Retirement - Managing your money

[Joli]

Originally Posted by dannc

To go along with that advice, don't panic and sell your stock during a down turn in the market.

I knew retired people who panicked in one of the bad down turns around 1990 and sold all of their stock. They went from having a paper loss to a real loss with no way to recover.

Later,
Dan

👍 Yes

[Simi 60]

Would love to get out of our rental properties
Something that doesn't require maintenance , rates, insurance has its appeal
But not convinced there is anything "safe" out there paying good enough yield to compare.

What I mean buy that is I get rent every fortnight
And most years that income increases, it may stay the same, it may even drop a bit
But if it drops it's only a small % say on one property $400 to $380/ week which is 5% and that ain't going to affect much
All pretty stable.

Shares on the other hand seem to have much bigger swings, bigger hits on income can be life changing

[Captain Graham]

Originally Posted by Simi 60

Would love to get out of our rental properties
Something that doesn't require maintenance , rates, insurance has its appeal
But not convinced there is anything "safe" out there paying good enough yield to compare.

What I mean buy that is I get rent every fortnight
And most years that income increases, it may stay the same, it may even drop a bit
But if it drops it's only a small % say on one property $400 to $380/ week which is 5% and that ain't going to affect much
All pretty stable.

Shares on the other hand seem to have much bigger swings, bigger hits on income can be life changing

I would not like to have rental real estate when I retire.
It is too much work and being on call 24/7 to fix things.

[Lucky Luke 1]

Originally Posted by Captain Graham

I would not like to have rental real estate when I retire.
It is too much work and being on call 24/7 to fix things.

You don't have to. Its why the vast majority of real estate investors use a Real Estate agent/ Property manager. (Their service are also tax deductible in the majority of western countries)

[Leighpilot]

Bear in mind that right now you can get 5.25% CDs. So there is a guaranteed decent rate of return available if you want it. My financial guy managed to snag some 6% CDs a few months ago.

[Captain Graham]

Originally Posted by Leighpilot

Bear in mind that right now you can get 5.25% CDs. So there is a guaranteed decent rate of return available if you want it. My financial guy managed to snag some 6% CDs a few months ago.

Over 5% is a good return but with CDs you will only get the 5% for a short amount of time (1 to 1 1/2 years).

With investing in the S&P 500 index you will get about 10% per year over the long term.
In 2023 YTD the return for the S&P 500 index is up 9% and when it gets back to its all time high add on another 13%.

So if you sell your stocks and buy a 5% cd you locked in a stock loss and only gained 5%

If you have new money to invest and you invested in a 5% cd you gained 5% but if you put it into stocks you would have gained 9%.

If you are using the bucket system and have a cash bucket that you filled when the market was high then I think putting some of the cash into a CD is a good idea.

In my case I did not setup my buckets yet so I am not going to sell any stocks until the market is back at new highs.

[sailorboy1]

Originally Posted by Captain Graham

So if you sell your stocks and buy a 5% cd you locked in a stock loss and only gained 5%

You didn't "only gained 5%", you guaranteed it and can plan around it. Unlike the "hope" that stocks will increase. I have been "hoping" my stocks will recover for 18 months now. It is easy to say stocks have been going up if you compare it to yesterday. But the S&P is currently at same level as June 2021.

[Captain Graham]

Originally Posted by sailorboy1

You didn't "only gained 5%", you guaranteed it and can plan around it. Unlike the "hope" that stocks will increase. I have been "hoping" my stocks will recover for 18 months now. It is easy to say stocks have been going up if you compare it to yesterday. But the S&P is currently at same level as June 2021.

The S&P 500 takes anywhere from 1 to 8 years to recover from a bear market (gets back to its highs).
So with the S&P 500 up 9% in the past 5 months is a good sign.
Yes it still has 13% to go but 9% in 5 months is a good start.

But to your point having money out of the market making a guaranteed 5% does help one sleep better.
That is why before I retire I will be using the bucket system in retirement.
See my earlier posts in this thread about the bucket system.

In my case I will be retiring in 2 years and when the S&P comes back to its new high I will be moving money out of the market and into my buckets

[Captain Graham]

FYI Some information about the S&P 500

High was about 4766 in late dec 2022
Recent low was about 3583 in early Oct 2023
Today is about 4189 on May 22 2023

So the market dropped -1183 points in 10 months
But is has gained back + 577 points or about 1/2 in 8 months.

It seems like a very normal bear market.

[sailorboy1]

Originally Posted by Captain Graham

In my case I will be retiring in 2 years and when the S&P comes back to its new high I will be moving money out of the market and into my buckets

I retired at 56 by not getting money advice from a boat forum

[TrentePieds]

Capt Graham said:

"It is too much work and being on call 24/7 to fix things."

Surely not so? There are all sorts of retirees in search of additional, occasional income to steady up after the ravages of governments' "controlling" inflation.

Find a good man or woman, pay a 5% service fee for looking after the bookkeeping, than which nothing could be simpler. Pay 30 bux an hour for the man, or woman, to do the simple maintenance: Painting and carpet cleaning at tenancy changes. Plumbing repairs as required. Generally, no more is required than to change the filler valve on the toilet tank. A twelve-year-old can do that. Changing an occasional worn our wall outlet. An eight-year-old can do that. At least he can, after I've taught him to do it, and do it safely. Landscapers will keep an eye on the lawn and the flower beds.

There ARE honest people out there! Some are even will to work for a (ugh!) landlord. If you are well enough situated to be a landlord, there is no harm in your letting some of your dead certain income trickle down to those who are less fortunate!

Landlording is no hassle as long as you treat it as a regular business even if it is only a tiny one.

Owning real estate is the ONLY protection a man of moderate means has against the depredations of politicians who've swallowed the blarney dished out by economists.

Bonne chance!

TrentePieds

[Mickeyrouse]

Investment advice in this thread is like a broken clock: even that clock is right twice a day.
A couple lines of advice is like buying on stock tips in a bar.
Investing skill takes a lifetime to accumulate for most, others just get lucky. It’s damned difficult to weed out the lucky advisers from those who have twenty or thirty years of a proven record. As a CPA, (now retired, at 52) I saw lots of retirees do well with their retirements, others just watched it fritter away. Too many think it’s like a casino, go in with that mind-set, and get plucked.

[Lucky Luke 1]

Originally Posted by Captain Graham

FYI Some information about the S&P 500

High was about 4766 in late dec 2022
Recent low was about 3583 in early Oct 2023
Today is about 4189 on May 22 2023

So the market dropped -1183 points in 10 months
But is has gained back + 577 points or about 1/2 in 8 months.

It seems like a very normal bear market.

Oct 2023 hasn't happened yet.

[Anders]

Originally Posted by Leighpilot

Bear in mind that right now you can get 5.25% CDs. So there is a guaranteed decent rate of return available if you want it. My financial guy managed to snag some 6% CDs a few months ago.

That's just about the same as inflation and real return is essentially zero as long as you don't need any of that "return" to live off.

[s/v Jedi]

Investing in stock isn’t difficult: take money you don’t need and buy some trackers like Nasdaq100, S&P500 etc. and that’s it, don’t touch it when you don’t know what you’re doing.

For a little more action, force yourself to sell some when it’s high (sell everything over a certain amount of value, i.e. if the position is $53k sell $3k worth) and buy when it’s low ($44k buy $6k worth).
Looking back, this mostly is for feeling good because the actual extra performance is little. Buy and hold is easy.

I don’t think a CD is good. What if fiat currency finally gives up the ghost after all the printing of money? What if civil unrest creates crazy inflation? You see it evaporate with your hands tied. I want to be able to move it, buy, sell etc.

Real real estate is good, especially if you get an income out of it. AirBnB, get someone to run it.