Retirement Investments

Your going to hear "Dont Try To Time The Market" but I've been doing this along time. This is the wrong time to start pouring money into the market. Put that money into a 401K Money Market for the time being
Don't follow this advice. This is literally the worst advice you could give to a novice, or really any expertise level.
The best active advisors don't beat the market year after year. But someone on an anonymous forum can?

Next thing we'll hear is that you need to invest in penny stocks, and have I got one for you!
 
I'm not a fan of those target funds. They're also a little too conservative. I'd rather go for an S&P 500 index fund, a Nasdaq fund or the Total Stock market. Those target funds tend to include bond funds which haven't been that great for years and OP has a long time to retirement.
I also hate target funds because over time they morph into a bond fund.
 
I also hate target funds because over time they morph into a bond fund.
By design over time they will transition to higher percentage of bonds, yes. And only over many years.
But will they ever be a bond fund...? Vanguard 2020 fund is about 50/50 stocks/bonds. Is that a bond fund? Or a well balanced fund for someone that retired recently?
Also, you can pick whichever fund you want, so if you retired in 2020 but wanted to be more aggressive nobody is stopping you from choosing a 2040 fund.
Bottom line is these are useful tools for diversification.

To be clear a bond fund would be close to 100% bonds.
You're free to hate them still.
 
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besides religiously maxing out ira and 401k annually forever, and watching spending habits, buy some long term care, life and disability insurance while young and healthy.
 
Agreed with all the above. Get the max employer match, then dump into a Roth after that. I'm 31 and 100% invested in total market, SPP 500 and tech stock index funds for both the 401k and my Roth IRA, and have no plans to change that in the near future. What comes down will come up according to history, no need to get scared and go conservative too early.
This is the best advice here. I am speaking with 40 years of hindsight, with a lot of investing during that time.
I do have one question for you. Does your employer match dollar for dollar money you put in your Roth 401k (up to the max), placing their portion of the contribution into the ordinary 401k, or do they not match at all? My previous employer would match my Roth contributions, but they had to put it into the ordinary 401k for tax reasons. The answer to this question will dictate if you should put enough into the ordinary 401k to get the match, or if you should put it all into the Roth (and still get the match, just in a different account).
With apologies to one poster above, the worst thing you can do (other than not contributing) is try and time the market. If you get in now, make regular and continued contributions and the market crashes worse than the Great Depression, you will be dollar cost averaging into a down market for years. That is actually a desirable scenario.
The following is opinion only. Target funds and anything that involves bonds make no sense to me at all with the current low yields. Add to that the specter of inflation and they look even worse. Anything that involves Chinese stocks or indexes should be avoided like the plague right now. Actually, forever.
 
According to the 401K planner, right now I am on track to have around $1.5M+ by the time I retire at 62 and have a monthly “allowance” of over $7K until my theoretical death at the age of 90. This does not include the SO’s retirement, assuming we make it to retirement together. My plan is to retire as early as possible. There is no way in hell I am working beyond 62, I plan to be out by 60.

That being said, put as much as you can into your 401K within reason. I am of the mindset that you need to enjoy and live your life NOW if you can financially support it, as well as smart planning for the future. But don’t put off vacations, life experiences, etc… Just because one wants to maximize their 401K to the IRS limits. Who the hell knows if you even make it to retirement… But you need to plan accordingly for it, of course.

Keep up your contributions and retire at 55.

Exponential snowball growth the last 10 years of your employment.
 
This is not an appropriate comparison. You're looking at a very small finite period of time.
The target funds will have foreign stocks and bonds. Both of which should be included in a balanced portfolio.

Putting all your money in S&P500 is ill advised.
As someone suggested above, research the 3 fund portfolio. Reasearch the risk vs. reward of various portfolio allocations.
Bottom line you don't want to be 100% stocks, ever.
Then go ahead and look at the long term. Oh wait, the 2065 fund hasn't been around that long and the S&P 500 index funds have been around a long time. You know why that fund doesn't have a long track record? It's a new fund, hasn't proven itself. Now you advise people to invest in a new unproven fund. Bad funds fold and new ones open up all the time. It's the ones that have been around a long time that tend to have good returns. As others said, bonds and international have been dogs for year. Conventional wisdom has been to have some international exposure, but if the US beats international 9 out of 10 years and international has 1 good year, wouldn't it have been better to just get those 9 good years instead of just chasing after 1 good one and suffering 9 years of bad returns? I'm still waiting for international to beat the US. What China has done to a bunch of their stocks lately is a warning of how volatile foreign stocks can be. I mean you can't trust US stocks either but even less so for foreign ones.
 
Yea but lets say you retired in 1998 or 1999, the 2000 crash did not recover until 2014. 2007 was just a blip on the screen but it further delayed the 2000 recovery. So yes if you were in as I was for that 14 years you were back where you started but still had not made up the interest you had lost. That did not happen until 2018 and some would say that at 7% interest you are still not there. If you did not have bonds during that period you were Sc***ed. The market is still not double the 2000 high and thats been 21 years. If you had bought a 20 year CD at the then rates it would have quadrupled.
 
Then go ahead and look at the long term. Oh wait, the 2065 fund hasn't been around that long and the S&P 500 index funds have been around a long time. You know why that fund doesn't have a long track record? It's a new fund, hasn't proven itself. Now you advise people to invest in a new unproven fund. Bad funds fold and new ones open up all the time. It's the ones that have been around a long time that tend to have good returns. As others said, bonds and international have been dogs for year. Conventional wisdom has been to have some international exposure, but if the US beats international 9 out of 10 years and international has 1 good year, wouldn't it have been better to just get those 9 good years instead of just chasing after 1 good one and suffering 9 years of bad returns? I'm still waiting for international to beat the US. What China has done to a bunch of their stocks lately is a warning of how volatile foreign stocks can be. I mean you can't trust US stocks either but even less so for foreign ones.
The 2065 fund is investing in underlying securities that have been around for a long time.
Just like your SP500 index wasn't locked into the companies that existed in 1960.
I'm not even outright promoting target date funds...just that its a good option for a lot of people. You can certainly pick and choose your own index funds to get whatever mix you want with a little knowledge.

I have no issue whatsoever with an SP500 index fund...just that it shouldn't be 100% of your portfolio.
You're allowed to have your opinion, and you can do whatever you want with your own money but to suggest a novice should be 100% stocks is absurd and against any conventional wisdom.
And you should really educate yourself more on the risk vs. reward of 100% stocks vs something like 75%stocks/25%bonds.
You might find that you are taking unecessary risk.
 
Yea but lets say you retired in 1998 or 1999, the 2000 crash did not recover until 2014. 2007 was just a blip on the screen but it further delayed the 2000 recovery. So yes if you were in as I was for that 14 years you were back where you started but still had not made up the interest you had lost. That did not happen until 2018 and some would say that at 7% interest you are still not there. If you did not have bonds during that period you were Sc***ed. The market is still not double the 2000 high and thats been 21 years. If you had bought a 20 year CD at the then rates it would have quadrupled.
Never seen a 20 year CD, most they go out to is 5 years. You could buy bonds that are longer though. Past performance is no guarantee of future results though. You can always cherry pick a time period. All I'm doing is comparing the performance of one fund to another. Not one time period to another. Magellen and Berkshire Hathaway used to beat the S&P 500, but lately the S&P 500 has beaten Berkshire Hathaway, but it varies from year to year.
 
The 2065 fund is investing in underlying securities that have been around for a long time.
Just like your SP500 index wasn't locked into the companies that existed in 1960.
I'm not even outright promoting target date funds...just that its a good option for a lot of people. You can certainly pick and choose your own index funds to get whatever mix you want with a little knowledge.

I have no issue whatsoever with an SP500 index fund...just that it shouldn't be 100% of your portfolio.
You're allowed to have your opinion, and you can do whatever you want with your own money but to suggest a novice should be 100% stocks is absurd and against any conventional wisdom.
And you should really educate yourself more on the risk vs. reward of 100% stocks vs something like 75%stocks/25%bonds.
You might find that you are taking unecessary risk.
The S&P 500 index is a somewhat actively managed fund just like the 2065 fund. It's just that it's the S&P which picks stocks to include in their index ever quarter.

All I said was that it's a better fund than a 2065 Target. Didn't say 100%. Probably either a mix of Nasdaq index, Total stock market. Usually people are diversified in other things like their home as another asset class. Most people have 3-5 funds, maybe sometimes up to 10. S&P 500 should be a core holding.
 
I am cherry picking the last 15 years before I retired. No there are no 20 year CD's but you could do as I did and ladder them. Some were over 9% and many over 7% and my bonds didnt do to bad until they started messing with them a few years ago.
 
Wolf,

Don‘t forget to have a little bit of cash in 2X and 3X leveraged ETFs.
Yeah but if I listen to people, the market is about to tank and those funds do actually much worse when the market is down. Expense ratios are also high as they have to buy lots of options every day.
 
Don't follow this advice. This is literally the worst advice you could give to a novice, or really any expertise level.
The best active advisors don't beat the market year after year. But someone on an anonymous forum can?

Next thing we'll hear is that you need to invest in penny stocks, and have I got one for you!
So telling someone to throw there money into one of the biggest stock market bubbles is good advice ?

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So telling someone to throw there money into one of the biggest stock market bubbles is good advice ?
Nope, I suggested a balanced porfolio. I am staunchly against putting your money 100% in stocks ever.
Predicting bubbles and timing the market is not in your best interest.

In your example one of 2 things can happen. The price of stocks can go down OR earnings can go up.
Coming out of the pandemic companies are starting to make bank. Earnings are going up. The reason prices are high is in anticipation of that.
So, you're betting one way...will miss out on a lot of earnings if you're wrong.
I've got a balanced portfolio with a long time horizon. I'm sort of indifferent to what happens short term.
 
Not sure on the dislike for target funds. I'm going to guess that most people using them are going to only reach a level of "just enough" for retirement. Once in retirement, that money has to last, and they have to pull from it regardless of what the economy is doing. I'm dubious that most have that much to spare--if you look up what the average and median 401k values are, most of America hasn't got anything to gamble with.
 
Choose index funds that will have low fees. Having low fees and compounding it over 40 years until you retire will make a larger difference than you think vs actively managed funds that have a much higher fee rate.
 
My strategy has always been to maximize tax efficient space and matching.

1. contribute the amount in 401k (roth or traditional) needed to get match.

2. max your IRA (trad or roth).

3. additional contributions go back to the 401k up to the max.

4. taxable account beyond that.

LOW FEES. I like broad index funds because most have low fees.

I would suggest bogleheads.org or something similar to get started. You don’t have to follow it exactly (or at all) but it’s an easily digestible way to start researching.
 
Read my previous post. If you actually look at the numbers, they can under perform the market. 2-6% a year can add up to a lot over 30-40 years.


The real question is did you outperform the market by doing so? There's been analysis of this approach and the main problem is that while some can call the top of the market, they're not good about the bottom so they end up underperforming the market by not knowing when to get back in. The other problem is that while you may be good at it, 99% of the people out there may not be. You mind as well say just do what Jeff Bezos or Bill Gates did, start a successful multibillion dollar company. Much easier said than done. The generic advice is generic and will work for most people. I rode out 2000, 2008 and last year. I'm happy with the returns. 75% of managed funds don't beat the S&P 500. 75% is passing.... When you aim for the home run, you may strike out.

I am slightly confused as to why you don’t understand that they are not designed to mimic “the market.”

They are balanced portfolios made up of 4 or so indexes. The individual indexes do what they are designed to do. The allocation between those indexes varies over time depending on the fund and target date. So yes, a 2065 target fund currently at a 90/10 won’t match a pure S&P500 fund in a “market” where the SPX is going gangbusters. It’s not designed to, and literally can’t because of the allocation of its funds.

Apples to oranges.
 
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