IRA Investment Options

L1: IRA Investment OptionsI’m new to the website and did not find this discussed in earlier posts. I have $200,000 in a IRA, mostly in equities. I’m 50, and using the 72t would need to take equal withdrawals for 9 1/2 years. Obviously, having the majority of the IRA in equities would be to risky, I could exhaust the account. I need to generate $10,000- $12,000 per year from the account, and don’t mind drawing down the account a small amount- once I reach 60 my pention will kick in and I’ll be fine. I realize everyone’s situation is different, and I’ll probably talk to a pro before I start this, but I thought I’d start here. Any ideas?2004-03-25 17:29, By: Coyote, IP: [66.42.39.67]
L2: IRA Investment OptionsGood morning Coyote:
This is the right site to start your planning to establish a SEPP, aka 72t. Suggest you explore completely, including running the calculators to determine the approximate amounts to include in the SEPP to give the desired income. If possible set aside some of your $200k in another IRA to use for emergency withdrawals so you don’t wind up ‘busting’ you plan. As far as investment plan to accomplish your needs, that’s not then intent of this site, and any of us ‘professionals’ would be out or order trying to create a plan for you through postings. Suggest you explore the options in your area, and don’t just go to the ‘biggies’ … consider an independent who may have more options for you, including access to professional money managers. Find someone who can offer all options and not just fixed annuities which an insurance only person would have. Fixed may make a good part of your overall plan but not for the whole deal. And don’t be afraid of equities at your ‘old age’ of 50. I have a 93 year old client who’s comfort level is no more than 5% cash in his $2 mil account. Let your advisor determine your risk tolerance and then put together the right mix for your goals and needs.
Good luck
Jim2004-03-26 08:37, By: Jim, IP: [68.1.147.61]

L2: IRA Investment OptionsHello Coyote:
You have fortunately, just zeroed in on the number one reason for SEPP plan failure particularly those commenced in the late 1990’s; e.g. failing to recognize that one is now charging their IRA(s) with a new task and failing to realign the underlying investments in the IRA to accomplish that task. Typically, often for decades, one has their 401(k) & IRA accounts pointed toward growth & justifiably so. Then, the day comes to re-orient one’s life & start using those assets to produce income in the form of a SEPP plan in this case. Many people just kept investing the same old way & got hammered 6 times over; two times per year for 3 years (2000 to 2002) where there accounts materially diminshed in value from both the annual distribution and the decrese in value of the underlying investments in the account.
Enough of my rant. I suggest you look at maybe 4 positions on a risk curve:
(1) Purchasing 30 year US Treasury zeros (or even the bond itself).
(2) 100% investment grade corporate bonds.
(3) A mixed porfolio of bonds, REITS, preferreds & even some high yield common.
(4) A portfolio of preferreds & high yield common.
Where do you think you fit in this picture? Are you a 1, 1.5, a 3.5, etc. Understand this issue first & you are well on your way to visiting an investment professional who can effectively design the details to both meet your needs as well as allow you sleep well at night.
TheBadger
wjstecker@wispertel.net
2004-03-26 18:08, By: TheBadger, IP: [38.116.134.130]

L2: IRA Investment OptionsHi Andy,
I know many will not agree with my opinion; however, if your risk tolerance is extremely low, you may want to consider some high yielding CD’s.
My portfolio allocation is approximately 85% FDIC insured CD’s and 15% corporate bonds. The average yield of the entire portfolio is over 6%. These types of investments can be purchased with no sales charge to you (the issuing agent pays the sales fees). My total annual outlay for an IRA with a SEPP implemented is a whopping $35.00 annually…. and no broker fees.
Even today, you can still find a 100k CD with a 6% yield if you know where to look and 5.5% CD’s are plentiful as well.
If interested, visit FISN at http://www.fisn.com for more information.
Good Luck,
gus 2004-03-27 07:43, By: gus, IP: [206.149.200.63]

L2: IRA Investment OptionsThanks for the feedback everyone! Some terrific ideas and advice that I may very well use. It’s a bit of a nervous time for me, and I want to look at all my options and go with the one, or combination, that’s best for me. Thanks again for all the great ideas!
Coyote2004-03-27 15:31, By: Coyote, IP: [66.42.37.10]

L2: IRA Investment OptionsI realize this isn’t for everyone, but I have had mortgage and trust deed investments in my IRA account and have averaged a 12-14% return with them for the past fifteen years. They provide a great income especially if you want to do a SEPP.2004-04-08 00:30, By: Wayne, IP: [12.17.140.156]

L2: IRA Investment OptionsWayne commented earlier today “I realize this isn’t for everyone, but I have had mortgage and trust deed investments in my IRA account and have averaged a 12-14% return with them for the past fifteen years. They provide a great income especially if you want to do a SEPP.”
I would certainly give some one a mortgage at 12% to 14%. I just can’t find the someone.Wayne, where do you find these investments?
Regards
TheBadger
wjstecker@wispertel.net
2004-04-08 07:50, By: TheBadger, IP: [38.116.134.130]

L2: IRA Investment OptionsNote that Wayne said that he has ‘ … averaged a 12-14% return with them for the past fifteen years.’ Fifteen years ago was 1989 and interest rates were extremely high. Let me know if you find any ‘credit worthy individual’ and I will join the parade to loan new money at 12% to 14%.
Jim2004-04-08 09:40, By: Jim, IP: [68.1.147.61]

L2: IRA Investment OptionsActually, in the lastseveral years you could have bought publicly-traded mortgage REITs, yielding in the 12-18% range. I know because I did so in my IRAs.
They have since moved up in price and therefore down in yield, but you can still get 8-10% yields. Two of the m-reits I like are NFI and IMH, both of which specialize in “non-prime” or alt-A type loans. Not real junk borrowers but decent FICO scores who either are self-employed or have a blemish or two. Still, there are risks in a leveraged pool of mortgages, so check them out carefully before investing. Other m-reits are FBR, NLY, TMA, RWT, AHH, AHR.
There are other high-yielding stocks that are good for IRAs, such as Canadian oil and gas royalty trusts yielding 12-18%, and preferred stocks paying 8%. A good site for helping to find them is www.valueforum.com, which costs $100 per year and is the intelligent and polite version of the Yahoo stock message boards.2004-04-08 10:08, By: mod, IP: [68.198.190.31]

L2: IRA Investment OptionsThe Badger, “I would certainly give some one a mortgage at 12% to 14%. I just can’t find the someone. Wayne, where do you find these investments?”

My wife and I have been in the real estate and mortgage business for about thirty years, and so most of our notes and investors come from referrals and word of mouth. I’d be happy to email you more info if you’re interested.
Wayne Bass2004-04-10 13:02, By: Wayne, IP: [64.4.226.207]