Retirement Advice   

Latest post 05-02-2008 10:01 AM by waldo. 7 replies.
  • 04-04-2008 1:41 PM

    Retirement Advice

    I'm 31 years old and I am trying to decide how I should be saving / investing for retirement. I don't have a 401k, but I'm looking at a Roth IRA. I am also thinking about a foreign currency IRA. Not sure what goes into selecting investments for the IRA, very unsure which ones to pick.Huh?What fees should I look out for?Could anyone here give me some advice or get me in touch with an advisor so I can figure this out. Thanks.

     

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  • 04-05-2008 3:00 PM In reply to

    • Buzzard
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    Re: Retirement Advice

     I'm just an Old Buzzard, so you can take this for what it's worth. Currently all assets seem overvalued on the fundamentals. Nonetheless, you need to accumulate assets for your retirement. But I would advise first getting out of debt except for your house. In this environment, there is no surer thing than paying off any credit card or student load or car loan debt. This will free up cash later when assets are priced much cheaper (which I think they will be). Having said that, I began accumulating at about your age and at the time I thought maybe $500,000 would do it. I did not understand how the financial geniuses were restructuring our economy by overleveraging and pushing paper as is it were gold. Had I known, I would have bought a lot of gold at less than $300 an ounce and less of the market in the late 90s. Oh, well. Make allowances for what you cannot know by saving more than you think you can. If you don't have a good pension, a half-million depreciating dollars doesn't make for the retirement of your dreams. I think you're wise to go with the Roth. You can find easy access to foreign currencies via EverBank (I'm not into it, maybe because it didn't exist when I started investing.  Plus, I don't know how to properly evaluate relative asset-claim instruments). Gold now is pricey but still the ultimate stable value fund. No more than 10 percent of a prudent portfolio ought to be in gold in my opinion. Easiest way to invest is with the many ETF funds. You might want to consider GoldMoney.com. Fees are high on gold in general and it produces no income. Stocks based on their P/E ratios are probably overvalued but getting resonable. Still, the faltering economy is likely to hit stocks hard and you must consider the possiblity that a Total Market or S&P 500 index (the cheapest way to invest) could lose considerable value. Nonetheless, you need stocks because this is the most dynamic, most resilient asset you can buy. My opinion. I'm just an Old Buzzard. Bonds are not likely to make you money. Interest rates are almost certain to go up along with inflation. Nonetheless, you must also buy bonds because they can reduce market risk. Safe government bonds can be bought directly for your Roth with as little as $1,000 apiece at TresuryDirect.gov. Not wise to go very long at the moment, I think. Bond funds have certain drawbacks but a bond index, with Vanguard, say, have very low costs and that's what you want in an income fund. Managed funds are supposed to protect you in down markets but history suggests that they don't. You can get stocks and bonds together in a balanced fund. Balanced funds force you to pay high costs on the income portion of your portfolio, but do consider the very consistent performance of Vanguard's Wellington fund. It's fees are around 30 basis points. Why pay more?

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  • 04-06-2008 12:16 PM In reply to

    Re: Retirement Advice

    Wow, thank you! Fantastic stuff and wonderful insight! I will be sure to refer to your advice while checking into my investment opportunities!I hope I can call you again!

     

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  • 04-07-2008 9:48 AM In reply to

    • MoneyTalks
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    Re: Retirement Advice

    Good stuff buzzard.  I wish I could've gone back and buy Gold at $300.00.  I should've listened to John Mauldin when he called Gold inevitable rise a few years back (as well as the Euro).  One good point that you keep hammering:  SAVING.  That's so key.  So many people focus on where to put their money, that they tend t forget how to wisely save and wisely spend their money too.   As well as diversification.  Index Stocks, ETF's, Bonds, Gold.  Not a bad start towards retirement.   And again, good stuff.  Looking forward to reading you in the future.   

     

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  • 04-08-2008 3:22 PM In reply to

    • MoneyTalks
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    Re: Retirement Advice

    BTW MadeoMoney.  Type in "Retirement" into the search engine on this site.  You can pull up some great info as well. 

    Take Care

     

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  • 04-29-2008 9:56 PM In reply to

    • Nummer 7
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    Re: Retirement Advice

    MadeOmoney,

     

    I would second most of what was said here and add that I am becoming more and more a fan of ETFs as a low-cost way to build a core portfolio.  There are lots of arguments for the benefits of active and passive investments (i.e. paying higher fees for a mutual fund vs. buying a fund that mirrors an index).   ETF are evolving into a very good compromise and you might want to check out Powershares because of how they select what they think are the best parts of a give index to buy.  I agree with Buzzard that just buying the whole S&P 500 might be pretty painful in the near future and that you could be  bit more selective.  Also, I understand FirstTrust has some 'smart' ETFs that you might want to look into.  Best of luck - it is a long journey, keep that in mind as well!

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  • 05-01-2008 10:57 AM In reply to

    • MoneyTalks
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    Re: Retirement Advice

    Hey Nummer.  I agree.  ETF's are great way to build a core portfolio.  Just do your due dilligence and look inside to find out what exactly the ETF's are made of.  Again, just a suggestion and anyone correct me if I'm wrong, but, I've found that sometimes an ETF will be too overweight on one particular stock.  Example: IBB (iShares Nasdaq Biotechnology (IBB) ETF)  Notice AMGN will be 8.55% of the index.  It's been a dog as of late.  But then again Gilead Sciences represents 9.94% of that ETF.  Just making the point that you should look inside and see what that ETF is made of before throwing down on it 

     

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  • 05-02-2008 10:01 AM In reply to

    • waldo
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    Re: Retirement Advice

    Very good point.  I do this before I buy any ETF.  It is a very good idea to compare and contrast the ETF components and make sure you are comfortable with the major holdings as they will be the price drivers.

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