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You're 55 and have $100K to invest. What to do?
Keep your costs down and don't settle for meager returns if playing catch-up
Emphasis added.
Hail Mary Pass
A Hail Mary pass or Hail Mary route in American football refers to any very long forward pass made in desperation with only a small chance of success, especially at or near the end of a half.
The expression goes back at least to the 1930s...
The expression goes back at least to the 1930s...
Ah, yes. The Great Desperation strikes again. Hail Mary time!
And if that doesn't work...
There's nothing quite like a well executed confidence game to even the odds.
20 comments:
There are so many unspoken truths in the article.
A "safe" rule of thumb is to use your age as the percentage of fixed income or bonds you should hold -- in your case, 55%. But seeing as you are starting from nothing, I might encourage you to be slightly more aggressive to ensure you grow your money fast enough.
Unspoken truth one: You can only invest in stocks and bonds. There are no other investment choices.
Unspoken truth two: If you are more aggressive, you ensure your money will grow faster.
Mr Slippery,
Unspoken truth one: You can only invest in stocks and bonds. There are no other investment choices.
And garbage bags... we musn't forget how those have been doing over the last decade thanks to the rising price of oil.
Unspoken truth two: If you are more aggressive, you ensure your money will grow faster.
Ensure
to make sure, certain, or safe : guarantee
I wonder if this also works when driving?
I'm sorry officer. I'm aware that I was driving 110 mph in a school zone. I was only driving aggressively because I was running way behind and I needed to get to my destination safely.
This is not driving advice! ;)
A "safe" rule of thumb is to use your age as the percentage of fixed income or bonds you should hold -- in your case, 55%.
Unspoken rule three: Although the use of quote marks around a word often denotes sarcasm, you can "safely" assume that I'm not being sarcastic. Oh, sure. It's a sarcasm report. I'll admit that. We have "never" convicted a person based on circumstantial evidence in this country though. Justice is "always" served.
"C'mon 22, 22, 22"
Troy,
Lost in America! Yes!!
David Howard: As the boldest experiment in advertising history, you give us our money back.
Desert Inn Casino Manager: I beg your pardon?
Go long Powerball! ;-)
Seriously, I'm finding the idea of a permanent ZIRP future scarier than most of the alternatives.
Hey, all these management types spent the '90's studying up on Japanese business practices and whaddya know, now we got a future just like theirs!
TJandTheBear,
I remember reading a worst case scenario comment back in 2004. It had the market plunging.
I offered an alternative worst case scenario. The market trades sideways for as far as the eye can see. Moderate inflation continues too.
Bulls lose purchasing power going long. Bears lose purchasing power going short.
If the market likes to inflict the maximum pain on the herd, and if the herd has embraced hedge funds, then it would seem that both the bulls and bears must lose. That's one way it could happen in my opinion. Hedge! Hedge! Hedge! It's a can't lose strategy I'm told.
For what it is worth, he felt that my scenario was scarier than his. It's also why you might understand in some small way my desire to lock in real yields on TIPS and I-Bonds. I'm not suggesting that hindsight will necessarily be kind to my plan, but I'm certainly not complaing so far. Sigh.
Who Struck John,
I worked as a programmer at a branch office of a Japanese landscape architecture company in the early 90's. Seriously.
They had the nerve to lay me off when their housing bubble popped. I know! Shocking!
Good thing we've studied up on their business practices.
I'm not even remotely bitter about it though. I'm saving that for the US company that hired me next, lol. Good times, good times.
I'm finding the idea of a permanent ZIRP future scarier than most of the alternatives
California pension funds have $400B or whatever. They need 7.5% to be 80% funded and they earned 0.1% to 2% last year, $30B less than they needed to make that low bar.
But that's chickenfeed compared to the SSTF's $2.7T.
http://www.ssa.gov/oact/progdata/newIssueRates.html shows their yields moving to under 1.5% . . . "Interest" -- "Printings" actually since no treasury money is actually appropriated to pay this yield -- is $40B/yr while outgo is $800B now, $1T by 2020 and $2T by 2043.
Federal health spending is $850B now ($2700 for every man, woman, and child) and will double by 2025 (and double again by 2043).
And you wonder why I'm studying Swedish . . .
"California pension funds have $400B or whatever. They need 7.5% to be 80% funded and they earned 0.1% to 2% last year, $30B less than they needed to make that low bar"
I read somewhere that california would soon announce a balanced budget? "and I wouldn't be surprised if California reports a balanced budget soon.
Read more at http://www.calculatedriskblog.com/2012/11/california-unemployment-rate-falls-to.html#HHyK4Ye3hisZhYuo.99
Troy,
And you wonder why I'm studying Swedish . . .
And people wonder why I'm hoarding Swedish Fish.
Ba-dum ching!
Fatboy,
For what it is worth, California's long-term balanced ex-unbalanced chart is looking sustainable to me.
Ba-dum ching!
"For what it is worth, California's long-term balanced ex-unbalanced chart is looking sustainable to me."
Snark aside no it does not. In less than 4 years LA Cities' revenue will go 30% to retirement benefits. This assuming the $75m/yr siphoning of DWP revenue continues. The huge tax increase Prop 30 works at best once. The announced Constitutional amendment to circumvent Prop 13 threatens to crash the housing market again. The nearly balanced budget does not count the 8.5-10b in roll over deficit and the now 114b owed to FedGov for UE insurance benefits. And don't think they get a pass or they can jack employer charges.
California has run out of donor veins to tap.
Edit: $14b owed for UE loans from FedGov.
$10B actually. I actually made a post here to include that, but calculated that repaying $10B over 10 years is like $5/mo per worker, not that big a deal.
http://www.edd.ca.gov/about_edd/pdf/qsui-Fund_Balance.pdf
Rob Dawg,
Snark aside...
Oh the humanity! Snark was keeping me sane, lol. Sigh.
Troy,
$10B actually. I actually made a post here to include that, but calculated that repaying $10B over 10 years is like $5/mo per worker, not that big a deal.
A lot can happen over those 10 years though. What happens if we have a few more recessions?
How about this unspoken truth...100k is not "nothing".
It is more than a great number of Americans in their 50s have saved, minus that ever-elusive home equity.
Spoken as an opening line by any financial advisor, it is a reason to run...it's a little mental beat-down before the client is set-up for the high-risk investment or the
stock churn. Yo, person with the cash--run!
Took me a minute to figure it out. The UE fund balance is not what they owe to FedGov.
fried,
Good point. I agree that $100k is more than many in their 50s have saved.
Bonus unspoken truth... article not intended for Chinese factory workers.
$100k = 5 decades at $1 per hour (40 hour work weeks)
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