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  • On the sidelines for a while

    Watching the unfolding financial train wreck overseas and the constant rate hike talk here in the U.S. we moved out of the market a little more in the last couple weeks.

    Nothing wrong with sitting on the sidelines for a while.

    I mentioned this at a conference I just spoke at and got about a half dozen questions about this.

    It's nothing new or monumental, just requires you to put yourself back in the driver's seat a little bit.

    I assume many people's 401K's are similar in setup to the 529 plan (college savings) we have had for about 14 years now. You may have only a few "options" in that sort of plan. They kind of suck in that regard really....

    For example, our 529 college saving plan gives us just FOUR options-

    An aggressive approach
    A Managed allocation based on age
    A balanced fund
    A "guaranteed" fund

    Ranked more or less from most speculative to less speculative.

    Yes I put "guaranteed" in quotes- "see the quotation marks I'm making with my claw hands?" Cause of course we know nothing is "guaranteed" most especially when it comes to this sort of thing.

    So for most of the last 13 or so years we have principally used the managed allocation based on age fund and the balanced fund. These have given good albeit not spectacular returns.

    As he is in high school now, we have been moving more and more of the funds into the "guaranteed" option to reduce market risk. Yes I know money market funds are still risky, not guaranteed, etc. But in those 4 lousy options, that's the safest. The return on the "guaranteed" has run 3% down to 1.5% currently I believe. Obviously it's not in there for the return....

    Now the really sucky part....

    Under this 529 plan, you are only allowed two "moves" per YEAR. So let's say you want to protect some of your funds that were in the aggressive fund and you move half of it into guaranteed, then the market drops a little bit. You then have only ONE "move" left in that calendar year.

    So you can't be too wishy washy about it, you have to plan for these moves and where possible, make them at opportune times.

    Just like a mutual fund, you won't know the NAV till close of the trading day. So is it up for is it down when you go to sell it? Best you can do is sell on an up market day. Watch the market, call them or get online about 3:45 and make the transaction. After that, you'll be looking at the trade going through the next trading day.

    It's not like a stock wherein the price will fluctuate around during the day and you can often time that sale to make a little extra money.

    If you have a 401K, I assume from talking to so many people with similar 4-6 fund options within the 401K, that your options will be similar. Find the safest harbor for your money and be prepared to sit on the sidelines for six months, maybe a year.

    It takes some guts to buy back in when the market is low, but it's worked out for me several times.

    If your retirement is close and thereby you might need the money soon, just leave it in a safe option. If you have a 10, 20 year horizon, then watch for a big correction and look for bargains to get back into the market after a while. Someone said "the best time to buy is when their is blood in the streets."

    Since this is part of your if TS DOESN'T HTF planning, making the most of it via the market timing will help. You don't have to try to wait for or hit the exact market bottom, no one ever does, but just try to scoop up bargains after a correction.

    And it's o.k. to be on the sidelines for a while. It's YOUR money, I would be protecting it now.
    www.homesteadingandsurvival.com

    www.survivalreportpodcast.com

    "Don't be too proud of this technological terror you've constructed..."

  • #2
    Yeah, I too have moved into the Gov't Bonds sideline until after the fall at a minimum... That is the safest option we have in our plan. Too much weirdness on too many fronts.

    Rmpl
    -=> Rmplstlskn <=-

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    • #3
      yeah, pulled 70% out of MFs and will put into some PMs and cash. if right deal comes along, i will buy some real estate...maybe a condo that can be rented as home sales may tank if economy tanks, or maybe land or warehouse. people will need a place to live. not sure i want to be a landlord though, but maybe a friend will need something, who knows....
      Protecting the sheep from the wolves that want them, their family, their money and full control of our Country!

      Guns and gear are cool, but bandages stop the bleeding!

      ATTENTION: No trees or animals were harmed in any way in the sending of this message, but a large number of electrons were really ticked off!

      NO 10-289!

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      • #4
        Well, I'm like a majority of the people in this country that doesn't have a lot, but I'm trying to protect my stuff as well. I've been noticing a trend here as of late, and my concern has grown exponentially over the last six months.

        I'm getting ready to make a major change in some things I have, and I've been suggesting to some friends and co-workers that prep, that they need to knuckle down big time, and get ready for something just a bit beyond the horizon.

        What I have is small compared to some others I know, but even they have some of the same concerns I do. One has over $ 200,000 that they are wanting to protect, and has said that they want to start taking a portion of it out of their accounts and squirrel it away in a safe at home. Their biggest concern is the government snoops that track large cash withdrawls from the banks. I have good idea how to get around that one, so I'll be sharing it with them over the next few weeks. Just hope when the crap starts flying, i have a big enough umbrella to cover my family.
        "It has been said that preparedness and being prepared promotes fear. This isn't true.......being UNPREPARED is what promotes fear"

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        • #5
          Squirreling it away is good, to a point... But what happens when the dollar is worth $0.10 in todays value?



          My belief is that you need to balance between cash and tangibles, and that doesn't necessarily mean bullion, but hard goods, tools, equipment... Then there is LAND... Sometimes spending money is the right thing to do...

          Rmpl
          -=> Rmplstlskn <=-

          Comment


          • #6
            Rmpl- yes that's exactly the dilemma I'm thinking through right now. We have some cash backup and really kinda "need" to also get some more into more tangibles. Since gold has been down I've bought more this year than I ever have- you don't want to be overweighted in any specific category. Doing some upgrades to our alternate energy system. PTL we have been debt free for a while.

            Basically coming down to an investment in production. One business can be expanded but will require the time to do so that I just don't have now thanks to regular business in the other business. Running fences and doing prep work and maintenance for the farm enterprises and considering an investment in machinery there. Thinking kind of boils down to this-

            Cash- need to have enough to pay the bills, maybe get some "deals" if/when economy tanks further, avoid Greek type bank closures, flight money.

            PMs- need to have enough to transition over should a currency change type deal happens (unlikely I feel), "hold value" (which hasn't happened) over time, shiny cool gift for inheritance when I die, sell to make property tax payments in drawn out collapse.

            Storage- need to have enough to feed family for a few years if need be, water resources, power, etc. "stay home and do nothing" type deal if economy (personal or national) goes to crap.

            Production- this is the thing really. Get land into more productive, i.e, money making mode. Increase income from homestead enterprises. Diversify where possible. Long term improve land value via various improvements that should also help production aspects.

            Goal is to be able to raise income from land to where we could have reasonable retirement income from the land.
            www.homesteadingandsurvival.com

            www.survivalreportpodcast.com

            "Don't be too proud of this technological terror you've constructed..."

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            • #7
              Originally posted by Lowdown3 View Post
              Rmpl- yes that's exactly the dilemma I'm thinking through right now.
              Knowing you as long as I have (even if most of it has been online), I know whatever decision you make, it will be wise and good. You are an example to us all...

              Rmpl
              -=> Rmplstlskn <=-

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