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Most people are not interested in following the market. They just want invest and forget it. To some extent that's not a bad approach. Too much tweaking can be counterproductive, since repeatedly shifting money into whatever was hot for the past couple of years can mean buying in at a high valuation.
Looking at this from a strategic point of view, I'll recommend going with 50%-60% in U.S. stocks. The remainder should go into good-quality intermediate bonds. In most 401k plans this can be accomplished with two or three funds. I don't care for automatically reducing the equity percentage with age, which I gather describes most "target date" funds?
I agree with Bogle, that international stocks are not necessary. For one thing, it's partly a bet against the U.S. dollar (unless the fund hedges the currencies, which of course entails some cost).
I do follow the market, but I am absolutely horrible at doing any sort of rebalancing or moving things around. Every single time that I have done so, has been to the detriment of my portfolio. So I absolutely want to invest, and then leave it alone.
should you never go to a doctor either because you have no interest in what’s going on health wise ? or drive an unreliable car because you are not an auto mechanic ?
there are things in life that are to important to ignore .. occasionally you need to make sure things are on track whether you care to or not.
if you don’t want to do it then get someone who can is my opinion when it comes to something as important as one’s financial well being
Taking care of one's health is simple as is going to the doc for an annual checkup.
Easy to take the car in too.
Both are relatively inexpensive maintenance (usually). That is a way different thing than understanding investments and calls and puts and all that "stuff". Most people would much prefer to "set it and forget it" that spend time to try and learn all that - absolutely zero desire to do so - no thanks.
I put in about 14K a year - not sure whether that includes the match. In the past year, my account lost almost 20 times that amount. As mentioned, the reported loss from the 401K report was roughly -20% (it said -19.88% for the preceding 12 months (the .88 may be wrong, it may have been .68 but it makes no difference to me).
I think the total loss was $268K I do not want to go back and look to get the exact number.
Dear GOD. Okay, you must have a massive portfolio.
Taking care of one's health is simple as is going to the doc for an annual checkup.
Easy to take the car in too.
Both are relatively inexpensive maintenance (usually). That is a way different thing than understanding investments and calls and puts and all that "stuff". Most people would much prefer to "set it and forget it" that spend time to try and learn all that - absolutely zero desire to do so - no thanks.
no one has to know a thing to invest .
least of all calls and puts
simply subscribe to a newsletter or just pick a lazy portfolio or get someone to invest for you .
my aunt in her 80s subscribed to fidelity insight right up until she passed away .
my wife has no real interest but she knows enough to handle our simple portfolio’s and rebalance once every year or two .
like i say , people spend more time learning about cars , refrigerators researching trips then they spend on something as important as what is happening with. their own money .
in my opinion , no excuse.
but hey, it’s their money , they can do as they like.
just don’t complain about investments that fell short of what you needed because they may have been poor choices and not markets
I disagree entirely. I have more financial education and exp than probably 90% of the population and I set it and forget it. It’s knowing enough to know what you don’t know. There are teams of the best financial experts in the world who have put plans together, why would someone need to question it? If anything a non financially educated person reading newsletters or little tips and tricks here and there will be biased, wrong, too experimental, emotional, arrogant, ect.
It’s basically the dunning Kruger effect at work.
It’s like that article I saw recently where more than 50% of people thought they could land a plane in an emergency situation if they had the guidance of an air traffic controller.
Or how 70%+ of people think they’re an above average driver.
They can’t, and they’re not. If anything, it’s too expensive for them to tinker with it. Like the phrase goes, if you think hiring a professional is expensive, try an amateur.
Many huge financial wins on here are luck or exaggerated. Or they see they’re up but don’t actually properly track the risk they took on or how alternatives fared, ect. But like the guy at the casino, you hear story after story about how they are the ones who beat the system and did better.
Last edited by Thatsright19; 04-18-2023 at 05:09 PM..
I have a relative that doesn't invest anything into his company's 401K as he simply doesn't trust it to return positive gains in the future. He puts it into crypto instead.
Can't really say I blame him to be quite honest, as it really is a leap of faith that whatever you put into your 401K you will get back and more once you retire.
Most people are not interested in following the market. They just want invest and forget it. To some extent that's not a bad approach. Too much tweaking can be counterproductive, since repeatedly shifting money into whatever was hot for the past couple of years can mean buying in at a high valuation.
Looking at this from a strategic point of view, I'll recommend going with 50%-60% in U.S. stocks. The remainder should go into good-quality intermediate bonds. In most 401k plans this can be accomplished with two or three funds. I don't care for automatically reducing the equity percentage with age, which I gather describes most "target date" funds?
I agree with Bogle, that international stocks are not necessary. For one thing, it's partly a bet against the U.S. dollar (unless the fund hedges the currencies, which of course entails some cost).
Considering all the news regarding countries attempting lessen their dependence on the dollar and transacting in other currencies...
if we fall in to a recession the corporate bond market can get crushed ….
almost 70% of the US corporate bond market IS IN BBB .
that is the sweet spot for investment grade bonds .
the problem is if credit ratings get lowered that is the last line in investment grade before they are rated junk .
every pension fund , insurer , institution, mutual fund , etc restricted to owning only investment grade bonds will have to dump these .
it is a real time bomb
You're a smart guy, but IMO you have a tendency to vastly overstate credit risk and understate interest rate risk. Yes, they are both real risks, but let's put things into perspective.
2008 was the worst economy that most of us have ever lived through, really scary stuff, companies that had been in existence over 100 years gone with little warning. Yes, prices on corporate bonds dropped during the panic, but they recovered their losses in less than two years.
The recent bear market has been all about interest rates. Today we're nearly three years past the peak in bond prices, and even a relatively sleepy intermediate Treasury fund (VFITX) is still showing a cumulative loss of about 10%. Unless rates drop precipitously it's going to be at least a couple more years to get back to break even.
With all that said, sure I'll suggest retired people have enough money in Tbills or insured deposits to survive a couple of years without selling other assets at depressed prices.
Considering all the news regarding countries attempting lessen their dependence on the dollar and transacting in other currencies...
Say what you will about the u.s world order and the western dominance, but I’m not sure the world should want to find out what a China, Iran, Saudi Arabia, and Russia led block means for the world if the system were to collapse or diminish. With all the future technology and control, it could look like a monstrosity worse than imperial Japan and Nazi germany.
The United States has made very big mistakes in the way it weaponized the dollar by seizing russias reserves.
How soon France forgets…do they really think China views them as anything but a poker chip to turn the tide?
I put in about 14K a year - not sure whether that includes the match. In the past year, my account lost almost 20 times that amount. As mentioned, the reported loss from the 401K report was roughly -20% (it said -19.88% for the preceding 12 months (the .88 may be wrong, it may have been .68 but it makes no difference to me).
I think the total loss was $268K I do not want to go back and look to get the exact number.
Forgive my ignorance. You lost almost 20% from your all time high? Does that mean your all time high was around 1.34M?
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Okay, you must have a massive portfolio.
