Another great global stock ETF option… it has got US, Foreign Developed, Emerging. Pair it with a bond fund, and you’re done.
ACWV Low-Volatility All Country World Index ETF. The “low volatility” part is important these past few weeks!
401k’s are a POS in my opinion. They penalize withdrawals before 70 years, make you take RMD, less taxes then increases your tax bracket. You get screwed every way you turn. By the time your old enough to avoid penalties they withhold the tax. You’d be better off investing your money where your return is higher than 3 or 4%.
Actually, I think the Roth 401k is a great option, although companies will put their matching contributions in the traditional bucket so they can take the deduction.
Wait… do you think 401(k) returns are limited to 3 or 4% ?
For many of us, we were nearing middle-age before Roths came into existence, and I for one was a bit slow to get the Roth IRA religion, but I am a convert now.
Especially if the 2017 tax cuts are extended this year, do Roth conversions, because I have a feeling in 2029 we’re going to have a quite different President, and those tax cuts may go away. I’d say we all will have a four year window which will be optimal for conversion.
1 Like
Really? What is the penalty for withdrawing before age 70?
Penalties before 70 is news to me, too.
The rule is age 59.5 or after the Roth 401(k) 5 year window expires, whichever is later.
YES… Roth 401(k)s have that darned five year thingy too!!!
“The Roth 401k 5-year rule states that you must have made your first contribution to the account at least five years before making your first withdrawal. If the Roth 401k has been held for 5 years, the entire rollover amount is qualified and will be treated as regular Roth IRA contributions in the Roth IRA. This means that any portion of that rollover can be withdrawn without taxes due. However, any earnings generated after the rollover do not become tax free for 5 more years. The 5-year rule means that 5 taxable years must pass on any Roth IRA or Roth 401 (k) plan before an approved distribution of funds can be withdrawn from the retirement account.”
1 Like
Hi Nancy,
See below info on www.investopedia.com
@MyCC other posters are simply pointing out that the 70 cutoff you mentioned is not accurate. The correct answer is 59.5 although there is also a Rule of 55 exception for a Traditional 401k that may be of interest to you.
Getting back to the original question of this thread… this fund is doing really well during this period of high market volatility. It holds cash-generating, conservatively-led US blue chip firms. Very low fee… 0.08%.
iShares Core High Dividend ETF, symbol HDV
Top ten holdings - these are considered “defensive” stocks for use during a recession
For lower volatility, I would choose something like SCHD, which is a higher-rated, dividend growth focused, and better performing fund all-around fund. Here is a 10-year comparison.
BTW, thanks for the FNDX recommendation in another thread. I am researching the methodology of the RAFI index that it is based on…
I hope the OP learned a lesson here to not overact to temporary economic conditions impacting the market with uncertainty. The people that went into risk-off mode in early April have left a LOT of money on the table. Buying quality stocks and ETFs on an irrational market selloff is always going to be a winning strategy. This was also the case during the COVID selloff, the Ukraine war beginning, and last years carry trade selloff. There will be more…that is for certain.
On another note, the OP has hopefully also learned a lesson about diversification, especially in the later phases of working life.
I never changed anything I was doing as far as putting money in my 401k. I still think this could go the other way just as fast. So far everything is just a delay.
Annuities are not an investment. They are a form of insurance for the fearful, where the deck is usually stacked against the buyer, with fees and limited returns on your money.
There is a place for the simple, straightforward annuity contracts for part of your portfolio, if you want it. I bought a QLAC at age 62 with payout starting at 82, and the payout amounts are very generous. It’s not supposed to beat the stock market… it’s supposed to provide insurance against the risk of living to a very old age.
At 82, even accounting for 3% inflation, it will provide about the same amount as Social Security, and I can’t outlive it, and it’s not like LTC insurance… I don’t have to make a claim. There is a wall of money coming at me ($73,000 a year, maybe $44,000 in 2025 Dollars), and I can’t stop it! It will just appear in my checking account at age 82.
When I bought it in 2023, I spent 8% of my portfolio on it. Buying more than that would have been… ill-advised. I bought the right amount.
I have a death benefit from it if I pass before 82. I will lose value, financially speaking if I die before about age 87. The nominal breakeven age is 85, but in real terms it’s 87.
But guess what? If I die before I get full value… I won’t care, because I will be dead. But I will care if I live to 100 and I start getting tight on money, because my stock and bond portfolio is only planned until 95, a 30-year retirement, which is what Bill Bengen assumed when he came up with his legendary 4% rule.
1 Like
In a way, it is a self-funded pension plan. There are so many annuities out there, choose the right one, understand all the fees, caps, flexibility and all these fine prints are important.
As for the percentage in your portfolio, I think it depends on the assets you have and your comfortable level. If I have 2 mils, I probably will have 1 mil in stock index funds and 1 mil on principal-protected options, so political games of chicken and finance farces will have no significant impact on me.
If I have 1 mil, the ratio will be strongly biased to stock. If I have only 500K, well, I am not ready to retire without totally re-defining my lifestyle.
To collect even 1 penny, your insurance company has to survive until you turn 82. That is a pretty large risk. What is your back-up plan in case it goes bankrupt? Is there insurance on your insurance annuity?
Indeed hindsight is 20/20. The chicken game pauses for now, and I got my money almost back to the level on April 2, but I can easily lose them again in less than two weeks. So it is the time for me to consider other options seriously (says my crystal ball 
)
My annuity is with NY Life, they are around since 1841. They didn’t miss payments during the Great Depression.
No one can insure against a nuclear war. In that case, everything is going to zero.
Then what does “free trade” mean?
To me Free Trade is no tariffs by either country. I think Clark would agree.
1 Like