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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/)

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!


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