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My wife and I are both 64 and retired.
Income is $80,000 from pension, scoial security, and wife's part time job.

As of now our income covers outr expenses.

We have a condo that is worth $350,000 with no mortgage but do still have high maitenance costs.

We have tax deferred Traditional IRA's of $400,000 mainly in money market accounts, and $200,000 outside of IRA's in money market accounts. We are not that conservative, I just have had analysis paralysis, and keep looking.

I am interested in asset allocations into mutual funds or ETF's.

Any advice and 'specific' recommendations of ETF's and mutual funds would be greatly appreciated

Thanks in advance!


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If the fed keeps raising interest rates a money market fund might be the place to be. You might consider puting 20% into a euro (or other currency) cd from www.everbank.com just incase the US$ takes a fall.

Simple mutual fund possibilities
1) 100% pimco total return

2) 50% vanguard lehman Index, 50% vanguard total market index

3) 100% vanguard star asset allocation fund

FWIW I own the following etfs GIM TEI CMK FAX FCO LDF BZF ISL CEE

Both bobbrinker.com and fundx.com give mutual fund advice which have been good in the past.

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Greetings,

I am interested in asset allocations into mutual funds or ETF's.

Do you want an all-in-one mutual fund like Vanguard's Balanced Index fund or do you want to have a combination of funds where each fund will be part of the allocation? An alternative allocation could be 60% into Vanguard Total Stock Market and 40% into Total Bond Market or TIPS or GNMAs for a few ideas if you want something similar to the Balanced Index fund.

As for the allocation, I think this requires your own research into how much in stocks and how much in bonds as the next step after you determine if you want to spread things around or have it all in one.

Regards,
JB
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>> My wife and I are both 64 and retired.
Income is $80,000 from pension, scoial security, and wife's part time job.
<<

How does that $80K suit your lifestyle? Is it easily enough? Just enough but worry it won't be in the future? Or would you like a more actiuve lifestyle, perhaps with more activity and travel?

I think that might influence how you should invest the $600K.

If the $80,000 income easily meets your needs and desires, I see no need to take much risk. Perhaps something like 1/4 in a growth and income fund, 1/2 in short term bonds or TIPS and 1/4 in money market funds might be about as aggressive as I'd go. At 64, assuming decent health, you can expect at least one of you to live for another 20-25 years, so keep that in mind when assessing your future needs.

If you feel like you need to be more aggressive based on your expectations and desires in the years ahead, I might go a bit more aggressive -- but probably no more than 40-50% in stocks. The balance I'd split between bonds and money market funds.

#29 (sometimes regretting he left a job with an honest-to-goodness pension plan in 1999)
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Income is $80,000 from pension, social security, and wife's part time job.

As I see it, you have 100% of your portfolio in income investments, and none in equities.

One of the "bibles" of asset allocation is The Four Pillars of Investing by William Bernstein.

On pages 277, 278 and 279 he points out that in allocating a portfolio we should consider a pension as the equivalent of a bond issued by our former employer and SS the equivalent of a bond issued by the government. The first thing we do is to capitalize this at a rate of 6% to possibly 12% for risky pensions. In other words, if you have $18,000 per year from SS, you have the equivalent of ($18,000/0.06) = $300,000 in a very safe bond.

I suspect that when you do this you will discover that you have enough fixed-income equivalents to account for much more than 60% of your total portfolio.

This argues strongly that most, if not all, of the rest of your money should be in equities. Bernstein likes the Vanguard index funds, I hold mostly Exchange-Traded Funds (ETF).

I am about 6 months from retirement, and DW and I will have just over $100k in pensions and SS. We have 94% of our liquid assets in equities. 80% of equities are in ETFs, about equally split between SPY, MDY, and QQQ, with 20% in individual stocks. We have 6% in i-bonds. These are not the funds Bernstein recommends, but I am comfortable with the risk levels right now. We have other investments about equal to our equity accounts in 3 single-family rental houses (now at 50% loan-to-value), which I consider a greatly under-utilized asset class. We do not consider the value of our residence as part of our portfolio, although possibly we should.

We are not going to make any changes in our asset allocation immediately after retirement, although I may start adding foreign equity funds and a small-cap ETF. I will probably rebalance about every 2 years.

My strong recommendation is that you:

1. Buy and read the Four Pillars, and

2. Move most of your investments to equities.

The greatest risk you face is not stock market losses, but loss of purchasing power through inflation.
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There are ETFs of all shapes and sizes. I would say you should stay close to the Dow Jones Total Market Index (IYY). Also, you can do a simple strategy that invests equal amounts in the 10 sectors that make up the Dow Jones TMI.

Also, for income, you might want to consider the iShares Fixed Income ETF. It pays interest monthly. I don't have the ticker, but you can go to http://ishares.com and find it. I think they only offer one.

One last thing, don't forget about going international. You might want to put a portion in international investments.

JLP

http://AllThingsFinancial.blogspot.com
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>> The greatest risk you face is not stock market losses, but loss of purchasing power through inflation <<

Um.. no... at retirement, the greatest risk you face is stock market losses.

We are in an on-going bear market. P/E ratios are still well above history's trend. Dividends are at all-time lows.

This is not a time to move all of one's assets into the market. Look at history. Look at every other time P/E ratios were this high. Look at the returns over the next 10-20 years. They were terrible. And those were years when dividends at least were decent, and provdied some boost. Not now.

Timing the market is impossible, but bull/bear swings do occur. We're currently in a bear. When will another bull start? I can't tell you, but it won't start with an average P/E ratio of 20. Wait for P/E ratios to drop to low teens or even single digits. That's when to start investing in broad-based index funds. Trouble is, it may take a while (last bear market went from 1966-1982)

It's hard to keep money in low-paying money market accounts... I would at least suggest this... If you're living well on the $80k, start moving some money to the market... slowly... If you have $600k, then move $5k to $10k a month into bonds/stocks (Percentages up to you). That will mean a very slow move into the market over the next 5-10 years (I'd probably always keep 100k in money markets though)

That way, you're not worrying about timing the market, and you're also not worrying about investing it all at once. I mean this is it. This is all the money you're going to have for the rest of your life. There's NO gambling with this money.

Another good book is Bull's Eye Investing. I highly recommend you read it.
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Sorry if that sounded harsh...

Actually, I'd love a discussion if now is a good time to invest in the stock market...

LOTS and LOTS of advisors say yes (but they always say yes), but I've read several books that make a very strong case for no.

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