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    401k return and asset allocation

    I would like to find out whatís the average returns for others who have been investing through retirement accounts like 401k and other IRA accounts for the last 10 yrs. I opened by retirement accounts, 401k and other IRA back in 2008. I have been maxing out right from the first year. I received on average 6 to 7k per year as employer match every year. I have about 336k currently. I am 43yrs old now. I have following 60/40 asset allocation through out. Rebalanced every once in a while whenever I saw a shift in the allocation. My 401k annual return for last 10 yrs shows 5%. We havenít seen bear market since I started, still return is only 5%. Wondering what would be the returns had we go through bear in the last 10 yrs. overall, my question is, was I too conservative? Anything abnormally different than what majority of investors do? 15% of 60% is in my company stock which did not do as well as the indexes like nasdaq or snp. I got 3% dividend tho. What should be the ideal allocation for company stocks when you follow 60/40 AA which I believe is popular and followed by many.

    #2
    336k in 401k which I maxed out and 15 k in other ira.

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      #3
      Originally posted by FoolFromAZ View Post
      I would like to find out whatís the average returns for others who have been investing through retirement accounts like 401k and other IRA accounts for the last 10 yrs. I opened by retirement accounts, 401k and other IRA back in 2008. I have been maxing out right from the first year. I received on average 6 to 7k per year as employer match every year. I have about 336k currently. I am 43yrs old now. I have following 60/40 asset allocation through out. Rebalanced every once in a while whenever I saw a shift in the allocation. My 401k annual return for last 10 yrs shows 5%. We havenít seen bear market since I started, still return is only 5%. Wondering what would be the returns had we go through bear in the last 10 yrs. overall, my question is, was I too conservative? Anything abnormally different than what majority of investors do? 15% of 60% is in my company stock which did not do as well as the indexes like nasdaq or snp. I got 3% dividend tho. What should be the ideal allocation for company stocks when you follow 60/40 AA which I believe is popular and followed by many.
      Knowing what my accounts have earned really won't tell you anything as I'm invested very differently than you. You have a pretty conservative asset allocation especially given your age. When I was in my 30s and 40s, I was 85-90% stock. Even now at 54, we are still 70% stock. I don't plan to cut back to 60/40 for probably another 10 years.

      You have been in a conservative portfolio and, with the large chunk of company stock, not as well diversified as me. Given all of that, and the fact that the company stock hasn't done that well, a 5% return is probably about right. In comparison, my Vanguard account, which holds about 50% of our total assets, has a 10-year return of 13% as of 1/31/19.
      Steve

      * Despite the high cost of living, it remains very popular.
      * Why should I pay for my daughter's education when she already knows everything?
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        #4
        I have no clue what my 60/40 portfolio has returned over the last 10 years. I do know that 60/40 hurts on the upside and helps on the downside vs. 100% stocks. 60/40 is my chosen AA because it matches my risk tolerance and I can achieve my goals with the expected returns. I use 2% real return (return after inflation) for planning purposes, which is below the average for a 60/40 portfolio, which works for me.

        These 2 charts are interesting and germane:





        This illustrates the awesome upside of 100% stocks vs. 60/40. It also shows the serious downsides vs. 60/40.

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          #5
          Really like this image corn18, very informative.
          james.c.hendrickson@gmail.com
          202.468.6043

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            #6
            Originally posted by corn18 View Post
            I have no clue what my 60/40 portfolio has returned over the last 10 years. I do know that 60/40 hurts on the upside and helps on the downside vs. 100% stocks. 60/40 is my chosen AA because it matches my risk tolerance and I can achieve my goals with the expected returns. I use 2% real return (return after inflation) for planning purposes, which is below the average for a 60/40 portfolio, which works for me.

            These 2 charts are interesting and germane:





            This illustrates the awesome upside of 100% stocks vs. 60/40. It also shows the serious downsides vs. 60/40.
            Thanks for that. As we have seen bull for more than 10 yrs, I donít want to get in to this tricky situation where I increased the AA to 70/30 or higher and we start seeing bear market. That would be horrible. Also thought thats more like timing the market. Thatís why I feel I have no other way but go with 60/40 till retirement.

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              #7
              Originally posted by disneysteve View Post

              Knowing what my accounts have earned really won't tell you anything as I'm invested very differently than you. You have a pretty conservative asset allocation especially given your age. When I was in my 30s and 40s, I was 85-90% stock. Even now at 54, we are still 70% stock. I don't plan to cut back to 60/40 for probably another 10 years.

              You have been in a conservative portfolio and, with the large chunk of company stock, not as well diversified as me. Given all of that, and the fact that the company stock hasn't done that well, a 5% return is probably about right. In comparison, my Vanguard account, which holds about 50% of our total assets, has a 10-year return of 13% as of 1/31/19.
              Wow 13% is really good. Wish I had gone with 70/30 at least. Would have got around 8 to 10%. I infact had AA of 55/45 for a year or so as I didnít maintain any emergency fund during those days. I had to be very conservative.

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                #8
                Originally posted by FoolFromAZ View Post

                Wow 13% is really good. Wish I had gone with 70/30 at least. Would have got around 8 to 10%. I infact had AA of 55/45 for a year or so as I didnít maintain any emergency fund during those days. I had to be very conservative.
                I just looked at my wife's Vanguard account. It's a little hard to figure out the actual numbers because we have one joint account (non-retirement) that shows up on both of our profiles, but her 10-year average return is 9.8%. The reason hers is lower is that she holds a good chunk of our bond allocation.

                So the 13% figure isn't for 70/30 or 80/20 (which is what we were until sometime last year) actually. I'd really need to calculate the joint return of all of our accounts, but it's somewhere between the 9.8% and 13% figure, at least for our Vanguard holdings which total about 60% of our total monies. Then I'd have to add in the returns from our other non-Vanguard investments. I'm not about to do that but let's just assume the result is well over that 5% return.
                Last edited by disneysteve; 02-20-2019, 04:59 PM.
                Steve

                * Despite the high cost of living, it remains very popular.
                * Why should I pay for my daughter's education when she already knows everything?
                * There are no shortcuts to anywhere worth going.

                Comment


                  #9
                  I am 42 and plan to be 100% stocks for a while. I have a ROTH IRA and a ROTH 457.

                  ROTH IRA - 10 Year 11.7%

                  I can not see a 10 year on my 457.

                  ROTH 457 - 3 year Annualized 12.09% Cumulative 40.83%
                  2 year Annualized 7.88% Cumulative 16.39%

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                    #10
                    My 401K from the last 7 yrs is around 11.77%. I'm 37, with 95/5, so pretty aggressive. I have not rebalanced my AA for it. As for Roths and rollover IRA, its 90/10 but I'll have to check the rate of return later. But I know its pretty low as I got into selecting funds only a couple years ago for them.
                    "I'd buy that for a dollar!"

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                      #11
                      I'll offer a slightly different view - as I track the increase (or decrease) in the total value of our portfolio on an annual basis. It's a simplified view - as the money we add in a given year as well as company match - are included in the calculation. I view our contributions as a "given" and the impact of these annual contributions on our returns has decreased as the value of our portfolio has grown. Looking back to 2006 (pre-great recession) to YTD 2019, our portfolio value has increased an average of approximately 16% per year.

                      Investment mix has changed over time, 2006 was heavily weighted to stock (likely 90%+), to roughly a 70-75% in stocks at present.

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                        #12
                        DH 401k returned ~17.79% for the year.
                        LivingAlmostLarge Blog

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