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Where should one invest
Old 04-18-2016, 10:21 AM   #1
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Where should one invest

The question; where should one invest for retirement income.
Growth mutual funds ? Stocks bonds, I would love to manage my own portfolio. Looking for any advise .


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Old 04-18-2016, 11:38 AM   #2
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If you have little investment experience, I suggest you get this:

http://www.amazon.com/The-Investment...s=books&sr=1-1

As a starting book. It's a short book that makes a case for index investing and gives several asset allocations for various risk levels. I liked it because it was like a refresher course from what I learned in school and the asset allocations were similar to a study done for a small endowment I managed.

If you want something now, an asset allocation of 51% domestic bond index, 35% domestic equity index and 14% international equity index will likely produce a 7% return (based on data from the 2000's). While you may hear arguments about the 7% return (this iMessage it's different), you'd have to take on a lot more risk to get a better return than what this allocation will eventually produce.


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Old 04-18-2016, 12:06 PM   #3
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Go with Warren buffet's advice. Pick an S&P ETF and buy and hold.
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Old 04-18-2016, 03:27 PM   #4
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Presuming that you are young, decide on a broad index ETF and hold on to it. Buy more when you can.
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Old 04-18-2016, 03:32 PM   #5
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Originally Posted by Terryjm51 View Post
The question; where should one invest for retirement income.
Growth mutual funds ? Stocks bonds, I would love to manage my own portfolio. Looking for any advise .


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See https://www.bogleheads.org/wiki/Three-fund_portfolio
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Old 04-19-2016, 07:09 AM   #6
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Thank you all for the advise, I have a coworker that I told him of this site. He had a question that I couldn't answer " let's ask these smart investors". He is looking at going with someone that will charge 1.4 on his nest egg.
I thought that was high but I believe it's the average. So he was asking if you self manage yourself what do you get into that's not so risky that you can make over 4 or 5 %



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Old 04-19-2016, 07:44 AM   #7
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Originally Posted by Terryjm51 View Post
Thank you all for the advise, I have a coworker that I told him of this site. He had a question that I couldn't answer " let's ask these smart investors". He is looking at going with someone that will charge 1.4 on his nest egg.
I thought that was high but I believe it's the average. So he was asking if you self manage yourself what do you get into that's not so risky that you can make over 4 or 5 %



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A fee (expense ratio) of 1.4% is close to the industry average, assuming this includes the advisor's fee, fund loads, and all other costs. But it's about 10x the cost of buying your own funds. After compounding for a few years, that's a much worse performance.

Please take a few weeks, read a book or two from this site's suggested reading list, and try to handle your own investing. If you can't for emotional reasons, then get a financial advisor who charges an hourly rate and is a fiduciary.

Good luck, and welcome!
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Old 04-19-2016, 07:45 AM   #8
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I mean that's what you should tell your friend...
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Old 04-19-2016, 07:55 AM   #9
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To be honest, you sound like someone who needs to get yourself educated about basic investing before making any move. By asking about "Growth mutual funds" you have probably been reading Dave Ramsey, who is excellent on debt reduction and lousy on investment advice. You sound to me like the perfect candidate for a Target Date Fund. Read what those are so that you have basic awareness, then set it and forget it and go back to your life.
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Old 04-19-2016, 08:17 AM   #10
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To be honest, you sound like someone who needs to get yourself educated about basic investing before making any move. By asking about "Growth mutual funds" you have probably been reading Dave Ramsey, who is excellent on debt reduction and lousy on investment advice. You sound to me like the perfect candidate for a Target Date Fund. Read what those are so that you have basic awareness, then set it and forget it and go back to your life.
Good advice.
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Old 04-19-2016, 10:03 AM   #11
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Originally Posted by Markola View Post
To be honest, you sound like someone who needs to get yourself educated about basic investing before making any move. By asking about "Growth mutual funds" you have probably been reading Dave Ramsey, who is excellent on debt reduction and lousy on investment advice. You sound to me like the perfect candidate for a Target Date Fund. Read what those are so that you have basic awareness, then set it and forget it and go back to your life.
+2 - A Target Date Fund would probably be an excellent place to start (and probably finish).

I will add that your comment " So he was asking if you self manage yourself what do you get into that's not so risky that you can make over 4 or 5 % " points out that you need a little education on how investments work.

As you move from very low returns and very low 'risk' investments, to the potential for higher returns from 'riskier' investments, you can't predict what you will 'make'. Higher risk/return investments have the potential for higher returns, sometimes you get them, sometimes you don't. But over the long run, higher risk has been rewarded.

But here's what we do know - If you self-manage, you are saving that ~ 1.4% each and every year, and it is very unlikely that your advisor can overcome that with better performance. It's more likely he will lag behind.

Just enter the terms "active versus passive investing" into a search engine and read for yourself. You will find a lot of comments like:

A New Measure of Active vs. Passive Investing - Total Return - WSJ

Quote:
The first Active/Passive Barometer report, which looks at fund results over the one-, three-, five- and 10-year periods through 2014, found that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons. The active funds have also experienced higher mortality rates, meaning that many have merged or closed, Morningstar says. ...

“More than anything, fees matter,” says Mr. Johnson. Even among lower-cost funds, those in the lowest quartile performed better than those in the next-higher cost quartile, he says.
You are asking the right questions though, and that puts you far ahead of most people.

-ERD50
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Old 04-19-2016, 10:08 AM   #12
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Index funds.
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Old 04-19-2016, 02:37 PM   #13
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1.4% may be industry average, but you should still not pay it. If one is not willing to learn to manage their own investments, one can at least try a "robo" advisor like Betterment that will have a much lower fee. On the 4-5% with no risk, in year past you could do that at the bank but in today's interest rate environment, there is no return like that without some risk. I agree on the index funds/ETF's.
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Old 04-19-2016, 03:05 PM   #14
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+1

Also - an easy read that will give you confidence that you don't need a FA and that investing is not magic/***** pocus/complicated.

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Old 04-19-2016, 03:19 PM   #15
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Rodi typed a dirty word, Rodi typed a dirty word...
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Old 04-20-2016, 05:04 PM   #16
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Google "Eight Simple Portfolios" and you will get a Boglehead forum hit based on two fund thru eight fund portfolios of mixed bag stock/bond US and foreign Vanguard index fund portfolios. Same can be said for Fidelity.


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Old 04-20-2016, 06:02 PM   #17
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Asset allocation and index funds are the closest thing to a free lunch you can get. Once I found out how well it works, how simple and foolproof it is, and how much less I was wasting on unnecessary fees, I vowed to never go back. 1.4% fees is 1/3 of my safe withdrawal rate. Why would I want to give away 1/3 of my retirement money? I also do better after quitting my FA and not following boilerplate advice.
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Old 04-20-2016, 11:45 PM   #18
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Good thing I wasn't drinkin milk at the time cause this just made me actually LOL.
In my head it was said with the whiniest lil' girl voice I could imagine!
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