Retired-Need some advice

[Carole]

Hello all,

I am retired and on Soc Sec recently. Also have annuity with a monthly income which I use to pay my mortgage.

My wish was to change direction of my investment income toward gold, silver and natural resources, but the people who handle my investments say I cannot do that and still have an income. I imagine they are typical mainstream Keynesian economists.

When I speak with them about my economic concerns, the best they can say is that as long as I am with a major company (annuity thing) I should be okay. Personally, I think they are blind and deaf to the real situation. They are supposed to send me some new information on investments shortly, but I am feeling insecure about what they tell me. Past four years have been reasonable earning years, but we are in a different era I think.

I must wait until after mid February to make major changes. I think I want to pay off my mortgage and whatever is left over remove from market and buy gold. But I am not very informed about this and not confident what to do really.

I would still require enough monthly income to pay dredded property taxes and insurances. So that would be a problem. Soc. Sec only cover my utilites and basis expenses.

If anyone can give me some sound advice on whether I should make a huge change right now or how to proceed I would be most grateful. I need advice from people who understand the flaws of our current monetary system and markets.

Currently I have only nothing more sound than some purchased quarter sets in platinum, gold, silver. I know this will probably make many laugh, but I had to start somewhere.

I do not want to lose my home. I just want to try to secure what investment I have rather than lose anymore of it to inflation, stagflation, or whatever. The lies have just made it so difficult for a novice to think clearly how to go about resolving my situation.

Thanks for any advice you may have.

 

[BreakYourChains]

Bump for answers.

 

[jclay2]

Wow, that is a big decision. I wouldn't take advice from these forums on a decision that is that big. If your financial advisor(s) are making you uncomfortable, get a new one who actually will hear your concerns and give you investments that in the end yield to your personal financial preference. Also, take your time, this is a HUGE decision and it would be a very bad idea to act soon. Deliberate and get council from people you know and trust.

Oh and I am only 17, so everything I said can most likely be discounted. Just my 2cents though.

 

[paulite2008]

jclay2 makes a fine point. Also, gold is at nearly record highs so now might be a bad time to buy. It's generally best to buy low and sell high

 

[davver]

If your retired I recommend holding CDs in other currencies. This will protect you from downturns in the dollar while providing income. There is relatively less risk then there is with commodities.

www.everbank.com

This is a great place to find world currency CDs.

They also offer a "risk free" gold or silver bullion CD. The way it works is if the price of gold or silver goes down you get back 100% of your principle (but no interest). If it goes up you get credited the average price over a five year period.

If you have money that your willing to take more risk with I recommend commodities. DJP is a pretty decent index fund.

 

[Truth-Bringer]

If your retired I recommend holding CDs in other currencies. This will protect you from downturns in the dollar while providing income. There is relatively less risk then there is with commodities.

www.everbank.com

This is a great place to find world currency CDs.

They also offer a "risk free" gold or silver bullion CD. The way it works is if the price of gold or silver goes down you get back 100% of your principle (but no interest). If it goes up you get credited the average price over a five year period.

If you have money that your willing to take more risk with I recommend commodities. DJP is a pretty decent index fund.

That's good advice. I keep my retirement accounts in Swiss francs. I've made a nice gain since the dollar has gone to @#$%. Swiss annuities are a great investment - and tax free.

 

[RonRules]

First thing: Take care of you health. Make sure you are not overweight, don't smoke and eat right. Health expenses is what bankrupts seniors first.

Stay active in the community, do volunteer work and be known by as many people as you can. Basically, get as many friends as possible. It's good for the morale and they may be able to help you later.

If you are not financially savvy, I would recommend you remain with the annuity, provided it is from a reputable company.

I do a lot of stock trades, options and spend a lot of time learning. It is very difficult to beat he market. Based on your situation, I would not get into stocks, commodities.

You may want to consider 10% in gold, just in case, but gold can go down very fast too.

Whenever the outlook is grim, people panic and make wrong choices.

 

[scooter]

You may want to consider 10% in gold, just in case, but gold can go down very fast too.

Whenever the outlook is grim, people panic and make wrong choices.

This is good advice for the OP. Do not make an irrational decision just because the markets are shaky. Your advisors were probably just keeping you from making a knee-jerk mistake. Talk to them about possibly putting a small percentage of your assets in a gold fund, but NOT everything you have.

The guy who suggested CD's is also smart. There are still some domestic ones offering decent rates, but the foreign ones could do very well.

I'm an investor, but not an advisor. However, I'll admit that I've been buying stocks of good companies in this downturn and I'm moving away from high-priced precious metals rather than towards. Remember, PM's are a discretionary item. They will go down in a recession too.

 

[AceNZ]

I must wait until after mid February to make major changes. I think I want to pay off my mortgage and whatever is left over remove from market and buy gold. But I am not very informed about this and not confident what to do really.

If you still have some equity left in your house, you might also consider selling and moving into a rental. I know it might sound extreme, but you are likely to find that you can rent for much, much less. House prices are likely to be going down for a long time -- like what's been happening in Japan for the last 10 or 12 yrs.

Soc. Sec only cover my utilites and basis expenses.

Keep in mind that as inflation goes up, SS won't keep up -- especially compared to something like utilities, which are usually driven, at least in part, by the cost of oil and gas.

If anyone can give me some sound advice on whether I should make a huge change right now or how to proceed I would be most grateful. I need advice from people who understand the flaws of our current monetary system and markets.

I definitely support your idea of getting out of your annuity and reducing your debt.

Although it's possible for someone to coach you through doing everything yourself, you might want to consider getting a different financial adviser. Europac, Peter Schiff's firm, is one option (he's a financial adviser to Ron Paul). They are a full-service brokerage, and can make detailed recommendations for your whole portfolio. They recommend things like stocks that pay dividends in foreign currencies, which you could then use for living expenses. For gold, they like the Perth Mint gold certificates. Another option for gold is BullionVault, which allows you to buy allocated gold (which is protected against potential creditors of the holding company) in an overseas vault.

 

[liberty_Forever]

Carole: If you have 401k or Pension, do one of these two options:

1) (preferable) Take the tax hit or penalties, pull ALL the money out, and put 70% into precious metals. Keep the other 30% in cash, in the form of physical cash or CDs.
2) Talk to your fund and move your pension allocations from stocks to short term US treasuries or Certificates of Deposit. Regarding 3month US Treasury bills....they have low yield, but you can be sure your money will be returned. CDs are also okay if they are short-term notes and under $100k in amount. I'd definitely move out of the stock market.

Option 1 is definitely preferable, especially if the government starts going through multiple "stimulus packages" where they are mailing out free money.


As for the house, I'd sell it if you can (immediately). If this is not an option, try contacting the bank to renegotiate the terms of the loan. Mortgage rates are at historic lows due to a confluence of market forces. So refinance (if it saves you money) or sell. If it was me, I would sell even at a loss. The gains on precious metals will more than make up the difference lost from a house short sale. Definitely switch to renting if you can.

No matter what you do, make sure you put at least some of your money into precious metals. Pay yourself first. Think of it as peace of mind. You will want physical tangible assets no one can take away.

 

[dvictr]

interesting post... actually one of the most interesting posts i HAVE EVER read...


my advice... is enjoy your retirment and dont expect to make a fortune now... smoke marijuana@!

 

[FreeTraveler]

LLepard is a financial guru, perhaps he could point you to a financial advisor, and Peter Schiff's company does investment work, I believe. You might check out the websites for those two guys companies for starters. Both companies are listed with their endorsements on Dr. Paul's site.

This would also allow you an opportunity to "keep it in the family" so to speak.

 

[liberty_Forever]

I can also recommend Peter Schiff / Euro Pacific Capital.

 

[scooter]

Carole: If you have 401k or Pension, do one of these two options:

1) (preferable) Take the tax hit or penalties, pull ALL the money out, and put 70% into precious metals. Keep the other 30% in cash, in the form of physical cash or CDs.
2) Talk to your fund and move your pension allocations from stocks to short term US treasuries or Certificates of Deposit. Regarding 3month US Treasury bills....they have low yield, but you can be sure your money will be returned. CDs are also okay if they are short-term notes and under $100k in amount. I'd definitely move out of the stock market.

Option 1 is definitely preferable, especially if the government starts going through multiple "stimulus packages" where they are mailing out free money.


As for the house, I'd sell it if you can (immediately). If this is not an option, try contacting the bank to renegotiate the terms of the loan. Mortgage rates are at historic lows due to a confluence of market forces. So refinance (if it saves you money) or sell. If it was me, I would sell even at a loss. The gains on precious metals will more than make up the difference lost from a house short sale. Definitely switch to renting if you can.

No matter what you do, make sure you put at least some of your money into precious metals. Pay yourself first. Think of it as peace of mind. You will want physical tangible assets no one can take away.

Bad advice...

I can also recommend Peter Schiff / Euro Pacific Capital.

Better advice...

 

[Michigan11]

If you still have some equity left in your house, you might also consider selling and moving into a rental. I know it might sound extreme, but you are likely to find that you can rent for much, much less. House prices are likely to be going down for a long time -- like what's been happening in Japan for the last 10 or 12 yrs.




Keep in mind that as inflation goes up, SS won't keep up -- especially compared to something like utilities, which are usually driven, at least in part, by the cost of oil and gas.




I definitely support your idea of getting out of your annuity and reducing your debt.

Although it's possible for someone to coach you through doing everything yourself, you might want to consider getting a different financial adviser. Europac, Peter Schiff's firm, is one option (he's a financial adviser to Ron Paul). They are a full-service brokerage, and can make detailed recommendations for your whole portfolio. They recommend things like stocks that pay dividends in foreign currencies, which you could then use for living expenses. For gold, they like the Perth Mint gold certificates. Another option for gold is BullionVault, which allows you to buy allocated gold (which is protected against potential creditors of the holding company) in an overseas vault.

Listen to the above member and his advice, this guy knows what he is talking about. Pick up a copy of Peter Schiff's, Crash Proof, book at a local book store and spend some time absorbing the information.

The last 3 chapters detail specific recommendations and also how to open up an account with his firm, Euro Pacific.

I'm opening up an account in about a month, and am recommending his book to my family and friends as well.

 

[Michigan11]

jclay2 makes a fine point. Also, gold is at nearly record highs so now might be a bad time to buy. It's generally best to buy low and sell high

Current gold prices aren't even close to record highs. Nominally, yes.

Factor in inflation, gold has a long way to go, we are at the beginning of a bull market in precious metals, due to the high inflation caused by the Federal Reserve, and other factors.

 

[lbadragan]

DO NOT DO ANYTHING DRASTIC UNTIL YOU HAVE THOUGHT ABOUT IT DEEPLY AND CONSULTED WITH AT LEAST TWO FINANCIAL ADVISERS!

Be wary of putting a high percentage of your money into gold and other precious metals. They can have wild price swings and you could see huge decreases in your portfolio within a few years. Even gold. Take a look at a graph of gold prices over the past few years and keep in mind that it can go down just as fast as it's gone up. Unlikely but POSSIBLE.

Regarding your mortgage. Depending on how much assets you have, paying it off could be a great idea. Rent would not be fun during rampant inflation. It's very smart to stay in your home if you can afford it. The security of a fixed monthly payment is preferralbe to the certainty of increasing rent payments.

And there are many ways to hedge against adverse economic conditions. Buying precious metals is only 1 way. Another way is to invest part of your money in companies that do BETTER when the economy is bad. You can also invest part of your portfolio in markets that aren't affected as much by what happens here, say Japan as opposed to China or Mexico.

Please consult financial advisers. Tell them your concerns and ask them to come up with a RANGE of investment options to alleviate your fears. Diversification is the key.

 

[AceNZ]

Regarding your mortgage. Depending on how much assets you have, paying it off could be a great idea. Rent would not be fun during rampant inflation. It's very smart to stay in your home if you can afford it. The security of a fixed monthly payment is preferralbe to the certainty of increasing rent payments.

If these were "normal" times, I would agree with you. But they aren't.

Let's take an example. Say I own a house that can be sold for $300,000 and I have a loan of $200,000, 6% for 30 yrs -- so $100,000 in equity. My mortgage payments would be about $1200/mo. plus property taxes, maintenance, etc. In many parts of the country, I would be able to rent a similar house for about $700/mo. If I sold the house, I would be able to invest the $100,000 equity at around 7%, which is $7000/yr or $580/mo. So now my house payment has gone from $1200/mo to $120/mo. Even if inflation causes rent to eventually double to $1400/mo, I'm still coming out ahead -- and if I invest right, my income should increase substantially in that case too.

Now compare that to the scenario where I hold onto my house and it declines in value by 33% over the next 5 yrs -- and that's a conservative number, I think -- now I've lost all of my equity and I'm still making $1200/mo payments. In the mean time, rents will actually have dropped, since house prices are going down. And without the right investments, my income will be close to what it is now, but all of my day-to-day expenses will be higher.

Another thing to keep in mind is that if inflation ever gets rampant (hyperinflation), you can bet that the government isn't going to leave existing fixed-rate mortgages alone. It wouldn't surprise me at all if fixed-rates get banned, and everyone is required to switch to variables to help save the banks, or something like that. The eventual introduction of a new currency somewhere down the road could also come with penalties for debt holders. As I said, these aren't normal times.

 

[Carole]

I wish I knew where to begin to find one who would think Austrian economics.

 

[IPSecure]

Move to Dubai?

That's where Haliburton went, from Houston!