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Thread: How should I invest my savings?

  1. Default How should I invest my savings?

    I'm approaching retirement (3-5 years away, ideally) and I have about $1 million invested in real estate (87% of which is already paid for). But, I have about $300k sitting in my bank account doing nothing, so I want to invest that money. I've met with a couple of advisors and agents and, overall, I'm between two options: entering gold or buying a fixed index annuity. The most attractive offer I've gotten (for the annuity) is Allianz 360, which offers me exposure to the S&P500 and other low-cost indices, capital protection, and guaranteed life-time income. I'm not interested in aggressive growth, since this investment will be allocated in my defensive portfolio. I just want to keep up with inflation and invest my money securely to ensure a happy retirement.

    What would you recommend? Should I pay off my real estate investments first? Should I buy this annuity? or Should I buy some gold and hope for the best?

  3. #2

    Join Date
    Sep 2006
    Upstate NY
    Blog Entries

    Default Re: How should I invest my savings?

    Any debt is a drag on returns and lifestyle, especially so close to retirement. Think of it this way. That $300,000 sitting in a savings account might have an interest rate of 1%. The mortgage is probably something like 4%. Paying down the mortgage is like an instant return on cash.

    Quote Originally Posted by johnnyBCV View Post
    I buy some gold and hope for the best?
    Does that really sound like a plan to you?

    Annuities are a gamble since you're locking in rates for the rest of your life. Advisors would love to sell annuities today with interest rates so low. If it's fixed and rates go up, you're in trouble.

    No need for anything aggressive - ever. Take a look at the TSP lifecycle funds or the target date funds at any major fund company and see what the recommend. I'm guessing you would be something like 50CSI and 50FG at this stage.

    I don't count real estate for anything net worth wise besides the debt. It's a house. I live there. It's not an ETF I can unload during market hours. Unless real estate is pumping out income via rent, I'd be very careful counting it as part of any kind of liquid net worth.

  5. #3

    Join Date
    Apr 2008
    Cleveland, Ohio

    Default Re: How should I invest my savings?

    You don't say what your real estate holdings are in; a big house, rental property, business property, land holdings, etc. Not that we need to know it just depends how it will be used upon retirement if used for that at all. Then it's the taxes, fees, etc. when said real estate is used for what ever needs that may come up in retirement. I'm guessing you have a comfortable TSP for retirement and looking to gain some interest in your cash holdings. In my opinion I might invest maybe half the cash and diversify your portfolio into some stocks and bonds. Gold and silver would also be an option and some folks here already talk about both. Remember one thing about cash, it's tax free. It's always nice to have some cash on hand for emergencies. If you do invest some, part or all of your cash what ever you have it invested in will have fees attached to it and eventually taxes will be paid on those investments either before or after they are sold.
    Regardless of any advice that might be thrown around here the bottom line is it is your decision. So congratulations on your upcoming retirement, your current investments and holdings. Good luck.
    May the force be with us.

  7. #4

    Default Re: How should I invest my savings?

    I do not have enough information to give you a clear answer on whether to pay your Mortgages or not. However, I can say that if your interest rate is below 4%, may be the best idea would not be to pay it in full just yet. Assuming that you have real estate investment that gives you a monthly income, you should use those rent payments and let it pay your mortgages by themselves and invest the 300k in a conservative investment that can net more than 4%.

    However, It would be good for your to reserve a portion of those 300k and have it as cash reserve in case anything bad happen in the years ahead with the pandemic situation.

    In regards of the annuity I wouldn't recommend you to buy an annuity with your entire savings because annuities are long-term investments, and after seeing what happened this year, I think It would be a good idea to be prepared and have some money aside reserved.

    However in case you want buy an annuity with a part of that money I wouldn't recommend you the Allianz 360, I've been reading that this annuity is locks you in for a lot of years, and might additional fees above. There's one that is similar called Allianz 222, but I think that one is better because charge you those fees. Anyways I found these two reviews for those annuites that might help.

    What I truly don't encourage you is to buy bonds right now, with the interest rate super low right now and after seeing the Fed printing so much money I think that wouldn’t be a good call right now. There are other annuities that offer you like 2-2.50% guaranteed for 3 years, they are popular right now and are better than CDs. But for what is worth I think it is better to be in cash and invest the rest of your money in an index fund and gold. I think gold can be a good investment to have in this market situation instead of buying an annuity, and specially approaching retirement.

    Anyways, hope you find a way to deal with your situation, Good Luck!


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