General Question

woolmark's avatar

Investments that preserve capital?

Asked by woolmark (9points) March 22nd, 2010

I’m turning 60 very soon and have most of my retirement money invested in stock mutual funds. I’m looking for some recommendations towards conservative investments that would preserve capital while providing some return (better than a CD or money market account). My portfolio is not back to the value it was prior to the 2008 meltdown but it’s only off about 15% so I feel now is the time to make an adjustment in my retirement account. I’m curious what are folks are doing that are in my age bracket.

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21 Answers

talljasperman's avatar

my moms 61 and saving $2000 (total not per year) for her retirement and she thinks it will be enough…seing she eats out a lot It will be a struggle to save

anartist's avatar

@talljasperman ????

has saved [throughout her lifetime] a total of 2 thou?

talljasperman's avatar

@anartist yes… but its actualy closer to $1300 in life savings… shes adding my $700 to her total…but we do own a 30 year old T.V. and this computer

anartist's avatar

What constitutes retirement for her? Has she always been a housewife and your father is the bread earner and his retirement plans will take care of them both? Does she own a house free and clear?

talljasperman's avatar

@anartist shes divorced and I’m disabled… she works full time as a cashier… she will get $400 a month in pension when she turns 65…she can apply to have it bumped up to $800 if she doesn’t have any income

anartist's avatar

are you living with her?

talljasperman's avatar

@anartist yes… we split rent and bills

anartist's avatar

I think we have gone off-topic. we could continue on comments if you like

anartist's avatar

@woolmark my apologies. Do you have enough for a small real estate investment like a small condo in a location location location in a city? Maybe to rent short term. My neighbor on Capitol Hill rents her very small condo on capital hill to lobbyists, researchers, at very lucrative rates…similar to The Residences at [one of the big hotel chains]

susanc's avatar

@anartist: I don’t think a $2000 investment is going to get them into a rental condo.

anartist's avatar

I was not talking to the man with $2000—that thread went off topic and we are talking privately. No I was asking woolmark.

njnyjobs's avatar

@woolmark check with you financial adviser if they can advise any mutual bonds worth looking at.

thriftymaid's avatar

treasury bonds

anartist's avatar

bond funds, tax-exempt, intermediate term

Just_Justine's avatar

I am in a different country to you. But I will try and perhaps use the same logic.

When investing post retirement funds some of the investment choices should be influenced by the following.

tax implication of the investment – meaning what is your tax liability when using the funds, does it incur estate duty? does it incur tax at your marginal rate? is it in line to receive tax exemptions (both on dividend and age of person). Also is it subject to capital gains tax.

Another factor is your time frame plus other investments you have. For example carry out an assets and liabiliy check, any debt in your “estate”. Can a property be sold in order to carry forward to retirement income? (liquidised to provide income). If you have debt get rid of it.. Remember return is less inflation in current terms, plus negative interest. (minus tax, and the others I have mentioned).

You spoke of preserving income, so you need to ascertain which type of income you require from this fund at the end of the term. This will influence asset choice. Perhaps ask a broker to sit with you and do a cash flow analysis. Of conservative moving to moderate and then finally spare cash going to more aggressive funds. (This is more in the income phase). There are technology funds that allow clients to use both aggressive funds but have guaranteed cash floors. So you can enjoy high upswings.

Finally when you retire you have a choice of a linked investment or a fixed interest investment. Which a broker will explain.

Ideally money should be split into risk ranges suitable for time, and objective then your risk profile and fund choice will become clearer.

Have a financial needs analysis done by a reputable Financial Adviser and do ask for qualifications.

CyanoticWasp's avatar

I’m 56, and I’m still investing fairly aggressively. I don’t imagine that I will ever have enough for a “comfortable” retirement, so I’m planning to work as long as I can, which makes the investing thing more or less moot: if I lose it all, well, I was planning to work anyway. (But it’s unfathomable to me that I could ‘lose it all’; I’m not investing that aggressively.)

anartist's avatar

@CyanoticWasp I love your attitude! I don’t think would feel comfortable not working, either. Sort of feel, you stop working, you die a little, as in an earlier fluther muster yesterday I’m older than you are and I lost a helluva lot [not on the market] a few years back. I’m retired but still work freelance/contract and still learn knew things and try new projects. Even though comfortable is no longer an issue, I still tend to invest a LITTLE aggressively. A lot of people in my shoes would bury themselves in treasury bonds and put a blanket over their heads.

plethora's avatar

I am in the business of advising people on exactly this sort of question, for 30+ years, and I never give any opinion until I have had at least a one hour discussion with the person (the couple, if married) and know everything they have and am certain of their goals and their basic knowledge of investing money. This I will tell you. Forget all you have learned up to now (in the accumulation phase) and learn the rules of investing in the decumulation phase. Better yet find an experienced person who does what I do and go to them. Pay their fee and take their advice. If you think the advice is not good, then find another one. Stay away from the brokerage houses. They work for the house first and then for you, maybe. Go to an independent. It would be a good idea to continue working in some capacity. I plan to do so for the rest of my life, but I am in a business that is very conducive to that.

@anartist “you stop working, you die a little” You are very right.

anartist's avatar

@plethora “Forget all you have learned up to now (in the accumulation phase) and learn the rules of investing in the decumulation phase. “You’re advice is very relevant and will require some serious thinking. Someone even suggested a “reverse mortgage” but I am definitely too young for that! This may be hard for me to do if it becomes an issue: one does not want to accept being in a “decumulator” phase if one is relatively fit, vital, and engaged in the world.
I’m sure it will come up when I meet w/FA later this month or next month.
Thank you again.

The ‘thank you’ button went off when I posted this. Sooner or later I’ll pick up fluther ways”

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