Investing for Retirement or for end of QE2

[curiousgeorge]

What income-producing (aka fixed-income, and supposedly 'safe')vehicles are retired and soon-to-retire folks should be invested in? Does the general guidance of investing a percentage that is equal to a person's age practical in today's market?

With the impending end of QE2 in June, I think retirees and non-retirees alike are probably looking to park their money in 'safe' investments until a clear market direction is 'knowable' (by end of summer?).

Thanks.

[rovo]

Does the general guidance of investing a percentage that is equal to a person's age practical in today's market?

I'm not familiar with the above statement about investing amounts equal to one's age. Can the original poster explain the comment in a little more detail?

I think retirees and non-retirees alike are probably looking to park their money in 'safe' investments until a clear market direction is 'knowable' (by end of summer?).

I don't believe there are any "safe" investments other than CDs and even CDs may lose the investor money when inflation is factored into the equation. It is all a matter of risk tolerance and need for growth of funds. If a person is about to retire without sufficient funds to finance the retirement, then there are two choices: assume more risk or delay retirement.

[phil5185]

Does the general guidance of investing a percentage that is equal to a person's age practical in today's market?

You often see it stated in reverse - ie, subtract your age from 100 and put that % in stocks.
In my experience, that rule of thumb has never been of much value - not a good way to build wealth. Eg, a 30-yr old would invest 30% in 'safe' products, a 50-yr old would only be 50% in stocks. (I was 100% in stocks in my 30's, 40's, 50's.)

[bimetalaupt]

Mar 6, 2011 13:11:13 GMT -5 @wxyz said:

Except for extended living money, I remain fully invested in stocks and mutual funds in retirement. BUT, and this is a big BUT, I currently have about 13 years of living money in CASH. Due to the current economic conditions. As I have gotten into my 60's I tend to stick more to the big cap, blue chip, American, iconic companies. I like the dividends and the cushion that the dividends give me in the current market conditions. I reinvest all dividends and cap gains as usual.

In today's low interest rate environment I am not concerned with putting the cash in anything but cash. If we experience massive inflation (ie: 30 year treasuries at 8% or above) I will move a significant amount of money (excess of 1mil) into 30 year treasuries. If you would be satisfied, and can live with, a yield of 5%, and will not need the principle, I believe you will see it in 30 year treasuries within the next 12-16 months

wxyz,
Bonds and stocks are used in a trading system called the Efficient Frontier. That is 40/60 with stock at the upper end.. Current numbers look more like 35/65 but at is a detail.

Inflation looks like 3% with the 30 year T-Bond at 5%.. ( 3% inflation + 2 % normal yield).. This would give stocks a total return of 10.2% with Equity Risk Premium of 5.2% ( NYU- Stern School of Business... Rebalance at 1 SD per quarter... ;D ;D ;D

This is for best return with the least risk..Bernstein. I think this is more like the current thinking then the 100 Stock of the 1990's.. Let me know what you think, Please

Just a thought,
Bruce

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[Bluerobin]

George, I early retired several years ago, and won't get SS for a few months. I am mostly in dividend stocks. I not only get the dividend, but they have been appreciating. I also have a few triple tax frees, and a corporate bond.
Hope this info helps.