Thoughts on investing for retirement...

[SaltyTiger 7,790]

On 5/20/2022 at 7:27 AM, abw0004 said:

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).pdfUnavailable Rewarding Distribution of Stock Market Returns (DFA).pdfUnavailable Do Downturns Lead to Down Years (DFA).pdfUnavailable Stock Gains After Large Declines (DFA).pdfUnavailable

Can’t open but thanks for effort. Think I have similar material from Valmark

Edited May 21, 2022 by SaltyTiger

[abw0004 10,110]

14 hours ago, Mike4AU said:

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

Try opening it on your computer or laptop.  I was able to open it on my MacBook Pro as well as my Windows computer at work.  If not, I will try to find another way to post.

[Mike4AU 1,739]

2 hours ago, abw0004 said:

Try opening it on your computer or laptop.  I was able to open it on my MacBook Pro as well as my Windows computer at work.  If not, I will try to find another way to post.

Still cannot open (on laptop) and attachments are showing Unavailable even before trying to open.

[abw0004 10,110]

38 minutes ago, Mike4AU said:

Still cannot open (on laptop) and attachments are showing Unavailable even before trying to open.

Okay let me try another option on Monday when I return to the office

[SaltyTiger 7,790]

On 5/21/2022 at 1:30 PM, abw0004 said:

Okay let me try another option on Monday when I return to the office

We really just wanted you to say all will be fine

Edited May 23, 2022 by SaltyTiger

[augolf1716 21,109]

9 hours ago, SaltyTiger said:

We really just wanted you to say all will be fine

Eventually it will.....key word eventually

[abw0004 10,110]

9 hours ago, SaltyTiger said:

We really just wanted you to say all will be fine

Well I am a visual person, so if I can show you visuals of why it will be fine and historically why it will be fine I think you will feel better.  Stand by for my next post...

Edited May 23, 2022 by abw0004

[abw0004 10,110]

Each of these are worth reading.  The market has desperately needed a correction for many years now.  But a correction can be a good thing for investing.

[augolf1716 21,109]

My FA sent this out a few days ago. Thought I would share I've been with them for over 25 years done very well

 

Dear Clients,

 

A confluence of factors have all hit at once: elevated inflation, a war in Europe, renewed COVID lockdowns in China, and a tighter Fed. This unusual combination of negative factors has caused a steady selloff in everything but commodities. As we have been predicting for over a year, a long-overdue market selloff has occurred. Since January 1, 2022, the S&P 500 has fallen almost 20%; the tech-heavy Nasdaq is down almost 30%. Even bonds, which usually go up when stocks go down, have dropped 10% or more. This bear market (decline of 20% or more) is not unusual after years of stock price appreciation. Since 1928, there have been 26 bear markets in the S&P 500, or one about every 3-4 years.

 

The slowing economy we are now experiencing is part of a normal economic cycle, and bear markets often accompany a slowing economy. There has been quite a bit of recent headline coverage of the slowdown leading to a recession (2 quarters of negative economic growth). Even though the risk of a recession has risen in the U.S., we believe the risk of one is small this year and even in early 2023. There are five important factors that give us reason to believe that a U.S. recession is not on the near-term horizon, and I will discuss each of them in our July Commentary. 

 

At the beginning of the year, we adjusted the portfolios (see SWWM Commentary, April 2022 for more details) for this slowing growth and higher inflationary environment. Additionally, to prepare you to withstand any major correction, we have emphatically advised all clients for the past three years in January to alert us of any portfolio cash needs for the next 6-12 months. The success of this has allowed us to avoid forced selling in the downturns. Fortuitously, this past January, we were selling to send cash when markets were near all-time highs.

 

[Proud Tiger 4,261]

[SaltyTiger 7,790]

@abw0004 any encouraging words?

[abw0004 10,110]

9 minutes ago, SaltyTiger said:

@abw0004 any encouraging words?

Right now we are in a holding pattern to see where this is going.  No new money is being invested that this moment from our firm.  If we do, we are investing half now and waiting to invest the other half.

[SaltyTiger 7,790]

@abw0004 Thoughts on I bonds. Just somewhat educated recently. Sounds good for now if anyone has a little they want to something with.

[abw0004 10,110]

23 minutes ago, SaltyTiger said:

@abw0004 Thoughts on I bonds. Just somewhat educated recently. Sounds good for now if anyone has a little they want to something with.

It all depends on your risk tolerance.  I would highly suggest taking a risk-tolerance quiz to see where you stand.  Bonds for for people who cannot stomach any risk, which may be you.  I have no idea.  I could not make any recommendations really without knowing where you stand.

[SaltyTiger 7,790]

1 hour ago, abw0004 said:

It all depends on your risk tolerance.  I would highly suggest taking a risk-tolerance quiz to see where you stand.  Bonds for for people who cannot stomach any risk, which may be you.  I have no idea.  I could not make any recommendations really without knowing where you stand.

Current rate @ 9.62%.  I would think you would be all for putting max allowed in them right now.

[keywest 138]

On 2/16/2021 at 1:43 PM, 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.

When I graduated from AU, I knew I would always make a very comfortable living with my technical degree but I wanted to learn how to build wealth. I spent every chance I got over the next 3+ year span with a much older AU alum that is extremely wealthy, self-made in every sector of business possible but his real passion was the markets. I got a free and very valuable education in the markets that allowed me to retire at the age of 52, the key to it is education! Selectively buy as much as possible as you go through life and don't sell unless a company gives you a reason. I started young and didn't need to take risk, another great nugget of advise he left with me.

Today I bought MO (great yield and stock appreciation that will put me in double-digit gains).  

[aubearcat 2,137]

On 9/23/2022 at 1:06 PM, abw0004 said:

Right now we are in a holding pattern to see where this is going.  No new money is being invested that this moment from our firm.  If we do, we are investing half now and waiting to invest the other half.

I have most of my investment account tied up in tech stocks and of course the NASDAQ is 📈. It’s on auto draft each paycheck so I’m hoping when the economy rebounds, I’ll make bank. I still have just about 9 years before I reach full pension potential so I have a little more tolerance than someone closer to retirement. 

Edited October 1, 2022 by aubearcat

[Cardin Drake 1,825]

Bonds aren't necessarily low-risk.  Rising rates can and will crush the principal.  Bond funds mitigate the default risk, but not the interest rate risk.  It's a cliche, but don't fight the Fed. As long as rates are rising, stocks and bonds will decline.  The Fed says they will raise rates another 1 to 1.5 %.  If you believe them, the buying opportunity for stocks and bonds looks to be Q1.  Can you believe them; that's the question.   If you just want to protect your capital, you finally have some interesting options. 10 year TIPS are now paying 1.25% plus the inflation rate. That seems like a good hedge to me.

[SaltyTiger 7,790]

8 hours ago, Cardin Drake said:

Bonds aren't necessarily low-risk.  Rising rates can and will crush the principal.  Bond funds mitigate the default risk, but not the interest rate risk.  It's a cliche, but don't fight the Fed. As long as rates are rising, stocks and bonds will decline.  The Fed says they will raise rates another 1 to 1.5 %.  If you believe them, the buying opportunity for stocks and bonds looks to be Q1.  Can you believe them; that's the question.   If you just want to protect your capital, you finally have some interesting options. 10 year TIPS are now paying 1.25% plus the inflation rate. That seems like a good hedge to me.

Thus my question about I Bonds. Seems good at this time. Limit on max but why not use it.

[abw0004 10,110]

10 hours ago, aubearcat said:

I have most of my investment account tied up in tech stocks and of course the NASDAQ is 📈. It’s on auto draft each paycheck so I’m hoping when the economy rebounds, I’ll make bank. I still have just about 9 years before I reach full pension potential so I have a little more tolerance than someone closer to retirement. 

That is a lot of risk to be only in one sector of the economy.  I would diversify if I were you.  If you are into tech, I would look into energy as well.  

[abw0004 10,110]

9 hours ago, Cardin Drake said:

Bonds aren't necessarily low-risk.  Rising rates can and will crush the principal.  Bond funds mitigate the default risk, but not the interest rate risk.  It's a cliche, but don't fight the Fed. As long as rates are rising, stocks and bonds will decline.  The Fed says they will raise rates another 1 to 1.5 %.  If you believe them, the buying opportunity for stocks and bonds looks to be Q1.  Can you believe them; that's the question.   If you just want to protect your capital, you finally have some interesting options. 10 year TIPS are now paying 1.25% plus the inflation rate. That seems like a good hedge to me.

Yes and no.  There are different classes of bonds that you would need to look at.  Stocks and bonds have an inverse relationship, though you are correct on the interest rate (and inflation for that matter).

I do believe the Fed will continue to try to curb the potential for a Recession, but truthfully we need a correction.  You can only hold that off for so long and that is not necessarily a bad thing.  

[abw0004 10,110]

30 minutes ago, SaltyTiger said:

Thus my question about I Bonds. Seems good at this time. Limit on max but why not use it.

Are you looking to liquidate your investment portfolio to go into bonds or is this new money?  Also, do you have an investment advisor helping you, or are you on your own?  You really don’t want to overweight your portfolio with bonds, unless that is in accordance with your risk tolerance.

Just remember, you cannot time the market.  So what I would suggest if you are making this move is to dollar-cost average your intention over a certain period of time.  

Edited October 1, 2022 by abw0004

[SaltyTiger 7,790]

1 minute ago, abw0004 said:

Are you looking to liquidate your investment portfolio to go into bonds or is this new money?

Not liquidating anything. Just thought they may be good option on some available cash at this time. Limited to 10,000/year. Sounds great to me and wanted any negatives from you.

[abw0004 10,110]

6 minutes ago, SaltyTiger said:

Not liquidating anything. Just thought they may be good option on some available cash at this time. Limited to 10,000/year. Sounds great to me and wanted any negatives from you.

There are too many unknown variables for me to say, which is the issue.  I would need to know your risk tolerance as well as the rest of what comprises your portfolio.  Because what you may be doing is overweighting what you have.  I simply just do not know.  It’s like asking me to call plays for LSU today without knowing who is on the team and their strengths/weaknesses.

Have you done a risk profile before?  If not, I would be happy to email you a quiz to take.  It wouldn’t cost you anything.  If so, just shoot me a PM.

Edited October 1, 2022 by abw0004

[Cardin Drake 1,825]

1 hour ago, SaltyTiger said:

Not liquidating anything. Just thought they may be good option on some available cash at this time. Limited to 10,000/year. Sounds great to me and wanted any negatives from you.

TIPS aren't limited. Buy as much as you want, and the 10 year is paying more than the inflation rate.  The only advantage to ibonds now is you can redeem them for face after 5 years if you wish with no penalty. If you sell a TIPS bond before it matures, you will get market value, which could be good or bad. 

abw004, bonds and stocks both tend to go up with lower interest rates, and down with higher rates.  It's not really an inverse relationship.