Finance Savvy Members Enter

[Lee]

I'm deciding to go with the Vanguard finally. Any places you recommend I can read up on what's best for me?

Vanguard is a solid choice, top 3 mutual fund company imo for sure.

Probably where I am going to move some of my money to also. Long story why I need to move money, but when i get time I will.

 

[Ob1]

I'm deciding to go with the Vanguard finally. Any places you recommend I can read up on what's best for me?

To give you non-generic advice, I'd need to know more about you.
Age
Time til retirement
Income
Risk Tolerance
etc etc

However, you're almost always going to be fine (no matter what age you are) if you employ a 3 or 4 fund portfolio. IE on vanguard you'd buy Total Stock Market Index Fund, Total International Stock Market Index Fund, & Total Bond Market Index Fund. Use roughly your age - 10 in bonds (my personal preference). Therefore, if youre 25, you'd do, 50% Total Stock, 35% Total International, 15% Total Bond.

Set it and forget it. Dont freaking touch it until retirement. I'm serious, I don't care if there is a market crash or you see gains for days. Don't touch it outside of re balancing it to keep your desired amount of bonds/proportions.

Read more, here: https://www.bogleheads.org/wiki/Three-fund_portfolio

 

[BMAN]

To give you non-generic advice, I'd need to know more about you.
Age
Time til retirement
Income
Risk Tolerance
etc etc

However, you're almost always going to be fine (no matter what age you are) if you employ a 3 or 4 fund portfolio. IE on vanguard you'd buy Total Stock Market Index Fund, Total International Stock Market Index Fund, & Total Bond Market Index Fund. Use roughly your age - 10 in bonds (my personal preference). Therefore, if youre 25, you'd do, 50% Total Stock, 35% Total International, 15% Total Bond.

Set it and forget it. Dont freaking touch it until retirement. I'm serious, I don't care if there is a market crash or you see gains for days. Don't touch it outside of re balancing it to keep your desired amount of bonds/proportions.

Read more, here: https://www.bogleheads.org/wiki/Three-fund_portfolio

26. I've got a while until retirement. Income is 51000. I wouldn't mind being a little risky

 

[Ob1]

26. I've got a while until retirement. Income is 51000. I wouldn't mind being a little risky

Do you have a sum you are starting with? Will you be maxing out your IRA and 401ks? What funds are in your 401k and what are their expense ratios? Over time, these things matter.

 

[Pick6]

Do what Ob1 says, or just slap it in a retirement date fund. These funds are designed and re-weighted as time goes on with an assumed appropriate level of risk by people who are much smarter on the topic than I am. If you are younger and you put it in say a 2055 or 2060 target retirement fund, there is going to be some risk there, because it is better to be riskier when younger compared to when you are closer to retirement. Meaning heavier in equities in your 20s and slowly (and automatically) reallocating itself to be heavier and bonds as time goes on.

I would only advise playing around and taking real "risks" in picking individual stocks with extra money. From what I can tell, I'm near the same age as a few of you (coming up on 26). I've dabbled in stocks from 17-25. Lost more than I won. Won good on some, lost bad on others. I'm done with that unless I have the spare money to one day, and that will be after making full use of tax advantaged accounts.

 

[natedagg]

Curious what you mean by this Dagg


They are, but that doesn't mean there isn't money to be made on tactical plays. I've been shorting volatility like a madman and kicking back smoking my cigars as the market rallies relentlessly. I am waiting for a significant market correction to get some blue chippers on discount, but until then there are still plenty of ways to make money in the market besides just going long.

Bro, I agree about tactical plays. There's always a way to make $, but some things in this thread are wrong, or at the very least incomplete, and then there's just some scorching hot takes. I am surprised by how many people seem to have it all figured out...

Anyway, on vol, there's a blog on VIX that escapes me that was super informative. I just tried to find it for you and couldn't, and I don't have any more time. The crux is that if you are blindly buying XIV or the equivalent on volatility bouts, you can improve. You have to understand the VIX futures roll and the VIX futures curve to really make it a sound idea. For example, on a bout of volatility, you can get backwardation of the VIX futures and get positive carry on the dreaded VXX! I like where your heads at tho: like you said, there's always a way to make $.

So that's how I would modify your strategy - it wouldn't be a "short volatility on spikes" strategy, it'd be a "play volatility in the direction of the carry." Not sure if better to short XIV or long VXX during vol backwardation, and not sure whether better to long XIV or short VXX during vol contango. If taxable account, maybe always keep a long XIV to get to a year-long holding period for LT cap gains, and when it's time to be "out" you can instead sell calls against it...

 

[TopGun]

26. I've got a while until retirement. Income is 51000. I wouldn't mind being a little risky

Ob1 gave you good advice. If you want to be a little riskier, add a fourth portfolio to his suggestion, I would suggest a mid (slight risk) or small (more risk) cap index fund.

Invest as much as you can as often as you can as soon as you can, it will pay off in spades later in your life.

 

[The Process God]

I don't get what the commotion over Vanguard is. Returns must be reported with fees (net expense ratio) taken into account, and, with fees taken into account, the true, top-performing funds are rarely Vanguard. Not to say that Vanguard doesn't have some top-performing funds.

I started a roth IRA with Fidelity, and i saw that some of their mutual funds have returned around 12-14% over the past 10 years and look pretty damn enticing. They do offer one mutual fund, PRGTX, that has returned almost 16% over the past 10 years (10k invested in 2008 would be 44.5k today), but it is closed to new investors currently at least at Fidelity. I'm thinking about going to the T. Rowe website and opening a roth IRA there just for that fund (it's open to new investors there) because those returns are too crazy to ignore. Then I can transfer the fund over to Fidelity since Fidelity will allow you to continue to contribute to a fund even if it is closed to new members as long as you already own the fund. The risk isn't too bad either. Definitely a little bit more volatile than some other funds, but its upward trajectory is obvious and fairly consistent.

I have a question about retirement and portfolio balance. Barring some unprecedented stock market crash that lasted a decade or more, wouldn't keeping most of your retirement in high-return/moderate risk mutual funds or at least indexes and then put maybe only the next 3-5 years worth of living expenses into bonds be the best for overall returns while considering safety? If a crash were to happen, the bonds would be minimally affected, and the mutual funds would have enough time to bounce back without being withdrawn upon in that time. I just hear about people putting decade's worth of their retirement or even all of it into bonds nearing or after retirement. It just seems like that's wasting potential returns without really increasing the risk too much.

 

[The Process God]

I just sent an email to my employer concerning something I read online, and I wanted to know someone else's thoughts on it. I'm a little long-winded in it, but here it is:

"
Hi Kevin,

Thanks for the reply.

I have another question or two, and I don't know if you can answer this. So I am contributing 5% of each paycheck to a Roth 401k. I read online that employee matches are generally put into a separate account and are actually pre-tax money. I put around $140 each paycheck towards that Roth 401k between what I put in and Vitamin Shoppe's matching.

My first question is: does Vitamin Shoppe match Roth 401k Contributions with pre-tax money or already-taxed money? Because it all shows up in my account as one lump sum and only tells me how much VS has contributed rather than indicating that it is in a separate 401k account that will be taxed later on. Secondly, if this is the case in that VS does match Roth 401k contributions with pre-tax dollars, meaning that VS contributions will be taxed later on, then wouldn't that be lowering the match VS gives because they're matching a post-tax contribution with pre-tax dollars?

With my current example of a total of $140 being contributed to my Roth 401k each paycheck:

My contribution: $77 (already taxed)
VS Contribution: $63 (minus, say, 15% taxes upon withdrawal for retirement) = $53.55 in the end
Total contribution after taxes = $130.55

Whereas, if I did a traditional 401k:

My contribution: $90.59 (estimated amount for pre-tax; post-tax of 15% tax is back down to 77)
VS Contribution: $72.47 (estimated employee match with current policy; 15% tax brings it back down to $63
Total contribution from both sides after taxes: $140

The tax rate might vary, but it doesn't matter. It's clear that a traditional 401k would yield 6.75% more if Vitamin Shoppe does indeed match already taxed dollars that are going into a Roth 401k with pre-taxed money.

But if Vitamin Shoppe's contributions are also already taxed, then I guess i am worrying about nothing.

Let me know which one it is if you would, please."

Does anyone know the answer?

 

[DJTJ]

I just sent an email to my employer concerning something I read online, and I wanted to know someone else's thoughts on it. I'm a little long-winded in it, but here it is:

"
Hi Kevin,

Thanks for the reply.

I have another question or two, and I don't know if you can answer this. So I am contributing 5% of each paycheck to a Roth 401k. I read online that employee matches are generally put into a separate account and are actually pre-tax money. I put around $140 each paycheck towards that Roth 401k between what I put in and Vitamin Shoppe's matching.

My first question is: does Vitamin Shoppe match Roth 401k Contributions with pre-tax money or already-taxed money? Because it all shows up in my account as one lump sum and only tells me how much VS has contributed rather than indicating that it is in a separate 401k account that will be taxed later on. Secondly, if this is the case in that VS does match Roth 401k contributions with pre-tax dollars, meaning that VS contributions will be taxed later on, then wouldn't that be lowering the match VS gives because they're matching a post-tax contribution with pre-tax dollars?

With my current example of a total of $140 being contributed to my Roth 401k each paycheck:

My contribution: $77 (already taxed)
VS Contribution: $63 (minus, say, 15% taxes upon withdrawal for retirement) = $53.55 in the end
Total contribution after taxes = $130.55

Whereas, if I did a traditional 401k:

My contribution: $90.59 (estimated amount for pre-tax; post-tax of 15% tax is back down to 77)
VS Contribution: $72.47 (estimated employee match with current policy; 15% tax brings it back down to $63
Total contribution from both sides after taxes: $140

The tax rate might vary, but it doesn't matter. It's clear that a traditional 401k would yield 6.75% more if Vitamin Shoppe does indeed match already taxed dollars that are going into a Roth 401k with pre-taxed money.

But if Vitamin Shoppe's contributions are also already taxed, then I guess i am worrying about nothing.

Let me know which one it is if you would, please."

Does anyone know the answer?

I'd think your company would be putting money that's post tax, because when withdrawing from a roth, it be almost impossible to tax the portion that's added in prior to any growth by your company.

It makes the most sense in my head that way. But if contributions are actually "pre-tax" per the wording in your benefits, then that's exactly what they are.

 

[natedagg]

I'd think your company would be putting money that's post tax, because when withdrawing from a roth, it be almost impossible to tax the portion that's added in prior to any growth by your company.

It makes the most sense in my head that way. But if contributions are actually "pre-tax" per the wording in your benefits, then that's exactly what they are.

Sigh. There is nothing to think about. I have never seen a company match that's not pretax. The company writes it off, and they can only do so by making it pretax.

@guitarlifter to reconcile whatever you were trying to reconcile from that email, just contribute more. Spend your energy not writing emails like this, but how to squeeze out of your budget enough to take full advantage of the match even if you do the Roth. If you are paid 2 times/mo, then you are putting in what, $2k/yr in the Roth?

Just side gig as a personal trainer for 1 hour per week and you could double your contribution. What am I missing?

 

[The Process God]

Thanks for the replies, guys. I called Fidelity, and they helped me out. They said that my contributions are based on my gross pay, so I am paying 5% of my pay BEFORE taxes. That amount I am contributing would stay the exact same if I were contributing to a traditional 401k. Thus the employee contribution stays the same no matter what because there is no differing amount to contribute off of since the amount I contribute stays the same in both scenarios.

For the Roth 401k, I don't get to reduce my claimed incone at the end of the year, whereas, with the traditional 401k, I do, but I get taxed when the money comes out. My employer's contributions are put in the traditional way no matter what.

However, I did think of an interesting topic today. So many articles and forums discuss the merits of contributing to a 401k while in debt, but not many talk about whether a Roth 401k is better than a traditional 401k while in debt. For example, we all know that a dollar today is worth more than a dollar in the future. If one is paying off debt that has interest on it, then delaying the tax until a later time by choosing a traditional 401k could let them get out of debt faster, thus saving money on interest. It's never a guarantee that taxes will be higher in the future. Besides, one can always start contributing to a Roth 401k once they get out of debt so that only a small portion of their 401k is taxed on the way out. Normally, I'd say that a Roth 401k would be better, but, because of the immediate cash flow produced by contributing to a traditional 401k (up to the company match and no more if you're in debt), that might the the better option in the long run.

And @natedagg, I have been thinking about doing a part-time training job on the side. I have been training on and off for about 5 years now, and it might be time to start again. I'm in the green right now month-by-month, but it's not by much, so getting out of credit card debt on top of school loans has been slow, not to mention wanting to get a house (although my mother and father in law have agreed to do the remaining amount on a downpayment on a house of whatever we can't save up and we just pay them back, which is super nice). It gets tougher when I live in the greater Seattle area and rents/bills are going up more than my and my wife's pay. So clawing to save money and reinvest more wisely is at the forefront of my thoughts all the time so that I can gain financial freedom.

I've been doing tons of research lately on how each dollar saved now is going to be essentially worth as much as 10x or even more if wise investing is involved, so it really changes how one thinks about money. In light of this, I've done just about everything imaginable to try to save money.

Just in the past year, I've changed car insurances twice, increased my deductible, took advantage of low interest rate balance transfer offers on two different credit cards, consolidated some credit card debt by taking a secured loan out via my wife's car, deferred all of my school loan payments, switched renter's insurance, opened a credit card with only 6.9% interest rate (permanent rate, and no balance transfer or cash advance fees!) that required that I close another card in order to get this one (but I called the card that got closed and had them reopen it anyway!), and now I'm looking to move to save a couple hundred dollars a month in rent. I'm also going to refinance the private student loans I have as well as refinance both car loans I have to lower interest rates that I just got offered from a local credit union.

My wife and I also rarely go out to eat or do anything that costs money (maybe once a month), and we never buy anything we don't need or for ourselves unless it's for a holiday or birthday.

This kind of stuff isn't fun, but it's necessary in order to get to where I want to be. One thing I'm really riding on in terms of turning my wife's and my future around is getting promoted. When I had originally interviewed at my current workplace, they were going to put me immediately in at store manager position, but the HR manager overrode the district manager's wishes and put me in as an assistant manager despite how I had been a store manager before. Now I am getting closer to getting promoted after basically two fucking years. I am about to enter into our store manager training program in August and should be ready to accept any store by November. We'll see what my employer offers me if it gets to the point where they offer me that position, but, if they offer me what I think is fair (about 14k more a year).

Once we get out of credit card debt, it will allow us to apply for a mortgage loan with a good interest rate due to an improved credit score (currently around 680). We're going to do a 30-year loan because the research shows that reinvesting the saved money each month from paying less to the loan will yield 10s of thousands of dollars more in the end than doing a 15-year mortgage. You also get tax breaks on the interest you pay, which mitigates some of the costs of the additional interest from a longer mortgage with a slightly higher interest rate. There's a reason why Quicken Loans and other places are pushing for 15-year mortgages. It's simple math that getting 7-15% annual returns on the stock market is going to beat out a tax deductible mortgage interest rate of 4-5% and that putting tens or even hundreds of thousands of dollars toward one's retirement earlier on as opposed to after a house is paid off is going to end up in a bigger retirement fund in the end.

Sorry for a long-winded update on my financial situation and going on from topic to topic. My wife HATES talking about finances, so, beyond her salary, I'm kinda slugging out this financial battle alone and have on one else to talk to about it. So it's nice to talk about my current financial state here, hear feedback, and talk about different theories on finances.

TL;DR version:

- Turns out my contribution is based off of my gross pay, so my contribution and my company's match stay the same for both Roth and Traditional 401k
- Although Traditional 401k may not be the best for tax savings in the end, going that route if one is in credit card debt can help one get out of debt more quickly and save on interest due to the yearly, immediate tax savings
- Living with as low of costs as possible and saving that money for retirement while still young can yield 10x or more per dollar saved in the early years of investing. Do everything you can to save or at least be informed when you do spend. Don't settle for high interest on your debts or high rent.
- Life is a rat race, especially for a renter. Buy a house ASAP to get out of throwing away money through renting. And, when you do buy a house, go for the 30-year mortgage. Studies show that reinvesting the saved money from paying less on the mortgage each month will yield tens if not hundreds of thousands more over the course of one's life.

 

[TopGun]

I don't get what the commotion over Vanguard is. Returns must be reported with fees (net expense ratio) taken into account, and, with fees taken into account, the true, top-performing funds are rarely Vanguard. Not to say that Vanguard doesn't have some top-performing funds.

I started a roth IRA with Fidelity, and i saw that some of their mutual funds have returned around 12-14% over the past 10 years and look pretty damn enticing. They do offer one mutual fund, PRGTX, that has returned almost 16% over the past 10 years (10k invested in 2008 would be 44.5k today), but it is closed to new investors currently at least at Fidelity. I'm thinking about going to the T. Rowe website and opening a roth IRA there just for that fund (it's open to new investors there) because those returns are too crazy to ignore. Then I can transfer the fund over to Fidelity since Fidelity will allow you to continue to contribute to a fund even if it is closed to new members as long as you already own the fund. The risk isn't too bad either. Definitely a little bit more volatile than some other funds, but its upward trajectory is obvious and fairly consistent.

I have a question about retirement and portfolio balance. Barring some unprecedented stock market crash that lasted a decade or more, wouldn't keeping most of your retirement in high-return/moderate risk mutual funds or at least indexes and then put maybe only the next 3-5 years worth of living expenses into bonds be the best for overall returns while considering safety? If a crash were to happen, the bonds would be minimally affected, and the mutual funds would have enough time to bounce back without being withdrawn upon in that time. I just hear about people putting decade's worth of their retirement or even all of it into bonds nearing or after retirement. It just seems like that's wasting potential returns without really increasing the risk too much.

So one thing to remember when you're looking at mutual funds, is that funds that perform poorly are either liquidated or merged with other funds to erase the negative return history. When you see a mutual fund with 15 years of returns, realize that a bunch of other funds started at the same time and have since gone away.

Now, you take the ones that survived, and some of them will still be good, but odds are that key personnel involved in managing the funds have moved on to other positions or retired and are no longer directly involved in operations. How good are their replacements in comparison?

Index funds (like Vanguard), in contrast, place almost no importance on the people that select what goes into the fund, as they simply do their best to copy the composition of the index their fund follows. So you are paying less in fees and your fund should theoretically generate more stable returns than actively managed funds.

To your question about portfolio balance, if you can stomach dips and have a significant amount of time (>20 years) until retirement, it absolutely makes sense to keep the vast majority of your retirement investments in equities. I currently have >95% of my portfolio invested as such. As I get nearer to the time I plan to withdraw, I plan to transition that to about 80%. Then I will be able to withdraw from equities while the market is strong, and use other savings if the market is down. Risk-averse investors have always been around, but keeping your investments out of the stock market is really not the best way to manage your money if you look at the historical results of doing so.

 

[TopGun]

Thanks for the replies, guys. I called Fidelity, and they helped me out. They said that my contributions are based on my gross pay, so I am paying 5% of my pay BEFORE taxes. That amount I am contributing would stay the exact same if I were contributing to a traditional 401k. Thus the employee contribution stays the same no matter what because there is no differing amount to contribute off of since the amount I contribute stays the same in both scenarios.

For the Roth 401k, I don't get to reduce my claimed incone at the end of the year, whereas, with the traditional 401k, I do, but I get taxed when the money comes out. My employer's contributions are put in the traditional way no matter what.

However, I did think of an interesting topic today. So many articles and forums discuss the merits of contributing to a 401k while in debt, but not many talk about whether a Roth 401k is better than a traditional 401k while in debt. For example, we all know that a dollar today is worth more than a dollar in the future. If one is paying off debt that has interest on it, then delaying the tax until a later time by choosing a traditional 401k could let them get out of debt faster, thus saving money on interest. It's never a guarantee that taxes will be higher in the future. Besides, one can always start contributing to a Roth 401k once they get out of debt so that only a small portion of their 401k is taxed on the way out. Normally, I'd say that a Roth 401k would be better, but, because of the immediate cash flow produced by contributing to a traditional 401k (up to the company match and no more if you're in debt), that might the the better option in the long run.

And @natedagg, I have been thinking about doing a part-time training job on the side. I have been training on and off for about 5 years now, and it might be time to start again. I'm in the green right now month-by-month, but it's not by much, so getting out of credit card debt on top of school loans has been slow, not to mention wanting to get a house (although my mother and father in law have agreed to do the remaining amount on a downpayment on a house of whatever we can't save up and we just pay them back, which is super nice). It gets tougher when I live in the greater Seattle area and rents/bills are going up more than my and my wife's pay. So clawing to save money and reinvest more wisely is at the forefront of my thoughts all the time so that I can gain financial freedom.

I've been doing tons of research lately on how each dollar saved now is going to be essentially worth as much as 10x or even more if wise investing is involved, so it really changes how one thinks about money. In light of this, I've done just about everything imaginable to try to save money.

Just in the past year, I've changed car insurances twice, increased my deductible, took advantage of low interest rate balance transfer offers on two different credit cards, consolidated some credit card debt by taking a secured loan out via my wife's car, deferred all of my school loan payments, switched renter's insurance, opened a credit card with only 6.9% interest rate (permanent rate, and no balance transfer or cash advance fees!) that required that I close another card in order to get this one (but I called the card that got closed and had them reopen it anyway!), and now I'm looking to move to save a couple hundred dollars a month in rent. I'm also going to refinance the private student loans I have as well as refinance both car loans I have to lower interest rates that I just got offered from a local credit union.

My wife and I also rarely go out to eat or do anything that costs money (maybe once a month), and we never buy anything we don't need or for ourselves unless it's for a holiday or birthday.

This kind of stuff isn't fun, but it's necessary in order to get to where I want to be. One thing I'm really riding on in terms of turning my wife's and my future around is getting promoted. When I had originally interviewed at my current workplace, they were going to put me immediately in at store manager position, but the HR manager overrode the district manager's wishes and put me in as an assistant manager despite how I had been a store manager before. Now I am getting closer to getting promoted after basically two fucking years. I am about to enter into our store manager training program in August and should be ready to accept any store by November. We'll see what my employer offers me if it gets to the point where they offer me that position, but, if they offer me what I think is fair (about 14k more a year).

Once we get out of credit card debt, it will allow us to apply for a mortgage loan with a good interest rate due to an improved credit score (currently around 680). We're going to do a 30-year loan because the research shows that reinvesting the saved money each month from paying less to the loan will yield 10s of thousands of dollars more in the end than doing a 15-year mortgage. You also get tax breaks on the interest you pay, which mitigates some of the costs of the additional interest from a longer mortgage with a slightly higher interest rate. There's a reason why Quicken Loans and other places are pushing for 15-year mortgages. It's simple math that getting 7-15% annual returns on the stock market is going to beat out a tax deductible mortgage interest rate of 4-5% and that putting tens or even hundreds of thousands of dollars toward one's retirement earlier on as opposed to after a house is paid off is going to end up in a bigger retirement fund in the end.

Sorry for a long-winded update on my financial situation and going on from topic to topic. My wife HATES talking about finances, so, beyond her salary, I'm kinda slugging out this financial battle alone and have on one else to talk to about it. So it's nice to talk about my current financial state here, hear feedback, and talk about different theories on finances.

TL;DR version:

- Turns out my contribution is based off of my gross pay, so my contribution and my company's match stay the same for both Roth and Traditional 401k
- Although Traditional 401k may not be the best for tax savings in the end, going that route if one is in credit card debt can help one get out of debt more quickly and save on interest due to the yearly, immediate tax savings
- Living with as low of costs as possible and saving that money for retirement while still young can yield 10x or more per dollar saved in the early years of investing. Do everything you can to save or at least be informed when you do spend. Don't settle for high interest on your debts or high rent.
- Life is a rat race, especially for a renter. Buy a house ASAP to get out of throwing away money through renting. And, when you do buy a house, go for the 30-year mortgage. Studies show that reinvesting the saved money from paying less on the mortgage each month will yield tens if not hundreds of thousands more over the course of one's life.

It seems like you (and your wife by association) have gotten a good handle on your finances, have developed clear financial goals, and have a plan to reach those goals. You are way ahead of a majority of the country, congratulations. Now all you have to do is stick to the plan.

 

[The Process God]

So one thing to remember when you're looking at mutual funds, is that funds that perform poorly are either liquidated or merged with other funds to erase the negative return history. When you see a mutual fund with 15 years of returns, realize that a bunch of other funds started at the same time and have since gone away.

Now, you take the ones that survived, and some of them will still be good, but odds are that key personnel involved in managing the funds have moved on to other positions or retired and are no longer directly involved in operations. How good are their replacements in comparison?

Index funds (like Vanguard), in contrast, place almost no importance on the people that select what goes into the fund, as they simply do their best to copy the composition of the index their fund follows. So you are paying less in fees and your fund should theoretically generate more stable returns than actively managed funds.

To your question about portfolio balance, if you can stomach dips and have a significant amount of time (>20 years) until retirement, it absolutely makes sense to keep the vast majority of your retirement investments in equities. I currently have >95% of my portfolio invested as such. As I get nearer to the time I plan to withdraw, I plan to transition that to about 80%. Then I will be able to withdraw from equities while the market is strong, and use other savings if the market is down. Risk-averse investors have always been around, but keeping your investments out of the stock market is really not the best way to manage your money if you look at the historical results of doing so.

That's pretty much What I plan on doing. Invest aggressively until about five years before retirement, then start pulling out during the peaks into safer investments until I am at about the same ratio as you. Glad I'm not crazy.

And I don't mind volatility much. Any investment I do just has to show me that it has a definite upward trajectory and that it won't fail. Biotech is one mutual fund category that scares me just because these companies work a lot of the time off of promise rather than real production. Leveraged funds are interesting, but I am leaning towards not touching those. But basically the top 10 mutual funds have produced 17% annualized returns over 10 years, and all of them are leveraged except for PRGTX, which is a fund I really like (a top tech fund, which is an exponentially growing sector). It was surprising to see that some of those leveraged funds had Sharpe ratios of about 1.21 (check out RYVLX). They were definitely volatile, but 47k after a hypothetical 10 years of growth of 10k is pretty crazy. And the upward trajectory was obvious. I know most leveraged funds are a bad idea, but for the exceptions, it makes me pause.

PRGTX's fund manager changed in 2012, and he has basically rode mostly a bull market, but he has had exceptional 5 year returns of basically 26%. Most market sources I have read recently point to the tech sector taking a dip soon, which might be my opportunity to get in with the fund and buy low for a few months.