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First I am very happy to see a new Retire Early Board. In the early days of "Retire Early" it was among the best boards on the fool.

I learned so much about personal finance, things I never learned at home or at school.

It was a place to share financial topics, encouragement, setbacks and success.

I gave it up years ago due to the steady stream conservative posts.

While I don't think, the name of this board is an improvement, I totally applaud the desire to get back to the roots.

So here is a status report on my early retirement.

I retired early at the start of the bear market. Good timing. I watched my "bridge the gap" account balance take a big hit after 9/11.

First lesson: have all money you need in five years in safe investments.

I cut back for a year or so on my spending. I called my FA, reminded him who I was, and after some discussion , we thought I could still bridge the gap to 59 1/2. So I went back to withdrawing from my "bridge the gap" account.

I am six months now from 59 1/2. My " bridge the gap" account is zero and I am living on my pension. Certainly not poverty but definatly cutting back on spending.

Second lesson: The "bridge the gap" account needs to be bigger then any previous spending habits would indicate. I was short about a year.

I don't regret a minute of the early retirement decision.

My IRA is going to make the goal my FA and I set seven years ago, regardless of the bear market.

Most of that IRA success is due to what I learned here all those years ago.

Sally







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I retired early at the start of the bear market. Good timing. I watched my "bridge the gap" account balance take a big hit after 9/11.

First lesson: have all money you need in five years in safe investments.


Sally, welcome! Thanks for stopping by. Ignore the trolls, they'll go away eventually.

This was a very interesting report. Thanks so much for sharing it.

Vickifool
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I cut back for a year or so on my spending. I called my FA, reminded him who I was, and after some discussion , we thought I could still bridge the gap to 59 1/2. So I went back to withdrawing from my "bridge the gap" account.

I may not reach RE before 59 1/2 anyways, so it may be moot for me. But I also expect to have some of our retirement savings in taxable accounts. We're maxing out our 401k contributions, and make too much to contribute to a Roth.

I believe we could still make non-tax-deductible contributions to a regular IRA? Anyone have any thoughts on whether that's worth doing? I guess I'm thinking that to have the flexibility of retiring sooner (if we reach our goals), that it'd be best to have several years' worth of our retirement "salary" in taxable (aka, "no strings attached") accounts. And we're nowhere near that amount yet.

But given that we're in a high tax bracket now, perhaps we ought to be putting some or most of our after-401k savings into a regular, non-deductible IRA? And try to snowball contributions into the taxable account when we're closer to retirement? To reduce the number of years we're paying high taxes on that savings, that is.

--FY
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This is very interesting. And congratulations on upcoming retirement!

Can you elaborate on what a "bridge the gap" account is supposed to do? I am not familiar with that concept.
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And try to snowball contributions into the taxable account when we're closer to retirement? To reduce the number of years we're paying high taxes on that savings, that is.


Actually, you don't pay taxes on your savings in taxable accounts.

You only pay taxes on the interest (full rates), dividends (some are "qualified" for a lower rate), and capital gains when you sell (lower rate.) You get to spend your savings without paying extra taxes.

We're switching over to a retirement economy and I've been trying to figure out how to balance the different sources we can spend to meet our needs. Some people are good enough at that that they can choose their tax bracket.

Vickifool
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Can you elaborate on what a "bridge the gap" account is supposed to do? I am not familiar with that concept.

You can't touch retirement accounts without incurring a penality until you reach a certain age.

This is rather bad, so you put money in a regular account and live on that until you can touch your retirement money.

Adrienne and I are trying to build an account like that, or vaguely like that. I have a three tiered investing stradegy.
1) retirement - Safe
2) Oh Crap Cushion/bridge - Safe
3) Surplus - Risky

You can't tap 1) and it is often unwise to tap 3), but if the engine falls out of the car or the water heater goes boom I'd rather tap 2) then incur credit card debt. It's not a splurge account however and we talk about touching it. Adrienne is rather tight with money so there is a good lock on it.

Now 3), well, I can loose 3) and not impact any of my retirement goals. It's money that I'm not counting on. Because of this I can be agressive and yet unemotional with it. If Jobs and Ives get killed in a car wreck tomorrow, I don't have to eat ramen noodles because of what happened to my aapl shares. I just have a "Man that sucks" look on it.

I will, however, take money from 3) and slip it in 2) or 1) to advance my retirement goals. Then I rework my timeline assuming that this will never happen again. I do not under any circumstances put money from 1) or 2) into 3). Sure, if I had done so when aapl was split adjusted $7 a share and I just "knew" it was a great stock I would be retired now, but the next time I "know" I may find out that I can never retire.

Ford
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<<
So here is a status report on my early retirement.

I retired early at the start of the bear market. Good timing. I watched my "bridge the gap" account balance take a big hit after 9/11.

First lesson: have all money you need in five years in safe investments.
>>


Sorry to hear your early retirement has been a rocky one financially.


Having five years of living expenses in laddered bonds is a method recommended by intercst to avoid having to sell stocks when they may have crashed, just the situation you encountered.

Would five years of expense money have been adequate to have avoided the worst of the stock market crash for you?

May I ask what expenses were included or were underestimated in your bridge account?

<<I am six months now from 59 1/2. My " bridge the gap" account is zero and I am living on my pension. Certainly not poverty but definatly cutting back on spending.
>>


I'm presuming you are aware that the IRS has rules that allow withdrawals from retirement accounts without penalty before age 59 1/2 without penalty if they meet IRS rules of being "substantially equal" and continue for at least five years?

If the finances have been the most troubling part, what have been the best parts of early retirement for you?


<<My IRA is going to make the goal my FA and I set seven years ago, regardless of the bear market.

Most of that IRA success is due to what I learned here all those years ago.

Sally
>>


Those are good recommendations that intercsts basic early retirement plan works as advertised, which is good to know. May I ask your age as well?


I'm 57, and I quit my regular job in 1999 at age 49 in favor of self employment in my furnace repair business. But in addition to my full time job, I also began cutting back on other income producing work as my volunteer and other activities took more of my time. I'm now nerving myself up to dumping my business altogether by the end of May. So I've been edging myself out of the working world, rather than taking the plunge all at once.




Seattle Pioneer














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To the OP: thanks for sharing your story. May I ask what expenses exceeded your projections? I project things like extra travel costs and extra hobby money, but it's hard to know if it will be enough.

To Foolyap: You asked: I believe we could still make non-tax-deductible contributions to a regular IRA? Anyone have any thoughts on whether that's worth doing?

This is often discussed on the Retirement Investing board, if you want to do a search. I did some research and decided it was not worth it for me - I'd rather invest in low-cost, low-turnover mutual funds in my taxable account instead. But some people decide the other way.

But, with my plan to retire at 52 (or earlier), I'll have at least 7 years of "gap" needed before I would want to touch my IRAs, so I want to have a pretty sizeable taxable account.

Karen


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First lesson: have all money you need in five years in safe investments.



check.


I cut back for a year or so on my spending. I called my FA, reminded him who I was,


You had to REMIND HIM WHO YOU WERE? (a good reason to do it yourself).



Most of that IRA success is due to what I learned here all those years ago.

Sally




And what did you learn?
Seriously, it might help the rest of us.

AM




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I left my firm on December 31, 1999, a mere three months before the market started to plunge. After settling down some, the market plunged again after 9-11. I didn't plan on either of these things, so I got a little concerned when my overall portfolio notched a 55% drop in net asset value. Time seems to cure most problems when it comes to the market, though. I think staying the course is the best thing to do when it comes to the market, assuming you had a reasonable investment strategy to start with. I've always been a conservative investor, but I'm still 90% in equities, so I guess that's not too conservative. My entire portfolio is with Vanguard, spread among a group of mostly large and mid-cap funds. As for bridging the gap, I've continued to do a little part-time consulting, so I actually haven't had to draw down anything from my portfolio over the past 7 years. I've been lucky with my part-time consulting...minimal work for maximum return.
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I worked for a state government for 23 years and had an OK pension.

Back in the 80's we opted out of social security and so I was ever so lucky to get a 403 retirement account. When I retired from my state job, i rolled that 403 into a Vanguard IRA.

I also had been saving in a deferred account at work plus a smaller savings account for emergency's.

Four legs. Pension, deferred account, emergency account, IRA.

I will get a very small SS check but it was never in any of my planning.

I was 52 when I retired and couldn't touch my IRA till 59 1/2. Seven years of additional income were needed to travel and live like I wanted.

My deferred account became my "bridge the income gap" account.

Back in the days, we discussed early withdrawals from our IRA's at great length. I chose not to do that because I thought I had enough flexibility in my retirement plan.

I am glad I didn't do those early withdrawals from my IRA. My IRA has really grown in the last seven years.






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Let me try and be clear.

Timing is everything is your financial plan. You retire and all of a sudden you are in a bear market. It wasn't at all clear to me that any of my accounts would make their goals.

9/11, Katrina, hurricanes, earthquakes, tornados. Events you can't control that can drastically change your spending or your income stream.

There were events that I spent money on that were never part of past spending. I never thought I would have to spend money on my parents, for example.

Just the little things.
the dollar to euro fell and I went to Europe twice anyway and for big long trips. I didn't cut those short just because they were more expensive.

My plan had my car lasting a whole lot longer then it did, piece of junk blazer. What I didn't realize that I was no longer just driving to work, I was driving across the country. I didn't know at the time how much I would enjoy the big road trips.

Speaking of part time jobs. I did a little of that for awhile but I gave it up. What I missed was the social interaction, not the additional income. I was doing it to get out of the house. I do just a little volunteer work now. Found some seniors who need a little help now and then.

The reason I had contacted a FA was to have him double check my retirement plan I developed while hanging out on the RE board. Sort of a second opinion on a pretty big financial step. We didn't have a continuing relationship.

I certainly wouldn't call my early retirement rocky. It has had some surprises, good and bad. I can certainly live on my pension, I just would prefer to have more income, while I am still a young 59.

The trouble with retiring early is what you decide is recreation can change and you spend money in a way you never did before.



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I left my firm on December 31, 1999, a mere three months before the market started to plunge. After settling down some, the market plunged again after 9-11. I didn't plan on either of these things, so I got a little concerned when my overall portfolio notched a 55% drop in net asset value.

Congrats on weathering the storm. I am concerned about what you were invested in that you suffered such losses after retirement?

Montecfo
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<<Let me try and be clear.

Timing is everything is your financial plan. You retire and all of a sudden you are in a bear market. It wasn't at all clear to me that any of my accounts would make their goals.
>>


I think there is a certain bias towards retiring early at the peak of a bull market too, since investments values are peaking and often limitless good times are being predicted in the media.

Thanks for describing the expenses you underestimated, I think that's a good list of things to pay attention to and be cautious about.




Seattle Pioneer

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Sorry, you can only recommend a post to the Best of once.

ChilkatSally,
these are some of the most valuable posts I've seen on TMF. You've actually experienced some of the bumps in the road and are sharing them with us.

Thank you so much.

Vickifool
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First lesson: have all money you need in five years in safe investments.

What specifically are "safe investments"? I've heard some people talk about a 5 year CD ladder, what are some other options for creating that 5 year "definitely there fund"?

tks and congrats,
6
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one last post on my "bridge the gap" account.

SP is right about one thing. I mishandled my "bridge the gap" account. account.

I didn't really plan for the worst that can happen, the biggest risk that might come my way. I have an optimistic personality.

Since it was supposed to last 7 1/2 years I expected it to grow-- while I took withdrawals from it. I only had 35% of it in cash. I lost 30% of it .

I finally capitulated and pulled it out of the market when I realized it should be in some cash equivalent. It didn't get to recover with the market when the market recovered.

It was sort of lose, lose.

Roll on July.

Sally



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What specifically are "safe investments"? I've heard some people talk about a 5 year CD ladder

T-bills and notes work. Safe as the U.S. Government.

High-rated bonds would work. How good do you need the credit rating to be? AA, A? (B and below are probably not safe enough.)

You want the CD/bill/note/bond to mature when you need it.

Vickifool
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{{You want the CD/bill/note/bond to mature when you need it.}}


Some of the internet banks with high interest rate savings accounts would also be a reasonable short term place to hold your money in addition to or in place of the ones you mentioned.


c
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What specifically are "safe investments"?


Bond ladders, CD ladders. Heck the year after the stock market fell, money markets were returning 8%.

The bond board here on tmf is working on a faq that is like a bible on income investments.

It is well worth lurking on.
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T-bills and notes work. Safe as the U.S. Government.

Well....which is it?

High-rated bonds would work. How good do you need the credit rating to be? AA, A? (B and below are probably not safe enough.)

In such an account, do you need a mix? Any reason to diversify that portion of retirement funds?

6



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The bond board here on tmf is working on a faq that is like a bible on income investments.

Thank you, that's exactly where I'll look for more info.

6
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Congrats on weathering the storm. I am concerned about what you were invested in that you suffered such losses after retirement?

I was in Vanguard funds, mostly large and mid-caps. I might be off a little on the 55%, but 55% would be close. You know, the SP500 still hasn't fully recovered from the downturn, at least I don't think it has yet. Regardless, I recovered fully around 18 months ago, and my portfolio is now around 25% higher than March 2000. Time seems to cure most problems with the market, but it hurts a lot when the curve bottoms out.

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What specifically are "safe investments"? I've heard some people talk about a 5 year CD ladder, what are some other options for creating that 5 year "definitely there fund"?

Money market funds and short-term corporate bond funds are two other options. I think most of the real number crunchers prefer a CD ladder, because of slightly higher return with lower expense. I've done something a little different. I keep about 35% of my total portfolio in Windsor II and Wellington (both Vanguard funds). These funds have signficant dividend distributions each year, which makes for a nice cash flow (currently at reduced tax rate). When you add cap gain distributions (also at a reduced tax rate) to dividend distributions, the result is about enough for me (and DW) to live off for a year, and that is exclusive of the other 65% of my portfolio. Currrently, I reinvest these distributions, but when the time comes, I'll simply have Vanguard deposit the distributions in my money market account. Dividends and cap gains tend to remain within a fairly tight range, regardless of whether the market is up or down. Consequently, I consider these funds to be part of my "safe investments." I also keep a chuck in the money market, which currently is paying over 5%. I'm not sure what the exact percentage is right now, but it's over 5%. There are many ways to protect yourself from the ups and downs, and I'm not sure anyone has a corner on the market in terms of knowing the best way to do it.
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Congrats on weathering the storm. I am concerned about what you were invested in that you suffered such losses after retirement?

I was in Vanguard funds, mostly large and mid-caps. I might be off a little on the 55%, but 55% would be close. You know, the SP500 still hasn't fully recovered from the downturn, at least I don't think it has yet. Regardless, I recovered fully around 18 months ago, and my portfolio is now around 25% higher than March 2000. Time seems to cure most problems with the market, but it hurts a lot when the curve bottoms out.

Well, that is good to hear. I am a value investor, and had a very nice run in the one true tech stock I owned right before the downturn. I found my portfolio weathered the storm quite nicely, and I would think a retirement type portfolio would have also. However, it would have been unnerving.

I think too if you are fully investing and not adding to your investments (such as in retirement) one disadvantage is not having new funds to take advantage of mispricing which typically occurs after large declines. Having said that, I think you can redeploy assets out of bonds in those circumstances.

Food for thought, thanks for sharing.

Best,

Montecfo
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I keep about 35% of my total portfolio in Windsor II and Wellington (both Vanguard funds)

I think that strategy makes a lot of sense.
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But, with my plan to retire at 52 (or earlier), I'll have at least 7 years of "gap" needed before I would want to touch my IRAs, so I want to have a pretty sizeable taxable account.

Karen

Probably been greeked, but the 59½ age to withdraw from an IRA has a secret door. If you set up a withdrawal schedule of Substabtiually Equao Payments (SEP), the penalties go away (but not the daxes). I haven't used it, but it is there. Not sure how much red tape is involved, but you have to stay on the schedule once you start.

cliff
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Probably been greeked, but the 59½ age to withdraw from an IRA has a secret door. If you set up a withdrawal schedule of Substabtiually Equao Payments (SEP), the penalties go away (but not the daxes). I haven't used it, but it is there. Not sure how much red tape is involved, but you have to stay on the schedule once you start.


you weren't greeked ...and it's a good point.

i don't think there's any red-tape... just do it and tell IRS ....

get off schedule and i suspect the hammer falls

(probably a bit like the required withdrawals when you hit age 70.5)



=
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{{you weren't greeked ...and it's a good point.}}

Uh, you are completely wrong. Here is a post by SP earlier in the thread that says basically the same thing.


"I'm presuming you are aware that the IRS has rules that allow withdrawals from retirement accounts without penalty before age 59 1/2 without penalty if they meet IRS rules of being "substantially equal" and continue for at least five years?


c
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T-bills and notes work. Safe as the U.S. Government.

Well....which is it?


???

traditionally ...SAFEST thing is US Treasury bills, notes bonds (the names have only to do with time to maturity) ... thinking being that they're goon until the US govt falls ... and when That falls, EVERYTHING falls.

CDs next .... pretty sure they're insured like a bank account.

maybe a good money market ....

maybe corporate bonds, govt agency bonds .... but i don't know enough about them.


High-rated bonds would work. How good do you need the credit rating to be? AA, A? (B and below are probably not safe enough.)

In such an account, do you need a mix? Any reason to diversify that portion of retirement funds?


one reason .... CDs typically earn a bit more than treasuries, but insured (iirc) only to 100k

being Safe, they don't earn like riskier things and they're semi-illiquid (that's why a 'ladder')


=
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If you set up a withdrawal schedule of Substabtiually Equao Payments (SEP), the penalties go away (but not the daxes).



I would think long and hard before using it. ITs been years since I did the pros and cons, but it is not flexable. The IRS is lurking out there if you should make a mistake. In seven years you can marry , or get a divorce. Your income/expense stream could change a lot. You are locked in. its been a lot of years since I looked at SEP's, maybe things have changed.

Should the market take a big hit, the same year you start withdrawals, you have taken a big chunk of earning life out of your IRA.

Your IRA could double in 7 years, if you make a the right bridge account.

Sally

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???

traditionally ...SAFEST thing is US Treasury bills, notes bonds (the names have only to do with time to maturity) ... thinking being that they're goon until the US govt falls ... and when That falls, EVERYTHING falls.


Sorry that was a little joke about the "safe as the US gov't" phrase.

6
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To the OP: thanks for sharing your story. May I ask what expenses exceeded your projections? I project things like extra travel costs and extra hobby money, but it's hard to know if it will be enough.



How much is enough? I was one of those anal programmer types. I had spreadsheets on my work computer, budget simulations going in my quicken, ran every budget/financial simulator I could find.

I had inflation protected my spending and said my bridge account would make 8% a year.

I should saved enough for 10 years instead of 7/12. Then those unexpected expenses or market events wouldn't have reduced my expectations.

I don't have the math skills to explain it any other way.

Sally


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T-bills and notes work. Safe as the U.S. Government.

Well....which is it?


That line freaks out an amazing number of people. I didn't comment because I wasn't sure that the response wasn't just teasing me. Could easily have been and I don't have vocal or facial clues to guide me here on the boards.

When I explained Treasuries to one of my non-internet friends, she panicked when I told her it was as safe as the government. The level of distrust of our government is currently VERY HIGH.

Vickifool
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I would think long and hard before using it. ITs been years since I did the pros and cons, but it is not flexable. The IRS is lurking out there if you should make a mistake. In seven years you can marry , or get a divorce. Your income/expense stream could change a lot. You are locked in. its been a lot of years since I looked at SEP's, maybe things have changed.

And it has to continue until 5 years or you reach 59.5, whichever comes LAST.
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I had inflation protected my spending and said my bridge account would make 8% a year.

Thanks, Sally.
I think this is the key thing. The big reason to have 5 years' expenses in fixed income. Sometimes the 8% takes a while to materialize. And if you had to spend it before it does....

I don't have the math skills to explain it any other way.

You are doing a fine job of explaining. Thanks.

Vickifool
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When I explained Treasuries to one of my non-internet friends, she panicked when I told her it was as safe as the government. The level of distrust of our government is currently VERY HIGH.
Vickifool

-----

Don't they know that if the gummint fails, everything else turns to just so much paper too?





Rich
-considering euros
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{{Don't they know that if the gummint fails, everything else turns to just so much paper too? }}

Not gold, ammunition and food.


c
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Don't they know that if the gummint fails, everything else turns to just so much paper too?


Oh I just saw your ps...I was going to ask, what about money in foreign banks?

6
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Oh I just saw your ps...I was going to ask, what about money in foreign banks?
6

-----

I was watching some Wall St. program recently and opinion on the street is that the dollar is like a prize fighter who's seen his better days. Still got some good fight left, but wearing thin. Euro's the up & comer. I think they said the euro recently passed the dollar in total worldwide investment currency.





Rich
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When I explained Treasuries to one of my non-internet friends, she panicked when I told her it was as safe as the government. The level of distrust of our government is currently VERY HIGH.

Vickifool


Given the attempts by some to bankrupt the government (and impossible thing) and elliminate all programs except the military it is understandable that many have distrust and misgivings.

A lot of rhetoric/propaganda is spewed claiming that "they are just IOU's" in SS and that it will be broke and nobody gets anything (not possible unless our government/civilization collapses) so many are frightened for no good cause.

Governments, even ours, cannot afford to default on loans, debts, etc.
The real world outcomes of such events harm the wealthy and can even cause revolution which almost always involves massive re-distribution of wealth. Not something the wise would promote...of course....

md

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I was watching some Wall St. program recently and opinion on the street is that the dollar is like a prize fighter who's seen his better days. Still got some good fight left, but wearing thin. Euro's the up & comer. I think they said the euro recently passed the dollar in total worldwide investment currency.

So what does one do, just open a bank account in Spain or something?

6
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Sorry that was a little joke about the "safe as the US gov't" phrase.


o ..... ok. no worries


-b
..... as an official card-carrying America-hater, i consider the issue real .... but still have treasuries
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So what does one do, just open a bank account in Spain or something?
6

-----

I've no idea how investing in foreign currency works. I'm hoping someone here can explain it in laymen's terms. It seems one has to be pretty savvy to make money there, though. I know it ain't just another mutual fund.




Rich
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{{I've no idea how investing in foreign currency works. I'm hoping someone here can explain it in laymen's terms. It seems one has to be pretty savvy to make money there, though. I know it ain't just another mutual fund.}}


One way to do so is to purchase a mutual fund that owns stocks in the country whose currency you want to be invested in. Then make sure that the fund does not hedge the currency and instead is linked to the local currency.
I also thought I remember about some ETF's that were purely based on currency of other countries, but I do not recall any details.

c
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"So what does one do, just open a bank account in Spain or something?

6"

I don't give financial advice, but a lot of people have been hedging against the dollar in a lot of ways. For example, I have been playing gold mine stocks for about five years as an inflation hedge. In my trading accounts, I spent a fair amount of time trading GG over the last couple of years, though I would never tell anybody else what to do.

Against the advice of my financial adviser, I put 50% of my individual IRA money in European funds instead of the recommended 20 or 25%. Again, though they are outperforming my U.S. money, I would not tell anybody else what to do.

I have a small amount of money, less than $50,000, in an active trading account solely because if forces me to pay attention to market forces.

A safer route that is often touted is simply weigthing your multinational companies more heavily because they are in all the markets.

I better shut up before I make a fool of myself because not all my financial moves turn out to be that bright.

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A lot of rhetoric/propaganda is spewed claiming that "they are just IOU's" in SS and that it will be broke and nobody gets anything (not possible unless our government/civilization collapses) so many are frightened for no good cause.

Governments, even ours, cannot afford to default on loans, debts, etc.
The real world outcomes of such events harm the wealthy and can even cause revolution which almost always involves massive re-distribution of wealth. Not something the wise would promote...of course....


i have a theory there'll be a selective default.

eg. <all treasuries held by citizens will be replaced by Good ones; all others defaulted> which would be good for the wealthy because they could buy Chinese held bonds for pesos on the dollar ....

what chaos might ensue..... dont' know.


=
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I was watching some Wall St. program recently and opinion on the street is that the dollar is like a prize fighter who's seen his better days. Still got some good fight left, but wearing thin. Euro's the up & comer. I think they said the euro recently passed the dollar in total worldwide investment currency.

Does this mean I should keep my Jack Nicklaus £5 note for more than just entertainment value?

t.

I love a country where multiple banks print the currency ... lots of variety and whimsy there.
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I've no idea how investing in foreign currency works. I'm hoping someone here can explain it in laymen's terms. It seems one has to be pretty savvy to make money there, though. I know it ain't just another mutual fund.


I guess I'm thinking, you save some dollars, wait for a relatively favorable exchange rate and trade for euros. But...then where do you keep the euros?

6
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I've no idea how investing in foreign currency works. I'm hoping someone here can explain it in laymen's terms. It seems one has to be pretty savvy to make money there, though. I know it ain't just another mutual fund.

This is just a guess, but I doubt many of the folks who visit TMF have made money over time by investing in foreign currency. Make money and keep it by following the simple approach, and speculating in currency isn't the simple approach. Just an opinion, though.

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I guess I'm thinking, you save some dollars, wait for a relatively favorable exchange rate and trade for euros. But...then where do you keep the euros?

Gucci or Coach, I'd guess.
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I guess I'm thinking, you save some dollars, wait for a relatively favorable exchange rate and trade for euros. But...then where do you keep the euros?

6

I think Rydex has ETFs that trade currencies, but I haven't played them yet.

If you were really adept at currency trading, you could probably do it in your trading account. Or even exchange money for Euros at a local bank that offers exchanges.

My suggestions made earlier were for people who haven't that kind of skill but who want to hedge their portfolios against the dollar.
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I don't give financial advice, but a lot of people have been hedging against the dollar in a lot of ways. For example, I have been playing gold mine stocks for about five years as an inflation hedge. In my trading accounts, I spent a fair amount of time trading GG over the last couple of years, though I would never tell anybody else what to do.

Against the advice of my financial adviser, I put 50% of my individual IRA money in European funds instead of the recommended 20 or 25%. Again, though they are outperforming my U.S. money, I would not tell anybody else what to do.

I have a small amount of money, less than $50,000, in an active trading account solely because if forces me to pay attention to market forces.

A safer route that is often touted is simply weigthing your multinational companies more heavily because they are in all the markets.

I better shut up before I make a fool of myself because not all my financial moves turn out to be that bright.


I'm out of recs but I think those are all perfectly good ideas. And...we asked.

I have a lot of questions right now because as soon as BBY gets back up over 55 I'm finally going to roll over my old 401k and sell my old options from there. So I'll go from someone who has previously only invested my (admittedly meager) IRA contributions to having a chunk of cash that will need to be diversified wisely. But agressively, I'm still young (vis a vis retirement age).

But really this is the first time I've been ready to think about a solid, comprehensive plan.

6
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I guess I'm thinking, you save some dollars, wait for a relatively favorable exchange rate and trade for euros. But...then where do you keep the euros?
6

-----

Dunno.

I just went to Google to see what's out there. I clicked on a coupla sites and my pop-up blocker and cookie detector went nuts.

Maybe there's a board somewhere in Fooldom?




Rich
-gotta go, fer now
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If you were really adept at currency trading, you could probably do it in your trading account. Or even exchange money for Euros at a local bank that offers exchanges.

My suggestions made earlier were for people who haven't that kind of skill but who want to hedge their portfolios against the dollar.


I will have to look into straight currency trading, see what's what. I am concerned that you suggest a person needs mad trading skillz to do this. My trading skillz are currently whack.

6
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One problem is that by the time the experts tell you to do something, they have already done it and finished profiting from it.

For example, I just ran the DOW against the Vanguard Euro Index fund out of curiosity raised by your question:

Over a five year period, it appears that the Euro fund beats the Dow:

http://moneycentral.msn.com/investor/charts/charting.asp?Symbol=$INDU&ShowChtBt=Refresh+Chart&DateRangeForm=1&CP=0&PT=8&C5=2&C6=2007&C7=2&C8=2007&C9=2&ComparisonsForm=1&CE=0&DisplayForm=1&D4=1&D5=0&D3=0&ViewType=0&PeriodType=8

But who the heck knows for sure how the next five years will shake out?

I personally am hedged agaist the dollar because of my belief that the deficits - trade, budget and personal - and impending retirements of baby boomers - and my position at the bottom of the baby boom at the age of 50 - all lead me to believe that I personally have to plan for the worst.
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I will have to look into straight currency trading, see what's what. I am concerned that you suggest a person needs mad trading skillz to do this. My trading skillz are currently whack.


currencies bounce around like commodities.

currency traders try to buy-low/sell-high. (see movie, "trading places" <g>)
need trading skillz in a specific game. Same as if you want to play Oil, you need to know
about Oil; want to play Corn, you need to know all about Corn. to play currencies, you need to know the game of "Global Thermonuclear Economics"


merely hedging against a possible/expected dive in the dollar is a different game.
not sure exactly, but there's ways to hold ,say, Euros .... and since that's just saying hedge against inflation, there's other investments to do that.

doesn't hedge against US going t***-up, IMO Canned goods and ammo in the mattress for that.


=
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I personally am hedged agaist the dollar because of my belief that the deficits - trade, budget and personal - and impending retirements of baby boomers - and my position at the bottom of the baby boom at the age of 50 - all lead me to believe that I personally have to plan for the worst.

The big thing for me is if (forgive me if say anything totally ignorant here) OPEC decides to only accept euros for oil. I have heard that is being discussed?

6
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I will have to look into straight currency trading, see what's what. I am concerned that you suggest a person needs mad trading skillz to do this. My trading skillz are currently whack.

6
-------------

Currency trading is indeed for the quick on their toes & very attentive crowd.

I did a bit of it, was able to parley a modest amount into abit more of a modest amount recently but had to pay way deep attention to catch those moments to buy / sell.

Personally I tend to stay within my knowledge & long skills - the biotech & alternative energy companies.

These are very volitile but with understanding the type of timeline momentums within the fields, I have turned over the years a very lofty % gain.

Futures trading is downright slippery & one must have a large amount of capital to make it happen.
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The big thing for me is if (forgive me if say anything totally ignorant here) OPEC decides to only accept euros for oil. I have heard that is being discussed?

6
------------

That story was on CNBC late night political talk shows last week. Had them all in a twitter.

That really will be in the extreme unlikely, unless the current administration amps up their wave into & onto Iran. Then the global markets will all go into their collective manic phase & indeed dollars will have some wobblies.

I by the way traded Yuans / Dollars.
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joseph714: "Personally I tend to stay within my knowledge & long skills - the biotech & alternative energy companies"

Completely off topic, I have started playing EEE recently. Their balance sheet would make you sick, but they seem to have been running in a channel from $8 to $10 for the last three months. I have bought and sold once, and recently got back in at $7.90 a couple of days ago.

Do you know much about them?
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to play currencies, you need to know the game of "Global Thermonuclear Economics"

The only winning move is ... not to play?
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The big thing for me is if (forgive me if say anything totally ignorant here) OPEC decides to only accept euros for oil. I have heard that is being discussed?

Not seriously.
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Completely off topic, I have started playing EEE recently.

jqc123
----------------

Here is the pretty humorous thing, I hold Evergreen Solar -ESLR.

EEE is looking into perhaps finding a way to make coal happen by getting rid of the blue meenies including mercury and the reduction of emissions of sulfur dioxide and nitrogen oxide.

Here is their Yahoo stock page for the interested. How have you done, as it trades near its 52 week low?

http://finance.yahoo.com/q?s=eee&x=0&y=0

On the surface of that, I am all for it, but just not sure about the application yet.

There have been a few pieces written in Scientific American covering these processes.

www.Sciam.com

I just get the willies with coal for the moment but you may very well have invested in one company that can turn a global disaster into a semi-Ok thing.

The continental U.S. certainly IS the coal cartel on the planet.
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to play currencies, you need to know the game of "Global Thermonuclear Economics"
=====
The only winning move is ... not to play?


the difference between war and economics....

GTNE --you might get killed.

GTNW --you, and everyone you love , but also everyone who annoys you ....probably get killed.



=b
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I better shut up before I make a fool of myself because not all my financial moves turn out to be that bright.

Not all need be "bright"...just enough of them to hit your target.

My plan...made some moons ago was to hit a 8-10% increase per year with a built in -35% drop for one year out of the ten....so far I am doing ok and am exceeding my plan to financial semi-security.

I agree gold has done well....though not it appears for the traditional reasons of inflation <shrug>...but more from fear of global insecurity.

I also put ~40% of my stock portion of my portfolio (stock 75% of the total portfolio) into overseas spread among Far East, EU, and Emerging markets and have done well. This means 30% of my total portfolio was in those...I sort of follow Berstien's advice and models from his book "The Intelligent Asset Allocator" (good book, easy read).

For those looking for interesting reading by an author who can write well, his books are well worth the time: Peter Bernstein

"Against the Gods" - Risk, risk analysis and its history
"The Birth of Plenty" - why did world growth take off
"The four Pillars of Investing" - sound and simple advice
"The Intelligent Asset Allocator" - modern portfolio theory made readable
"The Power of gold" - One I need to read

Edumacation is important for those of use with no daddy wealth or friends in wealthy places.

;^)

md








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I guess I'm thinking, you save some dollars, wait for a relatively favorable exchange rate and trade for euros. But...then where do you keep the euros?

6


Inna sock under the mattress?

<sorry could na resist the easy put>

md
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Inna sock under the mattress?

<sorry could na resist the easy put>


Okay but that's exactly what I was thinking.

6
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When I first retired, I had Vanguard do a investing plan for me. It cost me 400.00 and was allocated across many asset classes. I studied it for a long time.

I took about 60% of the advice and then filled in the rest with my plan. I was determined to "do this myself". I kept about 6% for short term trading.

I plugged inVanguards suggestions into a yahoo portfolio and have watched it grow over the last seven years. I have only beaten it by a few percent every year. That does add up over the years.

when I become old and drifty, I will be happy as a clam to turn it over to vanguard to run.

Emerging Markets. Several years ago Bill Gross of Pimco was advising a move into emerging markets, he said he had put a HUGE percent of his personal IRA into EM. I don't remember the % but it was way overweighted to any normal weighting. So I put in 10% into Vanguards EM.

Over the following year I increased it to 20%. After about three years of up-trending , I became uncomfortable with the allocation and dropped it back to 10%.

Last summer I got a letter from Vanguard expressing worry about Emerging Market. It encouraged cutting back the allocation. it discussed "reversing to the mean", yada yada.

So, i cut it back to 4%, and bought some individual foreign stocks instead.

Vanguard EM is still going up, after last summers correction.



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md - Inna sock under the mattress?

<sorry could na resist the easy put>

Okay but that's exactly what I was thinking.

6


lol...great minds and all that...of course that little Euros that I had retained after my trips to Europe were so few that what I did was to make a wall display with all the pretty money (paper and coin).

Was worth only a little more than I paid for it...materials costs you know.

md
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