My Franklin Fund Investment Took a Big Hit in February

Aunt Bea said:
I don't know anything about your situation but I've always found that it is easier to reduce my expenses than it is to increase my income.

Good luck!
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Until there is nothing left to reduce and expenses keep rising ...one is not a replacement for the other ....that is why Wall Street reports both earnings and revenue ....profits can be increased by cutting costs ....but there is a bottom.....then you need more income
 
I have our money in six different stocks and three mutual funds. Three of the stocks are doing well and one of the mutual funds is doing well. The others havent caught up since the covid thing last year but are still paying dividends.

I've always been told mutual funds are better but I've had better luck with individual stocks.

At one point last year I was down $40,000 but am ahead by nearly that much now.
 

rkunsaw said:
I have our money in six different stocks and three mutual funds. Three of the stocks are doing well and one of the mutual funds is doing well. The others havent caught up since the covid thing last year but are still paying dividends.

I've always been told mutual funds are better but I've had better luck with individual stocks.

At one point last year I was down $40,000 but am ahead by nearly that much now.
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Dividend or not is irrelevant, if the total return is lagging it is lagging....it is no different then pulling money out of a portfolio of non div payers in a down year and going at least I am getting income
 
Pecos said:
What happened to you is simply brutal.

On a much smaller scale, we had a similar experience with Lucent (Bell Labs). Long before we were married, my wife worked at AT&T and bought company stock on a regular basis even with her small salary. After we married, AT&T was split up and she received the greater bulk of her shares in Southwestern Bell, with one share in all the other baby bells. She also received about $6500 in shares for Bell Labs (Later Lucent). She sold all of the single shares and held on to the Southwestern Bell and Lucent.

Those rascal executives at Lucent were praising their company's prospects but secretly selling their own shares like crazy. Nobody outside the company and most of the lower level employees did not know the truth. When it finally tanked, and it went down quickly, her $6500 in shares was worth about $613 as I recall. Nobody went to jail, but they should have. We still have the Southwestern Bell (Now AT&T again) and it does spit out good dividends, but we don't really trust it and may sell it at some point.

Overall we have not had great luck with individual stocks. AT&T is the only individual stock that we still own. The rest is in big balanced funds. We don't want to be rich, we just don't want to be poor so we don't gamble.
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If you're going to own individual stocks you have to pay attention to them. Insider selling is public knowledge. There will always be an Enron or something similar in there but you'll usually see signs. That's why mutual funds are better for the vast majority of people.
 
@ Honeynut "I wonder if a reverse mortgage would be good to do in an extensive down market. I feel stressed by the uncertainty of it all."

In a word, no. I consider Reverse Mortgages to be evil things.
 
HoneyNut said:
I suppose that means its a good time to buy, unless it will get worse.
I'm in my last year of working (I hope), so now I'm getting interested in all this. Once I retire and need to sell some each month to live on, I am not sure what the strategy should be. I wish I had more cash, I put most of my emergency fund into the market when it crashed in the spring (and through the summer and fall because my emergency fund was in a CD ladder).
Now I think that once I retire I'll need to have a cushion of cash so I don't have to sell in a down month, but I don't see any way to have cash that would last an entire down year. I wonder if a reverse mortgage would be good to do in an extensive down market. I feel stressed by the uncertainty of it all.
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Reverse mortgages can be very tricky. Of course the ads tout them to be so wonderful. Here is an article from Forbes that lists 5 pros and 5 cons of reverse mortgages.
https://www.forbes.com/advisor/mortgages/reverse-mortgage-pros-cons/
 
I sold all my mutual funds decades ago. Reasons were as follows:
1. Too many really weak performers vs decent performers in each fund.
2. Impossible to calculate the true cost to you for each fund. (The only ones who make money are the fund managers and commissioned sales people - Bankers, Insurance Companies & other brokers selling these funds).
3. Too hard to sell when you need to without getting clipped big time on early cancellation fees.

Individual stocks are the way to go as far as I'm concerned. It does help to have a competent advisor to help guide you but the principals are pretty straight forward. Just as with Real Estate where location, location, location is the mantra; in terms of individual stock holdings it's' diversification, diversification, diversification!

Now, diversification has a number of aspects. Market sector diversification, global market diversification as well as growth vs dividend diversification. Hold blue chip stocks. Don't mess with speculative offerings. Yes; there is always the chance of an 'Enron', as someone mentioned but, if you are properly diversified you are not going to lose your shirt! The only people who get burned big time from the 'Enrons' of this world are greedy people who sunk everything into one offering. Like many other things in life, investing is all about discipline!

Yes, investing in individual equities can be nerve racking at times when you occasionally take a 20-30% hit but those hits are always temporary - Always! If you are invested in good, blue-chip stocks, you'll never be down for long. You do have to adjust your risk factors though as you age. Once you start drawing from your investment fund, make sure you have 6 months to a year worth of required cash in your portfolio. That way, in a severe downturn, you can draw cash rather than having to sell equities and take losses on those stocks when they are down.
 
Virtually Every investment in the markets includes some degree of risk....especially in the short term. The markets are a constant "roller coaster" from day to day, but continue to move upward over time. There really isn't any better alternative for growing one's wealth, over time. Money sitting in the bank...drawing a fraction of a % in interest...is losing value every year due to normal inflation.
 


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