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Subject:  Re: Portfolio Advice/Help Date:  3/23/2019  9:55 AM
Author:  TheBreeze Number:  92629 of 96916

I'll give you the same advice that I give my two sons, both in their late 20's:
-US stocks will give you the best return over the next many decades.
-If you ignore the daily and even yearly gyrations, holding bonds and other "diversifiers" won't do you any good, but will hold you back on the upside for the trade-off of not dropping as much on the downside.
-At the beginning, a large percentage drop in the stock market won't be a large monetary loss for you because you won't have as much invested yet.
-All the volatility and drops will buy you more shares when you're investing every paycheck. Because your buys are (amount invested)/(index price) you buy more shares at the low than at the high.
-The value of your portfolio on any given day is not as important as its value when you're ready to start "winding down." That is, when you're ~10 years from pulling money out of it, your asset allocation will start moving to optimizing drawdown vs. optimizing growth. Until then, go for the strategy that has the best chance of maximizing the amount you'll have in the future.

If you are able to ignore stock market gyrations, you could go 100% Total US Market Index. You could also go 80/20 US/International (rebalance yearly). If you are not able to endure potential big drops, you can include a bond fund whose anchor will reduce the downs but also reduce the ups. But, whatever allocation you think you need, don't screw with it continuously. A study (was it Dalbar?) showed that investors earned several percent a year less than the funds they invest in. Why? Because they panic and sell at lows, then fear they'll miss out on the upswings and buy in really late.

My two sons do this:
-One doesn't want to worry about all this stuff, so invests in a life-cycle fund. However, he's one of the people who has a pension promised to him.
-The other is aggressive, and has the 80/20 US/Intl mix.

Bonus advice:
-I have some money in REITs and commodities, and if I had to do it over, would not do that. I thought I could both reduce volatility and possibly increase the upside, and they both have been a 20 year drag.
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