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Assuming you're near retirement, which funds should you try to invest in? Is S&P500 too risky for someone near retirement? Would a total Bond Index be more appropriate? perhaps a combination of both? (what ratio would you say?)
Vanguard Wellesley might be a good choice. It's an all-in-one fund that's about 1/3 stocks and 2/3s bonds, with a fairly low expense ratio for an actively managed fund. Since it's designed to generate income, though, it would be best if you could hold it inside an IRA or 401k, so you won't owe any tax on the earnings it generates.
(An old rule of thumb for how much stock to hold at any given age is to take 100 and subtract your age; the number you get is the percentage of stock you should be holding. There are a lot of quibbles with that rule, but as a general principle it's not too bad.)
Vanguard Wellesley might be a good choice. It's an all-in-one fund that's about 1/3 stocks and 2/3s bonds, with a fairly low expense ratio for an actively managed fund. Since it's designed to generate income, though, it would be best if you could hold it inside an IRA or 401k, so you won't owe any tax on the earnings it generates.
(An old rule of thumb for how much stock to hold at any given age is to take 100 and subtract your age; the number you get is the percentage of stock you should be holding. There are a lot of quibbles with that rule, but as a general principle it's not too bad.)
There is far too much information missing to really give a recommendation that would be appropriate.
What are the details of the person's current assets? Breakdown by type of accounts? What is their annual income needs to cover expenses in retirement? How many years until they retire? When will they collect SS and what will that amount be? Are they married? What's the current tax bracket? What's an expected tax bracket after retirement? What is said person's knowledge level? What's their risk tolerance? There are more but just winging out funds based on age is not really an appropriate recommendation strategy
Assuming you're near retirement, which funds should you try to invest in? Is S&P500 too risky for someone near retirement? Would a total Bond Index be more appropriate? perhaps a combination of both? (what ratio would you say?)
You're supposed to diversify into both -- not invest in one or the other, unless you were in your 20's in which 100% in the S&P might not be a bad choice.
if i had to pick only one fund as a conservative fund through retirement i would go with wellesely income. in fact over on a very popular retirement board many here frequent many do just that.
Vanguard Wellesley might be a good choice. It's an all-in-one fund that's about 1/3 stocks and 2/3s bonds, with a fairly low expense ratio for an actively managed fund. Since it's designed to generate income, though, it would be best if you could hold it inside an IRA or 401k, so you won't owe any tax on the earnings it generates.
(An old rule of thumb for how much stock to hold at any given age is to take 100 and subtract your age; the number you get is the percentage of stock you should be holding. There are a lot of quibbles with that rule, but as a general principle it's not too bad.)
that rule about percentages by age and not someoneones pucker factor or consideration for the world around us is one of the worst myths out there.
more damage has been done putting newbees in to high stock allocations because they are young than markets have ever lost for folks.
a 25 year old bailing out on drops and losing money because they get scared does no one any good. on the other hand a 65 year old still has lomg term money they won't eat with for 30 years. that can still be aggressivly invested if they have the pucker factor.
don't even get me started on loading up retirees on bonds now at the end of a cycle . that is the most dangerous thing you can tell someone to buy and losses are right around the corner. it is only a case of when not if rates rise on bonds.
research by quite a few top researches show retirees need to increase equities slightly through retirement and further reducing them once spending down is exactly the wrong thing to do.
any time anyone gives you a simple answer to such a complex question odds are it is the wrong answer , although it sounds good.
wall street is good for that.
Last edited by mathjak107; 02-26-2015 at 02:46 AM..
There is no one size fits all allocation.. depends on what the market is doing. Understanding how the economy works and seeking out undervalued assets with high rates of return is the best allocation
Last edited by bigboibob; 02-26-2015 at 05:02 AM..
Assuming you're near retirement, which funds should you try to invest in? Is S&P500 too risky for someone near retirement? Would a total Bond Index be more appropriate? perhaps a combination of both? (what ratio would you say?)
AT this point, don't invest in ANY fund. Put your money in a CD or an Annuity, something that's guaranteed with FDIC or State Insurance Association protection. You are too old to weather any ups and downs of a fund. A good fund over 10 years might average 6% but that's with years of losing money and years of having positive gains.
^ really?
so you think a 58.5 year old should have 100% in cash? that seems super conservative; people now live longer, and thus have to potentially provide for themselves longer. with 100% cash, you're not growing at all, when in fact, there are parts of your money you probably won't touch for another 20 years....so you do have time if you think about it.
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