YOU stated that AGGRESSIVE funds hold treasuries.
That is completely off base.
I never said NO funds own treasuries. YOU said aggressive funds do.
That is wrong rate.
Go back, read what you wrote.
So I set up my 401k at age 18
- Thread starter morreo
- Start date
YOU stated that AGGRESSIVE funds hold treasuries.
That is completely off base.
I never said NO funds own treasuries. YOU said aggressive funds do.
That is wrong rate.
Go back, read what you wrote.
WAIT A MINUTE - WHERE ARE THE TREASURIES?
Rate - help me out here, you said all funds, in particular aggressive funds, hold treasuries...
I'm having trouble seeing where this aggressive fund you stated would hold treasuries does....
Hmmmmm....
Big surprise.
Amateur hour on ET yet again.
I'm sorry rate, please clarify how this aggressive fund will hold treasuries again as your post stated?
How about them bonds you said would comprise 30% of the portfolio?
HOW ABOUT ZERO PERCENT.
Well done rate!!! You OBVIOUSLY know what the hell you are talking about. Head back to the kiddie table and let the adults talk, thanks.
Brownsfan, you're utterly missing the point. Rateesquad was mostly right, you were mostly wrong. Aggressive lifestyle funds are quite widely diversified. They are perfectly safe as single holdings in a young person's 401k. They may or may not actually hold bonds (this one doesn't), but that doesn't invalidate the underlying point that rateesquad was making. Don't miss the forest for the trees.
Martin
Martin
If the above paragraph is not meant to be a joke, then consider how much think again how much reckless behavior really cost you when one is young.
Here is a parallel question - if you want to try jumping out of an airplane once in your lifetime, should you do it when you are 20, or 60?
I say I will try when I am 80, or diagnosed with a terminal illness, whichever comes earlier.
If shit happens when you are 20, you will have to live as a vegetable for 60 years. but if you try at 60, the worst case is that you are paralyzed for 20 years.
so you see, being young is not the license to be reckless..... quite the contrary, while time is on your side, cherish the opportunity and do what is the most sensible.... take the conservative approach and you are guaranteed to be wealthy at retirement.
on the other hand, if one is already 50 and has nada saved up for retirement, then he needs to go 'all out' and take the risk of jumping out of the airplane, because he either makes it and retire rich, or lose it all and live on social security. The reality is, if one does not have time on his side, then taking the conservative approach only means that instead of working as the Walmart greetor for 50 hours a week, he can get by with 45 hours a week.
One of the problem I hate these retirement plan is you cannot touch it until you retired. Since you are 18, that mean that's a good 40+ years to go. We all know the retirement age will go up, so it might affect the existing plan. And in 40 years, who know what happen to the dollars? It might worth less than the Yen.
if one takes distribution before the no-penalty age, then one jsut has to pay the penalty. however, that doesn't take away the fact that for all the years the investment is compounding tax free in the shelter.
true, nobody knows for sure what the future holds. but history is the only reference we have. equity index is the only asset class that consistently outperforms inflation and other asset classes, over the long term.
if it becomes worth less than the Yen, as long as you are invested, then the inflation is hedged to a certain extent.
What other options do we have?
I started maxing out my roth IRA when I was 16 as soon as I had a job. I was fortunate and did not have many expenses, so I was able to stash away that 4k a year working part time. The thing that really convinced me to open it was creating a spread sheet and seeing how big of a sum a few thousand a year would grow to by the time I was retired.
I had to deal with a similar decision on whether I wanted to just go for a homerun and take on more risk or just stay conservative, since i am already getting a head start. I decided go agressive and for the past 2 years have been buying calls in stocks I have conviction in, like Apple, but not getting out of hand. I just buy deep in the money LEAPs, so they are basically a stock replacement with leverage. I have toned down the risk lately after realizing that I have this nice head start, there is no need to risk losing it all and starting over at 0. I could handle a 50% loss with out panicking(not that I could see my strategy losing that much) because this is not cash i need to live off of.
So heres my real advice after a long post...I have believe value investing is actually your best bet to consistantly beat the market. Read up on Buffett and Graham, (im just starting to follow their teaching) buy great companies at good prices, and hold for the long term. Good value investors have been able to see returns of 20% over the long term. Compound your current balance by 20% for 40 years and you will be a believer.
I had to deal with a similar decision on whether I wanted to just go for a homerun and take on more risk or just stay conservative, since i am already getting a head start. I decided go agressive and for the past 2 years have been buying calls in stocks I have conviction in, like Apple, but not getting out of hand. I just buy deep in the money LEAPs, so they are basically a stock replacement with leverage. I have toned down the risk lately after realizing that I have this nice head start, there is no need to risk losing it all and starting over at 0. I could handle a 50% loss with out panicking(not that I could see my strategy losing that much) because this is not cash i need to live off of.
So heres my real advice after a long post...I have believe value investing is actually your best bet to consistantly beat the market. Read up on Buffett and Graham, (im just starting to follow their teaching) buy great companies at good prices, and hold for the long term. Good value investors have been able to see returns of 20% over the long term. Compound your current balance by 20% for 40 years and you will be a believer.
First off, I should state that yes, this fund is a 'fund of funds'. I could have chosen specifically what aspects of the markets I wanted to get in (emerging markets and the like), but I chose a fund of funds because of that exact reason of having all my eggs in one basket (and how I shouldn't). I actually feel that although I do have it all in one fund, the fund is compromised of a great number of other funds. I also think the average growth of the stock market is more than enough to satisify me for retirement. Also, this isn't my only plan for retirement. I currently manage my own stocks with a siginificant amount of money (for my age) and my father has a Roth IRA set up for me. Not to mention other physical assets such as gold and rare coins which sits in my personal safe. (not enough to retire on, but you get the point)
As for those who have said that education is better than just throwing my money to a manager. I completely agree. I probably should have stated that I have been investing in the stock market since I was 13, options since I was 16, and I currently hold a full time job at a futures trading firm where I trade Eurodollar futures and Treasury futures during the Asian trading hours. I've been at the futures job since I was 17. I just didn't know I had to give a personal bio.
Also, I'm not saying I can't stomach more that a 15% loss. I was saying that I put a stop loss at 15% so if the idiot running the fund makes a mess out of things. I don't have to watch a piece of my retirement plan dwindle to nothing. I've stomached 65% losses before (think new century), I decided I don't want that happening again and 15% is enough damage for a hit.
I decided on the portfolio set-up mainly because I do have other plans for retirement. This isn't my retirement egg, it's only a fraction of the shell. I just hope that it can be a big fraction and if not, I still have many other places to look to (like social security. hahaha. That was a joke).
Thanks for everyone for helping out though. I definitely keep in mind all opinions no matter who it's from.
As for those who have said that education is better than just throwing my money to a manager. I completely agree. I probably should have stated that I have been investing in the stock market since I was 13, options since I was 16, and I currently hold a full time job at a futures trading firm where I trade Eurodollar futures and Treasury futures during the Asian trading hours. I've been at the futures job since I was 17. I just didn't know I had to give a personal bio.
Also, I'm not saying I can't stomach more that a 15% loss. I was saying that I put a stop loss at 15% so if the idiot running the fund makes a mess out of things. I don't have to watch a piece of my retirement plan dwindle to nothing. I've stomached 65% losses before (think new century), I decided I don't want that happening again and 15% is enough damage for a hit.
I decided on the portfolio set-up mainly because I do have other plans for retirement. This isn't my retirement egg, it's only a fraction of the shell. I just hope that it can be a big fraction and if not, I still have many other places to look to (like social security. hahaha. That was a joke).
Thanks for everyone for helping out though. I definitely keep in mind all opinions no matter who it's from.
<i>"One of the problem I hate these retirement plan is you cannot touch it until you retired."
"if one takes distribution before the no-penalty age, then one jsut has to pay the penalty."</i>
Wrong, and wrong.
At any point in your life, you can start taking "substantially equal" monthly distributions from an IRA, with no penalty. You can create the IRA when you're 18 and start taking distributions when you're 22. You don't have to be retired. These are known as 72(t) distributions, look it up.
Martin
"if one takes distribution before the no-penalty age, then one jsut has to pay the penalty."</i>
Wrong, and wrong.
At any point in your life, you can start taking "substantially equal" monthly distributions from an IRA, with no penalty. You can create the IRA when you're 18 and start taking distributions when you're 22. You don't have to be retired. These are known as 72(t) distributions, look it up.
Martin
I'm 20 here and worked for the past 6-months as part of my school curriculum. I put 5% of my pay into my 401K plan.
While I agree its completely okay to put a large amount of money in an aggressive fund, I think timing is key. For the average investor, doing the typical "100 minus your Age = Aggressive" is fine, but as a trader, I don't see now as the right time to be long small and mid-cap equities (aggressive), so I'm not.
I swapped all into bonds 2 weeks ago at that swing high and I'm prepared for a 6-month - 2 year bear market... when I think the market may get strong I'll roll back into the aggressive fund, having kept more of my starting capital.
It all depends on how comfortable you are with your analysis... missing the big moves up and having to chase a market is the last thing you want to do. I'm definately planning on keeping the trades to a max of 1-2 a year in order to avoid this. Since it seems like this is only a portion of your investments, I think its probably pretty smart to keep it untouched... diversifying between your traded versus non-traded assets is not a bad idea... protects us from ourselves haha
While I agree its completely okay to put a large amount of money in an aggressive fund, I think timing is key. For the average investor, doing the typical "100 minus your Age = Aggressive" is fine, but as a trader, I don't see now as the right time to be long small and mid-cap equities (aggressive), so I'm not.
I swapped all into bonds 2 weeks ago at that swing high and I'm prepared for a 6-month - 2 year bear market... when I think the market may get strong I'll roll back into the aggressive fund, having kept more of my starting capital.
It all depends on how comfortable you are with your analysis... missing the big moves up and having to chase a market is the last thing you want to do. I'm definately planning on keeping the trades to a max of 1-2 a year in order to avoid this. Since it seems like this is only a portion of your investments, I think its probably pretty smart to keep it untouched... diversifying between your traded versus non-traded assets is not a bad idea... protects us from ourselves haha