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View Full Version : IRA/401k


Fourpaw
03-25-2018, 04:11 PM
I currently do the max contribution with my 401k, 10% with a 50% match. I also do the max Ira contributions per year, $5500. My wife runs our at home business and I plan on putting in $5500 in her Ira too.

My concerns come in the volital markets we are having today. Iím reading about potential 20% market drops. Would it be best to pull my money out of the freedom funds to avoid the looming downfalls or just keep it in the freedom fund for the long hall.

FWIW, Iím a 30 year old rj captain, married with two children.


Gnaw
03-25-2018, 05:10 PM
What you are trying to do is time the market, and that is a big mistake.
If you need the money anytime soon, you really shouldn't have it invested in the stock market. If you don't need the money soon, invest it and stop watching the markets. Go here (https://www.bogleheads.org/forum/index.php) for financial reading that will help you gain more financial literacy.

SonicFlyer
03-25-2018, 08:54 PM
What GNAW said.

If you are investing for long term, retirement, then you want to be properly diversified and not jumping in and out of the market.


This guy explains how to do that: Paul's Video Blog - Nashville TN Investor Coaching (http://www.paulwinkler.net/w/videos/)


He really enjoys teaching people so that they understand what they are doing with their investments.


Winston
03-25-2018, 09:44 PM
Watch out for the fees on those target funds. If youíre 30 years old and able to max out the 401k on regional pay, youíre ahead of the game. Likewise, your investment strategy for at least the next 20 years should be FULL STEAM AHEAD. Youíll be able to ride out the next couple massive market downturns and come out ahead if youíre all in rather than trying to time the market. The sooner you hit that max, the sooner the virtuous circle of compounding interest will work for you. Why pay exorbitant fees for someone to essentially make zero change in your asset allocation for the next couple decades? The difference could amount to many tens of thousands of dollars by the time you retire.

My advice? Dump everything in a super-low fee S&P500 index fund and donít even think about it for the next 20 years. As retirement shows up on your horizon, look into balancing your nest egg out into gradually more stable investments. Donít just take it from me, take it from Warren Buffett:

https://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13

Fourpaw
03-26-2018, 08:45 AM
Watch out for the fees on those target funds. If youíre 30 years old and able to max out the 401k on regional pay, youíre ahead of the game. Likewise, your investment strategy for at least the next 20 years should be FULL STEAM AHEAD. Youíll be able to ride out the next couple massive market downturns and come out ahead if youíre all in rather than trying to time the market. The sooner you hit that max, the sooner the virtuous circle of compounding interest will work for you. Why pay exorbitant fees for someone to essentially make zero change in your asset allocation for the next couple decades? The difference could amount to many tens of thousands of dollars by the time you retire.

My advice? Dump everything in a super-low fee S&P500 index fund and donít even think about it for the next 20 years. As retirement shows up on your horizon, look into balancing your nest egg out into gradually more stable investments. Donít just take it from me, take it from Warren Buffett:

https://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13

Okay so I did some research and the IRA I contribute to is a index fund. It is the Fidelity Freedom 2055 fund.

SonicFlyer
03-26-2018, 09:44 AM
My advice? Dump everything in a super-low fee S&P500 index fund and donít even think about it for the next 20 years. As retirement shows up on your horizon, look into balancing your nest egg out into gradually more stable investments. Donít just take it from me, take it from Warren Buffett:

https://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13


The problem with index funds is that they actually are not very diversified (http://www.paulwinkler.net/w/iblog/id/an-easier-way-to-invest) and increase risk for not much more gain.


There are better ways to increase return without increasing risk (http://www.paulwinkler.net/w/podcast/id/955/index-funds-how-to-measure-risk).

Winston
03-26-2018, 10:52 AM
The problem with index funds is that they actually are not very diversified (http://www.paulwinkler.net/w/iblog/id/an-easier-way-to-invest) and increase risk for not much more gain.


There are better ways to increase return without increasing risk (http://www.paulwinkler.net/w/podcast/id/955/index-funds-how-to-measure-risk).

Sounds like this Paul Winkler guy has it all figured out.

Good luck.

Fourpaw
03-28-2018, 06:49 AM
What I usually do is move money slowly over to the IRA account itself, wait for a slump in the market and buy into the mutual fund once the market slips a little.

Smooth at FL450
03-28-2018, 08:26 PM
If you're only 30, you shouldn't really be planning to touch this money for at least 35 years. So don't worry about the market gyrations. Instead look at the volatility as buying opportunities. You are in your wealth accumulation phase of life...you should be glad the market isn't on a vertical path up. Once you're closer to retirement then you need to take a more defensive position with regards to volatility. But like someone else already said, today you should be full steam ahead.

coolyokeluke
03-29-2018, 05:33 AM
Watch out for the fees on those target funds. If youíre 30 years old and able to max out the 401k on regional pay, youíre ahead of the game. Likewise, your investment strategy for at least the next 20 years should be FULL STEAM AHEAD. Youíll be able to ride out the next couple massive market downturns and come out ahead if youíre all in rather than trying to time the market. The sooner you hit that max, the sooner the virtuous circle of compounding interest will work for you. Why pay exorbitant fees for someone to essentially make zero change in your asset allocation for the next couple decades? The difference could amount to many tens of thousands of dollars by the time you retire.

My advice? Dump everything in a super-low fee S&P500 index fund and donít even think about it for the next 20 years. As retirement shows up on your horizon, look into balancing your nest egg out into gradually more stable investments. Donít just take it from me, take it from Warren Buffett:

https://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13Listen to this guy. Market timing is a proven way to make less money than the market average over a long time period.

Sent from my Pixel 2 XL using Tapatalk

sailingfun
03-29-2018, 09:02 AM
Listen to this guy. Market timing is a proven way to make less money than the market average over a long time period.

Sent from my Pixel 2 XL using Tapatalk

Also keep in mind if you try and time the market you need to make a correct guess not once but twice. You have to guess when to get out and when to get back in. If you. Can do that with any degree of success you should change professions.

nukem
03-29-2018, 05:27 PM
Watch out for the fees

THIS ^^^^

If you put in a thousand a month for 30 years, just the fees on Freedom 2055 will easily cost you over $150,000.

ZippyNH
03-29-2018, 07:19 PM
Listen to this guy. Market timing is a proven way to make less money than the market average over a long time period.

Sent from my Pixel 2 XL using Tapatalk

+1
Just regularly deposit money...it will do what is called dollar cost averaging of your shares/, investments....
By attempting to time the market you can miss the biggest ups and the biggest downs...
With 35+ years to go, it more important to get the $$ in and invested than worry about trying to get an extra half a percentage THIS year if you do it right, cause you might miss a bigger gain overall by sitting on a pile of cash at 0.01% in a money market.

Folks who tend to look at they accounts yearly tend to do best at not micromanageing things and do well...just rebalance and adjust for your goals/age or long term outlook...
Few people can ride the ups and downs emotionally of a big day/week/month and not take money out on a good day, then miss the top, or yank it out at the bottom, making a loss real, then miss an increase.

Fourpaw
03-30-2018, 04:30 PM
THIS ^^^^

If you put in a thousand a month for 30 years, just the fees on Freedom 2055 will easily cost you over $150,000.

What do you mean? Why would depositing into an Ira cost 150k?

Excargodog
03-30-2018, 05:12 PM
There basically are only two long term investment strategies. If you are an optimist, buy into a respectable Index-500 mutual fund at the least cost possible, which will likely be Vanguard. Just put as much as you can afford into it and don't even look at it until you are within five years of retiring. If the proverbial $hit doesn't hit the fan you are overwhelmingly likely to do better well diversified in the market WITHOUT PAYING ANY BROKERS OR MONEY MANAGERS than you are anyplace else.

If you are a pessimist and really believe there is going to be a societal meltdown capable of taking out the stock market, the logical place to put your money becomes guns, ammo, and freeze dried food.

I've got mine in Vanguard.

Excargodog
03-30-2018, 05:21 PM
What do you mean? Why would depositing into an Ira cost 150k?


Because FreedomFund 2055 charges three-quarters of a percent per year management fees:

https://money.usnews.com/funds/mutual-funds/target-date-2055/fidelity-freedom-2055-fund/fdeex/fees

Vanguard index 500 would cost you seven-hundreds of a percent.

https://money.usnews.com/funds/mutual-funds/large-blend/vanguard-500-index-fund/vfiax/fees

You are paying Freedom Fund ten times as much to manage your money and you are unlikely to get as good a result.

And if you don't like Vanguard, that's fine, Schwab or any of a number of other index funds have FAR lower expense ratios than Freedom Fund.

https://money.usnews.com/funds/mutual-funds/-blend/schwab-s-p-500-index-fund/swppx

You really need to check an Andrew Tobias investment book out of the library and read it on your next long deadhead.

nukem
03-30-2018, 06:35 PM
Good answer Excargodog.

Don't just trust us. Prove it for yourself.
https://www.alerusrb.com/calculator/FinCalc3.html

The simplest way is to assume some percentage return and then use the same return minus the fees. I think I used 7% to come up with 150K.

Look at HSA and mega back door Roth IRA too.

SonicFlyer
03-30-2018, 10:11 PM
There basically are only two long term investment strategies. If you are an optimist, buy into a respectable Index-500 mutual fund at the least cost possible, which will likely be Vanguard.

Index funds are on the right track, but are often not nearly as diverse as people think they are:

An Easier Way To Invest? - The Investor Blog - Nashville TN Investor Coaching (http://www.paulwinkler.net/w/iblog/id/an-easier-way-to-invest)

Excargodog
03-31-2018, 07:00 AM
Index funds are on the right track, but are often not nearly as diverse as people think they are:

An Easier Way To Invest? - The Investor Blog - Nashville TN Investor Coaching (http://www.paulwinkler.net/w/iblog/id/an-easier-way-to-invest)

I'm also 10% in small caps with a Russell 2000 index, but when a guy is paying out 0.75% annually to a fund that is going to underperform the market, I thought the important thing was to get him pointed in the right direction. He has 35 years to tweak it. Right now he just needs to stop giving his money away. That will make a much greater difference in his long term returns than the idea that an index 500 fund isn't diversified enough will. The stats have been run thousands of times since Bogle started pushing passive investments and they are pretty robust.

https://www.ft.com/content/4594f554-ba1a-11e7-9bfb-4a9c83ffa852

And they've damn sure worked for me.

overspeed
04-12-2018, 08:08 PM
+1
Just regularly deposit money...it will do what is called dollar cost averaging of your shares/, investments....
By attempting to time the market you can miss the biggest ups and the biggest downs...
With 35+ years to go, it more important to get the $$ in and invested than worry about trying to get an extra half a percentage THIS year if you do it right, cause you might miss a bigger gain overall by sitting on a pile of cash at 0.01% in a money market.

Folks who tend to look at they accounts yearly tend to do best at not micromanageing things and do well...just rebalance and adjust for your goals/age or long term outlook...
Few people can ride the ups and downs emotionally of a big day/week/month and not take money out on a good day, then miss the top, or yank it out at the bottom, making a loss real, then miss an increase.

+2 Opinion: I agree S&P 500 Index fund. Ask Warren Buffett. If you're going to "time the market" I would invest more as the market comes down. The risk is that something worse than has happened in the last 100 years will happen, which is possible. What you don't want to do is invest in the 500, see the market crashing and switching at or near the next bottom. The fact is the people that invest in the stock market as it's falling do better than the folks that try to time the market to buy at the bottom, which is an unknown price point, and sell when they think it's "high" which is an unknown price point. Chances are the S&P 500 will average around 10% for the next 100 years.

SonicFlyer
04-13-2018, 10:35 AM
+2 Opinion: I agree S&P 500 Index fund.Most index funds are weighted in a way so that they are not actually very diverse or reflecting of the entire market.


The fact is the people that invest in the stock market as it's falling do better than the folks that try to time the market to buy at the bottom, which is an unknown price point, and sell when they think it's "high" which is an unknown price point. Do you have a source for this? I'm interested in learning more.



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