Madeline wrote:Just found your website ... have had no help from Fidelity advisors who tell me just to put our entire portfolio in their Target date fund and won't recommend specific funds.
I think you are being unfair to Fidelity. I think they did
recommend "a specific fund," and I think well of them for doing it. They were
being helpful. Since you sound risk-averse and I personally am risk-averse too, most fund companies' target-date funds might have more stocks in them than you and I would be comfortable with, and it might have been more helpful if they'd gone over that with you, though.
We started investing very late in life ...our fifties after kids were done with college. So many people on this site have like a million dollars. where should I put about $75,000 cash to start?
Life is what it is. $75,000 ain't hay.
But by the time we get to our sixties we've pretty much got what we've got. The one thing you must not
do is make some panicky search for some magic investment that will "put your retirement back on track" and grow that $75,000 to $750,000. That could be a serious danger. And don't beat yourself up about sitting on cash for fear of losing what you've accumulated, what's done is done and that's not
by any means the worst mistake you could have made.
Make no mistake about it, any stock market investment is going to involve risk. The robust recovery after 2009 sure surprised me, but fortunately I had a low stock allocation all along and didn't cut back in 2008-2009. You missed out on some of that, what's done is done. Don't swing too far in the opposite direction.
even if I were to use a Target date fund, it seems like Vanguard ones have a lower expense than Fidelity ones.
Yes. Speaking as a sort of smarty-pants pseudo-connoisseur I can and have criticized Fidelity's target funds--which I held for many years in my employers' 401(k)--as complicated, irrational messes of funds, quantities too tiny to make any difference, and expenses that are distinctly higher than I'd have liked. So if you want a target-date fund by all means use Vanguard's because, yeah, I think they are "better" than Fidelity's. But that's the least important investment decision you are going to make, and, by the way, Fidelity's are perfectly OK.
it seems like Vanguard Wellesley Income Fund VWINX is a good fund ... would I put all our money in something like that or go to a Vanguard Target date fund?
Wellesley does have one interesting feature, I think
. I believe that if you invest in that fund, and set the account up so that only reinvests capital gains but does not reinvest dividends, that you will get a quarterly dividend payout that is relatively stable from quarter to quarter.
I think that one thing you really need to do, take however long it takes to work out an answer for yourself, is decide what percentage of your holdings should be in stocks.
The other big think you need to work out is how much of that $75,000 to invest in a mutual fund whose ups and downs may shock you if you're not used to it, and how much to keep back as an "emergency fund."
With regard to specifics, I feel that whatever else they look at, every investor should look at the growth charts for the funds they're interested in, carefully and in detail, even though past growth does not predict future growth. An explanation of how to use Morningstar's growth charts is in the Wiki here
. I'm going to compare four funds: Wellesley (blue), Target Retirement Income (orange), Fidelity Freedom Income (green),and a pure stock investment, Vanguard Total Stock Market Index (yellow) which tracks the stock market as a whole.
No, I'm not--I'm getting "server is too busy." I'll try to remember to get back to this later. But seriously, take the time to try it for yourself. Look closely at the growth charts for the funds you are interested in. Play with the starting point. Try going back more than 10 years. These charts show what you'd see in your brokerage account if you bought $10,000 of a fund and just let it sit, reinvesting dividends; they show the "total return" of the fund. They will give you an idea of the sort of fluctuations you need to expect if you invest in the fund.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.