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About to start with $5000-$6000 Roth IRA account.. I have nothing in retirement funds right now! My age is 35.

Since I obviously want to focus on aggressive "capital growth" strategy in an attempt to "catch up" for lack of saving up for retirement for years, I came up with the following:

Equities: 80%
Fixed Income: 15%
Cash/Cash Equivalents: 5%

For fixed income, I plan to invest into Janus High-Yield Fund.
For CCE, I plan to invest into Janus MMF (Money Market Fund).

For equities: 20% of portfolio will go to Janus Overseas Fund.
The rest (60%) will be invested into stocks.

I also know this is NOT the portfolio I want to be using during Bearish markets.. so what kind of portfolio allocation would you recommend during bear markets (knowing the % above is how I would like to be invested during Bullish markets). And lastly (on subject of Bullish/Bearish), does any of you have good indicators you regularly follow that will help you decide when the markets has became Bearish and move the allocations mover to fixed income/CCE?

I'd apperciate any feedback/input on the allocation. Too aggressive? Too much in one area? Any allocation fine-tuning tips?

Thanks in advance!



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About to start with $5000-$6000 Roth IRA account.. I have nothing in retirement funds right now! My age is 35.

Since I obviously want to focus on aggressive "capital growth" strategy in an attempt to "catch up" for lack of saving up for retirement for years, I came up with the following:

Equities: 80%
Fixed Income: 15%
Cash/Cash Equivalents: 5%

At your age, and with a Roth IRA, I wonder if you need CCE and fixed income. CCE should not be in an IRA where it's inaccessible. At your age, I would just use a Vanguard Extended Market Index Fund or something like that. Don't forget to have a cash fund outside the IRA, however.

Don't worry about "catching up". You are miles ahead of most folks.

cliff
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cliff wrote:

At your age, and with a Roth IRA, I wonder if you need CCE and fixed income. CCE should not be in an IRA where it's inaccessible. At your age, I would just use a Vanguard Extended Market Index Fund or something like that. Don't forget to have a cash fund outside the IRA, however.

D'oh, you're right *slaps forehead*. CCE and fixed income in Roth IRA.. doesn't make much sense now that I think about it, ha.

This however brings up more questions for me. I've been looking at various "recommended portfolio allocations" all day. When the portfolio allocation shows something like this: 65% equities, 20% fixed income, and 15% CCE.. is it usually referring to both retirement/non-retirement accounts, or one or the other? Now that you got me thinking.. I would imagine it should be referring to both retirement/non-retirement accounts, am I correct? (with a good portion of equities in retirement accounts, a smaller portion of equities and all of CCE/fixed income in non-retirement accounts)

Don't worry about "catching up". You are miles ahead of most folks.

Really? That's pretty encouraging to hear.
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D'oh, you're right *slaps forehead*. CCE and fixed income in Roth IRA.. doesn't make much sense now that I think about it, ha.

It has nothing to do with the Roth, and everything to do with your time frame to retirement. If you don't plan on retiring for 25-30 years, you have plenty of time to ride out the bumps that the market may throw at you. Of course, if you wouldn't feel comfortable 100% in equities, thats a consideration too. You need to do what lets you sleep at night. If you'd constantly be worried that way, then its no good for you.


I also know this is NOT the portfolio I want to be using during Bearish markets.. so what kind of portfolio allocation would you recommend during bear markets (knowing the % above is how I would like to be invested during Bullish markets).

You make a big mistake her. That is pretending that you have any way to know when a type of market will begin and end. If anyone of us could predict that, we would be retired to our favorite island and not sitting here ;). And the people who do tell you they can predict that are usually trying to sell you something - or fill time on the air.

If you waited to know you were in a bear market to switch to a more conservative portfolio, you already took a large chunk of the losses. And if you wait to know you're in a bull market to switch back, you already missed a nice chunk of the gains.

The key is consistency, and rebalancing your portfolio so you stay with your plan year in and out. So you don't end up more concentrated in one type of equity than you'd like after a run up.

This is why, as I said above, it need to be something you're comfortable with giving you good long term results, and able to ride out whatever may happen in the middle.


Really? That's pretty encouraging to hear

Well, yeah. But if you need to light a fire under your butt, you woulda been a lot better off it you started 10 years ago... so get going ;)
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Personally, I would go with 100% in equities. In fact, that's what I did do. Even now, 8 years after leaving my firm, I'm still 92% in equities. Growth is what most folks need at 35, at least that's what I did. You should do what lets you sleep well at night.
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Listen to DeltaOne, always the voice of reason.

I agree you probably don't need that much in bonds right now.

Also, you say you are going to invest 60% in stocks. Do you have a lot of experience picking stocks? This is a time consuming and risky way to invest your money. Since you are just starting out, it would make more sense to work on building a diversified portfolio of low cost mutual funds.

I'm about your age, and my breakdown is something like this (not saying it's right for anyone but me, just giving you an idea):

30% Domestic Large Cap Funds
10% Domestic Small Cap Funds
10% Domestic Mid Cap Funds
20% International Funds
10% Specialty (Realty)
10% Intermediate Term Bond Fund
10% Individual Stocks - my "play money" allocation

Karen

P.S. I'm not sure I'd agree that you are "way ahead" of others your age, BTW. I'm 37 and have a pretty big portfolio and have been investing since I was 23.
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Also, you say you are going to invest 60% in stocks. Do you have a lot of experience picking stocks? This is a time consuming and risky way to invest your money. Since you are just starting out, it would make more sense to work on building a diversified portfolio of low cost mutual funds.

Yes, I'm no stranger to picking stocks. I also subscribe to the MI (Mechanical Investing) concept with pretty good success rate. I know that some people are very opinionated about MI in general, but this is a portfolio allocation discussion :)

I'm not sure I like the idea of building the portfolio consisting mainly of mutual funds. This means I am in danger of being overdiversified and my returns will diminish (end up being closer to something like the S&P 500, if not under). But if I wanted to put my entire portfolio into mutual funds, I would probably have went with Janus' "Smart Growth Portfolio" option instead.

Remember, I'm building this portfolio to maximize "capital growth" which means I embrace higher risk at this point of my life. I also expect the portfolio to outperform S&P 500 index. I guess I should have mentioned that I have had some investing experience. It's not a question of if I'm comfortable with picking stocks (I am), it's a question of if I'm comfortable with my portfolio allocation (I am somewhat, but I value other people's feedback.)
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Personally, I would go with 100% in equities. In fact, that's what I did do. Even now, 8 years after leaving my firm, I'm still 92% in equities. Growth is what most folks need at 35, at least that's what I did. You should do what lets you sleep well at night.

That makes perfect sense. I believe it would be more beneficial for me at my age to increase my equities allocation to 80%, if not higher.
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Craig,

Your posts make me think you need to pay close attention to the wisdom of the Delta Force and Karen. I suspect you would protect yourself against your own hubris and end up with a better result by investing in something like Vanguard's Target 2050 or Star fund. An allocation like Karen's looks good but that requires discipline. For your own amusement, you could track an imaginary portfolio using Morningstar's software, but at 35 working at things that advance your career and enjoying life seem more rewarding than picking stocks and loosing long-term to a well diversified allocation of index funds.

db
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An allocation like Karen's looks good but that requires discipline.

----

Thanks, db.

But this type of allocation doesn't take a lot of discipline - just automatic monthly investing and a once a year rebalance! :) Oh, well, I guess that's a type of discipline, but to me it's just on autopilot.

Karen - likes to set it and forget it.

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Craig,

Your posts make me think you need to pay close attention to the wisdom of the Delta Force and Karen. I suspect you would protect yourself against your own hubris and end up with a better result by investing in something like Vanguard's Target 2050 or Star fund. An allocation like Karen's looks good but that requires discipline. For your own amusement, you could track an imaginary portfolio using Morningstar's software, but at 35 working at things that advance your career and enjoying life seem more rewarding than picking stocks and loosing long-term to a well diversified allocation of index funds.

db


"Hubris". Hmm. Where'd that come from? *frown*

DeltaOne's advice (at least in my opinion) is more sound than Karen's. He's right, I shouldn't be worrying about the bumps along the way. However, at the same time, I don't want to overdiversify myself by being invested solely in mutual funds alone (Karen's advice). Mutual funds usually have dozens of underlying stocks, which isn't what I want because having more stocks would usually mean diminishing my potential returns.

Rather than bore you with details, I'll leave it this way: the problem here is you wrongfully (perhaps unintentionally) assumed I have no discipline in investing. When people practive MI investing properly, things are done with 100% discipline. Once they make emotional decisions with MI, it no longer is purely MI.
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At the same time I don't want to discredit Karen's advice though.. it would be a sound one for a good portion of population around the age of 35.

I often thought about investing the majority of my retirement funds into Janus' Smart Growth portfolio (which I think uses allocation quite similiar to the percentages I listed in my original post), but I choose to go with investing into stock route. It's a choice I conscoiusly thought about and decided upon.

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Craig,

If the portfolio is only $5-6K, you need to be very careful with friction (the cost of trading). Even with MI, it is difficult to get over the hump of trading too frequently. I have had that issue with small accounts (IRA that I can't contribute any more to it). My solution has been to go with quarterly screens using the Top 3.

At 35, I don't worry about allocation after I had my emergency fund in place. I keep all retirement accounts 100% in stocks. Haven't studied enough about the Arezi Ratio to use it effectively.

HTH,

- zol
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However, at the same time, I don't want to overdiversify myself by being invested solely in mutual funds alone (Karen's advice). Mutual funds usually have dozens of underlying stocks, which isn't what I want because having more stocks would usually mean diminishing my potential returns.

I think there are two separate issues here. First, there is the adding risk and return potential of individual stocks. Of course, this also means you can certainly have lower returns as well. The average investor (literally) cannot beat the market - so for everyone who does better, someone else does worse. This is a risk only you can decide if you want to take.

Related to this is the fact that buying and researching and holding individual stocks takes a lot of time and effort. Only you can decide if this is worthwhile for you. Even mechanically you have to keep track of your stocks and follow the pattern you planned on (Hey, this isn't "Little Book that Beats the Market", is it? :) ).


However, diversification is different. What Karen provided would not be at risk for overdiversification. The reason is that there should be no overlap between those funds (large, mid, small, foreign, etc). Overdiversification occurs because you own 3 large cap funds or 4 international funds, such that the good and the bad of each kinda cancel our, and you're really left holding and index, except with much higher expenses. This the categories that Karen provides do not overlap, you would be diversified (still a good thing), but not overdiversified.

If you still don't want to do this through funds, that's your call, but I don't think this issue is at play here.
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-zol wrote:

If the portfolio is only $5-6K, you need to be very careful with friction (the cost of trading). Even with MI, it is difficult to get over the hump of trading too frequently. I have had that issue with small accounts (IRA that I can't contribute any more to it). My solution has been to go with quarterly screens using the Top 3.

At 35, I don't worry about allocation after I had my emergency fund in place. I keep all retirement accounts 100% in stocks. Haven't studied enough about the Arezi Ratio to use it effectively.


Certainly. The fact that I will be starting with approximately $4000-$5000 for equities portion means I'll have to start with a small number of stocks at the beginning due to friction costs as you mentioned. I plan on adding to the Roth IRA uniformly over the year from my paychecks now that I get the ball rolling, hopefully it'll get better in about a year (by this time next year, my total contributions into Roth IRA should be roughly $10k).

Thanks for the advice.
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I agree with the other posters that at age 35 you probably don't need to be keeping part of your retirement savings in cash. Also think that working the Bear/Bull market angle, adjusting your portfolio to match, won't serve you well with your investment horizon. Better to keep your eyes on the prize and take comfort that during bear markets, your regular retirement contributions (because you'll be making those, too, right?) will be buying you more shares of those high-powered growth stocks & funds you're investing in.

I'm 37, started 401(k) as soon as my first job out of college would let me though've never yet maxed it out, and am just now starting to see the compounding curve take off. It's working! And that's after a couple of years of watching the account balance trending DOWN even with payroll contributions, because the market was bobbling. I guess the point is not to get too defensive with the IRA in bear markets; it will come around as long as you've chosen your investments Foolishly. (I know, how helpful is that?)

Sounds like you're pretty committed to individual stocks and an MI approach. But here's a good article on lazy portfolios that may be useful:

http://www.marketwatch.com/news/story/lazy-portfolios-beat-benchmarks-again/story.aspx?guid=%7BDABA48D1%2D0DDA%2D43F7%2D8700%2D275FEF592BD1%7D&dist=


Good luck,
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Sounds like you're pretty committed to individual stocks and an MI approach. But here's a good article on lazy portfolios that may be useful:

http://www.marketwatch.com/news/story/lazy-portfolios-beat-benchmarks-again/story.aspx?guid=%7BDABA48D1%2D0DDA%2D43F7%2D8700%2D275FEF592BD1%7D&dist=

Good luck,


Thanks for the article link. ETFs do indeed rule! It allows me to invest into a specific sector or an emerging market overseas.

I've mentioned Janus Smart Portfolio - Growth a couple of times here. Perhaps I should consider tilting toward that direction (even though I mentioned I firmly want to do more hands-on equities investing), especially considering

Info on the Smart Portfolio - Growth could be found here: https://ww3.janus.com/Janus/Retail/FundDetail?fundID=356 <-- is this osmething any of you would invest into?

In light of a number of replies here, perhaps I should re-consider a more hands-on investing until a portion of my portfolio enters the "play money" (I like Karen's label) domain - when the 5%-10% of my portfolio is big enough to not be affected by friction/trading costs.
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D'oh, hit submit too soon - looks like I sent in an unedited post.

In any case, you'll probably know what I'm trying to say ;)
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... I have nothing in retirement funds right now! My age is 35...

It is sort of just semantics but one way to look at your investments is that the first dollar you save will be the last dollar you spend. If you are investing to support yourself through the age of 95, then you have a sixty-year time frame that this years money will be invested. With that time frame 100% stocks would be fine, if it is OK with your temperament.

The affect of compounding are amazing over that sort of time frame, but this also means that you need to be much more careful about keeping your expenses low than an older investor. In current (inflation adjusted) dollars, if $100 invested by 7% over the next 60 years, that is worth almost $6,000 in current dollars.

Greg
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Don't worry about "catching up". You are miles ahead of most folks.

Really? That's pretty encouraging to hear.

Yep, miles ahead. You're even miles ahead of some people here at the Fool. (I myself started investing in my early 50's.)

--SirTas
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When you glibly talk about market timing and stock picking, it sounds like hubris to me.

db
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Hi Craig,

I just wanted to follow up. Your subsequent posts helped me to get a better "feel" for you - your first one kind of makes it sound like you want to market time and that you have a bit of...hubris, as db said. But, you seem to be open to ideas from us, even if some of us are a little more conservative than you, and that is good.

I do understand that some people have the time and research skills to pick stocks and stay on top of them. I own stocks. Don't get me wrong. But you are starting with a small amount, so buying stocks right now in small quantities will be costly, percentage-wise. And it would be prudent to diversify a bit at first and then build on that with individual stocks to enhance a core portfolio.

So, I think you are on the right track. ETFs are a good way to get some diversification by sector - I own Vanguard's Emerging Markets ETF. But of course you have to pay the same fee as if buying a stock.

And I do agree that you don't really need much in the way of bonds. I own very little.

Good luck!

Karen
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When you glibly talk about market timing and stock picking, it sounds like hubris to me.

db


"Marketing timing"? LOL. I guess if you could call it that.

When one says "market timing", usually I associate it with tryng to time market for short-term fluctuations.

What I was referring to is when we are in prolonged bear market - as in declining for consecutive months over a good length of time. Since I will be making regular monthly contributions, I felt it'd be more Foolish to put the contributions into fixed-income-type funds, and once the bull market comes back (again, this is determined over periods of months, not looking at daily charts), I'll resume monthly contributions toward equities portion of the portfolio.

I should've made this clear from the beginning - the fact that I was referring to where I should put monthly contributions toward. I was not referring to moving around assests that already are invested and in place (which I believe Delta was referring to). Do this long enough (put monthly contributions toward a certain area that I normally would not in bull markets) and the portfolio allocation does change over time. This is what I meant.


Now, I have to wonder if you have any real advice to share as everybody else except for you have done, or are you more content sitting behind the screen like a little keyboard warrior throwing verbal jabs?
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Karen wrote:

Hi Craig,

your first one kind of makes it sound like you want to market time


Yes, I now realize it looks like that.

Allow me to rephrase my original thoughts - where should I be making monthly contributions toward during prolonged bear markets? I was never referring to moving around assests that is already invested and in place. My apologies. :)

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What I was referring to is when we are in prolonged bear market - as in declining for consecutive months over a good length of time. Since I will be making regular monthly contributions, I felt it'd be more Foolish to put the contributions into fixed-income-type funds, and once the bull market comes back (again, this is determined over periods of months, not looking at daily charts), I'll resume monthly contributions toward equities portion of the portfolio.

Sounds reasonable, but it may not work out in practice. Often the reason the market is declining is because the Fed has decided to raise interest rates. In this case, bonds decline as well. Very short term bonds or money market is the best place in that instance.

It was several years ago when this happened. I remember talking to some bozo financial advisor at Citibank at the time. He had put his clients into bonds and kept them there while the Fed raised rates. Of course, his clients lost money. Worse yet, he seemed puzzeled by the whole thing. I hope he is doing something else now, like selling socks.
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Sounds reasonable, but it may not work out in practice. Often the reason the market is declining is because the Fed has decided to raise interest rates. In this case, bonds decline as well. Very short term bonds or money market is the best place in that instance.

Right. Very short term bonds, MMF, or anything that I think would fit "fixed income" definition (I know, technically MMF is CCE).

WWYD? Put contributions toward usual places, pretending bear market isn't happening, or temporarily contribute toward safer areas (fixed income, MMF, etc)?
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What I was referring to is when we are in prolonged bear market - as in declining for consecutive months over a good length of time. Since I will be making regular monthly contributions, I felt it'd be more Foolish to put the contributions into fixed-income-type funds, and once the bull market comes back (again, this is determined over periods of months, not looking at daily charts), I'll resume monthly contributions toward equities portion of the portfolio.

When the market is down, stocks are on sale. Why would you want to buy something at higher prices, but not at lower prices? The stock market is on the only market where buyers don't like a sale - and it doesn't make much more sense than in any other market.

Deciding where to put new assets (just as potentially deciding where to move old ones) still assumes that you know what will happen, which is very different than what has happened.

If you act now based on what has just happened, it is somewhat akin to driving using only the rear view mirror. You won't move out of/stop adding to equities until they have already taken a good hit, and you won't move back into them/start contributing again until they have already made a good rise. That, plus taxes, and any transaction fees, if you're selling, means you're quite likely to end up worse off.

And you've just forfeited the opportunity to buy equities at some of the cheapest prices you're probably ever gonna see again.

Take a look at this S&P 500 chart:
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=5y

Are you really saying it woulda been a bad idea to be picking up stocks at the prices available in 2002 and 2003? You really woulda been buying bonds (who's value would have declined since then due to the Fed actions)?
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Hi Craig,
maybe this is redundant, but I cannot agree more this DeltaOne

Btw, I don't thing “market timing” is bad by default, especially since there are different definitions as of what the market timing is.
I would not do it my self, but there are smart people out there, like Paul Merriman, www.fundadvice.com
who has a market timing system, kind of defensive system, that allows you to preserve the capital from big losses in bear market. Again, I would not follow it myself, but it is pretty well back-tested and makes some sense.
But what you want to do (keep your money in stocks, but buy bonds, when stock are getting cheaper), neither protects you from stock downfall, nor benefits you from cheap prices, so I don't see the point of doing it…

Yuri
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<< The stock market is on the only market where buyers don't like a sale >>

DeltaOne81


I've been lurking/learning on this thread.

I see what you mean about people not wanting a sale. I see the spike in activity during the drops, and again in the rise, followed by low activity thru the course of the drop periods. If I understand correctly, people are dumping dropping stocks to save what gains they can, while an equal number of people are buying at discount. Later, when the stocks pick up, people are again jumping in, allowing an equal number of sale-buyers to sell and save their gains.

I can see why I'd rather buy when things are low. I haven't researched how to gleen and evaluate available information about a stock I may be interested in, so of course I'm likely to stick with index funds for a while. I assume they will take the same ride, but perhaps the stocks in the fund will be balanced by other stocks raising?

Thanks for the explaination.

(Sorry to interupt with a trip down "Basic Lane.")


Penny
reading, learning, reading, learning...
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If I understand correctly, people are dumping dropping stocks to save what gains they can, while an equal number of people are buying at discount. Later, when the stocks pick up, people are again jumping in, allowing an equal number of sale-buyers to sell and save their gains.

While no one really has proof that what you observe is caused by this, its is a very reasonable guess.


I assume they will take the same ride, but perhaps the stocks in the fund will be balanced by other stocks raising?

Index funds, or any kind of funds, benefit from diversification in this manner, yes. In a bear market, some stocks will drop more, some will drop less, and some will still go up. Holding a wide swath of the market means that you are greatly greatly reduces your chances to end up squarely on the worse side of the equation. Of course, it also greatly reduces your odds of ending up squarely on the good side of the equation - but that's the point, it reduces swings.

It is a perfectly logical and correct reasoning for most people to want to moderate the good and the bad somewhat, by guaranteeing market (or near market) performance.

If I missed your question, let me know :)
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WWYD? Put contributions toward usual places, pretending bear market isn't happening, or temporarily contribute toward safer areas (fixed income, MMF, etc)?

Well, I don't pretend that the bear market isn't happening, but I do still keep buying - whether the market is up or down. That is the point of dollar-cost averaging, which is what I am trying to do by buying consistently every two weeks or every month. My 401(k) is automatically invested, my brokerage account automatically invests.

I rebalance once a year if things get out of whack, but I invest consistently throughout the year.

Karen
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I think that people only need to to really worry about asset allocation, when they are EITHER getting close to retirement say 50-55 for the normal retirement age or they have a large portfolio >100K.

In your case you are neither. If you are comfortable enough to invest in individual security than I am sure you would be ok with investing the entire 5-6K now and even the 10K by next year in equities.

Given the relatively small amounts I would highly recommend using your IRAs to invest in funds and save individual stock investments for your taxable accounts. (IMO The real beauty of individual stock investments is the ability minimize taxes).

If you want to invest in an agressive managed fund like some of the Janus that is ok. (I just read an article (IIRC in Kiplingers) that Janus is slowly recovering from its fall from the pedestal when the buble burst. Obviously, us old fogeys will tell you to use boring old total stock market index fund, but if trying to beat the market gets you motivated to regularly invest that is more important than saving $50/year in additional expense for a managed fund.

For the next 5 years I look at invested in a variety of funds covering different asset class, so for example large growth, which I think the Janus Smart Portfolio, maybe next year looked at international, in 2009 small cap...

One comment about expenses, I do recommend invested enough in a individual fund to be able to first get waiver on the annual or quarterly fees (for Vanguard that is $10/quarter if you have less than $5,000) and secomd qualify for a lower expense version, example Fidelity Spartan Fund require a 10K investment.
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<< If I missed your question, let me know :) >>


Thanks, you hit it squarely on the head. (grin)

Penny
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I'm not sure I like the idea of building the portfolio consisting mainly of mutual funds. This means I am in danger of being overdiversified and my returns will diminish (end up being closer to something like the S&P 500, if not under).

Well, I have to disagree with your assumption that a portfolio consisting entirely of mutual funds will likely diminish your return. The salient point is to allocate well across the mutual funds, in accordance with a chosen strategy.

Except for the 'fixed income' portion, my portfolio is composed entirely of mutual funds. Last year the S&P500 returned ~ 13.7%, my portfolio returned 21.93%. In 2005 the percentages were about 4% and 12% respectively.

I suggest you read William Bernstein's "Four Pillars of Investing", and also pay a visit to "Coffee House Investor":

http://coffeehouseinvestor.com/

2old
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Are you really saying it woulda been a bad idea to be picking up stocks at the prices available in 2002 and 2003? You really woulda been buying bonds (who's value would have declined since then due to the Fed actions)?

I for one am extremely happy I kept regularly investing money into my allocation of equity funds during 2001 thru 2003! Thanks to William Bernstein, "Coffee House Investing", and of course, you folks at TMF!

Returns:

2003 19.20 %
2004 16.04 %
2005 12.17 %
2006 21.93 %

2004 was the year I recouped all my previous (foolishly allocated portfolio) losses--since then it's all been gravy.

2old

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Craig,

In my first post I offered advice: Invest in diversified index funds and use the time you might spend on stock picking instead on building your career and enjoying life. From your posts, I think you were seeking affirmation not advice. And that's not uncommon on these boards. You've gotten good advice in this thread, but you've continued to argue your original position.

A little background:

When I was 35, 35 years ago, I was a few years beyond a post doc, working at the Stanford Research Institute making more money than I had ever imagined, and filled with hubris. I dabbled in investing, but the bulk of my investments were through a 403B plan at TIAA-CREF to which the Institute contributed. The money was mainly in a fund that tracked the S&P 500. Every year I contributed 10% of my income.

My head was in an almost new Porsche 911 I'd bought from a designer who had discovered that a car with a difficult transmission and clutch was not what he wanted in hilly San Francisco. My wife and I were saving to buy our first home. Thinking about retirement was the last thing on my mind.

Having retired 15 years ago as director of a research center that employeed a bunch of 30-somethngs with PhDs in EE and CS from MIT, Berkeley, and Stanford, I can tell you that not one of them was concerned with picking stocks. What more financial advice could I offer than the excellent advice you've already received? Instead, my advice would be to be more introspective.

Hubris. Hell, I have tons of it.

db
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I for one am extremely happy I kept regularly investing money into my allocation of equity funds during 2001 thru 2003! Thanks to William Bernstein, "Coffee House Investing", and of course, you folks at TMF!

Returns:

2003 19.20 %
2004 16.04 %
2005 12.17 %
2006 21.93 %

2004 was the year I recouped all my previous (foolishly allocated portfolio) losses--since then it's all been gravy.
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Good for you! I started investing with this approach in mid-2000. Fortunately it spared me from getting mauled by the worst of the bear:

2001 -1.88%
2002 -5.41% (the S&P 500 tanked 22% in this year!)
2003 +27.17%
2004 +15.57%
2005 +7.97%
2006 +18.62%

It's beaten the S&P 500 every year with less volatility (and this is with about 30% in "safe stuff"). That streak has to end soon, but the ride has been comfortable so far. I'm virtually dead even with the S&P so far in 2007.

#29
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I started investing with this approach in mid-2000. Fortunately it spared me from getting mauled by the worst of the bear

You Foolish dog! How I wish I had known more sooner [sigh], but it was the horrific beating I took during the bear that finally motivated me to get off my butt and do something about it. I guess in that way the bear can be viewed as having a positive aspect, as I had a much smaller portfolio then--better to be ignorant and foolish with a smaller amount of money, than a larger sum.

2old
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