Thanks for stopping by the only investing website on the 'net designed by working folks for working folks. As more and more companies dump their old guaranteed pension plans and move their employees into 401(k) retirement plans, it's more important now than ever to learn how to manage your own investments. Come on in and get started!
We'll show you how to get a better understanding of the markets and become a confident, competent investor. And we lay it all out for you in plain English (well, a Southern variety of English, anyway). Hey, you work hard for your money - learn how to make your money work hard for you!
Make Your Own ‘Target-Date Fund’
Recent research by investment firms AB (formerly Alliance-Bernstein) and Compass Investors showed the performance of many target-date funds severely lacking . In fact, the returns during the funds’ critical ‘glide path’ period were downright pitiful! They believe that the poor results were largely due to the inflexibility of the funds’ structure. What makes these findings really bad is the fact that now many companies automatically enroll their employees into their 401(k) plan and put them right in a target-date fund! Hey, thanks, but no thanks…
The idea behind a target-date fund is sound: as we grow older, our approach to investing should adapt to reflect our changing risk tolerance and investment goals. A target-date fund’s manager adjusts that fund’s exposure to stocks and bonds as it gets closer to its target date, changing the asset allocations and reducing the risk exposure. All an investor has to do is decide when he or she will likely retire, choose that year’s target-date fund and fuggedaboutit…supposedly. The research results should make us think twice about using a ‘one-size-fits-all’ investment model.
Is there a better way? You better believe it! We can make our own target-date fund and tailor it to meet our specific needs. With just a little ‘hands-on’ effort, we can make our fund more responsive and more powerful. By creating our own target-date fund we can have the control to adjust our portfolio to reflect changes in:
> our life style/unexpected life events
> market conditions/investment choices
> our expected retirement date/other job opportunities
And in many cases, the costs associated with running our own target-date fund will be less than what the big boys charge to run theirs for us!
The investment approach we talk about here at our website is basically built around creating a kind of flexible, personalized target-date fund. We pick two or three index funds for our portfolio, use a simple age-based asset allocation method to divvy our moolah among those funds and let them start working for us. We make adjustments as need be, but we normally don’t do anything except peek at our account every other week or so - maybe 20 minutes worth of ‘work’ a month, if that.
Institutional target-date funds aren’t absolutely horrible. They really have improved since they were first introduced and they are absolutely better than not investing at all. But with just a little bit of effort and attention, you can create your own target-date fund and really take charge of your investments. Hey, it's your money!
A link to the US News & World Report article we are citing is here.
NEWS YOU CAN USE
"Mutual Funds with Heaviest Inflow/Outflow
for the First Half of 2015"
from Investor's Business Daily
"Dimensional, John Hancock in Partnership
to Build Their First ETFs"
"PIMCO Unveils Trend-Following Alternative Ucits Fund"
"Banks Slash Payments to Index Funds
for Russell Rebalance"
"Compass EMP Lists 3 New ETFs on the Nasdaq Market" from Nasdaq
VIEWS YOU CAN USE
"How This Buy-and-Hold Investor Times the Market"
"The Impact of Interest Rates on Bond Funds"
"Target-Date Funds: The Pros & Cons"
from The Motley Fool
"5 Charts Show How Index Investing
is Beating Stock-picking"
"Slashing Your Fund Fees"
from USA Today
Summer Reading List
Ah, the dog days of summer...whether you're whiling away an afternoon in a back yard hammock or hanging out on the beach, a good book is nice to have - especially when you're learning something!
Here are 3 great ones - guaranteed to make you smarter by autumn!! >>>>>>>>>>>>>
<<<<<<<< Clicking on these book images takes you to Amazon.com via our affiliate link. You won't pay a penny more for what you buy, but we do get a little moolah for sending you there - and that helps us cover the costs of keeping our website running free!
Here are a couple of very simple retirement calculators courtesy of our friends over at Calculator Pro.
Here are the figures we used:
> Required Annual Income: we put in what we're making now (we don't buy into that "plan to spend 70% of your working income in retirement" idea!)
> Years until Retirement: we shot for age 65, but who really knows, right?
> Years after Retirement: we sure hope to have 20 good years of doing what we want to do!
> Annual Inflation: we used 3.5% (maybe go a tad higher to be safe?)
> Annual Return on Balance: we used 7% (maybe go a tad lower to be safe?)