Quote:
Originally Posted by neguy11
I am 22 so very young.
My choices are:
Asset Allocation
VANGUARD ASSET ALLOCATION FUND
Foreign Large Blend
EUROPACIFIC GROWTH FUND R5
Foreign Large Value
TEMPLETON FOREIGN EQUITY FUND
Inflation-Protected Bond
VANGUARD INFLATION PROTECTED SECURITIES
BOND FUND OF AMERICA
VANGUARD TOTAL BOND MARKET
VANGUARD 5 INDEX PORTFOLIO
Large Growth
GROWTH FUND OF AMERICA
STRATUS GROWTH PORTFOLIO
Large Value
WASHINGTON MUTUAL INVESTORS FUND
FIDELITY ADVISOR EQUITY INCOME
WEITZ PARTNERS VALUE FUND
Mid Blend
VANGUARD STRATEGIC EQUITY FUND
Mid Growth
ALLIANZ RCM MID-CAP INSTL FUND
COLUMBIA ACORN FUND CL Z
Mid Value
GOLDMAN SACHS MID CAP VALUE FUND
None
VANGUARD BALANCED INDEX
FEDERATED US TREASURY CASH RESERVES
Short-Term Bond
STRATUS GOVERNMENT SECURITIES PORTFOLIO
Small Blend
VANGUARD SMALL CAP STOCK FUND
Small Value
VANGUARD SMALL CAP VALUE INDEX
Target Date
VANGUARD TARGET 2015
VANGUARD TARGET 2025
VANGUARD TARGET 2035
VANGUARD TARGET 2045
VANGUARD TARGET RETIREMENT INCOME
I like the idea of being aggressive and getting a lot of money, my eyes are like ($) ($), but I also fear waking up some morning and losing a lot of money.
If you have any ideas I'd appreciate. I know I should speak to a financial advisor, but I have no idea how to find one and don't really have time to meet with one.
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You need to think about the statement in red. If you wake up and your $1000 has shrunk to $500, are you going to lose sleep at night.
My advice at age 22 is time will remove most of the risk of losing money. You have time, time is the single biggest factor when investing and getting high returns. Use this.
I will suggest 3 strategies for you.
1) aggressive. 100% equities. 75% domestic, 25% foreign.
2) moderately aggressive. 80% equities, 20% bonds. 55% domestic, 25% foreign, 20% intermediate term bonds.
3) Conservative growth. 60% equites, 40% bonds. 40% domestic, 20% foreign, 20% intermediate term bonds 5% high yield, 5% cash, 10% corporate bonds.
1) is shooting for the best return possible over time. 12% returns could be the outcome, which means your investment doubles every 6 years. There will be years you lose 30%, there will be years you gain 30%. 10% is a realistic return expectation, meaning money doubles every 7 years.
2) is taking some precautions. I would expect 8% returns over time, meaning money doubles every 9 years. Might lower worst case to losing 15%. Might lower best case to 25%. You lower the probability of a bad year some, but if market tanks, 80% of the investment is affected.
3) is taking fewer precautions. 7% returns over time, meaning money doubles every 10 years. Might lower worst case to -5% type returns, but good years are tempered (not as high as other two).
Example portfolios for all 3:
1) GROWTH FUND OF AMERICA 20%
FIDELITY ADVISOR EQUITY INCOME 25%
VANGUARD STRATEGIC EQUITY FUND 15%
VANGUARD SMALL CAP STOCK FUND 15%
EUROPACIFIC GROWTH FUND R5 25%* (my wife owns this fund)
2) GROWTH FUND OF AMERICA 10%
FIDELITY ADVISOR EQUITY INCOME 25%
VANGUARD STRATEGIC EQUITY FUND 10%
VANGUARD SMALL CAP STOCK FUND 10%
EUROPACIFIC GROWTH FUND R5 25%* (my wife owns this fund)
STRATUS GOVERNMENT SECURITIES PORTFOLIO 20% (might subsitutue Vanguard retirement income fund here)
3) FIDELITY ADVISOR EQUITY INCOME 20%
VANGUARD STRATEGIC EQUITY FUND 10%
VANGUARD SMALL CAP STOCK FUND 10%
EUROPACIFIC GROWTH FUND R5 20%* (my wife owns this fund)
VANGUARD TARGET RETIREMENT INCOME 40%
or you could pick the date you retire (2050??) and choose that target date fund. In that case you are allowing Vanguard to choose how much risk you take for you.