U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Economics > Personal Finance
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 12-30-2018, 06:49 AM
 
70,984 posts, read 71,317,886 times
Reputation: 48562

Advertisements

Quote:
Originally Posted by mysticaltyger View Post
Someone always says this when these types of posts come up. But when you look at a fund like Vanguard Wellington, it's outpaced index funds like VFIAX and VTSAX over the last 20 years with less volatility.

Yes, I know. There's a good chance it won't do that over the next 20 years. But maybe a little less volatility when the market freaks out--as it has this last month--is worth the price.
don't forget the last 20 years were an exception for stocks because of the lost decade . a 30 year treasury bond actually beat wellington and the s&p 500 with no stock needed . you would not want to not buy equities and just buy 30 year bonds because of that exceptional period i am sure .. so equity comparisons are tough to make the last 20 years because no stocks were needed at all to do better
Reply With Quote Quick reply to this message

 
Old 12-30-2018, 06:51 AM
 
25,966 posts, read 28,388,910 times
Reputation: 24634
Quote:
Originally Posted by Petunia 100 View Post
The pro is that if US stocks outperform, you will do better being invested100% in US stocks than you will by diversifying into other asset classes.

The con is that if US stocks do not outperform, you will do worse being invested 100% in US stocks than you will by diversifying into other asset classes.

No one knows if US stocks will outperform or not. Anyone who tells you otherwise is lying, mistaken, or selling something.
Yes, this.

The target date funds have a pretty good chunk invested in international stocks, which haven't done all that well compared to the U.S. stock market over the last decade. But a lot of people would say that's a reason to stick with them as at some point they'll outperform. We can't know for sure.

They also own bonds, which tend to underperform stocks by a significant margin over long periods of time. The target date funds own more bonds and fewer stocks over time. They are designed to get more conservative over time. That is one reason why I don't like them. I much prefer a balanced fund like Vanguard Wellington that keeps its ownership of stocks and bonds within a certain range. A 60% to 70% allocation to stocks, which is what Wellington does, is an allocation you can hold for almost your whole lifetime. It's aggressive enough to get good returns, but conservative enough to let you sleep at night when the market freaks out.

But target date funds are still a reasonable option.
Reply With Quote Quick reply to this message
 
Old 12-30-2018, 06:52 AM
 
25,966 posts, read 28,388,910 times
Reputation: 24634
Quote:
Originally Posted by mathjak107 View Post
don't forget the last 20 years were an exception for stocks because of the lost decade . a 30 year treasury bond actually beat wellington and the s&p 500 with no stock needed . you would not want to not buy equities and just buy 30 year bonds because of that exceptional period i am sure ..
I didn't. Did I not say in my post that there's a good chance it won't outperform over the next 20 years? Sheesh.
Reply With Quote Quick reply to this message
 
Old 12-30-2018, 06:54 AM
 
70,984 posts, read 71,317,886 times
Reputation: 48562
just pointing out that over that time frame best results would not even have been balanced funds . it would have been just long treasury bonds and nooooo equities needed . .
Reply With Quote Quick reply to this message
 
Old 12-30-2018, 05:34 PM
 
Location: Olympus Mons, Mars
5,637 posts, read 8,557,495 times
Reputation: 5696
Quote:
Originally Posted by H'ton View Post
So, I just rolled over my retirement fund from my previous employer.

It is currently parked in a Vanguard money market account within a Traditional IRA.

The plan is to purchase Vanguard mutual funds within my Traditional IRA.

Do you have any suggestions on which Vanguard funds I should invest in?

I am currently 40 years old so i have some time till retirement.

Thank You.
I would suggest the standard 3 or 4 fund portfolio, this is very popular on Bogleheads and many other places. I personally went with a 4 fund approach:

VFIAX (30%) - S&P500 covers US large caps
VTMSX (30%) - S&P600 Tax Managed - covers US small caps
VTIAX or VFWAX (20%) - International
VBTLX or VBILX (20%) - Intermediate bond (if you need bonds for some security, in tax deferred it's probably not necessary imo since you can't access the funds without penalties before 59.5 yrs anyway)

Personally I dislike target date funds because I like to have my own allocation based on my requirements and risk profile, not what some fund manager thinks I need. Also, I like to have my asset classes separate (equities and bonds) and not as one combined bucket.
Reply With Quote Quick reply to this message
 
Old 01-02-2019, 03:15 AM
 
70,984 posts, read 71,317,886 times
Reputation: 48562
Something to keep in mind is most of the last 20 years have had long treasury bonds beat equities . You needed no stocks and you would have beat Wellington .

So it really was an exceptional time frame . Historically it never made financial sence for a long term investor to try to mitigate temporary short term dips with bonds whlle permanently hurting long term returns.

So what feels good may not coincide with what makes financial sense
Reply With Quote Quick reply to this message
 
Old 01-02-2019, 09:30 AM
 
8,706 posts, read 5,072,625 times
Reputation: 9846
Are you still out there, OP? As you may have guessed from the responses so far, there really isn't one correct answer to your question "How should I invest my money?". But there are some general guidelines which you will do well to follow:

1. Make a reasonable asset allocation plan. (The best one is one which you can stick with, in good times and bad).

2. Watch your costs. They compound against you, so you want to keep them low.

3. Re-balance on some regular schedule, or as otherwise needed. (This means you sell some of what has done well recently to buy more of what hasn't. Get back to your original allocation of stocks/bonds/cash). But otherwise, resist the urge to make changes to your plan unless you have a good reason. Just keep adding new money and let time work its magic.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Economics > Personal Finance
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top