# Thank You Vanguard



## fmdog44 (May 9, 2020)

Up to 2019 I only owned two mutual funds. They are with Vanguard and one was with a dividend fund and the Mega Cap Fund. Both have done well but I had a IRA to roll over from Merrill Lynch so I called them for advice as to where to put it. He recommended small caps to balance it out. I chose three funds and I am  so happy with how they have done I feel like calling them just to say thanks. With all the doom & gloom recently I am sure I am not the only one that has seen nice returns recently. Let us hope it continues.


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## Floridatennisplayer (May 9, 2020)

I dumped my Fidelity team last August with their “superior managed portfolio “ which was approximately 20 plus Private Client only specialty funds and stocks specifically fine tuned to my needs.   They had been churning that thing for nearly 3 years and sending me numerous reports on how they were daily analyzing and adjusting positions to maximize my returns. 

What BS! Their results were mediocre at best with a steep fee. I dumped them which set off a firestorm of phone calls from zillions of Fidelity suits. Begging me to come in and sit down with them and reconsider.

I went to a simple 3 fund portfolio.  Bond fund index fund, zero total market index fund, various cash MM, CD ladder, NY Life Annuity and my individual stocks.

My returns have been wonderful.  Zero fees!!!!!!!  They call me quarterly....voice mail as I don’t answer and ask if there is anything they can do to assist and begging me to come back.  I never return the calls.


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## mathjak107 (May 10, 2020)

Floridatennisplayer said:


> I dumped my Fidelity team last August with their “superior managed portfolio “ which was approximately 20 plus Private Client only specialty funds and stocks specifically fine tuned to my needs.   They had been churning that thing for nearly 3 years and sending me numerous reports on how they were daily analyzing and adjusting positions to maximize my returns.
> 
> What BS! Their results were mediocre at best with a steep fee. I dumped them which set off a firestorm of phone calls from zillions of Fidelity suits. Begging me to come in and sit down with them and reconsider.
> 
> ...


while i would take fidelity over vanguard any day i don't recommend allowing anyone to handle your money ....  fidelity tends to use a lot of the money they invest where they put you in the funds for seed money when they start new funds ....

anyone today can pull a "lazy " portfolio off the internet and use it on their own .

on the other hand i do things on my own and have averaged 11% a year for 33 years with fidelity funds using the fidelity insight newsletter ...

while i can put portfolios together in my sleep i have used the newsletter for part of my portfolio since 1987 to keep me from always planning my next move or second guessing the last move .

in fact for a conservative investor harry browns permanent portfolio has been in use for 40 years now with very good results in up and down markets . it consists of 4 opposing etf;s that align with the 4 major economic outcomes we can have .

25% total market fund , up 2% over the one year (vti)
25% long term treasuries (tlt )  up 35% over the one year
25% gold (gld ) up 33% over the one year
25% short term treasuries (shy )  up 5% over the one year .

just rebalance once a year , done >


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## OneEyedDiva (May 13, 2020)

Glad you're happy with your returns in this roller coaster market fmd. I still own a Vanguard fund that does well but I transferred it over to Schwab. As I've mentioned before...I find Vanguard cumbersome to deal with. @Floridatennisplayer  and @mathjak107 I dumped Fidelity when I couldn't get a simple answer from *anyone* about whether or not they were still affiliated with ALEC.


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## Aunt Bea (May 13, 2020)

In 2012 I went from Fidelity to Vanguard and have been satisfied with the change.  I've also been content with a simple portfolio.

I'm down a little year to date but when I widen the view to include 2019 I'm more than satisfied with how things are going for me.

It may be a difference in expectations.  I don't swing for the fences I just try to maintain a steady stream of income and modest growth to cover inflation while I wait for my ride to the cemetery.


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## In The Sticks (May 13, 2020)

My 401(k) account is with VOYA.  I like VOYA.  I've called and informally chatted with advisors for free for extended conversations.  None of it has been direct investment advice, but a lot about  strategy and mix.

I sold some gold I had been sitting on for a while and put it in 4 Vanguard funds.  Right after that gold went up by $200/oz. and the stock market went down.  Yay, me!  I don't blame Vanguard.  And I don't play individual stocks.

It is interesting how times have changed.  I recall when retirement meant conservative funds like bonds, cash accounts, and dividend paying Blue Chips.  These days everyone recommends a higher amount in equities for seniors.  Maybe they're afraid all the Boomers will all cash out and crash things.  I'm certainly not gonna put my money in something that only yields 1.5%.


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## mathjak107 (May 14, 2020)

In The Sticks said:


> My 401(k) account is with VOYA.  I like VOYA.  I've called and informally chatted with advisors for free for extended conversations.  None of it has been direct investment advice, but a lot about  strategy and mix.
> 
> I sold some gold I had been sitting on for a while and put it in 4 Vanguard funds.  Right after that gold went up by $200/oz. and the stock market went down.  Yay, me!  I don't blame Vanguard.  And I don't play individual stocks.
> 
> It is interesting how times have changed.  I recall when retirement meant conservative funds like bonds, cash accounts, and dividend paying Blue Chips.  These days everyone recommends a higher amount in equities for seniors.  Maybe they're afraid all the Boomers will all cash out and crash things.  I'm certainly not gonna put my money in something that only yields 1.5%.


we have now had 130 rolling 30 year retirement cycles .... looking at the  outcomes has demonstrated over and over that unless you want a very low draw , taking a modest 4% has failed to last 66% of all those cycles  using fixed income only , regardless of rates .

best results are in the 40-60% equity range ........you want at least a 90% chance of not running out of money without running out of time WITH OUT TAKING PAY CUTS . NO ONE LIKES PAY CUTS , NOT  WHEN WORKING AND NOT IN RETIREMENT.

research now shows that building a bond tent maybe the best way and reducing equities about a decade pre retirement and keeping a lower level in to about ten years in retirement ..then ramp up equities .

that protects against getting hit  at the nly real vulnerable time , day one in retirement before going through an up cycle .

as famed research michael kitces found :

*EXECUTIVE SUMMARY*
The final decade leading up to retirement, and the first decade of retirement itself, form a retirement danger zone, where the size of ongoing contributions and the benefits of continuing to work are dwarfed by the returns of the portfolio itself. As a result of this “portfolio size effect”, the portfolio becomes almost entirely dependent on getting a favorable sequence of returns to carry through.

And because the consequences of a bear market can be so severe when the portfolio’s value is at its peak, it becomes necessary to dampen down the volatility of the portfolio to navigate the danger – a strategy commonly implemented by many lifecycle and target date funds, which use a decreasing equity glidepath that drifts equity exposure lower each year.

Yet the reality is that the retirement danger zone is still limited – after the first decade, good returns will have already carried the retiree past the point of danger, and bad returns at least mean that good returns are likely coming soon, as valuation normalizes and the market cycle takes over. Which means while it’s necessary to be conservative to defend against the portfolio size effect, it’s not necessary to reduce equity exposure indefinitely.

Instead, the optimal glidepath for asset allocation appears to be a V-shaped equity exposure, that starts out high in the early working years, gets lower as retirement approaches, and then rebuilds again through the first half of retirement. Or viewed another way, the prospective retiree builds a reserve of bonds in the final decade leading up to retirement, and then spends down that bond reserve in the early years of retirement itself (allowing equity exposure to return to normal).

Ultimately, further research is necessary to determine the exact ideal shape of this “bond tent” (named for the shape of the bond allocation as it rises leading up to retirement and then falls thereafter). But the point remains that perhaps the best way to manage sequence of return risk in the years leading up to retirement and thereafter is simply to build up and then use a reserve of bonds to weather the storm.




https://www.kitces.com/blog/managing-portfolio-size-effect-with-bond-tent-in-retirement-red-zone/


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## treeguy64 (May 14, 2020)

I disliked Fidelity. Did OK there, but didn't care for their customer service. Went to Vanguard. Far better, all the way around. Got out of the market right before cv19 hit. Fine with me. I probably won't ever get back in, as I have no need to.


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## mathjak107 (May 14, 2020)

treeguy64 said:


> I disliked Fidelity. Did OK there, but didn't care for their customer service. Went to Vanguard. Far better, all the way around. Got out of the market right before cv19 hit. Fine with me. I probably won't ever get back in, as I have no need to.


opposite for me . vanguard was the worst customer experience i ever had from a brokerage . i wont do business from them ... i have been with fidelity 33 years and have nothing but praise for them


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## In The Sticks (May 14, 2020)

mathjak107 said:


> we have now had 130 rolling 30 year retirement cycles .... looking at the  outcomes has demonstrated over and over that unless you want a very low draw , taking a modest 4% has failed to last 66% of all those cycles  using fixed income only , regardless of rates .
> 
> best results are in the 40-60% equity range ........you want at least a 90% chance of not running out of money without running out of time WITH OUT TAKING PAY CUTS . NO ONE LIKES PAY CUTS , NOT  WHEN WORKING AND NOT IN RETIREMENT.
> 
> ...


Interesting.

I missed the boat on a big part of the stock market boom because I had a chunk of my 401(k) money in one of those funds that changes the mix as you approach your target retirement date.  They pull back on equities and increase bonds.  But during the time that equities were taking off, bonds were yielding low-to-negative returns.  Stupid me just left my money in that "We'll manage it to your target date" fund...it never occurred to me that my participation in _that_ was something to be managed. The fund just blindly marched forward based on what the calendar said. I only figured out what the approximate specific-year investment mix was when I copied a small graphic of the mix over the life of the fund and then magnified on my computer.

When I saw that VOYA's pure Bond Fund was negative, I started reading about the drivers of that market (wanting the classic conservative position for retirement), and concluded that there are no rules anymore.  The normal market drivers have been perverted by the externality known as The Fed.

As you say, the "4% rule" is now passé, mostly because there are no low-risk places to get that rate.  And I'd wonder how much of the efficacy of that V-shaped equity recommendation depends on where a given person might be on their retirement path during market ups & downs.

I have a VOYA document that puts forth a Base mix of equities and bonds (with 5-6 different classes in each bucket), and then a Defensive mix (less equity $/more bond $.)  The Base mix is your steady-state (there are different Base mixes depending on your risk tolerance), and when the most recent Annual Earnings Report is negative, you go to your Defensive mix and stay there (no matter how many consecutive negative Annual Reports there may be).  When the next positive Annual Earnings Report arrives, you return to the Base mix and stay there (no matter how many consecutive positive Annual Reports there may be) until the next negative Annual Report.  As I was told, this [obviously] is not a Market Timing tool.

I like Morningstar's bucket approach for simplicity: keep the money you'll need for the next 10 years in a variety liquid/semi-liquid investments (Cash/CDs/Bonds), with years 11+ being in equities.  This gives you time to recover from equity market downturns and is sure easy to manage.

Of course, all this depends on your having the money in the first place.  And concerns one may have over market movements must bring a like-kind degree of gratitude for being in a position where such things impact you.  Plus, keep in mind that the concept of "retirement" is a relatively modern one.


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## mathjak107 (May 14, 2020)

In The Sticks said:


> Interesting.
> 
> I missed the boat on a big part of the stock market boom because I had a chunk of my 401(k) money in one of those funds that changes the mix as you approach your target retirement date.  They pull back on equities and increase bonds.  But during the time that equities were taking off, bonds were yielding low-to-negative returns.  Stupid me just left my money in that "We'll manage it to your target date" fund...it never occurred to me that my participation in _that_ was something to be managed. The fund just blindly marched forward based on what the calendar said. I only figured out what the approximate specific-year investment mix was when I copied a small graphic of the mix over the life of the fund and then magnified on my computer.
> 
> ...


nooooooooooooo  , the 4% safe withdrawal rate is just fine .....

it has nothing to do with average  returns , inflation or interest rates ... it has to do more with the sequence of the gains and losses coming in while spending down .

that safe withdrawal rate is based on the worst outcomes in history . the likes of which we have not seen since the group that retired in 1965/1966 . if it wasn't for the fact they are based on the worst of times a saf withdrawal rate would be a whopping 6.50% .

in fact we had 120 30 year rolling retirement cycles  so far ..at 4% inflation adjusted and 50% equities you would have ended 90% of the time with more than you started and 67% of the time with 2x what you started . that is how conservative that draw is .

for a 4% inflation adjusted safe withdraw rate to hold all you need is a 2% real return over the first 15 years of a 30 year retirement period ....

the belief you need 4% interest rates is not correct


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