And as you get closer to retirement start moving them into more fixed income. I don't know if the same options are available in the states, but in Canada Vanguard, Blackrock and others offer broad market index funds that have risk profiles that you can move through as you get close to retirement, allowing you to slowly pull out of equities and move into bonds. You shouldn't be 2 years from retirement and still 100% into equities.
Yeah. Although there is some percentage of people who don’t or just don’t want the mental overhead relative to dealing with stuff they actually care about.
I’m not sure the target date funds are worth the management fees but I know people who use them because they are theoretically fire and forget. If you’re more active you can and should absolutely slowly move out of equities into more bonds and money market. (And can have managed IRAs based on age and risk profile as well.)
It depends on the vehicle. My financial advisor is relatively high but provides other services. My self-managed stuff is lower. And a couple of things that pay out as annuities that can’t really compare.
Oh absolutely, the advice I commonly hear (and agree with) is to have 2-3 years in cash or equivalents when you are planning to retire. That's in addition to significantly switching out equities for more stable investments in the invested portion of your retirement.
If you don't know what you're doing then stick to target date funds which automatically rebalance the asset mix to reduce risk as you approach retirement age. The fees might be slightly higher than index funds but on most retirement plans the extra cost is minuscule.
As sane of a suggestion that is, SPY index fund dropped a huge amount because the whole market dove. Not everyone can plan on suddenly missing 20% of their savings.
The people who cannot suddenly lose 20% should not be so heavily into equities. If you're getting close to retirement, your portfolio should be heavily things like bonds and treasuries.
So that reason is exactly why the person you're replying to said what they said. The OOP said: "If you don't know what you're doing stick to index funds, buy and hold." which is clearly not great advice unless you're under the age of 30
They are mostly equities and riskier investments early on, then auto-adjust to lower risk dividend stocks and treasuries when you are closer to the target fund date to support pulling out money every month to live on.
They also tend to have higher fees and a smaller return than managing it yourself with index funds and bonds. But for people that don't want to do that it is a good option none the less.
Truly private companies I respect their choice, but this just feels off that companies "stay private" yet you can wheel and deal in shares or similar with them, and they raise capital, etc.
This is what the stock market is for.. yet it now feels like that's just what you do to cash out and dump the business on the rest of the market.
General advice, index funds are the place to start unless you have special expertise. But as you get older you need to move into increasingly conservative investments. When you are 80 you will not live long enough to recover your losses from a market crash... so money markets, CDs, bonds, etc.
In general, for a given especially senior age, it also depends on your portfolio. If 4% or whatever inflation-adjusted amour puts you in good stead, you probably shouldn’t be betting more than a modest amount on significantly higher returns.
It’s a full decoupling of number 1 and number 2 economies in the world - of course it’s messy. If you can’t stomach the turbulence, stay in safe instruments
