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Then consider putting that $$$ in a small Cap value fund. This sector traditionally beats the S&P 500 over time & isn't included in it. Another option to consider is finding a Vanguard fund/etf that is focused on Dividend Aristocrats, many(most) are contained in the S&P fund but this is a bit more focused & with reinvesting the dividends over a 30-40 year period the compounding should put you in a nice spot.
What I have learned, late in life but soon enough to profit from it, is to have enough $$$ readily available in a bank account for the next 9-12 months expenses in case something bad happens, & in life something bad will always happen - just a matter of when, & to have a separate account to buy a home or college tuitions etc., don't take it from the retirement account. And pay off your credit cards first.
When I was seeing the age 60 getting closer, the 2008 crash happened & my life savings evaporated by 40%. Somehow I resisted the temptation to pull the remainder from the market & the last 4 years was a giant upside as the market reversed & flew up. What goes down will come up again eventually.
basically i'm looking for 1 more mutual fund.. i have money already on these 2 mutual funds..
There is no clear right amswer. You will hear people say, never sell SPY to buy something else or only monitor the market a few times per year etc. There is no clear right answer. People make money checking their positions every single minute, while some check once per year. Some people will always be fully invested in something like the SPY, but may sell some when a good buy comes along. My point is there are many routes you can take to make money, the worst thkng you can do os shut your mind to different ideas.
@bmw: the OP is asking about investing as opposed to trading. The latter involves minute-by-minute analysis and lots of homework on where money should be going, and is in general much faster paced than the former. It's been proven time and again that people who are investing would do well not to do panic selling and instead do dollar cost averaging where buying all the time, maintaining a percentage ratio of risk tolerance, and not investing in single companies to build wealth over the long term, usually for retirement.
The fact that the OP, thus, is saying that he might panic and sell when the market is bad tells me that he is a complete neophyte and needs to go to his library, check out some books and do some reading, wise up, realize there's going to be at least one more secular bear/bull cycle in our lifetime, and just ignore the daily swings.
Unless, of course, the OP decides to give trading a hand. Something I highly recommend people not do unless they have seven figures available to invest already.
If you don't know what you are doing, do like me, and buy the Vanguard Target retirement fund per my age. I am 34.
Make sure your 401k and ROTH IRA is fully maxed out before buying a mutual fund you have to tax on earnings in the future.
I agree with all of this. Brom, I don't mean to sound like a jerk, but you don't know what you're doing. Invest in an age appropriate Target Date fund from Vanguard which will do the stock/bond mix for you and adjust it for you based on your age.
I also agree with maxing out the 401k/Roth IRA before investing in a regular taxable account.
I agree this would be a good option for the OP. The only thing I'd add is that OP should base the target date fund on life expectancy rather than retirement date.
Quote:
Originally Posted by mysticaltyger
I agree with all of this. Brom, I don't mean to sound like a jerk, but you don't know what you're doing. Invest in an age appropriate Target Date fund from Vanguard which will do the stock/bond mix for you and adjust it for you based on your age.
I also agree with maxing out the 401k/Roth IRA before investing in a regular taxable account.
i would be broke way to early trying to guess my own life expectancy. my mother died at 54 and my dad died early on too. my great grandmother died at 101, go figure
if we only knew the day we would die planning would be so easy. we are actually gaining 1 year now of living longer every 4 years.
i wouldn't want to even try to predict my life expectancy. it is like trying to predict health shock expenses way in advance , you can't really do it.,
best advice i can offer is test the waters with some index investing, get your feet wet with about 1/3 of your money. see how you handle the down turns.
if you find you can tolerate the swings get it all in and divy it up using index funds . there are sooooo many model portfolios you can pick from on line once you know your risk tolerance.
my opinion is stay away from target date funds , you do not want investment decisions made by just your age at any stage of life.
if you want to find out why ,stay tuned when bond rates rise and retirees see those losses on their statements month after month .
for the most part no one has been in a bear market for bonds in their investing lifetime yet as we have known nothing but a bull market for more than 30 years .
on the other hand a generation of youngins fled the markets in 2008-2009 , lost money and never returned to investing just because they were allocated by nothing but their age and they lacked the pucker factor for those swings.
get a little investing education and pick up a model you like to follow on line.
discipline to stay the course will be 90% of your return no matter what model you pick.
Last edited by mathjak107; 06-29-2014 at 04:06 AM..
Do not concentrate as much on your initial investment, but rather on continuing to invest more every month or every quarter depending on what you can afford. You have a long way to go until retirement. Slow and steady is the way to go. Congrats on starting in your 30's. You are ahead of the game compared to most people.
Stock funds are considered better for taxable accounts, bond funds are generally considered better for tax-deferred (retirement) accounts. I would suggest you google tax efficiency of various funds before you invest.
i would add an extended market fund for coverage in the midcaps and small caps.
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