UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev Thread | Next Thread
Author: AlanK Big red star, 1000 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76237  
Subject: Core retirement investments Date: 8/15/2011 12:31 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
What are your core retirement investments?
The stocks that:
- pay you a regular dividend
- are large and stable enough that you don't usually pay much attention to them
- you gratefully load up on when the market does its swan dive every year or three
Print the post Back To Top
Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69416 of 76237
Subject: Re: Core retirement investments Date: 8/15/2011 12:48 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Apple, Caterpillar.

But I rely on other investments for income. These are to grow equity.

Print the post Back To Top
Author: tjscott0 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69417 of 76237
Subject: Re: Core retirement investments Date: 8/15/2011 2:34 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
What are your core retirement investments?
The stocks that:
- pay you a regular dividend
- are large and stable enough that you don't usually pay much attention to them
- you gratefully load up on when the market does its swan dive every year or three


I believe an argument could be made for Vanguard's Consumer Staples ETF [VDC]. Lower beta than S&P 500 & better return & pays a decent 2.4% dividend at this time.
http://quote.morningstar.com/ETF/f.aspx?t=vdc

Print the post Back To Top
Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69418 of 76237
Subject: Re: Core retirement investments Date: 8/15/2011 3:12 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Mostly drug and tech stocks

and ten years' worth of living expenses in short term corporate bonds

intercst

Print the post Back To Top
Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69422 of 76237
Subject: Re: Core retirement investments Date: 8/16/2011 2:22 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Total(DOMESTIC) Stock Market Index fund.
Total International stock market index fund.
Total Bond market index fund

Print the post Back To Top
Author: JLC Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69423 of 76237
Subject: Re: Core retirement investments Date: 8/16/2011 10:54 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Over the past few years I've been slowly changing over to dividend paying stocks and plan on living off the dividends when I retire. I'll still have about 30-40% in ETFs of other assets though.

Core holdings: MCD, KFT, PG, JNJ, SO, DUK, T, and KMP.

JLC

Print the post Back To Top
Author: ltangel Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69439 of 76237
Subject: Re: Core retirement investments Date: 8/19/2011 12:13 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
what about LEG? MAIN? VOD?

Print the post Back To Top
Author: ltangel Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69440 of 76237
Subject: Re: Core retirement investments Date: 8/19/2011 12:16 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
what do you rely on for investment income? I am fine -tunng andneed all the help I can get as I am certain do we all!!

Print the post Back To Top
Author: RetiredFloridian Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69441 of 76237
Subject: Re: Core retirement investments Date: 8/19/2011 1:53 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
For our core account, I invest in a mixture of mutual funds and use a variable hedge based on market conditions. Started doing this when I retired in 1998 and it seems to do well enough to generate sufficient returns for us as well as keep us shielded from the risks of protracted down trends. At the chance of getting a little long winded I’ll take a few minutes here and describe how it all works, in case someone might be interested in the details.

First, the funds. Prior to retiring, I invested in individual stocks, primarily growth issues, and followed them daily. As retirement approached I became less interested in the daily gyrations of stocks and more interested in other pursuits. On the advice of a good friend and retired financial advisor, now deceased, I moved our assets to mutual funds and started looking at hedging and timing. For diversification purposes I picked three core funds: a large cap growth-style fund, a large cap dividend oriented fund, and a small to mid cap fund. This was for half of the assets we felt comfortable exposing to equity investments. The other half I invest in a mixture of sector funds (could just as well use ETFs here, I guess). I follow a dozen broad sector funds and hold five at a time based on an approach I’ll describe in another paragraph below.

Next, the hedge. I spent my share of time trying to develop some sort of market timer, with lots of spectacular failures along the way. I finally got to a point where it made more sense to me to find a stable timing strategy, ignoring the daily and weekly whipsaws. I am more comfortable with a consensus-style timer, so I settled on a four part approach combining market trend, market breadth, valuation, and interest rates. I am forever indebted to my late friend for his invaluable advice here. For market trend I use two methods. (1) Comparing the daily close of the S&P 500 index to a long-term moving average, and (2) Examining the S&P 500 index price action, looking for increasing or decreasing highs and lows. Specifically I compare the index close to the 200d SMA for method (1). And for patterns of highs and lows, I see whether the index maximum high price over the past 80 days is increasing or decreasing. Timer method (3) looks at market breadth. I use the daily difference of the Nasdaq new highs and new lows, and compare the 20d SMA of the difference to zero. Finally part (4) of the timer examines the relationship of the S&P 500 dividend yield to the yield of three-month Treasuries. I subtract the Treasury yield from the index dividend yield and compare the difference to some value which represents an equilibrium level, which for me is -3.50, but can be modified based on risk tolerance. Adding all four parts of the timer together will yield a total of between 0 and 4. This total can then be used to determine the level of hedging to apply against the total fund holdings. The higher the value of the timer total, the lower hedging % is needed. Since I’m fairly risk averse, I use a 25% hedge when the timer has a value of four, 50% when it has a value of three, and 100% when the value is 2 or less. I use a short position in the SPY stock as a hedge. Since our account has enough cash to back up the short position, there are no margin fees imposed by my broker.

Now the sector fund selection. I follow a dozen broad-based sector funds, such as Financial, Utilities, Technology, and the like. Nowadays I’m sure you could just as well use broad sector ETFs instead of the funds, and maybe someday I’ll make the switch. Every other month I calculate the total return of each of the 12 sector funds over the past two months and invest in the five with the best 2-month return. I’ve done some testing over the years, and there are probably better time durations, but I started with the 2-month period for both returns and for a holding period, and it has worked out well enough.

I can almost hear someone asking how this has performed. Well, 1998 was my first year doing all this, and there was a good bit of transitioning and experimenting, so I’ll just leave those results out of the mix. Starting in January of 1999, and calculating through yesterday, the compounded return has been just shy of 11% annually. Nothing to shout about, surely, but a good bit better than the S&P 500 return over the same time. My goal is all this was to get to a place where I didn’t have to worry about individual stocks and to limit my risk at the same time. One way I like to look at risk is to find out what the worst twelve-month return has been, on a rolling basis. The S&P lowest 12 month return was about -45%, whereas my worst 12 month time was just a bit shy of -7%, back in late 2008.

That’s it in a nutshell. There are plenty of more details, such as which months I use for the sector fund rotation. I do that work on the first day of the odd-numbered months. And I rebalance the three core funds at that same time, selling or buying a few shares to start every 2-month period with the same dollar amount in each of them. I look at the timer every few days, and if it makes a sudden rise or takes a sudden dip (such as it did earlier this month) I’ll adjust the hedge accordingly. So far it’s kept us out of the swamp and with enough returns to keep things interesting. I don’t know if it will continue to do as well in the future but don’t see any obstacles to that. By the way, right now the timer is sitting at a total of 2, with only a couple of days to go until it will definitely drop to 1 when the calculation of the index's maximum high over the past 80 days will age off. That means that currently I'm hedged at 100%.

This brings me to the end of something that ended up longer than I expected and I guess that means it’s time to stop writing. I hope this is helpful to someone.

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
Author: RetiredFloridian Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69442 of 76237
Subject: Re: Core retirement investments Date: 8/19/2011 2:11 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
what do you rely on for investment income?

Thought I'd reply to this one in a separate post. This is something I'm very interested in hearing what others are doing. Over the years I've set up some bond ladders and CD ladders through my brokerage firm. I'm a little apprehensive about the bonds lately in case interest rates should begin to move up (where else can they go?). The CDs are currently are paying next to nothing. I've also set up a couple of CD ladders at local credit unions, which tend to pay better than the rates available on the brokered CDs, but then they necessitate going into the credit union occasionally in person. My brokerage firm is always sending me information on annuities but I'm leery of them.

So, short form of the answer: CD ladders, bond ladders.

Print the post Back To Top
Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 69443 of 76237
Subject: Re: Core retirement investments Date: 8/19/2011 11:35 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
what do you rely on for investment income? I am fine -tunng andneed all the help I can get as I am certain do we all!!

I managed to assemble a diversified portfolio of trust preferred stocks about 5 years ago before interest rates got very low. Some have been called, but others continue to pay, and though some are in less than ideal industries, so far diversification has been comforting (and nothing has turned into a bankruptcy).

I also have NQS and BLE closed end bond funds. And I have done well with SPH and more recently OK with APU. I also have some recently purchased dividend stocks.

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev Thread | Next Thread
Advertisement