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PBS Frontline : The Retirement Gamble, sorta Must See (2 Viewers)
- Thread starter Smack Tripper
- Start date
Binky The Doormat
Footballguy
NutterButter
Footballguy
I think a reasonable assumption is raising the retirement age a few years which is no big deal and reducing the max payment a bit, say 20%. Its not going to take anything drastic to make SS solvent. So if you're getting the max, that's still a nice chunk of change that would certainly affect your retirement. By my calculations, a reduced max of $2800 gets me about 5 more years of retirement than if I didn't receive any SS.
Unfortunately Washington isn't well-equipped to deal with non emergent, long-term problems these days. Dems will fight any cut in benefits tooth and nail, and GOP will fight any tax increase, so we'll get neither. When in reality a vast majority of voters would take a little bit of both if it meant securing solvency well into the future.
Judge Smails
Footballguy
F means testing......
FUBAR
Footballguy
I'm sure it's shtick and ss won't go away. But when we will be pulling a pension from uncle Sam already, it might become less controversial to decrease what we can get in ss. I hope I'm wrong, and probably am. But I'd rather be wrong in planning to not get something (worst case scenario short of Armageddon) than plan to have it and be wrong, even if it's far more likely to get what the site says we will.
KCitons
Footballguy
When my wife started with the Post Office in the mid 80's most carriers fell under Civil Service benefits (both her Mom and Step Dad retired under it in the last 5 years). But then they shifted everyone to Federal Employee Retirement System. FERS was sold as a three part system of Thrift Savings Plan, smaller FERS annuity and Social Security benefit. Everyone on FERS would take a big hit if they did away with SS. Wouldn't have to worry about budget shutting down the government, workers would do it themselves.
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xulf
Footballguy
Yes and yes. But what are you going to do? Im a CPA, undergrad degrees is finance and risk management and have a masters in predictive analytics. She wants to be more conservative than me and I think it evens us out to something decent.you and your wife have opposing investing strategies? Would it not make sense to have a unified strategy?I don't disagree with this thinking. The adviser we use for our ROTHs and my wife's IRA likes to play the conservative nature of my wife versus me. Had I not gone in the fund I went in, my wife would have even gone more conservative. Figured it was a compromise
Plus, from a mental standpoint, I feel better seeing a large® number in my biggest retirement account.
ghostguy123
Footballguy
If SS dies then just about every casino would go out of business. We cant have that.
fantasycurse42
Footballguy Jr.
So targeted date funds, complete nonsense?
I've got about 30-35 years conservatively until retirement, maybe 20-25 on the low end. My 401k is primarily invested in a targeted date fund of 2050, VFIFX.
I could care less if it goes up or falls down 20, 30, 40% in any given boom or bust year, as long as the long term trend is growth.
Thinking about shifting to what my plan allows, which isn't much...
Long term holding, thinking of a split like such:
30% VFIFX
10% VIGAX - Vanguard Growth Index Adm
20% VTSAX - Vanguard Total Stock Market
10% VVIAX - Vanguard Small Cap Index
10% VTMGX - Vanguard Developed Markets
10% VEMAX - Vanguard Emerging Markets
10% VGSLX - Vanguard REIT
Any advice?
I've got about 30-35 years conservatively until retirement, maybe 20-25 on the low end. My 401k is primarily invested in a targeted date fund of 2050, VFIFX.
I could care less if it goes up or falls down 20, 30, 40% in any given boom or bust year, as long as the long term trend is growth.
Thinking about shifting to what my plan allows, which isn't much...
Long term holding, thinking of a split like such:
30% VFIFX
10% VIGAX - Vanguard Growth Index Adm
20% VTSAX - Vanguard Total Stock Market
10% VVIAX - Vanguard Small Cap Index
10% VTMGX - Vanguard Developed Markets
10% VEMAX - Vanguard Emerging Markets
10% VGSLX - Vanguard REIT
Any advice?
RUSF18
Footballguy
Nothing nonsense about them as they are at least a vehicle for retirement saving. Not saving for retirement or thinking you'll eventually start saving or thinking you won't need a real retirement account and SS will take care of you is complete nonsense.
The main drawbacks to them are 1) the expenses are typically higher than you could get in funds you are choosing to invest in yourself and 2) they tend to be more conservative (higher percentage of bonds) than they need to be. It's a personal opinion but if you're 35 years from retirement, I don't think you need any percentage of your portfolio in bonds.
What people who advocate for the target funds suggest is to choose a fund that is 5-10 years past your targeted retirement date so it will be more aggressive.
I'd reallocate that 30% of the target fund into the total stock market or growth index funds.
lod01
Footballguy
VVIAX is not vanguard small cap. It's a value fund. http://finance.yahoo.com/q/hl?s=VVIAX+Holdings
Vanguard Small Cap Index is NAESX. http://finance.yahoo.com/q?s=naesx&ql=1
I jump in and out of small caps. That's where you get huge returns but of course, huge drops as well. How often can you move $ around?
wilked
Footballguy
It doesn't make much sense to have a mix of funds and then a target fund.
My advice- do 100% of the target fund and be done with it. Nice and easy
Is this your only retirement account?
What is the expense ratio on that target fund?
hxperson
Footballguy
You might think this is a diversified portfolio but it actually has around 80% of market exposure in a single asset class: US equities. I'd put more European equities, Global alternative assets like a global infrastructure or reit fund, and more fixed income (specifically, corporates) in your LT mix.fantasycurse42 said:
Instinctive
Footballguy
Surprised I have never blackdotted this thread. Doing so now.
Doctor Detroit
Please remove your headgear
The target funds are a bit conservative, but I agree having it as 30% of the portfolio makes little sense. I'd probably use that for an S&P 500 fund of some sort instead, and I'm not a big fan of total stock market indexes since they are way too broad.wilked said:
Can you get into the Vanguard Health Care fund? Some sector play at your age is good IMO, I for one believe in Health Care because so much of the economy is going to be dependent upon it as Baby Boomers enter their 70s and 80s in the next three decades.
dickey moe
Fingerpicker
http://www.marketwatch.com/story/most-americans-are-one-paycheck-away-from-the-street-2016-01-06
Sad and scary.Most Americans are one paycheck away from the street
Published: Jan 6, 2016 7:05 a.m. ET
http://www.marketwatch.com/story/mo...aycheck-away-from-the-street-2016-01-06/email
http://www.marketwatch.com/story/mo...aycheck-away-from-the-street-2016-01-06/print
Some 63% of people can’t deal with a $500 emergency
By
QUENTINFOTTRELL NEWS EDITOR
Shutterstock
Most households struggle to cope with financial surprises.Americans are starting 2016 with more job security, but most are still theoretically only one paycheck away from the street.
Approximately 63% of Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair, according to a survey released Wednesday of 1,000 adults by personal finance website Bankrate.com, up slightly from 62% last year. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (23%), borrowing from family and/or friends (15%) or using credit cards to bridge the gap (15%).
This lack of emergency savings could be a problem for millions of Americans. More than four in 10 Americans either experienced a major unexpected expense over the past 12 months or had an immediate family member who had an unexpected expense, Bankrate found. (The survey didn’t specify the impact of that expense.) “Without emergency savings, you may not have money to cover needed home repairs,” says Signe-Mary McKernan, senior fellow and economist at the Urban Institute, a nonprofit organization that focuses on social and economic policy. “Similarly, without emergency savings, people could raid their retirement account.”
The findings are strikingly similar to two other reports, one by the U.S. Federal Reserve survey of more than 4,000 adults released in 2014. “Savings are depleted for many households after the recession,” it found. Among those who had savings prior to 2008, 57% said they’d used up some or all of their savings in the Great Recession and its aftermath. And another survey of 1,000 adults released last year by personal finance website GOBankingRates.com found that most Americans (62%)have less than $1,000 in their savings account (although that doesn’t include retirement or other investment accounts).
Read: 5 reasons Americans are not saving money
Why aren’t people saving? Millions of Americans are struggling with student loans, medical bills and other debts, says Andrew Meadows, a San Francisco-based producer of “Broken Eggs,” a documentary about retirement. Central bankers hiked their short-term interest rate target last month to a range of 0.25% to 0.50% from near-zero, but that’s still a small return for savings left in bank accounts. Indeed, personal savings rates as a percentage of disposable income dropped from 11% in December 2012 to 4.6% in August 2015, according to the Bureau of Economic Analysis, and now hover at 5.5%.
More money and education can help. The latest Bankrate survey found that savings increased with income and education: Just 46% of the highest-income households ($75,000-plus per year) and 52% of college graduates lack enough savings to cover a $500 car repair or $1,000 emergency room visit. And while those figures could still be lower, Americans are willing to cut back on at least some expenses when money is tight: 58% say they’re “very/somewhat” likely to cut back on eating out, are likely to decrease their cable bill and 41% are likely to spend less on coffee at places like Starbucks, while 39% will seek out lower-cost cellphone bills.
But while unemployment is falling (5% in November 2015 versus 5.8% in November 2014) and the Affordable Care Act has given an estimated 16.4 million people access to medical care, the amount of wealth held by the middle class is shrinking. The share of income held by middle-income families has plunged to 43% of households in 2015 versus 62% in 1970, according to a report released last month by the nonprofit think tank Pew Research Center in Washington, D.C.
fantasycurse42
Footballguy Jr.
It is a company sponsored plan, the options are highly limited (I wish they weren't), besides the targeted date funds, this is basically all I can choose from:
http://i.imgur.com/o7xbdSI.png
Expense ration on the 2050 target plan is .18%. The targeted date funds are simple, but every one of them has been outperformed by a decent margin by the S&P over the last 10 years. Although the options in this plan are limited, I feel like a rebalance can be well worthwhile.
http://i.imgur.com/o7xbdSI.png
Expense ration on the 2050 target plan is .18%. The targeted date funds are simple, but every one of them has been outperformed by a decent margin by the S&P over the last 10 years. Although the options in this plan are limited, I feel like a rebalance can be well worthwhile.
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Steve Tasker
Footballguy
I love those options and wish I had them in my 401(k). I'm in VFIFX and VTSAX in my Roth. Jealous of your options
FUBAR
Footballguy
the only real issue for me is because my TSP is part of our retirement plan, using a lifecycle fund can make it more difficult to holistically maintain our portfolio. the L fund appears to be the exact same expense ratio as the other funds. Now, I could just balance separately, but it's actually easier to balance as a group.
You don't have a ton of options there, but the ones you do have are good and cover most of the bases.
Targeted date funds are going to under perform the S&P during a period where stocks outperform bonds, so that's no surprise. If you're happy with the asset allocation in the target plan and just want to set it and forget it, go with it. If you'd rather set your own, be more or less aggressive, or make changes/gamble more frequently, you can use those individual funds to do so.
wilked
Footballguy
Those are fantastic options. I have a few dozen funds to choose from and would change with you in an instant.
0.18% ER is a nice number. As others noted, of course S&P has outperformed over the last 10 years, stock market has had a good run for those 10 years. If the period was 2000 - 2010, though, you would find that the target plan outperformed it.
Sort through the makeup of the various target funds and choose one that matches your intended asset allocation. Crank up your contribution as high as you can stomach (try for at least 10%), then don't look at it more than once or twice a year. Your 'old self' will thank you later.
Dentist
***Official FBG Dentist***
I've heard this stat before. I definitely agree with it.http://www.marketwatch.com/story/most-americans-are-one-paycheck-away-from-the-street-2016-01-06
Sad and scary.Most Americans are one paycheck away from the street
Published: Jan 6, 2016 7:05 a.m. ET
Some 63% of people can’t deal with a $500 emergency
QUENTINFOTTRELLNEWS EDITOR
Shutterstock
Most households struggle to cope with financial surprises.Americans are starting 2016 with more job security, but most are still theoretically only one paycheck away from the street.
Approximately 63% of Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair, according to a survey released Wednesday of 1,000 adults by personal finance website Bankrate.com, up slightly from 62% last year. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (23%), borrowing from family and/or friends (15%) or using credit cards to bridge the gap (15%).
This lack of emergency savings could be a problem for millions of Americans. More than four in 10 Americans either experienced a major unexpected expense over the past 12 months or had an immediate family member who had an unexpected expense, Bankrate found. (The survey didn’t specify the impact of that expense.) “Without emergency savings, you may not have money to cover needed home repairs,” says Signe-Mary McKernan, senior fellow and economist at the Urban Institute, a nonprofit organization that focuses on social and economic policy. “Similarly, without emergency savings, people could raid their retirement account.”
The findings are strikingly similar to two other reports, one by the U.S. Federal Reserve survey of more than 4,000 adults released in 2014. “Savings are depleted for many households after the recession,” it found. Among those who had savings prior to 2008, 57% said they’d used up some or all of their savings in the Great Recession and its aftermath. And another survey of 1,000 adults released last year by personal finance website GOBankingRates.com found that most Americans (62%)have less than $1,000 in their savings account (although that doesn’t include retirement or other investment accounts).
Read: 5 reasons Americans are not saving money
Why aren’t people saving? Millions of Americans are struggling with student loans, medical bills and other debts, says Andrew Meadows, a San Francisco-based producer of “Broken Eggs,” a documentary about retirement. Central bankers hiked their short-term interest rate target last month to a range of 0.25% to 0.50% from near-zero, but that’s still a small return for savings left in bank accounts. Indeed, personal savings rates as a percentage of disposable income dropped from 11% in December 2012 to 4.6% in August 2015, according to the Bureau of Economic Analysis, and now hover at 5.5%.
More money and education can help. The latest Bankrate survey found that savings increased with income and education: Just 46% of the highest-income households ($75,000-plus per year) and 52% of college graduates lack enough savings to cover a $500 car repair or $1,000 emergency room visit. And while those figures could still be lower, Americans are willing to cut back on at least some expenses when money is tight: 58% say they’re “very/somewhat” likely to cut back on eating out, are likely to decrease their cable bill and 41% are likely to spend less on coffee at places like Starbucks, while 39% will seek out lower-cost cellphone bills.
But while unemployment is falling (5% in November 2015 versus 5.8% in November 2014) and the Affordable Care Act has given an estimated 16.4 million people access to medical care, the amount of wealth held by the middle class is shrinking. The share of income held by middle-income families has plunged to 43% of households in 2015 versus 62% in 1970, according to a report released last month by the nonprofit think tank Pew Research Center in Washington, D.C.
For many of these people it's just bad decisions and being targets for marketing that have gotten them there.
Most people really shouldn't be affording a big cable bill, big cell phone bill, car with car payments, etc.
It doesn't take too many bad decisions to put yourself in the poorhouse when you have a 50k household income and a couple kids.
One of my absolutely favorite new blogs I've found really does a great job of hashing out the bad decisions the poor make in keeping themselves poor.
http://livingstingy.blogspot.com/ Guy is heavily opinionated, a little bit of an #######, posts a TON, accepts no ads, has a liberal bias despite his poor bashing, and does write about other things than finance... very old school get off my lawn type... i love it.
fantasycurse42
Footballguy Jr.
The plan itself and the expense ratios are great, my company matches 4% and I max every year.
This might sound silly, but I wish I could just allocate 100% of it to the S&P 500 for the next 25 years and then reduce risk for the last 5-10 years until retirement. I don't care about crashes or booms and I rarely look it at it, it is strictly for retirement and whether it goes from $10 to $1 or $10 to $100 over a given year means nothing to me, only that overall pattern during the long haul is up.
I'm not a nut with an underground bunker hoarding gold waiting on the world to collapse. I'm very bullish on the USA over the next 30-40 years and will happily have myself exposed to it.
You essentially can, just put it all in VTSAX. It's the whole market not just the S&P 500, but compare the long-term returns.
wilked
Footballguy
Again, I am 100% certain if it loses 90% of its value 10 years before retirement (when you are 100% exposed to US stock market) it will not mean nothing to you. To say so is ridiculous
FUBAR
Footballguy
I just started reading Mr. Money Mustache. Good blog. Forget if it was mentioned here earlier or where I got it from.I've heard this stat before. I definitely agree with it.http://www.marketwatch.com/story/most-americans-are-one-paycheck-away-from-the-street-2016-01-06
Sad and scary.Most Americans are one paycheck away from the street
Published: Jan 6, 2016 7:05 a.m. ET
Some 63% of people can’t deal with a $500 emergency
QUENTINFOTTRELLNEWS EDITOR
Shutterstock
Most households struggle to cope with financial surprises.Americans are starting 2016 with more job security, but most are still theoretically only one paycheck away from the street.
Approximately 63% of Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair, according to a survey released Wednesday of 1,000 adults by personal finance website Bankrate.com, up slightly from 62% last year. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (23%), borrowing from family and/or friends (15%) or using credit cards to bridge the gap (15%).
This lack of emergency savings could be a problem for millions of Americans. More than four in 10 Americans either experienced a major unexpected expense over the past 12 months or had an immediate family member who had an unexpected expense, Bankrate found. (The survey didn’t specify the impact of that expense.) “Without emergency savings, you may not have money to cover needed home repairs,” says Signe-Mary McKernan, senior fellow and economist at the Urban Institute, a nonprofit organization that focuses on social and economic policy. “Similarly, without emergency savings, people could raid their retirement account.”
The findings are strikingly similar to two other reports, one by the U.S. Federal Reserve survey of more than 4,000 adults released in 2014. “Savings are depleted for many households after the recession,” it found. Among those who had savings prior to 2008, 57% said they’d used up some or all of their savings in the Great Recession and its aftermath. And another survey of 1,000 adults released last year by personal finance website GOBankingRates.com found that most Americans (62%)have less than $1,000 in their savings account (although that doesn’t include retirement or other investment accounts).
Read: 5 reasons Americans are not saving money
Why aren’t people saving? Millions of Americans are struggling with student loans, medical bills and other debts, says Andrew Meadows, a San Francisco-based producer of “Broken Eggs,” a documentary about retirement. Central bankers hiked their short-term interest rate target last month to a range of 0.25% to 0.50% from near-zero, but that’s still a small return for savings left in bank accounts. Indeed, personal savings rates as a percentage of disposable income dropped from 11% in December 2012 to 4.6% in August 2015, according to the Bureau of Economic Analysis, and now hover at 5.5%.
More money and education can help. The latest Bankrate survey found that savings increased with income and education: Just 46% of the highest-income households ($75,000-plus per year) and 52% of college graduates lack enough savings to cover a $500 car repair or $1,000 emergency room visit. And while those figures could still be lower, Americans are willing to cut back on at least some expenses when money is tight: 58% say they’re “very/somewhat” likely to cut back on eating out, are likely to decrease their cable bill and 41% are likely to spend less on coffee at places like Starbucks, while 39% will seek out lower-cost cellphone bills.
But while unemployment is falling (5% in November 2015 versus 5.8% in November 2014) and the Affordable Care Act has given an estimated 16.4 million people access to medical care, the amount of wealth held by the middle class is shrinking. The share of income held by middle-income families has plunged to 43% of households in 2015 versus 62% in 1970, according to a report released last month by the nonprofit think tank Pew Research Center in Washington, D.C.
For many of these people it's just bad decisions and being targets for marketing that have gotten them there.
Most people really shouldn't be affording a big cable bill, big cell phone bill, car with car payments, etc.
It doesn't take too many bad decisions to put yourself in the poorhouse when you have a 50k household income and a couple kids.
One of my absolutely favorite new blogs I've found really does a great job of hashing out the bad decisions the poor make in keeping themselves poor.
http://livingstingy.blogspot.com/ Guy is heavily opinionated, a little bit of an #######, posts a TON, accepts no ads, has a liberal bias despite his poor bashing, and does write about other things than finance... very old school get off my lawn type... i love it.
http://www.mrmoneymustache.com/
BeTheMatch
Footballguy
I read MMM too, but he's pretty hard-core. He spent like 20K or something last year total for his whole family. It's more of a way of life thing than about saving money.
Grahamburn
Footballguy
Can you explain why that is? My Roth is set up this way as well, with a few different funds and a target date fund. I read another post in here that it was silly to do so, and found myself second guessing my mix when I started adding to it again yesterday.wilked said:
The target date funds are a mix of stocks/bonds and diversify themselves automatically over time. Why wouldn't you also want to add different types of funds in addition to the target date fund that may focus in other areas?
Dentist
***Official FBG Dentist***
I also have read MMM
He makes some very good points, but pushes it to an extreme that is simply unrealistic.
His points about over-consumption are spot-on. His points about self-reliance are spot on.
But the thought that he's actually "retired" is stupid and a slap to the face to anyone who takes the time to be a writer, maintain a website, and have an internet presence.
He's a writer, an e-list internet celebrity, and an entrepreneur.
There's a lot of money in a good well maintained, monetized website. The main medical financial blog I read called White Coat Investor said this is the first year where his web presence made as much for him as his ER job.
So... if his point is that you can make it on your own and that it's nice to be self-employed and productive.. that's great. To insinuate that he's retired is simply stupid and a disservice to people who create content out there.
I'm pretty cheap and I'm not going to start biking to the effing grocery store to save a few bucks.
At any rate.. the living stingy blog has more content, is written without the MMM schtick, and has a lot of solid tips... and isn't monetized.
NutterButter
Footballguy
kutta
Footballguy
I've always lived by philosophy of - don't save a nickle, earn a dollar.
I am a horrible saver and spend a pretty good amount of money, but I'm pretty darn good at making money, so I come out ahead.
Ministry of Pain
Footballguy
Is this thread for ALL Frontline shows?
Or is it strictly a financial retirement thread?
Or is it strictly a financial retirement thread?
Sand
Footballguy
Generally target funds are just a mix of the funds that you also have on the side and they charge a bit more for them. And they are generally a bit conservative for the "age" they are for. For my kid's 529 the best they had were target date funds, so I aimed for one further out on the timeline than his actual college date to get the mix I wanted.
Now if the target date fund is missing the an allocation you want I wouldn't hesitate to add that in outside the fund. But if you have all the constituent funds you want and they're cheaper (and you have enough desire to monitor and change yearly) then just go with individual funds. Target date funds are mostly for folks that want to not to have to think about these things. I know many and it's certainly better than just ignoring it - at least there is some mechanism to keep it roughly on track.
Sand
Footballguy
NutterButter
Footballguy
Not to be confused with the other highly active personal finance/retirement thread
Dentist
***Official FBG Dentist***
Certainly not bad, but you can live paycheck to paycheck on almost any amount of money.
Living Stingy blog in fact authors two articles about the 100,000 income paycheck to paycheck person, and then even crazier, the 250,000 a year paycheck to paycheck person.
While good offense and average defense probably is better than mediocre to poor offense and great defense, I've found that defense (savings) is pretty important to wealth development... probably more important than offense.
Again.. if wealth development is even a goal... which for most people in America, it really isn't. They would actually RATHER be the person with the new car, Iphone 7, Coach bag, mcmansion, and premium cable subscription and CC debt and no retirement savings rather than have mediocre stuff and and a million bucks worth of investments
wilked
Footballguy
It's kind of like taking a multivitamin every day along with Vitamin D drops, Zn pill, etc. You either take each individual pill, or you take the multivitamin.
The target fund is designed to be a single fund you invest in (much like a multivitamin). If you instead want to mix and match, you should just mix and match and not do the target fund at all. Make sense?
NutterButter
Footballguy
Just keep in mind that a target fund is probably costing you approximately a few grand every year as well as all that glorious compounding interest on that lost money.
fantasycurse42
Footballguy Jr.
Okay, rebalanced....
36% large cap, 12% small cap, 12% international developed markets, 8% emerging markets, 12% real estate, 20% mixed among bond funds:
http://i.imgur.com/ONoB7hr.png
I think this is diversified and will provide healthy growth over a 25 year stretch. I'm out of the targeted date fund, just not a fan.
36% large cap, 12% small cap, 12% international developed markets, 8% emerging markets, 12% real estate, 20% mixed among bond funds:
http://i.imgur.com/ONoB7hr.png
I think this is diversified and will provide healthy growth over a 25 year stretch. I'm out of the targeted date fund, just not a fan.
Grahamburn
Footballguy
Certainly, and thank you. I'm just wondering why it's considered to be such a bad idea.
wilked
Footballguy
Mind showing the math on that? For what it's worth, I think you are way off
Here's what makes up Vanguard's Target funds, and their respective fees:
Total Stock Market: 0.17%
International Stock Index: 0.22%
Total Bond Index: 0.10%
International Bond Index: 0.23%
TIPS Index: 0.20%
Vanguard's Target funds charge between 0.16-0.18% ER fee. The additional cost of the target fund is virtually negligible
fantasycurse42
Footballguy Jr.
My target date fund is .18% FTR
wilked
Footballguy
Grahamburn - It's just inefficient more than it's a bad idea.
Let's say I want 40% Total Stock Market, 20% International Stocks, 20% general bonds, 10% TIPS, and 10% REIT. This is my target asset allocation (for instance).
Now let's say I start with 30% Target Fund 2040. This fund is made up of:
54% Total Stock
36% International Stock
7% Total Bond
3% International Bond
Let's lump the total bond and international bonds together, and now I multiply all by 0.3, which leaves:
16% Total Stock
11% International Stock
3% Total Bond (incl intn'l bond)
Now I need to allocate the rest of my portfolio to make up:
(40-16) = 24% stock
(20-11) = 9% international stock
(20-3) = 17% bond
(10-0) = 10% TIPS
(10-0) = 10% REIT
It makes rebalancing / asset allocation much trickier than simply buying each fund individually (total stocks, total international stocks, total bonds, TIPS, and REIT)
Let's say I want 40% Total Stock Market, 20% International Stocks, 20% general bonds, 10% TIPS, and 10% REIT. This is my target asset allocation (for instance).
Now let's say I start with 30% Target Fund 2040. This fund is made up of:
54% Total Stock
36% International Stock
7% Total Bond
3% International Bond
Let's lump the total bond and international bonds together, and now I multiply all by 0.3, which leaves:
16% Total Stock
11% International Stock
3% Total Bond (incl intn'l bond)
Now I need to allocate the rest of my portfolio to make up:
(40-16) = 24% stock
(20-11) = 9% international stock
(20-3) = 17% bond
(10-0) = 10% TIPS
(10-0) = 10% REIT
It makes rebalancing / asset allocation much trickier than simply buying each fund individually (total stocks, total international stocks, total bonds, TIPS, and REIT)
kutta
Footballguy
Totally agree.
It's amazing how many people put forth a certian image but are really on the brink of going under.
Grahamburn
Footballguy
Sand
Footballguy
Two sides of the coin - expenses and income. I find there are a few places to squeeze on the expenses side, but nowhere near what nuts like the MMM guy does; income increases are pretty limited. Increasing income is usually preferable, though usually harder to do.
Given what my wife comes home with that would be a crapload of round trips to the store.
Dentist
***Official FBG Dentist***
You have to make a #### LOAD of money to both look like you have money and then actually have money in the bank investment style.
On the coasts I'm guessing 500K plus in income a year.
in the midwest I've found that my buddies who make over 300K can generally accomplish both.
I can't though on my income <250k
