Sounds like a new act on Dancing With The Stars, but I'll let you conjure the visual images.
I love this site, and read articles and comments every day. Here I find both great ideas and settling influences at the same time. I've used, and continue to use, ideas and reporting to keep tabs on what I am doing.
I'm about five years from retirement, and like a lot of people, I've been caught up in the "yeah, later" style of investing, and am trying to catch up some in the little working time I have left. You 20/30 year olds who are putting something away now have my envy.
There are a lot of choices available to speed up one's retirement savings rate, but for one reason or another (maybe I don't have to money to do a "catch-up", and if I did, maybe it would be better spent reducing my debt) I can't choose them. I'd love to convert my IRA to a Roth, but it's too late to cover the up-front tax hit. Another penalty for the "yeah, later" philosophy. So I opened a new Roth, and am funding it on my own every month. I have talked to my employer, and a Roth 401k is possible with our plan, so maybe soon we'll have one. I'll take a look at my tax situation and see how to split my contribution, because Sam will take his cut regardless. Remember the old oil filter commercials? Pay me now or pay me later. I'm better able to pay taxes while I'm working, and the idea of tax free money in retirement really appeals to me.
I don't know about you, but my 401 doesn't offer a lot, even though some are good funds. No ETF choices, no stocks, just clone funds from recognizable families. I had been putting money into the three best return percentage funds, regardless of how that sliced my asset pie. My new money went into the money market, and then I bought on market dips. It's not as good as ETF or stock plays, but my experience tells me you can still get a sale price with a mutual. There is no such thing as wide-spread market BUYING, and everything seems to go back up slower than it went down, so you can still catch the "on sale" days.
Back in July of '12, I opened an IRA account at the local branch of a discount broker, and moved a variable annuity into the account. I quickly cashed it in because I was tired of seeing over $400 a year in "rebalancing fees" and no growth at all. I decided I wanted dividend paying stock so I could get some "new money" and use that to diversify the portfolio. I ran my screens, did my reading, did my DD and made my selections.
When I discovered I could roll over money FROM my 401k INTO my IRA without closing the 401 or quitting my job, I moved a chunk of cash into the IRA in November, and bought some other dividend stocks, mainly REITs and BDCs. I had originally set up some guidelines as to when I would sell (up 20% or down 5%). I got caught in that "maybe I should wait and squeeze some more out of it" when something hit 20, and I found there were a couple I should have held on to. Thanks to reading that I did here, I have now changed to the Joliet Jake style of portfolio management. "I wouldn't sell ya, honey! Honest I wouldn't! An old friend came in from out of town, I didn't have enough money for cab fare, I put a 2% trailing stop on everything..." That way I remove myself from the analysis paralysis, and I don't give too much of anything back (Thanks, Big Thinker!).
I decided I wanted to start sweeping some of my profits and dividends, so I added a NL high yield mutual bond fund that pays a monthly dividend which I reinvest. I'd do money market or CD ladder, but the rates we can get make under a mattress look like a viable alternative. I mean, the growth rate is so fast you'd have to speed it up to stop it. With the MF, I can do the little here, little there thing over the next few years without the commission and build a money bucket. I can take the monthly dividend instead of reinvesting when I retire. I definitely see the wisdom of cash, but I'd rather get my cash from non qualified sources, like the Roth, so I can better manage the tax bite.
I am sure there are others out there like me, who are closing in on hangin' 'em up and are wondering what to do now. I don't like this feeling of a day late and a dollar short, and I'm being aggressive to try to build. I mean, nobody ever retired with too much money, did they? I am nowhere near the "prudent man" 60% cash and bonds, but I do have my 401 in a balanced fund (highest rated fund I can choose). I still put my contributions into the money market, and transfer during a down market day. I don't know if it makes much of a difference, but I do feel like I'm turning bad news into an opportunity. My asset pie, therefore, would be served on several pie plates, instead of multiple pies with the same mix, some of which might not taste so fresh.
Currently in my 401, I am putting in 11% of salary, adding a % every raise I get. This takes advantage of the company match, which is dollar for dollar for the first 4%, and I am now fully vested, so my contribution is more like 15%. There is an inflation protected bond fund offered, and I'm thinking maybe I should redirect some of the balanced fund money into that. We all know rates will go up at some point, and maybe I can "insure" the 401 from a big hit with that.
What am I missing? What are you guys in my kind of situation doing? I don't day trade but I look every day at what's going on, and adjust accordingly. I'd love to trade ideas (you dummy, there is no market for that), be it tactics, strategies, or holdings, and I look forward to hearing from anybody who is interested. For example, say my capital gain tax rate is 15%, should I do my big selling for capital gain profit OUTSIDE the qualified account? What if my tax rate on social security and IRA income ends up being 18% when I retire? I'd be kicking myself AGAIN for being so smart I'm dumb.
When I was done with the money movement and the IRA contribution (March 2013) to reduce my 2012 tax return, my total cost basis is $62,176....and change. As of business close Friday, my balance was $73,814, so I've been getting the growth I wanted. Yeah, big deal. A nice little run over a few months that will mean little in five years if I don't stay on top of things. I moved from the annuity and the 401 because I thought I could do better than that. Not wanting to rest on my laurels, or anything else for that matter, I am taking the position that I can still do better.
My hope is some of you in the same predicament throw their two cents in on what they do and what they think. A lot of the technical stuff I read goes over my head, and I feel like Annie Proffitt after she decapitates the scarecrow. b-b-b-b-b-b-b. So please, drop a line.