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Shannow
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Reply #350 on: September 16, 2016, 09:32:14 AM

Psychics don't sound too bad considering A fresh blow for stockpickers as semi-annual survey finds 90% fall short of benchmarkwhy so serious?
(quotation in spoiler since FT link):

Man lands on the moon.  Any advisor worth their salt knows this and for large cap exposure for instance should just go out and buy the index (eg: SPY). To many people buying the same things, with shitloads of information available will make an active investors job extremely difficult. There are asset classes however where an active manager does make sense, smaller markets, less liquid or with less information such as international stocks or high yield bonds.

The idea of a broker picking individual securites is one that died 10+ years ago but still persists. Maybe it's still stronger than I think it is with the general public, being in the industry does skew my view.


And fuck brokers, who the fuck uses a broker anymore? If your guy or girl still calls themselves a broker fire them immediately, if they charge commissions take a serrrrious look at wtf they are doing for you. An ADVISOR should provide value in not just managing your portfolio but doing everything else around that.

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Someone liked something? Who the fuzzy fuck was this heretic? You don't come to this website and enjoy something. Fuck that. ~ The Walrus
Paelos
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Reply #351 on: September 16, 2016, 09:34:40 AM

I agree with everything Shannow said.

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Viin
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Reply #352 on: September 16, 2016, 12:20:58 PM

Man, I don't want to manage my own money but looks like I need to make a phone call.

It's easy. Throw most in an index fund (aka SP 500 (as above: SPY)) and some in bonds. Ignore it for 5 years. Rebalance.

- Viin
Yegolev
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Reply #353 on: September 16, 2016, 03:05:54 PM

I also have a liquidity requirement in my non-retirement accounts.

Why am I homeless?  Why do all you motherfuckers need homes is the real question.
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Torinak
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Reply #354 on: September 16, 2016, 04:48:42 PM

I also have a liquidity requirement in my non-retirement accounts.

A total stock market index fund and a total bond market fund for your retirement accounts, and cash ("high yield" money market for high liquidity, CDs for lower liquidity but no non-inflation risks) for the rest. 3 investment positions, spend 5-10 minutes a year managing it yourself. The amount of time it takes does NOT scale with the amount, either--it's still just a few minutes a year at 10K or 10M.

A lazy portfolio built from low-cost funds like the above can also give you literally hundreds of thousands of dollars more at retirement than hiring an "advisor" (salesman) to make things look harder than they have to be.

If you're fast approaching or over the current estate tax cutoffs ($10.9M for a couple, $5.45M for single), talking to an estate planner is a good idea. 99%+ of all Americans will never have to worry about it. Even at that level, you probably don't need to hire a professional to manage your money, and will do better without one than 90%+ of those who do.

If you're convinced that retirement investing can't really be that simple, spend a few hours learning the basics (e.g., read Bernstein's If You Can 16-page pamphlet, or browse the Boglehead's wiki that focuses on low-cost investing) and you're done.
Nebu
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Reply #355 on: September 17, 2016, 01:38:16 AM

A total stock market index fund and a total bond market fund for your retirement accounts, and cash ("high yield" money market for high liquidity, CDs for lower liquidity but no non-inflation risks) for the rest. 3 investment positions, spend 5-10 minutes a year managing it yourself. The amount of time it takes does NOT scale with the amount, either--it's still just a few minutes a year at 10K or 10M.

A lazy portfolio built from low-cost funds like the above can also give you literally hundreds of thousands of dollars more at retirement than hiring an "advisor" (salesman) to make things look harder than they have to be.

If you're fast approaching or over the current estate tax cutoffs ($10.9M for a couple, $5.45M for single), talking to an estate planner is a good idea. 99%+ of all Americans will never have to worry about it. Even at that level, you probably don't need to hire a professional to manage your money, and will do better without one than 90%+ of those who do.

If you're convinced that retirement investing can't really be that simple, spend a few hours learning the basics (e.g., read Bernstein's If You Can 16-page pamphlet, or browse the Boglehead's wiki that focuses on low-cost investing) and you're done.

Thank you for this. I'm going to do some reading.

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Abagadro
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Reply #356 on: September 17, 2016, 11:18:21 AM

Also pay attention to the expense ratio of any index fund you get into. It should be very low since it is basically buying the entire market or a defined basket of stocks (i.e. the S&P 500).  I prefer Vanguard's target retirement accounts (pick a year you want to retire, put money in, forget it) since they basically self-balance and are super cheap.

"As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron.

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Shannow
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Reply #357 on: September 18, 2016, 11:16:07 AM

Blah I wrote up a big thing on the difference between advisors and reps etc and managed to delete it. Poop.

In a nutshell, yes lots of people who call themselves 'advisors' are just salesppl in the financial services industry. There are people who are advisors who have to act as a fiduciary for their clients BY LAW. So don't call me a sales person. Fuck you! (nicely)

You're right most people don't need an advisor and a lazy portfolio is a pretty good way to go. However be aware that a good advisor DOES add value and not just in the investments they buy. I spent Friday advising clients on how to potenially secure a loan with private stock, re-characterize an over-contribution to a ROTH IRA and why they SHOULDN'T liquidate their stock holdings to buy a cheap ETF (TAXES!!).

If you're under the age of 45 and don't have 500k , yah go the lazy route. Just don't look at your portfolio when bear markets happen. Also be aware than indexing looks great right now because both the stock market AND bond market have been heading up at a fairly consistent rate over the last 8 years with somewhat historically low volatility. Also that proposed portfolio is very US centric.


Someone liked something? Who the fuzzy fuck was this heretic? You don't come to this website and enjoy something. Fuck that. ~ The Walrus
Torinak
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Reply #358 on: September 18, 2016, 04:56:15 PM

Blah I wrote up a big thing on the difference between advisors and reps etc and managed to delete it. Poop.

In a nutshell, yes lots of people who call themselves 'advisors' are just salesppl in the financial services industry. There are people who are advisors who have to act as a fiduciary for their clients BY LAW. So don't call me a sales person. Fuck you! (nicely)

You're right most people don't need an advisor and a lazy portfolio is a pretty good way to go. However be aware that a good advisor DOES add value and not just in the investments they buy. I spent Friday advising clients on how to potenially secure a loan with private stock, re-characterize an over-contribution to a ROTH IRA and why they SHOULDN'T liquidate their stock holdings to buy a cheap ETF (TAXES!!).

If you're under the age of 45 and don't have 500k , yah go the lazy route. Just don't look at your portfolio when bear markets happen. Also be aware than indexing looks great right now because both the stock market AND bond market have been heading up at a fairly consistent rate over the last 8 years with somewhat historically low volatility. Also that proposed portfolio is very US centric.



Most advisors are not good (as they're salesmen and not fiduciaries), but being a fiduciary does not guarantee that an advisor will add value. A small number of advisors will add value, absolutely. How does one determine that a given advisor will add value in the future?

Not aiming at you personally. I have too many co-workers who (collectively) wasted millions of dollars in fees due to having their assets managed by advisors, even some "good" ones with fiduciary responsibilities. A low-for-advisors flat 1% AUM (even absent putting their assets into front-loaded or high-ER funds) cost them literally years of possible retirement. One of them spent a few hours learning the basics and realized just how much in fees their (fairly good) advisor had cost them. As they put it, they realized they'd put their advisor's 3 kids through college.
Viin
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Reply #359 on: September 18, 2016, 06:15:52 PM

why they SHOULDN'T liquidate their stock holdings to buy a cheap ETF (TAXES!!).

Can you clarify this a bit for us?

I'm assuming you are referring to liquidating stock holdings (triggering capital gains) in non-retirement accounts. Is that right?

- Viin
Shannow
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Reply #360 on: September 18, 2016, 08:06:54 PM

why they SHOULDN'T liquidate their stock holdings to buy a cheap ETF (TAXES!!).

Can you clarify this a bit for us?

I'm assuming you are referring to liquidating stock holdings (triggering capital gains) in non-retirement accounts. Is that right?

Correct. We spend a lot of time dealing with the impact of taxes and consistently find people who have portfolios of individual stocks with large embedded gains. A lot of times we will simply tell the client NOT to sell the position (as usually its a collection of blue chips) and use it as a proxy for a US large cap position in our models. Unless the stocks are crappy or they have other tax losses in the year they can balance off to. We'll re-valuate those positions to see if it is worth selling out over a period of time or the tax situation changes. A lot of the times it won't and we'll simply leave the position alone. (Or you get the doctor client who's still clinging to his penny biotech stock with an 80% percent loss..'no doc, it's dead, let it go and enjoy the tax write off')

Someone liked something? Who the fuzzy fuck was this heretic? You don't come to this website and enjoy something. Fuck that. ~ The Walrus
Shannow
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Reply #361 on: September 18, 2016, 08:19:15 PM

Blah I wrote up a big thing on the difference between advisors and reps etc and managed to delete it. Poop.

In a nutshell, yes lots of people who call themselves 'advisors' are just salesppl in the financial services industry. There are people who are advisors who have to act as a fiduciary for their clients BY LAW. So don't call me a sales person. Fuck you! (nicely)

You're right most people don't need an advisor and a lazy portfolio is a pretty good way to go. However be aware that a good advisor DOES add value and not just in the investments they buy. I spent Friday advising clients on how to potenially secure a loan with private stock, re-characterize an over-contribution to a ROTH IRA and why they SHOULDN'T liquidate their stock holdings to buy a cheap ETF (TAXES!!).

If you're under the age of 45 and don't have 500k , yah go the lazy route. Just don't look at your portfolio when bear markets happen. Also be aware than indexing looks great right now because both the stock market AND bond market have been heading up at a fairly consistent rate over the last 8 years with somewhat historically low volatility. Also that proposed portfolio is very US centric.



Most advisors are not good (as they're salesmen and not fiduciaries), but being a fiduciary does not guarantee that an advisor will add value. A small number of advisors will add value, absolutely. How does one determine that a given advisor will add value in the future?

Not aiming at you personally. I have too many co-workers who (collectively) wasted millions of dollars in fees due to having their assets managed by advisors, even some "good" ones with fiduciary responsibilities. A low-for-advisors flat 1% AUM (even absent putting their assets into front-loaded or high-ER funds) cost them literally years of possible retirement. One of them spent a few hours learning the basics and realized just how much in fees their (fairly good) advisor had cost them. As they put it, they realized they'd put their advisor's 3 kids through college.

Quibble again. They're reps, not advisors if they are taking a commission. There are still however shitty advisors too, I will grant you that.

I'll make one argument that if you are simply judging your advisor on current performance, then your advisor is shitty for not explaining to you why you have him or her. Essentially a big part of what we do is play therapist to our clients and prevent them from making mistakes. There's a common stat that goes '80% of investment return is not determined by investments but by investor behaviour'. Aka , it's not what you buy , it's WHEN you buy and sell it. Behavioral finance is a bitch. Again the last 8 years have been excellent for index investors, a good advisor keeps an eye on where markets are going not just where they have been. I don't think the next 8 are going to be as rewarding. Could be wrong though!

A lot of people really don't need an advisor, I'll be the first one to tell you that. I turn people away on occassion and tell em to make sure they have the basics in place and maybe find a CFP who can write em up a half decent financial plan for a once off fee, IF they really want to go that far.


Someone liked something? Who the fuzzy fuck was this heretic? You don't come to this website and enjoy something. Fuck that. ~ The Walrus
Yegolev
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Reply #362 on: September 19, 2016, 02:34:52 PM

Sounds like a great plan until I decide I want to pull out $80k for a new pool house or fancy car.  Then I'll need to talk to a CPA, presumably.

Why am I homeless?  Why do all you motherfuckers need homes is the real question.
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Torinak
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Reply #363 on: September 19, 2016, 03:49:59 PM

Sounds like a great plan until I decide I want to pull out $80k for a new pool house or fancy car.  Then I'll need to talk to a CPA, presumably.

If you use a CPA, you have to give them all of the information you'd use to figure out what to sell on your own, and you also have to be able to check that the CPA did things correctly. Unless one has a massively complicated tax situation and are already paying $1K+ for tax prep, it's well worth learning how to do one's own taxes as it provides a lot of insight into how things work.

You'll need to keep track of your basis in all of your non-retirement assets--that's just the total amount you've paid for the investment, including any reinvested dividends. When you sell something, you owe taxes on the gains only, not on the basis amount. For example, if you spent a total of $50000 on a specific investment, and sell it all when it's grown to $80000, you have taxable gains on $30000. If you only sell part of it, the gains are based on what part you sold. That depends on how you're tracking the basis and purchases (average vs specific lot, etc); for a fairly comprehensive review see Cost Basis Methods or IRS publication 550. It's actually pretty straightforward, and consumer tax prep software (TurboTax, etc) can handle the details.

When deciding what to sell from a taxable account, it really depends on one's total portfolio and situation, including unrealized taxable gains or losses. One approach is to use the sale as an opportunity to rebalance. If part of your taxable portfolio has grown too much (maybe you lucked out with a stock picking gamble and it took off, or maybe you have a lot of stock in your employer due to option grants or an ESPP), sell that first and just pay the taxes. Or, if you have any unrealized losses, you can do some tax loss harvesting along with the sale. If you just focus on minimizing taxes, you may end up missing out on some opportunities, or end up exposing yourself to a lot more risk than you intended.

To make it easier to report taxes after a sale, don't set up any taxable accounts for automatic dividend reinvestment. Instead, send dividends to a money market account or even a bank account. Use some of that to cover taxes on the dividends, and treat the rest as money you've saved and invest based on your target allocations (how much you want in US/international stocks, bonds, etc) a few times a year. Or draw from it to buy that car. Or if you know about when an expense will come up (you're going to treat yourself to a new car in response to the mid-life crisis you're sure your 50th birthday will trigger  Ohhhhh, I see.) set aside money in a separate account just for that, so you don't have to sell any of your taxable investments at all.

See the above links for overviews and details of considerations for taxable investing. Or, when you have a significant expense that requires tapping your taxable accounts, you can post specific questions and get solid advice for free on the Boglehead's personal finance forum. "How should I pay for X" questions come up pretty regularly.
Shannow
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Reply #364 on: September 19, 2016, 03:51:20 PM

edit (personal bloody jinx Torinak..:D. Also the custodian that's holding the portfolio (Schwab, Fidelity etc) should track those cost-basis for you)

Depends. Where's the money coming from, have you planned for this expense and what does your tax situation look like for the year. Also, don't do it..:D

Again, a good advisor and you should have already discussed this purchase (we hate spur of the moment shit/large impulse buys) and have a plan in place. You're not pulling money out of your retirement savings for this shit, you dirty consumerist. You might've parked money in cash for this outlay, or, depending on the interest rate/terms you can get, it might be worth financing.

If you have to liquidate part of your portfolio for this (really? you don't fucking need it!) you'll look at stuff that maybe has a loss, or at least long-term cap gains, not short. Unless your situation is hideously complicated (ie your a business owner self-filing, depreciation etc etc) a CPA probably isn't needed.
« Last Edit: September 19, 2016, 03:54:01 PM by Shannow »

Someone liked something? Who the fuzzy fuck was this heretic? You don't come to this website and enjoy something. Fuck that. ~ The Walrus
Yegolev
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Reply #365 on: September 19, 2016, 06:21:50 PM

Unless one has a massively complicated tax situation and are already paying $1K+ for tax prep,

This describes me.

Lots of good info and it only makes me somewhat tired.

Let us pretend that there exists this pair of working people who do not like debt and so do not have any.  These imaginary people do, however, feel like chumps if they just keep their cash in a checking account.  These mythical people would already have the liquid cash to buy a $60,000 car and like having life-options (travel, etc), but would rather have their assets doing some income-generation.  That is where these hard-working parents with very little free time are likely to get in trouble and lose value.

I'll digest this info but I really just want to dump my dollars in a pile and let dividends (or something) roll in.
« Last Edit: September 19, 2016, 06:58:41 PM by Yegolev »

Why am I homeless?  Why do all you motherfuckers need homes is the real question.
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Samwise
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Reply #366 on: January 02, 2018, 03:13:31 PM

I was trying to remember if we'd ever talked about investing here and found this thread.  Rise!

My situation is pretty similar to Yeg's these days, including the general aversion to risk and debt, and over the past year I've been dipping my toe into investing, so I'm interested in comparing notes.

Robo-advisors seem like they're built for exactly the use case of "I want my money to work for me but I don't want to have to think about it".  I've been trying out Wealthfront, on the advice of my CPA, and while I think I'm going to change things up in the coming year I'd still recommend it to someone in the position of wanting to start investing but not knowing wtf they're doing.  Essentially a Wealthfront account acts like a bank account in that you can just transfer money in and out of it.  While the money is in there, it gets invested in ETFs that make up a target portfolio (which is based on a "risk level" that they determine with a little questionnaire).  When you pull the money out, your shares get sold to convert them into cash, and Wealthfront decides which shares to sell based on what gives you the smallest tax liability.

With a balance of more than $100k you also get their "direct indexing" feature which does clever loss-harvesting stuff by buying individual stocks that make up an index and swapping them around to generate short-term losses that are balanced against long-term gains (which ends up saving you about 15% of whatever losses get harvested).  All that just happens automatically -- I'm curious to see what the year-end tax docs look like, but as the "end user" really all you see is the overall numbers.

Of course now that I've gotten a taste I'm moving on to the harder stuff and once I cash out and pay down debt (because I'm pretty sure this shit is all going to crash soon) I'm going to start building up an ETF portfolio that I manage myself.   why so serious?  Part of my motivation is to divest from oil, so I'm going to be putting most of it into SPYX (fossil-free S&P 500 index), with the rest split between clean power (probably TAN) and CA municipal bonds (probably CMF).  The brokerage fees I incur by depositing/investing every month or so will be way less than even the paltry 0.25% that Wealthfront charges.

Any of you more adventurous traders gotten fabulously rich over the last year?

"Nice attempted blast about my "drinking".  I do enjoy a nice cuppa, but that is because I am a bon vivant of gregarious nature and cheery disposition." - Ab
Viin
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Reply #367 on: January 02, 2018, 09:12:33 PM

I've been using Vanguard for managing my retirement accounts (IRAs) and non-tax-exempt (brokerage) accounts. I think Wealthfront and a few others like it are interesting (what's the app called that rounds up every purchase to the next dollar and puts that money into a brokerage account?) but I worry about how much they charge in fees. I guess for small amounts it doesn't matter much, though the flat rates would be high as a percentage.

We are doing quite well in our portfolios, which is basically a mix of index (bond and stock) ETFs and a few straight stocks I will own for awhile (Amazon being one).

I'm interested in this SPYX index though, first I've heard of it. Time to do a little research.

Edit:

Looking at SPYX, the management fee is 0.25% which is pretty darn high. For comparison, my Vanguard S&P 500 Admiral Shares are 0.04%.
(John Oliver's take: https://www.youtube.com/watch?v=gvZSpET11ZY)
« Last Edit: January 02, 2018, 09:17:24 PM by Viin »

- Viin
Teleku
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Reply #368 on: January 02, 2018, 09:34:38 PM



Dogecoin had a 3300% return on investment for the year 2017.

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Viin
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Reply #369 on: January 02, 2018, 10:04:48 PM

I might like it better if it didn't have such a stupid name.

- Viin
Abagadro
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Reply #370 on: January 02, 2018, 10:23:29 PM

I just plow stuff into the lowest fee index funds and target retirement date funds for which I have the option and then don't touch it.

"As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron.

-H.L. Mencken
Viin
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Reply #371 on: January 02, 2018, 11:05:42 PM

I can't remember, did the FIFO rule for selling stocks make it into the tax changes? If so, next year will take some planning ..

- Viin
Abagadro
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Reply #372 on: January 02, 2018, 11:20:51 PM

No, it was dropped from the conference bill.

"As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron.

-H.L. Mencken
Shannow
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Reply #373 on: January 03, 2018, 08:07:42 AM

No, it was dropped from the conference bill.

Thank fucking god for small mercies.

(Acorns I believe is the app that rounds up purchases and invests the pennies, I've heard some not so good things about it)

Betterment, Wealthfront and Personal Capital all play in the robo advisor space. I have a client who loves Personal Capital for their planning tools, think of like Mint plus long term retirement planning stuff. It's pretty cool.

There are no ways to get fabulously wealthy by trading an ETF portfolio. Stop fucking doing it. You get wealthy by watching your spending, saving as much as you can automatically and investing for the long term, aka being patient. Outside of that , go start the next Facebook.

Btw the S&P 500 has gone up for 14 months straight, this has never happened before. Only good things can happen from here!

Someone liked something? Who the fuzzy fuck was this heretic? You don't come to this website and enjoy something. Fuck that. ~ The Walrus
Sky
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Reply #374 on: January 03, 2018, 09:48:17 AM

So if I'm looking at Vanguard for a 403(b), should I be thinking target (2030) or index? If index, which? They threw a massive dump of options at me.  US Stock: Vanguard Extended Market Index Fund Admiral Shares? Seems to be outperforming their balanced index both short- and long-term.

But their chart also conveniently mentions 'without fees' and then doesn't give data on what fees for each funds would be...

Btw the S&P 500 has gone up for 14 months straight, this has never happened before. Only good things can happen from here!
This is the thing. I despise everything about the modern stock market and hate the idea of having to put money into it, but I'd also like to, you know, retire. Luckily, I have a state pension that will hopefully be waiting for me (NY seems pretty set on staying progressive).

Also, I watched my dad get slaughtered twice since he retired in the late 90s.

Shannow
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Reply #375 on: January 03, 2018, 10:03:22 AM

How old are you Sky?  I'm 41 and my portfolio is 75% equity (mix of us large and small and international) and the rest alts and bonds. A target date fund is easy , but doesn't always perform the best (they are set on autopilot to lower risk as the target date gets closer but doesn't always adjust for current market conditions). You could use a mix of Vanguard Total Market, Intl and Bond to get an easy portfolio if you want to keep things simple.

Your Dad retired in the late 90s and then got slaughtered twice? This smells like a portfolio that had way too much money in equities for a retiree.

In this particular market I hear constantly from intelligent people that they are upset that their portfolio is not beating the S&P, when I then ask them if they'd like me to allocate their portfolios 100% to US Large Cap equity they sometimes understand why they shouldn't do that.

Someone liked something? Who the fuzzy fuck was this heretic? You don't come to this website and enjoy something. Fuck that. ~ The Walrus
Nebu
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Reply #376 on: January 03, 2018, 11:22:07 AM

I put my money into some low cost index funds last June and they have performed VERY well.  The question is... when is the best time to get out and where do I shelter my money until a rebound?  I have my concerns that the artificial inflation of the market isn't going to hold up much longer. 


"Always do what is right. It will gratify half of mankind and astound the other."

-  Mark Twain
Sky
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Reply #377 on: January 03, 2018, 11:28:47 AM

How old are you Sky?  
47, target date is 2030 (when I'm maxed out in the pension).

Let's assume I understand none of this, because all this stuff represents what I dislike about our society  Oh ho ho ho. Reallllly? The reality of wanting to retire is kinda forcing my hand here.

Your Dad retired in the late 90s and then got slaughtered twice?
No idea where he had it, but the dot bomb and 08 recession killed his dough, according to him (no reason for him to fib, none of it is my money ever, heh).

Samwise
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Reply #378 on: January 03, 2018, 11:39:43 AM

I put my money into some low cost index funds last June and they have performed VERY well.  The question is... when is the best time to get out and where do I shelter my money until a rebound?  I have my concerns that the artificial inflation of the market isn't going to hold up much longer.  

I'm planning on cashing out as soon as I hit the one year mark from when I invested my windfall last year (two months to go) so I don't get hammered with short term taxes.  I'll be paying down debt and then using the reliable extra cash I'll have each month after that to buy back in gradually so that whatever catastrophe is coming gets smoothed out by dollar-cost averaging.  It's tempting to just sit on it and wait until after the crash to buy back in all at once, but I've heard over and over that trying to time the market is never a good bet, and I'm still in my thirties so I can afford to wait for the rebound.

If you're trying to lower risk and don't have any debts to pay off my understanding is that government bonds are the way to go.
« Last Edit: January 03, 2018, 12:48:55 PM by Samwise »

"Nice attempted blast about my "drinking".  I do enjoy a nice cuppa, but that is because I am a bon vivant of gregarious nature and cheery disposition." - Ab
Viin
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Reply #379 on: January 03, 2018, 11:46:34 AM

Just to add to the discussion, I'll post my allocations from my IRAs here. My rate of return from 2011 to 2017 was 13%. (By no means am I suggesting my allocations are the way to go, I already see a few areas I want to tweak, namely less Large Cap).



Stocks:







- Viin
Shannow
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Reply #380 on: January 03, 2018, 12:49:59 PM

I put my money into some low cost index funds last June and they have performed VERY well.  The question is... when is the best time to get out and where do I shelter my money until a rebound?  I have my concerns that the artificial inflation of the market isn't going to hold up much longer. 



Who knows and don't are the answers. We've been predicting the fall/crash of the market since 08 and it hasn't happened. There WILL be market pullbacks but no one can predict that shit with ANY sort of reliability. AKA don't market time. So instead, what's your age and what's your emotional tolerance for loss. As you get closer to retirement age the basic advice is to add more bonds to your portfolio to lessen volatility in times of down markets.

Also diversification is not owning 3 different stocks, or frankly even owning 3 different types of stocks (say large cap, small cap, mid cap, growth or value) or even international stocks (as the world has globalized correlation in international stock markets has gone up too). It's about owning NON-correlated assets, aka things that go in different directions from each other in different market conditions. Historically US treasury prices head up when stocks go down, as do most bonds (but not all) to some degree based upon their credit worthiness . Govt bonds are safest typically, followed by things like high grade corporate bonds with junk/high yield bonds at the bottom (and while HY bonds are bonds they are highly correlated to stocks in terms of price movement).


We try to take the view that markets can't be controlled and that we managed for RISK first and return second. Determining your risk profile (primarily based upon your retirement horizon) is critical.

Sky if you hate this stuff then a robo advisor might be good for you, they can do automatic portfolios and rebalances for you based upon your risk profile. A target date can work but I think a well-designed portfolio of funds and etfs should work well.

Past Performance is no guarantee of future results (hello Mr. SEC, see what I did there?)

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Shannow
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Reply #381 on: January 03, 2018, 12:52:54 PM

I put my money into some low cost index funds last June and they have performed VERY well.  The question is... when is the best time to get out and where do I shelter my money until a rebound?  I have my concerns that the artificial inflation of the market isn't going to hold up much longer.  

I'm planning on cashing out as soon as I hit the one year mark from when I invested my windfall last year (two months to go) so I don't get hammered with short term taxes.  I'll be paying down debt and then using the reliable extra cash I'll have each month after that to buy back in gradually so that whatever catastrophe is coming gets smoothed out by dollar-cost averaging.  It's tempting to just sit on it and wait until after the crash to buy back in all at once, but I've heard over and over that trying to time the market is never a good bet, and I'm still in my thirties so I can afford to wait for the rebound.

If you're trying to lower risk and don't have any debts to pay off my understanding is that government bonds are the way to go.

As you're in your 30's I'd say dont get out of the market, keep it in the market for the long term. You do have time for recovery (or two). The thing to keep in mind about paying debt: What's the interest you are paying on that debt vs the likely returns you can get in your portfolio?  With most debt being so cheap right now it's usually worth keeping the debt and staying invested.

If this was the early 80s when interest rates were in the teens I'd suggest pay down that debt, but with most rates in the 3-5% range get your money working for you and enjoy the cheap prices of debt.

Someone liked something? Who the fuzzy fuck was this heretic? You don't come to this website and enjoy something. Fuck that. ~ The Walrus
Samwise
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Reply #382 on: January 03, 2018, 02:35:14 PM

As you're in your 30's I'd say dont get out of the market, keep it in the market for the long term. You do have time for recovery (or two). The thing to keep in mind about paying debt: What's the interest you are paying on that debt vs the likely returns you can get in your portfolio?  With most debt being so cheap right now it's usually worth keeping the debt and staying invested.

There's a somewhat intangible/psychological factor here where I really really want to pay off my house while I'm still in my thirties.  The 401k (which is also of course doing really well) is not getting touched so I'm not going completely nuts here, but I think I'm willing to sacrifice the 3% difference on what's left of the mortgage for the rock-solid financial security of having a fully paid off house in an area where the median rent is $4k.
« Last Edit: January 03, 2018, 02:37:56 PM by Samwise »

"Nice attempted blast about my "drinking".  I do enjoy a nice cuppa, but that is because I am a bon vivant of gregarious nature and cheery disposition." - Ab
Shannow
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Reply #383 on: January 03, 2018, 03:11:05 PM

Emotions are a big part of it. It's your money! Another wrinkle in your favor is that with the loss of the SALT deduction keeping that mortgage alive ain't worth as much anymore.

Make sure you save those mortgage payments once they stop.

Someone liked something? Who the fuzzy fuck was this heretic? You don't come to this website and enjoy something. Fuck that. ~ The Walrus
Samwise
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Reply #384 on: January 03, 2018, 03:28:05 PM

Emotions are a big part of it. It's your money! Another wrinkle in your favor is that with the loss of the SALT deduction keeping that mortgage alive ain't worth as much anymore.

That's part of my calculus, yeah.  I was already counting down the days before I'd be able to pay the house off, and everything that's happened in the last year has been a really strong push to git 'er done.

"Nice attempted blast about my "drinking".  I do enjoy a nice cuppa, but that is because I am a bon vivant of gregarious nature and cheery disposition." - Ab
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