I am 54 & hoping to retire at 55, questions about Fidelity

[VanWinkle]

Relying on simplicity has worked best for me. If you don't mind keeping 8-16 funds and know what you own compared to the market, go for it. I just don't need the complexity that goes with that. It is harder to gauge risk for me with that many funds.

Flexibility of selling can be accomplished with specific ID for cost basis, unless you bought the funds all at one time.

 

[2177V]

You are also selling winners and keeping losers, violating a common stock picking rule. Is it a good strategy? No easy way to find out or to predict. I'll stick to something simpler and wish you luck.

This is nothing wrong with selling winners during retirement and then keeping losers until the losers recovers.

Remember that value goes up and down like the (excuse the pun) stock market.

A loser this year may be a winner next year. Like you correctly stated...no easy way to predict.

However, generally in the long term, most investments recover. It is the short term and the recovery period that investors have to endure.

Patient investors can be rewarded in the long term and this is the premise of a buy and hold strategy.

 

[2177V]

Relying on simplicity has worked best for me. If you don't mind keeping 8-16 funds and know what you own compared to the market, go for it. I just don't need the complexity that goes with that. It is harder to gauge risk for me with that many funds.

Flexibility of selling can be accomplished with specific ID for cost basis, unless you bought the funds all at one time.

Great comment! This is because you respected my position to have 8 to 16 funds. I actually have 10 stock sector funds and 5 bond funds of corp, government, short term, long term, etc. I also respect your decision not to have muitiple funds because it is more complex.

My history of having multiple funds in my IRA account happened years ago before retirement when I discovered that the federal government does not tax your IRA until you withdraw. I also purchased common stock and taxible mutual funds but I get taxed every year I sold at a profit.

IRA account do not get taxed when you re-allocate your portfolio or exchange assets within the IRA account. Therefore I played the game of having multiple asset classes and when one asset class is at a 52 week high I would exchange it with a different asset class that is near their 52 week low. As a result, my portfolio grew faster than if I was a passive investor. This is not market timing. This is simply "selling high and then buying low".

I did this when I was young. I discontinued this practice because I have retired and I did not want the "complexity"....just like you. However, my multiple funds followed me into retirement and I now have the flexibility to decide which fund to cash out. I refused to consolidate because it is my personal opinion that there is little benefit.

 

[VanWinkle]

"Therefore I played the game of having multiple asset classes and when one asset class is at a 52 week high I would exchange it with a different asset class that is near their 52 week low."

I like this part of your plan!! I actually do the same thing with my Roth IRA accounts by looking for the most depressed sector of the market (except energy) and re-investing my Roth funds from another successful sector. Will it beat the market? Who knows but it is with 7% of my portfolio only.

Good luck to you,

VW

 

[2177V]

"Therefore I played the game of having multiple asset classes and when one asset class is at a 52 week high I would exchange it with a different asset class that is near their 52 week low."

I like this part of your plan!! I actually do the same thing with my Roth IRA accounts by looking for the most depressed sector of the market (except energy) and re-investing my Roth funds from another successful sector. Will it beat the market? Who knows but it is with 7% of my portfolio only.

Good luck to you,

VW

Active investor normally do better than a passive investor. However, the active investor must have the "experience" of knowing what he/she is doing and the "courage" of making the decision to do the exchange.

Lucky for me I did this when I was very young and the money that I moved was relatively small so a mistake did not cost me much. However, as I got older....my "experience" has increased but my "courage" has declined which is why I discontinued this practice.

I always advised younger investors to get the experience and go thru their learning curve because you can't get the experience by not making these decisions.

Once you make the right decision, you became embolden to take more risks.
....until you get burned and then you back off. Overall, I did very well because my gains were more than my losses. This game is not for everyone.

I would start out small (move $10K since a 10% mistake is $1K) and then increase as you get comfortable. Good luck to you too.

 

[OldShooter]

This is nothing wrong with selling winners during retirement and then keeping losers until the losers recovers. ...y

Maybe. I don't know that to be true. Do you have some research or data to support that theory,?

 

[OldShooter]

Active investor normally do better than a passive investor. ...

I know of no research or statistical analysis that supports this statement. Do you? Everything I know of says it is false.

 

[Ologist]

I follow a Fidelity funds investment newsletter. There are re five different portfolios reflecting different asset allocations: aggressive, growth, growth & income and income. I have followed this strategy for nearly 25 years. The cost is the newsletter cost of about $200 per year plus the built in fund fees.

An email arrives weekly and trades are made 3 or 4 times a year. The performance is tracked and published in the monthly newsletter.

In an up market the gains are a little less than the index but in a down market the loses are not as steep.

So I ask the astute members of this forum, is there anything wrong with this strategy?

 

[pb4uski]

Maybe. I don't know that to be true. Do you have some research or data to support that theory,?

+1 I have the same issue with the approach of selling winners and keeping losers that OldShooter has... what you end up with are tilts or concentrations that are the outcome of vagaries of the market and when you raise cash or rebalance.

I tested the sell winners and buy losers for stock market sectorsa while ago. The hypothesis was that if rebalancing forces one to sell high and buy low, then if one invested in sectors of the market rather than the market as a whole that there would be a benefit of doing so. Testing that hypothesis with backtesting, there were benefits, but they were fairly negligible compared to just holding the total market.

If vchan or others have research or data supporting that theory, I'm interested... but the backtesting that I did suggests that the benefits were negligible... and IMO not worth the additional complication.

From Post#56:

Back a few years ago, I toyed with a sector approach to domestic equities. The hypothesis was that the discipline of rebalancing to sell high and buy low would produce better returns than a pure equity index. The reality is that the historical returns are not very different although there is a minor benefit of about 15 bps. See https://www.portfoliovisualizer.com/...100&total3=100

I actually talked about doing this with my Roth with my Vanguard rep and ultimately decided that it wasn't worth the additional complexity. Also, there is a risk with your approach that you will ultimately be much less diversified and have concentrations in certain sectors if you only sell winners but I guess that risk could be managed.

 

[pb4uski]

I know of no research or statistical analysis that supports this statement. Do you? Everything I know of says it is false.

+2

 

[2177V]

One of my retiremnt accounts is a PROFESSIONALLY MANAGED IRA with Fidelity worth around $400,000. I am considering pulling the plug on this Managed IRA becuase of the fees, last year they were $4000. My research leads me to believe the IRA would probably do just as well if I put it in a low cost index fund and left it alone. Also, I have three mutual funds seperate from Fidelity that my Fidelity financial advisor suggested I sell and let Fidelity manage. She said if I do it by April 30th there is a 40% discount on fees. I am a little suspicious of this offer, is she getting commission on this? Any thoughts about either of my concerns would be greatly apreciated.

Thanks,

Tim

$4000 fee of a $400,000 account is 1%. Look at some mutual fees and the fees for index fees are way less than 1%.

However, the question you have to ask yourself is whether the 1% fee worth it?

Did the performance of your professional managed fund (minus the fee) is better than the performance of an index fund (minus the smaller fee)?

The second issue: Do you "trust" Fidelity? Trust is a key component of any business relationship. Did they treat you well? Did they answer your questions to your satisfaction? You used the word "suspicous" which raises red flags.

My thoughts: The best person to trust is yourself. However, they have the knowledge and you don't. If you have the time, you should try get smart on how to invest yourself. Going on this forum is a good first step.

When I was a landlord, I consulted an attorney to make sure I made the right decisions on which tenant application that I can approve. I asked whether i can discriminate against smokers. The attorney gave me his answer. When I wanted to give my daughter one of my houses free and clear, I ask a CPA on how I can do this without incurring a gift tax. The CPA gave me an answer that I never had thought of before.

I always consulted people who has more knowledge than me but once I acquired that knowledge, I generally do not need them any more. The cheapest way is to pay an hourly fee. However, you have to ask the right questions before you pay that hourly fee. The danger of using this forum is you can have good answers and bad answers. Find the answer than make sense.

My point: You should get smart on the fundamentals so you can ask the right question to a CFP to fill in your knowledge gap. Once you filled in your knowledge gap, then you can invest on your own. This means paying a CFP about one hour of his/her time and then you should not need a CFP unless your portfolio is $5M or more. A CFP may have a conflict of interest so i would consult friends that you can "trust" or a Certified Public Accountant who has less of a conflict of interest. Since you already have a relationship with Fidelity, I would consult someone that is independent and pay that hourly fee. Of all the hourly fees that I paid to extract certain knowledge that I needed I discovered it was worth every penny of that fee. Attorney fees are about $350/hr, CPA is about $100/hr and a CFP varies between $75 to $150/hr where I live. Note that these fees are way less than $4,000.

 

[2177V]

Maybe. I don't know that to be true. Do you have some research or data to support that theory,?

All depends how you define a loser. What matters to me is the day you buy and the day you sell. What happens in between is not important.

Example: You buy a stock at $10 a share. Later it goes up to $40 a share but you did not sell. Later you sell at $30 a share.

Is the glass half full or half empty? Did you lose $10 from $40 to $30? Or did you have a profit of $20 from $10 to $30? For some people, it is the former. Other people it is the latter. Human psychology is involved.

My point: It does not become a loser or a winner until you actually sell. I made a statement that eventually a loser can become a winner. That is likely to be true if you wait long enough for most fortune 500 companies. In this case, I defined a loser as a fortune 500 company that lost value at a specific time but most fortune 500 company eventually recovers if you wait long enough.

Whether an active investor is more successful than a passive investor is debatable. There are some active investors that makes much more than a passive investor. You probably read recently that some investor recently started out with $30,000 and now he is a millionaire after a few years. He is an example of a successful active investor. However, not 100% of the active investors are successful.

I will never forget the day when the stock market dropped 10% about 30 years ago and I decided to re-allocate about $25,000 of my bond fund to buy $25,000 of more stock in my IRA portfolio. 2 months later, the stock market recovered and I made $2,500 after I re-allocate $27,500 of my stock fund back to bonds. It was my first successful active trade using my IRA and I never became a passive investor again. If you need data or a article on this issue, then you will never learn how to take a "risk". Risk taking is part of my DNA. However, I do recognize other people are risk adverse.

I fully respect people who decided that this game is too risky and they made a decision to become a passive investor.

Please respect my decision to become active investor.

if the stock market crash 30% tomorrow, I will likely continue to play this risky game of buying low and selling high. This game is not for everybody. However, a lot more people play this game than you probably realize.

People should appreciate what I am doing. This is because when the stock market takes a dive, I am the investor who will look at this as a buying opportunity. When I decide to buy low, along with many other active investors, this will cause the market to go back up! If everyone is a passive investor and the market takes a dive, who will buy stock so the stock market will recover?

 

[OldShooter]

All depends how you define a loser. What matters to me is the day you buy and the day you sell. What happens in between is not important.

Example: You buy a stock at $10 a share. Later it goes up to $40 a share but you did not sell. Later you sell at $30 a share.

Is the glass half full or half empty? Did you lose $10 from $40 to $30? Or did you have a profit of $20 from $10 to $30? For some people, it is the former. Other people it is the latter. Human psychology is involved.

My point: It does not become a loser or a winner until you actually sell. I made a statement that eventually a loser can become a winner. That is likely to be true if you wait long enough for most fortune 500 companies. In this case, I defined a loser as a fortune 500 company that lost value at a specific time but most fortune 500 company eventually recovers if you wait long enough.

Whether an active investor is more successful than a passive investor is debatable. There are some active investors that makes much more than a passive investor. You probably read recently that some investor recently started out with $30,000 and now he is a millionaire after a few years. He is an example of a successful active investor. However, not 100% of the active investors are successful.

I will never forget the day when the stock market dropped 10% about 30 years ago and I decided to re-allocate about $25,000 of my bond fund to buy $25,000 of more stock in my IRA portfolio. 2 months later, the stock market recovered and I made $2,500 after I re-allocate $27,500 of my stock fund back to bonds. It was my first successful active trade using my IRA and I never became a passive investor again. If you need data or a article on this issue, then you will never learn how to take a "risk". Risk taking is part of my DNA. However, I do recognize other people are risk adverse.

I fully respect people who decided that this game is too risky and they made a decision to become a passive investor.

Please respect my decision to become active investor.

if the stock market crash 30% tomorrow, I will likely continue to play this risky game of buying low and selling high. This game is not for everybody. However, a lot more people play this game than you probably realize.

People should appreciate what I am doing. This is because when the stock market takes a dive, I am the investor who will look at this as a buying opportunity. When I decide to buy low, along with many other active investors, this will cause the market to go back up! If everyone is a passive investor and the market takes a dive, who will buy stock so the stock market will recover?

Wow. All that arm waving and not a single fact.
BTW if you read Jason Zweig's Your Money and Your Brain you will learn why the wins make you feel good. It's basically the same reason that the casinos and the lotteries will never go out of business.

 

[pb4uski]

+1 so much for research or data... a single anecdotal example at best.

Active investor normally do better than a passive investor. ....

.....Whether an active investor is more successful than a passive investor is debatable. ....

Now I'm confused. Is it "normally do better" or "debatable"?

He speaks with a forked tongue!

 

[bigcmagor]

We sure covered some ground here. The OP is probably in a fetal position under a blanket somewhere.

 

[OldShooter]

We sure covered some ground here. The OP is probably in a fetal position under a blanket somewhere.

... He speaks with a forked tongue!

But he's kind of amusing to read. I especially like the notion that he and his like-minded cohort can move the market.

 

[2177V]

This is my last comment since i have better things to do:

I find other people's cognitive dissonance very entertaining to me.

Goodbye and good luck.

 

[tdv2]

All depends how you define a loser. What matters to me is the day you buy and the day you sell. What happens in between is not important.

Example: You buy a stock at $10 a share. Later it goes up to $40 a share but you did not sell. Later you sell at $30 a share.

Is the glass half full or half empty? Did you lose $10 from $40 to $30? Or did you have a profit of $20 from $10 to $30? For some people, it is the former. Other people it is the latter. Human psychology is involved.

My point: It does not become a loser or a winner until you actually sell. I made a statement that eventually a loser can become a winner. That is likely to be true if you wait long enough for most fortune 500 companies. In this case, I defined a loser as a fortune 500 company that lost value at a specific time but most fortune 500 company eventually recovers if you wait long enough.

Whether an active investor is more successful than a passive investor is debatable. There are some active investors that makes much more than a passive investor. You probably read recently that some investor recently started out with $30,000 and now he is a millionaire after a few years. He is an example of a successful active investor. However, not 100% of the active investors are successful.

I will never forget the day when the stock market dropped 10% about 30 years ago and I decided to re-allocate about $25,000 of my bond fund to buy $25,000 of more stock in my IRA portfolio. 2 months later, the stock market recovered and I made $2,500 after I re-allocate $27,500 of my stock fund back to bonds. It was my first successful active trade using my IRA and I never became a passive investor again. If you need data or a article on this issue, then you will never learn how to take a "risk". Risk taking is part of my DNA. However, I do recognize other people are risk adverse.

I fully respect people who decided that this game is too risky and they made a decision to become a passive investor.

Please respect my decision to become active investor.

if the stock market crash 30% tomorrow, I will likely continue to play this risky game of buying low and selling high. This game is not for everybody. However, a lot more people play this game than you probably realize.

People should appreciate what I am doing. This is because when the stock market takes a dive, I am the investor who will look at this as a buying opportunity. When I decide to buy low, along with many other active investors, this will cause the market to go back up! If everyone is a passive investor and the market takes a dive, who will buy stock so the stock market will recover?

Wow....sounds like your playing a casino game here. Successful investors evaluate businesses, in detail, to make an intelligent judgement on the durability of a companies earnings and the prospects for that companies future earnings growth....it's just that simple for a value investor. Where you can get in trouble is overpaying (stock price) for those future earnings prospects. Say for example your detailed diligent analysis of this business turns out to be wrong and the price declines, and maybe the outlook for the company changes due to competition or a technology shift or whatever, you would have us holding it with hope that it will recover because it's a loser. That's just plain ridiculous logic for an intelligent investor.


Now let's say you don't want to do all this analysis and want to rely on a real smart stock analyst to do it for you. By definition half will equal or beat the index and the other half will equal or under perform the index (might as well throw a dart). Here is where the research is crystal clear....add in the fee for this active management and the tax implications of moving in and out of positions and it's almost a statistical certainty that you will under perform the buy and hold index investor over the long haul.

 

[esposla]

Thank you all, in the short turn I am going to cancel the professionally managed IRA. At that point of cancellation what happens to the fund allocation? does is just stay where it was the day of cancellation? This is what I gained on my IRA in 2018: -7.99 How did INDEX FUNDS do on average?

My historical return as posted on my Fidelity account.

Calendar YearYour Account
2018-7.99%
2017+15.54%
2016+5.80%
2015-1.45%
2014+4.14%
2013+18.32%
2012+12.53%
2011-4.46%

Thank you for sharing. I just met with an advisor (complimentary) who’s fee is 1.75%. Too much in my humble opinion. I am a novice, but did fairly well on my own the last 6 years. I don’t believe a lot of time needs to be spent tweeting. I’ve never spent more than few hours 2x a year. I’m looking at it more now because I found time for it. Good luck to you on the journey.