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Now before anybody flame me, I want to set the records straight. I am not looking for "get-rich-quick" scheme, or buy investment property game. Here is my situation. I had a 4% 15-year fixed mortgage for over $200K. Since I was not getting anywhere close to 4% in banks, I decided to pay off the balance. It is almost 10 years since I am paying the mortgage. I was paying some principal each month from Day 1. I have reward checking with Bank of Blue Valley but they have decreased the payout to 2% at 25K. Still was not making sense at 2% loss even if I opened one or two joint accounts. My wife is a doctor but decided not to work and take care of kids. I was(am) not ok with her decision, but life is life. I have come to peace with her decision. My income is not very high (about 120K) but with business deductions and kids, I come under 15% tax bracket. I live in Central CA, and I have some capital loss on my house (means I paid in interest and principal more than it is worth now) though not like others. My net worth is about $500k (mostly in passive retirement accounts-traditional IRAs, solo401(k) IRA, Roth IRA etc. I am heavy into international ETF (I believe future lies there) and some SPY. I have some play money (20K) into AAPL, MA and US REITs (recently purchased). So I feel I do not have to expose myself into investment property. Although it is quite enticing. I am about 46 and would like to retire at 50 to some cheap place. Kids' education is secured and separate.

Now the question. If my situation does not change (which is highly unlikely), what would be the ideal investments from now on for next 4 year? I can take some risks, but not too much. I like to understand the investments before I leap. So, I need to understand the cash flow and business model of the business before I can invest. I am a graduate engineer with MBA and hope to get my CFA by 12/2013. I am open to all ideas and I believe Fatwalet is a great crowd sourcing platform.

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Invest in treasury bonds "in your house?" What do you mean?

jeffc (May. 05, 2012 @ 7:58a) |

I love California.

UtahDealSeeker (May. 05, 2012 @ 1:17p) |

I forgot to add, buy Facebook at IPO.

qcumber98 (May. 08, 2012 @ 12:48a) |

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gold, silver, energy, and oil. everything else is a waste.

qcumber98 said:   gold, silver, energy, and oil. everything else is a waste.

Buy all the stuff that has done well recently, you can't lose with that strategy. Worked for .coms in '99, housing in '06...surely it will work with commodities now!

You can't go wrong with energy- it will go only in one direction.The demand will not go down and supply will not go wayyyy up. Considering Japan's withdrawal from nuclear energy, I feel that energy stocks will go way up in next decade.

Yeah I bought a whole bunch of Natural Gas stock about 4 years ago and have really done well.

Have you got umbrella liability insurance and have you made any attempts to protect your assets?

The fact that you've got a paid-off house is public record and might thrill anyone who believes you owe them money (maybe they slipped and fell on your property, or maybe your wife gave them some impromptu medical advice).

Good suggestion about Umbrella policy. I will get some quotes. I or my wife do not have any debts of any kind. Energy or Gold are good recommendations too. But I have exposure to it through ETF and SPY. I also have some Gold coins and jewelry too (about 300 gms).

vjsinha said:   My wife is a doctor but decided not to work and take care of kids. I was(am) not ok with her decision, but life is life. I have come to peace with her decision.
Many women of Indian origin engage in bait (higher education, work before marriage) & switch (SAHM after marriage).
vjsinha said:   I am about 46 and would like to retire at 50 to some cheap place.
vjsinha said:   
I am a graduate engineer with MBA and hope to get my CFA by 12/2013.

If you want to retire early then why get CFA? If you want to get CFA then why retire early?
vjsinha said:   
Now the question. If my situation does not change (which is highly unlikely), what would be the ideal investments from now on for next 4 year?

Why are you thinking about next 4 years ? You will still be invested after you retire. Check out Bogleheads

VJSinha,
Invest in US treasury Savings bonds. You can invest 10K per year per person in your house. Paying 3.6% currently.

Standard answer: I advise that you should chug a pint of sourkraut and hit your left hand repeatedly with a hammer.

If you don't want to do that, hire a financial advisor.

vjsinha said:   My wife is a doctor but decided not to work and take care of kids.

Now the question.....what would be the ideal investments from now on for next 4 year?

Best thing short term would be to convince the cash cow (no offense) to go back to work. Perhaps you could take over more of the child care and/or hire a nanny.

1. Demand the money back from both your CFA and MBA classes for not learning that 4% fixed capital for 10 years (below inflation) is both free money and the deal of the century. That should help with the retirement fund.

2. In your situation, I might look into muni bonds. You're losing your mortgage interest deduction and will lose dependent credits as your kids grow (not knowing their ages...) and so that 15% tax rate could go up significantly, wiping out any actual returns on your investments.

3. How much risk are you willing to accept on your money? If you have the education financial background you say you do, you should be able to do a reasonably good job of picking winning equities. To look at some alternate investments, diversify heavily in LendingClub/Prosper loans, they will give you a higher rate that you're earning in your rewards checking.

jm41 said:   VJSinha,
Invest in US treasury Savings bonds. You can invest 10K per year per person in your house. Paying 3.6% currently.
Which savings bonds that he can buy today are paying 3.6%?

MarkM said:   jm41 said:   VJSinha,
Invest in US treasury Savings bonds. You can invest 10K per year per person in your house. Paying 3.6% currently.
Which savings bonds that he can buy today are paying 3.6%?


They are 2.2% now

What is your business? What is it worth and what do you plan to do with it after you "retire" from it? Why are you working towards a CFA? Is that a second career? Your risk tolerance and investment choices changes dramatically if you're retiring in 4 years vs. changing careers and continuing to receive income for another 10-20 years.

BTW, if you're the one with the CFA (or getting the CFA), shouldn't you be the one giving us advice?

You have various buckets that would require different strategies. Are you talking about your overall asset allocation or specific investment, such as retirement account, college account, investment account, etc.? Do you count your home in your net worth? How many kids? Ages? How much in you "secured and separate" college fund?

Good news: The government most likely considers you a "rich" person and you'll be subject to all the new tax changes.

Reality: You're doing well and better than most, but with uncertainties in this decade make any future planning and expectations very worrisome for all.

Hello, You're 46 and a graduate engineer and an MBA and 18 months from a CFA and you can't figure out how to invest your own money? I'm surprised by that.

You think you can retire in 4 years with a net worth of $500,000 - that's weird, since 3% SWR would only give you $15,000 per year. I don't think you can count on more than that for a 40+ year period of withdrawals.

You invest heavily in international ETFs because 'the future lies there' which tells me you haven't read the Future for Investors by Jeremey Siegel. You should read that book.

And you don't appear to own any/believe in bonds which is also weird because, as I'm sure you know, adding up to 20% bonds dramatically reduces volatility and risk while having almost no impact on returns.

Do you not want to invest in something tried and true, such as:

40% TSM
20% TISM
20% TBM
20% TIPS

It seems like something low-cost, tax-efficient, ultra-diversified, and passive would be perfect for almost anyone. How about you?

psychtobe said:   Hello, You're 46 and a graduate engineer and an MBA and 18 months from a CFA and you can't figure out how to invest your own money?I think he is just looking for new ideas. Which is always a good idea, no one is as smart as everyone, you can always learn something new.

Although I agree with you, it does seem bizarre (and perhaps foolish) to be thinking about retiring at 50, with $500,000. It seems like he'd have to be VERY frugal (and, more importantly, healthy the rest of his life) for that to have a snowballs chance in heck of working out OK in the long run.

I know you don't want to be "lectured" OP, but ... you asked for advice. Hard to give you any, when your thinking behind what you are planning is baffling to us.

My income is not very high (about 120K)Strange to hear you call that not very high, then in the next breath say you want to retire at age 50, with only 4 years of that income level in the bank.

I have some capital loss on my house (means I paid in interest and principal more than it is worth now)That is not the definition capital loss.

Not to mention he can't access much of that $500k for 9.5 years after that...

psychtobe said:   You think you can retire in 4 years with a net worth of $500,000 - that's weird, since 3% SWR would only give you $15,000 per year. I don't think you can count on more than that for a 40+ year period of withdrawals.
Agreed. Although OP did mention "would like to retire at 50 to some cheap place". If by cheap place, OP meant outside the US (perhaps to his home country --- going by his FW username), 15k could provide for a decent retirement.

Guess you haven't done level 3 yet. RRTTLLS: Risk profile, Return requirement, Time horizon, Tax constraints, Liquidity constraints, Legal Issues, Special needs. You can't set up a "plan" unless you got those things listed.

so...4 yrs, "not so much risk," still missing A LOT of needed info....

Yes, I am a charterholder.

How will you earn your CFA designation 12/2013, unless you mean that you have passed Level 3 in June 2013 and you're figuring 6 months to earn the charter?

First, my apologies. I did not ask for retirement ideas and you guys gave it anyway. The reason I can afford to retire is I can withdraw $4000/mo at age 50 from Calpers. I may get more if I postpone. I have my reasons to retire early. My MBA was paid by the employer and CFA cost is a business expense (not much anyway). It is a great learning anyway. What I wanted advice on was how to invest 6-8K/mo for next 4 years. Investment Time horizon 10 years. Risk profile-moderate. No liquidity or tax constraints, No min. return requirements or special needs. I will read the Future for Investors by Jeremey Siegel. Open for all ideas.

I don't understand why an MBA and soon to be CFA needs investment advice from others.

NRE fixed deposit with ~10% interest rate...100% safe.

somal75 said:   NRE fixed deposit with ~10% interest rate...100% safe.

Yeah, no risks other than currency risk because it's in rupees and deposit insurance risk because it's Indian (which means DICGC instead of FDIC). Tell everyone who had Icelandic accounts that their money was 100% safe.

Listen to what Buffett said. If you have money, invest in the real estate. For the shorter duration that you have, invest in apartment REIT. Rent in my area went up by 10% in one year.

jm41 said:   VJSinha,
Invest in US treasury Savings bonds. You can invest 10K per year per person in your house. Paying 3.6% currently.


Invest in treasury bonds "in your house?" What do you mean?

vjsinha said:   The reason I can afford to retire is I can withdraw $4000/mo at age 50 from Calpers.

I love California.

I forgot to add, buy Facebook at IPO.



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