Tuesday, January 31, 2012 - 8:30 AM

Need Opinions On My Portfolio

I have a substantial amount saved over the last 30 years, I'm retiring in 7-8 years, Right now I'm 70% allocated in online savings accounts/CD's at around 1.5% is my average return total. 10% allocated in junk bonds (i.e. Ticker JNK, HYG) and 10% in REITS (i.e. STWD, SLRC) and 10% in Dividend paying stocks (i.e. PFE, VOD, IP, AGU, GE, Etc.). Is there something I'm missing here. I want to sleep at night and not worry about losing money. This is supposed to be investing and lately it should be called losing (last 10 years anyhow). My house has even depreciated 35% here in Atlanta) and I almost have it paid off. I will probably cash out of it ($500k (Paid $780k 4 years ago) and just rent at retirement. I also have 401k but not counting on that at all due to tax increases coming and you have to be 60 and I will only get to get 60% minimum on that money after taxes are raised. Pay 42% now with GA state tax. Bonds, other than junk bonds seem to hit a bubble, when interest rates rise (and the most certainly will) those will get hit. Not the junk bonds. Any other options for me between a cd and stock (risk wise) that I'm missing?...no I don’t want to be a loan shark. Some guy at TD Ameritrade said to generate monthly income with Options on my current positions. Thanks for any opinion. I wish I would have never put any extra money in 401k/IRA except matched by company. Because if I didn’t I would only be taxed at 15% capital gains rate on that if sold today. Not at personal income rate. Most people don’t understand that. Plus I can at least claim loses too, Not with 401kor IRA....yeah that a whole other topic/thread...

futuresynthpop5 posts since
Apr 10, 2010
Rep Points: 29

1. Tuesday, January 31, 2012 - 9:13 AM

You probably need advice from a professional fee-only certified financial planner or CPA on much what you have posted here. You noted "Right now I'm 70% allocated in online savings accounts/CD's at around 1.5% is my average return total." Either you are in relatively short-term maturities or you have not placed your funds into CD accounts until after the rates have been cut so drastically by the Federal Reserve. If you had been laddering your accounts out to five, maybe seven years your average yield should have been significantly higher than 1.5%. As far as bonds go, you didn't indicate you have any municipal bond holdings. Their long-term yields, considering your tax bracket, are quite appealing right now compared to the other alternatives out there. Of course, if rates began to rise significantly, far down the road, your price on these bonds would depreciate. But then you have to ask yourself if the important thing is current tax-free income or capital preservation? I would try to stay in your home. A $280k loss if you sell it is quite a haircut. Inquire about converting your 401k into an IRA. You will have more control over the investments. To reiterate, I believe an appointment with a professional that is very knowledgeable on tax related issues regarding investments would be quite beneficial regarding your situation. Good luck, and keep on reading Ken's excellent blog.

Shorebreak1,300 posts since
Apr 6, 2010
Rep Points: 4,901

2. Tuesday, January 31, 2012 - 9:36 PM

futuresynthpop, I have taken a small portion of my funds and have been purchasing high yield bonds (individual issues). This is not for the faint of heart, but I need additional income and, hopefully, I don't get burned for doing this.

lou352 posts since
Aug 3, 2010
Rep Points: 1,988