Furthur retirement discussion..investments

[Beeman]

It seems like there's a lot of us out there with questions and a few out there with answers that can help improve our quality of life in the future.

Lately I've had some suggest investing in an annuity as another place for money along with a 401k and IRA. I don't know much about them and wonder what others have done. What other investment tools do you use? Are you concerned about sheltering the money from taxes or pay the taxes up front?

[Dianol]

I suppose there is a practical application for annuities, but I have a hard time recommending them because of the high fees that are charged, 3% to 5% is not unusual. Usually the financial advisor will not voluntarily disclose those fee's either, and that really bugs me, because the advisor get's a payment from the annuity co. Proper setup of an IRA, and term life insurance is usually they most dollar efficient way to go.

But, like I said, there are probably some good applications for annuities,...just ask "What is your fee structure?" "How do you make money from selling me this annuity?" "What are the penalties if I withdraw after 1 year?,....5 years,....or ten years?"

If other pertinent questions come to mind later, I'll post them.

God Bless
Dianne

[ET1 SS]

I prefer to use active investments rather than passive investments.

Our investment vehicles tend to give us on average 16% per year.

But then most folks prefer passive investment vehicles.

As for sheltering. I have likely heard me speak of sheltering many times here on HT. I am very concerned about sheltering income from taxes. I have maintained my income fully sheltered for a long time, since 1983.

On the other hand, if you are just looking at whether or not to pay taxes today or to defer your taxes until once your retired; that is an entirely different thing. When you have sheltered your income, you don't pay taxes on it today, you don't pay taxes tomorrow.

If you are deferring your taxes, you still must pay them.

[agmantoo]

Since we are discussing retirement investments let me suggest something as a caution. Lets consider a dividend producing stock that we may have bought some time back. If you look at its current yield we may fail to realize that the 4% dividend that the computer states is the current yield now is not really the return. Increases in stock price and stock splits may have hidden the true return that we are experiencing and that point is often overlooked and could lead to disposing of a good stock that is doing admirably for us. I have a few (too few unfortunately) stocks that appear on the surface to yield a 4% dividend. Where in actualitity, one is giving a 16% yield and another is above 12%. Just be cautious!

[Beeman]

Dianol,

What's your reason for recommending term life insurance. What would you use if you've maxed out your 401k and your IRA. I don't really understand much about annuities so maybe you could give an overview.
ET1SS,
I've read your previous posts and understand your suggestion of sheltering income fromtax now and later and not just deferring. The investment vehicles you refer to, are they your real estate investments? I like many others are just not really wanting to be a landlord. I didn't say I haven't looked into it, as a matter of fact I've done it before but sold the property. This area isn't kind to landlords as most friends I have that have done it are constantly getting their places destroyed and chasing their money.

[ET1 SS]

Originally Posted by Beeman

... I've read your previous posts and understand your suggestion of sheltering income fromtax now and later and not just deferring. The investment vehicles you refer to, are they your real estate investments? I like many others are just not really wanting to be a landlord. I didn't say I haven't looked into it, as a matter of fact I've done it before but sold the property. This area isn't kind to landlords as most friends I have that have done it are constantly getting their places destroyed and chasing their money.

I would never mean to imply that using an active investment is everyone's bag of tea. For many people passive investments are better, but few have such good tax benefits.

[amelia]

Hopefully I am not hijacking this thread, but rather contributing toward an expanded discussion. My thought was to ask whether anyone here has read the book "Failsafe Investing" by Harry Browne. His philosophy seems well suited to the attitudes about money that predominate on this forum, which, in a nutshell, is "forget the big returns and stay safe." Basically the approach involves diversification between asset classes (growth stocks, long-term T-bonds, cash, and gold) so that no matter what the economic climate--prosperity, recession, inflation, or deflation--you're protected and at least one segment of the portfolio is carrying you. I'd be interested in knowing how others on this forum feel about this kind of investment approach.

[TechGuy]

Originally Posted by Dianol

I suppose there is a practical application for annuities, but I have a hard time recommending them because of the high fees that are charged, 3% to 5% is not unusual.

FWIW: I completely agree with Dianol's statement. I might add another issue is with insolvancy of the business offering annuities. if the business goes under (aka, rogue trader, fund mismanagement, etc), your annuity is dumped on the federal pool, which will probably pay pennies on the dollar.

[brownegg]

Beeman, you are getting alot of good free advice here.

Annuities come in alot of shapes and sizes. I hold a immediate cd annuity that pays you the contract rate for the contract time, like a bond in some ways. After the contract expires you have a 30 day window to exit and get all your dollars invested back plus the interest or renew to the original time at the present interest rate.

I really don't care how much commission someone makes, as long as I am getting my dollars in interest, and my investment back. Just a thought.

[hunter63]

Lot of talk about investments, how and when do you start getting and income from them.

FYI
I was offered an annuity, so much a month for as long as "I" live, anything left didn't go to any beneficiaries, the company took the balance.
So ask about what happens to the money if you die, when you are approached about one.

[Shadow]

Personally would not want annuity, don't trust them.
I worked for a large international company for 34 years and have a retirement with them, so far so good but the money was invested in the stock market, I can not get it our in a lump sum but so far have gotten a check every month for over nine years.
Me and the wife bought and fixed up realeastate for 15 years have some homes we bought updated and sold owner financed. That has worked really good in 80 percent of them the other 20 percent we just don't talk about.
Social security been drawing it for a few years started at 62 and have already got my money back, the ones of you that are working and paying in keep it up.
Precious metals, collectables, bought things we enjoyed and wanted. Not just for the market value and have done well with them. Have sold off some that we lost interest in and bought others.
Skills that we can make money in. When we want this works pretty good but glad we don't have to live off it.
Stocks and bonds, insurance, anuitys, never touched them, like things I can have control in or at least hold in my hand or atleast watch untill I decide what to do with it, buy or sale or just hold for a while.
Current income about 60,000 a year and should out last me and the wife, set the company retirement up so she would draw the same for life, this was necessary because she is much younger, 14 years and by the way did I mention she was a cheerleader. Hee hee hee.
It worked out so far for us, diversify in lots of things some will survive and today that is the best you can hope for.

[MWG]

Diversification is my goal. Little in real estate, 401K, Roth IRA, Traditional IRA, gold and silver, T-bills. Then when I retire I can take from which ever is most tax advantageous and is also on the upswing.

Almost everything in my IRAs are stocks. Fees on mutual funds will get you... I really like energy stocks that pay high dividends, reinvested...

Some include:

PAA
DUK
AYE
AEP
SFL
FRO
XOM
CMP
AES
SE

Anyone have any other stocks that have done well for them?

[papaw]

Hey, thanks for the tips....some of those look pretty good.

[agmantoo]

MWG
I too like DUK. BBT also!

[MWG]

I went with BAC for a banking stock... there is something to be said for those that travel across America being able to use the same bank.

Another good one...

HMX 265% in less than three years!

[MWG]

I bet you liked DUK's spinoff! Wow, we racked it in with that one, huh?

[MWG]

Originally Posted by papaw

Hey, thanks for the tips....some of those look pretty good.

SFL and FRO are risky. But with risk comes reward... Just becare of those two. FRO is the more risky one.

[ET1 SS]

Originally Posted by hunter63

Lot of talk about investments, how and when do you start getting and income from them. ...

I our case, we can begin taking the income from the first month.

Take the cash income and the tax situation is different, it no longer is much of a shelter. But we could take the cash at any time.

[papaw]

Originally Posted by MWG

SFL and FRO are risky. But with risk comes reward... Just becare of those two. FRO is the more risky one.

Thanks,
From the study that I've had time to do so far...I like PAA, AYE and SFL. I'll look further at these three, watch them a few weeks and then make a move .....Thanks again.

[MWG]

PAA is a partnership so you will receive a schedule K-1. Those arent't mailed out until usually March or April so if you are one that likes to get your taxes done in Jan stay away from it. Additionally, your tax preparer might charge you extra for the additional form. Just want you to be informed...