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There is and always will be this qualifying "if you are a young person" criteria for "don't pay attention". Unfortunately there are some who fall into the "down

There is and always will be this qualifying "if you are a young person" criteria for "don't pay attention". Unfortunately there are some who fall into the "down" period right during retirement, which may lead to disastrous consequences. Also unfortunately, the US (at least), whose retirement strategy is based on market investments (IRAs, 401Ks, etc.), combined with the high risk of health issues having the potential to have a large financial impact, and no other means for support of specific categories, has no mechanisms for adjustments / no social safety net. Moral: if [still] in the US, make sure you stay young for ever ;-)

viraptor 4y ago
The recommended way to deal with that (by financial advisors I talked to / read) is that you start with the "risk/aggressive" slider all the way to the right and then move it back as you get closer to the retirement age. In practice that means that on the extreme end I'm 80-90% in shares, but 5 years to retirement I may be 50% in cash / bonds / something else stable. (I don't know if you can do the same in the US, but I would expect something similar exists)
- Tyresian 4y ago
  What makes you think bonds are stable? Vanguard's Total Bond Market Fund is down 8.03% in the past 3 months / 10.54% in the past year. In regards to risk adjustment you can change your investments / asset allocation. Target Date Funds do this automatically, otherwise you can manually move the investments. You'd only want to do this in retirement accounts or else you'll pay taxes on moving the money though. If you mean buying actual bonds, that is a good method to mitigate risk, but most people can't do that in a retirement account.
  - viraptor 4y ago
    They're not as stable as cash, but more stable than stocks. I wasn't giving precise recommendation here, just commenting on how the people usually deal with the risk when getting close to the retirement. Similar to the target date funds, but at least in Australia I can do similar moves manually.
  - ricardobayes 4y ago
    Some bonds are, Hungarian government-backed bonds pay 6% guaranteed yield yearly. Been going strong for years even with covid and such. It is the textbook 'risk-free asset' from the Black-Scholes formula. Of course it's been a much better investment when their inflation was lower than that :) It actually blows my mind how much of financial modeling ignores taxes and inflation.

viraptor 4y ago

The recommended way to deal with that (by financial advisors I talked to / read) is that you start with the "risk/aggressive" slider all the way to the right and then move it back as you get closer to the retirement age. In practice that means that on the extreme end I'm 80-90% in shares, but 5 years to retirement I may be 50% in cash / bonds / something else stable. (I don't know if you can do the same in the US, but I would expect something similar exists)

Tyresian 4y ago
What makes you think bonds are stable? Vanguard's Total Bond Market Fund is down 8.03% in the past 3 months / 10.54% in the past year. In regards to risk adjustment you can change your investments / asset allocation. Target Date Funds do this automatically, otherwise you can manually move the investments. You'd only want to do this in retirement accounts or else you'll pay taxes on moving the money though. If you mean buying actual bonds, that is a good method to mitigate risk, but most people can't do that in a retirement account.
- viraptor 4y ago
  They're not as stable as cash, but more stable than stocks. I wasn't giving precise recommendation here, just commenting on how the people usually deal with the risk when getting close to the retirement. Similar to the target date funds, but at least in Australia I can do similar moves manually.
- ricardobayes 4y ago
  Some bonds are, Hungarian government-backed bonds pay 6% guaranteed yield yearly. Been going strong for years even with covid and such. It is the textbook 'risk-free asset' from the Black-Scholes formula. Of course it's been a much better investment when their inflation was lower than that :) It actually blows my mind how much of financial modeling ignores taxes and inflation.