Welcome to Our Forums. Once you've registered and logged in, you're primed to talk football, among other topics, with the sharpest and most experienced fantasy players on the internet.
Depends on your mix and location of your allocation. Meaning, what do you have in other tax deferred and Roth accounts? But generally I'd have no problem putting everything in the black rock fund for the reasons you mention. It's a solid company. It wouldn't necessarily be "wrong" to go 100% in this fund even without other accounts.
While I don't know your company, and there very well could be nefarious activity here, there could very well be an honest mistake. We had an incident at my job (much smaller company) a few years ago where we (employees) noticed that the 401k contributions weren't being timely remitted.
I assume since it's low fee it's a passive fund? I do this with my wife's account since she has one really good fund and a bunch of crap. When folded in with everything else it works fine. (And since the S&P is doing so well her account looks awesome these days).
Are you 20 or 60?
I'm more conservative than many, so I wouldn't do it. However, if you think you have a 30 year runway to retirement it isn't an outrageous choice. If you think you'll be done at 50, though, that seems too aggressive. (All IMO).
I'm not the one to ask, but it seems fine to me.jm192 said:
This is where I’m at. I think the idea that you need to have bonds is an antiquated one, personally, especially when you’re decades away from retirement.
When you say foreign, what fund / specific class? Developed nations line VEA, or total like VXUS? VXUS is already 75% developed, 25% EM. so you might not need the EM if you're already getting it, unless you want to tilt a bit. But if you're doing 25% VEA, 5% VWO (or similar funds) you're actually tilting away from EM. which might be the goal and a perfectly fine plan.jm192 said:
Bonds are supposed to act like a parachute if we hit down markets but I agree with you at the current rates. My plan for retirement will be current year funds in cash, year +1 in VTIP or G fund. Beyond that, all equities with about 10% in REIT.
I'm 50 and am 90% equities, 10% cash. I plan to go the rest of my life without changing that ratio too much.jm192 said:
Risk adjusted returns go up when mixing in non alike asset classes.
No, opening and voluntarily closing a deposit account does not report on your credit report and, therefore, does not affect your credit score.
I am curious as to why, my situation now is a little different in that I will be relying on a couple pensions for a big chunk of my retirement, but for someone your age this article that @Sand shared a while back makes a lot of sense to me.
Looks good to me. I'm 43 and have been looking at how much my potential balance at retirement will be impacted by increasing my contributions. Increasing my contribution $100 or $200 a month did not have a huge impact. The only thing that greatly increased my balance was a higher rate of return. Being aggressive at a young age can greatly impact your balance at retirement.jm192 said:
Right. The most I'll contribute any year (without winning the lottery) is less than 5% of our accounts. But, at some point, when you're close to your retirement goal, the risk of a market drop becomes huge. Not like last March, but like 2000-2006 and 07-13 (S&P 500 anyway). When you're buying 10-50% of your portfolio annually throughout that time period it doesn't hurt. But if you're only able to buy ~5% each year, that does.
A lot of people smarter than me advocate very strongly for bonds. Every investing expert seems to think it's still the way. A lot of them advocate for as high as 40% even in your 30's.
Yeah. I mean, even if you go with letting 20% of your portfolio rot in bonds, you can also just keep that in cash ready to deploy into equities if/when the market crash comes.
Agree. I’d rather have it in cash and jump in equities if there’s a crash. Look at Fidelity’s total bond fund. The yield is a little above 2% and in the past 19 years the fund is up 10%. The S&P over that 19 years has probably a similar yield but is up 400%. That’s a ridiculous amount to lose out on to hold bonds while young or even thinking about living 20 years past retirement. You could have moved your 20% cash into the market anywhere from April to September and still blown away the 19 year bond return in a year.
Wouldn't bonds return better than cash? I keep my "cash" in bonds and then jump into equities when rebalancing or after a crash. Just as easy to do a reinvestment from a bond fund to an index fund as have cash parked and buy the index fund.
Actually, in your case you can be more aggressive than those without pensions as you have a floor to work with.
Always debatable in a rising interest rate environment, if we're in one. In 2018 I think the best asset class was cash.
Yes, but there is kind of a false thought that bonds are completely safe. During the financial crisis, bonds got hammered (they don’t drop as much as stocks can). If your plan is to maximize the cash return then bonds can work as long as the plan is to take advantage of equity bear crashes. What we are trying to say is that cash can be better and maybe that’s since your more likely to invest the cash when a crash hits than sell you buns funds.
Totally agree on the behavior aspect.
I forget which guy it was, but the point was made a while ago in one of my podcasts that people should have a safety net sufficient to cover basics / necessities, and a riskier portfolio to cover wants / dreams which you could live without. Ever since then I've tracked expenses by basics vs extras to ensure sufficient coverage for basics by safe assets when we retire.
Credit sensitive bonds certainly did as their spreads blew out. However, most people would be allocating to a government bond portfolio. Government bonds like Treasuries rallied during the financial crisis. They rally during most crises as people sell out of risk assets.
“Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves”
Sort of.
Yeah, I was just using Fidelity’s total bond as more of a total market type of index.
And actual bonds aren’t something you can get in and out of to take advantage of stock market dips, correct? We were solely suggesting that cash could be a simple option to be safe at a young age as well as have the easy ability to jump in and take advantage of a crash.
Cash would be the better way to use market timing, sure.
Bold is exactly the point I was trying to make because rates generally fall during post-Volker crises. Bond funds should approximate those returns over time.
Yes, but the only way the federal reserve interest rate falls now is to go negative.
Very reasonable way to go and it's why pensions and SS can be so valuable. Having a floor is a huge boon.
Which ones? Intermediate bonds went down ~5%, Long bonds didn't budge. Munis, corporates, and sovereign bonds got hammered.
I don’t plan to withdraw the principal to any of the equity portion after retirement. I’ll live off the cash portion plus social security when I get it. When the market is up, I’ll fund cash. When it’s down, I’ll ride things out.
Still have way too much cash over here. Part of that is because we will likely get some work done on the outdoor area soonish to add a sunroom. Also want to use some of it to get a new rental unit or two.
In this boat also, way cash heavy but having a hard time putting it all in when we are at all time highs. Keep trying to tell myself that doesn't matter when it keeps climbing....just easier said than done. Been putting like $3k/month in to eventually get it in there working for me
I don’t know bonds well so I used the FTBFX Fidelity total bond fund as an example. The chart is hard to read over 20 years since the true bottoms/tops are smoothed a bit but it looks like it went down 15-20%.
Interesting idea on the margin account. I’ve never used it although it seems like it would have been nice to use when I buying a lot from 10/2019 through 6/2020. I’m pretty aggressive and not too far away from retirement but I’ve avoided real speculation, shorting and leverage.
It's 40% corporate and 10% mortgage. That's the part that vomited in '08. The UST side was pretty stable.
Absolutely. My ignorance is part of the reason I don't do bonds.
Timely, the retirement answer man gets into this a little today. https://www.rogerwhitney.com/blog/386-retirement-withdrawal-strategies-the-safety-first-approach
