Should I cash in my retirement account and pay the penalty?

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Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1893
Got My Mind On My Money, And My Money On My Mind

Ao

I sold ARR for a small profit (if one also counts dividends) a while back. Decided it wasn't really worth the risk and it was only a small stake anyway.

As for NRP, not yet, AO. But I've been thinking about it  I'm still in a positive position, if dividends are included. It's also a small stake.

GTU and other holdings have done okay. My real losses the past year have been in money market funds (due solely to inflation).

But as consolation, I appreciate you keeping me and my investments in your thoughts, Ao :-)

Poet

ao wrote:
ao wrote:
Poet wrote:

Right now Natural Resource Partners (NRP), which leases coal reserves to mining companies for royalties, is delivering an 8% annual dividend  (price around $26.70). They've raised their dividends steadily from $0.465 per quarter to $0.55 per quarter now. The stock price has gone down a few percentage points recently, as the price of metallurgical coal has gone down - or maybe because Jim Cramer recently said to sell all coal companies.

If you want more risk, look at Armour Residential REIT (ARR), which plays the mortgage securities game. It delivers around $0.12 per month and currently sells for $7.07, so the annual return is north of 18% - assuming it can sustain that kind of payout (it's been dropping lately).

Do your own due diligence, of course. I am not an investment advisor nor financial advisor.

Poet

Doug wrote:

Tell me where to get this kind of return reliably, and I'll dump a bunch of money in there in a hurry.

Poet,

Sometimes I wonder how much your recommendations come from a place of experience and practical knowledge as opposed to just theorizing.  We're talking about peoples' life savings here so it's very important to be cautious about what we recommend.  Do you understand why certain investments pay the high dividends they do and is that a risk you really think is wise?  Rather than just considering the absolute value of a dividend, as referenced in a recent edition of Investment Advisor I would look at future streams of cash flow available to shareholders (CFATS) to determine the real value of a business and its prospects as an investment.  Such a business might be AmBev (ABV).  The dividend yield is lower at 4.40% but the capital appreciation is much greater and more consistent, it's not as thinly traded, etc., etc.  The numbers in general are much more favorable.  While there's no absolute certainty in predicting the future of any investment, there is a lot more to consider than just the dividend yield.  Plus, Doug is at the opposite end of the financial life cycle from you.  I realize you're just trying to be helpful and I think Doug is savvy enough to know what is and isn't a good investment but someone else with less knowledge and experience might take your post at face value, due diligence warning notwithstanding.

Poet,

Here's why I made the comments I made.

http://finance.yahoo.com/echarts?s=ABV+Interactive#chart5:symbol=abv;range=3m;compare=nrp+arr;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

juice's picture
juice
Status: Member (Offline)
Joined: Mar 20 2012
Posts: 6
 I am firmly in the camp

 I am firmly in the camp that self directed retirement is the way to go.  I have been self directed since 2008 and love it. Here's why.

1.  I have direct possession of my money and investments.

2.  I have direct control of my money and investments.

3.  If the government decides to confiscate/nationalize, no custodian is going to surrender my money on my behalf.  I will have an option to surrender my own money or I can take a distribution at that time and keep 60% to 70% after tax & penalty instead of keeping none.

4.  I am invested in assets that will outpace inflation.  I have enjoyed a 24% annual return since 2008.

5.  I can invest in and hold in my possession, precious metals without paying penalty and taxes.

My opinion is that ROTH may not be a good option.  The basic deal is that you pay taxes now and none later.  But meanwhile, the government tracks your value.  What if they decide not to keep the ROTH promise?  you know they have a history of breaking promises like this (only gold/silver as money;  no federal income tax;  paper dollar redeemable for gold;  etc).  what makes you think they will keep the ROTH promise?

Heres a link where you can get good info on self directed retirement   www.401kliberty.com

 

    

 

 

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