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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Retirement Isn't A Pipe Dream--And Here's How To Make It Happen
    TB, umm, what does that mean?
    Retirement is over rated...investing to stop working is great!
    from Wikipedia:
    Retirement is the point where a person stops employment completely. A person may also semi-retire by reducing work hours.
  • Retirement Isn't A Pipe Dream--And Here's How To Make It Happen
    Retirement is over rated...investing to stop working is great!
  • Retirement Isn't A Pipe Dream--And Here's How To Make It Happen
    FYI: The idea of retirement is scary to many, especially those without a traditional pension. But at last week's Bogleheads meeting -- which gathered 250 fans of Jack Bogle, founder of low-cost index-fund-focused mutual fund company Vanguard -- investors focused on how to make it to retirement.
    Retirement is possible, said the consensus. Not easy, but possible. Here's advice from 11 mutual fund managers, authors, financial advisors and ordinary people about how you can save enough to quit.
    Regards,
    Ted
    http://www.thestreet.com/print/story/12933449.html
  • Biotech ETFs are Red Hot.
    Holding VGHCX, VPMAX & FBIOX, I have to agree with Jerry. Health care funds will be important for the 30 years that it takes the boomers to move from retirement to interment (I think that's an original phrase), but I don't know which companies to pick. Admittedly, I think medical biotech offers the best upside for the foreseeable future, but a less constricted health fund may do better later.
    General stock funds gravitate to their areas of expertise, and they may not have a good health sector analyst, although they should. Consequently, they will invest in areas that they understand.
  • Portfolio Review - Your comments/suggestions
    Fundalarm,
    Responding to all of you separately so that I won't end up with a big message.
    I sold out all my bond funds a while ago and in cash now. Sorry, I did not provide that info, and I should have done that.
    Burnt my fingers in 2000-02 downturn by investing in stocks, and converted to funds completely from 2005-06 (transition period). I am regular at M* forums since 2005 and at fundalarm/MFO from 2006. What I am saying is I am not a novice investor to follow the crowd. I invested in CGMFX as a speculative play, after its putrified performance, and after all the performance chasers left. Since that fund like feast or famine, I stayed in it for 3 years before I quite no loss or no gain.
    I am of same age as you.
    Have not checked portfolio in X-ray in the recent past but I do that on frequient basis, being a regular visitor of M*. I play around with their tool once in a while. This portfolio is purely a retirement one. Too many funds because these are across 4 accounts of ours. I have thought about consolidating them into two but V'rd does not offer all the funds that I want, which are avaiable in TDA. For example, Artisan funds.
    Finally, close to 75% of the funds are in solid core funds (VDIGX, FPACX, VHGEX, ARTKX, ARTGX, etc.). Obviously Grandeur peak and other EM fund are not part of that core.
  • Portfolio Review - Your comments/suggestions
    @mrc70:
    - what's your age?
    - have you done a look through (X-ray or similar) for the asset classes?
    - does this portfolio serve as your retirement portfolio or you have other goals for the moneys?
    below comments are very high level.
    the single and most important decision in investing is asset allocation. it looks like you're around100% equities with some tiny and emerging ones to scale your average volatility to may be twice that of the S&P500. and you don't have any duration to offset it.
    if you are in your 20s or 30s and are very risk tolerant, that might work, but judging by a selection of funds that are new and introduced here at MFO, you're subject to the groupthink and will be buying most of the stuff profiled/popular here and then getting rid of it should volatility rise on the downside (the upside is usually taken as granted).
    i am not commenting on individual positions, because @my tender age of 45, i would never have 100% of my money in a portfolio like this. or, scratch that, with a guaranteed government or private pension, i might load on equities -- but that is not a choice in my lifetime.
    best of luck.
    PS there are of course other methods to wealth: to find AAPL or FB while these are still in the garage stage; bet all your chips on the tightly controlled momentum play (a la Junkster); etc.
  • Portfolio Review - Your comments/suggestions
    Way too much in what sense ? Number of funds ?
    Sorry, I have not made that clear. This is a retirement portfolio spread across four different accounts for my and my spouse. Two IRAs and two Roths.
  • Portfolio Review - Your comments/suggestions
    Hi VF,
    VHGEX is an old fund in the retirement account, held it since 2005, when Marathon Asset Management was the only sub-advisor. I bought it based on the advice by Dan Wiener in the trial subscription I tried out then. Vanguard messed up this fund by making it multi sub-advisor fund. I am holding it as one of the core holding along with VDGIX. If V'rd has a good International Lcap fund, I would have easily opted for it instead of VHGEX but both V'rd ILcap funds are mediocre.
    TRF is speculative play on Russia, as its market being cheap realtively. I have progressively become aggressive in investing style over the last 10 years. I can't imagine holding some of these funds 5-10 years ago. :-).
    Thanks,
    Mrc
  • John Waggoner: Can You Retire On A $1 Million ?
    Really? A $1000/week isn't enough? Change your lifestyle then.
    p.s. I lived in the Bay Area (Berkeley to be precise) on a $1000/month, with 2 kids, no problem. Guess it all depends.
    I know I'll probably get scoffed at, but where I live (MD/Wash DC), $52,000 might get you check to check in a studio apartment, frugal or not, particularly if you are younger and just starting out.
    If you live in the closest and cheapest livable suburb in VA (which you'll have to do because living out further will mean you need a car, and living in DC or MD will mean much higher taxes), you'll take home $734.50 weekly of your $1000 salary. That's $3182.83 per month.
    Almost no leasing agent will even talk to you unless you make over $45k here, and then you better have sterling credit. 400 sq ft. studios start at $1250 as a rule; one bedrooms go for around $1500-$1700. That doesn't include utilities, internet, phone, water, transportation, food, health care, clothing, or any other outstanding debt.
    $3182.50 - take home
    -$1250 - rent
    -$ 100 - utilities/electric/water (my BGE bill + water averaged about $125 for a 1BR for the past 4 years)
    -$ 50 - internet (no cable)
    -$ 90 - 2GB Phone contract w/ phone through AT&T
    -$ 350 - Health insurance (figured @8% of $52k)
    -$ 200 - Transportation on METRO (@$8 p/d, 5 days a week + $25 p/m)
    -$ 380 - Food (@ $12.50 p/d. It isn't just rent that's steep here)
    -$ 375 - Student Loan payments (that's about $50,000 @ 6.8% over 20 years, because you aren't getting a $52,000 a year job here without at least 1 or 2 degrees, usually at a higher cost than this.)
    _______________
    $387.50, or $89.42 p/w before car, clothes, and other misc. expenses even start. And that is without any investing in a retirement account to get that $1M or savings towards a downpayment on a house. The obvious solution is to get a roommate, but that is only going to knock your monthly rent down about $400. You could also move some place us, but plenty of us are from here and have family, or have skills that are only employable in DC.
    And people don't even want to know what NYC costs.
  • Treasury, IRS OK Annuities In 401(k) Target Date Funds
    With respect to "skimming", do a search on "annuitization puzzle". Here's the first hit I got:
    https://www.aeaweb.org/articles.php?doi=10.1257/jep.25.4.143 (Journal of Economic Perspectives)
    "In his Nobel Prize acceptance speech given in 1985, Franco Modigliani drew attention to the "annuitization puzzle": that annuity contracts, other than pensions through group insurance, are extremely rare. Rational choice theory predicts that households will find annuities attractive at the onset of retirement because they address the risk of outliving one's income, but in fact, relatively few of those facing retirement choose to annuitize a substantial portion of their wealth." (From the abstract)
    "The theoretical prediction that many people will want to annuitize a substantial portion of their wealth stands in sharp contrast to what we observe. Only a tiny share of those who reach retirement age with money in a personal retirement account or other financial assets will choose to annuitize a substantial share of that wealth. Part of the reason is that only 21 percent of defined contribution plans even offer annuities as an option (PSCA, 2009), and virtually no 401(k) plans do." (From the text.)
  • Treasury, IRS OK Annuities In 401(k) Target Date Funds
    Many 401(k)s offer "brokerage windows" that allow employees to purchase individual bonds. The provider (issuer/guarantor) of these bonds can default.
    Are you just asking whether the government is responsible for all losses (such defaults on bonds) in 401(k) plans, or do you have something more specific in mind?
    While the article talks about several different types of offerings where the Treasury Dept has relaxed regulations on what a 401(k) can contain, unfortunately it offers a citation to only one of those changes. So it is difficult to figure out exactly what else is now being permitted. Or frankly, even exactly how the annuities within target date funds would work. (I found I had more questions after reading the cited IRS Notice 2014-66.)
    A keyword here is "permitted." Treasury is adding no requirements, no mandates. Are you suggesting in your question that employees' 401(k)s choices should be further restricted by the government (e.g. closing brokerage windows)?
    There's a case to be made for that. As you point out, the more freedom employees have with their retirement investments, the greater the possibility of total loss (as well as the possibility of greater gain).
  • John Waggoner: Can You Retire On A $1 Million ?
    The later comments on this thread are not relevant to "Fund Discussions."
    While I agree that cheap birth control should be available world-wide, it has little to do with retirement with $1 million.
    Depending on the area of this country in which one lives, adding the MDR from $1M to SS can provide a satisfactory existence. I also think it's going to be difficult for my children to achieve this level of savings (which will probably be $3M by the time they retire).
    I am very pessimistic about their chances of an income allowing savings with the "flattening" of the world, as they compete with low income countries with lower costs of living. One of the few remaining services/industries that can't be moved off-shore is health care, but that has to be paid for by someone, and the payors are reducing reimbursements yearly. Manufacturing returns to the US in robotic factories, which require fewer workers. Education is only rewarded when someone can pay for the knowledge you have.
    This comment is also drifting off-topic, so I'll stop.
  • John Waggoner: Can You Retire On A $1 Million ?
    That is the key. A lot of people do not know how to be frugal. They grew up spoiled by their parents or parent who couldn't say no. That is the end result when they are adults. There is a lot of stuff people can cut back on. Going to the movies every week? Bad habits like pubs or clubs most nights of the week. Eating out all the time instead of cooking at home. The list is huge.
    As for the question of attaining a million being easier for older people, my opinion is that we were raised by folks who endured the Great Depression and WW2. They taught us to spend wisely and save for the future. Somehow the lesson got lost as generations went by and now young children have iPhones and parents spoil them silly. Us older people were working in our school years already. Summers might mean picking berries or whatever was local. Now there are restrictions on how much young people can work.
    My keys to attaining a lot of money? Learn the discipline of saving early on. Even if the amount is small, it is that discipline that gets ingrained into one's mind and eventually you are putting several hundreds into your retirement accounts. (depending on your salary of course) Another key is to quit loaning money to the government in the form of overpaying your taxes. How many people get huge refunds every year? A lot. For example if you got $3000 back on your taxes that works out to $115 each paycheck. (3000 divided by 26) That money could be going to your 401k etc. Reduce your withholding so that you get close to break even. As you put more money into your tax deferred accounts, your taxable income goes down more and that provides you with even more money to put away. Usually big refunds get spent on adult toys or vacations etc.
    If you get a bonus or a raise, think about what would happen if that hadn't happened. Put those raises and bonuses into your retirement accounts too.
    How was my life after all that? I ate well, drove new cars, went on vacations etc. I wasn't deprived of the good things in life, I just knew what my limits were. I never let credit cards ruin my financial plan. That is very easy to do. I had a average middle class wage at my work but I did work OT and that also was saved. By the time I was in my early thirties I had my first $100k. Getting to $200k was much faster. The curve really takes off once you hit a certain amount. My accounts continued to soar as I kept to my plan. I won't tell exactly how much here but it is substantial. I was fortunate to have a good bull market. That is something we don't know or can predict. I made my share of mistakes as well. I pulled out of my funds after Oct 1987. That crash rattled me but it was a learning experience and I didn't make that mistake a second time. I thought about buying AAPL at $18. Hindsight. Thats water under the bridge now. I had money in Twentieth Century Ultra fund when it rose 87% one year. I had money in the TRowe Price New Asia fund when they had some booming years early on. Gold was spectacular in the early 2000's. I guess those made up for the mistakes.
    The main point is to keep pumping the money away and whenever you have an opportunity to increase that, go for it. It's called paying yourself first.
    I apologize for the long post. I didn't mean to drift off here but I wanted to share my experience and maybe someone can use some of my tips to increase their assets.
    Hey, JohnChisum!
    You stole this from me, didn't you????????? ;)
  • John Waggoner: Can You Retire On A $1 Million ?
    Dex, Thank you for clearing some things up. One's choice of words lead to certain interpretations.
    We're talking about rising costs of health care; that is, health care has always been a part of retirement costs. But it has become a larger part over time. This might have been clearer had health care been listed in the original list of costs.
    You mention Medicaid as something not kicking in before age 65. But Medicaid is a program based on income, not age. It's a different program in many ways from Medicare. For example, Medicaid covers long term care, Medicare does not.
    With respect to SS and Full Retirement Age (FRA) - As I understand your clarification, your first statement was that some people will have to take SS before (FRA) because they need the money. Fair enough.
    However, if SS COLA does not keep up with inflation, then everyone - whether they need to or not, should take payments early, because they would get more real value, as I explained. So people who have to take benefits before FRA are not disadvantaged (they don't "lose"). You may not have linked the two statements, but the two assertions are logically coupled.
    One last note on medical costs - they are rising at their slowest rate in fifty years.
    http://www.factcheck.org/2014/02/aca-impact-on-per-capita-cost-of-health-care/
    (One can just look at a couple of bar graphs in the article if one doesn't want to read the whole text.) And for 2015, Medicare premiums are rising less (0.0%) than SS benefits (1.7%).
    That's not to say that health costs are not a major concern. IHMO, they are one of the two most significant retirement uncertainties, and I said as much in another post. But if one is going to say that they are skyrocketing, one should acknowledge recent trends too.
  • John Waggoner: Can You Retire On A $1 Million ?
    >> If a person was to retire now or in the future before medicare/medicade kicks in that would be a significant cost that would impact the $1M question.
    Too true, but ACA has nothing to do with it, and in fact has made this scenario quite a bit better.
    Eloquent and thoughtful writeups, as others have said. msf's progressive history is highly useful to keep in mind, JohnC's advice is spot-on, and MikeM's situation is gratifying to hear about but for sure no longer available to anyone but the very rarest of situations. My own story is a combo: intensive and constant savings over the years, luck living in bullish decades, some in-law money to help with college, expensive location but frugal lifestyle, many layoffs and long stints of unemployment during which I consulted and had skills in moderate demand, and now sudden, enforced, but seemingly sustainable retirement. Lots of luck throughout, some of which I suppose I enhanced.
  • John Waggoner: Can You Retire On A $1 Million ?
    Very interesting thread. The diversity of responses is terrific. The thing that strikes me the most is the diverse circumstances and different ideas people feel were important to achieving their retirement wealth.
    For my wife and I, the biggest benefit we had was living in a place where you could come out of high school, get a good paying job at a fortune 500 company and feel secure until you were ready to retire. That just doesn't happen any more for younger generations. We accumulated (with savings and pension) $1m by the time I was 54, and all we had to do was blindly put around 10% of our wages into a 401k and stay working long enough to get our lump some pensions. I now realize how lucky we were.
    We were very lucky to have the employment cards we were dealt. And to be honest, we weren't big spenders but bought whatever we wanted even if we couldn't afford it at the time. We carried credit card debt all the way up until maybe a year or two ago. And cash reserve on the checking account, always a balance. Very much contrary to everybody else's advice. Still did it. Go figure.
  • John Waggoner: Can You Retire On A $1 Million ?
    Let's slow down here - you may have some good points, but the facts are rather mixed up.
    When Social Security began, it meant that a person would not be a pauper but food, clothing and shelter. Now, it means food, clothing, shelter, travel costs, cable TV, dining out, internet, Obamacare etc.
    When SS began, there was nothing else in place for health care - so to the extent that SS was intended to help people survive, that included medical care. It was only decades later that medical care was taken out of the equation.
    As to Social Security helping - look at how much you lose if you take it at 62 vs 65. AND, what a person gets if they do not make a lot of $ when working.
    Then there is inflation - although the official CPI is low the retirement CPI is higher - food, energy and health care.
    The two statements implied - that one gets more money by waiting, and that SS doesn't keep up with inflation - are contradictory.
    Let's slow down AND understand each other - not make inferences.
    Medical costs - Medical costs and ins have sky rocketed from the time SS came into being and even since the mid 1980s. That is why I specifically mentioned Obamacare. If a person was to retire now or in the future before medicare/medicade kicks in that would be a significant cost that would impact the $1M question.
    The other two statements were only to be linked regarding the $1M, not inflation. The first one relating to if, a person retires before 62 or 65 & not at the high end of the wage earning scale. This is important because many people (especially at the high end of the earning scale) do not have the option to work until SS kicks in - they are offered buy outs, laid off or other things happen. The second about specific inflation for a retired person VS the general CPI.
    So, to really evaluate if a person can retire on $1M, we need to know their assumption for spending, investments and expected returns.
  • John Waggoner: Can You Retire On A $1 Million ?
    Let's slow down here - you may have some good points, but the facts are rather mixed up.
    When Social Security began, it meant that a person would not be a pauper but food, clothing and shelter. Now, it means food, clothing, shelter, travel costs, cable TV, dining out, internet, Obamacare etc.
    When SS began, there was nothing else in place for health care - so to the extent that SS was intended to help people survive, that included medical care. It was only decades later that medical care was taken out of the equation.
    In 1965 (effective 1966) Medicare was created, but it is not part of SS. And because there is Medicare, the ACA (aka Obamacare) explicitly prohibits people over age 65 from purchasing individual plans. (Payments for Medicare can be made directly out of SS as a convenience; it is not a part of SS.)
    Even the idea that poor people had to be accepted and treated by hospitals isn't something that the government promised until COBRA, passed under Reagan in 1986 mandated that hospitals that take Medicare accept all patients regardless of ability to pay or lack of insurance.
    As to Social Security helping - look at how much you lose if you take it at 62 vs 65. AND, what a person gets if they do not make a lot of $ when working.
    Then there is inflation - although the official CPI is low the retirement CPI is higher - food, energy and health care.
    The two statements implied - that one gets more money by waiting, and that SS doesn't keep up with inflation - are contradictory.
    In theory, the expected real value of SS payments is the same no matter when one starts payments. (The term is actuarial equivalent.) But if SS COLA isn't keeping up with inflation (as you suggested), then the later dollars are worth less. So if one benefit (starting payments at 62) has more early dollars than the other (starting payments at 65), one doesn't lose by taking at 62. One wins.
    (Note: I don't agree with that conclusion for a variety of reasons; I'm just trying to show where the statements lead.)
    Where I think you are spot on is the difficulty that many people have in saving for retirement. That $50K average household income doesn't leave much room for saving, especially if one is raising a family. (That $1K/mo for two kids in Berkeley aside.)
  • John Waggoner: Can You Retire On A $1 Million ?
    That is the key. A lot of people do not know how to be frugal. They grew up spoiled by their parents or parent who couldn't say no. That is the end result when they are adults. There is a lot of stuff people can cut back on. Going to the movies every week? Bad habits like pubs or clubs most nights of the week. Eating out all the time instead of cooking at home. The list is huge.
    As for the question of attaining a million being easier for older people, my opinion is that we were raised by folks who endured the Great Depression and WW2. They taught us to spend wisely and save for the future. Somehow the lesson got lost as generations went by and now young children have iPhones and parents spoil them silly. Us older people were working in our school years already. Summers might mean picking berries or whatever was local. Now there are restrictions on how much young people can work.
    My keys to attaining a lot of money? Learn the discipline of saving early on. Even if the amount is small, it is that discipline that gets ingrained into one's mind and eventually you are putting several hundreds into your retirement accounts. (depending on your salary of course) Another key is to quit loaning money to the government in the form of overpaying your taxes. How many people get huge refunds every year? A lot. For example if you got $3000 back on your taxes that works out to $115 each paycheck. (3000 divided by 26) That money could be going to your 401k etc. Reduce your withholding so that you get close to break even. As you put more money into your tax deferred accounts, your taxable income goes down more and that provides you with even more money to put away. Usually big refunds get spent on adult toys or vacations etc.
    If you get a bonus or a raise, think about what would happen if that hadn't happened. Put those raises and bonuses into your retirement accounts too.
    How was my life after all that? I ate well, drove new cars, went on vacations etc. I wasn't deprived of the good things in life, I just knew what my limits were. I never let credit cards ruin my financial plan. That is very easy to do. I had a average middle class wage at my work but I did work OT and that also was saved. By the time I was in my early thirties I had my first $100k. Getting to $200k was much faster. The curve really takes off once you hit a certain amount. My accounts continued to soar as I kept to my plan. I won't tell exactly how much here but it is substantial. I was fortunate to have a good bull market. That is something we don't know or can predict. I made my share of mistakes as well. I pulled out of my funds after Oct 1987. That crash rattled me but it was a learning experience and I didn't make that mistake a second time. I thought about buying AAPL at $18. Hindsight. Thats water under the bridge now. I had money in Twentieth Century Ultra fund when it rose 87% one year. I had money in the TRowe Price New Asia fund when they had some booming years early on. Gold was spectacular in the early 2000's. I guess those made up for the mistakes.
    The main point is to keep pumping the money away and whenever you have an opportunity to increase that, go for it. It's called paying yourself first.
    I apologize for the long post. I didn't mean to drift off here but I wanted to share my experience and maybe someone can use some of my tips to increase their assets.
  • John Waggoner: Can You Retire On A $1 Million ?
    Let's first start with what retirement means. When Social Security began, it meant that a person would not be a pauper but food, clothing and shelter. Now, it means food, clothing, shelter, travel costs, cable TV, dining out, internet, Obamacare etc.
    Yes, you can retire on $1M based upon the old definition. Under the new definition it is very difficult to do in expensive areas - east/west coasts and other high price areas - ESPECIALLY when you take into account housing costs - rental or purchase. Look at the cost or renting in NYC or San Francisco.
    As to Social Security helping - look at how much you lose if you take it at 62 vs 65. AND, what a person gets if they do not make a lot of $ when working.
    Then there is inflation - although the official CPI is low the retirement CPI is higher - food, energy and health care.
    So, if you want to retire on $1M and maybe SS at 62 you will need to move to a low cost area.
    However, generally speaking, it is very difficult to accumulate $1M - depending upon when you were born and if your spouce worked or not.
    My guess is that there are 'OLDER' posters here born earlier then apx 1960 or '64 who have large assets who will disagree with me on the difficulty of accumulating $1M. They really need to look at the employment/economic/wage/benefit/defined benefit/health ins/401k changes over time.