Hardly your typical RJ question, but what's the best mid-term investment options?

  • groundcombat

    Posts: 945

    Oct 31, 2010 4:44 AM GMT
    So I hope I'm not still working 40+ hrs a week by the time I'm 59 1/2 when I can start making 401(k)/Roth IRA withdrawals. I'm hoping to have toned it down a bit by then but I don't think I'll necessarily need less income either. What's the best investment option if I want to supplement part-time employment income for those years, maybe age 48-59 1/2? Whole life insurance seemed to be a good option when the salesman explained it to me but I'm starting to hear horror stories online about it. Anybody have any suggestions or experiences to share?
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    Oct 31, 2010 8:48 AM GMT
    Wow, it really comes down to your goals and risk profile. I am a fan of copper and natural gas right now- but that is not really a good bet for a retirement plan and the intermediate term. I will confess a penchant for solid, real investments right now. China and India are buying them, and buying companies that produce them- China is trading USD for resources, and I would be tempted to follow suit. Personally, I would not touch anything housing related, commercial real estate related or anything in the financial sector right now.

    One of the huge problems right now is the low returns of any traditional, safe investments. Bonds are paying very little (and the value drops when interest rates increase- something that almost HAS to happen, eventually.) I would go with a small percent in gold or silver (traditionally 10% is recommended to hedge against inflation.) However, where they sit right now I keep thinking they are a little overvalued- and the Fed seems to be predicting more deflation. However, if you are in it for the long run...

    Being as you are in America, you would also have a "Treasury Inflation Protected Security" (TIPS) as an interesting option. You can find a good write up on what they are here: http://www.finpipe.com/tips.htm The problem is back to my statement that traditional investment vehicles are paying nothing right now. As a matter of fact, 5 days ago the return on TIPS fell to a negative yeild (see http://en.mercopress.com/2010/10/26/us-treasury-bonds-fetch-negative-yield-ahead-of-fed-s-actions-to-prop-inflation In English, it means that you are actually paying the government $5.50 for every $100 that you lend them. Yes, you are paying the government for the privilege of lending them your cash (and hoping that inflation breaks above 1.7%- the break even rate...)

    At your age, I would think that a little risk in the hopes of higher returns would be a good option, but again- I don't know how risk adverse you are when it comes to finances. I would honestly say that if you have anything approaching a substantial amount to invest you need to talk with an independent financial advisor. When you talk with your bank they will steer you to mutual funds that benefit them the most (they get money to sell to you and do NOT have your best interest in mind.) When you talk with an insurance salesman they get residual "kickbacks" on your policy (every year that you leave your $$ with them they get a percentage to keep- they do NOT have your best interests in mind.) Even when you talk to somebody who is independent they will likely attempt to profit from your investments. I wish I were more positive- but people are scum and will try to profit from you whenever possible.

    One thing to keep in mind are companies that pay dividends are often a very good investment over the long term. In addition to possible appreciation in the stock price you get a yearly payment for holding them (that you can re-invest.) They are often know as DRIP(s) [Dividend Re Investment Plan(s).] Many of them are pretty safe "blue chip stocks" like Coke. Watch for some of the utility companies who have old infrastructure or commercial real estate investments ect...

    ***The usual small print of this not being advice, not being a solicitation to buy or sell and steering you to consult your investment professional apply***icon_lol.gif
  • HndsmKansan

    Posts: 16311

    Oct 31, 2010 1:11 PM GMT
    Investment advice on RJ is inappropriate. Those of us who are licensed can't give you advice, due to compliance and licensing restrictions.

    Kudos to you for being so intuned with your investments and the need to save for your future. My suggestion is to visit your investment advisor or seek advice in your state.
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    Oct 31, 2010 1:36 PM GMT
    Do not come to a site like RJ for investment advice or you'll end up soliciting advice from, say, someone currently investing in copper and natural gas icon_rolleyes.gif

    Seek assistance from a qualified/licensed investment advisor.
  • groundcombat

    Posts: 945

    Oct 31, 2010 5:19 PM GMT
    Well I don't know if I'd call it "investment advice" or just plain discussion or perhaps education. It's not like I'm going to do whatever someone tells me to do. The problem with seeking professional advice, which is probably eventually a good idea, is how West77 stated it: advisers will usually steer you toward what's in their own best interest. I just thought it might be nice to have an idea of what really might be in my interest before dealing with them
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    Oct 31, 2010 5:25 PM GMT
    I have a licensed investment adviser take care of my investments. Maybe you should too. They are definitely worth the cost and will probably make you more money in the long run.
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    Oct 31, 2010 5:42 PM GMT
    groundcombat saidWell I don't know if I'd call it "investment advice" or just plain discussion or perhaps education. It's not like I'm going to do whatever someone tells me to do. The problem with seeking professional advice, which is probably eventually a good idea, is how West77 stated it: advisers will usually steer you toward what's in their own best interest. I just thought it might be nice to have an idea of what really might be in my interest before dealing with them


    Yeah, whole insurance generally generates a whole lot of fees for investment advisors. I've always found it odd myself that there are those who will spend more time shopping for a large appliance or a car than they will thinking about retirement/investments. There are plenty of good books though you might consider...

    Definitely don't consider this to be advice though (even if I'm going to be non-specific). I personally enjoy investing in stocks because I like thinking about the strategy, looking through and crunching some of the numbers and finding things that others undervalue or don't notice and of course being proven right which is often highly rewarding. I got started when I was 15 (though my parents wouldn't let me invest real money at the time until I was 17) first reading a book called Beating the Street and One Up on Wall Street, both by Peter Lynch (who ran Fidelity's iconic Magellan Fund achieving exceptional returns during his tenure). Online, check out the Motley Fool www.fool.com (really, despite the name they're one of the best all around personal investment sites on the web).

    Of course if you really don't have time, I would consider things like inflation adjusted US government bonds (TIPS) and ETFs (you buy them like stocks but they have far lower expense ratios relative to most mutual funds - of which, Vanguard has some of the lowest fees). Within these funds, you can choose from investing in the entire market or subsets of that market. Personally I am generally skeptical that a typical investment advisor can do better than I can with my own money but my background is in finance/accounting - a good one I would figure will sit down with you, evaluate where you sit on the continuum of risk, your age and make recommendations for allocations and explain why along the way. For instance, if you can't stomach a 25% drop in the value of a stock overnight while still being able to act rationally, stock investing (let alone even riskier commodity specific investing) isn't for you.

    I personally, would start though by reading what you can (I've also generally found books on Warren Buffet to be interesting). Good luck.
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    Oct 31, 2010 5:42 PM GMT
    Avoid being steered into an investment where the "adviser" is getting paid a commission. Pay a certified financial adviser a flat fee so that he or she is working in your best interest, not theirs.
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    Oct 31, 2010 5:50 PM GMT
    keepinghealthy saidAvoid being steered into an investment where the "adviser" is getting paid a commission. Pay a certified financial adviser a flat fee so that he or she is working in your best interest, not theirs.


    I'd entirely agree - though be specific when you ask them though if they collect any other fees from the products they offer. Many mutual funds at least in Canada pay "trailer fees" - annual management fees / fees when you leave a back load fund. A good rule of thumb is that if you don't understand it, don't invest in it,
  • FitBlackCuddl...

    Posts: 800

    Oct 31, 2010 6:03 PM GMT
    groundcombat saidSo I hope I'm not still working 40+ hrs a week by the time I'm 59 1/2 when I can start making 401(k)/Roth IRA withdrawals. What's the best investment option if I want to supplement part-time employment income for those years?


    I hope you are buying some fractional silver and gold coin and stowing it away in the sock drawer. A s things presently look, the purchasing value of your tax-free federal reserve notes by the time you reach 60 might not have much impact.
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    Oct 31, 2010 6:10 PM GMT
    HndsmKansan saidInvestment advice on RJ is inappropriate. Those of us who are licensed can't give you advice, due to compliance and licensing restrictions.

    Kudos to you for being so intuned with your investments and the need to save for your future. My suggestion is to visit your investment advisor or seek advice in your state.


    This. Its also inappropriate because those who can give advice are not properly licensed or educated in such matters. Investments are very personal and situational. Find someone that you trust (ask your friends, they may be working with an individual) and get advice from that person.

    Shop around and such, a good advisor wont ask you to move money on the first day you meet them so take your time.
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    Oct 31, 2010 6:11 PM GMT
    In my experience, a lot of investments are way overrated. Fund managers skim off their percentage, whether you make any money or not (and often you don't, because they do). It is win win situation for them.

    Not strictly investment advice, but for what it is worth, my advice is to find the best paying interest-bearing savings account and put your money there. You can get at it if you need it and it is still making some interest. If the rates are introductory (usually 1 year) move your money to another savings account afterwards. With the UK Base Rate at 0.5%, I have still managed to find instant access savings accounts paying between 2.5% and 5% pa over the past year.

    Good luck with whatever you decide, but do develop the saving habit. You won't regret it.
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    Oct 31, 2010 6:44 PM GMT
    reppaT saidDo not come to a site like RJ for investment advice or you'll end up soliciting advice from, say, someone currently investing in copper and natural gas icon_rolleyes.gif

    Seek assistance from a qualified/licensed investment advisor.

    Ah, but I am not in copper or natural gas (alright, I recently purchased a few shares in a company that has natural gas as a part of their holdings because of the dividends that they are paying, their balance sheet, their properties and their production numbers- but nothing at all in copper.) I only said that I kind of like them, right now (and used them only as examples of various commodities that I do like.) Being as it is a discussion forum I am wondering why the eye roll emoticon? Do you believe that natural gas is a poor investment because you are expecting more deflation or because, unlike oil we do not export it internationally and are stuck with whatever price the North American market is paying? Perhaps you believe that there is a decreasing industrial demand or see the increased volume being produced from coal bed methane putting further pressure on the prices? I need something more than an eye roll to understand why you would not want to hold it. I can play both sides and give good reasons to invest in it or to run screaming. I am not telling anybody to go buy copper or natural gas (The only investment vehicles to purchase them outright are risky, need to be understood, and are likely not for somebody who is asking advice. Outside of them, it is difficult to store a ton of copper or thousands of cubic feet of natural gas in your basement while waiting for the price to move.icon_lol.gif )

    Groundcombat seems to have gotten it: it is a discussion and ideas. I would venture that 9 out of 10 Americans are unaware of TIPS (for example). Even fewer will recognize that you pay a premium to buy them right now. Fewer still will understand why somebody would pay for the privilege of lending money to the government. Looking at the program and doing a little research will tell you why- and will also increase your awareness of bonds, interest rates, inflation and options that you have (none of this is a bad thing.) Again, I would not be putting money into them at this point, but they are an option. Perhaps I should just have concentrated discussion on this interesting program and ignored anything else, but I am curious what opinions others have on commodities, housing, commercial real estate, gold, foreign currencies etc...