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I bought a “year” that is five years beyond my retirement date. If I don’t like the allocation I can always switch it up, but so far it is all good. I’m only near 30% in bonds. Part of the key for me, however, is to not get too involved. I think you know that story.
I bought a “year” that is five years beyond my retirement date. If I don’t like the allocation I can always switch it up, but so far it is all good. I’m only near 30% in bonds. Part of the key for me, however, is to not get too involved. I think you know that story.
That is a great idea and with 5 years beyond retirement date, the fund will be more aggressive. Target funds can be a 'set it and forget it' for quite a while and as MathJac stated, the nearer to retirement is when they may be too focused on bonds. But with your plan to possibly switch things around, it can work out.
What is your opinion on simplifying the portfolio by going to Bogle's 3-fund portfolio?
TIA.
Excellent idea, especially if you get low E.R. funds and combine the other accounts into one. Set it and forget it to make life easier. Just adjust your asset allocation to your liking. I happily did something like this years ago.
My question is tangentially related to this topic. As people who follow this forum might remember, I am a semi-retired 59 uear old, do not like dealing with money, am not knowledgeable about investing, and will thus retire mostly on annuities (plus soc security at 70).
Nevertheless, I have had a small SEP-IRA with T.Rowe Price for about 15 years, placed from the beginning in the 2030 target date fund. This account has not grown too well, certainly not comparable to the growth of stock market indices. This year, I have started converting this account into Roth (the first $90k converted this year, plan to convert a similar amount in each of the next 2 years). As mentioned, I am 59 now (semi-retired), have other financial sources, and will definitely not need to withdraw money from this Roth account for at least 20 years.
Since money growth in this 2030 target date fund has not been great, I have been thinking of moving my Roth money into something else. It would have to be something that requires no actions on my part except the initial investment (I cannot deal with following the market, rebalancing, and whatnot).
I have been thinking of moving my Roth from the 2030 into the 2050 target date fund with the same company (T.Rowe Price), vs. moving it compleyely into stocks (specifically, the Vanguard Total Stock Market ETF). Would appreciate some informed opinions re pros and cons of either approach (again, I am aiming to not do anything with this account after the initial investment - just park the money somewhere, and leave it completely alone until I start withdrawing. I will not need the money at all for at least 20 years. Even after that, ie, after the age of 80, this account will serve only as a backup for emergencies or unplanned expenses, I will not need it for any usual expenses, that is all covered from other sources). Since this will be a Roth account, its future earnings will not be taxable, so it would be sort of cool to maximize the gain of this account (and I can take risks with it, because this is the money that I will in fact likely never even need). Opinions - 2050 target date fund, or total stock market ETF?
yep , they are safe to employers and wall street and that is why they are used , not because it fits the mold for what one should be in .
no one can hold them accountable if they matched this so called target date to you even if it is overly aggressive or does not fit your pucker factor .
i am never a fan of anything that just sizes you up by age and disregards what is happening around you ..
remember how bond funds were hit when rates were rising ? well we have not had a bond bear market trend in more than 40 years , just speed bumps in a down trend .
what do you think retirees will do when these target funds get hammered once the interest rate trend is actually up for years ? a blood bath ....
you can ski down the last 40 years . so all you had to do was sit static with a bond fund and the money rolled in ... it has been that way my entire investing time frame which spans more than 30 years . so trends in rates can span decades . but when they reverse as a trend , look out below . especially target funds that loaded retirees up on bonds . .
Mathjak, I am actually interested in your (and other) opinions about the question I asked in the previous post (see above). I guess this thread got inactive in a couple of days while I was in transit back home from Asia, and I did not reactivate it properly for it to go high enough in the list of topics, and be visible. So anyway, I'd like to keep the thread going, because I do have this question about long-horizon target date fund vs. index fund.
i want investments that i can change that fit what is happening in the world around me . today i may want the fighter cover of long term treasuries and gold , tomorrow i may not .
after a recession i would want to ramp up my allocation to equities . the target fund would be reducing equities as it follows a glide path based on age.
as far as your plan , i would never take something as important as my money and want nothing to do with it after i invest it ..
unless it was money that was decades away where i want it to run in 100% equity mode , everything requires a plan and rebalncing to not get to far away from its allocation as well as meet your own pucker factor and goals for that money ..
i worked to hard to accumulate it to want to ever turn a blind eye and to be what i wall call investing ignorant .
in fact even when i was 100% equities the holdings changed over time .
i think the first major recession , you may regret just throwing it all in a 100% equity index fund at this stage in time.. the past 20 years may very well be the norm going forward . we had two major down turns over that time frame and inflation adjusted it took 13 years for the s&p 500 to just get back to even.
so far the last 18 months have seen a drop and new highs and the 25% equity , 25% long term treasuries , 25% gold , 25% cash , all weather portfolio is still ahead of a 60/40 because of that drop last year .
so , while yes you certainly can throw it all in a total market fund , it is all fun and games until someone loses an eye . the real question is do you have the nerves of steel to watch up to half of it evaporate with no idea when it's coming back and is that worth it to you to do since you don't even need to take on so much risk at this stage ?
it isn't like you have a need to up the risk ante to such a high level to eat..
if it was my mother i was giving advice too , i would tell her stick to the newsletter i get , pick something you are totally comfortable with as far as models and once a week spend the 30 seconds to read an e-mail to see if there are any changes . at least someone would be monitoring things and nudging things along the way to stay on course .
Last edited by mathjak107; 11-19-2019 at 03:01 AM..
i want investments that i can change that fit what is happening in the world around me . today i may want the fighter cover of long term treasuries and gold , tomorrow i may not .
after a recession i would want to ramp up my allocation to equities . the target fund would be reducing equities as it follows a glide path based on age.
as far as your plan , i would never take something as important as my money and want nothing to do with it after i invest it ..
unless it was money that was decades away where i want it to run in 100% equity mode , everything requires a plan and rebalncing to not get to far away from its allocation .
i worked to hard to accumulate it to want to ever turn a blind eye . in fact even when i was 100% equities the holdings changed over time .
i think the first major recession you may regret just throwing it all in an index fund at this stage in time
Thank you, that reply is actually somewhat helpful, although we have nothing in common when ot comes to handling money :-).
First, it would never occur to me to throw it all in an index fund - just the opposite: about 75% of my retirement (and more than 100% of my regular expenses in retirement) will be funded by annuities.
But I also have a SEP-IRA that accounts for about 6 or7 % of my total assets, ie, small part of my assets. This IRA is in a 2030 target date fund, which is my ONLY exposure to market risk. This IRA is in the process of conversion to Roth (ie, I converted 1/3 of it to Roth this year, will likely convert the rest in 2020 and 2021). Since this money is an "extra" that I do not even factor into my retirement finances, and since it will be all in Roth, ie, its future earnings will never be taxed, it would be nice for it to fetch higher earnings.
I also worked very hard for my $ (harder than you, harder than people in almost any other profession), but I do not enjoy dealing with money, and do not intend to spend my remaining time on that. I am not seeking an advice on how or why to change that personality feature (because I don't want to change it), but what to do with my Roth in the context of that personality feature
Are you saying that (assuming no action on my part) money would have a harder time recovering from recession in an index fund than in a target date date fund? That is all I need to know.
Thank you, that reply is actually somewhat helpful, although we have nothing in common when ot comes to handling money :-).
First, it would never occur to me to throw it all in an index fund - just the opposite: about 75% of my retirement (and more than 100% of my regular expenses in retirement) will be funded by annuities.
But I also have a SEP-IRA that accounts for about 6 or7 % of my total assets, ie, small part of my assets. This IRA is in a 2030 target date fund, which is my ONLY exposure to market risk. This IRA is in the process of conversion to Roth (ie, I converted 1/3 of it to Roth this year, will likely convert the rest in 2020 and 2021). Since this money is an "extra" that I do not even factor into my retirement finances, and since it will be all in Roth, ie, its future earnings will never be taxed, it would be nice for it to fetch higher earnings.
I also worked very hard for my $ (harder than you, harder than people in almost any other profession), but I do not enjoy dealing with money, and do not intend to spend my remaining time on that. I am not seeking an advice on how or why to change that personality feature (because I don't want to change it), but what to do with my Roth in the context of that personality feature
Are you saying that (assuming no action on my part) money would have a harder time recovering from recession in an index fund than in a target date date fund? That is all I need to know.
it could take longer in the target fund depending on their allocation and glide path . remember they may be selling equities after a downturn to follow the glide path . that is the opposite of what i would want. i would want to be buying
it could take longer in the target fund depending on their allocation and glide path . remember they may be selling equities after a downturn to follow the glide path . that is the opposite of what i would want. i would want to be buying
So then, the money would be better off in an index fund after all?
I do not intend to make any regular withdrawals from this Roth, ever. It is an extra money for emergencies or small luxuries in deep old age (I will not touch it until I am 80, ie, in the next 20 years, and likely not even for a few years after that, if it looks reasonably likely that I might live past 90). I will certainly not withdraw anything from it during a recession, when its value drops - I will wait til its value recovers.
But I won't be doing anything else with it, except for occasional withdrawals in my deep old age. I will not be rebalancing or adjusting anything. Under such conditions then, would you recommend to put this money into an index-linked ETF (I am considering Vanguard Total Stock Market ETF) rather than a target date fund?
Mathjak, I am actually interested in your (and other) opinions about the question I asked in the previous post (see above). I guess this thread got inactive in a couple of days while I was in transit back home from Asia, and I did not reactivate it properly for it to go high enough in the list of topics, and be visible. So anyway, I'd like to keep the thread going, because I do have this question about long-horizon target date fund vs. index fund.
With a target dated fund there is still a built in glide path lowering equities over time. With a Total Market there is no glide path and until you do something it will be 100% equities.
Another thing is that Target Date Funds by prospectus are able to hold cash. Total Market probably not. It isn't just bonds or equities but a variety financial instruments vs equities. You know how diversified you want to be.
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