Home Forums Hunting & Shooting Hunter's Campfire Dumping an IRA with an 8% loss in the last 2 years, for 5.1% 1 year CD's?

You have to ask yourself where do you see things in the next 10-20 years?
I tend to shoot low because I'm a pessimist at my core so whatever I think is probably too bearish.

It looks like the Fed has broken the crypto banks and now is starting to break more mainstream smaller banks but is still acting like it wants to reduce inflation. I'm guessing the market will throw another tantrum to get the Fed to cut rates which will put the Fed in a showdown. After the Fed craters(again) and maybe bails out a bunch of banks then it seems like inflation will run hotter....but the market will like it. I can see gold at $3K sooner than later. At some point the dollar will crater.

Your point is valid…to a point.

When you are at “critical mass” and your investments produce more than you need to sustain your lifestyle, you can take more risk.

If you are below that point, it really doesn’t matter if you have 200K or a million. Just the percentages change. If you take out 8% a year, that can get you in trouble if there is a prolonged down turn, so three to five years of draws should be set aside to keep from selling low. There have been only a couple of five year periods in the stock market that were down. It makes no sense to park your entire nest egg on the side lines because you’re going to need 15% of it short term.

There’s some pretty cool Monte Carlo style retirement calculators on the net you can play with and work out a strategy for yourself.

18% CD’s just Around the Corner..

That’s the Bright Part ..

Watching the rest of the World around You ain’t going to be Pretty..

Just Remember we’re all in this Together..

As usual, you articulate it better than me.
May have came across as class envy type of thing, wasn't meant that way.
But i do stand by the point that most research material is geared to folks
able to move more money. It blows my mind that according to all sources,
we are well invested for our age. Not even including my wife's 401.


Sad in a way.
Lotta years of adulthood I just couldn't contribute, some were at a low level.

It's not about income though. It's about priorities.
I counsel young guys to use raises to step up their contribution.
2% per year soon has you maxed out, and the paycheck never drops.

Amazingly, many are so..........whatever, that even when you explain that next
month they will still take home a little bit more,
"I can't afford 8%! I have bill$!"

+1 , I am getting more Bought xxx Sold xxx emails from Fidelity than I have ever received.

You are down 8% over the last 2 years, but what are you up over the life of your 401(k)? Hopefully substantially more. Chances are you had a match as well as pre tax benefits for investing in it. Chances are you worked into it over years of investing, I would take it out the same way. Taking it out in one big chunk will lock in your loss or gain and you will be taxed on the entire amount in one year.

Might as well stuff your mattress with $100.00 bills. They are safe in that the Federal Government guarantees to tax and inflate enough of your money to pay them back to you with a little nominal interest, but not nearly enough to compensate for your losses via taxes and inflation. They constitute a Ponzi scheme. There's ultimately no there there.

I wish I was only down 8% in the last two years. I’m hard headed and still buying . Looks like a sale to me. Buy it cheap and stack it deep!

OP, if you're still losing money, cut your losses and take the sure thing. Sometimes you'll make money by not losing it. If a guy believes in the demise of the US Dollar, look hard at commodities.,,,,,,,gold, silver, crude oil, etc.

What hobbies drive you? If you are handy, a rental property might be a good idea at this time. Especially if there is a family member currently renting somewhere that would be interested in paying you to rent from you. Lose a little in cashing out, but re-investing into a stronger revenue maker.

Diversity in assets and revenue streams.

Might want to look into rollover to a Fidelity Rollover IRA and manage it closely, as it will not be long until you start mandatory withdrawals.
Time goes by so fast. Best of luck in whatever you choose!

I did that once and it looked smart for a little while, but it wasn’t after a few years. Also note that if you cash in a traditional IRA (Roth would be different) and put the money in a non-tax deferred account, you are going to pay income tax on the distribution, making your loss 8% plus the tax amount.

Being down only 8% over the past two years isn’t that bad. Your situation depends on how long you have before you need to tap the money in the 401(k). If you don’t need it for a while, and your investments in the plan are well diversified, you easily will beat 5% over time with compounding and reinvestment of dividends. But, your question is too broad and your personal situation and risk tolerance are unique to you, making it impossible for anyone on this forum to suggest a course of action other than to get a good financial planner and/or start reading some books on the subject. You may want to start simple with The Psychology of Money by Morgan Housel.

Just remember that the big dogs get rich when the masses get scared and sell their investments and assets in a downturn. There is an expression to the effect of “Recessions are garage sales for the rich.” Then there is the famous line from a 1986 shareholder letter by Warren Buffet: “. . . [W]e simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." The bottom of the pandemic was a garage sale. Even now you can do fine over time with undervalued stock. The S&P 500 low in 2020 was 2230, and it is at 4082 right now. Anyone who was continuing to buy throughout the entire period should be doing fine now even if they are off their all-time highs.

Thanks guys. Plenty of suggestions here to at least head me toward making some sort of a different plan. I appreciate it.

After I started this thread, I refigured and should have typed 6-8% a year, or approx. 14-16% down since Biden took office. Those numbers coupled with the inflation rate are challenging for sure.

I'm possible to say if it's an appropriate investment without knowing your whole financial picture and goals. You should consider dumping Edward Jones and working with a fee only advisor. I guarantee EJ made money on your account over the past two years.

If by "Dumping the IRA" you mean withdrawing all of the funds, be very careful you don't trigger income taxes on all or part of the proceeds. You can leave your money in your IRA and buy short term CDs or whatever. No income taxes when the CDs mature in the IRA and you can probably get a wider range of maturities and interest rates than you would at a local bank. Be aware you'll probably need to begin mandatory withdrawals at age 72.

I'm assuming your IRA is at one of the big national firms like Schwab and that your advisor isn't charging a fee.

I have moved a 1/3 of mine into CDs in the last 3 months. I don't regret it. I plant to move it all. at 5 % it pays about the same as.if I divided the whole amount by 20 years and drew it out.
Except I am not shrinking my savings. The tax implications may be different but Fugh it. I am going to retire and try to enjoy the good years I have left. If we have something left to leave our kids good if not I haven't inherited anything and made it.

I reduced my holdings by 8% this year until today.. I sold just a little bit 3 months ago , and kept some of my money in a ROTH in the form of SPRXX. It is a Fidelity account that is now paying 4.57% with no commitment.. I started putting some money back in municipal bonds (HYD) and a corporate bond that is paying just shy of 7% (SPHY is the ticker.) At this point, I would not change anything except try to change over into a higher dividend ETF if the provide it. However, I hope to live off my divies and never withdraw. On Feb. 8 ,2016. I was ready to do much the same . I was ready to just get the heck out of stocks and forget it. As I turned on the TV, an old man was being interviewed. A snappy little reporter asked the old many what should people do.. He said " dont do anything,,, just sit there, dont do anything, just run the course. " I was very surprised and thankful I listened to this ancient looking man and figure he has been around a lot longer than me... His name was Jack Boggle, founder of vanguard index fund.. I am glad I listened , cause about 3 days later, the market took off and had I put it in the bank I would have lost about $25,000 that year. It seems you dont need the money , so let it ride. Getting 4 or 5% is nothing if this market takes off again and you will gain that in a week when it does turn.. It might go down,, and might go down another 20% , but dont forget , if you have good dividend stocks , your divies will reinvest 20% cheaper and your yield will go up. Dont take it out. I mostly took out cause I was going to by a boat but it got sold and I had cash too. Bonds will very likely rise too. I dont think the feds will raise rates much more due to risk of bank failure. " Just sit there, don't do anything, just run the course" - Jack Boggle and now Ihookem.

Be careful with Edward Jones. If you get completely out of some funds they'll charge you over 5% commission to get back in. It's not the place if you like to change things up. We have 1 fund there still but I moved a lot to fidelity.

When Joe stole the office I told them to put my money in a money market or cash fund or something safe against loss. I didn't open my statements for over a year after that and then opened one and found they put me in a bond fund and ID lost tens of thousands.

I called them pissed off and they said they would have had to move me out of American funds to find a money market then I would have had to pay 5.25% to go back into mutual later. So they put me in a bond fund with American funds. I've lost more money trying to avoid their commissions than their commissions would be.

I'm going to move the rest from Edward to fidelity. I just did a bunch of CD latter's at fidelity and it was easy. From 1 month ones at about 4.4% on out to year ones at about 5.1% and everything in between. I just did $5000 to $10,000 at each bank I picked from a list.

Bb

REAL good advise . I am amazed there is anyone out there still charging load fees. It was a poison when I had a financial advisor . I went to Fidelity and have not regretted it once . That " financial advisor" Was the worst . A small town guy that was terrible. I too might put some money in a longer term CD. Not sure yet.

You Boyz gonna cause a Banking Crisis..

All this running around looking for Yield..

Oh Domino ..

Roll Me Over Domino ..

Oh Domino ..

Why not put your money into gold and silver?