"the fiscal cliff"......

booboo60December 2, 2012

With this ominous monetary monster looming in our not to distant future has anyone here thought about doing anything different with their IRA's, 401, ....meaning money invested in the stock market? Dh and I are retired on a pension and SS plus we have an IRA but really don't want to do the old "under the mattress" trick or put it in our credit union? Does anyone freak out about this besides me?

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Try the Household Finances forum.

If you are thinking about timing the market, think again. Most stock market trades are done by large-scale investors using computer programs. For personal accounts, mutual funds holding a balance of stocks are recommended.

    Bookmark   December 3, 2012 at 12:09PM
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Well, as I'm not a millionaire, I don't believe in gambling in the millionaire's casino (the stock market). The ONLY stocks we have are 'play money' ones--a few thousand $$$ worth of profit sharing from DH's work (that was given him, we put not a penny into it) and my SEP account which was bought one year when I had a windfall--with money I'd have had to pay in taxes otherwise, so it was 'free' money also. Neither has done well enough to encourage me to gamble any of our precious retirement $$$ in the market. As a matter of fact, if the market recovers a bit, I'm considering moving my Sep from the fund it's in to the bank. It won't have the potential growth possibility that the mutual fund has, but then again, it's not going to lose ACTUAL value there either--as the mutual fund has.

I just don't think the stock market, in any form is for the middle class. We've always felt that way, and now that we're retired, we find ourselves in a lot better financial situation than many of our friends and relatives--mainly because over the years we've been frugal with our spending and avoided risks with our savings.

Obviously, you need to do your own research and make the decision that's right for your family. And I don't know your situation--you may be very wealthy--to the point that the ups and downs of the stock market aren't important enough to make you lose sleep at nights. I'm just offering one point of view, one that's worked well for us.

    Bookmark   December 3, 2012 at 10:58PM
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Thanks for the responses! When I refer to the stock market I am talking about my Dhs' 401k that he took with him when he retired and has since rolled it into a Roth IRA. This account is managed by a finance company and at the present time is in a low risk, mostly mutual funds. We in no way "dabble or play" in the stock market! I would have a heart attack! I just am letting fear and the unknown get the better of me and wonder if others are planning anything as the days get closer to this debaucle?
Thanks again!

    Bookmark   December 4, 2012 at 9:18PM
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Mutual funds are not by definition "low risk". Some are very risky. Better to know what funds you are invested in.

A good start is Morningstar. Wisdom says that if you can't describe what a company (or a fund) does in one sentence, then you don't understand it, and you should not invest in anything that you don't understand. Start by looking up what funds you hold, and look up the analysis of each.

Here is a link that might be useful: Morningstar

    Bookmark   December 4, 2012 at 11:06PM
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Ok 'sushipup' I will admit I am not a scholar when it comes to the stock market or what we have exactly. My Dh is well informed and I trust his knowledge after 41 years!
We have a very low risk portfolio and we get statements that keep us informed all the time of how our account is doing. Please don't assume or insinuate that we have some odd ball stock market venture that we know nothing about!

    Bookmark   December 5, 2012 at 11:52AM
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Ah, in that case, you should direct your concerns about the so-called "fiscal cliff" and other market uncertainties directly to your DH's financial adviser instead of a bunch of complete strangers on the internet. Your advisors will undoubtedly understand you and your portfolio best.

    Bookmark   December 5, 2012 at 1:25PM
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I agree with azzalea, it is gambling. When we retired we cashed in out retirement savings, out of the 5 options our accountant gave us I chose to go that route. We wanted it in our control and if I cashed it in after he died I would be in a higher income bracket and cost us more then. My Sis lost $50,000. in the market in spite of me telling her at our age the principal is more important than the interest we MIGHT earn.

    Bookmark   December 11, 2012 at 4:43PM
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If the Tpublican nutters in Congress were not purposely trying to destroy the economy the past 4 years then we would all be doing fine.
We have a TSP account which allows us to sort of play the market a bit as we can move money from C,S,I,F and G funds twice every month.
The G fund is basically totally safe although makes very little, but never loses.
C fund is basically the S&P 500 and can win or lose big in just a day.
S fund is basically small business, Dow Jones index and dividend fund.
I fund is International stocks
F fund is basically the Barclays Bond index.

We made 10.42% interest last year in our TSP, that was diversified with about 34% in C fund, 12% S fund, 19% I fund , 8% F fund and 27% G fund.
Sadly we only had about $58,000 in it so made a little over $6000 in interest, but $500 a month interest isn't bad.
I am seriously going to play it this year, going to try to do better just hope I don't blow it though. Hoping to get at least 12% this year.
20/20 hindsight if I had just put 100% into the S fund last year would have made over 18% interest, wish I had 20/20 Foresight.
Total crap shoot as long as the Tpublicans are determined to destroy the economy and hold the country hostage.

If they would simply stop committing treason and do the right thing the stock market would skyrocket, unemployment would plummet and we could all be doing really well in our retirement accounts.


This post was edited by Nunyabiz1 on Wed, Feb 6, 13 at 14:36

    Bookmark   February 6, 2013 at 2:24PM
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Was all media hype.. get over it! To be filed with the Myans prediction.

This post was edited by susieq07 on Thu, Feb 7, 13 at 11:50

    Bookmark   February 7, 2013 at 11:49AM
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Anyone heard of "Y2K"?

The mutual fund guys like to tell of their great depth of knowledge, skills ... and experience.

How, then, does one explain the fact that about 85 - 90% of them fail to match the rates of return of the sectors of the market in which they operate?

Though there have been several occasions when the stock market grew very little for a number of years, there have been a number of times when there has been substantial growth, over a number of years.

When the long-term average growth rate in the stock market is something around 7 - 8%, and the mutual fund managers take a Managment Expense Ratio of 1.5% or more, they're getting about a sixth to a fifth of the growth ... and they have no skin in the game: it's all your money at risk.

In Canada it's even worse: our mutual fund agencies charge 2.5% (or more) ... so they're taking a larger proportion of the possible growth than are your guys.

Better to do some study of the market, to find out which sectors may do well, and buy ExchangeTraded Funds, where the money gathered is passively invested in whichever section of the market - financial, oil and gas, mining, pharmaceutical, healthcare, consumer durables, etc., that one chooses. Those managers, less active, charge about half of one percent.

Studying how money works is an interesting hobby ... that pays well. How taxes work, as well.

Better yet ... learn how the market works, and buy some stocks yourself.

When I bought some stock in a major Canadian bank, 46 years ago, it cost me about $4.20 or so, and paid about 10 - 12 cents per year ... which here was then taxed at a lower rate, and in recent years, even lower.

In June of '07, I could have sold them for $107., and would have had to pay no tax on that growth in the intervening years ... or until I sold them ... or die. Then the tax would be at half of the regular rate.

And they were paying $3.08 per year ... at an even lower rate than earlier. In that fall, they raised the dividend rate to $3.48 annually.

Not too long after that, they had substantial exposure to the U.S. financial fiasco ... and the share price dropped to $40.00 or so ... but they maintained the dividend ... so $3.48 on a $40.00 stock was better than 8%.

As they recovered, there were no increases in dividend for three or four years, and the stock price has since recovered to about $80.00, paying about $3.70 dividend annually.

If the only income that I had was dividends on Canadian stocks, until '05, I wouldn't have paid any federal tax until income of about $28, - 30,000.00 ... and then at a much reduced rate.

In '06, they changed the way they calculate ... resulting in more than a 50% increase in tax-free income, to $46,345.00 before one had to pay a cent of federal income tax.

Yes ... I've had some losers ... and some have died.

But, all in all, I'm pleased with the way that things are going, investment wise.

Plus, if I have an emergency, that I can't cover with cash on hand, I have a line of credit, using those stocks as collateral, which I rarely use, so would cover the emergency with a credit card, then draw on the line of credit to pay off the card balance in full, just after first billing date, to avoid paying their high rate of interest.

If I plan to borrow to invest, I'd open another line of credit, as the interest on one is deductible, but not on the other, and I wouldn't want complications.

Do you figure that, for example, Johnson and Johnson, or P & G, Kraft, Exxon, Coke, etc. are going to nearly die, or near it, any time soon?

Good toi find some companaies that have a substantial portion of their business overseas, due to expected U.S. shrinkage in future years, as the value of the inflated U.S. Dollar falls.

Good to have some foreign exposure, as well.

Some Canadian banks have been judged to be among the world's best, in recent years.

The U.S. was once a great manufacturing nation, and a creditor nation, and their dollar was strong ... but much manufacturing has been moving overseas, you've become a big debtor nation, and, due to printing gobs of money, the value of the U.S. Dollar is slipping.

Instead of U.S. folks putting a good share of your extra money into buying into the production mode, to produce ongoing income, you've become major consumers ... but those products wear out and need to be replaced, rather than producing an income for you.

ole joyful

    Bookmark   April 24, 2013 at 7:38PM
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>>due to printing gobs of money, the value of the U.S. Dollar is slipping. >>

ALL the central banks have loosened credit. Maynard Keynes has been proven right numerous times, yet conservatives keep denying his theories. The EU is the best example to come around in decades. Financial reform is necessary, but no country in the world can produce growth through severe austerity.

>>you've become a big debtor nation>>
Yes, but the majority of that debt is held by the US Treasury. The much-ballyhooed "deficit" has been falling sharply over the last three years.

One of the biggest 'aces in the hole' is how much gold the US owns. It isn't counted in the GDP or against any debts. The United States holds MORE gold bullion than any other country, with about 2.39 times that of the next leading country, Germany.

The United States Bullion Depository (Fort Knox) holds 4,578 metric tons (5,046.3 short tons) of gold bullion (147.2 million oz. troy). This is roughly 3 percent of all the gold ever refined throughout human history. Even so, the depository is second in the United States to the Federal Reserve Bank of New York's underground vault in Manhattan, which holds 7,000 metric tons (7,716 tons) of gold bullion (225.1 million oz. troy), some of it in trust for foreign nations, central banks and official international organizations.

LOL, think how mean we could be by simply refusing to give that foreign gold up to its owners!

    Bookmark   April 28, 2013 at 3:17PM
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It is not necessary all bad to have a weak dollar.

I thought they have already started moving manufacturing back to the the U.S. due to the wage competitiveness, political risks, difficulty of managing and regulating suppliers, energy cost...etc.

    Bookmark   May 5, 2013 at 4:25PM
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A number of other countries have enjoyed much larger growth rates in recent years than have ours.

What about buying some shares in U.S. companies that have major business in some of those fast-growing economies: some are doing way over half of their business there?

ole joyful

    Bookmark   December 12, 2013 at 4:31PM
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