We are talking about a self directed retirement plan here. Preservation of capital with some growth potential. Portfolio is heavily weighted in individual stocks, some mutual funds and cash. Account at major brokerage firm. I am thinking large amount in stock index fund with low fees like Vanguard, and liquidating most stocks. Thoughts??

I love the unloved that pay dividends. Kroger, Walgreens, Papa John's, Ford, GE among others. Hard to get in when mkt is a new high daily.

A modified dogs of the dow is basically what I do and I've used TD Ameritrade since it was TD Waterhouse. Bought my first stock in 1964, 8 shares of Eli Lilly. Still have it and thru splits and div re-invest it's over 1000 sh now. I've had some spectacular rides and I've rode some in the ground.

I read someplace that "melt up" is one of the terms most googled of late. Just buy a market tracking etf and let it rise with the tide.

I would suggest bonds, this is the go too for someone of you age, heavily weighted ~70% +/- for your risk tolerance.

If you are willing to put a majority of your money in a stock index fund, remember you are still gambling even in a blue chip or general market index fund.

The internet wasn't quite so big as when I use to do this for a living. Google asset allocation models and risk tolerance. I use to have a questionnaire that I would use with clients and it usually nailed down good asset allocation mixes for people. I am sure there is a free online version of similar now.

Bonds offer the worst of all possible worlds. The present return is next to nothing, when rates go up (which other way is there from here?), they decline in value leaving the beggars crossroad of enduring the below market yield or selling at a loss, and there is always the possibility of default and being treated like the red headed step child. The only thing worse is to put your wad into a safe sound proven investment that turns out to be a ponzi scheme.

I agree with getting out of individual stocks unless you have the interest, ability, experience and discipline to do the research and keep current, i.e. do the work of managing those holdings.

It is almost impossible to compare funds and pick one that will do better than the others. The index fund with lowest cost might be as good as any.

I have been in Realty Income for many decades. It is a REIT, pays a monthly dividend, owns thousands of triple net leased single tenant properties all over the place. It has worked for me and my family, but the future is just as murky as ever of course. https://www.realtyincome.com/Home/default.aspx. It’s not the only stock I own, but I’m heavily overweighted, as they say, and boy have I been glad, so far.

Are you still working and not touching the money? Or are you retired and living off the money? If you a still working maybe 40 percent stock mutual funds and 60 percent bonds. If you are living off that money you should be like 50 percent bond and 50 cash equivalent.

I use TD Ameritrade for trades and the Motley Fool for advice. I am about 75% stocks and 25% cash with my stock picks coming from the Fool's advice. I am 2 years retired and closing in on 70.

So Far, so Good
Mike

Working and drawing ss at 66. I want to continue to work for my sanity. There are some nice perks such as writing off my Medicare premiums, computer equipment, professional books and the like. Been working since age 14. Professional self employed. Cutting back some to four days.

Self educated on stocks. Never had a business course. Started watching Louis Rukeyser years ago, read WSJ daily and Barrons. Paid for two daughter college and graduate school out of stock market mutual fund investments started when they were born through dollar cost averaging.

quote:

Preservation of capital with some growth potential

IMO a Vanguard brokerage account would be excellent.

The Vanguard Wellington VWELX and Wellesley VWINX Income funds are two of the best balanced funds you can get and lots of other choices.

https://finance.yahoo.com/quot.../performance?p=VWELX

https://finance.yahoo.com/quot.../performance?p=VWINX

quote:

Originally posted by Skins2881:
Google asset allocation models and risk tolerance. I use to have a questionnaire that I would use with clients and it usually nailed down good asset allocation mixes for people. I am sure there is a free online version of similar now.

Schwab has the "Intelligent Portfolios" you can get some ideas, without signing up for an account.

With the financial condition of the world, bonds are the last place you want to be if you want to see your money again.

Look for sectors that are growing and get into a fund that represents that sector. Technology is one of the fastest growing sectors now.

Goldman Sachs chief Equity strategist said this morning that the equity markets are trading at a level that incorporates approximately 65% of the tax reform yet to be passed based on the current valuation multiples. Basically if Tax reform gets passed(depending on the final plan) the market will get a bump, if it doesn’t get passed we will see a drop all things held constant. May not be a good time for market entry when the market is at an all time high unless you are long term.

I agree with the mention of vanguard.

right or wrong I still believe in diversity in mix. As I get older I do have somewhat of equalish mix of stock and bond funds.

I do believe in the bond funds as a way to counter the loss in the event of some kind of a crash. And preserve a large part of my overall portfolio. That portion comes at the expense of growth in a bull market though. But I cannot take a huge hit at this point. So preservation is important to me.

Best of luck.

JALLEN has recommended "The Little Book of Value Investing" by Chris Browne as a starting point, and "The Intelligent Investor" by Ben Graham as a more advanced book about 1,000 times on this board. My undergrad is in Finance with a minor in Economics. However, I moved to the IT side of the house 15 years ago. But anywho... One of those book **I think** raised a point that I thought made perfect sense.

Say the stock market totally shits the bed and has a major correction. Say 35% + drop in value, or more. How long do you think it would take to recover from that? 5 years....7 years...longer? Once you come up with the # of years, think about what you need to withdraw every year to live on. $30k...$50k....whatever. Multiply that # by the # of years. Stick that dollar amount in cash or bonds. Invest the remainder in low cost index mutual funds, i.e. Vanguard, etc..., and spread it around...S&P 500, Russel 2000, etc... Re-baseline every year.

Doing this approach you will be much, much more heavily weighed in stocks than what the "experts" recommend. I did my calcs and it came to about 15% - 20% in cash/bonds, the rest in index stock mutual finds.

I will say I am EXTREMELY risk tolerant. My target # of years was 5 - 7. I've never been paid for my advice and it's worth what you are paying...nothing. Maybe I am wrong and this will cause you to go completely broke and live in poverty for your retirement. Use your own judgement.

Read both books, they are well worth the read. Graham's book is definitely a deeper dive.

quote:

Originally posted by old rugged cross:
I agree with the mention of vanguard.

right or wrong I still believe in diversity in mix. As I get older I do have somewhat of equalish mix of stock and bond funds.

I do believe in the bond funds as a way to counter the loss in the event of some kind of a crash. And preserve a large part of my overall portfolio. That portion comes at the expense of growth in a bull market though. But I cannot take a huge hit at this point. So preservation is important to me.

Best of luck.

Get Stan Weinstein's "Secrets For Profiting in Bull and Bear Markets".

https://www.amazon.com/dp/1556...f=pd_sl_9bdc4263k5_b

^^^^^
When the market breaks its 200 day moving average, you move stocks to cash and wait out the correction.

During the 80's it was easy to make money and we played Fidelity Select Funds and moved to their cash account when the market corrected.

Another good indicator is the new highs/new lows which got me out of the market about a month before the market crashed in 1987. It lost half its valve at the time.

I have the bulk of our savings in Vanguard spread around several funds but mostly Index 500.

I sleep well at night and I am not going to worry about whether I sold too soon or too late.

I do have enough to cover potential major expenses in a bond fund and a bit in a money market.

The reason for the bond and money market fund is to have money available which will not trigger a tax event if withdrawn. For example; I just replaced an AC unit and the place needs painting.

I suspect the market, I mean I KNOW the market will go up and down, but in general over the 50 years of savings there has been more up than down.

Everything I have read about annuities has made me think there are too many fees with them to be attractive to us.
If you are extremely risk adverse they can be an option but you will pay for the security..

Regarding Vangaurd index funds having low fees that is true but Fidelity's fees are actually lower if that is of interest to you.

A few years ago I moved one of our Fidelity accounts over into their professionally managed portfolios as a way to mitigate some of my more riskier accounts and their returns have been satisfactory ...

If you're looking for a balance of bond/stocks another option is the new trend of firms, including Vanguard, offering targeted retirement funds by target year. For example a 2035 fund is targeted for someone planning that approximate year to retire and the mix of stock/bonds is at a certain level and changes over time as you get closer. Fees are minuscule, but of course they are investing in their own funds with their own layer of fees. Still very, very low.

In my experience and looking at these I feel they are overly conservative by timeline for my goals and risk tolerance based on my actual age/retirement plans. I just selected the fund for the next later set of years by 5 or 10 years to shift that mix.

Maybe not the perfect solution, but does give another option to get professionals managing the details of the mix and individual investments at a low cost.

You guys have given me a lot to think about. I appreciate the help. Thanks

Age in bonds is a general rule of thumb. So, if you are 60-something, than 60-something % of your portfolio should be in bonds. If you have a pension (I don't mean Social Security) then your bond allocation can be less.

Google "asset allocation"

Also, visit bogleheads.org, the sigforum of investing (not stock picking). "Bogleheads emphasize regular saving, broad diversification, and sticking to one's investment plan regardless of market conditions. We follow a small number of simple investment principles that have been shown over time to produce risk-adjusted returns far greater than those achieved by the average investor."