We paid off the mortgage on our little house last fall,but we wanted to sell in the spring and buy one closer to the kids.My husband never trusted the market and has his 401k and IRA in money markets-never made much,but its safe–or is it? He retires in the spring.
What to do now?

lizzee on August 7, 2007 at 9:04 AM

At the moment, if you figure in inflation and taxes, money markets are just about breaking even in terms of maintaining purchasing power. A conservative investment portfolio consisting of at least 60-80% in varied bonds, and 20-40% in diversified stock funds will average 7-8% annually over the longer term.

He might want to consider a Variable Annuity.* The good ones let you invest in the market, but with an income or withdrawal guarantee. AXA Equitable is my favorite, and Pacific Life and John Hancock are also very good.

*Note: there are quite a lot of bad ones out there, which have given the entire industry a bad name. The internal costs are slightly higher, which is what pays for the guarantee part.

Yes the trend is your friend. goes back to newtons law. since markets are determined by external events and human activity. emotion ply short term but it is human activity that control the long term trends and that activity can be tracked and used to increase wealth.

While no one knows what the markets are going to do from day to day since it is dependent on news for its daily actions. Smart traders and investors can read the trends over the intermediate and long term and invest/trade accordingly. The long term trend for the dollar is down. The long term trend for the dow/American economy has been up. Those that have followed those trends are today very wealthy.

unseen on August 7, 2007 at 9:15 AM

Unseen, we don’t know the future, but what’s been discussed as “probable” in this thread, has in fact, already happened.

I can’t find the chart that I was going to link here, but take a look at this chart page for a real eyeopener.

The chart I was TRYING to find, was a chart of Real Estate prices, versus the DOW 30. In REAL DOLLARS terms, the price of real estate HAS ACTUALLY GONE DOWN in the past few years, versus the Dow 30 rise/weakness of the US Dollar against gold. (the traditional currency standard)

People who have taken equity loans out on their homes are not losing money now….they just didn’t realize that their “profit” never really existed in real money terms.

IOW, you don’t have to predict the future. You’re standing in it!

While no one knows what the markets are going to do from day to day since it is dependent on news for its daily actions. Smart traders and investors can read the trends over the intermediate and long term and invest/trade accordingly. The long term trend for the dollar is down. The long term trend for the dow/American economy has been up. Those that have followed those trends are today very wealthy.

Money markets risk include the lost vaule of the dollar. An addtional risk for money markets is inflation.

No one really knows – thats the point isnt it – if I knew what the market was going to do Michelle and Allah would be working for me because I would have all the money in the world

Insert Dr Evil laugh here

What I don’t understand is why homes are being built when the housing market is slowing down? Are not the banks that finance home mortgages the same ones financing the builders? Why would banks finance home construction and then make it hard for builders to sell the homes by making mortgages hard to obtain? That makes no sense to me whatsoever.

calirighty on August 6, 2007 at 7:02 PM

You neglected to factor in the building-lag time. A lot of building projects get financed and started when the market is warming up, good, or already hot. From then it may be 3-10 years before the actual building project is actually completed. Plenty of time to have the market crash (and recover) while they’re in the middle of construction. See “Miami Condo” situation. This is especially true when the majority of the market is based on real estate speculators. However, if you’re in a market area with a lot of natural growth, you can still move units. It may just take awhile longer.

Big up days in a market are a sign of a bear market and big down days in a market are a sign of a bull market. Big up days and big down days right after each other are a sign of a undecided market the FED meeting tommorrow could bring the market down 400 points as well as up 400 points without blinking.

the rally today was due to stocks that have been beating up bounceing off their lows. This does not inspire confidence. The short covering going on towards the end of the day helped the rally sustain itself. A rally led by short covering does not inpire confidence either. Only if another rally day on high volume by market leading stocks occures before another selloff day will the shortterm problem be dealt with. Smart traders are waiting for the Fed meeting and if the news is bad look for the shorts to come out and the market to tank on high volume. If it is good the buyers will return and drive the stocks to new highs in a short time while the dollar tanks.

Seeing how yet again the market proving Cramer completely wrong by turning around and screaming just as loudly upward

Also his fortune was a payout so he would not damage the funds he was managing anymore – it did not come from personal investment but salary and bonus’

Cramer is a great salesmen and attracted alot of investors

So you have no 401k, pension, or IRA? You do not own a home either right? You own no bonds, cd’s, mutal funds or T-bills? You get you paychecks in euros also right?

ONLY if all the above is true will you not be impacted by what is occurring on wall Street. If you do have any of the above I guess you too deserve what you get by gambling in the USA economic market. You social security funds are also being impacted by that funny Wall street gambling house.

If you think the only people being impacted by this is Wall Street you are in a different world. Everyone that has an IRa, 401k, mutal funds or a pension is being hurt in this. Everyone that uses dollars in everyday transactions is being hurt by this. Every country that exports to this country has the possibility of being hurt by this. Pretty much everyone that owns a home in certain parts of the country are being impacted by this.

The Fed raised rates to fast and too long. They did this to try and save the dollar and the net inflow of world currency into this country to fund our nation’s debt. What happens when the world due to the sinking dollar no longer will fund our debt?

The Fed is stuck due to our government’s budget failures over the last 40 years. Instead of cutting spending and paying off debt they added to the debt. The bill will come due.

the responses on this thread amaze me. If I didn’t know any better I would say it was KOS. Soak it to the rich.

Does no one understand what is going on in the market right now? We have the possibility of 7 million people losing their homes next year. We have the possibility of the credit world drying up. We have the possibility of ALL housing prices going down in vaule something that has not happened since the GREAT DEPRESSION. We have the possibility of a Savings and Loans type of problem with the NATIONS banks. The FED is in a corner right now. If they cut rates the dollar sinks causing a run on the dollar causing WORLD wide economic choas. If the fed raises rates the entire US housing and credit markets nosedive. And we have a massive economic problem in our country and the world. If the FED keeps rates the same we have a lot of pain over a long time for average American as millions lose their homes or see their 401k’s, ira’s pensions nosedive. This is not a “rich” problem this is an american problem. cramer is trying to get the FED to give the entire system a breathing room to let the market digest the problem.

http://www.youtube.com/watch?v=bTb7R4LdOv8

“Thanks, Shelduck. Killer Kramer, tell us how you feel about your upcoming match with Bruiser Bernanke?”

“Erin, I’ll tell you what. I’M GOING TO PICK UP THAT PIECE OF PUKE BERNANKE! THEN I’M GOING TO THROW HIM OUT OF THE RING! THEN I’M GOING TO PICK HIM UP AND THROW HIM BACK INTO THE RING! THEN HE’S GOING TO FEEL THE CRIPPLING FORCE OF MY PRODIGIOUS PILEDRIVER! THEN I’M GOING TO PIN HIM AND THE REFEREE IS GOING TO COUNT ONE, TWO, THREE, AND I’LL BE THE INTERCONTINENTAL WALL STREET CHAMPION! HOY–OH!

You have no idea what you are talking about. I hate his act, hate his show, but the man was near-legendary in the investment community on the basis of his SUCCESS as a hedge fund manager. He returned 24% to his investors PER YEAR over a 15 year period (on average). That means $100k invested would grow to $2.5 Million in 15 years. Give me a break, the man is a legend and you clearly know nothing about him. His show sucks, I admit, but don’t knock his investing prowess, that’s just insane.

RW Wacko on August 6, 2007 at 11:07 AM

Pwnd!

Actually he would be making about one million dollars a trading day right now or more so why would he waste on minute going on a third tier television program that probably pays him a hundredth or two hundreth of his supposed investment income

EricPWJohnson on August 6, 2007 at 12:12 PM

For the same reason he did his radio show. It’s called sharing the wealth, giving back, helping the lil guy out.

- The Cat

The Stock Market is not the Economy, the Stock Market is not the Economy.