Retirement - Are We Just Screwed? (reporting, procedure, classes, student)
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Demographics is destiny. Being born at the end of the Baby Boom is like living in Hiroshima during WWII. You might be okay, but the odds are against it.
Does anyone know if this is a good 401K percentage spread? It's through my work and I call every year and ask them if I should change anything and they always tell me that I should leave it...I don't know what any of this means so I rely on them...it's very frustrating..I have around 75K in there and I want to make sure it's doing the right things! Any advice?
And this is the problem we have folks.. Most know more about their cars and refrigerators then they do anything financial.
Im not singling the op out other then this is a typical issue....
Instead of a portfolio being put together based on someones own stomach for risk, their goals and time frames the typical 401k portfolios are hodge podges of stuff based on what their buddy did ,who got his advice from the ups man because his brother inlaw said its a good thing.
We need more real life financial stuff taught in schools , more tv shows and more info in general for the masses...
So now folks follow each other,dont have the stomach for the down turns and bail and loose money . Then they bad mouth the markets how they lost their money....
If it were me I would sell off your bond stuff so that your allocation is around 10% on the bonds/government securities. Of course I would only recommend that if you were young and the market had time to perform.
I'm not a big fan of mutual funds but unfortunatley that's all you have to choose from in a 401K plan. So your stuck earning dollar cost average returns. I don't know about you, but I don't want to be average, that's why I would only recommend contributing up to the company match, and then putting the rest elsewhere.
nothing wrong with being average.. thats why index funds typically beat 80% of the pros long term ..once you try to outsmart the markets themselves and that you know better it rarely has a good ending.
dollar cost averaging is fine these days. more then a decade ago the markets spent 2/3 of the time higher and only 1/3 lower so odds were you were going to buy in higher and higher each year.
but those days haven happened in almost 12 years now. the last decade you buy some higher,some lower all the time.
the only thing i dont like for dollar cost averaging are the target date funds. reason being that in rising markets at the same time you may be buying shares at higher and higher prices buying less shares over time the funds by design are cutting stock exposure. you could in a rising market end up far more conservative then the fund intended you be.
Last edited by mathjak107; 08-31-2010 at 05:42 PM..
I think dollar cost averaging is fine for a traditional saver, but I wouldn't call it true investing. Dollar cost averageing tells me that you are to afraid to invest a lump sum of money, and you rather try to time the market by dipping your toes in the market once every two weeks. Now for some people that's all they can afford to do out of their paychecks and that's fine up to a point. But I encourage people to take a portion of their wealth and invest it, not save it via dollar cost averaging. Invest it in individual stocks, personal real estate, a business, partnership, private REIT, etc. Use your money as Leverage to leap ahead.
I encourage people to take control of their finances and learn from everyone they meet. There is a lot of opportunity in the world and if you try just a little bit you can live comfortably.
ooooh dollar cost averaging is investing ,no question. your money is just as at risk as any other method. not everyone has a stomach for risk,in fact as 2008 showed very few have the stamina to take a hard drop without doing the wrong thing and bailing and loosing money.i cant imagine them using borrowed money to do this to boot. this has nothing to do with knowledge, its all about someones personal tolerance to pain.
the investments you mainly picked are not passive investing.
real estate is a profession unto its self, individual stocks take quite alot of research time if your not going to just roll the dice.as now you have added individual company risk to the equation and not just market risk.
most people dont have the nerve to start a business and few have the capital to sustain it.
im not saying your ideas arent the quickets way to making some serious dough, im just saying they arent for the masses who really belong dollar cost averaging into index funds and covering up any mistakes they made in timing the buy in.
the simpler and more fool proof you make things for the masses the better as left to their own devices most small investors dont even make market or fund returns.
morningstar tracks small investor returns on each fund by tracking the money in and out. it shows most small investors try to time things or bail when they should buy and do exactley the opposite of what they should.
its amazing how many folks just have a thing about not wanting to learn or have no interest in learning about investing ,then they loose money and forever sour on the markets and complain how they cant save enough to retire.
Last edited by mathjak107; 09-01-2010 at 03:52 AM..
I'm wondering if the next shoe to fall is going to be on all the people who couldn't stand the pain of the stock market, finally sold out and joined the "flight to quality" in government bonds
I'm wondering if the next shoe to fall is going to be on all the people who couldn't stand the pain of the stock market, finally sold out and joined the "flight to quality" in government bonds
I hope not--there has been too much pain already.
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