|
Cacafuego posted:Is there any info from people who rode out the market in their retirement accounts over the 2008 recession and kept everything in place? After everything bottomed out, did it all climb back up with the recent stock market highs? Pretty sure MOST people did that, actually. Why wouldn't they? The lost value in the shares you've bought is only well and truly lost when you sell the shares. Your losses aren't "real" (hence the term "realize" when talking about losses/gains) until you sell what you've bought. Your portfolio value tanking is only an imaginary number that doesn't matter because you are not going to sell anything.
|
#
?
Mar 24, 2017 15:47
|
|
|
|
| # ? Jun 9, 2024 15:23 |
|
|
I'm not old enough to have any investments from that time but my parents rode it out just fine. They're getting ready to retire soon now. There's plenty of retrospective analyses of the various peaks and valleys of the market and there basically isn't a time when you hold for long enough where you don't come out at least somewhat ahead.
|
|
#
?
Mar 24, 2017 15:57
|
|
|
I had like 3 or 4 years of Roth IRA contributions from that time, and yeah, they've rebounded just fine.
|
|
#
?
Mar 24, 2017 17:07
|
|
|
Cacafuego posted:Is there any info from people who rode out the market in their retirement accounts over the 2008 recession and kept everything in place? After everything bottomed out, did it all climb back up with the recent stock market highs? Myself, I had what I realize now is a small amount of money, but at the time seemed like a lot. I had about $40k at the peak, and fell to $20k at the bottom, and it definitely sucked, but I'd been reading various books and intellectually understood that this was a good thing. I upped my contributions and rode it all down into hell. I was fully recovered pretty quickly. Because you're dollar cost averaging continuously right down into the bottom, once it recovers even a little, you get fantastic results. It doesn't have to return to the previous highs for you to fully recover. I had one friend who pulled it all out into cash in some misguided attempt to time the market. He didn't recover very well and he's now strictly an index fund and rebalance forever guy. I also worked with a lot of people who were close to retirement at that time, so this was a big topic at the office. It delayed retirements for quite a few people, but the guys who stayed the course were fully recovered within a couple of years, and they are more than fine now. My parents are in that boat as well. Lots of the guys who put off retirement are now retired, and probably slightly better off than they would have been to be honest.
|
|
#
?
Mar 24, 2017 17:27
|
|
|
paternity suitor posted:I also worked with a lot of people who were close to retirement at that time, so this was a big topic at the office. It delayed retirements for quite a few people, but the guys who stayed the course were fully recovered within a couple of years, and they are more than fine now. My parents are in that boat as well. Lots of the guys who put off retirement are now retired, and probably slightly better off than they would have been to be honest. This is where being more bond-heavy is good, because you can sell your bond assets while waiting for anything you still hold in stocks to recover.
|
|
#
?
Mar 24, 2017 18:06
|
|
|
totalnewbie posted:Pretty sure MOST people did that, actually. For others though they might have held significant positions in say, Lehman Bros or Merril Lynch or any one of hundreds of other businesses that tanked and never recovered and that money be gone. For older generations 'safe investing' was to have 10-15 long positions, for that style of investing I can easily see panic set in due to fear of a systemic risk and trying to get something, anything out.
|
|
#
?
Mar 24, 2017 18:16
|
|
|
Oh yeah, I thought about putting in a caveat for that, but at that point, it doesn't matter if you hang on or sell because your losses are so complete that it's all the same, anyway. But that's exactly the reason people advocate for index funds, so that if Coca-cola ever collapses, you won't even notice.
|
|
#
?
Mar 24, 2017 18:21
|
|
|
As more and more people embrace broad market indexes, active or passive, and come to understand that a failure in a small portion of the market is no cause to sell I wonder if deep prolonged crashes will be damped out somewhat. Sure, there are always going to be speculators willing to short something, it's a necessary function of price controls, but as long as it doesn't spread to general panic, eh, so what? A major segment collapse is only going to have a few points dip in a total stock market fund.
|
|
#
?
Mar 24, 2017 18:37
|
|
|
Murgos posted:As more and more people embrace broad market indexes, active or passive, and come to understand that a failure in a small portion of the market is no cause to sell I wonder if deep prolonged crashes will be damped out somewhat. Sure, there are always going to be speculators willing to short something, it's a necessary function of price controls, but as long as it doesn't spread to general panic, eh, so what? A major segment collapse is only going to have a few points dip in a total stock market fund. Eh the broad market tanked pretty badly in 2008.
|
|
#
?
Mar 24, 2017 18:44
|
|
|
That is something though, with less active management to move prices around, volatility could decline. You wouldn't have as many active managers pushing a stock that they think is over/undervalued, so there would be fewer people looking for the next Enron level accounting scandal if the index funds will hold it anyways when they make their short thesis. On the flip side, index funds would n't be buyers in that case, so you could see an increase in volatility if there aren't buyers when someone wants to panic sell.
|
|
#
?
Mar 24, 2017 18:52
|
|
|
monster on a stick posted:Eh the broad market tanked pretty badly in 2008. Eh, equity index fund market share was around 16% of the market in 2008. It was up to around 34% in 2015. I've seen it posited that the huge growth is because of what are seen as the strengths of a broad market fund to that style of event. But still only 1/3rd of the total AUM is in indexes, and of that 1/3rd only about 40% is passively indexed. So, I think there is still a ways to go before rock like stability is achieved. Although some (active stock pickers) contend that as liquidity dries up due to so much 'long money' just sitting still volatility will increase. A lot of other people (Bogle, Vanguard etc..) have pretty much poo poo all over that hypothesis though. Personally, I think that kind of volatility is just noise and should be pretty easy to filter out.
|
|
#
?
Mar 24, 2017 20:09
|
|
|
Cacafuego posted:Is there any info from people who rode out the market in their retirement accounts over the 2008 recession and kept everything in place? After everything bottomed out, did it all climb back up with the recent stock market highs? I'm 52 and have been steadily investing in my accounts for 25 years. I will have enough to retire at 55, but might work to 60 for reasons ($$$). I left my cash in the stock market and kept buying. My mix of funds has changed because the company changed providers and I am currently 100% in vanguard target retirement funds.
|
|
#
?
Mar 24, 2017 21:47
|
|
|
That poo poo makes me tear up.
|
|
#
?
Mar 24, 2017 21:53
|
|
|
Ropes4u posted:I'm 52 and have been steadily investing in my accounts for 25 years. What has the majority of your career been in? Congrats on approaching financial independence 
|
|
#
?
Mar 24, 2017 22:09
|
|
|
Michael Scott posted:What has the majority of your career been in? Congrats on approaching financial independence Power industry, good benefits, love the work, but the work life balance can be ok to terrible.
|
|
#
?
Mar 24, 2017 22:25
|
|
|
As in power generation?
|
|
#
?
Mar 24, 2017 22:29
|
|
|
It's an interesting question - do believers in passive low cost indexing stick to their investment strategy with more conviction than active investors in a long tail event like 08. Given human nature, I'm skeptical. They might do the age old sell low buy high thing but with fixed income etfs replacing broad market etfs.
|
|
#
?
Mar 25, 2017 00:36
|
|
|
I think it's plausible that passive investors keep with their strategy more because they are by definition more passive. There's not much of a reason to look at your money if you're a passive investor and if you don't look at it, then you won't mess with it. I can guess approximately how much I have in my retirement accounts because I rebalance every other year, but if the actual number is half that or double that, I wouldn't be surprised. I know we had a recession in 2007-09, but I have no clue how much money I lost during that time. Edit: Honestly, it's quite liberating to not give a poo poo while your coworkers bitch and hoard gold coins. potatoducks fucked around with this message at 01:06 on Mar 25, 2017 |
|
#
?
Mar 25, 2017 00:53
|
|
|
Considering issues like glide path and rebalancing, I'm not necessarily sure I agree with you. In fact, target date retirement funds have been tinkering around with their equity fixed income mixes and glide paths to skew more towards equity due to perceived underperformance in recent years. Similarly, it's a bit funny to see people here talk about 90-100% equity allocations for people up to theirs 40s whereas I suspect people would have been a lot more conservative in the noughts due to mediocre equity returns. And I suspect people are less likely to stick to prior plans to rebalance towards fixed income over time due to the bull markets. Our minds are wired with cognitive biases that prime us to be poor investors.
|
|
#
?
Mar 25, 2017 01:16
|
|
|
Saint Fu posted:As in power generation? Yes. I work for a large utility / independent power producer.
|
|
#
?
Mar 25, 2017 01:24
|
|
|
Throwing another anecdote on the pile here. I switched careers in 2006 and was just getting back to "normal" IRA contribution levels in the crash. I lost a lot of value, but my contributions in 2008-09 are now worth 2-3 times what I put in and I'm ahead of where I would have been overall. I also bought a house in the double-dip and now those prices have recovered, so all in all it was a pretty good time to throw money at things. If I had been set to retire in 2010 I would have been a lot worse off, but on the other hand if I had been getting close to retirement I wouldn't have had 95% of my retirement funds in stocks....
|
|
#
?
Mar 25, 2017 22:10
|
|
|
As someone who hasn't been investing long enough to experience a big downturn, these stories are very helpful! Keep 'em coming.
|
|
#
?
Mar 25, 2017 22:32
|
|
|
pokeyman posted:As someone who hasn't been investing long enough to experience a big downturn, these stories are very helpful! Keep 'em coming. There is absolutely truth to this article when you're talking about retirement investing: http://www.businessinsider.com/forgetful-investors-performed-best-2014-9 I basically don't look at my retirement accounts beyond the monthly summary Future Advisor sends me.
|
|
#
?
Mar 26, 2017 19:21
|
|
|
A few weeks ago I rebalanced my Ira. I was watching the price of the etf I wanted to buy and was trying to time it. Then I remembered my time frame was 30+ years and I clicked buy. I am a professional in the securities industry and even I got fooled by my brain for a while. My advice is to find a nice place that auto rebalances and has low fees and then just ignore it unless you are changing your time line or objectives. Don't look at it. Just forget the login and only follow up on it once a quarter or so. And if the market crashes because Trump did something stupid remember that you still have many years until you need that money and don't do anything.
|
|
#
?
Mar 27, 2017 00:16
|
|
|
My 401k just added VIMAX as a fund option. Should I be making any changes to my current holdings or investment direction?Current 401k posted:RERGX (large cap growth): 92 shares, $4553 value Outside of my 401k, I was just gifted 200 shares of Prudential. I was thinking about selling them in favor of either splitting it percentage-wise across my brokerage portfolio, or just dumping it into VTSAX. Given bond performance I'm more keen towards spreading it proportionally across the stock side of things, or at least putting 80% into the proportional split and 20% into bonds. I'm open to suggestions, though. Current Brokerage posted:VBLTX (long-term bond): 1125 shares, $15336 value I can post my IRA if that's useful - my wife and I have both maxed out for 2016, and I'm open to using the PRU to max us out for 2017 and put the rest towards whatever brokerage option ends up being useful. My brokerage account is just there to grow in value, I have no immediate objective. The house is in good shape, we have more than enough in savings to exist for 6 months or thereabouts, no need for cars anytime soon, etc.
|
|
#
?
Mar 27, 2017 15:00
|
|
|
I need some help knowing where to stick my money. I'm a US gov employee under the FERS retirement system. Last year I just put as much money as I could afford towards a Roth IRA in my TSP account. I got a raise this year and now I can pass the Roth cap. I assume I should max the TSP up to the cap with the traditional IRA, but what then? The only other investment vehicles I know about are stocks, bonds, and CD laddering. I want a good retirement and I'm willing to pour most of my salary into it, but I'm not money minded enough to do too much more than just parking it somewhere so I'm looking for easy to manage if possible. Also, I understand that the Roth IRA contributions are taxed on the way in so I actually need to put in more than the $5500 cap. I'm not sure how to determine what taxes I need to consider.
|
|
#
?
Mar 27, 2017 15:57
|
|
|
MJP posted:My 401k just added VIMAX as a fund option. Should I be making any changes to my current holdings or investment direction? Decide on an asset allocation and then follow it across all your retirement accounts. VIMAX can be used with VINIX and VsMAX to approximate the total market. Why do you have RERGX and MWTIX? The former doesn't fit in a normal asset allocation matrix and both have high expense ratios. Why do you have a mix of individual funds and a target retirement fund?
|
|
#
?
Mar 27, 2017 16:03
|
|
|
asur posted:Decide on an asset allocation and then follow it across all your retirement accounts. VIMAX can be used with VINIX and VsMAX to approximate the total market. Why do you have RERGX and MWTIX? The former doesn't fit in a normal asset allocation matrix and both have high expense ratios. Why do you have a mix of individual funds and a target retirement fund? Long story on the latter question. Basically, I had a financial advisor, I got lousy returns, read the pamphlet version of The Four Pillars of Investing, and struck out on my own. I'm hanging onto the target date fund to allow growth over time, but in case I don't spend from the brokerage account it'll help my retirement. My 401k has a pretty limited selection of funds. I posted the list some time ago and what I have is about as good as it got at the time. Hence why I want to see about reallocating into VIMAX now that it's available. Should I shift anything into VIMAX from the 401k?
|
|
#
?
Mar 27, 2017 17:21
|
|
|
Question on what will be our upcoming 403(b) choices. I'd ideally like a 80/20 stock/bond split, with the stocks split as 60% domestic, 35% international, and 5% REIT, with a tilt to small value on the domestic side. However, our 403(b) choices, while having great domestic options, don't have very low cost international or bond funds. What do you guys make of this? Domestic Equity - MFS Value R6 (MEIKX): ER 0.51 - American Funds Fundamental Inves R6 (RFNGX): ER 0.31 - TIAA-CREF Growth & Income Instl (TIGRX): ER 0.43 - Vanguard Institutional Index (VINIX): ER 0.04 - American Century Select Instl (TWSIX): ER 0.79 - JP Morgan Large Cap Growth R6 (JLGMX): ER 0.60 - TIAA-CREF Mid Cap Value Instl (TIMVX): ER 0.42 - Vanguard Mid Cap Index (VMCIX): ER 0.07 - Blackrock US Opportunities Instl (BMCIX): ER 1.02 - Prudential QMA Small-Cap Value (TASVX): ER 0.73 - JP Morgan Small Cap Equity (JSERX: ER 0.80 - Vanguard Small Cap Index (VSCIX): ER 0.07 - Vanguard Small Cap Growth Index (VSGAX): ER 0.08 - Parnassus Core Equity Institutional (PRILX): ER 0.60 International Equity - Harbor International Institutional (HAINX): ER 0.76 - Virtus Emerging Markets Opportunities (HIEMX): ER 1.33 - Virtus Foreign Opportunities (JVXIX): ER 1.18 Other - Invesco Real Estate R5 (IARIX): ER 0.87 Bonds - BlackRock High Yield Bond (BHYIX): ER 0.61 - JP Morgan Core Plus Bond R6 (JCPUX): ER 0.40 - Metropolitan West Total Return Bond (MWTSX): ER 0.38 Target Date - T. Rowe Price: ER 0.59 - 0.76
|
|
#
?
Mar 27, 2017 18:29
|
|
|
Chu020 posted:Question on what will be our upcoming 403(b) choices. I'd ideally like a 80/20 stock/bond split, with the stocks split as 60% domestic, 35% international, and 5% REIT, with a tilt to small value on the domestic side. However, our 403(b) choices, while having great domestic options, don't have very low cost international or bond funds. What do you guys make of this? Do you have 401k/IRAs/taxable accounts that you can use to buy international/REITs/bonds?
|
|
#
?
Mar 27, 2017 18:35
|
|
|
I think you just take the low expense ratio and rebalance with your IRA or a taxable account.
|
|
#
?
Mar 27, 2017 19:09
|
|
|
-Zydeco- posted:I need some help knowing where to stick my money. I'm a US gov employee under the FERS retirement system. Last year I just put as much money as I could afford towards a Roth IRA in my TSP account. I got a raise this year and now I can pass the Roth cap. IRAs are totally separate from TSP, do you mean you are making Roth TSP contributions? Roth IRA contributions are made from normal post tax income, the $5500 cap is the actual amount you can put in. You just pay normal income tax on that money when you file.
|
|
#
?
Mar 27, 2017 19:09
|
|
|
MJP posted:Long story on the latter question. Basically, I had a financial advisor, I got lousy returns, read the pamphlet version of The Four Pillars of Investing, and struck out on my own. I'm hanging onto the target date fund to allow growth over time, but in case I don't spend from the brokerage account it'll help my retirement. Are you trying to approximate the total US market? If so, it's 81% VINIX, 4% VIMAX, and 15% VSMAX.
|
|
#
?
Mar 27, 2017 23:34
|
|
|
totalnewbie posted:I think you just take the low expense ratio and rebalance with your IRA or a taxable account. There's a Roth IRA that we can use, but over time it would likely not be enough to keep the allocation close to goal over time. Also, we'll probably use the 457 too, which has the same choices as the 403(b), so over time they'd likely be the dominant parts of the portfolio. Without good bond/international options, they'd just end up being much smaller parts of my portfolio than I'd like, unless I just take the hit on the ERs. Maybe I can lobby them to get Vanguard's international and bond funds in there after I get there. Could certainly be worse.
|
|
#
?
Mar 28, 2017 01:07
|
|
|
Today was a good reminder that BFC is an echo chamber of (good, correct) ideas, and the outside world is full of raving lunatics. A lunchroom discussion at work about retirement savings turned in to my entire office nodding their heads in agreement that "ya gotta put your money in real estate so you got control over the risk" and "it's all about knowing people who can invest your money into the right businesses" BRB have to go kill myself to restore calmness to my brain
|
|
#
?
Mar 28, 2017 01:29
|
|
|
GoGoGadgetChris posted:Today was a good reminder that BFC is an echo chamber of (good, correct) ideas, and the outside world is full of raving lunatics. A lunchroom discussion at work about retirement savings turned in to my entire office nodding their heads in agreement that "ya gotta put your money in real estate so you got control over the risk" and "it's all about knowing people who can invest your money into the right businesses" And that's better than some, since people are saving/investing at all!
|
|
#
?
Mar 28, 2017 02:18
|
|
|
pig slut lisa posted:And that's better than some, since people are saving/investing at all! Oh yeah, the icing on the cake is that most of these people don't actually DO any saving, because "I need my whole paycheck to survive" or "You wanna be the one to tell my wife we can't eat this month because I wanted to do a four oh one kay?" Another guy prioritizes his two kids' 529 plans above any retirement savings, which seems crazy, but he's at least doing some form of Not-Spending-All-His-Money.
|
|
#
?
Mar 28, 2017 02:21
|
|
|
Tyro posted:IRAs are totally separate from TSP, do you mean you are making Roth TSP contributions? Ahh, I misunderstood what the TSP was. I thought it was just a program that contained a traditional and Roth IRA. Yes I am making Roth contributions to my TSP at the moment. The caps on a Roth IRA aren't connected to the Roth cap on a TSP are they?
|
|
#
?
Mar 28, 2017 02:24
|
|
|
-Zydeco- posted:Ahh, I misunderstood what the TSP was. I thought it was just a program that contained a traditional and Roth IRA. Yes I am making Roth contributions to my TSP at the moment. The caps on a Roth IRA aren't connected to the Roth cap on a TSP are they? Traditional IRA and Roth IRA are individual accounts not associated with your employer. You take your income and invest up to $5500 a year as you see fit (BFC consensus is Vanguard index funds). Then you declare on your taxes what you did with the money, whether it's in a Traditional IRA where you don't pay taxes on that income now but pay taxes when you withdraw, or Roth IRA where you pay taxes on that income now and don't pay when you withdraw. They have nothing to do with TSP or 401(k) or 403(b) or SIMPLE IRA or anything else that comes from your employer. CannonFodder fucked around with this message at 03:09 on Mar 28, 2017 |
|
#
?
Mar 28, 2017 03:07
|
|
|
|
| # ? Jun 9, 2024 15:23 |
|
|
Chu020 posted:There's a Roth IRA that we can use, but over time it would likely not be enough to keep the allocation close to goal over time. Also, we'll probably use the 457 too, which has the same choices as the 403(b), so over time they'd likely be the dominant parts of the portfolio. Without good bond/international options, they'd just end up being much smaller parts of my portfolio than I'd like, unless I just take the hit on the ERs. Maybe I can lobby them to get Vanguard's international and bond funds in there after I get there. Could certainly be worse. My personal opinion is that the lower ERs outweigh the benefits you get from having the perfect allocation. As long as you're able to rebalance in some way with your Roth IRA, I think you're fine. Others who want to disagree are probably more right than I am.
|
|
#
?
Mar 28, 2017 03:26
|
|