I'm investing pretty close to BH style, but I do commit a couple sins that some of the purists would not agree with. For example, I do not currently have any bonds in my portfolio, though I will in the future. The reason is that when I have student loans (basically a negative bond) with a 6.5% interest rate, and the interest rate on bonds are about 2-3%, any money that I would put into bonds I simply put into paying down one of those high interest rate student loans. Guaranteed rate of return of 6.5% (taxes notwithstanding).Mullins wrote: ↑Fri Jun 28, 2019 1:47 pmI just wanted to jump on board to congratulate your milestone! Good for you!
Keep going! I'm assuming you're investing BH style, so, "Stay the Course."
There's also nothing wrong with investing into taxable accounts after you've maxed tax advantaged accounts.
When IRAs first became a thing I was close to your age and they said "sock away $2000 a year, you'll have a million when you retire!" Then the common wisdom from the "gurus" was to save 10% of your income.
In hindsight I now say they were all wrong.
I went through all that and what I finally realized was what you want to do for the long term is invest every dollar you can spare. You'll determine what that amount is. But there's no such thing as set amounts or set percentages, that just makes it sound like it's been figured out. Yet common sense dictates having more capital working more years should yield results better than investing less capital over that same period, in the same vehicles (though of course nothing is 100% certain, right? But you do your part and diligence during this journey).
I also have a little bit of active in my portfolio (PRIMECAP) and I have no plans on getting rid of it. They are relatively low cost for an active fund (30-40bps), I've studied their methods and their history well, and I believe they are set up for long term success. With low expenses, the PMs investing heavily in their own funds, their long-term perspective and the closed status of their fund, if any active fund will be able to earn its expenses, it'll be this guy (IMHO).
But that's not my greatest investment sin. That would be the plan I've written into my IPS that states that I will increase the leverage of my investment portfolio when the S&P 500 hits certain negative thresholds. So when the S&P 500 falls 10% from its previous all-time high, I change my portfolio to 110% equities. When it hits 20% down from its previous all-time high, I change my portfolio to 120% equities. And then I de-leverage as it works its way back up. I do this by using either double or triple leveraged ETFs in my Roth IRA. I've done back-testing analysis for this technique and found it to have a positive ROI even through events like the 2008 financial crisis. It also compared it to a portfolio that was always leveraged by the same average % (approximately 11%) and it outperformed that portfolio as well. What we've observed here is that when the market falls significantly (10% or more) the actual expected ROI for the market goes up. We can't predict when it will have those drops, and generally speaking it's not a good idea to keep money on the "sidelines" so I remain at least 100% invested at all times. But when the expected ROI goes up enough at those thresholds, I use that leverage to go 110% or 120% or more (my IPS sets a limit at 150%) because the increased ROI is worth it to me. This has been very profitable for me, but I definitely don't recommend it to others. The stress of being leveraged is pretty high, but I'm the sick kind of guy that enjoys that.