• filter:

Long term investment vehicles

  • Page :
  • 1
  • Text Only
  • Search this Topic »
Voting History
rated:
Folks

I'm 34 and looking for a way to simply invest in certain vehicles and not have to manage them at all over a 20 year horizon hoping for an early retirement. I'm looking at two options

Option 1 - buy ultra low-expense passive managed MF tracking s&p 500 and hopefully make 6% over 20 years
Option 2 - buy high-yield fixed income MF and move all funds to above ETF in a down market

With Option 2, what's the highest yield instrument available that could match 6% but still be lower risk than equity? Am I trying to time the market in and being very unrealistic? I'm aiming to be disciplined over moving funds over to an equity ETF if we hit a recession or see a certain % fall (maybe 20%) in the s&p, similar to what occurred in 2008

Thanks

Member Summary
Most Recent Posts
One of the last normally-aspirated 911's with a stick.

ganda (Dec. 30, 2016 @ 10:35a) |

kchunk (Dec. 30, 2016 @ 7:39p) |

Isn't 10-12% a bit high? I know there are a few historical periods that may have returned that much, but recently most h... (more)

samko (Jan. 02, 2017 @ 4:53p) |

Staff Summary
Thanks for visiting FatWallet.com. Join for free to remove this ad.

rated:
Long term bonds have returned 6%. If your goal is 6% average then 100% total bond market index fund should accomplish it.

But of course its just a guess what returns will be in the future. And interest is low lately so bond return hasn't been as good lately.

6% return is a conservatively low expectation for S&P500 investment. 10-12% is the average historical return. Lately more conservative estimates are expecting 7-9% in the future.

rated:
Vanguard Target Retirement 2040 Fund (VFORX)
https://personal.vanguard.com/us/funds/snapshot?FundId=0696&Fund...

Or one of their 2040 Retirement Trust options also might make sense depending on your allocation/risk preferences. In both cases they slowly move from more-to-less aggressive investing as your retirement date approaches. If you want to not manage at all...likely one of the better options.

Market timing is a fallacy. Flip a coin. Google"market timing fallacy" if you want a wealth of info.

As for maximizing yield with low risk, best of luck. We'd all like to do this. Super large investors (i.e. retirement funds) have historically used 7.5% as a reasonable estimate of their long-term growth, but are slowing being forced to see daylight and downgrade their expectations to 6.5-7.0% (which is impacting the cost of funding pensions, for example). If you expect 6% with low-risk in this kind of low-inflation environment, hard to see how but good luck!

rated:
jerosen said:   Long term bonds have returned 6%. If your goal is 6% average then 100% total bond market index fund should accomplish it.

But of course its just a guess what returns will be in the future. And interest is low lately so bond return hasn't been as good lately.

6% return is a conservatively low expectation for S&P500 investment. 10-12% is the average historical return. Lately more conservative estimates are expecting 7-9% in the future.

  I am shocked to hear bonds return the same as S&P500

Are you sure about this?

rated:
Credit Suisse High Yield Index - averaged 8% over 15 yrs

rated:
There are many many preferred stocks that return 6-7% dividend and most short term bond funds are paying this right now too. Both have a lower overall risk than the broader stock market. Neither is risk free.

rated:
fleetwoodmac said:   
jerosen said:   Long term bonds have returned 6%. If your goal is 6% average then 100% total bond market index fund should accomplish it.

But of course its just a guess what returns will be in the future. And interest is low lately so bond return hasn't been as good lately.

6% return is a conservatively low expectation for S&P500 investment. 10-12% is the average historical return. Lately more conservative estimates are expecting 7-9% in the future.

  I am shocked to hear bonds return the same as S&P500

Are you sure about this?

  Long term bonds have done spectacularly well since interest rates have trended down for the last 30 years, but that doesn't mean they will continue to do so in the future.

rated:
you guys are smoking

SP500 is way better than Credit Su high Yield

http://i.hizliresim.com/41aXb0.jpg

rated:
Think ETFs instead of MF these days. For broad market exposure with minimal expense: SCHB has an expense ratio of 3 bps. Probably not going to find one that low with a FI ETF but I'm in SJNK--its protected from interest rate rises.

rated:
If I was your age and had a do-over I would simple bet the entire financial market and not try to beat it.  

A mix (ETFs or funds) covering the broad equity markets (US + international) plus US bond market and call it a day.

 

rated:
hornagain said:   If I was your age and had a do-over I would simple bet the entire financial market and not try to beat it.  

A mix (ETFs or funds) covering the broad equity markets (US + international) plus US bond market and call it a day.

 

  Well I am in S&P500 100% and I am happy

rated:
lodak008 said:   Folks

I'm 34 and looking for a way to simply invest in certain vehicles

  No one has mentioned Crown Vic yet?

rated:
bluegreenturtle said:   There are many many preferred stocks that return 6-7% dividend and most short term bond funds are paying this right now too. Both have a lower overall risk than the broader stock market. Neither is risk free.

what he said. All about the dividends. It may be boring but its a great angle if your simply hanging out in something long term

rated:
Bend3r said:   
lodak008 said:   Folks

I'm 34 and looking for a way to simply invest in certain vehicles

  No one has mentioned Crown Vic yet?

  Dang! You beat me to it.

rated:
I prefer a total stock market index fund to an S&P fund. The addition of mid- and small-cap stocks increases your diversification and <i>should</i> increase the risk-adjusted return. Keep in mind that the S&P 500 is going to make up ~80% of a U.S. total stock market fund, so there's going to be strong correlation between the two.

rated:
lodak008 said:   Folks

I'm 34 and looking for a way to simply invest in certain vehicles and not have to manage them at all over a 20 year horizon hoping for an early retirement.

 

  Firearms...
Specifically, full auto with the proper paperwork.
Purchase and bury them.

rated:
From the title I thought the topic was related to vintage Ferrari's and 30's classics. Bummer.

rated:
stanolshefski said:   I prefer a total stock market index fund to an S&P fund. The addition of mid- and small-cap stocks increases your diversification and should increase the risk-adjusted return. Keep in mind that the S&P 500 is going to make up ~80% of a U.S. total stock market fund, so there's going to be strong correlation between the two.
  As you can see there is no difference between total stock market and SP500

http://i.hizliresim.com/3vz1z5.jpg 

But you pay less expense ratio

rated:
woowoo2 said:   
lodak008 said:   Folks

I'm 34 and looking for a way to simply invest in certain vehicles and not have to manage them at all over a 20 year horizon hoping for an early retirement.

 

  Firearms...
Specifically, full auto with the proper paperwork.
Purchase and bury them.

  
Subject to the risk of a repeal of the NFA - or at least the Class 3 registry restrictions?    You know pressure is going to increase to kill it because the stocks of transferable weapons get less every year.  Plus there are a lot of used weapons out there that are non-transferable currently.  

I figure the NFA is going to get neutered in the next 20 years. 

rated:
One of the last normally-aspirated 911's with a stick.

rated:
ganda said:   One of the last normally-aspirated 911's with a stick.

Better yet, an air-cooled 911...

What's driving the spike in air-cooled Porsche 911 prices​

rated:
jerosen said:   Long term bonds have returned 6%. If your goal is 6% average then 100% total bond market index fund should accomplish it.

But of course its just a guess what returns will be in the future. And interest is low lately so bond return hasn't been as good lately.

6% return is a conservatively low expectation for S&P500 investment. 10-12% is the average historical return. Lately more conservative estimates are expecting 7-9% in the future.

  Isn't 10-12% a bit high? I know there are a few historical periods that may have returned that much, but recently most have been 10% or less. 

This is from Morningstar Total Return. http://performance.morningstar.com/funds/etf/total-returns.actio...
Total Return %  1-Day 1-Week 1-Month 3-Month YTD 1-Year 3-Year 5-Year 10-Year 15-Year
SPY (Price) -0.37 -0.97 2.03 3.95 12.00 12.00 8.77 14.58 6.87 6.65

You can also use this: https://dqydj.com/sp-500-return-calculator/

Going back 20 years to 1996 yields 7.5%. 
30 years to 1986 = 10%
40 years to 1976 = 11%
50 years to 1966 = 10%
60 years to 1956 = 10%

  • Quick Reply:  Have something quick to contribute? Just reply below and you're done! hide Quick Reply
     
    Click here for full-featured reply.


Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2017