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I like a simple 3 fund portfolio of TBM,TSM, & Total International.
Its simple, less clutter and complexity than slicing and dicing. I don't know if it will outperform a sliced and diced portfolio, however I do know it will outperform most actively traded funds and that's good enough for me.
Slow and steady as she goes....
So you have 3 total funds? How much is into equity?
Less clutter as in looking at the funds? Its all online.
You can still be diversified with 3 funds but a fund may not do so well either.
35% Bonds? What is your age and target retirement age?
I might go 97% Equities and 3% Bonds.
I'm 38 and target retirement age is around 62.
I do not have the stomach to go through what happened 3 years ago, and be 80-100% in equities...even w/that much time left. I found out my "true" risk tolerance 3 years ago. When I say true, I might not have worried as much say 10 years ago when I had a lot less in my 401k portfolio. As I've gotten older and had more time to accumulate, my risk tolerance has changed a little.
65-70% is the sweet spot for me. Plus the fact I'm investing in funds that won't go disappear (like many funds do), w/extremely low expenses, I am way ahead of most investors.......
IMO, I don't know the #'s, however I think very few people back in '08-'09 that were invested 100% in equities, (and had a SIGNIFICANT amount in their 401k), left it alone and didn't get scared.....just my .02
35% Bonds is way too conservative for me. I will get a lot more return by staying in equities in the long haul.
What happened 3 years ago would benefit someone who stayed in equities and continued to buy into the the down market which means Dollar Cost Average. If the market did not crash in 2008 then I would have a lot more less shares now. Why does it even matter if the market crashed anyway? You are many years away from retirement anyway.
You gained a lot less in the 2008 crash because you were into 65% equities then someone who was 90%.
Quote:
Originally Posted by CouponJack
I'm 38 and target retirement age is around 62.
I do not have the stomach to go through what happened 3 years ago, and be 80-100% in equities...even w/that much time left. I found out my "true" risk tolerance 3 years ago. When I say true, I might not have worried as much say 10 years ago when I had a lot less in my 401k portfolio. As I've gotten older and had more time to accumulate, my risk tolerance has changed a little.
65-70% is the sweet spot for me. Plus the fact I'm investing in funds that won't go disappear (like many funds do), w/extremely low expenses, I am way ahead of most investors.......
IMO, I don't know the #'s, however I think very few people back in '08-'09 that were invested 100% in equities, (and had a SIGNIFICANT amount in their 401k), left it alone and didn't get scared.....just my .02
I don't get the point of that 1% in a Target 2020 fund, given how much slicing and dicing you are doing with the rest.
Is your goal to ensure that the little 1% slice it consists of moves its relatively simple stock/bond allocation along over time, so it provides 0.7% of your portfolio with an equity allocation now but maybe 0.5% by 2020 as it grows more conservative nearing target date? Doesn't make sense, what is the goal of that fund and how does it impact your asset allocation?
Why does it even matter if the market crashed anyway? You are many years away from retirement anyway.
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Obviously you are a very young inexperienced investor w/not much money saved if you make a statement like the above. And/or you don't understand that everyone's risk tolerance is totally different!
For many people who have accumulated 6 figures and were heavily in equities during 08-09, you got to see your "puker factor".
Anyway, there is not really a major increase in performance between a 10-15% increase/swing in bonds/equities...the key is low cost funds too which don't eat away at your performance.
I can sleep much better at night w/very good future performance and not have to experience as much downside as someone else.
I was not one of those investors who bailed out in the crash of 2008. I bought into it so this means Dollar Cost Average and when the market went back up from March of 2008, I got extraordinary gains and who people who switched to mostly Bonds did not gain much other.
Are we talking about emotional tolerance here?
I have ALWAYS been in Equities like I said earlier. I have always kept around 90% Stocks and 10% Bonds.
Sure, with 65% Stocks and 35%, you may not lose a lot in the downturn but you aren't gain much either which is ok but you won't have as much in retirement as someone who had mostly Stocks in their portfolio.
Quote:
Originally Posted by CouponJack
Obviously you are a very young inexperienced investor w/not much money saved if you make a statement like the above. And/or you don't understand that everyone's risk tolerance is totally different!
For many people who have accumulated 6 figures and were heavily in equities during 08-09, you got to see your "puker factor".
Anyway, there is not really a major increase in performance between a 10-15% increase/swing in bonds/equities...the key is low cost funds too which don't eat away at your performance.
I can sleep much better at night w/very good future performance and not have to experience as much downside as someone else.
Sure, with 65% Stocks and 35%, you may not lose a lot in the downturn but you aren't gain much either which is ok but you won't have as much in retirement as someone who had mostly Stocks in their portfolio.
There's nothing wrong with going 100% stocks if that is one's choice, BUT...you're making a lot of assumptions. Do you realize that you're criticizing an allocation strategy that has outperformed a 100% stock strategy over the last 15 years? AND one that has had significantly less volatility along the way? IOW, when you consider risk/reward (which any intelligent investor should), a 60/40 stock/bond strategy has kicked a$$ on a pure stock strategy.
Sure, it's very possible that a 100% stock allocation will outperform a 60/40 stock/bond allocation over the NEXT 15 years, but you don't know that. And it's not all about return anyway. If the bank down the street offered a risk-free 8% interest rate on a money market account, would you keep all of your money in stocks because the market has historically returned 9%? If so, you're one of the few who would. If not, then you have to admit that return is NOT all that matters and you're therefore just as "guilty" as someone choosing to go with a mix of stocks and bonds.
There's nothing wrong with going 100% stocks if that is one's choice, BUT...you're making a lot of assumptions. Do you realize that you're criticizing an allocation strategy that has outperformed a 100% stock strategy over the last 15 years? AND one that has had significantly less volatility along the way? IOW, when you consider risk/reward (which any intelligent investor should), a 60/40 stock/bond strategy has kicked a$$ on a pure stock strategy.
Sure, it's very possible that a 100% stock allocation will outperform a 60/40 stock/bond allocation over the NEXT 15 years, but you don't know that. And it's not all about return anyway. If the bank down the street offered a risk-free 8% interest rate on a money market account, would you keep all of your money in stocks because the market has historically returned 9%? If so, you're one of the few who would. If not, then you have to admit that return is NOT all that matters and you're therefore just as "guilty" as someone choosing to go with a mix of stocks and bonds.
65% Stocks and 35% Bonds is good if you are putting chunks of money in and are satisfied with the available cash into retirement.
15 years is nothing. We all know that we just had a lost decade.
For someone starting at age 18 and retiring at age 67 is 49 years. So lets look at any 49 year period.
Why should a person who is into their 20's, 30's and 40's put more then 10% of their portfolio into Bonds?
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