401k in safe funds...time to move????

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Boy, I'm at wits end here. Switched to secure funds about 2 months ago. Sure enough, markets have risen, oil has risen and just about everything else. It's like no matter what I do, the opposite happens. Anyhow, please my brethren, spare me the lecture on "you should leave you funds alone." I get it. However, wondering what the consensus might be about getting back into the S&P funds? Are any of you in a holding pattern right now or is it time to jump back in and try and ride the wave? Appreciate any comments.
 
Don't put all your eggs in in one basket. Leave half where it is and use the other half to play the game. That way youve always got something happening.
 
Appreciate any comments? Mine would be to pick a target fund and forget about it. I'm not versed at all at stock stuff, so that's my comment.

I was recommended to go over to bogleheads forum for financial stuff. You might want to surf over there.
 
While I'm not on Bogleheads, I read Sir Jack's book over twenty years ago. Great read, cannot recommend it strongly enough!

Simply put, dollar cost average, choose low cost and STOP trying to time the market. Wall Street gurus who do this full time can't time the market well...so there's virtually no chance that you can. People who do try tend to really hurt their long term returns.

Take the long view - determine your risk tolerance, from which you derive your asset allocation, contribute regularly and fully to meet your goals and just let it ride...
 
Originally Posted By: supton
Appreciate any comments? Mine would be to pick a target fund and forget about it. I'm not versed at all at stock stuff, so that's my comment.

I was recommended to go over to bogleheads forum for financial stuff. You might want to surf over there.


I agree. Bogleheads.org is the perfect place for the Original Poster. Put your 401k 100% in the cheapest index mutual funds (e.g., Vanguard Total Market or an S&P500 Fund) and just ignore it until you retire. Don't touch it. People who buy and sell lose money.

Here is a good article on this from the NYTimes...
http://www.nytimes.com/2015/08/25/upshot/how-emotion-hurts-stock-returns.html

I like the opening quote: “As investors watched global stock markets tumble, the behavioral economist Richard Thaler, who is also an occasional contributor to The New York Times, offered the following advice: “Inhale, exhale. Repeat. Then watch ESPN.”

Watching ESPN is far better than messing with one's investments during market turbulence.

One study found that the best investment returns were from accounts of dead people or people who had forgotten they had an account. Dead! The idea is that the less one messes with one's investments, the better...
http://www.businessinsider.com/forgetful-investors-performed-best-2014-9
http://theconservativeincomeinvestor.com/2015/05/26/fidelitys-best-investors-are-dead/

And this chart is telling. The average investor does very badly when they mess with their accounts... http://www.businessinsider.com/typical-investor-returns-20-years-2014-8

The chart shows that people tend to buy high (when stocks are popular or rising) and sell low (when they are less popular or dropping).

Don't buy high and sell low. Just buy and hold, and stay the course. Ignore the ups and downs. When a fund falls, that is often the best time to hold it, since it is more likely to go up in the long term.

Go to Bogleheads.org for more information or advice. They are very helpful.
 
You do not provide the critical information even an amateur investor would need to help you. So my first bit of advice is to take some time and learn about investing.

The most important detail anyone would need to help you is what is your age?

A standard bit of advice is invest partly in risk and partly in safe.

The ratio of safe to risk can be based on your age: put the % equal to your age in safe investments (bonds, etc) and the balance into risk (stocks, other speculative paper). The theory being as you get closer to retirement, you can less afford to lose your investment while the benefit of a high risk high return investment is by far greater when you are younger and can use the return with compounding to maximize your return.

So, age 20 = 20% bonds (or equivalent) and 80% stocks (or equivalent).

Age 50 = 50% bonds (or equivalent) and 50% stocks (or equivalent).

That is very, very basic advice, and I must offer the disclaimer that I am not an investment advisor and under no circumstances should you take my advice without further studying investment strategies yourself.

All I offer is my past experiences with my own money, which were very fruitful. I specialized in stocks in a risky category (oil, gas, mining and BRIC economies) because I started at a late age (40). So I didn't even take the advice I just gave you ... I was about 70% into risk since I started so late with an initial $10,000.

I've since retired (at age 57, one year ago).

My last "play investment" ... a nationwide contest lasting 90 days where you were given a fictitious $100,000 to invest in the real market ... I came in 13th in Canada with 11,000 participants and I started 3 weeks late, earning a 37% return in 70 days.

Which is why I say you need to spend the effort to learn more about investing. For example, five years is short term investing, 20 years is long term. If you can't maintain the same strategy or stay in the same stock for five years, you are doing it all wrong, period.

There are investment strategies that are shorter than five years (right down to day trading) but let me just say you are years short of investing knowledge to go there, so don't even think about it.
 
What I said previously:

"One way to GAURANTEE that you will underperform the market and a basic index fund: TRY AND TIME THE MARKET."


Go to bogleheads, read the intro/getting started wiki. Use low cost index funds, set your AA (asset allocation) to YOUR acceptable risk tolerance level, then leave it alone. Rebalance one a year if needed.

If you can't do that, buy a target date fund as supton stated - it will do it all for you. Don't touch it, except to put in more money.
 
401 k ,,,safe funds ? --- Nothing is safe , With our country in 19 trillion in debt and counting , someday they will take it all away from everyone and there will be nothing you can do about it , not for me , i have zero debt and know how to save my own coins
 
Civil service....got funds in the G market, guaranteed. Averages about 1-2% a year, but never does down. Yeah, I don't know SQUAT about the markets. Science trained, not business. Like the diversify and not all in one basket idea though.
 
Unless you are a Wall Street insider, trying to time the performance of the mutual funds in the short run is a fool's adventure. For a diversified portfolio, the only thing you can do is go against the economic cycles. Number one, you have to be able to identify the beginning of the cyclical movement and then take action that you are comfortable with.

Otherwise you end up selling low and buying high. Unfortunately, that's how our brains are wired to function.
 
My best advice to those who want to earn a decent return in the stock market is to join an investment club and deal with a broker who specializes with fractional share trading and dividend reinvestment.

They offer the tools (you can do it on graph paper if you want, or buy software) to choose the stocks to purchase, and group buy stocks perhaps once or twice a month. You invest a fixed amount each month ($50, $500, whatever) and they keep track of fractional shares.

That way you can buy anything on the market ... Apple and Google are $500+ a share, but you can buy them fractionally at $100 a month without penalties that an ordinary stock broker would charge (buying less than 100 shares at a time carries penalties). Any dividends are re-invested in purchasing more stock.

The overall strategy is long term investing in stocks with a proven rate of return, and once you learn how to do the legwork of choosing stocks, is pretty hands-off, you don't need to devote more than an hour a two a week to monitoring your investment.

That is the best advice I can give to someone who isn't planning to actively get into the market. For the rates of return I was getting, I was waking up at 4 AM and working until about 11 AM every day, plus an hour or so at market close. Essentially a full-time job. Any time work or other commitments made that level of attention impossible, I would sell and re-invest in safe forms, leaving my money there until I could again dedicate the required amount of time to the job. This worked for me because I had a seasonal career with long stretches of time off broken by long stretches of intense work (7 days /week 12 hour days for months).

Investment Club education and tools:

In the USA:
http://www.betterinvesting.org/public/default.htm

In Canada:
https://www.shareowner.com/index.html
 
Diversify, diversify, diversify. Nobody knows what will happen in 3 weeks, 3 years, 10 years....

How old are you is very important as older folks don't want to loose half their nest egg. My 401K was up over 12% last year but that was due to company stock. Some say your age = the percentage of bonds as a safety net from another crash.

Target date funds are good, they adjust as you get older. At my job we are offered Fidelity TD funds, they have a low expense ratio 0.08%
 
" ... It's like no matter what I do, the opposite happens. ..."

Interestingly, you have hit on one of the investment strategies that actually does work. Because the Baby Boom generation is so large a % of the population, every time a Boomer decides to do something, thousands or millions of other boomers decide to do the same thing at the same time.

If you know this, it's a good way to predict what will happen next.

Thinking about retiring to Costa Rica? Too late ... the Boomers already are in there. Should have done it 10 years ago instead, when they were just on the cusp of thinking of retiring in the Caribbean. Prices for land and homes were cheap in Costa Rica in 2005 ($100K got you a VERY nice place), they are 4x that now.

Investing in the Caribbean for the next 10 years? Where has an artificial barrier kept Boomer Americans out of the market? (Cough! Cuba! Cough!).

Just one example, but it illustrates the strategy of picking the "next big thing" for the Boomer Generation (and it is just as applicable to predicting what the Not-A-Boomer generation will do). And if you can predict the future, you can profit from the future.
 
Originally Posted By: Alfred_B
Unless you are a Wall Street insider, trying to time the performance of the mutual funds in the short run is a fool's adventure. For a diversified portfolio, the only thing you can do is go against the economic cycles. Number one, you have to be able to identify the beginning of the cyclical movement and then take action that you are comfortable with.

Otherwise you end up selling low and buying high. Unfortunately, that's how our brains are wired to function.


You got it part right. Mutual Funds are a Fool's Game. If you want to track the market at a low cost in fees, buy Index Funds instead.

https://en.wikipedia.org/wiki/Index_fund
 
Originally Posted By: Schmoe
Civil service....got funds in the G market, guaranteed. Averages about 1-2% a year, but never does down. Yeah, I don't know SQUAT about the markets. Science trained, not business. Like the diversify and not all in one basket idea though.

There's lots of good advice above. I'm assuming this is a TSP account. I'll shoot you a PM later on when I have a few free moments.

How many years do you have left before retirement?

For the time being, just get ready for the Alex Jones fans to show up here and tell you to bury gold coins.
 
How old are you? If you're close to retirement, you may not have the stomach for the risk. If you're in the 30s or 40s, this will barely be a blip down the road.

As the others have said, what bitog is to oil, bogleheads is to finance. They'll tell you that if you can stomach the risk, buy, hold, and don't peek at the balance, and tune out the news.

It worked for me for the last 32 years. I watched in amusement, and held steady, as my 401k was cut in half in 2008/2009. Very happy I did. I am happily retired as of Jan 1.

And if you decide to get back in, you'll be about where you were in December. Just use it as a lesson.

Now, I am off to the dog park to read Andre Agassiz's autobiography while the pooch plays. Maybe some alpine hiking next week, once the snow in the High Country abates.
 
Last edited:
Originally Posted By: WillsYoda
Originally Posted By: supton
Appreciate any comments? Mine would be to pick a target fund and forget about it. I'm not versed at all at stock stuff, so that's my comment.

I was recommended to go over to bogleheads forum for financial stuff. You might want to surf over there.


I agree. Bogleheads.org is the perfect place for the Original Poster. Put your 401k 100% in the cheapest index mutual funds (e.g., Vanguard Total Market or an S&P500 Fund) and just ignore it until you retire. Don't touch it. People who buy and sell lose money.

Here is a good article on this from the NYTimes...
http://www.nytimes.com/2015/08/25/upshot/how-emotion-hurts-stock-returns.html

I like the opening quote: “As investors watched global stock markets tumble, the behavioral economist Richard Thaler, who is also an occasional contributor to The New York Times, offered the following advice: “Inhale, exhale. Repeat. Then watch ESPN.”

Watching ESPN is far better than messing with one's investments during market turbulence.

One study found that the best investment returns were from accounts of dead people or people who had forgotten they had an account. Dead! The idea is that the less one messes with one's investments, the better...
http://www.businessinsider.com/forgetful-investors-performed-best-2014-9
http://theconservativeincomeinvestor.com/2015/05/26/fidelitys-best-investors-are-dead/

And this chart is telling. The average investor does very badly when they mess with their accounts... http://www.businessinsider.com/typical-investor-returns-20-years-2014-8

The chart shows that people tend to buy high (when stocks are popular or rising) and sell low (when they are less popular or dropping).

Don't buy high and sell low. Just buy and hold, and stay the course. Ignore the ups and downs. When a fund falls, that is often the best time to hold it, since it is more likely to go up in the long term.

Go to Bogleheads.org for more information or advice. They are very helpful.

Yoda is right - just pick a couple of Vanguard funds (they're cheap) and let it ride. 50-50 in VT and VOO and you'll do fine. You could add in 10% VNQ and 10% VWO for more diversity. I have the feeling the Dow will get back below 16500, that will be a good time to get back in. That being said, I also feel the market will be mostly sideways from here in 2016 - maybe a 5% upside. We're all just guessing. If Hillary, Cruz or Trump get in, defense stocks should do well so you can also add in some ITA - one of my favs.
 
There is a lot I don't like about Warren Buffet. His politics, mostly. With that said, though, he is astute with an incredible track record.

Buffet, in his 80'S, holds 90% in an S&P index fund, and holds 10% cash. Wrap your mind around that. "In his 80's"...
 
The no load mutual funds do better than the managed funds so invest in one of Vanguard's S&P 500 funds. You have to keep in mind that the market goes up and the market goes down, but mostly the market goes up. Be prepared to periodically watch your wealth drop thirty percent or more. And don't let any slick talking insurance salesman talk you into any kind of an annuity.
 
Congratulations. You've managed to do just about the wrong thing at every turn with your investment funds.

First off, get yourself a real financial manager, not a discussion forum. Once who can assess your situation, your needs, your goals, and then determine which buckets your money needs to go into and how it should be allocated. For example, if you are retired (or close) you may want 3 buckets: one for immediate access, an intermediate bucket, and a long term bucket. Then you and your financial manager can determine what goes into each bucket-for example, even at retirement your long term bucket can contain higher risk investments. Even if the market does turn down for a bit, you're protected by your immediate and intermediate term buckets, and when the market recovers you'll still have your long term bucket available.

When you are planning for your future, there should never be a "set it and forget it" option-that's simply foolish. Your investments are something that need to be managed on an ongoing basis, and when a buying opportunity arises (such as 2008-2010) then you should be prepared to invest heavily to take advantage of the market when it returns. The smart investors took advantage of investments when they were on sale at huge discounts, now those investors are reaping the rewards.

Originally Posted By: heyu
401 k ,,,safe funds ? --- Nothing is safe , With our country in 19 trillion in debt and counting , someday they will take it all away from everyone and there will be nothing you can do about it , not for me , i have zero debt and know how to save my own coins


Nonsense. I've been hearing that same tripe from the tin foil hat club for decades.
 
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