I’m 51.... IRA has really done well... 80% Mutual Funds 20% Bonds.... getting a little nervous.... should I move it all to Bonds and TBills or keep riding the Trump Bump?
OT.... when do I move it all to Bonds or TBills?
- Thread starter Leeshouldveflanked
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Y'all can bury me with my VTSAX. It will take 6 feet of dirt to make me move my money from index funds.
Ride that Trump train for awhile longer. Good chance we break out higher in the next week or 2. If it breaks I see another 20% gain in S&P
A little thread hijack, but Forest reminded me of a conversation I had with a friend last week...
I have a buddy of mine that I worked with in the commodities market that is now a pretty successful FA and he is arguing with me that he can beat my index funds. I told him I would give him half of my old 401k to invest in his best actively managed funds. I will leave the other half in my grandfathered Vanguard S&P 500 fund with an expense ratio of .01%. In 10 years if his fund is ahead, I will give him every dime of mine and the wife's to manage .. if my index is ahead he or his brokerage would make up the difference and return my funds. He declined, said the risk/reward was too high. I agreed and he was stumped.
I see index funds as the happy medium. Some percentage of active funds will beat the market over a given period of time and others will underperform. The whole market will always be the benchmark and I win by being 100% in and not getting drug down by bonds killing my growth. I may consider bonds if and when I can no longer work and I am not eligible for social security. Until then, put me in a mass grave with Forestdepth and our index funds.
To the OP, talk to CFP that charges hourly if you want an unbiased breakdown of your situation. He will make the same if you buy crapload of bonds, ETFs, or collectable dolls.
And this is exactly why index funds are such a good investment. The expense ratio is virtually 0%. Sure there are some funds and investments that will beat them over time. But most of them won't. And even the ones that do won't beat them by much.
Keyser has a point... Everyone laughs at silver until a werewolf needs to be put down. Might get a few bushels of garlic while you are at it.
When you say 80% mutual funds do you mean all that is in equities? Or is some of those in balanced funds? If you are truly 80/20 overall, that would be too aggressive for my taste. But I'm conservative by nature. I like the 100 rule which would put you in a 50/50 stocks bonds AA for your age. I'm not much of a market timer either btw. I rebalance every year to my desired AA and ride it out until next year. May not buy high and sell low perfectly but it takes the emotion out of the equation.
For what it worth, I am and plan on being in about 95 percent equities for life. I am also almost exclusively in dividend aristocrats so the plan is to live off of the income so market fluctuations aren’t a factor.
One of of the easiest ways to invest close to retirement is to go with a target retirement fund. They will automatically begin to make your assets more conservative as you approach retirement. If you would prefer to keep a little more risk in you portfolio, just select a fund with a date 5 years or beyond when you actually want to retire to keep the mix somewhat more agressive longer.
One of of the easiest ways to invest close to retirement is to go with a target retirement fund. They will automatically begin to make your assets more conservative as you approach retirement. If you would prefer to keep a little more risk in you portfolio, just select a fund with a date 5 years or beyond when you actually want to retire to keep the mix somewhat more agressive longer.
With a question like this, you need to call an advisor. It'll do you some good. The answer to your questions is NEVER and you are way too young to get that conservative. Ask a friend for a sit down with someone they trust. It shouldn't be with someone who works at an Insurance company either.
Schwab has a newish service called Schwab Intelligent Advisory and it's very low cost and you get a mix of robo and a real adviser. They focus on the long term planning aspect as well as portfolio management. You should talk to someone being that your 51 years old and you've done well for yourself and some major decisions are on the horizon.
Schwab has a newish service called Schwab Intelligent Advisory and it's very low cost and you get a mix of robo and a real adviser. They focus on the long term planning aspect as well as portfolio management. You should talk to someone being that your 51 years old and you've done well for yourself and some major decisions are on the horizon.
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I like index funds, but the lack of real volatility for an extended period of time the past 10 years has a lot of folks complacent and a false sense of stability. I just wonder how folks will react if the market does go through a period of real volatility.
Good question. Because the market WILL go down. And it will go up. I lost 25% in the last big downturn (and I did good, many lost in the 30%-40% range). That's not real easy to take.
You are not wrong. If you are going to buy and hold index funds, you better have iron conviction. When your portfolio takes a 30% hit, you cannot decide you now want active management/downside protection. If you do that, you take all the negative of index investing and miss most of the positives of active management.
This is the reason I think index investing is not for most people. I don't let my wife do it with her 401k, she looses her mind when there's a negative return for a quarter.
Let me add that you should always remain diversified, never go all in to one or
two asset classes and never put more than 3-5% in any one position. Also consider putting some of your wealth outside the markets with real estate investments.
A barbell approach is not a bad way to go where you put 30% in higher risk, high yield type investments, 30% in very safe 1 to 2% investments and 40% in the middle trying to return around 4%. The goal here is about 6% return for older folks without a bunch of volatility.
Good luck, one size does not fit all.
two asset classes and never put more than 3-5% in any one position. Also consider putting some of your wealth outside the markets with real estate investments.
A barbell approach is not a bad way to go where you put 30% in higher risk, high yield type investments, 30% in very safe 1 to 2% investments and 40% in the middle trying to return around 4%. The goal here is about 6% return for older folks without a bunch of volatility.
Good luck, one size does not fit all.
Just depends on how old you are. If you are within 5 years of retirement, yea, that's probably pretty distressing. If you are planning on working for the next ten years, a 30% drop should be a lot easier to stomach. Really, if you're ten years out from retirement and in peak earnings year, your biggest risk right now is probably continued moderate growth keeping the CAPE up around 30 before coming back closer to the historical average shortly before your ready to retire. So if you're say 50 and not worried it will cost you your job, you should probably want a 20-30% correction so that you don't spend the next ten years buying stocks at historical highs before you retire.
If it weren't for elderly relatives that would be harmed, I would welcome a 30% decline. Not a huge fan of pumping money into the market with a CAPE of 30 or higher, but basically everything seems to be bubbly. Local real estate certainly is and bond yield is expensive, so I'm just putting money into the stock market knowing that my returns are likely going to be well below the historical average, and if there isn't a significant correction, I'm going to get historically bad lifetime weighted average returns because I had so little to invest when the market was more reasonably priced.
If you're not planning on retiring early, you are probably too young too worry about it. The market is historically expensive, but that doesn't mean that it won't chug along with moderate growth for the next four or five years. When you get to within five years of retirement, I would definitely start building up an equity glide path.
That said, if you don't need the extra growth, you can move enough into bonds now to meet your low equity allocation on the equity glide path. That would be historically inefficient, but if you don't need the growth and it makes you sleep better, there wouldn't be anything wrong with it.
But if you're in a position where you don't need the growth, then you might be in a position where a big correction wouldn't hurt you anyway. I would look at whether moderate growth would get to say a 2.75% or 3% withdrawal rate by your target retirement age. IF so, even if CAPE ratios stay historically high, you would have such a low withdrawal rate that you could stomach some pretty awful sequence of returns. Conversely, if we don't see moderate growth but instead have a big correction, you might end up with less money than you would with moderate growth, but with stocks more reasonably priced, the worst sequence of return risks would be eliminated, and a higher withdrawal rate would still be safe.
Been 15 hours. He dead.
Drebin is going to have to come up with a new SPS Magazine feature to replace engie explains.
It's not just going down though. It's the rapid nature of the up down moves over a prolonged period of time in a down trend. Liquidity is not what it used to be with the Fed ending QE. The other banks around the world haven't really started to tighten yet. Liquidity is becoming tighter and the fed is unloading trillions of dollars off their balance sheet, something that's never been done before. Other central banks will eventually do the same thing. When the central banks make huge financial institutions buy the bonds on their balance sheets, what does that do?
If there's a lack of liquidity and a lot of folks head to the exits at once, what happens then?
I'm not calling for a huge shock anytime soon, but this is a huge risk that hardly anyone owning ETFs knows about.
What you say is correct. Unfortunately classic market psychology comes into play almost every time there's an issue. Herd mentality will never die lol.
Are you making regular contributions? I'm the same age and have similar "oh ****" feelings about the market turning and losing a lot of the gains I've made from my index funds. On the other hand, a lot of that gain is because I was hitting my earnings stride and my monthly contributions through the 07-08 years were buying shares cheap when things tanked. I've kicked around the idea of locking in some gains now with bonds/real estate while keeping new contributions focused mostly on broad index funds to take advantage of cost averaging when the market tanks. Tough call to me anyway.
I'm almost 100% in stocks for my self managed investments. I've got my 401K and other funds in mutual funds that have a bond factor. I realize that's heavy given that I'm 50+, but I feel like I pay attention enough to place triggers and sell when appropriate. It's paid off too. Bonds and Tbills haven't paid **** for nearly a decade.
Maybe Drebin can replace Peepin Crxxms with a Tiny Engie Intense Cohen Avatar instead? **
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