Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Best of bad choices
Old 05-16-2005, 02:20 PM   #1
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Best of bad choices

So I'm reading the 4 pillars and trying to use what I've learned. My 401(k) has some good choices, but my DW has some crappy funds! I'm desperate for some advice on this, at this point I'm ready to leave it all in the S&P 500 index! I know, handing out investment advice, tricky, but if any of you have read 4 pillars, do you see a way to approximate that strategy here?

Stock Investments
Large Cap

ADV GR & INC CL T
Inception Date 12/31/1996 2.15 2.37 -4.04 N/A 6.13 04/30/2005

AIM BASIC VALUE A
Inception Date 10/18/1995 4.81 2.84 4.83 N/A 12.41 04/30/2005

* DREYFUS S&P 500 INDX
Inception Date 01/02/1990 5.88 3.75 -3.42 9.69 9.75 04/30/2005

* OPPHMR CAP APPREC A
Inception Date 01/22/1981 2.91 1.96 -5.24 11.08 14.14 04/30/2005

VK EMERGING GRTH A
Inception Date 10/12/1970 1.64 -2.35 -14.39 10.00 14.65 04/30/2005

Mid-Cap

ADV MID CAP CL T
Inception Date 02/20/1996 5.29 6.59 3.77 N/A 13.52 04/30/2005

Small Cap
* ADV SMALL CAP CL T
Inception Date 09/09/1998 10.72 8.23 2.66 N/A 13.72 04/30/2005

RS SMALLER CO GROWTH
Inception Date 08/15/1996 0.48 4.11 -0.46 N/A 11.26 04/30/2005

International

ADV DIV INTL CL T
Inception Date 12/17/1998 12.46 12.12 4.25 N/A 10.51 04/30/2005

* OPPENHEIMER GLOBAL A
Inception Date 12/22/1969 10.30 7.76 1.18 12.40 12.56 04/30/2005

Specialty
ADV HEALTH CARE T
Inception Date 09/03/1996 4.85 3.77 2.05 N/A 10.82 04/30/2005

ADV TECHNOLOGY CL T
Inception Date 09/03/1996 -4.16 1.35 -17.33 N/A 6.32 04/30/2005

ADV TELCOM UTIL GR T
Inception Date 09/03/1996 19.99 9.68 -8.04 N/A 7.52 04/30/2005

Blended Fund Investments*
ADV BALANCED CL T
Inception Date 01/06/1987 2.86 4.22 0.60 5.83 8.44 04/30/2005

ALL/BERN BALANCED A
Inception Date 06/08/1932 6.89 6.60 5.64 10.31 5.27 04/30/2005

Bond Investments
Income

ADV GOV'T INVT CL T
Inception Date 01/07/1987 4.43 4.97 6.56 6.24 6.51 04/30/2005

ADV MORTGAGE SEC CLT
Inception Date 12/31/1984 4.76 4.60 6.63 6.62 8.03 04/30/2005

Short Term Investments
FIDELITY TREASURY FD
Inception Date 08/31/1983
7 day yield as of
04/30/2005 2.11% 1.13 0.81 2.04 3.47 5.00 04/30/2005
__________________

__________________
laurence is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Best of bad choices
Old 05-16-2005, 06:50 PM   #2
Thinks s/he gets paid by the post
charlie's Avatar
 
Join Date: Mar 2004
Location: Dallas
Posts: 1,211
Re: Best of bad choices

Laurence,

Keep in mind that the important thing is to look at all of your
financial investments as ONE portfolio. It might make perfect
sense to use the 500 index in your wife's 401k and use your
401k for additional diversification.

Cheers,

Charlie

P.S. Don't forget I-bonds in your taxable!
__________________

__________________
charlie is offline   Reply With Quote
Re: Best of bad choices
Old 05-16-2005, 07:09 PM   #3
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Re: Best of bad choices

That's a good point, I could make her portfolio mostly index and eliminate it from my portfolio. Still I don't like any of the other choices, from what I can tell.
__________________
laurence is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 03:31 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Best of bad choices

I've done that a bit with my wifes 403b. Crappy choices but they do have a good 'global equity fund', so I socked a lot of her money into that and eased up on the foreign and US growth a little.

Charlie...you can hold your ibonds...between your knees!!! (I'm presuming you're a jack nicholson fan and this wont totally hang in the breeze)
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 05:23 AM   #5
Dryer sheet wannabe
 
Join Date: May 2005
Posts: 12
Re: Best of bad choices

My only thought is: Why do you have all of these funds? If you buy the market in a fund like Vanguard Total Stock Market why do you need anything else? You own the entire market. It seems to me you are paying a LOT of fees for duplication of effort, and purchasing the same thing over and over again.
__________________
Steven<br />I have done so much with so little for so long, I am now qualified to do everything with nothing.
ag4gt is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 05:38 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Dec 2002
Posts: 3,875
Re: Best of bad choices

Quote:
Originally Posted by ag4gt
My only thought is:* Why do you have all of these funds?* If you buy the market in a fund like Vanguard Total Stock Market why do you need anything else?* You own the entire market.* It seems to me you are paying a LOT of fees for duplication of effort, and purchasing the same thing over and over again.
Yeah, that was my reaction too.

JG
__________________
MRGALT2U is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 10:39 AM   #7
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Re: Best of bad choices

No, no, I don't own all these funds, these are all of my choices, sorry for the confusion! That's the whole menu, not what I've ordered! :P

She's in the S&P index, capital appreciation, small cap, and international.
__________________
laurence is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 12:45 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Best of bad choices

Quote:
Originally Posted by ag4gt
My only thought is: Why do you have all of these funds? If you buy the market in a fund like Vanguard Total Stock Market why do you need anything else? You own the entire market. It seems to me you are paying a LOT of fees for duplication of effort, and purchasing the same thing over and over again.
You primarily own US large cap growth stocks, very little direct foreign exposure, no bond exposure, and some of the past and likely hotter future sectors like real estate, gas and oil and so forth are almost non-existent. You have very modest current income in the form of dividends from TSM. You have no currency exposure.

Which isnt to say 100% ownership of TSM or a Target Retirement wont get you by.

I've seen numbers that show conclusively that a portfolio of ~60% small cap value and ~40% commodities gives you a SWR far higher than 4% and back tests great...better success rates than a 'target retirement' type setup as well. So why isnt everyone doing that?
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 01:28 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: Best of bad choices

Same reason I ain't spending 75k with early SS this year for our 60/40 portfolio - even if Firecalc says it's 100% safe - backtested and all that.

We got the first 11 years of ER in by my being a Cheap SOB - and CHANGE my habits - NEVER, NEVER, NEVER!

Markets may change/fluctuate - Tradition dies hard.

Wellll may lighten up a little on spending. Change the horse I rode in on - that's tougher.

Durn Wellelsey - still looks good even after all these years(last owned 1993).
__________________
unclemick is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 01:46 PM   #10
Full time employment: Posting here.
 
Join Date: Oct 2003
Posts: 961
Re: Best of bad choices

Hi Th,

Quote:
I've seen numbers that show conclusively that a portfolio of ~60% small cap value and ~40% commodities gives you a SWR far higher than 4% and back tests great...better success rates than a 'target retirement' type setup as well.* So why isnt everyone doing that?
That SWR # doesn't reflect the after commissions, spreads, and fees. For SCV, my guess would be that these would've amounted to about 3-5% of each years' return - more for really small and really value [e.g. DFA SV]. So, I highly doubt that anyone could've realized this SWR.

- Alec
__________________
ats5g is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 02:01 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: Best of bad choices

Seriously

I recommend charlie's post - depending on where you are in the accumulation/distribution cycle - choose the simplest solution possible.

Unless you a born again slice and dicer or something.

My nephew got Bogle's 1994 book and my stern lecture out of the Naval Academy - wisely listened - 100% closest TSP version of total market index for ten years(it was a good decade). Now after ten years - has read Four Pillars and stationed in CA of all places, first child this year and thinking real estate(civy wife with good job).

Need to talk to the boy! Those male hormones will lead you to overthinking.

Simple is good. Of course, I have my dividend stocks.

Heh, heh heh.
__________________
unclemick is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 02:04 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 1,318
Re: Best of bad choices

Quote:
Originally Posted by ats5g

That SWR # doesn't reflect the after commissions, spreads, and fees. For SCV, my guess would be that these would've amounted to about 3-5% of each years' return - more for really small and really value [e.g. DFA SV]. So, I highly doubt that anyone could've realized this SWR.
Alec,
The fees on DFSVX, (DFA's smallcap US Value fund) are 0.56% a year. Not sure how to calculte spreads and commissions on their trading, but would be surprised if they got nailed that badly.

In any case, this fund outdistance the Russell 2000 Value Index (value stocks chosen from among the smallest 2000 of the Russell 3000 stock universe) by 3% or so a year over most of the historical periods. Since the index would not include spreads or commissions at all, never mind fees, I still contend that DFA does a great job at delivering the returns of this asset class (US Small Value) at a fair price.

http://www.dfaus.com/downloads/pub/p...value_port.pdf
__________________
ER for 10 years; living off 4.3% of savings (and a few book royalties ;-)
ESRBob is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 02:08 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Best of bad choices

Alec - Raddr did this up on his site at www.raddr-pages.com

He had a bunch of breakdowns by asset classes coupling an equity component with an inflation hedge like commodities or tips. Then he backtested their 'safety' against the historic data. I'm not an economist, I dont play one on tv and I didnt even stay at a holliday inn express last night, but a lot of his info seems good to me.

However of the top handful of people whose advice I trust without question, you're one of them. I know there are 'hidden' costs in funds like transaction fees that eat up returns without being seen easily. I'd be surprised if they hacked the resulting numbers down that far, but its possible.

By pure recollection, I think raddr was showing a 6.somehing or 7.something% SWR from the SVC/Commodities mix.

I dont have the stones for that though, thats for sure...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 02:25 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: Best of bad choices

I don't think raddr does either - but clearly he has more than me - and apparently has done well. Every once in while puts up his portfolio selections. Someone interested in slice and dice - or even worthwhile diversification ideas will find some intriging posts.

__________________
unclemick is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 08:50 PM   #15
Full time employment: Posting here.
 
Join Date: Oct 2003
Posts: 961
Re: Best of bad choices

Hey gang,

I've got no problem with raddr's commodities stuff. I think he makes a pretty good case for commodities as diversifiers. He's a pretty smart guy. Roger Gibson also makes a good case for commodities here and here .

I was pointing out that unfortunately we can't really model the actual return to an investor because we don't know the actual costs to investing in collateralized commodities futures. This is a problem with using historical indexes for SWR analysis because commissions and spreads were a lot higher than they are now, and there were no index funds before 1975-ish. My guess was that the costs were much higher than they are today, which I think is a good guess, especially for buying what were fairly exotic investments for non-institutional investors.

Gotta love all those "gentlemen's agreements" of those brokers/traders/specialists to keep the increment in spreads only as low as 1/4 of $1.00 for years and years. Can you imagine when the lowest spread on NYSE stocks was only $0.25. 8) I think it was only recently [perhaps in 2000-2001] that the SEC mandated the industry go to decimal spreads in increments of pennies and fractions of pennies, instead of 1/4, 1/8, or 1/16 of a $. Perhaps Brewer can give a quick history of the increments of spreads.

As for DFA, I wasn't suggesting that their funds have high expenses since, as Bob noted, they most certainly don't. I guess I wasn't all that clear, and combined two thoughts into one. Oh well. What I meant to say was that because of the higher costs of investing [commisions, spreads, taxes?, account fees] in the past, I would think that the realized investor returns, especially for small caps and small cap value, wouldn't be all that close to F&F's scv indexes. Perhaps anywhere from 1-5% less, depending on the investing costs at the time [the further in the past, the higher the trading costs].

Unfortunately, we don't have an actual fund with actual investors' returns in small cap value pre early 1990's [I'm not quite sure the exact inception date of DFSVX]. I think DFSVX does an excellent job of capturing the small and value premiums, and if I needed to use an advisor I would definitely use DFA funds.

I think raddr gives some excellent advice:

Quote:
Certainly no rational person would retire with a portfolio split roughly equally between ScV and a commodity futures fund but it is clear that a portfolio split about evenly amongst multiple asset classes including commodities would've fared well in the past and probably will in the future.
Wow. this was waaaaaaaaaaayyy off topic. Sorry laurence. I agree with the others of using the lowest cost investments in each 401(k).

- Alec
__________________
ats5g is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 09:36 PM   #16
Dryer sheet wannabe
 
Join Date: Aug 2004
Posts: 13
Re: Best of bad choices

Quote:
Originally Posted by unclemick2
Seriously

I recommend charlie's post - depending on where you are in the accumulation/distribution cycle - choose the simplest solution possible.

Unless you a born again slice and dicer or something.

My nephew got Bogle's 1994 book and my stern lecture out of the Naval Academy - wisely listened - 100% closest TSP version of total market index for ten years(it was a good decade). Now after ten years - has read Four Pillars and stationed in CA of all places, first child this year and thinking real estate(civy wife with good job).

Need to talk to the boy! Those male hormones will lead you to overthinking.

Simple is good. Of course, I have my dividend stocks.

Heh, heh heh.
Unclemick2

Why not the Vanguard Target Retirement Series say 2015 and call it quits.

eleighj
__________________
eleighj is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 09:58 PM   #17
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Re: Best of bad choices

So...uh...no one has any favorites in the funds I listed, eh? Maybe a top three (I know the S&P index would be one). DW and I are able to max the 401(k)s and our Roth IRA each year, should we lower her 401(k) contribution and go after tax to get into better funds?
__________________
laurence is offline   Reply With Quote
Re: Best of bad choices
Old 05-17-2005, 10:16 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 1,318
Re: Best of bad choices

Laurence,
A quick look at those fund I see several that have high annual fees. (Alliance Bernsteins are one of my favorite offenders).

I didn't see any favorites on your list there. Am essentially 100% in Vanguard, DFA and Pimco Institutional funds.

Most of these 401k plans are sold by brokerage firms to the employer. We all know what that means: "Lets' find all the different ways to convert employee retirement savings into brokerage firm income."
__________________

__________________
ER for 10 years; living off 4.3% of savings (and a few book royalties ;-)
ESRBob is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
bad gateway error mathjak107 Forum Admin 0 09-24-2006 03:57 AM
Nords! - We have good news and bad news!............ Cut-Throat Life after FIRE 16 09-13-2006 02:26 PM
New Worth, Savings & Investment Choices mb FIRE and Money 21 03-25-2006 05:23 PM
SWR in bad times sgeeeee FIRE and Money 37 02-16-2004 02:11 PM
Retirement Housing Choices poocher Life after FIRE 15 01-08-2004 07:01 PM

 

 
All times are GMT -6. The time now is 05:12 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.