PRAP / Investment
 

Looking for some professional advice on to how to best diversify my 18 month old PRAP. I currently add 13% combined contribution to the companies 16% (29% total).

It's a CS product, and my rate of return *only(?)* is 4.47%. I'm no financial guru, but I feel like I am missing out on a significant opportunity in todays strong economic era.

Anyone have a good manager who can help, PM's are more than welcome.

Just one perspective... CS has decent products. Your most effective first step is max the $18,500 (or catchup too if over 50 in a given year) you’re allowed to put in. Doing it by dollar amount per paycheck not % is easiest. Post tax (Roth) vs pre is debatable. I think there’s something to be said for reducing your tax burden when your income is high but there are various things to consider.

You have a PRAP and PCRA option. First is the most hands off. The second puts the cash into a money market and you distribute it yourself. CS has some low cost decent ETFs for most broad markets that trade for free and you can access just about anything in the market for (IIRC) $4.95 per trade.

Im not smart enough (or dumb enough) to specifically recommend an investing technique but time, dollar cost averaging and maxing your contributions are your friends. So are being generally more aggressive when you’re younger and less so in those last pre-retirement years... have talked to a few CA’s who are 2 or less years from retirement and 100% stocks... to put it lightly, that’s a bold proposition.

Good luck and don’t wait on maxing your contributions.

You must ask yourself the question? How much time are you willing to put in to your PRAP investing? As one that has done it for my entire career, it takes alot of time if you do it yourself. (Notice: I am recently retired and completely out of the PRAP and don't know the exact funds you may use)
I had started off splitting my and the company contributions in to 5 major funds,
S&P 500 Index
Lg Cap Growth
Small Cap
Tech
International
Money Market

Each quarter, based on research (paid) and my own analysis, I might change the percent each fund gets. The first few years I just put 20% in each fund and let dollar cost average work for me. Then after about the 100K level I started moving funds based on market condition, ie. more in tech and less in International, or more in small Cap and less in Large Cap Growth. I did this at the most 4 times per year. Some times there were no changes or slight changes in percentage. (past performance is no indication of future performance).
After reaching about 500K, I started on individual stocks. Eventually reaching 1/3 in the funds and 2/3 in the stock accounts. Be aware you may be over concentrated in a stock if it is held by many of the same funds (check the funds holdings). I did this in case something happened to me and didn't want my wife dependent on my stock choices.

After retirement, I wanted to have more freedom in my allowable investment. I removed all money from the PRAP and moved into Schwab directly. I split all pretax money and Roth money into separate accounts. The reason is our PRAP only allows investments in Covered calls and Protective Puts and I have used options for years in my personal accounts. I now have the use of all Options thru CS in my rollover retirement account and Roth accounts.

As far as the Roth option. I suggest you use it extensively. We did not have that option on the United side until after the merger. Due to minimum distribution rules (IRS) and the assumption of 8% rate of return, I will be in the second highest tax bracket (303K) beginning when I turn 75, and highest tax bracket at 77 (353K). That is a high class problem, I know (there are a few ways to change that but only delays it a few years).

Assuming (I know that is a loaded word) that Congress doesn't change rules on the Roth account, you could potentially have more money for yourself in retirement.

"Tell me where I'm going to die, so I won't go there" Charlie Munger.
My family lives into their 90's except for accidents, so I am planning at least 25 years of retirement money.

Call Charles Schwab... they have financial advisors for these types of questions.

You could school up some yourself, there are a few management Co’s that have a following. Either approach can be right for an individual, depends on the handful of factors.

No matter what way you go, it is helpful to be knowledgeable with your financial life, and investments.

You can start with age, time horizon, risk tolerance, and any outside investments. I’m somewhat of a Vanguard fanboy when it comes to investing. They have some good books on philosophy, asset allocation, and diversity.

Any particular book or books?

Cheers,
Biff

Max out your personal contributions and put them into total us equity index. It's load is something like .04%? Fees are what kill long term gains

Lots of good advice here, but you have to decide a strategy. Meaning, how many years do you have to go? Are you eligible for the over 50 catch up provisions?

Do you value money in your RHA. There are only a few ways to do that. One is to max out the 415 limits early, then the excess contributions go to the RHA. How you decide to manage contributions to the RHA will depend on how many years you have to go.

Kids, no kids, school, private, public....you need to decide on priorities first, then devise an investment strategy. Schwab is excellent in this area.

Considering that the the DJIA is negative for the year and the S&P500 is +5.43%, I'd say your +4.47% is not bad. (YTD returns courtesy of morningstar.com)


Can it be better? of course, but it also could be worse.


So many variables go into an investing decision. Age, your risk tolerance, how active you want to manage your investments etc etc etc. There is no right answer except for:

Invest as much as you are able. Max out that 401K. It is much easier to start early and let the compounding work (even at 5% for example), then wait and have to contribute later more in life, and needing a bigger % return to retire on.


I'm a pretty passive, middle of the road risk, type of investor. I split my 401k over 6 options within the various funds that Schwab offers us. I don't trade in individual stocks, I don't own any except for the few shares left over from our BK allotment. A couple of times a year I will check out how my various selections are doing and adjust as necessary. Schwab records goes as far back as September 2005 for me. My rate of return annualized is 7.5% since that date. Certainly not spectacular but solid and "steady". My worst return was -38% in 2008, the best was 28.4% in 2013. When the market is up, I do ok, when its down I don't. Thankfully there have been more ups then down over the past 20 years.



I'm not a financial expert, don't even play one on TV, and I didn't stay at a Holiday Inn Express last night. So take what i said for what its worth.

Go check out http://bogleheads.org and ask your question there.

More you’ve ever wanted to know about investing can be found there.

I invest in the index funds in the PRAP and let it ride. You’ll do better than most investors if you do that.

What experts say about “simplicity”