Back in early January I changed my entire account allocation from a target 2045 to a low fee SP500 fund. Gained 8.5% since then.
The last few days I have been getting a little worried about having all my eggs in 1 basket.
I am wondering what opinions are on putting half, or more,in a low risk low yield account made up of stable value, money market, short-term bond, and guaranteed interest accounts.
I am getting a little worried about the market.
I am not a financial investment type,but I just hate to chance that nice 4 month gain go away if this thing tanks.
Feel free to call me a dumbass for what I am thinking,or what I did and tell me what I can do better.

S&P goes up
Yours goes up .
Average returns about  7 or 8%  a year .
Good years up 10 to 30%
Bad -50%
Long run I would say you will
Make more with new fund .

Next high put some in a good money market
Pays 5%  maybe 20 to 30%

That what I do but I’m retired.
If you have a way to go let it ride. Tomorrow

I will take that "1 basket" versus any other basket out there.

"if this thing tanks". If you mean the strongest 500 companies in America tanks, we'll be using gas/bullets/food instead of dollars.


Reading for your pleasure


If you want to spread it out, try a "Total Stock Market Fund" which is the entire thing.



But the one thing we are not clued in, your age and what is your runway until you have to, need to, want to and required to tap those funds. Those 4 items affect your answer as a top priority actually.


I don't have the ability to post pics but if you stack up in a comparison VFIAX or VWUAX versus a target date fund 2045, the targe date funds get beat and some of the near term target funds crushed.


Reddit is stupid but sometimes they have a few interesting scenarios posted and already played out. For your reading pleasure part deaux: https://www.reddit.com/r/Bogleheads/comments/z5zxgl/target_fund_date_vs_vtsax_for_roth_ira/

I think i have only S&P and tesla at this point.

I've got mine split between about 6 different funds, based on the advice of a financial advisor.

My philosophy is that if the market tanks bad enough to wipe out my 401k, the problems we'll have won't be fixable with money anyway.

Letting your emotions impact your investment plan is a sure method of losing money and screwing up your retirement nest egg.

You don't have "all eggs 1 basket" you have "all eggs in 500 baskets"!!!

Your gains in 3 months are nothing.  Look at gains in 10-year segments, not 3-month.

1.  How old are you?
2.  What age do you plan to retire?
3.  Will this 401k be your primary source of income in retirement?

If you are age 55 and plan to retire at age 62, that is a VERY different picture than a parson who is age 35 and planning to retire in 27 years.

You mentioned a 2045 fund.  If that is your planned retirement date - that is 21 years away.  You need to be investing primarily in equities, and SLOWLY rebalancing toward a more conservative allocation by 2045.

I'd advise to use a Total Market US equity index like VTSAX/VTI/FSKAX, or if not available, an S&P500 fund like VFIAX/VOO/FXAIX.  With 20 years away, I'd be 100% or 95% in equities, and then rebalance yearly, moving 1-2% per year toward a decent Total US Bond Fund, like VBTLX/BND/FXNAX.

If you cannot handle this, then just move back to a target date fund and eat the fees.  Because your thinking you can time the market will result in less money at the end of the line, guaranteed.

Good advice guys.  Thank you.
I was worried everyone would say "you should have gone cash yesterday!"

S&P500 historical rate of return

If you put $100k in the S&P500 in 2010, it’s over $1M today

Attached File

Old saying get out in May and stay ?
I say get back in in October.
But You can’t time it  usually.

Where are you getting that?

2010 was only 14 years ago - it would not be $1M.

$100k in the S&P500 index WITH dividend reinvestment yields a final portfolio today of $605k with an annualized return of 13.5%.

Source:  https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/

Stocks do not lose money from May-October on average, they simply "gain less".

In the past 5 and 10 year periods, they gained an avg of 5-6% over 5 to 10 years in the "bad" months.  That blew cash out of the water, and if you followed this strategy - you ended up with less money than staying invested.

I said old saying I did not say I practice it. But if you do get back in by September or October.

Ya they gain less or ……..lose more . You generally can’t time the market I did say .

Sell in May and go away
Don't come back until St. Legere's Day

Since St. Legere's Day was the day of a famous horse race in England, this made sense.  But it was more about the weather before the invention of air conditioning.  From May to some time in September was uncomfortably hot in cities.  Stocks do tend to follow this pattern some times, but not closely enough to make going by it worthwhile.

Target 2045 means 20 years until you plan to retire.  Leave it alone.  Worry about asset reallocation in 15 years.

just curious.

what funds are those....

20 years of maxing out a FXIAX would be glorious.

Sorry, you’re right.  I ran that spreadsheet in last year for some reason I thought it was closer to 1M.  Still impressive return

State Street S&P 500 Index.  30%
Dodge & Cox Stock. 10%
Jennison Large Cap Growth.  10%
Artisan Mid Cap Growth.  20%
Voya Small Cap Growth.  10%
American Fund Europacific Growth. 20%

Seems to be working out decent for me so far.

I am sure those have done well.  However, holy expense ratios batman!  Many of those managed funds are 1%.

The power of compounding interest and discipline.

If I could go back, I might have tweaked the ratios.

Real case study with real numbers:
This is our bridge account to hold us over from 55-59.
9-13-16:
Purchased a total of $121,438 of VIGAX (80%), VTCLX (10%), VTMSX (10%)


4-5-24:
Value: $303,745



I haven't touched it, won't touch it, let it ride for another 7 years. Meanwhile my energy is focused on increasing my income and making other purchases simliar in nature versus trading or playing the market. Buy, park it, wait, profit.

stay the course in S&P 500 fund, it's a winner.
Go to yahoo finance (seriously) and get in the habit of looking at ticker symbols on anything you're thinking about buying.  Look at performance, and compare it to the S&P500 index fund (SPY).
Numbers don't lie, words do.

Unless you know you want to(and can) retire within the next 5 years or so you need to think on a much longer timeline.  
You mentioned a 2045 target fund, so if you're looking at retiring in 20 years then just keep contributing to low-fee index funds and spend your brain power worrying about other things in life.




This.  You can get zero/low fee funds from fidelity/vanguard that are 99% the same and increase your returns by about 1% per year just from the fees.  

OP, let it ride. Value will go up and down, long term it will go up. If most managed funds don't beat the S&P, you probably won't either.


No offense, but this is overcomplicated and too much expense for a 401k.

Loomis Sayles Growth Fund would beat everything on your lower list in returns with a much lower expense ratio. Or just park it all in a 500 and that would beat it too.

You have a specific account, seperated from other accounts, just to plan income from age 55-59?

How should one avoid those fees in a 403b?

Absolutely.
Highly recommend it. Why not?
6 month emergency fund, check
Maxxing retirement, check
Bridge accounts, hammer down if we have #1 & #2 covered. Where else to go with extra funds?


Multiple actually as they are all post tax accounts and sometimes different sources. (I couldn't imagine not as I want to make it as clear as possible when I set up my 3-buckets at 54-ish to understand options and impacts of taxes. It is free and an easy way to seperate Money Market Funds, emergency funds or stock purchases. Vanguard does not charge for opening accounts.)


This specfic scenario I listed has a bit of a back story.
My wife had a personal loan to her parents for $121k back in 2011.

We got married in 2014 and we were very open about our finances and where we stood. She owed her parents $121k. So for 2 years we scrimped, saved and didn't eat out or anything. Cut all expenses and piled up all the money to pay them back. We moved the money into our checking account. She cut them a check for the $121k and handed it to them at dinner. They were blown away and very happy. They tore the check up and basically forgave the debt. I turned around the next week and moved the money to VG and make the purchase to honor them and be a part of our retirement funds in the bridge account.



We have conslidated old employer 401ks to vanguard and the likes. the long boxes have my name and my wifes name on them as joint accounts.
She has a login with similar.

Attached File

@gunner226
10 year performance of your portfolio above vs 100% in fxaix.  

Attached File

this is where I was headed. those ratios.

yep.
thank you.

if you can choose from the various funds available in your 403b, you should find a low fee SP 500 somewhere in the list.

find out what funds are available and make a thread for us to look at.

Here's my thread on pretty much the same topic.
I was too complex for my own good, and thought I was smart.

https://www.ar15.com/forums/general/Rate-my-asset-allocation-IRA-401k-/133-2707126/

I have since simplified my portfolio.

This is a useful tool:
https://www.portfoliovisualizer.com/backtest-asset-class-allocation

Look for Vanguard index funds.  For example the S&P500 ETF fund VOO has a 0.03% fee.  The same thing as the SPY ETF, but SPY has 0.09% fee, so it is 3 times the cost.  (Still a lot cheaper than many funds though).  

Hell somehow my wife’s retirement has a Blackrock S&P 500 index with a current 0.00% fee.  Not sure how it happened, think it used to be 0.01 or something similar, but while I can detest BR, not paying any fee is hard to beat.  (And it is the only S&P 500 fund in her plan).

I pay 0.03% in my plan, (maybe even less), for the Vanguard S&P 500 index fund (mutual fund version).

It does amaze me how some companies charge so much for the exact same things- for example everyone touts SPY as a great fund.  Yet it is expensive compared to the alternatives.  


Anyhow- for the OP- leave it as everyone else already said.  It is 500 baskets, not one, with the simplest diversification you can get cheap.  S&P500 (VOO) is up an average of 12.9% or so over the last 10 years.