Financial Info, Please

[Anja]

I see there are many here who seem to have a good knowledge of financial principles.

Would you lend me some advice on the direction of the stock market?

Here's the deal - I have, what is to me, a considerable amount of money in investments with a national bank.

This bank made a grievous error this Spring which cost me some money and since then I've seen a board full of similar complaints about unethical business practices. I closed my savings and checking accounts with them and went to a credit union. But I left my investents with the other bank because of the penalty issue. I think they mature in a year.

I won't be making much more money in my lifetime. And I have been rapidly losing what is, in my consideration, large amounts currently.

I wonder if I shoudn't just take it out and keep what I have. I've never been interested in making more. For me the investments were simply a safe place to store my money which had the pleasant side-effect of also increasing it.

Most of my acquaintances are saying, "No. Be patient. The market will rectify itself." But I'm not convinced. Mankind has a way of establishing "failproof systems" which do fail.

My husband says that if I take it out with the intent of retuning it when the market begins to stablize again that I will be "buying high." But I could consider the option of just sitting on it in future years. I have a reliable friend who would take care of it for me.

Now, I'm sure you guys must think I'm nuts. What I know about finances you could put in a thimble. But what I know about people tells me my money would be safe out of the bank.

When I get advice to leave it in I feel sort of like someone telling me, as I get on the Titanic, that we won't be needing so many lifeboats.

What are some perspectives on this?

[robespierre]

Buy gold/silver. Not stocks in gold/silver mining companies, or some other shares of funds... but real physical gold/silver and keep it yourself. Hyperinflation is coming.

[Risen]

Originally Posted by robespierre

Buy gold/silver. Not stocks in gold/silver mining companies, or some other shares of funds... but real physical gold/silver and keep it yourself. Hyperinflation is coming.

Precisely. I'm trying to secure some cash at the moment so I can buy into gold and silver soon before it makes it jump. I think I'll use the current credit situation to my advantage. Take out a $10,000 loan/line of credit from the bank and put it all into precious metals with the expectation of them doubling in price soon. The current dollar value of gold is not a real correlation with the amount of supply that is available, which is to say they are suppressing the value of gold. But they can't do it for much longer because people are starting to clamor for purchasing gold and silver, and finding that there's none available.

[ptgatsby]

Originally Posted by Anja

Would you lend me some advice on the direction of the stock market?

No... and no one can. Do not, under any circumstance, let what others tell you factor into what you decide. No one knows.

What are some perspectives on this?

Keep in mind that I'm not offering any sort of sound financial advice. I can, however, generalise the following.

The sheer minimum amount of time for you to be invested in the stock market is 10 years. You need to find out what funds you own (if you have penalties, you must own funds) and their asset mix. If you can name the fund, I can look it up for you. The nebulous ground is in the 10-30 year bracket. Ideally you could wait 30 years before taking your money out. I don't believe this is an option, so I won't consider it.

Next, you need to know how many years worth of money you have available to you. Take your total investments and divide it by your expenses. Here's roughly where you stand;

@20 years - you have enough forever
@17 years - you have enough for 38 years
@15 years - you have enough for 28 years
@13 years - you have enough for 21 years
@10 years - you have enough for 14 years
@5 years - You have enough for 5 years

For example, if I spend ~15,000 a year and have 150,000 in the bank, I'm at the "10 years - you have enough for 14 years". Keep in mind that at the end of that time, there will be no money left to pass on.

These are all approximate, since the calculations are quite rough on such a simple calculation. However, it should give you a ballpark figure.

The current meltdown leaves no safe place. I don't want to be alarmist, but that's the nature of a financial meltdown like this. If you have lost less than 50%, consider yourself lucky. That's roughly where I'm at, heh So, for particular advice, I'd have to know actual numbers - but even given that, I couldn't really give you solid advice. This is a historical upset. The kind that is highly improbable.

Given the situation, and not knowing what you already have, the best bet is to find dividends and bonds (I'm assuming you need to live off the income already - if this is not the case, please disregard this part) that seem fairly solid.

If you have enough money to diversify properly (rule of thumb for the US, that'd be ~50,000 minimum, with major risk/cost breaks around 200,000/750,000), that'd be your best bet. That's the tricky part, unfortunately.

If any of this seems alarming at first, keep in mind that the two variables are "income" and "time". If you can spend less to get a lot more time. You can find alternative income to get a lot more time.

Please, feel free to ask anything at all/clarify.


** Edit: I took your OP to mean that you need to work out your retirement, and this puts it at risk. I may of misunderstood, on reflection. If this is not a risk for you at all, then it is only the time horizon that matters for your money. Anything less than 10 years should be low variation (bonds, dividends at most). If you plan on taking out more than a couple of percent of your money at any given time, that's what you need to look at.

I think I need you to clarify your particular needs, just so I can be clear.

[The_Liquid_Laser]

Originally Posted by ptgatsby

No... and no one can. Do not, under any circumstance, let what others tell you factor into what you decide. No one knows.

This is probably the best advice. No one really knows, and it's all a guess. Additionally you haven't really given us enough info for us to give good advice assuming that us strangers on the internet actually know what we are talking about. In short don't take financial advice from people on the internet.

[Anja]

Thank you so very much. I've been asking around in RL and pooling the suggestions to help me feel more sure of what I'm doing.

I don't need to pass any money on and I would guess that I have about ten more years before I need to go into assisted living. If anything of the system is left at that point, as a good taxpayer, I would have no qualms about accepting my share of financial assistance and it is good here in Minnesota.

If nothing is left of the system, I suppose I can join the hordes who will be dying off! It'll be close to time at that point anyway. Heh.

That's how I'm looking at it at present. No financial intricacies are needed as much as knowing that I'm using common sense.

Some acquaintances I talked to tonight seem to support this idea as well.

The "buy gold" idea is a good suggestion, I think.

[LostInNerSpace]

Originally Posted by ptgatsby

No... and no one can. Do not, under any circumstance, let what others tell you factor into what you decide. No one knows.

It's basically good advise. It's very true that no one knows. But we can look to the past for similar situations. A very similar thing happened in Japan. They had an explosive economy right to end of the 80's, then their bubble burst. They experienced what is known as a triple waterfall decline. Their recession lasted a good 15 years or more, not sure if they even ever came out of recession. I've not kept track of the Japanese economy for a couple of years. The thing to note was that it was the bursting of their real estate bubble that sent their economy into that deep recession.

Japan is a manufacturing economy. The last I read manufacturing was 50% of Japanese GDP. The US Consumer is approximately 70% of US GDP. The Japanese were financing their economic expansion with rising commercial real estate values. We were fueling consumer spending with rising residential real estate values.

What does this mean? Can't really say. It could be bad. If you are worried, a good strategy might be to take half of the table, meaning cash in half of your 401k.

[Anja]

I think I, by lack or knowledge or expertise in the financial area, need to gather information and consider what others are saying in order to make a decision. It's not so much a matter of having anyone tell me what to do as it is listening carefully and hearing answers in repetitive patterns. Then combining that with the directioon that seems the most comfortable to me.

I am appreciating the little details that I've been picking up from others. Things I hadn't thought of.

I do agree that the past is the best predictor of the the future.

[Little Linguist]

I'm not a financial expert, but I always hear that it is best to invest in physical gold. Be sure to inform yourself how to tell real gold from fake gold, though. (Weight, etc.) Silver - uh uh. Gold. You can never do anything wrong with gold.

Money in a bank, no way. Everyone knows about it. Grandma needs to go in a nursing home and no one has money, but they see you have 200,000 - YOU have to pay. Oh yeah. And by the way, if the US is anything like Germany, you have to pay taxes on the interest you make. Heh.

If you have a great deal of money, inform yourself on how to tell good, pure gold from crap gold and buy it. (But only if the price is cheap, not when it's especially high).

Alas, I have no money to invest, as I am a poor teacher. BUT if I did, that would be what I'd do.

[tenINsFJ]

Originally Posted by robespierre

Buy gold/silver. Not stocks in gold/silver mining companies, or some other shares of funds... but real physical gold/silver and keep it yourself. Hyperinflation is coming.

Ditto.

Don't count on our monetary system, there is nothing to give value to the dollar...except those that create it.. and trust me, you don't want that.