what do you need to hold in IRA/401k

by Propagandhi711 Tue Apr 21, 2015 12:38 pm

to manage 401k/IRA (not roth) with minimal costs and passive management style and still keep up with rest of market:

1. 40% in vanguard total market index (VTSAX, 0.05% expense ratio)
2. 15% in small cap value (VSIAX, 0.09%)
3. 15% in world index (VFWAX, 0.14%)
4. 10-15% in emerging indec (VEMAX, 0.15%)
5. rest (15-20%) in target sectors/stocks you believe in (pharma, commodity, telecom, tech, whatever)

no bonds..you might want to put 10-15% in bonds if you like but I dont.

by truthbetold Tue Apr 21, 2015 1:32 pm

If your money is in an Ira, why would you manage it differently than your brokerage account?

Not all 401k's are the same. Fidelity int fund sucks.

Europe may offer better returns in the coming year.

by Propagandhi711 Tue Apr 21, 2015 1:56 pm

truthbetold wrote:If your money is in an Ira, why would you manage it differently than your brokerage account?

Not all 401k's are the same. Fidelity int fund sucks.

Europe may offer better returns in the coming year.

I guess this applies to self directed IRAs and not company provided 401Ks. the point of investing in these low cost indexes is to avoid having to make calls on direction of markets and playing around with retirement money. I'd rather do that with outside money that's in brokerages.

by truthbetold Tue Apr 21, 2015 3:38 pm

Prop
Agree. Retirement funds - low risk.

by TruthSeeker Tue Apr 21, 2015 9:00 pm

I started in Vanguard in 2006.

25% in Total Stock Index.
25% in Small Cap Index.
25% in Mid Cap Index.
25% in Large Cap Index.

Imagine my returns 5 years later?

Negative!

by Propagandhi711 Tue Apr 21, 2015 11:24 pm

TruthSeeker wrote:I started in Vanguard in 2006.

25% in Total Stock Index.
25% in Small Cap Index.
25% in Mid Cap Index.
25% in Large Cap Index.

Imagine my returns 5 years later?

Negative!

smack in the middle of your 5 yr window was the worst downmarket ever for global securities. with non correlated asset classes such as gold, reits and bonds of which there are zero in above list, imagine negative returns!

also it's kinda dumb to put 25% in total stock index (which is a collection of large and mid caps) AND invest in mid cap & large cap indices separately. quite dumb infact and defeats the goal of diversification.

net net: diversification model woefully misunderstood and completely broken

by TruthSeeker Wed Apr 22, 2015 12:13 am

Diversification sounds good in articles posted on msn.money.com or finance.yahoo.com by some 20 year olds, teaching the world, the obvious, and getting paid for it.

Try to recollect the names of best investors in this world, who succeeded, with diversification in the history of investing?

Nope.

I aint falling for it. Diversification basically means - I have no idea to distinguish good from bad, so I'd invest in all.

The most successful investor in mankind - Warren B. - does not follow it.

Its meant for the masses.

As for my post - it was to show that when markets are down, index investing, even over 5 years with regular investments each month - can result in negative return.

Enough for now,
TS.

by FluteHolder Wed Apr 22, 2015 12:26 am

Just a few question to the investors here about their expectation or industry norm.

1. What is the 'Average' return in terms of % per year or long term(1/5/10 years)?

2. What is the 'Best/Outstanding' return in terms of % per year? or (1/5/10 years)

by Propagandhi711 Wed Apr 22, 2015 7:39 am

TruthSeeker wrote:Diversification sounds good in articles posted on msn.money.com or finance.yahoo.com by some 20 year olds, teaching the world, the obvious, and getting paid for it.

Try to recollect the names of best investors in this world, who succeeded, with diversification in the history of investing?

Nope.

I aint falling for it. Diversification basically means - I have no idea to distinguish good from bad, so I'd invest in all.

The most successful investor in mankind - Warren B. - does not follow it.

Its meant for the masses.

As for my post - it was to show that when markets are down, index investing, even over 5 years with regular investments each month - can result in negative return.

Enough for now,
TS.

newsflash: you aint a great investor like buffet. not even close. you are the masses. face it and invest accordingly. or go the other way and bet all in on something you *think* you know about, I dont care.

by Propagandhi711 Wed Apr 22, 2015 7:40 am

FluteHolder wrote:Just a few question to the investors here about their expectation or industry norm.

1. What is the 'Average' return in terms of % per year or long term(1/5/10 years)?

2. What is the 'Best/Outstanding' return in terms of % per year? or (1/5/10 years)

first I want to hear sadguru's take on this

by MaxEntropy_Man Wed Apr 22, 2015 7:51 am

all my retirement money is in a total stock market index fund. i neither have the talent nor the time to do better than that. i also have an IRA from a long time ago that is all in BRKB. i consider myself firmly of the masses when it comes to investing wisdom (or lack thereof).

http://www.marketwatch.com/story/warren-buffetts-investing-tip-for-lebron-james-stick-with-an-index-fund-2015-03-02

by Propagandhi711 Wed Apr 22, 2015 8:24 am

MaxEntropy_Man wrote:all my retirement money is in a total stock market index fund. i neither have the talent nor the time to do better than that. i also have an IRA from a long time ago that is all in BRKB. i consider myself firmly of the masses when it comes to investing wisdom (or lack thereof).

http://www.marketwatch.com/story/warren-buffetts-investing-tip-for-lebron-james-stick-with-an-index-fund-2015-03-02

not that you would have 'felt it' in the past few years but with total market index you're only exposed to large cap & mid cap US companies (total market index is market cap weighted so moves closely with large cap indices, mid caps have limited impact). that's only at best 2 of the 8 non-correlated asset classes supposedly required to achieve true diversification. here's a snapshot of the returns of various asset classes since 2000 and it shows having a properly diversified account not only gooses long term return but also tamps down bear market losses (compare worst year performance of large caps vs AA portfolio). it seems to make sense to diversify

cliffs: when US markets decide to tank, with your 100% exposure to US large & midcaps, you might see a worse % loss than a properly balanced account would.
what do you need to hold in IRA/401k Annual-asset-return

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