I have a substantial amount of cash I want to move into stock and bond mutual funds I already own. I'm aware of the concept of dollar-cost averaging, but I'm afraid that as soon as I move the money it will decline in value and take years to recover. My question is not about what to invest in, but how to make those investments timing wise. -- Robert P.
I'm thinking of retiring this summer. Ideally, I'd like to withdraw a higher percentage of my savings the first 10 years or so of retirement and then step it down as my wife and I become less active. Are there any rules of thumb or planning tools that could help me out? -- Craig R.
My IRA rollover account is already diversified across a wide range of low-expense investments (including some Money 70 funds), but I'm considering diversifying even more, perhaps global bonds, mid-caps, REITs and commodities. How far should I split the atom in terms of diversification? -- K.S.
I've split my stock portfolio among three different funds characterized as "growth," "tech" and "index." How can I tell whether my stock holdings are truly diversified? -- Matthew B., St. Louis, Missouri
Looking to improve your portfolio's performance? Still licking the wounds from tax day? Then it's time to kill two birds with one stone by making sure your investments are as minimally exposed to taxes as possible.
The strategy: Shift your portfolio to cheaper, more tax-efficient mutual funds and ETFs.
How do I know if my financial planner is making me the most money possible? -- Jorge, Billerica, Mass.
I've read a lot about the benefits of rebalancing your portfolio annually, but I've never seen the answer to these questions: How do I decide which stocks to sell? And when should I "wait it out," assuming that a good stock will rise back to its pre-crash price, as opposed to pulling the trigger and accept a loss? -- Chris, Long Beach, Calif.
Question: My adviser is recommending that I put about 80% of my retirement portfolio into large-cap stocks? I'm 40 years old -- is that too big of a risk at my age? -- Mark, Shelby Township, Mich.
Question: I plan to retire in a few years, so my target asset allocation is 40% stocks and 60% in bonds, cash, real estate and other investments. My question: How should I rebalance my portfolio? Should I bring my allocations back in line at some trigger point? Should I do it annually on my birthday or some other date? Is there some other method? I would be interested in your thoughts on this. -- R.B., Northbrook, Illinois
Question: I just sold my house and have $300,000 to invest. Everyone has suggestions, but what do you think I should do? -- John, Pacific Palisades, Calif.
Question: With all the discussion about Greece, Portugal, Spain, etc., I'm concerned about how failing economies in Europe will affect my retirement savings. My portfolio is diverse, but I'm still worried that I am going to take another major hit. I am nine years from a potential retirement. Should I be concerned? --Gary, Buffalo, New York
With the market up more than 60% since March, you're probably feeling a lot better about your portfolio lately than you did a year ago. The worry for 2010: Will the runup run out of steam?
Question: I'm nearing retirement, but would like to continue investing in stocks and bonds. My question: Should retirees continue to put money into the markets even after they have retired? --Lee Benge, Charlotte, North Carolina
Question: The 4% rule seems to have become the conventional wisdom for drawing money from your savings in retirement. But I believe the rule is flawed. I think it might make more sense to choose a percentage of your savings that you will withdraw annually and then just apply that percentage to your savings balance at the beginning of each year so you would have more money to spend in years when investment returns are good and less to spend in years when returns are bad. What do you think? --E. W., East Lansing, Michigan
Question: I'm planning to invest some money in the stock market, but I'm wondering whether I should buy mutual funds or individual stocks. Which do you think is better? And in the event I decide to go with stocks, which ones do you think are really good buys now? --Monique Thompson
Before the market imploded last year, turning your nest egg into steady income for 30 or more years of retirement seemed pretty straightforward. Just follow the old 4% rule: Withdraw that much of your portfolio's value initially and then boost that dollar amount annually for inflation.
Will I ever be able to retire now? That's a question you're likely asking yourself these days. After a year in which your 401(k) has been hammered by the biggest stock losses since the Great Depression, your home equity has been whacked by the collapse of the real estate market and the specter of being laid off looms larger every day, no one can blame you for being skeptical.
There's an old saying that goes, "You make your money in stocks but keep your money in bonds."
Question: I've been told real estate investment trusts offer great diversification. But do they really? Last year REITs lost 38% - that's a bit worse than the S&P 500. --Brian M., Greenwich, Conn.
Question: I want to better diversify my portfolio. So I'm thinking of getting rid of some funds that focus on specific industries or geographic areas and investing in funds with broader holdings. The problem is that the funds I want to get rid of tanked hard in 2008. Would it be better for me to hold onto them until the sector recovers? Or should I sell them and create a more diversified portfolio right now? Josef Werne, Duluth, Minnesota
Question: I've been sticking with my investments in the hopes that the market will recover, but I'm tired of seeing the value of my portfolio continue to drop. Should I just sell everything, put the proceeds into money-market funds and bonds and wait until we see an upturn before getting back in the market? Or should I hang in there with my present portfolio of stocks and mutual funds? Eric Rosenberg, Little River, South Carolina
Question: All the financial gurus tell me to diversify my investments. But if I am making money on some investments but losing on others, how is this a great investment plan? Why not just buy a CD and not worry? --John D., Idabel, Oklahoma
Question: I'm 57 and planning to retire at 66. Before this year's stock market turmoil my 401(k) was balanced at 70% stock mutual funds and 30% bond funds. Now it's 59% stock and 41% bonds. To take advantage of very low stock prices I was thinking about re-balancing to 75% stocks and 25% bonds. Does this sound like a good plan or should I just re-balance to 70% and 30%?
Seventy years ago in 1938, Richard Whitney, the chief executive of the New York Stock Exchange (NYSE), was sentenced to 40 months in Sing Sing for embezzling funds from clients, including the widows and orphans benefit fund of the NYSE.
How bad is inflation for your portfolio? Let us count the ways.
Question: I have a continuing debate with a classmate of mine regarding why a financial adviser does not include calculations/spreadsheets when determining asset allocation. My classmate claims it is trade secrets. I claim that the adviser doesn't know how to do/explain the calculations and blindly plugs the client's financial information in a system and reports the answer. Who do you think is right?
Question: Is now a good time to move more of my portfolio from domestic mutual funds into international funds? - Brett Phillips
Question: I know I can protect my portfolio against inflation by investing in TIPs and against market volatility by diversifying my investments. But how can I hedge against adverse U.S. dollar movements? - Brian Canes, Scarsdale, N.Y.
The stock market got a nice bump Wednesday following an interest rate cut by the Federal Reserve. On Thursday, the market gave back all those gains - and then some.
Question: I contribute 15 percent of my salary to my 401(k) and put money into an IRA and a taxable investment account, but I don't have much investing experience. I've heard that I should rebalance my portfolio each year, but I'm not sure how to do that.
After years of watching stocks go almost straight up, it became pretty easy to forget how temperamental the market can be. Until mid-July, when the subprime mess gave Wall Street its worst scare in nearly five years, stocks were basking in the glow of the second-longest uninterrupted bull run in history.
Question: I need to rebalance my portfolio and move some money out of stocks. I don't want to touch the total stock market index fund in my 401(k), so I'm thinking of selling individual stocks I own in tax accounts that aren't doing as well as I would like. But I don't want to take a huge tax hit. What should I do? -Linda, Dover, N.J.
Question: I'm 34 and am concerned about how to invest my retirement savings in this market. I currently have 100 percent of my portfolio in a mix of funds that invest in large-to-small-cap stocks as well as international funds. But I'm wondering how much I should change that mix given these turbulent times. What do you suggest? - Brian, Mitchell, South Dakota
Question: I've read that if I withdraw roughly 4 percent of my retirement savings each year to live on, my money will last virtually forever. But does this 4 percent include the money my portfolio already kicks off in dividends and interest? Or is the 4 percent withdrawal on top of that? - Doug Martin, Syracuse, New York
You're no hedge fund trader or big-time lender, but the subprime mortgage fallout is putting a dent in your portfolio, too.
Question: In a world of globalization, should you invest a larger portion of your assets in foreign equities? I'm in my mid-40s and currently have about 40 percent of my money in both international and emerging markets, but I wonder whether I'm taking too much risk. - Hung Lee, Annandale, Virginia
This past Thursday was the second worst day of the year for the Dow Jones Industrial Average. But remember, it was just a week ago today that the Dow closed above 14,000 for the first (and only) time.
Question: About six months ago, I invested a chunk of money into four separate mutual funds. When would you recommend adjusting the balances so each fund is back to its original percentage of my portfolio? - John R., Arlington, Virginia
These common mistakes could send your retirement savings up in smoke. Find a better way to divvy up your investment pie.
Five simple strategies will get your financial papers organized. Now's your chance to end the chaos forever.
Question: I often hear that you shouldn't withdraw more than 4 percent a year from your 401(k) after you retire. But if your account is growing at 8 percent a year and you take out only 4 percent, wouldn't your account value just keep growing?
IF YOU HAVEN'T TAKEN A PEEK AT YOUR portfolio for several years, chances are it's taken on a shape you don't even recognize. The tiny slivers of international stocks you bought a few years ago are ...
Stocks plunged Tuesday with the Dow Jones Industrials losing more than 400 points. It was the worst day in 5 years. Markets stabilized Wednesday morning, but the drop is still a loud wake-up call to investors. We'll tell you how to protect your investments if the stock market does tank.
If you haven't taken a peek at your portfolio for several years, chances are it's taken on a shape you don't even recognize.
Question: I'd like your view on what percentage of pay I should be putting in my 401(k) for retirement. I'm currently saving 15 percent of my annual salary of $74,000 a year, and have accumulated $392,000 so far. There is no company match in my company plan, nor any pension beyond the 401(k). I have another $46,000 in mutual funds and own a home that's worth about $320,000, although I owe about $95,000 on a home equity loan.
Question: I cashed in my investments to raise a 25% down payment to buy a house. I'm thinking of taking out a home equity line of credit, borrowing against it and then investing the loan proceeds. I figure this would be a good way to rebuild my investment portfolio. What do you think? - James
You saved diligently throughout your career, plowing as much as you could into your 401(k) and other retirement accounts. Now you're looking forward to kicking back and relaxing, secure in the know...
WHEN YOU'RE SAVING FOR RETIREMENT, YOU FACE A timeline measured not in years, but in decades. How do you find investments that can go the distance, so that you don't have to keep worrying about you...
When you're saving for retirement, you face a timeline measured not in years, but in decades. How do you find investments that can go the distance, so that you don't have to keep worrying about your portfolio and making constant adjustments to your holdings, a practice that, study after study shows, lowers your returns?
READER QUESTION: In the past, you've said that investors shouldn't try to time their investing so they get in just before the market soars. While most of my investments are in stock funds, I have some cash parked in a money-market fund waiting for lower stock prices. I almost moved some of this cash recently when the Standard & Poor's 500 declined to around 1220, but I really want to invest at an S&P of 1200. Meanwhile, the cash is earning 5 percent. What's wrong with this approach? - Alan S., Silver Spring, Maryland
You saved diligently throughout your career, plowing as much as you could into your 401(k) and other retirement accounts. Now you're looking forward to kicking back and relaxing, secure in the knowledge that your nice plump portfolio will carry you comfortably through retirement.
QUESTION: Why do you advise people planning for retirement to figure on living to 90 or beyond? I hope to retire at 57, but I'm not going to plan on living beyond 85. That just seems iffy at best. -- Paul, Bridgeport, Connecticut
QUESTION: I'm about six months shy of 62 and expect to be laid off soon. I'll have enough savings to hold me over until I begin collecting Social Security, and after that I'll have Social Security plus about $320,000 in an IRA rollover. Of course, I'll also have to pay for medical insurance until I hit 65, when I can enroll in Medicare.
1) Like professors and therapists, financial advisers list their credentials after their names. Three of these are legit. Which isn't?
I sold a commercial property I owned and after paying off the mortgage on my condo I expect to have about $500,000 left over. Is it possible to live off the interest from $500,000? I'm single and 57 years old.
I'm in my early 30s and have about two-thirds of my portfolio in stock mutual funds. I'm considering also investing in Treasury Inflation-protected securities (TIPS) and real estate investment trusts (REITs). Do you think that's a good idea and, if so, how much of each should I own?
t balance between maximizing return and minimizing risk, and you're well on your way to reaching your goals. ...
You've probably given a lot of thought to what your dream retirement will look like. But here's what you really need to think about: How are you going to pay for it?
My wife and I are both 62 and retired. We receive Social Security and have a $400,000 stock portfolio that generates income of about $500 a month. Would it make sense to take money from our stock portfolio to purchase a fixed income annuity so we can increase our monthly income for life?
Mutual fund companies are slapping the word dividend on seemingly every new fund they trot out these days. It's easy to understand why they think the funds will sell: For five years, stocks that pa...
I'm 60 years old and have an IRA worth about $700,000. I'd like to start withdrawing $15,000 a year after taxes in about four years. If I do this, how long can I reasonably expect my portfolio to last?
The balances of our IRA and regular taxable accounts have grown large enough that a severe market downturn would be devastating for me and my wife. How can we protect our retirement savings? Should we consider derivatives and options, or is there something else we can do?
Whether or not success in life is about just showing up, as Woody Allen claimed, success in retirement investing is about proper asset allocation. Divide your retirement savings to strike the right...
Whether or not success in life is about just showing up, as Woody Allen claimed, success in retirement investing is about proper asset allocation. Divide your retirement savings to strike the right balance between maximizing return and minimizing risk, and you're well on your way to reaching your goals.
You've probably given a lot of thought to what your dream retirement will look like. But here's what you really need to think about: How are you going to pay for it?
I work for a major financial services firm that allows us to buy company stock once a quarter at a 15 percent discount. I want to take full advantage of the discount, but I'm not sure what percentage of my portfolio should be invested in this one stock. Considering the discount, what do you recommend?
I retired about two years ago and left my 401(k), which is about 90 percent invested in a capital preservation fund, with my previous employer. I'd like to start drawing about $50,000 a year from it to supplement my income, but am wondering how to go about it. What do you say?
I'm 38 years old and I invest $1,650 a month into a portfolio of 10 mutual funds that now has a balance of $165,000. If I continue doing this will I have enough to retire?
If this is a time in your investing life when you're focusing less on the growth of your portfolio and more on the stream of cash you can draw from it, you're facing a real challenge. Years of dema...
Dear Armchair Millionaire: I watched my parents lose half their retirement portfolios in 2000 when the stock market took a nose dive. I'm starting to invest now and I'm terrified at the thought of repeating their experience. How can I make sure I don't expose my investments to risk?
If this is a time in your investing life when you're focusing less on the growth of your portfolio and more on the stream of cash you can draw from it, you're facing a real challenge.
When I rebalance my mutual fund portfolio, should I just be trying to maintain the proper balance between stock funds and bond funds overall? Or should I also be rebalancing to maintain the balance between different types of stock and bond funds-say, large-cap funds vs. small-cap in stocks and long-term vs. intermediate-term in bonds?
I'm 56 years old and hoping to tap Social Security at 62. I'll also have a small pension. What would be considered a minimum amount of savings someone in my position should have to be able to retire comfortably -- and how should those savings be invested?
In almost every game or contest, you have to choose between two strategies. Do you go all out, even if it means taking big risks? Or do you proceed cautiously, accumulating small advantages that wi...
In almost every game or contest, you have to choose between two strategies.
It's one of the greatest lines in one of the greatest movies of all time, The Wizard of Oz. Dorothy Gale, played by Judy Garland, has just been transported, along with her little terrier, Toto, fro...
My husband and I, both retired, have $60,000 in mutual funds, but we seem to be losing money every day. We're thinking of moving our money to an investment where we can get a guaranteed 4 percent return. What do you advise?
Editor's note: The following is adapted from "We're not in Kansas anymore: Strategies for retiring rich in a totally changed world," by Walter Updegrave, senior editor at Money magazine.
A financial adviser has been managing about $400,000 in assets in mutual funds and a few stocks for me since 2001 for a fee of 1 percent of assets per year.
When you're accumulating money for retirement, you're probably aware that you're taking on investment risk -- that is, exposing yourself to the possibility that your stocks, bonds and other investments might lose value.
I'm saving for retirement in a 401(k) and IRA account invested in mutual funds. How can I most efficiently keep track of the paperwork -- cost basis, dividend payments, etc. -- so I can effectively manage my portfolio over the next 30-plus years? Keeping track of the cost basis and dividend payments until retirement sounds daunting!
Dear Armchair Millionaire: I read an article recently that said that the expense ratio is one of the most important things you should consider when choosing a mutual fund. I completely disagree. I'd definitely pick a fund that performs better over one that has slightly lower expenses. What's your opinion?
Q. My New Year's resolution was to rebalance my portfolio and replace my stinker mutual funds with index funds. When I reviewed my portfolio's 2003 performance, however, I noticed that many of my losers had 20 to 30 percent gains and my biggest loser had a 60 percent gain. I'm still way below my break even point for these funds, but now I'm wondering if I should continue with my index fund strategy. What do you think?
In some respects, the home stretch of 2003 feels eerily similar to the winter of 1999, and we're not talking about the weather. The Dow is up an ebullient 30 percent since its low last October, the...
In his best-selling book The Perfect Storm, Sebastian Junger describes how a rare combination of meteorological events produced a monster nor'easter with 120-mph winds and waves towering 10 stories...
The home has long held a place of mythic stature in the hearts and minds of Americans. Our 17th-century Puritan forebears considered home ownership a key component of a democratic society. And as t...
If you're like most investors this year, you're sitting on a pile of losses. But those losses have an upside: By using them well for tax purposes, you can turn them into real cash -- and put yourself in a better position for the future.
There's only so long you can play a losing game before giving up. In basketball, once coaches see that they can't possibly win, they bench their starters. In boxing, trainers infamously throw in th...
If you're like most investors this year, you're sitting on a pile of losses. The S&P 500-stock index is down 22% year to date, while the average equity mutual fund is off 23%. No question, that's p...
It's the most underrated component of portfolio management. It's blindingly simple yet devastatingly effective. And it's something that--unfortunately--very few investors actually do. No, we're not...
PART TWO
Remember Aesop's fable about the ant and the grasshopper? You know, the one where the grasshopper fritters away the summer days singing songs, while the industrious ant busts his hump laying in a s...
As a retiree, you have one overriding concern: making sure your money lasts as long as you do. When the market was charging along at more than 20% a year, as it did for much of the 1990s, that seem...
Did you know I can run a mile in under four minutes? I haven't actually done it yet. But I ran 100 yards in 13.1 seconds the other day. If I hold that pace, I figure I can do a quarter mile in 57.6...
Feeling anxious about your finances? We don't blame you. But we have a suggestion. Gather all your records, set aside a few hours and embark on a comprehensive re-evaluation of your portfolio. In f...
In the late 1990s, investors learned all there was to know about reward. They bought blue-chip stocks--they made money. They threw cash into IPOs--they made money. They loaded up on profitless dot-...
Seeking financial advice is a natural impulse. Expertise, confirmation, confidence--we want all these things at different times in our lives. But seeking advice is fraught with uncertainty: Will it...
Come on, admit it. It was darn fun owning technology stocks and chalking up easy gains in your portfolio. But after the past 18 months you know you're not an investing genius--or even a slightly-ab...
For the nation's 39 million 401(k) investors, the past year has been a shocking reversal of fortune. After nearly a decade of fat double-digit returns, participants were lulled into thinking that t...
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