Isn't it about time to retire this sexist expression?
Hah! No never... those of us who know have the experience/scars to show for it.
OP: Put half in VTSAX/VTIAX and keep the rest in a HYSA or hustle for yield from new bank/brokerage account bonuses. It keeps your life interesting and you wife... happy.
-TheDDC
I have VTSAX and have loved it of course. You like the international stock VTIAX? In any case total stock funds can’t really be considered low risk, even at 50/50. She ain’t gonna like it lol.
I have 20-25% of my investments in VTIAX. Good mutual funds like VTSAX/VTIAX with a good track record are generally lower risk. A higher risk ETF would be QQQ or anything leveraged. I expect market average returns from the S&P side of the house, and I do keep a long growth tilt. New money in taxable goes into VTSAX.
How would your wife like to see spending power erode due to inflation? That happens with long bonds. Certainly not as easy to see, but that (and many other reasons) are why we invest in stocks.
-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks.
TheDDC wrote: ↑Mon Oct 18, 2021 4:52 pm
I have 20-25% of my investments in VTIAX. Good mutual funds like VTSAX/VTIAX with a good track record are generally lower risk. A higher risk ETF would be QQQ or anything leveraged. I expect market average returns from the S&P side of the house, and I do keep a long growth tilt. New money in taxable goes into VTSAX.
How would your wife like to see spending power erode due to inflation? That happens with long bonds. Certainly not as easy to see, but that (and many other reasons) are why we invest in stocks.
-TheDDC
QQQ tracks the Nasdaq top 100 stocks - mostly non-blue chip. I'm not sure why anyone would think someone 'conservative' or risk adverse would ever consider putting must keep money into anything like that let alone discus leveraged funds.
They already have a i401k for a 3-fund port, that already has more risk than a money market account, iBond's, or bank CD's.
I wouldn't add that kind of major risk to this money if it was mine.
brad.clarkston wrote: ↑Sun Oct 17, 2021 9:12 pm
I'm with your wife. I would not get crazy this late in life with the economy we have and the high flying stock market we also have.
Anything you do above I-Bonds and certificates is doubling the risk.
I would stop and really listen to your wife.
If it was my money and my wife I would:
buy the max in I-Bond's for both of you this year and next.
build a certificate ladder.
Keep $250k in a high yield account as liquid money.
JDave wrote: ↑Wed Oct 20, 2021 6:16 am
1. you cannot get 2-4% with minimal risk these days
2. you cannot time the market
1. Yes you can. Municipal bonds are currently providing annual returns in this range, and the minimal risk of investment rated munis has been well-documented by Moody's every other year or so in a report they publish/update.
2. We all know the saying, doesn't mean it applies to every person on the planet.
Really? Most of the muni bonds that Vanguard offers are yielding, year to date, under 1%.
JDave wrote: ↑Wed Oct 20, 2021 6:16 am
1. you cannot get 2-4% with minimal risk these days
2. you cannot time the market
1. Yes you can. Municipal bonds are currently providing annual returns in this range, and the minimal risk of investment rated munis has been well-documented by Moody's every other year or so in a report they publish/update.
2. We all know the saying, doesn't mean it applies to every person on the planet.
Really? Most of the muni bonds that Vanguard offers are yielding, year to date, under 1%.
And that is why you shouldn't invest in a muni bond fund.
Understood. But where are the 2%-4% yields that you're seeing?
My wife is very risk averse as well but understands TINA. She understands that other than a mix of Stock/bond indexes, there is no one that is going to shoulder the risk and give you the rewards out of the goodness of their hearts. Maybe ask if she is ok locking in guaranteed losses? Absolutely what is going on right now wether you do funny math or not and choose to believe it or not..Inflation is only getting worse (unless you take out the cost of meat, fuel, housing, cars, etc...then we are pretty normal) 10 years is a long time to not need it and to let it deteriorate in value.
JDave wrote: ↑Wed Oct 20, 2021 6:16 am
1. you cannot get 2-4% with minimal risk these days
2. you cannot time the market
1. Yes you can. Municipal bonds are currently providing annual returns in this range, and the minimal risk of investment rated munis has been well-documented by Moody's every other year or so in a report they publish/update.
2. We all know the saying, doesn't mean it applies to every person on the planet.
Really? Most of the muni bonds that Vanguard offers are yielding, year to date, under 1%.
It depends whether you are talking about the SEC Yield or the actual payout....example...Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX)
Vanguard's VWIUX which is 90% AAA/AA/A
There is risk; at the start of covid, the share price dropped. Since I thought that the holdings were solid. I stayed. There were 2-3 days where I could have tax loss harvested...but I wasn't prepared. VWIUX works for me....but at only 10% of my holdings.
VWIUX paid out over 2% annualized on Oct. 1; it pays out 12 times a year. Check the distribution chart for VWIUX; you'll see that that payout is slowly declining towards the SEC yield. Over the next year, I speculate that one can expect around 1.5%. In the longer term, expect something between that and the SEC yield.
1. Yes you can. Municipal bonds are currently providing annual returns in this range, and the minimal risk of investment rated munis has been well-documented by Moody's every other year or so in a report they publish/update.
2. We all know the saying, doesn't mean it applies to every person on the planet.
Really? Most of the muni bonds that Vanguard offers are yielding, year to date, under 1%.
And that is why you shouldn't invest in a muni bond fund.
Understood. But where are the 2%-4% yields that you're seeing?
I am not familiar with Vanguard and if/how they offer individual municipal bonds. However, on Fidelity/Etrade/Merrill you can easily purchase municipal bonds in the secondary market. I'm looking at a screen of a few hundred triple tax free (depending on state of residence) A-rated and higher munis both callable and non-callable offering yield to maturity of 2% to 2.8%. If you want to expand your view to include taxable munis, that yield goes up to 3.6% for non-callable to 4.46% callable. Understand that's just at this very moment, and will change day to day. However, my point is that even in the current low yield environment, there are quality, extremely low risk options out there for those who know what they are doing.1
1 And are willing to take the risk on individual bonds -- a risk that isn't present in a bond fund.
Creditcardguy wrote: ↑Sun Oct 17, 2021 9:25 am
We’re going to meet with a financial planner,
Hopefully not at Edward Jones/Raymond James/Morgan Stanley/Merrill Lynch, etc.
As others have warned, these are salespeople, not advisors...
Yes. If you and your spouse are concerned about risk, please bear in mind that there are also risks with financial advisors who actually manage an account (as opposed to just providing advice while leaving you in charge of making trades). A small number are actual criminals who will steal your money. A larger number will put your investments in high-cost, high-commission products (the FINRA hall of shame describes a number of minor and not minor infractions). And none, as far as I know, offer a fee structure where, say, since they know what the market is going to do, so they guarantee to beat it, and split the profits. I believe in the saying I learned here that by the time you know enough to pick a reasonable financial advisor, you do not need a financial advisor. I like the White Coat Investor tips.
And that is why you shouldn't invest in a muni bond fund.
Understood. But where are the 2%-4% yields that you're seeing?
I am not familiar with Vanguard and if/how they offer individual municipal bonds. However, on Fidelity/Etrade/Merrill you can easily purchase municipal bonds in the secondary market. I'm looking at a screen of a few hundred triple tax free (depending on state of residence) A-rated and higher munis both callable and non-callable offering yield to maturity of 2% to 2.8%. If you want to expand your view to include taxable munis, that yield goes up to 3.6% for non-callable to 4.46% callable. Understand that's just at this very moment, and will change day to day. However, my point is that even in the current low yield environment, there are quality, extremely low risk options out there for those who know what they are doing.1
1 And are willing to take the risk on individual bonds -- a risk that isn't present in a bond fund.
A bond fund is simply a lot of bonds. The risk no different than if a knowledgeable investor constructed his/her own portfolio of individual bonds. With municipal investment rated bonds, the risk is extremely low and very well documented. I can make the case that a municipal bond fund is actually more risky than what an individual can/would do on his/her own, but I am not going to post an article here.
I'm not looking to get into a debate over this. I pointed out the option, if you are interested in it then go investigate on your own, or drop me a message and I can point you in the right direction.
Fair enough. It looks like you're new to the board, so here's a heads-up: most people here do not invest outside of mutual funds. I'm sure there's opportunities for knowledgable people such as yourself to actively construct a bond portfolio that does really well, but most people here, investing-wise, are believers in passivity.
And that is why you shouldn't invest in a muni bond fund.
Understood. But where are the 2%-4% yields that you're seeing?
I am not familiar with Vanguard and if/how they offer individual municipal bonds. However, on Fidelity/Etrade/Merrill you can easily purchase municipal bonds in the secondary market. I'm looking at a screen of a few hundred triple tax free (depending on state of residence) A-rated and higher munis both callable and non-callable offering yield to maturity of 2% to 2.8%. If you want to expand your view to include taxable munis, that yield goes up to 3.6% for non-callable to 4.46% callable. Understand that's just at this very moment, and will change day to day. However, my point is that even in the current low yield environment, there are quality, extremely low risk options out there for those who know what they are doing.1
1 And are willing to take the risk on individual bonds -- a risk that isn't present in a bond fund.
A bond fund is simply a lot of bonds. The risk no different than if a knowledgeable investor constructed his/her own portfolio of individual bonds. With investment rated municipal bonds, the risk is extremely low and very well documented. I can make the case that a municipal bond fund is actually more risky than what an individual can/would do on his/her own, but I am not going to post an article here.
I'm not looking to get into a debate over this. I pointed out the option, if you are interested in it then go investigate on your own, or drop me a message and I can point you in the right direction.
Holding a part of 13,137 bonds (Vanguard's muni fund as of 30-Sep) is orders of magnitude less risky than holding a handful of individual bonds. The lower return reflects that.
Met with a Financial Planner today. He liked my overall balance and I told him I’d continue doing my own i401k with Fidelity. Surprisingly he didn’t like the idea to refi at 2% to invest, that could have been 500k more for him to manage. Anyway, bottom line he’d like to grow our 500k with an AA of 50/50, his fee is 1% annually (charged quarterly). The example account he showed us had primarily American Funds, same ones I had with EJ a few years ago.
That’s $5000 a year to start, for something I’m pretty sure I can do myself with Boglehead’s help. Or with Fidelity’s managed account charging .3% at least. Plus my wife thinks 50/50 is still too aggressive for these funds.
I’m doing the ibonds for sure, and leaning towards a 35/65 AA or maybe a bond ladder.
Creditcardguy wrote: ↑Wed Oct 20, 2021 4:42 pm
Met with a Financial Planner today. He liked my overall balance and I told him I’d continue doing my own i401k with Fidelity. Surprisingly he didn’t like the idea to refi at 2% to invest, that could have been 500k more for him to manage. Anyway, bottom line he’d like to grow our 500k with an AA of 50/50, his fee is 1% annually (charged quarterly). The example account he showed us had primarily American Funds, same ones I had with EJ a few years ago.
That’s $5000 a year to start, for something I’m pretty sure I can do myself with Boglehead’s help. Or with Fidelity’s managed account charging .3% at least. Plus my wife thinks 50/50 is still too aggressive for these funds.
I’m doing the ibonds for sure, and leaning towards a 35/65 AA or maybe a bond ladder.
Confused, OP: can't you "grow" your own savings at a fee of 0% annually?
Creditcardguy wrote: ↑Wed Oct 20, 2021 4:42 pm
Met with a Financial Planner today. He liked my overall balance and I told him I’d continue doing my own i401k with Fidelity. Surprisingly he didn’t like the idea to refi at 2% to invest, that could have been 500k more for him to manage. Anyway, bottom line he’d like to grow our 500k with an AA of 50/50, his fee is 1% annually (charged quarterly). The example account he showed us had primarily American Funds, same ones I had with EJ a few years ago.
That’s $5000 a year to start, for something I’m pretty sure I can do myself with Boglehead’s help. Or with Fidelity’s managed account charging .3% at least. Plus my wife thinks 50/50 is still too aggressive for these funds.
I’m doing the ibonds for sure, and leaning towards a 35/65 AA or maybe a bond ladder.
Confused, OP: can't you "grow" your own savings at a fee of 0% annually?
Yes, for some reason I though a Financial Planner might have some magic bullet or plan I’d never heard of. Now that I’ve talked to a couple I’m thinking Boglehead.org is a much better resource at a fraction of the price lol.
Creditcardguy wrote: ↑Wed Oct 20, 2021 4:42 pm
Met with a Financial Planner today. He liked my overall balance and I told him I’d continue doing my own i401k with Fidelity. Surprisingly he didn’t like the idea to refi at 2% to invest, that could have been 500k more for him to manage. Anyway, bottom line he’d like to grow our 500k with an AA of 50/50, his fee is 1% annually (charged quarterly). The example account he showed us had primarily American Funds, same ones I had with EJ a few years ago.
That’s $5000 a year to start, for something I’m pretty sure I can do myself with Boglehead’s help. Or with Fidelity’s managed account charging .3% at least. Plus my wife thinks 50/50 is still too aggressive for these funds.
I’m doing the ibonds for sure, and leaning towards a 35/65 AA or maybe a bond ladder.
Confused, OP: can't you "grow" your own savings at a fee of 0% annually?
Yes, for some reason I though a Financial Planner might have some magic bullet or plan I’d never heard of. Now that I’ve talked to a couple I’m thinking Boglehead.org is a much better resource at a fraction of the price lol.
Creditcardguy wrote: ↑Wed Oct 20, 2021 4:42 pm
Met with a Financial Planner today.
Anyway, bottom line he’d like to grow our 500k with an AA of 50/50, his fee is 1% annually (charged quarterly). The example account he showed us had primarily American Funds, same ones I had with EJ a few years ago.
Typical salesman... High front-load funds... With that 5.75% load he takes, every $100 you give him is immediately worth $94.25 (not to mention the AUM fee PLUS the high expense ratios)
Creditcardguy wrote: ↑Wed Oct 20, 2021 4:42 pm
Met with a Financial Planner today.
Anyway, bottom line he’d like to grow our 500k with an AA of 50/50, his fee is 1% annually (charged quarterly). The example account he showed us had primarily American Funds, same ones I had with EJ a few years ago.
Typical salesman... High front-load funds... With that 5.75% load he takes, every $100 you give him is immediately worth $94.25 (not to mention the AUM fee PLUS the high expense ratios)
So true. I wish I could get my mother away from her so-called adviser. But I look at the 1% that he charges her as the price of my own sanity.
Creditcardguy wrote: ↑Wed Oct 20, 2021 4:42 pm
Met with a Financial Planner today.
Anyway, bottom line he’d like to grow our 500k with an AA of 50/50, his fee is 1% annually (charged quarterly). The example account he showed us had primarily American Funds, same ones I had with EJ a few years ago.
Typical salesman... High front-load funds... With that 5.75% load he takes, every $100 you give him is immediately worth $94.25 (not to mention the AUM fee PLUS the high expense ratios)
So true. I wish I could get my mother away from her so-called adviser. But I look at the 1% that he charges her as the price of my own sanity.
Ah, but if he puts her in high front-loaded funds like this so-called "adviser" suggested in the American Funds for OP, the initial cost might be viewed as 6.75% loss right out the starting gate... That's a heck of a financial disadvantage to overcome...
Isn't it about time to retire this sexist expression?
Hah! No never... those of us who know have the experience/scars to show for it.
OP: Put half in VTSAX/VTIAX and keep the rest in a HYSA or hustle for yield from new bank/brokerage account bonuses. It keeps your life interesting and you wife... happy.
-TheDDC
I have VTSAX and have loved it of course. You like the international stock VTIAX? In any case total stock funds can’t really be considered low risk, even at 50/50. She ain’t gonna like it lol.
Correction, I do NOT have VTSAX, I have FSKAX, which I think is the Fidelity equivalent. Is FSKAX a good taxable choice if I wanted to put 200k (40%) in it? Then 20k ibond this week, 20k in Jan, and figure out an ultra safe bond ladder or something for the other 260k? Happy wife happy life.
Coopsdaddy wrote: ↑Sat Nov 06, 2021 7:08 am
Did you ever decide in your strategy?
We spoke with 2 advisors and 1 is putting together our "retirement plan", which looks interesting. 1% fee with both, one seemed much more intested and helpful than the other. My plan is to go it alone, but I have to get the Mrs. on board. So far:
Maxed out the IBond in October $20k and will do it again in Jan $20K
$350k or so in something like this Vangaurd Conservative Growth fund that was recommended. https://investor.vanguard.com/mutual-fu ... view/vscgx It's 40/60 so pretty conservative. Looks like I can get vscgx through Fidelity for $50 bucks if I don't see a Fidelity fund that's the same.
The rest will stay in the money market to keep everyone happy.
That's my plan we're supposed to get this retirement plan thing Monday I think. Thanks for asking.
Thanks for the update. My DW has the same concerns, but she sldo agreed to investing some cash in a conservative fund when she saw our bonds underwater right now. We have been investing during the pandemic and it should payoff long term.
I’m pretty sure that Fidelity does not have a fund similar to life strategy and there’s no equivalent ETF.
It sounds like you got some good information from the advisor. The 1% annual fee is just too much to ignore. Glad you will DIY.
Good luck to you.
"I started with nothing and I still have most of it left."
Creditcardguy wrote: ↑Sun Oct 17, 2021 8:25 am
We sold a condo and have about 500k to do something with. My wife is ultra conservative and she’d be happy leaving it in a Money Market at .03% I’m 54 and plan to work about 5 more years. We wouldn’t need it for 10 years at the earliest. Maxed out the i401k already. Looking for something to make 2-4% with minimal risk. It’s tough because my wife is so risk averse. Any advice appreciated.
Explain inflation to her? A money market IS NOT safe at .03 when inflation is much higher.
I am thankful my wife lets me make all investment decisions. But I do wish she took more interest. At some point I need to simplify portfolio and/or give her instructions so she can manage since she will likely outlive me.
Wiggums wrote: ↑Fri Nov 12, 2021 7:42 am
I’m pretty sure that Fidelity does not have a fund similar to life strategy and there’s no equivalent ETF.
Vanguards's VSCGX (0.13%) 40/60 AA fund has 2 equivalents, that I'm aware of:
ETF: AOM (0.25%) Blackrock iShares Core Moderate Allocation Fund
Mutual Fund @ Schwab: SWCGX (0.50%)
Fidelity doesn't have one that I'm aware of, the closest Fidelity has is a 20/80 AA fund; FIKFX (0.11%)
Obviously AOM is the clear winner if one is unable to get VSCGX, even as a Schwab customer.
Whether rich or poor, a young woman should know how a bank account works, understand the composition of mortgages and bonds, and know the value of interest and how it accumulates. -Hetty Green
A conservative play would be to buy either a 5 year or 10 year treasury bond or TIPS at auction and hold to maturity. The 5 year would assume that rates would go up between now and maturity, so you're giving up some yield today to hopefully get more yield in the future. The 10 year would be conservative, and you'll know exactly how much you'll have at maturity. But if rates go up, you can lose money if you sell before the maturity date. But if you own the actual bond, you have no risk of loss if you hold to maturity. The more times you want to the roll over, the shorter the term.
If you want to gamble more, buying a bond fund would introduce more interest rate risk than the two scenario above.
Wow, what a difference a year makes! I put about half of the 500k in the S&P500 and the other half in the MM at .03% to keep the misses happy. Fast forward a year, my “safe money” is in a hysa at 3.6% and I’m about to move most of that to a Treasury Bill ladder which looks to be 4.5%+.
Just a reminder that just a year ago 2-4% return with little risk was almost impossible.
Creditcardguy wrote: ↑Fri Nov 18, 2022 2:51 pm
Wow, what a difference a year makes! I put about half of the 500k in the S&P500 and the other half in the MM at .03% to keep the misses happy. Fast forward a year, my “safe money” is in a hysa at 3.6% and I’m about to move most of that to a Treasury Bill ladder which looks to be 4.5%+.
Just a reminder that just a year ago 2-4% return with little risk was almost impossible.
I hope the misses isn't unhappy about the 15-20% loss in the S&P500 with the other half of the 500k over the last year
"Ignorance more frequently begets confidence than does knowledge" |
“At 50, everyone has the face he deserves”
goodenyou wrote: ↑Fri Nov 18, 2022 4:37 pm
I hope the misses isn't unhappy about the 15-20% loss in the S&P500 with the other half of the 500k over the last year
She’s good. If it was up to me the whole thing would have gone into the S&P so she really saved us some money!