I have 140k how long.............

[KIWI]

Your wrong about Kiwi bank , My older brother is a US resident and opened up a Kiwi acc., There is a way around it

[GZgunner]

Kiwi would you mind Pm me with some direction or advice on this.

[Lightfin]

GZ, for what it's worth, my opinion is that the suggestion to "bank" about half your nest-egg, and then "cruise" for as long as the other half lasts is a wise strategy.

For investing your "nest-egg," I suggest you NOT bet against the U.S. dollar. It has taken a pounding, but has probably "bottomed" and is poised for a long-term rise (w/ ups and downs, but long-term "up").

After 9/11 the Fed lowered rates too far and for too long to boost the economy. So money was too cheap and was made available too easily to too many unqualified borrowers. Hence, the real estate bubble and the credit crisis. They chose to err on the side of keeping the economy "alive" and keeping people in jobs. The worst of these crisises are "probably" behind us. As the banks work through the bad debts and the housing inventories are worked through, the economy will gradually improve. I think we're 4 to 8 months from the beginning of another multi year growth cycle in the U.S.

Europe chose a strategy of focusing more on fighting inflation than on protecting growth and jobs. Hence they kept interst rates higher, and the Euro soared verses the dollar. Generally speaking, their economies have actually suffered more than the U.S. and are now reaching the point that they will have to lower rates to avoid more pain.

Most commodities (oil,steel,corn, etc.) around the world are priced and traded in U.S. dollars. As the dollar weakened, producers raised prices to offset. Also, China et.al had increased demand, further driving up commodity prices.

In my opinion, almost all of the circumstances that led to the dollar drop and commodity increase are in the process of reversing; and if you add to that the probability that the U.S. is soon going to get very serious about drilling for more oil and aggressively pursuing other energy options, then I think the short and medium term prospects for the U.S. dollar and economy are reasonably promising.

Long term there are the social security and medicare/medicaid issues, but historically the U.S. has a track record of eventually addressing their challenges and will address these as well. Dealing w/ them will definitely be a "damper" on the economy but probably not a "killer."

I suggest you consider finding a local "broker" and putting about 25% of your nest egg in an 18 month investment grade bond (I saw them this morning yielding about 7%). I'd put another 25% in a 36 month investment grade bond (should be able to get about 7.75%). I'd put the rest in a one year CD (should be able to get a "brokered" CD paying about 4.2%). I'd leave directions to renew that CD for another year a year from now at the best one year rate availble (I expect rates to be about 3/4% to 1% higher a year from now). This strategy should enable you to at least match inflation, and have no expenses and no "worries."

For your "cruising kitty", you may want to keep about 25% in a money market account, then "ladder" the rest (25% in 3 month CD, 25% in 6 month CD, & 25% in 9 month CD, w/ arrangements for them to pay interest into your money market account and to renew for 6 or 9 month intervals). This strategy gets you maximum safe earnings w/ plenty of liquidity.

I know the above is and over-simplification and that these are just my opinions and I may be very wrong, but I have been in the investments business for 30 years and have experienced and observed a lot of ups and downs.

The one "qualifier" or "wrench-in-the-gears" problem that could really mess things up is the "Iran situation." If Israel or "anyone" decides to try to "take out" Iran's nuclear bomb making capability, we could see oil embargoes, and who-knows-what. The best place to have your money if/when that happens is gold. BUT, there have been huge international geopolitical problems just about every decade for past hundred + years, and so far the world has found ways to survive and often prosper.

Fair winds!!!

[jzk]

What do you think about preferred securities? For example, citigroup CpM? It seems to be selling at around 22 and pays 8.5% effectively yielding 10%. What about dividing half of the kitty up in 5 of these kinds of securities?

**** Please no one go out and make any financial decisions based on this question, I have no idea what I am talking about in this arena!

However, some of the previous recommendations are tied to the currency market and are effectively betting against the dollar. This is called "chasing performance" and many people lose their fortunes chasing performance.

[Lightfin]

"Preferred" Stocks of quality companies are a good option for a portion of your $$.

Preferred stock holders are "ahead" of common stock holders in terms of who gets paid in the event of a bankruptcy, but they are "behind" bond holders. A current hot example of this is Fannie Mae & Freddie Mac. Their stocks have tanked from about $60/share to about $4/share, but their bond prices have held more value because the govt. may not "bail out" the stock holders, but indications are that the bond holders are more likely to be repaid.

Most preferred stocks start w/ a "par" value of $25 per share. So, the one you mentioned is selling at a discount, driven by the credit/capital/mortgage challenges many banks currently face.

The way the one you mentioned would work is that it would pay the 8.5% dividend (probably payable every six months). To get up to the "10%, you have to wait and sell when/IF the value gets back to $25.

In the event of a "worst case" scenario, I wouldn't want too much of my nestegg in such a security, but a small portion may be appropriate.

Also, make sure any "preferred" stock you get is a "cumulative preferred." That means that if for any reason they suspend paying the dividend, they've got to pay you for any unpaid dividends before continuing "current" dividends to anyone.

[David_Old_Jersey]

At the risk of stating the obvious - even if planning to go cruising long term (forever?) you do not need to do your financial planning in one go before you depart - with the intention that the financial planning will last a lifetime.

Indeed, if you can come up with a strategy that is zero maintanence with good returns over 10/20/30 years (ahead - not with hindsight!)........then you could sell the knowledge .......otherwise, no reason (especially in this information age) why someone cannot carry on pretty much as if they were on shore and adjust their financial planning as they feel needed over the years to come.

[jzk]

Originally Posted by Lightfin

"
The way the one you mentioned would work is that it would pay the 8.5% dividend (probably payable every six months). To get up to the "10%, you have to wait and sell when/IF the value gets back to $25.

Actually, I think you really do get the 10% because it is paying 8.5% of the $25, but you didn't pay $25, you bought at a discount.

You mentioned Freddie Mac.

FREpV has a call price of $25, and pays 5.57%. However, you can get it for $7.4, so for you it will be paying 18.85%.

This is how I think it works, but I am by no means an expert. Now what happens if the feds bail out Freddie Mac? The common stock guys are out, but what about the Preferred stock? Is that wiped out also?

[jzk]

Originally Posted by David_Old_Jersey

At the risk of stating the obvious - even if planning to go cruising long term (forever?) you do not need to do your financial planning in one go before you depart - with the intention that the financial planning will last a lifetime.

Indeed, if you can come up with a strategy that is zero maintanence with good returns over 10/20/30 years (ahead - not with hindsight!)........then you could sell the knowledge .......otherwise, no reason (especially in this information age) why someone cannot carry on pretty much as if they were on shore and adjust their financial planning as they feel needed over the years to come.

Yes, I agree.

[Pappy Jack]

Hi GZ,

A book that I would highly recomend Is "Rich Dad Poor Dad" by Robert Kiyosaki. It's a real eye opener on finance, where money comes from, where it goes, and how to make it grow. He also has a series of books on the subject but this is the first one and a must read. My wife and I now have three condos(one of which we live in) and a trailer park. Any extra money goes back into the investments but once they are paid for we should be getting about $3,000/mo. There is risk, of course, but the trick is to minimize any risk that you can and to get a good manager to run it all for you(you want to sail, not fix toilets...right?)

Fair winds and full sails

Pappy Jack

[Delezynski]

Have you looked in to “The Motley Fool” web site?
http://www.fool.com/
They are eager to pass along money making tips.....

I am NOT endorsing or condemning the site, just bringing it up.


Greg

[Lightfin]

"JZK" is right about that 8.5% preferred paying more than that for you since you purchase it for $22, but it's not 10%.

It pays 8.5% of $25 = $2.12

You pay $22 for the share, so you earn $2.12 divided by $22, netting you income earnings of 9%.

If/when you sell (or they "call" it) for $25, you earn $3 per share more than you paid for it, making you an additional 13% on your $22 invested.

Keep in mind too that if the company's prospects deteriorate, the price might drop, and if you had to sell you could take a loss on your principal. The Preferred Stocks also usually have a very long maturity date; i.e. out many years before they buy you out

That's why I suggested the 18 month and 36 month investment grade bonds. Much less risk, a very good interest rate, and they buy you out in 18 months and 36 months; and odds are good that interest rates will be higher then and you can reinvest for a better rate.

[Brent Swain]

I could cruise the rest of my life on that much money and still leave some behind. Anyone who can't is not being anywhere near frugal.

[speedoo]

Originally Posted by Louis Riel

I could cruise the rest of my life on that much money and still leave some behind. Anyone who can't is not being anywhere near frugal.

Ah but "frugal" for one may be comfortable, but unacceptable for another.

When I start long term cruising, one of the decisions I will have to make is exactly how frugal I will have to be. Decisions like how many meals ashore, how many days at a marina, etc.

[sctpc]

Originally Posted by Louis Riel

I could cruise the rest of my life on that much money and still leave some behind. Anyone who can't is not being anywhere near frugal.

Thats one very bold statement Maybe no boat or health insurance never useing a marina and liveing like a hobo or just haveing a short life might do it.

[Pappy Jack]

GZ,


Another thing you have to think about your ROI(return on investment) is taxes and inflation. Inflation might be just a few % points but taxes can really sap your money. Just food for thought.

Fair winds and full sails,

Pappy Jack