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I'm a one-person business starting over after the recession. I'm 65 and expect to work as a writer for at least 20 more years. I'm considering opening both a solo 401k and a Roth 401k with different portfolios at Schwab. I thought one would be a 2038 targeted retirement fund, and the other one perhaps consisting of a high-yield dividend index and a S&P 500 index. Does this approach make sense? Haven't talked to Schwab yet or seen the make-up of their targeted retirement funds.
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I thought one would be a 2038 targeted retirement fund, and the other one perhaps consisting of a high-yield dividend index and a S&P 500 index. Does this approach make sense?

No, not really. A date-target fund is primarily just automatically shifting the asset allocation to higher bond & lesser equity allocations. You don't need to do that. It's conventional wisdom, but not the most optimal thing to do.

"high-yield dividend index and a S&P 500 index."
Don't fall for the fallacy of high dividend yield. Especially now when interest rates look to be going up. Lots of people implicitly think that dividends are free money. They are wrong.

Just put your money into an S&P500 index fund, or a Vanguard LifeStrategy Fund -- like LifeStrategy Moderate Growth Fund. https://investor.vanguard.com/mutual-funds/lifestrategy/#/mi...
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I'm 65 and expect to work as a writer for at least 20 more years. I'm considering opening both a solo 401k and a Roth 401k with different portfolios at Schwab.

If you don't want to have to take RMDs out of these accounts beginning at age 70 1/2, you need to be sure that the 401(k) plan is set up to allow deferral of RMDs while you are still employed.

And yes, Roth 401(k)s do require RMDs, unlike Roth IRAs.

AJ
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Ok, thanks. I plan to go to Schwab's tomorrow
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I like the idea of shifting more into bonds as I get closer to retirement. I don't want to be 100% in stocks. Lost everything during the recession, so my first inclination is to put everything under my mattress. The decision to invest again is a major milestone for me. Need to protect myself a bit more this time around.
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Florida65,

You wrote, I like the idea of shifting more into bonds as I get closer to retirement. I don't want to be 100% in stocks. Lost everything during the recession, so my first inclination is to put everything under my mattress. The decision to invest again is a major milestone for me. Need to protect myself a bit more this time around.

I hate to break it to you, but bonds are not automatically "safe" investments either. They are simply "relatively uncorrelated" to the performance of equities. During the financial crisis bond prices cratered. Some bond funds very quickly lost half or more of their NAV.

Personally I jumped into the fixed income market in 2008. I bought when people were scared. Buffet would have been proud. In a few short years I made what seemed at the time like a lot of money. But today I hold only a very small bond position.

Today bonds simply are not cheap. But today stocks are not cheap either.

I'm not saying you shouldn't invest, but I'd say that waiting 9 years to jump into the market is a very telling comment of what you might do the next time the market corrects.

Officially the last recession started June 2009. Since that date the S&P 500 has had a total return of 217.074%, including reinvested dividends. In other words your money would have tripled over the past 8+ years. The annualized rate of return has been 15.013%. These numbers are simply not normal. Sure we were starting from a trough, but over longer time frames the S&P 500 total return is more like 8-10%/year.

My point is simply this: You seem to be out at the bottom and don't get back in until we appear to be at all-time highs. Personally if I saw that behavior in myself, it might worry me more than a recession.

- Joel
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The recession in South Florida started in 2006. I own a real estate company and the real estate market totally collapsed along with financing. I got out of stocks because I had to cash everything in to live. I lost two houses and all my savings. I didn't arbitrarily get out of the market. Fortunately, I started freelance writing during that time since there were No jobs in South Florida. That led to writing and publishing books which led to my recovery. My behavior patterns don't worry me. I'm a proven survivor. Other people weren't so fortunate; the police will tell you that there were a lot of suicides. It just didn't make the news. Unless you live here and were involved in any way in the housing industry, you simply cannot understand the desperation. But, I'm bouncing back and at age 65, I prefer not to hit rock bottom again.
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