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401k and todays stock market.

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  • Caoineag
    replied
    I am 26 and I actually got a little miffed when the value of my shares went up because they became more expensive to buy (thus I got less for my money). Obviously I don't want to lose money year after year but I could definitely handle cheaper share prices right now.

    As to trying to have your money in a safer vehicle during a recession, I wouldn't recommend it. I did that with my first 401(k). It bled slowly but did so consistently for 3 solid years (it was still losing money when I cashed out because it had shrunk below required level and it was too small to transfer). Stocks during that time regained money, my "safe" vehicle never regained from the losses. I have learned my lesson and now am far more aggressive with my investing. The losses are bigger but so are the gains (and no one can force me to cash out my Roth IRA).

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  • Fern
    replied
    That's the nature of the stock market. It goes up. It goes down, And back again. If you are 25, you have plenty of time to ride out the current volatility. Now if you were 60 and just a few years away from retirement, i might say to transfer a portion of your stock funds to safer income or money market funds.

    But the worst thing you could do is cash out your investments now or stop regular investments. If you keep investing thru 401k contributions or dollar cost averaging, that means you can take advantage of periodic dips in the stock market and end up buying at a lower price. If you cashed out now, for instance, your losses on paper would become real losses.

    Sit tight, unless you feel that constitutionally, weathering this kind of risk is just not part of your makeup.

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  • Mistawho
    replied
    Vanguard PRIMECAP VPMCX

    what do you think about Vanguard PRIMECAP VPMCX instead of VFINX?

    Leave a comment:


  • Broken Arrow
    replied
    Heh, recessions are great for people with money to invest. Bad for people who owe money. Although, to be fair, dollar cost averaging is something that has been brought up here before, so that's why I didn't mention it. I was JUST telling a buddy of mine that I'm ready for a shopping spree if or when recession hits.

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  • humandraydel
    replied
    Originally posted by rooskers View Post
    I am 29 and don't understand peoples thinking sometimes. I still have a majority of my life to invest so I am kinda hoping for a big recession. Why? If the market goes really high then my dollar cost averaging is buying less shares each time the market goes up while if the market goes down I will be buying more shares.
    Ding ding ding! We have a WINNER!

    Leave a comment:


  • rooskers
    replied
    I am 29 and don't understand peoples thinking sometimes. I still have a majority of my life to invest so I am kinda hoping for a big recession. Why? If the market goes really high then my dollar cost averaging is buying less shares each time the market goes up while if the market goes down I will be buying more shares. Yes I will see great returns if the market goes up now but with my retirement only around $120,000 this would be very shortsighted thinking. I would much rather see a nice drop in the market now with my contributions buying a lot more shares and in around 20 years see the market skyrocket. It would be much nicer to see the market go up when my portfolio is in the millions. I still say that investing is easy in theor, buy low sell high, but to actually do it is a much bigger problem. One of those reasons it is difficult is human emotions.

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  • kv968
    replied
    Originally posted by disneysteve View Post
    Same point I was making. I have more than 4 funds, but they are different - large company growth, small company value, international, real estate, gold and minerals, healthcare sector fund, bond index. There isn't much overlap
    I didn't get to page 2 of the post and read your reply until after I had already posted mine. Sorry about that Steve. Hey, at least we agree

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  • disneysteve
    replied
    Originally posted by kv968 View Post
    IMO it's not so much that the OP has too many funds, the problem is there's really not much diversification between most of them. There's a lot of overlap.
    Same point I was making. I have more than 4 funds, but they are different - large company growth, small company value, international, real estate, gold and minerals, healthcare sector fund, bond index. There isn't much overlap

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  • jIM_Ohio
    replied
    I agree the OP is not properly diversified. Don't see enough international and I would question the amount of small caps. Overwieghted big time on large cap growth.

    That being said, I own 6 funds in my Roth, plus another 6 in my 401k and another 6 in my wife's 401k, plus two more in my wife's Roth.

    Large Cap Growth
    Large Cap Value
    Mid Cap
    Small Cap
    International

    in each... plus a bond fund in mine, plus a company stock fund in hers... to some people 6-8 funds is OK if they are selected properly.

    Leave a comment:


  • kv968
    replied
    Originally posted by Scanner View Post
    As some general advice - to the original poster - you have way too many funds IMO.

    Compress it to 4 or 5.

    This is the problem with being overdiversified - you won't get to ride bull markets. I used to only have 2 funds (an international and a domestic). Now I have 3. . .there's not much reason to own beyond 5 IMO.
    IMO it's not so much that the OP has too many funds, the problem is there's really not much diversification between most of them. There's a lot of overlap.

    Mistawho, the number of funds you hold doesn't mean you're properly diversified.

    Leave a comment:


  • disneysteve
    replied
    Originally posted by Scanner View Post
    if he's going to get weirded out on bad years (and the poster sounds weirded out), then he should probably go 50% bonds and 50% stocks.

    As some general advice - to the original poster - you have way too many funds IMO.

    Compress it to 4 or 5.

    This is the problem with being overdiversified - you won't get to ride bull markets. I used to only have 2 funds (an international and a domestic). Now I have 3. . .there's not much reason to own beyond 5 IMO.
    I tend to agree. Another problem with too many funds is you aren't necessarily more diversified. You end up with a lot of overlap - multiple funds holding the same stocks. Without even looking, I'd suspect that Growth Index, Life Strategy and 500 Index have a lot of the same holdings.

    I'd run this through Morningstar's portfolio x-ray feature (free at their site) and see what it says.

    Leave a comment:


  • jIM_Ohio
    replied
    Here our my choices for 401k.

    Vanguard LifeStrategy Consrv Grwth - VSCGX
    Vanguard LifeStrategy Growth Fund - VASGX
    Vanguard LifeStrategy Income Fund - VASIX
    Vanguard LifeStrategy Mod Growth - VSMGX
    Vanguard Federal Money Mkt Fund - VMFXX
    Vanguard High-Yield Corp Fund Inv - VWEHX
    Vanguard Inter-Term Treasury Inv - VFITX
    Vanguard Total Bond Mkt Index Inv - VBMFX
    Vanguard Wellington Fund Inv - VWELX
    Baron Asset - BARAX
    Baron Growth - BGRFX
    Royce Total Return Serv - RYTFX
    Vanguard 500 Index Fund Inv - VFINX
    Vanguard Growth Index Fund Inv - VIGRX
    Vanguard PRIMECAP Fund Investor - VPMCX
    Vanguard Selected Value Fund - VASVX
    Vanguard Windsor II Fund Inv - VWNFX
    Janus Worldwide -JAWWX
    Vanguard Emerging Mkts Stk Idx Inv - VEIEX
    Vanguard International Growth Inv - VWIGX
    Vanguard REIT Index Fund Inv - VGSIX


    Moderate (70-30 equity-bond, 20% international)

    VFINX 30%*
    VASVX 10%
    RYTFX 10%*
    VWIGX 15%
    VEIEX 5%
    VBMFX 30%

    Aggressive (100% equity, 25% international)
    VFINX 45%*
    VASVX 15%
    RYTFX 15%*
    VWIGX 15%
    VEIEX 10%

    * are funds I own.
    Last edited by jIM_Ohio; 11-13-2007, 07:48 AM.

    Leave a comment:


  • Scanner
    replied
    Here's a suggestion (but please do what you are comfortable with and figure out how you want your assets allocated as JimOhio suggested along with what risk you want to take):

    If you are MODERATE
    25% Vanguard Total Bond Mkt Index Inv
    25% Vanguard 500 Index Fund Inv - VFINX
    25% Janus Worldwide -JAWWX or Vanguard International Growth Inv
    25% Vanguard REIT Index Fund Inv - VGSIX

    If you are AGGRESSIVE
    33% Vanguard 500 Index Fund Inv - VFINX
    33% Janus Worldwide -JAWWX or Vanguard International Growth Inv
    33% Vanguard REIT Index Fund Inv - VGSIX

    This is only what I would do. But I am not you and you are not me. But I think you are looking for suggestions and viewpoints and I'll offer one.

    Leave a comment:


  • jIM_Ohio
    replied
    OP asked a question and many of us responded to the question.

    I do agree with scanner though... maybe OP needs to think about risks and risk tolerance.

    I see his selections and I own some of the funds... my opinion is he needs more knowledge of asset allocation and I need to understand some of the funds he has better as well.

    Leave a comment:


  • Scanner
    replied
    Wait a minute, people.

    While I agree that he should be thinking long term. . .I too would be wondering why I haven't made money in this bull market.

    The last time we took a poll here, we were all up a considerable amount. I know the recent months have been jumpy but I am still probably up around 20-30% for the year as a whole (up 10% on silver, 20% on domestic, and 40% on international).

    The OP may have a penchant for picking sucky funds.

    If that's the case, stick with indexes then you don't have to wonder whether your fund manager is a chucklehead or not.

    The OP also wrote:

    I just hate losing so much money.
    If this is really a true statement, then perhaps the Pundit Advice of "think long term and ride out losses" isn't really appropriate and he should be in something more conservative, like the Vanguard Wellington fund. Yes, he's 25 but if he's going to get weirded out on bad years (and the poster sounds weirded out), then he should probably go 50% bonds and 50% stocks.

    As some general advice - to the original poster - you have way too many funds IMO.

    Compress it to 4 or 5.

    This is the problem with being overdiversified - you won't get to ride bull markets. I used to only have 2 funds (an international and a domestic). Now I have 3. . .there's not much reason to own beyond 5 IMO.
    Last edited by Scanner; 11-13-2007, 07:13 AM.

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