I know nothing about investments so I let Vanguard and TRowePrice do it for me. But to invest, you need funds and I learned about saving. Actually, my wife did.
I took a position in Taipei, and wife became friends with the Chinese in the apt bldg. She learned Chinese pay themselves FIRST! Before anything else. Get the pay check and X% goes into savings. If they don’t have much left before payday, they eat bowls of rice.
As they become accustomed to paying themselves first, that X% savings goes from a start of 5% to 10%, 20%, 30%.
Wife began our Draconian budget while there, and came home to an even stricter budget. Annoyed at the beginning, then realized how much we had to invest!
My Mom is from Taiwan, and I concur. This is the way to do it. We’re empty nesters, saving 30%, house paid, cars paid, no college debt anywhere, no credit card or medical debt, retirement portfolio doing well, retirement approaching.
Checking back in. I found a fee-only advisor that seemed like a good fit, but I think I asked too many questions. I don’t know what I’m doing, and I’ve never trusted anybody with this much money ($200k is a LOT for me). During the initial phone consult (free) I asked some questions about how he would handle things like me being in my 50’s and needing to play catch up on retirement, how he’d handle unexpected events, etc. I think he had a script he wanted to go through, but at least on that call he was gracious about answering my questions. Once we were to get started, I was looking over the eMoney agreement and had questions (again, I know nothing about what is reasonable or not) and he replied with a note saying it would be best to refer me to Vanguard since “Their big-company policies would likely offer more peace of mind for you.”
I feel like I managed to run this guy off. Now I am back at square one, and am nervous to ask questions that might offend somebody or make them think I’m going to be higher maintenance than I will be . . . .I’m just lost with this stuff.
Is the money in one or more retirement accounts now? Or is it literally sitting in the bank? Are you earning any interest on it? Do you have a toe-hold at Schwab, Fidelity, or Vanguard at all, or is this all new for you at 50?
Listen… don’t be in a super hurry to do anything with it if it is just in the bank now, because the amount of turmoil in the markets and economy is high right now. Very high. It’s not a buying opportunity. It’s a money-losing opportunity. Buy the dip is dead as far as I’m concerned. Well, it’s “on hold until further notice”.
I’m going to try to pre-innoculate you from advice that has been floating around for the last decade which I think is just not relevant any longer:
just invest 100% in US S&P 500 stock index mutual funds or ETFs
stay away from foreign investments
just buy the dip
don’t buy bonds they suck they will lower your returns
cash is trash
gold is a worthless barbarous relic
You do have to start somewhere which is why the advisor was asking so many questions. Yes, it is a script, because they were trying to fill out a spreadsheet. You can do the same, a simple retirement calculator is at AARP:
Probably the most important thing to do is know when you should claim Social Security:
@ochotona
Thank you for the details. I appreciate the help. It was actually me who had so many questions, not him though.
As for my situation: 100k in tech-heavy stocks. 75k in sep-ira (I max out my contributions to that each time I pay myself a check). 20k in IRA annuity.
I plan on holding off as long as possible to claim social security, depending on the best way to leverage it with the rest of my plan. This is all very new to me now bc I was not able to save for retirement as much as I would’ve liked before now due to a variety of circumstances (some stupidity, some just circumstances I didn’t know how to manage, etc.).
I know I am better off than some people, but I’m still very concerned that I won’t be able to be very comfortable as I get older.
@Dizzy The tech stocks have been in an historic bubble especially during 2023 2024, which is why you got drawn into them disproportionately. You and everyone else.
I know everyone is going to cast their aspersions at me, they will say “time in the market beats timing the market blah blah” but I’m retirement-ready (can go play any day) and I’m down 0.77% this year.
You need to sell I would say all of your individual tech stocks in the next few days when they catch a bid. It could be Monday and Tuesday there could be more “Hurrah! Everything is wonderful!” after the China phone exemptions were granted over the weekend. In fact, the futures are up now.
Schwab has some stock market ETFs that use a “fundamental” different weighting scheme and they are not so obscenely weighted to the tech sector. The total US stock market version is FNDB, the US large cap version is FNDX.
I would also add some International to your stock allocation, Vanguard VEU is a one-and-done choice.
The old rule is “your age in bonds”, it fell out of favor as the stock market soared. I think it’s about to come back into favor. At 50 (I’m almost 64) I’d adopt a more neutral 60/40 allocation, 60% stocks, 40% bonds. As to the kind of bonds, it bears noting that as stocks sagged recently, bonds got hit too (bond rates went UP), because of geopolitics. So I’d stick to short term high quality bonds, like Schwab’s SCHO or iShares SHY. Long bonds lose value a great deal as rates climb.
Everything I’m suggesting to you falls under the rubric of the Bogleheads 3-fund methodology, with the three funds being FNDX or FNDB, VEU, and SCHO. Go look up bogleheads.org
If it’s all just too much… just buy an economical, low-fee asset allocation fund like AOR and call it a day. Target date funds are also easy but they generally charge WAY too much in fees.
Congratulations on increasing your savings over the last 3 years I understand your frustration with deciding how to proceed. Many individuals experience the same frustration. Using the Vanguard Personal Advisory Services is a very reasonable choice. The Vanguard service is low cost and uses low cost Vanguard index funds. Think of using the service as a learning experience. You can use the service for a year and then decide whether to continue with them, or move to DIY, a fee only advisor etc.
For learning more about investing as you interact with a financial advisor:
A) Two Video series by the same presenter on the principles of investing https://www.youtube.com/watch?v=sYkSgR6qhCg&list=PLhuFTdy_6tKNpee1sgzyaiub6ZvqdTVSwhttps://www.youtube.com/watch?v=P38tR8IoTGI&list=PLDjAbnn_RxML8KVDhzkcPdtPPFqgbyhkv
B)The following books are all very good introductory investing books.
“The Ages of the Investor, a critical look at life -cycle investing” William Bernstein.
“The Only Investment Guide You’ll Ever Need”, Andrew Tobias
“The Elements of Investing”, Burton Malkiel & Charles Ellis
“The New Coffeehouse Investor”, Bill Schultheis
C) Of the various detailed investing books that I have read, I learned the most from:
“The Four PIllars of Investing” by William J Bernstein (I read the 2003 edition, a second edition was published in 2023)
@ochotona Just selling all of my solo stocks freaks me out a bit . . . I’ve actually had most of them for quite some time (well before 2020’s) . . . I think I just bought them and decided to let them sit; yes, I’d buy in the the bear markets, buy less during bull markets, then whatever I could in between. I think that approach is outdated now, but going full-bore sell feels like I’d be letting go of a good bit of bang-for-buck (I have some AMAT stocks that I bought at $15 . . . and that later split; I don’t understand economics well enough to know if I’d be smarter to let that go. I am definitely open to it, but would need to really understand what I’m doing…thus, my need for an advisor who can help me understand. I think my blessing/curse is I can see the logic of everything I hear, so I’m left in analysis paralysis.
I don’t know anything about international stuff, or how to do it via E*Trade . . . but it sounds like Vanguard may have a good product to help with all of that.
(oh, I also run my own single-member LLC, so that takes up quite a bit of time that I wish I had to go learn all of this quickly…I think having Vanguard take it for now while I learn from them, and y’all, makes sense).
J
@p1g1 Thank you for that. The idea of using Vanguard while I learn more helps. I’ll take a look at the Four Pillars book since I’m a slow reader. Watching that vid now.
Thanks!
J
One of the really bad behavioral biases of investing is to become attached to any investing you own, because of how “well they have treated you”. That’s called “the endowment effect”. Remember the disclaimer, “past results do no guarantee future returns”?
In the late 1960s, tech stocks (“solid state”, “transistorized”, “electronics”) were in a bubble. In real terms, adjusting for inflation, stocks lost 60% of their purchasing power and only starting going up again in 1982. Fourteen years of nowhere.
The NASDAQ, QQQ, lost 80% or more of its value after the 2000 tech bust (“Internet 1.0”), and was underwater for how many years? From 2000-2015, so fifteen years. They only broke even after fifteen years.
I was alive for both of those events. I was an investor for the 2nd one. This is not ancient history. It’s likely that someone gets badly busted at least once during their investment lifetime.
I am led to believe that you have a handful of tech stocks. I would declare you to be at extreme risk of a Lost Decade, just before you wish to retire… or maybe you have to retire. There is a lot of age discrimination out there, it’s tough for people in their 60s to hold down really nice jobs, unless they are the owners or executives.
I don’t know what I can do to convince you of the risks. You’re 50, pretty much I’m going to leave what I wrote right there, and I wish that you de-risk your portfolio really fast, and get the help you need with it.
@ochotona I agree 100% with being far to tech heavy in my investments and therefore at extreme risk. I got started with Vanguard today and will do my intro call with a Pers Advisor on Monday. I am absolutely prepared to sell whatever they want me to sell and re-allocate as needed. I just don’t want to make a big decision like cashing out without somebody looking at my overall situation. I have no intention of staying tech heavy. I don’t even know what tax implications would be if I just sold $100k of stock all at once, or what the alternatives are for how to do it without getting capital gains taxes (like can I just move things from stocks to bonds, mutual funds, etc etc, and if so, what products would I leverage? How would I do it? When would I sell each price lot (AMAT purchased at $15 vs AMAT purchased at $100)? I think if I just sell off and get $100k plopped in my bank account, I’m in for another nightmare of owing a lot in taxes that I don’t know that I could pay without eating a chunk . .. vs having Vanguard do it for me/with me in a way that I either minimize or eliminate having to eat an enormous chunk to pay taxes. I am sure there will be some of this anyway, I just need to be smart about it. God willing, 1 week won’t cause me to lose everything, but yes, I know it can.