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Old 01-11-2015, 09:22 AM
 
Location: Orlando
1,994 posts, read 2,638,622 times
Reputation: 7600

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I'm 67 years old and a widow for almost a year. I'm living on Social Security and whatever I withdraw from my savings. My question has to do with how best to make those savings last me the rest of my life. Mathjak, whose opinions I hold in high regard, has said that women fear becoming bag ladies, and at least as far as I'm concerned, he's right.

Let me state at the outset that I am not capable of investing my money myself. I consider myself a smart person, and I have tried to educate myself about investments, but I find that the more I read the more confused I get.

Until six months ago, my savings were invested in a number of different types of funds that were basically doing nothing. So on the advice of a relative, I consulted with a person who works with one of the very large, well-known investment companies, the name of which I won't say here.

He consolidated all my investments into one managed account at his large, well-known investment company, and he said my money would be invested in moderately conservative funds and that I should probably expect to realize an average of 5% gain annually.

That was six months ago. As soon as my money was invested in this company, my balance went down by an amount that scared me. Since then, it has gone up a little bit, and down a little bit, but at this point I'm still almost 1% below my initial investment.

They tell me not to worry, that the decline in my balance has to do with the decline in the stock market. My feeling is, if I'm so dependent on the stock market in a managed fund, why do I need to pay them to manage my money when I can just invest it in an index fund and ride the market without paying their fee?

They tell me that I have to take a longer view, that six months doesn't mean anything, that the 5% annual gain they projected is an average over time. My feeling is, I don't have a lot of time. I'm retired now. I can't afford for my balance to go down. It needs to go up if I'm going to withdraw money from it to live on.

So, as I see it, here are my options: (1) stay the course and hope that the company is right; (2) get out of a managed fund and invest in an index fund; (3) take the money (or some or most of it) and buy an immediate annuity.

What, in your view, is the best of my three options, or are there other options I'm not seeing? Thanks in advance for any guidance you can offer.
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Old 01-11-2015, 10:28 AM
 
Location: Maryland
282 posts, read 306,111 times
Reputation: 338
Quote:
Originally Posted by WellShoneMoon View Post
That was six months ago. As soon as my money was invested in this company, my balance went down by an amount that scared me. Since then, it has gone up a little bit, and down a little bit, but at this point I'm still almost 1% below my initial investment.

They tell me not to worry, that the decline in my balance has to do with the decline in the stock market.
Six months ago, on June 30, 2014 the S&P500 stock index was 1960 and on Dec 31, 2014 it was 2059. That is an increase of 5% So for that period, it appears your manager didn't do very well. The details are important. There may have been a couple percent fee for starting the account (ouch), but still I feel it should have resulted in a positive return during that six month period. So I don't know how they could say it was due to a decline in the stock market.

Now on January 9, 2015, the S&P500 index was down to 2045, so that change was 4.3%

They may have put some of your money in the bond market also, a normal strategy.
Looking at an Investment Grade Corporate bond fund ETF (LQD):
119.26 June 30, 2014
119.41 Dec 31, 2014
0.13 Percent Change
But it also paid $2.33 per share in dividends during that period (2% over 6 months almost 4% annually)

Either way, I would not be happy with their performance.
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Old 01-11-2015, 10:56 AM
 
Location: MMU->ABE->ATL->ASH
9,127 posts, read 17,148,738 times
Reputation: 9980
I would suggest the annuity..

Maybe not all of it, but enough for SS and the annuity to pay your fixed expensive.

How much is your "Nest-Egg"? (apx)
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Old 01-11-2015, 11:00 AM
 
Location: In a daze
244 posts, read 219,159 times
Reputation: 918
I don't mean to be glib, but if you find the answer to your question, please share. I think many of us feel the same way. It's a matter of how much you have to invest, and how much you need to draw annually.

I'll be watching this thread closely for replies.

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Old 01-11-2015, 11:01 AM
 
753 posts, read 706,683 times
Reputation: 1175
I too am a widow and this is one of the smartest moves I made: a FEE ONLY FINANCIAL PLANNER. You could greatly benefit.

At first, I too listened to a relative who I thought was giving great advice and looking out for me... turned out to be a mistake that my fee only planner and I are still digging out from, but nothing that can't be changed thankfully.

FEE ONLY, not fee based. Big difference there... Liz Westin and many other financial people highly recommend them and I found it to be solid advice.
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Old 01-11-2015, 01:13 PM
 
2,041 posts, read 1,949,102 times
Reputation: 3454
My opinion is stay away from advisors that charge you annual fees or even the fee only planners; just put your money into S&P 500 ETFs like the SPY. Managed accounts rip you off with their 1% or 2% fees that are in addition to the 1% or 2% expense ratios for the actual funds you are in. It is expense on top of expense and it is no surprise you are lagging the market because you are just giving money to them that you could have kept for yourself.
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Old 01-11-2015, 01:39 PM
 
48,516 posts, read 83,955,483 times
Reputation: 18050
I'd say your in a low risk position. your not able to replace any loss while at same time your withdrawing. That is a fact many missed with retired not recovering has fast as those with new money while not withdrawing. Its also the reason that the FED has done great harm to many retired after their losses as they keep interest rates so low. Then they wander why retail investments have never return to nay degree and like it will be another generation like 70's recession before they reenter markets. I was in a position to never have to withdraw invests in market; but I realize many where permanently harmed.
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Old 01-11-2015, 02:07 PM
 
Location: Great State of Texas
86,093 posts, read 72,525,560 times
Reputation: 27566
Should have just gotten an annuity. There's your guaranteed income for the rest of your life.

The stock market is a lot like Vegas. If you don't understand it and are fearful and not willing to lose money then get out.
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Old 01-11-2015, 02:22 PM
 
Location: in the miseries
3,302 posts, read 3,581,162 times
Reputation: 3810
The stock market is the same as gambling in Vegas IMO. I'm out.
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Old 01-11-2015, 03:16 PM
 
240 posts, read 195,263 times
Reputation: 348
Quote:
Originally Posted by WellShoneMoon View Post
I'm 67 years old and a widow for almost a year. I'm living on Social Security and whatever I withdraw from my savings. My question has to do with how best to make those savings last me the rest of my life. Mathjak, whose opinions I hold in high regard, has said that women fear becoming bag ladies, and at least as far as I'm concerned, he's right.

Let me state at the outset that I am not capable of investing my money myself. I consider myself a smart person, and I have tried to educate myself about investments, but I find that the more I read the more confused I get.

Until six months ago, my savings were invested in a number of different types of funds that were basically doing nothing. So on the advice of a relative, I consulted with a person who works with one of the very large, well-known investment companies, the name of which I won't say here.

He consolidated all my investments into one managed account at his large, well-known investment company, and he said my money would be invested in moderately conservative funds and that I should probably expect to realize an average of 5% gain annually.

That was six months ago. As soon as my money was invested in this company, my balance went down by an amount that scared me. Since then, it has gone up a little bit, and down a little bit, but at this point I'm still almost 1% below my initial investment.

They tell me not to worry, that the decline in my balance has to do with the decline in the stock market. My feeling is, if I'm so dependent on the stock market in a managed fund, why do I need to pay them to manage my money when I can just invest it in an index fund and ride the market without paying their fee?

They tell me that I have to take a longer view, that six months doesn't mean anything, that the 5% annual gain they projected is an average over time. My feeling is, I don't have a lot of time. I'm retired now. I can't afford for my balance to go down. It needs to go up if I'm going to withdraw money from it to live on.

So, as I see it, here are my options: (1) stay the course and hope that the company is right; (2) get out of a managed fund and invest in an index fund; (3) take the money (or some or most of it) and buy an immediate annuity.

What, in your view, is the best of my three options, or are there other options I'm not seeing? Thanks in advance for any guidance you can offer.
Go to the carribbean get some local knowledge then move out of the touritst trap city and live like aKing on very little
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