I couldn’t tell you the particulars but we had a meeting with our financial adviser and the person who advises the allocation. We tweaked it a bit. More stocks, less bonds. It seemed like the bond market is down.
1 Like
Interesting. The “old” advice was to increase bonds and decrease stocks as you get older, but I know my bonds have lost a lot over the last years, and of course stocks have increased quite a bit.
That was the recommendation but my husband said no. Because the bond market is bad.
1 Like
Generally, this is true. Bonds were already overvalued when we moved to the US and we gave instructions for them to be mainly in short dated bonds (less capital loss when yields rise). Our bond portfolio portion has been pretty stable the whole time, which I’m happy with. Didn’t expect it to grow, but didn’t want it to fall. It’s been like that. Stocks, as you say, have done great. They also meant our 529s could fully fund the kids’ college fees, which we hadn’t expected to be the case so that was a great bonus.
Stocks - also depends what type of stocks. Generally the traditional advice is reducing stocks /reducing more risky stocks as you get closer to retirement. Some stocks are safer in that less potential for price rises but good stable dividends, for example. But it really depends on what your starting point is and how big your “sleep at night” part of the portfolio is, as well as myriad other factors such as property ownership, retirement plans, individual tax circumstances etc. it really should be individualized advice based on your own circumstances.
1 Like
Generally, as you age and get closer to retirement (or are in retirement) conventional wisdom always has been to start shifting from stocks to bonds. But what that allocation looks like is so dependent on the individual/couple. How old are you? How risk averse are you? What’s your family longevity look like? In other words, does your money need to last you 20 years or 40 years? How reliant are you on these funds – do you have pensions, SS, annuities?
So, yeah, it’s difficult to say. I can tell you that our FA told us that when we meet later this year, he is making us go down to 65% stocks/35%bonds for the money he manages because of our ages and what we say we want the money to do for us (pay for retirement rather than a legacy account that all goes to the kids). I am not risk averse. I want more stocks so we have money in accounts that we don’t let him manage that is heavier in stocks. 
2 Likes
I’ve heard this go both ways.
One camp says “I have a pension so I have no need to be risky with my money so I invest conservatively “
The other camp says “I have a pension so I will always have an income so I can be riskier with my investments”
I personally have a pension and continue to invest 60/40 stocks to bonds.
3 Likes
Does anyone have a link to a site where you can input your medications and it’ll help you figure out the best Medicare prescription plan? I thought I read about one here but can’t find it.
‘The rule’ has typically been when stocks are up bonds are down and vice versa. However 2022 had both stocks and bonds down.
I never liked bonds, but needed something to reduce our portfolio risk, specifically with DH’s large 401k and the rest of our investments. We found the solution with our financial planner.
Instead of bonds, we have purchased various annuities over the years, spinning out funds from 401k to purchase annuities which are considered pre-tax retirement funds. As with everything, these annuities have to be carefully chosen by someone who evaluates their features. There are times when there is not a good annuity to be purchased. A lot of financial people do ‘sell’ annuities because of the commission received. Our financial planner (CFP, who is to work in the investor’s best interests) reduced our portfolio risk with annuities (neither DH nor I have pensions). We established a relationship prior to purchasing any annuity, and consolidated and cleaned up our investments. We continue to manage DH’s 401k - it is under DH’s former employer plan. Our first two annuities have matured (10 years) - one was mine from IRA funds and one was DH’s. We currently have 5 annuities (4 are DH’s), purchased with ‘spun off’ funds from DH’s 401k which had grown over the years with portfolio now in three stock funds - the annuities are with various Insurance companies with different maturity (6 - 12 years) and contract terms. After a year with the annuity, we can withdraw penalty free a certain amount of funds each month - and that is our cash flow in addition to our SS. 20% Federal tax is withheld, and the value of the annuity doesn’t go down because of the annuity guaranteed gains (with the contract terms). Our financial planner manages the paperwork, and we have the monthly payments go into our checking account with electronic direct deposit. Every year, we make sure we have the maximum penalty free monthly payments out of these annuities. We did the last very sizable annuity purchase July 2021 - and our financial planner said that was a good move - and many people would not have done that move. But the size of the 401k had gotten so big we had to reduce our risk. Our personal return in 401k in 2019 was 34.41%, in 2020 was 34.85%, and 2021 was 15.20%. Suffered the 2022 downturn (-26.92%) - that was the only year our funds with financial planner did better than our 401k portfolio (they control things a little better w/o big losses which took everyone by surprise that early Jan 2022).
1 Like
We were in the muni bond market for many years. Had a bond fund that was managed by our broker which invested only in double tax exempt bonds (so bonds only for our state). (We live in a high income tax state). We pulled out of it when my husband early retired. Moved most of that money into CDs and interest bearing accounts. The bond market was not doing well, our bonds were being called early constantly and therefore not yielding what they should.
I will never purchase an annuity. I don’t think they are a good investment in most cases, and husband and I both get pensions.
4 Likes
There used to be some excellent annuity products available - I don’t think that’s the case any longer. I worked in a financial planners office and I found them complicated and difficult to understand. Most of the clients did as well - and a few were very unpleasantly surprised.
5 Likes
We are not a big fan of annuities in general, though I can see why SOS wanted them after careful study and consultation.
However for my small-ish pension, it was a no-brainer to take the annuity option rather than the cash option. The terms were favorable, and two FA (at retirement planning class followup private sessions) agreed that they could not offer any products to compete if I took cash. This way I have a set monthly payment for as long as I live. (Mom lived to age 89, and Dad is 97.)
4 Likes
Just returned from our semi-annual meeting with our CFP – our annuities are doing about 10% annual return and maintaining our principle (about 31% of our portfolio assets are in annuities).
To build better investments (and mitigate bond risks) our financial group has gotten enough of a pooled mutual fund to get into private real estate debt markets (less than 5% of individual investors are eligible to tap into this), joining hedge funds and pension and endowed fund groups. They go after secured debt, real estate hard assets with 50 - 51% of loan to value, short term loans (upgrade current property). We attended the group semi-annual meeting and then we have our individual meeting with our financial guy shortly after the group update.
Our Roth IRAs are with total equity funds with our financial advisor group and we will keep an eye on the returns on this new investment area for our financial group.
We are doing some home improvements this year - some with insurance claim area damage and some to upgrade/maintain the home.
Next door neighbor is getting their deck replaced, and our cantilevered two second floor decks will get replaced – the latest material which will keep them like new for many years. The fellow is giving us a quote and we will get in his work queue. As soon as the insurance areas get done, will see what work we want to have continue to be done in our home for ‘refresh’. Still waiting on insurance line-item adjustments on the roof materials (IBHS Fortified roof) – adjuster is talking to inspector and contractor, then we can sign a contract and have the roof done. Insurance has been a bumpy road, but it seems they are paying out correctly and we have a good contractor who we have used before. Once roof is started, we can iron out a contract for formal living/dining room and master bath. Insurance to upgrade the line item on flooring with ITEL carpet and pad analysis sent in (we are getting hardwood flooring with paying the difference, which will primarily be with installation as our carpet/pad is tippy top grade). Contractor won’t start on interior until roof is done.
2 Likes
It’s one thing to leave her the house, but could she afford the upkeep? Kind of pointless if she can’t!
2 Likes
Cliff notes, please? It is behind paywall. Thanks!
1 Like
Thank you! I know just the person who needs to see this.
1 Like
I just can’t relate. I LOVE being retired!
6 Likes