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Is anybody out there actually not using money managers or mutual funds with your irreplaceable lump sum payout? The recent market drop has made me very unsure about my ability to do the "foolish" thing that I've admired and read about for the last year.
What are you retired fools really doing out there and I'm asking about "nuts and bolts"....thanks....john

Hi John,

I can sympathize with you as I retired April 1,1999 and had to decide what investment strategy was right for me. True, the market wasn't as volatile but the valuations were high and many involved in the market were calling for a significant correction.

I definitely ruled out "hiring" a money manager. I spoke with a couple but eventually reached the conclusion that they were in no better position to time the market (or a particular investment within the market) than I was. So I decided to go it alone and create a portfolio that offered some diversification, would not demand a great deal my time, and would allow me to sleep nights.

I took a lump sum payout when I retired and moved it into a Waterhouse Rollover IRA. This account represents about 2/3 of my nest egg. I decided that I eventually want to have 5 years of future income in a corporate bond ladder. I currently have one years worth in 6 different AA bonds (or better) maturing in 5 years. (Three additional years of my bond ladder is currently represented by "fixed income securities in my ex-company's 401k. (I retired in the year in which I turned 55 so I can take penalty free withdrawls from my 401k.))

After I created a plan, it took me about three months to actually get up the nerve to execute it. I was very fearful that I'd loose a lot of money in the "overvalued market" and suffer the consequences for years to come. In June, I bit the bullet and invested the remainder of my Waterhouse account in 4 different Foolish screens. I equally distributed the money between RP4, BSP, PEG, & KEY 100. (Oh, I did hold back about 5% of the account as "mad money" which I've invested in SOS-E.) It would take many paragraphs to elaborate why I chose these particular screens but suffice it to say that if you are going to go this route, you need to study the available screens and invest in what seems most reasonable to you.

My 401k, which represents about a third of my investments is split 50% fixed income (see above), 25% S&P500 like index fund and 25% ex-company stock.

The bottom line is that since I "jumped into the market" I have seen my paper wealth surge by about 38% only to see it fall 20% from the top! I am ahead by about 18% in a little over a year but the market is still falling and I have no idea when it will bottom. However, so far, I'm still sleeping and tusting that the 4 years of "cash" that I have stashed will see me through these volatile times.

I believe that the main support that I have is a belief that the screens that I currently hold have a REASONABLE chance of succeeding over the long haul. This is important, especially if you follow the MI and Foolish Workshops. Several posters are loosing faith in their screens because of the current market. Doubt fosters fear and fear causes irrational behavior and loss of sleep. So my advice is .... make sure that you are comfortable with whatever investment plan that you decide to pursue.

Good Luck -> Craig
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