Thoughts on investing for retirement...

[SaturdayGT 686]

   So to start,  I dont dabble much in my retirement. My company started a SAR/SEP fund for retirement years ago and I just basically let it do its thing. Now, they are moving it all into a Vanguard account to get rid of all the management fees and what not. With this move,  I am now in charge of managing my funds how I see fit, and since Im not on top of this stuff very well, Im trying to throw out feelers to get opinions to help make some decisions on what to do going forward . My boss, who is really involved in investing, recommends to stick with investing it in either  the S&P 500 ,  target retirement, or a combination of the two. He has made some valid points on why.  ...Another persons advice was to subtract your age from 100, use that number as a percent to put into something a little more high risk, but keep the other portion in something like the S&P 500. That way, you start off a little more risky, but the older you get, the less risk you take. ...Sounds like theres alot of schools of thought out there, so Id love to get some thoughts from others on it all.

[The Freak 2,156]

paging @abw0004

[abw0004 8,709]

2 hours ago, SaturdayGT said:

   So to start,  I dont dabble much in my retirement. My company started a SAR/SEP fund for retirement years ago and I just basically let it do its thing. Now, they are moving it all into a Vanguard account to get rid of all the management fees and what not. With this move,  I am now in charge of managing my funds how I see fit, and since Im not on top of this stuff very well, Im trying to throw out feelers to get opinions to help make some decisions on what to do going forward . My boss, who is really involved in investing, recommends to stick with investing it in either  the S&P 500 ,  target retirement, or a combination of the two. He has made some valid points on why.  ...Another persons advice was to subtract your age from 100, use that number as a percent to put into something a little more high risk, but keep the other portion in something like the S&P 500. That way, you start off a little more risky, but the older you get, the less risk you take. ...Sounds like theres alot of schools of thought out there, so Id love to get some thoughts from others on it all.

GT, let me get back to you on this.  There are a few thoughts I want to share with you but I lack the time today as I am preparing for a business trip to Savannah tomorrow to meet with a few clients.  If you do not hear from me by Friday morning just simply respond to this message so I see the notification.

[abw0004 8,709]

@SaturdayGT, I have a few moments before I leave so I wanted to throw out a few comments:

I am glad to hear you have contributed to your retirement plan.  You would be surprised how many people either do not contribute or pull money out of their retirement plans early and take the 10% penalty.

Companies like Vanguard and Fidelity do a great job of cutting costs and keeping things as cheap as possible for you.  I would feel comfortable with you being in their funds.  Target funds are good for people who want to allocate their money and forget about it until they retire.  It isn't as cut and dry though as the advice you have received.  For example, you and I could be retiring the same year, which means we would both be in the same retirement fund.  Most likely you and I have different risk tolerances, but the retirement fund has a set risk preference.  Retirement funds are trying to be a one-size-fits-all and people are all different.  I would recommend to be in a risk-based fund instead.

Personally, I would recommend you take a risk-tolerance quiz so you can see how much risk you are willing to take.  From there, I would recommend to invest you funds accordingly.  I would say an overriding factor can be how close you are in retirement or how far along you are in retirement.  Naturally, the closer you are, the more conservative you want to be.  I wouldn't want you be be all risk with one year to go until you retire and the market corrects itself like in 2008.

I would personally recommend to be in ETF's, or an "Exchange Traded Fund."  These offer diversity like a mutual fund, but are passively managed.  As in, with mutual funds, each fund has a manager that trades inside the fund, which is good but can be expensive.  I am comfortable with you in an ETF that tracks the S&P 500 if you are comfortable with the risk involved.

What I would say is to not buy single stocks.  Way too much risk.  If that company tanks, you are in trouble.  Each mutual fund or ETF has hundreds of stocks, so if one company tanks, your portfolio doesn't have as much of an effect.  This is the reason why people say to diversify.

One other thing, ignore the Robinhood news and the hype of using it.  That is one of the dumbest things I have ever seen.  You can't time the market, and paying a premium for a failing company like GameStop is a big waste of money.  Honestly, seeing all of the people complaining on Facebook for losing money on that basically outed themselves publicly that they have no idea how to invest.

Here is a thread I created back when COVID-19 first hit you might enjoy reading.  I hope all of this helps!

 

[SaturdayGT 686]

23 minutes ago, abw0004 said:

@SaturdayGT, I have a few moments before I leave so I wanted to throw out a few comments:

I am glad to hear you have contributed to your retirement plan.  You would be surprised how many people either do not contribute or pull money out of their retirement plans early and take the 10% penalty.

Companies like Vanguard and Fidelity do a great job of cutting costs and keeping things as cheap as possible for you.  I would feel comfortable with you being in their funds.  Target funds are good for people who want to allocate their money and forget about it until they retire.  It isn't as cut and dry though as the advice you have received.  For example, you and I could be retiring the same year, which means we would both be in the same retirement fund.  Most likely you and I have different risk tolerances, but the retirement fund has a set risk preference.  Retirement funds are trying to be a one-size-fits-all and people are all different.  I would recommend to be in a risk-based fund instead.

Personally, I would recommend you take a risk-tolerance quiz so you can see how much risk you are willing to take.  From there, I would recommend to invest you funds accordingly.  I would say an overriding factor can be how close you are in retirement or how far along you are in retirement.  Naturally, the closer you are, the more conservative you want to be.  I wouldn't want you be be all risk with one year to go until you retire and the market corrects itself like in 2008.

I would personally recommend to be in ETF's, or an "Exchange Traded Fund."  These offer diversity like a mutual fund, but are passively managed.  As in, with mutual funds, each fund has a manager that trades inside the fund, which is good but can be expensive.  I am comfortable with you in an ETF that tracks the S&P 500 if you are comfortable with the risk involved.

What I would say is to not buy single stocks.  Way too much risk.  If that company tanks, you are in trouble.  Each mutual fund or ETF has hundreds of stocks, so if one company tanks, your portfolio doesn't have as much of an effect.  This is the reason why people say to diversify.

One other thing, ignore the Robinhood news and the hype of using it.  That is one of the dumbest things I have ever seen.  You can't time the market, and paying a premium for a failing company like GameStop is a big waste of money.  Honestly, seeing all of the people complaining on Facebook for losing money on that basically outed themselves publicly that they have no idea how to invest.

Here is a thread I created back when COVID-19 first hit you might enjoy reading.  I hope all of this helps!

 

   Man I really appreciate all this! Lots of good info here!  ETFs are a new thing for me so ill have to look into those a little further.   Ive been more of let it set and forget it type throughout the history of the investment, it wasnt until recently that I started to really look at things.  ....So I have a full time job and a part time job. My full time job has accounted for the the vast majority of my retirement savings, which was in that managed fund. I started a 401K through my part time job and they have it all in Vanguard target 2035...looking at the performance between the 2, the target fund has taken off like a rocket compared to the managed fund, which was almost stagnant the last several years.   Im honestly a little...well very,  frustrated because I feel like I missed out on a lot of the market success, and I could be in a way better position if so much of my retirement was better managed.   I realize Ive got to be careful when I start to allocate, because Im tempted into putting it into something higher risk for the sole reason of trying to make up for what I could have gained!  So I know Ive got to be smart about it, but I am definitely leaning to try to be more aggressive.  Thats why that whole taking the  100 minus your age and using that as the percentage to invest in the riskier funds. Ill see if I cant find and take that risk tolerance quiz. Im sure theres one I can look up, but if you have one in particular you recommend, let me know!

[Mike4AU 1,308]

5 hours ago, SaturdayGT said:

   So I know Ive got to be smart about it, but I am definitely leaning to try to be more aggressive.  

Low cost index funds (Fidelity has some really good ones) would be a good way to invest and when you determine your risk tolerance, you could decide whether you want to invest in individual stocks.  If you decide that you want to buy individual stocks you should consider getting a subscription to Morningstar.  MS has a wealth of information.  Be advised that investing in individual stocks can be very rewarding, but it can also be very painful and very time consuming.  
 

Now that I am retired I do have the time to carefully look at stocks and make investment decisions.  I am a pretty aggressive investor (note the difference between a trader and an investor) and have had a lot of sleepless nights, as well as a bunch of nights with sweet dreams.  If you cannot handle the times when your stocks’ prices go down, and they will, just stay in low cost index funds. 
 

You might also enjoy reading Warren Buffett’s book, The Warren Buffett Way.  
 

Good luck!

Edited February 17, 2021 by Mike4AU
Typo

[Proud Tiger 4,261]

1 hour ago, abw0004 said:

@SaturdayGT, I have a few moments before I leave so I wanted to throw out a few comments:

I am glad to hear you have contributed to your retirement plan.  You would be surprised how many people either do not contribute or pull money out of their retirement plans early and take the 10% penalty.

Companies like Vanguard and Fidelity do a great job of cutting costs and keeping things as cheap as possible for you.  I would feel comfortable with you being in their funds.  Target funds are good for people who want to allocate their money and forget about it until they retire.  It isn't as cut and dry though as the advice you have received.  For example, you and I could be retiring the same year, which means we would both be in the same retirement fund.  Most likely you and I have different risk tolerances, but the retirement fund has a set risk preference.  Retirement funds are trying to be a one-size-fits-all and people are all different.  I would recommend to be in a risk-based fund instead.

Personally, I would recommend you take a risk-tolerance quiz so you can see how much risk you are willing to take.  From there, I would recommend to invest you funds accordingly.  I would say an overriding factor can be how close you are in retirement or how far along you are in retirement.  Naturally, the closer you are, the more conservative you want to be.  I wouldn't want you be be all risk with one year to go until you retire and the market corrects itself like in 2008.

I would personally recommend to be in ETF's, or an "Exchange Traded Fund."  These offer diversity like a mutual fund, but are passively managed.  As in, with mutual funds, each fund has a manager that trades inside the fund, which is good but can be expensive.  I am comfortable with you in an ETF that tracks the S&P 500 if you are comfortable with the risk involved.

What I would say is to not buy single stocks.  Way too much risk.  If that company tanks, you are in trouble.  Each mutual fund or ETF has hundreds of stocks, so if one company tanks, your portfolio doesn't have as much of an effect.  This is the reason why people say to diversify.

One other thing, ignore the Robinhood news and the hype of using it.  That is one of the dumbest things I have ever seen.  You can't time the market, and paying a premium for a failing company like GameStop is a big waste of money.  Honestly, seeing all of the people complaining on Facebook for losing money on that basically outed themselves publicly that they have no idea how to invest.

Here is a thread I created back when COVID-19 first hit you might enjoy reading.  I hope all of this helps!

 

How do you feel about gold or silver "stocks" like GLD or  SLV?

[abw0004 8,709]

11 hours ago, SaturdayGT said:

   Man I really appreciate all this! Lots of good info here!  ETFs are a new thing for me so ill have to look into those a little further.   Ive been more of let it set and forget it type throughout the history of the investment, it wasnt until recently that I started to really look at things.  ....So I have a full time job and a part time job. My full time job has accounted for the the vast majority of my retirement savings, which was in that managed fund. I started a 401K through my part time job and they have it all in Vanguard target 2035...looking at the performance between the 2, the target fund has taken off like a rocket compared to the managed fund, which was almost stagnant the last several years.   Im honestly a little...well very,  frustrated because I feel like I missed out on a lot of the market success, and I could be in a way better position if so much of my retirement was better managed.   I realize Ive got to be careful when I start to allocate, because Im tempted into putting it into something higher risk for the sole reason of trying to make up for what I could have gained!  So I know Ive got to be smart about it, but I am definitely leaning to try to be more aggressive.  Thats why that whole taking the  100 minus your age and using that as the percentage to invest in the riskier funds. Ill see if I cant find and take that risk tolerance quiz. Im sure theres one I can look up, but if you have one in particular you recommend, let me know!

We use Riskalyze for all of our clients to find their risk profile.

In regard to which fund is performing better, I wouldn’t necessarily compare that.  One fund may be more conservative than the other.  On the flip side, if the market is doing poorly, if your target date fund doing worse than the managed fund?  The best thing to compare is the fees.  The best thing someone can control are the fees, you can’t control the market.

[abw0004 8,709]

10 hours ago, Proud Tiger said:

How do you feel about gold or silver "stocks" like GLD or  SLV?

They will always be a steady force, but I wouldn’t be all in on those stocks.  Never invest everything you have in one company or one sector. 

[SaturdayGT 686]

I've been hearing advice to move funds to a cash reserve type  fund until the Russia/ Ukraine issue is resolved...Im also hearing moves like this usually end up being mistakes. How is everyone looking at this current situation?

[fredst 8,434]

@abw0004 gives excellent advice and I would second everything that he has said. I would offer an alternative strategy summarized below:

 

For reference: abw0004>fredst

Edited February 16 by fredst

[SaltyTiger 5,672]

Don’t retire if the long haul wife is at home!!! Loved my work and did a four year slow withdrawal. Retirement means learning to vacuum and washing your own breakfast dishes. 

[The Freak 2,156]

13 minutes ago, SaltyTiger said:

Retirement means learning to vacuum and washing your own breakfast dishes. 

[abw0004 8,709]

13 hours ago, SaturdayGT said:

I've been hearing advice to move funds to a cash reserve type  fund until the Russia/ Ukraine issue is resolved...Im also hearing moves like this usually end up being mistakes. How is everyone looking at this current situation?

That move would be a mistake if you put everything into cash.  No one can correctly time the market, and people who try end up making the wrong moves.  Is this in a retirement account or advisory/brokerage account?  If it is an advisory/brokerage account, liquidating your account into cash and then reinvesting it will give you unnecessary charges.  For example, most funds charge $25.50 to invest into their fund.  Multiply that by how many funds you are invested in and that can be expensive.

Actually the best time to invest is when the market is doing poorly. For example, in 2008 when everyone was rushing to pull their money out (horrible move), you should be rushing to put more money in.  Since 2008, the bulk of the upswing in the market to what it is today was over the course of 3 days.  So out of the last 14 years, if you missed those three days, your portfolio is way behind.

It sounds like you may be sensitive to market fluctuations.  If that is correct, I would suggest to invest in more conservative funds that can stomach the downturns better.  There is less upside when the market is doing better, but less heartburn if you are conservative.

The best way to think about it is, "When there is blood in the streets... BUY, BUY, BUY."

If it also makes you feel better, in our firm, we have four advisors (including myself) and are on track to reach $1 billion in assets under management within four years ($700 million currently).  We have not moved a single dollar into cash because of the market fears.

[Mike4AU 1,308]

Great advice ABW!

When the market goes red, like it will because of the Russian crap, follow the advice of Warren Buffett and go buy you an ice cream cone to take your mind off the market.  I am heavily invested in stocks, but under no circumstances do I try to time the market.  I usually keep some spare cash on hand to buy on the dip. 

[abw0004 8,709]

On 2/15/2022 at 6:53 PM, SaturdayGT said:

 

...Buy, buy, buy...

[SaltyTiger 5,672]

19 hours ago, abw0004 said:

...Buy, buy, buy...

Thanks, last few weeks required an extra afternoon beer or so here.

[augolf1716 17,088]

57 minutes ago, SaltyTiger said:

Thanks, last few weeks required an extra afternoon beer or so here.

Yes it has.....

[kevon67 2,299]

On 2/15/2022 at 8:13 PM, SaltyTiger said:

Don’t retire if the long haul wife is at home!!! Loved my work and did a four year slow withdrawal. Retirement means learning to vacuum and washing your own breakfast dishes. 

I totally skipped that...........hand delivered meals by the wife😆

 

[abw0004 8,709]

Here is a piece I sent out to a few clients of mine.

[augolf1716 17,088]

5 hours ago, abw0004 said:

Here is a piece I sent out to a few clients of mine.

Totally agree abw I've been with the same wealth management firm for over 30 years. One of the best things I ever did. https://www.sprakerwest.com/

[SaltyTiger 5,672]

@abw0004. Any encouraging words, rough lately.

[abw0004 8,709]

I was actually thinking about this thread this week.  Here are a few more pieces of literature I might suggest those who are worried about today's market to read.  These come from DFA (Dimensional Fund Advisors).  It is probably the largest fund family you have never heard of as they do not spend money on marketing and you have to be approved by them to work and purchase their funds (I am one of those).

Let me know if you have trouble opening or reading them.  I am happy to email them to you as well.

 

Bulls, Bears and Long Term Benefits of Stock Investing (DFA).pdf Rewarding Distribution of Stock Market Returns (DFA).pdf Do Downturns Lead to Down Years (DFA).pdf Stock Gains After Large Declines (DFA).pdf

Edited May 20 by abw0004

[Mike4AU 1,308]

Abwooo4, I can’t open the attachments on my IPad. 

Edited May 21 by Mike4AU

[Cardin Drake 917]

If the Fed is really going to keep raising interest rates like they say they are, this is going to keep getting uglier.  Hard to know if they will stick to it as the economy tanks.