I don't think I've ever opened that thread.

Chipotlemonger said:

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jamey said:

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MAS444 said:

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Yeah it works perfectly as long as you always get out at the right time and then back in at the right time. Easy!

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I outperformed by 10%

It works as long as you get back in at a lower price.

The only way it doesnt work is if you get out and you get back in higher.

The timing doesn't have to be anything close to perfect to help

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Good luck with the active timing over the course of a long investing career.

https://engaging-data.com/market-timing-game/

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$30,000 Millionaire said:

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Put it all in S&P funds and ignore it.

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Is this better than doing one of those target retirement date funds?

I have an S&P 500 index fund available with a 0.015% expense ratio in one of my former employer's 401k.

There is also a target retirement date fund with a 0.35% expense ratio.

Is it more risky long term to put all of that 401k into the S&P 500 index since it is not managed as much?

The performance of the target retirement fund is historically about 3% worse than the S&P 500 index fund. Seems like I've been paying additional expenses for worse performance, but I wonder about the risk of going all into the S&P 500.

XXXVII said:

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$30,000 Millionaire said:

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Put it all in S&P funds and ignore it.

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Is this better than doing one of those target retirement date funds?

I have an S&P 500 index fund available with a 0.015% expense ratio in one of my former employer's 401k.

There is also a target retirement date fund with a 0.35% expense ratio.

Is it more risky long term to put all of that 401k into the S&P 500 index since it is not managed as much?

The performance of the target retirement fund is historically about 3% worse than the S&P 500 index fund. Seems like I've been paying additional expenses for worse performance, but I wonder about the risk of going all into the S&P 500.

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I don't think there is a problem with target funds but take a look at the allocation and see if you like it; my wife's target fund (mid-40s) has more bond and international exposure than we like so we also allocated a percentage directly to S&P and total market funds (which of course are doing worse than the target fund this year but that is how it goes). Just depends on how aggressive you want to get.

Thanks, I'm wondering if I'd be better off rolling it over to an IRA with Vanguard and investing in one of their target date funds. That might at least get me a better expense ratio.

It all depends on how active you want to manage it year over year and how long your investment horizon is. For the average consumer and investor, the target date funds are definitely good enough. They'll rebalance over time for you to lower risk the shorter your horizon is. That being said, even bond ETFs have been hit this year and have not been safe.

If you're under a certain age, 100% stocks is fine. Others will chime in with varying "scales" of stocks:bonds depending on your time to retirement. I can't remember the generic rules on that right now.

A target date fund of say 2065 is going to be near 100% stock anyways, and the majority of that is going to be in the domestic stock market.

A 0.35% expense ratio is insane and you are absolutely getting raked over the coals. Look at the composition of the fund and just mirror that with a blend of other funds with lower expense ratios. The difference between 0.015% and 0.35% over a career is massive.

I had asked this same question in december...ha. Down about $300K since then...whooo! No big deal really just gave back a years gains to be honest.


https://texags.com/forums/57/topics/3257098/replies/61381764

topher06 said:

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A 0.35% expense ratio is insane and you are absolutely getting raked over the coals. Look at the composition of the fund and just mirror that with a blend of other funds with lower expense ratios. The difference between 0.015% and 0.35% over a career is massive.

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For sure. I've decided to roll it over to a Vanguard IRA where I can get a much lower expense ratio for the same thing. Like 0.08%.

If you take money out of equities - don't do this - please ride it out, but if you panic and do, please at least roll into TIPS.
Holding cash is the same as losing +8% with inflation. TIPS will preserve buying power, but you will miss out on market recovery.

I'm hoping this market keeps going down over the next week or so. My rollover money is frozen in a check on its way to me, so I hope can get back in at a lower price.

Duplicate

Bobaloo said:

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Got this from CNBC in early 2018. The market corrected in the fourth quarter. Now in 2020 we are going through the same thing.

Going back to the year 1950, ALL 18 mid-term elections have had a roughly -5% to -38% intra-year pullback with the average around -17%. It's worse if you only go back to the 1962 mid-term election when all the drops have been -7% or more and the average goes to -19%.

Most of the pullbacks (13 of 18) have occurred in the second half of the year with only five prior to July (earliest was Feb. 25, 1958).

The good news is the bounce backs a year later from the intra-year lows have averaged around +32%.

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AggieDruggist89 said:

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Dirt 05 said:

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If you take money out of equities - don't do this - please ride it out, but if you panic and do, please at least roll into TIPS.
Holding cash is the same as losing +8% with inflation. TIPS will preserve buying power, but you will miss out on market recovery.

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Holding cash is the same as losing with inflation...

But isn't holding equities in index funds or stocks that are losing value just as bad or worse?

What if you're holding cash in IRA right now.. doesn't that provide an opportunity to buy discounted equities?

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If you got out a while ago, or if you get out now and it keeps going down. And this assumes you time re-entry correctly.

Question about 401k rollovers: I have 60 days to deposit the rollover check into my Rollover IRA without facing a penalty. Does the 60 days apply to just getting it into the settlement fund for the IRA, or does it apply to getting the money back into the market?

Settlement fund

RebAg13 said:

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Settlement fund

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Thanks. I'm really struggling with when I should get back into this market. My rollover money should be ready to invest in a couple days. The market seems to have come back to the same spot from the day my check was mailed. So is it riskier to wait on the market maybe dropping a bunch more which seems inevitable, or should I get back in ASAP?

XXXVII said:

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RebAg13 said:

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Settlement fund

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Thanks. I'm really struggling with when I should get back into this market. My rollover money should be ready to invest in a couple days. The market seems to have come back to the same spot from the day my check was mailed. So is it riskier to wait on the market maybe dropping a bunch more which seems inevitable, or should I get back in ASAP?

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I'm not an advocate for timing the market. I almost never attempt that. The one time I did, I missed.

However, if I had a lot of money in process like you do it would be hard for me to not let it sit on sideline at least for a little bit right now once it clears. Do not see how we avoid a recession at this point with the dominoes falling right now globally that are going to lead to significant chaos and upheaval. Like skipping past depression and going straight to anarchy bad in some places.

Purely my personal opinion right now, today. Im sitting on my normal quarterly dividend reinvestments right now because of all of this.

Thanks, I'm now ready to put the money in something. Might do it today as the market has dropped a lot relative to last week, but I'm not wanting to wait too long in case something positive happens.

What is a good mix between stocks and bonds in this inflationary economy? Is something like 90% stocks and 10% bonds reasonable? I have about 30 years until retirement.

XXXVII said:

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$30,000 Millionaire said:

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Put it all in S&P funds and ignore it.

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Is this better than doing one of those target retirement date funds?

I have an S&P 500 index fund available with a 0.015% expense ratio in one of my former employer's 401k.

There is also a target retirement date fund with a 0.35% expense ratio.

Is it more risky long term to put all of that 401k into the S&P 500 index since it is not managed as much?

The performance of the target retirement fund is historically about 3% worse than the S&P 500 index fund. Seems like I've been paying additional expenses for worse performance, but I wonder about the risk of going all into the S&P 500.

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the one point you are neglecting is the composition of a Target Date Fund versus the SP 500 tracker

meaning, if you were retired RIGHT NOW, I bet you would be pretty happy if all your money is in mostly bonds within a Target 2020 fund -

rather than the SP500 in a bear market.

understand the point of what I am stating?

LMCane said:

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XXXVII said:

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$30,000 Millionaire said:

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Put it all in S&P funds and ignore it.

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Is this better than doing one of those target retirement date funds?

I have an S&P 500 index fund available with a 0.015% expense ratio in one of my former employer's 401k.

There is also a target retirement date fund with a 0.35% expense ratio.

Is it more risky long term to put all of that 401k into the S&P 500 index since it is not managed as much?

The performance of the target retirement fund is historically about 3% worse than the S&P 500 index fund. Seems like I've been paying additional expenses for worse performance, but I wonder about the risk of going all into the S&P 500.

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the one point you are neglecting is the composition of a Target Date Fund versus the SP 500 tracker

meaning, if you were retired RIGHT NOW, I bet you would be pretty happy if all your money is in mostly bonds within a Target 2020 fund -

rather than the SP500 in a bear market.

understand the point of what I am stating?

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Yes, I get the point of moving more into bonds as you get closer to retirement.

Since I'm roughly 30 years from retirement, does 90% stocks and 10% bonds make sense?

Yes that makes as much sense as 100% stock or 80% stock. It all depends on your preference. I believe 90% would be close to a target date fund anyways that is 30 years off.

XXXVII said:

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LMCane said:

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XXXVII said:

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$30,000 Millionaire said:

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Put it all in S&P funds and ignore it.

---

Is this better than doing one of those target retirement date funds?

I have an S&P 500 index fund available with a 0.015% expense ratio in one of my former employer's 401k.

There is also a target retirement date fund with a 0.35% expense ratio.

Is it more risky long term to put all of that 401k into the S&P 500 index since it is not managed as much?

The performance of the target retirement fund is historically about 3% worse than the S&P 500 index fund. Seems like I've been paying additional expenses for worse performance, but I wonder about the risk of going all into the S&P 500.

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the one point you are neglecting is the composition of a Target Date Fund versus the SP 500 tracker

meaning, if you were retired RIGHT NOW, I bet you would be pretty happy if all your money is in mostly bonds within a Target 2020 fund -

rather than the SP500 in a bear market.

understand the point of what I am stating?

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Yes, I get the point of moving more into bonds as you get closer to retirement.

Since I'm roughly 30 years from retirement, does 90% stocks and 10% bonds make sense?

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yes that makes sense- particularly as the past 7 months has seen major bear markets and massive plunges in individual stocks.

as you are quite young- be very aggressive right now. you have literally nothing to lose. each year you get older you would want to be less aggressive with your entire portfolio (meaning go 95/5 aggressive in your 20s and then 80/20 aggressive in your 30s and 70/30 in your 40s)

today is a fantastic time to be a young investor! but I am 51.

I switched to a 70/30 bonds to equities allocation last December. Did not anticipate the bond market doing so poorly the past few months.

At what S&P level would it be good to reallocate more back to equities? 3,800? 3,700? Now?

Does anyone know if Vanguard's target date retirement funds pay out dividends that could be reinvested?

Just wondering if I'd be missing out on those if staying in all cash for the time being.

XXXVII said:

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Does anyone know if Vanguard's target date retirement funds pay out dividends that could be reinvested?

Just wondering if I'd be missing out on those if staying in all cash for the time being.

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Yes, they do. The TDF are just a mix of broad market ETFs. The underlying stock assets will have dividends. Open up the TDF, look at the 4 or so market index ETFs it uses, then individually research those and you'll find your answer.

Chipotlemonger said:

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XXXVII said:

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Does anyone know if Vanguard's target date retirement funds pay out dividends that could be reinvested?

Just wondering if I'd be missing out on those if staying in all cash for the time being.

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Yes, they do. The TDF are just a mix of broad market ETFs. The underlying stock assets will have dividends. Open up the TDF, look at the 4 or so market index ETFs it uses, then individually research those and you'll find your answer.

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Thanks. Is it logical that missing out on those dividends (which I would automatically reinvest) by staying in cash right now would be worse than trying to find a lower entry point into the market?

There are a lot of factors at play, but it boils down to: no one knows. Hedge and go 50/50 for the time being if concerned. Or DCA the full settlement fund in over time.

turning 50 this year, so I get the advantage of catchup contributions on the 401k when everything is on sale. Finally something good.

I mean, the answer is always the same. No one knows.

Set an allocation that helps you sleep at night. Don't touch it. Repeat x365.

I wouldn't be 70/30 bond/equity unless I was retired, but that's just me.

I'm 48 and currently 90/10 equities to bonds. My allocation model has me at 17.5% in bonds which I have opted not to meet at this time considering the market. For those aghast at that allocation for my age and time horizon, that is a reflection of adjusted risk portfolios that some firms have adopted. Mine, at least, has moved their overall spectrum of portfolios to the more conservative end. And this change was made before the current administration.

Like everyone else the uncertainty has me spooked, but I just stick to my plan which is the following:

• Investments: stick to your plan if you aren't retiring within the next 5 years or so. For me, that means I essentially have a dollar amount goal every year that is allocated across 401k, IRA, HSA, and taxable accounts. I have changed nothing with that goal other than my comment above about ignoring the model mix a little bit. To be clear, and for illustrative purposes, I'm still putting the $100K per year into investments that I normally do.

• Cash: we keep about 1 year of cash on hand. Within that 1 year of cash that I always have on hand, I have put $30K of it into I Bonds to simply try and capture some interest I otherwise would not have captured letting it sit in my online savings account. I have another $10K I'm planning to put in I Bonds under my wife's name, but we have an administrative hurdle right now. So, that would be $40K total.

• Discretionary Cash: this is new cash above and beyond the first two bullets that I don't know what to do with. As of right now, I'm building back up bullet 2 until I figure that out. What that will ultimately look like though is buying some stocks on the cheap. I'm a buy and hold guy so I'll be looking for discounts. One stock I'm already buying into which I've held for many, many years is PLUG. It's priced at least 50% of what most analysts project it's value so I have no qualms about buying more of it.

Chipotlemonger said:

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It all depends on how active you want to manage it year over year and how long your investment horizon is. For the average consumer and investor, the target date funds are definitely good enough. They'll rebalance over time for you to lower risk the shorter your horizon is. That being said, even bond ETFs have been hit this year and have not been safe.

If you're under a certain age, 100% stocks is fine. Others will chime in with varying "scales" of stocks:bonds depending on your time to retirement. I can't remember the generic rules on that right now.

A target date fund of say 2065 is going to be near 100% stock anyways, and the majority of that is going to be in the domestic stock market.

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One of the common rules of asset allocation is to invest a percentage in stocks that is equal to 100 - minus your age. the remainder in bonds