What percentage Bonds in your asset allocation ?
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I forgot to mention the other ETF is VTIP (Short Term Inflation Protected Security.
Originally Posted By: Mr Nice
Al,
What is your breakdown of the 4 you listed?
Right now I am not highly invested and I only have VTENX and VTINX. VTINX is meant to be more conservative than VTENX. (Target 2010)
I am sure about my information. I had a really long chat with a representative who serves only clients who have more than 500K with Vanguard. Vanguard has equivalent mutual funds that are identical to the respective ETF's But doing the ETF's are cheaper and you can get in and out with no restrictions
You can go here and see the percentages ETF's that make up these "Target Retirement" funds. Fidelity has the same stuff but their funds are more expensive. I rolled all my Fidelity accounts into Vanguard.
https://investor.vanguard.com/search/?query=target+retirement
Originally Posted By: Mr Nice
Al,
What is your breakdown of the 4 you listed?
Right now I am not highly invested and I only have VTENX and VTINX. VTINX is meant to be more conservative than VTENX. (Target 2010)
I am sure about my information. I had a really long chat with a representative who serves only clients who have more than 500K with Vanguard. Vanguard has equivalent mutual funds that are identical to the respective ETF's But doing the ETF's are cheaper and you can get in and out with no restrictions
You can go here and see the percentages ETF's that make up these "Target Retirement" funds. Fidelity has the same stuff but their funds are more expensive. I rolled all my Fidelity accounts into Vanguard.
https://investor.vanguard.com/search/?query=target+retirement
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Originally Posted By: Al
I forgot to mention the other ETF is VTIP (Short Term Inflation Protected Security.
Originally Posted By: Mr Nice
Al,
What is your breakdown of the 4 you listed?
Right now I am not highly invested and I only have VTENX and VTINX. VTINX is meant to be more conservative than VTENX. (Target 2010)
I am sure about my information. I had a really long chat with a representative who serves only clients who have more than 500K with Vanguard. Vanguard has equivalent mutual funds that are identical to the respective ETF's But doing the ETF's are cheaper and you can get in and out with no restrictions
You can go here and see the percentages ETF's that make up these "Target Retirement" funds. Fidelity has the same stuff but their funds are more expensive. I rolled all my Fidelity accounts into Vanguard.
https://investor.vanguard.com/search/?query=target+retirement
In practice though, ETFs will only meet that goal if they have enough volume and liquidity so you are not eaten alive by the spread.
So BND and VTI are ok as it's got a volume of over 1,000,000 shares per day, which is still pretty paltry from a liquidity standpoint.
I'd stay away from VTUX or BNDX as they have less than 1Million in volume per day.
Even if you save 1% in your management fees, if you lose 1% off the bat from the spread then you need a year before you break even from savings versus going with a more liquid ETF.
I forgot to mention the other ETF is VTIP (Short Term Inflation Protected Security.
Originally Posted By: Mr Nice
Al,
What is your breakdown of the 4 you listed?
Right now I am not highly invested and I only have VTENX and VTINX. VTINX is meant to be more conservative than VTENX. (Target 2010)
I am sure about my information. I had a really long chat with a representative who serves only clients who have more than 500K with Vanguard. Vanguard has equivalent mutual funds that are identical to the respective ETF's But doing the ETF's are cheaper and you can get in and out with no restrictions
You can go here and see the percentages ETF's that make up these "Target Retirement" funds. Fidelity has the same stuff but their funds are more expensive. I rolled all my Fidelity accounts into Vanguard.
https://investor.vanguard.com/search/?query=target+retirement
In practice though, ETFs will only meet that goal if they have enough volume and liquidity so you are not eaten alive by the spread.
So BND and VTI are ok as it's got a volume of over 1,000,000 shares per day, which is still pretty paltry from a liquidity standpoint.
I'd stay away from VTUX or BNDX as they have less than 1Million in volume per day.
Even if you save 1% in your management fees, if you lose 1% off the bat from the spread then you need a year before you break even from savings versus going with a more liquid ETF.
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Originally Posted By: raytseng
I don't understand keeping 5% in bonds.
That percentage of your portfolio basically has no effect on your overall portfolio.
You might as well either just add it to your main investments. The only reason is if it's a built-in sweep and you also use that 5% for account for cash or to cover fees.
I'm in my 40's and have 10% in bonds. I prefer doing 100% mutual funds, but my adviser at Fidelity told me to throw 10% into bonds to reduce volatility. The market's been a little crazy going up and down lately so when the market is up, I'm not up as much because of the 10% in bonds, but when the market is down, the bonds are up so the losses aren't as much. Since I did my allocation, my bond fund is doing better than most of my stock funds. It's been somewhat of a sideways market so far this year so people in bonds probably did better than those in stocks.
I don't understand keeping 5% in bonds.
That percentage of your portfolio basically has no effect on your overall portfolio.
You might as well either just add it to your main investments. The only reason is if it's a built-in sweep and you also use that 5% for account for cash or to cover fees.
I'm in my 40's and have 10% in bonds. I prefer doing 100% mutual funds, but my adviser at Fidelity told me to throw 10% into bonds to reduce volatility. The market's been a little crazy going up and down lately so when the market is up, I'm not up as much because of the 10% in bonds, but when the market is down, the bonds are up so the losses aren't as much. Since I did my allocation, my bond fund is doing better than most of my stock funds. It's been somewhat of a sideways market so far this year so people in bonds probably did better than those in stocks.
yes we understand how Bonds work.
However, if your allocation is less than say 15%, the overall effect on your overall portfolio is so insignificant that it's not really worth doing.
If you have 90% invested elsewhere, what you chose for that other 90% completely dwarfs what you did with the last 10% in bonds.
You intend for that other 90% in mutuals to make money not lose money, so you should just follow the same strategy with your last 10%.
If you feel your 90% in mutuals is not going to make money and you need to protect yourself, you should pull the trigger and take a bigger chunk out of it to put into bonds to diversify. It's like taking out only $5000 worth of insurance on your $50,000 car, it's not going to help.
These types of micromanagement are things things advisers say just to obfuscate and makes you feel they are worth something, but really this micromanaging does nothing and the overall luck of how the market doeshas 10x the effect.
They love to give you charts and reports that say you should allocate 23.91% in largecap instead of 25% based on if you are 35years old versus 39years old. But really there is no need for that fine tuned management. Probably about 5 main investment types are all that matters, and the rest of the significance completely lost because nobody can tell what the market is going to do with even 10% precision.
However, if your allocation is less than say 15%, the overall effect on your overall portfolio is so insignificant that it's not really worth doing.
If you have 90% invested elsewhere, what you chose for that other 90% completely dwarfs what you did with the last 10% in bonds.
You intend for that other 90% in mutuals to make money not lose money, so you should just follow the same strategy with your last 10%.
If you feel your 90% in mutuals is not going to make money and you need to protect yourself, you should pull the trigger and take a bigger chunk out of it to put into bonds to diversify. It's like taking out only $5000 worth of insurance on your $50,000 car, it's not going to help.
These types of micromanagement are things things advisers say just to obfuscate and makes you feel they are worth something, but really this micromanaging does nothing and the overall luck of how the market doeshas 10x the effect.
They love to give you charts and reports that say you should allocate 23.91% in largecap instead of 25% based on if you are 35years old versus 39years old. But really there is no need for that fine tuned management. Probably about 5 main investment types are all that matters, and the rest of the significance completely lost because nobody can tell what the market is going to do with even 10% precision.
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Originally Posted By: raytseng
yes we understand how Bonds work.
However, if your allocation is less than say 15%, the overall effect on your overall portfolio is so insignificant that it's not really worth doing.
If you have 90% invested elsewhere, what you chose for that other 90% completely dwarfs what you did with the last 10% in bonds.
You intend for that other 90% in mutuals to make money not lose money, so you should just follow the same strategy with your last 10%.
If you feel your 90% in mutuals is not going to make money and you need to protect yourself, you should pull the trigger and take a bigger chunk out of it to put into bonds to diversify. It's like taking out only $5000 worth of insurance on your $50,000 car, it's not going to help.
These types of micromanagement are things things advisers say just to obfuscate and makes you feel they are worth something, but really this micromanaging does nothing and the overall luck of how the market doeshas 10x the effect.
They love to give you charts and reports that say you should allocate 23.91% in largecap instead of 25% based on if you are 35years old versus 39years old. But really there is no need for that fine tuned management. Probably about 5 main investment types are all that matters, and the rest of the significance completely lost because nobody can tell what the market is going to do with even 10% precision.
Their advice is free. I sorta think like you did but then they like to talk about things like Beta. Stuff like how having 10% protects you on the downside and doesn't stop you that much on the upside. Sorta like having a straddle if you're doing options. So I just went with it. So far in this market it's still working out although I suppose I'd be slightly ahead if I were 100% in cash, but you never know when you might miss out on that 30+% run up a couple years ago.
yes we understand how Bonds work.
However, if your allocation is less than say 15%, the overall effect on your overall portfolio is so insignificant that it's not really worth doing.
If you have 90% invested elsewhere, what you chose for that other 90% completely dwarfs what you did with the last 10% in bonds.
You intend for that other 90% in mutuals to make money not lose money, so you should just follow the same strategy with your last 10%.
If you feel your 90% in mutuals is not going to make money and you need to protect yourself, you should pull the trigger and take a bigger chunk out of it to put into bonds to diversify. It's like taking out only $5000 worth of insurance on your $50,000 car, it's not going to help.
These types of micromanagement are things things advisers say just to obfuscate and makes you feel they are worth something, but really this micromanaging does nothing and the overall luck of how the market doeshas 10x the effect.
They love to give you charts and reports that say you should allocate 23.91% in largecap instead of 25% based on if you are 35years old versus 39years old. But really there is no need for that fine tuned management. Probably about 5 main investment types are all that matters, and the rest of the significance completely lost because nobody can tell what the market is going to do with even 10% precision.
Their advice is free. I sorta think like you did but then they like to talk about things like Beta. Stuff like how having 10% protects you on the downside and doesn't stop you that much on the upside. Sorta like having a straddle if you're doing options. So I just went with it. So far in this market it's still working out although I suppose I'd be slightly ahead if I were 100% in cash, but you never know when you might miss out on that 30+% run up a couple years ago.
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