yield curve being inverted but it will probably approach being flat. It will be interesting to see how inflation expectations will be priced into the 5+ years portion of the curve. I'm concerned about near-term inflation / interest rates rising. Definately wouldn't suggest anyone to lockin a long-term fixed rate security now.

Usually, it inverts in the face of high inflation expectations. I think once the flight to quality is over, it will invert.