Better money strategies to consider

Nathan

Nathan

SF VIP
Location
High Desert- Calif.
Secure and safe are primary goals, as well as guarding against decline in value. Several years ago I paid off the VA mortgage, seemed logical at the time to stop paying 5% interest, plus the additional insurance the VA required. Anyway, since then monies have been accumulating in a credit union savings account whose interest rate is a paltry .15%. I would like for these funds to at least keep up with the Cost of Living, but am hesitant to get into too much market exposure, as I haven't forgotten about the losses I took(thank you ING) on my 457 account back in 2007~2008.

U.S. Savings Bonds?
Real Estate?
Banana Republics?

...I'm listening.
 

Agree about CDs for safety and security. Treasury bonds are also an option but their maturity takes a long time.

The stock market certainly holds risk but there have been far more rewards the past few years. Not sure what the next few years will hold.
 

I started laddering Cds for some cash i had in a savings account .. i actually have them in a bank and credit union. it is safe and secure as i do not want a chance on a big drop on all my cash in the market just in case but i want a return also.
you need to shop around to get the best rates if your bank is not offering the best deals.

you can also chase the HYSA american express was paying 4.6% on savings but as rates change it is down to 3.9%
 
Jeni said:
I started laddering Cds for some cash i had in a savings account .. i actually have them in a bank and credit union. it is safe and secure as i do not want a chance on a big drop on all my cash in the market just in case but i want a return also.
you need to shop around to get the best rates if your bank is not offering the best deals.

you can also chase the HYSA american express was paying 4.6% on savings but as rates change it is down to 3.9%
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Am also in a credit union which is paying me 4.5% on savings - at least for the last year - am waiting for that to change.
 
It doesn’t have to be an all or nothing situation.

I keep most of my cash in a very short term bond fund/money market account.

I keep longer term money in balanced mutual funds that are automatically rebalanced.

I have some money in mutual funds that carry a bit more risk but a better chance of longer term growth.

It all depends on your tolerance for risk, your future needs, the amount, etc…

Go slow and if you don’t understand or feel comfortable then don’t do it, we’re too old to start over.
 
Nathan said:
I would like for these funds to at least keep up with the Cost of Living
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Treasury Direct sells i-bonds that are inflation protected. But, a person is only allowed to purchase $10,000 per year (tho there are ways to buy more).

I personally dislike TIPS bonds so I'll just not mention those :)

If you have an account at a major brokerage you could maybe get free advice. I talked to a fixed income guy at Fidelity last year and he said they generally diversify bond holdings to be 40% Treasuries, 35% Corporate bonds, and 25% Federal Agency bonds.
Of course if you aren't familiar with the ratings for bonds it'd be important to watch some YouTubes, though Treasuries are always the safest.

If your money is in a taxable account then you might be interested in Municipal Bonds for your own state to avoid having to pay Federal, State or Local taxes.

There is a lot of good advice over on the early retirement forum https://www.early-retirement.org/
They also have some nice threads on various types of bonds. Though it can be eye-rolling to read the woes of very rich people on that forum.

There are lots of good YouTube videos, such as this one about how to decide between Treasuries and CDs:
 
Nathan said:
Secure and safe are primary goals, as well as guarding against decline in value. Several years ago I paid off the VA mortgage, seemed logical at the time to stop paying 5% interest, plus the additional insurance the VA required. Anyway, since then monies have been accumulating in a credit union savings account whose interest rate is a paltry .15%. I would like for these funds to at least keep up with the Cost of Living, but am hesitant to get into too much market exposure, as I haven't forgotten about the losses I took(thank you ING) on my 457 account back in 2007~2008.

U.S. Savings Bonds?
Real Estate?
Banana Republics?

...I'm listening.
Click to expand...
if you lost money it was your own poor behavior not markets .

markets went on to higher and higher gains over the years
Nathan said:
Secure and safe are primary goals, as well as guarding against decline in value. Several years ago I paid off the VA mortgage, seemed logical at the time to stop paying 5% interest, plus the additional insurance the VA required. Anyway, since then monies have been accumulating in a credit union savings account whose interest rate is a paltry .15%. I would like for these funds to at least keep up with the Cost of Living, but am hesitant to get into too much market exposure, as I haven't forgotten about the losses I took(thank you ING) on my 457 account back in 2007~2008.

U.S. Savings Bonds?
Real Estate?
Banana Republics?

...I'm listening.
Click to expand...
 
Money Markets and High Yield Savings that are FDIC insured. Some were paying about 5.5% until the Fed rate cut, and now hovering around 4.5%. These rates are offered by online banking only, but still FDIC insured.

CD's will lock in a rate, but you can't move money around. You would have to ladder them, and possibly buy longer term CD's.
 
mathjak107 said:
if you lost money it was your own poor behavior not markets .

markets went on to higher and higher gains over the years
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Thanks for inserting your uninformed negative spin into the conversation. Blaming the customer for the institutions account mismanagement and failing to fulfill fiduciary responsibilities is an unacceptable excuse of unprofessional and unethical corporate behavior.
 
Nathan said:
Thanks for inserting your uninformed negative spin into the conversation. Blaming the customer for the institutions account mismanagement and failing to fulfill fiduciary responsibilities is an unacceptable excuse of unprofessional and unethical corporate behavior.
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ultimately you need to be in the drivers seat with your money and understand what is being done with it .

that still isn’t a market issue . markets and just about every diversified fund have only gone up since then.

its no more a market issue then people trusting bernie madoff with their money.

you picking a poor choice for who is handling your money is a personal issue not a market performance one.

one can have just bought an s&p fund or total market fund and done very nicely with zero mgmt.

in fact any diversified fund would have done well
 
Nathan said:
Secure and safe are primary goals, as well as guarding against decline in value. Several years ago I paid off the VA mortgage, seemed logical at the time to stop paying 5% interest, plus the additional insurance the VA required. Anyway, since then monies have been accumulating in a credit union savings account whose interest rate is a paltry .15%. I would like for these funds to at least keep up with the Cost of Living, but am hesitant to get into too much market exposure, as I haven't forgotten about the losses I took(thank you ING) on my 457 account back in 2007~2008.

U.S. Savings Bonds?
Real Estate?
Banana Republics?

...I'm listening.
Click to expand...
Banks make billions by investing the money people have in their saving/checking accounts. While it is important to keep sufficient funds in a bank to cover your daily/annual expenses, any excess money sitting there is just a "bonus" to the bank. Its very important for a person to educate themselves on money management, and invest any excess funds and let them grow to keep pace with the economy and inflation. There are many mutual funds, etc., that allow the funds to grow, and help insure future stability.

If you are unsure/confused about where to put extra money, it might be wise to meet with a couple of financial advisors, and get some ideas.
 
mathjak107 said:
ultimately you need to be in the drivers seat with your money and understand what is being done with it .

that still isn’t a market issue . markets and just about every diversified fund have only gone up since then.

its no more a market issue then people trusting bernie madoff with their money.

you picking a poor choice for who is handling your money is a personal issue not a market performance one.

one can have just bought an s&p fund or total market fund and done very nicely with zero mgmt.

in fact any diversified fund would have done well
Click to expand...

My beef wasn't / isn't with the Market, it was with ING's handling of my money. Zero management on the part of the customer was the sales pitch, If I wanted to be a day trader I wouldn't have entrusted my money with ING.
 
bobcat said:
Money Markets and High Yield Savings that are FDIC insured. Some were paying about 5.5% until the Fed rate cut, and now hovering around 4.5%. These rates are offered by online banking only, but still FDIC insured.

CD's will lock in a rate, but you can't move money around. You would have to ladder them, and possibly buy longer term CD's.
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I have a couple 100K in CDs with American Express that pay well above what my credit union offers.
 
Nathan said:
My beef wasn't / isn't with the Market, it was with ING's handling of my money. Zero management on the part of the customer was the sales pitch, If I wanted to be a day trader I wouldn't have entrusted my money with ING.
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well no one loves your money like you do .

i know i would never hand over my money to anyone to manage regardless of their slogan without paying attention to what they were doing with it .

my wife did that before i met her .

she was a widow .

she trusted the broker at her savings bank .

at the time he put her in tech and dot coms and when the smoke cleared half her money was honey.

today she makes sure she understands and agrees with everything i do .

its a question of wanting to take the time to learn about what’s important to you.
 
Don M. said:
Banks make billions by investing the money people have in their saving/checking accounts. While it is important to keep sufficient funds in a bank to cover your daily/annual expenses, any excess money sitting there is just a "bonus" to the bank. Its very important for a person to educate themselves on money management, and invest any excess funds and let them grow to keep pace with the economy and inflation. There are many mutual funds, etc., that allow the funds to grow, and help insure future stability.

If you are unsure/confused about where to put extra money, it might be wise to meet with a couple of financial advisors, and get some ideas.
Click to expand...
cash instruments and cds are really for near term money .

there are not many times in history they did not have negative real returns after taxes and inflation .

pretty much a guaranteed loss .

unless one is pretty wealthy or spends so little , cash instruments should never be the investment .

there are so many lazy portfolios of all allocations and volatility as well as that fit different time frames for when that money is needed .

even at 65 there is money that won’t be used to eat for 2 to 3 decades and that is still long term money .

we have had 123 rolling 30 year retirement time frames to date .

65% of them failed to last the time frame at a mere 4% inflation adjusted draw with just fixed income .

on the other hand a balanced portfolio has ended those 30 years with more than you started 90% of the time .

which one is the real danger ?
 
Nathan said:
I have a couple 100K in CDs with American Express that pay well above what my credit union offers.
Click to expand...
If your credit union is a brick-and-mortar location, they won't offer the rates I spoke about (Too much overhead). Online High Yield savings banks can because they have very little overhead. If you have CD's that pay you 4.5% or more, then you are in the best place, assuming you don't need access to those funds until they mature.
 
mathjak107 said:
if you lost money it was your own poor behavior not markets .

markets went on to higher and higher gains over the years
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I agree. Those invested in broad market index funds simply had to wait. Not only did they get every penny back that they lost, but they also got a nice pile of money as the market climbed even higher over the next decade. Buy High Sell Low is not a good strategy. It’s Buy Low Sell High.

Buying individual stocks is for those much smarter than I. If you are, good luck. I stick with total market indexes funds. So far they are up about 25% this year. I already have taken some profits off the table. I see no need to be greedy. And, it will please the tax man when I file my 2024 return. :oops:
 
Laddered CD’s and/or treasuries held to maturity
US Government agency bonds
Ibonds
TIPS, but only if you really know what your are doing. IOW, most folks should skip them.
 
mathjak107 said:
well no one loves your money like you do .

i know i would never hand over my money to anyone to manage regardless of their slogan without paying attention to what they were doing with it .

my wife did that before i met her .

she was a widow .

she trusted the broker at her savings bank .

at the time he put her in tech and dot coms and when the smoke cleared half her money was honey.

today she makes sure she understands and agrees with everything i do .

its a question of wanting to take the time to learn about what’s important to you.
Click to expand...
I will agree with you there. My father was a financial advisor so he handled my investments as well as his. I knew very little about the markets. When he passed away unexpectedly I kept his subscriptions to every financial newsletter he received and studied up on everything we jointly earned. I used to read the S&P pages in the big notebook he kept.

I also used to hear him arguing with his financial advisor so I knew there were issues and flew to another city to meet with him. I wasn't satisfied with his advice, mainly putting my mother into annuities, so I looked elsewhere. I asked around in my industry and found that several top-level executives were happy with a particular broker at a particular firm. I contacted him and he took over the accounts. That was 24 years ago, and he and his successor have made me very happy. Even through the Great Recession he made me feel calm and I was confident that he was still making the best investments. I highly recommend a good financial advisor.
 
Brookswood said:
I agree. Those invested in broad market index funds simply had to wait. Not only did they get every penny back that they lost, but they also got a nice pile of money as the market climbed even higher over the next decade. Buy High Sell Low is not a good strategy. It’s Buy Low Sell High.

Buying individual stocks is for those much smarter than I. If you are, good luck. I stick with total market indexes funds. So far they are up about 25% this year. I already have taken some profits off the table. I see no need to be greedy. And, it will please the tax man when I file my 2024 return. :oops:
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actually no other mantra has lost money for investors then buy low sell high .

no one knows where low is . back in 2008 we thought low was when markets fell 2,000 points . little did we know we had 6,000 more to go .

what has made the most money is buy high and sell higher .

THE TREND IS YOUR FRIEND . that is a mantra that makes a lot of money .

trying to buy low the next stop is usually lower . either stop losses are hit or investors throw in the towel as markets continue to fall .

buying high and selling higher is usually up as a next step

there is also not as much money added in declines as in uptrends.
 
I’ve never been smart enough to recognize the lowest of the lows or the highest of the highs, I just stick with my allocation and rebalance from time to time.

A breathtaking and brutal drop in the markets can be terrifying but you have to trust the system, rebalance, and wait.

If you don’t have the time to wait out the market or faith in the market it’s probably best to look at other investments or stick to cash.
 
Aunt Bea said:
I’ve never been smart enough to recognize the lowest of the lows or the highest of the highs, I just stick with my allocation and rebalance from time to time.

A breathtaking and brutal drop in the markets can be terrifying but you have to trust the system, rebalance, and wait.

If you don’t have the time to wait out the market or faith in the market it’s probably best to look at other investments or stick to cash.
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my point is even at 65 we have long term money that won’t be used for eating for 2 to 3 decades , that can certainly be in a balanced portfolio

i keep cash instruments for two years spending .

then i have an income oriented portfolio for money from 3-10 years out which is in about 25% lower volatility equity funds and bond funds .

then i have a growth and income portfolio for 11 years out and more which runs 60/40

so there are lots of ways to appropriately invest without resorting to not investing and just taking breaking even at best in cash instruments over time or the guaranteed losses after taxes and inflation over most time frames
 
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mathjak107 said:
my point is even at 65 we have long term money that won’t be used for eating for 2 to 3 decades , that can certainly be in a balanced portfolio
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I don’t disagree, I plan to die with money in the bank.

My point is that some people do have money that they won’t need for several decades and some people don’t.

If people have a nest egg that will be needed to make repairs, buy cars, etc… they need to approach investing with great caution.

The old advice about not investing money you can’t afford to lose or money that you will need in the next five years is still valid.
 

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