The Investment Thread (2 Viewers)

[superchuck500]

I'm kind of tempted to get into Tesla, but then they're still WAY above pre-pandemic prices, so there's still plenty of room to crater.

Still looks like a falling knife.

 

[SteveSBrickNJ]

The posters on this thread are so far above me in investing competency. Yet maybe someone will comment on my very basic question:
My 401k has a "Science and Technology" fund that has not done well for months.
With covid still around and more people using technology than in the past....why would such a fund not do well?

 

[UncleTrvlingJim]

The posters on this thread are so far above me in investing competency. Yet maybe someone will comment on my very basic question:
My 401k has a "Science and Technology" fund that has not done well for months.
With covid still around and more people using technology than in the past....why would such a fund not do well?

Without knowing specifically about the fund, in general, COVID was very good to a lot of tech companies that thrived off of people being home all the time, as restrictions have lifted and so on, people are spending less time at home... so you likely saw a spike up that was not sustainable long term.

Also, a lot of Science/Tech companies are high growth and depend on low interest rates to fund their high growth rates. With inflation, the era of cheap money is ending.... higher interest rates will mean slower growth, and tech companies tend to be hit harder in that area.

For a 401K, if you aren't closer than 10 years to retirement, I wouldn't stress it too much... depending on the fund.... tech stocks should do well over the very long term.

 

[SteveSBrickNJ]

Without knowing specifically about the fund, in general, COVID was very good to a lot of tech companies that thrived off of people being home all the time, as restrictions have lifted and so on, people are spending less time at home... so you likely saw a spike up that was not sustainable long term.

Also, a lot of Science/Tech companies are high growth and depend on low interest rates to fund their high growth rates. With inflation, the era of cheap money is ending.... higher interest rates will mean slower growth, and tech companies tend to be hit harder in that area.

For a 401K, if you aren't closer than 10 years to retirement, I wouldn't stress it too much... depending on the fund.... tech stocks should do well over the very long term.

I plan to retire in 3 to 5 years. I can talk with my financial advisor but feel free to comment further. My money is 50% in "fixed" and 50% in the variable Science & Tech Fund.

 

[UncleTrvlingJim]

I plan to retire in 3 to 5 years. I can talk with my financial advisor but feel free to comment further. My money is 50% in "fixed" and 50% in the variable Science & Tech Fund.

OK - depending on what "fixed" means, it's probably a safe ratio.... you could be a little more aggressive if you wanted, but not by much.

I am not a financial advisor, but my general plan is to make sure as I near retirement to have more and more of my portfolio in "safe" investments (cash and bond, etc). I don' think I'll have more than say 7 years worth of living expenses in safe investments though... I just need enough to weather 5-7 years of a bad market should it come to that.

 

[DaveXA]

OK - depending on what "fixed" means, it's probably a safe ratio.... you could be a little more aggressive if you wanted, but not by much.

I am not a financial advisor, but my general plan is to make sure as I near retirement to have more and more of my portfolio in "safe" investments (cash and bond, etc). I don' think I'll have more than say 7 years worth of living expenses in safe investments though... I just need enough to weather 5-7 years of a bad market should it come to that.

I'm guessing fixed would be fixed income, typically bonds, CDs and interest bearing accounts/investments.

The rest is on point.

 

[SteveSBrickNJ]

OK - depending on what "fixed" means, it's probably a safe ratio.... you could be a little more aggressive if you wanted, but not by much.

I am not a financial advisor, but my general plan is to make sure as I near retirement to have more and more of my portfolio in "safe" investments (cash and bond, etc). I don' think I'll have more than say 7 years worth of living expenses in safe investments though... I just need enough to weather 5-7 years of a bad market should it come to that.

My "fixed" is a pot of money that can never lose principal and is earning money at a 3% rate.
If it is helpful for you to help me.... here's my situation... I'm paid each month on the 15th and the 30th.
Each time I'm paid, $375 of my pay is directed as a contribution to my 401k. Until yesterday, 50% of my contribution was always allocated to the Science & Tech and the other 50% was allocated to the fixed.
Yet yesterday, I called the company ( Corebridge Financial / AIG ) and changed it for the future. My future contributions will have 75% allocated to the fixed and only 25% to the Science & Tech.

 

[UncleTrvlingJim]

My "fixed" is a pot of money that can never lose principal and is earning money at a 3% rate.
If it is helpful for you to help me.... here's my situation... I'm paid each month on the 15th and the 30th.
Each time I'm paid, $375 of my pay is directed as a contribution to my 401k. Until yesterday, 50% of my contribution was always allocated to the Science & Tech and the other 50% was allocated to the fixed.
Yet yesterday, I called the company ( Corebridge Financial / AIG ) and changed it for the future. My future contributions will have 75% allocated to the fixed and only 25% to the Science & Tech.

Thanks.... please keep in mind I'm not a financial advisor, just a guy on the internet, so apply your own analysis as appropriate. I think your plan is fine, but a bit on the conservative side - howevver I prefer that to some people I see who are nearing retirement but are almost 100% in stocks - that seems like a recipe for disaster.

The main things to think about are, if the bulk of your investments are only earning 3% is that enough for you to live on in retirement? If so, then stick with that for sure. There was a general rule that you should only withdraw about 4% of your retirement account every year... so if you have a million in the retirement account, you withdraw $40K.... theoretically that is supposed to last you forever. I think that's still a pretty decent rule.

So then think about how much you are going to need per year in retirement (factoring in probably increasing medical bills) then figure out what you are getting from social security and any pensions, any difference is what you're going to withdraw from your retirement plan.

For your stock/risky side, I'd consider mixing that money into a number of different funds. Science/Tech is generally good for long term growth potential, but as you can see you can hit patches where the whole sector is down for extended periods. You might want to add in something like healthcare (we're getting older as a population meaning more need for healthcare services, so decent long term growth prospects), etc...

 

[DaveXA]

My "fixed" is a pot of money that can never lose principal and is earning money at a 3% rate.
If it is helpful for you to help me.... here's my situation... I'm paid each month on the 15th and the 30th.
Each time I'm paid, $375 of my pay is directed as a contribution to my 401k. Until yesterday, 50% of my contribution was always allocated to the Science & Tech and the other 50% was allocated to the fixed.
Yet yesterday, I called the company ( Corebridge Financial / AIG ) and changed it for the future. My future contributions will have 75% allocated to the fixed and only 25% to the Science & Tech.

What is a pot of money that can never lose principal at 3%? Money market and interest checking accounts are 1% at best right now. I understand rates have been going up, but parking cash still isn't near 3%. Just wondering what's paying 3% rate if it's not a bond.

 

[SteveSBrickNJ]

What is a pot of money that can never lose principal at 3%? Money market and interest checking accounts are 1% at best right now. I understand rates have been going up, but parking cash still isn't near 3%. Just wondering what's paying 3% rate if it's not a bond.

I'm gonna call Corebridge Financial this afternoon to discuss if they feel there is a better fund for my 50% variable contributions to go into than the Science & Tech.
While I am having that conversation later, I'll ask for clarification on my fixed portion of my portfolio.
If "portfolio" is even an appropriate vocab. word in my case?

 

[superchuck500]

The posters on this thread are so far above me in investing competency. Yet maybe someone will comment on my very basic question:
My 401k has a "Science and Technology" fund that has not done well for months.
With covid still around and more people using technology than in the past....why would such a fund not do well?

One thing to remember is that stock prices are not purely correlated to the company’s sector and products “doing well” in a general sense. Stock price is based on many factors that include a speculative factor of how much the company will be worth in the future. This is often reflected by a “multiple” or price to earnings or price to value ratio - and it is quite fluid, it’s party of the regular fluctuation of a stock’s price. All of this is part of the stock’s valuation.

Information can become available that causes the valuation to decrease even though the company’s business is solid and its products are in-demand. A tech stock like Apple can be solidly hooked into our present and future but it can have a period of depressed value based on things like softening Chinese consumer demand or an anti-trust investigation in the EU. This can also happen across a sector based on things like inflation.

 

[DaveXA]

I'm gonna call Corebridge Financial this afternoon to discuss if they feel there is a better fund for my 50% variable contributions to go into than the Science & Tech.
While I am having that conversation later, I'll ask for clarification on my fixed portion of my portfolio.
If "portfolio" is even an appropriate vocab. word in my case?

It might possibly be a fixed income fund. There are wide variety of bond funds out there, but no advisor worth his salt is going to say a given investment can never lose principal unless it's cash or money market. Bonds can lose value. So it's sort of a red flag for me unless they're talking about something pretty specific.

 

[SteveSBrickNJ]

It might possibly be a fixed income fund. There are wide variety of bond funds out there, but no advisor worth his salt is going to say a given investment can never lose principal unless it's cash or money market. Bonds can lose value. So it's sort of a red flag for me unless they're talking about something pretty specific.

Ok. I called the advisor assigned to me but had to leave a voicemail. IF I do get to speak to him today, I will report back here with the main takeaways...........Edit: I came back to this post to mention that the financial advisor did not return my call. Friday before New Year's weekend .

 

[Mr. Blue Sky]

i came back to this post to mention that the financial advisor did not return my call. Friday before New Year's weekend .

Yeah ive been making some phone calls over the last couple of days, trying to get some stuff done and ’get ahead of the game’ as it were before the new year starts- with very little success getting ahold of people by phone.. then again, I haven’t done much work at all myself since the second week of December so i dont have much room to talk, ha .

 

[SteveSBrickNJ]

Ok. I called the advisor assigned to me but had to leave a voicemail. IF I do get to speak to him today, I will report back here with the main takeaways...........Edit: I came back to this post to mention that the financial advisor did not return my call. Friday before New Year's weekend .

@DaveXA I spoke with my financial advisor today. He said I established my "fixed account" way back in 1997. My fixed account is part of as contract between myself and their company. For this reason my 3% rate is locked in and cannot go down. I am grandfathered in so to speak.