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Since I started looking at my retirement savings account in terms of how many shares could I potentially have of each indexed fund (this year vs last year),
Using the life cycle index fund for the year of my retirement as the benchmark (not US dollars), I notice a better financial improvement due to the new approach of (do not take actions based on what the dollar values are showing because holding dollars is more risky than not holding dollars due to the impact of longterm inflation).
Is my thinking correct here? Instead, I compare index funds against other index funds, and just see Govt Bonds as one of many other indexes that goes up when everything else goes down.
I'm still for the buy low sell high, but what I see as low could be one index fund dropped much faster than the one I'm invested in, and trends are turning so it's time to switch to that index fund. Or the one I'm in rose a lot faster than the other index fund that looks undervalued so time to switch to that index fund. In terms of dollars, this could mean selling out of something that is lower than when you bought it. If there is no tension in the market at all, then I default back to my life cycle diversified index fund. That way you are always doing better than at least one fund when another one is losing, and can buy the losing one on the rebound every time.
Goal is to pick up shares of life cycle fund due to investment gains when excluding any new contributions to the fund...so I can beat the diverse portfolio expected return. I think I can beat the diverse life cycle fund return because I'm confident that 95% of all significant market swings are temporary swings.
To answer your question, both must be considered. If you rebalance your portfolio to keep the correct $$$$ allocation, you are naturally buying low and selling high.
It can't be that hard to beat a life cycle fund over the long term.
I don't buy many funds, but I don't buy any funds that hold other funds. Fees on top of fees.
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