Talk of The Villages Florida
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Talk of The Villages Florida (https://www.talkofthevillages.com/forums/)
-   Investment Talk (https://www.talkofthevillages.com/forums/investment-talk-158/)
-   -   Move all investment money into fixed income? (https://www.talkofthevillages.com/forums/investment-talk-158/move-all-investment-money-into-fixed-income-336869/)

melpetezrinski 11-22-2022 08:42 AM
Quote:
Originally Posted by Daddymac (Post 2159685)
Fed Chair Jerome Powell signaled officials will likely take interest rates even higher than the 4.5-4.75 percent they initially projected in September, but might take smaller steps to get there. That could mean rate hikes worth a slower half a percentage point — and eventually a quarter point.Nov 3, 2022 Bank Rate.
Does NOT support the quote, "Jerome Powell, head of the Federal Reserve, has said that the goal is for interest rates to be more than the inflation rate." Now, it is very well possible that the fed funds rate will exceed the inflation rate in the future but I don't think Powell explicitly stated that goal.

PugMom 11-22-2022 08:45 AM
Quote:
Originally Posted by Two Bills (Post 2159522)
Wife and I living in UK retired 27 years ago. We decided to put all our investments into cash, and avoid the grind of the ups and downs of the S&S market.
We looked for tax free fixed rate government cash bonds, and Government Inflation proof tax free cash bonds.
Ultra conservative, and capital making no spectacular growth, but no spectacular falls either.
In fact with inflation rising all time in UK at present, we are doing very nicely thank you!
It worked for us.
Some folks love the daily market gamble, but we wanted no more of that.
Some even aim to be among the richest residents in the cemetery, but we definitely don't want that either!
will the new fuel prices be a problem for you? i read it's going up considerably.

manaboutown 11-22-2022 09:08 AM
Well, I for one appreciate the serious responses. Most of the folks who were able to retire and move to The Villages got here through hard work and persevered in managing their finances well enough to retire here. We all have different investment experiences and outlooks but apparently most of them worked at least well enough to get and sustain us here.

RickyLee 11-22-2022 09:41 AM
Quote:
Originally Posted by bowlingal (Post 2159719)
why don't you ask a financial professional instead of all the yahoos on here?
I personally like hearing others thoughts & strategies. Knowledge is priceless

SHIBUMI 11-22-2022 10:01 AM
CD's
 
Most folks that play in the stock market at an older age do it as a hobby. You don't gamble what you can't afford to lose. Folks living off of their money are glad to see cd rates up from
2%. 5-10 years rates are lower because banks believe that rates will go back down in the short term. You can get 5+ % on 5-10 year cd's, BUT, they are not call protected. This means banks can call, redeem, them at their whim. That whim happens when interest rates go back down, like in a recession to promote business. Goal is to get the longest term protected rate you can, then sleep easy.
The federal reserve, does what it says it will do. Stock people try to bend and twist their meaning. The rate will go to 5 or 6 until inflation starts to cave. Then it will sit there for awhile, the banks are saying 2-3 years. Enjoy that guaranteed money while you can.
Stock pickers are just playing bingo with the market as they don't have much to do. Get out and enjoy what life you have left. Inflation is a supply side issue that will still take 2-3 years or more to conquer. Sleep better at nite with fixed income. That window will close soon enough. BUT, if you really enjoy playing Bingo, have at it, just stop complaining.

chrissy2231 11-22-2022 10:07 AM
Quote:
Originally Posted by golfing eagles (Post 2159516)
Obviously the higher the risk, the higher the return. Just remember, today's 5 yr T note rate in 3.96%, inflation is almost double that.
ibond 6+%

Boomer 11-22-2022 10:23 AM
………..

kkingston57 11-22-2022 10:42 AM
Quote:
Originally Posted by manaboutown (Post 2159594)
Why not consult a fee based financial advisor you vet ahead of time who will sign on to act as a fiduciary? Some people experience extreme stress making big financial decisions, especially irrevocable ones such as selling securities which may bring about huge tax bills or significant losses. Frankly, before I make big decisions in areas with which I am unfamiliar, unknowledgeable or uncomfortable I try to consult one or more experts
BEST answer to this question. Everybody is different as shown in the advice(?) given here. Too many good/safe options out there.

kkingston57 11-22-2022 10:45 AM
Quote:
Originally Posted by Babubhat (Post 2159671)
It’s all about cash flow. Figure out what you need and plan accordingly. If you can’t sleep at night it’s not the right strategy
My broker has the same advice(sleep at night)

HJBeck 11-22-2022 10:49 AM
Good question. I believe if one is in their 70's 60/40 is way too high. However, what happens to your assets if inflation continues at the current pace for some time to come? If you make your change in strategy now, are you losing potential gains if the market moves up from the lower position they are currently in. I don't think there is a definitive answer to this question. A lot depends on your risk tolerance. Good luck!

rsmurano 11-22-2022 11:34 AM
Quote:
Originally Posted by LuvtheVillages (Post 2159609)
Because Jerome Powell, head of the Federal Reserve, has said that the goal is for interest rates to be more than the inflation rate.

There are more interest rate hikes to come.

If you decide to go fixed income, perhaps start moving just a portion of your funds, and add more later as interest rates increase.
You should have got out a year ago. I got out all of my non-taxable stocks last January and have saved a lot of $$$ by doing so. I have never got out of the market when things got bad in the past but this is different. We haven’t seen the lows yet in this downturn, but you might be too late to sell.
The 60/40 method is for people that are scared about the market. I’m 100% in stocks/funds because that’s where you make your money. Some people will try to tell you that bonds are safer which isn’t true, in 2008, bonds went down almost as much as stocks, and the last few years bonds have performed terrible.
Even today, you can make some really good money in certain areas but you have to be more picky. I’ll get in to a fund for a couple months, make 6 digits, then get out and then get back in again when the timing is right. (I’ve done this twice this year alone). If you have cash on hand you can do this pretty easy, and if you do this in non-taxable accounts, you don’t have to worry about paying capital gains taxes.

jimjamuser 11-22-2022 12:18 PM
Quote:
Originally Posted by 44Apple (Post 2159510)
At what point should one change from being an investor to a "saver"?

I've been retired a number of years and have invested all my adult life. Luckily, we have enough non-investment money to live on.

I now wonder if I should gradually begin selling my ETFs, Mutuals, and stocks and move all the money into fixed income.

I know the outcome will be lower and stable, but I won't have to deal with the daily ups and downs.

I'm familiar with the 60/40 rule but wonder if I should go 0/100.
Keep the ETFs and sell the mutuals and stocks and convert them to bonds or ETFs for fixed income.........IF you believe that a recession is in the near future.

jimjamuser 11-22-2022 01:24 PM
Quote:
Originally Posted by retiredguy123 (Post 2159598)
I would have agreed with you 20 years ago, when I could live off of my money market and bond monthly interest checks. But I don't think the Federal Reserve will ever again let savers get a fair rate of return on their fixed rate income investments. They want to encourage more borrowing and less saving.
I believe that the Fed. has the MANDATE to try to keep INFLATION around 2%. They control the prime borrowing rate to achieve the 2% inflation rate. Today with inflation high and rising, they try to dampen economic growth and drive inflation back to 2%. To accomplish this, the Fed must walk a tightrope to bring down inflation without causing a RECESSION. Historically, most often, they have FAILED !

jimjamuser 11-22-2022 02:00 PM
Quote:
Originally Posted by LuvtheVillages (Post 2159609)
Because Jerome Powell, head of the Federal Reserve, has said that the goal is for interest rates to be more than the inflation rate.

There are more interest rate hikes to come.

If you decide to go fixed income, perhaps start moving just a portion of your funds, and add more later as interest rates increase.
Yes, because the Fed is trying to drive INFLATION down. Older retired people are the ones MOST hurt by inflation because they are on fixed incomes and NOT working. So remember, the Fed. is YOUR friend.

jimjamuser 11-22-2022 02:07 PM
Quote:
Originally Posted by CoachKandSportsguy (Post 2159664)
The stock market is going lower in the beginning of CY23, interest rates may or may not go higher from here. as inflation has peaked, or is near its peak, but the federal reserve has not finished yet.

Taxes should not be as much of a consideration to sell stock -> taxes are a by product of success, the more success, the more taxes you will pay, and that sure beats taking a tax loss. . .. .Loss of gains is now on what you should be focused, given retirement and only the lottery will significantly change your income to invest more. Indexes or highly diversified portfolios are a bit different. . I sold a large portion of my stocks over two years ago, very near the peak as the divergences were showing cracks, and I have been 20% -25% equities and 60% bonds and 20+ percent cash ever since.

What is going to happen is that inflation is going to drop very quickly, as the recession and calculation base effects occur. Bond will also be bought very quickly as well, so i would encourage some shift, but that is just me, because I m patiently waiting for 3,000 3,200 on the SP500 to go back in, and trying to find a bottom to trade the long bond, and find zombie companies to continue to short on the way down. You can search on some of my posts

With treasuries, you don't have to wait for the maturity to sell, you can sell them anytime as the price rises and you get capital gains versus interest, and you can move that money back to equities if you like. .

good luck. . .

trader guy
Very good and informative post. The more taxes that I would pay on my investments the better .......because it means that I am succeeding and getting good gains. Concentrate on making GAINS and the taxes will take care of themselves.

jimjamuser 11-22-2022 02:17 PM
Quote:
Originally Posted by Villages Kahuna (Post 2159720)
About two weeks ago I increased my allocation to fixed income by purchasing two-year Treasuries paying 4.7%. My thinking was, do I sell equities and their upside (and downside) chances in exchange for a U.S. Treasury bond with NO downside risk but an annual payment of 4.7%? With the strong prospect of a recession facing us in ‘23, probably with more stock market downside, it was an easy decision.

I’m still allocated about 1/3 to equities, all blue chip companies, some paying 2-3% dividends. When the recession is over and our economy and the stock market begins to rebound, I’ll reallocate back to equities. Will I miss the rebound? Sure, but limiting further losses by owning Treasuries paying a reasonable dividend is worth it. I’ll make sure to keep a portion of the portfolio in very short maturities or cash, to be able to roll over into even higher paying bonds or to begin buying stocks when the economic recovery becomes apparent.

As far as the inflation rate being higher than the bond yield, the higher inflation rate only becomes applicable when you actually spend the money. Until then it’s purely a risk-reward investment consideration.
I agree with that reasoning about the recession and the needed adjustments.

jimjamuser 11-22-2022 02:27 PM
Quote:
Originally Posted by tovliteuser (Post 2159727)
If your non-investment income covers all the bills, why are you even considering doing this? Leave it alone. How many times have we seen the market go through ups and downs? Stop worrying. Turn off the Bloomberg channel. The market will come back. Always has, always will. And the biggest losers will be those that went to fixed income for a little "peace of mind".
The problem for some people or people with some unexpected bills like residents hit with hurricane Ian or big medical bills.......is that they MAY have to sell their equities. Then they are in the BAD economic situation of having bought HIGH originally and NOW having to sell LOW. Many people get burnt in the stock market by buying high, and selling low. NO one likes to admit to it ........yet it happens !!!!!!!

jimjamuser 11-22-2022 02:35 PM
Quote:
Originally Posted by Cobullymom (Post 2159738)
The inflation rate is nonsense? What do you mean?
Good question, I don't believe that "inflation is nonsense". It would only be nonsense to someone that does NOT have to spend money. I can only think of an Eskimo hunter-gatherer to whom it would apply.

jimjamuser 11-22-2022 02:41 PM
Quote:
Originally Posted by BlueHeronFan (Post 2159740)
I remember a few months ago that I mentioned buying gold as an inflation and investment method. Immediately I was hammered about crypto being being better than gold. Well I have gold in my hands. I can touch it and enjoy watching the gold market. Wonder how that crypto investor feels right now.
That's the thing about investments, NOT everyone is a winner, especially in the short run. You get in at the wrong point in an economic cycle and you LOSE.

melpetezrinski 11-22-2022 05:45 PM
Quote:
Originally Posted by jimjamuser (Post 2159911)
Yes, because the Fed is trying to drive INFLATION down. Older retired people are the ones MOST hurt by inflation because they are on fixed incomes and NOT working. So remember, the Fed. is YOUR friend.
"Older retired people are the ones MOST hurt by inflation because they are on fixed incomes"

Actually poor people are hurt the most by inflation. They usually have no savings/investments to earn the higher interest and generally don't see pay increases that match the level of inflation. On the hand, the "older retired people" usually have social security, which IS indexed for inflation. If you are talking about pensions when you mention "fixed income" well, something tells me that you will be way ahead of the "poor" community if your are collecting social security AND a pension. IMO!

jojo 11-22-2022 06:09 PM
Quote:
Originally Posted by manaboutown (Post 2159594)
Why not consult a fee based financial advisor you vet ahead of time who will sign on to act as a fiduciary? Some people experience extreme stress making big financial decisions, especially irrevocable ones such as selling securities which may bring about huge tax bills or significant losses. Frankly, before I make big decisions in areas with which I am unfamiliar, unknowledgeable or uncomfortable I try to consult one or more experts
It's difficult to find financial advisors who will review a portfolio only. Everyone I've talked to wants to manage it. I would particularly like to find a financial advisor strong in advising for tax purposes.

CoachKandSportsguy 11-22-2022 08:58 PM
Quote:
Originally Posted by 44Apple (Post 2159691)
Related to all this is, how long do you hold after you buy? And when do you cash in your stock gains? After 10%? 20%?

I'm thinking of targeting my IRA oil/energy holdings first as they have basically doubled and I wonder if they might begin to tail off. I don't want to lose those gains.
First, well done on the gains. From a portfolio point of view, that is if you look at your pile of money and investments as a portfolio, the large gains become a higher percentage of the portfolio, which means you are less diversified, and you should sell at least 50% to 75% of the position to keep the gains, as well to rotate into the undervalued stocks or sit in cash and wait for the next undervalued, high return potential sector.

Second, trading is about loss aversion, both loss of principal and loss of gains. . . and not sure how you picked that sector, then repeat that sector selection again for other sectors

gains can add up

Two Bills 11-23-2022 03:12 AM
Quote:
Originally Posted by PugMom (Post 2159784)
will the new fuel prices be a problem for you? i read it's going up considerably.
Not too bothered. Everything is going up.
Wife and I will get a nice pension rise, inline with inflation.
Lots of 'free' money being thrown around, whilst avoiding tackling the cause of the problem.
We are going through one of our 'Financial madness' periods at the moment.
The UK government are experts at the great sport of Foot Shooting.'
Give it a few years and it will go back to some semblance of fiscal sanity..
(Well at least until the next time.)

Borrow your way out of debt seems to be the mantra at moment! :ohdear:

rsmurano 11-23-2022 08:34 AM
How long do you hold onto your stocks/etf’s/funds? Forever until you shouldn’t.
Most of my taxable funds have been invested for many years/decades and some not as long because the economy had changed enough to hit a particular sector hard (for example, in the past oil, tech).
When you have good funds/stocks, which meet this criteria: low cost (< .2%), low risk, high return, low turnover (high turnover costs more and you pay higher taxes), high dividends (3% or higher), and the managers must have these funds in their portfolio, why sell?
We live off our dividends from our taxable accounts and we use the bucket system to live on.
For our non-taxable accounts, I day trade (day/days/week/month) during this recession/downturn, or when times are good, use the same criteria to purchase stocks/funds as my taxable accounts.
No bonds, no annuities, no mixed/balanced funds, just normal low cost/low risk/high return equities.

jimjamuser 11-23-2022 11:01 AM
Quote:
Originally Posted by melpetezrinski (Post 2159962)
"Older retired people are the ones MOST hurt by inflation because they are on fixed incomes"

Actually poor people are hurt the most by inflation. They usually have no savings/investments to earn the higher interest and generally don't see pay increases that match the level of inflation. On the hand, the "older retired people" usually have social security, which IS indexed for inflation. If you are talking about pensions when you mention "fixed income" well, something tells me that you will be way ahead of the "poor" community if your are collecting social security AND a pension. IMO!
It is true that "the poor" are going to be affected negatively when inflation is high. But, I was thinking that a large % of "the poor" are young and working. Because they are young and working they can adjust their lives MORE easily than older retired people. Being young they have more FLEXIBILITY to change their lives than older retired folks. Younger people can relocate easier to increase their earnings. Young people have the energy and ambition to work more hours or get a 2nd job. Older people have much LESS flexibility.

I can see the case for saying that poor people are the MOST affected by inflation. And experts may say that. But, I think that it is debatable. Rapid inflation is difficult and confusing for all economic groups. And there are subgroups like non-working poor and working retired people, which confuses the debate as to which group is most adversely affected by inflation.

justjim 11-23-2022 11:38 AM
Pardon the off topic diversion but 40% of Americans don’t have $400.00 in cash. That would be over 120 million people. This group is definitely hurt by inflation. Many are hurt more by their inability to budget and effectively handle their own financial affairs. Parents and our education system have failed IMHO.

justjim 11-23-2022 12:08 PM
Mandate
 
Quote:
Originally Posted by jimjamuser (Post 2159900)
I believe that the Fed. has the MANDATE to try to keep INFLATION around 2%. They control the prime borrowing rate to achieve the 2% inflation rate. Today with inflation high and rising, they try to dampen economic growth and drive inflation back to 2%. To accomplish this, the Fed must walk a tightrope to bring down inflation without causing a RECESSION. Historically, most often, they have FAILED !
Who gives the mandate of 2% inflation? Keeping inflation at 2% is not sustainable. If there is a mandate (?) it realistically should be more in the 3%-4% range.

CoachKandSportsguy 11-24-2022 09:09 AM
Quote:
Originally Posted by bragones (Post 2159724)
Sounds like market timing. It never worked for me.
FYI: you can also sell CDs purchased through Fidelity on the open market. I will need to check if the proceeds are are taxed as cap gains.
Why would someone buy an interest rate instrument with penalties for selling, no potential capital gains, and less interest than the market rates from an institution which takes a huge management fee from the interest?

CDs should seldom/never be purchased as they are a very inefficient financial instrument

just my opinion from looking at the sales material as compared to other similar competitive instruments.

Stu from NYC 11-24-2022 10:36 AM
Quote:
Originally Posted by bowlingal (Post 2159719)
why don't you ask a financial professional instead of all the yahoos on here?
As the old saying goes ask 10 economists for prediction and you will get 11 different answers.

If anyone can consistently time the market they will be filthy rich and no need to do anything but lay on a beach drinking margaritas.

When the wizard of Omaha cannot time the market why would you think anyone else could?

Common wisdom is everyone expects a recession, will there be one who knows if there is one mild or strong also who knows.

One of the best long term bond funds out there is Fidelity Contrafund that goes the other way and is normally very successful.

Boomer 11-30-2022 10:44 AM
Quote:
Originally Posted by Stu from NYC (Post 2160489)
As the old saying goes ask 10 economists for prediction and you will get 11 different answers.

If anyone can consistently time the market they will be filthy rich and no need to do anything but lay on a beach drinking margaritas.

When the wizard of Omaha cannot time the market why would you think anyone else could?

Common wisdom is everyone expects a recession, will there be one who knows if there is one mild or strong also who knows.

One of the best long term bond funds out there is Fidelity Contrafund that goes the other way and is normally very successful.
I used to sometimes copy Will Danoff’s homework, when I first started trading online. I looked at his 10 top holdings from time to time, and then looked further into any of them that caught my eye. (Yes. I know. I will now be chastised by some random poster for not consulting a professional.)

Btw, some of you, especially if interested in behavioral economics, might want to read — or reread — Freakonomics. I recently listened to the original, on Audible, and am now into the next one and some of the podcasts. I think the first one was written somewhere around 2005. Looking at the original Freakonomics from the future of 2022 can be a little eerie, but thought provoking.

Boomer

CoachKandSportsguy 11-30-2022 10:25 PM
Quote:
Originally Posted by Boomer (Post 2162082)

Btw, some of you, especially if interested in behavioral economics, might want to read — or reread — Freakonomics.

Boomer
Absolutely! Handling money is always behavioral, as in the modern society, its the currency of power! Another good book is "The Psychology of Money: Timeless lessons on wealth, greed, and happiness" by Morgan Housel

Amazon.com

always learning

day trader guy

Stu from NYC 12-01-2022 08:17 AM
Quote:
Originally Posted by Stu from NYC (Post 2160489)
As the old saying goes ask 10 economists for prediction and you will get 11 different answers.

If anyone can consistently time the market they will be filthy rich and no need to do anything but lay on a beach drinking margaritas.

When the wizard of Omaha cannot time the market why would you think anyone else could?

Common wisdom is everyone expects a recession, will there be one who knows if there is one mild or strong also who knows.

One of the best long term bond funds out there is Fidelity Contrafund that goes the other way and is normally very successful.
Oops meant to say growth stock fund not bond fun which is definitely Contrafund.

chrissy2231 12-01-2022 08:35 AM
Quote:
Originally Posted by 44Apple (Post 2159510)
At what point should one change from being an investor to a "saver"?

I've been retired a number of years and have invested all my adult life. Luckily, we have enough non-investment money to live on.

I now wonder if I should gradually begin selling my ETFs, Mutuals, and stocks and move all the money into fixed income.

I know the outcome will be lower and stable, but I won't have to deal with the daily ups and downs.

I'm familiar with the 60/40 rule but wonder if I should go 0/100.
I did. If you have enough for the rest of your life, more interest is not necessary. I found I Bond 6+%, also CD's 3-4.5%

rmd2 12-09-2022 08:57 PM
Quote:
Originally Posted by manaboutown (Post 2159792)
Well, I for one appreciate the serious responses. Most of the folks who were able to retire and move to The Villages got here through hard work and persevered in managing their finances well enough to retire here. We all have different investment experiences and outlooks but apparently most of them worked at least well enough to get and sustain us here.
Thank you. Very well stated.

rmd2 12-09-2022 08:59 PM
Quote:
Originally Posted by chrissy2231 (Post 2162325)
I did. If you have enough for the rest of your life, more interest is not necessary. I found I Bond 6+%, also CD's 3-4.5%
I feel the same way. I am fairly happy with the bond and CD rates. I got out of equities and have done just fine.

Stu from NYC 12-09-2022 09:47 PM
Quote:
Originally Posted by rmd2 (Post 2164936)
I feel the same way. I am fairly happy with the bond and CD rates. I got out of equities and have done just fine.
As long as your funds last year the rest of your life given the high inflation rates we now have you are ok.

Aces4 12-09-2022 11:39 PM
Quote:
Originally Posted by Stu from NYC (Post 2164944)
As long as your funds last year the rest of your life given the high inflation rates we now have you are ok.
Not really, many of the residents in the nice assisted living center where my mother resided in the last years of her life were unable to pay the freight and they received the same care as she did. No worries.

Stu from NYC 12-10-2022 06:23 AM
Quote:
Originally Posted by Aces4 (Post 2164954)
Not really, many of the residents in the nice assisted living center where my mother resided in the last years of her life were unable to pay the freight and they received the same care as she did. No worries.
What happens if things change in the center and she wants to move elsewhere? Not quite so simple unfortunately/

retiredguy123 12-10-2022 07:52 AM
Quote:
Originally Posted by Aces4 (Post 2164954)
Not really, many of the residents in the nice assisted living center where my mother resided in the last years of her life were unable to pay the freight and they received the same care as she did. No worries.
If it was an "assisted living" facility, not a nursing home, it is unlikely that a typical facility would care for very many residents without some type of special State authorized Medicaid program approval. Most assisted living facilities are "for profit" businesses that will require non-paying residents to move out. Some states have a special Medicaid program that will pay for a very limited number of assisted living residents. By contrast, most "nursing homes" rely heavily on the Medicaid program to fund their facility. It is not unusual for as many as 90 percent of a nursing home's residents to be on Medicaid.

Aces4 12-10-2022 10:10 AM
Quote:
Originally Posted by Stu from NYC (Post 2164974)
What happens if things change in the center and she wants to move elsewhere? Not quite so simple unfortunately/
My mother and others were paying the whole freight, then there were others who had no money and received the same care and probably could only contribute their monthly SS check. When you reach an advanced age and require assisted living, you’re not out shopping for new digs every year. It was a beautiful facility.


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