Furthur retirement discussion..investments

You didn't rack up anything on the Spectra Energy spinoff from Duke Energy. The combined value of both companies is still only $33 per share. SE was a 1 for 2 split from Duke. And the combined dividend is equal to JUST Duke's dividend before the split. I own both of them. Decent stocks, which pay a fair dividend, but nothing special at this time.

SE research report;

We believe Spectra's relatively high amount of regulated natural gas transmission pipeline and smaller amount of utility earnings will lead to a relatively smooth earnings stream. The unregulated portion of the company's earnings is exposed to crude oil prices and changes in the fractionation spread (the weighted average natural gas liquids price less the natural gas price), among other things.
In our view, the company had a good history of maintaining cost control when it was part of Duke Energy. We anticipate that SE will be able to deliver on its strategies related to cost control. Also, we think SE has a good grasp on financial management and think that its plan to use master limited partnership or Canadian income trust financial structures for some of its businesses will help keep the cost of capital relatively low due to tax advantages.
Assuming no share repurchases, we estimate 2007 operating EPS of $1.40, compared to our pro forma 2006 estimate of $1.44. Pro forma EPS in 2005 was $1.07. We expect 2008 EPS of $1.49.

DUK research report;
We look for 2007 revenues to rise as results will include a full year of revenues from Cinergy, which was acquired in March 2006. We expect utility results also to benefit from customer growth partly offset by the likelihood that there will be fewer cooling degree days (CDDs) than in 2006, when CDDs were 16% higher than normal. We believe commercial power segment revenue growth could also be negatively affected by cooler summer weather.
We expect that earnings will continue to benefit from slower growth (than revenues) of operations and maintenance expenses resulting from merger savings and cost controls, partly offset by faster growth in depreciation and amortization charges. We expect pretax profit growth to benefit from a higher operating margin, partly offset by higher interest expense related to the Cinergy merger.
Assuming an effective tax rate of 34.0% and no share repurchases, we estimate 2007 operating EPS of $1.15. We see 2008 EPS rising 6.1%, to $1.22.

Hope this helps.....God Bless

Dianne

Term life and your IRA really are only part of an overall investing strategy, and have very little to do with each other. Life ins is for the living after you are deceased. A rule of thumb....Never use insurance as an investing vehicle. This is only good for the insurance companies. Term life is the cheapest insurance, and is only good to take care of the children IF the primary income earner passes. In the case of one spouse being primary or only income earner....esp if other spouse has no marketable skills ie; minimum wage....then term life can be extremely important to spouse/children. I have seen tragic situations where a family consisting of man making $40k, wife with no marketable skills stays home with children.....he dies from accident or illness.... income suddenly stops. NOW...Mom has to find a minimum wage job JUST to pay important bills, and obtain health insurance for children.

Many variables depending on family dynamics, history, other family, etc...drive the decision on how much life insurance to buy. Also, given same family situation as above, what if wife suddenly passes? How will Dad take care of young children without hiring sitters, daycare, etc...? Can be expensive. So, a smaller life insurance on her might be called for. What might it cost to take care of a couple of 2 or 3 year olds until they get into school? $50k would be minimum life ins.

As to your primary question;

After you have maxed out your 401k to get any matching <free>money, then invest in a Roth. An IRA is next. HOWEVER....this advice might not be best for everyone.....things such as age, income, size of family/responsibilities, existing savings, etc.... would impact any suggestions that I might make.

We also have had rental real estate, and also have had rental home damaged beyond belief, and also sold it in frustration. We're both a little wiser now, and I would be willing to try rental housing again for investments, BUT,....ONLY if we lived fairly close so we could monitor our investment. Other downside is that it's sooo much easier to allow someone into your house than to get them out. Most Laws are now on renters side.
Hope some of this helps someone a little.

GOD Bless

Dianne

Very good points.



We have had life insurance on me, but only for the outstanding mortgage notes on each apartment building.

If I died, my DW and children would still have their home and it's income, and the insurance would pay it off. They would suddenly have to begin paying income taxes, but at least they would not lose their home, and they would have a good income from the apartments.



Sorry to hear about your bad luck.

It has always worked best for us, to buy the building as our primary residence and live in it. It really keeps the renters from being terribly bad. And making repairs is much easier.

I really like seeing so much of other folk's money going into my investment vehicle.

And it all lowing my tax obligation.

I looked up these funds too ...

LETRX
OBCHX
TREMX
FRESX
FHKCX
FIGRX

Anyone have any thoughts on them?

__________________
I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it."
Thomas Jefferson

Buy gold, preferably US gold eagles. The dollar will continue to fall and gold is the best investment hedge for that.

Except for when the price of gold drops.

I think that any investment vehicle where folks are paying you $1k/month [after expenses] is a good investment. Fully insured of course, so if it burns down you have enough to right quick replace it.

If I fronted $3k into buying gold, how much would it pay me back each month?

On the DUK thing, I was looking at where it was a year or so ago, not before the split...

I have owned DUK since I was little.

This is one that people could use as retirement stock without putting into an IRA. Duk will let you buy directly from them in $50 increments. So say you save $75 a month. All you have to do is send it to them and it will buy stock without a commission fee. Reinvest the dividends and before you know it you have some money... just another idea.

BTW ~ I think it takes $250 to start, then it is $50 minimum.

You are exactly correct ET1. Gold is extremely speculative, and it can go up or down in price with high volatility. Nothing wrong with putting around 1 to 2% of your portfolio into gold as long as it's high risk money. This is money you could afford to lose if the shtf. Isn't there a Proverbs that says in the end days, people will trade their gold for a loaf of bread?

I haven't forgot your question on annuities. I'm still putting together an answer appropriate to this forum. I just have to do it in my spare time. Thanks for your patience.

God Bless

Dianne

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In March, 2006, DUK was trading for $28, so it's up by around 17% in past year. Not bad, but wait.....if you had bought it in mid 2002, you paid $38...soooo....$38 to $33 (todays relative value just before split) equals a 15% loss in 5 years. Now...before someone flames me, I did not include dividends in this calculation. <I'm just making a point> The dividends would exacerbate both percentages around 3% to 4%. This would make the total return (2006 to 2007) around 20%, and the loss from (2002 to 2007) around 12% or 2.4% loss per year as an average.

I really don't care for investing directly with a company, although it can work for non IRA money. IRA money should be in mutual funds unless you are a fairly sophisticated investor. Also, keep in mind that investing directly makes it a little more difficult to liquidate your money. I would recommend you open an account with a discount broker such as TDAmeritrade or Scotttrade. I have been with TD for almost 20 years, and find them decent, and inexpensive. Trades are only $10 online. The biggest advantage is that you can get out of a stock quickly for only ten bucks, and put it in something else just as easily, and be able to do it in seconds as opposed to days or weeks if a company has your stock. When ENRON melted down, those direct investing folks lost almost everything. If their money was with a broker, you can liquidate it in seconds. A little loss is better than a total loss. If really bad news hit's the media fan, you want to be able to liquidate that stock NOW ! You can always get back in when it bottoms out, IF the stock looks appealing.

Hope this helps a little - Have a great day !

Dianne

When Enron dived a lot of funds dropped.

I was fortunate in that I had nothing in mutuals to drop. But my property taxes did go up, when the state general fund turned out to have been heavily invested in Enron. Of course the property taxes just came out of the business, so it was really just other folks money.

There is a high probablity that if a global financial crisis developed, that many central banks would sell off precious metal reserves in order to remove currency volitility. Back in 2003 or 2004 Germany was planning to dump a significant amount of gold on the open market to finance its economy. Back then the Germany economy was in the dumpster. Fortunately for PM owners Germany's economy make a turn around and no gold was sold off. A sudden offer of a few tons of PMs on the open market would likely cool off PM prices pretty quickly. IIRC, the big run up in PM orignated in China and India, as the economies took off and provided much higher incomes that people used to purchase jewelry and other items made of PMs. Assuming the that dollar tanks, the US imports from China and India will also tank, resulting in a lost of wealth as factories turn out less stuff to export. Its likely that a significant number of workers would be laid off, and perhaps leading to significant sales of PM, as workers sell of thier PM items inorder to pay bills and put food on the table.


Also be aware that investments in PM are taxable. When you go to sell PMs or PM's stocks you have to pay capital gains.

If you believe the SHTF is going to happen, than you might want to consider silver coins too. How are you going to barter with a 1 oz gold coin when all you want to buy is really work just a fraction of coin's value. Another option is to stock up on sundries and other staple good that you could barter for. After the collapse of the Soviet Empire, The majority of people where interested in trading in simple goods (TP, toothpaste, Vodka). PM and jewelry were rarely used.

A very good point.

Capital gains are hard to shelter from taxes.

Profits from the sell of gold and silver are not taxed.

I posted back in 2004 that gold and silver were excellent investments as a hedge against the dollar falling in value. At the time, gold was around $400 per oz. Now it is $670 per oz. I got a lot of flac then and no one agreed with me. It has been a great investment for us: better than the stock market or an annuity.

This chart just about says it all about gold.
http://www.gold.org/value/stats/stat...rices1900.html

It's extremely volatile, and the higher the price becomes, the more risk you take. I stand by what I said in an earlier post, no more than 1% to 2% of your total portfolio in gold - IF you can afford to lose most of it. Yes...gold has done well since 2002, BUT....past performance is not a predictor of future results !

Don't invest in gold unless you are really sure about what you are doing. I have been investing for years, and gold is not a risk I'm willing to take, especially now that the price is high. and when the price falls.....How many years are you willing to wait for the price to surge again? It might take 5 to 10 years..or more to see remarkable gains.

Whereas if you invested in a decent mutual fund which is achieving 10% returns year over year, you'll do better in the long run with much much higher levels of safety.

My 2 pennies.....

God Bless

Dianne

The IRS requires that you file taxes on the profits of any sale.

Land, vehicles, gold and silver.

After much thought, it will be virtually impossible for me to provide a detailed overview of annuities in this forum. There is much information on the internet. Just be cautious, and look closely at the motivation of the entity that is providing that information. This is a quote from Kenneth Fisher who runs one of the biggest financial investment firms in the states: " Annuities don't make sense for most investors, period. So why are brokers eager to sell them? The answer is simple. Brokers reap enormous fees when they sell annuities, and they do so under the pretense of providing safe alternatives to traditional investments." end quote.
I have found nothing in my research that disagrees with that statement. The insurance companies do tremendous research before they sell an annuity and the deck is stacked in their favor each and EVERY time. If your parents lived way into their 90's or 100's, and you share those longevity traits, then an annuity "might" work for you.
For most of us who only expect to live into our 80's, then the insurance co will profit handsomely from our annuity investment money. They will not receive a dime from me.

The above is not a recomendation to buy, or not to buy, any financial product.....just my 2 c

g'nite ya'll

Dianne

Dianne - I agree

There are far too many good investments out there to mess with this.

I am at a point in life where I need low risk investments. I can in no way risk the principal. For that reason, I tend to be drawn to mortgage backed agency bonds. If you look around, you can find them paying 6% or so. I never sell them but rather just wait for them to be called. Then I look around and buy replacements.

Now in my IRA, I feel I can tolerate a bit more risk. There I have most in a S&P 500 index fund. Extremely low fee and it follows the S&P perfectly.

Now if I was going to invest in a more risky equity, I'd think seriously about SBR. I've watched that one for 15+ years and always been surprised. Wish I had bought it but unfortunately just watched it. Still looks good. Paying 8.5% dividend and has potential to go up in price too.

Just my 2 cents.

Too deep for me! I like to invest in cheap rental mobile homes. After a small investment I get a VERY decent return in two or three years. Until old houses on small lots got way too high in my area, I used to dicker in them too. As long as I can buy a cheap mobile and a lot to rent I'll continue on my retirement/living fund.

From my experience, there is never a shortage of inexpensive rentals.

__________________
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