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while yes we never had the long bond triple its no problem for gold or equities .
i use gld for gold and while not exactly the best way it does work well...
25% cash and 25% long bonds make for easy cash distributions.
gold is a competitor for the dollar and usually goes the reverse of the dollar.. its all part of the package ... once you start trying to guess which pieces of the mix arent going to performm you loose the protection of the mix
actually if you use zero coupon treasuries yes they can double. i forgot i used back in the 80's benham capital used to have target date zero coupon treasury funds which i used for the long term treasury position . they were a little to heavily weighted for my taste as a 1 point move in rates was almost a 25-30% swing in value of the fund. a 3 or 4 point drop in long term rates which was a given saw those bonds double or more...
as far as gold as an investment, call it what you want but for the last 30years just rebalancing the gold position every year back to its 25% stake in the mix left you with a 9.2 % average gain vs 9.8 for the total market fund.
you never know when each piece of that mix will be called on to do its thing but i can tell you 2008 was a wild year. with long term treasuries a sell on every soothsayers list and not on anyones buy list the almost 30% gain they had coupled with the gold made 2008 a profitable year even though the equities markets plunged...
we dont buy fire insurance for our homes only during the dry season and once you screw with the parts of the portfolio because you think you know better then dont bother doing it you destroyed the protection it affords you.. just go back to a regular portfolio that bets only on prosperity and cross your fingers your right..
Last edited by mathjak107; 05-01-2010 at 02:27 AM..
by the way im one of those who lost his job last month... i was going to retire next year but have gotten involved with another exciting job in a start up business venture and so retirement is officially on hold for now.
I somehow missed this statement of yours yesterday, and wanted to express my condolences. Glad you already found another business venture to get involved in. Best of luck.
yeah its funny but due to some internal issues a few of us left the firm.... we were going to retire to pa next year but now that it was a reality i guess we got scared...
then a whole bunch of offers started coming in and next thing you know i accepted one.....
while yes we never had the long bond triple its no problem for gold or equities .
i use gld for gold and while not exactly the best way it does work well...
25% cash and 25% long bonds make for easy cash distributions.
gold is a competitor for the dollar and usually goes the reverse of the dollar.. its all part of the package ... once you start trying to guess which pieces of the mix arent going to performm you loose the protection of the mix
GLD is good for trading in tax-deferred accounts - but really doesn't replace holding physical gold yourself. After all - if the world is falling apart - you want to have physical possession of your gold (when my grandmother came to the US - her mother sewed silver spoons into the hem of her skirt in case she had an emergency and didn't have access to cash). Also note that GLD isn't subject to capital gains rules (all gains in taxable accounts are taxed as "collectibles" gains at 28% - don't know what happens with losses - do you?).
Always keeping 25% in cash is way too much cash IMO (at least for me). Means at least in recent years losing 25% of the earning power of my portfolio.
BTW - I don't know why you think portfolio management is "guessing". It is not - to be sure - an exact science - but it is certainly better than a permanent static buy and hold strategy - or throwing darts. FWIW - I think that tax management can be as important as portfolio management in terms of maximizing after-tax long-term returns (maybe more important). Robyn
nothing wrong with a static portfolio of the :BIG FOUR ABOVE" and rebalancing.. 30 years of over a 9% average return and very little in the way of volatility is about as good as it gets for such a relatively small amount of risk... things are always going up and other things down but the ups have always propelled the permanent portfolio ahead.
what it dosent gain in the bull markets it makes up for in the bear markets and actually harry brown and terry coxen started that concept almost 40 years ago and today it still holds true as 2008 showed us.
as far as high cash, my 3 bucket system for our retirement withdrawls calls for 7 years of withdrawls in cash or equivelents, another 7 years in bonds,bond funds and un-traded reits, bucket 3 is all equities.
why so much cash?
because we need around a 15 year time frame to insure we will probley not have to liquidate equites in a down market.
as we saw, 10 years is to short.
remember the cash is used to balance risk..as we get closer to retirement its no longer about getting richer, its all about not growing poorer and having your money last a lifetime.
its all about finding a level of risk and return that works for you. after all if you already won the game why keep playing?
if you move the cash into anything with risk then you may be taking on more risk in your portfolio then you need or want to..
cash is also used for re-balancing so it may very well get spread around slightly depending on whats needed to bring the mix back in line.
high cash positions are very dependant on the strategy and reasoning behind them.
My LTC is through a professional association and when they tried to raise rates a few years ago they wre met with such outrage they didn't and the rates have remained the same. I will only tell you that when getting legal advice on wills and estates we were advised a number of things and one was LTC. The experienced attorney advised that one of the most important reasons was replacement parts and new technologies to come. LTC was part of a comprehensive health care program that was to work in concert and provide a greater level of support for maintaining quality of life. The key word is work in concert.
IMO - the people who stand to benefit most from LTC insurance are people "in the middle" (those can who afford to live ok without SNF expenses - but can't with them). You also have to have a reasonable expectation of early SNF needs. Otherwise - you are likely to wind up in an insurance pool where rates suddenly spiral out of control when you're about 80 (I think average age of SNF admission is about 83 or so - give or take a few years). This has happened to a lot of people in Florida.
Believe it or not - I think one of the best alternatives for people with only a few bucks who can't afford a spouse in a nursing home is getting divorced - and having the healthy spouse winding up with the money. The spouse in the SNF will wind up on Medicaid in that case - which is not a great option - but there aren't many great alternatives for people who have perhaps $500k plus SS whose spouses wind up in SNFs for an extended period of time.
LTC insurance has almost nothing to do with improved medical technology - since it deals with custodial care (and a lot of the people who need custodial care have some form of dementia). How much money for advanced medical technology is anyone - even a spouse - going to spend on someone who can't recognize his/her wife/husband?
OTOH - I do share your concerns about expensive technology down the road. My husband went on Medicare today! We decided to drop his primary health insurance policy - got part B and part D Medicare and a good Medigap policy as well (will give us much better coverage and cost us $300/month as opposed to almost $600/month on his old primary care policy). But we decided to keep an old medical excess "catastrophe" policy. It's an indemnity policy that pays up to $2 million for almost everything if we pay more than $25k out of pocket over any rolling 3 year period. It's a large group policy (through the Florida Bar) - and costs less than $600/year. Other friends of ours have done the same thing (although they got their excess policies through other large groups - like groups of doctors - dentists - etc.). Large group policies like this usually have short open enrollment periods once in a blue moon - and my husband got his policy maybe 15 years ago during one of these short open enrollment periods. Pays to look around when you're younger - and see if you can find one of these policies through a employment related affinity group. A lot will probably disappear (sooner or later) - but they're good while they last IMO.
I'm not sure how much lawyers know about this stuff. I know our estate planning lawyer is great at estate planning - but not insurance issues. Ditto with our accountant in terms of tax issues as opposed to insurance issues. Only reason we know about a lot of the insurance issues is because we've dealt with 4 elderly parents over the years. I don't know that I'd trust a whole lot of insurance agents. But if you learn a little on your own (easy to do with all the on-line resources these days) - you can screen out the insurance agents who are worth their weight in gold from those who are sleazebags. We were very sad to lose our State Farm property/casualty agent of many years this year due to early retirement (if you've followed the P/C market in Florida - you'll know it's no fun for agents these days). We have a new independent agent who deals with all the Medicare kind of stuff - he seems ok - but I won't have a definite opinion for at least a couple of years. Robyn
P.S. Don't ever take legal/accounting advice from anyone who is trying to sell you any kind of product.
Retirement calculators are for people who had enough money to just willy nilly spend their money without the need for a budget.
If you had to budget your money monthly all of your working life, then you ha e no need for a retirement calculator. You know what your income and expenses are in the real world, and if you have a good projection of what your income will be in retirement, then you know what you need to get to survive at whatever level.
and i find it the opposite, assuming im not moving i know my expenses and i know what my income was when i was working.
as far as how much i can pull from nest nest agg, have it last my spouse and i a lifetime and add an inflation factor in the mix is more than i can know in my head. lets throw in the mix of your investments in your nest egg as well into the calculation your doing in your head.
if i had nilly willy money i really wouldnt care how the numbers worked out as if i didnt need as much as i can generate to live on who cares about calculators.
IMO - the people who stand to benefit most from LTC insurance are people "in the middle" (those can who afford to live ok without SNF expenses - but can't with them). You also have to have a reasonable expectation of early SNF needs. Otherwise - you are likely to wind up in an insurance pool where rates suddenly spiral out of control when you're about 80 (I think average age of SNF admission is about 83 or so - give or take a few years). This has happened to a lot of people in Florida.
Believe it or not - I think one of the best alternatives for people with only a few bucks who can't afford a spouse in a nursing home is getting divorced - and having the healthy spouse winding up with the money. The spouse in the SNF will wind up on Medicaid in that case - which is not a great option - but there aren't many great alternatives for people who have perhaps $500k plus SS whose spouses wind up in SNFs for an extended period of time.
LTC insurance has almost nothing to do with improved medical technology - since it deals with custodial care (and a lot of the people who need custodial care have some form of dementia). How much money for advanced medical technology is anyone - even a spouse - going to spend on someone who can't recognize his/her wife/husband?
OTOH - I do share your concerns about expensive technology down the road. My husband went on Medicare today! We decided to drop his primary health insurance policy - got part B and part D Medicare and a good Medigap policy as well (will give us much better coverage and cost us $300/month as opposed to almost $600/month on his old primary care policy). But we decided to keep an old medical excess "catastrophe" policy. It's an indemnity policy that pays up to $2 million for almost everything if we pay more than $25k out of pocket over any rolling 3 year period. It's a large group policy (through the Florida Bar) - and costs less than $600/year. Other friends of ours have done the same thing (although they got their excess policies through other large groups - like groups of doctors - dentists - etc.). Large group policies like this usually have short open enrollment periods once in a blue moon - and my husband got his policy maybe 15 years ago during one of these short open enrollment periods. Pays to look around when you're younger - and see if you can find one of these policies through a employment related affinity group. A lot will probably disappear (sooner or later) - but they're good while they last IMO.
I'm not sure how much lawyers know about this stuff. I know our estate planning lawyer is great at estate planning - but not insurance issues. Ditto with our accountant in terms of tax issues as opposed to insurance issues. Only reason we know about a lot of the insurance issues is because we've dealt with 4 elderly parents over the years. I don't know that I'd trust a whole lot of insurance agents. But if you learn a little on your own (easy to do with all the on-line resources these days) - you can screen out the insurance agents who are worth their weight in gold from those who are sleazebags. We were very sad to lose our State Farm property/casualty agent of many years this year due to early retirement (if you've followed the P/C market in Florida - you'll know it's no fun for agents these days). We have a new independent agent who deals with all the Medicare kind of stuff - he seems ok - but I won't have a definite opinion for at least a couple of years. Robyn
P.S. Don't ever take legal/accounting advice from anyone who is trying to sell you any kind of product.
WE are buying Long Term Health Care for a world of medicine and technology we don't yet know of. We can have an honest disagreement about the advantages of having it for future medical advancements. Once again each person is an individual and their circumstances and planning are different.
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