Join Early Retirement Today
Thread Tools Search this Thread Display Modes
IRA Investors Avoiding the Panic Button
Old 01-24-2016, 06:14 PM   #1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 39,197
IRA Investors Avoiding the Panic Button

Interesting study by Vanguard on the equity buy/sell activity of IRA investors between 2007 and 2015. Findings:

Fewer than 1 in 4 investors who owned Vanguard IRAs continuously from 2007 through September 2015 ever made a change that altered the stock allocation in the IRA by more than 20 percentage points in a single month. Of those who did make a change, fewer than half made more than one change.
In a typical month, 0.2% of Vanguard IRA investors made a large move out of stocks, although such moves are more frequent after stock market drops. But even in the worst month, clients were only about 1 percentage point more likely to make a major stock sale.

Even over the entire period of January 2008 through April 2009—which includes the global financial crisis—only about 1 in 15 Vanguard IRA investors made a large reduction in their stock allocation in any month.
Investors who sold out in 2008 must have felt relieved at their decision while they watched the market plummet through the financial crisis. But when you time the market, you also have to figure out when to get back in.

About 40% of those who sold out of stocks during the crisis never made a large purchase back into stocks. Perhaps the crisis simply made these investors reassess their risk tolerance. However, even the "market timers" never returned to their previous stock allocations.
Check out the full article and informataive charts & graphs here:

Numbers is hard.

Retired in 2005 at age 58, no pension

REWahoo 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 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 01-24-2016, 09:00 PM   #2
MBAustin's Avatar
Join Date: Jul 2010
Posts: 3,347
Very interesting, thanks for sharing!

I think there is something about buying into Vanguard's approach that makes investors less likely to overreact to market fluctuations.

"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute." William Feather
ER'd Oct. 2010 at 53. Life is good.
MBAustin is online now   Reply With Quote
Old 01-24-2016, 09:16 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 16,433
Yes, interesting!

I bet there is a correlation between not making any big portfolio changes, and not watching/reading the 'financial porn' stations/magazines!

ERD50 is offline   Reply With Quote
Old 01-25-2016, 03:44 AM   #4
Full time employment: Posting here.
Join Date: Dec 2015
Posts: 522
I wonder how many small investors moved their portfolios to VG after reading "4 Pillars"..
or being exposed to similar AA strategies. If that was a big number, then they came in believing in that approach.
HadEnuff is offline   Reply With Quote
Old 01-25-2016, 05:13 AM   #5
Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,931
morningstar's small investor returns compared to the funds actual returns show the damage is even greater .

the mass money movement really shows the small investor under performing as a group
mathjak107 is offline   Reply With Quote
Old 01-25-2016, 08:47 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
Join Date: Jul 2008
Posts: 15,892
According to an article I happened to spot, in the 3 weeks YTD investors have pulled $7B from stock funds. Last month, Dec 2015, they pulled $48 billion.

The above is really minuscule, compared to the total US market value of $23 trillion back in 2014, while the entire world stock value was $67 trillion.

So, it is not just Vanguard account holders who are not selling. I compute the $48 billion withdrawal in December to be 0.2% of US stock values, matching the number posted by Vanguard.

"Old age is the most unexpected of all things that can happen to a man" -- Leo Tolstoy
NW-Bound is offline   Reply With Quote
Old 01-25-2016, 02:14 PM   #7
Recycles dryer sheets
Join Date: Jul 2014
Location: Undisclosed
Posts: 59
I wonder what percentage of the $48 billion pulled in December could be attributed to RMDs.
N02L84ER is offline   Reply With Quote
Old 01-25-2016, 02:57 PM   #8
Full time employment: Posting here.
Join Date: Apr 2015
Posts: 903
Originally Posted by N02L84ER View Post
I wonder what percentage of the $48 billion pulled in December could be attributed to RMDs.
It's not necessary to take RMDs as cash. Moving shares from IRA to a taxable brokerage account satisfies RMDs just fine.

hnzw_rui is offline   Reply With Quote

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
Are vanguard investors more savvy investors? mathjak107 FIRE and Money 5 06-07-2014 02:40 AM
Roth IRA's: Avoiding withdrawl penalties Life_is_Good FIRE and Money 6 07-14-2007 09:10 AM


All times are GMT -6. The time now is 05:54 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.