<p>I think Harry Dent is full of crap. I have no idea who Kelly Evans is. </p>
<p>There is a positive bias to the stock market. The economy grows. Money supply grows . Credit usually grows. Companies are leveraged so they have more upside if business improves. The wealthiest people in society want their stocks to go up which is a big positive. </p>
<p>If you are young and you dont own assets, you arent going anywhere financially. I have told my daughter her financial assets should be 100 percent invested in stocks. </p>
<p>So⊠I am not super gloomy.
I think notrichenoughâs post about what may happen if rates rise looks right⊠But maybe stocks just go up less if rates normalize. </p>
<p>I guess my point is, I hope people are not relying on making real compounded returns of 3 to 5 percent during retirement. </p>
<p>Just my opinion. </p>
<p>The following was amazingâŠ</p>
<p>Only 2,000 people between the ages of 25 and 54 watched one of Jim Cramerâs Mad Money shows a couple of weeks ago.</p>
<p>2,000!</p>
<p>You get bigger crowds at some high school rallies. My old high school definitely had bigger crowds.</p>
<p>Kelley Evans is one of the cnbc hosts.
I donât watch Jim Cramer anymore because his show doesnât come on at night for the West Coast people, maybe thatâs why the viewership dropped, who is at home around 3-4pm? I got a lot of tips from people calling in asking him about their stocks. Now I received nothing, no clues whatsoever.</p>
<p>The question then becomes, âwhat is a normal interest rateâ. And, IMO, that answer depends on what the return on assets is. Companies wonât borrow at a higher rate than they can earn on the borrowed money.</p>
<p>Iâm not sure that bank account rates would get bid up much by banks, because they canât put the money out to creditworthy borrowers at particularly high rates. </p>
<p>Revenue growth has been very tepid during the recovery. Companies are squeezing more and more earnings from very light revenue growth, and there is a limit to how much can be done with thatâŠwhich I think we are near. </p>
<p>I think in todayâs market, if companies can make mid-upper single digit returns, thatâs not so bad. If you can invest in stocks and get high single digit returns, thatâs pretty darn good compared to the 10 year treasury at 2.6%. And it would be still good if the 10 year treasury went back to a 4% yield, although that might trigger some equity value adjustment. </p>
<p>There are clearly some posters here that are comfortable with investing, and some that really want to learn more before they invest on their own. Some (like me) use a professional because H and I believe we have less risk and greater returns. My H also understands things better with our finance guy, and our finance guy is doing this for his living - he lives and breathes this stuff. We still manage the majority of our funds in Hâs 401k - limited choices of funds, but do the best we can (and our professional has also looked at our funds there too). H and I talked about 401k last night after I revealed the amount it has grown to (the highest we have ever had), and I told him donât get too comfortable with that number, because the stock market will have some kind of adjustment. I am not moving all our money thinking there is going to be a major downturn - some on this thread are a lot more optimistic (as also discussed by a poster).</p>
<p>With retirement (as with pre-retirement) it is income and expenses. So if you do pretty well on the income side and manage pretty well on the expenses sideâŠ</p>
<p>So people really get a charge out of living high. H and I do not. Saw a show about a 3 month cruise where the guests in the best accommodations pay $500,000. Cannot fathom that level of wealth and that way of living. I imagine the top staff are paid pretty well, but I imagine there are a fair number of resentful worker bees on the ship. I went on a one-week cruise one time - enjoyed it; to me it was a nice vacation for me to do one time. I know a gal (another cancer survivor) that goes on three or four cruises every year over the last 20 years - I am astounded at spending that level of money (she isnât wealthy) - I think she just lives for the next cruise. However everyone has their own bells and whistles and have the right to spend their money as they wish. I just could not in good conscience live the high life when there are so many people in need.</p>
<p>I think most people agree there is going to be a stock market correction - I hope it is a soft one.</p>
<p>My take on inflation is that normal average inflation about 2% is good for stocks, stocks will keep up with inflation, but rampant inflation is bad for stocks because people canât afford things, donât buy as much, start to cut back.
I think this is what Janet Yellenâs been alluding to in her testimonies. She said she is trying to keep the inflation around 2%.</p>
<p>We own no bonds. A lot of our retirement money is in TIAA guaranteed, which pays a guaranteed return based on when the shares were acquired. The returns are quite good, 3-6%. The money canât be withdrawn, though. The only option is to set up a 10-year withdrawal plan. So you can take out 10% (no more, no less), but then you are required to take out the rest on a prescribed schedule. There is always the option to annuitize, and TIAA-CREF is a good company for annuities, I believe. (I guess these funds must be invested in bonds, so maybe we do own some bonds indirectly.</p>
<p>Some of our investments, both retirement and non-retirement, are with a private financial manager. He uses bonds minimally, preferring dividend-paying utilities as an alternative. </p>
<p>I wish I knew as much about investing as some of you. But with the job and kids, there has never been time. So our âstrategyâ has been to save aggressively, but pay no attention to how the investments are doing. Once every few years we look at things and make adjustments that seem to make sense. </p>
<p>I used to think that weâd made a big mistake leaving so much money in TIAA, instead of the stock market. But now that decision doesnât look so bad.</p>
<p>This is the foundation of a sound plan. Itâs very hard to âinvestâ yourself to prosperity in old age, but it is possible to âsaveâ yourself to a level of comfort. The investment returns are icing on the cake. </p>
<p>NYmom, we have always contiributed to tiaa-cref, 20% to tiaa guranteed, 80% cref stocks. Many years later, our balance is about 10% tiaa 90% cref. In rebalancing I count tiaa with cash and bonds.</p>
<p>Yes, I count TIAA as âcashâ, too - but knowing that the liquidity is very limited. So instead of bonds, we have TIAA guaranteed and dividend-generating utility stocks. </p>
<p>True, liquidity is limited. I was jus looking at the stablity of the price. We are having trouble rebalancing with stocks having appreciated so much.</p>
<p>Igloo, do you know that TIAA also has a liquid option? The interest rates are lower by about a point, but you can park money there as cash, get decent returns, and it is completely liquid.</p>
<p>Why give up on trying to invest well? I havenât figured it out yet but Iâm working on it. Investing well over investing poorly seems like the easiest money you can make. A 10% return annually over 30 years multiplies money by more than 17. A 6% return annually over 30 years multiplies money by less than 6. Itâs a huge difference. Better returns also mean the less money you need to retire on, because your money is making more for you. This seems like the worst thing to give up on and say âmeh, itâll all work out.â Of anywhere to excel, this seems like the place you want that excellence to be. </p>
<p>Also, just an illustration: </p>
<p>Save 20K a year for 25 years at 6%, thatâs about 1.1M. Not an amazing retirement.
Save 20K a year for 25 years at 10%, thatâs 2M. You can retire on that very happily. </p>
<p>I donât know what youâre talking about with âitâs hard to invest yourself into prosperity.â</p>
<p>NYmom, Thank you for the tip. Does the price go and up down like bonds? We are so close to retirement and consolidating funds that I am weary of any price movement.</p>
<p>Iglooo, I donât think there is a price, exactly. You make contributions, usually by payroll deduction or employer retirement contributions, and the return is set each year, with rates varying by year of investment. This seems to be a current rate table:</p>
<p>So contributions made now will earn 3.5% this year; while contributions made in 2008 make 5% this year. Sometimes the earnings are more than the established rates, but only the established rates are guaranteed. I think that the rates for the âliquidâ option are one point lower. I put some money in this in 2008, so it is probably earning 4% this year.</p>
<p>But you should call them and ask. I may be wrong on some of these points.</p>
<p>Iglooo, I thought again about your question - you are asking whether principal can be lost, right? I am virtually certain that the answer is no. My understanding is that if you transfer money into the liquid option, it will earn 2.5% this year. Iâm not sure whether you can transfer money into the regular option, but if you do, and accept the loss of liquidity, then you should be earning 3.5% this year, with no risk to principal.</p>