I assume you are referring to your retirement investment accounts- not you personal checking or savings account. BIG difference. However, you are welcome and able to “invest” your checking and regular savings accounts in the stock market if you like, since it is your money.( level of risk is up to you). You have only yourself to account for losses. With the VEBA, even though it is our earnings and our money, we have no say in how it is managed or invested.

 

I'm sure they can invest in the money market fund if only to have a settlement account for trades but usually there is a rather low restriction on cash (on the order of 5%).

I understand your point, if a guaranteed return is the goal perhaps there should be an option to convert their funds into an annuity after retirement for those who want minimal risk.

On a similar subject I find the investment mix in target date funds absurd. They start with over 90% stocks in some cases and are barely at 60 (bonds)/40 by retirement age. It's only 20 years into retirement that they achieve 80/20.

Ignoring the disaster that owning bonds in a rising rate environment is, even in normal times I find the level of risk in target date funds to be scary. As always the question to ask money managers is "Where are the customers' yachts?"

 

Tallpilot, VTINX is comprised of other Vanguard funds. For which we pay a .08% management fee. It is just a fund of funds.
The funds within VTINX have an overall 70% bond and 30% stock composition. I'd dig through the other funds to see what they have, but I'm not sure I want to know.

Here are the funds and percentages in VTINX:
Vanguard Total Bond Market II Index Fund37.20%
Vanguard Total Stock Market Index Fund Institutional Plus Shares17.30%
Vanguard Short-Term Inflation-Protected Securities Index Fund Admiral Shares17.10%
Vanguard Total International Bond II Index Fund16.30%
Vanguard Total International Stock Index Fund Investor Shares12.10%

 

17% TIPS? Ouch. They have performed absolutely terrible. Which is ironic since we're having 70s style inflation.

 

So the question I want to know is what time frame are we looking at for things to come back? 2 years till the next presidential election? 5 years? My kid will be 13 soon and investments for his college are down right now. Will they come back by then? I'm thinking they will. It all depends on the time frame right?

Sent from my SM-G960U using Tapatalk

 

If you're referring to Vanguard Short-Term Inflation-Protected Securities Index Fund Admiral Shares, that fund has only lost 3.35% this year.
It is the best performing this year of the 5 funds that comprise VTINX.

I looked at couple other funds for those born after 1962. As expected, they're worse.

All of this is the standard brain dead Vanguard/Boglehead thought process toward investments. 'You don't know what's going to happen so don't change your allocation.' Bogleheads.
Anyone with a finance background who didn't see a large drop in both equities and the bond markets after the Fed (and the rest of the world's central banks) announced a tightening cycle has no business managing money. The only place to hide was money markets, but now ultrashort term TBills (4 and 8 week) are paying close to 3%. And given that we have another 75BPS raise coming on Nov 2, those rates should be around 3 1/2% after the next Fed meeting.

 

I don't think active management or self-directed activity would have prevented the losses we have seen this year to the VEBA, if it was actually allowed by the IRS (I'm not sure). I've flown with pilots my entire career who somehow have always known (in retrospect) when they should have gone to cash and most often, they are wrong. Hopefully you don't need to access your VEBA funds anytime soon. It will come back.

 

I assume you've never heard Marty Zweig's quote about fighting the Fed.

 

Yep ,and spot on.

I must reiterate, RHA funds should be in the most conservative vehicle once you retire, just like your checking or savings account. This is why you invest when younger…to have money to spend later, regardless of what markets do. Even Schwab’s money market is paying near 1.5%..and that is a dollar fund, that is fixed- it cannot lose value unless there is a default in the money markets (armageddon).

The investment committee needs to get this.


It will come back? When does your crystal ball say? In the mean time as I write checks to cover hospital bills, do I tell the billing department to wait until the market comes back, in a year or five?

Self direction is not even required, so long as the investment committee were truly as responsible with the funds as they will be with their own money, used to pay monthly expenses.

 

That's not really a question that can be answered with certainty.

Five years is fairly safe that the markets will return to/surpass previous highs. Two years will probably see us out of this bear market and most stocks should have recovered.

At this moment in time, the Fed is planning on a 75BPS (3/4%) raise in the Fed funds rate on Nov 2 and another 50BPS (1/2%) on Dec 15. As long as those rate increases occur and the Fed continues QT, the markets should be lower than today in mid-December.

In addition to raising the Fed funds rate, the Fed is also shrinking its balance sheet through Quantitative Tightening (QT), which is the opposite of QE. The Fed has been engaged in QE off and on since early 2009, buying both TBills and mortgage backed securities. For QT, the Fed is allowing their balance sheet to 'run off' ... they are allowing the assets to mature and rather than 'roll' (reinvest) them, they are shrinking their balance sheet.
It was the QE policy over the last decade that helped cause assets to rise so much; all of that money sloshing around (liquidity) the system flowed into assets. Now that the Fed (and other central banks) are doing QT, the world's money supply is shrinking and it's causing asset prices to fall.
However, it is QT that is currently starting to cause problems in the world's economy. The UK's government debt market is stressed to the point where the Bank of England (their version of the Fed) has had to go back to QE due to British inflation-linked government debt blowing out. Here's a quick article: https://www.reuters.com/markets/euro...ts-2022-10-11/
Credit Suisse is also on the verge of blowing up. https://indianexpress.com/article/ex...ahead-8190225/
Japan's also got major issues related to higher rates and QT.
So we're starting to see the first cracks in worldwide finance as countries try to tame inflation. I don't know how much worldwide financial damage the Federal Reserve will allow before they stop QT and possibly rate increases.
So far, they've been pretty resolute on killing inflation, but things are now starting to break. So that raises the question of how strong the Fed's resolve on controlling inflation is. If they blink as soon as things start breaking, we could be stuck with high inflation which could ironically also inflate asset prices.

If you're not willing to sell your investments, none of this matters. You will sit there and watch the markets rise and fall.

Since I'm parked completely in ultra short term Treasuries, I am watching inflation reports, Fed statements, etc for any major changes. But then again, almost all of my TV time is spent watching CNBC and Bloomberg. I tend to fly on weekends because there's little financial news over weekends. It's what I do - if you have no interest in doing that, you need to figure out a few great information sources that you can easily digest.
This is one of my favorites; excellent technical analysis: https://www.youtube.com/channel/UC_y...JrnMuZt33y7QYQ
One investor I follow closely is Dan Niles of Sntori Capital; he appears on CNBC on occasion. Here's one of his interviews: https://www.youtube.com/watch?v=f8ZYXGW6Um8
My personal Technical Analysis puts the S&P in the 2500 range, but I tend to be overly negative. The bottom is likely to be higher than 2500.

I personally am not bothering to try to trade anything in this market; I will wait until I think all's clear. I won't hit the bottom exactly and I sold a bit past the top. That's fine for me. I sleep easily at night.