Forget the whys and wherefores. What strategies are you guys taking IRT holding onto your money? I've got:
Aprox 70 percent in fairly conservative domestic stock market funds
Aprox 15 percent in a domestic bond fund
Aprox 15 percent in a fund specializing in overseas stocks
Just sit and hope for the best, or???
I'm just "set it and forget it" on my IRA and long term investment account. Keeping the same monthly contribution schedule.
Mostly, I'm just lazy and don't think I want to try to put the effort into managing accounts better than a robo-investor. I'm also smart and know that I can't manage these accounts better than a robo-investor.
If the market slumps, then my monthly contributions go farther.
For my investments, I just buy avocados on special and strategically shift some of my holdings to the fridge to delay the vesting period, but for you I think shifting to European stocks might make the most sense since they're not too close to the metaphorical blast radius and not highly dependent on any small number of key imports/exports.
In reply to Beer Baron 🍺 :
That's how we've looked at downturns over time.
The diversification should be part of the core structure of the funds. The balance between stocks, bonds, commodities, etc- is more a function of how far you are from retirement. And if people are a long way from retirement, then as long as you keep your job, downturns are great times to invest. The fundamentals of the economy will take generations to really change, if they ever will- we are a consumer economy- and the amount of stuff that has transition from luxury to nice have to needs have gone up over time. So people will eventually consume stuff.
Even after the COVID downturn, when we heard lots of people claim they were going to spend less and consume less, that pretty much evaporated pretty quickly.
Here's the problem I've always had with trying to time a downturn and recovery... By time I'm confident it's a real downturn, it's well on the way down. By time I'm confident it has really bottomed, it's well on the way back up. Subsequently, those two points usually end up shockingly close together... So it's ends up not really being wort the time, effort, and stress. I react too slow because I need too strong of an indication.
Of course, I've also known other people with the opposite problem... Ending up no better off by reacting too quick because they move on too weak of an indication.
Time in the market beats timing the market... So instead, I'll just keep buying the 'discount' on the way down.
My take is that I have to be right TWICE to time a downturn/recovery. I have a retired investment banker/college professor friend. When things took a big turn in '23(?) he told me he really thought he had put everything in place to prepare for it but still got smacked. What chance do I have of getting it right?
EDIT: I'm very S&P500 (SPY) heavy. I have a bunch of ETFs from a previous fiancial advisor but I think they are essentially "unwind SPY to look like I'm doing something".
In reply to mfennell :
I thought I was ready too. While S&P heavy, had branched into some great performing funds that also had much stronger records vs TSM/S&P through previous downturns... Except that time. LOL
mfennell said:My take is that I have to be right TWICE to time a downturn/recovery. I have a retired investment banker/college professor friend. When things took a big turn in '23(?) he told me he really thought he had put everything in place to prepare for it but still got smacked. What chance do I have of getting it right?
It's been studied and found that the professionals whose job it is to understand the markets and make good picks to actively manage investment accounts underperform the robo-manager systems. Those of us without that knowledge have even less chance.
Really the only way to beat the market is with insider knowledge, or having the opportunity to invest in lots of startups (because most will fail, but the ones that don't will make up for it).
I'm not too worried. Once the source of the downturn either gets his peepee slapped, or has driven the market down far enough to buy a bunch of bargains, it will come back better than before.
I'm 64, fairly conservative on my portfolio, and hopeful that all will settle out somewhere in the next couple of years.
Investments? You guys have investments?
Buy physical assets. Or cash everything out and take it to Vegas, probably have a better chance of winning that way.
In reply to RevRico :
Are you sure about that?
Now, if you have the room and the security to buy and store Porsche's or Ferrari's, that is generally a good plan, but most can't do that.
In reply to aircooled :
Those are cars, and while it may sound heretical to this group, cars are liabilities.
I mean actual physical assets ie: land, precious metals you can actually hold in your hand not pieces of paper that say you own it, animals (eh maybe a wash as far as asset v liability, but you can't eat a Porsche).
If you don't see the stock market as an overgrown slot machine, I can't help you though. It's been 112 years now, sooner or later the federal reserve is going to want their $35 trillion back and we've barely been covering the interest payments.
I had a small IRA from my first job ($3 to $4 K) that had done basically nothing for 10 plus years. I put it into a very aggressive growth fund (IRA transfer) around 1998 after I'd started a small investment account in the same fund and saw there was an IRA option. I then "forgot" about both of them as "they" tell you to and it worked out. The investment money is what it is and even with the recent pull back it's fine and will be there for "someday".
I did pull most of the IRA money out of the the growth fund back in December and transferred it into another much more conservative IRA I have. I felt the growth fund was probably about as far up as it was going to get in the short term and I'm 3 or so years from retirement. I'm not hating that decision right now but time will tell. I'll also admit that deciding to go back to work instead of calling it a career after being let go last June was a good one for me. I'd be a lot more concerned with the current volatility without a paycheck coming in every week.
I bought Games Workshop stock in 2019 and my Financial Advisor thought I was nuts.
Look to Euro stocks, especially in defense. I don't hold any other individual stocks right now, but I have a pretty healthy percentage of my IRA in International funds.
Time plus consistency wins again and again in the market.
if you were putting money away before then you keep doing it. If you have debt below the average rolling 18 month then you pay that down then use that to add more to the pile when you are done.
we are mostly all old enough here to remember the lack of gains in the 90s. We had a lost decade but still pulled 3-4% above inflation so we double our investments in 12 years not 5. What we have had is the anomaly not the norm. We are back at the norm.
don't get me wrong even with my very safe distributions I am down 300-350k in the last couple weeks. But I was up 22% for almost five years straight. So yeah not at the peak but better then standing in line for bread.
only 50% of people in the states even have money in the market. And the big sharks make us look like guppies. We eat at the bottom of the lake and emerge bigger year over year.
We are looking at a house tomorrow. If we buy it, we will turn the current one (which is paid off) into a rental. That's gonna make a big chunk of our stash significantly less liquid, but it's on 19 acres and they ain't making more land.
If I could do it again, 4 words would really have helped: Never sell real estate. With the exception of a house in Akron, every one that I sold appreciated hugely after I got rid of it. But that's nether here nor there.
So I guess that it's hold on for the ride time. If I bought Euro military stocks I can pretty well guarantee that the war would end the next day.
Consistently put money into a tax advantaged account invested in a low expense ratio (0.08% or less; VTSAX is 0.04%) fund. Total stock market, SP500, or a Target Retirement fund (but again, watch those expense ratios; Vanguard and Fidelity target retirement funds seem like solid ones in my experience).
I recommend this savings order - note that not all of them are available to everyone and sometimes the fees mean you should switch the order:
I used to favor Roth contributions, I have changed my tune and prefer traditional now UNLESS you're using the Roth IRA as an emergency fund - just keep good records of what you've contributed, as you can withdraw contributions at any age without penalty or taxes. Also got the backdoor Roth option, but there is a 5 year waiting period on that.
That's it. Don't overthink it.
RevRico said:
If you don't see the stock market as an overgrown slot machine, I can't help you though.
Hmm, and how has that mindset worked out for you, financially?
I have a set it and forget it mentallity. But it drove me nuts wondering if I could do better or worse or just something. SO I took my big lump and put it in a fidelity managed account. Sure it costs me a little over doing it myself, but thst little Bit was worth my sanity. Luckily i have just enough managed that im in their lowest bracket for cost. Something like .2% or something. Lat year it cost me 4K but I gained back a bunch of time and sanity.
that is all
Since I am turning 70 next week my strategy is very conservative. A 2008 type crash would take longer to recover from than I may be breathing. And that graph from 65 to 85 looks even worse to me.
I pulled out of the stock market in Nov, bought long term CDs and a fifth of scotch. Have been tracking what I was in and getting out was a good idea. Turmoil in the market is not good, the tariff spin the wheel game is helping no one. I am very happy sitting on the sidelines for a while. The only thing I am considering right now is more physical gold. Stuff bought in '17 and '19 has earned me 9% annual, which is not great but considering the risk not shabby. And if the market tanks the value goes up fast, if the market takes off it rarely drops by much. Guns and gold, helps you sleep at night.
mtn said:Total stock market, SP500, or a Target Retirement fund
+1 to your whole post. This part... Target Retirement assumes you are burning down principal in retirement. If you aren't, you can stay the total-market route.
porschenut said:Since I am turning 70 next week my strategy is very conservative. A 2008 type crash would take longer to recover from than I may be breathing. And that graph from 65 to 85 looks even worse to me.
I pulled out of the stock market in Nov, bought long term CDs and a fifth of scotch. Have been tracking what I was in and getting out was a good idea. Turmoil in the market is not good, the tariff spin the wheel game is helping no one. I am very happy sitting on the sidelines for a while. The only thing I am considering right now is more physical gold. Stuff bought in '17 and '19 has earned me 9% annual, which is not great but considering the risk not shabby. And if the market tanks the value goes up fast, if the market takes off it rarely drops by much. Guns and gold, helps you sleep at night.
If you use the "4% plan"- where your use is 4% of your total funds, 9% means it grows more than you are using- which is really good. We target 5% for planning of using it.
Kreb (Forum Supporter) said:If I could do it again, 4 words would really have helped: Never sell real estate. With the exception of a house in Akron, every one that I sold appreciated hugely after I got rid of it. But that's nether here nor there.
So I guess that it's hold on for the ride time. If I bought Euro military stocks I can pretty well guarantee that the war would end the next day.
One downside of real estate is property taxes. Here in Michigan, the property that isn't your primary residence gets taxed at a higher rate than your home, which really is tough. Every 1% in taxes takes away from the value growth- but has to be paid live as opposed to realizing real estate gain only when you sell.
As an income source, that can easily be dealt with, though. Given that many rentals are owned by large corporations, it does show that it's a good income source.
RevRico said:If you don't see the stock market as an overgrown slot machine, I can't help you though.
Sure. The stock exchange is like a giant casino. And holding long term, diverse portfolios is like betting that the house is going to win.
You'll need to log in to post.
