Hello, I am due for retirement in two years, I'm a senior citizen but I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $50K per year but nothing to show for it yet.
In this current unstable markets, It is advisable to diversify while retaining 70-80% in secure investments. looking at your budget, you should consider financial advisory.
I think you're better off with majority investment in S&P500 and uprising equities cos they always outperform. Also speaking with an advisor can help with pointers. I've been in contact with one I reached through commentaries here, she has been really helpful.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
AI stocks are poised to dominate in 2024. I prefer NVIDIA due to their strong position for long-term growth and their support of other AI companies. I know someone who gained over 200% with NVIDIA. I'm also open to considering the other recommendations you mentioned.
I agree. Even with great opportunities, we should proceed cautiously. Seeking market analysis or advice from certified market strategists is important.
Absolutely, having a solid plan is crucial. My portfolio has doubled since early last year. My financial advisor and I are working towards a seven-figure goal, though it might take until Q3 2024.
I came across your channel through this video-case studies are incredibly valuable, and I'm eager to see more in the future! Building wealth involves establishing routines, like consistently setting aside funds at regular intervals for smart investments.
You're correct. I think the smartest way to go is to spread out your investments. By putting your money into different asset classes like bonds, real estate, and stocks from other countries, you can lower the risk if one part of the market goes bad.
That sounds like a good plan. In the past two years, working closely with a financial market specialist, I've built a six-figure diversified stock portfolio. Now, I aim to diversify even more this year.
Talking about a financial market specialist, do you consider anyone worthy of recommendations? I have about 100k to test the waters now that large cap stocks are at a discount... Thanks
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market..
True talk, we had invested money through a financial advisor for nearly 30 years. The market had its ups and downs, but in the long run it did very well for us. With my pension, social security, and investments we are able to live comfortably. We are now able to fully enjoy our hobbies, travel, family, and making new acquaintances.
Been retired for about 15 months. Have 3-4 years in cash then 3-4 years in Wellington then the rest in the Total market fund. Seems to be working. Wasn't excited about not getting SP500 returns but had to realize its about making it last and not accumulating anymore.
I retired 4 years ago and never invested a cent until after I retired. I have a pension and social security as a lowly civil servant. My investments now are just to see how the market works and if I can prosper as I learn, so be it. I was thrilled to see info on how to invest as a retiree since everything else is aimed towards those who are preparing to retire. You had me until you said I'd have to give up control. Can't do that. At least if I lose, I can blame myself...don't want to lose and pay someone else to do it.
Don't blame you, especially when you don't even know the person or persons knowledge that is making the decisions. What if it's someone right out of college.
@@B126USMCRetirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determines a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through 401k. We both still earning after our retirement.
I understand the theory behind these "retirement" funds. When you retire, you need secure income without risk, so they buy high grade bonds and a few conservative stocks, more or less depending on your risk tolerance. But in periods of high inflation like today, fixed income is not so great. Your income won't grow with inflation, and the stock price will fall. If you have to liquidate in an emergency, you lose big. So don't get lulled into thinking these are always the way to go. They are great when inflation is low, or even just steady, but when inflation is rising, they lose real income and stock value. They are right for some people who just don't know anything or don't want to bother, but if you are a well educated investor with time to research investments, you can do better with high dividend stocks, albeit with more risk.
Looking for advice. I've done well, I'm retired, and believe I'm all set. The advice is truly about a friend. I recently reconnected with a HS friend I haven't seen in 30 years. He's a little older and I asked when he was going to retire. He admitted to having no savings and $150K variable interest mortgage. He grosses about $75K and lives in a small town in Northern Wisconsin. Here's my thoughts and I'd love feedback. He's in his Full Retirement Year so shouldn't have an issue with his salary / social security payment. I get Social Security grows 8%/yr. But if he started taking it now and applied all of it to his mortgage payment plus the additional he is paying now, he could have the mortgage paid off in 4 - 5 years. When he's 70 -71. Then work one more year putting his social security and paid off mortgage payment in the bank. I believe being debt free and having $60K - $80K in the bank would allow him to be able to live on his social security payment. Thoughts?? Thanks!!
Our peak era is gone, with 401(k)s failing in the recession. My $750K retirement portfolio shrinks with inflation. I fear leaders repeat history's mistakes. If rising costs worry your retirement, I empathize. Foreign policies, regulations, and energy policies are chaotic.
Rob, would you be able to do a video on how to manage a retirement portfolio and aim to "spend it all or as much as possible without leaving much" for singles? :) I know it's hard to gauge how long one lives, but all strategies such as 4% seem not to withdraw the main pot of portfolio. As a single without commitments, I think many of us are interested in other more suitable strategies - that will also withdraw part of the portfolio as we live and the goal is adjust and leave as little as possible for "others".., I often wonder about it. lol
If you are not investment savvy and want a reasonable way to invest, do in target funds and do not fret. You will be ahead of the crowd. No real need for an advisor. I invested regularly in a target fund, and invested smaller amounts in stocks, which helped me to gain a better knowledge of the overall market, etc.. Fidelity and Vanguard are both trustworthy. Do not invest in niche funds like ESG. Sounds good but really just a subjective, marketing gimmick, not necessarily a sound investment strategy.
You don't need to go searching funds and ETFs that match the asset allocation you want. Just buy a pure stock fund and a pure bond fund in the proportions you want to get to the AA you want.
thanks for the effort and sharing. i am an appreciative subscriber. my problems with these funds is on the bonds side. since i am now in the very beginning of my retirement, i prefer my bonds to truly act as a safety net to my equity holdings. i want my bonds to be short term/intermediate term treasury funds/etfs. i do not want long term bonds with their exposure to interest rates. i do not want corporate bonds with their exposure to credit risk. i do not want international bonds with their exposure to currency risk. that said, while i was in my accumulation phase, i invested in both Vanguard Target Date funds and Wellington Admiral. both had decent results and made investing more automatic and that was a good thing! thumbs up.
Long-term government bonds are only volatile if you plan on selling before maturity. If you wait until maturity, they're safer than short-term bonds because you're not exposed to any interest rate cuts. My recommendation would be, get Treasury Inflation-Protected Securities with a maturity date after you expect to die. That way, you will have predictable income which keeps up with inflation.
I like target retirement funds and life strategy funds but right now I love the combination of S&P 500 fund and CDs. You decide the risk ratio depending on your age, risk tolerance, and when you will need the money. Fidelity CDs are paying 5.3% while the S&P gained 20% this year. These are good times to be an investor. BTW, Fidelity's S&P expense ratio is .015%. That's almost free!
Growth company funds or stocks....if you cannot handle the risk buy dividend paying stable companies like Verizon? MO? The stock prices do not move much but you can get yourself a 7 to 10 per cent dividend. Cheers!
Rob - how about a podcast on how retirees can invest in IRAs, etc. so that RMDs are covered by dividends and capital gains distributions to avoid having to sell shares in a down market.
Rising prices have affected my intention of retiring at 62, working part-time, and building my savings. I'm worried about whether individuals who weathered the 2008 financial crisis found it less challenging than my current situation. The stock market's volatility, coupled with a reduced income, is making me anxious about having enough for retiremen
Maybe what we need in retirement is a reverse target date fund. Where stocks increase in allocation over time from a low level to allow for sequence of return risk. The duration based on estimated lifespan.
The performance of this target date funds have been horribly for some years now. There are many articles indicating that in an environment where bonds and stocks underperformed at the same time, which has been the case for several years, this is not a good investment. Just think about selling them to comply with the RMD every year and you get the picture. Owning a small percentage will work as a diversification, but never a substantial amount of your portfolio
Yes, it does. But, as Rob pointed you loose some of the simplicity. You pick the asset allocation and you have to do the rebalancing. Not, that big of a deal. But, some people may not want to do the rebalancing. I would certainly pick your option.
Good video Rob! I plan on keeping my Vanguard TDF for life. I like its index based structure, diversification, low costs and the fact that it includes TIPS as the target date draws closer. That said, I found (as you pointed out) that it's stock allocation (50%) when the target date is reached was too conservative for my taste so I just chose a fund 5 years beyond my retirement date. So I'll be 60% equities when I retire, then it will go down to 50% 5 years later and, seven years after that, it will be 30% and that is something I can live with as I'll be a lot older by then.
@@joshuaryan8694I it’s in an IRA, but if you choose a TDF in a taxable brokerage account, they are still good as long as you choose a company that uses index funds ( like Vanguard) because index funds are, by design, very tax efficient. Target Date Index Funds are the only type I like.
Thank you, Rob, as the tutorial on Asset Allocation Funds was very helpful. I am educating myself in how to move my funds from the accumulation phase of my career into an IRA, upon retirement.
Rob - As usual your input is informative and concise. I have been evaluating going tthis route in lieu of Vannguard Flagship I have been in (been retired 10 years). The allocation in the Wellington fund is consistent with my current holdings🎉. I have fouhd the Flagship Service of value making SS decisions and moving dollars into Roth account. Now that I am almost 72 that value has diminished.. Thanks Again!
Warren Buffet offered this advice. Before he dies, his family members should take the proceeds of his Will and invest 90% in the lowest cost Vanguard S&P 500 index ETF and 10% invested in short term government bonds. Sound advice, especially if you don’t have the experience nor inclination in investing.
I was in a 'Retirement Year' fund for 10 wasted years in my 30s to 40s. It was far too conservative and delivering very little growth when I could take some risk, ask that age. I moved its all into higher performing funds and never looked back. I retired at 55, 9 years ago.
@TR4zest Thank you for writing this. I was wondering the same thing. And congratulations on retiring at 55; that is impressive and best wishes on your journey.
I cannot imagine having less than 50% of my portfolio in equities in retirement. While I know it's possible, it seems like an insane decision. Despite that, most Target Date funds have a glide slope that end with just 30-40% bonds. Like I said...
For the FIRE people, or even people that want to retire slightly early, that kind of portfolio cannot sustain you. The only way that would work is if you had a steady stream of income like a pension or real estate income, but if you're just depending on investments, less than 50% will not sustain most people. But in the case of steady income such as a pension, that frees you up to go even more aggressive. I will never have anything less than 70% equities.
Stocks have had periods of time where returns went nowhere for decades…after tax interest income and qualified dividends are the name of the game for retirees with a portion of portfolio meant to hedge inflation
Yes you could put your money into date funds if you wanted to pay a butt load in management fees every month. Me I like keeping my money in my account and not be giving away my money in fees to.some fund managers who in the long run do even worse that the S&P 500. I only invest in a low fee S&P 500 index mutual fund. That way I keep as much of my money in my pocket as I can. When I am ready to retire then I will set up a multable year cash fund so when the market is down I have safe cash to draw on. When the market is flat or up I will draw out of the S&P 500 fund.
I'm going to show my ignorance and tell you what I've done! I am retired now for 13 yrs. I went with 40% index funds and 60% cds. I do not understand the preaching of bonds when CDs are earning me a min.5.25%! The s&p 500 index and the total stock market index have done well as of Aug 25,2024. As a result 13 yrs. After retiring I have much more in my retirement than I began with! I worry less about my remaining years as a result! I guess my burning question is am I doing myself a disservice by avoiding bonds?
Do bond funds work? It seems to me, at this time in history, you are just better off investing in 5-year Treasuries and know exactly what interest rate you will receive.
When I retire next year it will be either the Wellington fund or balance index fund, both are a 60/40 portfolio. These are two very good moderate conservative funds that average 8-8.75 rate of return with not too many big loss years which even if they did have a down turn for a few years , I have enough cash to hold over
My wife - a poor teacher - forwarded this to me. With not a single mention of index funds that have outperformed all of the funds you mention - no thanks.
Unless 100% of your investable assets are in Qualified accounts like IRA,401k.. then this simple strategy will cost you in Tax efficiency. Having stocks in taxable accounts and Bonds in IRA type accounts results in less overall tax paid as the stocks will be capital gains rate. Sequence of Return Risk is a big threat to early retirees (ie reverse dollar cost averaging) , and one strategy might be to buy a 90% bond fund-or cash, just before retirement, then increase your stock allocation every couple or three yrs .. increasing your stocks as you get older..
Rob, I was a 401K administrator for several companies over the years. I found the target date funds significantly underperformed the market for overall fund return. I know they have a mixture of stocks and bonds depending on the the retiremnet date. Ive listened to several of your videos and enjoy them immensly, how come you do not focus at all on total returns for the funds? You seem to focus on fees and asset allocation.
Rob believes in holding a mix of stocks and bonds and international diversification. If you watch his videos on his own personal portfolio, it’s very similar to a TDF. So the reason he pushes it so much is because he obviously prefers safety and diversity over “total returns”
I have to take a different approach in retirement. I have a young child and spouse that is significantly younger than I. I am doing a bucket strategy with 3-4 years in cash (cd and money market) my social security is my bond portion, most of my stocks and etf are a 40/60 mix of dividend income and dividend growth (60%). This way I can leave a legacy to my wife and children long after I am gone. We will continue investing into dividend growth stocks for the next 12-15 years because we don't need all of the income we currently receive.
Although you can’t predict the future, you can prepare; the journey is not always easy, embrace persistence, patience and perseverance. Outline your goal and pull your efforts together to attain that goal. I had a fair share of struggles before diving into crypto last year. And let me tell you, it completely changed my life! So don't lose hope, my friend.
Spot on. The market presents a lot of opportunities to create passive income, with the right skill and proper understanding. Whether you’re not sure about what to invest in, or you don’t have time to manage your assets, just make sure to consult an advisor. Good luck!
Even with one account, a lot of us will likely have multiple accounts - probably based on taxation - from HSA, Roth, tax deferred, & taxable. It's still a lot to keep track off.
Thank you Rob for your thoughtful choice of topics that are very helpful to retired DIY investors like me. Very helpful overview of good options for those who prefer KISS. I did not realize your last point regarding the old target date funds continuing to modify allocations after "expiration" date. Also appreciate the brevity in communicating the information. Buckeys #1? Ha, overrated. Go Blue! - Bill s.
Really liked all this info, personally though i would never recommend a REIT to my worst enemy. Try cashing out a REIT unlike a mutual fund, you have to ask to try to be first in line every quarter and they only let you take out so much. Inherited some REITs and its taking over a year to get them all cashed out.
Some REITs are listed on stock exchanges, so they're more liquid. These include Realty Income and Invitation Homes. Although, I still wouldn't recommend them. They're no safer than stocks and they underperform.
The idea of investing a significant sum of money may be both thrilling and intimidating. There seems to be potential for considerable wealth increase with the correct strategy. How can one take advantage of the present market to grow one's retirement savings over time?
you should buy bonds not funds. in this rising interest rate environment, everyone who owns funds are suffering huge real losses. those that own the actual bonds can hold to maturity and realize zero real losses. Bond funds are dangerous and people don't know it...
I agree 100%. My only bond funds are in VWELX. The rest I have laddered myself. Bond funds/etfs lose money. Nothing safe about that. I'd rather hold cash.
Honestly, as you age you should ALSO be changing your asset allocation to be more conservative. So, maybe instead of targeting your retirement year .. you target your longevity year. For instance.. if you have a retirement plan to make your money last until you are 90 years old, and the year you turn 90 is 2060, then you could choose that year and the fund shifts for your longevity downcount.
All good intimation Rob. I was wondering if you have already discussed TIPS and TIPS funds. like VIPSX vs just buying TIPS directly. I'm mostly in VTSAX and BND but I'm looking to add TIPS to the bond side of my 60/40 mix.
I have a pension and 401k and am now retired. I made 42% last year with my 401k but I’m sure I can’t expect to make that much every year. I want to watch these videos to educate myself. I’m going to draw my social security now that I’m 62.
Great topic Rob, much appreciated! Do you or others have any feedback regarding the inability to manually rebalance following a withdrawal if all your eggs are in one strategy retirement fund? I'm currently looking at consolidating and simplifying my portfolio and torn between investing in either one "60/40 Balanced Index Fund" such as VBIAX or two separate total market Stock & Bond funds and perform the rebalancing myself. The unknown for me is how a "Balanced Index" fund allocates withdrawal distributions, do they pull the funds proportionally 60/40 ?
The problem with target funds is that they have too much in bond funds. Bonds are fine, but bond funds are a disater IMO. You have no control over the bonds in the fund, a good bond portfolio may return 2-3% on average but have the potential for 20% downside like in 2022.
Hey Rob great episode. I know it's not your Forte but would you consider doing an episode about Social Security and spousal benefits. There's a lot on the internet about this but I trust you the most
This works well if you aren’t taking distributions. But, I’m taking distributions, so I want separate asset classes in my portfolio so I can take distributions from the winners, rather than the losers or the average of the portfolio.
I like Vanguard but like to be involved, I keep it simple with Large Cap funds, CD ladders, money market/auto default VMXFF, balance and move things around a bit
Hello Rob from Canada. Canadas had similar funds (in etf form) for 3-4 years now from ishares and vanguard. The symbols are XEQT, XGRO, XBAL, XCONS. Switch the X's with V's for Vanguard's products. It's slightly more expensive than the ones you mentioned at MER of 0.2% but its very famous here!
I’m not a fan of the Vanguard life strategy funds because Vanguard for some reason uses the more expensive “investor” share class instead of admiral shares to make up the fund. It still is a generally fair price, but that choice makes me question the motives of those designing the funds.
There are several ETFs and you could construct your own allocation. It takes some research but there is lots of data available. CDs also are good now as a backbone income.
From what I see, VWENX returned only 3.72% over a 10 year span while SPY returned 160% over the same 10 years. VGYAX, since 2017, returned only 4.28%. Am I missing something? These Vanguard funds look terrible to me?
Hi rob, I had an interesting question. I am currently 23 years old and have watched almost all your videos. Is it better to save as much as possible of my paycheck since I am young or should I save a smaller amount now and then increase as I get older? I currently save 16% of my income for retirement with the goal of getting to 25% of my income but I only make 31,500$ a year. Is it better to hold off on this until I get a better paying job in the future or just dump as much as humanly possible now?
You didn't ask me, but I would say that if you have a 401k at least get the match. If you don't, try to throw some money in an IRA. After that, have an emergency fund and save for a house(if that is a goal). After that, get as aggressive as you can afford to get. The longer you're in the market, the more your money will grow(historically).
The earlier you get that money in, the better off you will be. Since your income is so small, your taxes are minimal. I would strongly suggest you invest in a ROTH IRA so that all your withdrawals in retirement will be TAX FREE.
The real question is, if you aren't putting it into savings, are you spending it? It would seem to me that no one could have enough savings, especially at your age. Emergencies happen and life happens and it is also really helpful to have learned to live a smaller life. Save on !
Great video love the content. I’m currently 55 years old and probably will retire between 62 and 65. I am a Fidelity customer and I don’t know if I am needing stocks or ETF now that paid dividends or do I don’t worry about dividends now and just worry about the growth I’m stuck in confused on where to go..
Rob, yet another excellent video. Thanks! Simplicity aside, I presume, however, that you still personally prefer the 3 fund approach....with the possible one or two fund addition?
Rob, i just don't like these funds for retirement because they are so limited in what you can invest in. like 20% in stock& 80% in bonds, what if we could enter into a raising interest environment for the next 15- 20 years. Your bond fund becomes trash. And stocks might not do well during inflation or high-interest rates. Where do you really go? Most of these retirement funds are not really prepared for what is coming up ahead of us. They did well in the last 40 years as interest drops but the next 40 years might not be the same.
Most of the choices are too conservative and overly invested in bonds........some even have high fees....read the advice from Buffet: Warren Buffet offered this advice. Before he dies, his family members should take the proceeds of his Will and invest 90% in the lowest cost Vanguard S&P 500 index ETF and 10% invested in short term government bonds.
I am retired with 2 pensions fortunately. I have 60% in cash mostly in a HYSA and 5% CDs. I have 2 ETFs in stocks and real estate which makes up the other 40%. I have no debt. Is that too aggressive? Thanks for the video
Too aggressive? No, I'd say way too conservative. We live off pensions and SS and don't need money from our IRAs. So we are invested like a long term investor, but keeping in mind RMDs. I'd say in the main IRA (rollover from husband's 401k), we have about 70% stock mutual funds, 20% in bonds within a balanced mutual fund, and about 10% in money market or CDs getting about 5%. Our Roths are all in stock funds. Just my opinion, of course.
Thanks for a helpful discussion! I have heard that after retirement and outside of an IRA putting your assets in an asset allocation fund has negative tax consequences so it is not a good idea. Do you agree and please comment/ explain this?
