Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
Bonds vs. Stocks When Nearing Retirement - Jane Bryant Quinn
Reply to @Derf: That equals to 0.275% as the management fee. If there is no additional layer of custodian fee being paid annually, and this is the expense ratio of your fund, then you are are doing very well.
Jane Bryant Quinn....hard to believe she is still writing. This article is full of strange, "rule-of-thumb" advice. Investors are individuals, so for someone to say retirees should have 30% in stocks, or (even worse) put everything in TIPS, is just nuts. Folks need to consider the fact that interest rates have nowhere to go but up, so all those bond funds that have returned 6-10% over the last decade will be struggling to pay their dividends and maintain their NAV as interest rates rise over the next decade. This does not mean that retirees should abandon bond fund, but they do need to be aware of reality. Dividend-paying stocks could be more important over the next 10 years than they have been in the past. And for sure, retirees who will be taking distributions from their investment portfolios should have 3-5 years of cash needs in short-term bonds, money market, CDs or similar liquid holdings. This could prevent the need to sell investments in a down market.
Our clients have all different kinds of allocations, depending on their risk tolerance, cash flow requirements, and other considerations. We run our lifetime cash flow projections to age 100, and that gives us a pretty good indication of whether a 4 or 5% expected return will make it or not. These kinds of projections are available on the internet, even if they are not as flexible as our in-house calculations. But they do give retirees an idea of how realistic their expectations are.
Comments
Thanks, Derf
Our clients have all different kinds of allocations, depending on their risk tolerance, cash flow requirements, and other considerations. We run our lifetime cash flow projections to age 100, and that gives us a pretty good indication of whether a 4 or 5% expected return will make it or not. These kinds of projections are available on the internet, even if they are not as flexible as our in-house calculations. But they do give retirees an idea of how realistic their expectations are.