Possibly the best and most honest article I've ever read about 401k's. http://fortune.com/2015/03/25/fidelity-401k-millionaire/ The article closes with stats I've never seen before. "...Its easy. So easy that of the roughly 13 million 401(k) accounts that Fidelity administers, a total of 72,379, or just 0.6% of them, have a balance of more than $1 million. This is, as Fidelity reported, up from 0.3% two years ago. Congrats! Among people who made less than $150,000 a year, the number of 401(k) millionaires was much, much lower, around 1,100. The rest made a lot more, over $350,000 a year, making the fact that they were able to save $1 million over 34 years sound a lot less impressive, and probably not even enough for someone making $350,000 to retire on."
Wish I had a dollar for every time I've quoted Jason! Anyway, somehow this guy knew the bull market would be strong this year. Right now there doesn't seem to be any end in sight with a record dow on tap. But still, I feel like things have to take a bear market turn at some point. Right? The "sooner", rather than later, smacked me like a brick today. I read some articles that very much hinted that it may take us by surprise and there are a few indirect signs. After all, Black Monday was October 19, 1987. We're rapidly approaching the 20th anniversary date. Thoughts?
That would be the 30 year anniversary, 2017 - 1987 = 30. Time flies when you're having fun, even when you're not!
No one knows what the market will do, regardless of whatever articles you read out there. I suggest you look at who wrote the article and what agenda they may have in writing it. Do they want you to send money for their full proof plan? The market is a long term investment. The closer you get to when you might want to pull the money out, the more protective you need to be. The market doesn't go up in a straight line, it's a jagged line, peaks and valleys, the valleys are a buying opportunity. The market has been going up for a while now. It was close to 20,000 at the beginning of the year. In March of 2009, it was 6500. All it takes is a worldwide or domestic crisis to drop the market triple digits. Again, no one knows what it will do, even Jason. I wonder if he has any money in the market, I've never asked him. Regardless, the current optimism is based on the expectation that this administration is business friendly. They expect tax reform. If for some reason, that doesn't happen, there might be a correction at some point. Who knows?
Larry--with all the concrete and asphalt in NYC, how do you find any virgin dirt in which you can bury all the Gold Doubloons your have accumulated over the years? And what happens if you loose track of the exact location of the deposit?
With a fairly conservative mix (73% gov't securities) and some lucky timing, I did 3.67% over the last 12 months
12.73% year to date, I'm heavy into large cap and international equities. (Uploaded pic and corrected percentage form 12.3 to 12.73%)
Not worth a tinker's cuss. I made close to 4% and the inflation rate (the real one, not the doctored "official" one that doesn't take into account things like gas and food) is between 11 and 15%. So I'm losing ground. A good way to look at is if the bank is charging you more for your mortgage or a loan than you're earning you're losing ground. I was promised when we went off of a fixed defined benefit pension to this defined contribution one that my money would double every seven years. It took 14. I got in just before "Black Monday" and got my first bath back then. It's been underwhelming performance ever since. The last 16 years have been fairly flat and it hasn't doubled yet, took a major hit in '08 and again last year. My guy didn't lose anything, but he pulled to cash before the market crashed and then was a bit slow on the uptake. I personally think mutuals and "consumer-grade" investment materials are the biggest fraud ever perpetrated on the Middle Class. By the time most of us were able to buy in, the "real" money had already made it's fortune and moved on to flogging bad discounted mortgages. The only people who are really making it on mutuals and that are the brokers who charge fees and the people who skim off percentages of huge blocks of money. The little guy with his 5 shares gets bunkus. In reality I might have been better off if I'd have put all my money in old or vintage banknotes and waited for them to get old and then sold them piecemeal. I would have tripled my initial investment. I did get lucky though, my guy was seriously looking at Madoff before he got busted; the numbers were impressive but there was just something "funny" about a fund that overperforms above and beyond in a lousy market. So he backed off; - good thing too, after what happened. I kept this guy simply because his "6th sense" is well honed, he's been right so far and kept me in the black, but as I said, in the overall scheme of things, it's more or less going backwards as compared to what it'll buy today.
While I agree in principle, I'm curious where you get 11 to 15% from? I think part of that could be housing costs as you note, but I can tell you from being here in south Texas that with the collapse of oil prices several years back, things have certainly slowed down and gas continues to be cheaper than it was in 2013. And while I can certainly sell my home for more than I bought it for several years back, it doesn't get anywhere near 11 to 15% inflation rate. Your local market may be different. Sorry, don't intend to copy paste to alter the meaning of what you said, just wanted to point out where you followed a similar theme in a couple spots. You note "your guy" hasn't lost you anything but he hasn't gained you much either. You are much kinder than I, I would have moved on to someone else much sooner than you. I won't go back all the way to Black Friday, but if for instance you invested all your money (pretend it is $1,000 dollars) in the S&P 500 on the first of January 2005 and took it out right before the crash you would have about $1,320.00 when he took it out in October, 2007. Now, if he would have done nothing in October 2007, just let it sit there and you had gone about your way spending more time with your cars and no time thinking about your investments, how much would you have? $2,148. He's cost you 63.7% in gains. I wouldn't call that a great sixth sense. This example assumes no dividend payments, that would have changed things a little bit and actually made the missed opportunity worse. No, I'm not a financial adviser, I can't make any recommendations, and yes I do my own investing. I'm also fairly tolerant of risk and make timing mistakes. Got out early in 2008 and so didn't lose much but also went too much to cash in August of 2015 and that has cost me some gains. Many in that industry are overpaid in my opinion, but there are some good ones out there that follow simple asset allocation principles that work over time. And don't charge you much to do it.
Alright, now that we have been experiencing wonderful gains in the market, lets talk about disaster planning. I've worked hard to obtain what I have in the 401k and I think about this often and imagine some of you do also. I'd hate to lose it with only 10 years to retire. Lets say there is a catastrophic event in world that we would be certain the market would crash or drop significantly. We might have a day or 2 to react to try and prevent major loss with a 401K. Since I am my own advisor I'd have the ability to quickly move investments out of stock and into safer funds. The 401ks I have experience with all give the investor a means to login and quickly change funds on their own so assume most of you would also have that option. So if we had an major event that we think justifies moving all money from mutual funds invested in stocks to something very safe what would it be? Assuming the financial institutions website wouldn't come to a halt due to everyone doing the same thing! Money Market, certain types of Bond funds? Other? If someone uses an advisor or financial firm, is it logical to think the agent for the firm could be overwhelmed in such an event and may not get to your account quickly enough to make needed changes. What priority would you and their other customers get? Would it depend on the size of your investment?
I am lucky. My wife is, among other things, a certified financial planner, graduating #1 in her class at Duke. There is a big gap between being certified and a financial planner that is not certified. If you seek outside help from a financial planner, ask the person if they are certified. Relatively few pass the certification process. I would avoid commercial services like Edwards Jones.
