I need some (honest) reassurance of my portfolio

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Bob_Sacamano
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I need some (honest) reassurance of my portfolio

Post by Bob_Sacamano »

I started investing in 2013 when I got my first real job at age 23. I heeded much of the advice given here and elsewhere which was to set up a 3 fund portfolio in a target retirement fund. I've been maxing out each of my retirement accounts since (except the 401k which I started contributing to two-ish years ago). I'm bleeding bad right now and just need to know if there's anything I should be doing differently. I've lost ALL my earnings since 2013. Is what I have below a good overall allocation? As you can see, I have everything invested towards Vanguard's 2055 target retirement fund.

Here are my holdings:

Ally - 16k earning 1.5% interest
Roth IRA - 37.4k (as of 3/16) invested 100% in VFFVX
HSA - 19.5k (as of 3/16) invested 100% in VFFVX
401k - 56.5k (as of 3/13) invested 100% in VTRS55 (Vanguard Target Retirement Trust)

I'm 29 now, how am I doing? What would you do differently? I ask because I don't see many educated investors holding all their assets in a target retirement fund. I can't help but feel I should be doing more, especially with the way things look right now.
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retired@50
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Re: I need some (honest) reassurance of my portfolio

Post by retired@50 »

Bob,
I suggest you stick with what you've been doing.

Target date funds have some great built-in advantages like auto re-balancing, a broadly diversified portfolio, and a low expense ratio.

I see absolutely nothing wrong with what you've done.

I'd stick with periodic investing, via your paycheck, month after month. Depending on how you contribute to your Roth IRA and HSA accounts, I'd use a similar periodic approach, every pay period, all year long. If looking at this stuff bothers you, then set up your contributions on an "auto-pilot" schedule so you don't have to pay any attention.

Regards,
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theorist
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Re: I need some (honest) reassurance of my portfolio

Post by theorist »

You basically have 12% in cash, and 88% in a 2055 Target retirement fund which is 90% stocks (well diversified between US and international) and 10% bonds. This comes out to a roughly 80/20 allocation with half the 20 in bonds and half in cash, though not exactly that,

This is a perfectly reasonable approach at 29. The Target date funds are great “set it and forget it” investments, and further do your rebalancing for you, maintaining your desired level of risk. At the moment they are buying stocks as they get cheaper by rebalancing from the bonds (at least in effect), which is a good thing to be doing, and one which takes nerve from an individual investor during a declining market. That is one of their benefits!

Make sure you have an IPS drawn up so you can decide, calmly and clearly, why your allocation is what it is, and what you do in various situations. A market panic isn’t a good time to be rethinking your whole strategy. Happily your strategy looks pretty good as is. I’d stick with it.

Good luck!
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Rick Ferri
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Re: I need some (honest) reassurance of my portfolio

Post by Rick Ferri »

I started investing in 2013 when I got my first real job at age 23
You're 30 years old. I'll be 62 years old next week. You are looking at this all wrong. At 30 years old, you have only a tiny fraction of your future wealth invested. If I were 30 years old again, I would be putting every dime I could possibly afford into stocks today and every day. You don't see that, but I do.

Rick Ferri
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mroe800
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Re: I need some (honest) reassurance of my portfolio

Post by mroe800 »

Bob_Sacamano wrote: Mon Mar 16, 2020 6:42 pmI'm 29 now, how am I doing? What would you do differently? I ask because I don't see many educated investors holding all their assets in a target retirement fund. I can't help but feel I should be doing more, especially with the way things look right now.
Perhaps being in a target date fund where you have no action you can possibly take is the best place to be right now?
LeeMKE
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Re: I need some (honest) reassurance of my portfolio

Post by LeeMKE »

Keep going!

I was about your age in 1987 when a crash almost as severe hit. Luckily, like you, I was fully invested and heard that things were bad, but I couldn't be sure how bad without a fair amount of looking things up, and multiplying by the number of shares from my last statement. (no internet back then) And I didn't. I just kept pumping money in with each paycheck. It worked out fine, and you will too.

Stay the course.
The mightiest Oak is just a nut who stayed the course.
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Bob_Sacamano
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Re: I need some (honest) reassurance of my portfolio

Post by Bob_Sacamano »

So what is everyone else on this board doing if a target retirement fund is perfectly good? How come I see so few people here talking about them? Surely I can do better than a set it and forget it approach. Maybe something more tailored for the time. It seems a lot of people are making calculated moves while I'm losing 10s of thousands and not doing anything.
ososnilknarf
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Re: I need some (honest) reassurance of my portfolio

Post by ososnilknarf »

You're in good shape. At your age, you have time on your side.
When you hear about people making calculated moves that is probably mostly just people rebalancing their portfolios to their target asset allocation since the stock portion just tanked. You have that happening automatically with your target date fund, as it is being balanced for you.

If you feel like you need to do something, you could do what I did when I was just about exactly your age in 2008/9, which is I tried to scratch together as much money as I could to put more into stocks. It paid off handsomely over the last 10 years.
sambb
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Re: I need some (honest) reassurance of my portfolio

Post by sambb »

its quite the loss. If you didnt see the risk last month, then at this point it might not be worth it to change. But if you feel that you have too much risk for your comfort level, then youll have to change
Pikel
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Re: I need some (honest) reassurance of my portfolio

Post by Pikel »

Bob_Sacamano wrote: Mon Mar 16, 2020 8:48 pm So what is everyone else on this board doing if a target retirement fund is perfectly good? How come I see so few people here talking about them? Surely I can do better than a set it and forget it approach. Maybe something more tailored for the time. It seems a lot of people are making calculated moves while I'm losing 10s of thousands and not doing anything.
Read Jack Bogle's Little Book of Common Sense. Do not start actively trading, you will lose. People posting about 'winning' won't post when they lose.

A target fund is a good choice, the difference between using that and managing equity/bond yourself will save you a very small amount in expense ratio, and you may find you prefer things like CDs, I and EE bonds to being in the total bond market. On the equity side, I think target funds are globally diversified and I am in the minority (maybe deservedly so) in only wanting to hold US, so another option there.
HomeStretch
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Re: I need some (honest) reassurance of my portfolio

Post by HomeStretch »

Bob_Sacamano wrote: Mon Mar 16, 2020 8:48 pm So what is everyone else on this board doing if a target retirement fund is perfectly good? How come I see so few people here talking about them? Surely I can do better than a set it and forget it approach. Maybe something more tailored for the time. It seems a lot of people are making calculated moves while I'm losing 10s of thousands and not doing anything.
I was very thankful during the 2008-9 recession to be mostly invested in target date funds that were professionally rebalanced.

I don’t use target date funds now as it is more tax efficient for me to place equity and bond funds across my taxable, tax deferred and Roth accounts.

Regardless of the moves I am making, I too have significant market losses. Hang in there. When the market rebounds, you will be happy that you did.
Dontridetheindexdown
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Re: I need some (honest) reassurance of my portfolio

Post by Dontridetheindexdown »

You are doing great!

Stay the course if you possibly can do so.

Only thing I would add, as the previous poster suggested, perhaps U.S. more than international, and perhaps stable assets rather than bonds.

On a muddy track, bet on the big horse.

I've been investing for more than 40 years.

This is the muddiest track I have seen, and right now we are 49% U.S. equities/51% stable U.S. assets.

We continue to invest additional funds and to reinvest dividends each month, and right now, we believe the U.S. is the safest place to invest.
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F150HD
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Re: I need some (honest) reassurance of my portfolio

Post by F150HD »

Rick Ferri wrote: Mon Mar 16, 2020 6:55 pm
I started investing in 2013 when I got my first real job at age 23
You're 30 years old. I'll be 62 years old next week. You are looking at this all wrong. At 30 years old, you have only a tiny fraction of your future wealth invested. If I were 30 years old again, I would be putting every dime I could possibly afford into stocks today and every day. You don't see that, but I do.

Rick Ferri
^^^^ this
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jabberwockOG
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Re: I need some (honest) reassurance of my portfolio

Post by jabberwockOG »

Some folks on the board are "down" several hundred thousand dollars, ask me how I know :shock:

But after investing regularly for 35 years and weathering a few major downturns, a lot of us know that an investor loses absolutely nothing in the long run unless they panic and sell low to lock in losses.

Equities are on a huge sale right now relative to a month ago and if I was a young person in accumulation phase I would max out my contributions to take advantage.

Relax - stop checking your accounts for a while - trust the advice given on this board - your accounts and shares will be there for many years and you will be just fine in the long run.
InvestingGeek
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Re: I need some (honest) reassurance of my portfolio

Post by InvestingGeek »

The reason I switched from target retirement funds to vtsax and VBTLX and other such funds is the slightly higher expense ratio. The target funds come with features like auto rebalancing, auto glide path and whatnot for a little extra in fees. I didn't want the drag. Otherwise what you're doing is fine.
CourseCorrect
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Re: I need some (honest) reassurance of my portfolio

Post by CourseCorrect »

Please try to keep everything in perspective as you continue with investing. You are very young and in the grand scheme of things you have decades of compounding ahead of you. Every major world event seems overwhelming and like there was no history before it and no future ahead of it. However there is plenty of both. The markets have made it through some pretty unbelievable events that must have been nothing short of all consuming while they took place. We can only imagine how people felt during events like World War II when 10,000 people per day were being killed in action. Even though it didn’t seem possible the world and market survived and time continued on. People rebuilt their lives and started pushing humanity forward again.

This virus shall also pass and the market (along with the rest of us) will move ahead as well. I can’t stress how challenging it is to put things in a long term perspective as it doesn’t seem like we are naturally wired that way. However, it’s probably the greatest investing skill you can learn. Also, listen to Rick.
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retired@50
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Re: I need some (honest) reassurance of my portfolio

Post by retired@50 »

Bob_Sacamano wrote: Mon Mar 16, 2020 8:48 pm So what is everyone else on this board doing if a target retirement fund is perfectly good? How come I see so few people here talking about them? Surely I can do better than a set it and forget it approach. Maybe something more tailored for the time. It seems a lot of people are making calculated moves while I'm losing 10s of thousands and not doing anything.
Bob,
The fact that you're in a target date fund isn't the source of your losses. Everyone in the stock market has losses. If I believed you could do better than a target date approach, I'd tell you.

If they had target date funds when I started investing, I would have used one. You'll never even know how many mistakes you've avoided by using a target date fund. So many people screw things up when they start to put their fingers into the gears of a well constructed, broadly diversified, age appropriate, automatically re-balanced portfolio. You've got it made and you don't even realize it.

Try reading some of the horror stories from investors moving to Vanguard from Edward Jones or Merrill Lynch or any other high cost investment house. Paying annual asset under management fees that would make your head spin. You're in Shangri-La and you somehow think you can do better.

Sit tight. Keep on contributing. Best of luck.

Regards,
This is one person's opinion. Nothing more.
dboeger1
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Re: I need some (honest) reassurance of my portfolio

Post by dboeger1 »

I'm the same age as you, started my career the same year, and started in mostly the exact same investments. I have between 2 and 3 times as much in my portfolio, but otherwise, similar story. Less than a year ago, I shifted to 100% equities. I don't regret the decision and see myself sticking with it for a very long time, but maybe it'll comfort you to know that someone in a very similar position to you is bleeding just a little bit worse from taking on additional risk, haha. You have a very sensible investment portfolio. I'd stay the course. See you on the other side of this, my friend.
MTF
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Re: I need some (honest) reassurance of my portfolio

Post by MTF »

Bob_Sacamano wrote: Mon Mar 16, 2020 8:48 pm So what is everyone else on this board doing if a target retirement fund is perfectly good? How come I see so few people here talking about them? Surely I can do better than a set it and forget it approach. Maybe something more tailored for the time. It seems a lot of people are making calculated moves while I'm losing 10s of thousands and not doing anything.
I'm a little older than you (36), but started investing a few years later than you did, so I've probably been investing for roughly the same length of time. The value of my investments has gone down tens of thousands of dollars also in the last few weeks. I'm not in a target date fund but hold a mixture of ETFs with an 80:20 split between stocks and bonds so again essentially the same as you. The only thing I have done differently is increase the automatic contributions from my fortnightly salary payments. If I was in a target date fund I would be doing the same. If you feel you need to do something different and can afford to increase your contributions then that is what I would do in your situation.
algebra_goddess
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Re: I need some (honest) reassurance of my portfolio

Post by algebra_goddess »

I’m an economist, professor teaching asset pricing and business cycles. This is a different shock, lot of uncertainty, hence the volatility. It will get better, just hang in there...I would not buy the “dip/bottom” as we haven’t reached it yet due to an impending credit crisis. It can take 10 years to be back, average is normally 4 years...best case would be 20 months. You are young...it will be ok for you if you just hang on, volatility is the price we pay for high long term returns.
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Re: I need some (honest) reassurance of my portfolio

Post by PoultryMan »

Rick Ferri wrote: Mon Mar 16, 2020 6:55 pm
I started investing in 2013 when I got my first real job at age 23
You're 30 years old. I'll be 62 years old next week. You are looking at this all wrong. At 30 years old, you have only a tiny fraction of your future wealth invested. If I were 30 years old again, I would be putting every dime I could possibly afford into stocks today and every day. You don't see that, but I do.

Rick Ferri
Consider the source and heed his advice. For someone this young this is a terrible event but a long term amazing opportunity to be in stocks.
Alex GR
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Re: I need some (honest) reassurance of my portfolio

Post by Alex GR »

Rick Ferri wrote: Mon Mar 16, 2020 6:55 pm
I started investing in 2013 when I got my first real job at age 23
You're 30 years old. I'll be 62 years old next week. You are looking at this all wrong. At 30 years old, you have only a tiny fraction of your future wealth invested. If I were 30 years old again, I would be putting every dime I could possibly afford into stocks today and every day. You don't see that, but I do.

Rick Ferri
Mr. Ferri,
I find it absolutely amazing that you're on here! I was just reading your book 'All About Asset Allocation' and here you are!

I do have one question and it is about the very subject you're the expert on :D (asset allocation):
I "lost" about $130k since the peak in February. I am not panicking or panic selling, so no issues there. My portfolio was ~70/30 in February and it is now something like 63/37.
However, like many people, I am nervous, and I was wondering if it would be ok to just leave it there and wait for the market to come back rather than selling bonds and bringing it back to 70/30 ?
Although I get very depressed when I think about how much work it takes (for me personally) to earn, let alone save, $130k, I know it's the wrong way of looking at it. I am mentally strong enough to stay the course thanks to this forum and to you personally. Good news is that there's no way I am selling any stock right now (too late anyway, we're down ~30% :oops: ). I know in theory it will come back and I should not worry if I don't plan to touch the money anytime soon. But I am finding it a bit difficult to sell bonds to buy stock to revert back to 70/30.
Unfortunately I don't have new cash coming in, so I cannot rebalance by contributing.
Would it be OK to not rebalance to replenish the equity side but do diligently rebalance when either it's time for annual rebalance or the stock portion exceeds 5% band? In other words, only sell stock to buy bonds, but not vice versa?
Age 43, not contributing, not withdrawing, investing horizon ~22 years.
I don't work full-time but various gigs cover my living expenses. I expect this trend to continue.
Thanks for everything you've done for us, Sir.
Dottie57
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Re: I need some (honest) reassurance of my portfolio

Post by Dottie57 »

I didn’t have a target date fund for1/2 my investing life. Wising I had a decent one the rest of the time too. Go with TD funds. No fuss no muss.

Good luck.
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Re: I need some (honest) reassurance of my portfolio

Post by Grt2bOutdoors »

Bob_Sacamano wrote: Mon Mar 16, 2020 6:42 pm I started investing in 2013 when I got my first real job at age 23. I heeded much of the advice given here and elsewhere which was to set up a 3 fund portfolio in a target retirement fund. I've been maxing out each of my retirement accounts since (except the 401k which I started contributing to two-ish years ago). I'm bleeding bad right now and just need to know if there's anything I should be doing differently. I've lost ALL my earnings since 2013. Is what I have below a good overall allocation? As you can see, I have everything invested towards Vanguard's 2055 target retirement fund.

Here are my holdings:

Ally - 16k earning 1.5% interest
Roth IRA - 37.4k (as of 3/16) invested 100% in VFFVX
HSA - 19.5k (as of 3/16) invested 100% in VFFVX
401k - 56.5k (as of 3/13) invested 100% in VTRS55 (Vanguard Target Retirement Trust)

I'm 29 now, how am I doing? What would you do differently? I ask because I don't see many educated investors holding all their assets in a target retirement fund. I can't help but feel I should be doing more, especially with the way things look right now.
Keep investing as you are doing now. Who cares that you've lost all of your earnings? Bob - look in the mirror, the accounts you list all have one thing in common - do you know what it is? The word is Retirement!! Are you retiring tomorrow Bob? Doesn't look like it, I see the year 2055 on there. You have a long long way to go......embrace the declines Bob. Are you happy paying full price or do you get the giddy feeling when you buy it on sale and have some extra change in your pocket? Can't do much about interest rates, be happy you have 16K in a savings account, alot of folks would be estastic to have 1/3 of it!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: I need some (honest) reassurance of my portfolio

Post by Grt2bOutdoors »

Bob_Sacamano wrote: Mon Mar 16, 2020 8:48 pm So what is everyone else on this board doing if a target retirement fund is perfectly good? How come I see so few people here talking about them? Surely I can do better than a set it and forget it approach. Maybe something more tailored for the time. It seems a lot of people are making calculated moves while I'm losing 10s of thousands and not doing anything.
Nope Bob, you can't do better, do you want to know why? Read your first post - I've lost all my earnings since 2013, I'm bleeding bad. Sound familiar? Now try that with a portfolio that has a 3 Fund or 4 Fund composition ~ the same as the Target Retirement fund you hold only it's broken out individually. You think you can handle looking at a 25% + greater in the Small Cap Index fund? How about holding your nose and selling bonds now to buy more of the fund that is down 25% now? You can't do it, remember? You are bleeding bad, it's hard to throw what seems like good money after bad, but that is exactly what the professional money managers for the Target Retirement fund do everyday of the trading week.

Bob - turn off the tv, stop looking at newspapers, pick up a new hobby - say gardening? Spring will be here in a few days. It's good for your mind.
Those who are making money in this market are very far and few between, everyone else is either speculating or buying low and waiting for the market to resume its trend upwards. I did not catch the bottom, but I did personally buy at discounted prices from just a few weeks ago, I bought again on Friday, yesterday the markets went down again, today its partially down. I expect it to drop further in the coming weeks, then we have earnings season and I'm sure there will be some surprises and some that are expected. I'm still buying and if I'm not able to buy, I will hold. I'll let you know how it turns out in about 15-20 years. :wink:
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: I need some (honest) reassurance of my portfolio

Post by sergeant »

Bob_Sacamano wrote: Mon Mar 16, 2020 8:48 pm So what is everyone else on this board doing if a target retirement fund is perfectly good? How come I see so few people here talking about them? Surely I can do better than a set it and forget it approach. Maybe something more tailored for the time. It seems a lot of people are making calculated moves while I'm losing 10s of thousands and not doing anything.
A target date fund with your desired asset allocation is perfectly fine and probably will result in a much higher ending balance than tinkering with your own constructed portfolio. You're 29, don't worry about the market. Keep plowing in your regular contributions. Stay healthy and please convince your friends this virus is serious and no #BoomerRemover behaviors.
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.
BlueMoonXD
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Re: I need some (honest) reassurance of my portfolio

Post by BlueMoonXD »

Bob_Sacamano wrote: Mon Mar 16, 2020 8:48 pm So what is everyone else on this board doing if a target retirement fund is perfectly good? How come I see so few people here talking about them? Surely I can do better than a set it and forget it approach. Maybe something more tailored for the time. It seems a lot of people are making calculated moves while I'm losing 10s of thousands and not doing anything.
The only difference between your approach and other savvy young folks here is that others may be maintaining a simple diversified (and age-appropriate) portfolio themselves rather than using a target-date fund. If you wish to be more hands-on, you can go that route. But that simply means manually rebalancing and tax-loss harvesting, not active trading.

This is basically a forum for nerds, so obviously the demographic skews towards folks who enjoy the hands-on approach. I know plenty of young professionals who have all their savings in target date funds, or even roboadvisors, and that's a totally fine approach that will yield good results.

I am also in my 20s with an equities heavy portfolio and have also lost tens of thousands. I'm simply going to continue to invest and am excited to take advantage of the discounted prices. Anyone who is actively trading to avoid losses right now also quite likely to actively manage their way into missing lots of profits.
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Re: I need some (honest) reassurance of my portfolio

Post by David Jay »

Bob_Sacamano wrote: Mon Mar 16, 2020 8:48 pm So what is everyone else on this board doing if a target retirement fund is perfectly good? How come I see so few people here talking about them?
Apparently you didn't read the four links I posted on your Sunday thread. Lots of people talking about the "one-fund portfolio" here on BH. Link: viewtopic.php?f=1&t=307709#p5098892

If you look at the fourth link in that post, you will see that I recently converted all of my long-term assets to a Fund-of-Funds (In this case, a Life Strategy fund, which is like a target date fund except it holds the asset allocation constant which is more appropriate for my stage of life).
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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Re: I need some (honest) reassurance of my portfolio

Post by abuss368 »

Bob_Sacamano wrote: Mon Mar 16, 2020 6:42 pm I started investing in 2013 when I got my first real job at age 23. I heeded much of the advice given here and elsewhere which was to set up a 3 fund portfolio in a target retirement fund. I've been maxing out each of my retirement accounts since (except the 401k which I started contributing to two-ish years ago). I'm bleeding bad right now and just need to know if there's anything I should be doing differently. I've lost ALL my earnings since 2013. Is what I have below a good overall allocation? As you can see, I have everything invested towards Vanguard's 2055 target retirement fund.

Here are my holdings:

Ally - 16k earning 1.5% interest
Roth IRA - 37.4k (as of 3/16) invested 100% in VFFVX
HSA - 19.5k (as of 3/16) invested 100% in VFFVX
401k - 56.5k (as of 3/13) invested 100% in VTRS55 (Vanguard Target Retirement Trust)

I'm 29 now, how am I doing? What would you do differently? I ask because I don't see many educated investors holding all their assets in a target retirement fund. I can't help but feel I should be doing more, especially with the way things look right now.
Put as much into stocks until it hurts. Then find a way to buy more!
John C. Bogle: “Simplicity is the master key to financial success."
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Bob_Sacamano
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Re: I need some (honest) reassurance of my portfolio

Post by Bob_Sacamano »

Thank you all for the thoughtful responses. The fact that all of you are sharing the exact same sentiment is assuring.

I've been front loading my 401k since the beginning of 2020 by contributing 70% of each paycheck so I only have about 10k left to add before I reach the maximum for the year. The Roth IRA I already maxed out before this sell off even began. So there's not much more I can buy. Not the best timing but oh well.

A few of you mentioned switching a portion of my stocks from international to US as they are more reliable right now. Is there a fund that captures this but still has an overall allocation that's similar to VFFVX?
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Wiggums
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Re: I need some (honest) reassurance of my portfolio

Post by Wiggums »

I agree. Keep investing and stop checking your balance so often. It will be a bumpy road while we work through this health crisis.
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Re: I need some (honest) reassurance of my portfolio

Post by abuss368 »

Rick Ferri wrote: Mon Mar 16, 2020 6:55 pm
I started investing in 2013 when I got my first real job at age 23
You're 30 years old. I'll be 62 years old next week. You are looking at this all wrong. At 30 years old, you have only a tiny fraction of your future wealth invested. If I were 30 years old again, I would be putting every dime I could possibly afford into stocks today and every day. You don't see that, but I do.

Rick Ferri
Rick -

When you say stocks do you mean Total Stock, Total International, and REITs?
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