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missing 25% the last year in an s&p fund or total market fund and 48% in qqq is lost compounding going forward from here .
big difference between that and 5% as future gains work on less.
becuse the really big up years are few and far between and so far above the averages , it is the big years that average out the down years to that 9-10% average .
missing the big up years can make the down years really hurt as well as really hurt long term compounding.
it’s like it’s pointed out that if you spend x amount at star bucks over a year , in 30 years you would have given up up some crazy number if it was invested , this is no different.
you can never recover that going forward , in effect it’s like you spent what you missed getting
Last edited by mathjak107; 02-19-2024 at 10:11 AM..
I am close to 50 and I have saved 5.5x my pre-tax salary in 401K, IRA and regular trading account stocks.
Currently I have all of my 401k in Fidelity Contrafund which is heavily into Tech with Meta, Berkshire Hathaway, Amazon, Google, NVDA, Microsoft and Apple.
My IRA + regular account stocks are only in 3 stocks, NVDA, GOOG and TSLA.
I know these stocks, except TSLA, are at all time high. I am also nervous and will to accept smaller returns. I have been putting my extra cash into a local bank CD with 5% for 13 months. I want to reduce my exposure. For my 401K, which mutual fund is designed to have small gains and resistant to a major crash?
My company 401k has limited choices but I can move the money into a 401K brokerage fund so I can buy any mutual fund.
Thanks,
I'd say Vanguard Wellesley Income is the best single fund for this. It's 35% dividend paying stocks and 65% bonds. In its 53-year history, it has had only 8 down years, the worst being 2008, losing 9.84%.
Long term annualized returns are unexciting, but decent. 9.13% since inception in 1970. 6% over the last 20 years. 7.27% over the last 15 years, 5.39% over the last 10 years. These are returns for the more expensive (but still cheap) "investor" share class. If you have at least 50K in the fund, you can get the "admiral" share class, and returns would be about .1% higher.
No one knows the future, but I think the 9% annualized returns since inception are unrealistic going forward. Probably 5% to 7% annualized returns are realistic for the next decade.
I'd say Vanguard Wellesley Income is the best single fund for this. It's 35% dividend paying stocks and 65% bonds. In its 53-year history, it has had only 8 down years, the worst being 2008, losing 9.84%.
Long term annualized returns are unexciting, but decent. 9.13% since inception in 1970. 6% over the last 20 years. 7.27% over the last 15 years, 5.39% over the last 10 years. These are returns for the more expensive (but still cheap) "investor" share class. If you have at least 50K in the fund, you can get the "admiral" share class, and returns would be about .1% higher.
No one knows the future, but I think the 9% annualized returns since inception are unrealistic going forward. Probably 5% to 7% annualized returns are realistic for the next decade.
portfolio visualizer goes back to 2002
wellesly took 100k and grew it to 392.095 at 6.38 cagr
voo s&p fund is 639,862 at 8.77 cagr
percentage wise it sounds close . dollar wise it’s night and day and can be the difference between an underfunded retirement and a decently funded one
so i am not a fan of losing valuable time in the accumulation stage in less capable assets even if it means someone else handling that money.
investor behavior determines our outcomes more than anything else
wellesly took 100k and grew it to 392.095 at 6.38 cagr
voo s&p fund is 639,862 at 8.77 cagr
percentage wise it sounds close . dollar wise it’s night and day and can be the difference between an underfunded retirement and a decently funded one
so i am not a fan of losing valuable time in the accumulation stage in less capable assets even if it means someone else handling that money.
investor behavior determines our outcomes more than anything else
It probably will return less over time than the S&P 500. But nobody knows the future. The OP asked for something conservative that still got decent returns and I gave him that option without questioning whether it was a good idea or not.
As you've said in these threads, the best investment is the one you actually stick with.
the problem in the conservative investment arena is that those in their accumulation years that are conservatively invested may not know the harm they do themselves. because they have no interest in invest so they just pick something in the middle . they don’t realize they can be talking hundreds of thousands of dollars or millions in difference
the 2nd thing is that many try conservative investing but data shows they just have lower trigger points and don’t stay any better in down turns .
the majority would do better letting a 3rd party do the investing for them .
i know voya does that if you want in the 401k and i am sure others do it .
otherwise a target date fund is the way to go since it has high equity levels in the accumulation stage and likely is the best choice
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