I will officially retire in Nov this year. I have been off on medical leave for the last 9 months and when the day comes to finally sever the ties I will need a little help. Here is the scenario. Pension income of about 30k/yr gross. Net after taxes, medical, dental and extended health payments is about $20,400. I also have 2 rental properties producing net of about $1200/month with a mortgage and tax payment of about the same, so the rentals and their normal costs are about even. I have about 100k in registered investments and about 45k in non sheltered investments. I need to create an income from my investing, of about 10-15k to continue the lifestyle for a few more years until we cash out of our home and then will have lots to live on. Any suggestions for a varied portfolio which will provide a 12% or better return over the next 5 years without depleting the principal? Looking for an aggressive port since I will have plenty of time to watch it on a daily basis if needed, so I am not too worried about volatility. I am a relatively experienced investor who could use a few good ideas from you folks for a couple of pointers for good stocks to research. Thank you in advance, Clay
Lots of discussion on this topic at the Early Retirement forum on TMF, at http://boards.fool.com/Messages.asp?id=1380025000000000Also see the "Retire Early Home Page" at http://www10.geocities.com/WallStreet/8257/reindex.htmlGood luck!Dory36
Anyone needing a 10-12% return from the stock market for the next five years, for additional income to live on, is treading on dangerous territory, even if they aren't worried about 'volatility' and are willing to watch things everyday. Most folks will suggest that ANY money you have to depend upon, being there for the couple of years, should NOT be in the stock market. Look at 1973/4. Will you sell everything when the market drops 8% in one day. What will it do the next day? Rebound (causing you terrible loss as you try to sell on the way down), or go down even further (minimizing your substantial losses). Those retiring in 1972 saw their nest egg in the stock market drop by 50%. Rather than 10-12% return, they took an immediate 50% drop in value. If they had to sell some along the way, to live on, they would have been wiped out in a few years.
I wouldn't have to sell into a panic market as I expect to have cash on hand for at least a year of "top up" at any time. I also can live quite comfortably on just the pension income but couldn't do the extras like travel a lot. The top up to my pension is JUST for the extras, and all of them can be put on hold for a year or two if needed. I don't worry about getting hit with a major bear market for longer than 6-9 months since that is the historical average length. Although I am NOT a market timer, I do watch it quite closely and have taken some defensive moves over the last several months which protected me from a major drop over the last few weeks. I do trade regularly (6-10 trades a month) and have made adjustments to my portfolio as I felt they were warranted. I guess that what I was looking for, is a dialogue with others in the same position who have stocks, not mutual funds, and are researching them on an ongoing basis. Someone to recommend stocks for others to do their Due Diligence on. Some I like are APA, EMC, ORCL, AMAT, ADBE, and VSH. Anyone else got a few recos?
re: 6-9 month stock market reboundThe Nikkei in Japan hit 40,000 in early 90s. Nothing could go wrong. Today it is sitting at 18,000 or so. Not only did a lot of people lose a lot of money on a 'sure thing', they also lost the opportunity to earn income with their savings. Getting a guaranteed 7.5% (today's 5 yr CD rate), on 40,000 would have been a lot better for a lot of people, rather than a more than 50% drop and effective income of >-12% yr(lost the interest and lost the principle). Having a diversified portfolio, maybe some REITs (nice income), some utilities FPL, Dominion Resources, TXU, and some CDS/Bonds, as well as a small percentage of high tech, would let me sleep a whole lot better. If you want to have your fun for the next five years, you are taking a big chance on the returns over the next few years. Just keep staring at the Nikkei, where everything was going right, and think it could happen here. Where would you be at that point? Could you really sleep well with a 50% loss that stayed that way for 10 years?
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