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AMERICAN BALANCED FUND CL A
CAPITAL WORLD GROWTH & INCOME FUND CL A
EUROPACIFIC GROWTH FUND CL A
FUNDAMENTAL INVESTORS FUND CL A
GROWTH FUND OF AMERICA CL A
INCOME FUND OF AMERICA FUND CL A
INVESTMENT COMPANY OF AMERICA FUND CL A
NEW PERSPECTIVE FUND CL A
NEW WORLD FUND CL A
seems like a huge amount of funds ..i dont see much use for 21 funds and issues. .. there is so much overlap you can most likely get that down to 4-6 funds i would think.
when its that many funds and they fall below 10-15% in each they all just get in the way of each other and after a certain point add nothing extra except confusion.
i keep things tight and simple.
my permanent portfolio has 3 funds and cash.
my active portfolio does it all with 6 fidelity funds and that includes cash..
with that many funds its hard to actually have a strategy except fling money in. re-balancing money, keeping track of fund managers, keeping track of when fund objectives change all become way to much trouble then any benefit.
my active portfolio has run since 1987 with no more then 6 funds ever and most of the time just 5. that returned over 1200%...
Last edited by mathjak107; 04-01-2011 at 04:55 PM..
AMERICAN BALANCED FUND CL A
CAPITAL WORLD GROWTH & INCOME FUND CL A
EUROPACIFIC GROWTH FUND CL A
FUNDAMENTAL INVESTORS FUND CL A
GROWTH FUND OF AMERICA CL A
INCOME FUND OF AMERICA FUND CL A
INVESTMENT COMPANY OF AMERICA FUND CL A
NEW PERSPECTIVE FUND CL A
NEW WORLD FUND CL A
Any suggestions?
Age : 33.
---Either get rid of or reduce company stock to 4% of your 401k portfolio. A lot of people invest too much in company stock, then get laid off,while the stock tanks at the same time they're laid off.
Beyond that I'd reduce it down to 2 funds:
---Dodge & Cox Balanced for 401K. It's beaten the S&P 500 with less volatility for many years. It can invest up to 20% internationally and does have some bonds (anywhere from 25% to 50%...although right now it's around 25% bonds 75% stocks)
---American Funds Income Fund of America for the IRA. Takes a similar balanced approach as the above with a greater emphasis on dividend paying stocks. Can also invest in high yield (junk) bonds. Can invest up to 25% internationally. It's performance is consistenly a shade lower than #1 over most time periods, but it still matches or beats the S&P 500 with less volatility over most time periods.
The other funds in your plan are just too high octane and/or have mediocre performance (although nothing really bad). People tend not to sick with high volatility funds for the decades necessary to get good returns.
The 2 funds I've recommended have been around forever and are the kind of funds you can hold your whole life. They are fairly boring. But investment success is much more about consistency and prudent/calculated risk taking as opposed to excitement and wild risk taking.
The PIMCO Total Return is a great bond fund, but since your two funds already hold some bonds, you don't need more bond exposure. I'd recommend the PIMCO fund in conjunction with a really good stock fund if you had on in your plan. But based on the options you've listed, the stock funds are just ok.
The Vanguard Target 2020 is a waste. It is meant to be used as a single investment. 2020 is the year it targets as your retirment year, and it gets more conservative as time goes (eg...more to bonds and cash as time goes on). This fund might be ok if you use it as your only fund...but I think the Dodge & Cox Balanced is a better option. I just don't like the "target date" retirement concept--just my personal preference.
There's also a lot of overlap between the Spartan 500 Index and the Total Stock Market index. About 80% of those 2 funds are the same.
I am 40 now. If I had just invested with solid balanced funds from the age of 33 until now, I would have a lot larger 401K balance. Those high volatility funds are just too hard to stick with. Even if they have good long term performance, you have to stick with them to get that performance....and most of us don't do that, even though we tell ourselves we will.
Last edited by mysticaltyger; 04-01-2011 at 05:21 PM..
to use this as an example :this is the typical mish mosh of funds folks end up with when they just grab at straws and buy things with no strategy or plan.
im not blaming the op either as very few i find in all the plans i look at really understand whats going on.
as an example .NEVER BUY A TARGET FUND IN A MIX OF OTHER FUNDS.
You wipe out the reason you would want the target fund. it serves no purpose. a target fund should not be mixed with other funds.
ditto on the company stock. way to much.
the total market fund is 95% the s&p 500 fund. the list goes on and on but the op really needs guidance on this hodge podge. short of selling everything and startng over i cant even take a stab at it. i can comment on the fidelity funds and vanguard and i do like dodge and cox balanced but i know nothing about the other funds.
get a pro to help you untangle this mess and get a strategy in place . that is the best advice any of us can give you or do some crash learning .
Last edited by mathjak107; 04-01-2011 at 05:43 PM..
to use this as an example :this is the typical mish mosh of funds folks end up with when they just grab at straws and buy things with no strategy or plan.
im not blaming the op either as very few i find in all the plans i look at really understand whats going on.
as an example .NEVER BUY A TARGET FUND IN A MIX OF OTHER FUNDS.
You wipe out the reason you would want the target fund. it serves no purpose.
the total market fund is 95% the s&p 500 fund. the list goes on and on but the op really needs guidance on this hodge podge.
Yes, I agree on all points.
That's why I recommended the 2 balanced funds, one for the IRA and the other for the 401k, plus a little company stock if he wants. Simplicity is soooo much easier to deal with. Complexity is a prescription for poor returns, IMO.
One citicism of my recommendations is he won't be perfectly diversified because he'll be lacking exposure to small companies...but he'll be diversified enough. If the small cap fund in his 401k were not so volatile, I'd recommend it, but alas it is volatile. And unfortunately for his IRA, American Funds does not really focus on small cap stocks and the one small cap fund they offer is mediocre.
I thought the more you have, the more its diversified?
Quote:
Originally Posted by mathjak107
seems like a huge amount of funds ..i dont see much use for 21 funds and issues. .. there is so much overlap you can most likely get that down to 4-6 funds i would think.
when its that many funds and they fall below 10-15% in each they all just get in the way of each other and after a certain point add nothing extra except confusion.
i keep things tight and simple.
my permanent portfolio has 3 funds and cash.
my active portfolio does it all with 6 fidelity funds and that includes cash..
with that many funds its hard to actually have a strategy except fling money in. re-balancing money, keeping track of fund managers, keeping track of when fund objectives change all become way to much trouble then any benefit.
my active portfolio has run since 1987 with no more then 6 funds ever and most of the time just 5. that returned over 1200%...
Well I also actually use the Employee Stock Purchase Program and 5% of my check goes to Comcast Class A stocks anyway. I get 15% discount per share.
2 funds? Are you serious? That is not diversified is it?
You are a licensed financial advisor?
Quote:
Originally Posted by mysticaltyger
---Either get rid of or reduce company stock to 4% of your 401k portfolio. A lot of people invest too much in company stock, then get laid off,while the stock tanks at the same time they're laid off.
Beyond that I'd reduce it down to 2 funds:
---Dodge & Cox Balanced for 401K. It's beaten the S&P 500 with less volatility for many years. It can invest up to 20% internationally and does have some bonds (anywhere from 25% to 50%...although right now it's around 25% bonds 75% stocks)
---American Funds Income Fund of America for the IRA. Takes a similar balanced approach as the above with a greater emphasis on dividend paying stocks. Can also invest in high yield (junk) bonds. Can invest up to 25% internationally. It's performance is consistenly a shade lower than #1 over most time periods, but it still matches or beats the S&P 500 with less volatility over most time periods.
The other funds in your plan are just too high octane and/or have mediocre performance (although nothing really bad). People tend not to sick with high volatility funds for the decades necessary to get good returns.
The 2 funds I've recommended have been around forever and are the kind of funds you can hold your whole life. They are fairly boring. But investment success is much more about consistency and prudent/calculated risk taking as opposed to excitement and wild risk taking.
The PIMCO Total Return is a great bond fund, but since your two funds already hold some bonds, you don't need more bond exposure. I'd recommend the PIMCO fund in conjunction with a really good stock fund if you had on in your plan. But based on the options you've listed, the stock funds are just ok.
The Vanguard Target 2020 is a waste. It is meant to be used as a single investment. 2020 is the year it targets as your retirment year, and it gets more conservative as time goes (eg...more to bonds and cash as time goes on). This fund might be ok if you use it as your only fund...but I think the Dodge & Cox Balanced is a better option. I just don't like the "target date" retirement concept--just my personal preference.
There's also a lot of overlap between the Spartan 500 Index and the Total Stock Market index. About 80% of those 2 funds are the same.
I am 40 now. If I had just invested with solid balanced funds from the age of 33 until now, I would have a lot larger 401K balance. Those high volatility funds are just too hard to stick with. Even if they have good long term performance, you have to stick with them to get that performance....and most of us don't do that, even though we tell ourselves we will.
I thought the more you have, the more its diversified?
its not diversification when they are just re-hashments of each other. they all move in the same direction at the same time .they all invest in equity markets and they all depend on prosperity. buying the same types of investments over and over in slightly different shapes adds no value.
many that you have even hold the same stocks.
real diversification covers the 4 major possible out comes
recession
prosperity
inflation
deflation
you only have duplicate bets on one of those.prosperity for the most part..
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