Investments? Do or dont at our age?

posted 2 months ago in Finances
Post # 2
Member
14884 posts
Honey Beekeeper
  • Wedding: June 2011

We have recently read and saw data (https://earlyretirementnow.com/ is a good site) that actually supports a full stock portfolio as you near retirement and we are moving our investments in that direction.  When we first started investing, we picked individual stocks and would never do that again.  We simply do index funds now (that are essentially a blend of stock, so we see it as stock).  And then we diversify by picking different markets (US funds/international, etc) and are currently looking into real estate funds.  Vangaurd has funds that are already targeted and balanced for certain age groups too that are simple to invest in.  Whatever you do, you certainly dont’ want your money in just a money market account/bonds where the growth barely beats inflation.  

Post # 3
Member
2362 posts
Buzzing bee

Financial professionals aren’t good enough at picking stocks to beat the market on average. So the odds of you being able to pick individual stocks that outperform the market is slim to none. Don’t try. 

Buy low-fee ETFs that track the whole market. ETFs have tax advantages over index funds and also generally have lower expense ratios. But both index funds and ETFs are good. 

What are your 401ks currently invested in, and how much do you have in them now? Ideally you want 25x the amount you spend annually by retirement. 

I’d caution you against the all stocks plan suggested above – that’s exposing yourself to a lot of risk. A good starting point for figuring out your allocations would be inputting your data and risk tolerance into a questionnaire like this one: https://www.wealthfront.com/questionnaire. I wouldn’t pay to use Wealthfront, I’d just use this to get an idea of what your target allocations should look like. I also recommend the free site Personal Capital, which is great for tracking your assets and playing around with retirement calculators. Once you link your accounts, they also suggest target allocations and tell you where you’re paying too high fees. 

Post # 4
Member
1061 posts
Bumble bee

I used to work with a guy who had made millions from investing in the stock market (he also lost millions in the recession). His advice was to only invest was you can afford to lose, with stocks and shares you’re essentially gambling, yes you can make a lot of money, but you can also lose it all too. I personally, would not be gambling with my entire pension. My cousin’s husband also makes a lot of money in stocks and shares, but during the recession he lost most of what he had accumulated and it’s taken him until now to make the money back that he lost. If you’re set on investing do not invest your entire pension, it’s far too risky. 

Post # 6
Member
810 posts
Busy bee

Our 401ks both offer multiple investment choices, some more conservative and others more aggressive. Can you not just switch to a slightly more aggressive investment strategy within your current 401k plans?

Post # 7
Member
269 posts
Helper bee
  • Wedding: May 2012

Have you thought of non-traditional investments? And by that I mean, not 401K? 

We own a lot of investment properties that give us a monthly income, each gives (after taxes, etc) of $500-1000. Sure, being a landlord is some work, but if you are partially retired anyway then it’s should be fine. It’s certainly not a full time job for me. Theoretically between our properties and savings, we could cash all out, sell the properties, and live a simple, retired life but we aren’t quite there yet since we are in our 30s. Just illustrating it’s been worth it for us 

Post # 8
Member
2362 posts
Buzzing bee

ariesscientist : In general, not investing is more of a risk than having a balanced investment portfolio. 

With risky investments like individual stocks or cryptocurrency you are gambling. But with a diversified portfolio in low-fee funds that track primarily developed markets, you can reliably expect decent returns over time – assuming you don’t make poor choices like selling when the market is down, and you’re willing to hold onto your investments for a long time. Someone who lost money in the last recession and hasn’t more than made it back by now — after a record bull market — likely either panicked and sold, or was very poorly diversified. 

Post # 9
Member
7153 posts
Busy Beekeeper

princessanon0125 :  I’m another fan of index fund investing. I use it for my 401k, IRA, and our taxable brokerage account. There are different options for stocks, bonds, real estate, etc with varying rates of return and risk. I don’t think late 40s is too late to start investing – you all could still have another 40+ years to live! You have to figure out your risk tolerance to decide what your portfolio blend should be (aggressive vs. conservative) but if you have extra savings each month I think investing it is better than just letting it sit in a savings account. Don’t bother with individual stocks though – it’s risky, expensive, and time consuming. 

Post # 11
Member
3090 posts
Sugar bee
  • Wedding: January 2021

Of you’re a bit risk averse you are better off sticking with ETFs than buying individual stocks. ETFs typically take a small management fee but lots of providers are offering very low rates these days, like less than 1%. It’s worth paying a fee to bave that extra safety that comes with spreading the risk across multiple stocks. 

Mutual funds are a waste of money.

If you want to play around with stocks a bit but not throw all your money into that kind of arena, maybe check out QuestTrade or WealthSimple Trade. I’m not sure about Quest, but on WS you can create your account and make a watch list of stocks before you aftuactu put any money in, and you can invest really small amounts on WS as well. You can put as little as $200 into your cash account on there and buy as little as one $0.99 stock if you want (which is obviously pointless but I’m just saying there is more room to play around with less terrifying amounts of money just to get a feel for it). 

Your advisor is right that you need to invest. If you aren’t comfortable at all with managing your own investments though, it is probably worth it to just set up accounts through him and have him manage investments for you based on your risk profile. 

Post # 12
Member
7153 posts
Busy Beekeeper

princessanon0125 :  are you already maxing out the 401k? If not that’s the easiest way to set more aside if you don’t want/need it until retirement and since it’s already set up you don’t have to think too much about investment options since it will just follow the plan already in place. 

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