Personal Finance Advice and Education! (2 Viewers)

[Tau837]

In the 2.5 years or so that Empower has managed my portfolio, its value has increased about 30%. Following my method;, it would have increased about 50%. That 20% delta is a lot of money.

Curious if you can share a more specific date to see what other benchmarks did over that period.

Everything was sold in those Fidelity accounts on 7/15/2022 and Empower started buying on 7/26/2022.

 

[The Z Machine]

In the 2.5 years or so that Empower has managed my portfolio, its value has increased about 30%. Following my method;, it would have increased about 50%. That 20% delta is a lot of money.

Curious if you can share a more specific date to see what other benchmarks did over that period.

Everything was sold in those Fidelity accounts on 7/15/2022 and Empower started buying on 7/26/2022.

Unfortunately, Ithink you got hit with being on the wrong side of a historic run up in SP500. Pick a different time period 3 years before that date and see what happens.

 

[Desert_Power]

In the 2.5 years or so that Empower has managed my portfolio, its value has increased about 30%. Following my method;, it would have increased about 50%. That 20% delta is a lot of money.

Curious if you can share a more specific date to see what other benchmarks did over that period.

Everything was sold in those Fidelity accounts on 7/15/2022 and Empower started buying on 7/26/2022.

Unfortunately, Ithink you got hit with being on the wrong side of a historic run up in SP500. Pick a different time period 3 years before that date and see what happens.

S&P up about 40% since then. I met with Empower around December 2021. They were pretty concerned with exposure to technology stocks (which obviously got beat up). I'm guessing that is driving the under-performance here.

****ers never sent me the gift card or whatever they were supposed to either.

 

[culdeus]

I'm pretty conflicted now. With stock gains, salary, and just being born on third base I'm at a turning point. Have houses, cars, schools all paid off, plenty saved for kids college and then some.

I'm casting a shadow now on having enough savings to just run lean until can cashout the 401k and IRAs.

Motivation to keep grinding is rather low, but damn would it be boring AF to retire. Wife wants to keep going for a bit. Finding a job with a non profit or something is just not something I have any networking for.

 

[BeTheMatch]

I'm pretty conflicted now. With stock gains, salary, and just being born on third base I'm at a turning point. Have houses, cars, schools all paid off, plenty saved for kids college and then some.

I'm casting a shadow now on having enough savings to just run lean until can cashout the 401k and IRAs.

Motivation to keep grinding is rather low, but damn would it be boring AF to retire. Wife wants to keep going for a bit. Finding a job with a non profit or something is just not something I have any networking for.

Golf

 

[Chadstroma]

I'm pretty conflicted now. With stock gains, salary, and just being born on third base I'm at a turning point. Have houses, cars, schools all paid off, plenty saved for kids college and then some.

I'm casting a shadow now on having enough savings to just run lean until can cashout the 401k and IRAs.

Motivation to keep grinding is rather low, but damn would it be boring AF to retire. Wife wants to keep going for a bit. Finding a job with a non profit or something is just not something I have any networking for.

A past client of mine is a retired firefighter. He started a fly fishing rod and fly making company as well as a guided tour company. He doesn't make a ton from it but obviously that is what he loves to do. The guided tours pay for his trips (Alaska is where he goes) and when he is home he works on the rods and flys to kill time. His income is really from the retirement income but the company money pays for most of his day to day stuff and his hobbies.

Any hobbies you have? Things you spend your time doing?

 

[steelerfan1]

Spent some time this weekend assessing investments and wanted some perspective.

Up until July 2022, I never had any financial adviser, I just handled my own investments. At that time, I had a 3 Fidelity brokerage accounts, one for after tax investments, one rollover IRA, and one Roth IRA. I'm sure I made plenty of mistakes over the years, but by that point I had arrived at almost all investments being in low fee mutual funds, mostly index funds. The only stock I had at that point was a small investment in my own company's stock.

Most of it was in S&P 500 and NASDAQ index funds, so my portfolio generally followed market performance. We have a lot of cash in a high yield savings account (I'm sure most financial advisers would say too much), plus my work 401k and equity in our home, but the majority of our net worth was in these 3 accounts.

I knew that according to prevailing wisdom, I was too heavy in stocks, and almost exclusively US based stocks at that. I had made no attempt to achieve a portfolio that was properly balanced between stocks and bonds, and I had made no attempt to ensure I was properly weighted across the different sectors. I was turning 54 later that year and decided I should look into having someone else manage our portfolio to make sure I didn't screw up our financial future.

So I chose to turn over all assets except my small stake in company stock (my position is senior enough that I can only buy/sell in specific windows with pre-approval) to Personal Capital, now called Empower.

There is no doubt that they have constructed a portfolio that is more appropriately diversified than the one I had created myself. But today I looked at comparing what my performance would have been in comparison to theirs had I just continued my own methodology. I assumed I left everything as it was at the time I turned it over to them, except that I assumed I would have reinvested cash that I had recently generated at the time from selling a couple funds back into the primary S&P 500 and NASDAQ index funds I had in my portfolio.

In the 2.5 years or so that Empower has managed my portfolio, its value has increased about 30%. Following my method;, it would have increased about 50%. That 20% delta is a lot of money.

I'm interested in perspective on this. I anticipate some criticism of my choice of Empower, and that's fine, I'm interested in thoughts on how to choose the right service/manager if I continue to not do this myself. I'm also interested in whether or not this is the kind of performance tradeoff one should expect with a portfolio constructed for diversification and balance rather than for growth, which is essentially what I had before. Also interested in time horizon perspective, i.e., the right timeline to foresake some upside for security.

From a personal perspective, my wife is disabled and in hospice care (separate thread about this), and we do not have kids, in case that factors into anyone's comments. Our only debt is our mortgage, which is at 2.75%.

Thoughts?

I basically did the opposite of you. I never did anything until we hired an Ameriprise adviser who was a friend of a friend in 2013. Long story short, we put 2 and 2 together in 2020 right during Covid and realized we were getting violated, so I took over then. I’m still butt hurt by it and very untrusting now of a big company planner.

Our town went to empower from prudential as well and I have been very happy with them, but I don’t use their advice. I just like their super low expense ratios, and although they don’t have a ton of funds and wish there were more options, I get the s&p for a .01 ER.

As far as them not having a higher rate of return than what you would have had, is it possible that’s because you were aggressive for your age and they balanced it out more? If you were 90/10 at 56 years old most planners I would guess would put you around a 60/40, 70/30 which of course is going to give you lower returns. If you were all US stocks and they put you in a more balanced with international, that would have also been a reason.

Do you know what type of fee they charge you to manage. Even 1% which may not sound huge is basically about 25% of your money yearly that you would plan to have.

I hope your person isn’t doing to you what our person did to us.

 

[NutterButter]

I'm pretty conflicted now. With stock gains, salary, and just being born on third base I'm at a turning point. Have houses, cars, schools all paid off, plenty saved for kids college and then some.

I'm casting a shadow now on having enough savings to just run lean until can cashout the 401k and IRAs.

Motivation to keep grinding is rather low, but damn would it be boring AF to retire. Wife wants to keep going for a bit. Finding a job with a non profit or something is just not something I have any networking for.

Maybe hike the appalachian trail. fastest time is ~41 days. you can beat that.

 

[Sand]

Spent some time this weekend assessing investments and wanted some perspective.

Up until July 2022, I never had any financial adviser, I just handled my own investments. At that time, I had a 3 Fidelity brokerage accounts, one for after tax investments, one rollover IRA, and one Roth IRA. I'm sure I made plenty of mistakes over the years, but by that point I had arrived at almost all investments being in low fee mutual funds, mostly index funds. The only stock I had at that point was a small investment in my own company's stock.

Most of it was in S&P 500 and NASDAQ index funds, so my portfolio generally followed market performance. We have a lot of cash in a high yield savings account (I'm sure most financial advisers would say too much), plus my work 401k and equity in our home, but the majority of our net worth was in these 3 accounts.

I knew that according to prevailing wisdom, I was too heavy in stocks, and almost exclusively US based stocks at that. I had made no attempt to achieve a portfolio that was properly balanced between stocks and bonds, and I had made no attempt to ensure I was properly weighted across the different sectors. I was turning 54 later that year and decided I should look into having someone else manage our portfolio to make sure I didn't screw up our financial future.

So I chose to turn over all assets except my small stake in company stock (my position is senior enough that I can only buy/sell in specific windows with pre-approval) to Personal Capital, now called Empower.

There is no doubt that they have constructed a portfolio that is more appropriately diversified than the one I had created myself. But today I looked at comparing what my performance would have been in comparison to theirs had I just continued my own methodology. I assumed I left everything as it was at the time I turned it over to them, except that I assumed I would have reinvested cash that I had recently generated at the time from selling a couple funds back into the primary S&P 500 and NASDAQ index funds I had in my portfolio.

In the 2.5 years or so that Empower has managed my portfolio, its value has increased about 30%. Following my method;, it would have increased about 50%. That 20% delta is a lot of money.

I'm interested in perspective on this. I anticipate some criticism of my choice of Empower, and that's fine, I'm interested in thoughts on how to choose the right service/manager if I continue to not do this myself. I'm also interested in whether or not this is the kind of performance tradeoff one should expect with a portfolio constructed for diversification and balance rather than for growth, which is essentially what I had before. Also interested in time horizon perspective, i.e., the right timeline to foresake some upside for security.

From a personal perspective, my wife is disabled and in hospice care (separate thread about this), and we do not have kids, in case that factors into anyone's comments. Our only debt is our mortgage, which is at 2.75%.

Thoughts?

I hope your person isn’t doing to you what our person did to us.

PC uses a pretty set playbook, so no churning, etc. The underperformance is due to international and small caps being inserted in there, which have done poorly lately.

PC also charges a pretty hefty fee, which over time will eat away at returns.

 

[SFBayDuck]

Spent some time this weekend assessing investments and wanted some perspective.

Up until July 2022, I never had any financial adviser, I just handled my own investments. At that time, I had a 3 Fidelity brokerage accounts, one for after tax investments, one rollover IRA, and one Roth IRA. I'm sure I made plenty of mistakes over the years, but by that point I had arrived at almost all investments being in low fee mutual funds, mostly index funds. The only stock I had at that point was a small investment in my own company's stock.

Most of it was in S&P 500 and NASDAQ index funds, so my portfolio generally followed market performance. We have a lot of cash in a high yield savings account (I'm sure most financial advisers would say too much), plus my work 401k and equity in our home, but the majority of our net worth was in these 3 accounts.

I knew that according to prevailing wisdom, I was too heavy in stocks, and almost exclusively US based stocks at that. I had made no attempt to achieve a portfolio that was properly balanced between stocks and bonds, and I had made no attempt to ensure I was properly weighted across the different sectors. I was turning 54 later that year and decided I should look into having someone else manage our portfolio to make sure I didn't screw up our financial future.

So I chose to turn over all assets except my small stake in company stock (my position is senior enough that I can only buy/sell in specific windows with pre-approval) to Personal Capital, now called Empower.

There is no doubt that they have constructed a portfolio that is more appropriately diversified than the one I had created myself. But today I looked at comparing what my performance would have been in comparison to theirs had I just continued my own methodology. I assumed I left everything as it was at the time I turned it over to them, except that I assumed I would have reinvested cash that I had recently generated at the time from selling a couple funds back into the primary S&P 500 and NASDAQ index funds I had in my portfolio.

In the 2.5 years or so that Empower has managed my portfolio, its value has increased about 30%. Following my method;, it would have increased about 50%. That 20% delta is a lot of money.

I'm interested in perspective on this. I anticipate some criticism of my choice of Empower, and that's fine, I'm interested in thoughts on how to choose the right service/manager if I continue to not do this myself. I'm also interested in whether or not this is the kind of performance tradeoff one should expect with a portfolio constructed for diversification and balance rather than for growth, which is essentially what I had before. Also interested in time horizon perspective, i.e., the right timeline to foresake some upside for security.

From a personal perspective, my wife is disabled and in hospice care (separate thread about this), and we do not have kids, in case that factors into anyone's comments. Our only debt is our mortgage, which is at 2.75%.

Thoughts?

I hope your person isn’t doing to you what our person did to us.

PC uses a pretty set playbook, so no churning, etc. The underperformance is due to international and small caps being inserted in there, which have done poorly lately.

PC also charges a pretty hefty fee, which over time will eat away at returns.

First thing to look at is the fee drag. Not a huge deal over a couple of years in your case, but it can sure add up over time. Found this on the interwebs:

To illustrate the impact, consider an investor who contributes $1,000 per month for 40 years. Assuming an 8% annual return, the portfolio would grow to $3.2 million. However, with a 1% AUM fee reducing the return to 7%, the portfolio would only reach less than $2.5 million, a difference of about $700,000

Otherwise looks like you're just talking about diversification, which kind of sucks when we're in a US equity bull market. And the standard diversification of US/Int'l Equities/Bonds sucked in 2022 as well during the last bear market we went through. So it's been a tough stretch for those doing anything other than VTSAX and chill.

But in exchange for lower return it theoretically reduces risk as well...which will come into play at some point, over a long enough time frame. Draw downs will be shallower, and recoveries will be quicker.

I've gotten into consuming content from the FIRE movement the past year or so, and those people look so smart right now, it's just been so easy. Their "bible", The Simple Path to Wealth, came out in 2016. They've all been in VTSAX/VTI and nothing else, which of course has worked great in what has been a secular bull market since right around the time the book was published. As long as that's the case, that approach is ideal. But what happens if/when we see another period like 2000-2013, where the real return over that 13 year time frame in the S&P was flat (including dividends) and we experienced a couple of huge draw downs? Meanwhile look what Bonds did for you during that time in comparison? Now if you were plowing money into equities during that time it turns out you were buying low. But what if you retired in 2001 and were withdrawing and didn't have a diversified portfolio?

The mistake I, and I think a lot of people made, was diversifying too early. Target date funds in my 401K in my 20s, 10-20% bonds in my 30s and 40s. For long-term/retirement funds, I don't see any reason to own anything but a total market equity fund through your 20s-30s-40s and maybe even 50s, depending on when you want to retire. If you believe in the research on the SCV premium, then maybe tilt some toward that. But that early diversification during the accumulation phase is what can kill the long-term compounding.

Once you get to "your number", then diversify. Or once you're within 5-7 years of retirement when you're running out of working years, it probably makes sense to do so. In your mid-50s as you are, have you modeled out to see if you have enough saved? Or are you still 20%-40% short and able to keep working for several years if need be? Those are two very different scenarios.

A well diversified portfolio of uncorrelated assets probably isn't the best way to grow wealth, but as you transition to a drawdown portfolio it's the best way to maximize your opportunity to spend. Put another way, I've heard said "the fastest way to build wealth is concentration, the best way to keep wealth is diversification."

 

[Chadstroma]

Back in 2008 when I was out of work in banking and it was near impossible to find a job in the industry I took an interview with Ameriprise. It consisted of a very short "interview" which was more them selling me on Ameriprise than asking or finding out about me. It came off very used car salesish. I dismissed it because maybe that was just the guy I was talking to. The next phase after that which I was told the final phase was a phone simulation of selling. If you passed, you would be connected to the next phone simulation and then a third. The first was a cold call. The second was a referral from a friend. The final one, which I did not pass, was selling to a family member. They do not tell you why you didn't pass or did but there is no doubt in my mind that I didn't pass because I did not hard sell this supposed family member. As soon as I got off, I knew that that place was not somewhere I would want to work no matter how badly I needed a job. I would never trust my money with them or allow anyone I had any influence over invest with them.

 

[SFBayDuck]

Back in 2008 when I was out of work in banking and it was near impossible to find a job in the industry I took an interview with Ameriprise. It consisted of a very short "interview" which was more them selling me on Ameriprise than asking or finding out about me. It came off very used car salesish. I dismissed it because maybe that was just the guy I was talking to. The next phase after that which I was told the final phase was a phone simulation of selling. If you passed, you would be connected to the next phone simulation and then a third. The first was a cold call. The second was a referral from a friend. The final one, which I did not pass, was selling to a family member. They do not tell you why you didn't pass or did but there is no doubt in my mind that I didn't pass because I did not hard sell this supposed family member. As soon as I got off, I knew that that place was not somewhere I would want to work no matter how badly I needed a job. I would never trust my money with them or allow anyone I had any influence over invest with them.

“Now sell me this pen”

 

[ConstruxBoy]

Back in 2008 when I was out of work in banking and it was near impossible to find a job in the industry I took an interview with Ameriprise. It consisted of a very short "interview" which was more them selling me on Ameriprise than asking or finding out about me. It came off very used car salesish. I dismissed it because maybe that was just the guy I was talking to. The next phase after that which I was told the final phase was a phone simulation of selling. If you passed, you would be connected to the next phone simulation and then a third. The first was a cold call. The second was a referral from a friend. The final one, which I did not pass, was selling to a family member. They do not tell you why you didn't pass or did but there is no doubt in my mind that I didn't pass because I did not hard sell this supposed family member. As soon as I got off, I knew that that place was not somewhere I would want to work no matter how badly I needed a job. I would never trust my money with them or allow anyone I had any influence over invest with them.

“Now sell me this pen”

Just re-watched that before Xmas, lol.

 

[SFBayDuck]

Back in 2008 when I was out of work in banking and it was near impossible to find a job in the industry I took an interview with Ameriprise. It consisted of a very short "interview" which was more them selling me on Ameriprise than asking or finding out about me. It came off very used car salesish. I dismissed it because maybe that was just the guy I was talking to. The next phase after that which I was told the final phase was a phone simulation of selling. If you passed, you would be connected to the next phone simulation and then a third. The first was a cold call. The second was a referral from a friend. The final one, which I did not pass, was selling to a family member. They do not tell you why you didn't pass or did but there is no doubt in my mind that I didn't pass because I did not hard sell this supposed family member. As soon as I got off, I knew that that place was not somewhere I would want to work no matter how badly I needed a job. I would never trust my money with them or allow anyone I had any influence over invest with them.

“Now sell me this pen”

Just re-watched that before Xmas, lol.

No joke, I got that twice in interviews in the 90s.

My first job out of college, selling long distance services for Frontier Communications, was one of them. Job started off with like 30 of us at the LAX Embassy Suites for a week of training. They told us on day one the lowest scorers in the role play at the end of the week would be fired, and sure enough two people had their first job out of college end after 5 days.

 

[steelerfan1]

Back in 2008 when I was out of work in banking and it was near impossible to find a job in the industry I took an interview with Ameriprise. It consisted of a very short "interview" which was more them selling me on Ameriprise than asking or finding out about me. It came off very used car salesish. I dismissed it because maybe that was just the guy I was talking to. The next phase after that which I was told the final phase was a phone simulation of selling. If you passed, you would be connected to the next phone simulation and then a third. The first was a cold call. The second was a referral from a friend. The final one, which I did not pass, was selling to a family member. They do not tell you why you didn't pass or did but there is no doubt in my mind that I didn't pass because I did not hard sell this supposed family member. As soon as I got off, I knew that that place was not somewhere I would want to work no matter how badly I needed a job. I would never trust my money with them or allow anyone I had any influence over invest with them.

Yup, we were put in an annuity where she was making more money on it than we were. And when I left Ameriprise to put everything over to vanguard there was a 7k penalty to get out of it. Shame on me though for not caring enough at the time to research more. I’m sure this is happening to tons of people.

 

[NutterButter]

Back in 2008 when I was out of work in banking and it was near impossible to find a job in the industry I took an interview with Ameriprise. It consisted of a very short "interview" which was more them selling me on Ameriprise than asking or finding out about me. It came off very used car salesish. I dismissed it because maybe that was just the guy I was talking to. The next phase after that which I was told the final phase was a phone simulation of selling. If you passed, you would be connected to the next phone simulation and then a third. The first was a cold call. The second was a referral from a friend. The final one, which I did not pass, was selling to a family member. They do not tell you why you didn't pass or did but there is no doubt in my mind that I didn't pass because I did not hard sell this supposed family member. As soon as I got off, I knew that that place was not somewhere I would want to work no matter how badly I needed a job. I would never trust my money with them or allow anyone I had any influence over invest with them.

“Now sell me this pen”

Just re-watched that before Xmas, lol.

No joke, I got that twice in interviews in the 90s.

My first job out of college, selling long distance services for Frontier Communications, was one of them. Job started off with like 30 of us at the LAX Embassy Suites for a week of training. They told us on day one the lowest scorers in the role play at the end of the week would be fired, and sure enough two people had their first job out of college end after 5 days.

Great company . One of the handful of stocks I individually owned throughout my life; don't ask me why b/c i couldn't tell you. Held it right until it went bankrupt. Subscribe to my newsletter to get more hot stock tips.

 

[Tau837]

Spent some time this weekend assessing investments and wanted some perspective.

Up until July 2022, I never had any financial adviser, I just handled my own investments. At that time, I had a 3 Fidelity brokerage accounts, one for after tax investments, one rollover IRA, and one Roth IRA. I'm sure I made plenty of mistakes over the years, but by that point I had arrived at almost all investments being in low fee mutual funds, mostly index funds. The only stock I had at that point was a small investment in my own company's stock.

Most of it was in S&P 500 and NASDAQ index funds, so my portfolio generally followed market performance. We have a lot of cash in a high yield savings account (I'm sure most financial advisers would say too much), plus my work 401k and equity in our home, but the majority of our net worth was in these 3 accounts.

I knew that according to prevailing wisdom, I was too heavy in stocks, and almost exclusively US based stocks at that. I had made no attempt to achieve a portfolio that was properly balanced between stocks and bonds, and I had made no attempt to ensure I was properly weighted across the different sectors. I was turning 54 later that year and decided I should look into having someone else manage our portfolio to make sure I didn't screw up our financial future.

So I chose to turn over all assets except my small stake in company stock (my position is senior enough that I can only buy/sell in specific windows with pre-approval) to Personal Capital, now called Empower.

There is no doubt that they have constructed a portfolio that is more appropriately diversified than the one I had created myself. But today I looked at comparing what my performance would have been in comparison to theirs had I just continued my own methodology. I assumed I left everything as it was at the time I turned it over to them, except that I assumed I would have reinvested cash that I had recently generated at the time from selling a couple funds back into the primary S&P 500 and NASDAQ index funds I had in my portfolio.

In the 2.5 years or so that Empower has managed my portfolio, its value has increased about 30%. Following my method;, it would have increased about 50%. That 20% delta is a lot of money.

I'm interested in perspective on this. I anticipate some criticism of my choice of Empower, and that's fine, I'm interested in thoughts on how to choose the right service/manager if I continue to not do this myself. I'm also interested in whether or not this is the kind of performance tradeoff one should expect with a portfolio constructed for diversification and balance rather than for growth, which is essentially what I had before. Also interested in time horizon perspective, i.e., the right timeline to foresake some upside for security.

From a personal perspective, my wife is disabled and in hospice care (separate thread about this), and we do not have kids, in case that factors into anyone's comments. Our only debt is our mortgage, which is at 2.75%.

Thoughts?

I hope your person isn’t doing to you what our person did to us.

PC uses a pretty set playbook, so no churning, etc. The underperformance is due to international and small caps being inserted in there, which have done poorly lately.

PC also charges a pretty hefty fee, which over time will eat away at returns.

First thing to look at is the fee drag. Not a huge deal over a couple of years in your case, but it can sure add up over time. Found this on the interwebs:

To illustrate the impact, consider an investor who contributes $1,000 per month for 40 years. Assuming an 8% annual return, the portfolio would grow to $3.2 million. However, with a 1% AUM fee reducing the return to 7%, the portfolio would only reach less than $2.5 million, a difference of about $700,000

Otherwise looks like you're just talking about diversification, which kind of sucks when we're in a US equity bull market. And the standard diversification of US/Int'l Equities/Bonds sucked in 2022 as well during the last bear market we went through. So it's been a tough stretch for those doing anything other than VTSAX and chill.

But in exchange for lower return it theoretically reduces risk as well...which will come into play at some point, over a long enough time frame. Draw downs will be shallower, and recoveries will be quicker.

I've gotten into consuming content from the FIRE movement the past year or so, and those people look so smart right now, it's just been so easy. Their "bible", The Simple Path to Wealth, came out in 2016. They've all been in VTSAX/VTI and nothing else, which of course has worked great in what has been a secular bull market since right around the time the book was published. As long as that's the case, that approach is ideal. But what happens if/when we see another period like 2000-2013, where the real return over that 13 year time frame in the S&P was flat (including dividends) and we experienced a couple of huge draw downs? Meanwhile look what Bonds did for you during that time in comparison? Now if you were plowing money into equities during that time it turns out you were buying low. But what if you retired in 2001 and were withdrawing and didn't have a diversified portfolio?

The mistake I, and I think a lot of people made, was diversifying too early. Target date funds in my 401K in my 20s, 10-20% bonds in my 30s and 40s. For long-term/retirement funds, I don't see any reason to own anything but a total market equity fund through your 20s-30s-40s and maybe even 50s, depending on when you want to retire. If you believe in the research on the SCV premium, then maybe tilt some toward that. But that early diversification during the accumulation phase is what can kill the long-term compounding.

Once you get to "your number", then diversify. Or once you're within 5-7 years of retirement when you're running out of working years, it probably makes sense to do so. In your mid-50s as you are, have you modeled out to see if you have enough saved? Or are you still 20%-40% short and able to keep working for several years if need be? Those are two very different scenarios.

A well diversified portfolio of uncorrelated assets probably isn't the best way to grow wealth, but as you transition to a drawdown portfolio it's the best way to maximize your opportunity to spend. Put another way, I've heard said "the fastest way to build wealth is concentration, the best way to keep wealth is diversification."

Thanks for this thorough response. I haven't had time to respond to this until now.

My Empower dashboard shows the following for 2024:

• My portfolio: +10.79%
• Indexes:
  • "Blended": +15.26%
  • "US Stock": +23.81%
  • "Foreign Stock": +5.56%
  • "US Bond": +1.31%
  • "Foreign Bond": -6.5%
  • "Alternatives": +11.28%

The "Blended" description: "The comparative blended benchmark is a mix of low-cost ETFs designed to represent a combination of five major asset classes: US Equities (VTI), International Equities (VEU), US Bonds (AGG), International Bonds (IGOV), and Alternatives (equal mix of VNQ/IAU/DBC). Asset allocations of the blended benchmarks align with respective Alternative allocations shown in the Dashboard. This benchmark is useful for comparing portfolios of similar high level asset allocations like respective Personal Strategies. However, the blended index may not necessarily reflect the same asset mix as the actual portfolio. The blended allocation is rebalanced quarterly. A hypothetical 0.83% annual fee is applied for comparative purposes as this benchmark has some aspects of a professionally managed account."

I don't feel great about the fact that the "Blended index" crushed my portfolio performance in 2024, especially considering that my "Current Strategy" is defined as "Full Growth," defined as "A multi-asset class global strategy which seeks to maximize long-term growth with expected volatility similar to an all stock portfolio."

My "Personal Risk Profile" is defined as:

• Need to take risk: Low
• Willingness to take risk: Highest growth
• Ability to take risk: High

Back to your post, I have always felt challenged to come up with "my number." In my situation, I have been married for 32 years, and my wife has been disabled with progressively worsening health for the past 26 years. So I have always been challenged to project the future in what I think of as normal terms. I have never felt comfortable projecting my wife's future medical expenses, so I have always felt I would have to work until 65-70 to maintain big employer health insurance in addition to her Medicare insurance, because some of her medications would potentially cost $15K/month out of pocket with only Medicare coverage. Now she is in hospice care, so she may not live to retirement age, completely changing the entire exercise. So I'm not sure how I could define retirement goals today... I have two completely different scenarios that might play out. (Not intending to make this about my wife's health situation, just providing context.)

It is very possible we have already reached "my number," since I don't really know what it needs to be. I feel great about our total net worth, liquidity, etc. But I am still kicking myself for having moved my portfolio to Empower given the net loss that has resulted. I'm talking about more than $300K, so it is significant.

I have a review with my rep tomorrow. Interested in any more thoughts anyone has in advance of that review. Will report back.

 

[Steve Tasker]

If you have a lump sum of cash that you expect to use in a reasonable time-frame, what's your rule of thumb as to whether to put the cash into liquid savings or put it into the market? Assume the only two options are a high-yield savings account or a taxable brokerage account with some mix of investments. You don't know when you're going to spend that cash, but let's say you know that you're going to want it at some point in the next ~couple years. What's your personal cutoff of whether to put it in savings or play the market?

 

[BeTheMatch]

If you have a lump sum of cash that you expect to use in a reasonable time-frame, what's your rule of thumb as to whether to put the cash into liquid savings or put it into the market? Assume the only two options are a high-yield savings account or a taxable brokerage account with some mix of investments. You don't know when you're going to spend that cash, but let's say you know that you're going to want it at some point in the next ~couple years. What's your personal cutoff of whether to put it in savings or play the market?

For me, one year. If you hold that long, then it's just taxed as long-term capital gains. If I had it now, though, I probably would be a little gun shy to put in S&P 500 fund. Because if you're going to take it out in a year or two anyway, I'd probably just take the security of a money market fund at 4+% rather than risking in a stock fund. But that's just me.

 

[SFBayDuck]

If you have a lump sum of cash that you expect to use in a reasonable time-frame, what's your rule of thumb as to whether to put the cash into liquid savings or put it into the market? Assume the only two options are a high-yield savings account or a taxable brokerage account with some mix of investments. You don't know when you're going to spend that cash, but let's say you know that you're going to want it at some point in the next ~couple years. What's your personal cutoff of whether to put it in savings or play the market?

In 2021 I had much of my down payment money sitting in SPACs while we were house shopping....so guess I'm a little more aggressive than most!

Don't think I'd do that again.

I think it really depends on life situation - are you still working? Is there flexibility in when you need the money, or a hard date?

Rule of thumb is probably if you need it in the next 1-3 years, you should be focused on return of your money and not return on your money. Between 3-5 years I'd take on some risk, risk parity style portfolio.

 

[Steve Tasker]

In 2021 I had much of my down payment money sitting in SPACs while we were house shopping....so guess I'm a little more aggressive than most!

Don't think I'd do that again.

I think it really depends on life situation - are you still working? Is there flexibility in when you need the money, or a hard date?

Rule of thumb is probably if you need it in the next 1-3 years, you should be focused on return of your money and not return on your money. Between 3-5 years I'd take on some risk, risk parity style portfolio.

Yes, I'm still working. I'm a partner in a partnership and received my year-end profit-sharing payout. My comp is structured such that I end up getting maybe 50-60% of my total comp during the year, and then a large chunk in early January depending on how profitable we were.

The cash in this case is for a downpayment on a house. Girlfriend and I are starting to look, slowly, for a house. I do have enough savings and cash in non-retirement brokerage accounts to make the downpayment even if something were to happen to this new cash, though would prefer to leave my investments as they are without dipping into them. Could also sell my current house and clear a decent gain, but would prefer not to do that in the short-term for complicated reasons that would take awhile to explain. I am aware and very thankful that I'm in a good financial situation.

I don't know when I'm going to need this cash, but there's going to come a point and I want to be ready. I would expect in the next 6 months - 3 years. My gut feeling is to keep it in cash, but this time of year I usually do some shuffling and investing, and I'm kinda itching to get something in the market rather than just in a HYSA.

 

[BeTheMatch]

In 2021 I had much of my down payment money sitting in SPACs while we were house shopping....so guess I'm a little more aggressive than most!

Don't think I'd do that again.

I think it really depends on life situation - are you still working? Is there flexibility in when you need the money, or a hard date?

Rule of thumb is probably if you need it in the next 1-3 years, you should be focused on return of your money and not return on your money. Between 3-5 years I'd take on some risk, risk parity style portfolio.

Yes, I'm still working. I'm a partner in a partnership and received my year-end profit-sharing payout. My comp is structured such that I end up getting maybe 50-60% of my total comp during the year, and then a large chunk in early January depending on how profitable we were.

The cash in this case is for a downpayment on a house. Girlfriend and I are starting to look, slowly, for a house. I do have enough savings and cash in non-retirement brokerage accounts to make the downpayment even if something were to happen to this new cash, though would prefer to leave my investments as they are without dipping into them. Could also sell my current house and clear a decent gain, but would prefer not to do that in the short-term for complicated reasons that would take awhile to explain. I am aware and very thankful that I'm in a good financial situation.

I don't know when I'm going to need this cash, but there's going to come a point and I want to be ready. I would expect in the next 6 months - 3 years. My gut feeling is to keep it in cash, but this time of year I usually do some shuffling and investing, and I'm kinda itching to get something in the market rather than just in a HYSA.

"Don't do something. Just stand there!" -- Jack Bogle

 

[-OZ-]

Rule of thumb is probably if you need it in the next 1-3 years, you should be focused on return of your money and not return on your money. Between 3-5 years I'd take on some risk, risk parity style portfolio.

Funny, I didn’t look at the poster’s name before I read the post, yet knew exactly who this was.
(I agree with you)

 

[matttyl]

If you have a lump sum of cash that you expect to use in a reasonable time-frame, what's your rule of thumb as to whether to put the cash into liquid savings or put it into the market? Assume the only two options are a high-yield savings account or a taxable brokerage account with some mix of investments. You don't know when you're going to spend that cash, but let's say you know that you're going to want it at some point in the next ~couple years. What's your personal cutoff of whether to put it in savings or play the market?

For me personally, 18 months. Longer than that invest. Shorter than that, cash/CD/ibonds back in the day.

 

[Sand]

If you have a lump sum of cash that you expect to use in a reasonable time-frame, what's your rule of thumb as to whether to put the cash into liquid savings or put it into the market? Assume the only two options are a high-yield savings account or a taxable brokerage account with some mix of investments. You don't know when you're going to spend that cash, but let's say you know that you're going to want it at some point in the next ~couple years. What's your personal cutoff of whether to put it in savings or play the market?

For me personally, 18 months. Longer than that invest. Shorter than that, cash/CD/ibonds back in the day.

These days I'd argue a bit longer as you can get 4.5% on a CD or 4% in a money market.

 

[thecatch]

If you have a lump sum of cash that you expect to use in a reasonable time-frame, what's your rule of thumb as to whether to put the cash into liquid savings or put it into the market? Assume the only two options are a high-yield savings account or a taxable brokerage account with some mix of investments. You don't know when you're going to spend that cash, but let's say you know that you're going to want it at some point in the next ~couple years. What's your personal cutoff of whether to put it in savings or play the market?

For me personally, 18 months. Longer than that invest. Shorter than that, cash/CD/ibonds back in the day.

These days I'd argue a bit longer as you can get 4.5% on a CD or 4% in a money market.

Vanguard's MM is still paying 4.5%

 

[GoBirds]

If you have a lump sum of cash that you expect to use in a reasonable time-frame, what's your rule of thumb as to whether to put the cash into liquid savings or put it into the market? Assume the only two options are a high-yield savings account or a taxable brokerage account with some mix of investments. You don't know when you're going to spend that cash, but let's say you know that you're going to want it at some point in the next ~couple years. What's your personal cutoff of whether to put it in savings or play the market?

For me personally, 18 months. Longer than that invest. Shorter than that, cash/CD/ibonds back in the day.

These days I'd argue a bit longer as you can get 4.5% on a CD or 4% in a money market.

Vanguard's MM is still paying 4.5%

Did you alls vanguard cash plus drop to 3.65% also? Not sure insured is worth that spread.

 

[stbugs]

In 2021 I had much of my down payment money sitting in SPACs while we were house shopping....so guess I'm a little more aggressive than most!

Don't think I'd do that again.

I think it really depends on life situation - are you still working? Is there flexibility in when you need the money, or a hard date?

Rule of thumb is probably if you need it in the next 1-3 years, you should be focused on return of your money and not return on your money. Between 3-5 years I'd take on some risk, risk parity style portfolio.

Yes, I'm still working. I'm a partner in a partnership and received my year-end profit-sharing payout. My comp is structured such that I end up getting maybe 50-60% of my total comp during the year, and then a large chunk in early January depending on how profitable we were.

The cash in this case is for a downpayment on a house. Girlfriend and I are starting to look, slowly, for a house. I do have enough savings and cash in non-retirement brokerage accounts to make the downpayment even if something were to happen to this new cash, though would prefer to leave my investments as they are without dipping into them. Could also sell my current house and clear a decent gain, but would prefer not to do that in the short-term for complicated reasons that would take awhile to explain. I am aware and very thankful that I'm in a good financial situation.

I don't know when I'm going to need this cash, but there's going to come a point and I want to be ready. I would expect in the next 6 months - 3 years. My gut feeling is to keep it in cash, but this time of year I usually do some shuffling and investing, and I'm kinda itching to get something in the market rather than just in a HYSA.

Two thoughts. First, for a short horizon, I’d go cash in brokerage (4.3% for my Fidelity accounts), basically like a money market. I don’t foresee a great stock return this year so if you want to use this for a house, no reason to get risky especially when you want to leave your investments alone.

Second, I would never buy a house with a girlfriend. I would if I was engaged with a wedding date set but no chance with a girlfriend. It worked out for my wife and I to buy our first house because we had a choice to get married 6 months after engagement or 18 months due to Rochester weather and we decided to do the house at 6 months and get married the next summer. Great call but we were engaged and not worried about a break up. Still together almost 30 years later.

 

[Steve Tasker]

Second, I would never buy a house with a girlfriend. I would if I was engaged with a wedding date set but no chance with a girlfriend. It worked out for my wife and I to buy our first house because we had a choice to get married 6 months after engagement or 18 months due to Rochester weather and we decided to do the house at 6 months and get married the next summer. Great call but we were engaged and not worried about a break up. Still together almost 30 years later.

I appreciate this point, there's more to that story that I didn't elaborate on. Ideally she's not a girlfriend by the time any house is purchased.