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How to Invest as You Near Retirement [Rate my Portfolio Series]
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- Опубликовано: 31 авг 2021
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In this video we look at a portfolio of a viewer who is 10 years from retirement. Her advisor has her invested in a 50/50 portfolio. We'll look at the "Smart Sector" and Momentum ETFs she has, consider the impact of the 50 basis point fee, and examine whether a 50/50 portfolio makes sense.
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ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
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If your investment experience is less than 10 years start with a 5-6 portfolio. Don't bet big on any single company, learn the process first... Initially diversification is not that bad, it worked for me in initial year's, remember that protection of capital is a must.
Market crashes are an opportune time to protect capital in the sense that one can gain a year of growth from the bottom of a crash in a matter of months. The last crash provided over a decade of growth in the majority of stocks. Always be ready to jump at these opportunities.
What a great video *Rob Berger* 🤝
I’m 54 my wife 45 and we are retired living my best life now with my partner in Springfield.we gathered over $5 million for retirement, saving and investing as been our biggest success and made it possible for us this early. I’ve just stumbled upon this channel,much ❤️ love .
I’m inspired by your story ...
@@sarakatherine5159 thanks 🙏
@@melforddavidson6156 wow am so much inspired, the Springfield is a cheap place to live ,have a good life . Can you please speak about the investment you made, I’ll be glad to learn from you .
@@jessicaangel2952 my wife and I did a lot of saving from paycheck towards investing and built a strong retirement portfolio,it has pay off in so soon. I’m so much glad.
Investing is the proven way to get richer .
I appreciate the careful selection of AI-related stocks on the list and how they complement each other. Focusing on the expanding AI-driven markets is a strategic move. I believe the AI market will sustain its rapid growth as projected, shaping the future where fortunes, including yours, can be made. If you're at a crossroads and need sincere advice on the best moves, consult an independent advisor like David Marvin Willis with expertise in the financial markets.
First, thank you Rob for excellent content, your channel is much better than the view and like counts make it appear, I would say easy worth 100x more. I have stumbled upon your channel only about a week ago and have since watched a few videos. About 90% of what you say matches my understanding from prior learning, which doesn't mean the other 10% is incorrect, it is either new ways of presenting an idea or a differently placed accent around the same tenet. I appreciate the openness, candor, and easy going narrative style. Don't change that! I appreciate that you are honest about your credentials and don't necessarily present yourself as an investment 'pro' or 'expert', you simply say what you've done and let that be, so viewers can draw their conclusions. I also like that most of your advice is given from a position of independent investor, almost a fiduciary, but with even less profit motive than a CFP - the videos are free to watch and learn. Please continue in the same spirit.
I have one question, and apologies in advance if you address it elsewhere in your videos. Do you recommend consolidating all securities investments with a single inv-t account provider (e.g. Merrill, etc) or is it fine to maintain accounts with different providers? I have a few accounts which I opened as a way to compare and contrast and figure out the best platform, but I am finding that different vendors have slightly different strengths and it is tricky to pick the best overall. Or should I try to consolidate into the better one of those? I currently have no problem tracking my investments across different platforms, using Yahoo Finance and personal spreadsheets. What's the best strategy with a 20-30 year horizon? I find problematic consolidating via a 3rd party aggregator like Personal Capital or the like that require cross-platform data sharing in order to work, for infosec/privacy reasons. Thank you.
It's a great question and one I plan to address as part of a new video. The short answer is I like having more than one brokerage account. It's a bit less convenient, but I'm nervous having all of my investments at one place, primarily due to the risk of a hack.
Love your content. Keep doing what you are doing!
Hi Rob long time lurker first time commenter. Thanks for the good content and wide variety of neutral colored t shirts. One topic I am interested in is sequence of return risk and how to mitigate it. Im not sure there is a perfect way to mitigate it but if youre looking for topics for another video I would be interested in hearing your thoughts
Rob, Momentum Factor works and studies/data have shown to beat the market, just as small cap value, large cap value and so forth.
I'd recommend Larry Swedroe books on factor investing as he shows data behind why and how it outperforms.
I personnaly have 10% of my US allocation in MTUM. It isnt market timing based on opinions.
Cheers from Brazil.
Good advice! I have friends who use financial advisors and take their recommendations as gospel . I have difficulty convincing them to educate themselves at least enough to be able to question and evaluate the advice they are getting. Leaving your financial future entirely in the hands of others is risky.
Good points. I began investing in 1985. $20/month. Terms such as "risk tolerance" can seem daunting but they are easy to figure out. Experience is a great teacher. Bear markets are great teachers. I don't need to pay a financial adviser to tell me to invest consistently over the longterm.
Excellent video. 58 with a few million and I find my self now having to make the difficult decision hiring an advisor or self-managing. Still trying to figure out the value of turning my money over to an advisor after I was able to buil my portfolio without them. In a future video it would be great to do a deep dive on that decision. Also, why adopt a glide path and not just continue to fly?
Glide fund for me because a) retired at 55 and no longer buying stock... so I can't/won't buy in any future 'SALE' mkt crash event e.g. another 1987 (which could happen as Nasdaq has doubled in 18 months) would hit fund hard and b) I'm interested in other investment classes with 'wasted asset' CGT treatment. Oh, and it sounds like you don't need to lend someone your watch to tell you the time (so to speak) either by the sound of it 😉
@@paulthorpe766 Thanks for the response. What is CGT?
@@Surf62 cheers Capital Gains Tax - watches, cars, MC's, some antiques and art and many other assets (not wine though) are treated as 'wasting' (they are considered to wear out) if over 50 yrs old, so no CGT applies on disposal. Pretty good on say a Rolex Submariner 6538 red writing that was $150 in 1958, and you pick up in 1990 for $56,000, and then sell in 2020 for $350,000 !! (Actual figs)
@@paulthorpe766 Got it. Thanks again.
Smart sector investment not to outperform but could be better inflation hedge or more recession proof such as food, energy, groceries, especially for seniors
Thank you so much for this - it is exactly what I needed to know.
Plus, super grateful for someone who is older than 30 and has a mature, thoughtful demeanor!
I am 65 . What is best portfolio for me . Tks.
Bonds make me squirm at current rates. Furthermore, looking back at them and projecting forward is not only dangerous but wrong.
I still love buckets after your videos. Love your analysis.
Don’t overlook the self dealing aspect of financial advisors. Belinda’s advisor might be getting kickbacks and that’s why he put 50% of her money into bonds. For myself, I would never put a penny into bonds. Always technology stocks until the very end regardless of volatility.
Thanks for this video. Very informative. I too like Bengen's research results. I retired last year and am not sure where to put my "near term" money. I have 3 years of living expenses in cash, but think that may be too conservative. You mention that you do not invest your 5 year near term money in the stock market, but rather in "fixed income". Bengen modeled bonds being in intermediate government bonds, but did not consider near term money. If you don't mind sharing, what do you have your 5 year near term money invested in?
thanks
I don't understand why anyone would buy bond funds at this time. Wouldn't any rise in interest rates cause them to go down? And since we're near 0 interest rates doesn't that make a bad investment? What is the rationale?
Thank you so much for rating my portfolio. You have given me so much food for thought. Appears I am going to have to ask a number of questions to my advisor and possibly have no advisor at all
11:59 "I'm not going to sell something just cause it's done well."
Isn't this this the whole idea behind keeping a balanced portfolio? If you're going to allocate 10% of your portfolio to non-index funds then I don't see why you would be opposed to rebalancing as necessary.
Hmmm, this is weird, my last 2 comments disappeared from the video. I guess I will have to rephrase it.
I had the idea of weighing the 10 economic sectors equally and it seems to work alright during grow weather and not as bad as the market during recessions. I wonder if anybody here has considered that distribution.
Thank you ,
Are high dividend bearing REITS a stable place to allocate a large portion of our portfolio during retirement? If so, what percentage is reasonable?
I am sorry to say Belinda is being fleeced. 50% bonds 10 years out is ridiculous--and she is paying someone to give her bad advice. Plus she is in loaded funds too.
Waste of money in fees
One thing you mentioned at the beginning was that the advisor was only managing her Roth? I wonder if they went 50/50 in the Roth while she was heavier in equities within her 401k. I am not sure that asset location strategy makes sense but trying to find an out for this advisor!
Why do you and others talk about adding Bonds to Equities. Personally, I've found bond funds a disaster. Are there no alternatives to Bonds?
Hello Rod, thanks for all your advice. I have a portfolio of 44 holdings with my brother advising on 2/3 in individual stock and myself in index funds. I feel I have been outperforming him over the last few years. When I use portfolio visualizer he has done extremely well. I can only put in 25 funds at any one time so I am not sure of the accuracy. Let me know if you have the time to look or if you can advise where to go. Lee
@Rob Berger, Like your case analysis that helps to void some potential problems. Would you talk about how to invest and rebalance tax free Roth portfolio that It does not have bonds in it? thanks
Why choose this example portfolio when there is not enough data? Why not find an example portfolio with over 6 months of data? I know this is nit-picking, but it made the video very confusing to me when you started making adjustments. It just messed up the comparison of annualized return for me. It made a simple comparison of 2 portfolios confusing. I still very much like the idea of the video. I am in late 50s like the person who wrote you. I like to see where a simple 2, 3 or 4 self directed etf portfolio compares to a real financial advisor's selected portfolio. I did learn stuff here.
In your example, would the same advice be applicable if I'm retired, but won't need a bucket of funds for 10-years?
Great question. I'm defining retirement as that point in time when you start spending your investments. Some go from working to 100% reliant on their portfolio. Others ease into retirement with a part-time job or consulting. So there is no one right approach. Having said that, I focus on when I'll start spending my money, not when I quit my job (for most they occur at the same time, but not for everybody).
Hey I am new in stock market. Is there a huge fee diff. between index funds and management funds?
A lot of people have much lower risk tolerances than what many planners/advisors project. A person could do a lot worse than a balanced 50/50 portfolio.
Or a lot better.
I find your videos really useful overall but definitely targeted more towards people nearing retirement. I am younger and looking at buying my first home soon, any advice for people in that situation as far as building up and preparing for a down payment?
It's basically just saving. Ensure that you are positioning yourself for growth in your career field. There are no short investments that aren't risky. Then you have tax implications with any gains. I hate to say it, but save, save, and look towards earning more.
Thanks makes sense. I’m all in on saving and index funds/bonds with a 90/10 portfolio. I’m curious about the actual mechanics of pulling out a large sum for a down payment, and if any adjustments should be made to stocks/bond ratio leading up to a payment like that.
You do not give me a target date. "Soon" is less that 5 years?
@@MyTittyballs You are heavy on equities. What happens to your house downpayment in a bear market?
@@DavidEVogel yes soon is let’s say 2-3 years. Yes that’s my concern, if there were a bear market I wouldn’t want to have to wait it out to buy a house
Ssus expense ratios is way too high
Thanks Rob. I found it helpful to see your combined use of the various analysis tools taken together and their specialized application. Appreciate your fresh perspective and that you are not beholden to any particular interest other than data and the investor. - Bill
Perhaps for a future Rate my Portfolio Series breakdown - I'm 61 and plan on retiring at 63. I will not be touching money from this portfolio for approximately 4-5 years with a good cash position. 25% VWENX; 35% VTI; 20@ VXUS; 10@ GLD and 10@ ARKK - would love to hear your assessment. Thanks!
Thank you!!!
Social Security income can be thought as the interest payments of a fixed income investment. For most people it can be equivalent to $1M amount (using 4% interest rate and around $3k income). So a separate investment might not be warranted.
Exactly! My SS will be about $3k / mo at 67… that’s like a $900K annuity! If I can get most of my assets into Roth then I won’t really need to dig into my retirement funds much, and they’ll have a bit of time to grow (I’m getting a bit of a late start).
I have been collecting social security for the past 9 years for a total of $115,344. I'll let you know when I get to $1 million.
Faith, how are you arriving at a 4% "return" for Social Security? That certainly would be nice.
@@i-postm4943 I used a low-end average annuity return rate. Hypothetically, if have invested $1M to an annuity you'll get around $40k per year life-time (even for joint life). SS income is approximately equivalent to that.
@@DavidEVogel You're not going to collect $1M, it's as if you're receiving the interest payment of that investment. However, your SS income is too low compared to my example.
Great analysis, Rob. I've been using portfolio visualizer for a long time and I now judge everything against Wellington (VWELX) and/or Fidelity Balanced (FBALX) as benchmarks. When looking holistically like you did here, it's very hard to beat those with anything but much more volatile portfolios, at least on my investment timeline (starting mid-90s). And with the Admiral version of Wellington now (VWENX) and its lower fees, that's where I'm planning to shift everything (except our Roth accounts) over the next few years in preparation for retirement.
Amazing video
Agreed re the Smart and Momentum funds. But you need to look at advisor fees from the perspective of what was she earning before hiring the advisor? Not what can she earn if she removes the advisor. There's a possibility the advisor increased her account by the 30 year's of fees within the first year as things have gone. I can only guess as to why she's 50/50, but often is the request, "I don't want to lose money", from the client. So nevermind all of the research and asset allocation when that occurs. And lastly, when the markets decline and your client asks, "How much would I have lost if I didn't follow your 80/20 recommendation and stayed 50/50?", what would you tell them?
If you don’t sell the S&P 500 when it falls you don’t lose anything. If you are patient it recovers eventually.
@@george6977 lol. Give that advice face to face to a near or recent retiree and watch their reaction!
Schwab’s stock ratings A-F are all momentum related. I follow them fairly carefully for my individual stock holdings
The advisor recommends it because they have a vested interest in it. Why else would they recommend it?
Would be great to see how to invest when you just starting at 30. Thank you
Plenty of those on RUclips, including from Rob. IMHO, at 30 do 100% in S&P with monthly contributions with as much as you can stand. Do it for 20 years and increase as possible. Then come back here and tell us how you did. You’ll be fine and likely rich.
@@swright5690 agree, but I think would be great to start from something more aggressive then S&P 500
@@kostiantynsudarchenko7393 Fair point. Oh to be 30 again! If I knew then what I knew now. Yeah.... you can ride through some pretty serious ups and down for 20+ years and come out ahead.
@@swright5690 Hi, I’m looking to invest passively as a 24 y/o but the US market is looking extremely scary since it keeps reaching ath. Meanwhile the Chinese index CSI300 has fallen quite bit from its highs. Should I start investing in Chinese index? Do you think they have the potential to go up from now?
@@neoarmstrong100 Your guess is as good as mine.
She has $11 million saved thus far for retirement and asking for advise?
No those are other portfolios that Rob has reviewed. He said in the beginning he doesn't know how much she has he just created a sample $1mil portfolio with that percentage allocation.
Damn I want $11.5 million in my IRA.
Nah, mo money mo problemz ;)