Curious what others here have opted to do.
That is 62k gone to fees assuming:
12k start, 12k put in per year. for 30 years at 7%.
In your example that 67k is 4.8% of your investments. And that's not including the fees of the ETF or mutual funds you get invested in.
I would never even think about touching this service - why would anyone use this?
perhaps it's because they receive kickbacks from that specific fund.
Hope they're doing more for you then just managing your investments
I'll die with more than I will ever need. But thanks for the concern.
+ they
Knowing those sources could help us find more recent ones citing them, and see how this strategy has held up over time.
Here’s one:
Everything is going towards a target date fund in vanguard with a low expense ratio. This should manage the risk for me. I am also contributing pre tax, since I expect to be in a lower tax bracket when I retire.
Oh also, I plan to eventually transfer the other two accounts into my current vanguard 401k. This is different from rolling over into an IRA. I think 401k is better since it has more legal protections
Important to note I still have, if I'm lucky, 35 years or more until retirement. I'm betting the value factor premium will re-emerge at some point during that time. As I get closer to retirement I'll rotate into more broadly diversified/conservative stocks, but I see little point in holding bond funds in a portfolio for my situation.
That's not to say I won't own bonds outright when it makes sense. A good chunk of my security fund is in T-Bills and I-Bonds. But I can say from having lived through market downturns that I don't panic-sell, so the "portfolio stability" argument for bonds is largely wasted on me. In retirement I plan to keep a multi-year cushion in a Federal Asset Money Market account (to avoid state/local taxes) and the rest 100% stocks to maximize total long-term returns.
I'm a recipient of modest generational inheritance myself, my grandparents were dirt poor, my parents made it to upper middle class. It's part of my job to keep the generational snowball rolling for my kids and (hopefully) future grandkids. Particularly if wealth inequality isn't going to get any better.
Given population demographics, I see most of Europe and developed Asia going the way of Japan and am betting their equity markets will show similar characteristics. Never mind that even during good times there has been a historical small-cap value premium in most of those regions, although not as pronounced as in the US.
Ditching emerging markets is part practical part political. The practical aspect is most emerging market funds have a sizeable allocation to Chinese stocks. Chinese stocks have failed to produce reliable returns and are incredibly distorted by the Chinese government picking winners and losers, sometimes at gunpoint. I don't want to bet my financial future on how Xi feels about his breakfast on any given morning. Additionally, China is a geopolitical adversary. Yes it's impossible to completely cut them out of one's supply chain, but I can avoid directly boosting their financial markets.
As for the few emerging markets funds that don't include China, they include other nations such as Saudi Arabia that I'm hesitant to actively invest in for political reasons. I also think emerging markets in general are going to get screwed for the next few decades as globalization declines, climate change becomes more impactful, and the world generally becomes more dangerous and chaotic. There may be money to be made in EM, but I doubt it will be consistent or as simple as investing in an EM index fund.
The only thing Fidelity couldn't do was way back when I wanted a Solo 401(k) that permitted loans, but they didn't have a prototype plan for that, so I would've needed to find&pay someone else draw up the plan document, to hand to Fidelity.
Fidelity even has HSAs now, and very convenient to buy&sell within them, without the headaches and ridiculous investment options like I had with two other places.
They have most any kind of fund I was aware of. But lately I just stick with the simple low-expense-ratio total-market iShares ETFs, like ITOT/IVV, AGG, IXUS, which have only a negligible fee upon selling. (IIRC, you can also get the Vanguard funds at Fidelity, but my backtesting of ITOT, etc., against Vanguard counterparts looked like they were equivalent.)
Cash in accounts can be moved automatically to/from funds like FDRXX (4.99% yield) or SPAXX (4.96%), and my bank-like Cash Manager account uses an FDIC deposit sweep (2.72%).
If you are self-employed, you can also consider a SEP-IRA, which has similar limits. The only downside is it is only available in traditional flavor, no Roth. You can roll it to a traditional IRA and then do a Roth conversion though.
I've heard mixed things about doing backdoor Roth from SEP IRA.
Traditional 401K: 100% GME
Roth 401K: 100% IBIT/FBTC (bitcoin ETFs)
This is not investment advice, but my general rule is to use 401Ks and IRAs for, high-risk, high-gain, short-term, tax-inefficient trades.
My traditional 401K is mostly unvested company match. If GME crashes and I lose all of it, bleh, I change jobs earlier, no big deal. If GME skyrockets, I sell, then stay at my current company and vest that shit.
As for the roth 401K, I believe there is a high chance in BTC going up drastically more in the next 1 year, in which case I'll sell and the government can't lay their rotten hands on a penny of it. If BTC crashes due to some short term economic crisis, I'll just hold until it goes back up some time in the next 25 years, which I believe is nearly certain.
My normal brokerage account is where I do long-term index funds and long-term investments, because they are already taxed much less at long-term rates, and I can sell them at a future time when they would be taxed even less (e.g. hypothetical future gap year with intentionally zero income, hypothetical future time I'm not living in California).
I think it's worth it for you to consider reducing your allocation to these even if you have strong conviction in their long term success. If you do 25% GME/crypto and 75% index funds (or target retirement) then you're still going to be doing extremely well if these assets take off as hoped for but you'll be much better off in the alternative and less surprising scenario where they don't
I expect GME to crash and burn. I was going to change jobs at some point, in which case my traditional 401K funds will just disappear because they are not vested. If I happen to win the blue moon GME lottery I'll just stay a bit longer to vest the winnings. In my specific situation it's essentially buying memes with someone else's money at zero downside.
As for BTC, I don't use Roth 401K/IRAs as a retirement vehicle. I use it as legal tax avoidance on a very specific high-risk part of my portfolio that is tax-inefficient if it wins. Given the shitty 401K dollar limits I'm not going to put a cent of it toward stuff that's already tax-efficient if I have tax-inefficient stuff outside that can be swapped in.
The vast majority of my net worth is {municipal bonds, index funds, stocks} are all held in a normal brokerage account because they are not taxed as much to begin with. That's my actual stably-growing retirement fund, and much, much larger than my 401K.
This isn't investment advice, but if you are in a job where you are maxing out your 401K but saving much more outside the 401K than inside it, I'd encourage you to consider the math of doing all your index funds outside 401K and whatever high risk plays inside 401K/IRA. You may find the math works out better that way, like I do.
Thanks for sharing, but for most this is, as you said, terrible investment advice.
Are you not contributing your own money (from your salary) to your 401k?
In every 401k I've seen it's only the employer matching portion that is vested, and the majority of the account is the employee contribution which they can take 100% with them when they leave (regardless of vesting).
curious why you think this?
Even if that cyclic behavior breaks, I think the US economy and foreign policy is so unhealthy right now that BTC is widely becoming a new store of value across the world. It's a lot easier to deal with than gold.
You can believe otherwise; I'm not here to argue, convince, or be convinced, for or against BTC and I'm not a crypto-nut. I'm just de-dollarizing and hedging against uncertainties in the US economy.
If I lose all of it, it's no big deal as my actual retirement fund isn't my 401K, I just use 401K/IRA to churn tax-inefficient high risk stuff.
None of this is investment advice. Do what you believe, I'm just stating what I do.
Each time I leave a job I roll into Vanguard so I'm not paying more fees each year for no reason.
If you don't want 10% bonds, then use VTSAX maybe.
If the market crashes you'll be heavy on bonds and able to buy the dip when you rebalance.
Check this out: https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Lar...
Look what happened with COVID: it crashed, but then politicians immediately and for a long time printed a shitload of money to make it stop crashing. This is the new normal.
Market indices are already at all-time highs, and the Federal Reserve is indicating it may cut rates due to inflation being measured as negative (no matter how it feels in reality for you and I) and the USA is about to have the most pro-pump-and-dump run-the-country-like-a-business president ever (for the second time and not being willing to ) who I completely expect will find even more and better ways to take money from the poor and give it to corporate investors.
Therefore, as much money as I feel willing to risk on this is in broad market index call options. I'm not trying to convince you to buy the same, just stating my opinion.
have not regretted decision to take direct control
People overestimate their ability to pick stocks when they are up. Not everyone gets lucky.
(For the record, I am up a lot but I sold my NVDA way too early to take advantage of the current hockey stick)
I definitely have other bets which did NOT work out; FSLY -90.58%, ZIZTF -76.81%. These were smaller bets, I'm still bag holding hoping Nightingale turns it 'round @ FSLY.
I recently exited AAPL in May, which turned out to be a poor move.
I'm definitely NOT great at picking stocks and I probably do overestimate my ability. Look at my horrible FSLY pandemic trade.
Taking direct control and responsibility has been a good learning and overall financially rewarding experience for me.
Just get an asset allocation of index funds you're happy with and roll with it. The "three fund portfolio" is hard to beat for simplicity.
Portfolio is a modified ben felix portfolio with a small allocation to qmom and individual stocks. No bonds
If you want that much risk, day trading might be an option