Investing Before and During Retirement

Today I thought I would write about investing for retirement.  I didn’t invest by doing anything difficult or brilliant, but I am pleased with my outcome at this point.

When I started teaching I was fortunate to have a wise investment counselor who told me “cash is trash,” and taught me to invest the maximum I could from my income into a 403 B.  I did this faithfully for the 20+ years I worked as an educator.  I invested in moderately conservative funds.  Some years they grew a little, one year they lost about half of what I had invested.  I left the money in the market, and eventually all that money was regained.  The long and short of it was that at the end of my career I basically had the money I had invested, without too much gain.

Interest rates are extremely low right now for investors.  I have come to the age when I must think about withdrawing the money I invested.  In the program I have I can pull out a guaranteed sum each month, and at the end of 15 years the principal is gone.  I say guaranteed because even if the market dips to below that amount I am still guaranteed that amount of money for 15 years.

My husband is a realtor, and he wasn’t very excited about that investment.  Vince convinced me now to invest in real estate instead.  I opened up a self-directed IRA and transferred the money from my  403B account.  Then we made a cash offer on a beautifully restored home in an older part of Visalia, CA.

SFW SF Walking Tour #2001

The process was simple, if not a little strange.  We couldn’t have anything to do with the purchasing process including writing the check to hold the property.  Because of regulations Vince’s sister had to do that.  We also can’t rent to anyone to whom we are related ie. kids.  The entire process from writing the offer to closing took three weeks.  The income will be about the same, and at the end of 15 years I will still have income, AND I will still own the house free and clear.

1816 Heritage

There are many ways to invest as you prepare for retirement.  Stocks have been pretty good for me in spite of the extreme dip in the market.  We have also bought and sold a few pieces of property over the years we’ve been married, and some of those have made money, and some have broken even.  The difference between buying property and owning stocks are many, but here are a couple.

First stocks are liquid.  You can cash them in for money in just a few days, and spend the money.  Houses and land are not so easily exchanged for money – usually.  A house that is priced right, in a good neighborhood, and is clean may sell in a few days, as did the one we purchased, or in a bad market, it may sit for a few years.

We have two beautiful pieces of property that have been for sale for several years.  We bought them at the right time, split the land, and by the time the county had processed the split, the property had dropped in value.  At this point if it sells it will sell for half of what the other two pieces sold for 4 years ago.  Nonetheless, the two pieces that we did sell just about paid for the cost of splitting the property, and we do still have two pieces of property that some day will be worth something.

Second, houses and land retain some value, you can lose everything in the stock market.  We did have a guarantee for our stocks, but in the end the money would be entirely gone.  That will not be the case with our property.

Similarly, you can invest in the wrong stocks, and you can invest in the wrong land.  If you invest in the wrong land, and say the soil is found to have cancer producing chemicals in it, there is nothing you can do about it.  No one will buy it.

The moral of this story is that you have to be wise and careful with how you spend your money all your life if you want to live comfortably.  I think you have to work hard, and spend as though you won’t have millions of dollars later to pay it back.  Most people don’t have.  I also think you have to be faithful to God and give away part of your income.  The Christian church calls it a tithe, or tenth. Research shows that people do better financially if they give away 1/10 of their income to charities outside of their immediate families.  To me it is a way of expressing gratitude, and humility, realizing that my existence in this world was not caused by me, and I am extremely fortunate to be here.

Some people seem extremely lucky, almost like they win the lottery – everything seems to turn rosy for them.  Other people appear extremely unlucky.  They buy the property that has cancer growing in the garden.  Most people can expect to be somewhere in between.

How are you preparing or have you prepared for retirement?

Here are some pictures of our new rental.

If you live in Spain, you probably don’t want to rent it, but if you live in Visalia, and know someone who might be interested, the rental company is

Millcreek Management and Real Estate Inc.

300 School

Visalia, CA  93291

559-733-7145

 

Author: Marsha

Hi, I'm Marsha Ingrao, and I'm working on retirement. heheh Read more about me here. http://wp.me/P7tP3I-2

50 thoughts on “Investing Before and During Retirement”

  1. Good advice! And this is beautiful. … Still 15 years to go for me….. the other option you did not mention was: find a millionaire to retire with….. I am keeping my options open 🙂 ( love Manny’s picture on the top! )

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    1. The picture of Manny is for Ralph. He complained that he hadn’t seen enough of him recently. Yes, you need a multi-millionaire, or winning the lottery. I forgot to mention that, too. They are both about as likely! Well more for you than for me. I’m not in the market for a millionaire, and I don’t play the lottery, so my odds are the same for that as well. But you go girl! 🙂 I’m rooting for you! Go Ute! Go Ute! Go Ute! 🙂

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        1. Look around. I can’t find Manny anywhere, and I found this note under my pillow. “Mom, you won’t find me. By the time you read this I’ll be on a plane to England. I’ve just got to find Ute and go dancing. I love you, Mom, but I love Ute more. Don’t try to stop me!” So I don’t know what to tell you, Ute. I don’t know where you live, but apparently Manny thinks he does! Have a great time dancing! Tell Manny to get home as soon as he can, his mama loves him. 🙂 Luv you too, Ute. Take care! 🙂

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  2. I have friends that has invested in real estate in UK … they will never get their money back, they can’t even sell – real estate was the way to go … to invest for so many years and I think it still is.
    I love the job you have done with the house – I would love to rent something like that – love the bathroom and the shower. Good luck to you.

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    1. Yes, the timing has to be right as well. It is not good to buy when the market is high unless you plan to stay there a very long time. It’s not great to buy when interest rates are 10.6 percent like they were when I bought my first house, but I still made $30,000 on my first house. I lost it on the second. My dad was a broker, and his advice was never to expect to earn money on the house you live in. He had rentals, but he would pay next to nothing for them. My husband is not like that. This house was at the top of the market, but the market is still fairly low, and the house is really nice. So we shall see. The true test will come in 15 years time when the money would have been gone from my stocks. 🙂 Good luck to you, too. You are still young. The point is to begin thinking about what you want to do now. 🙂

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      1. Still young …. retiree in 3 months. – Thank you so much. *smile Young at heart .. and that is the main thing.
        Our interest rates is 0.5-1.4%. No use having money on the bank over here.
        Rental is a great market really – but it can also mean problems .. with tenants. I’m sure you will walk away with a profit on this property. You win some and lose some. *smile Have a great weekend now.

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          1. I retired 2009 – when moving back to Sweden .. didn’t feel for going back into the Swedish orgnaision again … in the company I worked for. I have been working more or less every day since October 1963. Enough is enough. It felt right to leave working life behind – but I miss the social everyday and the blog makes up for some of that.

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  3. Investing in anything is scary. If you need the money when the market is down, you’re SOL. When I was a neophyte, a stock broker convinced me to invest all my money in one stock–that happened to be hitting its peak. After I bought it, the stock continued to fall until it was nearly worthless. Everyone told me to hold on to it until it recovered. Well. the company went bankrupt. Once bitten, twice shy, as they say. Now I’m diversified with a mix of risk and conservative income. With that said, I just inherited 60 acres of farm ground in Illinois. We will be selling that in a year because we don’t want to be landlords. And then there’s the question of how we’re going to pay for our son’s college in 9 years…Many people I know have done well in real estate. Perhaps I should do something along those lines…

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    1. You are so right! Investing to me is like playing Monopoly. You want to do a good job, but they don’t always work out. I’m pretty conservative, and I figure if you buy a well-cared for home in a decent neighborhood, and keep it up, you will at least have the property. The other part of that, and maybe most important is staying or getting out of debt. Whatever you buy in goods and services is bound to go down in value, and you are still paying for them years later. I think Vince is right when he says to diversify our investments. Some people I know have invested in rental homes in the town where their child/children go to school so that they save money on housing at least for their children. They can rent the house out by renting rooms to their child’s roommates. So that might be a thought for you as well.

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        1. hahaha, that’s for sure, but if you trust your kids, and they trust and respect you, and know that it’s an investment, the people I have known have been blessed to have done well with it. When you stop and think about it your children are your biggest investment, and hobby and everything rolled together! We are an investment of our parents, and I bet you made yours proud. I’m sure your son ?? will make you proud as well.

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          1. Perhaps I’m only looking at it from the perspective of his 9-year-old self right now. I’m sure he’ll be much more responsible when he’s 18. :o)))

            Yes, we are the results of our parents’ investments. And we all (at least most of us) want our parents to be proud of us.

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  4. ewedhf ….. Star did that walking across the keyboard 😀 Thanks for the Manny header picture. Ute will be happy when Manny arrives in London. I’ve asked Manny to be my financial advisor. Should I invest in sombreros and ponchos or donkeys? Such high tech investments for my Spanish mountain village !! What do you think MVBF Marsha ?? Ralph xox 🙂

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    1. Actually it doesn’t matter what I think, and Manny is out of town right now. You can text him at 223094u201-34u01. My guess is that he will lean towards donkeys. They make him look taller. 🙂 xox

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        1. I just got a text from Manny. He said definitely the donkeys, and also something about he wasn’t going to do your job for you. Do you know what he means by that cryptic remark? There’s no understanding Manny sometimes. I guess he’s having a great time in England. He said he got to watch Ute dance, but he was hiding so she wouldn’t see him. He’s shy! 🙂

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          1. Don’t be sad, Ralph. Manny is jealous of you. He’s afraid if you come anywhere close to Ute that he’s going to lose out. I’m not sure I would trust his advise about the donkeys either. I think you should invest in gondolas and accordions.

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      1. Oh. You will make a really great financial advisor MVBFM !! 😉 Gondolas in the mountains of southern Spain??*’£!! With walking poles instead of oars I suppose 😉

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          1. It was too risky. The whole lot dived and crashed. I am now broke and standing on a ledge 3 feet up. I am going to jump. It was too much of a loss to bear 😉

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          2. The stress is too much for you, Ralph. Have a cup of tea with some Baileys in it. Don’t look down, back, or up. Last I heard there were still a few pigs up there. Rumor has it that the elephants were seen jumping off cliffs trying to fly with the pigs! Come on in here away from the scaffolding, MFR. 😄🐰

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  5. In Australia you are forced to save, you don’t get a choice, if you earn money you have to have a superannuation fund. It is crap really, because they force you to do it, but they are very strict about how to invest the money, and then you have to invest it in things like the stock market. My husband paid in over $10,000 one year and only got $1000 further ahead, someone made a lot of money from him.

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    1. That’s how Vince feels about my investments. We lost half of it the year the stock market here lost so much money. It’s come back now to equal just about what I put into it all those years of working without any growth. So that’s why we took some of it out and bought a rental house. It is already rented, and the people move in in the next few days! So that seems like it’s going to be a great investment. 🙂 sorry you are forced to save. Do you have Social Security on top of that? We are forced to put into Social Security, unless we teach, then we put into State Teacher’s Retirement System (STRS) You get back much more than you put into it, though unless you die young. Then your spouse get it. 🙂

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