Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Four timeless principles to help you reach your investment objectives (from Vanguard)
Old 07-03-2013, 03:32 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,978
Four timeless principles to help you reach your investment objectives (from Vanguard)

https://personal.vanguard.com/us/ins...nvestingtruths

They are:
1) Goals - Create clear, appropriate investment goals.
2) Balance - Develop a suitable asset allocation using broadly diversified funds.
3) Cost - Minimize cost.
4) Discipline - Maintain perspectiveand long-term discipline.

Nothing new to most here, but a good summary, and the PDF version is a pretty complete read. I would recommend it to newbies and novices, though it doesn't hurt for any of us to review and reinforce.

It's interesting to me how 1 thru 3 dominate discussion here and elsewhere, when 4 is where most people go off the tracks. I can't the last meaningful thread on how to keep your head when the market goes into spasms, as it always will. Too many people alternate between panic and greed or just decide they can outsmart the pros...1 thru 3 probably won't help if you don't have the discipline to go with the program. YMMV

Quote:
Because investing evokes emotion, even sophisticated investors should arm themselves with a long-term perspective and a disciplined approach. Abandoning a planned investment strategy can be costly, and research has shown that some of the most significant derailers are behavioral: the failure to rebalance, the allure of market-timing, and the temptation to chase performance.

Far more dependable than the markets is a program of steady saving. Making regular contributions to a portfolio, and increasing them over time, can have a surprisingly powerful impact on long-term results.
__________________

__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack 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!

Old 07-03-2013, 04:50 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,978
Not new, but nice AA graph from the PDF...
Attached Images
File Type: jpg image.jpg (74.9 KB, 154 views)
__________________

__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 07-03-2013, 06:42 PM   #3
Full time employment: Posting here.
SumDay's Avatar
 
Join Date: Aug 2012
Posts: 799
Thanks for sharing. I'm going to now share with my young adult kiddos.
__________________
SumDay is offline   Reply With Quote
Old 07-03-2013, 07:23 PM   #4
Full time employment: Posting here.
ER Eddie's Avatar
 
Join Date: Mar 2013
Posts: 721
Yeah, thanks. That's an interesting AA graph.
__________________
ER Eddie is offline   Reply With Quote
Old 07-03-2013, 07:50 PM   #5
gone traveling
 
Join Date: Oct 2012
Posts: 329
A timely reminder - thank you
__________________
UserRequested is offline   Reply With Quote
Old 07-03-2013, 09:41 PM   #6
Full time employment: Posting here.
ER Eddie's Avatar
 
Join Date: Mar 2013
Posts: 721
Quote:
Originally Posted by Midpack View Post
It's interesting to me how 1 thru 3 dominate discussion here and elsewhere, when 4 is where most people go off the tracks. I can't the last meaningful thread on how to keep your head when the market goes into spasms, as it always will.
Threads like this help. Thanks, you're a smart guy, Midpack.
__________________
ER Eddie is offline   Reply With Quote
Old 07-04-2013, 06:13 AM   #7
Thinks s/he gets paid by the post
jollystomper's Avatar
 
Join Date: Apr 2012
Posts: 1,364
Thanks for the article!

One of things I have tried is showing my kids and other young folks, when the discussion has come up a trend graph (with numbers removed) of my 401K value since I opened it almost 30 years ago. Panics such as the 1987 crash, 1991 recession, 2000 bubble burst, and 2008-2009 crisis suddenly look like little bumps in the road compared to the overall growth due to steady investment discipline. I also used to show my mistake of not saving/investing at a higher rate when young, which would have made the curve look even better. It serves as a good reminder to me of the value of discipline.
__________________
Current target FIRE date: Under negotiation, can happen anytime.
jollystomper is offline   Reply With Quote
Old 07-04-2013, 08:51 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 5,899
Always understood 1, 3, and 4 intuitively, but had little or no clue about 2 until 6-12 months into being an ER forum member. Our "balance" is off, and we can't figure out how to correct it without big nuisance and costs.

At least I did get up the courage to dump loser stocks and harvest the losses, which helped some. But what to do with the big tax-deferred annuity, to which we contributed for 20 years, and which no longer pays competitive rates?

Amethyst
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
Amethyst is offline   Reply With Quote
Old 07-04-2013, 11:48 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,461
Quote:
Originally Posted by Amethyst View Post
Always understood 1, 3, and 4 intuitively, but had little or no clue about 2 until 6-12 months into being an ER forum member. Our "balance" is off, and we can't figure out how to correct it without big nuisance and costs.

At least I did get up the courage to dump loser stocks and harvest the losses, which helped some. But what to do with the big tax-deferred annuity, to which we contributed for 20 years, and which no longer pays competitive rates?

Amethyst
I'm just curious as to the nuisance and costs of rebalancing. Mine are minimal unless I start playing around with my taxable accounts and even then are relatively benign given 0% federal capital gains rate (but there is a state tax bite).

On the annuity you can switch to a company with more competitive rates (called a 1035 exchange IIRC) but it would frequently start a new surrender charge clock - or perhaps do a 1035 exchange to a Vanguard or other low cost annuity provider. You could also annuitize it but it might be better to wait until you are in a lower tax bracket.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 07-04-2013, 01:47 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 5,899
I'm talking about taxable accounts.

As for annuities, Vanguard doesn't offer any better rates. The rates just stink, period. Back when I started contributing, it was 8% locked in for 5 years!

I am supposed to be able to get all my money back at age 59 1/2, but then I'd owe tax on the earnings, and earnings are disbursed before principal.

Amethyst

Quote:
Originally Posted by pb4uski View Post
I'm just curious as to the nuisance and costs of rebalancing. Mine are minimal unless I start playing around with my taxable accounts

On the annuity you can switch to a company with more competitive rates (called a 1035 exchange IIRC) but it would frequently start a new surrender charge clock - or perhaps do a 1035 exchange to a Vanguard or other low cost annuity provider. You could also annuitize it but it might be better to wait until you are in a lower tax bracket.
__________________

__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
Amethyst 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


 

 
All times are GMT -6. The time now is 08:49 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.