Help needed before I go mad :D

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Oneworld82
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Help needed before I go mad :D

Post by Oneworld82 » Sat Mar 24, 2018 2:08 pm

Hi all,

this is my very first post on this forum - and honestly, I wish I found this site earlier on! I decided to post because this last week the markets left me rattled to say the least: I thought I was being smart and bought FB stocks at $168, only to see them plunge to $159 and perhaps making even a worse decision: sell them. Long story short, I have been investing for about 2 years now - until January I had a number of mutual funds through Fidelity that earned me returns around 19%... until the January crash.

As newbie investor used to see my money only grow in the past two years, I panicked, and I sold my funds, losing about 5% of the total value of my investments after recapturing part of it in the subsequent weeks. As I tried to rebalance my allocations too quickly, I incurred in roundtrip violations, which got me banned from Fidelity until May (only funds trading). So I resorted to ETF's, which left me 1% ahead... until this week. FB and other stocks let me with a 5% loss since the January crash (can we call it so?), ~10% for the year. I currently have 56k in my fidelity account, all stocks.

Let me tell you something about myself:

- Mid-30s; wife in mid-20s
- Combined annual income of ~200k in TX
- Some student debts (gone by November 2018) and mortgage (3.75%), car loans
- Able to comfortably save ~4k a month that I try to invest in my fidelity account.

I have a 401(k) with around 93k in it (my wife just started one) to which I contribute 10% of my salary plus 5.5% of employer match, and a Roth IRA with only 3k, plus we have just started funding a 529 college savings account where we put $200 a month for daughters.

So, we'll want to buy a new house in the near future, but since the value of our current house went up quite a bit we plan to use the value difference for the downpayment, so I do not have to worry too much about it. Daughters are 2 and 1, so we have still a lot of time before they go to Cornell like their daddy (as long as they can get a scholarship, that is!).

I don't mind risk - but I get very nervous because I think I am not sure my investments are right. I like tech, and the exposure to it (FB, YY, ESIO) left me with a 3k hole this week. Now, all analysts are gloomy about the prospects of the economy, and this is rattling me even more because. 1. I do not want to have my money sit there for nothing and 2. everyone keep saying that having some cash position is good at this point.

Ideally I would like a somewhat aggressive portfolio, with some handpicked stocks analysts recommend (think GE, Merck, FB after it bottoms down) but also something that gives the confidence that no matter the lows, I am balanced enough to go up in the end.

Do you have any recommendation for me? Just writing this down made me feel better - so I welcome any input you might have!

Happy weekend everyone!

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bottlecap
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Re: Help needed before I go mad :D

Post by bottlecap » Sat Mar 24, 2018 3:03 pm

I have a hot tip for you: Vanguard's Target Retirement 2050 fund.

Anything other than one of these funds and you are doing yourself a disservice.

Sleep tight.

JT

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Pajamas
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Re: Help needed before I go mad :D

Post by Pajamas » Sat Mar 24, 2018 3:13 pm

A stock's price moving from $168 to $159, that is less than a 6% change in value. You should really take to heart the lesson from that experience. If you are so upset over a small fluctuation like that in the price of FB, my recommendation would be to avoid any individual equities at all in the future and stick to mutual funds. You just aren't cut out for trading stocks or even investing in them.

I would agree that you should just pick a target date retirement fund and stick with it to avoid being your own worst enemy. Don't even look at the price fluctuations, just put money into it on a regular basis and forget about it.

Not only will you have better financial returns, you'll be able to sleep better at night.

If you don't learn this lesson now, you will hopefully learn it at some point in the future, but it will be an even more expensive lesson to learn the longer it takes.

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dwickenh
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Re: Help needed before I go mad :D

Post by dwickenh » Sat Mar 24, 2018 3:24 pm

In individual stocks, the smartest, emotionless and most informed are the winners.

The most emotional, uninformed, and panicky are the losers.

Which one of the above descriptions fits your style of investing?

I would concur with Pajamas and say a Target retirement fund (low cost) would be the best thing for you.

Stock picking is for very few people. Even less of that few actually match the market. A very small percentage beat the market.

Good luck and let time in the market make you rich- not time in and out based on emotions.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Oneworld82
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Re: Help needed before I go mad :D

Post by Oneworld82 » Sat Mar 24, 2018 3:30 pm

Thanks folks,

much appreciated. I like the Vanguard target fund - seem like a good idea. Two quick questions:

1. All my assets are today with Fidelity, including employer-sponsored 401(k). Should I buy the Vanguard fund through Fidelity or transfer my assets to Vanguard?
2. How much of our income (assuming we have 4k/month after all expenses, discretionaries) should we put in the fund vs into a savings account?

Thanks a lot again!

TropikThunder
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Re: Help needed before I go mad :D

Post by TropikThunder » Sat Mar 24, 2018 3:41 pm

Oneworld82 wrote:
Sat Mar 24, 2018 2:08 pm
I have been investing for about 2 years now - until January I had a number of mutual funds through Fidelity that earned me returns around 19%... until the January crash.
There was something of a market correction around January 2016, so if your investment memory only covers the last ~24 months, then yeah everything’s been rosy. :D

I can’t pull up a figure on my phone, but if you go to Morningstar and pull up the performance of VTSAX (Vanguard Total Stock), you’ll see the trend is absolutely positive but not smooth. There are ups and downs, mostly ups. Shoot, look at the performance since you started investing in 2016. Even after the recent dips, you would still be up ~25% or so. The mantra here is find an allocation that lets you sleep at night, and the Target Date finds help you leave things alone.

TropikThunder
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Re: Help needed before I go mad :D

Post by TropikThunder » Sat Mar 24, 2018 3:41 pm

Fidelity has similar Target Funds, just make sure you look for the “index” ones with low fees.

Oneworld82
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Re: Help needed before I go mad :D

Post by Oneworld82 » Sat Mar 24, 2018 3:45 pm

Yes, I need something I can leave alone. Like my 401(k) - which I never look at and I am not worried about at all. My main concern with other methods is just not to be diversified enough. I was up in my investments ~20% in the last year 1/2 until the end of Jan... then the correction came and a string of bad decisions brought me back to zero... Wanna avoid that in the future!

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oldcomputerguy
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Re: Help needed before I go mad :D

Post by oldcomputerguy » Sat Mar 24, 2018 3:46 pm

Oneworld82 wrote:
Sat Mar 24, 2018 3:30 pm
Thanks folks,

much appreciated. I like the Vanguard target fund - seem like a good idea. Two quick questions:

1. All my assets are today with Fidelity, including employer-sponsored 401(k). Should I buy the Vanguard fund through Fidelity or transfer my assets to Vanguard?
You can buy either Vanguard mutual funds or Vanguard ETFs commission-free through Vanguard. If you try to buy a Vanguard ETF through Fidelity, you'll pay (I believe) a $4.95 commission for each purchase; buying Vanguard mutual funds through Fidelity incurs a $75 trading cost (no, that's not a typo). If you really want to invest in one or more Vanguard funds, I suggest you open an account at Vanguard. Nothing says you can't have both a Vanguard account and a Fidelity account; I have both and so do many others.
2. How much of our income (assuming we have 4k/month after all expenses, discretionaries) should we put in the fund vs into a savings account?

How much is in your emergency fund? By "emergency fund" I mean the cash you have stashed back to cover living expenses should one or both of you lose your job. Until this is covered, you might want to think about it.

From this (and your original post), I get the feeling that you should start out by reading "the Bogleheads' Guide to Investing", and forget about trying to buy individual stocks. Analysts can recommend all they want, but they're only guessing, none of them can beat the market consistently. It makes much more sense to hold the entire market (through mutual funds or ETFs) than it does to try to guess which stocks will be "the best stocks". Think Enron. Think Xerox. Think Eastman Kodak. They were "too big to fail". Until they weren't any more.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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dwickenh
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Re: Help needed before I go mad :D

Post by dwickenh » Sat Mar 24, 2018 3:48 pm

You can likely find a reasonable Target Date Fund in your Fidelity 401K. Just match the date to your approximate retirement date or a little sooner if you want to be more conservative. I would save up enough cash to cover 6 months to 1 year in an emergency fund(unemployed or short term disability)

After maxing out my 401K, I would max out the wife's 401K also with a target retirement fund. That will get you 37,000 in savings space (18,500 each).

Only then would I start a taxable account at Vanguard and buy low cost index funds.

This will get you started on the right track the Boglehead way-

https://www.bogleheads.org/wiki/Getting_started

Best to you and your family,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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Pajamas
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Re: Help needed before I go mad :D

Post by Pajamas » Sat Mar 24, 2018 3:49 pm

Yes, go with the appropriate Fidelity fund. If you can max out your contributions to your 401(k) and your wife can do the same, that would be a great goal. Once you pay off your student loans, that will free up some additional cashflow.

By using the target fund, you can avoid all the trouble and worry of retirement investing and direct those energies into something more useful and you will almost certainly have better financial results, too.

dknightd
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Re: Help needed before I go mad :D

Post by dknightd » Sat Mar 24, 2018 3:51 pm

Oneworld82 wrote:
Sat Mar 24, 2018 3:30 pm

1. All my assets are today with Fidelity, including employer-sponsored 401(k). Should I buy the Vanguard fund through Fidelity or transfer my assets to Vanguard?
Fidelity probably has a similar fund. I find it convenient to have all my investments in one place.
Oneworld82 wrote:
Sat Mar 24, 2018 3:30 pm
2. How much of our income (assuming we have 4k/month after all expenses, discretionaries) should we put in the fund vs into a savings account?
I'd put it all into savings until I had a comfortable emergency fund. Then I put it all in the fund.

YMMV

dbr
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Re: Help needed before I go mad :D

Post by dbr » Sat Mar 24, 2018 3:58 pm

Aren't there alread two other threads on the same topic:

viewtopic.php?f=1&t=245173

viewtopic.php?f=1&t=245171

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Pajamas
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Re: Help needed before I go mad :D

Post by Pajamas » Sat Mar 24, 2018 4:01 pm

dbr wrote:
Sat Mar 24, 2018 3:58 pm
Aren't there alread two other threads on the same topic:

viewtopic.php?f=1&t=245173

viewtopic.php?f=1&t=245171
No, this particular poster was in danger of going mad. 8-)

Oneworld82
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Re: Help needed before I go mad :D

Post by Oneworld82 » Sat Mar 24, 2018 4:02 pm

Thanks folks. Are the funds in the 2050 target fund available for withdrawal at any time should something happen? We do have our back covered in case of emergencies through our families, although that's not a desirable option of course. I am only asking because I'd rather have funds into something more liquid than a 401k.

delamer
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Re: Help needed before I go mad :D

Post by delamer » Sat Mar 24, 2018 4:03 pm

Highly recommend that you read this 16 page paper:

http://www.etf.com/docs/IfYouCan.pdf

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oldcomputerguy
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Re: Help needed before I go mad :D

Post by oldcomputerguy » Sat Mar 24, 2018 4:05 pm

Oneworld82 wrote:
Sat Mar 24, 2018 4:02 pm
Thanks folks. Are the funds in the 2050 target fund available for withdrawal at any time should something happen?
It depends on where it's invested and what the circumstances are. Generally, you can't touch your 401k prior to age 59-1/2 without penalty.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Pajamas
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Re: Help needed before I go mad :D

Post by Pajamas » Sat Mar 24, 2018 4:06 pm

Oneworld82 wrote:
Sat Mar 24, 2018 4:02 pm
Thanks folks. Are the funds in the 2050 target fund available for withdrawal at any time should something happen? We do have our back covered in case of emergencies through our families, although that's not a desirable option of course. I am only asking because I'd rather have funds into something more liquid than a 401k.
Yes, but that would depend more on the account rules [401(k)] than the fund rules in this instance.

Start with the Getting Started link someone gave above. You should have a liquid emergency fund if practical.

nordsteve
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Re: Help needed before I go mad :D

Post by nordsteve » Sat Mar 24, 2018 4:09 pm

Oneworld82 -- one thing I noticed about your original post is that you don't discuss in detail your goals for investing. You might want to consider writing an investment policy statement.

dknightd
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Re: Help needed before I go mad :D

Post by dknightd » Sat Mar 24, 2018 4:15 pm

Oneworld82 wrote:
Sat Mar 24, 2018 4:02 pm
Thanks folks. Are the funds in the 2050 target fund available for withdrawal at any time should something happen?
funds in your after tax account can be withdrawn at any time. You'd have to pay taxes on the withdrawal. And the value could go down just when your emergency strikes.
Oneworld82 wrote:
Sat Mar 24, 2018 4:02 pm
We do have our back covered in case of emergencies through our families, although that's not a desirable option of course. I am only asking because I'd rather have funds into something more liquid than a 401k.
I think relying on family for emergencies is a bad idea. You are grown up now, you should have your own emergency money. What if your family has an emergency at the same time you do? My kids are still in college, or recently graduated, so I am prepared to help them in an emergency. But once they have been out of school for a few years I expect them to be able to take care of themselves.

I agree with this recomendation
http://www.etf.com/docs/IfYouCan.pdf

Also the wiki here is very good

dbr
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Re: Help needed before I go mad :D

Post by dbr » Sat Mar 24, 2018 4:15 pm

oldcomputerguy wrote:
Sat Mar 24, 2018 4:05 pm
Oneworld82 wrote:
Sat Mar 24, 2018 4:02 pm
Thanks folks. Are the funds in the 2050 target fund available for withdrawal at any time should something happen?
It depends on where it's invested and what the circumstances are. Generally, you can't touch your 401k prior to age 59-1/2 without penalty.
But you can touch it with penalty or it may be possible to take a loan from the account. That does not mean a particular plan might not have some restrictions or that a particular investment in a plan might not have some restrictions. I am not sure of the law on that --whether or not a plan is allowed to prevent withdrawals with penalty.

Oneworld82
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Re: Help needed before I go mad :D

Post by Oneworld82 » Sat Mar 24, 2018 4:18 pm

dknightd wrote:
Sat Mar 24, 2018 4:15 pm
Oneworld82 wrote:
Sat Mar 24, 2018 4:02 pm
Thanks folks. Are the funds in the 2050 target fund available for withdrawal at any time should something happen?
funds in your after tax account can be withdrawn at any time. You'd have to pay taxes on the withdrawal. And the value could go down just when your emergency strikes.
Oneworld82 wrote:
Sat Mar 24, 2018 4:02 pm
We do have our back covered in case of emergencies through our families, although that's not a desirable option of course. I am only asking because I'd rather have funds into something more liquid than a 401k.
I think relying on family for emergencies is a bad idea. You are grown up now, you should have your own emergency money. What if your family has an emergency at the same time you do? My kids are still in college, or recently graduated, so I am prepared to help them in an emergency. But once they have been out of school for a few years I expect them to be able to take care of themselves.

I agree with this recomendation
http://www.etf.com/docs/IfYouCan.pdf

Also the wiki here is very good
By all means - I do not plan to rely on the family but they are wealthy enough to be retired at 50 (lucky them!) and with positive cash flow from owning properties every year (even luckier).

dave1054
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Re: Help needed before I go mad :D

Post by dave1054 » Sat Mar 24, 2018 4:43 pm

You appear to be a prime setup for a disaster. You must take the emotion out of the equation. Do an index fund for your percent in stocks and forget about it. You want one fund for everything. Try VT. You can purchase through Fidelity for nominal fee.

Concerning Cornell, don’t waste your money. Univ. Of Texas is just as good for 1/3 the price. Your children some day will be much happier living in Texas.

dknightd
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Re: Help needed before I go mad :D

Post by dknightd » Sat Mar 24, 2018 4:44 pm

You might want to look at
https://www.bogleheads.org/wiki/Roth_IR ... gency_fund
I started doing this a few years ago. I wish I had discovered it sooner.
Since you both work, and are thinking about buying a house, I'd start an FDIC insured savings account (probably online these days) and throw money at it, until you thought you could cover an emergency, and your house downpayment. You have already experienced a small market blip, and found it drove you crazy. There could be bigger blips in the future. When I thought my emergency/house fund was big enough I'd start using a roth for extra savings.
You really do need a plan. If your plan is retire at 50 you want some after tax investments. If you plan to retire after 59.5 I'd max out your 401k.
But you need your plan. Everybody is different. Spend time on the wiki https://www.bogleheads.org/wiki I've learned a lot from it and I've only been here a few weeks.

sambb
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Re: Help needed before I go mad :D

Post by sambb » Sat Mar 24, 2018 5:18 pm

Vanguard target and be done with it

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roymeo
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Re: Help needed before I go mad :D

Post by roymeo » Sat Mar 24, 2018 5:22 pm

You've been gambling for 2 years, not investing.
The sewer system is a form of welfare state. | -- "Libra", Don DeLillo

Oneworld82
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Re: Help needed before I go mad :D

Post by Oneworld82 » Sat Mar 24, 2018 6:03 pm

And all like gambles, I ended up not winning anything

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sam5
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Re: Help needed before I go mad :D

Post by sam5 » Sat Mar 24, 2018 6:23 pm

Here's an interesting article about Target Date Funds from Fidelity and Vanguard.

https://www.investopedia.com/articles/p ... e-fund.asp

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celia
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Re: Help needed before I go mad :D

Post by celia » Sat Mar 24, 2018 7:15 pm

Oneworld82 wrote:
Sat Mar 24, 2018 2:08 pm
I decided to post because this last week the markets left me rattled to say the least: I thought I was being smart and bought FB stocks at $168, only to see them plunge to $159 and perhaps making even a worse decision: sell them. Long story short, I have been investing for about 2 years now - until January I had a number of mutual funds through Fidelity that earned me returns around 19%... until the January crash.
As a retiree, I look back at awe at the last two years. That 19% gain a year probably only happens 2 or 3 times in a lifetime. There will be years when you likely lose 19% too.

It is best to think of the long term--save as if most of the money will be needed in 17 years (college) or 30 years (retirement). There will be up years and down years, but historically the average seems to be 4-7% growth. But there will seldom be a year with 4% or 7% growth. Those are just the averages spread over a lifetime.

Oneworld82
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Re: Help needed before I go mad :D

Post by Oneworld82 » Sat Mar 24, 2018 7:53 pm

celia wrote:
Sat Mar 24, 2018 7:15 pm
Oneworld82 wrote:
Sat Mar 24, 2018 2:08 pm
I decided to post because this last week the markets left me rattled to say the least: I thought I was being smart and bought FB stocks at $168, only to see them plunge to $159 and perhaps making even a worse decision: sell them. Long story short, I have been investing for about 2 years now - until January I had a number of mutual funds through Fidelity that earned me returns around 19%... until the January crash.
As a retiree, I look back at awe at the last two years. That 19% gain a year probably only happens 2 or 3 times in a lifetime. There will be years when you likely lose 19% too.

It is best to think of the long term--save as if most of the money will be needed in 17 years (college) or 30 years (retirement). There will be up years and down years, but historically the average seems to be 4-7% growth. But there will seldom be a year with 4% or 7% growth. Those are just the averages spread over a lifetime.
Indeed. I am more than anything upset at how I lost 4k this week - probably more because of pride than anything else. I realize it's a good lesson learned (don't gamble!) and will come handy in the end, it's just a bit hard to swallow at the moment.

dknightd
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Re: Help needed before I go mad :D

Post by dknightd » Sat Mar 24, 2018 8:12 pm

Loosing money is part of the game

protagonist
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Re: Help needed before I go mad :D

Post by protagonist » Sat Mar 24, 2018 8:28 pm

OP-
1. An income of 200K puts you in the 97.3d %ile...only 2.7% of Americans make more than you. And if you are only in your 30s you have plenty of time to make up for your temporary losses. So Rule #1 from the Hitchhiker's Guide to the Galaxy.... DON'T PANIC!

2. I am probably speaking for many here...perhaps the majority, who , like me, did dumb things with their money when they were in their 30s - much dumber than what you did- and learned from the experience. I'd be embarrassed to share what I did with this crowd. Consider the price you paid a modest tuition for your financial education. Don't worry. Be happy. You will be fine.

(And don't think you are the only one who is down since Jan 1. Anybody heavily invested in the broad US stock market is. )

macheta
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Re: Help needed before I go mad :D

Post by macheta » Sat Mar 24, 2018 8:35 pm

A lot of people lost money last week. The market will be down next week based on the current premarket . Don't sell during this time and mitigate your exposure from individual equities by using mutual funds. Take the this as a lesson and learn from the mistakes. I have a hard head and tend to learn only after getting kicked in the face a couple times.

RudyS
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Re: Help needed before I go mad :D

Post by RudyS » Sat Mar 24, 2018 8:40 pm

All good advice. This is what some folks call a cheap lesson. Glad it didn't cost that much except maybe some pride.

lostdog
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Re: Help needed before I go mad :D

Post by lostdog » Sat Mar 24, 2018 8:45 pm

I was in the same boat as you in the beginning. Read the "If You Can" PDF and Taylor's 3 fund portfolio. Also read the wiki's on tax efficient placement. Read as much as you can so you absorb the boglehead philosophy. Then the light bulb will go off and you'll "get it". Develop your IPS execute the plan and stay the course.

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BL
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Re: Help needed before I go mad :D

Post by BL » Sun Mar 25, 2018 1:14 am

Simple is Smart!

The 3-fund portfolio as seen in the above mentioned thread and If You Can pdf both suggest Total Stock Market, Total International Stock Market, and Total Bond market. Vanguard has these, but Fidelity also has these low-ER INDEX funds that should work just fine. Look up 3-fund portfolio in the Wiki and scroll down to find suggested funds for various brokerages. The V. Target date fund is made up of these same indexes, as are the Life Strategy funds.

Fidelity has similar target INDEX fund but you have to check carefully because they also have a similar named non-index fund. F also has the four-in-one fund if about 15% bonds suits you. Almost all of V funds are low-ER, even the active funds are quite low.

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Re: Help needed before I go mad :D

Post by catdude » Sun Mar 25, 2018 1:45 am

protagonist wrote:
Sat Mar 24, 2018 8:28 pm
2. I am probably speaking for many here...perhaps the majority, who , like me, did dumb things with their money when they were in their 30s - much dumber than what you did- and learned from the experience. I'd be embarrassed to share what I did with this crowd. Consider the price you paid a modest tuition for your financial education. Don't worry. Be happy. You will be fine.
OP, protagonist is right, just about all of us seasoned Bogleheads have made mistakes in the past. Live and learn. I started a thread on this topic about six months ago --

viewtopic.php?t=228527

I suggest you read thru it, you'll feel better if you do...
catdude | | All generalizations are false, including this one.

Oneworld82
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Re: Help needed before I go mad :D

Post by Oneworld82 » Mon Mar 26, 2018 3:00 pm

Thanks for all the useful and kind comments - they helped me not necessarily feeling better but at least they pushed me towards something new I had never considered before. You see, my (limited) knowledge had pushed me in investing in mutual funds with the expectation of having my money readily available in a year or so if I needed to. Hence, after a year of smooth riding where I netted 8k in returns, the minor turbulence that hit us in January was enough to make me waver. I lost sight of the end goal because my goals were misconceived. So I felt bad and took risky bets to make up the losses quickly, and so I lost more. Mindless to say last year gains have been wiped off, but at least I can live with being down 5-6k because of my silly mistakes - it could have been much worse (I even managed to lose money today when the markets are all up...).

This experience made me realize I am not cut for day trading and that I am only comfortable investing in something I do not have to look at everyday, with a not assured but proved track record of success. The Vanguard fund seems like a great option also given the time horizon, and after talking to my wife we agreed it would be a great idea to put 50k of the 62k we have today in there. We still work and are able to save every month 4k, so we'll rebuild our cash balance quickly and we can keep that money invested for the long run.

I'd still like to invest in markets - perhaps ETF's or index funds that bear less individual risk and move more with the market. I realize now that picking single stocks made me very uncomfortable because I did not really know much about the underlying strenght of each company.

A lot of lesson learned here. First of all: don't panic. Trust teh markets. We have a long time horizon, and a 5-6% dip should not send me panicking. But these strategies I feel will give me some ease of mind, which hopefully will help going forward!

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mhadden1
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Location: North Alabama

Re: Help needed before I go mad :D

Post by mhadden1 » Mon Mar 26, 2018 3:12 pm

lostdog wrote:
Sat Mar 24, 2018 8:45 pm
Develop your IPS execute the plan and stay the course.
OP got everything he needed in one sentence. He sounds plenty clever enough to make good use of the advice with minimal self-education. Heck, "If You Can" alone is plenty, at what, 35 pages? And the wiki has plenty of other pertinent material for someone who wants to look into things further.

That is what I love about the BH forum.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

pkcrafter
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Re: Help needed before I go mad :D

Post by pkcrafter » Mon Mar 26, 2018 4:49 pm

Welcome,

Undisciplined behavior is the No.1 cause of poor returns.

https://www.bogleheads.org/wiki/Behavioral_pitfalls

You never want to pull money from tax-deferred retirement accounts. The money is for retirement only. It's not available for 25-30 years. We do recommend everyone have an emergency fund.

https://www.bogleheads.org/wiki/Emergency_fund

You are showing strong symptoms of risk aversion. Much of it is simply a lack of understanding on how markets behave in the short term. Most of it will go away with a little education and some experience.

What is your overall asset allocation to equity now?

The TR 2050 funds are 88-90% stock, so even though holding a TR fund dampens the amount of equity loss you see, it's still very aggressive. Some members can handle it, but many recommend no more than 80% stock, and even that might be a bit high for you right now.

Anyway, choose a TR fund by the asset allocation, not the date. Note too the Fidelity has two lines of TR funds--Freedom and Freedom Index Funds. You want only Freedom Index funds.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Oneworld82
Posts: 18
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Re: Help needed before I go mad :D

Post by Oneworld82 » Mon Mar 26, 2018 6:10 pm

100% stocks - 75% on SPY and 25% on ONEQ. I lost 5k last week because I played with stupid risky bets and I got greedy. I have been 3 times at $700+ on short sales and got so greedy I waited until that became zero. I also had too many bets at any given time. Stupid of me. I am transferring everything to Vanguard now as I like their fund better. Again, I do not mind stock exposure - my 401(k) has a very aggressive allocation and whenever it is down 5% I don't even care. For some reason, though, these past three weeks in my investment account made me very, very nervous. This is why I think something I do not actively manage will be best for me.

MoneyMarathon
Posts: 161
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Re: Help needed before I go mad :D

Post by MoneyMarathon » Mon Mar 26, 2018 6:29 pm

Oneworld82 wrote:
Mon Mar 26, 2018 6:10 pm
Again, I do not mind stock exposure - my 401(k) has a very aggressive allocation and whenever it is down 5% I don't even care.
5% drawdowns happen in most years. It's not much of a stress test. 30-50% drawdowns tend to cause a lot more people to feel very, very nervous and to make bad choices.
Oneworld82 wrote:
Mon Mar 26, 2018 6:10 pm
For some reason, though, these past three weeks in my investment account made me very, very nervous.
Your asset allocation is much too aggressive for you if you're very, very nervous now and considering changing things up.

This is not even a bear market yet. Corrections of 10% or more happen every few years (or every few months) even in a bull market.

You are probably best off right now in a all-in-one fund that has 20% to 40% in bonds, then trying to ignore it. Having a single fund makes it easier to tune out the noise. Having multiple funds makes you acutely aware of what's ahead and what's behind, relatively, whenever you check your account.
I don't mind risk
Ideally I would like a somewhat aggressive portfolio
You appear to want some risk - only up to a point - and by "somewhat aggressive," you clearly also don't want something very aggressive.

If you use an all-in-one fund, you don't have to handle the rebalancing, so you can get the benefit of diversification without trying to manage the money and tinker with it. You're currently doubting yourself way too much to be able to rebalance yourself.
This is why I think something I do not actively manage will be best for me.
Definitely. Here are some things you can consider.

Vanguard LifeStrategy Growth Fund (VASGX) - 20% bonds
LifeStrategy Moderate Growth Fund (VSMGX) - 40% bonds

One of these might be best if you're currently nervous, now, in your 30s.

The target date funds look like they're simultaneously too aggressive (now) and/or too conservative (in a decade from now) for you. You should try to pick an asset allocation that you can stick with, not mess with, not think about, and then gradually shift into more bonds in your 50s and 60s, when nearing retirement. When nearing retirement, you can pick a target date fund from Vanguard that matches your retirement date and forget about it.

Oneworld82
Posts: 18
Joined: Sat Mar 24, 2018 11:27 am

Re: Help needed before I go mad :D

Post by Oneworld82 » Mon Mar 26, 2018 6:47 pm

MoneyMarathon wrote:
Mon Mar 26, 2018 6:29 pm
Oneworld82 wrote:
Mon Mar 26, 2018 6:10 pm
Again, I do not mind stock exposure - my 401(k) has a very aggressive allocation and whenever it is down 5% I don't even care.
5% drawdowns happen in most years. It's not much of a stress test. 30-50% drawdowns tend to cause a lot more people to feel very, very nervous and to make bad choices.
Oneworld82 wrote:
Mon Mar 26, 2018 6:10 pm
For some reason, though, these past three weeks in my investment account made me very, very nervous.
Your asset allocation is much too aggressive for you if you're very, very nervous now and considering changing things up.

This is not even a bear market yet. Corrections of 10% or more happen every few years (or every few months) even in a bull market.

You are probably best off right now in a all-in-one fund that has 20% to 40% in bonds, then trying to ignore it. Having a single fund makes it easier to tune out the noise. Having multiple funds makes you acutely aware of what's ahead and what's behind, relatively, whenever you check your account.
I don't mind risk
Ideally I would like a somewhat aggressive portfolio
You appear to want some risk - only up to a point - and by "somewhat aggressive," you clearly also don't want something very aggressive.

If you use an all-in-one fund, you don't have to handle the rebalancing, so you can get the benefit of diversification without trying to manage the money and tinker with it. You're currently doubting yourself way too much to be able to rebalance yourself.
This is why I think something I do not actively manage will be best for me.

Definitely. Here are some things you can consider.

Vanguard LifeStrategy Growth Fund (VASGX) - 20% bonds
LifeStrategy Moderate Growth Fund (VSMGX) - 40% bonds

One of these might be best if you're currently nervous, now, in your 30s.

The target date funds look like they're simultaneously too aggressive (now) and/or too conservative (in a decade from now) for you. You should try to pick an asset allocation that you can stick with, not mess with, not think about, and then gradually shift into more bonds in your 50s and 60s, when nearing retirement. When nearing retirement, you can pick a target date fund from Vanguard that matches your retirement date and forget about it.
Thanks MoneyMarathon - much appreciated.
I just feel angry at myself because I think of all the things I could have done with that money and because with my behavior I amplified a loss that by now would probably be only 2k...

MoneyMarathon
Posts: 161
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Re: Help needed before I go mad :D

Post by MoneyMarathon » Mon Mar 26, 2018 6:51 pm

Oneworld82 wrote:
Mon Mar 26, 2018 6:47 pm
Thanks MoneyMarathon - much appreciated.
I just feel angry at myself because I think of all the things I could have done with that money and because with my behavior I amplified a loss that by now would probably be only 2k...
It happens. We've all made mistakes. Hopefully you're wiser now and more likely to stay the course in the future.

Keep reading here and make an investment policy statement before making more changes. When you make a change, try to stick with it. Most plans do worse if you dump them as soon as you're nervous about them (this goes for both aggressive and conservative plans - you can feel sick from fear of missing out as well). The professionals aren't able to time the market, so don't worry that you can't either. Accept that your accounts will go up and down, that you'll make lucky and unlucky contributions, and that your surest returns come from keeping a consistent plan in place for the long haul.

https://www.bogleheads.org/wiki/Investm ... _statement

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Sandtrap
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Location: Hawaii😀 Northern AZ.😳 Retired.

Re: Help needed before I go mad :D

Post by Sandtrap » Mon Mar 26, 2018 6:53 pm

Oneworld82 wrote:
Sat Mar 24, 2018 3:30 pm
Thanks folks,

much appreciated. I like the Vanguard target fund - seem like a good idea. Two quick questions:

1. All my assets are today with Fidelity, including employer-sponsored 401(k). Should I buy the Vanguard fund through Fidelity or transfer my assets to Vanguard?
2. How much of our income (assuming we have 4k/month after all expenses, discretionaries) should we put in the fund vs into a savings account?

Thanks a lot again!
1
Pick your brokerage based on the family of funds available within the brokerage that you favor. IE: There is no charge for trading Vanguard funds within Vanguard. Same for Fidelity. Etc.
2
Vanguard has a very wide selection of low cost index funds. Including the target date funds mentioned. Compare to Fidelity.
3
This is funding order. You can think of it as "Tiers" or "Buckets" or a variety of other mental strategies but it goes roughly like this (there are many ways to approach this. This is roughly from "dratkinson".

TIER STRATEGIES

The larger your lower EF tiers, the less likely you'll need the later tiers. So the more risk you can take with the later EF tiers.
EMERGENCY FUND
*Lower tiers can be smaller if Tier-3 is large and/or job and/or other income streams are secure and large compared to debt.

1st-Tier EF (6 mos to 1yr of living expenses)
(protection of principal and liquidity)
--Checking, savings, mmkt accounts, are insured.
--Short term CD's

2nd-Tier EF (1-3yrs of living expenses <> overlap to 3rd Tier
--Longer term CDs, CD Ladder, Treasury Bonds/Ibonds,etc.
--Shorter duration bond funds, muni-bond funds, etc. (overlap to 3rd-Tier)

3rd-Tier EF <> overlap to 4rth-Tier
-- Short Term Bond Funds (low cost) (VFSUX, etc)
--Muni Bond Funds (low cost)

4rth-Tier Long Term Retirement Portfolio
-- Bogle 3 fund portfolio consisting of low cost index funds (or equive.)

4
Now, for some basics. Read these.
GETTING STARTED
https://www.bogleheads.org/wiki/Getting_started

Post this when you have time for comprehensive help.
Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212

5
Continue reading.
Bogle Philosophy
https://www.bogleheads.org/wiki/Bogleh ... hilosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Bogleh ... rt-up_kit

5b
*Nail this down:
Define General Investment Goals and Objectives (what is your plan?)
https://www.bogleheads.org/wiki/Invest ... statement

6
Your funding order. Where does new money go?
Funding Priority (what do I do first?)
https://www.bogleheads.org/wiki/Priori ... vestments
Tax Efficient Fund Placement
https://www.bogleheads.org/wiki/Tax-ef ... _placement

7
How do you organize it?. .

Risk Tolerance (what is your "sleep factor"?)
https://www.bogleheads.org/wiki/Risk_tolerance
Asset Allocation (what is right for you?)
https://www.bogleheads.org/wiki/Asset_allocation

8
Do this first.
Emergency Fund
https://www.bogleheads.org/wiki/Emergency_fund

9
Really really grasp this:
Bogle 3 Fund Portfolio Basics and Beyond
https://www.bogleheads.org/wiki/Three- ... _portfolio

10
And, a free book:
Free Reading: "If You Can" by Bernstein
https://www.google.com/url?sa=t&rct=j& ... -SB3S580I5

mahalo,
j :D

Oneworld82
Posts: 18
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Re: Help needed before I go mad :D

Post by Oneworld82 » Tue Mar 27, 2018 10:25 am

Thanks a lot!

One question. I am ready now to buy Vanguard funds - I think either Target Funds 2050 or 2055 are right for me. In 2050 I will be 68 and my wife 60, in 2055 I will be 73 and my wife 65. Which of the two options would you suggest? We both contribute to the fund jointly. I suppose it doesn't make any sense to split between the two as we'd lose compounding strength. I am leaning more towards 2055 fund because I think we can withdraw early anyways (assuming the fund will be in a good place).

Thanks!

mhalley
Posts: 6074
Joined: Tue Nov 20, 2007 6:02 am

Re: Help needed before I go mad :D

Post by mhalley » Tue Mar 27, 2018 10:30 am

Don't buy the vanguard tr funds at fidelity. Use the freedom index funds. Fidelity makes them hard to find, so here is a list.
https://www.fidelity.com/fund-screener/ ... Type&exp=1

Darth Xanadu
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Location: Middle Earth

Re: Help needed before I go mad :D

Post by Darth Xanadu » Tue Mar 27, 2018 10:30 am

Oneworld82 wrote:
Tue Mar 27, 2018 10:25 am
Thanks a lot!

One question. I am ready now to buy Vanguard funds - I think either Target Funds 2050 or 2055 are right for me. In 2050 I will be 68 and my wife 60, in 2055 I will be 73 and my wife 65. Which of the two options would you suggest? We both contribute to the fund jointly. I suppose it doesn't make any sense to split between the two as we'd lose compounding strength. I am leaning more towards 2055 fund because I think we can withdraw early anyways (assuming the fund will be in a good place).

Thanks!
Read Sandtrap's post, paying particular attention to #7. This will determine which fund is right for you. The target dates are only meaningful from an asset allocation perspective.
"A courageous teacher, failure is."

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fundtalker123
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Re: Help needed before I go mad :D

Post by fundtalker123 » Tue Mar 27, 2018 11:25 am

Set it and forget it using balanced funds. Everyone wants to make it more complicated, but that is unnecessary

delamer
Posts: 6138
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Re: Help needed before I go mad :D

Post by delamer » Tue Mar 27, 2018 3:27 pm

Oneworld82 wrote:
Tue Mar 27, 2018 10:25 am
Thanks a lot!

One question. I am ready now to buy Vanguard funds - I think either Target Funds 2050 or 2055 are right for me. In 2050 I will be 68 and my wife 60, in 2055 I will be 73 and my wife 65. Which of the two options would you suggest? We both contribute to the fund jointly. I suppose it doesn't make any sense to split between the two as we'd lose compounding strength. I am leaning more towards 2055 fund because I think we can withdraw early anyways (assuming the fund will be in a good place).

Thanks!

You won’t lose compounding strength by splitting into two accounts. With some investments, your ER is lower if your balance is higher though. If you like to split your investment, go ahead.

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