It's all fun and games until somebody loses their retirement savings | Hacker News Reader

It's all fun and games until somebody loses their retirement savings

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35 pointsmooreds39 comments

If you don't know what you're doing stick to index funds, buy and hold.

Index funds doing 12pp round trips in a week are not normal, that’s what bitcoin does.

This time the why of it - basically whims of a single man - is especially scary.

That's why we do the hold part.

You have to stop holding sometime, that time is not always in your control. Index funds behaving like meme coins are not fun.

Oh absolutely, the advice I commonly hear (and agree with) is to have 2-3 years in cash or equivalents when you are planning to retire. That's in addition to significantly switching out equities for more stable investments in the invested portion of your retirement.

And as you get closer to retirement start moving them into more fixed income. I don't know if the same options are available in the states, but in Canada Vanguard, Blackrock and others offer broad market index funds that have risk profiles that you can move through as you get close to retirement, allowing you to slowly pull out of equities and move into bonds. You shouldn't be 2 years from retirement and still 100% into equities.

I've usually seen those called 'Target Date' retirement funds in the US, and they automatically rebalance your investments.

Yeah, that's another level of that, totally hands off.

The Target Date funds often charge high fees. You pay for automation that you could do yourself.

Yeah. Although there is some percentage of people who don’t or just don’t want the mental overhead relative to dealing with stuff they actually care about.

Vanguard's target date funds have high fees compared to their other funds, but 0.08% instead of 0.03% doesn't actually matter.

I’m not sure the target date funds are worth the management fees but I know people who use them because they are theoretically fire and forget. If you’re more active you can and should absolutely slowly move out of equities into more bonds and money market. (And can have managed IRAs based on age and risk profile as well.)

Aren't the management fees still very small, especially when compared to other retirement vehicles?

It depends on the vehicle. My financial advisor is relatively high but provides other services. My self-managed stuff is lower. And a couple of things that pay out as annuities that can’t really compare.

As sane of a suggestion that is, SPY index fund dropped a huge amount because the whole market dove. Not everyone can plan on suddenly missing 20% of their savings.

The people who cannot suddenly lose 20% should not be so heavily into equities. If you're getting close to retirement, your portfolio should be heavily things like bonds and treasuries.

So that reason is exactly why the person you're replying to said what they said. The OOP said: "If you don't know what you're doing stick to index funds, buy and hold." which is clearly not great advice unless you're under the age of 30

money that you need soon shouldn’t be in the broader market.

for retirement savings, balance should shift to bonds or similar as you near retirement.

same principle applies to saving for other large events, like a down payment on a house. decrease risk as even nears.

no need to manage this yourself; every roboadvisor will do this for you rather cheaply

Dollar cost averaging on a well-diversified portfolio and chive on.

If you don't know what you're doing then stick to target date funds which automatically rebalance the asset mix to reduce risk as you approach retirement age. The fees might be slightly higher than index funds but on most retirement plans the extra cost is minuscule.

Corollary: if you're confident you can outperform index funds, you almost certainly don't know what you're doing.

i rather enjoy making lots of money from those who do not know what theyre doing in this realm

This is why Target Date Retirement funds exist.

Just plow your 401(k) into Fidelity Freedom Fund 2055 (or whenever your retirement year is - they have many options) and forget about it.

https://www.fidelity.com/mutual-funds/fidelity-fund-portfoli...

They are mostly equities and riskier investments early on, then auto-adjust to lower risk dividend stocks and treasuries when you are closer to the target fund date to support pulling out money every month to live on.

They also tend to have higher fees and a smaller return than managing it yourself with index funds and bonds. But for people that don't want to do that it is a good option none the less.

target date funds exist only to keep brokers in business

Truly private companies I respect their choice, but this just feels off that companies "stay private" yet you can wheel and deal in shares or similar with them, and they raise capital, etc.

This is what the stock market is for.. yet it now feels like that's just what you do to cash out and dump the business on the rest of the market.

General advice, index funds are the place to start unless you have special expertise. But as you get older you need to move into increasingly conservative investments. When you are 80 you will not live long enough to recover your losses from a market crash... so money markets, CDs, bonds, etc.

In general, for a given especially senior age, it also depends on your portfolio. If 4% or whatever inflation-adjusted amour puts you in good stead, you probably shouldn’t be betting more than a modest amount on significantly higher returns.

It’s a full decoupling of number 1 and number 2 economies in the world - of course it’s messy. If you can’t stomach the turbulence, stay in safe instruments

But genuine question : Is it necessary and for what goal ?

This seems more like an advertisement for their podcast.

200K income or 1M in assets minus your primary residence to be in this conversation about SPV.

Exactly no one invests 100% of their retirement savings in SPVs.

> Exactly no one invests 100% of their retirement savings in SPVs.

Eh. There's probably at least one stupidly overconfident individual who does so, and more who put too large a fraction into stuff like that.

I did a quick search and in less than 10 seconds I found examples of retirement savings in subprime mortgage backed securities in 2008. https://texashousers.org/2008/06/24/texas-teachers-retiremen...

So what percent of the fund was invested in MBS and how much of that was lost?

Based upon Retirement savings rate in the US, I am sure many people decided retiring while Trump is in office is a non-starter now.

But I am sure a lot of people are being forced or will be forced to retire and maybe get a part-time "Mc-Job".

People who retired based on their stock holding when the S&p was at a p/e nearing 30 were wildly optimistic

Heck, even Trump himself got a job at McDonald's!

Yet another site using invisible font. Somebody has to pull their head out of their ass and get a grip on basic ergonomics

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