65

There is not one right answer to this but in my opinion, this is not the time to move to safer options for someone in your position. You are very young and this is a retirement account, you want to continue to put money in stocks because they are going to be VERY cheap right now compared to when you plan on retiring if the market continues as it always has. ...


62

Lots of people will post lots of advice about what to invest in, or which research blog to read, but definitely the best advice is: Talk to a financial planner As newbie investors there are lots of basic mistakes you can make that will cost you dear. A good financial planner will avoid them, even if they don't get you the absolute best theoretical return. ...


49

This seems to me irregular both in terms of risk, lack of diversification Me too. Is this a suitable allocation of assets? Putting 50% in one stock is acceptable, I think, if that one stock is a highly diversified and well-run investment company like Berkshire-Hathaway. (Apparently, half of Bill Gates' wealth is in B-H.) Of course, a giant bank isn't ...


33

Not safe at all. A 4% withdrawal rate would require the US stock market in the 21st century to produce returns similar to those of the 20th century, i.e. in the vicinity of 7% in real (inflation-adjusted) terms. Fair estimates for stock returns going forward are not this high. Rick Ferri proposed a real 5% over a 30-year horizon in 2015. I recall Bernstein ...


26

Investment is inherently risky. Other investment options compared to stocks would be: Cash, which is likely to be eaten by inflation over time (100.000 at 2% yearly inflation will be worth ~55.000 in purchasing power in 30 years). Real-Estate, which is extremely location dependent, may necessitate manpower for upkeep and can be just as volatile as stocks. ...


19

Moving money out of your 401(K), adjusting your target date, or in general taking measures to stop your losses is very likely the worst thing you could do with this account right now. You should be doing the opposite, putting more money into the account. You may have heard the phrase "buy low, sell high". The stock market is now low, so it is time to buy, ...


17

Before you do anything I would suggest you look at history. This has happened before, and it will happen again. Also, what will happen again is that things will recover. This is an important lesson, stocks do not always increase in value. This is why savings accounts, and debt reduction can be very attractive when compared to stock market investing. ...


17

Adjust your risk tolerance as you get closer to your goals. For example, most target-date retirement accounts include a mix of stocks and bonds. At the start, with many years to grow, they tend to be very stock heavy. Over time, as you get close to retirement they adjust to having a much larger bond portion. The funds' managers gradually shift each ...


14

In my opinion that there is no better resource than bogleheads.org. This site is founded on the opinions of John Bogle, who is credited with founding the first index fund. There are tutorials, articles, and very helpful folks that help get you started. If you ask a question, they will ask for more information like your current income and assets, your ...


13

The critical question is posed in a comment by BernhardDöbler: do you need this money soon? The danger in selling is that you may be following the pattern of many casual investors: fear of missing out drives them to buy stocks when the market is very strong and then fear of losing all drives them to sell when the market is very weak. They end up "buying ...


11

The 4% rule was created by looking at hypothetical retirees throughout all of the history of the stock market. 4% was found to always ensure that a retiree never ran out of money for at least 33 years regardless of what period of history you looked at. This includes a retiree going through any of the 30 year periods that intersected the Great Depression, ...


11

First off, we should clarify what you mean by "529 - money in the kid's name". Usually, this means that the parent sets up a 529 account in their name, but puts down their kid as the beneficiary. Therefore the parent is the custodian, or the "owner" of the account. However, if the student is both the beneficiary and the custodian of their own account, that ...


10

Market crashes are pretty inconvenient when you need a large wad of cash now and all your capital is in stocks. But long-term investors, like those saving for retirement, don't need to worry, because market crashes are a temporary condition. Whenever there is a crash, it doesn't take long until the market goes back to how it was before. Let's take a look at ...


9

Yes, this is terrible in terms of lack of diversification and concentrated risk. Conflict of interest? No, because there's no benefit to Morgan Stanley if a client owns shares of JPM. Mismanagement? Maybe, maybe not. This might be a violation of FINRA's "Know Your Client Rule" which requires a broker to assess each customer's financial situation, ...


9

I think you could answer this by looking at how the world market does on average compared to the US market. Essentially a comparison of VTSAX to VTWIX. This website will allow you to do exactly that. While VTWIX has a lower growth rate over a 10 year period (8.57% versus VTSAX's 13.09%) it's still higher than the ~7% annualized growth required to make the 4% ...


8

Understand how investing works for yourself You need a freshman's understanding of investing and how the industry works. Fortunately this isn't hard at all: John Bogle's book "Common Sense on Mutual Funds" is a great place to start. You need that so you have enough intuition to recognize poppycock when you see it. We're not asking you to get an MBA. I ...


8

That thought is a very common one... but it's deadly wrong. Your feeling of "OMG I invested and it went down, I should sell" is a very standard response new investors have to the market. And this is what makes them shoot themselves in the foot. And that's exactly what novices do: they sell after the loss: in other words, they sell low. And when they try ...


8

There has been zero talk about cutting social security payments to people currently receiving payments. There has been talk about cutting the taxes funding the social security system. The idea would be to make up the shortfall due to a tax cut by sending money from the general fund into the social security system. That plan has problems due to unemployed ...


7

Yes, you should take action. You should make your regular 401(k) contribution as usual, and invest it as usual. Ensure your company's match is still in force before you do that; if your company is going through a hardship then it's possible they will suspend it, so in that case consider holding off on a contribution until you can confirm a match will be ...


6

What would make investing into my 401k the better option other than NW? Company match. Eliminating all 401(k) contribs means no company match, and that's a pay cut, which naturally is Unwise. More important is the foolishly binary thinking embedded in your statement: If I choose to invest $19k into my 401k Who mandates that you must fully contribute ...


5

Given the capital gains basis on the stock, it would be practical for her to continue to hold it. It is potentially possible that JPM grow so much over the past 10 years that it went from a moderately weighted position (10-15%) to 50% and was not sold for tax reasons. With that in mind it is hard to tell if this is mismanagement as the adviser could be ...


5

It's not correct to say that a 401(k) withdrawal is "taxed at" a certain bracket. Rather, a Traditional 401(k) withdrawal (assuming no after-tax contributions) is simply added to your taxable income, along with your wages and other income. And you are taxed based on that total income, basically the same as if the 401(k) withdrawal were wages. The 401(k) ...


5

Yes, sort of, unless Congress changes the laws. Currently, past earnings are adjusted by an "index factor" (to use the SSA term) which isn't precisely the inflation rate, but is similar. It is calculated from average wages for the past years compared to the current year. Here's a link to an example: https://www.ssa.gov/oact/progdata/retirebenefit1.html ...


5

You've stopped the drawdown projection after 15 years, but you could easily live longer than that, and in just a few more years you'd run out of money. Your initial withdrawal rate of >7% is very high. You haven't considered the need to grow your withdrawals with inflation. As a result of the above, most people cannot rely purely on "conservative portfolios" ...


5

I would argue that you have three possible options, two tax advantaged and one not. Backdoor Roth - Make a non-deductible contribution to a Traditional IRA and immediately convert it to a Roth. This is essentially the same as contributing to a Roth but with no income limits. You said that you currently have a pre-tax IRA, this can complicate things. You ...


5

There are two issues here. The first is that you may run out of money if you live past the age of 85 and the second is that there's the possibility of Alzheimer's disease in which case you're going to need even more money because there will likely to be a need for caregivers. There are a variety of annuities that address the first issue. I'll take a pass ...


5

To first order, assuming your tax rate in retirement will be the same as now, you would be indifferent between traditional and Roth -- an equal reduction in current take-home pay will lead to equal after-tax retirement income. Note that the employer match always goes into a traditional account, so that does not affect the decision (since you are maxing out ...


4

Based on the key parts of the question: A. Martha doesn't have a retirement plan at work. B. Martha makes too much to deduct the traditional IRA contribution C. Martha makes too much money to participate in a Roth IRA. From these three statements we know: From A we know Martha has no 401(k) or 401(k) like retirement plan at work, she also doesn't have a ...


4

Spreadsheets are really handy for this!! I calculated my hypothetical initial retirement budget based on my current budget adjusted for: what my father currently pays for Medicare Advantage (we're in the US), what expenses I think might disappear, what new expenses I think might appear, how taxes are calculated, years until retirement, and estimated ...


4

There are long articles, and full books that address this topic. In general, the answer is yes. Money available is treated according to how it's owned. And your retirement accounts don't count towards that formula, but money in a child's name does. Keep in mind, your income and other assets also count towards the expected parental contribution. This is why ...


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