PBS Frontline : The Retirement Gamble, sorta Must See (3 Viewers)

[Redwes25]

Agree w Dentite. You need to decide on an equity / bond split. Age in Bonds is an oft used rule of thumb, as a starting point.

I know they always say that, but more and more I'm seeing people say that's probably too conservative, especially given that we are working and living longer now that the stock market just hit all time highs and the bond market is languishing a bit.

Fixed the above for you.

Everything will come around...it always does. And when it does, people will be beating the drum about how of course you need age in bonds.

FWIW I do roughly Age in Bonds - 5

Think the bond market is in a much more dangerous place. There is really no way for it to go up much higher as i just don't see yield on 10 year going below 1.50% so don't see much if any upside. On the downside there are some real risks becuase of classic inflation risk and current prices are supported by fed buying. While you have downside risk on stocks you still have upside potential I just don't see in bonds.

Corporates and High Yields are not a place I would park my money either as upside just isn't there either.

 

[Fruitbat]

So I've got my TDAmeritrade account....linked to my bank....cash transfer in process. Plan is to seed the account with a lump transfer, then keep throwing in a little more each month on a scheduled basis.

But, I'm looking at the buy options....and I can only buy full shares of each fund. is this normal? How am I supposed to set up, for example, put $100 in fund A, $100 in fund B, and $200 in fund C each month on xx date? isnt that what I want to do, just like my monthly 401(k)?

 

[wilked]

You must be looking at etf's. you can only buy full shares of those. Mutual funds, you can buy partial

 

[Sand]

So I've got my TDAmeritrade account....linked to my bank....cash transfer in process. Plan is to seed the account with a lump transfer, then keep throwing in a little more each month on a scheduled basis.

But, I'm looking at the buy options....and I can only buy full shares of each fund. is this normal? How am I supposed to set up, for example, put $100 in fund A, $100 in fund B, and $200 in fund C each month on xx date? isnt that what I want to do, just like my monthly 401(k)?

Careful the cost of transactions doesn't create a big drag on your returns. Depending on the amounts you're talking about the lump should be spread the way you want and you may want to rotate your ETF choices each month to only buy one or two things.

 

[Fruitbat]

No worries there. Commission free ETFs only. I'll just have to do a little math each month to keep things in balance I think.

 

[Dentist]

No worries there. Commission free ETFs only. I'll just have to do a little math each month to keep things in balance I think.

what did you end up deciding to buy?

 

[Dentist]

I did my calculations last night for the first time in a long time because of the work needed to aggregate all accounts.

This is the % breakdown of my retirement assets only.. i did not include my cash management fund because that's very conservatively invested as an extension of my emergency fund:

Large Cap - 28%

Mid Cap - 13%

Small Cap - 20%

International - 14%

Bonds/Cash - 17%

REITs - 2%

Preferred stock 5%

Hi Yield Bonds - 1%

I'll take any criticisms or thoughts

Age 35, wife 28

 

[Slapdash]

I did my calculations last night for the first time in a long time because of the work needed to aggregate all accounts.

This is the % breakdown of my retirement assets only.. i did not include my cash management fund because that's very conservatively invested as an extension of my emergency fund:

Large Cap - 28%

Mid Cap - 13%

Small Cap - 20%

International - 14%

Bonds/Cash - 17%

REITs - 2%

Preferred stock 5%

Hi Yield Bonds - 1%

I'll take any criticisms or thoughts

Age 35, wife 28

I'm younger and hold more bonds than this. Maybe I'm just overly conservative.

What kind of yield are you getting in the cash mgmt?

 

[wilked]

IMO anything at the 1% or 2% level is just noise, I would simplify and get rid of them.

You are a little light on bonds, which can be ok so long as you are willing to absorb a 20% haircut on your portfolio should the market drop 40ish %

What is your personal investment plan? Suggest writing one down, target % to each asset group, how often you will rebalance, etc

 

[Dentist]

IMO anything at the 1% or 2% level is just noise, I would simplify and get rid of them.

You are a little light on bonds, which can be ok so long as you are willing to absorb a 20% haircut on your portfolio should the market drop 40ish %

What is your personal investment plan? Suggest writing one down, target % to each asset group, how often you will rebalance, etc

I agree about the personal investment plan idea.. i don't have that and should.

so far it's been: "make boatloads"

i agree slightly light on bonds.. main problem there is that my bond fund choices absolutely BLOW in both my wife's and my accounts.

Wilked, how do you factor in "wife's pension" into my retirement plan?

it's a significant chunk of change.. i look at their approximate investment portfolio.. but its' hard to quantify it or calculate it?

 

[Dentist]

I did my calculations last night for the first time in a long time because of the work needed to aggregate all accounts.

This is the % breakdown of my retirement assets only.. i did not include my cash management fund because that's very conservatively invested as an extension of my emergency fund:

Large Cap - 28%

Mid Cap - 13%

Small Cap - 20%

International - 14%

Bonds/Cash - 17%

REITs - 2%

Preferred stock 5%

Hi Yield Bonds - 1%

I'll take any criticisms or thoughts

Age 35, wife 28

I'm younger and hold more bonds than this. Maybe I'm just overly conservative.

What kind of yield are you getting in the cash mgmt?

6.5% 100% preferred stocks and exchange traded debt (individual issues, not ETFs)

if i added it into the mix with everything else it would raise my preferred stock/ETD % to 15% of a total portfolio.

Again, this is money that is beyond a normal 6 mo. emergency fund. my first 6 mo. is 100% true cash in online savings accounts... this is like the next 6-9 mo.

 

[wilked]

IMO anything at the 1% or 2% level is just noise, I would simplify and get rid of them.

You are a little light on bonds, which can be ok so long as you are willing to absorb a 20% haircut on your portfolio should the market drop 40ish %

What is your personal investment plan? Suggest writing one down, target % to each asset group, how often you will rebalance, etc

I agree about the personal investment plan idea.. i don't have that and should.

so far it's been: "make boatloads"

i agree slightly light on bonds.. main problem there is that my bond fund choices absolutely BLOW in both my wife's and my accounts.

Wilked, how do you factor in "wife's pension" into my retirement plan?

it's a significant chunk of change.. i look at their approximate investment portfolio.. but its' hard to quantify it or calculate it?

What is the pension? Certain % of her income?

If it is significant I wouldn't ignore it.

You've got to estimate what you need at retirement for salary. I would discount the pension 50% to account for the fact it might not be there. From there you can make a reasonable estimate at your portfolio growth, years, etc etc.

Then again, you are only 35. That might be a calculation for another day, maybe once 40 hits. Given that, I would prob ignore it. My wife has a small pension, but I have never considered it in my accounting

 

[Dentist]

IMO anything at the 1% or 2% level is just noise, I would simplify and get rid of them.

You are a little light on bonds, which can be ok so long as you are willing to absorb a 20% haircut on your portfolio should the market drop 40ish %

What is your personal investment plan? Suggest writing one down, target % to each asset group, how often you will rebalance, etc

I agree about the personal investment plan idea.. i don't have that and should.

so far it's been: "make boatloads"

i agree slightly light on bonds.. main problem there is that my bond fund choices absolutely BLOW in both my wife's and my accounts.

Wilked, how do you factor in "wife's pension" into my retirement plan?

it's a significant chunk of change.. i look at their approximate investment portfolio.. but its' hard to quantify it or calculate it?

What is the pension? Certain % of her income?

If it is significant I wouldn't ignore it.

You've got to estimate what you need at retirement for salary. I would discount the pension 50% to account for the fact it might not be there. From there you can make a reasonable estimate at your portfolio growth, years, etc etc.

Then again, you are only 35. That might be a calculation for another day, maybe once 40 hits. Given that, I would prob ignore it. My wife has a small pension, but I have never considered it in my accounting

The pension is a 100% income replacement of the average of her last 3 years of service provided that she puts in the requisite 31 years... it's a massive missouri state teacher's pension.. they don't pay social security because of it.

they take out 15% of her paycheck for this.

The only thing is that i never know if she will really put in that amount of time... there will be some benefit even if she doesn't make it to 31 years.. just less.

 

[wilked]

I would ignore it for the time being then. Once she gets halfway to the pension maybe start thinking about it

 

[Fruitbat]

No worries there. Commission free ETFs only. I'll just have to do a little math each month to keep things in balance I think.

what did you end up deciding to buy?

just got this rolling Monday morning...

25% VTI Vanguard Total Stock Market ETF25% IVV iShares Core S&P 500 ETF15% AGG iShares Core Total U.S. Bond Market ETF15% BND Vanguard Total Bond Market ETF20% VEU Vanguard FTSE All-World ex-US ETF

although I was tempted to go with one or both of the dividend based funds (VIG,VYM)

 

[Fruitbat]

ok, trying to leach even more info from you guys....

below are my 401(k) choices. assuming this is the primary retirement account, what would you recommend. we have about 20 years until retirement.

Spoiler

Short Bonds/Stable/MMkt Federated CapPresrvInterm./Long-Term Bonds PIMCO Totl Rtrn Vanguard Totl Bd Amer Cent Infl AdjAggressive Bonds Templeton GlobalBdLarge-Cap Stocks T Rowe Eqty Inc Vanguard Wndsr II Amer Cent Eqty Gr Vanguard Inst Indx Calvert Equity Pf Harbor CapApprc T Rowe Grth StkSmall/Mid-Cap Stocks Gldmn Scs MdCap Val T Rowe MdCap Val Artisan Mid Cap Vanguard MdCap Idx Disc Gwth MdCapGwth Janus Entrprise Federated Small Val Westcore SmCapVal DFA US MicroCap Vanguard SmCap Idx Eagle SmCap Gr Invesco SmCap GthInternational Stocks Amer Fds EuroPac Dodge&Cox Intl UMB Scout Intl Fund Vanguard Dev Mkts T Rowe Intl Disc DFA Emrg MktsMulti-Asset/Other Vanguard Bal Index Personal Choice Self Directed Vanguard Rtrmt Inc Vanguard TR 2010 Vanguard TR 2015 Vanguard TR 2020 Vanguard TR 2025 Vanguard TR 2030 Vanguard TR 2035 Vanguard TR 2040 Vanguard TR 2045 Vanguard TR 2050 Vanguard TR 2055

 

[Dentist]

No worries there. Commission free ETFs only. I'll just have to do a little math each month to keep things in balance I think.

what did you end up deciding to buy?

just got this rolling Monday morning...

25% VTI Vanguard Total Stock Market ETF25% IVV iShares Core S&P 500 ETF15% AGG iShares Core Total U.S. Bond Market ETF15% BND Vanguard Total Bond Market ETF20% VEU Vanguard FTSE All-World ex-US ETF

although I was tempted to go with one or both of the dividend based funds (VIG,VYM)

While that sounds fine my questions to you are:

1) There is going to be a TON of overlap between BND and AGG. Why bother doing both? just curious the reasoning? Their performance is nearly identical over 5 years.

2) same with VTI and IVV .. ton of overlap there.. i mean you do get some of the small company performance with VTI.. but VTI almost makes IVV irrelevant.

I want to assure you there's 100% nothing wrong with what you did.. just makes for more re-balancing work later

 

[Dentist]

ok, trying to leach even more info from you guys....

below are my 401(k) choices. assuming this is the primary retirement account, what would you recommend. we have about 20 years until retirement.

Spoiler

Short Bonds/Stable/MMkt Federated CapPresrvInterm./Long-Term Bonds PIMCO Totl Rtrn Vanguard Totl Bd Amer Cent Infl AdjAggressive Bonds Templeton GlobalBdLarge-Cap Stocks T Rowe Eqty Inc Vanguard Wndsr II Amer Cent Eqty Gr Vanguard Inst Indx Calvert Equity Pf Harbor CapApprc T Rowe Grth StkSmall/Mid-Cap Stocks Gldmn Scs MdCap Val T Rowe MdCap Val Artisan Mid Cap Vanguard MdCap Idx Disc Gwth MdCapGwth Janus Entrprise Federated Small Val Westcore SmCapVal DFA US MicroCap Vanguard SmCap Idx Eagle SmCap Gr Invesco SmCap GthInternational Stocks Amer Fds EuroPac Dodge&Cox Intl UMB Scout Intl Fund Vanguard Dev Mkts T Rowe Intl Disc DFA Emrg MktsMulti-Asset/Other Vanguard Bal Index Personal Choice Self Directed Vanguard Rtrmt Inc Vanguard TR 2010 Vanguard TR 2015 Vanguard TR 2020 Vanguard TR 2025 Vanguard TR 2030 Vanguard TR 2035 Vanguard TR 2040 Vanguard TR 2045 Vanguard TR 2050 Vanguard TR 2055

PIMCO is about the best active management name in bonds.. if there is an active manager i like, it's bill gross.

otherwise stick with vanguard.. the TR funds may be great for you.

in the international space.. vanguard only has emerging markets.. so you need something more broad.. Dodge and Cox probably the next best on a glance

 

[Fruitbat]

No worries there. Commission free ETFs only. I'll just have to do a little math each month to keep things in balance I think.

what did you end up deciding to buy?

just got this rolling Monday morning...

25% VTI Vanguard Total Stock Market ETF25% IVV iShares Core S&P 500 ETF15% AGG iShares Core Total U.S. Bond Market ETF15% BND Vanguard Total Bond Market ETF20% VEU Vanguard FTSE All-World ex-US ETF

although I was tempted to go with one or both of the dividend based funds (VIG,VYM)

While that sounds fine my questions to you are:

1) There is going to be a TON of overlap between BND and AGG. Why bother doing both? just curious the reasoning? Their performance is nearly identical over 5 years.

2) same with VTI and IVV .. ton of overlap there.. i mean you do get some of the small company performance with VTI.. but VTI almost makes IVV irrelevant.

I want to assure you there's 100% nothing wrong with what you did.. just makes for more re-balancing work later

i guess i dont have a feel for how much overlap there really is. I was thinking is was more conservative to split my money between 2 stock funds, and 2 bond funds. are they pretty much literally the same?

 

[Fruitbat]

ok, trying to leach even more info from you guys....

below are my 401(k) choices. assuming this is the primary retirement account, what would you recommend. we have about 20 years until retirement.

Spoiler

Short Bonds/Stable/MMkt Federated CapPresrvInterm./Long-Term Bonds PIMCO Totl Rtrn Vanguard Totl Bd Amer Cent Infl AdjAggressive Bonds Templeton GlobalBdLarge-Cap Stocks T Rowe Eqty Inc Vanguard Wndsr II Amer Cent Eqty Gr Vanguard Inst Indx Calvert Equity Pf Harbor CapApprc T Rowe Grth StkSmall/Mid-Cap Stocks Gldmn Scs MdCap Val T Rowe MdCap Val Artisan Mid Cap Vanguard MdCap Idx Disc Gwth MdCapGwth Janus Entrprise Federated Small Val Westcore SmCapVal DFA US MicroCap Vanguard SmCap Idx Eagle SmCap Gr Invesco SmCap GthInternational Stocks Amer Fds EuroPac Dodge&Cox Intl UMB Scout Intl Fund Vanguard Dev Mkts T Rowe Intl Disc DFA Emrg MktsMulti-Asset/Other Vanguard Bal Index Personal Choice Self Directed Vanguard Rtrmt Inc Vanguard TR 2010 Vanguard TR 2015 Vanguard TR 2020 Vanguard TR 2025 Vanguard TR 2030 Vanguard TR 2035 Vanguard TR 2040 Vanguard TR 2045 Vanguard TR 2050 Vanguard TR 2055

PIMCO is about the best active management name in bonds.. if there is an active manager i like, it's bill gross.

otherwise stick with vanguard.. the TR funds may be great for you.

in the international space.. vanguard only has emerging markets.. so you need something more broad.. Dodge and Cox probably the next best on a glance

my current balance...based on adviser's recommendation:

PIMCO Totl Rtrn 18.39% Templeton GlobalBd 14.32% Vanguard Wndsr II 21.45% Harbor CapApprc 15.18% Artisan Mid Cap 15.55% UMB Scout Intl Fund 15.11%

 

[Dentist]

No worries there. Commission free ETFs only. I'll just have to do a little math each month to keep things in balance I think.

what did you end up deciding to buy?

just got this rolling Monday morning...

25% VTI Vanguard Total Stock Market ETF25% IVV iShares Core S&P 500 ETF15% AGG iShares Core Total U.S. Bond Market ETF15% BND Vanguard Total Bond Market ETF20% VEU Vanguard FTSE All-World ex-US ETF

although I was tempted to go with one or both of the dividend based funds (VIG,VYM)

While that sounds fine my questions to you are:

1) There is going to be a TON of overlap between BND and AGG. Why bother doing both? just curious the reasoning? Their performance is nearly identical over 5 years.

2) same with VTI and IVV .. ton of overlap there.. i mean you do get some of the small company performance with VTI.. but VTI almost makes IVV irrelevant.

I want to assure you there's 100% nothing wrong with what you did.. just makes for more re-balancing work later

i guess i dont have a feel for how much overlap there really is. I was thinking is was more conservative to split my money between 2 stock funds, and 2 bond funds. are they pretty much literally the same?

goto Google finance

type in your ticker symbol

then in the graph there is a compare ticker.

do that... play with the results

or you can get into the prospectus's and see the overlap.

VTI will own a lot more companies.. but also owns the same 500 that IVV owns

AGG and BND.. almost identical

 

[Slapdash]

I did my calculations last night for the first time in a long time because of the work needed to aggregate all accounts.

This is the % breakdown of my retirement assets only.. i did not include my cash management fund because that's very conservatively invested as an extension of my emergency fund:

Large Cap - 28%

Mid Cap - 13%

Small Cap - 20%

International - 14%

Bonds/Cash - 17%

REITs - 2%

Preferred stock 5%

Hi Yield Bonds - 1%

I'll take any criticisms or thoughts

Age 35, wife 28

I'm younger and hold more bonds than this. Maybe I'm just overly conservative.

What kind of yield are you getting in the cash mgmt?

6.5% 100% preferred stocks and exchange traded debt (individual issues, not ETFs)

if i added it into the mix with everything else it would raise my preferred stock/ETD % to 15% of a total portfolio.

Again, this is money that is beyond a normal 6 mo. emergency fund. my first 6 mo. is 100% true cash in online savings accounts... this is like the next 6-9 mo.

Didn't you have some forum you recomended that helps you with this stuff?

 

[Dentist]

I did my calculations last night for the first time in a long time because of the work needed to aggregate all accounts.

This is the % breakdown of my retirement assets only.. i did not include my cash management fund because that's very conservatively invested as an extension of my emergency fund:

Large Cap - 28%

Mid Cap - 13%

Small Cap - 20%

International - 14%

Bonds/Cash - 17%

REITs - 2%

Preferred stock 5%

Hi Yield Bonds - 1%

I'll take any criticisms or thoughts

Age 35, wife 28

I'm younger and hold more bonds than this. Maybe I'm just overly conservative.

What kind of yield are you getting in the cash mgmt?

6.5% 100% preferred stocks and exchange traded debt (individual issues, not ETFs)

if i added it into the mix with everything else it would raise my preferred stock/ETD % to 15% of a total portfolio.

Again, this is money that is beyond a normal 6 mo. emergency fund. my first 6 mo. is 100% true cash in online savings accounts... this is like the next 6-9 mo.

Didn't you have some forum you recomended that helps you with this stuff?

http://www.siliconinvestor.com/subject.aspx?subjectid=58607&LastNum=730&NumMsgs=10

http://www.dividendyieldhunter.com/

problem is, it was one of those things where i got in at the right time.. 2011.. early 2012 and made most of my purchases then... most of the new issues they've been coming out with lately blow.

i would have a hard time investing in new issues if i was starting fresh now.

I have another 20-30k i'd love to deploy into income issues.. but nothing looks good... it's like i'm going to have to do something crazy like actually spend the money on goods or services that might bring me enjoyment.. what a waste!

having said that.. CTY (Quest 6.125% notes) come out today and the return isn't great, but the capital appreciation will be.. i'm a buyer

 

[wilked]

ok, trying to leach even more info from you guys....

below are my 401(k) choices. assuming this is the primary retirement account, what would you recommend. we have about 20 years until retirement.

Spoiler

Short Bonds/Stable/MMkt Federated CapPresrvInterm./Long-Term Bonds PIMCO Totl Rtrn Vanguard Totl Bd Amer Cent Infl AdjAggressive Bonds Templeton GlobalBdLarge-Cap Stocks T Rowe Eqty Inc Vanguard Wndsr II Amer Cent Eqty Gr Vanguard Inst Indx Calvert Equity Pf Harbor CapApprc T Rowe Grth StkSmall/Mid-Cap Stocks Gldmn Scs MdCap Val T Rowe MdCap Val Artisan Mid Cap Vanguard MdCap Idx Disc Gwth MdCapGwth Janus Entrprise Federated Small Val Westcore SmCapVal DFA US MicroCap Vanguard SmCap Idx Eagle SmCap Gr Invesco SmCap GthInternational Stocks Amer Fds EuroPac Dodge&Cox Intl UMB Scout Intl Fund Vanguard Dev Mkts T Rowe Intl Disc DFA Emrg MktsMulti-Asset/Other Vanguard Bal Index Personal Choice Self Directed Vanguard Rtrmt Inc Vanguard TR 2010 Vanguard TR 2015 Vanguard TR 2020 Vanguard TR 2025 Vanguard TR 2030 Vanguard TR 2035 Vanguard TR 2040 Vanguard TR 2045 Vanguard TR 2050 Vanguard TR 2055

Can you add your expense ratios?

 

[Slapdash]

I did my calculations last night for the first time in a long time because of the work needed to aggregate all accounts.

This is the % breakdown of my retirement assets only.. i did not include my cash management fund because that's very conservatively invested as an extension of my emergency fund:

Large Cap - 28%

Mid Cap - 13%

Small Cap - 20%

International - 14%

Bonds/Cash - 17%

REITs - 2%

Preferred stock 5%

Hi Yield Bonds - 1%

I'll take any criticisms or thoughts

Age 35, wife 28

I'm younger and hold more bonds than this. Maybe I'm just overly conservative.

What kind of yield are you getting in the cash mgmt?

6.5% 100% preferred stocks and exchange traded debt (individual issues, not ETFs)

if i added it into the mix with everything else it would raise my preferred stock/ETD % to 15% of a total portfolio.

Again, this is money that is beyond a normal 6 mo. emergency fund. my first 6 mo. is 100% true cash in online savings accounts... this is like the next 6-9 mo.

Didn't you have some forum you recomended that helps you with this stuff?

http://www.siliconinvestor.com/subject.aspx?subjectid=58607&LastNum=730&NumMsgs=10

http://www.dividendyieldhunter.com/

problem is, it was one of those things where i got in at the right time.. 2011.. early 2012 and made most of my purchases then... most of the new issues they've been coming out with lately blow.

i would have a hard time investing in new issues if i was starting fresh now.

I have another 20-30k i'd love to deploy into income issues.. but nothing looks good... it's like i'm going to have to do something crazy like actually spend the money on goods or services that might bring me enjoyment.. what a waste!

having said that.. CTY (Quest 6.125% notes) come out today and the return isn't great, but the capital appreciation will be.. i'm a buyer

Thanks, I'll file those away. Something I need to look into. Do you do this stuff through Merrill Edge? Looks like that is what I have to use for a broker.

 

[Fruitbat]

ok, trying to leach even more info from you guys....

below are my 401(k) choices. assuming this is the primary retirement account, what would you recommend. we have about 20 years until retirement.

Spoiler

Short Bonds/Stable/MMkt Federated CapPresrvInterm./Long-Term Bonds PIMCO Totl Rtrn Vanguard Totl Bd Amer Cent Infl AdjAggressive Bonds Templeton GlobalBdLarge-Cap Stocks T Rowe Eqty Inc Vanguard Wndsr II Amer Cent Eqty Gr Vanguard Inst Indx Calvert Equity Pf Harbor CapApprc T Rowe Grth StkSmall/Mid-Cap Stocks Gldmn Scs MdCap Val T Rowe MdCap Val Artisan Mid Cap Vanguard MdCap Idx Disc Gwth MdCapGwth Janus Entrprise Federated Small Val Westcore SmCapVal DFA US MicroCap Vanguard SmCap Idx Eagle SmCap Gr Invesco SmCap GthInternational Stocks Amer Fds EuroPac Dodge&Cox Intl UMB Scout Intl Fund Vanguard Dev Mkts T Rowe Intl Disc DFA Emrg MktsMulti-Asset/Other Vanguard Bal Index Personal Choice Self Directed Vanguard Rtrmt Inc Vanguard TR 2010 Vanguard TR 2015 Vanguard TR 2020 Vanguard TR 2025 Vanguard TR 2030 Vanguard TR 2035 Vanguard TR 2040 Vanguard TR 2045 Vanguard TR 2050 Vanguard TR 2055

Can you add your expense ratios?

here:

Spoiler

Interm./Long-Term Bonds PIMCO Totl Rtrnnd 0.46Vanguard Totl Bdnd 0.07Amer Cent Infl Adjnd 0.28 Aggressive Bonds Templeton GlobalBdnd 0.66 Large-Cap Stocks T Rowe Eqty Incnd 0.68Vanguard Wndsr IInd 0.27Amer Cent Eqty Grnd 0.68Vanguard Inst Indxnd 0.04Calvert Equity Pfnd 0.68Harbor CapApprcnd 0.68T Rowe Grth Stknd 0.7 Small/Mid-Cap Stocks Gldmn Scs MdCap Valnd 0.75T Rowe MdCap Valnd 0.81Artisan Mid Capnd 1.08Vanguard MdCap Idxnd 0.08Disc Gwth MdCapGwth 1.27Janus Entrprisend 0.75Federated Small Valnd 1.27Westcore SmCapValnd 1.38DFA US MicroCapnd 0.52Vanguard SmCap Idxnd 0.1Eagle SmCap Grnd 0.8Invesco SmCap Gthnd 0.83 International Stocks Amer Fds EuroPacnd 0.5Dodge&Cox Intlnd 0.64UMB Scout Intl Fundnd 1Vanguard Dev Mktsnd 0.1T Rowe Intl Discnd 1.23DFA Emrg Mktsnd 0.61 Multi-Asset/Other Vanguard Bal Indexnd 0.08Vanguard TR 2010nd 0.16Vanguard TR 2015nd 0.16Vanguard TR 2020nd 0.16Vanguard TR 2025nd 0.17Vanguard TR 2030nd 0.17Vanguard TR 2035nd 0.18Vanguard TR 2040nd 0.18Vanguard TR 2045nd 0.18Vanguard TR 2050nd 0.18Vanguard TR 2055nd 0.18Vanguard Rtrmt Incnd 0.16

 

[wilked]

Vanguard Index Funds are clearly the winners...

Vanguard Inst Indxnd 0.04

Vanguard Dev Mktsnd 0.1

Vanguard Totl Bdnd 0.07

Those are what I recommend.

Figure out your bond % (age in bonds is a common rule of thumb). Then take what is left, and go 75% VII and 25% VDM

Done...

 

[Dentist]

Vanguard Index Funds are clearly the winners...

Vanguard Inst Indxnd 0.04

Vanguard Dev Mktsnd 0.1

Vanguard Totl Bdnd 0.07

Those are what I recommend.

Figure out your bond % (age in bonds is a common rule of thumb). Then take what is left, and go 75% VII and 25% VDM

Done...

 

[Dentist]

I did my calculations last night for the first time in a long time because of the work needed to aggregate all accounts.

This is the % breakdown of my retirement assets only.. i did not include my cash management fund because that's very conservatively invested as an extension of my emergency fund:

Large Cap - 28%

Mid Cap - 13%

Small Cap - 20%

International - 14%

Bonds/Cash - 17%

REITs - 2%

Preferred stock 5%

Hi Yield Bonds - 1%

I'll take any criticisms or thoughts

Age 35, wife 28

I'm younger and hold more bonds than this. Maybe I'm just overly conservative.

What kind of yield are you getting in the cash mgmt?

6.5% 100% preferred stocks and exchange traded debt (individual issues, not ETFs)

if i added it into the mix with everything else it would raise my preferred stock/ETD % to 15% of a total portfolio.

Again, this is money that is beyond a normal 6 mo. emergency fund. my first 6 mo. is 100% true cash in online savings accounts... this is like the next 6-9 mo.

Didn't you have some forum you recomended that helps you with this stuff?

http://www.siliconinvestor.com/subject.aspx?subjectid=58607&LastNum=730&NumMsgs=10

http://www.dividendyieldhunter.com/

problem is, it was one of those things where i got in at the right time.. 2011.. early 2012 and made most of my purchases then... most of the new issues they've been coming out with lately blow.

i would have a hard time investing in new issues if i was starting fresh now.

I have another 20-30k i'd love to deploy into income issues.. but nothing looks good... it's like i'm going to have to do something crazy like actually spend the money on goods or services that might bring me enjoyment.. what a waste!

having said that.. CTY (Quest 6.125% notes) come out today and the return isn't great, but the capital appreciation will be.. i'm a buyer

Thanks, I'll file those away. Something I need to look into. Do you do this stuff through Merrill Edge? Looks like that is what I have to use for a broker.

yes, i'm all merrill edge due to my relationship with Bank or America and the 30 free transactions per month.

i would not have done this plan without those free trades because i would've spent a few hundred bucks in transaction fees.

 

[Fruitbat]

Vanguard Index Funds are clearly the winners...

Vanguard Inst Indxnd 0.04

Vanguard Dev Mktsnd 0.1

Vanguard Totl Bdnd 0.07

Those are what I recommend.

Figure out your bond % (age in bonds is a common rule of thumb). Then take what is left, and go 75% VII and 25% VDM

Done...

OK this makes me nervous since this is the largest pile of retirement money I have. and I have none of it in the 3 funds listed above, so I'd be shifting a lot of cash.

These same choices are available in our 457 deferred comp account, and in an old 403(b) that we are no longer contributing to (403b was phased out and 401k was introduced a couple years back). collectively these 3 accounts are about 50% of my retirement savings.

 

[Slapdash]

As an aside, I'm curious what everyone's thoughts are towards an emergency fund. I see estimates between 3 and 12 months. Some people do emergency funds at total expenses and others assume they would cut back on extraneous expenses in the event these funds are needed. What do y'all do?

 

[wilked]

Fruit, why does that make you nervous?

What are you investing in today?

If you move from a large cap fund to a large cap fund... there is no impact (other than you saving fees)

 

[wilked]

As an aside, I'm curious what everyone's thoughts are towards an emergency fund. I see estimates between 3 and 12 months. Some people do emergency funds at total expenses and others assume they would cut back on extraneous expenses in the event these funds are needed. What do y'all do?

I think the idea is what happens if you lose your job? I think 3 months is enough time for me to find a new job, but that can vary from person to person. Do you carry short term disabillity? If not, you should 'self-insure' against that with a larger e-fund

 

[Dentist]

Vanguard Index Funds are clearly the winners...

Vanguard Inst Indxnd 0.04

Vanguard Dev Mktsnd 0.1

Vanguard Totl Bdnd 0.07

Those are what I recommend.

Figure out your bond % (age in bonds is a common rule of thumb). Then take what is left, and go 75% VII and 25% VDM

Done...

OK this makes me nervous since this is the largest pile of retirement money I have. and I have none of it in the 3 funds listed above, so I'd be shifting a lot of cash.

These same choices are available in our 457 deferred comp account, and in an old 403(b) that we are no longer contributing to (403b was phased out and 401k was introduced a couple years back). collectively these 3 accounts are about 50% of my retirement savings.

I feel like you're nervous because you're looking at a fund as like an individual stock.

a single stock can go way up or down regardless of what is happening with the broad market economy.

Funds are nothing more than a big pile of different stocks or bonds.

It doesn't matter what stock fund you're in.. if the market goes down.. they are ALL going down.

if the bond market goes down, ALL bond funds go down.

sure, some less than others... but still.. ALL.

You're already diversified by buying any fund.. especially an index fund.

even if you buy different funds.. i'm guessing if you looked at what individual stocks they held there would be a HUGE amount of crossover.

If you're nervous about the stock market itself.. that's normal, natural, and you probably need increased bonds.

But the number of funds you are in shouldn't impact your return very much.

I really think you're confused about what these funds actually mean or do

 

[Dentist]

As an aside, I'm curious what everyone's thoughts are towards an emergency fund. I see estimates between 3 and 12 months. Some people do emergency funds at total expenses and others assume they would cut back on extraneous expenses in the event these funds are needed. What do y'all do?

This is a question i've never had a good answer to.

I mean.. like with myself.. I can't lose my job because i'd be firing myself.

But my income can fluctuate wildly from year to year based on economic conditions, luck, insurance shifts, etc.

To me an emergency fund means... if I blow a transmission, get injured and need a full deductible for a broken bone, and my lawnmower shoots craps all in the same month.. will i be able to pay for that without using expensive credit.

I do think it's a concept more for those that either don't have hardly any money at all and run their budget tightly and get a in a cycle of using and abusing credit... or for those in volatile industries at risk of losing their job though.

But if I did lose my job somehow for reasons not including disability (which i have insurance for).. it would mean enough to sustain me for several months whilst i got something new going.. but i would definitely pare back expenses to the absolute minimum.

 

[Fruitbat]

My nervousness is irrational, and I know that. I've never self-managed this amount of cash before. it just feels "heavy" to me right now.

I understand what funds are.

 

[Dentist]

My nervousness is irrational, and I know that. I've never self-managed this amount of cash before. it just feels "heavy" to me right now.

I understand what funds are.

this is pretty normal.. it's a feeling of self doubt... but you can do it!

unfortunately a lot of people just throw their hands up and figure they can't do it and overpay an "expert"

People are even fine if the adviser loses them money because at least the can "blame it" on someone.

But in general people are paralyzed by decision.. and thus.. many people never choose at all... putting their money into just money markets, or the default investment within their choices.

in the american dental association fund.. we have over 25 choices.. and 70% of the money is in money market and default (Moderate fund) per AXA equitable... it's unbelievable because 100% in that "moderate" fund is only the right choice for a very small % of people.

But the intimidation and the fear are too much to overcome for people.. not to mention general malaise and being pound foolish.

 

[wilked]

My nervousness is irrational, and I know that. I've never self-managed this amount of cash before. it just feels "heavy" to me right now.

I understand what funds are.

You should be excited. If you can reduce your ER by 0.5% than you are raising returns by 0.5%.

Starting with a nominal $100K, allowing 10 years, here is the difference between 5% return and 5.5% return

$265K vs $292K - big difference.

You should buy yourself a beer once you make the switch...

 

[guru_007]

My nervousness is irrational, and I know that. I've never self-managed this amount of cash before. it just feels "heavy" to me right now.I understand what funds are.

It's not irrational, not at all.And it's real easy for people to dole out generic, pick the fund with the lowest expense ratio and be done with it.Fact of the matter is, you should be nervous when trying to invest for your retirement. You should be doubly nervous if you don't have any idea what you're doing. You should probably be triply nervous if you're blindly taking advice from a fantasy football message board.Why don't you do yourself a favor, and talk to someone who knows what they're doing. Seriously. I am not a financial adviser, I do not work in the financial services field. But you shouldn't be effing around with your retirement money, and if you're not going to take some time to learn on your own, you probably should find someone who has.and re: emergency funds - the reason why you have heard 3 months through 12 months (or more) is that every one's situation is unique. There are a ton of factors that need to go into this decision. Do you have kids, a mortgage, how secure is your job, how soon would you be able to find another job if you got laid off, and what percentage of your income is likely as a new hire.....and so on.When I was 25, the only emergency fund I needed was to cover unexpected car expenses.When I was 30, I needed about a month emergency fund.At 35, I ramped it up to 3 months.Nowadays I don't have an emergency fund, per-se. I keep about 1 month's expenses in my checking account, earning zero interest. I have about 2 years worth of expenses in a brokerage account, with only about 10% cash, the rest invested. If something were to happen to my job, I could find another, earning 70% of my current income within 3-4 months, but it may take quite a bit to get back to my current income level. But, my wife also works and she could find a job within a week earning more than she does now. So, we're in a pretty good spot right now.

 

[Fruitbat]

My nervousness is irrational, and I know that. I've never self-managed this amount of cash before. it just feels "heavy" to me right now.I understand what funds are.

It's not irrational, not at all.And it's real easy for people to dole out generic, pick the fund with the lowest expense ratio and be done with it.Fact of the matter is, you should be nervous when trying to invest for your retirement. You should be doubly nervous if you don't have any idea what you're doing. You should probably be triply nervous if you're blindly taking advice from a fantasy football message board.Why don't you do yourself a favor, and talk to someone who knows what they're doing. Seriously. I am not a financial adviser, I do not work in the financial services field. But you shouldn't be effing around with your retirement money, and if you're not going to take some time to learn on your own, you probably should find someone who has.

Just hold on there, chief. so far I am self-directing approximately 0.3% of my investments. This is going to be a gradual process, with no set goal of being completely self-directed. Been reading some online articles and talked to a couple other folks as well. Watched some videos. So far I've thrown some play money into an account holding commission free ETFs, and considered re-distributing my 401(k) to similar types of funds that I already own. Its not like I'm going to vegas to play roulette and putting my house on "red".

Besides, what could go wrong listening to the advice of anonymous message board "experts"?

So far all my financial adviser has done is throw my money into a bunch of stocks and funds that have pretty much just kept pace with the market. For a fee. That reminds me that I really need to figure out the fee structure for my adviser. Cant remember what it is/how it works from when we first sat down...

 

[Dentist]

My nervousness is irrational, and I know that. I've never self-managed this amount of cash before. it just feels "heavy" to me right now.I understand what funds are.

Fact of the matter is, you should be nervous when trying to invest for your retirement. You should be doubly nervous if you don't have any idea what you're doing. You should probably be triply nervous if you're blindly taking advice from a fantasy football message board.

Confidence can be gained through knowledge.

I agree that blindly taking advice from a fantasy football message board isn't a good idea.

I definitely think he should be reading a good personal finance book as validation.

However, having read all these books myself, i can tell you that wilked is giving good solid advice.. i have no reason to give anything but good advice... and i've gotta tell you that even before i educated myself on personal finance i asked a lot of financial questions on here and got nothing but good advice.

This is a pretty solid community that ultimately wants nothing more than for everyone to succeed.

 

[Fruitbat]

I definitely think he should be reading a good personal finance book as validation.

However, having read all these books myself, i can tell you that wilked is giving good solid advice..

i know you have suggested some books in the past. too lazy to search. can you recommend some good reading? something not too overboard heavy. I'm fine with the mathematics, just could use some good reading on the actual investment decisions/strategy side.

 

[Dentist]

I definitely think he should be reading a good personal finance book as validation.

However, having read all these books myself, i can tell you that wilked is giving good solid advice..

i know you have suggested some books in the past. too lazy to search. can you recommend some good reading? something not too overboard heavy. I'm fine with the mathematics, just could use some good reading on the actual investment decisions/strategy side.

http://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

http://www.amazon.com/Bogleheads-Guide-Retirement-Planning/dp/0470919019/ref=sr_1_1?s=books&ie=UTF8&qid=1369252509&sr=1-1&keywords=bogleheads+guide+to+retirement+planning

http://www.amazon.com/Jim-Cramers-Stay-Mad-Life/dp/1416558853/ref=sr_1_1?s=books&ie=UTF8&qid=1369252532&sr=1-1&keywords=stay+mad+for+life

http://www.amazon.com/Making-Most-Your-Money-Now/dp/0743269969/ref=sr_1_1?s=books&ie=UTF8&qid=1369252560&sr=1-1&keywords=jane+bryant+quinn%27s+updated+making+the+most+of+your+money (this book is MASSIVE.. but it covers so many different personal finance situations.. it's a great book that could serve as a reference book to go back to as your life changes)

 

[wilked]

There is another word for most Financial Advisors, it is salesman (or saleswoman).

There are some good ones, but they are the exception. Just like there are some good realtors who are the exception.

If anyone in this thread still feels the need to get an advisor, please get a fee-based one, do not get a commission-based advisor.

 

[Britney Spears]

I'm going to just go ahead and ask a really stupid question.

I am reading the Bogleheads book, and have been learning a lot about how to do a better job of managing this money. But I have one nagging question that I can't seem to wrap my head around.

These books, articles, etc. tout the power of compound interest. I understand how that concept works. They then go on to direct people to using low cost mutual funds, generally with a large percentage stock index funds. I also understand how reducing fees can maximize your money that you keep.

What I don't get is this: Are stock index funds actually earning interest? I thought they rose and fell with the value of the stocks they hold? How does this bring interest? It's not like your shares multiply, do they? They just rise and fall in value I thought.

I might be completely dense here. Does this question make any sense? Just trying to understand what I am basing this whole plan on and I don't get it.

Am I betting that as a whole stocks will rise, or am I earning interest (which compounds)?

 

[ShaqAttaq]

As I understand it, The funds actually own those shares. When a divided is paid, you get some.

 

[Sand]

These books, articles, etc. tout the power of compound interest. I understand how that concept works. They then go on to direct people to using low cost mutual funds, generally with a large percentage stock index funds. I also understand how reducing fees can maximize your money that you keep.What I don't get is this: Are stock index funds actually earning interest? I thought they rose and fell with the value of the stocks they hold? How does this bring interest? It's not like your shares multiply, do they? They just rise and fall in value I thought.

Funds don't earn interest, per se (well, stock funds don't; bond funds earn interest from those bonds). Replace "interest" with "returns". Stock index funds rise and fall (minus the fees and internal slippage) with the stocks they own. You typically do get a dividend distribution, as well.

Shares don't multiply, unless you are invested in an actively managed fund where they reinvest dividends and such.

 

[Balco]

These books, articles, etc. tout the power of compound interest. I understand how that concept works. They then go on to direct people to using low cost mutual funds, generally with a large percentage stock index funds. I also understand how reducing fees can maximize your money that you keep.What I don't get is this: Are stock index funds actually earning interest? I thought they rose and fell with the value of the stocks they hold? How does this bring interest? It's not like your shares multiply, do they? They just rise and fall in value I thought.

Funds don't earn interest, per se (well, stock funds don't; bond funds earn interest from those bonds). Replace "interest" with "returns". Stock index funds rise and fall (minus the fees and internal slippage) with the stocks they own. You typically do get a dividend distribution, as well. Shares don't multiply, unless you are invested in an actively managed fund where they reinvest dividends and such.

Shares do multiply on plain old index funds if you do dividend reinvesting. I get $30 a month on my Vanguard total bond market fund, and that buys me 2 or 3 extra shares a month, give or take.

 

[wilked]

Brit: Think of one of the standard index funds - S&P 500. All that does is own the largest 500 publicly traded companies in the US. The index reviews its lists every so often (let's call it daily), and if a company falls out of the top 500, it sells off that company and buys the one that knocked it out. Pretty simple stuff (and a big reason why the fees are so low).

Now let's simplify one step more, and make an S&P 5 index, top 5 largest companies index. Apple, Exxon, Microsoft, IBM, and GE (note, this may not be current). Your S&P 5 fund owns these 5 companies, and let's assume equal weighting for this exercise (20% of the fund dollars in each stock). As the stock prices rise and fall, so does your index. If all 5 stocks rise 5% in one day, your index went up 5%. If two go up 8% and one goes down 16%, with others level, your fund stays level. You see what I mean.

Stock price itself is simply valuation, what people think a company is worth. Shares trade based upon different views of what a company is worth. If you think MSFT is worth $25 and I think it is worth $30 (and today it trades at $27), you might sell it to me at $28. Each trade pushes the price higher and lower.

There is a bit of simplification in the above, but hopefully that gives you an idea of how an individual stock can be turned into many stocks can be turned into an index

 

[Random]

Brit, I'll take a stab at it. With Bonds or Cash accounts there is a stated interest rate. If you leave x amount in there at y% for z years it will be worth x*(1+y)*z. The more years you leave it in, the more its worth. In real dollars. With stocks or funds, the assumption is that it will go up. You don't know when, how much, or for how long. You really don't get compound interest, you get compound appreciation.