Comments on: Year End Retirement Funding: The Moment of Truth Approaches http://toughmoneylove.com/2008/11/18/year-end-retirement-funding-the-moment-of-truth-approaches/ The Hard Truth about Money and Personal Finance Tue, 31 Jan 2012 13:37:18 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Penny Price http://toughmoneylove.com/2008/11/18/year-end-retirement-funding-the-moment-of-truth-approaches/comment-page-1/#comment-1778 Penny Price Wed, 17 Dec 2008 14:06:18 +0000 http://toughmoneylove.com/?p=166#comment-1778 Good Morning Mister, I am 26, and my Fiance just turned 30. We are DINKS right now, and I managed to pay off the second mortgage on my home a year ago (purchased 4 years ago...don't even ask what it would appraise for "today"!)---and I also have an emergency fund covering about 6 months. Neither of us has any credit card or car debt anymore---just the house. But part of me wonders if I would be better off getting the "guaranteed" return of paying down the mortgage versus playing with stocks and stuff (a corner of the world that sorta frightens me :)). Thank you again for any help you can offer! ~Penny Good Morning Mister,

I am 26, and my Fiance just turned 30. We are DINKS right now, and I managed to pay off the second mortgage on my home a year ago (purchased 4 years ago…don’t even ask what it would appraise for “today”!)—and I also have an emergency fund covering about 6 months. Neither of us has any credit card or car debt anymore—just the house. But part of me wonders if I would be better off getting the “guaranteed” return of paying down the mortgage versus playing with stocks and stuff (a corner of the world that sorta frightens me :) ).

Thank you again for any help you can offer!

~Penny

]]> By: Mr. ToughMoneyLove http://toughmoneylove.com/2008/11/18/year-end-retirement-funding-the-moment-of-truth-approaches/comment-page-1/#comment-1758 Mr. ToughMoneyLove Tue, 16 Dec 2008 22:34:56 +0000 http://toughmoneylove.com/?p=166#comment-1758 Penny: Thanks for the visit and comment. Key question before I can respond to yours: how old are you and your fiance? Penny: Thanks for the visit and comment. Key question before I can respond to yours: how old are you and your fiance?

]]> By: Penny Price http://toughmoneylove.com/2008/11/18/year-end-retirement-funding-the-moment-of-truth-approaches/comment-page-1/#comment-1757 Penny Price Tue, 16 Dec 2008 22:06:00 +0000 http://toughmoneylove.com/?p=166#comment-1757 Hello Mister, I was attracted to your article because I face a similar-yet-different conundrum. I have NO 401k options at work, and neither does my Fiance BUT I have gotten us both to save $5k to open our very first RothIRA's. I thought that might happen this year, but now I am not sure if the money is better off in a high-yield/liquid online savings account, or if I should go ahead and fully fund a new targeted retirement account via Vanguard or something just before I file my '08 taxes. Can you help offer me/us any advice? ~Penny Hello Mister,

I was attracted to your article because I face a similar-yet-different conundrum. I have NO 401k options at work, and neither does my Fiance BUT I have gotten us both to save $5k to open our very first RothIRA’s. I thought that might happen this year, but now I am not sure if the money is better off in a high-yield/liquid online savings account, or if I should go ahead and fully fund a new targeted retirement account via Vanguard or something just before I file my ’08 taxes. Can you help offer me/us any advice?

~Penny

]]> By: Mr. ToughMoneyLove http://toughmoneylove.com/2008/11/18/year-end-retirement-funding-the-moment-of-truth-approaches/comment-page-1/#comment-1267 Mr. ToughMoneyLove Wed, 19 Nov 2008 02:43:41 +0000 http://toughmoneylove.com/?p=166#comment-1267 Mike - Thanks for your thoughtful comments. Our portfolion in the 401(k) is well diversified (I use the Scott Burns 10-speed portfolio) but desperately needs re-balancing.) I agree that finding the market bottom is all but impossible and that is why I hesitate to implement the Plan B I discussed. I also own stocks in taxable accounts but actually bought them primarily based on dividend yields. Lots to think about over the next month. Mike – Thanks for your thoughtful comments. Our portfolion in the 401(k) is well diversified (I use the Scott Burns 10-speed portfolio) but desperately needs re-balancing.) I agree that finding the market bottom is all but impossible and that is why I hesitate to implement the Plan B I discussed. I also own stocks in taxable accounts but actually bought them primarily based on dividend yields. Lots to think about over the next month.

]]> By: mike http://toughmoneylove.com/2008/11/18/year-end-retirement-funding-the-moment-of-truth-approaches/comment-page-1/#comment-1266 mike Wed, 19 Nov 2008 00:41:48 +0000 http://toughmoneylove.com/?p=166#comment-1266 I would personally continue to buy equities and not worry about the personal value fund until you're closer to retirement. Or I guess to put it another way, you should continue to invest today as if you're going to retire in 5-10 rather than creating now the portfolio you want to have when you retire. If you're worried about equities being too risky then you could also supplement your portfolio with international stocks, REITS, commodities, foreign currency, oil + gas, etc. The more of everything you have the less risky it becomes. I would also say that don't forget to diversify your account types. Do most of your investing inside your 401K where taxable investments (bonds, div producing stocks) receive the most benefit, but also keep some stocks(preferably ETF's) in a self titled brokerage account and don't touch it. That way you're not really being taxed on anything. When you retire in 10 years then those stocks in the personal account could be sold (paying taxes once, long term capital gain rate) and converted into your stable value fund. You'll also still have a good diversified portfolio inside the 401K. As for the "meat" of the market. I hate to say it but if the best "technical" stock analysts can't tell when the market bottoms, us as laymen have no prayer that we'll know either. So that means you can either invest no matter and don't worry about that day's prices or you can pick an indicator you like or are comfortable with and follow it consistently. I personally like moving averages that show when a market has "bottomed" but other very intelligent people will disagree with me. I would personally continue to buy equities and not worry about the personal value fund until you’re closer to retirement. Or I guess to put it another way, you should continue to invest today as if you’re going to retire in 5-10 rather than creating now the portfolio you want to have when you retire. If you’re worried about equities being too risky then you could also supplement your portfolio with international stocks, REITS, commodities, foreign currency, oil + gas, etc. The more of everything you have the less risky it becomes.

I would also say that don’t forget to diversify your account types. Do most of your investing inside your 401K where taxable investments (bonds, div producing stocks) receive the most benefit, but also keep some stocks(preferably ETF’s) in a self titled brokerage account and don’t touch it. That way you’re not really being taxed on anything. When you retire in 10 years then those stocks in the personal account could be sold (paying taxes once, long term capital gain rate) and converted into your stable value fund. You’ll also still have a good diversified portfolio inside the 401K.

As for the “meat” of the market. I hate to say it but if the best “technical” stock analysts can’t tell when the market bottoms, us as laymen have no prayer that we’ll know either. So that means you can either invest no matter and don’t worry about that day’s prices or you can pick an indicator you like or are comfortable with and follow it consistently. I personally like moving averages that show when a market has “bottomed” but other very intelligent people will disagree with me.

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