stable investment advice
April 11, 2025 1:58 PM Subscribe
What sources can you recommend to educate myself on a slow and steady approach to grow funds for retirement? Articles, columns, books, blogs, newsletters that outline approaches aside from the stock market would be really helpful.
I'm in the US, slightly above median income, about 20 years from retirement, and you're not my financial advisor.
I manage my own 401k / IRA with mostly index funds of US stocks and a few bond funds. Historically I've been levelheaded and rode out dips in the market. Just keep dollar-cost averaging.
But I feel like I can't handle this current situation. Some combination of my own mental health, ever-shrinking time toward retirement, the intentionality of the latest volatility along with not being sure of intentions going forward, has me wanting to get off the rollercoaster.
I'm not looking to exit the market completely. I know I need to stay invested to take advantage of the upswings, but I want to understand the bond or other more stable investment side better, and gradually increase my investments there.
Target date funds are a great concept, but what's really helpful for me mentally is to give myself better understanding and more control, which I don't feel like I get from a managed fund but I do get from picking my own mix of funds.
Thanks for resources you can suggest.
Books, articles, blogs, etc. are most helpful.
I'm in the US, slightly above median income, about 20 years from retirement, and you're not my financial advisor.
I manage my own 401k / IRA with mostly index funds of US stocks and a few bond funds. Historically I've been levelheaded and rode out dips in the market. Just keep dollar-cost averaging.
But I feel like I can't handle this current situation. Some combination of my own mental health, ever-shrinking time toward retirement, the intentionality of the latest volatility along with not being sure of intentions going forward, has me wanting to get off the rollercoaster.
I'm not looking to exit the market completely. I know I need to stay invested to take advantage of the upswings, but I want to understand the bond or other more stable investment side better, and gradually increase my investments there.
Target date funds are a great concept, but what's really helpful for me mentally is to give myself better understanding and more control, which I don't feel like I get from a managed fund but I do get from picking my own mix of funds.
Thanks for resources you can suggest.
Books, articles, blogs, etc. are most helpful.
Well, I suppose you might want to spare 10 minutes to view Warren Buffet from last year give his opinion about where to invest (though I realize you are more focused on Bonds).
I assume you have no debts? My wife and I were fortunate enough to "snow ball" pay down our outstanding car, home and credit card debts.
The other reason we are in good shape is because a co-worker from MANY years ago recommended I speak to his financial planner and the rest (so they say) is history (sadly he passed away relatively young). In about a year and a half I will need to begin RMD (required minimum distribution).
Also, there is an old saying that "You can't time the market".
That's all I've got for you. There are of course many books on the subject, but since I haven't followed any of them (I just did what my Financial Planner suggested, including putting away some funds in I Bonds as phunniemee suggested) I can't recommend any.
posted by forthright at 2:24 PM on April 11
I assume you have no debts? My wife and I were fortunate enough to "snow ball" pay down our outstanding car, home and credit card debts.
The other reason we are in good shape is because a co-worker from MANY years ago recommended I speak to his financial planner and the rest (so they say) is history (sadly he passed away relatively young). In about a year and a half I will need to begin RMD (required minimum distribution).
Also, there is an old saying that "You can't time the market".
That's all I've got for you. There are of course many books on the subject, but since I haven't followed any of them (I just did what my Financial Planner suggested, including putting away some funds in I Bonds as phunniemee suggested) I can't recommend any.
posted by forthright at 2:24 PM on April 11
Follow-up to my answer above:
1) I meant the co-worker died young, not my financial planner.
2) Fidelity did just send me a link to a Market Volatility Overview here.
3) I also just noticed that Fidelity sent me a link to "How to be a smart investor" here.
FWIW.
posted by forthright at 3:04 PM on April 11
1) I meant the co-worker died young, not my financial planner.
2) Fidelity did just send me a link to a Market Volatility Overview here.
3) I also just noticed that Fidelity sent me a link to "How to be a smart investor" here.
FWIW.
posted by forthright at 3:04 PM on April 11
There is something called efficient portfolio allocations (efficient portfolio frontier -lots of books, articles, etc about it), which you can read about, and most conservative financial guys consider it the #1 thing normies can do to minimize risk and maximize return. It basically uses correlations between investment classes, which you can calculate for yourself if you want to do more self-management.
And it allows you to pick your own investments to build efficient portfolios, as long as you get the correlations close enough.
Of course, most people don't need to do this - target funds basically do it for you. But if you are interested I'd start there.
posted by The_Vegetables at 3:17 PM on April 11
And it allows you to pick your own investments to build efficient portfolios, as long as you get the correlations close enough.
Of course, most people don't need to do this - target funds basically do it for you. But if you are interested I'd start there.
posted by The_Vegetables at 3:17 PM on April 11
It’s 2025, 20 years away from retirement, so a low fee 2045 target date fund is all you need.
posted by MisantropicPainforest at 4:16 PM on April 11 [8 favorites]
posted by MisantropicPainforest at 4:16 PM on April 11 [8 favorites]
The Boglehead forums, plus the wiki, is a great place to start with all of your questions.
posted by gingerbeer at 4:31 PM on April 11 [6 favorites]
posted by gingerbeer at 4:31 PM on April 11 [6 favorites]
Rational Reminder podcast and community forum (Canadian but they talk about US stuff).
posted by mullacc at 7:48 PM on April 11
posted by mullacc at 7:48 PM on April 11
The good news is that if retirement is still around 20 years away, there isn't a pressing need to draw down on your investment portfolio. For your timeline, it doesn't matter that much what stock prices do next week, or what they do over the next few years, or the next five years. If you are able to ignore the financial news following the whiplash of policy changes and resulting gyrations of the market, and continue regular investment with dollar-cost averaging, you will do OK. You'll probably do even better in the long run with high market volatility in the short term as there will be some weeks when you are dollar-cost averaging and buying stock when most other investors are fearful and are selling -- you'll pick up some great long term investments at bargain prices.
This is simple to argue in theory while unemotional, but much harder to do in practice.
In addition to the bogleheads forum & wiki linked by gingerbeer, which are excellent resources for sound financial self-education, you may get some practical advice and reassurance by reading a book or two about behavioural finance -- a lot of the biggest risks with investing are due to us making "unforced errors" as we are human and we are prone to making bad decisions when we get emotional and start reacting to situations instead of thinking things through. there's a list here: goodreads.com/shelf/show/behavioral-finance -- I haven't read many of these myself but have heard a few good things about Morgan Housel & Jason Zweig's books.
It is natural to want more control in uncertain times. Being more hands-on with your investment portfolio is one way to feel more in control. But a possible down side of this is giving yourself more flexibility to adjust things also creates more opportunity for "unforced errors" if your decision making becomes driven by emotion. Lots of people achieve worse financial outcomes for themselves when they start adjusting their portfolios too frequently rather than picking a simple strategy and sticking to it.
One major thing to figure out is what asset allocation of bond and stock you want, especially as you approach and near retirement. There might be one setting that gives an "optimal" financial outcome for a perfectly rational hypothetical being, but you also need to pick an allocation that lets you sleep at night. This is different for different people.
When investing toward requirement, the job of your portfolio is to generate enough cash flow during retirement for you to cover expenses that are not covered by social security / pension. Bonds or other bond-like investments (say, high interest savings accounts at a bank) give much more certainty of how much cash you can draw on in the short term. Learning more about bonds and fixed income to position yourself for retirement is a good idea.
E.g. suppose I am going to retire in 20 years and I believe I will need around $40k / year to cover my retirement expenses, and that I expect social security benefits of about $20k / year, so I need to generate a cashflow of $20k / year from my investment portfolio to cover the gap. If I only hold stocks and no bonds, if there is a crash in stock prices shortly after I retire, I might find myself in a position where I would need to sell a large amount of stock at an unusually low price to cover immediate expenses. On the other hand, if I had enough bonds to cover expenses for 5 years - say 5x$20k = $100k in bonds, then I could use those to generate cash flow for expenses (perhaps generating cash by a mix of combination of the interest/coupon payments or selling the bonds on the market) to "buy time" to avoid needing to sell stocks for 5 years -- during while time there is a good chance that the stock market prices would rebound and I could start to generate cash flow from stock again without needing to sell too much stock at very low prices.
posted by are-coral-made at 12:29 AM on April 12
This is simple to argue in theory while unemotional, but much harder to do in practice.
In addition to the bogleheads forum & wiki linked by gingerbeer, which are excellent resources for sound financial self-education, you may get some practical advice and reassurance by reading a book or two about behavioural finance -- a lot of the biggest risks with investing are due to us making "unforced errors" as we are human and we are prone to making bad decisions when we get emotional and start reacting to situations instead of thinking things through. there's a list here: goodreads.com/shelf/show/behavioral-finance -- I haven't read many of these myself but have heard a few good things about Morgan Housel & Jason Zweig's books.
It is natural to want more control in uncertain times. Being more hands-on with your investment portfolio is one way to feel more in control. But a possible down side of this is giving yourself more flexibility to adjust things also creates more opportunity for "unforced errors" if your decision making becomes driven by emotion. Lots of people achieve worse financial outcomes for themselves when they start adjusting their portfolios too frequently rather than picking a simple strategy and sticking to it.
One major thing to figure out is what asset allocation of bond and stock you want, especially as you approach and near retirement. There might be one setting that gives an "optimal" financial outcome for a perfectly rational hypothetical being, but you also need to pick an allocation that lets you sleep at night. This is different for different people.
When investing toward requirement, the job of your portfolio is to generate enough cash flow during retirement for you to cover expenses that are not covered by social security / pension. Bonds or other bond-like investments (say, high interest savings accounts at a bank) give much more certainty of how much cash you can draw on in the short term. Learning more about bonds and fixed income to position yourself for retirement is a good idea.
E.g. suppose I am going to retire in 20 years and I believe I will need around $40k / year to cover my retirement expenses, and that I expect social security benefits of about $20k / year, so I need to generate a cashflow of $20k / year from my investment portfolio to cover the gap. If I only hold stocks and no bonds, if there is a crash in stock prices shortly after I retire, I might find myself in a position where I would need to sell a large amount of stock at an unusually low price to cover immediate expenses. On the other hand, if I had enough bonds to cover expenses for 5 years - say 5x$20k = $100k in bonds, then I could use those to generate cash flow for expenses (perhaps generating cash by a mix of combination of the interest/coupon payments or selling the bonds on the market) to "buy time" to avoid needing to sell stocks for 5 years -- during while time there is a good chance that the stock market prices would rebound and I could start to generate cash flow from stock again without needing to sell too much stock at very low prices.
posted by are-coral-made at 12:29 AM on April 12
This might be a good time to consider a mix of international mutual funds as well as the US. Historically the US markets have been very strong and also very diverse. However, we are going to be in a bumpy ride so diversifying into other economies makes sense to me.
posted by metahawk at 12:30 AM on April 13
posted by metahawk at 12:30 AM on April 13
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posted by phunniemee at 2:18 PM on April 11