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Author: martanzana Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75377  
Subject: retirement Date: 9/13/2006 11:23 AM
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I have a question for anyone. I am 56 years old. Will soon get $50000.00 to invest. Have annuity, deferred comp, mutual funds and stocks. What to do with $50,000.00?
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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: 53641 of 75377
Subject: Re: retirement Date: 9/13/2006 11:49 AM
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That really isn't enought information to begin to guess.

If you don't have a clue to where to start you might get the book, "The Bogleheads' Guide to Investing".

http://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0471730335/ref=sr_11_1/103-9229411-0993419?ie=UTF8

Greg

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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: 53645 of 75377
Subject: Re: retirement Date: 9/13/2006 9:54 PM
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Welcome martanzana. Glad you could join us.

Do you have a retirement date in mind? Have you worked out how much income you will need in retirement? And where it will come from?

This will help a lot in deciding where to invest the new funds. Fools usually recommend equities, and especially total market index funds or S&P 500 index funds, if you have any doubt. That is because, the S&P tends to grow steadily over time and gives you better returns than you get from bonds. So you are more likely to be able to make your funds last for the 30 or more years most of us expect to be retired.

Motley Fool used to have a retirement planning workbook, and occasionally there is a seminar on the subject. I think it is now available to subscribers to Rule Your Retirement. It walks you through the process for getting the numbers together to see how much you need to retire on and then how much investment you need to fund that retirement. There are also sections on how to close the gap if your costs exceed your funding capacity. Certainly there are other sources out there, but Motley Fool's is nicely done and easy to understand.

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Author: buzman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53646 of 75377
Subject: Re: retirement Date: 9/13/2006 10:34 PM
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Asking what to do with 50K on a internet message board is dangerous.

Put it in a MMF, power down your computer and read some books.

Four Pillars of Investing

Winning the Losers Game

buzman




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Author: hirundo Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53648 of 75377
Subject: Re: retirement Date: 9/13/2006 11:53 PM
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Hello martanzana,

I am just an occasional visitor to this board and pretty new to serious self-education about investing. Apart from agreeing generally with the responses already posted--especially the value in reading Four Pillars of Investing while leaving your $50K parked somewhere--I'll suggest that before or after pouring the $50K into an MMA you check the rates available at Treasury Direct (13 week and 26 week flavors) and for that matter on I bonds. The Fool's Bonds board may already have reasonably recent threads on the pluses and minuses of TD and Ibonds rates, for you to look at.

hirundo

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Author: buzman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53651 of 75377
Subject: Re: retirement Date: 9/14/2006 10:02 AM
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While I like I bonds, they carry a 3mo interest penalty if redeemed within 5 years of purchase.

buzman

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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: 53652 of 75377
Subject: Re: retirement Date: 9/14/2006 11:23 AM
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buzman writes,

While I like I bonds, they carry a 3mo interest penalty if redeemed within 5 years of purchase.

Assuming that one has room in their IRA/401k to buy a 2-year TIPS with a about a 2.5% coupon currently, why would one buy an I-bond with a only a 1.4% coupon?

intercst

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53653 of 75377
Subject: Re: retirement Date: 9/14/2006 11:35 AM
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>> Assuming that one has room in their IRA/401k to buy a 2-year TIPS with a about a 2.5% coupon currently, why would one buy an I-bond with a only a 1.4% coupon? <<

Well, in an IRA or 401K that's certainly true. But in a taxable account, maybe someone would prefer the tax deferral and state income tax exemption that savings bonds provide.

Still, with a 1.4% "fixed" return component, it's still not very compelling. My regret is that I didn't buy more I bonds in early 2000 when they had a 3.4% fixed rate. I bought about $4,000 worth and now I'm wishing I backed up the truck on 'em.

#29

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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: 53654 of 75377
Subject: Re: retirement Date: 9/14/2006 5:30 PM
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My regret is that I didn't buy more I bonds in early 2000 when they had a 3.4% fixed rate. I bought about $4,000 worth and now I'm wishing I backed up the truck on 'em.

They would be getting at most 4.62%, be careful what you wish for.

http://www.savingsbonds.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm

Greg


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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53655 of 75377
Subject: Re: retirement Date: 9/14/2006 6:20 PM
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I'm pretty sure that rate listing is the current rate those bonds are earning.

The best piece of evidence is that the semi-annual inflation is 0.5%, and the previous set of bonds, with the 1.0% fixed rate, are listed with a 'composite rate' 2.0%. But for their first six months they were earning nearly 7%. So that rate must be current, and not a long term average.

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53656 of 75377
Subject: Re: retirement Date: 9/15/2006 9:21 AM
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>> They would be getting at most 4.62%, be careful what you wish for. <<

That's not a bad "sure thing" guaranteed return when inflation was 1.2% annualized over the preceding six month period.

This assumes you think inflation will continue to be 1.2% per year. I wouldn't ever see these as a replacement for any of my equity allocation, but for cash equivalents and as part of an emergency fund, yes.

#29

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Author: buzman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53660 of 75377
Subject: Re: retirement Date: 9/15/2006 3:52 PM
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buzman writes,

While I like I bonds, they carry a 3mo interest penalty if redeemed within 5 years of purchase.

Assuming that one has room in their IRA/401k to buy a 2-year TIPS with a about a 2.5% coupon currently, why would one buy an I-bond with a only a 1.4% coupon?

intercst

------------------------------------------------------------------------

As mentioned by another poster, I bonds work a bit better in taxable account.

I like Ibonds but I mainly use TIPs simply because I believe a well balanced portfolio needs an allocation to that asset class.

Rarely do any of my clients use Ibonds-unless you count my nieces and nephews who get them in their stockings at Christmas each year.

buzman



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Author: MWFool100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53661 of 75377
Subject: Re: retirement Date: 9/15/2006 10:15 PM
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Hi Martanzana

Here's an option.........

This sounds like a windfall (i.e. not a planned retirement income source). Why not invest it in some high growth small cap companies? These are more volatile and risky but the reward can be much higher. If this interests you, I recommend you try a Hidden Gems trial subscription....it's dedicated to making some good gains in small caps.

MW

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Author: kahunacfa 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: 53769 of 75377
Subject: Re: retirement Date: 9/25/2006 3:41 PM
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I have not read Four Pillers of Investing or Winning the Losers Game.

Several books that I always recommend are: The Intelligent Invester by Benjurmin Graham (Value Investing orientation), Security Analysis second edition by Graham, Dodd, & Cottle, Not an easy read, One Up on Wall Street, Lynch, Peter, and Jim Cramer's Real Money, Cramer, James J.

Kahuna,CFA

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Author: greenvillewolf Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 54142 of 75377
Subject: Re: retirement Date: 10/26/2006 11:13 AM
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Send it to me, and I'll invest it for ya! ;)

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