Best Investments?

Kirk W · November 1, 2021

10 best low-risk investments in November 2021

or................

9 best long-term investments in November 2021

What are you doing with your savings now?

Randyretired · November 1, 2021

Everyone has their own risk tolerance. I think it is important to evaluate where one stands and invest accordingly. If ones tolerance is low besides not sleeping well rash decisions can compound problems. Right now most bonds and money markets which are pretty safe are not likely to keep up with inflation and add some taxes and yikes. However, when you want your money it is VERY likely to be there. As the risks go up the potential for more favorable returns follow. At this time I have very few safe investments except for money I will need in the next year or 2. On the other hand I tend not to own single stocks but funds, mutual or ETF that spreads our investments. My preference is index funds. My primary fund is an S&P 500 fund and I have others. This is just what suits me but others are different.

Edited November 1, 2021 by Randyretired

RV_ · November 1, 2021

I agree with the first recommend in the "9 best long-term investments in November 2021" article. Both excellent articles. We have Funds in a 401k, Growth stocks (Tesla gained $100.98 just today including after hours, and is still going up after hours) I am getting Rivian stock on IPO, which should happen in days or weeks, and then Starlink on IPO but they have not formally filed yet. We're selling our funds to buy our Rivian R1T EV tow truck for our next trailer to take advantage of the $7500 tax credit incentive which will cover a lot of the tax from capital gains selling the funds. The Rivian is also an investment in the short term as it takes us out of the Oil Industry price gouging for gasoline/diesel fossil fuels. It may even b worth more than we paid like our Tesla in a year. Our Tesla Model Y is now worth more than I can order one for by about $10k but the new one won't arrive until May 2022.

Kirk, your article says:

"Overview: Top long-term investments in November 2021

1. Growth stocks

In the world of stock investing, growth stocks are the Ferraris. They promise high growth and along with it, high investment returns. Growth stocks are often tech companies, but they don’t have to be. They generally plow all their profits back into the business, so they rarely pay out a dividend, at least not until their growth slows.

Growth stocks can be risky because often investors will pay a lot for the stock relative to the company’s earnings. So when a bear market or a recession arrives, these stocks can lose a lot of value very quickly. It’s like their sudden popularity disappears in an instant. However, growth stocks have been some of the best performers over time.

If you’re going to buy individual growth stocks, you’ll want to analyze the company carefully, and that can take a lot of time. And because of the volatility in growth stocks, you’ll want to have a high risk tolerance or commit to holding the stocks for at least three to five years.

Risk/reward: Growth stocks are among the riskier segments of the market because investors are willing to pay a lot for them. So when tough times arrive, these stocks can plummet. That said, the world’s biggest companies – the Facebooks, the Alphabets, the Amazons – have been high-growth companies, so the reward is potentially limitless if you can find the right company."

6. Real estate

In many ways, real estate is the prototypical long-term investment. It takes a good bit of money to get started, the commissions are quite high, and the returns often come from holding an asset for a long time and rarely over just a few years. Still, real estate was Americans’ favorite long-term investment in 2021, according to one Bankrate study.

Real estate can be an attractive investment, in part because you can borrow the bank’s money for most of the investment and then pay it back over time. That’s especially popular as interest rates sit near attractive lows. For those who want to be their own boss, owning a property gives them that opportunity, and there are numerous tax laws that benefit owners of property especially.

That said, while real estate is often considered a passive investment, you may have to do quite a bit of active management if you’re renting the property.

Risk/reward: Any time you’re borrowing significant amounts of money, you’re putting extra stress on an investment turning out well. But even if you buy real estate with all cash, you’ll have a lot of money tied up in one asset, and that lack of diversification can create problems if something happens to the asset. And even if you don’t have a tenant for the property, you’ll need to keep paying the mortgage and other maintenance costs out of your own pocket.

While the risks can be high, the rewards can be quite high as well. If you’ve selected a good property and manage it well, you can earn many times your investment if you’re willing to hold the asset over time. And if you pay off the mortgage on a property, you can enjoy greater stability and cash flow, which makes rental property an attractive option for older investors. (Here are 10 tips for buying rental property.)"

Real estate is only a lack of diversification if it is all you have as an investment. We just sold this one at 35% profit and our son is renting it out until they return from Europe in three years.

Edited November 2, 2021 by RV_

Randyretired · November 1, 2021

2 more things I would like to add to my first response. 1 If all things are equal I try to hold investments for a year or more for tax purposes. Capital gains taxes are less than short term gains. I also try to avoid investments that can bring suprise taxable gains or losses so I can plan my taxes.

2 I have never felt my age should determine investment strategy. One time I visited an advisor that started the session with at your age you should... I excused myself and left. My investments are relatively simple and I direct our investments accordingly to our preferences and risk tolerance. We are fine with pulling back during rough times.

RV_ · November 1, 2021

Randy our posts crossed.

Our risk threshold is higher than anyone I know. If we lost our stock investments (unlikely) we still have a house paid for, two EV vehicles paid for and can live on our retirement/two SS checks/military retirement and medical coverage, and military retirement/30% disabled VA tax free pay just fine with our only outflow food, clothing, utilities including streaming services/phones/electricity/gas/water/monthly Medicare payment. Our ability to live well is not at risk, just our kid's inheritance that we will be spending down starting now. No credit card or other debt of any kind.

For the risk averse your methods I think combine the good low risk returns.

I can't advise my way for anyone in any kind of debt with any kind o notes and no retirement medical covered.

Kirk W · November 1, 2021

With increasing age our risk tolerance has dropped and our activity outside of our tax sheltered savings has slowed considerably. I have read that a retired person should have 1 to 2 years of expenses in cash and liquid assets. Other places say 3 to 6 months. If you do enough reading on the internet you will find a very wide range of numbers for what people have and what we should have. It is enough to make one's head spin!

Quote

The U.S. Census Bureau reports the average retirement income for Americans over 65 years of age as both a median and a mean. In the most recent data from 2019, the figures were as follows:

Median retirement income: $47,357

Mean retirement income: $73,288

What Is the Average Retirement Income in 2021 and How Do You Compare?

One thing that I have found interesting is that we had somewhat less than the amount of money most advisors said that we should at retirement when we did but today we have more than most say we should at our present age.

Edited November 2, 2021 by Kirk W
typo

RV_ · November 1, 2021

6 minutes ago, Randyretired said:

2 more things I would like to add to my first response. 1 If all things are equal I try to hold investments for a year or more for tax purposes. Capital gains taxes are less than short term gains. I also try to avoid investments that can bring suprise taxable gains or losses so I can plan my taxes.

2 I have never felt my age should determine investment strategy. One time I visited an advisor that started the session with at your age you should... I excused myself and left. My investments are relatively simple and I direct our investments accordingly to our preferences and risk tolerance. We are fine with pulling back during rough times.

I agree on age having zip to do with it. An I had to laugh because I had the same experience and did the same thing both times I talked to a financial advisor I had the same thing said to me and I excused myself and left too!

I also hold my stocks for the much cheaper long term capital gains tax rates. I held my first big one 8 years with the Tesla I bought on IPO. My current shares of Tesla are from last year @$350. I am bailing on the funds and using that for the new truck we bought and some of the taxes are covered by incentives.

That's why I like our house being paid for, it is like getting monthly income because I do not have to pay a~ $1300-1500 house note but that lack of note is not taxed like a withdrawal or income producing investment may trigger with some. And I save that horrendous interst on the house over 20 or 30 years and being 69 I doubt I would be here anyway to se 100. Mine can gain and drop and until I sell - no taxes and I sell when it is most advantageous to me.

Randyretired · November 1, 2021

Certainly ones financial situation has an impact on one's risk tolerance. Those with pensions and other secure income are in a better position to gamble some if they want. Especially if they don't have many bills. I don't know how much money the experts say we should have and I don't really care. We have enough to live our relatively simple life and may have enough in the future. If we wanted to live in New York or Sacramento it might take more but we don't. Still ones own tolerance is important. I have friend that had a decent retirement and SS and some savings that stretched into 6 figures. An advisor talked her into investing in some mutual funds. Right after she invested the market tanked. She sold everything at nearly the lowest point and cussed that advisor. She was very upset.

RV_ · November 2, 2021

7 hours ago, Randyretired said:

Certainly ones financial situation has an impact on one's risk tolerance. Those with pensions and other secure income are in a better position to gamble some if they want. Especially if they don't have many bills. I don't know how much money the experts say we should have and I don't really care. We have enough to live our relatively simple life and may have enough in the future. If we wanted to live in New York or Sacramento it might take more but we don't. Still ones own tolerance is important. I have friend that had a decent retirement and SS and some savings that stretched into 6 figures. An advisor talked her into investing in some mutual funds. Right after she invested the market tanked. She sold everything at nearly the lowest point and cussed that advisor. She was very upset.

Randy we've seen that kind of panic loss too. It's a shame. Lynn was assistant to the manager of the branch of Prudential Bache Brokerage in our town back in the 80s and saw why they failed, and some of the shenanigans brokers can and do pull. She also worked the slots cage for a casino they called Casino Tragic seeing folks insanely trying to win when it was fixed at about 90% for the Casino and 10% for the customers back then.

I have read crazy too high and too low for what we should have liquid but we are a lot like you in that we don't care either as long as we are comfortable and can do what we want. I've found people are only as interesting as they are interested.

I like your approach in that you have your tolerance and goals figured out. In counseling I'd tell folks if you don't know where you are going, you'll always end up somewhere else. We are all living with the results of decisions we made decades ago, or last year. My recent P.E. In both lungs is waaaay better but it sure got my attention. Today I spent an hour fertilizing and putting the lawn away for the winter without my oxygen. My O2 sats were slightly low but almost normal off the O2 - not like last month in the mid 80%. That made us decide to buy the Rivian, and not die later as he richest corpses in the cemetery! LOL! She used to be the most risk averse and resistant to change. She's the love of my life, and my buddy for the last 50 years, 49 married. We are healthy with no blood pressure, cholesterol, diabetes, or other issues. Now I'm on Eliquis for life! Just prophylaxis.

None of us can control how or when we die. But we can control how we live with whatever means we have at our disposal. For however long. So can you.

Edited November 2, 2021 by RV_

bigjim · November 2, 2021

rv, glad to hear the medical part of your last post here. I was actually going to ask about something else when I noticed that part.

My other question was just sort of nosey. Were you able to use the TSP program and if so did you? I did the best I could but when I was put into medical retirement I could not contribute any longer but could leave what I had in the program there. I am happy-ish with it but because of the medical issues I pretty much played it very safe. What has been good is I was able to never siphon off any off the money until I hit the age that required minimum distribution (RMD). I do wish I had converted a lot of it or all of it to the Roth but I have to say I did not at all expect to live this long. (74 on Oct. 8.) Fooled them all and me too. Now I am trying to decide if I should participate in the Annuity choice. With the interest rates so low, I lean toward no as long as I have my minimal wits about me. I am concerned about I need to go in to assisted care of some kind having to deal with the spend down.

RV_ · November 5, 2021

Thanks Jim, yep dodged the bullet yet again.

No, at the time I was in there was no TSP for active duty. I retired in 1997 actually and Lynda was Civil Service at that time and she did TSP. That evolved into our funds when the Putnam fiasco touched our money, we rolled it all into different funds same 401k.

I can't comment on annuity choice as my military retirement is "sort of" that for me. I am only hip somewhat to EVs and ave been wanting what we have today since skiing Zermatt Switzerland (The Matterhorn) every year for a week as one of our many trips while stationed in Europe Jan 1990-Jan 1997. They outlawed Internal combustion engines in 1978, so you have to park down in another village and take the cog railway up and all the buses, taxis, and work trucks are electric. I fell in love with the instant torque and quietness. So when Musk started Space X and invested in Tesla in 2003 I followed them from that point on to today.

So other than our funds research and investing in Tesla, cars, and our real estate, I'm not much of a investment guru beyond my little niche interests??

Keep me posted