The daughter is asking for investment guidance.

[brewer12345]

Quote:

Originally Posted by redduck They have six months emergency fund. The other backup is my daughter's parents. And, that's really a good backup. End of that story. I also was thinking Wellington, but is she too young to be in a fund that is 40% bonds? She's 35.

Anywhere from 60/40 to 80/20 is probably suitable for someone her age. The more conservative mix means that they may be more likely to stick with it when things get ugly.

[pb4uski]

At that age I was more 100/0 but had a value tilt - was in the Vanguard Value Index fund. It worked well for us.

[timo2]

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Originally Posted by Mulligan ...would probably do well to dump their entire 401k fortune into the target date option. "

I've recently been seeing arguments that the target funds go the wrong direction. The if one counts social security as the 'safe' part of the portfolio, then savers could put more of their allocation in equities- as in more than the typical target fund provides. I'm not endorsing this, but I do know that I was never happy with the performance of target funds available to me. So I would be fertile soil for arguments against them.

[Animorph]

Quote:

Originally Posted by timo2 I've recently been seeing arguments that the target funds go the wrong direction. The if one counts social security as the 'safe' part of the portfolio, then savers could put more of their allocation in equities- as in more than the typical target fund provides. I'm not endorsing this, but I do know that I was never happy with the performance of target funds available to me. So I would be fertile soil for arguments against them.

Easy enough to buy the later dates and get more equities, though over a long period you might have to switch to maintain the higher equity allocation.

[timo2]

Quote:

Originally Posted by Animorph Easy enough to buy the later dates and get more equities, though over a long period you might have to switch to maintain the higher equity allocation.

True. I guess what I noticed the last few years in the lifecycle funds available to me is that when everything was down except stocks, the 'everything but stocks' dragged down the positive results of the stocks, especially in early date funds. Then when stocks would go down, the early date fund would really be down, more than the early date funds would ever be up. But the same effect, just smaller, would be felt on the late year funds also. If the next few years in bonds are like the last few years .

[2B]

The only investment book I've been able to get my DW to read all the way through was The Millionaire Teacher by Andrew Hallam. After reading it, she was all excited and acted like she understood what I was doing. We did our annual rebalancing and see did all the calculations. She was very pleased with herself. She had me buy copies for all of our children.

This book is the most simple of books on LBYM and index investing I have come across. It's way below the knowledge level of 99% of this forum's members but it is directed towards the totally novice investor. For that reason alone, I recommend this for your daughter to read. It gives you a base to discuss her situation and eliminates "lecturing" her.

Quite honestly, it is all anyone really needs to know. The mental gymnastics on portfolio development and asset allocation argued here add marginal value compared to whats discussed in this book.

[Mulligan]

Quote:

Originally Posted by timo2 I've recently been seeing arguments that the target funds go the wrong direction. The if one counts social security as the 'safe' part of the portfolio, then savers could put more of their allocation in equities- as in more than the typical target fund provides. I'm not endorsing this, but I do know that I was never happy with the performance of target funds available to me. So I would be fertile soil for arguments against them.

It makes sense to me anyways concerning what you said about factoring SS in to your investments. I only extracted part of the article as it was dealing with people who know absolutely nothing about investing and do not want to. I suspect the author would argue that if these type of people did what you said they would be the type that would be prone to pull it all out at the wrong time on a downturn. He also mentioned more about your concern of performance. Some target funds have various asset expenses and expenses that are not good, and he would not be in favor of them. He did cite a few examples.
I do not use target date funds either, but I understand that psychological pull when down markets occur. My yearly goal even though in retirement is still to invest 20k a year. 10 of it goes to IBonds, the rest into index funds so I know the absolute worst loss I could ever have is 50%.

[2B]

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Originally Posted by redduck I just discovered that I can't put a moderator on the ignore list.

Why would you ever want to put Bestwifeever on "ignore?"

[FinanceDude]

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Originally Posted by Mulligan I was just reading today in the Sunday paper financial sector. The editors column today was discussing people who needed to save for retirement and were not interested in investing. He said the average "Jane and Joe" who know little about investing would probably do well to dump their entire 401k fortune into the target date option. Provided of course it wasn't a sub par one with high fees, poor asset mix, etc. He quoted Josh Charlson senior fund analyst at Morningstar: "from a theoretical perspective you are best off putting your money in a target date fund. Amateurs tend to make 2 errors, hoarding cash in a stable value fund, and panic too easily selling out of a stock fund when market takes a hit."

Target funds are not the panacea they were advertised as.........

[redduck]

Quote:

Originally Posted by 2B The only investment book I've been able to get my DW to read all the way through was The Millionaire Teacher by Andrew Hallam. After reading it, she was all excited and acted like she understood what I was doing. We did our annual rebalancing and see did all the calculations. She was very pleased with herself. She had me buy copies for all of our children. This book is the most simple of books on LBYM and index investing I have come across. It's way below the knowledge level of 99% of this forum's members but it is directed towards the totally novice investor. For that reason alone, I recommend this for your daughter to read. It gives you a base to discuss her situation and eliminates "lecturing" her. Quite honestly, it is all anyone really needs to know. The mental gymnastics on portfolio development and asset allocation argued here add marginal value compared to whats discussed in this book.

OK, I ordered the book (The Millionaire Teacher) for myself. I will read it as soon as Amazon delivers it and then I'll send it off to the child. I also bought Richest Man in Babylon, but, I'm not sure why. I think it might be a momentum thing.
Anyhow, thanks for the suggestion.

[Moemg]

I would buy her "Financial Planning for the Utterly Confused " By Lerner . It explains everything in simple terms & don't rule out the red lipstick idea .

[2B]

Quote:

Originally Posted by redduck OK, I ordered the book (The Millionaire Teacher) for myself. I will read it as soon as Amazon delivers it and then I'll send it off to the child. I also bought Richest Man in Babylon, but, I'm not sure why. I think it might be a momentum thing. Anyhow, thanks for the suggestion.

I suggest you only feed her one book at a time. Discuss it with her and only feed her another one if it's on-topic with where she needs to go. Most of us here read almost anything we can find but we are confident enough in our knowledge base to sort out the different themes.

It's been awhile since I read Richest Man in Babylon but I think it was more a LBYM theme and not on index investing and asset allocation. I think she's more interested right now in investing. The LBYM starts to come into play when she has a plan and goal in mind. Millionaire Teacher goes into LBYM also and ties it into getting money to invest. You will find it extremely simple but it's a good place for a novice to start.

[redduck]

So, a big day at the redduck household: "The Richest Man in Babylon" arrived (in book form) as did "Millionaire Teacher" (in book form). Also arriving was the DVD "Fat to Firm: Fitness Ball Workout for Dummies." I just love Amazon.com.

2B: One day I will learn to underline just like you.

Anyhow, I do plan on reading both these books and then sending them on to the daughter. The DVD is for me.

I am currently reading "Four Pillars" and this time on plan on getting all the way through it. And, I'll watch the Boglehead's video suggested by LOL.

[timo2]

This federal internet site has many links on where to find more financial education information. OCC: Financial Literacy Resource Directory

[travelover]

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Originally Posted by timo2 This federal internet site has many links on where to find more financial education information. OCC: Financial Literacy Resource Directory

Good resource, but in my experiences, the problem is getting the horse to drink, not a lack of water.

[MRG]

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Originally Posted by travelover Good resource, but in my experiences, the problem is getting the horse to drink, not a lack of water.

Think the OP had a thirsty horse.

I 100% agree with where your comment.

MRG

[travelover]

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Originally Posted by MRG Think the OP had a thirsty horse. ..........

Time will tell. A lot of horses seem thirsty until they find out they can't drink a lifetime of water is a few minutes, then they wander off.