No. of Recommendations: 16
Author: Tobeykins Date: 12/24/01 3:43 PM Number: 32898
I am a 60 yo female whose retirement savings were embezzeld while I was working in a family Investment Property business, which collapsed at the same time, so I lost my job with my savings. However, I did make a lot of money for the family business, so I believe I can now do the same for myself...I live in Sunny southern California and have done the following:

1. Moved to a low cost area
2. Re-started myself as a substitute teacher and got into a teacher prep program
3. Discovered California Teachers are penalized for drawing teachers retirement, and Social Security at the same time. Reprogrammed myself to move out of teaching. Many industries are not age friendly, but Real Estate is.
4. Got my Real Estate License and am working on developing a client base. Teachers have a much higher than average success rate when they go into real estate.
5. Am researching distressed real estate and learning my "farm" area. Trying to develop an investor pool for same.
6. LIVING AS CHEEPLY AS POSSIBLE: old car paid for, no bills except medical ones, low cost housing, buy everything on sale or deep discout. I am a Poster Child for the Living Below Your Means Board.

Well, you've really had a rough road!! But, I also think you've coped with it remarkably well!! You've got a solid work ethic and my guess is you'll do very well for yourself.

WHAT ADVICE CAN YOU GIVE ME ABOUT WHERE AND WHAT TO PUT WITH ANY DISCRETIONARY INVESTMENT FUNDS I MAY HAVE...CURRENTLY, I am focused on the AL FRANK FUND, as his Prudent Speculator News Letter enjoys a top rec from Hulbert's and he has a solid 23% gain per year for aprox 20 years as rated by Hulbert's. The Fund enjoys a top rating with Morningstar (5 stars)? However, I have not reached the required $1,000 to invest with Al.

Now, this I would be VERY VERY CAREFUL with!! I can tell you from experience, and I think most of the others on this board can as well, that historical performance of a fund means absolutely nothing!! In fact, studies have shown that the best way to find next year's losers is to invest in this year's winners!! And, if you find a fund that has gained five years in a row, it's even more likely to have a bad next five years.

The other thing is expenses. The Al Frank Fund (VALUX) is extremely expensive. It has an expense ratio of 2.25% and a front load of 5.5%. These are astronomical!! This amount is simply deducted from what the fund earns, and I would doubt if this fund will even come close to beating the market over the next ten years.

I think the best approach is buy no-load index funds with ultra-low expense ratios directly from the fund family; ie, NO BROKER, and NO COMMISSIONS! Vanguard is my choice for this.

The last thing you need to have happen is to lose your retirement money again!! You need to be very careful to achieve max gains with minimum risk. I think you should use a balanced, diversified approach. You won't get spectacular gains, but you probably won't a big chunk of your money either.

I AM TERRIFIED OF OUTLIVING MY EARNING CAPACITY. Please help. Your advice is appreciated.

OK, one thing you need to do is figure out your minimum monthly expenses, and then find out how much social security you'll be getting. Next, estimate what your portfolio may be worth when you retire; use a conservative figure, like 8% growth per year. Then, calculate 4% of that amount. That's the historically 'safe' withdrawal rate, where you will never use up all of your money.

If you are living as cheaply as I think you are, you may find that you really don't need a lot of investment income to live well.

THIS IS THE UPSIDE: Previously, I had lots of "friends" based on my position in life. Most of them dropped out of my life. I made new friends when I was at the bottom: suddenly homeless, suddenly poor, etc. They have stayed with me and helped me as I came back from disaster. They are friends for life and I am grateful that I lost the false friends and found true ones. I also discovered that God protected me and that writing to my Guardian Angel helped me not only get through it, but deepen my spiritual dimensions. All my priorities are changed and I am much happier now. Instead of high cost charity. I now work in animal rescue. Life is sweeter. Having lost almost everything, I deeply enjoy every moment I cook, clean, and maintain the roof over my head. Something I did not do when I took it for granted.

This is a very significant upside. It's very much to your credit to have made it out the other side. Friends are essential in times like you're going through.

Just watch out for friends in 'SHARK'S CLOTHING', ie, people who want to 'help' you invest in funds like VALUX where they will likely be the only ones making any money!!

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