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Tag Archives: Retirement
I was reading through my Harry Potter books the other day, and it started a train of thought about death, our mortality and how it shapes the decisions we make, especially in regards to spending money.
I promise this won’t be a depressing post. At least, it wasn’t to me. It frees you up to think about what you should be doing today.
WE WILL EVENTUALLY PASS ON, ONE DAY OR ANOTHER
Some sooner than others, but eventually everyone dies. Hopefully it’s in a bed, where your body gives out gently with no pain or any diseases to speak of.
But eventually, we will all die.
Death and taxes, these are both certainties and facts of life.
I see this as a rather good thing because it gives us a flexible and also inflexible view on what we should choose to do with our time and our life.
We know our time is limited, so we plan accordingly by saving for retirement for when we are too old and creaky to get up at 6 a.m. to go to work.
WHAT IF EVERYONE LIVED FOREVER?
I couldn’t think of a more horrible idea than living forever.
At first glance, it sounds great.
You, your friends, family, everyone living forever and having a grand old time.
(Despicable Me screenshot. I love this film!)
Not only would this put a serious strain on our planet’s resources, but aside from practical reasons, you’d all get bored eventually.
Maybe not with your friends or family (or maybe WITH them?), but you’d get bored of life because it has no finite time period attached to it.
You’d hear about, read about and talk to the same people for the next infinite number of years, and there wouldn’t be anyone new or interesting to change it up, and anyone who grew up in a world of immortals, would be seen as too young to know anything – they’d more than likely not be allowed to rule a country.
THAT’S SICK, I MISS MY GRANDPARENTS!
I miss my elderly neighbour and my one grandmother too!
(Never really interacted with the rest of my grandparents as a kid or had much extended family.)
But while there are plenty of people whom I wish were still alive today, but I cherish them and their memories even more by the fact that I wish desperately to be more like them — less impulsive, calmer, more rational — these are all things I have to work on, and am finding it very hard to do without a role model to guide my thoughts, either dead or alive.
Sometimes my memories of them are rosier than what the reality was like, and I think I’d prefer it that way.
TIME WOULD BECOME A LESS VALUABLE RESOURCE
Would we even bother caring about saving for retirement?
We’d never retire!
We’d work just to stave off boredom.
That great trip around the world you wanted to take?
You could do it, or put it off for the next 100 years out of sheer procrastination or laziness.
Photograph I took of Lisbon, Portugal
Time becomes less valuable rather than being the finite resource it is today.
Want to learn about a specific subject in detail? Why bother studying for it today? You can just do it sometime in the future, like say in 1000 years.
IT FREES YOU UP TO REALIZE THAT LIFE IS LIMITED SO DON’T WASTE IT
Rather than being a depressing chestnut being tossed around of:
What a life.
You work, you owe money/taxes, and by the time you get to actually enjoy your life and the fruits of your labour, you’re ready to die.
You realize that your time is limited.
This in and of itself, freed me up to ask 3 questions that basically made me realize what kind of life I want to live:
- Is this what I want to be doing for the rest of my life?
- Is what I am doing able to sustain me for when I don’t want to work in retirement?
- Are the people I am meeting and spending my precious time with, the people I want to see?
Sounds a bit harsh, maybe elitist to some, but I really do choose where to spend or not spend my time and money.
It’s mine to spend, after all.
FOR WHO I WANT TO SEE:
I am not in the slightest bit interested in talking or meeting with some people I have met over my life.
They’re perfectly lovely, nice people, but they’re not who I want to see for whatever the reason may be.
That’s absolutely fine, because I too, am someone whom another person doesn’t want to meet with either, and I’m thrilled that such choices exist in polite society.
This lets me RSVP to things I want to say like:
No thank you, I don’t want to accept that invitation to go to your baby shower, because you were someone I really didn’t get along with in business school, and we both know it.
I’m pretty sure you’re just doing it because you want all the attention (AGAIN) and I’d even have to fork over an expensive registered gift to boot, for your child whom I have no desire of ever visiting once he or she is born.
Thank you for your invite, desperately fishing for gifts, but I’d rather keep my money for people I actually love and care for, because they were there for me even when I didn’t want to become a ruthless investment banker like you, and as a result, backhanded our mutual friends for marks.
In reality, I write a nice brush-off that is accepted as good social etiquette everywhere:
Please accept my thanks in having been invited to your baby shower, but unfortunately, I will not be able to attend.
Some of you might ask: “But who will go to YOUR baby shower!? FREE GIFTS!”
Who says I’m even having one when I have kids?
For one thing, there’s nothing that I want to buy that I can’t buy for my own future kids.
Money is nice, but I don’t need it either. Maybe the person giving it, can’t afford it and should very well keep that money for their bills.
I don’t even particularly think that people enjoy giving basic essentials at a baby shower, which is what I thought the whole point of a baby shower was.
It’s always something cutesy, or impractical that they’ll grow out of in 2 minutes.
The last baby shower I went to, I gave the most practical things on her list — all those nipple cover things, diapers, receiving blankets, soothers, everything that I could think of that would help a new mother.
Others went bonkers off the registry, and instead of buying diapers, bought fun, exciting, pretty toys that I can predict, will go unused for the most part (hope she got a gift receipt to return it all).
I’m also fairly sure that I too, will end up with junk I and the kid will never use, with more to come once the kid actually comes out and has regular, annual birthday celebrations.
“But the social interaction to celebrate his/her new life and how big you got”, you cry..!
Then the whole thing of trying to guess how fat I became while being 8 months pregnant?
I can do without that, thanks.
Or trying to wrap toilet paper around me to guess how big I got?
Again, no thanks.
I do like the idea of getting together to celebrate a new life, but my instinct tells me this will be happening regardless of a planned baby shower.
I’m pretty sure I’ll be cooed over, petted, asked to sit down a million times, and have overeager strangers come up and excitedly rub my belly for good luck.
All of that is tolerable for me, because it’s nice to see how a baby can bring such joy to strangers who don’t even know what kind of person you can be sometimes, but mostly because it’s what I’ve been doing to my friends who have been pregnant
(sans the belly rubbing thing; I already know that it’s impolite to do so without asking, especially as some creepy stranger who doesn’t look like a grandparent)
The attention will already be there, I can do without the rest of it.
FOR WHERE I GO:
As a traveler, I have no interest in the slightest in visiting Africa, Russia, or the Middle East.
I know plenty of adventurers who are thrilled at the chance to visit such untouched, beautiful landscapes, to interact with cultures so very unlike their own, and to live on the edge of danger in some cases, but I am not one of them.
Photograph I took in Portugal of a very old stone home — this is as untouched as it gets for me.
I also don’t go to events that are a waste of my time.
I avoid parties and get-togethers with people I don’t enjoy talking to because I’ve already met them once, twice, even thrice, and they were insufferable each time.
I don’t need (or want) to go out of my way to be mean to anyone, but why should I force myself to interact with people I don’t like, when my time is already limited?
Life really is too short.
Although I must admit that I enjoy going to events to meet new people, such as meeting readers, blogger meet-ups, or anything where I think I might meet an interesting stranger to talk to and share ideas with.
You never know.
Even if I don’t meet anyone for a long period of time, I’m okay with that too.
I’m more of an introvert than an extrovert (I don’t thrive off the energy of others), and I’m content with being by myself and having fewer, but higher quality interactions.
FOR WHAT I DO:
I also don’t spend my money on hobbies and activities that I don’t want to do.
Playing the piano?
Yes please. I’ll put in a few thousand for a nice digital piano that can travel around with me.
(I really want this Roland 700NX some day. It plays like a dream.)
Playing the violin?
Put that thing away, I was never a fabulous student at it even after 5 years. I can play it, but I don’t enjoy it as much as listening to the real virtuoso who can make my heart sing like Joshua Bell.
It just made me think of a tortured cat, and I was doing it to myself.
But only to countries and areas I actually want to visit and take an interest in, and am able to explore and live like a local for a temporary period of time.
Photograph I took in Port Stanley, Canada
Don’t ask me to go to the Caribbean with you to sit on a beach, get skin cancer, feel down right covered up in my one-piece bathing suit, and have to politely refuse cocktails every half hour because I don’t like to drink.
That is more stressful than relaxing for me, especially if you think about all the armed guards with machine guns patrolling the borders of the resort.
LIVING FOREVER IS NOT THE ANSWER
Living forever is not the answer. Making the most of your time today, and living in the Now, is.
Don’t waste your time in a career that you won’t enjoy.
Slash your budget, live on less, and open your possibilities up to doing WHAT you want rather than what you should, because you have a car payment on a vehicle you couldn’t afford in the first place.
Otherwise, find a career you enjoy that makes good money as well (right, I might as well tell you to go search for a black unicorn right?).
…but it’s really true that you just have to sometimes sit back and not force anything to happen.
Look for jobs, take on things you normally otherwise wouldn’t try, and you never know what you’ll end up in.
Most of all, choose the life you’re living, and do what you want to do, taking into account all the sacrifices you will have to make to live with your choices and values.
DO YOU WANT TO LIVE FOREVER? HAVE YOU EVER THOUGHT ABOUT IT?
This is a part of the Investing Series.
Something that people kept repeating and I didn’t understand when I started, was what “re-balancing a portfolio” meant.
I was imagining clowns and elephants on little blocks, but I was fairly sure it wasn’t as fun as that.
WHAT’S A PORTFOLIO?
A portfolio just means all your money.
They say portfolio to make you think of something like a folder to hold all of your investments in stocks, bonds, mutual funds, cash, etc.
WHAT DOES RE-BALANCING A PORTFOLIO MEAN?
The best motto to describe the act of “re-balancing your portfolio” is: “Not keeping all your eggs in one basket”
Photograph I took in Beijing, China
Re-balancing your portfolio means you’re just making sure you aren’t too heavily invested in one area versus another, based on what you’ve set out as your investing strategy.
It’s like adjusting the wheel of a car — you know how sometimes a car drifts to the right or the left sometimes because it it isn’t balanced or tuned up correctly?
Well re-balancing your portfolio is like taking the wheel and adjusting for it going too far left, or too far right, so that you’re going straight down the road instead.
You have to set a strategy or a roadmap of where you want your money to go, how much growth you want to achieve and what you want to do it with, and then STICK TO THE PLAN.
Stick to using something more like Google Maps, and don’t, under any circumstances, take Apple Maps and get lost in some ocean of bad investments somewhere.
HERE’S AN EXAMPLE OF RE-BALANCING A PORTFOLIO
Let’s say you have $1000 in your portfolio.
You may have decided you want to put 50% of your portfolio into Index Fund A, and another 50% into Index Fund B.
- $500 Index Fund A
- $500 Index Fund B
Well, over the year as you invest, let’s say Index Fund A does really well.
You had originally put $500 into Index Fund A, and it is now worth $700, you’re up $200!! YAY!
Index Fund B on the other hand, has gone down; you originally put in $500, but it’s now worth $400, you’re down $100. Boo hiss!!!
Your total portfolio is what it is today, also known as “market value” is the following:
Index Fund A’s Market Value $700 + Index Fund B’s Market Value $400 = $1100
You’re up $100 overall from your original investment.
But the problem is that you now have a lot more money in Index Fund A than you do in Index Fund B, which is not in line with your original investing strategy of a 50/50 split.
Index Fund A = $700 / $1100 = 63% of your money is in this fund
Index Fund B = $400 / $1100 = 37% of your money is in this fund
If you wanted to stick to your 50/50 split, you would need to move some money from Index Fund A to Index Fund B to even things out back to what it was in the beginning.
Think of it like re-distributing the wealth.
If your entire portfolio is now $1100, then 50% of that would now be $550.
THIS IS WHERE RE-BALANCING MAGIC HAPPENS
When you go to re-balance your portfolio, you would have to move $150 from Index Fund A to Index Fund B, so that they’re both now at $550, or 50% of your entire portfolio of $1000.
You can do this by selling, buying or exchanging your investments (depending on what you bought).
Et voila! You’re back to 50/50 split, as you had originally intended.
HOW OFTEN SHOULD I RE-BALANCE MY PORTFOLIO?
You can do it either every quarter (every 3 months), or every year at the end.
Any more than that, and it will (probably) not be worth your time and effort.
May even cost you a lot more money in fees if you are charged any to buy and sell.
I tend to re-balance about 4 times a year, because I take chunks of money and divvy it up into 25% chunks to take advantage of dollar-cost averaging.
WHAT IS DOLLAR-COST AVERAGING?
It’s just the idea that you are buying a fixed amount over the course of let’s say a year, and on AVERAGE you will pay less, than if you dump in all your money at once (like I do).
To use an example, let’s say you buy a pizza every month as a treat to yourself.
Some months, that pizza costs $10, sometimes it goes up to $11, and sometimes it goes down to $9 because of promotions.
At the end of the year, let’s pretend your average cost of 12 pizzas (one per month), works out to be about $10.50 per pizza.
You would have spent 12 pizzas x $10.50 per pizza = $126 in a year on pizzas
Now let’s say that I also decide to buy some pizza (unbelievable, as I don’t buy takeaway pizza*, but let’s go with this story), but I decide that I want to buy all 12 pizzas all at once in one month because I’m lazy and too impatient to wait for delivery, and I’m planning on eating 1 right away, and freezing 11 for the other months.
If I bought a pizza in a month where it cost $11.
I would have spent: $121 a year in pizzas and about $5 more than you!!
All because because I didn’t want to buy a pizza monthly and take advantage of (inevitable) dollar-cost averaging.
I just bought everything at once, whereas you wanted to buy one each month because you never know whether pizza workers are going to go on strike for more money which means the price of pizzas go up, or maybe it’s a bad month and the businesses need to give a little deal or promotion to get people to buy their pizzas.
All of this stuff happens in real life — stocks are up one month, down the next. The only way to take advantage of the lower-prices, is to buy in chunks, spread out over the year.
Otherwise, you’d be trying to time the bottom of the market and buy at the ‘cheapest possible’ floor, and that may not end well for you.
Update: I will be looking into this “value averaging” instead of dollar cost averaging that Jacq mentioned in the comments, and get back to you with a post on it.
*I don’t buy takeaway pizza because I’ve been horribly spoiled with delicious, homemade pizza.
There is no pizza I’ve ever purchased, that tastes as good as what BF makes at home.
BUT WHY WOULDN’T I KEEP MY MONEY IN THE FASTEST GROWING FUND/STOCK?
You may be wondering why you would want to move money from an (obviously) great index fund to a crappier one (Index Fund B), or why wouldn’t you just put ALL your money into Index Fund A, and make out like a bandit?
This is because you can’t time the stock market, as evidenced in the years of 2008-2009, and if frankly, if people could time the market, they’d all be millionaires in no time.
In 2008-2009, anyone who had their money in bonds started seeing an increase in value because investors were fleeing the stock market and selling their equities or stocks in the stock market.
If you had most of your money invested in the stock market, you’d be down by a lot if you had sold at that point.
In contrast, if you had invested some of your money in bonds, you would have seen that money go up instead of down during that period, and perhaps the profits from bonds and the losses in stocks would have evened out for you.
You wouldn’t have freaked out as much, because you didn’t lose half of your savings over night.
(Plus it would have helped to not have sold anything and just waited for 5 years for your money to go back up.)
This is also called DIVERSIFICATION, where you don’t put all your money into one area — you put a little bit of it into each area, so that as one goes up, the other goes down, and in the end, you’re still making money.
Update: Jacq made a great point in the comments about how the bond bubble is pretty much done.
Don’t start putting all your money into bonds now!!
If you do, think about short-term bonds, not long-term ones, so that your money will take advantage of the better interest rates. Long-term bonds will just lock you in at low rates that you won’t be able to break out of.
I’ve seen the trend of people switching back to equities about sometime in November 2011.
That seems to be the time a lot of stocks started taking off, as people took money out and started re-investing it again, and I think it’s the swing back into equities.
IT ALL DEPENDS ON YOUR LEVEL OF RISK WHICH IS YOUR AGE
What it all boils down to is this: being heavily invested in one area over another, is risky (unless you just have money in bonds earning a measly 1% over time), and the amount of risk you can take depends on your current age.
If you’re younger (under 37 I’d wager), you can be more heavily weighted towards stocks because you have time on your side to recover from any portfolio losses.
As you get older and nearer to retirement, you should think about preserving your money, and start weighting it towards bonds so that the money WILL BE THERE when you go to retire.
Otherwise, you might end up like some Baby Boomers who had to recently come out of retirement to make money to keep putting food on the table.
Photograph I took of an old Chinese woman in Shanghai trying to make a living.
STOCKS WILL (PRETTY MUCH) ALWAYS GROW MORE THAN BONDS…. I THINK
The general sentiment is that stocks will always return more on the whole than bonds, but they are STILL risky investments, even if you invest fairly conservatively.
Over the past 100 years of the stock market, it has always pretty much gone up over time, on a slow incline.
Sure, there were jagged bumps and dips, but the direction is UP, because the stock market continues to get bigger because more money is invested each year, simply because the world population is growing, and there are more people alive today, than 100 years ago.
If you stick all your money in bonds, you will lose out on gains over time (and inflation eats it).
If you stick all your money in stocks, you are risking your nest egg.
The best strategy is always a balanced one, if you don’t want stress and to worry about your money all the time but you still want to preserve your wealth with some moderate growth.
SO HOW DO I KNOW WHAT TO PUT MY MONEY IN WHAT?
Some people say to take your age.
If you’re 30, you should have 30% of your money in bonds, and 70% in stocks.
Of course, this is assuming your life span is 100, so seeing as people generally live until 77 – 82 years of age, not 100 years old, you can weight it on something more mathematical by age.
Such as: 82 / 4 = 20.5, so you should have 25% of your money at age 20 – 21 (which is at about 25% of your life span), invested in bonds, and 75% in stocks.
Or maybe you just FEEL like you should have 20% in bonds, and 80% in stocks because you’re young, and you have time on your side.
Whatever you decide to do and however you want to calculate it, you have to do it based on how far away you are from needing all that money you’re saving.
SO WHAT’S THE POINT?
The whole point is when you invest, you need to keep an even, steady growth and to not risk losing all your money over night.
This means ignoring what your impulsive human heart tells you to to (put all your money into the fastest growing fund and stock and watch it rise!!), and following a rational, measured, lower-growth-but-wealth-preserving strategy that may be boring, but won’t make you sob in the corner from a drop in the markets.
If you’re invested in all areas of the market, you won’t have to worry (too much) when things go south for one area or another because things are going north for another part of your portfolio.
- A portfolio is all of your money with a business-y name for it
- Re-balancing a portfolio is just making sure you adjust your investments
- You should think about re-balancing 1-4 times a year (depending on fees/costs)
- Dollar-cost averaging is buying small amounts over a period to get an average cost
- Timing the market is stupid; no one can claim to know anything definitively
- You shouldn’t put all your money into one stock or one fund, or style; diversify!
- Where you put your money depends on your age, and what you want to do with it
- Spend time and think about what kind of investor you are!
The only data I’ve been able to get for all the countries at once, is for the year 2010. Luckily, it isn’t so far off from 2013, and the savings rates at a quick glance, haven’t really changed much from 2010, except in the fractions of percentages:
Here’s the chart I created in order of highest to lowest savings rates around the world for 2010
(Click to biggify anything)
China and India are the two towers of savings you see on the left.
New Zealand and Denmark are the two towers of not-saving you see on the right.
SAVE LIKE A DEVELOPING NATION FOR OPTIMAL RESULTS
It’s cultural as well, I’m sure, but China and India are blowing everyone else out of the water in terms of savings rates.
…OR AT LEAST SAVE LIKE SOME EUROPEANS
Aside from India or China, if we take a look at the next tier of double-digit savers from Turkey, France, Spain, Germany, Belgium and Portugal, their savings rates of 10.20% to 19.50% are nothing to sneeze at.
I received an email from a lovely reader (*waves!*) in Germany who told me that she recently read a statistic that young people (aged 14-25) are now saving about 28% of their income, and 20% of them, have already started saving for retirement, above their national average of 13.6%.
She also goes on to note that they can save 28% because they’re also living at home, so it helps.
AND WHERE DO WE STAND?
Clearly for Canadians and Americans, we’re not doing as well as we could.
The estimated savings rates for 2013 are actually lower than that.
Canada is set for a savings rate of 4.3%, and the U.S. is set for a savings rate of around 4%.
Australia will also up its game at 12.10%.
In detail, here are the specific numbers:
Data taken from: GFMAG, Business Week
ARE YOU KIDDING ME? LESS THAN 5% IS NOT ENOUGH
If we only save about 4.3%, it is for one thing, not even close to the PF maxim of save at least 10%, and certainly not enough to secure your future.
Let’s say you make $30,000 a year.
Your net income is $25,942, which is about $2161.83 a month.
4.3% for Canada, is about $92.96 a month.
In 30 years, it’d be $93,379.71.
Now it makes so much more sense why the average retirement savings for a person about to retire is only about $100,000.
Furthermore, with 4.3% as the average, it means that there are people saving less or more than that!
WE AREN’T SAVING ENOUGH!
In contrast, if you saved like other countries mentioned above, it’d look like this with a $30,000 salary per year:
Looks like China, India or Turkey would be my role model if I was earning $30,000 gross a year.
Obviously if you earn more, you could afford to save a bigger percentage of your net income, but you’d have to hit at least the same absolute dollar savings of about $10,000 a year to reach those numbers.
It’s why it’s better to look at your net savings per year rather than as a percentage of things.
You can get lost into thinking that you’re doing well, and you can afford to upgrade your lifestyle when you should really be doing much more.
That’s a rather high percentage of savings however, almost 40% is crazy, especially with the higher cost of living here versus a developing nation.
How do you figure out how much to save without starving?
To do all of the above, you need to know how much you spend on average, and where you can cut back on your spending.
If you have NO IDEA where your money is going, you can’t make any changes.
Estimations are for people who don’t have facts.
If I only estimated how much I spend each month rather than really tracking it, I’d be consistently under by a solid 30% – 50%, no doubt, and I would have been hard pressed to remember each category as an average each month.
Plus, I wouldn’t be saving as much as I am today, because I’d be out there wasting my money on crap without knowing where it’s really going. I’d probably be appalled at my spending once faced with the numbers on some debt show that I would eventually end up on.
HOW MUCH DO YOU THINK YOU NEED TO SAVE?
I’ve always wondered what the benchmarks were for saving, net worth and retirement numbers by age.
It can be so hard to judge all of that, seeing as our income varies over our lifetime, and we don’t know how long we’ll live or how much we will really need.
According to Fidelity, here are some numbers they tried to pony up for us:
By age 35, your goal is to save an amount equal to your annual pay.
By 45, you will want to have saved about three times your salary, rising to five times your salary by 55.
Typical wage earners should aim to save at least eight times their final annual pay to be sure they can afford basic living expenses in retirement.
Naturally, this is assuming that you will eventually get promotions and climb that proverbial ladder to earn $75,000 by the time you’re 55 or so.
Let’s say you get a 3% raise per year as an average, and you started working at 24 for about $30,000 a year.
Here are your numbers:
35: Saved $41,527 as your net worth (1 time)
45: Saved $167,426.51 as your net worth (3 times)
55: Saved $375,012.05 as your net worth (5 times)
65: Saved $806,375.74 as your net worth (8 times)
These numbers are not terribly realistic, as not many people at 65 will reach $100,000 as their annual income, but they’re a start for people to see where they’re at.
So if I made a chart for myself, it’d look like this:
- 35: Saved $221,377
- 45: Saved $750,000
- 55: Saved $1,250,000
- 65: Saved $2,000,000
(Adjusting for: 1) I’d DEFINITELY max out at around $250,000 a year for an income, and 2) my average income has actually been around $75,000, accounting for the fact that I’ve been working 2 out of the 5 years.)
I’m on track then.
I am also aiming to save $1,000,000.
I don’t think I need $2M, and it’d be nice to have, but I’m not going to kill myself for it.
What about you? What do you want to have saved by the time you retire? Are you as freakily obsessed about having enough money at retirement as I am?
Really, all of my savings = my savings.
It goes into one big category of “savings”, but within that category, I have allocated parts of my money to different priorities.
At any given time, here are the following funds I have:
- Short-Term Savings
- Emergency Fund
- Retirement Savings
- Investing Fund
- Other Funds
- PRIORITY: Pay the bills
- MONEY RISK: Very Low
I have a short-term savings fund which is just my chequing account.
I put money in here about $2000 or so, to cover bills like my rent, utilities, cellphone, groceries and so on.
It’s my daily banking account, and I keep a fairly low balance in there because I don’t want to miss out on higher interest rates by leaving my money elsewhere.
Going to max out my retirement, and here’s where the money is going and its asset allocation:
Vanguard 500 Index Signal — 45 %
- MER: 0.6%
- Return Since Inception: 3.17%
Vanguard Balanced Index Signal — 45%
- MER: 0.12%
- Return Since Inception: 5.44%
Selected American Shares D — 5%
- MER: 0.6%
- Return Since Inception: 4.47%
Invesco Stable Value — 5%
- MER: 0.2%
- Return: 5.39%
HOW I DECIDED
- Betting on the American economy to bounce back — I am very confident here
- Looked at MER (management expense ratios) for the cheap ones
- Looked at their returns since inception (good range covering the highs & lows of economy)
- Looked at the stocks the fund was made up of — big ones, etc
- Kept in a moderate risk frame of mind for now — I can always change later
I am interested in returns, but I think just a moderate return is fine for a retirement plan.
I like a “set it and forget it” sort of thing, but I don’t want the expenses of an actively managed fund where they target your retirement date and shift the assets into bonds as you age.
WHAT I MAY DO IN THE FUTURE
Change a few funds. I am going to do more research (it was a quick, 1-hour scan and pick situation), and re-allocate as I see fit.
I am also going to be moving my money over here, so I need to figure out if I want to put my money into the same brokerage, or go with Vanguard directly.