Fellow Moparians, Any Investment Diversification Advice?

[7E-Bodies]

Ok, so a little off topic, but since it's the general topic area...

I just retired a few months back (59-1/2) and am really nervous about an over inflated market holding the lions share of my 401k and IRAs. It seems shaky at best to keep printing money. I'm just curious as to other ways to hedge money while possibly keeping from paying income taxes on withdrawals. I wish there were a way to invest in farm ground under a tax shelter because I'd jump at that. Right now I'm very uneasy about what I feel is a grossly and artificially overinflated market. Most of us are into a rather expensive hobby here, so I figured it'd be a great group to get a discussion going with. Not trying to poke a political bear (please), so no implication intended. Anyone hedging against corrections, crashes and runaway inflation?

[blown motor]

I'm not sure how farm ground gives you a tax shelter but real estate is normally a good investment. By a condo or house as rental property. I know there's lots of people that phoo phoo that but it can done successfully if you stay away from low end situations.

Or you could jump on the Gamestop band wagon. 

[7E-Bodies]

Can't disagree, yet I'm not seeing a way to pull from retirement funds to invest in real estate without getting hit for 20% income tax.

[Moosefire66]

Can't disagree, yet I'm not seeing a way to pull from retirement funds to invest in real estate without getting hit for 20% income tax.

For RE, yeah you might be penalized, but you could also change where your 401 money is held. Guys at my work about to retire are moving their money away from the market and into cash. Don't ask me how or what they're doing, but they definitely don't make any money there. But it's better than losing if that's the case... could call whoever is holding your 401k and see what the safe bet is

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[7E-Bodies]

@Moosefire66 indeed a portion of mine is moved to cash and the remainder is conservatively scattered in long term stuff and very diversified. I guess my big worry is a 1929 style market dump. You make a valid point in absorbing the 20% tax hit to just get away from the market, but then I'm left to wonder where to place it.

[captcolour]

Like 7E-Bodies said, unless you have cash sitting around to invest, taking a lot of money out of the 401K isn't necessarily a good idea.  Tax rate isn't 20% for a withdrawal but rather withdrawals are taxed as ordinary income at your tax rate when you are above 59-1/2.  If you take out a lot to use for an investment, the tax rate could be pretty high.

I'm 62 and just retired last month.  I've moved most of my riskier investments to cash in the retirement account to cash in on the high market.  I end of having about 1/4 in a very conservative mutual fund, 1/4 in bonds, 1/4 in international and other mutual funds, and now 1/4 in cash.  Waiting for a correction or something to buy with the cash.  Wish I knew about GameStop!

Of course the correct answer here is to consult a financial advisor and perhaps a tax professional.

[SgtSuperbird]

Look into rolling that money (if you can, in your situation), into an indexed annuity fund. You can choose the amount of risk you'd like to take. The upside is they protect your money, some are set up, even if the market is in the negative, your investment can't go below 0%. The downsides are: a huge percentage of your money is tied-up for several years and, in a real good market, you don't make anywhere near what the market gains. (But you're "buying" protection of your principle.) Just my two cents...

Hey, wait a minute... you're asking investment advice from us schmucks? The ones, including me, that couldn't recognize a great investment and sold our A-12s, Superbirds, AARs, etc., for pennies? 

[7E-Bodies]

@captcolour great reply and my setup currently mimics yours almost identically. Indeed the 20% I referred to is my approximate income tax rate, yet it'd be a pretty stiff voluntary penalty to suffer (saying I pulled 1/4 to 1/2 to invest in rural land). My financial guy says it's only possible to shift into land by utilizing trusts, whatever that involves, but he says it's insanely expensive. I'm also deferring SS until age 67 unless an emergency arises.

[Skdmark]

Are any of your retirement funds in a Roth?

[7E-Bodies]

@Skdmark yes, but a very small portion. Wishing I'd converted the traditionals during the 08-09 housing bubble crash. I certainly gave it serious thought.   

[7E-Bodies]

@captcolour how do you like Kentucky? Thats one of the states we're looking to escape Illinois to. Tennessee and Missouri are the others being considered. Right now, Missouri is tempting us for several reasons.

[Skdmark]

@Skdmark yes, but a very small portion. Wishing I'd converted the traditionals during the 08-09 housing bubble crash. I certainly gave it serious though.   

I hear ya. I'm always torn about doing a backdoor Roth conversion to shift more money from my traditional IRA over.

[7E-Bodies]

I think the only time to do that is after a huge market correction.

[CudaMoparRay]

Hey, wait a minute... you're asking investment advice from us schmucks? The ones, including me, that couldn't recognize a great investment and sold our A-12s, Superbirds, AARs, etc., for pennies? 
[/quote]


Lmao 😂 😆 hopefully old age made us wiser 😂
Actually, I had a good idea that my 'Cuda would be worth a lot of money in the future. Unfortunately  the economics of getting my next newer car, I had to sell it.

[7E-Bodies]

Tell me about it @CudaMoparRay As a guy that sold a JS23R0B in the 80s AND a JS27N0B AND a JS23U0B with 28k miles, two JH27Gs, etc etc etc, I totally get it.