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[AndyD]

One of my coworkers had an interesting question today. In looking at other jobs, how should we factor our current stage government hybrid 401k/pension system vs. a private 401k system?

And I though I'd come and ask the experts. What would be a good "thumb" rule in this situation? What kind of details should I provide you to help me out?

The current hybrid plan details are at http://treasury.tn.gov/tcrs/PDFs/hybridplan.pdf

 

[bennywhatever]

Feel like an idiot. Been at a new company for going on 2 years. In January, I finally started the process to roll over my 401k to the new company's plan. Get most of the way done, the money gets transferred and sits in a CORE account. I fill out the paperwork to finally get it transferred over from the rollover CORE account to the company 401k aaaaaaand I forget to send it it in. Just noticed yesterday that it's still sitting there, unsigned, waiting to be mailed. So all my 401k money was just sitting in an account not making interest for 4 months, so that's nice.

 

[tokkun]

One of my coworkers had an interesting question today. In looking at other jobs, how should we factor our current stage government hybrid 401k/pension system vs. a private 401k system?

And I though I'd come and ask the experts. What would be a good "thumb" rule in this situation? What kind of details should I provide you to help me out?

The current hybrid plan details are at http://treasury.tn.gov/tcrs/PDFs/hybridplan.pdf

For comparing the 401K component, the two most important details of the comparison are:
1. Employer matching contributions
2. Fund selection (specifically access to low-cost broadly diversified index funds)

I would think you could come up with a reasonable formula for quantifying those factors based on a person's projected future contributions.

The tricky part about coming up with a rule of thumb for comparing the pension component is that you need to be able to project the age that the person will die, which is probably much harder to accurately project.

 

[AndyD]

For comparing the 401K component, the two most important details of the comparison are:
1. Employer matching contributions
2. Fund selection (specifically access to low-cost broadly diversified index funds)

I would think you could come up with a reasonable formula for quantifying those factors based on a person's projected future contributions.

The tricky part about coming up with a rule of thumb for comparing the pension component is that you need to be able to project the age that the person will die, which is probably much harder to accurately project.

Ok, I think I have a few more details that might help me craft this math problem out.

The formula for the guaranteed retirement is:
.015 * (average of highest 5 years salary) * years of service = monthly benefit post 65.
For me this currently ends up being about $450 if I quit today. There is also a maximum attainable amount, currently estimated to be about $2800 at 65.

On the 401k side, they only match $50 a month, so $600 a year, regardless of my contribution.

Looking at the private sector I see a 3-4% match for 401k to be normal with no pension.

Now my question is how comparable is the 2-3% 401k match gap with the set retirement income? I can't figure out the math on how much the retirement is "worth" against a 401k alternative.

 

[n0razi]

Any tips for SEP IRA Investing?

 

[Natetan]

To elaborate on this, here's an example:

VTSMX and VTSAX are both "total stock market" index funds, exposing you to small-, mid-, and large-cap equities across the entire US equity market. However, the minimum initial investment in VTSMX is $3,000, whereas it's $10,000 with VTSAX. The expense ratio (the % of money invested in the mutual fund that is spent for administrative fees each year) of VTSMX is 0.16% while VTSAX is 0.05%; VTSMX has roughly a 3 times larger expense ratio than VTSAX. Performance/return-wise, they're more or less identical, excluding the difference in the expense ratios.

However, if you don't want to invest $10,000 into the fund but want the lower expense ratio, the very acceptable and comparable third option is to invest in the equivalent ETF, named VTI, which performs nearly identically to VTSMX or VTSAX, but has the 0.05% expense ratio of VTSAX while having a minimum equivalent to whatever one share costs, which as of April 11th 2017 is $121.01 (far lower than the $3,000 or $10,000 minimums of the equivalent mutual funds).

Guys I just dumped about 30k into VTI. Should I pull it out and put it I to VTSAX?

Seems like it's the same...
https://www.bogleheads.org/forum/viewtopic.php?t=116581

 

[tokkun]

Now my question is how comparable is the 2-3% 401k match gap with the set retirement income? I can't figure out the math on how much the retirement is "worth" against a 401k alternative.

In order to do that calculation, you have to predict how long you will live after you retire.

You can compute what starting 401K value would by exhausted by withdrawing an equal amount to the pension over that time period. That is the 401K equivalent value of the pension.

 

[Piecake]

Guys I just dumped about 30k into VTI. Should I pull it out and put it I to VTSAX?

Seems like it's the same...
https://www.bogleheads.org/forum/viewtopic.php?t=116581

In all that is important, they are the same. I personally prefer mutual funds, but the only difference between etfs and mutual funds is the way you buy and sell your stock/fund.

I have actually sold etf shares and put it in the corresponding mutual fund, but I was abnormally annoyed by the small remainder left in my money market account that the etf caused. It tickled some dormant OCD tendency in my brain and I just couldn't take it anymore.

So yea, I fully admit that the reason why I did it was psychological and not logical.

 

[AndyD]

In order to do that calculation, you have to predict how long you will live after you retire.

You can compute what starting 401K value would by exhausted by withdrawing an equal amount to the pension over that time period. That is the 401K equivalent value of the pension.

Yep, that's the math I was thinking. Say 15 years past 65. So about 80,000 would be coming in from pension over that time and similarly withdrawn from 401k.

Edit: I did the math more or less. It seems the current pension is the equivalent of less than 1% match in 401k. So if I leave today, anything over 1% elsewhere would be better. Also, at the top of the scale for the pension, it will be the equivalent of just under 3% match. So if I stay at the State for at least 22.5 more years to max out my pension, it will be the equivalent of a 2.8% match all along. So even at max after spending a ton of time here, it won't really be competitive with a private approach.

Thanks guys!

 

[Mairu]

I know this is the retirement thread, but how do people feel about taxable investing in place of a general savings account for excess funds that may or may not be used in the next 1-3 years? I don't have a current goal for long term saving but it seems like the benefits to sticking money beyond an emergency fund in some Vanguard LifeStrategy fund would be better than just leaving it as cash in a 1% interest online savings account.

 

[anonymous_abc]

.

 

[hockeypuck]

I know this is the retirement thread, but how do people feel about taxable investing in place of a general savings account for excess funds that may or may not be used in the next 1-3 years? I don't have a current goal for long term saving but it seems like the benefits to sticking money beyond an emergency fund in some Vanguard LifeStrategy fund would be better than just leaving it as cash in a 1% interest online savings account.

I plan on doing just that for saving for my next vehicle, aiming to purchase in about 9 years, or maybe even further out. Throwing $200 a month into an all-in-one moderate growth fund (ER=0.14%) that is solely invested for this.

 

[Mairu]

If you have nothing particularly planed with the money definitely go ahead and invest it. Point is if the market should tank in 3 years, as long as you don't need it at precisely that time and can live with it being invested for a few more years you are likely to come out ahead on average.

Yeah... I figured I could use one of the funds with a higher percentage against bonds vs. stocks if I'm worried about market risk.

 

[anonymous_abc]

.

 

[hiryu64]

Yeesh, this Trump stuff is killing my vibe. I feel like I picked the wrong time to start investing. Hopefully the markets can bounce back, but it's kind of a bummer seeing red number day in and day out. :/

I'm not touching what I already have in my IRA, but I'm wondering if maybe I should hold off on maxing my yearly contribution until the markets stabilize a bit.

 

[Smiley90]

Yeesh, this Trump stuff is killing my vibe. I feel like I picked the wrong time to start investing. Hopefully the markets can bounce back, but it's kind of a bummer seeing red number day in and day out. :/

I'm not touching what I already have in my IRA, but I'm wondering if maybe I should hold off on maxing my yearly contribution until the markets stabilize a bit.

say what? My numbers have been insanely good every since October and even more so since he became president. Stock market loves Trump as president, what are you talking about.

 

[Natetan]

say what? My numbers have been insanely good every since October and even more so since he became president. Stock market loves Trump as president, what are you talking about.

Well yesterday was pretty shitty for the stock market. Yes it's one day but...

 

[Smiley90]

Well yesterday was pretty shitty for the stock market. Yes it's one day but...

I'm still up ~2.8% since early April and ~8.3% for the year, really nothing to complain. Just correcting for an extremely positive April.

 

[Natetan]

I'm still up ~2.8% since early April and ~8.3% for the year, really nothing to complain. Just correcting for an extremely positive April.

It's mostly because of trump and his antics, not a correction as such.

Hopefully he will be less dumb and things will be up tomorrow. I just dropped a bunch of money in an equity yesterday, and seeing it go down 3% wasn't really what I was hoping for...

I honestly don't care if he stays president as long as this rally continues. Greed is good. Etc

 

[PopcornMegaphone]

The last few months I've been upping my international allocation with "Vanguard Total International Stock Index Fund Admiral Shares". Before I was 3 to 1 U.S. to international equities, now I'm closer to 2-1.

Prices in the US market seem high and... Trump. Also, I noticed Vanguard is going stronger international in their target retirement funds.

 

[Randolph Freelander]

Yeesh, this Trump stuff is killing my vibe. I feel like I picked the wrong time to start investing. Hopefully the markets can bounce back, but it's kind of a bummer seeing red number day in and day out. :/

I'm not touching what I already have in my IRA, but I'm wondering if maybe I should hold off on maxing my yearly contribution until the markets stabilize a bit.

Bro. Chill. Invest.

Markets are up 10.5% since election day despite yesterday's small sell-off. That trend may or may not continue, but we have no way of knowing, and a bad day or bad week or bad month isn't an indication of a longer term shift. And even if it does shift, you're presumably a long way from retiring, so it doesn't really matter. The longest term direction of the market is up, so focus on that.

 

[PopcornMegaphone]

Bro. Chill. Invest.

Markets are up 10.5% since election day despite yesterday's small sell-off. That trend may or may not continue, but we have no way of knowing, and a bad day or bad week or bad month isn't an indication of a longer term shift. And even if it does shift, you're presumably a long way from retiring, so it doesn't really matter. The longest term direction of the market is up, so focus on that.

I agree with this. Maybe tweak your allocations like I am, but don't stop investing.

 

[tokkun]

Here is a secret that may help you feel better when you see that stock ticker in the red:

If you are young and have good job security, a stock market crash would probably benefit you a lot. Long term stock values will probably be the same either way, so a crash just gives you an opportunity to buy at a discount.

Just think if you could take the money you are saving now and buy stocks at those bargain basement 2009 prices. Plus you could take all your existing taxable investments and bank capital losses to lower your taxes. Bear markets tend to be better for people following the advice in this thread, because disciplined investors can reap profits off of fickle investors. In contrast, bull markets driving up valuations only benefits people who are selling - market timers and retirees.

 

[scurker]

I know this is the retirement thread, but how do people feel about taxable investing in place of a general savings account for excess funds that may or may not be used in the next 1-3 years? I don't have a current goal for long term saving but it seems like the benefits to sticking money beyond an emergency fund in some Vanguard LifeStrategy fund would be better than just leaving it as cash in a 1% interest online savings account.

I did that earlier in the year with my 6 month emergency fund into VBTLX. Since it's an emergency fund I wanted something a little less risk prone since I could need the money at any time.

There's a chance you might see a little more growth in a Life Strategy fund, but you also stand slightly more risk since you still have a good percentage of those funds in index stocks. It's just a matter of what your risk profile is. You could also put that into a total stock market index, but you would have to be okay with potentially being on a downswing if you were to need that money for an emergency.

 

[Mairu]

I did that earlier in the year with my 6 month emergency fund into VBTLX. Since it's an emergency fund I wanted something a little less risk prone since I could need the money at any time.

There's a chance you might see a little more growth in a Life Strategy fund, but you also stand slightly more risk since you still have a good percentage of those funds in index stocks. It's just a matter of what your risk profile is. You could also put that into a total stock market index, but you would have to be okay with potentially being on a downswing if you were to need that money for an emergency.

I've started out with just VASIX, which is 80% bond and 20% stock, so there's a little risk, but not too much. Glad to hear I'm not the only one tending to this direction, though my emergency fund is still just in a 1% online savings fund. Maybe I should just move all of that over though.

I suppose if I do put my emergency fund in a taxable investment account and do have to withdraw within a year, the taxes are just on the gains and not the whole balance...

 

[Unknown Soldier]

The last few months I've been upping my international allocation with "Vanguard Total International Stock Index Fund Admiral Shares". Before I was 3 to 1 U.S. to international equities, now I'm closer to 2-1.

Prices in the US market seem high and... Trump. Also, I noticed Vanguard is going stronger international in their target retirement funds.

The issue with doing this is there isn't exactly a lot international you can push into and reasonably expect a break out. This is why everyone is staying in the US market and why US prices seem high. Where else you gonna go?

 

[hiryu64]

Bro. Chill. Invest.

Markets are up 10.5% since election day despite yesterday's small sell-off. That trend may or may not continue, but we have no way of knowing, and a bad day or bad week or bad month isn't an indication of a longer term shift. And even if it does shift, you're presumably a long way from retiring, so it doesn't really matter. The longest term direction of the market is up, so focus on that.

I agree with this. Maybe tweak your allocations like I am, but don't stop investing.

Oh don't get me wrong, I didn't sell off anything, nor do I plan to. This is a thread for retirement, not day trading. It just kind of sucks knowing that I started my retirement fund during a downtrend, and I was venting for a second. I'm aware of the overall trend, and I'm still going full-steam ahead. I'm definitely off to a rocky start because of when I started, though.

That said, if I were in a situation where I know we're in a contraction or trough, and the market's showing no sign of recovering any time soon, is it wise to hold money and wait until the market bounces back to invest, or should I just go ahead and invest anyway knowing that the market will recover eventually? Like, would I be better off investing during a recession or waiting until the recovery/expansion phase and then investing? Obviously I wouldn't know where we are in the real world without psychic powers, but I'm wondering which investment strategy is more effective in general.

 

[PopcornMegaphone]

The issue with doing this is there isn't exactly a lot international you can push into and reasonably expect a break out. This is why everyone is staying in the US market and why US prices seem high. Where else you gonna go?

That's a fair point, however for me it's an overall asset allocation play with a bit of market timing. When I look at target retirement funds I notice they have quite a bit more international. It's made me believe I should do the same. Regardless of what what happens in the market I don't see myself changing my asset allocation in the foreseeable future (5 yrs).

 

[tokkun]

The issue with doing this is there isn't exactly a lot international you can push into and reasonably expect a break out. This is why everyone is staying in the US market and why US prices seem high. Where else you gonna go?

I don't see the problem. Based on valuations, international has higher projected future growth than domestic. Why does a retirement investor need "break outs"? In the long run, fundamentals are what matter.

Some of the other factors that might have traditionally steered you toward US stocks have also weakened:
- Currency risk: The USD is fairly strong historically, so I would lean more toward believing International investors will benefit from exchange rate changes in the future.
- Governance: US stocks have already taken a big rally from the prospect of a pro-business Trump agenda without it actually being achieved. The potential now seems mostly like the downside if it doesn't get enacted. And Trump himself always seems to have the potential to do something impetuous to shake the markets.

 

[spyshagg]

anyone into Cryptocurrency?

put 10% of my cash on Ethereum some time ago. It's now 80% of all my worth.

 

[demosthenes]

anyone into Cryptocurrency?

put 10% of my cash on Ethereum some time ago. It's now 80% of all my worth.

I'm not into 9am art besides reading news on them 2nd this seems like a horrible idea.

 

[Brandson]

anyone into Cryptocurrency?

put 10% of my cash on Ethereum some time ago. It's now 80% of all my worth.

Ethereum, Ripple, and Dash are all going nuts lately. I wish I had bought some of all 3 when I first started considering them in January. Finally got my verifications done and deposit applied at a reputable exchange and did a few trades this morning. I'm up about 4% already on paper by the afternoon. My plan is to hold for at least a year though, and probably longer, and I only allocated a small part of my total investment portfolio into cryptocurrencies, which wouldn't trouble me that much if it was all wiped out. I would feel worse for missing out if this stuff continued to take off. I wouldn't recommend putting the majority of your holdings in cryptocurrency, but it's also a bit foolish not to have at least some small part of a long term portfolio in it at this point.

My personal view is that I think Ethereum has the most potential long term. Ripple feels a little bit fly-by-night-ish given how the currency pool is controlled, but I could be wrong. Dash's security has me a bit concerned. I'm not feeling Bitcoin at the current price. So I weighted my investing towards Ethereum, with a bit of Ripple in case it explodes.

 

[spyshagg]

Ethereum, Ripple, and Dash are all going nuts lately. I wish I had bought some of all 3 when I first started considering them in January. Finally got my verifications done and deposit applied at a reputable exchange and did a few trades this morning. I'm up about 4% already on paper by the afternoon. My plan is to hold for at least a year though, and probably longer, and I only allocated a small part of my total investment portfolio into cryptocurrencies, which wouldn't trouble me that much if it was all wiped out. I would feel worse for missing out if this stuff continued to take off. I wouldn't recommend putting the majority of your holdings in cryptocurrency, but it's also a bit foolish not to have at least some small part of a long term portfolio in it at this point.

My personal view is that I think Ethereum has the most potential long term. Ripple feels a little bit fly-by-night-ish given how the currency pool is controlled, but I could be wrong. Dash's security has me a bit concerned. I'm not feeling Bitcoin at the current price. So I weighted my investing towards Ethereum, with a bit of Ripple in case it explodes.

to clarify, I did not put 80% of my holdings on Ethereum. I put only ~10-20% years ago and today those 10-20% grew to be >80% of all my holdings.

But I think regular folks should at least try investing a small portion of their portfolios in crypto (specially Ethereum) or they will miss the boat (or missing the future, as its panning out to be!), which is only leaving the shore.

 

[SummitAve]

You're not missing anything if you aren't trying to catch boats, regardless of how fast they are sailing out. The catching boats line of thinking runs contrary to the overall message of this thread in my opinion. I wouldn't risk having even a small portion (10% is massive imo and even larger when considering long term) of my investments getting stranded out at sea when there is a secure, reliable path available.

 

[BraXzy]

I know it's all part of the process but my relatively new and first investment portfolio took a nice little dip the past day or so with the dips on the US Index. Scary to see for the first time.

At the minute, my highest weighted fund is a simple L&G US Index with a low fee. The rest of the weighting is fairly evenly distributed between Lindsell Global Equity, Baillie Gifford Global Discovery, Fidelity Global Technology and Old Mutual North American Equity.

I've tried to spread it across a few sectors, with companies that I think have big potential for growth included within them such as Tesla, Salesforce, NVIDIA and more. Really though I'm still incredibly new to it all. Anyone have any thoughts?

 

[tokkun]

to clarify, I did not put 80% of my holdings on Ethereum. I put only ~10-20% years ago and today those 10-20% grew to be >80% of all my holdings.

But I think regular folks should at least try investing a small portion of their portfolios in crypto (specially Ethereum) or they will miss the boat (or missing the future, as its panning out to be!), which is only leaving the shore.

Currency trading is not investment. It's speculation.

There is a lot of debate over the exact definitions of those terms, but I would put it like this:
- Investment is the idea that people are able to apply capital to make products or services that are more valuable than the sum of their parts.
- Speculation is a bet that the price of some asset will rise faster than others.

Currency trading is essentially a zero sum game, with the only potential value added being the defrayal of risk for people using it as a form of hedging - which isn't want you're suggesting.

 

[Mrbob]

The issue with doing this is there isn't exactly a lot international you can push into and reasonably expect a break out. This is why everyone is staying in the US market and why US prices seem high. Where else you gonna go?

I dunno, Europe and Emerging Markets are looking stronger than the us market right now. Overseas percentage increase has been stronger than the sp500 in the last year with room to grow.

The way of the past (USA dominance in the market) may not be the wave of the future. It's one of the reasons why I'm about 40% international (More specifically about 30% VEA and 8% VWO). Don't want to tilt one way too far, though I know many will say that's too risky. I'm ok with it though because I have a long time before cashing out. Need a little risk for gain.

 

[Unknown Soldier]

I dunno, Europe and Emerging Markets are looking stronger than the us market right now. Overseas percentage increase has been stronger than the sp500 in the last year with room to grow.

The way of the past (USA dominance in the market) may not be the wave of the future. It's one of the reasons why I'm about 40% international (More specifically about 30% VEA and 8% VWO). Don't want to tilt one way too far, though I know many will say that's too risky. I'm ok with it though because I have a long time before cashing out. Need a little risk for gain.

If you're looking to risk for gain, you know what to do since you hang out in Stock-Age with us.

 

[Mrbob]

Haha, that thread is a whole another level of risk sometimes with boom or bust stock picking. I'll take on some risk with my retirement fund but not go that crazy.

 

[Joe]

I currently have 6-months emergency savings in a 1% online account.

Is it actually worth it to keep more than 3 months of expenses in such a low-yield savings account?

I remember reading an argument here about how it makes more sense to invest rather than save any money given the ability to liquidate stocks without penalty (Roth IRA) coupled with a cash-advance credit card.

It kind of makes sense to me and I'm wondering if I should take 3 or 4 months worth of my 6-months in savings and putting it in my Roth.

I think I'm understanding this correctly or am I wrong?

 

[ArcLyte]

If your employer offers 401k matching, max-out your regular contribution. Free money.

 

[tokkun]

I currently have 6-months emergency savings in a 1% online account.

Is it actually worth it to keep more than 3 months of expenses in such a low-yield savings account?

I remember reading an argument here about how it makes more sense to invest rather than save any money given the ability to liquidate stocks without penalty (Roth IRA) coupled with a cash-advance credit card.

It kind of makes sense to me and I'm wondering if I should take 3 or 4 months worth of my 6-months in savings and putting it in my Roth.

I think I'm understanding this correctly or am I wrong?

Yeah, that's the approach I promote.

Basically, if you think you need to keep X months expenses in cash, I challenge you to come up with a specific example of a situation where you have an expense of that size and you can't wait a few days to pull the money out of a brokerage account.

 

[Brandson]

FYI, Ethereum is up 30% since my post about it here on Friday.

 

[Joe]

Yeah, that's the approach I promote.

Basically, if you think you need to keep X months expenses in cash, I challenge you to come up with a specific example of a situation where you have an expense of that size and you can't wait a few days to pull the money out of a brokerage account.

Yes, it was you! Thanks for the reply. In my situation your approach would work well for me I believe.

However, let's say the market is in the middle of a recession, your portfolio is down 15% from the previous year, and an emergency arises that requires substantial cash. If you sell stocks during this period isn't it possible you will actually be losing money?

I may not be correct here though.

 

[Unknown Soldier]

Yes, it was you! Thanks for the reply. In my situation your approach would work well for me I believe.

However, let's say the market is in the middle of a recession, your portfolio is down 15% from the previous year, and an emergency arises that requires substantial cash. If you sell stocks during this period isn't it possible you will actually be losing money?

I may not be correct here though.

The only scenario where this might happen is you suddenly have a heart attack and you are hospitalized and you need quadruple-bypass emergency surgery and you don't have health insurance or a very high deductible.

I mean, how often do you have an emergency which requires like $20,000 immediately?

In all other situations where you might need to come up with a large sum of cash, like buying a car or a house, you know well in advance when you need the money. Actual sudden emergencies occur maybe once in a lifetime, and mostly likely never.

Besides, if you're in a recession and you're down 15%, 30%, or even 60%, and suddenly you have this infinitesimally unlikely emergency, the odds are if you have been saving a long time you would still in positive territory versus socking it all under a mattress or in a savings account. You're still ahead overall.

 

[GhaleonEB]

FWIW, my approach is not to keep 6 months of savings, but a small fixed buffer in savings (crappy bank account). We budget the year's planned activities, and keep a bed of cash on hand beyond that ($5,000) if things run over, come up unexpectedly, or we find something else we want to do. We've tapped into it a few times in recent years, and it was nice to have it on hand.

Six months expenses in cash is definitely too high, though.

 

[tokkun]

However, let's say the market is in the middle of a recession, your portfolio is down 15% from the previous year, and an emergency arises that requires substantial cash. If you sell stocks during this period isn't it possible you will actually be losing money?

Sure it's possible, and it's something you should plan for. I actually encourage thinking about a 30% drop in stock prices for this exercise.

What you should do is think about what sort of reasonably plausible emergencies could occur, and whether you would still have enough money to cover them if you lost 30%. This puts you in one of two categories:

If the answer is "yes", then I advise you to put all the money in stocks. The idea here is that true emergencies should be rare and periods where the market is significantly down are also rare. On the other hand, years where the market beats cash are common. I usually figure that the opportunity cost of cash vs stocks averages out to about 5% per year. .over the course of 30 years, that 5% average difference in stocks vs cash works out to a 330% higher balance for the stock investor if they don't have any emergencies. With that big of an advantage coming from compound interest, they can afford to be extremely unlucky and have several major emergencies that coincide with market downturns and still come out ahead.

Now, if the answer is "no, I can't afford to take a 30% loss and still pay for my hypothetical emergency, you probably still shouldn't keep the money in cash. Instead, you can put the money in something like intermediate-term corporate bonds. The yield is more like 2% better than cash rather than 5%, however the risk of large losses is much lower; the biggest total drop in price I could find in recent history was something like 7%.

 

[ferr]

So recently, I have been focused on using a low exp ratio fund that follows the s&p -- FUSVX. Exp ratio at 0.045% which is def great.

However, I have run into some other funds that are tempting. FUSVX (and the market in general) has ~7% YTD return. Which is good. But some other funds I'm seeing have 20-40% YTD. Problem is they have incredibly higher exp ratio -- anywhere from 0.9% - 1.75%. So there's some basic exp ratio vs returns calculations involved.

But looking deeper, I am wondering if I should just avoid it entirely. They all seem to funnel to the same annualized return when looking at 10 or even 5 years out. Maybe there were anomalies, e.g. 2008 is included in the 10 year, and looking that far out will funnel anything down to a norm.

Thoughts? Low exp/good return vs High exp/great return.

 

[PflargBlarg]

What an annoying spread of time April/May has been. Got hit with some car repairs, although I can't complain about that too much since it is the first repairs on the car beyond oil changes etc. since 2002. And then paying the balance on our VRBO in Hawaii plus car rental for those 2 weeks and travel insurance and of course the CAD/USD exchange rate boning us so hard.

I managed to save $222 which is like 10-12% of what I usually do.

Should be set for the rest of the year though I hope.

 

[Unknown Soldier]

So recently, I have been focused on using a low exp ratio fund that follows the s&p -- FUSVX. Exp ratio at 0.045% which is def great.

However, I have run into some other funds that are tempting. FUSVX (and the market in general) has ~7% YTD return. Which is good. But some other funds I'm seeing have 20-40% YTD. Problem is they have incredibly higher exp ratio -- anywhere from 0.9% - 1.75%. So there's some basic exp ratio vs returns calculations involved.

But looking deeper, I am wondering if I should just avoid it entirely. They all seem to funnel to the same annualized return when looking at 10 or even 5 years out. Maybe there were anomalies, e.g. 2008 is included in the 10 year, and looking that far out will funnel anything down to a norm.

Thoughts? Low exp/good return vs High exp/great return.

If you're looking for returns above all else, then it's time to start thinking about individual stocks. Do your research, buy things you understand well, and be willing to take on additional risk in exchange for big gains.

It's all a matter of your tolerance of risk and your own plans. If you're fine with working until you are 65 or 67, then be conservative. If you want to retire earlier, then you make changes to target your new goal.