No. of Recommendations: 3
I'm a 55 year old male who owns a small business. I have $150,000 in a traditional IRA money market. I'm nervous the market is too high now. I pulled $3,000 and plan on putting it and more into Vanguard's S&P 500 index fund. How much of the 150,000 should I move,seeing it's all I have. And where should I put another $6,000 a year? I'd like to have a million or more by the time I'm 70 but I'm afraid that will be difficult to do at this late date.

Let's say you averaged 7% a year in returns (you won't get that every year, but the average over 15 years could be 7%). You start with $150,000 invested in an asset allocation (see below) that targets 7% a year.

If you contributed $31K a year, or $2583 a month into ($24,500 into your self-employed 401k plan, and $6,500 into an tIRA), by the time you are age 70 the initial $150K plus the contributions, plus the power of time and compounding could mean you have a balance around $1.2M. 6% average annual return would end up around $1.1M. 5% average annual return would end up around $980K.

Obviously, things will not be linear like that due to the ups and downs of the stock and bond markets, but if you have the income to contribute and play catch-up, there is a path to reach your stated goal of $1M or more by age 70. I'm your age, so if you go with a target fund from any of the major brokerages, the target fund for people age 54-58 currently is allocated like this:

63.25% in equities
36.75% in bonds

Or even more specific if we look at the Vanguard Target 2025 Fund (VTTVX):

38.25 US Domestic Equities
25.50 International Equities
25.38 US Nominal Bonds
10.88% International Nominal Bonds

Do you have a self-employed 401k plan? Could you create one and contribute enough to max it out this year at $24,500? What about an additional $6,500 into an IRA as well?

Is yours the only income in the household? In other words, are you married and is your spouse working as well?

Fairly easy to get your asset allocation and do it with low cost stock index funds and bond funds. The most well known is something called a "lazy portfolio" - of which there are many - but the simplicity, diversity, and ease for you as the investor makes it very attractive. It's called the Second Grader's portfolio, or over at Bogleheads.org they call it the Three Fund Portfolio (and there are some variations):

https://www.bogleheads.org/wiki/Three-fund_portfolio

You can accomplish it using low cost mutual funds or ETF's (Fidelity, Blackrock iShares, Schwab, Vanguard, TIAA, etc...).

At this point in time, and with your $150K base sitting in money markets, I wouldn't yank around with individual stocks to try and reach those goals. Using low cost diverse index funds/bond funds would be the suggested path I would recommend.

We do know that by being conservative, your money in the IRA sitting in a money market is losing value to inflation. What's been, has been. Now is the time to look forward and position your assets in an allocation that is designed to move you towards your goals, and contribute as much as you can each and every month. If you can contribute to the minimum of maxing out your 401k and IRA - you should hit age 70 in pretty good shape.
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