sam1000
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Cash: $ 21.05
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Joined: 28 Jul 2005
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| some advice please |
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This is my 401k portfolio (total value is $23,000) and I'm concerned that I am going to be affected by the decline of the DOW in the near future. I want to move all the money into BOND funds (specifically PIMCO LOW DUR INST), is that a good idea?
Current allocation:
29.2% Fidelity Diversified International FDIVX
26.5% Spartan International Index FSIIX
20.11% Lord Abbett Small Cap LRSYX
10.25% Fidelity US EQ Index Pool
9.49% Fidelity Balanced FBALX
4.47% Vanguard Explorer Fund Admiral Shares VEXRX
I was told that my investments are heavilyl biased towards stocks and I should have a 70%/30% stocks/bonds mix instead. My rationale was that most of my investments are international stocks and if the $ declines in value they will increase. Who is right?
Thanks very much for any feedback!
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Tue Aug 14, 2007 10:52 pm |
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oldguy
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quote:
is that a good idea?
I don't know. Depends on your time horizon. If you want the $23k to be worth about $690,000 in 30 years you will need to keep it in 12% products and ignore the short-term volatility. But if you are interested in next year's value, you will need to give up the chance of getting 12% and settle for about 7% in bonds. The trouble is, everytime you do this you interrupt the 12% power of compounding and give up a lot of the $690,000.
The market has gone from Dow100 to Dow14000 in 65 years, it is a pretty steady trend, goes up 9 out of 10 years - any time tha I have shorted the market, I have failed to make money.
You are right about the monetary exchange - if your intl stocks hold their value in intl currency, and the dollar falls, your stock will be worth more in dollars. (That works the other way too)
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Wed Aug 15, 2007 12:29 am |
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sam1000
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Cash: $ 21.05
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thanks a lot for the advice. That does make sense. I think interest rates are headed up in the long term and that makes bonds less attractive, I agree.
What do you think about the way my portfolio is diversified considering that I have 35 yrs to retirement?
Another question.. why is my portfolio declining in step with the DOW considering that 56% of my investments are international?
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Wed Aug 15, 2007 7:31 pm |
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more freedom
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Just a thought here.
If you would like to use 401k as the plan for your retirement plan that is OK. However, I have never seen anyone got rich because of that plan.
I feel that plan is risky.
I have been reading several books like rich dad poor dad or books by Robert Allen, and all these rich people do not recommend 401K as the retirement plan
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Sat Aug 18, 2007 2:42 pm |
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oldguy
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quote:
However, I have never seen anyone got rich because of that plan.
I feel that plan is risky.
I have over $1M in my 401k - not rich by today's standards but an extra $M can come in handy. And I only had 15 years between th ebeginning of 401k's and my retirement - a 30-year period would have realized 4X the money. I consider it to be a great plan, I'm surprised that more young people don't participate.
I also read Rich Dad, Poor Dad, I didn't relate at all - it is my guess that he made a lot more money selling seminars and books than with stocks.
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Sun Aug 19, 2007 6:40 pm |
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Fern123
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You are very heavily weighted...more than 50% in international stocks. IMO a fairly aggressive portfolio for someone with 3o years or more to go before retirement shouldn't have more than 20% in international stocks.
If you have a long time horizon as you have already indicated, then sit tight and don't move your money to bonds now. If you do, then you'll be making a paper loss a real one, with no chance of recouping when the market rebounds, as it always has.
If you are feeling too jittery, you should not be invested in the stock market to begin with, becus the stock market is for long-term investments.
401ks, or any tax-deferred accounts, such as IRAs and Roth IRAs, are a superior investment becus of the power of compounding over time without taxaction eroding your gains.
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Mon Aug 20, 2007 8:31 pm |
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fixedannuitypro
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Location: Lansdale, PA
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Okay: One way to protect your 23K, is to place it into an Equity Indexed Annuity. By doing so, you can receive an immediate cash bonus.
There are plans available that offer 10% on your initial deposit and throughout the balance of the first contract year.
OR: 5%: Initial Deposit & for 5 full contract years.
In addition, you will receive interest income, based on the S&P 500 or a Bond Index. This way, you are not be so effected by "quarterly" hits within the market. They are averaged out, either on a monthly or annual basis.
I have one client who elected the 5%/5 Year option.
He recently received 7.25% return, plus 5% upfront on his money.
The key now, is how long until you retire, to determine what is best.
And how soon would you be drawing on these funds.
Sincerely,
fixedannuitypro
[deleted]
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Mon Aug 20, 2007 11:45 pm |
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Fern123
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Financial planners love to sell annuities because the commissions they earn from them are much higher than those they earn from other investments.
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Tue Aug 21, 2007 1:21 pm |
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