quote:

Originally posted by ridewv:

quote:

Originally posted by RogueJSK:

Ah. Yeah, you need to take the additional step of using that money within the settlement fund to buy actual stocks/bonds/mutual funds.

....Split your investment either 80% stocks and 20% bonds or 60% stocks and 40% bonds, depending on your risk tolerance (more stock is riskier).....

60/40 might look like:
48% VTSAX
12% VTIAX
40% VBTLX

Many thanks for the suggestion, I'll work on figuring out how to get this done.

At Fidelity, they call the 'settlement fund' your CORE Position. You have a choice of multiple Money Market/Gov't Money Market Funds for any cash/funds not invested in any other vehicle that's part of your investment strategy (Mutual Funds, Bonds, ETF's, Stocks, etc). Fidelity's SPAXX is one such fund that's been returning 5%. Presumably Vanguard has similar options...

Yes, Vanguard's default settlement fund is VMFXX, which currently returns 5.1%. However, money market funds are not intended to generate significant returns, and yield goes up and down dramatically with interest rates. Over the last 10 years, VMFXX has only returned 1.2%, and SPAXX has only returned 1.01%. It's effectively a savings account, not an investment. It's intended to ensure you never lose any of the unused money you have just sitting in the brokerage account, and can cash it in dollar for dollar on any given day (regardless of market conditions) to purchase actual investments.

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Originally posted by Keystoner:
2023 became unbelievable from the end of October. Just ride what I have through 2024 or move positions to even more aggressive ones? Not trying to introduce politics into an otherwise apolitical topic, but what's the history of the stock market in election years? I'm afraid this particular election year will portend much differently.

Normally a Presidential election year is overall good. Emotion trumps facts every time. Eventually reality comes home to roost, but as we've seen for the last 50 years the politicians are able to kick the can down the road for a very long time.

I believe (predict, guess, divine from the coffee grounds in the bottom of my cup ....) that the economy will go into a true recession very soon. Based on facts and the underlying trends (consumer debt rising, consumer debt defaults, layoffs, inflation, etc).

However, and this is the lynchpin of the whole thing, the media will side with the Democrats and will therefore lie as much as they can about the economy. They will try to trick the general population into thinking the economy is doing really well.

For a long term investor, I think the strategy is to dollar cost average into well diversified investments. History says over a span of a decade it is better to avoid trying to time the market. If you're looking at maximizing your portfolio one year from now, that is a different story and, imho, very unpredictable this time around.

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Originally posted by 6guns:
A target date fund sounds like a great idea!

Long story short: only in a tax advantaged account (IRA, ROTH IRA, 401k, ROTH 401K, etc).

Long version: I thought a target retirement account sounded good too, and unfortunately bought in an aftertax account. I had thoroughly researched (e.g. looked at 10 years of dividends and tax implications) and purchased in May. In November of the same year, they published their annual list of dividends and I didn't read it as I wasn't going to revisit my holdings for a year. Unfortunately, Vangaurd had decided to screw their individual investors by creating an institutional version, and billions of dollars left the original fund. The last few days of December, I get a notification of a $28k dividend, and then find that my account value had decreased $28k. I had to pay tax on the $28k dividend so their decision cost me money as well as millions of other individual investors.

The good news is that you can replicate Vanguards Target Retirement funds as they're just comprised other Vanguard Mutual Funds (e.g. Total US Stock Market, Total International Stock Market, Total Bond Market, and Total International Bond Market), and even better replicate it with ETFs if you want to hold in an aftertax account. ETFs are typically more tax efficient than a regular mutual fund.

sIndeed. Even beyond the normal tax disadvantages of holding target date funds in a non-tax-advantaged account, someone at Vanguard really screwed the pooch with how they handle that particular issue in 2020.

I assume you're keeping tabs on the ongoing class action suits?

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Originally posted by CoolRich59:
The cumulative average for us is 4%.

We're retired and so are in more conservative funds. But, I'm still pretty underwhelmed.

ETA: I came up with 4% based on my calculations, but my Vanguard advisor says it's 14% for 2023.

I plan on spending a lot more time digging into this. But, seeing as how the S&P was up 24% for the year, even if 14% is correct, I'm still underwhelmed and may be moving to Schwab or Fidelity soon.

Look at how your portfolio is allocated.

If you're actively retired and are invested more conservatively, you hold a lower percentage of stocks than the usual 60-90% of younger folks, with most of your retirement portfolio almost certainly being in safer investments like bonds, money market funds, or TIPS, which didn't return anywhere near 24%. Allocation could be something like 30% stocks, 40% bonds, and 30% short term income.

So even if all of your stock holdings are in S&P 500 index funds, if only 30% of your total portfolio is stocks, then only 30% of your portfolio would be earning that 24% return of the S&P. The rest would be earning single digits, thus resulting in an overall return in the teens.

This isn't your Vanguard advisor doing a bad job. This lower percentage of stock holdings in a more conservative portfolio is intended to protect retired folks who are actively living off their investments from the volatility of the stock market and the prospect of losing 20+% in a year (like last year). But the flip side of that extra security from the conservative approach is that you won't benefit as much from the dramatic stock gains in good years like 2023.

Sure, you could fire your advisor, change brokerages, and invest 100% of your portfolio in the S&P 500 for 2024, hoping for a similar 24% return next year. But what happens if the S&P 500 returns -30% in 2024? Or we enter a true recession with negative returns over several years in a row, like happened 2000-2003 and 2008-2009? Your retirement takes a massive hit, and you may not have sufficient time left to recover in your lifetime, risking running out of money.

For an actively retired person, the prospect of a safe +5% to 10% is generally much better than a risky -25% to +25%. The time to get rich from actively growing your retirement with most of your portfolio in riskier stock investments with higher earning potential is before retirement, when you can absorb some big hits and still have years/decades to surpass them. Retirement is generally when you play it safe, at least with the bulk of your retirement fund.

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Originally posted by RogueJSK:
I assume you're keeping tabs on the ongoing class action suits?

Yep. In May, judge named lead counsel (Rosen) as 2 firms (Rosen and Dovel) couldn't stop fighting. In November, judge ruled against most of Vanguard's motion to dismiss.

quote:

Originally posted by RogueJSK:
For an actively retired person, the prospect of a safe +5% to 10% is generally much better than a risky -25% to +25%. The time to get rich from actively growing your retirement with most of your portfolio in riskier stock investments with higher earning potential is before retirement, when you can absorb some big hits and still have years/decades to surpass them. Retirement is generally when you play it safe, at least with the bulk of your retirement fund.

If the average retirement is 30 years, then much of a retiree's portfolio is indeed "long term". Some risk is ok with that timeline. Money needed sooner must be in lower risk. And, of course, the long term investments could go bad and then there's nothing out in the long term!

Honestly it is a tough nut to crack. The extreme volatility in every sector makes it challenging. My worst investment in the last 18 months is a TIPS fund. It paid dividends ok but the nature of a mutual fund means assets are sold at a loss when people bail out suddenly. Any mutual fund can do this. Algorithm trading and emotional investors create lots of risk in what should be pretty stable funds.

Imho, retirees should look out beyond maybe 10 years and have a balanced approach like they'd have pre-retirement. Anything closer than 10 years needs to be nearly risk-free, and any cash needed in the next 3 years should be totally risk free (as much as that is possible).

Also, today is one of those times when the various indexes are deceptive. The big market gains are only in a few stocks that did spectacularly and only in the last few months. If those few companies have a pullback it will then show a very large loss. Someone with a diversified portfolio might feel they got shafted this year with only a 5% gain, but next year they may feel like a hero for a 5% gain if Meta and NVDA drop 50%.

https://townhall.com/tipsheet/...tock-market-n2633013

'Wolf of Wall Street' Explains How Pelosi, Corrupt Politicians Get Rich In 'Rigged' Stock Market



video at:

https://twitter.com/i/status/1740862759477162304

quote:

Originally posted by RogueJSK:
Look at how your portfolio is allocated.

Thanks Rogue. You make a lot of good points. Our Vanguard advisor may be doing right by us. I need do a better job reviewing the allocation and understanding the funds he has us in.

(Referencing sdy’s post about the Wolf of Wall St) ^^^He also did Tucker Carlson’s podcast this week. It was a fascinating listen.

I tossed up my hands early in 2023 and gave over my self-managed investments to Fidelity. Much more conservative and very diversified. Portfolio is up about 10% overall. Had I stayed with previous investments (a lot of Apple stock, Amazon) I would have done much better. But I was afraid--like many others. The WSJ is saying no one expected the S&P 500 to do so well. I don't need to live on my IRA, hope to leave most to kids and grandkids; so I could have a longer timeline and have more invested in stocks. But it sure seems to me as if we're overdue for a severe recession.

Better this year than last. Let’s hope that trend continues.

I like big tech MSFT, NVDA & AMZN, also healthcare LLY and AMGN. I’d avoid energy and retail now except for COST. Many of these names are trading at or near 52 week highs and sport some high PEs; I’d recommend holding off initiating or adding to positions until we get a pullback. A 15% one in say NVDA next year is almost a given. Exercise patience grasshopper.

Seems I was a little off on my back-of-the-napkin calculations for annual return. According to the formal year end stats that are available as of today, I'm actually up 20%. Even better.

My 401k was 15.29% for the year.
I’m planning on retiring in 3 years and I can’t afford to lose, 401k and social security is all I get, I have no pension.

Very well.

quote:

Originally posted by RogueJSK:
Seems I was a little off on my back-of-the-napkin calculations for annual return. According to the formal year end stats that are available as of today, I'm actually up 20%. Even better.

I checked mine again today and was very pleasantly surprised from last week. YTD/1-year 33.57% I always like to look at "life of available data" (from 2008); that's 16.17% No complaints!

Our stock portion did fine, with VPMCX Vanguard Primecap being the main holding, but at 72 it is a smaller percentage of our total portfolio and will remain that way with capital preservation being a high priority. We should have enough to comfortably retire with no debt including home paid off and don't want to get too greedy at this point.

2024 will be an interesting year as Wall Street has already placed a big bet that inflation is well under control with many rate cuts to come though not one has actually happened yet, that risk of any recession is low, and that DC will somehow get spending under control. Will also be interesting to see how this long lasting inverted yield curve pans out.