There’s a much better argument for “not driving a $40,000 vehicle if you want to become wealthy.” I’m pretty sure everyone agrees with that. That’s not, “pay off your 2% car loan if you can.”
The precursor to me actually investing officially has a plan now. You all should be proud of me, I'll be debt free (besides student loans, that's forever) by April 2021. And then I'll be in the market for a house and get a mortgage later that year probably.
Not sure if it’s been mentioned or not but to get an HSA you need to be on a high deductible healthcare plan.
How do I judge the relative performance of my 401k? I have auto-rebalancing and the following distribution, just have no idea how to know whether I’m getting the most out of it. Spoiler
What is the Balanced fund? Is it a blend of large, mid, and small cap? Or is it bonds? If it's bonds, the ratios seem roughly standard.
I would say you are fine if you are happy with that bond ratio. For people in their 30's 10-20% is fine.
Do you have a list of the actual funds being used as well as their expense ratios? That would be helpful. Some 401ks have ridiculous ERs that you need to avoid. Overall those percentages are solid, just depends on whether you’re in the best individual funds available from your plan.
I've never understood this philosophy. Why be in 10-20% bonds when you aren't retiring for another 20-30 years if Bricks like most Americans? Just seems like someone his age should be in stocks until you are lets say within 10 years. Maybe someones got a good point I haven't thought of.
Anything above 10% for someone that age seems excessive. Personally, I have 5% in bonds. I turn 30 in a few months.
The main point would be for moving them into stocks during down turns. Once stocks rebound, you would rebalance back into bonds to wait for the next time. It also just depends on each person's risk aversion. These numbers aren't exact, but I think 100% stocks would return 10.8%, and 75/25 would return around 8.8%. But in drops, the losses for the one with bonds would be less. Rebalancing allows for one to take advantage of the changes in value. I'm at 5%, but also have a cash balance plan that pays 6% of salary and minimum 4% interest, so I count that as bonds also.
Ah okay, I like that point. Depends on the person I'd guess cause I'd bet most Americans wouldn't think to move their bonds into stocks during a down turn.
It’s easy to say that when most if not all of us weren’t investing in 2008. Handling a huge market downturn is very difficult psychologically. When your retirement nest egg drops 50% because you’re 100% stocks, people tend to not handle it well. And the long term difference between 95/5 and 85/15 is fairly negligible. It isn’t going to make some significant difference when you retire.
Yeah. I've found this site to be a good source, though I am admittedly more aggressive than industry experts recommend. https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit
This too. On the Boglehead website, there are several good threads where people who were in mid career then posted what it was like. It's a good driver for not being too used to this record bull market.
All good info. When I think about the risk I have in my other investment vehicles (rental properties, Roth IRA, and my Robinhood holdings), it seems to make sense that I’m more conservative in my 401k positions.
Yea but stating the difference between 95/5 and 85/15 is fairly negligible also means that when the stock market tanks 50% people will still feel shitty at 85/15 as they would 100%. I like Dozers point of being able to take advantage of a downturn via bonds but it is true you miss out on some % gain, just figure out what situation is right for you. Using 2008 is an extreme outlier in the grand scheme of market downturns, not saying it wont happen again but its a rarer form of correction.
Additionally it is better to have your lower interest rate funds, such as bonds, in pretax and let the bigger growers be in Roth.
For example, I moved bonds into stocks in December and the rebalance in April to take advantage of the drop then.
My company match is standard but my contributions are Roth. Are you suggesting I can control which source goes to each asset class? If so, that’s pretty cool.
What was your performance difference compared to S&P out of curiousity? Yea those are really interesting reads, maybe I just have a different mindset on my 401k accounts. It seems so far off that I figure if the market doesn't rebound over 10 years then I'll probably have bigger problems than that and being in bonds 15% wouldn't have made much of a difference if the market didn't bounce back anyways.
Depends on the 401k provider. Some will let you do it, but you probably have to call them and can't do it through the website.
True on 2008, but 2000-2002 showed three straight years of market drops of roughly 10, 10, and 20% consecutively. To me, that’s almost more nerve-wracking than 2008.
https://www.portfoliovisualizer.com/backtest-asset-class-allocation Here’s a cool tool where you can backtest different asset allocations based on historical records. Disclaimer: historical trends do not apply to the future, I know. But it’s still interesting to play with different stock/bond ratios and timelines to see the effect.
I can't pull the exact numbers right now, but I moved my fixed income funds, which was at around 4% in late December into my S&P fund, which is essentially FXIAX. Before the drop in November, S&P was basically equal to where it was at the start of 2018. It was up about 16% on the year in April.
I'm not a boglehead, I just like the site for the information. I play with 5-10% of my 401k in triple levered ETFs.
Those of us in our 30’s should look forward to a correction because that’s the time to make the most from your money long term. My strategy is 100% in the market until I hit 40 (8 more years) then allocate 10% to bonds for that decade followed by 20% in my 50s and so on
Check the fees associated with each fund you’re in. The balanced pooled option through my 401A has 8x the fee of vanguard admiral fund. Admiral had twice the return over the last 5 years too.
Bought a bunch of July PAAS $12 calls and sold them for a wonderful 65% profit. They’d be up over 200% today
He realized a 65% return. I don't see the problem. Shit could have just as randomly went down 200%. Secure the gains.
S&P ended the first half of the year up 17%, best first half since 1997. Hopefully it will continue with the news of the trade war with China slackening.
https://qz.com/1655309/beyond-meat-needs-to-communicate-how-it-makes-its-plant-based-burger/ Is this a concern for you BYND holders?
When did you buy it? Seems it tends to reach a near high followed by a reasonable pullback before charging again.
Up 38% since 12/24/18 in my 401k. Etrade account down 8.5% over the same period. Vanguard is worth their fees.