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Hoodwinker posted:For clarity, the discussion you want to have is, "What happens if the market doesn't return 7% real return over a given 30 year period?" Yeah, that's where my planning's at. I assumed 2% return over interest over the next 30 years. I can weather a down market so long as the economy doesn't totally collapse, because that's a long way out and a pretty modest goal. I gotta stop looking at my portfolio though, the YTD return rate hurts.
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Mar 18, 2020 12:21
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YTD will end up being great when you look back at it, 2 months of really expensive buy ins yes but then 10 months of super cheap ones
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Mar 18, 2020 12:40
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Doccykins posted:YTD will end up being great when you look back at it, 2 months of really expensive buy ins yes but then 10 months of super cheap ones Unless you put all your non-emergency savings in VTSAX right before the crash, then you have nothing to buy with 
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Mar 18, 2020 12:54
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look we all know the bottom is april 31
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Mar 18, 2020 14:11
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KYOON GRIFFEY JR posted:look we all know the bottom is april 31 Yeah, that's the date everything bottoms out. Just like my bottle of lime juice from a few years back. 
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Mar 18, 2020 14:42
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all hail lime juice prophet
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Mar 18, 2020 14:44
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Ironically enough, the market timed me correctly for when I started maxing my 401k contribs, but not for my limp-sum retirement investment. Fake edit: keeping that typo. Also, considering changing that Vanguard account to be marked retirement and not non-retirement.
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Mar 18, 2020 16:25
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With the tax deadline being moved out, does that mean contributions to a Roth for 2019 are extended too? Fidelity is taking forever to link my credit union (still in prenote status) so I can drop my max in before end of the fiscal year.
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Mar 18, 2020 16:36
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Pollyanna posted:the market timed me
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Mar 18, 2020 16:36
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Pollyanna posted:Unless you put all your non-emergency savings in VTSAX right before the crash, then you have nothing to buy with
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Mar 18, 2020 16:50
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seiferguy posted:With the tax deadline being moved out, does that mean contributions to a Roth for 2019 are extended too? Fidelity is taking forever to link my credit union (still in prenote status) so I can drop my max in before end of the fiscal year. I wouldn't count on it.
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Mar 18, 2020 16:53
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Pollyanna posted:How do you expect to for sure make enough money to retire on in less than 30 years?
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Mar 18, 2020 17:09
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Thinking about doing some tax-loss harvesting. I have VTI (Vanguard total U.S. ETF) and VOO (Vanguard S&P500 ETF - which I'm holding as the result of prior tax loss harvesting back in December 2018), both in the red. I'm thinking about selling them both and putting the proceeds into ITOT (Blackrock iShares total U.S. market). But considering I already have ~50K of tax losses harvested, mostly from international indexes, I'm not sure whether it really makes sense to do more harvesting. I have enough losses to deduct the annual $3000 from income for what is hopefully the remainder of my years in the workforce, and after that it just cancels out capital gains, and I'll effectively have more capital gains because I've locked in a new, low cost basis for my shares. I could, at the prices this minute, lock in another ~30K of tax losses. Any thoughts about whether this makes sense?
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Mar 18, 2020 17:20
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Kylaer posted:Thinking about doing some tax-loss harvesting. I have VTI (Vanguard total U.S. ETF) and VOO (Vanguard S&P500 ETF - which I'm holding as the result of prior tax loss harvesting back in December 2018), both in the red. I'm thinking about selling them both and putting the proceeds into ITOT (Blackrock iShares total U.S. market). But considering I already have ~50K of tax losses harvested, mostly from international indexes, I'm not sure whether it really makes sense to do more harvesting. I have enough losses to deduct the annual $3000 from income for what is hopefully the remainder of my years in the workforce, and after that it just cancels out capital gains, and I'll effectively have more capital gains because I've locked in a new, low cost basis for my shares. I could, at the prices this minute, lock in another ~30K of tax losses. Any thoughts about whether this makes sense? It could make sense if you normally do things that could generate big chunks of (especially short-term) capital gains; like actively trading stocks, buying and selling investment properties, etc. Otherwise I don't think it makes much sense to reset your holdings of what are really just the whole US market regardless, just so you'll still have losses you can credit in 2050 or whatever. Also, just at this particular moment, the market can move very fast in one day, and it'll likely take you a day to make that sale and subsequent buy, yeah? But your exact tax situation this year and in future years is super relevant here, so I'd say this is the sort of question worth spending a couple hundred on a CPA/tax professional for, unless your tax situation is simple and going to stay simple forever. You might also consider checking in the tax thread.
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Mar 18, 2020 17:26
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Thank you. I don't actively trade and don't intend to generate any capital gains (until I'm selling shares in retirement, and by then they'll all be longterm and I won't have much/any other income). They're ETFs so they trade instantly, that's not a problem. I might get rid of VOO and buy VTI with the money because I'd rather hold total market than S&P500, but that's more about shifting my holdings to be exactly what I want instead of banking losses for the future. (I have a significant chunk of losses in VEA, Vanguard total developed international index, but I'm not getting rid of it simply because I'd rather hold that fund than any of the alternates)
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Mar 18, 2020 17:34
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Ralith posted:You're continuing to save more, are you not? Oh yeah, definitely. At the very least via maxed 401k contribs, and saving up for the 2021 IRA.
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Mar 18, 2020 17:51
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Curious from some of the older folks: Was the media generally the exact same during the dot com and housing crashes? We are even more connected now with more 24/7 news but I am guessing it was very similar. I was in high school and just out of college for those and just starting to invest in 2009 once I was able to access a 401k. I really didn't pay it any attention though, we had jobs, I was able to pay rent and bills, etc. Also curious on anyone's overall thoughts on the market? I have said for several years that I would welcome a 30-40% reduction and keep buying in at a discount for 30 years from now and I am staying the course. I haven't moved out of positions and I haven't changed my investment strategy. I also have a years worth of cash available plus credit if I had to. My whole company (all 13,000 of us) are working like normal, mostly remote. I am wondering how much of this is panic from the virus, how much is "the market was over valued", how much is a 4% reduction in GDP if EVERYTHING closed for 2 weeks (which isn't happening at all), how much is the gas price war, etc? Supply chains are kind of messed up and many people are being furloughed unfortunately but we kind of still have access to everything we NEED. I know none of us have the answer and if I am just going to keep on buying and holding at my risk tolerance for my age then the answers don't really matter.
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Mar 18, 2020 18:43
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My savings continue to get murdered by AGG, an ETF that is invested in 70% treasuries and government debt and 30% investment grade bonds. I have about 70% of my assets invested in this for the purpose of risk-aversion and I have more than double a dollar-loss from it than the much smaller percentage I have in stocks. The trading value of this ETF has been significantly under its NAV and it is currently at the same price that it was when the 10-year was 125 basis points above its current level (even after the recent rise in rates). I notice there was a similar drop in October 2008, so I am wondering if this is just a temporary issue with the way these securities are priced. Was I wrong to focus medium term savings on an aggregate bond fund, or is this a more unique market situation which will likely pass?
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Mar 18, 2020 18:45
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I didn't contribute to my 2019 Roth at all. Maxed it out an hour ago.
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Mar 18, 2020 18:56
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Not that old but I remember with the recession there were articles questioning if civilization would topple. Which seemed pretty alarmist to me given no one was dying, factories and farms still worked etc.
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Mar 18, 2020 18:57
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Cheesemaster200 posted:My savings continue to get murdered by AGG, an ETF that is invested in 70% treasuries and government debt and 30% investment grade bonds. I have about 70% of my assets invested in this for the purpose of risk-aversion and I have more than double a dollar-loss from it than the much smaller percentage I have in stocks. That seems kind of weird. I was under the impression that when rates got cut, the value of existing bonds would increase (and vice versa), since if you're holding a bond that pays 3%, it's much more attractive than a bond paying 2%. Also you expect to see bond values rise if money is fleeing stocks into the supposedly safer bond market. If these aren't happening, uhh, I'm at a loss, and I'd be curious on hearing an explanation from someone who knows more about this topic.
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Mar 18, 2020 19:09
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Kylaer posted:That seems kind of weird. I was under the impression that when rates got cut, the value of existing bonds would increase (and vice versa), since if you're holding a bond that pays 3%, it's much more attractive than a bond paying 2%. Also you expect to see bond values rise if money is fleeing stocks into the supposedly safer bond market. If these aren't happening, uhh, I'm at a loss, and I'd be curious on hearing an explanation from someone who knows more about this topic. Something like AGG holds all kinds of bonds including corporate and municipal. People pay less for bonds from Tesla and Las Vegas during a crisis because they are worried about defaults, so the value of those holdings goes down. Government bond prices trade on a free market and the prices aren't static based on a government rate, it's more complicated than that to include investor expectations of future rate changes and other things, so even in a normal market those don't work the way you described either. And during a crisis like this people panic and move from stocks into bonds, along with liquidity becoming an issue in general across the financial markets, which makes them do extra wonky things.
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Mar 18, 2020 19:14
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I know you hold short-term savings in HYSAs and not stocks, and long-term in your balanced retirement portfolio, but does that make medium-term savings (10-15 yrs) closer to 50/50 stocks/bonds?
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Mar 18, 2020 19:16
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spwrozek posted:Curious from some of the older folks: Was the media generally the exact same during the dot com and housing crashes? We are even more connected now with more 24/7 news but I am guessing it was very similar. I was in high school and just out of college for those and just starting to invest in 2009 once I was able to access a 401k. I really didn't pay it any attention though, we had jobs, I was able to pay rent and bills, etc. The media was incompetent as always. That part’s not different. Previous recessions (in my adult lifetime) were essentially financial in nature. They could be solved by printing more money, which the government does (which leads to the next bubble, rinse, repeat). Oil crashing is not a big deal for the US economy unless you are in the industry. Oil is cyclical, it happens. Even without the price war between Russia and Saudi it would have gone down from reduced demand due to social distancing. The main difference between this and “normal” bubble popping is this time the entire country is on lockdown. The entire nation is being told to stay home and not go to work or school. This has never happened in my lifetime. People who can’t work from home might get some kind of bailout but it will be not be sustainable long term. Credit companies won’t want to lend to them without a job. Supply and demand both fall due to fewer people working and spending money. Basically until this virus passes we’re going to have negative GDP. And it’s not just the US. It’s a global problem which makes it look more and more like the Great Depression. The good news is this, as with everything, is temporary. The virus will run its course. People will go back to school and work. The economy will rebalance to adapt to new realities. What isn’t guaranteed is the same ticker symbols will exist.
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Mar 18, 2020 19:25
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nelson posted:What isn’t guaranteed is the same ticker symbols will exist. The SP500 will almost certainly exist though and whatever ETF or mutal fund you have following it will be adjusting so you don't have to. This is the massive advantage to index fund and hold. You don't need to worry about a specific company going bust. So if you need to forget about your retirement account for 5 years while you deal with poo poo you can it just does the thing by itself.
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Mar 18, 2020 19:29
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Droo posted:Something like AGG holds all kinds of bonds including corporate and municipal. People pay less for bonds from Tesla and Las Vegas during a crisis because they are worried about defaults, so the value of those holdings goes down. I get why the rates have been volatile and why something like AGG may not perform as strongly as you would expect right now. Treasury rates have been all over the place with announcements of QE and fiscal stimulus, affecting supply and demand. Additionally, corporate rate spreads have been increasing dramatically as people shy away from risk. Finally, liquidity is drying up for some bonds as people are selling to raise cash, which can affect pricing of underlying assets. My question is more in regards to why it is dropping so much. AGG is off 10%+ from its high (and falling). Interest rates are still at or near record highs. The NAV of the ETF is still significantly higher than the trade price. This seems to be more a side effect of panic selling rather than this security representing its underlying index. E: I mean there is a 10-12bp rise on the 10-year today and AGG is off nearly 4%. This isn't normal behavior for this ETF and something seems off. Cheesemaster200 fucked around with this message at 19:37 on Mar 18, 2020 |
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Mar 18, 2020 19:30
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nelson posted:The media was incompetent as always. That part’s not different. Previous recessions (in my adult lifetime) were essentially financial in nature. They could be solved by printing more money, which the government does (which leads to the next bubble, rinse, repeat). That all makes good sense. Thanks for the response. I do think VTSAX will still exist though 
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Mar 18, 2020 19:38
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Same. I assume that if something does change, Vanguard will just transfer the value to the new symbols automatically.
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Mar 18, 2020 19:42
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Cheesemaster200 posted:E: I mean there is a 10-12bp rise on the 10-year today and AGG is off nearly 4%. This isn't normal behavior for this ETF and something seems off. AGG is not equivalent to the 10 year bond, because it includes corporate and municipal bonds which are risky and can trade more like stocks than bonds during a crisis. On top of that 30 year government bonds have been goofy/bubbly for a while now, and are quite a bit off their recent highs as well. If you look at Vanguard's BND the performance is similar.
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Mar 18, 2020 19:45
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Cheesemaster200 posted:I get why the rates have been volatile and why something like AGG may not perform as strongly as you would expect right now. Treasury rates have been all over the place with announcements of QE and fiscal stimulus, affecting supply and demand. Additionally, corporate rate spreads have been increasing dramatically as people shy away from risk. Finally, liquidity is drying up for some bonds as people are selling to raise cash, which can affect pricing of underlying assets. OK so one aspect of mutual funds to remember: NAV is calculated daily, after the close of the market, but ETFs float on the market all day. So if the underlying assets have plunged in value since last night's market close, you should expect the ETF to trade below its quoted NAV, but then see it trued-up after market close when the NAV is recalculated. I think. Anyway I think that explains the large deviation you're seeing on a chart. BND is also trading well below its quoted NAV.
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Mar 18, 2020 19:50
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Leperflesh posted:OK so one aspect of mutual funds to remember: NAV is calculated daily, after the close of the market, but ETFs float on the market all day. So if the underlying assets have plunged in value since last night's market close, you should expect the ETF to trade below its quoted NAV, but then see it trued-up after market close when the NAV is recalculated. There was an article in Forbes that AGG and BND are trading up to a 6% discount on their NAV due to liquidity issues. Essentially people are selling so much in the panic that the ETF cannot keep up to track the benchmark: https://www.ft.com/content/3d452b5c-a767-48ad-9b8d-ba3af7d54419 It is likely this will pop back up one sanity comes back to the market. If you look at 2008 it did the same thing. quote:AGG is not equivalent to the 10 year bond, because it includes corporate and municipal bonds which are risky and can trade more like stocks than bonds during a crisis. On top of that 30 year government bonds have been goofy/bubbly for a while now, and are quite a bit off their recent highs as well. If you look at Vanguard's BND the performance is similar. Cheesemaster200 fucked around with this message at 22:24 on Mar 18, 2020 |
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Mar 18, 2020 20:11
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That financial times article is behind a paywall, but yeah that makes some sort of sense I guess. Bonds are a weird beast. At one point I was super confused in part because some headlines report "bonds are up" meaning that bond yields are up, and others report "bonds are up" meaning bond prices are up... and these are completely opposite movements! And then you get people discussing bonds and not differentiating between buying actual individual bonds at auction, buying individual bonds on the secondary market, or buying bond funds which absolutely do not behave the same as just buying a bond. And then finally, sometimes when people refer to bonds they are talking specifically about US treasuries, and at other times, they're talking about the whole bond market (treasuries, corporates, munis). The jargon can be confusing to weigh through until you know enough about all of them that you can use contextual clues to know what a particular poster or article is actually talking about. Then there's the whole thing about how bonds can either be a safe haven for money when people are fleeing stocks... or they can be dumped when people are worried about solvency/defaults; there's the yield curve of treasuries and how it moves and what those moves forecast; there's the issue of sovereign debt and currency exchange and all the politics that apply there; and there's the tendency of governments and munis to borrow more heavily via bonds during both crises (to raise cash for stimulus) and booms (to fund excess government spending because exuberant legislators suddenly care a lot less about the national debt). tl;dr, bonds are crazy, I've read a lot and I still don't feel I have a firm grasp on bonds, and that's a little worrying when something approaching a quarter of my net worth is in bonds. 
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Mar 18, 2020 20:38
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Leperflesh posted:tl;dr, bonds are crazy, I've read a lot and I still don't feel I have a firm grasp on bonds, and that's a little worrying when something approaching a quarter of my net worth is in bonds.
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Mar 18, 2020 20:46
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seiferguy posted:With the tax deadline being moved out, does that mean contributions to a Roth for 2019 are extended too? Fidelity is taking forever to link my credit union (still in prenote status) so I can drop my max in before end of the fiscal year.
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Mar 18, 2020 21:50
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Hoodwinker posted:When I read The Big Short and discovered that for a long time the bond market was both crazier and more cut-throat than equities, that's the moment I knew that I really truly had no idea how bonds fit into things. I already knew I knew little, but that was the moment I knew I knew nothing. Stock traders are like the marijuana of traders. Forex traders are meth/coke/adderall. Bond traders are heroin by far the most insidious I only know a single person who does anything with bonds professionally and he strikes me as the most reserved person who undoubtedly has murdered someone or at least committed a string of light felonies, so that might color my opinion.
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Mar 18, 2020 22:10
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How many rounds of 223 currently equals one roll of toilet paper? Do you think this ratio will change in the short term as TP is being consumed in much greater quantities than ammunition? e: sorry I meant to put this in the short term investing thread
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Mar 18, 2020 22:31
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bird with big dick posted:How many rounds of 223 currently equals one roll of toilet paper? Do you think this ratio will change in the short term as TP is being consumed in much greater quantities than ammunition? My bidet is the buy and hold approach.
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Mar 18, 2020 22:32
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Leperflesh posted:That financial times article is behind a paywall, but yeah that makes some sort of sense I guess. The funny thing is that I previously had all this money in various individual treasuries, agencies and corporate bonds between 1mo-7y durations. However it became such a pain in the rear end to manage and some corporate bonds have zero liquidity even in good times. Therefore I moved it all over to an ETF back in December. If I would have just kept it like that I would probably be up like 10%... This whole episode is rather stinging for me since the bonds in my portfolio were supposed to be relatively stable and income-producing. Instead they are more of a negative effect on my portfolio than stocks. However I am thinking this will correct in the short term after the bond market gets its poo poo together.
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Mar 18, 2020 22:39
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Cheesemaster200 posted:The funny thing is that I previously had all this money in various individual treasuries, agencies and corporate bonds between 1mo-7y durations. However it became such a pain in the rear end to manage and some corporate bonds have zero liquidity even in good times. Therefore I moved it all over to an ETF back in December. If I would have just kept it like that I would probably be up like 10%... Yeah I definitely think this will correct. We're experiencing the hyperbolic leading crash edge of a much longer-term correction, and when the crazy movements calm down and people take time to assess, I think bonds stabilize a lot. And, I'm still 20 years from retirement, so I expect bonds to fully recover and then some in that timeframe. But this does serve as a reminder that while bonds aren't 100% correlated with stocks, they're not anticorrelated either; diversifying with bond exposure doesn't eliminate all market risk, it just mitigates a certain amount of volatility risk. e. Oh and I should add: your move from holding individual bonds, to holding a bond fund, was absolutely not an exchange of equivalent assets. When you buy individual bonds, you're locking in a yield that you can count on if you hold to maturity, with the only real risk being the risk of default from the issuer - similar to buying a CD, but with no FDIC insurance and a higher likelihood of default. But a bond fund is exposure to a market, and the risks include all the normal market risks; volatility being the most important. Of course you did become more diversified in your bond holdings, but I hope you fully understood that you were doing something significant there, not just buying diversification for free with no drawbacks. Leperflesh fucked around with this message at 22:52 on Mar 18, 2020 |
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Mar 18, 2020 22:46
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Gazpacho posted:The postponement applies only to the timely payment of income tax due on April 15. See if Fidelity offers a form for contributing by mail. Yeah if I don't see anything by the end of the week I was going to call and see if I can do a virtual check or one by mail. I'm assuming the hellworld is delaying it.
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Mar 18, 2020 22:50
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