Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Up until a year and half ago, my 401K was comprised of one, moderately-aggressive fund; a year and half ago, I moved it to another fund, the QQQ, which is an ETF heavily-weighted toward large-cap technology companies and is often viewed as a snapshot of how the technology sector is trading. I've made substantial gains in the time I've been in it, but after seeing it recently plummet, I'm wondering if my 401K is too aggressive (or simply not diverse enough) given that I've just bought into the Motley Fool Blast Off Service. This Blast Off will be an aggressive venture, which I will be allocating a 1/3-1/2 of my money this year. I don't want to move out of the QQQ, but I am thinking it might be a good idea to diverse into one more fund.

Any thoughts, general or specific (fund recommendation), you have would be greatly appreciated. I'm 50 years of age.

Thanks in advance,
Drew
Print the post Back To Top
No. of Recommendations: 0
It would help to know what funds are available in your 401k. Also, many of us who are posters are not familiar with the service Motley Fool has open, such as Blast Off Service.
Print the post Back To Top
No. of Recommendations: 0
I should have just stated that my current investments
include a group of stocks that represent a risky/aggressive
portion of the portfolio, while the 401K represents the rest.
1/3 of my money this year will go towards the former and 2/3 to the latter. 

Here is a list of the funds available in the 401K. 

DIA	SPDR Dow Jones Ind Ave ETF
DVY	iShares Select Div ETF
IEF	iShare 7-10 Yr Tres Bond ETF
IAU	iShare Gold Trust ETF
IJR	iShare Core S&P Small-Cap ETF
BND	Vanguard Total Bond Market ETF
VEA	Vanguard FTSE Developed Markets ETF
VNQ	Vanguard REIT ETF
DBC	Invesco DB Commodity Index Tracking Fund
BWX	SPDR Barclays Intl Tresurey Bond ETF
VOO	Vanguard 500 ETF
VUG	Vanguard Growth ETF
VTV	Vanguard Value ETF
DGCXX	Dreyfus Gov Cash Mgmnt Inst
SCHO	Schwab Short-Term US Tres ETF
DSI	iShares MSCI KLD 400 Social ETF
VTIP	Vanguard Short-Term Infl-Prot Secs ETF
EMB	iShares JPMorgan USD Emerging Mkts Bond ETF
IEMG	iShare Core MSCI Emerging Markets ETF
SCHM	Schwa US Mid-Cap ETF
Print the post Back To Top
No. of Recommendations: 2
danbobtx, BlastOff 2019 is a new service launched last month by David Gardner which recommended 20 companies up front following the Rule Breakers investment philosophy. The goal is aggressive, to maximize returns over the next 5-10 years by investing in high growth opportunities, some which may not pan out.

In my experience, 401k funds tend to be more conservatively managed than a portfolio like BlastOff, and I would not read too much into the performance of a technology fund or ETF over the last couple months. When the market swoons like it did to close out 2018, that's more a reaction to macro economic conditions than a particular weakness in the tech industry or in any individual companies.

That said, I would encourage diversification. OP will know that the BO19 portfolio has a lot of tech companies that are serving diverse markets. I had this conversation with my investment club last month, making the point that the definition of a tech company has evolved over the decade. Once upon a time, a tech company was any company that relied heavily on tech to operate. Amazon was a tech company, but would you call them that today (AWS)? Or maybe a media company (Prime Video)? Or an online retailer (Amazon.com)? Or how about a grocer (Whole Foods)?

The lines have blurred. To me, a tech company today is a company, such as Palo Alto Networks, that exclusively makes technology products or services. Shopify would be a tech company - it provides a cloud-based eCommerce platform. Apple is more a productivity and entertainment services company, focusing on its central iTunes hub and using its devices as outlets and interfaces. Disney is moving to more Direct-To-Consumer OTT products (ESPN+, Disney+) but remains at its heart and entertainment business.

Even at age 50 (congratulations for making the half-way mark!), I would focus on risk tolerance. With about 15-17 years until retirement (age 67 1/2 to receive full Social Security benefits), you can afford to tolerate the risk of an aggressive growth portfolio but start to introduce some more conservative elements. Maybe 10% in cash and bonds, and look for some dividend-paying stable equities. You'll want to adjust the balance as you go along.

By the time you reach retirement, you'll want to have 5-8 years worth of living expenses in cash or cash equivalents so that the next time a market like this one, you won't be worried about having to liquidate investments at price lows in order to pay the next month's bills. That does not mean all your money should be in a savings account, but you'll want to move it in stages each year, from your aggressive pool to your conservative pool to your cash pool.

You should also be thinking in terms of asset allocation. BO19 has a nice mix of Large, Mid and Small Cap companies, though it leans heavily towards the large cap. You may want to have your 401k also mirror that allocation or compliment it by increasing the exposure to small and mid cap companies. You may also want to add some exposure to international if you feel BO19's selection is too small.

Again, OP's options are limited to what is available in their 401k plan as well as any IRA or Retail investments outside of their 401k (it's not too late to invest in a Roth IRA if eligible).

Fuskie
Who thinks now is a great time to begin allocating 401k purchases into new funds and then watch the dollar-cost-averaging flowers bloom down the road when the market recovers...

-----
Ticker Guide for The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME) and MongoDB (MDB)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)
Fool Code of Conduct: https://www.fool.com/legal/the-motley-fools-rules.aspx#Condu...
Print the post Back To Top
No. of Recommendations: 0
As I recall, QQQ is the NASD 100. The 100 largest cap stocks listed on the NASD. It is not a technology ETF per se, but is heavy in tech stocks.

For a 50 year old, I think your stock holdings are too aggressive. I would encourage you to put half of your 401k funds in an S&P 500 index fund or a total market fund. That is a reasonable way to diversify.

Tech stocks are an attractive growth segment, but volatility tends to be on the high side (as we are recently reminded). Holding a few blue chips is not a bad idea. Personally I would not go so far as to buy bonds or fixed incomes just now, but blue chips like Caterpillar or Boeing are industry leaders likely to do well over time. Not as well as tech stocks, but still a reasonable place to put your funds.

These days tech stocks are everywhere. Even the DJIA 30 includes 6 tech stocks: Apple, Cisco, IBM, Intel, Microsoft, and Verizon.
Print the post Back To Top
No. of Recommendations: 1
Hi Drew!

What Fuskie said about diversification and cash reserves is solid....and to that I would add that the biggest mistake I see investors make is jumping into investing without any long-term financial plan...sort of a "ready, fire, aim" approach:

https://boards.fool.com/hi-jah609-it-has-been-my-experience-...

That being said, your specific question boils down to what funds from the list in your post might be good for the long haul in terms of asset allocation balance, risk, etc...here are my thoughts, which are NOT meant as recommendations for you, since no one but you knows your specific financial circumstances, goals and risk tolerances:


Aggressive/hi tech already covered in the Blast Off portfolio, and represents 1/3 of your portfolio and your ETF funds list represents 2/3. I'm not necessarily fond of all your fund choices...but, that being said

Maybe equal amounts in these funds: (5 funds means about 13.5% in each fund....or you can weight otherwise to your personal preferences)


"Market" surrogates: DIA (Dow Jones Industrial surrogate), VOO (S&P 500 surrogate) primarily the largest companies

REITS: VNQ

Dividend Stocks/larger caps: DVY

International exposure: IEMG

Note that these funds may hold some of the same stocks (i.e. dividend stocks in DVY may also be in DIA or VOO, etc.)

As you get older, you may want to consider bond-related choices ( I have a bias against bonds until interest rates normalize, but that is me....most financial advisors recommend bond exposure, so you may want to add one of the bond ETF's to your mix now)


Cheers!
Murph
BL and MFPP Home Fool
Print the post Back To Top
No. of Recommendations: 0
Murph wrote: "Aggressive/hi tech already covered in the Blast Off portfolio, and represents 1/3 of your portfolio and your ETF funds list represents 2/3."

Murph, when I stated that 1/3 of portfolio would be Blast Off, I meant to state that it would be 1/3 of the money I have allotted for investment this year versus it actually being 1/3 as a percentage of my portfolio. In other words, 90% of my portfolio is my 401K. Sorry for confusion. Does this change your thinking around "tech already covered in Blast Off portfolio"., because I definitely want to have a solid share of the large-cap tech game, hence, the QQQ fund.

Lastly, in regards to the the funds you listed as possibilities, was the thinking here to get out of QQQ altogether and move all money into new funds - OR - Keep QQQ, but weighted equally or at a smaller percetage of the total new fund number?

In any event, I'm starting to get the picture and appreciate everybody's input.
Print the post Back To Top
No. of Recommendations: 0
Ah, sorry about the misunderstanding, Drew!

Well, with only 10% of your assets in Blast Off, you certainly have room for more aggressive, positions. Historically, small caps have performed the best over long periods of time, so maybe a small cap fund allocation?

In the end, only you know the nature of your risk tolerance. As Buffett says, if you can't sleep/stand the thought of your stocks being down 50% in a year or so (which is about what happened back in 2007-2009), don't put money in the market. Aggressive positions tend to have even higher volatility than the market.

For me, all "aggressive" positions (including Blast Off and other small caps/ higher-risk, super-value positions are less than 10% of assets), but then, I'm 72 and don't really have much in the way of bonds (and won't until interest rates are closer to historical norms).


Cheers!
Murph
BL and MFPP Home Fool
Print the post Back To Top
No. of Recommendations: 2
Murph, Fuskie, and everyone else, thanks so much for taking the time to help me out!

I appreciate your generosity.

Happy New Year!
Drew
Print the post Back To Top
No. of Recommendations: 0
Happy to be of service, Drew....and that's what Fool's do....investors helping other investors….just like Tom Engle and Philip Durrell and so many other Fools helped me when I came to TMF many years ago.


Some day, you'll get a chance to do the same!

Cheers!
Murph
BL and MFPP Home Fool
Print the post Back To Top