Anyone here retire with all their money in the bank (collecting under 1%)? (55, grandparents)
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I have been retired for 5 1/2 years and have averaged about 8% annual returns. It seems that my cost of living is increasing faster than the official amount of less than an annual 2%. I would be real nervous about my long term standard of living if my investments were not increasing by at least 3-4% annually.
Some people have so much money, they do not need to be concerned about their investments. I am not in that category.
Quote:
Originally Posted by NewbieHere
I've been getting 4-5% on cash, but not CDs. The market is at an all time high, so I'm not surprised that 54 millions people think long term investment is cash.
can you guys explain how you managed to get 8% and 4-5% returns without taking risk? The high yield checking interest rate is at max 1%. 30 year us treasury bond is at less than ~2.5% and that comes with risk if you want your money back before the 30 year is due.
I am at a loss how you guys manage to get those returns safely and i work in the financial industry.
I don't like risk. Everything is in real estate and cash.
I don't like risk either, but as someone who owns RE and mutual funds, I would say that RE can be just as risky, and more effort to deal with depending on the type of RE investment.
At 64, I'm not sure if I'll ever fully retire, but I do look forward to slowing the business down somewhat. I'm about 60% into dividend paying stocks, some I Bonds (seemed like a good idea at the time) and the rest in CDs or cash. The CDs are barely worth bothering with these days, so I have an insane amount in my checking account. The funny thing is when I go in to cash a check and the teller always says, "Excuse me sir, but do you realize how much money you have in your checking account?" "Yes, I do."
On line banks and CD can do a little better than the 1%. You do have a risk. That is inflation is growing at more than 1% so you are losing purchasing power.
I would take your basic living expenses, subtract SS, pension, annuity etc. and put the balance in cash. I would say from 3 to 5 years in cash. The rest in good stocks or ETF indexes. Outliving your money is also a risk so all cash is not good.
can you guys explain how you managed to get 8% and 4-5% returns without taking risk? The high yield checking interest rate is at max 1%. 30 year us treasury bond is at less than ~2.5% and that comes with risk if you want your money back before the 30 year is due.
I am at a loss how you guys manage to get those returns safely and i work in the financial industry.
I did not say anything about risk. My portfolio has averaged an 8% return over the past several years, including this past year when my portfolio had a negative "return." Currently it is about 60% equities, down from 70%. Tomorrow it will be at 50% equities since I am increasing my real estate allocation.
I consider the stock market to be low risk at least long term. Leaving money in cash at a near zero return is sure to result in weak portfolio, long term.
can you guys explain how you managed to get 8% and 4-5% returns without taking risk? The high yield checking interest rate is at max 1%. 30 year us treasury bond is at less than ~2.5% and that comes with risk if you want your money back before the 30 year is due.
I am at a loss how you guys manage to get those returns safely and i work in the financial industry.
I sell cash covered puts on the market index. I get from 6-13%, of course I don't wait until maturation either. That's why it's 4-5% and not 6-8%. I'm not sure I consider them safe like CDs either. But I'm 97% in cash, 4-5% is what I made for 6 months since Feb.
I was positive 6% last year. I'm hoping to repeat this year.
I'm getting 2.4%! And I sleep quite well thank you. With flat inflation, I have done OK. The S&P made 1.36% for 2015. I may ease back into the market when things look better. We won't depend on our reserve for income.
I did not say anything about risk. My portfolio has averaged an 8% return over the past several years, including this past year when my portfolio had a negative "return." Currently it is about 60% equities, down from 70%. Tomorrow it will be at 50% equities since I am increasing my real estate allocation.
I consider the stock market to be low risk at least long term. Leaving money in cash at a near zero return is sure to result in weak portfolio, long term.
i see, thought you were talking about CD or something to that effect.
Quote:
Originally Posted by NewbieHere
I sell cash covered puts on the market index. I get from 6-13%, of course I don't wait until maturation either. That's why it's 4-5% and not 6-8%. I'm not sure I consider them safe like CDs either. But I'm 97% in cash, 4-5% is what I made for 6 months since Feb.
I was positive 6% last year. I'm hoping to repeat this year.
I hope you remain cash covered, understand what cash covered means, and dont need that money. Selling naked puts is like picking up pennies in front of a freight train. You will be fine for months or even years taking those premiums, then all it needs is 1 blackswan for the option's iv to sky rocket and you blow up your account (08 lehman anyone? ). There are countless traders who blow up this way and there will be countless more newbies to come thinking this is easy money.
Just think about who is buying your puts, they are professional market makers. Do you really think they are clueless to offer free lunch and buying worthless contracts.
This is actually one strategy i will have trouble sleeping at night if it was active in my portfolio, even as i am still working making good money, nevermind if i was retired and more dependent on the savings.
I'm getting 2.4%! And I sleep quite well thank you. With flat inflation, I have done OK. The S&P made 1.36% for 2015. I may ease back into the market when things look better. We won't depend on our reserve for income.
You have given me something to shoot for I am small fry but active in my range.
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