Am I in trouble? Worried I messed up my retirement already.

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Topic Author
tryingtobogle
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Joined: Thu Jan 13, 2022 5:26 pm

Am I in trouble? Worried I messed up my retirement already.

Post by tryingtobogle »

Hi all,

33-year-old here. Finally able to start investing and have a steady job now. Anyway, I'm just hoping to get any sort of feedback for retirement goals. I will make 70k this year. I should continue to make around then in the foreseeable future.

Debt: student loans 15K at 4%-ish

I started investing in my Roth IRA and have about 30k in there. However, only 12k is in a global index fund. The other 18k are in speculative/high risk growth ETFs and stocks (i.e. ARKK and TDOC). I bought many of these near their peaks and am down considerably. I was worried I was behind in investing and tried to do riskier options to try and make up time. At first, I was fine just averaging down and holding because I believe they will recover at some point in the future.

But if they don't, am I screwed? Since I'm late to investing, can I afford to take a risk on over half my Roth IRA going to zero? Since I can only add 6k a year, it may be hard to average down sufficiently. Was planning on adding 3k to global index fund and 3k to other ETFs each year.

Other investments: Recently started a 403b and have about 3k in it. Will be adding roughly $500 a month for this in index funds.
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WoodSpinner
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by WoodSpinner »

OP,

First, you are Way Ahead of Most People!

Time to change your inner narrative!

Are the aggressive ETFs you purchased in an IRA or Taxable? Do they have Losses? Gains?

Do you have a vision of what you want to invest in?

There are lots of options and we will be happy to assist you.

WoodSpinner
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David Jay
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by David Jay »

Welcome to the forum!
tryingtobogle wrote: Thu Jan 13, 2022 5:41 pm The other 18k are in speculative/high risk growth ETFs and stocks (i.e. ARKK and TDOC). I bought many of these near their peaks and am down considerably. I was worried I was behind in investing and tried to do riskier options to try and make up time.
You have learned one thing already - speculating simply because you are "behind" - without considering willingness and ability to take that risk - is a problem. ARKK may come back, but it made a huge bet on Tesla so as Tesla goes so goes ARKK. The two biggest holdings in TDOC are Pfizer and Moderna, who are unlikely to continue at the current level of profitability without another pandemic.

Since these are in a Roth there will be no tax penalty, so I would consider selling a portion (not all) to reduce your level of anxiety, and hopefully the remainder will recover over time.

The other thing that you will discover is that holding narrowly focused funds leads to performance that is significantly different than the market. The feels good when the sector is "up" but feels really bad when the sector is "down". This leads to a questioning of your choices - like you are doing in this post. Holding broad-market funds is a lot easier because you will have a performance similar to the entire market, which will lead to less regret.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
sailaway
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by sailaway »

On a scale from "not optimal" to "messed up" you are somewhere in the middle. You still have plenty of time to accumulate and invest the Bogle way.
pwill112
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by pwill112 »

I would have been thrilled had I found a forum like this when I was 33. Now it's up to you to study the possibilities if offers.
Dave55
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by Dave55 »

You are not even close to messing up your retirement. Many light years away. You are ahead of a few 70 year olds I know.

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
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GerryL
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by GerryL »

OP,
When I opened this thread, I expected to see a post from a 63-year-old, not a 33-year-old.

You've got time to work on getting your portfolio in order so that you can watch it grow over time. My recommendation would be NOT to make any sudden moves. Read the resources on this site and maybe get a copy of Bogleheads' Guide to Investing. Come up with a plan that suits your "behavioral profile." What will mess you up is making constant changes because you're not confident about your decisions.

I did not get serious about investing until I was in my 40s*. No debt, but no significant savings. And I really didn't know much about what I was doing besides 1) save consistently, 2) invest in stocks, and 3) keep costs low. You have found Bogleheads at a much earlier point than I did, so you have lots of time to get it all together.

* I am now in my 70s and gainfully unemployed (read: retired).
Topic Author
tryingtobogle
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by tryingtobogle »

WoodSpinner wrote: Thu Jan 13, 2022 7:30 pm OP,

First, you are Way Ahead of Most People!

Time to change your inner narrative!

Are the aggressive ETFs you purchased in an IRA or Taxable? Do they have Losses? Gains?

Do you have a vision of what you want to invest in?

There are lots of options and we will be happy to assist you.

WoodSpinner
Thank you WoodSpinner.

The aggressive ETFs are in my Roth IRA. So if I sell at a loss, I don't get any kind of tax break. They are all down 30-40% at this point.

Again, I'm okay with having some risk in my Roth IRA since I know I have time to wait out the bumps. If I could do it over again, I would do something like 90% global index fund and 10% aggressive/risky equities. I'm just trying to figure out how to move forward with my allocation. If I aggressively average down in the risky ETFs, I might be in better shape to rebound. Or I could allocate more to my global index fund, but then my risky ETFs average cost will not budge much.
Topic Author
tryingtobogle
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by tryingtobogle »

Dave55 wrote: Thu Jan 13, 2022 7:39 pm You are not even close to messing up your retirement. Many light years away. You are ahead of a few 70 year olds I know.

Dave
Thank you Dave (and Pwill and others) who believe I am still early. I guess I shouldnt compare myself to 27 year olds who already have 250k+ in savings.
I know the vast majority of my net worth will earned in the future. I've really only had a decent paying job for a couple years now. So I'm just trying to get on the right path moving forward. I always was a fan of Boglehead investing, but just made some bad decisions and am trying to make my way back.
Topic Author
tryingtobogle
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by tryingtobogle »

GerryL wrote: Thu Jan 13, 2022 8:01 pm OP,
When I opened this thread, I expected to see a post from a 63-year-old, not a 33-year-old.

You've got time to work on getting your portfolio in order so that you can watch it grow over time. My recommendation would be NOT to make any sudden moves. Read the resources on this site and maybe get a copy of Bogleheads' Guide to Investing. Come up with a plan that suits your "behavioral profile." What will mess you up is making constant changes because you're not confident about your decisions.

I did not get serious about investing until I was in my 40s*. No debt, but no significant savings. And I really didn't know much about what I was doing besides 1) save consistently, 2) invest in stocks, and 3) keep costs low. You have found Bogleheads at a much earlier point than I did, so you have lots of time to get it all together.

* I am now in my 70s and gainfully unemployed (read: retired).
Thank you Gerry. Yes, I am trying to remove my impulse to sell the ETFs that are doing poorly. I do believe they will rebound with time as they seem to follow boom and bust cycles.

So perhaps I can just stick to mostly investing my global passive index funds from now on and eventually the risky % of my portfolio will become a much smaller % overtime. Maybe it will be ok?
autopeep
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by autopeep »

tryingtobogle wrote: Thu Jan 13, 2022 8:03 pm
WoodSpinner wrote: Thu Jan 13, 2022 7:30 pm OP,

First, you are Way Ahead of Most People!

Time to change your inner narrative!

Are the aggressive ETFs you purchased in an IRA or Taxable? Do they have Losses? Gains?

Do you have a vision of what you want to invest in?

There are lots of options and we will be happy to assist you.

WoodSpinner
Thank you WoodSpinner.

The aggressive ETFs are in my Roth IRA. So if I sell at a loss, I don't get any kind of tax break. They are all down 30-40% at this point.
This is a nonsensical statement and embodies sunk cost fallicy. Tax consequences are largely irrelevant in your context and income level (assuming your decision to use a Roth account was correct). Sell the high risk positions
fortunefavored
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by fortunefavored »

The smartest thing to do is learn your lesson, forget about "risky moonshots" and invest the Bogleheads way for 30 or 40 years and retire rich. Worked for me and a countless others.

The not-so-smart thing to do is to limit your "risky" investments to 10% of your total portfolio, and constantly rebalance any gains into your "real" portfolio. Maybe write down in your IPS (Investment policy statement): "Invest no more than 10% into individual and risky assets. Rebalance any gains into my main portfolio and never add money to my risk portfolio." - if it goes to 0, you've solved your problem.

The reason I say "not-so-smart" is chasing that next big win, or hopping on the latest trend requires you to consume far too much "noise" and you will be endlessly tempted to "do something" with the rest of your portfolio.
KlangFool
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by KlangFool »

tryingtobogle wrote: Thu Jan 13, 2022 8:03 pm
Again, I'm okay with having some risk in my Roth IRA since I know I have time to wait out the bumps. If I could do it over again, I would do something like 90% global index fund and 10% aggressive/risky equities.
tryingtobogle,

You should start by understanding a simple point.

1) This does not matter. Aka, taking additional risk. It is totally pointless and useless.

2) The most important thing is how much you save each year.

A) If you save enough, you can reach your goal.

B) If you do not save enough, you would not reach your goal even if you take extra risk.

3) Average American save less than 5% of their gross income. You are way ahead of most American just by saving more than 5%.

4) Take a deep breadth and start with the basic.

A) What is your gross income?

B) What is your marginal tax rate?

C) What is your annual savings/investment?

D) What is your annual expense?

KlangFool
40% VWENX | 12.5% VFWAX/VTIAX | 11.5% VTSAX | 16% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 40% Wellington 40% 3-funds 20% Mini-Larry
Topic Author
tryingtobogle
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by tryingtobogle »

fortunefavored wrote: Thu Jan 13, 2022 8:26 pm The smartest thing to do is learn your lesson, forget about "risky moonshots" and invest the Bogleheads way for 30 or 40 years and retire rich. Worked for me and a countless others.

The not-so-smart thing to do is to limit your "risky" investments to 10% of your total portfolio, and constantly rebalance any gains into your "real" portfolio. Maybe write down in your IPS (Investment policy statement): "Invest no more than 10% into individual and risky assets. Rebalance any gains into my main portfolio and never add money to my risk portfolio." - if it goes to 0, you've solved your problem.

The reason I say "not-so-smart" is chasing that next big win, or hopping on the latest trend requires you to consume far too much "noise" and you will be endlessly tempted to "do something" with the rest of your portfolio.
Wise advice. Thank you. I like the idea of sticking to a plan and rebalancing above the number. If I keep moving my investments mostly into the index fund in my Roth, I should get there eventually. I guess I am just trying to figure out how to best do that.
Topic Author
tryingtobogle
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by tryingtobogle »

KlangFool wrote: Thu Jan 13, 2022 8:34 pm
tryingtobogle wrote: Thu Jan 13, 2022 8:03 pm
Again, I'm okay with having some risk in my Roth IRA since I know I have time to wait out the bumps. If I could do it over again, I would do something like 90% global index fund and 10% aggressive/risky equities.
tryingtobogle,

You should start by understanding a simple point.

1) This does not matter. Aka, taking additional risk. It is totally pointless and useless.

2) The most important thing is how much you save each year.

A) If you save enough, you can reach your goal.

B) If you do not save enough, you would not reach your goal even if you take extra risk.

3) Average American save less than 5% of their gross income. You are way ahead of most American just by saving more than 5%.

4) Take a deep breadth and start with the basic.

A) What is your gross income?

B) What is your marginal tax rate?

C) What is your annual savings/investment?

D) What is your annual expense?

KlangFool
Thank you Klang! I do save more than 5%. I am very frugal and don't really spend much money at all. Basically, my risky investments were my expensive hobby this past year, but I'd like to move on to other hobbies moving forward. Again, sticking with a plan makes sense.
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Beensabu
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by Beensabu »

tryingtobogle wrote: Thu Jan 13, 2022 9:13 pm If I keep moving my investments mostly into the index fund in my Roth, I should get there eventually. I guess I am just trying to figure out how to best do that.
All your contributions go to the index funds in your Roth and 403b, and you don't add to the other stuff at all.

Max out your 403b every year. Not $500/month. You make $70k a year now. Max it out. Just do it. Set your standard of living on the income left after retirement contributions, healthcare premiums, payroll deductions, and taxes.

By the time you retire, those speculative funds/stocks will be a negligible % of your overall portfolio. It won't matter how they've done.

You did what you did, and it's done. Don't do it again.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
260chrisb
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by 260chrisb »

tryingtobogle wrote: Thu Jan 13, 2022 5:41 pm Hi all,

33-year-old here. Finally able to start investing and have a steady job now. Anyway, I'm just hoping to get any sort of feedback for retirement goals. I will make 70k this year. I should continue to make around then in the foreseeable future.

Debt: student loans 15K at 4%-ish

I started investing in my Roth IRA and have about 30k in there. However, only 12k is in a global index fund. The other 18k are in speculative/high risk growth ETFs and stocks (i.e. ARKK and TDOC). I bought many of these near their peaks and am down considerably. I was worried I was behind in investing and tried to do riskier options to try and make up time. At first, I was fine just averaging down and holding because I believe they will recover at some point in the future.

But if they don't, am I screwed? Since I'm late to investing, can I afford to take a risk on over half my Roth IRA going to zero? Since I can only add 6k a year, it may be hard to average down sufficiently. Was planning on adding 3k to global index fund and 3k to other ETFs each year.

Other investments: Recently started a 403b and have about 3k in it. Will be adding roughly $500 a month for this in index funds.
Welcome to the forum! Nah, you're fine! You're also 33! You've got plenty of years to screw up...... :D I mean do things better. Learn from what you've done and don't repeat it. You have not lost much time in your investing life as many of us started later than you. My first dollar for retirement was saved at 33 so you're way ahead of me. Do some research, learn from this forum, forget the past, come up with an asset allocation you can live with that includes funds you understand, understand your risk tolerance and long term capacity, and never stop contributing. Things will work out just fine. Ask me how I know. Also, get rid of that student loan debt. You're 33!!
ivgrivchuck
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by ivgrivchuck »

tryingtobogle wrote: Thu Jan 13, 2022 8:03 pm
WoodSpinner wrote: Thu Jan 13, 2022 7:30 pm OP,

First, you are Way Ahead of Most People!

Time to change your inner narrative!

Are the aggressive ETFs you purchased in an IRA or Taxable? Do they have Losses? Gains?

Do you have a vision of what you want to invest in?

There are lots of options and we will be happy to assist you.

WoodSpinner
Thank you WoodSpinner.

The aggressive ETFs are in my Roth IRA. So if I sell at a loss, I don't get any kind of tax break. They are all down 30-40% at this point.

Again, I'm okay with having some risk in my Roth IRA since I know I have time to wait out the bumps. If I could do it over again, I would do something like 90% global index fund and 10% aggressive/risky equities. I'm just trying to figure out how to move forward with my allocation. If I aggressively average down in the risky ETFs, I might be in better shape to rebound. Or I could allocate more to my global index fund, but then my risky ETFs average cost will not budge much.
Accept the loss, move on. Trying to make up for the losses is just gambling.

100% VT, that's all you need.
40% VTI | 40% VXUS | 13% I-bonds | 7% EE-bonds
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Taylor Larimore
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by Taylor Larimore »

tryingtobogle:

Many of us have made mistakes investing. I made my share.

Take a look at the many benefits using The Three-Fund Portolio or something similar--then stay-the-course.

Best wishes
Taylor
Jack Bogle's Words of Wisdom:"The Three-Fund Portfolio will help you to develop a sound asset allocation strategy, make smart investment selections, and guide the implementation of your plan."
"Simplicity is the master key to financial success." -- Jack Bogle
rxtra8
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by rxtra8 »

Don't worry. You are way ahead of the vast majority of folks in the US. Follow the collected investing wisdom on this site and do not reach for the moon. I knew nothing and did not even begin to save in a 401 until I was 42 years of age. But I saved and did not over spend. Even after I started a 401 I knew nothing and made a few mistakes along the journey, but I made a few good choices. My good choices were choosing a well paying career and working for a company that paid well and offered a defined benefit pension, finding the woman of may dreams at 60yo, SAVING and maxing out 401, SS at 70 (I am 10.5yrs older than DW), finding this forum and investing appropriately (with Vanguard). Now my pension and SS are significantly more than 50% of my expenses (we paid cash for our apartment so no mortgage). We do not worry about money.

Lots of good advise already given to you. Again, do not worry, just look forward and follow the Forum advice. You cannot get better advice at a lower (or higher) price.

Good luck to you!
“The eye sees only what the mind is prepared to comprehend.” | — Robertson Davies
Topic Author
tryingtobogle
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by tryingtobogle »

Beensabu wrote: Thu Jan 13, 2022 9:26 pm
tryingtobogle wrote: Thu Jan 13, 2022 9:13 pm If I keep moving my investments mostly into the index fund in my Roth, I should get there eventually. I guess I am just trying to figure out how to best do that.
All your contributions go to the index funds in your Roth and 403b, and you don't add to the other stuff at all.

Max out your 403b every year. Not $500/month. You make $70k a year now. Max it out. Just do it. Set your standard of living on the income left after retirement contributions, healthcare premiums, payroll deductions, and taxes.

By the time you retire, those speculative funds/stocks will be a negligible % of your overall portfolio. It won't matter how they've done.

You did what you did, and it's done. Don't do it again.
Thank you. It is done! I am trying to move on and this forum is helpful for that. You're right, if I just forget about the speculative stocks and add to my global index funds, eventually the stocks will be a very small % of my portfolio. I think I will view them as lost money and just hold them as a reminder. If they go up, great, I will sell and rebalance. If they don't, no worries because eventually it will be an insignificant %...if just feels significant now.

I am just learning that I can add a lot more to my 403b, I will do that, thank you!
Last edited by tryingtobogle on Thu Jan 13, 2022 9:57 pm, edited 1 time in total.
Topic Author
tryingtobogle
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by tryingtobogle »

260chrisb wrote: Thu Jan 13, 2022 9:27 pm
tryingtobogle wrote: Thu Jan 13, 2022 5:41 pm Hi all,

33-year-old here. Finally able to start investing and have a steady job now. Anyway, I'm just hoping to get any sort of feedback for retirement goals. I will make 70k this year. I should continue to make around then in the foreseeable future.

Debt: student loans 15K at 4%-ish

I started investing in my Roth IRA and have about 30k in there. However, only 12k is in a global index fund. The other 18k are in speculative/high risk growth ETFs and stocks (i.e. ARKK and TDOC). I bought many of these near their peaks and am down considerably. I was worried I was behind in investing and tried to do riskier options to try and make up time. At first, I was fine just averaging down and holding because I believe they will recover at some point in the future.

But if they don't, am I screwed? Since I'm late to investing, can I afford to take a risk on over half my Roth IRA going to zero? Since I can only add 6k a year, it may be hard to average down sufficiently. Was planning on adding 3k to global index fund and 3k to other ETFs each year.

Other investments: Recently started a 403b and have about 3k in it. Will be adding roughly $500 a month for this in index funds.
Welcome to the forum! Nah, you're fine! You're also 33! You've got plenty of years to screw up...... :D I mean do things better. Learn from what you've done and don't repeat it. You have not lost much time in your investing life as many of us started later than you. My first dollar for retirement was saved at 33 so you're way ahead of me. Do some research, learn from this forum, forget the past, come up with an asset allocation you can live with that includes funds you understand, understand your risk tolerance and long term capacity, and never stop contributing. Things will work out just fine. Ask me how I know. Also, get rid of that student loan debt. You're 33!!
Thank you! This forum is super helpful! I have been trying to get comfortable with my investing this past year. And I think I am finally coming to terms with it now.

As for the student loans...I was in grad school a long time so that's why I still have them!
lostdog
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by lostdog »

VT and chill from now on... :beer

Add BND or BNDW when you get closer to your goals.
Taxable: VTI+VXUS || IRA: VT+BNDW
Katietsu
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by Katietsu »

-Consider this to be a cheap lesson. Better to lose 40% of $18,000 now than 40% of $200,000 later.
-Go ahead and put future contributions into the index funds.
-I do not believe you should own individual stocks unless you are prepared to stay on top of them. So I would consider selling the individual stocks.
-If you want to let the ETFs ride like ARKK, that could be your play money.
-Here is one way to evaluate whether or not to sell. If you did not own it, would you want to buy at the current price? Given that buying and selling stocks is now essentially frictionless, holding on it a stock is the equivalent of buying at today’s price.
-You plan to add $1000 a month to index funds. Even if you do nothing else, you will be providing the foundation for your retirement.
-The amount you need to save for retirement depends on many factors. But without considering any personal information, aiming for at least 15% is a good rule of thumb.
—If your income goes up, try to use the increase to fund savings. It is easier to just keep living on the same income than it is to cut back.
-You have made a few statements that show some of the thoughts creeping in that lead to faulty decisions. You identified the first one which was fear of being behind. Consider reading the Wiki on doing an IPS. I think it might help.
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calmaniac
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by calmaniac »

tryingtobogle, welcome to the forum!

This is not a lethal mistake, your retirement will survive. My guess is that almost everyone reading your post has done something similar when they were young, learned an important lesson, and voila, went from a stock-trading frog to a Boglehead prince or princess.

I made my mistake at 43 during the 2000 tech bubble. Learned my lesson, switched my investments to low-cost index funds, and now 20 years later we are doing great in regards to assets. The basics are pretty simple.

You are fine. You need to do some reading and learn the basics. This is not a race, it is a marathon.
≈63yo. AA 70/30: 30% TSM, 16% value (VIOV/VFVA/AVUV), 16% foreign LC, 8%emerging, 30% GFund/VBTIX. Fed pensions now ≈60% of expenses. Taking SS @age 70--> pension+SS ≈100% of expenses. What me worry?
Topic Author
tryingtobogle
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by tryingtobogle »

Katietsu wrote: Thu Jan 13, 2022 10:07 pm -Consider this to be a cheap lesson. Better to lose 40% of $18,000 now than 40% of $200,000 later.
-Go ahead and put future contributions into the index funds.
-I do not believe you should own individual stocks unless you are prepared to stay on top of them. So I would consider selling the individual stocks.
-If you want to let the ETFs ride like ARKK, that could be your play money.
-Here is one way to evaluate whether or not to sell. If you did not own it, would you want to buy at the current price? Given that buying and selling stocks is now essentially frictionless, holding on it a stock is the equivalent of buying at today’s price.
-You plan to add $1000 a month to index funds. Even if you do nothing else, you will be providing the foundation for your retirement.
-The amount you need to save for retirement depends on many factors. But without considering any personal information, aiming for at least 15% is a good rule of thumb.
—If your income goes up, try to use the increase to fund savings. It is easier to just keep living on the same income than it is to cut back.
-You have made a few statements that show some of the thoughts creeping in that lead to faulty decisions. You identified the first one which was fear of being behind. Consider reading the Wiki on doing an IPS. I think it might help.
Very good points. And reading more is calming my nerves about feeling behind.

Interesting point about the stocks...I actually would want to own at the current price haha. TDOC in particular I think is pretty fair around 75 and my cost basis is 120. So might as well just hold I think. As others mentioned, eventually if I keep adding more to my 403b and index in my Roth, the ARKK and stocks will be a very small % of my overall portfolio. That is my goal. Thank you!
HappyPappy
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by HappyPappy »

tryingtobogle wrote: Thu Jan 13, 2022 5:41 pm Hi all,

33-year-old here. Finally able to start investing and have a steady job now. Anyway, I'm just hoping to get any sort of feedback for retirement goals. I will make 70k this year. I should continue to make around then in the foreseeable future.

Debt: student loans 15K at 4%-ish

I started investing in my Roth IRA and have about 30k in there. However, only 12k is in a global index fund. The other 18k are in speculative/high risk growth ETFs and stocks (i.e. ARKK and TDOC). I bought many of these near their peaks and am down considerably. I was worried I was behind in investing and tried to do riskier options to try and make up time. At first, I was fine just averaging down and holding because I believe they will recover at some point in the future.

But if they don't, am I screwed? Since I'm late to investing, can I afford to take a risk on over half my Roth IRA going to zero? Since I can only add 6k a year, it may be hard to average down sufficiently. Was planning on adding 3k to global index fund and 3k to other ETFs each year.

Other investments: Recently started a 403b and have about 3k in it. Will be adding roughly $500 a month for this in index funds.
You’re good, you’ve got plenty of time to recover and adjust. Decades, literally.

When I was 33 I was out of work and living with my parents. :) Sometimes life’s like that. I had no savings of any kind. But 17 years later with one salary the only debt we have is the mortgage, college and retirement savings look good (not bullet proof, but the plans have some fault tolerance). Of course, luck plays a much larger role in all that than I like to think about. But I started out by reading Dave Ramsey, got rid of all my debt, then started investing in individual stocks - not a good idea. :) my favorite purchase is this sugar refinery I bought into, seemed like they were poised to expand their market and make mega bucks, then boom, it blew up, literally. As in the refinery exploded. :shock: in fact, I have a few stories like that. I bought into a company that makes these gigantic machines to extract oil from the sea-bed - right before the cost of oil plummeted. The company sank to the bottom along with my money. But then I discovered broad market ETFs and the concept of risk management and things started going better.

Just keep saving and reading, and with a little luck you’ll be good. Unless you planned to retire when you’re forty. Then maybe you’re screwed. :) (kidding!)
wetgear
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by wetgear »

You made some small mistakes but you're doing fine. Have you considered a full portfolio review here?

viewtopic.php?t=6212

It's a good exercise to fully understand the whole picture and you will get better and more complete advice.
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FrugalInvestor
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by FrugalInvestor »

Most if not all of us have made mistakes in our investing careers. As others have said, time is your friend and you have it in abundance. Learn your lesson, get back on track and stay the course and you'll be fine.
Have a plan, stay the course and simplify. Then ignore the noise!
Valuethinker
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by Valuethinker »

tryingtobogle wrote: Thu Jan 13, 2022 8:03 pm
WoodSpinner wrote: Thu Jan 13, 2022 7:30 pm OP,

First, you are Way Ahead of Most People!

Time to change your inner narrative!

Are the aggressive ETFs you purchased in an IRA or Taxable? Do they have Losses? Gains?

Do you have a vision of what you want to invest in?

There are lots of options and we will be happy to assist you.

WoodSpinner
Thank you WoodSpinner.

The aggressive ETFs are in my Roth IRA. So if I sell at a loss, I don't get any kind of tax break. They are all down 30-40% at this point.

Again, I'm okay with having some risk in my Roth IRA since I know I have time to wait out the bumps. If I could do it over again, I would do something like 90% global index fund and 10% aggressive/risky equities. I'm just trying to figure out how to move forward with my allocation. If I aggressively average down in the risky ETFs, I might be in better shape to rebound. Or I could allocate more to my global index fund, but then my risky ETFs average cost will not budge much.
I am sure someone has already mentioned the Sunk Cost Fallacy.

What has happened with your investments in the past is irrelevant. It's only the future that matters.

You are likely to be more successful by switching to a global equity index fund (or a US Total Stock Market fund, or a mix).

These funds are highly concentrated & high risk and they have not done well for you.

Sell them. The best thing you can do with a bad investment is take the pain up front and get rid of it. For more complicated reasons bad funds have a way of staying bad funds - those who hold on take the pain of letting those who get out sell.

I was a dot com millionaire (my employer's stock) at the beginning of 2000. As the stock went down, I did not sell. I sold eventually for about 10% of the peak price (maybe not even that). I kept anchoring on the previous share price.

Even though there was a bear market ahead (2000-03) and then the Global Financial Crisis (2008-09) if I had just bought a global equity index fund or ETF, then, I would be in a lot better shape now.
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Tamarind
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by Tamarind »

Valuethinker wrote: Fri Jan 14, 2022 3:40 am
tryingtobogle wrote: Thu Jan 13, 2022 8:03 pm
WoodSpinner wrote: Thu Jan 13, 2022 7:30 pm OP,

First, you are Way Ahead of Most People!

Time to change your inner narrative!

Are the aggressive ETFs you purchased in an IRA or Taxable? Do they have Losses? Gains?

Do you have a vision of what you want to invest in?

There are lots of options and we will be happy to assist you.

WoodSpinner
Thank you WoodSpinner.

The aggressive ETFs are in my Roth IRA. So if I sell at a loss, I don't get any kind of tax break. They are all down 30-40% at this point.

Again, I'm okay with having some risk in my Roth IRA since I know I have time to wait out the bumps. If I could do it over again, I would do something like 90% global index fund and 10% aggressive/risky equities. I'm just trying to figure out how to move forward with my allocation. If I aggressively average down in the risky ETFs, I might be in better shape to rebound. Or I could allocate more to my global index fund, but then my risky ETFs average cost will not budge much.
I am sure someone has already mentioned the Sunk Cost Fallacy.

What has happened with your investments in the past is irrelevant. It's only the future that matters.

You are likely to be more successful by switching to a global equity index fund (or a US Total Stock Market fund, or a mix).

These funds are highly concentrated & high risk and they have not done well for you.

Sell them. The best thing you can do with a bad investment is take the pain up front and get rid of it. For more complicated reasons bad funds have a way of staying bad funds - those who hold on take the pain of letting those who get out sell.

I was a dot com millionaire (my employer's stock) at the beginning of 2000. As the stock went down, I did not sell. I sold eventually for about 10% of the peak price (maybe not even that). I kept anchoring on the previous share price.

Even though there was a bear market ahead (2000-03) and then the Global Financial Crisis (2008-09) if I had just bought a global equity index fund or ETF, then, I would be in a lot better shape now.
I agree with this advice. You have lost 30-40% of your 18k which was invested in inappropriately risky stocks. So you lost less than 7.2k. I know it's painful as a share of what you have invested, but it's less than what you'll contribute to retirement this year. And you have learned a valuable lesson: the risk in risky stocks is real and can happen to you.

I lost 10% of my Roth total at the time on an inverse leveraged ETF back in 2008, so I've been there. Sell the risky stuff, stick to the global index. Focus on developing your career, making more money, and increasing your savings rate. For the next 10 years at least, most of the increase in your retirement funds will be from your contributions. So focus on contributing as much as you can.
bog007
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by bog007 »

Mr. Larimore is 96 I believe. I'd take his advice. Gluck
Taylor Larimore wrote: Thu Jan 13, 2022 9:39 pm tryingtobogle:

Many of us have made mistakes investing. I made my share.

Take a look at the many benefits using The Three-Fund Portolio or something similar--then stay-the-course.

Best wishes
Taylor
Jack Bogle's Words of Wisdom:"The Three-Fund Portfolio will help you to develop a sound asset allocation strategy, make smart investment selections, and guide the implementation of your plan."
The only person that can predict the future is Nostradamus and you're no him. Simplicity | 60/40
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dogagility
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by dogagility »

tryingtobogle wrote: Thu Jan 13, 2022 8:10 pm Yes, I am trying to remove my impulse to sell the ETFs that are doing poorly. I do believe they will rebound with time as they seem to follow boom and bust cycles.
I would sell these high expense ETFs now. The best predictor of future fund returns is the expense ratio. The higher the expense ratio, the lower the expected return.
https://www.morningstar.com/articles/75 ... or-failure
https://occaminvesting.co.uk/the-predic ... r-of-fees/

I strongly suggest investing all of your retirement funds in low expense ratio index funds now.
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by Jack FFR1846 »

dogagility wrote: Fri Jan 14, 2022 7:49 am
tryingtobogle wrote: Thu Jan 13, 2022 8:10 pm Yes, I am trying to remove my impulse to sell the ETFs that are doing poorly. I do believe they will rebound with time as they seem to follow boom and bust cycles.
I would sell these high expense ETFs now. The best predictor of future fund returns is the expense ratio. The higher the expense ratio, the lower the expected return.
https://www.morningstar.com/articles/75 ... or-failure
https://occaminvesting.co.uk/the-predic ... r-of-fees/

I strongly suggest investing all of your retirement funds in low expense ratio index funds now.
This is exactly correct.

Some good news for you. I didn't start saving until my first "real" job at 29 and back then, everyone saved about 5% in their 401k, which I also did. Today, I have (at 64) over $3 1/2M in investments and no debt. You can easily do this with the big lead you have over me at the time. I'm a lowly engineer and my wife's a nurse, so we don't have the dump trucks of money doctors pull in. Yes, we did have student loans and a mortgage and a personal loan for our wedding and a car loan.....all of which were avalanche paid off before that word was invented for what we were doing.

Now, something to learn from. When you feel behind, there is no way to "catch up" beyond simply saving more. Those garbage, high cost investments will remain garbage and high cost. Today is a great day to sell them all and buy proper 3 fund, low cost, diversified funds.
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sureshoe
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by sureshoe »

tryingtobogle wrote: Thu Jan 13, 2022 5:41 pm Hi all,

33-year-old here. Finally able to start investing and have a steady job now. Anyway, I'm just hoping to get any sort of feedback for retirement goals. I will make 70k this year. I should continue to make around then in the foreseeable future.

Debt: student loans 15K at 4%-ish

I started investing in my Roth IRA and have about 30k in there. However, only 12k is in a global index fund. The other 18k are in speculative/high risk growth ETFs and stocks (i.e. ARKK and TDOC). I bought many of these near their peaks and am down considerably. I was worried I was behind in investing and tried to do riskier options to try and make up time. At first, I was fine just averaging down and holding because I believe they will recover at some point in the future.

But if they don't, am I screwed? Since I'm late to investing, can I afford to take a risk on over half my Roth IRA going to zero? Since I can only add 6k a year, it may be hard to average down sufficiently. Was planning on adding 3k to global index fund and 3k to other ETFs each year.

Other investments: Recently started a 403b and have about 3k in it. Will be adding roughly $500 a month for this in index funds.
First - pay off the student loan. There is nowhere in the market you're going to get a taxfree return guaranteed of 4% or higher.

Then, rebalance to a simple portfolio of broad indexes. If you're able to save $500/month, that's $6k/year. I'd do everything I possibly could to fund that Roth each year. If you could do that, and nothing more, you should be a millionaire by age 60, with $2M around age 65. Retirement probably costs more 30 years from now, but hopefully your earnings and savings continue to improve.

Just like I told a similarly aged family member - this time is about accumulation and getting the money to grow year over year. The compounding is the magic. I have a lot of friends who chased big returns in the late 90s. They're fine now, but not as good as the tortoises who just kept plowing money into simple mutual funds and indexes.
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by ResearchMed »

tryingtobogle wrote: Thu Jan 13, 2022 5:41 pm Hi all,

33-year-old here. Finally able to start investing and have a steady job now. Anyway, I'm just hoping to get any sort of feedback for retirement goals. I will make 70k this year. I should continue to make around then in the foreseeable future.

Debt: student loans 15K at 4%-ish

I started investing in my Roth IRA and have about 30k in there. However, only 12k is in a global index fund. The other 18k are in speculative/high risk growth ETFs and stocks (i.e. ARKK and TDOC). I bought many of these near their peaks and am down considerably. I was worried I was behind in investing and tried to do riskier options to try and make up time. At first, I was fine just averaging down and holding because I believe they will recover at some point in the future.

But if they don't, am I screwed? Since I'm late to investing, can I afford to take a risk on over half my Roth IRA going to zero? Since I can only add 6k a year, it may be hard to average down sufficiently. Was planning on adding 3k to global index fund and 3k to other ETFs each year.

Other investments: Recently started a 403b and have about 3k in it. Will be adding roughly $500 a month for this in index funds.
Welcome to Bogleheads.

You are 33, and you have many years ahead of you to earn and save, etc. So don't panic... in part to save yourself grief (and wear and tear on your body), and also so you don't make "panic decisions". Those will almost never be good decisions.

Now, about "catching up". The stock market (and most things) do not work that way.
Whatever the market, and individual holdings, are going to "do", that will happen regardless of your particular situation. Keep in mind there will be others on sort of "different cycles" than you... and the market won't - and can't possibly - "catch up" for all of them. Each person may have different "cathing up" they wish they could do.

The way to think about this is to consider: "I am here, now. What is the best way for me to invest from this point forward?" And that should be without any regard for "how you got here", except perhaps to learn from mistakes :wink:

Please do a bit of reading about "sunk costs", which is more specific, but related. (It's usually considered about a specific decision, but it can hold for one's current situation as well.)

Whatever your investment situation NOW... you want to figure out the best way GOING FORWARD.
That can include selling holdings that may not have been wise, even if they are "down" (this is the sunk cost situation). This particular issue is difficult, in part emotionally, because of the tendency to think the way you did: "one wants it to catch back up" or such.
That *might* work if there is a particular and *temporary* reason why a holding is "down". But it's rarely that clear cut.

Get a fresh start "from this point forward" and focus on doing that... and trying to avoid panicky trades in the future.

You are doing fine.
At your age, many aren't even thinking about any of this yet, and some haven't saved a thing yet... or may be in debt. Try to focus on how *well* you are doing!

RM
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WoodSpinner
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by WoodSpinner »

tryingtobogle wrote: Thu Jan 13, 2022 8:03 pm
WoodSpinner wrote: Thu Jan 13, 2022 7:30 pm OP,

First, you are Way Ahead of Most People!

Time to change your inner narrative!

Are the aggressive ETFs you purchased in an IRA or Taxable? Do they have Losses? Gains?

Do you have a vision of what you want to invest in?

There are lots of options and we will be happy to assist you.

WoodSpinner
Thank you WoodSpinner.

The aggressive ETFs are in my Roth IRA. So if I sell at a loss, I don't get any kind of tax break. They are all down 30-40% at this point.

Again, I'm okay with having some risk in my Roth IRA since I know I have time to wait out the bumps. If I could do it over again, I would do something like 90% global index fund and 10% aggressive/risky equities. I'm just trying to figure out how to move forward with my allocation. If I aggressively average down in the risky ETFs, I might be in better shape to rebound. Or I could allocate more to my global index fund, but then my risky ETFs average cost will not budge much.
Since they are in your Roth you do have options.

Fortunately you have plenty of time and opportunity to save, invest, and enjoy life.

It sounds like you understand your options ….

Personally, I would:
- Start by writing an Investment Policy Statement (IPS) (the Bogleheads WIKI and Search bar will be helpful) and describe how you want to invest and what you want to own. Think of it as a message and guidance from your current self to your future self.

- Make a quick shift from where you are today to what your IPS says and move forward. Keep saving, investing and enjoying life.

This is how I handled things when I discovered Bogleheads in 2017 and had to start seriously planning for Retirement in 2018.

WoodSpinner
Volando
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by Volando »

tryingtobogle wrote: Thu Jan 13, 2022 8:08 pm I guess I shouldnt compare myself to 27 year olds who already have 250k+ in savings.
I know the vast majority of my net worth will earned in the future. I've really only had a decent paying job for a couple years now. So I'm just trying to get on the right path moving forward. I always was a fan of Boglehead investing, but just made some bad decisions and am trying to make my way back.
Comparing your savings to others is generally a fruitless exercise unless they have a lesson to share (like the importance of saving early). Each persons situation is different. As others have mentioned you’re already ahead of many people by taking this seriously at your age. I’m around your age and also just started fairly recently. Because of schooling and other factors I didn’t get a chance to start saving as early as others. If I were to compare myself to those 20 year olds I would feel like a failure but my (and your) circumstances are different. Some of the people who post here around our age who have high savings generally were able to start with much higher salaries or had a head start in some other way. The important thing is that you develop a plan that works for your circumstances and that you stick to it over the long run. Plenty of advice on here on how to do that! :sharebeer :sharebeer
vtsnowdin
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by vtsnowdin »

In addition to all the good advice above I suggest you pick up a copy of "The little Book of Common sense investing" By John C. Bogel and read it cover to cover. It is pretty much the bible here at BH. and is a great store of wisdom.
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Bogle101
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by Bogle101 »

You have not messed up your retirement because you are still relatively young.

My advice would be to move all retirement investments into some combination of Vanguard 500, Vanguard Total Stock Market or Vanguard Extended Market. Extended Market is my personal favorite.

Max out you're 401k at $19,500 and your Roth IRA at $6k, you have enough salary to do it.

Also, they may cancel student debt so maybe don't pay that back faster than you need to.
80% Extended Market | 10% S&P 500 | 10% Cash
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by LadyGeek »

I removed an off-topic post. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

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CurlyDave
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by CurlyDave »

tryingtobogle wrote: Thu Jan 13, 2022 5:41 pm ... I bought many of these near their peaks and am down considerably. I was worried I was behind in investing and tried to do riskier options to try and make up time. At first, I was fine just averaging down and holding because I believe they will recover at some point in the future...
1. You are not in trouble. You have a long time ahead of you to invest wisely. I am 76 and wish I had understood this at 33.

2. You have learned an important lesson about your risk tolerance. Learning this early in your career is worth the cost.

3. "Averaging down" is a stock trader's term, not a stock investor's term. Long before this forum existed I was an investor, but every once in a while some salesman for a sleazy pump and dump brokerage would call me on the phone. Once I let myself be persuaded to invest in his recommendation. When the stock promptly went down, he called back and suggested that I should "average down". It took a few milliseconds for me to figure out this would be more to his advantage than mine. Since then I have told anyone who suggested "averaging down" that if he came over to my place after work I would treat him to a nice tar and feathers party. Shockingly, no one has ever take me up on the offer. Refusing to play this game has benefitted me greatly.

Stock investors talk about Dollar Cost Averaging. And while this might not be the textbook definition, I consider steady, routine investments into a fund with some, but not excessive, risk exposure to fall into this category. Over many years you will average out the cost of your shares, without regrets. Read Jack Bogle's advice on "funny money" and if you want to put some modest percentage of your investments into high risk-high potential reward vehicles, go for it, but only with a small amount of your portfolio.
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BrooklynInvest
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Re: Am I in trouble? Worried I messed up my retirement already.

Post by BrooklynInvest »

fortunefavored wrote: Thu Jan 13, 2022 8:26 pm The smartest thing to do is learn your lesson, forget about "risky moonshots" and invest the Bogleheads way for 30 or 40 years and retire rich. Worked for me and a countless others.
I'd add that I'd think that many people here learned a similar lesson and investing according to Boglehead principles didn't happen overnight.

OP the cost of your 'early detour' is low relative to a lot of folks on this board, me included (I owned Yahoo stock at your age.) You saved and invested. Sure the "invested" part needs modification but that gets filed under VERY solvable problem. You're doing just fine and learned how to improve things at a fairly early age. I understand the concern, but the concern is what's helping you optimize... in plenty of time.

Write your IP

Move to indexing

Keep saving

Lather, rinse, repeat.
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