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Sorry about that previous post-- Hit the wrong key.

Anyway, here goes---

At the time I retired about 4 years ago, I allocated about one third of my retirement monies to mutual funds. This was monies I would not need for some 10 years.

Since then, that portion of my portfolio has been systematically destroyed.

I started out with a mix of aggressive growth, balanced, etc. Then when that went south, I re-allocated to an index fund (S&P 500), where I've been for the last 2-3 years. I thought this would be the most conservation way to go. Wrong!

Now, with interest rates low, thus bonds or CDs not a good option and the market trading down or sideways and seeming to continue that way for some time to come, I am at a loss as to where the best place to be is.

I would be interested to hear how other retirees have navigated this stormy market and what their results has been. And, better yet, what their ideas are for the future months.

Thanks to all,

Sam
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I would be interested to hear how other retirees have navigated this stormy market and what their results has been. And, better yet, what their ideas are for the future months.


++++++++++++++++++++++++

It appears our lifeboat is having more & more people getting into it. DH & I are in the same situation. We've done a few things...so here goes:

1.) Traded in 2 fairly new cars & have gone to 1

2.) Have our new, expensive house for sale (sniff sniff)

3.) DH is finally receiving all his routine medical & Rx's from the VA

4.) I have a p/t job paying 400.00/mo

5.) Opened an ING acct...but now switching to another bank that has
3.5% interest rate.

6. Bought US Savings Bonds last fall (iBonds).

7. Seriously considering taking all money from currently owned stocks
and making investments in CD, Savings accts. until this daily
plunge in stock prices abates.

8.) We shop Sams Club & Winn-Dixie, buy & cook in bulk, have a definite
budget & we stick to it....I could go on & on.

Putting it mildly, we're worried. DH has been retired for over 6 years, and we're only 57 years old. SS & Medicare are a long way off. We've allowed a Financial Consultant to handle our affairs since retirement, but his lack of doing ANYTHING has seen our portfolio drop 50% in the last 18 months. We simply can't go any lower....and also believe with conservative investments for the next few years ..ones we decide on, we can't do any worse.

It's now time to step up to the plate and PRESERVE what we have rather than worry about growth.

All of this is JMHO...and you get what you paid for it.

Kitty

ps...I evan have a new email acct that is QueenofCheap@xxxx.xxx
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I forgot to add, when we traded in our Corvette & Blazer on a new Trail Blazer, we deposited the difference into our ING Saving Acct.

Any and ALL extra money each month goes straight into savings...no other investments.


Kitty
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<It's now time to step up to the plate and PRESERVE what we have rather than worry about growth....Seriously considering taking all money from currently owned stocks and making investments in CD, Savings accts. until this daily plunge in stock prices abates.

DH has been retired for over 6 years, and we're only 57 years old. SS & Medicare are a long way off. We've allowed a Financial Consultant to handle our affairs since retirement, but his lack of doing ANYTHING has seen our portfolio drop 50% in the last 18 months. We simply can't go any lower....and also believe with conservative investments for the next few years ..ones we decide on, we can't do any worse.>


It seems like you have done some things backwards. One of my favorite posters "chipsboss" used to talk about his exercise of taking his portfolio and lopping 50% off of it. The purpose of the exercise is to ask yourself how that may impact your day to day life or if it will cause you to lose any sleep. If it does, you need to go back to the drawing board. The benefit is that you can deal from a position of strength rather than the position you are now in.

This is a very basic concept that any financial advisor should bring up and fully discuss in your very first session with him or her. If they don't, I would run like hell in the other direction.

I infer from your post that you were invested in mutual funds that did not match your risk profile at all. Why did you go along with that? Did you have at least an annual review with this person to see if you wanted or needed to make any changes? In addition to paying your consultant a fee each year, they may have received additional fees from the funds they placed you into. It is not enough to place all of your trust in someone else and then forget about it. You should always have a clear idea of what you own. The advisor should be able to explain in laymans terms why these investments are good for people in your circumstances. I would like to know how he convinced a new retiree to make very agressive investments.

Before one transitions from working to retirement, there should an extensive review of all of the implications. You should have a good idea of what your annual expenses are and what your monthly cash flow will be. You should also have 3-5 years worth of living expenses in a very liquid form (cash, MM, bonds, CD ladder, etc) so you do not get stuck in a situation you now have: selling out at the worst time.

I urge you to be cautious in looking at your intended "conservative" investments. Interest rates are at a 40 year low. You will not get much in CD rates now. Also if you buy bonds or a bond fund you should recognize that at some point interest rates will move back up. If they move up enough and you are again forced to sell at the wrong time, your safe investment can lose real money.

You may want to consider Vanguards GNMA fund (VFIIX) if you need additional current income. It too is not that far off it's 10 year high, but it tends to move within a tighter range depending on the interest rate environment. Over the last 10 years it has had two one year periods when it fell below 10.00. The range has been from a low of about 9.60 to a high of 10.60 and is now selling for around 10.50 now. Good luck!



BRG


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I may not have been very clear in my explanations, so I'll try again.

We've decided that the lifestyle we have now is more than we're currently willing to continue to support. Hence, trading in both cars, & selling a house we didn't need when we built it and now feel the current amount of money needed each month to maintain..i.e. taxes, lawn, maint.fee etc. is simply more than we want to pay.

We did meet each year with our advisor, and do take full responsibility of laziness/lack of interest when the boom of the mid-late nineties was happening. We were well diversified (still are) but had more than we should have in a couple of "tech" companies. We have since bailed out of all but INTC (gasp, what a day today), and have now purchased large cap well known stocks of outstanding companies. We still are highly diversifed.

Current income is not an issue, but I did take a look at the Morningstar rating of VFIIX that you mentioned.

My point simply was that we feel we also need some super conservative investments, as they make me sleep easier at night.

We have an appt. with our advisor in July, and as the Reba song says " I wouldn't want to be you right now". We are preparing a long list of questions that we expect answers to, and a better plan than what has been in place these last 6 1/2 years.

Kitty
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We've allowed a Financial Consultant to handle our affairs since retirement, but his lack of doing ANYTHING has seen our portfolio drop 50% in the last 18 months.

This is little short of scandalous, IMO. You didn't say if you were up 1000% in the previous five years, but any portfolio which dropped 50% in the last 18 months is far too volatile for me. My port is down, but nothing like that. But, then it wasn't up 1000% during the NASDAQ bubble. Either you didn't clearly communicate your risk tolerance, or the consultant is incompetent, or both. Even the Foolish Four did better than this!

Is the consultant a fee-for-service type? Some folks who call themselves Financial COnsultants are mutual fund salesmen in disguise.

I sympathise with your pain.

cliff
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We've allowed a Financial Consultant to handle our affairs since retirement, but his lack of doing ANYTHING has seen our portfolio drop 50% in the last 18 months.

I don't have data for the past 18 months, but in the last 12 months, the S&P is down 19% or so. This is better than -50%, no?

My largest holding is New Perspective (ANWPX), down 13% in the last 12. (Yes, I know ... actively managed, large up-front costs, but I already own it, and I am satistied with the performance.) My next largest is Income Fund of America (AMECX), down 5%. This is an income oriented fund (duh!). Without it, I would be much worse off than I am. My SmallCapWorld (SMCWX) is down 15% (Not my "worst" holding, btw!). The Vanguard Extended Market Index Fund is down 14%, also better than the S&P.

My point is that it isn't necessary to be down 50%, even in an awful market. I hope you were up a bunch in prior years.

regards,
cliff
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All of this shows what the fool has stood for: do your own investing!
There is really no excuse for down 50% in the last 18 months. During this time has he made money from your account, either by buying and selling, thus generating commissions, or by 12b1 fees on mutual funds?
What did you own, Enron? Or mutual funds that did?

Fire the Advisor!
The current place to be is largely small and mid-cap stocks, and definitely in dividend-paying stocks. The S&P longterm is a good spot, but when the market takes a fancy to small caps it generally continues for some time.
Do some reading, review your portfolio (come around if you want ideas). If you are considering a particular stock, there may be a board discussing that specific stock. Look around.
Nobody cares more about your money and your retirement than you do.
Best wishes, Chris
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Let me tell a little more about all this.

DH retired from a company in 1996 that was Employee Owned, and ALL of our money had been in that one basket for close to 20 years. We were fortunate to be able to retire at age 51, but had absolutely NO knowledge of stocks, bonds, mutual funds etc.

Retirement that early was fun fun fun! We were up a huge amount when it starting falling about 18 months ago, and finally starting paying some attention to what was going on. It was then & there we decided we needed to know a little more about all this than we did....so, here I am, a Fool member and taking baby steps to get us back to some feelings of security again. And great steps we HAVE taken.

Thanksfully, we were/are well diversified, and have made a couple of decisions lately that (including INTC today) make us feel better about things.

It's a disservice to our FA to blame him for everything, when we are also responsible for what has happened to us...but we are taking a much more proactive approach to finances now.

Just as an aside, we finally started our first budget EVER in January 2002 (never needed one before). We've cut our monthly expenses over 30% while absorbing increases in monthly requirments, and reducing our monthly income by 12%. All in all, great strides!!

I just appreciate all the feedback & help from Fools around here...especially the LBYM board.

Kitty
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<we were/are well diversified, and have made a couple of decisions lately that (including INTC today) make us feel better about things.

It's a disservice to our FA to blame him for everything, when we are also responsible for what has happened to us...but we are taking a much more proactive approach to finances now.>


I think it is very helpful to post your questions here. There are very few of us who have not had a serious stumble or two along the way. My big one was LU (I know I have a lot of company with that one!). While some may say why cry over spilled milk, I think it is very valuable to go over our mistakes. If we can be objective about it, we can possibly avoid making them again.

I question just how diversifed you were with a 50% drop in your portfoilo. Some people thought they were diversified by having 5 different mutual funds. If they were all agressive growth funds they were wrong. Even funds that sounded like they had different goals had many of the same growth stocks in them. Many fund managers tried to goose their returns this way. It actually worked for awhile, but made for a steeper slide on the down side.

It is good that you want to take responsibility for your mistakes. However, I think you are letting your FA off the hook too easily. Since you stated that you knew nothing about investments, it was even more imperative for the FA to sit down and make sure you were all on the same page at the beginning. He should have clearly established what your risk tolerance was, your LT goals and how you would get there. It may sound counter intuitive, but I think your initial success actually shows just how bad a job your FA did.

The S&P index has a beta of 1.0. It is the standard by which volatility is measured. INTC has a beta of 1.7, which means it is 70 percent more volatile than the index. By contrast many stocks in the asset class of REITs have betas between 0.1 and 0.2, meaning that they are 80-90% LESS volatile than the S&P. Also REITs provide a very stable flow of income to their shareholders, which can be important to retireees whether they retire early or not. They can also provide some meaningful diversification to a portfolio. Has your FA ever discussed them with you or suggested you add them to your holdings? That may be a question you want to add to your list for your next meeting.


BRG

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What do the terms LBYM and INTC mean? Have just begun reading Discussion Boards. js
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What do the terms LBYM and INTC mean? Have just begun reading Discussion Boards.

++++++++++++++++++

LBYM = Live Below Your Means

INTC = Intel

LBYM is the most popular message board that Motley Fool has.

Intel is the maker of Pentium computer chips
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I would be interested to hear how other retirees have navigated this stormy market and what their results has been. And, better yet, what their ideas are for the future months.

Thanks to all,

Sam


I'm not retired, but I intend to in the next year, so I'm essentially at the same point you are regarding my mutual funds.

I've found asset allocation along the following lines has worked well for me:

Small Cap Value 12.5%
Small Cap Growth 12.5%
S&P 500 Index Fund 25 % (Large Cap Growth)
Equity Income Fund 25 % (Large Cap "Value")
International Fund 25 %

I rebalance every year.

The maximum drawdown with this allocation has been about 20 %, well within my risk tolerance levels.

The current value of my portfolio is at about 0% change from inception about 2 years ago.

b2w

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