Looking for Investment opinions

This! I personally invest into FXAIX which is the Fidelity Index Fund that tracks the S&P 500, Fee Free!

 

Ok - a few things stood out to me here.

Not that anyone could give a qualified answer without seeing the full financial picture (assets/liabilities/situation and goals) here is my take.

#1 - why are you in a 85/15 portfolio at age 55 and 85/15 what ? Stocks/fixed income ? What kind of stocks and what type of fixed? That is in general a very aggressive mix for a moderate term until you need it.

#2 - not knowing assets - but you are saving just 5% of income at this time ? I mean if you have a paid off home, no debt and put 35% of your income into savings and have a trust fund - then your fine…but if your a renter living paycheck to paycheck and planning on retiring on social security and your savings in 15 years - don’t worry about what to do with that extra 2% - work on a budget first and reducing expenses.

#3 Roth makes sense if your in a low tax bracket now and expect to be in a lower one at age 60+ - it doesn’t sound like your in a real high bracket now - and assuming you drop down one level at retirement- it’s not going to be a big difference - max 5% tax rate.

# that 15% discount is tempting - but a lot depends on the stock your buying/restrictions. I mean if your in a blue chip company with dividends and you can sell at the next round if you like at full price - it’s a good deal. A lot of people at Blockbuster held stock in their employer - NEVER hold more than 5% of your assets in company stock - unless you own the place - it’s better to pass on discounts and be diversified.

So say you put 900 a year into company stock (35x26 paychecks) - your getting 1050 in stock per year. 15% is a great ROR if your company does nothing - unless it drops your guaranteed that return - if there’s a 2% dividend and it appreciated say 5% YOY - you could easily top 25% ROR. Even invested bi annually - that’s a good deal.

As to buying a specific asset type - no more than 15% in any sector and no more than 40% in any class (big/mid/small caps/bonds/cash) is good rule of thumb.

 

I just want to give you something to think about regarding your comment on the 85/15 ratio above.

For ease of math, lets assume at age 50, one has a 70/30 mix which is recommended by many financial types who like to follow the 120 minus your age approach. Most financial types like to use some type of % ratio without looking at actual dollar amounts...easy to defend and it a OSFA approach...ie perfect for the lazy financial guy!

And let us further assume you have $1,000,000 in your portfolio at age 50, so that 70/30 mix would equate to $300,000 in bonds/fixed. So everybody is happy, everybody is fine...with the 30% but also with the amount it represents...$300k..yes? That is enough bonds/fixed to weather the storm and ensure a long a prosperous retirement.

So why does that gross amount need to increase as one ages..realize as one ages...you don't need your money to last as long. Obvious of course but overlooked by most who follow strict % allocations.

So if everybody was happy and agrees $300k was good at age 50...why not just hold that gross amount steady at $300k..maybe letting it increase a bit on an actual dollar amount every year for inflation. So now lets also assume that the 70% in equities does well, and 5 years later that person now has $2,000,000. Let that 70/30 go to 85/15...meaning you hold steady at $300k bonds/fixed that everybody was more than happy with 5 years earlier when you had 5 years longer to live.

I like this approach and plan to generally follow it as we go through retirement. Sure we might spend big chunks of money that will come from the equity pot...but that is part of retirement...enjoying the fruits.

Thoughts?

 

The % approach is not perfect - but is a simple “guideline” used as a point of reference by “advisors” in their snippets for local news/internet articles.

I’m not an advisor - but I k is enough to know they do more than just say - “let’s make your portfolio look like this cookie cutter model”.

Agreed - with a million dollars - you probably need less in fixed - can afford more risk (assuming you have a backup source if some income (ie social security) your needs in retirement are fixed and under 50k yearly and you can presumably work at gradually increasing salaries until say age 64 or so when social security becomes an option.

Thing is - everyone is different and a million dollars is about 10x higher than the average retirement savings.

There are so many variables out there. Hell - my parent’s lived to 67 and 71 respectively….and by 61 my mother had 10 years of extensive medical bills awaiting her (fortunately dad had excellent health benefits that extended into retirement- but that’s uncommon in today’s market).

To get professional advice tailored for you - seek out a pro. Formulas and tips from the internet are fine - but take them for what they are - one sized fits all approaches. What fits the OP for example - probably doesn’t apply to the majority of people for example (not many get the option to buy stock at a 15% discount an put it into their 401k).

 

Think you’ve received some decent advice in the posts above. Only thing I really have to add is that a resource I’ve used that has completely changed my financial security is found at bogleheads.org (named after John Bogle, founder of Vanguard). Good luck!