Doubling my investments by the age of 50 seemed like a good enough goal to have. But thanks to a bull market in stocks and bonds, my public investment portfolio returned more. And thanks to a strong recovery in San Francisco real estate, everything has turned out fine so far. In , my public investment portfolio returned Seemed pretty obvious that the stock market would soar once Trump was elected despite what many so called experts said. Regardless of accomplishments, investors gained trust in the market again once a businessman was elected as opposed to another career politician on either side.
For those of you who may feel bad about your investment performance or were criticized by others for not doing better let me share some following thought gems:. Money is a means to an end. Therefore, the absolute dollar amount you return is also much greater. You likely have a wide assortment of investments as part of your net worth compared to most Americans who have most of their net worth in their primary residence.
Even if your public investments underperform, your other asset classes such as coastal city real estate, private equity, venture capital, real estate crowdfunding , venture debt, fine art, etc might outperform. When you can combine the freedom to do what you want with not having to worry about ever going to work because your investments are generating enough income, you feel like the luckiest person on Earth. Not only have you won the game, you get invited back as a VIP with front row seats and all you can drink and eat privileges.
Your baseline investment goal in retirement is to at least beat inflation. You can easily beat inflation with no risk if you invest all your money in treasury bonds. Treasuries will almost always yield more than inflation. So long as you hold your treasury bond until maturity, you will get all your principal back plus the annual coupon.
The problem is finding a CD with a high enough interest rate to comfortable cover inflation. CDs also have early withdrawal penalties.
When will my mutual fund investments double?
The next investment you can make is to invest your entire liquid net worth in a portfolio of the highest rated municipal bonds in your state. You can find year municipal bonds yielding 3. You can take more risk buying individual corporate bonds, emerging market bonds, or high yield bonds. But overall, buying the aggregate bond index is a moderately risky investment.
If you buy an index fund, you have no guarantee of getting your principal back. You are riding appreciation or depreciation and collecting coupons. Corporations can default or corporate bonds can lose principal value if a corporation experiences financial difficulty. There are no guarantees. Just like in the bond market, you can buy all sorts of different stocks with different risk profiles.
But as we know, the stock market can have violent corrections. See the recent number and magnitude of corrections below in the chart. Retirees will have a combination of different types of risk levels. The question to ask is what type of investment weightings one should have in each based on their risk profile. Income based portfolios are what the typical, truly satisfied retirees should focus on.
- When Boxing Was a Jewish Sport.
- Retirement Investment Risk Levels.
- Spanish To Italian Dictionary (Spanish Edition).
- The Stowmarket Mystery Or, A Legacy of Hate.
- The Perfect Pilot (Falling Eagle Book 1).
- Browse Companies.
In 14 years, your retirement portfolio will have doubled. But if you are already satisfied with the amount of money you have, who cares about an extra 1. The improved performance will make no difference in your lifestyle. With a potential improvement of 1. A balanced-oriented investor seeks to reduce potential volatility by including income-generating investments in his or her portfolio and accepting moderate growth of principal.
An average annual return of 8. Once I got out of early retirement mode by working on my online business, I got more aggressive in stocks because my business income began to surpass my investment income. Your investments should be a relatively worry-free tailwind that ensures you never have to return to the salt mines again. If you are starting to worry about your risk exposure, then dial down risk by raising more cash, CDs, or rebalancing more towards treasury bonds or top-rates muni bonds.
Yes, it can get annoying if you underperform your respective benchmarks. Every single dollar you make above the rate of inflation is gravy. The pain of losing money is always much worse than the joy of making money. You can use Personal Capital to help monitor illegal use of your credit cards and other accounts with their tracking software. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. And that amount, combined with social security, is more than enough to pay my bills.
I just like the safety of it all. Most of them pay a monthly or quarterly dividend, providing a steady revenue stream on a consistent basis. The annuity is another way to diversify that is a little less risky… possibly not as profitable, but less risky. Some insurance companies may even go out of business and you will lose your income. I would suggest buying municipal bonds if your state is financially strong. We have a bit over 2M of 3.
You can always sell it in the future but you may lose some principle depending on the value of the bond. I buy the cow for its milk. I keep my bonds until they are called or matures so that I will get the face value principle back. I prefer to buy bonds directly but I do own 2 funds that use leverage to get to 5 or 5.
Mutual fund:When will my mutual fund investments double?
The other issue with bonds in inflation will eat you alive over the long-term we do have 30 years left! I know that our principle in our munis will not appreciate like with stocks and that is OK. Otherwise, it would be earning less than. I am happy earning 87K tax free this year. My wife is retired in with a 52K pension and gets 8K for retiree company medical.
For , her medical is We budgeted 20K for medical for both of us. Medical cost is scary. That is why I choose to work another 20 more months to double my pension to 70K and to get 8K yearly for retiree company medical. Our Ks are invested in fix 4. Hopefully, it will generate K combined at age With our passive incomes from munis, pensions, Ks and SS, it will cover X expenses. Our expenses are K a year. We will get a min of K to K in passive income at 62 so we can afford to be more conservative.
Bill, Our Ks are managed by our own company. I heard that they invest in corporate bonds to provide the fixed rate. I only buy muni bonds in Fidelity.
But I “Missed Out BIG TIME”
Even when I retire, I will leave my K at my company mainly for the fixed interest rate. Our company is in the top of the fortune companies so it is stable. What is a pension but a variation on an annuity? In fact for many it literally is an annuity product, and there is great lamentation over the disappearance of the DB pension.
Also, it makes sense to consider an SPDA when you have income to live on for 30 years, but worry about what 40 years might like like. An SPDA purchased at age 65 that starts at age 90 or so might give peace of mind and an annuity is truly an insurance product, in this case insuring you against the possibility of running out of money. I think you are right to limit the amount spent on an annuity to a minor portion of your savings.
Hah that made me chuckle.
Three simple steps to double your money
This is part of what I love about finance though — just how unique it can be to everyone. You nailed it with point number 1. Yes if you are already free you win! There were hundreds of potential risks during the year which might have eventuated, and being unprepared for any of those could have been a disaster for some people. Great advice as usual. I could just dump everything in bonds but keeping a balanced portfolio feels like better stewardship of the money.
Agreed that the asset allocation will vary depending on individual circumstances for each individual. And at least some should be in equities in order to participate in some of the growth of the economy. Not only are life expectancies getting longer, but you may also wish to consider how much you will leave behind to heirs.
Also, longer term bonds, whether they are treasury or municipal can still be very risky. A significant rise in interest rates and inflation can cost you. The bond can drop in price quickly in such a case. Now if you hold it to maturity you will get back all your principal. But your income during the holding period may not keep up with inflation or the going market rate of newer bonds.
With your asset level you dont need to take additional risk to squeeze out a little extra return. Any wealth management professional knows this and would advise like your plans above. You obvious understand how to grow wealth and protect it at the same time! I decided to go risk free. You still took some risk though. If interest rates go up to 7. You could then use your k to buy a truly risk free 1y T-Bill 1y not 10y! You may say that interest rates will never go up again. Fair enough, but that is a bet you made nonetheless.
Any bet with interest rates, whether short or long, is a bet nonetheless. There is no free lunch, especially in the financially oppressed times our economic masters have put us into as I describe in more detail in a post below. I agree, HB, that there may be a future opportunity cost associated with our decision to pay off the mortgage. In fact, I feel quite the opposite.
Take the low risk option. Fritz, your rationale is solid. Hard to place a value on peace of mind ; I would just offer a slightly different perspective as I too was looking to make a similar decision. Like you, I have a 3. I was thinking about making a lump payment toward principal to reduce that to 5 years. I ran an amortization schedule on my remaining time of my mortgage and was somewhat surprised by the results.
- The easiest way to double your money?
- A Womans Guide to Buying a New or Used Vehicle: Everyday Secrets You Should Know (Part II)?
- Single Mother on the Verge!
- Theory of Vibration: An Introduction: An Introduction Vol 1 (Mechanical Engineering Series).
As most people know, mortgages load interest on the front end of the early years of the mortgage. The longer you have the mortgage the total interest begins to drop since you paid more interest up front. When I ran our numbers, I realized my total interest remaining on our loan was only Fortunately, we have the ability to pay it off anytime we want so I feel like we can afford to take on a little market risk for now and see what happens.
Good luck when you pull the trigger in June. Fritz, I paid off my home two years ago. It already has with just a few moves in the last few months. What your comfortable with does.
How Much Investment Risk To Take In Retirement: Various Portfolio Compositions To Consider
I have the same question! Now, how would you verify whether the scheme would help you double the money in five years? Or in whatever time? Rule of 72 This rule estimates the number of years in which your investments would double. For example, anyone who has invested a lumpsum in a largecap mutual fund scheme can expect his investment to double in 3. Largecap mutual funds have returned Some experts argue that Rule of 69 gives more accurate result, especially when the returns of the investment are compounded continuously.
Rule of Similar to the rule of 72, this rule estimates the number of years in which your investments would triple. For example, if you have invested Rs 5, in a largecap mutual fund scheme, it would balloon to Rs 15, in 5. That is, provided your investments continue to grow at Rule of This rule tells you the time in which your investment quadruple. Suppose you have invested Rs 5, in a multicap scheme. Using the formula, you can find out that your money would become Rs 20, in approximately 5. Multicap mutual funds have returned BSV invests in U.
Government bonds with one- to five-year maturities and also carries a minuscule 0. Very few investments in life offer you the potential to double your money as easily as you can by investing in your Traditional k , accepting your employer's match, and watching your contribution reduce your taxable income. If that opportunity is available to you, the sooner you start taking advantage of it, the more quickly it can help you build your nest egg. But remember, two times zero is still zero. You have to take the first step and contribute to get the rest of the money headed your way.
Even if your personal circumstances are such that your tax rate and employer match won't let you double your money quite that easily, take a good look at the retirement plan you have available at work. You just might find that the features it offers you still give you an incredible toolset to help you fund a comfortable retirement. Still, in order to get yourself on that path, you need to take the first step and participate in the plan. So get started now, and improve your chances of a more comfortable future. Chuck Saletta has no position in any stocks mentioned.
The Motley Fool has no position in any of the stocks mentioned.