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Check out Wallstreetbets on reddit - I think someone with your risk profile will see gains in the 10,000% range after following the advice there!
Let me just go ahead and put my money in an index fund picked by fresh college grads that weren't smart enough to get my job, then pay all their hidden fees all while rendering my personal balance sheet totally illiquid.
I more thought you were being sarcastic initially, in that case (while i disagree with the index fund comments for the most part), thanks for the response - good on ya. I guess the employer matching 50% up to a threshold makes it quite attractive for me, but obviously companies and your perspective can be different.
We're not given matching which probably has a large effect on my decision to not contribute to a 401k
Beanie Babies, er, I mean Bitcoin.
On a more serious note, I'm going to speak primarily to my 401k, as my strategy is more coherent there than in my IRA.
I work primarily in US equities at work, but can't pick the ones I work on in the 401k. I'm also in my early 30s. Because of this my allocation is 80% in the Vanguard target 2050 fund, and 20% in a highly regarded EM fund that my employer runs. This is due to my age and risk tolerance dictating a primarily equity allocation, and my belief that EM equities are more attractively priced than DM or US. (having access to a renowned EM manager that is otherwise closed to accepting new funds at the lowest cost available didn't hurt either)
Because of legacy allocations and trading costs my IRA is a mess. I have legacy investments from an old 401k rollover, a couple small individual REIT positions, and some of our funds I bought to express support for them on a corporate level.
Obviously, these are not suggestions that you invest like me. I could be way out in left field, and your situation could be completely different. Consult a professional.
That would make me rethink a lot, and my incentive to put anymore past what the employer will match is slim to none. I see where you are coming from.
I clicked on something that said Vanguard last year and I'm up 20%
The S&P 500 was up >20% last year. I think EM was up even more. Don't mistake lucky timing for skill.
You really inferred a lot from my comment. I suppose people working in asset management have to think there's more to it these days than coding for their own sanity.
I'd piggy back on with Whatever1984 posted. For me I actually had 25% annualized returns over the past 2.5 years, which is obviously extremely high - but by no means do I expect these returns to repeat until retirement.
Most investors/funds/BS (professional or other) do not outperform the market, especially when the investment horizon is 20-40 years. Nothing wrong with picking a Vanguard name (I assume you did more diligence than your username suggests), but diversifying the number of funds you put your money into (in my opinion) is a no brainer.
Where to move IRA money (Originally Posted: 08/06/2014)
Currently my IRA is in ETFs and I've gotten a tidy return over the past few years as the market has rebounded. It looks like the market is heading toward a correction. I'd like to move my money into cash, but I don't think it's possible with an IRA, at least not with Vanguard. The money market funds have fees that are higher than the interest rates (wtf) and the bond funds will lose value when interest rates rise (which may also be the catalyst for the a drop in stock market). CDs are icky because your money is tied up with almost no return. Any other ideas for where I can put this money? I suppose a fund with low beta?
if your strategy is to go to 100% cash every time you think there's a correction, good luck making money long term. you are allowed to hold cash in an IRA, and mmkt fund fees will be higher than your apy in this zirp environment. I'd pare your gains, always hunt for bargains, and don't try to time the market, it's a fool's errand.
You are reading too many CNBC articles. If you want to worry about something worry about secular changes.
Overnight treasuries, but I actually know what I'm doing so the odds of me missing out on getting back in are slim to none. The key to accumulating wealth is preserving the wealth you already have. My whole trading methodology/career is based on that simple principle.
You're going to want to long gold/precious metal funds and etfs. Much better than any crappy S&P in a stagflation-tastic economy.
I would love to hear your rationale for why gold is such a great investment. I say that sort of sarcastically (because I disagree) but I am also genuinely curious. not trying to start an argument, but I would like to hear it.
haha looks like I shut down this thread. I guess my logic was just infallible.
But seriously, don't buy 100% gold with your retirement account, but you should have some...
Inflation increases equities and real estate also. It fucks people who just sit on cash.
I'm not convinced high inflation is good for equities. Look at what happened in the 70s. As inflation spiked up the markets usually tanked (or at least flat lined). I think the mechanism is input costs (labor/materials) go up and companies have to choose to either increase prices and see demand get crushed or take the margin hit. Either way is bad for stocks.
Well high inflation coupled with an energy embargo. IMO, we'll have extended low to moderate inflation coupled with low energy ala fracking. I just don't see a great case for gold or fixed income right now. Maybe move some money into divided stocks or MLP/REIT type investments.
I think the 70s is a fair reference but look at it in context, we had hyperinflation, high teens yields on cash & bonds, and an oil embargo. simple math and knowledge of discount rates and PE multiples meant that stock multiples HAD to come down, otherwise there would've been a negative risk premium.
what matters is earnings and the level of interest rates, those are the 2 main determinants of stock returns. if earnings continue to grow, I believe any multiple contraction we'd get as a result of rising rates (which you say wouldn't happen because Yellen is a wimp) would be manageable and overall returns would be flat to modestly up.
if your logic is that low interest rates + inflation = bad market for stocks, you're wrong. accelerating interest rates + non growing earnings + HYPERinflation + tail event (geopolitical crap) = bad for stocks. also remember that the 70s was interesting in that it was a slow decline & collapse of the multiple as Volcker got a hold on rates & inflation, ended up being around a 60% loss in value over several years. a similar event happened not too long ago, during the financial crisis the S&P declined about 60% as well, only it took 19 months instead of closer to 12 years (peak late 60s to bottom in early 80s).
even then, while inflation was bad and equities had a drop, inflation only reached 14% at its peak. what's more, equities and bonds both beat the piss out of gold for the ensuing 30 years. I will agree with the thought that IF we have 14% inflation, rapidly rising interest rates, non growing earnings, and some sort of tail event (oil crisis, Russia invades Ukraine for real, Israel gets nuked by Iran, whatever), then stocks would likely have a bad decade, but I just don't see it, I do not see this Fed losing control of interest rates to the degree of the 70s, maybe we see the 10 year peak at 7%, but I put my money on 3-5%, even still rates are a far bigger determinant of returns than inflation, so if rates don't pop up like they did in the 70s, we won't have a stock market like we had in the 70s.
Find a couple of underperforming ETF's and throw your money at those. When they're outperforming in a few years, sell, and start the process over. IRA's are great since they really are there for the long haul. No reason to go bananas on short term timing.
Can Private REITs be placed in an IRA? (Originally Posted: 10/03/2013)
I was pondering this early today. REITs must give 90% of its income to the share holders, but also avoids taxation by doing so. If the shareholders own the REIT in an IRA which defers taxation, would the shareholder essentially keep all of the income until it is withdrawn?
If anyone has any insight on this matter, it would be greatly appreciated to hear about it.
Thanks
I'm going to say yes. The probably comes with buying shares of these non traded REIT within the contribution limits of the IRA.
I know people who has placed small rental properties in an IRA.
This is not a REIT question. This would apply to any dividend-paying corporation.
If you're asking "Can I own EQR inside of my IRA?" the answer is yes.
For a non-publicly-traded company, I'm pretty sure the answer is also yes. Heck, you can even own property inside of an IRA. But there are some arms-length requirements that you need to be very careful of:
If you own an IRA, and that IRA owns property (or possibly is structured as property ownership through a REIT where you're a significant holder), and you:
-Live on that property -Do work on that property. -Even so much as set foot on that property,
The entire IRA is deemed a distribution for Roth or pre-tax IRA purposes. Meaning you pay taxes (and penalties, if you're under 59.5 and don't have severe medical bills, college tuition, or bought a house).
My hunch is yes, there's a way to do this, but just be careful.
Or go out and buy some EQR or AVB. Or a royalty trust.
Yes, but it must be a "self-directed" IRA held by a custodian. With a self-directed IRA you can invest in private placement offerings, real estate, notes, etc. Check it out, its a neat concept.
IRA account Compliance Restrictions (Originally Posted: 12/02/2010)
I was looking to open up a Roth IRA account, and to my surprise compliance only allows me to open one at a very limited number of brokerages(schwab for example). I was hoping to open one with lowcost index funds from Vanguard/Fidelity, but it looks like this cannot happen.
Has this been the experience of others? FYI, I work in Equity Research.
Just so your aware, the reason why you have a limited selection is not due ot the account your trying to open but to make sure your in compliance with Rule 407. It's done to prevent insider trading and illegal trading activity. Any account you have outside the firm is subject to oversight by your firm's compliance department in order to prevent you from engagin in any unmonitored trading. Most banks have a few places where you can open up your own account and they will automatically send your statements out to your compliance office accordingly.
Every major shop on the street has something similar to this in place in order to protect themselves and their employees from doing something shady.
I forced to house my accounts at Chuck Schwab. They have a dozen or so commission free ETFs that rival Vanguard in price. Schwab isn't the end of the world.
Caping off the last 1000 of my first year of IRA contributions (Originally Posted: 03/17/2014)
(23 yrs old) Already invested $3000 in VFINX, $1000 in PZD, $800 in VGT this year. Wondering what the best long term security is for the last $700 for my IRA before April 15 as the so called bull market ages.
It's an IRA. The "bull market aging" doesn't mean anything... You're not taking this money out for 36 years.
Wow, I didn't know your initial investments were "locked" when you put them in an IRA. Is that new? Do you really take a 36 year view with your IRA investments?
Invest Rollover IRA, or wait? (Originally Posted: 10/27/2014)
Hey guys,
So I just recently changed companies and have 2 years of 401k contributions that I just rolled-over into my IRA account. Given the current market conditions, do you think I should invest now, or wait to see what the market does? I realize that in the long-term approach I should probably just invest it now and not try to time the market, but I'm curious to see what some of your opinions are.
Thanks!
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