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one other point is there is no consistancy even for the same year from fund family to fund family.. the aggressiveness of the same target date changes from fund family to fund family.
as the different fund families compete for the publics money they got more and more aggressive hoping someone goes to them because they show a higher return.
a 2020 target date fund from wells fargo is 48% equities, the same target year from t.rowe is 73%.
there is a huge difference in volatility there.
2008-2009 taught many small investors alot about themselves. they learned they are really not as tolerant of volatility as they thought or were led to believe.
they bailed out in droves and lost money.
we also found since 2000 volatility has changed. a 60/40 mix historically produced swings within a certain range.
well starting in 2000 those swings became larger than ever exceeding the comfort range of even many knowledgable investors.
a 30% drop from a balanced fund was more than anyone signed on for by going balanced . but that is what they saw in the plunge.
unless wall street introduces products to help control the volatility of volatility they will lose many small investors forever especially the young who got burned by not having the stomach for these swings today.
Last edited by mathjak107; 11-14-2013 at 03:56 AM..
mathjak - For people that are saving for retirement that do not have [much or any] investing or financial knowledge, or the time necessary to learn - (1) where should those people put their money...and (2) who is going to rebalance, adjust and manage how their retirement savings is invested? Remember who your audience is (retirement investors that don't want to be, or don't have the time to be, involved in deciding such matters).
they can easily subscribe to a newsletter the same as I do.
they can also take the same amount of time they spend on sports and learn a little bit about what is the most important aspect of their financial lives.
20 years ago few of us knew how to read a food label. today we all learned the basics.
I have no sympathy for anyone who does not want to take an interest in their own financial well being.
there is enough dummy and idiot guide books out there to give them the basics.
it isn't they can't learn a little ,they won't.
like everything else if you do not do at least a minimum of learning on your own then you will be taken advantage of or fail financially.
how anyone can say they have no interest or time to devote to their financial well being escapes me.
they can easily subscribe to a newsletter the same as I do.
they can also take the same amount of time they spend on sports and learn a little bit about what is the most important aspect of their financial lives.
20 years ago few of us knew how to read a food label. today we all learned the basics.
I have no sympathy for anyone who does not want to take an interest in their own financial well being.
there is enough dummy and idiot guide books out there to give them the basics.
it isn't they can't learn a little ,they won't.
like everything else if you do not do at least a minimum of learning on your own then you will be taken advantage of or fail financially.
how anyone can say they have no interest or time to devote to their financial well being escapes me.
.
Respectfully mathjak, your comments do not address my two questions...the way I asked them!
I do not disagree with your view that people 'should' take an interest in their own financial well being, and take the same amount of time they spend on sports and learn, and subscribe to a newsletter, etc., etc. But, you know full-well that there is a very large percentage of people that will not do as you think they should... So, with that said...I'll ask my two questions again: For people that are saving for retirement that do not have [much or any] investing or financial knowledge, or the time necessary to learn - (1) where should those people put their money...and (2) who is going to rebalance, adjust and manage how their retirement savings is invested?
highcotton: "...For people that are saving for retirement that do not have [much or any] investing or financial knowledge, or the time necessary to learn - (1) where should those people put their money...and (2) who is going to rebalance, adjust and manage how their retirement savings is invested?"
You are asking Mathjak a question that is logically impossible for him to answer intelligently, despite his best previous (and excellent) efforts in many posts. The guy has spent an enormous amount of time on the subject. I doubt there is much more he can say to lead the horses to where the water is, let alone get the recalcitrant to drink.
1) Where to invest?- Sorry, but that is hugely specific to a discrete individual's situation in the context of his/her/their overall situation. There is no generic answer worth spit absent a complete individual picture. That is an immutable fact of life.
2) Who is going to do investment management through time? That question actually does have an blatantly obvious answer. a) Pay competent financial advisors (good luck finding that) to do so or b) DYI.
My apologies for jumping into this conversation but I couldn't resist. There is no free lunch - either one pays dollars to advisors or time. There is not any other option.
Last edited by Pilgrim21784; 11-14-2013 at 11:36 AM..
There is no answer . But one thing is certain most of these folks end up committing financial suicide on their own just because they either do not want to learn or pay someone to help them.
They listen to myth ,other informed people and the media instead.
wall street does what is best for them when it comes to products and guidance.
My only comment to this discussion is this. On this and a few other forums I am on it seems that anyone who uses or even contemplates an adviser is looked down upon. (and harshly many times)
My point would be that everyone should be encouraged, as much as possible, to start saving for retirement. If they choose to use an FI because they are intimidated by the process, or chose not to learn or want someone for their sig-other to be able to go to if they pass....or whatever reason...they should still be encouraged to save.
Maybe, later, they will get more involved..................maybe not......but at least they are planning.
highcotton: "...For people that are saving for retirement that do not have [much or any] investing or financial knowledge, or the time necessary to learn - (1) where should those people put their money...and (2) who is going to rebalance, adjust and manage how their retirement savings is invested?"
You are asking Mathjak a question that is logically impossible for him to answer intelligently, despite his best previous (and excellent) efforts in many posts. The guy has spent an enormous amount of time on the subject. I doubt there is much more he can say to lead the horses to where the water is, let alone get the recalcitrant to drink.
1) Where to invest?- Sorry, but that is hugely specific to a discrete individual's situation in the context of his/her/their overall situation. There is no generic answer worth spit absent a complete individual picture. That is an immutable fact of life.
2) Who is going to do investment management through time? That question actually does have an blatantly obvious answer. a) Pay competent financial advisors (good luck finding that) to do so or b) DYI.
My apologies for jumping into this conversation but I couldn't resist. There is no free lunch - either one pays dollars to advisors or time. There is not any other option.
No problem jumping in the discussion...glad you did.
All I am saying is that the Retirement Target-Date Funds, of which there are many to choose from (conservative, moderate or aggressive), are really an excellent choice for those people that I described. Mathjak pooh-pooh the funds, but he failed to offer any suggestions on just how those people (that I described) should invest. You, likewise, have avoided answering the two questions - no answer at all for Question #1, and I'll give you minor credit for your answer to Question #2 in which you said; "Pay competent financial advisors or DYI." You both are making my case! Those people probably make up the majority, so let's give them a good answer to the questions...instead of turning and just walking away!!! The answer is Retirement Target-Date Funds!
Yes, I know that everyone is different and one-size-does-not-fit-all, but for the people that I described that (a) want to save for retirement and (b) don't want the hassle of dealing with how or where to invest and (c) would find it much easier to pick a conservative, moderate or aggressive fund that (d) has a target-date when they plan to retire...these funds do indeed make perfect sense.
Plain and simply, for those people who (for whatever reason) don't want the hassle of deciding how or where they should put their dedicated retirement assets the Retirement Target-Date Funds, of which there are MANY, are perfect. They can choose a conservative, moderate or aggressive Retirement Target-Date Fund and pay a minimal 'Fund Fee' (e.g. 0.17%) for an expert (far better than they) to manage the fund. In my opinion these funds are a perfect choice for those people. And the amount of money people have invested in Retirement Target-Date Funds continues to grow well into the trillions of dollars, not because any investor is pushed to choose them (because that is illegal) but because they make good sense.
Last edited by highcotton; 11-14-2013 at 01:46 PM..
My point would be that everyone should be encouraged, as much as possible, to start saving for retirement. If they choose to use an FI because they are intimidated by the process, or chose not to learn or want someone for their sig-other to be able to go to if they pass....or whatever reason...they should still be encouraged to save.
Maybe, later, they will get more involved..................maybe not......but at least they are planning.
Agree! The people that are 'into' investing are almost always in-tune (to some degree) with corporate earnings, Fed policys, economics, financing, world markets, politics, etc., etc. Most people could care less about such stuff, or they don't have the time to stay on top of such stuff. You and I, and some others here, may be different...but most people are simply just not 'into' such stuff...and don't want to learn. So be it...
Ask the average person working at his/her job for a living that wants to save for retirement what the following mean (EBITDA, QE, IPO, PE, 8-K, 10-K, 10-Q, 12b-1, SEC, DD, ETF, REIT, NDA & a zillion other types of notations) and probably only 1 in 30 would know what even three of them mean. Those are the people that should consider the Retirement Target-Date Funds. That's all I'm saying............
No problem jumping in the discussion...glad you did.
And all I am saying is that the Retirement Target-Date Funds, of which there are many to choose from (conservative, moderate or aggressive), are really an excellent choice for those people that I described. Mathjak pooh-pooh the funds, but he failed to offer any suggestions on just how those people (that I described) should invest. You, likewise, have avoided answering the two questions - no answer at all for Question #1, and I'll give you minor credit for your answer to Question #2 in which you said; "Pay competent financial advisors or DYI." You both are making my case! Those people probably make up the majority, so let's give them a good answer to the questions...instead of turning and just walking away!!! The answer is Retirement Target-Date Funds!
Yes, I know that everyone is different and one-size-does-not-fit-all, but for the people that I described that (a) want to save for retirement and (b) don't want the hassle of dealing with how or where to invest and (c) would find it much easier to pick a conservative, moderate or aggressive fund that (d) has a target-date when they plan to retire...these funds do indeed make perfect sense.
Plan and simple, for those people who (for whatever reason) don't want the hassle of deciding how or where they should put their dedicated retirement assets the Retirement Target-Date Funds, of which there are MANY, are perfect. They can choose a conservative, moderate or aggressive Retirement Target-Date Fund and pay a minimal 'Fund Fee' (e.g. 0.17%) for an expert (far better than they) to manage the fund. In my opinion these funds are a perfect choice for those people. And the amount of money people have invested in Retirement Target-Date Funds continues to grow well into the trillions of dollars, not because any investor is pushed to choose them (because that is illegal) but because they make good sense.
I can't say unless I know time frames, their stomach for risk and what they have available to them, and if I am familiar with what they do have.
if they use fidelity I suggest what I have been doing for more than 25 years and just follow one of the models in the fidelity insight newsletter.
they have different model portfolios to match ones risk and goals, not age.
my entire portfolio involvement is about 2 minutes a week .
up until a few years ago I followed the growth model and was 80-100% equities.
up 1400% since 1987.
since I am ready to retire I am now 2/3's the income and capital preservation model and 1/3 the growth and income model.
that puts me at about 40% equities over all.
I will be increasing equities by about 1% a year once I retire.
YES! INCREASING EQUITIES THROUGH RETIREMENT but that is another topic.
before bond rates bottomed any strategy would have worked. now it takes a lot more buy and manage then buy and hold to do well.
portfolios have to be nudged by the big picture like steering a big ship.
just sticking to a strategy that avoids paying attention to the big picture now can do more damage then good.
bonds can sustain severe damage as rates rise and what worked in the past can be harmful now.
Last edited by mathjak107; 11-14-2013 at 01:52 PM..
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