HELP..not sure what to do at 55 YOA

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BurnedBefore
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Location: San Diego

HELP..not sure what to do at 55 YOA

Post by BurnedBefore » Wed Apr 11, 2018 4:21 pm

FIRST OFF, I AM SORRY FOR USING ALL CAPS. I'M NOT YELLING IT'S JUST EASIER FOR ME TO SEE THE SEPERATION FROM THE QUESTION TO MY ANSWER :-)

Emergency funds: YES
Debt: Only debt I have are 3 credit cards which I pay off every month ($4000.00). No mortgage or other monthly payments other than a $250.00 mo HOA fee.
Tax Filing Status: Married and file jointly- we have no kids or see them in our future
Tax Rate: xx% Federal, xx% State
State of Residence: California
Age: 55
Desired Asset allocation: NONE- Got burned years ago. I have no idea how much to put in stocks or bonds
Desired International allocation: None and have no idea

Current retirement assets

Taxable
xx% cash (100%)
xx% fund name -NONE
xx% stock company name - NONE

His 401k- NONE

His Roth IRA at VanGUARD- NONE

His Rollover IRA at Schwab- NONE

Her 403b - NONE

Her SIMPLE IRA at Fidelity- NONE

Her Traditional IRA at Vanguard- NONE

Total of All Accounts Together -NONE

Contributions- WE HAVE A LARGE SAVINGS ACCOUNT. I WILL JUST SAY IT IS SIX FIGURES

New annual Contributions
$xx his 401k- NONE
$xx her 403b- NONE
$xx his IRA/Roth IRA- NONE
$xx her IRA/Roth IRA- NONE
$xx taxable (for retirement, not short term goals)- I HAVE AN HSA ACCOUNT FOR MEDICAL BILLS

Available funds -SAVINGS ACCOUNT

Questions:
1. I HAVE NO IDEA WHAT TO INVEST IN. I DON'T WANT TO GET TO 70 YOA AND HAVE THE MARKET CRASH AND LOSE EVERYTHING LIKE OTHERS I KNOW.
SO I DON'T KNOW IF CD'S WILL BE THE SAFEST OR WHAT THE MATURATION DATE I SHOULD BE AND SHOULD GET AN ADVISOR OR FIDUCIARY OR NEITHER AND DO SIMPLE INVESTMENTS ON MY OWN LIKE INDEX FUNDS THROUGH SOMEONE LIKE FIDELITY OR VANGUARD? I HEARD ABOUT A COMPANY CALLED CREATIVE PLANNING BUT ALL THE HIDDEN FEES SCARE ME WHICH IS WHY I WAS THINKING ABOUT CREATIVE PLANNING?

2. WE OWN OUR HOUSE FREE AND CLEAR. PART OF ME WANTS TO INVEST IN REAL ESTATE BUT I DON'T WANT THE HEADACHE OF A BAD RENTER. SHOULD I DO JUST STOCKS AND BONDS OR IS THERE ANOTHER ROUTE? MY AGE IS 55

THANK YOU SO MUCH IN ADVANCE

REPLY:
Hey everybody,

first I want to say thanks for all your input, it's greatly appreciated!!!

The interest rate I am earning on the cash is .006%..I know its horrible!!

I am a self employed individual with no options for 401Ks or other retirement plans. I am going to do the Roth IRA max.

I got burned back in 1999 with a mutual fund I was told was a good buy. As soon as I bought it tanked. I waited 5 years and it tanked more so I pulled out. lost 60k.

Invested in real estate and made my money back. I no longer want to or am able to invest in real estate. I moved to California and the housing market here is hugely inflated and it's going to blow. Also, it's a pain and the laws out here screw over the landlords if you get a bad renter.

My tax brackets are 15% and 4%. I own a business and cut myself a small check, which is why my bracket is so low....for California!

Also, I wanted to do a fixed annuity account with Hartford but some friends scared me out of that. Not FDIC insured and a lot of fees.

Thanks again everyone
Last edited by BurnedBefore on Fri Apr 13, 2018 2:09 pm, edited 2 times in total.

jpsc
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Re: HELP..not sure what to do at 55 YOA

Post by jpsc » Wed Apr 11, 2018 5:44 pm

wow, you have it all in saving account that probably earn a nice whopping 0.25% ?
if you take that six figure saving account and put in I-bonds, you would earn at least 2.48% lately.
I have some I-bonds that go back to 2000, and they earn a nice 5%, all Fed tax deferred, no state/local income tax.

Personally, this is a bad environment to get into stock market, and with rising interest, you don't want to buy US Treasury either.
earning 2.48% seems great, rather than loosing 15%

JoeRetire
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Re: HELP..not sure what to do at 55 YOA

Post by JoeRetire » Wed Apr 11, 2018 6:01 pm

BurnedBefore wrote:
Wed Apr 11, 2018 4:21 pm
1. I HAVE NO IDEA WHAT TO INVEST IN. I DON'T WANT TO GET TO 70 YOA AND HAVE THE MARKET CRASH AND LOSE EVERYTHING LIKE OTHERS I KNOW.
SO I DON'T KNOW IF CD'S WILL BE THE SAFEST OR WHAT THE MATURATION DATE I SHOULD BE AND SHOULD GET AN ADVISOR OR FIDUCIARY OR NEITHER AND DO SIMPLE INVESTMENTS ON MY OWN LIKE INDEX FUNDS THROUGH SOMEONE LIKE FIDELITY OR VANGUARD? I HEARD ABOUT A COMPANY CALLED CREATIVE PLANNING BUT ALL THE HIDDEN FEES SCARE ME WHICH IS WHY I WAS THINKING ABOUT CREATIVE PLANNING?
It seems as if you are radically risk-averse. I would suggest that you talk with a fee-only Certified Financial Planner.
You would discuss your goals, your current financial situation, and what you might need to change to achieve your goals.

But if you aren't comfortable doing even that, just put your money in a high-interest online money market account and get 1.5% or so. Hopefully your 6 figures with modest interest will get you where you want to be.
2. WE OWN OUR HOUSE FREE AND CLEAR. PART OF ME WANTS TO INVEST IN REAL ESTATE BUT I DON'T WANT THE HEADACHE OF A BAD RENTER. SHOULD I DO JUST STOCKS AND BONDS OR IS THERE ANOTHER ROUTE?
It doesn't seem as if you really want everything that comes with owning rental properties. So best to avoid that and stick to what you know.
Last edited by JoeRetire on Wed Apr 11, 2018 6:03 pm, edited 1 time in total.

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ruralavalon
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Re: HELP..not sure what to do at 55 YOA

Post by ruralavalon » Wed Apr 11, 2018 6:03 pm

Welcome to the forum :) .

You need to invest in something.

A regular savings account feels safe, but will probably give a negative real return net of inflation.

What interest rate are you receiving on your savings account?

More information is needed in order to to suggest ideas for relatively safe investments you could consider.

What is your tax bracket, both federal and state? (This will help you decide what type of account is better for you.)

Is there a work-based plan (such as a 401k, 403b, 457, SIMPLE IRA, or TSP) offered at your job? If so is there an employer match offered? What is the match? What funds are offered in the plan? Please give fund names, tickers and expense ratios. If the work-based plan offers a stable value fund, what return has it been paying?

Please simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

22twain
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Re: HELP..not sure what to do at 55 YOA

Post by 22twain » Wed Apr 11, 2018 6:21 pm

BurnedBefore wrote:
Wed Apr 11, 2018 4:21 pm
Got burned years ago. I have no idea how much to put in stocks or bonds
It might help if you could tell us something about how you got burned. Was it something like a handful of individual stocks like pets.com during the dot-com boom of the late 1990s? Or were you in mutual funds and you bailed out at the bottom of the Great Recession in early 2009? Or what?

livesoft
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Re: HELP..not sure what to do at 55 YOA

Post by livesoft » Wed Apr 11, 2018 6:22 pm

One immediate thing you can do is tell us the interest rate that you are earning on your cash.
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The Wizard
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Re: HELP..not sure what to do at 55 YOA

Post by The Wizard » Wed Apr 11, 2018 7:10 pm

Get that savings account up to mid seven figures and I don't see any problem...
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alter
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Re: HELP..not sure what to do at 55 YOA

Post by alter » Wed Apr 11, 2018 7:44 pm

Unless you start investing, you are on track to getting burned again when you turn 70 and find out how much cat food and ramen prices have gone up.

Dak52
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Re: HELP..not sure what to do at 55 YOA

Post by Dak52 » Fri Apr 13, 2018 2:16 pm

Hi BurnedBefore,

Have you looked into your options with a SEP IRA? https://www.bogleheads.org/wiki/SEP

The very first thing I would do while you are researching is open a vanguard account and transfer some money into it. Even if you decide you are not ready to invest it, the interest rate on their MM accounts are much better than what you are getting now.

You can also look into some of the high yield savings accounts out there. Some get up to 1.75% right now and that number is likely to increase. (these will also be FDIC insured)

I understand being risk averse. I have been struggling with that for years, and am starting to come to terms with things and start to invest more (just in time for all this volatility yay!). Anyways, it is important to be comfortable with any decision you ultimately make. The worst thing you could do would be to make a huge decision that you don't feel good about and then back out of it quickly at a loss. Keep reading and asking questions. The people on here are great and much more knowledgable than me. I just wanted to make some short term suggestions to help slow the loss of value of your portfolio while you wait.

Best of luck!

smitcat
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Re: HELP..not sure what to do at 55 YOA

Post by smitcat » Fri Apr 13, 2018 2:43 pm

What are you doing for health insurance?
What is the current status of your SS account and your wife's SS accounts?
What do you believe your business value would be if you sold it?

BrooklynInvest
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Re: HELP..not sure what to do at 55 YOA

Post by BrooklynInvest » Sat Apr 14, 2018 7:12 am

Your story sounds a little familiar -

My wife had a rather "extreme" savings account before we got married - if you watched 30 Rock, it's called "Lemoning". Anyway, she's very risk averse. She also has her own business that, while it's going very well, has a higher than average chance of failure I suppose.

After a lot of discussion her taxable money is in Vanguard Conservative Growth with about 3 months of expenses in money market. She knows losses are possible but gains likely over time.

Broad diversification and prudent asset allocation are your friends. Good luck!

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ruralavalon
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Re: HELP..not sure what to do at 55 YOA

Post by ruralavalon » Sat Apr 14, 2018 8:30 am

BurnedBefore wrote:
Wed Apr 11, 2018 4:21 pm
FIRST OFF, I AM SORRY FOR USING ALL CAPS. I'M NOT YELLING IT'S JUST EASIER FOR ME TO SEE THE SEPERATION FROM THE QUESTION TO MY ANSWER :-)

Emergency funds: YES
Debt: Only debt I have are 3 credit cards which I pay off every month ($4000.00). No mortgage or other monthly payments other than a $250.00 mo HOA fee.
Tax Filing Status: Married and file jointly- we have no kids or see them in our future
Tax Rate: xx% Federal, xx% State
State of Residence: California
Age: 55
Desired Asset allocation: NONE- Got burned years ago. I have no idea how much to put in stocks or bonds
Desired International allocation: None and have no idea

. . . . .

Contributions- WE HAVE A LARGE SAVINGS ACCOUNT. I WILL JUST SAY IT IS SIX FIGURES

. . . . .

Questions:
1. I HAVE NO IDEA WHAT TO INVEST IN. I DON'T WANT TO GET TO 70 YOA AND HAVE THE MARKET CRASH AND LOSE EVERYTHING LIKE OTHERS I KNOW.
SO I DON'T KNOW IF CD'S WILL BE THE SAFEST OR WHAT THE MATURATION DATE I SHOULD BE AND SHOULD GET AN ADVISOR OR FIDUCIARY OR NEITHER AND DO SIMPLE INVESTMENTS ON MY OWN LIKE INDEX FUNDS THROUGH SOMEONE LIKE FIDELITY OR VANGUARD? I HEARD ABOUT A COMPANY CALLED CREATIVE PLANNING BUT ALL THE HIDDEN FEES SCARE ME WHICH IS WHY I WAS THINKING ABOUT CREATIVE PLANNING?

2. WE OWN OUR HOUSE FREE AND CLEAR. PART OF ME WANTS TO INVEST IN REAL ESTATE BUT I DON'T WANT THE HEADACHE OF A BAD RENTER. SHOULD I DO JUST STOCKS AND BONDS OR IS THERE ANOTHER ROUTE? MY AGE IS 55

THANK YOU SO MUCH IN ADVANCE

REPLY:
Hey everybody,

first I want to say thanks for all your input, it's greatly appreciated!!!

The interest rate I am earning on the cash is .006%..I know its horrible!!

I am a self employed individual with no options for 401Ks or other retirement plans. I am going to do the Roth IRA max.

I got burned back in 1999 with a mutual fund I was told was a good buy. As soon as I bought it tanked. I waited 5 years and it tanked more so I pulled out. lost 60k.

Invested in real estate and made my money back. I no longer want to or am able to invest in real estate. I moved to California and the housing market here is hugely inflated and it's going to blow. Also, it's a pain and the laws out here screw over the landlords if you get a bad renter.

My tax brackets are 15% and 4%. I own a business and cut myself a small check, which is why my bracket is so low....for California!

Also, I wanted to do a fixed annuity account with Hartford but some friends scared me out of that. Not FDIC insured and a lot of fees.

Thanks again everyone
Savings vehicles.
You say that the "rate I am earning on the cash is .006%"

For a better rate on the savings you could consider:
1) higher interest FDIC insured savings accounts or CDs. For rates see www.bankrate.com;
2) a money market fund such as Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 1.77%.


Work-based accounts.
Since you are self-employed you could consider using a SEP IRA, SIMPLE IRA, or individual (solo) 401k. Vanguard, small-business plans,"Compare plans". Fidelity also offers the same types of plans. Fidelity "Retirement plans for small businesses ". The Bogleheads' wiki has articles on each type of plan. Boglehead's wiki, "SEP IRA". Boglehead's wiki, "SIMPLE IRA". Boglehead's wiki, "Solo 401k Plan".

These accounts allow higher annual contributions than an IRA.

Do you have any employees in your business, other than yourself?

You could invest is a single fairly conservative balanced fund like:
1) Vanguard LifeStrategy Conservative Growth (VSCGX) ER 0.13%, 40/60 stock/bond asset allocation; or
2) Vanguard LifeStrategy Income Fund (VASIX) ER 0.11%, 20/80 asset allocation, or
3) Vanguard Target Retirement Income Fund (VTNIX) ER 0.13%, 30/70 asset allocation.
All three funds are very diversified, with very low expense ratios.

It's very important to make use of tax-advantaged accounts whenever possible.


Annuity.
Most annuities a are a horrible way to invest, they are expensive with lots of hidden fees. Your friends did you a favor talking you out of that idea.

When you get close to retirement, less than one year, you could consider an inexpensive Single Premium Immediate Annuity (SPIA). To shop for rates see www.immediateannuities.com.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Who
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Re: HELP..not sure what to do at 55 YOA

Post by Who » Sat Apr 14, 2018 11:36 am

Hi, BurnedBefore-

Your picture may not be as bleak as you think. You have some good things going for you.

(1) You are a saver.

To have a large savings account with over six figures is impressive. Try to save even more. The recommended savings rate often suggested is 15%. I'd recommend more..as much as you can. Your money isn't working for you -- not at that interest rate which is so low, I have to squint to see it -- so you had better work for your money. It looks like you are doing this, and that's great.

(2) You own real estate in California -- free and clear. This gives you several options.

My sister and husband bought a townhouse in the bay area a few years ago, and after several years of paying down the mortgage, they are giving up. Even with 2 good paying jobs, the mortgage was just too much for them, and their townhouse wasn't that great. They are moving up to the Vancouver Washington/Oregon area. Ten years ago, my sister had a beautiful house up there. Everything is more affordable up there. Their salaries will be lower, but money will go further.

I am also a California native, but am in Arizona. The house I bought (with cash) is twice as nice as the townhouse I had in the bay area -- at half the price.

You may consider selling your California home, and moving to another state, sometime later in life.

Or, if you want to stay in California, you may want to look at a reverse mortgage when you're older. I am not a fan of these, but it is there if you need it. With the inflated California real estate market, you should get a good monthly income.

(3) You have a decade or more to work and earn money.

You have an income flow, and it sounds like you have a great job that you love. Self employed? That sounds wonderful. This is important, especially if you need to work a few years longer than normal, to make your retirement more comfortable.

---

You just need to figure out how to get back on the horse, after it kicked you off. You need to figure out how to get your money working for you, instead of you working for your money.

Read investment books, blogs, and web sites like this one, throw some podcasts into the mix, find out who are the "good guys" that make sense and you can learn from. Also find out who the "bad guys" are -- and there are many. Don't just follow only one guru, get many. Nobody has the right answer all the time. Differing views from knowledgeable people can be very informative. In the end, you'll have to use your own brain to analyze what you see, and make your own decisions. Nobody knows what's right for you except you.

Twist my arm and ask me what I'd do if I was in your situation, I'd say to look hard at using Vanguard for your investments, and not do anything fancy. Stick to reasonably conservative funds, that have both stocks and bonds in them, and are well diversified. And do the transfer from your savings SLOWLY. Very s--l--o--w--l--y.

As someone else said, this may be a bad time to get into the stock market. The US stock market is very expensive now, and because of that, some analysts are saying that in the next few years we should expect negative earnings. That is, we will lose money, if their projections are correct. But don't let that stop you from investing. Nobody knows what the future will bring. It could be crazy good.

One thing we Bogleheads know: a sensible stocks and bonds portfolio will serve you much better than your current savings account.

But don't just listen to me. Others may suggest ETFs, and other investment companies. Their advice may be much better than mine. I am by no means an expert. I only do Vanguard mutual funds. That's all I do, I do not care to do anything else.

Good luck.

dbr
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Re: HELP..not sure what to do at 55 YOA

Post by dbr » Sat Apr 14, 2018 1:20 pm

BurnedBefore wrote:
Wed Apr 11, 2018 4:21 pm


Questions:
1. I HAVE NO IDEA WHAT TO INVEST IN. I DON'T WANT TO GET TO 70 YOA AND HAVE THE MARKET CRASH AND LOSE EVERYTHING LIKE OTHERS I KNOW.
The US stock market has never crashed such that anyone invested in the market as a whole has lost everything. A person has to make a whole series of mistakes for that to happen failing a complete disintegration of the nation. So the first part of the procedure is to invest in diversified portfolios that hold lots of stocks rather than one or two. A single stock can and and does fail to zero. Investing on margin and other kinds of risky tactics can cost a person everything. Don't do that. A second part of the procedure is to not hold only stocks. That is not the same thing as hold no stocks. It might help to look and see how people you "know" actually "lost everything."

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dratkinson
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Re: HELP..not sure what to do at 55 YOA

Post by dratkinson » Sat Apr 14, 2018 1:35 pm

BH HELP..not sure what to do at 55 YOA

Four market lessons. Sixty+ years of academic research into investing teach four major stock market lessons; ignore them at your peril:
--It’s very easy to get the market return, just buy index funds.
--It’s so impossible difficult to get more than the market return, that it's not worth trying.
--The short-term market return is mostly noise, so should be ignored.
--If you must reach for yield, can have a 5% play money account to scratch that itch. (This last does not appear to apply to you. :) )

Therefore, long-term investing for retirement is simple---just do a few things right and avoid serious mistakes.

Read "The Arithmetic of Active Management" to understand the rationale for wise market investing.
See: https://web.stanford.edu/~wfsharpe/art/ ... active.htm

Over the long run, the population increases, and more people need more goods and services. So over the long run, businesses selling more goods and services cause the markets to rise. It's just in the short-run that the markets appear to be volatile.

Market direction. The market is said to be high now. It could be. But in the future it will be higher (more people,…). So the best time to invest is now, and when you have the money.

Lump sum. You should lump sum into your tax-advantaged retirement plans to get the annual contribution limit.

DCA (dollar cost average). You can DCA into any taxable account investments just to soothe your fears.



To summarize the advice you've received above.
--Start a self-employed retirement plan. Ensure the plan can accept your wife as an employee.
--If possible, ensure your self-employed plan can accept after-tax contributions.
--Employ your wife in your business and include her in your self-employed retirement plan.
--Start a Roth IRA for yourself.
--Start a rIRA for your wife. (She’s eligible under your earned-income.)
--Use a TDR (target date retirement) fund that is 50-60% bonds in each tax-advantaged retirement plan.
--Begin taxable investing. More about this below.
--You have the options to delay taking SS to age 70. Delay will help surviving spouse.
--You have the option to use an SPIA to delay taking SS.
--You have the option of a reverse mortgage.
--You have the option to sell your business before retiring.
--You have the option to move to a lower-cost area in retirement.

You’ll need to tweak this advice to fit your situation and desires.



Your tax-advantaged retirement plans. The market is volatile, but the amount you can invest in your tax-advantaged retirement plans is limited each year, so the market fluctuations you will see will also be limited. So you might as well lump-sum, based on the annual contribution limit, into an appropriate investment.

After weathering the markets for a few years in your tax-advantaged retirement accounts, and seeing how they fair, then you can extend your retirement investing into a taxable account.



Your taxable account.

In a low tax bracket, you could use the same TDR fund in a taxable account as you are using in your tax-advantaged accounts.

Or you could use the separate discrete funds recommended by the 3-fund portfolio concept.
See Wiki topic: https://www.bogleheads.org/wiki/Three-fund_portfolio
See forum discussion: viewtopic.php?f=10&t=88005

If you go the discrete fund route and for your tax brackets, I'd choose these funds for myself:
--VTSMX (total stock market index fund)
--VGTSX (total international stock market index fund)
--VWAHX (Vanguard high-yield tax exempt fund)



Bonds.

Sidebar. An appropriate AA (asset allocation) to bonds would be 50-60%, based on your age.

Sidebar. The 40/60 (stocks/bonds) investment portfolio is reported to last longest in retirement under withdrawal pressure.


Why VWAHX?

VBMFX (TBM: total bond market index fund) is the 3-fund portfolio's preference. Deviate from it only for a good reason.

VBMFX SEC yield = 2.86%. TBM, national taxable fund.
See: http://quotes.morningstar.com/chart/fun ... ture=en_US
VCAIX SEC yield = 2.19%. CA intermediate-term muni, single-state tax-exempt fund. (edit above URL)
VCITX SEC yield = 2.57%. CA long-term muni, single-state tax-exempt fund.
VWAHX SEC yield = 3.16%. High-yield, national tax-exempt fund.

For the muni funds, we need to account for the preferential tax treatments (national and state) by computing the muni TEY (taxable-equivalent yield).

Muni TEY = muni SEC yield / (1 - fed tax rate - state tax rate)

5yr CD APY = 2.5%. (The last time I checked.)
VCAIX TEY = 2.19% / (1 -.15 -.04) = 2.70%
VBMFX SEC yield = 2.86%
VCITX TEY = 2.57% / (1 -.15 -.04) = 3.17%
VWAHX TEY = 3.16% / (1 -.15) = 3.72%

Compare taxable bond SEC yield to muni TEY to CD APY.


Why VWAHX?

1. A HY fund has an AMT (alternative minimum tax) exposure. But in your 15% (12%?) fed tax bracket, don’t believe this will affect you. Double check to be sure.

2. A national muni fund is safer than a single-state muni fund.

3. VWAHX’s TEY is 86 basis point (=3.72-2.86) higher than VBMFX. So believe you will be appropriately compensated for taking the additional risk.

So because of 1-3, I’d personally prefer VWAHX to VBMFX.

And to use a discrete bond fund, I’d need to use discrete stock funds to round out my AA in taxable. So this is why I’d use the 3-fund portfolio in taxable, and not its TDR incarnation.



International. The recommended additional allocation to international stocks is 0-50%. Why? Large US companies are reported to earn ~40% of their annual income from international sources. The US is ~50% of the world market. Vanguard recommends a 30% additional allocation. Believe Mr. Bogle now accepts a 20% allocation (use to recommend 0%).

Disclosure. I have a small allocation to international, not because I know the future, but because I use it to buy equities, when I need to rebalance into equities, and the US is high.



Large emergency fund, safe cash bucket in retirement. Many retired investors report keeping 5yrs of livings expenses liquid in savings, mmkt, CDs, short-term bond funds, or a stable value fund so they don't need to sell during a down market. (Most market corrections recover within 4 years.) You could start now and do the same.

You can get the same today by just extending the recommended 1yr EF, to 5yrs.

Recall Vanguard has a CA mmkt fund. Might give you more after-tax income than savings.



Your investing structure. I see you working toward this structure:
--5yrs of living expenses in cash, savings, mmkt, CDs, ST bonds, or stable value fund.
--Growing your self-employed retirement plans.
--Growing your rIRAs.
--Growing your taxable retirement investing.

Planning to use SPIA or reverse mortgage to delay SS until age 70. Delay should help surviving spouse.

Your AA would be 50/50 to 40/60. Your choice.

Your international allocation would be 0-20%. Your choice.

Your use of TDR funds in your tax-advantaged accounts would implement above suggestions for you and do the work of keeping you in balance. Your choice.

You could also use a TDR fund in taxable, but I believe discrete funds would give you a little more after tax income due to substitution of VWAHX for VBMFX. Your choice.



Disclosure I found this forum when I was 58 and was only investing in CDs---similar reasons.

Long story short.
--"The Arithmetic of Active Management" convinced me it was reasonably safe to invest in the market.
--The forum helped me select appropriate investments.
--It required ~5yrs of reading the forum, the Wiki’s recommended books, and experience with my personal investments before I could tweak them (a deviation from the forum’s recommendations) to better suit my needs.

You can expect something similar to happen for you.


(Added) P.S. There is a concept called “shoot for the moon in our tax-advantaged space”. Its purpose is to put equities in our tax-advantaged space to maximize growth, and to maintain our AA by putting bonds in our taxable space.

I follow this concept by putting equities in my rIRA to maximize tax-free growth, and muni bonds in taxable to maintain my AA.

So my small rIRA contains equities, and my much larger taxable space contains TSM, TISM, and munis, for a combined target AA of 50/50.




Welcome.



Edit. Grammar. Completeness. Clarity. Additional thoughts.
Last edited by dratkinson on Sun Apr 15, 2018 10:33 pm, edited 2 times in total.
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

goblue100
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Re: HELP..not sure what to do at 55 YOA

Post by goblue100 » Sat Apr 14, 2018 2:22 pm

BurnedBefore wrote:
Wed Apr 11, 2018 4:21 pm

I got burned back in 1999 with a mutual fund I was told was a good buy. As soon as I bought it tanked. I waited 5 years and it tanked more so I pulled out. lost 60k.
Do you remember the mutual fund and what your initial investment was in 1999?
Some people are immune to good advice. - Saul Goodman

mouses
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Re: HELP..not sure what to do at 55 YOA

Post by mouses » Sat Apr 14, 2018 2:33 pm

I haven't read all the replies.

BurnedBefore, At the very least, you should look at CDs at federally insured banks and credit unions. You cannot lose money on these unless you take the money out early, in which case you will have to pay an early withdrawal penalty, which is usually six months to a year's interest. 5 Year CDs pay about 2% at most credit unions.

If you can contribute to a Roth IRA, the interest earned in it is tax free with a couple of caveats like how old you are when you withdraw money, etc.

What is your retirement situation in terms of Social Security for you and your wife? Pensions? How does that compare to how much you spend?

I would stay away from rental property. There can be massive headaches if you have even one bad tenant. Plus it is a lot of work. You don't have to leap from being super cautious to being risky.

dbr
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Re: HELP..not sure what to do at 55 YOA

Post by dbr » Sat Apr 14, 2018 2:49 pm

goblue100 wrote:
Sat Apr 14, 2018 2:22 pm
BurnedBefore wrote:
Wed Apr 11, 2018 4:21 pm

I got burned back in 1999 with a mutual fund I was told was a good buy. As soon as I bought it tanked. I waited 5 years and it tanked more so I pulled out. lost 60k.
Do you remember the mutual fund and what your initial investment was in 1999?

And the point is not whether or not something is a mutual fund but what mutual fund it is. There can be mutual funds that lose a lot of money and don't really recover. You have to have your eyes more open than that.

sambb
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Re: HELP..not sure what to do at 55 YOA

Post by sambb » Sat Apr 14, 2018 3:37 pm

lifestrategy income and youre done until you can handle more risk
doesnt matter if it is in taxable, since youre at a very beginning phase
you need one fund portfolio, not 3 or 4

delamer
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Re: HELP..not sure what to do at 55 YOA

Post by delamer » Sat Apr 14, 2018 4:20 pm

I assume that your goal is to have enough to retire on when you decide to stop working.

There are two components to retirement planning. One is expenses and one is income. So you need to have a good estimate for each.

You said you have about $4,000/ month in charges plus a $250 HOA fee. Are there other monthly or irregular expenses, like auto insurance, for instance? Will some of those expenses go away in retirement? Will there any new expenses?

In other words, how much will you spend a year including income and property taxes in retirement?

For income, do you know how much you and your wife will get in Social Security at various ages?

If you subtract your annual SS from your annual expenses, you will know how much you need to withdraw each year from your savings to meet your expenses. That withdrawal amount impacts how you need to invest your savings. If you have $1 million and need to withdraw only $10,000/year then you can keep you money in cash and be OK. If you need to withdraw $40,000, then you’ll need to invest some of your money in stocks to fund a 30 year retirement.

(Note that given the high likelihood that you and your wife will die at different times, you need to take into account that the SS available to the survivor will be less than what you’ll as a couple.)

So go through the exercise of estimating expenses and SS income. Then come back here to get better advice in your investment options.

Good luck.

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Earl Lemongrab
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Re: HELP..not sure what to do at 55 YOA

Post by Earl Lemongrab » Sun Apr 15, 2018 4:47 pm

BrooklynInvest wrote:
Sat Apr 14, 2018 7:12 am
My wife had a rather "extreme" savings account before we got married - if you watched 30 Rock, it's called "Lemoning".
I don't remember that from the show, and I didn't turn up anything relevant with a web search. Could you expand?
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

BurnedBefore
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Re: HELP..not sure what to do at 55 YOA

Post by BurnedBefore » Sun Apr 15, 2018 7:26 pm

Thank you everyone for all the great advise!!!

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