Annuity Investment - What Options are There?

[ZeeOSix]

^^^ Yes, I've been hearing of the possible interest rate hike which would hurt mutual bond funds, depending on their effective bond duration. What's the rule of thumb, if the effective duration is 5 years, then for every 1% increase in interest rate the principle of the fund would drop by 5%.

Yeah, sounds like some kind of balanced stock/bond fund might be the way to go based on future movement of the markets.

Vanguard VWELX fund:
http://www.morningstar.com/funds/XNAS/VWELX/quote.html

 

[Mr Nice]

Quote:
so I'll still suggest 100% in the Total Stock Market fund for the next 10 years.


Yep, and weekly deposits from you paycheck will go unnoticed for the next 10-20 years. Reinvest the dividends.

 

[Bandito440]

Originally Posted By: Mr Nice
Quote:
so I'll still suggest 100% in the Total Stock Market fund for the next 10 years.


Yep, and weekly deposits from you paycheck will go unnoticed for the next 10-20 years. Reinvest the dividends.

Here's an example of what you could be missing out on by going with bonds for safety this early in your career. If you start with $3,000 and invest $5,500 annually for 20 years, you'll have $222,875 if your investments average 8% annually (equities) and $156,882 if your investments average 4% (bonds).

I just used an online savings calculator to come up with those numbers, as I'm on my mobile device. That seems about right though, at least the disparity is.