Roy,
Man do I miss you and your old forum and the frequent visitors like Rono, which I was drawn to because you provided a method/analysis, for investors to dump poorly performing mutual funds. At the time, the internet was full of advice on what to buy, but not what to sell or when to sell a badly performing mutual fund. Investing was simple then, the 1990's and into early 2000's. Thanks so much for your 3-alarm advice, your website, and definitely your humorous columns on the junk stuff out there. After many years of investing and having felt some pain during the tech run, I am just a boring buy and hold indexer, and have not much to say about this board.
birdsgears, anders, anderson

Dex, you are spot-on and I have been doing similar calculations. But I am also trying to factor in that the $125,000 is RMD free. But regardless, if I live to 95 that is $550,000 (actually $425,000 after factoring in the $125,000) I have received from the annuity. It may just be better to grow the $125,000 at 70 instead of letting it do nothing until I am 85. Then again, the way I look at it, instead of worrying about the next 20 or 25 years or longer when I am 70, all I have to worry about is the next 15. Probably no right or wrong answer but a personal choice.

One thing to consider is as you age will you be able to handle your finances? I'm not talking about Alzheimer or similar but just mental decline. From that aspect the annuity could be helpful. I have some nephews I can turn my fiances over to.
As I mentioned before I think my small pension and SS does give me some peace of mind.

I have always been against annuities. The first link explains why you should never buy an annuity. But the second link about the new rule where you can purchase up to $125,000 of a deferred annuity with IRA money that won't go against your RMD sounds compelling to me. Playing around with an annuity calculator, I see that at age 70 a 15 year $125,000 deferred annuity pays out some $4600 monthly (over $55,000 annually) beginning when I am 85.

I really like to see the math of that and then look at alternative investments.
In 15 years 125,000 will double to 250K at 4.8%/year
rule of 72
72
15 years
4.8 %
So the question is - what is the % the 125 is growing at and how much of the 55 is return of principal so we can calculate the annual return.

Dex, you are spot-on and I have been doing similar calculations. But I am also trying to factor in that the $125,000 is RMD free. But regardless, if I live to 95 that is $550,000 (actually $425,000 after factoring in the $125,000) I have received from the annuity. It may just be better to grow the $125,000 at 70 instead of letting it do nothing until I am 85. Then again, the way I look at it, instead of worrying about the next 20 or 25 years or longer when I am 70, all I have to worry about is the next 15. Probably no right or wrong answer but a personal choice.

I have always been against annuities. The first link explains why you should never buy an annuity. But the second link about the new rule where you can purchase up to $125,000 of a deferred annuity with IRA money that won't go against your RMD sounds compelling to me. Playing around with an annuity calculator, I see that at age 70 a 15 year $125,000 deferred annuity pays out some $4600 monthly (over $55,000 annually) beginning when I am 85.

I really like to see the math of that and then look at alternative investments.
In 15 years 125,000 will double to 250K at 4.8%/year
rule of 72
72
15 years
4.8 %
So the question is - what is the % the 125 is growing at and how much of the 55 is return of principal so we can calculate the annual return.
When I looked at annuities they didn't compare favorably with junk bond funds.

I have always been against annuities. The first link explains why you should never buy an annuity. But the second link about the new rule where you can purchase up to $125,000 of a deferred annuity with IRA money that won't go against your RMD sounds compelling to me. Playing around with an annuity calculator, I see that at age 70 a 15 year $125,000 deferred annuity pays out some $4600 monthly (over $55,000 annually) beginning when I am 85. Yes, I know many/most of us males, including me, may never make it to 85 or much beyond, but it still sounds compelling. Instead of worrying about the next 25 to 30 years and outliving our nest egg, I would think this would narrow our focus to only the next 15 years (before the annuity kicks in) and doing the right things financially in our investments. What am I missing here? I will say, were I to ever purchase an annuity it would ONLY be through New York Life.
http://www.forbes.com/sites/davidmarotta/2012/08/27/the-false-promises-of-annuities-and-annuity-calculators/
http://taxvox.taxpolicycenter.org/2014/08/01/new-way-invest-old-age-many-will-buy/

Sometimes it take some encouragement to get seniors to spend. This list is a bit long, but I like getting a 10% raise at my age.
Dunkin Donuts gives free coffee to people over 55 . If you're paying for a cup every day, you might want to start getting it for FREE. YOU must ASK for your discount !
Other discounts for seniors as young as 50 years young:
List 1
List 2
List 3
List 4
NOW, go out there and claim your discounts - - and remember -- YOU must ASK for discount ---- no ask, no discount.

MJG, I enjoy your discussions. However, in the real world, the middle class "dollar costs averages" over a working lifetime with ups and downs on the level of contribution due to stuff that happens. For most people, most of the money is invested in later years.

Hi Guys,
Returns are intimately tied to when you leave the investment starting gate. Nobody can consistently predict returns for the next few years. Both GMO and John Hussman have launched signals warning that the Shiller cyclically adjusted price-to-earnings (CAPE) ratio is uncomfortably high. They imply the likelihood of a near-term downturn.
Indeed if that is the case, the question is how to prepare? I sure don’t have a definite answer. Any answer is likely to be closely coupled to an individual’s specific timeframe, his wealth, his risk profile, and his short-term/long-term need tradeoffs. But history can provide some guidelines to help scope the problem.
Here is a Link to a nice chart from the Wrapmanager site that displays the S&P 500 pricing history since 1900:
http://www.wrapmanager.com/wealth-management-blog/did-the-sp-500-reach-all-time-highs-is-there-a-cause-for-concern
Note that the chart also marks off P/E ratios at critical turning points in the S&P’s storied history.
As LewisBraham suggests with his post, when the investment battle is exactly joined directly influences annual returns. Some starting dates are especially disastrous. But over time, the historical record demonstrates that even poor starts have been integrated away by the rising tide. Over the very long haul, the precise starting date is not all that significant.
Here is a Link to a nifty calculator that yields S&P 500 returns with and without dividends reinvested for any input starting and end date. The calculator is from a “Don’t Quit Your Day Job” website:
http://dqydj.net/sp-500-return-calculator/
The calculations can be easily completed both with and without inflation adjustments.
For example, if an investor had the misfortune to invest immediately before the 1929 Crash, his annual return to this month would have been 9.69% with dividends reinvested. If he had been prescient enough to have delayed that initial entry date until April of 1932, his annual return would be at the 11.37% level.
For those of us old enough to have initiated our investment program immediately after WW II, our annual return would have been 11.01%, again with dividends reinvested. If we have been in the S&P 500 Index over the last 30 years, our reward would have been 10.99%. When you leave the starting gate matters a little, but the returns are impressive regardless of the precise timing.
I hope you visit the websites that I referenced, and that you find them helpful.
Best Wishes.

Sounds like you and I are in about the se place nearing retirement and thinking what to do investment wise going forward. I can tell you what I did.
I was downsized a couple years ago but was able to pick up with another company at the same pay. This allowed me to move my 401k to an IRA with Schwab. I picked Schwab because they have a local office here that gave me access to a financial advisor - for free. Also chose them because of all the products they have to offer.
To make a long story shorter, I split money 3 ways. A 3rd in their robo syst, Intelligent Portfolio, a 3rd in their managed Windhaven portfolio and the remaining 3rd, for the same fun reasons you gave, self manage.
Hech, we are all different, but this is what was most comfortable for me leading into retirement. I'm happy with my choice.

For what it’s worth and
from a purely - over simplified - Technical Analysis…
The “lows” brushed the 150-day Simple Moving Average.
This also happened earlier this year.
Each time, the price has bounced off this price area.
We have seen this several times over the past few years
so this has been a decent buying area.
The first sign of this pattern failure is likely to be if the
price falls thru this 150 area and fails to bounce back above it
with greater than average volume.
This would mean that the next (lower level) of price support
would be that 200-day moving average.
If and when the markets break down, it appears to me that
$INDU will be the first to go.
Off to play tennis.

FYI: Morgan Stanley’s stocks guru, Adam Parker, argues that part of the trouble active managers have had beating index funds in recent years is that benchmarks themselves are moving targets.
Take the S&P 500: While turnover of the large-cap stock benchmark is low, there certainly is turnover. For the S&P 500, an average of 22 companies, about 4.4% of the index, are added or removed each year. That number tends to rise during big rallies and busts, like 1995-2001 and 2005-2009, when mergers and bankruptcies tend to peak.
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2015/06/15/should-active-managers-blame-the-benchmark/tab/print/

Hi guys!
My thought was maybe a lot mis-stated, let's say. I should've said mid long-term....my use of the word "buckets" was not well chosen. The funds I chose are funds I own now. In three (3) years, I will retire.....soooooo, what I'm looking for is what to do after that mid- and long-term. A poor way to start the conversation, and I humbly apologize for that. Many of my friends are seeing financial advisors. I'm not sure that's what I want to do. So, I'm trying to get ideas for down the road. Funds for the long haul....I am waiting now for a friend who will see an advisor---one that many from work use. I want to see what he says. All my life, I've been investing for short- or mid-term......cars, houses, college, etc., --- so when I retire, there will be no paycheck to offset losses.....no pay raises every year or overtime to help out. It's kind of scarey to think this way. Also, if I gave all my money to somebody to invest, what would I do? No reason to check the market or to slide that buy or sell order in as you sit there with a smile 'cause you're all that and a bag of chips today. I saw what Ted said about cashing out.....I'm not sure that's what I want to do. Maybe split the money.....
the Pudd

I believe the Yacktman funds are still good funds but there have been a couple changes from the pre-great recession days to now. The first I think is that the son now runs the fund, not the father. The other is assets under management. The 2 very similar funds now have over 21 billion. I don't know for sure, but I'm guessing it was less than a third of that back in 2007-8.
I like the idea of a good value stock picker willing to go to cash in the large cap space. I owned YAFFX for years. But when I moved my 401k to and ira last year I went with a smaller fund with similar style, SEEDX. Haven't bothered to compare the 2 but I like smaller, focused funds with capital preservation as it's main goal. SEEDX to me was a smaller version of Yacktman.
edit to add: and of course a third change is it is not owned by the Yacktmans anymore.

Hi puddenhead. Seems more like you are trying to time investments in the short term and over the next 10 years rather than establish a true bucket system. A bucket system goes from very conservative investments to aggressive investments and the aggressive bucket replenishes the conservative bucket every few years when needed. In my thinking it is a method used when you are drawing down investments, ala retirement. Maybe you are just using the "bucket" terminology incorrectly(?). Google 'Bucket System Investments' and take a look.

I thought I read that cancelling old credit cards, even if unused, might shrink your total available credit and worsen your credit score. I think I'll keep them in their inactive or minimally active state. So long as I use them once a year and pay them off, I may be better off in terms of credit score.
Otherwise, it seemed he said, "The only thing you can control about a situation is your reaction to it." Therefore, anticipate a decline in your stock value. I've told my children that for years; just not about a decline in their stock values.
Doesn't seem all that insightful.

Career: 3 HR, .219 BA, 29 RB
Does anyone besides me think this initial paragraph sucks? Even a mediocre phenom exceeds theses stats.
If you have a moderate amount of savings, buy a retirement fund dated 10 years after you plan to retire to achieve an adequate stock percentage; if not, buy a date close to actual retirement.
If you have quite a lot of money, get professional advice, hopefully from someone who understands "Moneyball" as an investment approach.

>> bonafide Three Alarm Fund month ending May 2015
More sore limitations of the methods here, and the historical timescales.
What do we pay for, or want to pay for, intend to pay for, in paying a manager? It is unlikely that Charles et alia are simply too young to fully realize the value of time. But to see the answer, or one answer, just compare the performance of YAFFX with just about anything roughly similar for the last six years (good but arguably meh and not superior) and then the last seven and eight years.
Striking, those last two .
MFO, the place to go for advice on the shorter term, six years and since.

It seems to be a hybrid bucket/sleeve style portfolio but the funds are misapplied. It should be set according to years, like 1-3 years out, 4-7 years out etc.

Hi Guys, Hi Ted,
Ted, you are not alone in an overarching investment policy to Keep It Simple Stupid (KISS). A decade ago I owned most everything, mostly based on believed “expert” recommendations that accumulated over time. Today, I wholeheartedly join your KISS inspired ranks.
The wisdom of the crowd works in some circumstances and under certain conditions. But it often fails, and becomes the senselessness of the crowds. I battle to pair down my holdings and am slowly winning that challenge.
Outfits like CNBC and guys like Jim Cramer make it difficult with their frantic reporting. Guys like Jack Bogle and David Swensen get little press and even less air time because of their boring passive investment endorsements. We tend to follow the thundering herd rather than think and act independently. I suppose the behavioral wizards would call that a Confirmation bias; a bias that followers practice which could be harmful to end wealth.
Whenever I reflect on herd behavior, I recall the funny but serious bit that appeared many years ago on the old Candid Camera TV show. In that historical TV segment, a victim would get on an elevator with a group that was part of the ploy. The door would close and the in-group would unnaturally and simultaneously turn away from the door. Mostly, the victim would do the same. Herd instincts are hard to overcome.
Not only do investors become members of the herd, but so do financial journalists. Lately, the “less is more” theme has been making the news cycle rounds. CALPERS has been pruning their advisor army and expenses for several years now. It has been a lesson a long time in the learning. With so many diverse advisors, CALPERS had to be like the market itself, although with very high expenses. That’s a loser’s game.
Why do folks continue to support active fund managers? Although the odds of superior performance are definitely against them, these investors play the equivalent of the Lottery. They hope for the bigger payoff. There are a legion of sub-par performers, but there are some winners too. Hope is eternal.
I played that game for many decades, but not anymore. KISS works and is far less worrisome and is far less time intensive. Some lessons come slowly. Jason Zweig is spot on-target in this instance. And so are you, Ted.
Best Wishes.

Even Yale/Harvard endowments are not using 200 investment vehicles. Read elsewhere that Calpers failed to keep up with the expected return in recent years and thus they ventured into hedge funds without knowing the cost and benefits.