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Old 12-02-2018, 03:19 PM
 
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simple , but likely wrong for most .

i was on the 401k committee at work . almost all the youngins fled in 2008-2009 licking their wounds because they used target funds that invested by age or retirement date rather then their own comfort zone .

very few came back in time so they really took a beating . investing by age or some date is rather silly when you look at all the parameters that determine our allocation .

the product is nothing more than wall street covering their butts since how can they be blamed when it is supposedly for your age , whatever that is supposed to mean . ?

Last edited by mathjak107; 12-02-2018 at 03:35 PM..
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Old 12-02-2018, 04:06 PM
 
Location: The Ozone Layer, apparently...
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My company offered a pension plan, so that's the first thing I joined into. They also offered a TDA (tax deferred annuity). The first thing I had to do was decide what type of investor I am. I am conservative.


So, initially, 50% of my 2% went into the Guaranteed Interest Account. Then I have hit the large and small cap blend and growth portfolios investing in a few to start. As time went on I got a little more risky with money and spent quite a while with nothing going into my GIA. Then a crash came and I rolled everything into the GIA.

Real Estate did well initially, but as an investment, it has not done well overall yet, so I have stayed away from those stock funds. I also haven't done anything with bonds, mutual funds and money markets, as they paid so little that I was doing just as good to put the money in the totally safe GIA.

I have been in and out of global stocks. They did well at first, then went up in flames for a long while, and seem to be crawling back to life now. There are 2 Global Market stock portfolios that I have about 1K each in, and 5% each going to now. As I am at end game, I also have 55% of my now 17% going into my GIA directly.

I would suggest starting conservative and slow. Learn the rules of your plan, like any limitations on moving money between portfolios and any costs as well. I can change my contribution and percentage allotments at will, but when it comes to moving money around in my annuity there are limitations. Learn these things.

Study how different items are doing over the past quarter, year and 10 years. Make your choices from there. I have found that what the fund and its reps have said all along is the best policy - diversify. I took my time, since I wasn't making a lot of money, but am very diversified now. This way, if one group starts to slip, another seems to rise and make up for the slippage.

Its strange for the uninitiated, because like everyone is saying, you have to forget about that money. But if you hear a crash is eminent, pay attention. Look for things like the GIA that can help with damage control, and save that once a year roll of everything into something for just such an event so it doesn't cost you more than it needs to to do it.

Another trap not to get caught in is the up and downs of your investments. I have had coworkers lament forever at me about losing money when they really didn't lose anything. Their principal investment was not touched. What they were getting crazy about was the interest money going up and down. Its going to do that. Its not really your money until you can start making withdrawals so keep that in perspective.

You want to pay attention but you also want to forget about that money. Start slow and conservative. Start getting risky once you have had time to study the performance of the investments offered. Aim to eventually have a rather well diversified investment annuity. Talk to plan reps whenever they are on site. For the most part, they can be very helpful for learning the basics.

It can be a pain in the butt and overwhelming at first, but once you get to end game, you start to believe you have a clue.
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Old 12-02-2018, 04:33 PM
 
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At your age a target date fund is a pretty good choice. You can do a lot worse and probably can't do much better. A broad market index fund is a slightly more aggressive choice.

If you are thinking about a MANAGED fund- ask yourself- why exactly is your manager better than the other guy's manager? What do you look at- past performance (which is no guarantee of future results, as they are sure to inform you). Manager resume? Classy office? Glossy brochure, with photos of happy retirees?
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Old 12-03-2018, 04:45 PM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by TattedCOdude View Post
Fees are not the "be all and end all" I'll agree with that...but I'd rather pay a .15% fee vs. a 1.7% fee on two funds tracking the same index. Frontline did a great piece on this very topic. An Economist charted, graphed, spread-sheeted and evaluated his own retirement account and realized over 30 years the fund managers were going to make more off his account than he was (after compounding). By now everybody knows about Buffetts famous bet so it has merit. If you don't like Bogle/Vanguard--Schwab, Fidelity, BlackRock all offer low fees as well.


In any case the OP is likely stuck with whomever his company chose to manage the account and their associated funds and fees so this point may not matter much.
What I highlighted was the key part of the Frontline story. I agree with MathJak about Contra fund but not everyone has Fidelity as one of their work place choices as you note.
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Old 12-04-2018, 02:04 AM
 
2,443 posts, read 2,072,308 times
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Quote:
Originally Posted by mathjak107 View Post
simple , but likely wrong for most .

i was on the 401k committee at work . almost all the youngins fled in 2008-2009 licking their wounds because they used target funds that invested by age or retirement date rather then their own comfort zone .

very few came back in time so they really took a beating . investing by age or some date is rather silly when you look at all the parameters that determine our allocation .

the product is nothing more than wall street covering their butts since how can they be blamed when it is supposedly for your age , whatever that is supposed to mean . ?
Target funds are more of a Ron Popeil 'set it and forget it' investing tool. For many that don't want to deal with moving in and out of funds, it is not a bad way to go. Are there better ways, sure but at least it is consistent investing for someone just starting with a company.
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Old 12-04-2018, 02:18 AM
 
71,607 posts, read 71,751,865 times
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for many they fail because there is no standard as to what constitutes the right mix . so many bail and lose money because these don't align with what their pucker factor is .

the same 2010 target date fund from wells fargo in 2008-2009 lost 11.5% while the t.rowe price 2010 target fund lost 26.5%. that is a target fund that had 2 years to go before retirement. in fact the t.rowe target date fund didn't fall to below 45% equities until 5 years after the target date.

so which is the right mix ?

no one ever said investing could be or should be simple and hands off and unskilled un knowledgeable people can do it well , except for bogle. but even he changed his story when vanguard promoted their money mgmt services . now his study showed most small investors leave at least 2-3% on the table by trying to do things themselves , mostly because of bad behavior because the mix does not match their pucker factor .

so heres your index funds , here is your allocation , have a nice life--- does not seem to work that well for many .
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Old 12-04-2018, 03:26 AM
 
2,443 posts, read 2,072,308 times
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Quote:
Originally Posted by mathjak107 View Post
for many they fail because there is no standard as to what constitutes the right mix . so many bail and lose money because these don't align with what their pucker factor is .

the same 2010 target date fund from wells fargo in 2008-2009 lost 11.5% while the t.rowe price 2010 target fund lost 26.5%. that is a target fund that had 2 years to go before retirement. in fact the t.rowe target date fund didn't fall to below 45% equities until 5 years after the target date.

so which is the right mix ?

no one ever said investing could be or should be simple and hands off and unskilled un knowledgeable people can do it well , except for bogle. but even he changed his story when vanguard promoted their money mgmt services . now his study showed most small investors leave at least 2-3% on the table by trying to do things themselves , mostly because of bad behavior because the mix does not match their pucker factor .

so heres your index funds , here is your allocation , have a nice life--- does not seem to work that well for many .
Quite an allocation difference in target funds. I thoughts most had similar strategies. T Rowe is way more aggressive. Probably too aggressive for people that want funds to automatically get more conservative over time.

For me, I think T Rowe is more my style with there still being near 50% in equities even after the retirement date. Of course, there are different kinds of equities to be invested in and I wouldn't want the speculative kind. I would think there would be a lot of blue chippers in the mix.
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Old 12-04-2018, 03:33 AM
 
71,607 posts, read 71,751,865 times
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they vary widely . there is no standard mix as far as target date funds for any given age . that is what is so pathetic about it . it has nothing in common with it being right for you. i rather see them take pot luck on a balanced fund until they learn their own pucker factor. if it is high then they can ramp up the aggressiveness after a cycle . .

but throwing people in to high equity allocations day 1 because they are young is silly in practice. it does no one any good if they can't or won't stay the course .

people put more effort in to learning about their car , refrigerator or even scoping out restaurants then they do learning about their financial well being .

they think this is stuff that requires no expertise , planning or knowledge and they are quite wrong . the problem is the industry encourages this lack of learning by giving the impression they have one size fits all products simply based on age and there is nothing else to consider.
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excerpt from the article below :
Fidelity has boosted performance - by ramping up risk.

Since a strategy overhaul that took full effect in 2014, Fidelity has substantially increased exposure to stocks, including those from volatile emerging markets. The firm also scrapped a long-held belief of sticking to pre-set allocations of stocks, bonds and other assets in target-date funds.

Instead, Fidelity portfolio managers now try to time market shifts, for instance by moving billions of dollars out of money-losing commodities bets and into Chinese stocks and U.S. tech shares, regulatory filings show.

Such changes have worked well in the second-longest running bull market in U.S. history, but they expose investors to bigger losses if the funds’ increasingly volatile assets head south.

In the 1990s, Fidelity helped pioneer target-date funds as a prudent method to diversify investments and automatically dial down risk as participants age. The fund names typically include a projected retirement year - the target date.

Today, many target-date fund managers have turned to riskier investments to boost returns, and Fidelity has gone further than its peers, said Ron Surz, president of research firm Target Date Solutions.




https://www.reuters.com/article/us-f...-idUSKBN1GH1SI

Last edited by mathjak107; 12-04-2018 at 04:17 AM..
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Old 12-04-2018, 05:03 AM
 
71,607 posts, read 71,751,865 times
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just look at someone approaching retirement or even in retirement
.
you have those who have enough in pension and assets and are investing for heirs and legacy money for the most part . .

you have those who intend to still be aggressive in retirement .

you have those who need little draw and want little market exposure .

you have those who hope to maximize income while taking moderate risk .

why should the same target fund be right for all of them ? the answer is it isn't . in fact it may be wrong for all of them depending on individual needs and goals .

so you really need to do your homework and understand your own situation ,wants ,needs and pucker factor , and since each fund families idea for what is right varies , you need to understand that aspect too .

so this is anything but pick a date by age and you are done .
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Old 12-04-2018, 05:15 AM
 
2,443 posts, read 2,072,308 times
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Quote:
Originally Posted by mathjak107 View Post
just look at someone approaching retirement or even in retirement
.
you have those who have enough in pension and assets and are investing for heirs and legacy money for the most part . .

you have those who intend to still be aggressive in retirement .

you have those who need little draw and want little market exposure .

you have those who hope to maximize income while taking moderate risk .

why should the same target fund be right for all of them ? the answer is it isn't . in fact it may be wrong for all of them depending on individual needs and goals .

so you really need to do your homework and understand your own situation ,wants ,needs and pucker factor , and since each fund families idea for what is right varies , you need to understand that aspect too .

so this is anything but pick a date by age and you are done .
The problem is most don't want to do their homework and are more content to set it and forget it.
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