Quote:
Originally Posted by Larry-NC
It used to be that the fraction of your savings that should be in bonds and CDs corresponded to your age. 60 years old--60% in bonds and CDs, 40% in stocks.
Financial advisors these days admit that's no longer sustainable. With a couple of administrations forcing interest rates down (possibly for political purposes), we have to keep our investments in shares.
I'm 74, just a couple of years younger than you, Mike, and on a fixed income. I forsee that the proposed jump in minimum wage (also for political purposes) is going to cause an inflationary spiral that will hurt me badly.
Am I prepared? is the original subject of this thread. Yes. I have substantial resources, shares and bonds/CDs/cash. I will just leave less to my heirs than I planned.
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My Bank is always pestering me to sit down with one of their "financial advisers" (they think I keep too much cash in my checking account). One day I decided to put an end to the pestering. I set up an appointment along with my wife.
We met with a "20 something" young lady who looked like she'd just graduated the week before. She started telling us how we should be investing our money. I told her that before we got into that she should share how "her portfolio" was doing. Her response ------"not very well". We both got up and told her to not bother calling us again and added "why would we want to take investment advice from someone that wasn't doing as well with their investments as we were". Sure, it was a little harsh, but I don't get pestered by my bank anymore and it doesn't look like I'm going to be homeless or eating dog food in the near future.
FWIW, "financial advisers" are compensated by either commissions on what they sell or the institution they sell for. Guess where that money comes from. Right out of your pocket.
Biggest way to prepare for retirement and live well in it is to avoid debt like the plague. Also, while working take advantage of every opportunity to put away money in deferred tax instruments like IRA's, 401K's, etc, etc,. Lastly, don't use your home equity like an ATM.
Everyone has their own strategy but this is what worked for my wife and I. When everyone's Retirement Funds took a major "haircut" in the last recession my wife and I didn't lose a dime. While the "financial advisers" were pushing the high yield (and high risk) investments my wife just followed the "slow and steady wins the race" philosophy.
BTW, there's a lot of competition out there that's cutting into the traditional big bank business. Lots of "internet only" banks and Credit Unions that are offering HUGE multiples of regular bank CD's. They don't have large "skyscraper office spaces" to maintain along with thousands of employees. For all practical purposes they exist on the internet only yet are FDIC insured. When the choice is a CD from a major bank offering .15 percent interest or an internet bank offering over 3%, what would your choice be.
Bonds? Only as good as the company issuing. Wonder how bond holders made out when GM filed bankruptcy? Bethlehem Steel?
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