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Author: ShiningDawn Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75381  
Subject: Re: Retirement planning Date: 4/8/2013 2:58 PM
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Last, but not least, since interests are low, are Total Bond Market index funds a good idea? In truth, both Vanguard and Fidelity's pension calculators advise me to take those.

I personally don't look to actively manage my investments. Others choose to do different things. There are lots of boards that have great information on a variety of investing methods.

Actively managing your own funds can take a lot of time and effort. I'm sure there are people who do it well, but there are also people who are a lot worse off actively managing versus passivly managing.

It sounds like you are relatively new to investing. You may want to set up a passive approach to start with your retirement money and have a fake account set up where you can play around with different ideas to see how you do with active management before jumping into it with real money.

Basically I came up with my personal target asset allocation and preferred funds. I then invest in those funds in the appropriate allocation percentage and rebalance 3-4 times a year to get back to my target allocation. My allocation includes a mix of stocks & bonds. When I rebalance my portfolio I am forced to sell things that have gained in value and buy things that have declined in value.

As I mentioned before, I have severe restrictions on what I can invest in, so I don't look to invest in much other than index funds. If I invest in an individual stock there is the chance that I would be forced to sell it before I wanted to (or at an inopportune time) for reasons beyond my control. Since this is a risk I can't control for I choose not to invest in individual stocks.

There are going to be times when stocks outperform bonds. There are times that bonds will outperform stocks. I don't have a crystal ball - otherwise I would have bought a bunch of 5 year CD's back when interest rates were around 5% instead of keeping my cash liquid in money markets paying just under 5% :) At the time, it didn't seem to make sense to tie up my money in a CD when money markets were paying very similar interest rates.

Good luck!
Dawn
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