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Comment by SoftTalker | Hacker News Reader

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

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.

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

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

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.

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

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.

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.

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.

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

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

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

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