I am 53 and retired at 50. 1 thing I did do to retire early was to get out of the 401K and IRA programs. Bought rental real-estate and I am now a Limited Partner in about 1500+ units from collabrative efforts in the fund my estate planner has me invested in. I do not work
I only contribute 5% to get full company match, that's it. The 401K plan is designed for you to work until you are about dead. Also, the government does not have their hands on it yet either
My wife and I live off of our 401K. We don't work. I recommend highly to everyone to build your 401K or Roth IRA's as an alternate revenue stream in retirement to your Social Security. An observation on 401K's is when it gets over 300K it starts to accelerate. When you get over 500K it can really accelerate as the stock market grows
Retired at 55 with $1.4M (60/40 split of stocks and bonds) liquid assets and about $300K in a paid off property/lot in Hawaii that I never built on. I'm now 57, have $1.5M liquid and am about to list the lot for $400k so I match this scenario pretty closely. Our budget since I retired was $9.2K/mo and we've spent only $8k on avg even with 6 months of global travel, a year living in Hawaii and golfing twice a week and some domestic travel. I too got similar (poor) results from my retirement planner but there was no way I would've kept working in a high stress job working 65hrs/wk average because of hypothetical scenarios and probabilities as we're highly adaptable... who in their right mind wouldn't cut back in discretionary expenses during a major recession? Besides, as long as you don't sell or do something dumb in a down market, historically they bounce back in 6 months on avg, maybe a year worst case so you just need to have about 1-2 yrs worth of cash (in a High yield MM) to live off of. At my age, worst case is I get a part-time job at Walmart or get a remote gig where I can work in my PJ's for a year to fund my discretionary spends and hobbies. My highly probable backup plan is to get travel health insurance for $500/mo for both me and my wife where we have to live abroad for 6 months and in the US for 6 months for a year or two. Already got quotes and can save $0.5 - 1k/mo in health insurance and travel abroad half the year. There are too many options to list but my advice is to retire as early as you can and be flexible. Is about financial literacy and great a financial advis0r. Credits to mine Abigail ann ryan.
My company paid a consultant to provide retirement classes when I was 24 and just started saving for retirement. The class was called "The Kids Table" and basically their advice was go with a target retirement fund that aligned with your 65th birthday. That was 20 years ago. It is the only thing I've ever invested in. How else can I grow my finance?
Agreed, when it comes to retirement planning, following the steps of a well experienced advisor did the trick for me in barely 5 years, turned my $500k capital to 5 figure monthly dividends. If you want to keep it very safe, then Vanguard TDF may be for you.
this is superb! could you be kind with details of your advsor please? I have a good amount of money, recently opened a Roth account, but I need help trying to diversify my investment for a much better growth
I've stuck with ‘Karen Lynne Chess' since the 2020 pandemic, and her performance has been consistently impressive. She’s quite known in her field with over two decades of experience, simply look her up.
glad to have stumbled upon this, curiously inputted Karen Lynne Chess on the web, easily spotted her consulting page and was able to schedule a call session. Ive seen commentary about advisers but not this phenomenal)
I came across your channel through this video-case studies are incredibly valuable, and I'm eager to see more in the future! Building wealth involves establishing routines, like consistently setting aside funds at regular intervals for smart investments.
Hello, I am due for retirement in two years, I'm a senior citizen but I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $50K per year but nothing to show for it yet.
In this current unstable markets, It is advisable to diversify while retaining 70-80% in secure investments. looking at your budget, you should consider financial advisory.
I think you're better off with majority investment in S&P500 and uprising equities cos they always outperform. Also speaking with an advisor can help with pointers. I've been in contact with one I reached through commentaries here, she has been really helpful.
I followed Jack Bogle the last decade, but I wanted to hear Rob's opinion on this as well. Currently retired and I have most of my 401k contributions of $200K going into small cap and utility funds, because these seem to be at a "discount" right now.I'm hoping this is a valid thought process?
Utility funds have low/no growth, yields are not great either. Their value goes opposite to interest rate trends. speaking to a certified market strategist can help with pointers
I've been through the 'bonds are beating stocks' periods since the 90s with no bonds and with all aggressive stock mutual funds. At 66, my IRA and cash accounts are far more than I expected for my retirement. I can easily handle a worst-case 80% stock crash, Thanks to my CFA.
*Marissa Lynn Babula* is the licensed CFA I use and im just putting this out here because you asked. You can Just search the name. You’d find necessary details to work with to set up an appointment.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
I just want my money to keep growing faster than inflation. That’s why I’m looking for companies to invest my retirement savings of $250K I have sitting in the bank. I just don’t know the best strategies to use to make solid gains with steady cash flow.
I agree. Based on personal experience working with a financįal advisor, I currently have $2 million in a well-diversified portfolio that has experienced exponential growth from when i started. It's not only about having money to invest in, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Sophia Maurine Lanting” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
I'm a single, 43-year-old father who resides in Hamburg. If everything continues to go well for me, I intend to retire at age 50. I couldn't be happier right now than I am that I just bought my first house last month. I'm so happy that I made wise choices that altered my life forever.
Salutations, dude. At your age, you're doing extremely well. I'm 54 years old, and right now my finances are a mess. Any helpful advice would be greatly appreciated in helping to mold my life. I want to buy a home of my own.
High prices for everything have severely affected my plan. I'm concerned if people who went through the 2008 financial crisis had an easier time than I am having now. The stock market is worrying me as my income has decreased, and I fear I won't have enough savings for retirement since I can't contribute as much as before.
It's recommended to save at least 15% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. By saving this much, you can take advantage of compound interest and potentially grow your retirement savings over time.
I recommend considering a diversification strategy for your financial portfolio due to the increased complexity since the 2008 crash and COVID. My colleague hired an advisor and successfully grew her portfolio by over $120K during this turbulent market by using defensive strategies to protect and profit from market fluctuations.
I require suggestions on how to restore my portfolio and create more effective strategies in light of the huge declines. Where can I locate this instructor?
Finding financial advisors like Marisa Michelle Litwinsky who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I've come across a lot of recommendations but this one stands out. Marisa Michelle Litwinsky" resume is pretty sophisticated, and shows she was active during the last bear market, I also emailed her. Thanks for the info!
I Hit 12k today trding. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject. thanks to Brooke Miller for helping me achieve this.
She is my family's personal broker and also a personal broker in many families I'm United States, she's a licensed broker and a FINRA AGENT in United states
Been retired for about 15 months. Have 3-4 years in cash then 3-4 years in Wellington then the rest in the Total market fund. Seems to be working. Wasn't excited about not getting SP500 returns but had to realize its about making it last and not accumulating anymore.
Am 58 retiring next year but the thought of retirement gives me weakness. My apologies to everyone who have retired and filing social security during this time after putting in all those years of work just to lose everything to a problem you never imagined to happen. It’s so difficult for people who are retired and have no savings or loved ones to fall back on.
target date funds made me a multimillionaire but i also watched them drop 40% in a very short time and take a long time to recover. my best suggestion is that you seek the guidance of a fiduciary to avoid mistakes
Great! mind if I look up your advisor please? only invest in my 401k through my employer as of now, but enthused about investing for my eventual retirement.
I've shuffled through investment coaches and yes, they can be positively impactful to an individual's portfolio, but do your due diligence to find a coach with grit, one that withstood the 08' crash. For me, "Teresa L. Athas" turned out to be better and smarter than all the advisors I ever worked with till date, I’ve never met anyone with as much conviction.
Thank you for saving me hours of back and forth investigation into the markets. found her web instantly. After reviewing her credentials and conducting due diligence, i reached out to her.
I retired 4 years ago and never invested a cent until after I retired. I have a pension and social security as a lowly civil servant. My investments now are just to see how the market works and if I can prosper as I learn, so be it. I was thrilled to see info on how to invest as a retiree since everything else is aimed towards those who are preparing to retire. You had me until you said I'd have to give up control. Can't do that. At least if I lose, I can blame myself...don't want to lose and pay someone else to do it.
Don't blame you, especially when you don't even know the person or persons knowledge that is making the decisions. What if it's someone right out of college.
@@B126USMCRetirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determines a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through 401k. We both still earning after our retirement.
I understand the theory behind these "retirement" funds. When you retire, you need secure income without risk, so they buy high grade bonds and a few conservative stocks, more or less depending on your risk tolerance. But in periods of high inflation like today, fixed income is not so great. Your income won't grow with inflation, and the stock price will fall. If you have to liquidate in an emergency, you lose big. So don't get lulled into thinking these are always the way to go. They are great when inflation is low, or even just steady, but when inflation is rising, they lose real income and stock value. They are right for some people who just don't know anything or don't want to bother, but if you are a well educated investor with time to research investments, you can do better with high dividend stocks, albeit with more risk.
When I retire next year it will be either the Wellington fund or balance index fund, both are a 60/40 portfolio. These are two very good moderate conservative funds that average 8-8.75 rate of return with not too many big loss years which even if they did have a down turn for a few years , I have enough cash to hold over
If you are not investment savvy and want a reasonable way to invest, do in target funds and do not fret. You will be ahead of the crowd. No real need for an advisor. I invested regularly in a target fund, and invested smaller amounts in stocks, which helped me to gain a better knowledge of the overall market, etc.. Fidelity and Vanguard are both trustworthy. Do not invest in niche funds like ESG. Sounds good but really just a subjective, marketing gimmick, not necessarily a sound investment strategy.
Rob, would you be able to do a video on how to manage a retirement portfolio and aim to "spend it all or as much as possible without leaving much" for singles? :) I know it's hard to gauge how long one lives, but all strategies such as 4% seem not to withdraw the main pot of portfolio. As a single without commitments, I think many of us are interested in other more suitable strategies - that will also withdraw part of the portfolio as we live and the goal is adjust and leave as little as possible for "others".., I often wonder about it. lol
Looking for advice. I've done well, I'm retired, and believe I'm all set. The advice is truly about a friend. I recently reconnected with a HS friend I haven't seen in 30 years. He's a little older and I asked when he was going to retire. He admitted to having no savings and $150K variable interest mortgage. He grosses about $75K and lives in a small town in Northern Wisconsin. Here's my thoughts and I'd love feedback. He's in his Full Retirement Year so shouldn't have an issue with his salary / social security payment. I get Social Security grows 8%/yr. But if he started taking it now and applied all of it to his mortgage payment plus the additional he is paying now, he could have the mortgage paid off in 4 - 5 years. When he's 70 -71. Then work one more year putting his social security and paid off mortgage payment in the bank. I believe being debt free and having $60K - $80K in the bank would allow him to be able to live on his social security payment. Thoughts?? Thanks!!
Rob - how about a podcast on how retirees can invest in IRAs, etc. so that RMDs are covered by dividends and capital gains distributions to avoid having to sell shares in a down market.
Maybe what we need in retirement is a reverse target date fund. Where stocks increase in allocation over time from a low level to allow for sequence of return risk. The duration based on estimated lifespan.
You don't need to go searching funds and ETFs that match the asset allocation you want. Just buy a pure stock fund and a pure bond fund in the proportions you want to get to the AA you want.
I was in a 'Retirement Year' fund for 10 wasted years in my 30s to 40s. It was far too conservative and delivering very little growth when I could take some risk, ask that age. I moved its all into higher performing funds and never looked back. I retired at 55, 9 years ago.
@TR4zest Thank you for writing this. I was wondering the same thing. And congratulations on retiring at 55; that is impressive and best wishes on your journey.
Growth company funds or stocks....if you cannot handle the risk buy dividend paying stable companies like Verizon? MO? The stock prices do not move much but you can get yourself a 7 to 10 per cent dividend. Cheers!
I’m not a fan of the Vanguard life strategy funds because Vanguard for some reason uses the more expensive “investor” share class instead of admiral shares to make up the fund. It still is a generally fair price, but that choice makes me question the motives of those designing the funds.
The performance of this target date funds have been horribly for some years now. There are many articles indicating that in an environment where bonds and stocks underperformed at the same time, which has been the case for several years, this is not a good investment. Just think about selling them to comply with the RMD every year and you get the picture. Owning a small percentage will work as a diversification, but never a substantial amount of your portfolio
Great topic Rob, much appreciated! Do you or others have any feedback regarding the inability to manually rebalance following a withdrawal if all your eggs are in one strategy retirement fund? I'm currently looking at consolidating and simplifying my portfolio and torn between investing in either one "60/40 Balanced Index Fund" such as VBIAX or two separate total market Stock & Bond funds and perform the rebalancing myself. The unknown for me is how a "Balanced Index" fund allocates withdrawal distributions, do they pull the funds proportionally 60/40 ?
I like target retirement funds and life strategy funds but right now I love the combination of S&P 500 fund and CDs. You decide the risk ratio depending on your age, risk tolerance, and when you will need the money. Fidelity CDs are paying 5.3% while the S&P gained 20% this year. These are good times to be an investor. BTW, Fidelity's S&P expense ratio is .015%. That's almost free!
Do bond funds work? It seems to me, at this time in history, you are just better off investing in 5-year Treasuries and know exactly what interest rate you will receive.
Good video Rob! I plan on keeping my Vanguard TDF for life. I like its index based structure, diversification, low costs and the fact that it includes TIPS as the target date draws closer. That said, I found (as you pointed out) that it's stock allocation (50%) when the target date is reached was too conservative for my taste so I just chose a fund 5 years beyond my retirement date. So I'll be 60% equities when I retire, then it will go down to 50% 5 years later and, seven years after that, it will be 30% and that is something I can live with as I'll be a lot older by then.
@@joshuaryan8694I it’s in an IRA, but if you choose a TDF in a taxable brokerage account, they are still good as long as you choose a company that uses index funds ( like Vanguard) because index funds are, by design, very tax efficient. Target Date Index Funds are the only type I like.
Rob, I was a 401K administrator for several companies over the years. I found the target date funds significantly underperformed the market for overall fund return. I know they have a mixture of stocks and bonds depending on the the retiremnet date. Ive listened to several of your videos and enjoy them immensly, how come you do not focus at all on total returns for the funds? You seem to focus on fees and asset allocation.
Rob believes in holding a mix of stocks and bonds and international diversification. If you watch his videos on his own personal portfolio, it’s very similar to a TDF. So the reason he pushes it so much is because he obviously prefers safety and diversity over “total returns”
8:52 Note that it’s easy to mix these to hit a target allocation. Half in 60/40 and half in 80/20 will give you a 70/30 allocation. Anything between the 30/70 and 80/20 extremes requires only two investments.
Rob - As usual your input is informative and concise. I have been evaluating going tthis route in lieu of Vannguard Flagship I have been in (been retired 10 years). The allocation in the Wellington fund is consistent with my current holdings🎉. I have fouhd the Flagship Service of value making SS decisions and moving dollars into Roth account. Now that I am almost 72 that value has diminished.. Thanks Again!
Honestly, as you age you should ALSO be changing your asset allocation to be more conservative. So, maybe instead of targeting your retirement year .. you target your longevity year. For instance.. if you have a retirement plan to make your money last until you are 90 years old, and the year you turn 90 is 2060, then you could choose that year and the fund shifts for your longevity downcount.
True talk, we had invested money through a financial advisor for nearly 30 years. The market had its ups and downs, but in the long run it did very well for us. With my pension, social security, and investments we are able to live comfortably. We are now able to fully enjoy our hobbies, travel, family, and making new acquaintances.
Rob...WHY complicate it and pay higher fees. You can buy the components of these Lifestyle funds on your own and save 10 bps. Is it the convenience of having them do the rebalancing?
Our peak era is gone, with 401(k)s failing in the recession. My $750K retirement portfolio shrinks with inflation. I fear leaders repeat history's mistakes. If rising costs worry your retirement, I empathize. Foreign policies, regulations, and energy policies are chaotic.
The problem with target funds is that they have too much in bond funds. Bonds are fine, but bond funds are a disater IMO. You have no control over the bonds in the fund, a good bond portfolio may return 2-3% on average but have the potential for 20% downside like in 2022.
Rob talks about the Wellington fund admiral shares. But you need $50k minimum investment. That's ok for some people, but for me I need a place to invest some of my monthly pension money. The Wellington investor shares require $3k minimum. The difference: admiral shares expense ration is 0.18%. Investor shares is 0.26%. I'm going for the investor shares and putting in $500/month. But if you got the bucks, the admiral shares is the place to be.
All good intimation Rob. I was wondering if you have already discussed TIPS and TIPS funds. like VIPSX vs just buying TIPS directly. I'm mostly in VTSAX and BND but I'm looking to add TIPS to the bond side of my 60/40 mix.
My thought exactly, I'd keep the stocks and bonds in different funds, that way I can draw on the one doing well and don't touch the one doing badly. But there are people who want simplicity and just do a total return kind of strategy, which is fine if you keep the withdrawals under Bill Bengen's limit.
Thank you, Rob, as the tutorial on Asset Allocation Funds was very helpful. I am educating myself in how to move my funds from the accumulation phase of my career into an IRA, upon retirement.
Really liked all this info, personally though i would never recommend a REIT to my worst enemy. Try cashing out a REIT unlike a mutual fund, you have to ask to try to be first in line every quarter and they only let you take out so much. Inherited some REITs and its taking over a year to get them all cashed out.
Some REITs are listed on stock exchanges, so they're more liquid. These include Realty Income and Invitation Homes. Although, I still wouldn't recommend them. They're no safer than stocks and they underperform.
thanks for the effort and sharing. i am an appreciative subscriber. my problems with these funds is on the bonds side. since i am now in the very beginning of my retirement, i prefer my bonds to truly act as a safety net to my equity holdings. i want my bonds to be short term/intermediate term treasury funds/etfs. i do not want long term bonds with their exposure to interest rates. i do not want corporate bonds with their exposure to credit risk. i do not want international bonds with their exposure to currency risk. that said, while i was in my accumulation phase, i invested in both Vanguard Target Date funds and Wellington Admiral. both had decent results and made investing more automatic and that was a good thing! thumbs up.
Long-term government bonds are only volatile if you plan on selling before maturity. If you wait until maturity, they're safer than short-term bonds because you're not exposed to any interest rate cuts. My recommendation would be, get Treasury Inflation-Protected Securities with a maturity date after you expect to die. That way, you will have predictable income which keeps up with inflation.
Unless 100% of your investable assets are in Qualified accounts like IRA,401k.. then this simple strategy will cost you in Tax efficiency. Having stocks in taxable accounts and Bonds in IRA type accounts results in less overall tax paid as the stocks will be capital gains rate. Sequence of Return Risk is a big threat to early retirees (ie reverse dollar cost averaging) , and one strategy might be to buy a 90% bond fund-or cash, just before retirement, then increase your stock allocation every couple or three yrs .. increasing your stocks as you get older..
I cannot imagine having less than 50% of my portfolio in equities in retirement. While I know it's possible, it seems like an insane decision. Despite that, most Target Date funds have a glide slope that end with just 30-40% bonds. Like I said...
For the FIRE people, or even people that want to retire slightly early, that kind of portfolio cannot sustain you. The only way that would work is if you had a steady stream of income like a pension or real estate income, but if you're just depending on investments, less than 50% will not sustain most people. But in the case of steady income such as a pension, that frees you up to go even more aggressive. I will never have anything less than 70% equities.
Stocks have had periods of time where returns went nowhere for decades…after tax interest income and qualified dividends are the name of the game for retirees with a portion of portfolio meant to hedge inflation
Hi Rob, thanks so much for your videos. I’ve been learning lots. I have a few questions that cover this and other topics. 1. Why would anyone own QQQ if they could own QQQM which is pretty much following the same nasdaq index, but is cheaper? 2. Why would anyone own VOO if they could own SPDR which is pretty much following the same S &P 500, but is cheaper? 3. Why would anyone own more than 1 Roth IRA if at the end of the day, you can only ever max on with contributing $7300, or whatever annual max contribution it is? Why would someone do the work to establish more than one Roth IRA if that’s the case? Am I missing something? CAN I contribute more than $7300 if I set up more than one Roth IRA? I just don’t understand what the advantage would be. Thank you soooooo much for your help with these questions. I’d like to make switches to the first two questions today (get out of VOO and trade for SPDR,…) but don’t want to do anything too hasty. Have a great day and thanks again, Rob! Regine 😊
Rob, i just don't like these funds for retirement because they are so limited in what you can invest in. like 20% in stock& 80% in bonds, what if we could enter into a raising interest environment for the next 15- 20 years. Your bond fund becomes trash. And stocks might not do well during inflation or high-interest rates. Where do you really go? Most of these retirement funds are not really prepared for what is coming up ahead of us. They did well in the last 40 years as interest drops but the next 40 years might not be the same.
Yes, it does. But, as Rob pointed you loose some of the simplicity. You pick the asset allocation and you have to do the rebalancing. Not, that big of a deal. But, some people may not want to do the rebalancing. I would certainly pick your option.
This works well if you aren’t taking distributions. But, I’m taking distributions, so I want separate asset classes in my portfolio so I can take distributions from the winners, rather than the losers or the average of the portfolio.
I'll never invest in a target date fund again, Fidelity's funds have almost a 50/50 split with their US and international stock holdings. And then in a time of rising interest rates you are locked into keeping a significant portion in bonds which got hammered as you KNEW this would happen. A recipe for not great returns.
Another well done video of yours. Thanks. Just watched your other video on the Bucket Strategy being flawed (in sum, rebalance your portfolio each year is better). Do these fixed allocation funds accomplish the same thing or would it be better to have say two types of funds; diversified fixed and diversified equity and rebalance the 2 every year?
According to Dave Ramsey a bond fund is not that much more conservative and has underperformed stocks by a large gap. He said stay in 5 star mutual funds. Dont need no cookie cutter assignment that doesnt take into fact the terrain we are in now. George says and so does goldman we will have a low growth over the next 10 years so your better off in dividend stocks .
Yes you could put your money into date funds if you wanted to pay a butt load in management fees every month. Me I like keeping my money in my account and not be giving away my money in fees to.some fund managers who in the long run do even worse that the S&P 500. I only invest in a low fee S&P 500 index mutual fund. That way I keep as much of my money in my pocket as I can. When I am ready to retire then I will set up a multable year cash fund so when the market is down I have safe cash to draw on. When the market is flat or up I will draw out of the S&P 500 fund.
I'm going to show my ignorance and tell you what I've done! I am retired now for 13 yrs. I went with 40% index funds and 60% cds. I do not understand the preaching of bonds when CDs are earning me a min.5.25%! The s&p 500 index and the total stock market index have done well as of Aug 25,2024. As a result 13 yrs. After retiring I have much more in my retirement than I began with! I worry less about my remaining years as a result! I guess my burning question is am I doing myself a disservice by avoiding bonds?
I plan to retire in a few years time and have our money tied up in Vanguard index funds etc just in case im not missing anything would you sell stocks on a monthly basis or annually to live off?
I am retired with 2 pensions fortunately. I have 60% in cash mostly in a HYSA and 5% CDs. I have 2 ETFs in stocks and real estate which makes up the other 40%. I have no debt. Is that too aggressive? Thanks for the video
Too aggressive? No, I'd say way too conservative. We live off pensions and SS and don't need money from our IRAs. So we are invested like a long term investor, but keeping in mind RMDs. I'd say in the main IRA (rollover from husband's 401k), we have about 70% stock mutual funds, 20% in bonds within a balanced mutual fund, and about 10% in money market or CDs getting about 5%. Our Roths are all in stock funds. Just my opinion, of course.
I like Vanguard but like to be involved, I keep it simple with Large Cap funds, CD ladders, money market/auto default VMXFF, balance and move things around a bit
Warren Buffet offered this advice. Before he dies, his family members should take the proceeds of his Will and invest 90% in the lowest cost Vanguard S&P 500 index ETF and 10% invested in short term government bonds. Sound advice, especially if you don’t have the experience nor inclination in investing.
Great video love the content. I’m currently 55 years old and probably will retire between 62 and 65. I am a Fidelity customer and I don’t know if I am needing stocks or ETF now that paid dividends or do I don’t worry about dividends now and just worry about the growth I’m stuck in confused on where to go..
Hey Rob great episode. I know it's not your Forte but would you consider doing an episode about Social Security and spousal benefits. There's a lot on the internet about this but I trust you the most
Be careful with retirement date funds. Just because your retired doesnt mean u need as much of a bond exposure. If social security and pensions cover all or most of your expenses then u may want to invest more aggressively if you dont need your investments for income
Thank you Rob for your thoughtful choice of topics that are very helpful to retired DIY investors like me. Very helpful overview of good options for those who prefer KISS. I did not realize your last point regarding the old target date funds continuing to modify allocations after "expiration" date. Also appreciate the brevity in communicating the information. Buckeys #1? Ha, overrated. Go Blue! - Bill s.
Even with one account, a lot of us will likely have multiple accounts - probably based on taxation - from HSA, Roth, tax deferred, & taxable. It's still a lot to keep track off.
I have a pension and 401k and am now retired. I made 42% last year with my 401k but I’m sure I can’t expect to make that much every year. I want to watch these videos to educate myself. I’m going to draw my social security now that I’m 62.
you should buy bonds not funds. in this rising interest rate environment, everyone who owns funds are suffering huge real losses. those that own the actual bonds can hold to maturity and realize zero real losses. Bond funds are dangerous and people don't know it...
I agree 100%. My only bond funds are in VWELX. The rest I have laddered myself. Bond funds/etfs lose money. Nothing safe about that. I'd rather hold cash.
All fine and good, but how does one know what asset allocation one wants? I haven't a clue. I retired in 2020 at age 71 (due to COVID) with a target retirement 2015 with Vanguard. I've let them choose at 30% stocks and 70% bonds.
We had a managed fund too. Every expert will tell you these companies Trade several times a Week. Red Flag Run. They charge you everytime making money off you while losing yours. No separation or choices. This was addition to my earlier comment.
Hello Rob from Canada. Canadas had similar funds (in etf form) for 3-4 years now from ishares and vanguard. The symbols are XEQT, XGRO, XBAL, XCONS. Switch the X's with V's for Vanguard's products. It's slightly more expensive than the ones you mentioned at MER of 0.2% but its very famous here!
Rob, yet another excellent video. Thanks! Simplicity aside, I presume, however, that you still personally prefer the 3 fund approach....with the possible one or two fund addition?
Thanks for a helpful discussion! I have heard that after retirement and outside of an IRA putting your assets in an asset allocation fund has negative tax consequences so it is not a good idea. Do you agree and please comment/ explain this?
The idea of investing a significant sum of money may be both thrilling and intimidating. There seems to be potential for considerable wealth increase with the correct strategy. How can one take advantage of the present market to grow one's retirement savings over time?
Right now in my IRA brokerage account, I’m laddering T-Bills and may eventually move into T Notes and Bonds when yield curves get above water. But, it seems the tax exempt advantage of the Treasuries will be lost - come the time I move money out of my IRA. So is this where TIPS may offer an advantage in a retirement account or does somehow the interest earned on T-Bills while in an IRA account maintain their tax exempt status when withdrawn into regular income?
My wife - a poor teacher - forwarded this to me. With not a single mention of index funds that have outperformed all of the funds you mention - no thanks.
I am 53 and retired at 50. 1 thing I did do to retire early was to get out of the 401K and IRA programs. Bought rental real-estate and I am now a Limited Partner in about 1500+ units from collabrative efforts in the fund my estate planner has me invested in. I do not work
I only contribute 5% to get full company match, that's it. The 401K plan is designed for you to work until you are about dead. Also, the government does not have their hands on it yet either
My wife and I live off of our 401K. We don't work. I recommend highly to everyone to build your 401K or Roth IRA's as an alternate revenue stream in retirement to your Social Security. An observation on 401K's is when it gets over 300K it starts to accelerate. When you get over 500K
it can really accelerate as the stock market grows
Who is your advisor, please?
I learned about govt actions from my licensed fiduciary in by name "Nora Jean Erickson"
Nora Jean Erickson explained the benefits of long-term treasuries and alternative investments, which the govt doesn't disclose
How can I make good profit as a beginner starting with $6,000 ~it9
As a beginner, it's essential for you to have a guardian to keep you accountable. I'm guided by Amanda Katherine Nakitare
Don't rush in rather seek expertise like Amanda Katherine. Growing a port-folio is complex
I racked up so much losses trying it on my own. Amanda really saved me from myself
Finding someone truly skillful is hard. I'm happy to see that a lot of people found Amanda
Same here. Amanda managing myportfolio was my best decision. Gotten more than half a million since
Retired at 55 with $1.4M (60/40 split of stocks and bonds) liquid assets and about $300K in a paid off property/lot in Hawaii that I never built on. I'm now 57, have $1.5M liquid and am about to list the lot for $400k so I match this scenario pretty closely. Our budget since I retired was $9.2K/mo and we've spent only $8k on avg even with 6 months of global travel, a year living in Hawaii and golfing twice a week and some domestic travel. I too got similar (poor) results from my retirement planner but there was no way I would've kept working in a high stress job working 65hrs/wk average because of hypothetical scenarios and probabilities as we're highly adaptable... who in their right mind wouldn't cut back in discretionary expenses during a major recession? Besides, as long as you don't sell or do something dumb in a down market, historically they bounce back in 6 months on avg, maybe a year worst case so you just need to have about 1-2 yrs worth of cash (in a High yield MM) to live off of. At my age, worst case is I get a part-time job at Walmart or get a remote gig where I can work in my PJ's for a year to fund my discretionary spends and hobbies. My highly probable backup plan is to get travel health insurance for $500/mo for both me and my wife where we have to live abroad for 6 months and in the US for 6 months for a year or two. Already got quotes and can save $0.5 - 1k/mo in health insurance and travel abroad half the year. There are too many options to list but my advice is to retire as early as you can and be flexible. Is about financial literacy and great a financial advis0r. Credits to mine Abigail ann ryan.
Big F-ing deal. Tell someone who cares.
My company paid a consultant to provide retirement classes when I was 24 and just started saving for retirement. The class was called "The Kids Table" and basically their advice was go with a target retirement fund that aligned with your 65th birthday. That was 20 years ago. It is the only thing I've ever invested in. How else can I grow my finance?
Agreed, when it comes to retirement planning, following the steps of a well experienced advisor did the trick for me in barely 5 years, turned my $500k capital to 5 figure monthly dividends. If you want to keep it very safe, then Vanguard TDF may be for you.
this is superb! could you be kind with details of your advsor please? I have a good amount of money, recently opened a Roth account, but I need help trying to diversify my investment for a much better growth
I've stuck with ‘Karen Lynne Chess' since the 2020 pandemic, and her performance has been consistently impressive. She’s quite known in her field with over two decades of experience, simply look her up.
glad to have stumbled upon this, curiously inputted Karen Lynne Chess on the web, easily spotted her consulting page and was able to schedule a call session. Ive seen commentary about advisers but not this phenomenal)
I came across your channel through this video-case studies are incredibly valuable, and I'm eager to see more in the future! Building wealth involves establishing routines, like consistently setting aside funds at regular intervals for smart investments.
Hello, I am due for retirement in two years, I'm a senior citizen but I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $50K per year but nothing to show for it yet.
In this current unstable markets, It is advisable to diversify while retaining 70-80% in secure investments. looking at your budget, you should consider financial advisory.
I think you're better off with majority investment in S&P500 and uprising equities cos they always outperform. Also speaking with an advisor can help with pointers. I've been in contact with one I reached through commentaries here, she has been really helpful.
I'm thinking of trying out an advisor, how can one reach a decent advisor like the one you use?
You may not have a great financial situation but you look amazing .
@@EmilyMoore-n7nSCAM ALERT!! ‼️ 🚨
I followed Jack Bogle the last decade, but I wanted to hear Rob's opinion on this as well. Currently retired and I have most of my 401k contributions of $200K going into small cap and utility funds, because these seem to be at a "discount" right now.I'm hoping this is a valid thought process?
Utility funds have low/no growth, yields are not great either. Their value goes opposite to interest rate trends. speaking to a certified market strategist can help with pointers
I've been through the 'bonds are beating stocks' periods since the 90s with no bonds and with all aggressive stock mutual funds.
At 66, my IRA and cash accounts are far more than I expected for my retirement. I can easily handle a worst-case 80% stock crash, Thanks to my CFA.
I could really use the expertise of this advsors
*Marissa Lynn Babula* is the licensed CFA I use and im just putting this out here because you asked. You can Just search the name. You’d find necessary details to work with to set up an appointment.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
I just want my money to keep growing faster than inflation. That’s why I’m looking for companies to invest my retirement savings of $250K I have sitting in the bank. I just don’t know the best strategies to use to make solid gains with steady cash flow.
Pick quality stocks and keep track of them. If that feels too complicated, consider hiring a wealth manager to grow your money. That's what I do.
I agree. Based on personal experience working with a financįal advisor, I currently have $2 million in a well-diversified portfolio that has experienced exponential growth from when i started. It's not only about having money to invest in, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Sophia Maurine Lanting” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
I just googled her now and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
I'm a single, 43-year-old father who resides in Hamburg. If everything continues to go well for me, I intend to retire at age 50. I couldn't be happier right now than I am that I just bought my first house last month. I'm so happy that I made wise choices that altered my life forever.
Salutations, dude. At your age, you're doing extremely well. I'm 54 years old, and right now my finances are a mess. Any helpful advice would be greatly appreciated in helping to mold my life. I want to buy a home of my own.
High prices for everything have severely affected my plan. I'm concerned if people who went through the 2008 financial crisis had an easier time than I am having now. The stock market is worrying me as my income has decreased, and I fear I won't have enough savings for retirement since I can't contribute as much as before.
It's recommended to save at least 15% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. By saving this much, you can take advantage of compound interest and potentially grow your retirement savings over time.
I recommend considering a diversification strategy for your financial portfolio due to the increased complexity since the 2008 crash and COVID. My colleague hired an advisor and successfully grew her portfolio by over $120K during this turbulent market by using defensive strategies to protect and profit from market fluctuations.
I require suggestions on how to restore my portfolio and create more effective strategies in light of the huge declines. Where can I locate this instructor?
Finding financial advisors like Marisa Michelle Litwinsky who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I've come across a lot of recommendations but this one stands out. Marisa Michelle Litwinsky" resume is pretty sophisticated, and shows she was active during the last bear market, I also emailed her. Thanks for the info!
Hats off to Vanguard for TRYING to simplify investing during all our life stages...
They are making a lot of money on it. There is a fee for managed funds.
@@Trying858 Hats off to Vanguard for TRYING to simplify investing during all our life stages...
They are not on your side...... Lets not be naive
@@Trying858 Expense Ratio is only 0.14% for VASGX - seems like a pretty low cost fund
You may want to look at Vanguard and ESG. SCARY
I Hit 12k today trding. Started last month 2024.
Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject. thanks to Brooke Miller for helping me achieve this.
She is my family's personal broker and also a personal broker in many families I'm United States, she's a licensed broker and a FINRA AGENT in United states
The very first time we tried, we invested $1000 and after a week, we received $5500. That really helped us a lot to pay up our bills.
I'm new at this, please how can I reach her?
she's mostly on Instagrams, using the user name
FXMILLER 17 💯.. that's it
Been retired for about 15 months. Have 3-4 years in cash then 3-4 years in Wellington then the rest in the Total market fund. Seems to be working. Wasn't excited about not getting SP500 returns but had to realize its about making it last and not accumulating anymore.
Am 58 retiring next year but the thought of retirement gives me weakness. My apologies to everyone who have retired and filing social security during this time after putting in all those years of work just to lose everything to a problem you never imagined to happen. It’s so difficult for people who are retired and have no savings or loved ones to fall back on.
target date funds made me a multimillionaire but i also watched them drop 40% in a very short time and take a long time to recover. my best suggestion is that you seek the guidance of a fiduciary to avoid mistakes
Great! mind if I look up your advisor please? only invest in my 401k through my employer as of now, but enthused about investing for my eventual retirement.
I've shuffled through investment coaches and yes, they can be positively impactful to an individual's portfolio, but do your due diligence to find a coach with grit, one that withstood the 08' crash. For me, "Teresa L. Athas" turned out to be better and smarter than all the advisors I ever worked with till date, I’ve never met anyone with as much conviction.
Thank you for saving me hours of back and forth investigation into the markets. found her web instantly. After reviewing her credentials and conducting due diligence, i reached out to her.
I retired 4 years ago and never invested a cent until after I retired. I have a pension and social security as a lowly civil servant. My investments now are just to see how the market works and if I can prosper as I learn, so be it. I was thrilled to see info on how to invest as a retiree since everything else is aimed towards those who are preparing to retire. You had me until you said I'd have to give up control. Can't do that. At least if I lose, I can blame myself...don't want to lose and pay someone else to do it.
Don't blame you, especially when you don't even know the person or persons knowledge that is making the decisions. What if it's someone right out of college.
Not me, I have been investing since the 1980s and prefer mutual funds to individual stocks. Maybe I ain’t that smart, but just lucky.
@@joycef8443 Did you have capital gains annually from your mutual funds? How did you deal with the taxes?
@@joycef8443 I hear you...however, I only see...3 thumbs....up...4...ur....post....Not...very...convincing
@@B126USMCRetirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determines a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through 401k. We both still earning after our retirement.
I understand the theory behind these "retirement" funds. When you retire, you need secure income without risk, so they buy high grade bonds and a few conservative stocks, more or less depending on your risk tolerance. But in periods of high inflation like today, fixed income is not so great. Your income won't grow with inflation, and the stock price will fall. If you have to liquidate in an emergency, you lose big. So don't get lulled into thinking these are always the way to go. They are great when inflation is low, or even just steady, but when inflation is rising, they lose real income and stock value. They are right for some people who just don't know anything or don't want to bother, but if you are a well educated investor with time to research investments, you can do better with high dividend stocks, albeit with more risk.
Wellesley has taken a beating this year. It’s done really well in years past.
Yes it has so great time to buy in.
Why invest in Vanguard Moderate Growth at a 0.13% expense ratio when you can just buy the 4 component funds with a net expense ratio of about 0.05%?
The fund auto rebalances, this may be of value if a spouse is not interested or able to manage the funds properly. It is a set and forget option.
When I retire next year it will be either the Wellington fund or balance index fund, both are a 60/40 portfolio. These are two very good moderate conservative funds that average 8-8.75 rate of return with not too many big loss years which even if they did have a down turn for a few years , I have enough cash to hold over
G8r ideas but T-Bills are good enough for now. The yields are above 5%
If you are not investment savvy and want a reasonable way to invest, do in target funds and do not fret. You will be ahead of the crowd. No real need for an advisor. I invested regularly in a target fund, and invested smaller amounts in stocks, which helped me to gain a better knowledge of the overall market, etc.. Fidelity and Vanguard are both trustworthy. Do not invest in niche funds like ESG. Sounds good but really just a subjective, marketing gimmick, not necessarily a sound investment strategy.
Bonds are not always a conservative investment, it depends where they are in price and the rate environment.
Now is the best time in 15 yrs to invest in bonds.
True. Duration risk. Keep them short dated if you need to.
Rob, would you be able to do a video on how to manage a retirement portfolio and aim to "spend it all or as much as possible without leaving much" for singles? :) I know it's hard to gauge how long one lives, but all strategies such as 4% seem not to withdraw the main pot of portfolio. As a single without commitments, I think many of us are interested in other more suitable strategies - that will also withdraw part of the portfolio as we live and the goal is adjust and leave as little as possible for "others".., I often wonder about it. lol
Go to “FI Calc” and use their retirement draw calculator. You can choose a withdrawal option that spends it all at the end of your investment period.
Looking for advice. I've done well, I'm retired, and believe I'm all set. The advice is truly about a friend. I recently reconnected with a HS friend I haven't seen in 30 years. He's a little older and I asked when he was going to retire. He admitted to having no savings and $150K variable interest mortgage. He grosses about $75K and lives in a small town in Northern Wisconsin. Here's my thoughts and I'd love feedback.
He's in his Full Retirement Year so shouldn't have an issue with his salary / social security payment. I get Social Security grows 8%/yr. But if he started taking it now and applied all of it to his mortgage payment plus the additional he is paying now, he could have the mortgage paid off in 4 - 5 years. When he's 70 -71. Then work one more year putting his social security and paid off mortgage payment in the bank. I believe being debt free and having $60K - $80K in the bank would allow him to be able to live on his social security payment. Thoughts?? Thanks!!
I decided years ago that 60/40 stock/bond is my comfort level. For better or worse, its vanguard balanced index fund for much of my portfolio.
Rob - how about a podcast on how retirees can invest in IRAs, etc. so that RMDs are covered by dividends and capital gains distributions to avoid having to sell shares in a down market.
Seeking Alpha and lots of dividend portfolio advice on youtube. It's a different strategy than what is here.
Maybe what we need in retirement is a reverse target date fund. Where stocks increase in allocation over time from a low level to allow for sequence of return risk. The duration based on estimated lifespan.
You don't need to go searching funds and ETFs that match the asset allocation you want. Just buy a pure stock fund and a pure bond fund in the proportions you want to get to the AA you want.
Unless your pretty late in life the total market index fund beats all target date funds from 20 years old to 50's and 60's.
But you have to accept the drawdown, it's easy looking back, but when the sky is falling today it feels bad.
@@gg80108 yep, time in the market rewards, not timing the market.
I was in a 'Retirement Year' fund for 10 wasted years in my 30s to 40s. It was far too conservative and delivering very little growth when I could take some risk, ask that age. I moved its all into higher performing funds and never looked back. I retired at 55, 9 years ago.
@TR4zest Thank you for writing this. I was wondering the same thing. And congratulations on retiring at 55; that is impressive and best wishes on your journey.
Growth company funds or stocks....if you cannot handle the risk buy dividend paying stable companies like Verizon? MO? The stock prices do not move much but you can get yourself a 7 to 10 per cent dividend. Cheers!
I’m not a fan of the Vanguard life strategy funds because Vanguard for some reason uses the more expensive “investor” share class instead of admiral shares to make up the fund. It still is a generally fair price, but that choice makes me question the motives of those designing the funds.
The performance of this target date funds have been horribly for some years now. There are many articles indicating that in an environment where bonds and stocks underperformed at the same time, which has been the case for several years, this is not a good investment. Just think about selling them to comply with the RMD every year and you get the picture. Owning a small percentage will work as a diversification, but never a substantial amount of your portfolio
Yeah. In a market like 2022 where equities and bonds were both down changed the rules of the game.
I like the Wellington fund vwenx, since I’m close to retirement I’ve added it to my ira.
Great topic Rob, much appreciated! Do you or others have any feedback regarding the inability to manually rebalance following a withdrawal if all your eggs are in one strategy retirement fund? I'm currently looking at consolidating and simplifying my portfolio and torn between investing in either one "60/40 Balanced Index Fund" such as VBIAX or two separate total market Stock & Bond funds and perform the rebalancing myself. The unknown for me is how a "Balanced Index" fund allocates withdrawal distributions, do they pull the funds proportionally 60/40 ?
Nice video. I tried to manage my own stocks, but ended up with homes“analysis paralysis” and haven’t done well this year.
I like target retirement funds and life strategy funds but right now I love the combination of S&P 500 fund and CDs. You decide the risk ratio depending on your age, risk tolerance, and when you will need the money. Fidelity CDs are paying 5.3% while the S&P gained 20% this year. These are good times to be an investor. BTW, Fidelity's S&P expense ratio is .015%. That's almost free!
what is ratio of S&P 500 fund and CD
Which fund are you talking about with the 0.015% expense ratio?
Great presentation. For me these funds have to much international equity exposure. I think that is reflected in the average returns.
Interesting. These would presumably simplify the annual distribution issue but simply selling shares and not worrying about which funds to sell
exactly what i was thinking. seems there's should be a "catch" to it though, if it makes it simpler, beyond giving up some control, as Rob points out.
I appreciate you and your channel. This was a very thought provoking video- I subscribed today.
Do bond funds work? It seems to me, at this time in history, you are just better off investing in 5-year Treasuries and know exactly what interest rate you will receive.
Bond funds are good to buy if you expect interest rates to go lower, which is right now.
Invest in these funds, but always watch them. I learned a long time ago that Nobody but Nobody Takes Care of You Like Yourself.....
Good video Rob! I plan on keeping my Vanguard TDF for life. I like its index based structure, diversification, low costs and the fact that it includes TIPS as the target date draws closer. That said, I found (as you pointed out) that it's stock allocation (50%) when the target date is reached was too conservative for my taste so I just chose a fund 5 years beyond my retirement date. So I'll be 60% equities when I retire, then it will go down to 50% 5 years later and, seven years after that, it will be 30% and that is something I can live with as I'll be a lot older by then.
Is your target date fund in a taxable brokerage? People have told me not to use target date funds because of tax consequences.
@@joshuaryan8694I it’s in an IRA, but if you choose a TDF in a taxable brokerage account, they are still good as long as you choose a company that uses index funds ( like Vanguard) because index funds are, by design, very tax efficient. Target Date Index Funds are the only type I like.
Rob,
I was a 401K administrator for several companies over the years. I found the target date funds significantly underperformed the market for overall fund return. I know they have a mixture of stocks and bonds depending on the the retiremnet date. Ive listened to several of your videos and enjoy them immensly, how come you do not focus at all on total returns for the funds? You seem to focus on fees and asset allocation.
Rob believes in holding a mix of stocks and bonds and international diversification. If you watch his videos on his own personal portfolio, it’s very similar to a TDF. So the reason he pushes it so much is because he obviously prefers safety and diversity over “total returns”
8:52 Note that it’s easy to mix these to hit a target allocation. Half in 60/40 and half in 80/20 will give you a 70/30 allocation. Anything between the 30/70 and 80/20 extremes requires only two investments.
Rob - As usual your input is informative and concise. I have been evaluating going tthis route in lieu of Vannguard Flagship I have been in (been retired 10 years). The allocation in the Wellington fund is consistent with my current holdings🎉. I have fouhd the Flagship Service of value making SS decisions and moving dollars into Roth account. Now that I am almost 72 that value has diminished.. Thanks Again!
Honestly, as you age you should ALSO be changing your asset allocation to be more conservative. So, maybe instead of targeting your retirement year .. you target your longevity year. For instance.. if you have a retirement plan to make your money last until you are 90 years old, and the year you turn 90 is 2060, then you could choose that year and the fund shifts for your longevity downcount.
That is sound advice; thank you for writing this!
True talk, we had invested money through a financial advisor for nearly 30 years. The market had its ups and downs, but in the long run it did very well for us. With my pension, social security, and investments we are able to live comfortably. We are now able to fully enjoy our hobbies, travel, family, and making new acquaintances.
How much money did you spend on an advisor over those 30 years? It's best to educate yourself on money matters
and be your own advisor.
My wife's 401k is in one of these type funds - set and forget. I prefer to be more hands-on.
Rob...WHY complicate it and pay higher fees. You can buy the components of these Lifestyle funds on your own and save 10 bps. Is it the convenience of having them do the rebalancing?
Our peak era is gone, with 401(k)s failing in the recession. My $750K retirement portfolio shrinks with inflation. I fear leaders repeat history's mistakes. If rising costs worry your retirement, I empathize. Foreign policies, regulations, and energy policies are chaotic.
The problem with target funds is that they have too much in bond funds. Bonds are fine, but bond funds are a disater IMO. You have no control over the bonds in the fund, a good bond portfolio may return 2-3% on average but have the potential for 20% downside like in 2022.
Rob talks about the Wellington fund admiral shares. But you need $50k minimum investment. That's ok for some people, but for me I need a place to invest some of my monthly pension money. The Wellington investor shares require $3k minimum. The difference: admiral shares expense ration is 0.18%. Investor shares is 0.26%. I'm going for the investor shares and putting in $500/month. But if you got the bucks, the admiral shares is the place to be.
All good intimation Rob. I was wondering if you have already discussed TIPS and TIPS funds. like VIPSX vs just buying TIPS directly. I'm mostly in VTSAX and BND but I'm looking to add TIPS to the bond side of my 60/40 mix.
This is a terrible idea. You want to be able to draw from the assets that are doing well while not touching the ones that are doing poorly.
My thought exactly, I'd keep the stocks and bonds in different funds, that way I can draw on the one doing well and don't touch the one doing badly. But there are people who want simplicity and just do a total return kind of strategy, which is fine if you keep the withdrawals under Bill Bengen's limit.
Thank you, Rob, as the tutorial on Asset Allocation Funds was very helpful. I am educating myself in how to move my funds from the accumulation phase of my career into an IRA, upon retirement.
Really liked all this info, personally though i would never recommend a REIT to my worst enemy. Try cashing out a REIT unlike a mutual fund, you have to ask to try to be first in line every quarter and they only let you take out so much. Inherited some REITs and its taking over a year to get them all cashed out.
Some REITs are listed on stock exchanges, so they're more liquid. These include Realty Income and Invitation Homes.
Although, I still wouldn't recommend them. They're no safer than stocks and they underperform.
thanks for the effort and sharing. i am an appreciative subscriber. my problems with these funds is on the bonds side. since i am now in the very beginning of my retirement, i prefer my bonds to truly act as a safety net to my equity holdings. i want my bonds to be short term/intermediate term treasury funds/etfs. i do not want long term bonds with their exposure to interest rates. i do not want corporate bonds with their exposure to credit risk. i do not want international bonds with their exposure to currency risk. that said, while i was in my accumulation phase, i invested in both Vanguard Target Date funds and Wellington Admiral. both had decent results and made investing more automatic and that was a good thing! thumbs up.
Long-term government bonds are only volatile if you plan on selling before maturity. If you wait until maturity, they're safer than short-term bonds because you're not exposed to any interest rate cuts.
My recommendation would be, get Treasury Inflation-Protected Securities with a maturity date after you expect to die. That way, you will have predictable income which keeps up with inflation.
If you invest in a total bond fund then by definition you are investing in an intermediate bond fund.
i recently bought the moderate growth one. it looks promising. i like that it also has some international investments
Unless 100% of your investable assets are in Qualified accounts like IRA,401k.. then this simple strategy will cost you in Tax efficiency. Having stocks in taxable accounts and Bonds in IRA type accounts results in less overall tax paid as the stocks will be capital gains rate.
Sequence of Return Risk is a big threat to early retirees (ie reverse dollar cost averaging) , and one strategy might be to buy a 90% bond fund-or cash, just before retirement, then increase your stock allocation every couple or three yrs .. increasing your stocks as you get older..
I cannot imagine having less than 50% of my portfolio in equities in retirement. While I know it's possible, it seems like an insane decision. Despite that, most Target Date funds have a glide slope that end with just 30-40% bonds. Like I said...
For the FIRE people, or even people that want to retire slightly early, that kind of portfolio cannot sustain you. The only way that would work is if you had a steady stream of income like a pension or real estate income, but if you're just depending on investments, less than 50% will not sustain most people. But in the case of steady income such as a pension, that frees you up to go even more aggressive. I will never have anything less than 70% equities.
Stocks have had periods of time where returns went nowhere for decades…after tax interest income and qualified dividends are the name of the game for retirees with a portion of portfolio meant to hedge inflation
Hi Rob, thanks so much for your videos. I’ve been learning lots. I have a few questions that cover this and other topics.
1. Why would anyone own QQQ if they could own QQQM which is pretty much following the same nasdaq index, but is cheaper?
2. Why would anyone own VOO if they could own SPDR which is pretty much following the same S &P 500, but is cheaper?
3. Why would anyone own more than 1 Roth IRA if at the end of the day, you can only ever max on with contributing $7300, or whatever annual max contribution it is? Why would someone do the work to establish more than one Roth IRA if that’s the case? Am I missing something? CAN I contribute more than $7300 if I set up more than one Roth IRA? I just don’t understand what the advantage would be.
Thank you soooooo much for your help with these questions. I’d like to make switches to the first two questions today (get out of VOO and trade for SPDR,…) but don’t want to do anything too hasty.
Have a great day and thanks again, Rob!
Regine 😊
Rob, i just don't like these funds for retirement because they are so limited in what you can invest in. like 20% in stock& 80% in bonds, what if we could enter into a raising interest environment for the next 15- 20 years. Your bond fund becomes trash. And stocks might not do well during inflation or high-interest rates. Where do you really go? Most of these retirement funds are not really prepared for what is coming up ahead of us. They did well in the last 40 years as interest drops but the next 40 years might not be the same.
Doesn't Total Stock Market (VTSAX) with Total Bond Market (VBTLX) give us simplicity AND control?
Yes, it does. But, as Rob pointed you loose some of the simplicity. You pick the asset allocation and you have to do the rebalancing. Not, that big of a deal. But, some people may not want to do the rebalancing. I would certainly pick your option.
I agree. It’s a matter of preference.
As he said just options.
I am not sure, but it seems to me we have to pay 1% for buying Vanguard total bond mutual fund.
This works well if you aren’t taking distributions. But, I’m taking distributions, so I want separate asset classes in my portfolio so I can take distributions from the winners, rather than the losers or the average of the portfolio.
I am surprised that some of these funds have a heavy weight in international equities and bonds.
I'll never invest in a target date fund again, Fidelity's funds have almost a 50/50 split with their US and international stock holdings. And then in a time of rising interest rates you are locked into keeping a significant portion in bonds which got hammered as you KNEW this would happen. A recipe for not great returns.
Another well done video of yours. Thanks. Just watched your other video on the Bucket Strategy being flawed (in sum, rebalance your portfolio each year is better). Do these fixed allocation funds accomplish the same thing or would it be better to have say two types of funds; diversified fixed and diversified equity and rebalance the 2 every year?
According to Dave Ramsey a bond fund is not that much more conservative and has underperformed stocks by a large gap. He said stay in 5 star mutual funds. Dont need no cookie cutter assignment that doesnt take into fact the terrain we are in now. George says and so does goldman we will have a low growth over the next 10 years so your better off in dividend stocks .
Sorry, Rob, what are TIPS?
Yes you could put your money into date funds if you wanted to pay a butt load in management fees every month. Me I like keeping my money in my account and not be giving away my money in fees to.some fund managers who in the long run do even worse that the S&P 500.
I only invest in a low fee S&P 500 index mutual fund. That way I keep as much of my money in my pocket as I can. When I am ready to retire then I will set up a multable year cash fund so when the market is down I have safe cash to draw on. When the market is flat or up I will draw out of the S&P 500 fund.
Vanguard target date series is 0.08% fee.
I'm going to show my ignorance and tell you what I've done! I am retired now for 13 yrs. I went with 40% index funds and 60% cds. I do not understand the preaching of bonds when CDs are earning me a min.5.25%! The s&p 500 index and the total stock market index have done well as of Aug 25,2024. As a result 13 yrs. After retiring I have much more in my retirement than I began with! I worry less about my remaining years as a result! I guess my burning question is am I doing myself a disservice by avoiding bonds?
I plan to retire in a few years time and have our money tied up in Vanguard index funds etc just in case im not missing anything would you sell stocks on a monthly basis or annually to live off?
I am retired with 2 pensions fortunately. I have 60% in cash mostly in a HYSA and 5% CDs. I have 2 ETFs in stocks and real estate which makes up the other 40%. I have no debt. Is that too aggressive? Thanks for the video
Too aggressive? No, I'd say way too conservative. We live off pensions and SS and don't need money from our IRAs. So we are invested like a long term investor, but keeping in mind RMDs. I'd say in the main IRA (rollover from husband's 401k), we have about 70% stock mutual funds, 20% in bonds within a balanced mutual fund, and about 10% in money market or CDs getting about 5%. Our Roths are all in stock funds. Just my opinion, of course.
I hate the target date fund i selected. Yes, its way to conservative when you get to the retirement age. Better with a ETF like SCHD.
I like Vanguard but like to be involved, I keep it simple with Large Cap funds, CD ladders, money market/auto default VMXFF, balance and move things around a bit
Warren Buffet offered this advice. Before he dies, his family members should take the proceeds of his Will and invest 90% in the lowest cost Vanguard S&P 500 index ETF and 10% invested in short term government bonds.
Sound advice, especially if you don’t have the experience nor inclination in investing.
Great video love the content. I’m currently 55 years old and probably will retire between 62 and 65. I am a Fidelity customer and I don’t know if I am needing stocks or ETF now that paid dividends or do I don’t worry about dividends now and just worry about the growth I’m stuck in confused on where to go..
Hey Rob great episode. I know it's not your Forte but would you consider doing an episode about Social Security and spousal benefits. There's a lot on the internet about this but I trust you the most
Be careful with retirement date funds. Just because your retired doesnt mean u need as much of a bond exposure. If social security and pensions cover all or most of your expenses then u may want to invest more aggressively if you dont need your investments for income
Thank you Rob for your thoughtful choice of topics that are very helpful to retired DIY investors like me. Very helpful overview of good options for those who prefer KISS. I did not realize your last point regarding the old target date funds continuing to modify allocations after "expiration" date. Also appreciate the brevity in communicating the information.
Buckeys #1? Ha, overrated. Go Blue! - Bill s.
Most of these funds seem to have low return for the past 10 years.. inflation is biggest problem if using these funds
All I want to know is what is the return on these funds. Could you please disclose this in your videos.
Even with one account, a lot of us will likely have multiple accounts - probably based on taxation - from HSA, Roth, tax deferred, & taxable. It's still a lot to keep track off.
Taxation has made a lot of things messy
I have a pension and 401k and am now retired. I made 42% last year with my 401k but I’m sure I can’t expect to make that much every year. I want to watch these videos to educate myself. I’m going to draw my social security now that I’m 62.
you should buy bonds not funds. in this rising interest rate environment, everyone who owns funds are suffering huge real losses. those that own the actual bonds can hold to maturity and realize zero real losses. Bond funds are dangerous and people don't know it...
I agree 100%. My only bond funds are in VWELX. The rest I have laddered myself. Bond funds/etfs lose money. Nothing safe about that. I'd rather hold cash.
@@cathyg1099why vwelx? Just trying to learn. We retired last year - holding cash in tbills and hysa
All fine and good, but how does one know what asset allocation one wants? I haven't a clue. I retired in 2020 at age 71 (due to COVID) with a target retirement 2015 with Vanguard. I've let them choose at 30% stocks and 70% bonds.
We had a managed fund too. Every expert will tell you these companies Trade several times a Week. Red Flag Run. They charge you everytime making money off you while losing yours. No separation or choices. This was addition to my earlier comment.
Hello Rob from Canada. Canadas had similar funds (in etf form) for 3-4 years now from ishares and vanguard. The symbols are XEQT, XGRO, XBAL, XCONS. Switch the X's with V's for Vanguard's products. It's slightly more expensive than the ones you mentioned at MER of 0.2% but its very famous here!
Looks like the life strategy funds are avail here too.
I mostly use XGRO and it couldn't be simpler!
what happens to the fund when the target year comes around? Does it liquidate? transfer to another fund???
they tend to become more static and become a balanced fund. I personally would avoid Target Date Funds for retirees.
Thank you for your straight forward excellent presentation. I'm thoroughly impressed.
Are these iShares Life Path ETFs a good choice for a taxable brokerage account?
What advice do you give for already "retired" people about 80 years old??
Rob, yet another excellent video. Thanks! Simplicity aside, I presume, however, that you still personally prefer the 3 fund approach....with the possible one or two fund addition?
Where should we people put our non Ira/ roth (cash) savings when we are 5-6 years from retirement? Love your videos.
Thanks for a helpful discussion! I have heard that after retirement and outside of an IRA putting your assets in an asset allocation fund has negative tax consequences so it is not a good idea. Do you agree and please comment/ explain this?
The idea of investing a significant sum of money may be both thrilling and intimidating. There seems to be potential for considerable wealth increase with the correct strategy. How can one take advantage of the present market to grow one's retirement savings over time?
Great info, loved this video!
Looking into this stuff to help my dad out. You gave me some good key terms to work off of and some great information. Cheers!
How do you consolidate your funds to get them all into a life strategy fund? Isn’t there a big tax bill coming from capital gains gains in a taxable?
Right now in my IRA brokerage account, I’m laddering T-Bills and may eventually move into T Notes and Bonds when yield curves get above water. But, it seems the tax exempt advantage of the Treasuries will be lost - come the time I move money out of my IRA. So is this where TIPS may offer an advantage in a retirement account or does somehow the interest earned on T-Bills while in an IRA account maintain their tax exempt status when withdrawn into regular income?
Wh6 not CDs. The tax advantage goes away in an IRA
My wife - a poor teacher - forwarded this to me. With not a single mention of index funds that have outperformed all of the funds you mention - no thanks.