Scared of money in the states

[steveandpenny]

Ok maybe im overthinking all this but we have our savings in the states in a 2 401-k. Its in a modrate agressive fund and we arent useing it to live.
With the new leadership Im scared the ecomey might goes tits up. Last time they had a republican pres, congress , senate, and most of the governers was in 1928. In 1929 was the start of the great depression and by 1931 uneployment in the states hit 25%.
So would like to hear some wise advice. We are thinking of maybe moving money into a secure low intrest account or even moving our money out of the states and putting it to work in singapore. We arent greedy but dont want to take the chance on losing a big chunk of it. IF we move it out we will get hit with the taxes. Also this isnt a hugh sum but its our nest egg.
Also im not that smart so any advice please keep it simple sp i dont get lost.
Oh for background we are retired couple me in my early 60s wife in her 50s. Have social secertity and a small pension that makes life here easy. We have no plans to move back to the states as long as both of us are alive. We still own a house in the states and rent it out.(no real income from it but it covers house payments and taxes)
So hit me with your best shoot.

 

[IndoTom]

You are not alone! This could be a populist fascist scenario just like Europe in the 1930's. Do some historical research to find the parallels of what occurred to the private economic systems after Hitler and Mussolini came to power. A few ideas on this subject which I will be following myself is to diversify (cash, bonds, stocks, and property). While guessing exactly what investment mix is the best. Sometimes it's about minimizing loss not how much you gain. My hunch is investing in companies that profit during times of war and civil strife will be looking good (Lockheed Martin, Northrup Grumman, Raytheon, General Dynamics, etc.). Owning property is always good in the long run because unlike stocks, property always has some value and you can live in it. Whereas a stock can become totally worthless through a company going bankrupt.

With a trade war between the USA and practically the rest of the world seeming to be on the near horizon. I would steer clear of retail, consumer, and transport related stocks. Yes I know that's a big portion of the world economy. The Utility or food sectors might be a safe play to minimize loss and perhaps some settled European country stocks that will not be involved in a trade or shooting war are an option. But again all this might just be about minimizing loss.

 

[Puspawarna]

We're in a similar boat. Still bringing in some income at the moment, but nearing the end of our professional careers for a variety of reasons, including that I doubt there will be much work for people like us under a Trump administration. (All of my husband's jobs, and many of mine, have been funded through USAID).

So, I hear you. At the moment we are hanging tough but I think we should be looking at other strategies. My husband is traveling but is far more knowledgeable about financial markets and the like than I am. I think we should chat when he's home. If our conversation results in any interesting/useful insights, I'll come back to this thread and share.

 

[Puspawarna]

\My hunch is investing in companies that profit during times of war and civil strife will be looking good (Lockheed Martin, Northrup Grumman, Raytheon, General Dynamics, etc.).

Probably wise advice, but for some of us that could pose moral problems. I will admit I haven't been involved in managing our stock portfolio - I leave it to our financial manager and barely manage a grunt through most of our conversations - but personally, I do draw a line when I have to actively consider investing in particular areas. Our broker tried to get us to invest heavily in a company that does a lot of fracking a few years ago. I wouldn't do it.

(I'm not saying other people shouldn't go ahead and invest, it's a very personal issue. Everyone has to follow their own conscience.)

 

[Banana72]

With a trade war between the USA and practically the rest of the world seeming to be on the near horizon. I would steer clear of retail, consumer, and transport related stocks. Yes I know that's a big portion of the world economy. The Utility or food sectors might be a safe play to minimize loss and perhaps some settled European country stocks that will not be involved in a trade or shooting war are an option. But again all this might just be about minimizing loss.

Interesting opinion on the industry. Got me some in the mixed energy stocks and food..I thought grocery stores (like Walmart, etc) would do okay since people would always need the consumer goods (personal hygiene stuff, food, etc), but it hasn't done that well, maybe because it sells lots of Chinese imports and many people are shopping at discount stores more and more.

Ironically I had moved some money to Indonesia (when dollar was closer to 10,000) and the interest rates seemed lucrative. Now..not so much, especially with the rupiah about 30% lower.

 

[jukung11]

First, if you are getting news from Facebook or social media, stop. It is heavily skewed and designed to cause panic for greater attention.
The major political parties have significantly changed over the years in both ideology and constituency.

Second, at your age you should be more diversified. Many people in there 60s have been forced into riskier investments over the past couple of years because of the very low interest rate environments. Most 401k plans I have been in have 15 to 30 different funds to choose from. If you plan does not, since you left the company you can roll your 401k to an IRA tax free. Look for a plan that offers a wide range of funds. I have moved my investments between international low cap, high cap, govt bonds, high yield bonds, commodities, and domestic investments. Depending on the mix, as one goes down another goes up.

My personal philosophy is don't try and beat the market if you are not a savy investor. You are more likely to get burned.
Without risk, there is no return. If people are telling you the are making money with no risk, they are either ignorant to it or lying.

 

[Puspawarna]

First, if you are getting news from Facebook or social media, stop.

I can't speak for others, but I wouldn't dream of getting my news from either of those sources.

 

[jukung11]

You are not alone! This could be a populist fascist scenario just like Europe in the 1930's. Do some historical research to find the parallels of what occurred to the private economic systems after Hitler and Mussolini came to power.

I heard all the same parallels when Obama took over with a Democratic house and Senate. He heavily expanded the power of the executive branch. People can find whatever similarities they want to justify the other side is Hitler and the Nazis. I got sick of hearing it about Obama and I am already getting sick of hearing it about Trump. I remember Louis Black did a hilarious sketch about it once. I can already see a major flaw in that, Mussolini and Hitler were both socialists. Only one candidate was the socialist in this election. He also campaigned heavily against train deals and putting Americans first. That was Sanders.

90% of the Federal government and laws doesn't change with the executive branch. The American worker has been one of the hardest working and most productive for the past century. I watched some have glee in the last recession that the world was going to decouple from the U.S. economy and the u.s. would not be the center of everything. They ignored a lot of history. Yes, there will be corrections and recessions as part of the business cycle, but I wouldn't bet against the American economy long term.

 

[IndoTom]

90% of the Federal government and laws doesn't change with the executive branch. The American worker has been one of the hardest working and most productive for the past century. I watched some have glee in the last recession that the world was going to decouple from the U.S. economy and the u.s. would not be the center of everything. They ignored a lot of history. Yes, there will be corrections and recessions as part of the business cycle, but I wouldn't bet against the American economy long term.

While you are correct that most laws are not made by the President, he does wield considerable power through executive actions that directly control our international relations through diplomacy and non declared wars and military actions. Let's see who Trump bombs first or whose plea for help from an aggressive nation he ignores. To compare Obama to Trump is a very bad comparison. Trumps lack of self control is identical to Duarte; the new leader of the Philippines. He is turning friend into foe and foe into friend. In terms of the last US recession, I did correctly predict it and sold my house 1 month before the s**t hit the fan and took a 2 year holiday to Indonesia to weather the storm where it was cheap to live. Maybe I was lucky, maybe my instincts warned me in advance. Either way it worked out very well for me. In the end time will tell all things. Perhaps Trump will be to America as Nero was to Rome. Let's give it 2 years and check the score board.

 

[waarmstrong]

I can't speak for others, but I wouldn't dream of getting my news from [Facebook or social media.]

Could be wrong, but is not the Forum sort of a part of social media?

That being said, you are kidding yourself if you think Singapore will be a safe haven if the US economy tanks. If the USA suffers a Trump depression, the rest of the world will go down with the ship and probably more so. Moving your money offshore will serve only to deplete your nest egg via transaction fees and costs, as well as the tax consequences already mentioned.

Trump may be a self-serving demagogue, but he is not an idiot. Keep in mind that his fortunes are tied to a strong US economy, just like the rest of us.

 

[waarmstrong]

While you are correct that most laws are not made by the President, he does wield considerable power through executive actions that directly control our international relations through diplomacy and non declared wars and military actions. Let's see who Trump bombs first or whose plea for help from an aggressive nation he ignores. To compare Obama to Trump is a very bad comparison. Trumps lack of self control is identical to Duarte; the new leader of the Philippines. He is turning friend into foe and foe into friend. In terms of the last US recession, I did correctly predict it and sold my house 1 month before the s**t hit the fan and took a 2 year holiday to Indonesia to weather the storm where it was cheap to live. Maybe I was lucky, maybe my instincts warned me in advance. Either way it worked out very well for me. In the end time will tell all things. Perhaps Trump will be to America as Nero was to Rome. Let's give it 2 years and check the score board.

You were lucky.

 

[R Cameron]

As unstable as I personally think Trump is, the USA will remain one of the most (if not the most) stable economies. There are uncertainties with Trump (and right-wing control of both other branches), but I still think it pales in comparison to the uncertainties in most other countries.

Regardless, a common portfolio balance would be 1/3 in a US index fund, 1/3 in an international index fund, and 1/3 in bonds (split US/intl if you like). I think that's still a good balance in these times of increased uncertainty.

 

[steveandpenny]

Frist off waarmstrong I really belive Trump is idiot. And iost afraid he will do as he done many times before and make thay marjor mistake and this time it will be the United States that goes bankrupt.And as socal media , Im askimg for advice and opions not facts or news.
My investment are broken up in 8 to 10 groups . I do understand the risks in pulling my money out and moving it. No one has spoken to the idea of a secure low interst account. It would limit what my money is doing but on the other hand limit the big loss.
Im not trying to make this a political disscussing on hows right and whos wrong.
Im most scared of the talk of deregulating the banks. Ive all ready seen what the too big to fail banks have done when left alone to run it there way. I dont want to ne one of those guys at a casino table that doesnt know when to walk away.
Thanks for input so far , keep it coming

 

[fastpitch17]

If I still had my 401K and thought there was any chance of losing a sizable chunk of my savings, I would move the funds to an interest bearing account with-in it until I had an idea what was happening or where we were headed. I did that during the housing collapse and wasn't hurt so much by it. I learned a valuable lesson during the dot com fail when i lost 57% of my savings in two weeks while the experts said not to worry.

I do have to say that if I were to need to choose a country to keep my funds in and not worry a lot, it would still be the US.

 

[Banana72]

If I still had my 401K and thought there was any chance of losing a sizable chunk of my savings, I would move the funds to an interest bearing account with-in it until I had an idea what was happening or where we were headed. I did that during the housing collapse and wasn't hurt so much by it. I learned a valuable lesson during the dot com fail when i lost 57% of my savings in two weeks while the experts said not to worry.

I do have to say that if I were to need to choose a country to keep my funds in and not worry a lot, it would still be the US.

I remember back in 2007 at the height of the housing prices, my neighbor across the street sold his house. A week before closing, I asked where are you going? "Moving to an apartment...and I'll buy back into the market in a couple years" I thought he was losing his mind. So yeah a couple months later market took a dive. I rode the roller coaster just fine, but it was a sight when I drove through my housing complex...foreclosure signs popped up every other month for a while.

I wasn't fully invested in the market like I am now...did have a pretty bad year in 2015. I think I'm still going to be fully invested, but maybe raise my cash position to about 10-15% and move all my growth stocks to growth/income (minimum 1.5% dividends). Thoughts on investment mix, Fastpitch?

 

[fastpitch17]

I really don't any longer. All my money has been removed from investments and I haven't even watched it for the past 4 years. Long story as to why but today I just rely on no transaction fee banks and ATMs to keep me going.

 

[jukung11]

Frist off waarmstrong I really belive Trump is idiot. And iost afraid he will do as he done many times before and make thay marjor mistake and this time it will be the United States that goes bankrupt.And as socal media , Im askimg for advice and opions not facts or news.
My investment are broken up in 8 to 10 groups . I do understand the risks in pulling my money out and moving it. No one has spoken to the idea of a secure low interst account. It would limit what my money is doing but on the other hand limit the big loss.
Im not trying to make this a political disscussing on hows right and whos wrong.
Im most scared of the talk of deregulating the banks. Ive all ready seen what the too big to fail banks have done when left alone to run it there way. I dont want to ne one of those guys at a casino table that doesnt know when to walk away.
Thanks for input so far , keep it coming

I still stick with the advice to diversify. Cashing out and putting your money in an interest bearing account is putting all your eggs in one basket, and in my humble opinion is not prudent financially. It is highly risky. Just look at what has happened with exchange rates over the years. Currency risk alone could wipe out much of your money. You may remember 18 years ago, there were a few countries with high currency risk, including the country you currently reside in. That may be why many people are not recommending putting your money in a low interest account.

Also there is the downside of taxes. You have to pay taxes on whatever money you pull out of your 401K. It is not foreign source income. Based on the fact that you stated you have pension income and rental income, I would assume you would at least be in the moderate marginal tax rate on your money that you pull out. Also, I am not as familiar with Indonesian tax law, but you have to file a tax return for Indonesia too. My best guess is you are going to lose 25% of whatever you take out to taxes. That is a pretty hefty loss.

If inflation spikes, you will want to be invested in stocks and commodities. If recession hits and interest rates fall (not much further they can go) you will want to have been invested in bonds. If there is a trade war, most countries admit they have more to lose in a trade war. You will want your money in a currency like the U.S. dollar. Hence back to my original theme, diversify.
Most 401k plans have funds that you can split your money between many categories. If they don't you can roll it over to an IRA that does. Some plans also allow you to withdraw your money as a loan. It does not trigger a taxable event. You can make a long payback time and the interest you pay is being paid to yourself. The last time I did it, the administration fee was only $100.

There is an old adage. When America sneezes Asia (sometimes the world) gets a cold. If you are expecting the SHTF for the U.S. economy, I wouldn't call moving your money to Asian banks safe.

 

[IndoTom]

Also there is the downside of taxes. You have to pay taxes on whatever money you pull out of your 401K. It is not foreign source income. Based on the fact that you stated you have pension income and rental income, I would assume you would at least be in the moderate marginal tax rate on your money that you pull out. Also, I am not as familiar with Indonesian tax law, but you have to file a tax return for Indonesia too. My best guess is you are going to lose 25% of whatever you take out to taxes. That is a pretty hefty loss.

Concerning the tax implications of investment changes. With 401k retirement investments you don't need to cash-out to move funds from stocks into cash or bonds. Just change the investment mix within the 401k itself. You can change the IRA and 401k investment mixes all day long without being taxed. US taxes for regular investments is a shell game of tax brackets and long verse short term holding periods. Always hold stocks for 1 year or more before selling them if possible in non-retirement accounts.

 

[waarmstrong]

Yes, I recall that within the confines of a 401K and an Individual Retirement Account, investments can be rebalanced without tax consequences. Only distributions are taxable events. I would think you could switch your within account investments to funds that specialize in those kinds of foreign holdings that you feel provide more protection from a Trump economic loose cannon.

 

[fastpitch17]

Just be careful to read the fine print on some accounts with in your 401K prior to moving funds. Some have penalties based on time with them for removing funds.