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5 year investment question
Old 05-02-2020, 04:45 PM   #1
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5 year investment question

Just put $5k in a FIDO Roth account. It has to stay there for 5 years (I know, I am late to the party with respect to Roths, but better late then never). Anyway, where would you invest the $$ for that period of time? Our overall AA is about 55/35/10 right now, split between FIDO and VG. This Roth is in Fido.

My first thought was to invest in FIPDX - the FIDO TIPS fund, but that seems to conservative at this point. I am gradually moving all of our funds towards index funds, generally speaking.
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Old 05-02-2020, 04:51 PM   #2
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It depends on your objective. In our case (we are both retired and 65yo), we see the Roth as an inheritance fund for DS. We will likely never pull a dime from it. So the Roth is about 85% in the market, for next 10-20 years (or more with some luck).
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Old 05-02-2020, 04:59 PM   #3
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It depends on your total assets and on your age, but if I was good on total assets, $5K is not a lot of money so I would put it into a total US market fund. If history is any guide, this is a great time to be buying stocks. There may be some kerfluffles in the short term but a five year horizon should work well.

If you like TIPS skip the fund, just buy $5K worth on the auction, probably an issue that matures in 5 years if available. If not, buy the earliest maturity after that. TIPS really have no yield curve anyway so the exact maturity date is not a big deal.
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Old 05-02-2020, 06:53 PM   #4
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We have our Roths 100% equity; thus, "regular" IRAs are disproportionately income/debt holdings. The bigger the likely return, the more it belongs in the no taxes on withdrawal account.
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Old 05-02-2020, 10:00 PM   #5
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This sounds like a regular contribution, which you should be able to withdraw at any time. Only gains would have to stay in.

I'd make it part of your regular AA, though you can weight it towards equities and balance that with bonds/cash in a tIRA. I'm normally 25% bonds, in retirement, and usually the same in tIRA or Roth. But with stocks down I've increased my equities in both and am working on moving to all equities in the Roths. A recovery in stocks is then like a free Roth conversion, some value moved from the tIRA to the Roth due to stock growth, with no taxes incurred. I'll try to be back to my normal AA before the next bear market.
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Old 05-02-2020, 10:15 PM   #6
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are you sure there will not be another BIG dip ( i think there MIGHT be )

if there is a dip then WHEN .. say before or after the Presidential election

i see shocking fundamentals but a Fed and Treasury working overtime to keep the debt cycle inflated

so let's assume history repeats and the Fed keeps the stock market up BEFORE the election .. what's next the election result is in there is NORMALLY a 3 month honeymoon period

so far this year the market has defied all my predictions and the government/Fed has intervened everywhere .. how long can they keep intervening

good luck
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Old 05-03-2020, 05:27 AM   #7
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FFNOX - then look at it in 5 years.

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Old 05-03-2020, 08:07 AM   #8
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are you sure there will not be another BIG dip ( i think there MIGHT be )
So what? OP is an investor, not a trader. He's in for five years.
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Old 05-03-2020, 08:27 AM   #9
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Originally Posted by OldShooter View Post
So what? OP is an investor, not a trader. He's in for five years.

My take on Oz's comment is that it could be related to market timing. Meaning sit on cash in the Roth for now, and buy on the dip. Of course as always the trick is to know when the bottom is.



Back to the OP's original question, since the Roth is assuming to be for long term (I'll call that 10 years plus), then I would go 100% equities or at least a very high % equities. I would not be conservative. Index fund(s) for low fees and high diversity. Just put the money in equities now and don;t try to time the market; especially since this is longer term investment.
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Old 05-03-2020, 09:16 AM   #10
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My take on Oz's comment is that it could be related to market timing. ...
Exactly. No one, including @Oz is able to predict the future. Certainly there "might be" at dip. There also might not be. And if there is a dip, will the OP catch it? Probably not. Statements like @Oz'S are basically just noise in the system.

At least he understands this: "... so far this year the market has defied all my predictions .."

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Just put the money in equities now and don;t try to time the market; especially since this is longer term investment.
Exactly!

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... look at it in 5 years. ...
OP, here is wisdom. This is the graphic that I use in my Adult-Ed class when we talk about how to handle market volatility:


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Old 05-03-2020, 09:23 AM   #11
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Originally Posted by tominboise View Post
Just put $5k in a FIDO Roth account. It has to stay there for 5 years (I know, I am late to the party with respect to Roths, but better late then never). Anyway, where would you invest the $$ for that period of time? Our overall AA is about 55/35/10 right now, split between FIDO and VG. This Roth is in Fido.

My first thought was to invest in FIPDX - the FIDO TIPS fund, but that seems to conservative at this point. I am gradually moving all of our funds towards index funds, generally speaking.
FZROX - Fidelity ZERO Total Market Index Fund in a Roth.
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Old 05-04-2020, 11:47 AM   #12
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Thanks for the opinions. I will put it into equities, as it is going to be there awhile. I will be adding to it as we go along.
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