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MLPs

Posted by phoggie (My Page) on
Thu, Mar 28, 13 at 20:39

Please explain and give me more information about MLPs. A person I know has invested everything they have in them, but when I mentioned it to two of my financial planners, they advised me not to do this. I am already retired, widowed, and have most in CDs at 1.25% and fixed mutual fund at 4%....I am very conservative in my investing because I can not afford to lose any of it.

This "person" also told me he lost $1.4 million, so I can not completely trust his judgement.....but I would like to know what some of you think.

Thanks


Follow-Up Postings:

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RE: MLPs

My Little Pony?
Maui Land and Pineapple Co.?

Or Master Limited Partnership?

Just google it.

Your friend sounds like he has more money than brains.


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RE: MLPs

They have advantages for the wealthy. They are riskier, have much higher fees, but can return higher ROI.

Capital losses can be useful to use against certain types of capital gains. Most small investors, however, don't have those types of capgains so their loss carryforward is limited to $3K/yr.

My MIL has been amortizing portfolio losses for the last three years against her taxes owed (she doesn't have tax taken out of her pension, SocSec and modest distribution). 2012 finished the amortization and this year she'll begin paying estimated quarterly payments again.

Since you don't sound as if you have sufficient financial reserves for riskier investments that would damage your principal, I see no reason why you should be going against the advice of your financial planners.

There is no magic bullet in investing. Higher risk = higher returns = high potential of partial or complete loss.


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RE: MLPs

Was the advice against MLPs in general or against sinking one's life savings into them?

If the latter, good advice since it's always best to be diversified. They do pay excellent dividends - some well over 7%. You can buy in at any level; and the shares are publicly traded on the major stock exchanges. And though the MLPs wax and wane like any stock type vehicle, the dividend remains a constant.

I'm Medicare age, long since retired, relatively conservative in my investing. Did some fast footwork and didn't lose anything in the 90's downturn; lost a bit in the tanking of 2008 but made it all back plus substantially more quite quickly - likely because I wasn't frightened enough to cash everything out.

There is a wealth of information about MLPs on the web - to narrow it down, look up Linn Energy (LINE) ,Boardwalk Pipeline Partners (BWP): Energy Transfer Partners ( ETP), Kinder Morgan (KMP) to get an idea of their structure.

Disclaimer - I have no relationship with these companies aside from being a private investor. And am relatively new to MLPs, buying into the first one 18 months ago and the last one on Monday.


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RE: MLPs

Hey I can advise you how NOT to loose your money, I have never lost a dime....except a few in the couch cushions. Keep it in CD's, you are doing it right. Now I am going to duck............


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RE: MLPs

Good thinking, Emma - same "sound" advice given to the poster who had $50k in a maturing CD and was looking to try and make some kind of decent return on the funds.

And, the OP here had a legitimate inquiry re MLPs. Suffice to say one should never rush headlong into investing in something they don't understand... but there are ways of backlogging some financial acumen. The main way is to spend/invest some time in studying up.

Sometimes I just don't know what to say, so I guess it's best to say nothing. :-)


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RE: MLPs

Advice on investments is simple. If you can't explain it to somebody else, giving the pros and cons, you shouldn't invest in it.

If you want to educate yourself, that's a different matter. Google and start reading. Be prepared to spend hours. Ask questions about anything you don't understand (see above, can you explain it to somebody else?). Re-examine your risk profile. Run some Monte Carlo scenarios: not how much you can gain, but what happens if you lose part or all of your investment.

Look at other options. Is there some way you can reduce your overhead expenses? Bring in some extra money? Stretch your dollars further? Are there no local/state/federal programs available to help you? Very few people are in such a bare-bones situation that they're truly trapped.

Help is often there if you look around. If you need it, then you need it and should take it.


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