stock market

[WinniWoman]

I was reading an article the other day from a respected financial advisor and he said 73 percent (based on bank data) of the population will retire poor because of ....

Savings rate.

Yup, you guessed it...they don’t save in the first place. So anyone who saves regularly will do well and most will retire wealthy.

Good for your son saving in the first place.


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Well- you know who pushed him on that.

He doesn't save a lot as he is does not have a high income, but he puts enough in the 401k for the employer match and a little into the Roth each month on automatic. Unfortunately, he didn't start the 401K until quite a few years after he started the job, but at least he finally did it.

 

[Fredflintstone]

Well- you know who pushed him on that.

He doesn't save a lot as he is does not have a high income, but he puts enough in the 401k for the employer match and a little into the Roth each month on automatic. Unfortunately, he didn't start the 401K until quite a few years after he started the job, but at least he finally did it.

to mama.


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[bluehende]

Don't worry. He is young and won't need the money until he retires. We have lived through 3 major ups and downs in the stock market. Left the money there and it returned stronger every time. He has time on his side.

Rule of thumb is your allocation between stock and fixed income (safe) is: 100 - your age.

This is a good rule of thumb as long as you consider having 5 yrs expenses liquid at retirement. I was always more of a risk taker so was always over invested. Three years ago I was 50% above that rule of thumb and had been retired for 10 yrs. Over these three years I have brought that down to only being 25% above the rule.

 

[tompalm]

Different strategies for everyone and the closer you get to retirement, the more conservative you should be. But if you don’t need your savings during retirement than maybe your strategy is more aggressive. Selling some now might be a good plan if looking to buy in at a lower price or change asset allocation. But as long as the economy is good and unemployment is lower than 5 percent the market should be fine. There will be pullbacks and corrections of 10 percent or more. Ride them out unless other indicators start to fail like staples XLP, starts outperforming discretionary XLY, or transports IYT, is going down. The Dow theory says all sectors will be going up in a healthy market. Right now, a lot of sectors are going sideways and not up. So the future is not certain. So heads up if you are too aggressive or loosing sleep over your investments.

 

[CalGalTraveler]

We are still dollar cost averaging in. We have some standing buy orders if the market dips below a certain percentage. Right now I am slowing investment to keep our allocation and use the dips to buy to keep our balanced allocation.

One possibility is putting a stop-loss on ETFs in a downward ladder i.e. if the market starts to tank you have recouped some of the sales and don't have to ride the entire roller coaster down. This limits your losses but can also limit your gains if the market ratchets back up again.

 

[Fredflintstone]

Different strategies for everyone and the closer you get to retirement, the more conservative you should be. But if you don’t need your savings during retirement than maybe your strategy is more aggressive. Selling some now might be a good plan if looking to buy in at a lower price or change asset allocation. But as long as the economy is good and unemployment is lower than 5 percent the market should be fine. There will be pullbacks and corrections of 10 percent or more. Ride them out unless other indicators start to fail like staples XLP, starts outperforming discretionary XLY, or transports IYT, is going down. The Dow theory says all sectors will be going up in a healthy market. Right now, a lot of sectors are going sideways and not up. So the future is not certain. But what else is new.

True, true, true. No one has a crystal ball. All I know is I have seen economies cycle. In my small world, I just save 15 percent of my Gross Income and don’t touch it. I have 5 percent in liquid savings set aside for emergency so I’m not as victim to the economic cycles.

I guess the biggest lesson I’ve learned is there is no such thing as get rich quick. Slow and steady wins the race.


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[rapmarks]

Well we retired twenty years ago. We did not do anything you guys are doing, like pulling back five years before retirement. We went through two bad markets after retirement but we certainly have more in stocks than bonds, not 100 minus age. And many times I don’t look at my statements. My broker says we are diversified enough to not worry.

 

[Fredflintstone]

Well we retired twenty years ago. We did not do anything you guys are doing, like pulling back five years before retirement. We went through two bad markets after retirement but we certainly have more in stocks than bonds, not 100 minus age. And many times I don’t look at my statements. My broker says we are diversified enough to not worry.

That’s awesome. I think the trick is to have either the knowledge or know where to either get good advice or have a money manager you trust who protects you before thinking commissions. If you are good, the commissions follow anyway.

Just from my experiences, once I hit over 500 k in investments many years ago, I got better quality managers. Before, I had to really look for the right people. Now, thankfully, they come to me. What I do now is have 2 managers and they do well for me. They know performance pays and kind of know that if they don’t they lose my business.


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[VacationForever]

That’s awesome. I think the trick is to have either the knowledge or know where to either get good advice or have a money manager you trust who protects you before thinking commissions. If you are good, the commissions follow anyway.

Just from my experiences, once I hit over 500 k in investments many years ago, I got better quality managers. Before, I had to really look for the right people. Now, thankfully, they come to me. What I do now is have 2 managers and they do well for me. They know performance pays and kind of know that if they don’t they lose my business.

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It is interesting that you have 2 money managers, presumably you have money managed at 2 different firms. We have all of our investments in a very large, if not the largest, wealth management firm. Our person is the head of that branch. We are aware that we have all our eggs in the basket. What was your tipping point when you decided to go with 2?

 

[Fredflintstone]

It is interesting that you have 2 money managers, presumably you have money managed at 2 different firms. We have all of our investments in a very large, if not the largest, wealth management firm. Our person is the head of that branch. We are aware that we have all our eggs in the basket. What was your tipping point when you decided to go with 2?

Both managers work for 2 different banks.

My tipping point? It wasn’t really a tipping point. Without saying it to them, I wanted them to feel they need to EARN my business every day. So, they know they only have half the assets each and I can easily transfer to their competitor at anytime. When I did this, I get better service. Actually, magically my investment yields increased by 20 to 35 percent depending on the year after doing it. Plus, the advice I got really improved.

When I started out, I just found when a place has ALL your savings, they are quick to get complacent. In a sense, arrogant.

That’s why competition is healthy in any business. Competition makes you always find ways to better serve your customers as you know you can lose them if you don’t.

Plus each manager has different perspectives on investing. This gives me better choices on strategies that I would not get from just dealing with one.

They both know they will never get the whole enchilada. They simply get half the savings each and risk losing that if they take their eye off the ball.


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[Fredflintstone]

Oh and when I moved to 2, they magically cut their management fees by 50 percent too.


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[VacationForever]

Both managers work for 2 different banks.

My tipping point? It wasn’t really a tipping point. Without saying it to them, I wanted them to feel they need to EARN my business every day. So, they know they only have half the assets each and I can easily transfer to their competitor at anytime. When I did this, I get better service. Actually, magically my investment yields increased by 20 to 35 percent depending on the year after doing it. Plus, the advice I got really improved.

When I started out, I just found when a place has ALL your savings, they are quick to get complacent. In a sense, arrogant.

That’s why competition is healthy in any business. Competition makes you always find ways to better serve your customers as you know you can lose them if you don’t.

Plus each manager has different perspectives on investing. This gives me better choices on strategies that I would not get from just dealing with one.

They both know they will never get the whole enchilada. They simply get half the savings each and risk losing that if they take their eye off the ball.


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Thanks. We get great service from this guy. Obviously that position is really more of a front facing rep. He is very knowledgeable and always has time for us. We had used another wealth management firm before and they were awful.

 

[Fredflintstone]

Thanks. We get great service from this guy. Obviously that position is really more of a front facing rep. He is very knowledgeable and always has time for us. We had used another wealth management firm before and they were awful.

Hey, if he’s the guy you trust, then thats the guy to stick with. Sounds like he’s earning your business every day which is what you want.


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[VacationForever]

Oh and when I moved to 2, they magically cut their management fees by 50 percent too.


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We have a rate which is hard to beat unless you get to more mass market types like Schwab.

 

[WinniWoman]

It is interesting that you have 2 money managers, presumably you have money managed at 2 different firms. We have all of our investments in a very large, if not the largest, wealth management firm. Our person is the head of that branch. We are aware that we have all our eggs in the basket. What was your tipping point when you decided to go with 2?

My brother has 3. LOL! I take that back- 4- because he manages some money himself with a mutual fund company. Yeah- he is very wealthy- at least by far compared to people like my husband and I. We have everything with one mutual fund company and we have a couple of banks and that's it.

Our financial advisor does not touch our money. He strictly advises us what to do for a annual fee only (or hourly if that is what you want). Next year we will probably put him on a retainer for the year as we transition to a paycheckless life..

 

[bnoble]

The kids are both in college, and their 529s are in age-based allocations. Michigan's 529 lets you pick between three different mixes based on risk tolerance. Those funds re-balance periodically and have low expense ratios. I am aggressive, my wife is conservative, so we put them both in the Moderate category to split the difference. I am still 15-20+ years from retirement. That plus my risk tolerance has my (tax-deferred) retirement account entirely in an equity index fund with very low expenses. My wife has an allocation that is not 100% equities, and she re-balances probably less often than she should, which means that it probably has more in equities than she'd prefer at the moment. This is a good nudge that I should remind her to take a look at that if she'd like to.

We also have more of a cash reserve than we probably should, but we also don't have much beyond travel that we spend real money on. The house is not quite "period" in decor, it's just dated, but you get the idea. We drive cars into the ground. Etc. etc. etc. And, our time is currently more limited than our travel budget, so it's not the end of the world that we aren't getting every last cent of return.

I tried timing the market once, when I bought a bunch of stuff on the big dip in late September of '08 and thought I was a genius. That wasn't a terrible idea, but it wasn't the brilliant move I though it was, and I've decided to not make that mistake again. Now I don't even open my quarterly statements.

 

[bogey21]

Unless I missed it no one has said they sold out and went into annuities...

George

 

[bluehende]

We are still dollar cost averaging in. We have some standing buy orders if the market dips below a certain percentage. Right now I am slowing investment to keep our allocation and use the dips to buy to keep our balanced allocation.

One possibility is putting a stop-loss on ETFs in a downward ladder i.e. if the market starts to tank you have recouped some of the sales and don't have to ride the entire roller coaster down. This limits your losses but can also limit your gains if the market ratchets back up again.

The only danger with stop loss is a gap down. People have been very surprised when the stop loss order is filled considerably below that stop.

 

[CalGalTraveler]

The only danger with stop loss is a gap down. People have been very surprised when the stop loss order is filled considerably below that stop.

It is a risk but if you have small enough order tranches in your ladder the order should execute at or near the price. Problems arise when they cannot fill the entire order at the price because there are too many shares.

 

[PamMo]

We're invested for the long haul (30+ years), so rebalance as needed. We laugh about how smart we thought we were, trying to time the market when we were younger. We would have been much smarter, and richer, buying and holding total stock and bond index funds. We do use advisors for tax and estate planning, though.

 

[CalGalTraveler]

Never used a money manager. And if we did, we would go the route of Mary Ann and hire a CFP on a fee basis to review our plan. We have also gotten free consultations from brokerages in the hopes they would get our money. Similar to a TS presentation we listen to their recommendations but say "No."

A 1% management fee every year adds up - that's $10,000 for every million - every year! Imagine if you put this $10,000 a year (or $1000/year if you have $100,000 saved) and invested it into an Total Market ETF such as Vanguard Total Market ETF:

• If that $1000 every year had a 7% compounded annual return in an ETF total market index fund = $47,734 in 20 years (if my calculator has this right). That's almost half of your $100,000 base.
• If one had a million invested with $10k every year to the money manager, that would be worth $477,734 in 20 years! That's coming out of your retirement - i.e. at a 4% retirement draw rate you would have $20,000 less per year available in retirement income.

Even if your money manager gets you better than market returns, does it recoup consistently and significantly more than $1000/$10,000 every year versus what you could do investing on your own in a Total Market ETF, Midcap, Smallcap, and S&P 500 fund? The industry wants you to believe it is complicated so you pay them fees. It's not that complicated. With broad market based index funds with low fees it's easy.

Biggest trick is to save - dollar cost average every month into your ETFs/Mutual Funds and diversify. Keep some of the money in safe fixed investment. We always maxed out our 401k/IRA retirement plan limits every year and we follow Bob Brinker's fund recommendations, and read Kiplingers etc. to figure out our allocations.

If you can figure out timeshares, you can definitely figure this out. Although we DIY our investments, similar to @PamMo we use a tax advisor - well worth the cost.

 

[rapmarks]

Oh and when I moved to 2, they magically cut their management fees by 50 percent too.


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No management fees

 

[PamMo]

I don't think things have changed much since Warren Buffett won his bet. Saving/investing money is not rocket science.

https://www.google.com/amp/s/fortune.com/2017/12/30/warren-buffett-million-dollar-bet/amp/

In more detail here.

https://www.investopedia.com/articl...etts-bet-hedge-funds-year-eight-brka-brkb.asp

 

[Fredflintstone]

I don't think things have changed much since Warren Buffett won his bet. Saving/investing money is not rocket science.

https://www.google.com/amp/s/fortune.com/2017/12/30/warren-buffett-million-dollar-bet/amp/

I agree in that sense. Warren Buffett is actually simple. Buy companies that actually earn and keep earning money, the business concept should be simple, and hold/acquire forever. Don’t forget to buy a few money maker businesses outright too.

In my case, it’s frankly not lack of knowledge (ie. I bought 500 shares of Amazon for 4.55 CDN dollars a share on September 12, 1997 and still have it). It’s that market cycles change and I don’t have the time or interest to follow. Also, I don’t see myself as an expert at all. I used to be real involved in the 1990s. Also, I am emotional with my money and that sometimes hinders good decisions. Having it managed keeps it objective. Yes, I pay for the privilege but being one step away from it makes me happy. I pay .040 fee at the one bank and .042 fee at the other.


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[Sugarcubesea]

Your thinking reminds me of the “Couch Potato” approach which has proven to be quite smart. I think downsizing is also smart. After all, you don’t need the same space as when you were raising kids. True that you don’t want maintenance either and I think it’s easier to leave the place when you travel too. No mortgage? Oh yeah! It’s amazing how little you can live on when you don’t have payments, especially an expensive mortgage.

Since I have begun to simplify my life with hardly any payments, it’s amazing how free you truly feel. That was partly why I dumped my timeshares and only rent. I saw the MF as payments. I see renting as using money saved to travel. I go when I can afford to versus saving for an MF payment and then save to actually enjoy the vacation.

IMO, you are thinking clearly and I suspect will have a wonderful retirement.




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thanks. I feel pretty confident that I will have a great retirement. Just need to get to 2026, with enough saved to last me 25 years.