Getting my butt kicked on stocks

[john67elco]

Lost 1/32 of my 401k and want to park it safe for a while and hide. Which out of the lower is where i want my money for those who know Vanguard. Thanks for any help. Mutal funds or something safe is where id like to be for a bit.

Balanced Funds (Stocks and Bonds)
Vanguard LifeStrategy Consrv Grwth %
Vanguard LifeStrategy Growth Fund %
Vanguard LifeStrategy Income Fund %
Vanguard LifeStrategy Mod Growth %
Other Plan Investments
Short-Term Reserves
Vanguard Prime Money Mkt Fund %
Vanguard Retire Savings Trust V %
Bond Funds
Vanguard High-Yield Corp Fund Inv %
Vanguard Total Bond Mkt Index Inv %
Domestic Stock Funds
Vanguard 500 Index Fund Inv %
Vanguard Explorer Fund Investor %
Vanguard Mid-Cap Index Fund Inv %
Vanguard Small-Cap Index Fund Inv %
Vanguard U.S. Growth Fund Investor %
Vanguard Windsor II Fund Inv %
International Stock Funds
Vanguard International Growth Inv

[powayseller]

We’re hiding in Vanguard’s Prime Money Market, but are moving next week to Vanguard’s CDs. There’s a wide selection.

[hs]

Powayseller, could you tell me the interest rate of Vanguard’s CDs?
I just parked my cash in USAA Performance First Index and their interest rate is 4.61%. If you open your account online, they give you 1% bonus, so your interest will be 5.61%. It is a savings account.You can take your money out anytime if you want.

[powayseller]

Wow – that’s a great rate, better than Vanguard’s offering, which is 5.25% for a 1 year CD.

I don’t qualify for USAA; it’s for military people only.

That is a very good rate, and I assume is FDIC insured.

[hs]

Thanks for the info. I need to chek with them if it is FDIC insured.

I am thinking to take my IRA out and park it there, too.
If you take all of your funds out now, you also have to pay lots of tax next year. Right?

[powayseller]

No, you don’t need to take it out of your retirement account to put it into a CD. Under the IRA designation, you can buy any index fund, mutual fund, CD, or stock or bond. Our retirement money is in CDs. It’s an IRA invested in a CD.

If the bank/brokerage holding your IRA does not offer the product you want, you transfer your retirement money to another institution. Probably USAA offers IRAs, and IRA CDs. You just have to ask. If they don’t, you can set up and transfer to Vanguard or other brokerage. What I like about Vanguard is that I can buy stocks in my retirement account.

When my husband and I worked at companies which gave us only 5 retirement options, we would put our retirement funds into their company-designated firm’s money market account. Then we made quarterly transfers from the company firms accounts into Vanguard brokerage, and then could do online trades into index funds, mutual funds, stocks, whatever.

There is no tax fee when you transfer.

You don’t need to use Vanguard. There are many brokerage firms. They help you with filling out the transfer forms.

I wish I knew where I could make a better investment than a CD, but since I do not know, I am in the CD for now. I plan to buy gold, silver, commodities index fund, Asian index fund, bond futures, but while I am checking this all out, I am in the CD. I’m not decided yet in my direction. In the meantime, while I am learning and deciding, I wanted to get out of the stock market, because I think it will correct. This is my strategy, and I hope more people will share their thinking and strategy so we can all learn from each other.

[powayseller]

John, if you don’t mind telling us, which type of investment lost money?

[john67elco]

Vanguard U.S. Growth Fund Investor

[powayseller]

To verify the FDIC status, you can of course check with your bank, but also look at the fdic website. They list all banks they insure. Credit unions have a similar insurance called NCUA or something like that. This is safe like FDIC.

[powayseller]

John, I was hoping for more feedback for you, and for me too, because I would like to learn from others.

I’d like to add what I know about bond funds: Their payout is the current rate, but the value fluctuates. If you sell before maturity, as I think the bonds are sold, you can lose money. In any case, the bond value goes down in a period of rising interest rates. For this reason, bond funds are not as favorable now.

I am a big believer in index funds. I’ve rarely been fortunate to outdo the index. Certainly not in my own stock picks. When I first started investing, about 18 years ago, I read everything I could get my hands on. After a few years of picking the best recent fund, and losing money in the following years, I realized that you cannot pick a mutual fund based on last year’s returns.

Then I converted from picking mutual funds to index funds and picking stocks. Now I realize that stock picking is just for fun. For every Fannie Mae and Caterpillar that did well, along comes one Delphi that goes bankrupt… From what I know today, index funds give the highest returns in the market. Some years that can mean a -5% return, so a loss. But that is a smaller loss than I would have in a mutual fund.

Go to the finance.yahoo site, and you can put in the ticker symbol for your fund or stock, and then they let you compare it to the S&P, Nasdaq, and Dow. Unfortunately they don’t have a Russell2000 comparison.

One stock-picking suggestion is Warren Buffet’s Berkshire Hathaway. His diversified holdings are akin to owning a mutual fund led by the world’s richest man, and one of its most astute investors. He believes the dollar will lose value, and invests accordingly. He just made a $4bil purchase of an Israeli tool company to hedge against the falling dollar. Last week he bought a $376 mil stake in Britain’s top retailer, and invested $1.13 bil in Conoco Philips, and $330 mil in GE and UPS. His goals now is reducing his $43bil cash holdings to $10 bil by making non-US acquisitions.

Buffett does not want to own dollars anymore. He prefers to invest in foreign companies over playing the currency market, bec. he lost $955 mil in 2005 betting against the dollar, a year in which the dollar index rose 13%.

BRK-B, $3059/share.
The A shares are $91,500.

His holding company has done better than the S&P500. In the last 10 years, BRK.B is up 150%, while the S&P, Nasdaq, and Dow are up only 100%. If you look at the last 2 years, he underperformed the S&P500.

However, his main business is insurance, and if there are any catastrophic losses, such as another big hurricane, his fund can have a bad year. You’d have to be prepared for that, and not pull out just at the low. He’s prepared to lose $6 bil in a year.

I bought one B share in early 2000, and it was around $2000. I’m considering getting more. What would be a reason not to?

One interesting thing about Buffett is his intense honesty at his shareholder meetings, and that despite his net worth of $43billion which is all tied up in his shares at Berkshire, his salary is only $100K/year. He lives in Omaha, NE.

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