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If you're near retirement and your investments are so volatile as to be "wiped out" and "ruined" by a short term economic downturn then they are absolutely not

If you're near retirement and your investments are so volatile as to be "wiped out" and "ruined" by a short term economic downturn then they are absolutely not doing everything right. In fact it's pretty much the opposite.

JohnFen 8y ago
Well, I was not privy to their entire approach, so you could be right. However, they thought they were doing it right. Nonetheless, it did, and does, give me pause.
- pickle-wizard 8y ago
  You bring up a good point. When it comes to investing, most people don't have a clue what they are doing. This in my opinion is the biggest problem with the move from a defined benefit to a defined contribution retirement scheme. It took the investing out of the hands of the people that knew what they were doing. Along those lines it really grinds my gears how the financial industry is ripping off people who are saving for retirement. Most 401k plans I've seen have incredibly high fees with a few investments that charge equally as high of fee. Especially those at small companies.
  - JohnFen 8y ago
    > When it comes to investing, most people don't have a clue what they are doing. This is why I largely avoid investing (I do have some money in index funds, though). I know that I don't know what I'm doing in that world, and I also lack the time or interest required to become competent in it.
FilterSweep 8y ago
“love to blame individuals for systemic issues.”
- sethammons 8y ago
  Standard advice is to move weight from equity investments to income investments as you near retirement. Lots of people stay(ed) heavy with equity because the potentially higher returns and shucked off the general advice.
- whamlastxmas 8y ago
  If by "systemic" you mean that the universe itself does not coddle you and prevent you from making poor decisions, then yeah sure.
  - FilterSweep 8y ago
    Did the Bankers deserve 29Tn bailout? How’s that for “coddling and preventing them from making poor decisions” The yield curve has already inverted so we’re looking down the barrel of “Recession The Sequel.” But yeah, keep blaming GenX (and presumably GenY and GenZ) for someone else’s problem. Many of them aren’t even earning a wage to save, avocado toast aside.
dajohnson89 8y ago
I wouldnt call the Great Recession a short term economic downturn. A financial crisis of that scale hadn't happened in nearly a century.
notacoward 8y ago
I'm between you two on this. The GenX cohort (I'm on the older end at 53 BTW) is caught in a bind. No, those near retirement shouldn't have all of their assets in volatile investments. But also no, they shouldn't have all of their assets in super-safe low-yield investments either because compounding is an essential part of building up a retirement fund. The transition from prime-earning-years portfolio choices to near-retirement (and then actual-retirement) portfolio choices is far from simple. Also, keep in mind that even supposedly-safe types of investments got hit pretty hard in that downturn. Top-rated funds were actually far riskier than anyone knew because of the ratings shenanigans that were part of the MBS/CDO/etc. mess. Home values also declined sharply. Many lost their jobs, so they had to draw from already low and declining retirement funds. I was fortunate. Many of my friends were not. While I'm proud of having made choices that preserved my ability to provide for my family, I wouldn't be so quick to criticize others whose rationally-equivalent choices turned out much worse.
- saltcured 8y ago
  If you are nearing retirement, you should already have moved some of your portfolio into low volatility assets. Those are the ones you should then be prepared to draw on in the immediately coming years. Retirement shouldn't viewed as an event. You don't just cash your chips one day. It will be a phase of life where you have to continue to do a mixture of short term and long term planning. The more volatile assets, if sensibly diversified, were not "wiped out" in 2008. The paper value dropped but then rebounded. As a GenX worry wort, I watched my own retirement account do this dance. I also watched my cash accounts slowly deteriorate against inflation. I am too risk averse to have gone all-in on the stock market even in my younger years, so had a portfolio mix more like someone 15-20 years older. If I'd been forced to live off my multi-year cache equivalent reserves, my 401K equivalent investments had mostly bounced back before I had to think about tapping any. What was the worst in 2008 were those who had gone all-in on the housing market and turned out upside-down. And, those who still counted on a pension as a large part of their retirement plan and saw their pension providers going bankrupt. Those were really wiped out.

JohnFen 8y ago

Well, I was not privy to their entire approach, so you could be right. However, they thought they were doing it right. Nonetheless, it did, and does, give me pause.

pickle-wizard 8y ago
You bring up a good point. When it comes to investing, most people don't have a clue what they are doing. This in my opinion is the biggest problem with the move from a defined benefit to a defined contribution retirement scheme. It took the investing out of the hands of the people that knew what they were doing. Along those lines it really grinds my gears how the financial industry is ripping off people who are saving for retirement. Most 401k plans I've seen have incredibly high fees with a few investments that charge equally as high of fee. Especially those at small companies.
- JohnFen 8y ago
  > When it comes to investing, most people don't have a clue what they are doing. This is why I largely avoid investing (I do have some money in index funds, though). I know that I don't know what I'm doing in that world, and I also lack the time or interest required to become competent in it.

FilterSweep 8y ago

“love to blame individuals for systemic issues.”

sethammons 8y ago
Standard advice is to move weight from equity investments to income investments as you near retirement. Lots of people stay(ed) heavy with equity because the potentially higher returns and shucked off the general advice.
whamlastxmas 8y ago
If by "systemic" you mean that the universe itself does not coddle you and prevent you from making poor decisions, then yeah sure.
- FilterSweep 8y ago
  Did the Bankers deserve 29Tn bailout? How’s that for “coddling and preventing them from making poor decisions” The yield curve has already inverted so we’re looking down the barrel of “Recession The Sequel.” But yeah, keep blaming GenX (and presumably GenY and GenZ) for someone else’s problem. Many of them aren’t even earning a wage to save, avocado toast aside.

dajohnson89 8y ago

I wouldnt call the Great Recession a short term economic downturn. A financial crisis of that scale hadn't happened in nearly a century.

notacoward 8y ago

I'm between you two on this. The GenX cohort (I'm on the older end at 53 BTW) is caught in a bind. No, those near retirement shouldn't have all of their assets in volatile investments. But also no, they shouldn't have all of their assets in super-safe low-yield investments either because compounding is an essential part of building up a retirement fund. The transition from prime-earning-years portfolio choices to near-retirement (and then actual-retirement) portfolio choices is far from simple. Also, keep in mind that even supposedly-safe types of investments got hit pretty hard in that downturn. Top-rated funds were actually far riskier than anyone knew because of the ratings shenanigans that were part of the MBS/CDO/etc. mess. Home values also declined sharply. Many lost their jobs, so they had to draw from already low and declining retirement funds. I was fortunate. Many of my friends were not. While I'm proud of having made choices that preserved my ability to provide for my family, I wouldn't be so quick to criticize others whose rationally-equivalent choices turned out much worse.

saltcured 8y ago
If you are nearing retirement, you should already have moved some of your portfolio into low volatility assets. Those are the ones you should then be prepared to draw on in the immediately coming years. Retirement shouldn't viewed as an event. You don't just cash your chips one day. It will be a phase of life where you have to continue to do a mixture of short term and long term planning. The more volatile assets, if sensibly diversified, were not "wiped out" in 2008. The paper value dropped but then rebounded. As a GenX worry wort, I watched my own retirement account do this dance. I also watched my cash accounts slowly deteriorate against inflation. I am too risk averse to have gone all-in on the stock market even in my younger years, so had a portfolio mix more like someone 15-20 years older. If I'd been forced to live off my multi-year cache equivalent reserves, my 401K equivalent investments had mostly bounced back before I had to think about tapping any. What was the worst in 2008 were those who had gone all-in on the housing market and turned out upside-down. And, those who still counted on a pension as a large part of their retirement plan and saw their pension providers going bankrupt. Those were really wiped out.