I have a question for the investors that have done well over the years and I want some opinions on how to invest for income if you are already retired.
Here's the situation a good friends father is 75 years old and has 100k to invest and I have been asked to help out.
I currently have many canroys and have been happy with the results and I believe that these should also make up a portion of his porfolio.
I was thinking like this:
1) ERF or ES (Energy Split) mutual fund - ES.TO - 25%
2) Enervest - EIT_u.TO - 25%
3) REIT mutual fund - 25%
4) Bond mutual fund - 25%
What do you guys and gals think?, since this board isn't shy about their opinions by any stretch of the imagination!.
Any specific funds to recommend?
There's a lot of real bad advise going around here.
"Pick big blue chip stocks." That's garbage. I'm retired, and last year I realized a 63% return by avoiding those stocks-they went nowhere; MSFT, C, MCD???
"Pick a plan and stick to it." That's real bad advice. Some of my friends never fot out of the market in 2000, and are still sitting there with 50-70% losses. I enjoyed three bubble years after retirement (1997,1998,1999). When things started going south I sold everything and sat with cash, slowly investing in REITS and small financials. I made a fortune while those guys who stuck with their plan were getting bombed.
You must be flexible and only buy companies with good managment who don't rape the cash flow with self-serving options.
Wish all success!!
Retired, and picking stocks --- Experts disagree on best way for retirees to navigate market
By Andrea Coombes, CBS.MarketWatch.com
Feb. 22, 2004
"Retirement used to signal a switch to more fixed-income investments, the time to bow out of the stock market and leave that kind of risk to younger people. Now, longer life spans, rising health-care costs and other factors are pushing retirees to stay in the market longer in search of much-needed portfolio growth."...
Geez thanks for all of the help and recommendations, I have a lot to study which is what I like, and your right we don't have to jump into these all at once, at least he avoids the risk of being 100% invested in the S&P 500 - too much risk, LOL
Investing for Income
"QUESTION: I am 64 and retired. How do I invest in mutual funds to earn income?"
ANSWER: Investing during retirement is tricky business indeed. While a young investor has years to make up for poor investment decisions, an error in judgment could be devastating for a retiree. We'll give you some investing advice in the paragraphs that follow, but if you're concerned about your cash flow during retirement, we also suggest"...
SmartMoney's: Bond Investing
� Bond Allocation
� Investing for Income
� Investing for Profit
� To Swap or Not?
� A Bond Primer
� Ten Things Your Broker Won't Tell You About Bonds
� Bond vs. Bond Funds
� The Living Yield Curve
� Bond Calculator
What are my options for investing for income?
Some options for investing for income are:
Shares - many shares pay dividends regularly, increasing your chances of obtaining a regular income from shares.
Property - investing in property can provide rental returns, however, a large capital outlay is required.
Cash and fixed interest - investing in cash and fixed interest can provide a steady return but does not keep up with inflation if you take the returns as income.
Income streams - income streams are investment products that provide an income from a lump sum investment.
concept of the two types of risk: (page 2 of 24)
..."Market risk, which deals with market volatility (e.g., the stock market); and non-market risk, which deals with the volatility of a particular asset (e.g., a company that may go bankrupt). An investor should obtain higher returns by accepting greater market risk (i.e., investments in stocks are riskier than in bonds, so as market risk increases so should the return on investment).
On the other hand, non-market risk generates no additional return because an investor can avoid it by diversifying her investments. An investor should take at least two steps to deal with these risks. First, she should determine the level of volatility she is willing to accept in exchange for the return she hopes to receive. This will determine the level of market risk she assumes. Second, she should diversify her portfolio in accordance with her chosen level of market risk to avoid non-market risk.
The second concept, more controversial than risk, is that of market efficiency, which assumes that information about assets is disseminated efficiently and all assets are priced more or less correctly. If this is true, no investor should be able to consistently outperform the market. An investor�s best strategy, in that case, is to invest passively, primarily through index funds, which should perform as the market does as a whole. Under the theory of market efficiency, active management (picking particular stocks, for example) is problematic because it generates additional management expense without a consistently higher return."...
Standard & Poor's brochure, Investing for Income presents information on:
(This Australia PDF article is from 2002, but covers diversification, etc.)
Fixed interest markets
Fixed interest investments
The benefits of diversification
The impact of interest rate movements
Fixed Income and laddering forgets INFLATION.
Sure this has not been a concern for a while and all the talking heads say it is still no so!
BUT oil is at $35, Gold is at 400, the EURO is at 1.25, copper is at 1.30...
WHAT is this?
I like the first mentioned portfolio... as it had 50% based on raw materials, a natural inflation hedge...
BUT the first money MUST be in TIPS!!! ladder TIPS forget treasuries
Free advise, DONT forget it!
Very Good stuff here and I wasn't aware of Treasury Direct bonds from the Feds.
The investment planners from smartmoney are a good place to start and it looks like it can be used for all age groups.
The last link talking about "Prudent Investor Litigation" is real eye opener and I believe that too many retirement accounts are being set up too quickly without proper investment considerations.
incorrect link.. that was to the index themselves.. not the ETF tickers...
look at the whole site.. it is pretty good..
HEHE!!! u can also check
LQD SHY and TLT... bond funs..
mabye as rates go up u can put a little investment in each as priceses go down and yields go up.. i like the REITS but i am not sure that if rates go up they won't go down.. so i would wait for putting money in them.
I think u are in a position... HEHE!! Right in the middle of a market turn, and trying to figure a good direction...
here is a list of ETFs that give some ok returns for income and pretty good for research....
i think i gave you
I think that you had better check your allocation plans.. you are much too concentrated. My own thoughts are that the bond and REIT funds have already had their day... you're getting very late to the party. Good luck with your no win situation.