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Agree with you 100%, I did the same simulations and found the same result. I would suggest a step beyond though, because rebalancing your portfolio is fun year

Agree with you 100%, I did the same simulations and found the same result. I would suggest a step beyond though, because rebalancing your portfolio is fun year 1-5, but not so fun year 5-20: have a look at e.g. Vanguard retirement target funds. Essentially, it's an ETF with a rebalancing rule included for a specific target date. For instance if you buy the target 2050 (your hypothetical retirement age), the ETF rebalances itself between bonds/monetary fund/stocks until it reaches that date, u til it's pretty much all cash in 2050. Lowest hassle diversified retirement scheme I found.

kqr 2y ago
This is one of those things where again, one will have to weigh the costs of both alternatives. A rebalancing ETF usually has higher costs (management fees, but possibly also internal trading costs that show up as performance beneath benchmark index), but of course, manually rebalancing also has a cost – the cost of one's time and effort!
- agos 2y ago
  Vanguard's ETFs are really cheap. The retirement funds in question are like 0.24%, which is in the cheaper range for ETFs
youngtaff 2y ago
You still need to be invested in equities at retirement otherwise inflation just eats away at the value of the cash
- sgerenser 2y ago
  That’s why these target funds go down to ~50% stocks [edit: at the target date] not 0.
  - ac29 2y ago
    At least at Vanguard the final stage of target date funds is ~30% stocks: https://investor.vanguard.com/investment-products/mutual-funds/profile/vttvx#portfolio-composition https://investor.vanguard.com/investment-products/mutual-fun...
    - sgerenser 2y ago
      That fund is currently at 50% stocks. It does get more conservative as you get past the target date, but I was mainly referring to the stock percentage at target date, which the parent poster implied was almost zero.
arpinum 2y ago
There are scenarios where these target date funds are not good. Rebalancing into bonds and mmmfs is a form of insurance against catastrophic losses equities. But if you have a sufficiently large account then catastrophic losses that affect your life are extremely rare, if they do occur they will likely affect your bond portfolio as well, and the expected loss vs 100% equities over 15-20 years is significant, something like 10x the value of the insurance you are buying. If you want insurance for a large account then long-dated put options 20% of the money are much cheaper.
wil421 2y ago
My target date 2050 funds have performed 50% less than my S&P 500 and like 30/40% less than my total stock market fund.
- jart 2y ago
  You mean VFIFX? What a disaster. My retirement plan put me in that until I realized investment advice for young people is a tax on the inexperienced and vulnerable. VFFSX (S&P 500) does 2x better returns every time. I feel guilty saying it on Hacker News. Like pension funds I bet Vanguard is one of these so-called LPs who give money to VCs like Y Combinator to help ivy league kids follow their dreams. Without these heroes I'm not sure there'd be a startup economy. I just don't want to be the one who pays for it. I think the future Wall-E predicted with Buy N' Large is probably closer to the truth.
  - ac29 2y ago
    > VFFSX (S&P 500) does 2x better returns every time US large cap has certainly recently outperformed the other parts of the target date fund (international stocks, bonds). But there is certainly no guarantee that it will happen "every time". In the last 10 years, US equity has been the best overall performing asset class for the past decade but 7 out of those 10 years at least one other category outperformed it: https://www.blackrock.com/corporate/insights/blackrock-investment-institute/interactive-charts/return-map https://www.blackrock.com/corporate/insights/blackrock-inves... > Like pension funds I bet Vanguard is one of these so-called LPs who give money to VCs like Y Combinator to help ivy league kids follow their dreams. You can look up the holdings of VFIFX or any other Vanguard fund. There is no private equity or private credit.
    - jart 2y ago
      And now GLD with its 1 year return at 40% is outperforming them both, which is a really scary thought. How bad do things have to be, that all our blood sweat and tears scurrying off to work each mourning earns less than a piece of metal dug out of the ground that sits around doing nothing? I thought inflation was supposed to be a tax on poors, but even rich private equity which gets ahead by sucking the blood out of Americans digging themselves out the grave can't save itself.
sgerenser 2y ago
Nope not all cash, it goes down to around 50% stocks at the target date (and actually continues to get slightly more conservative after). Just look at the current portfolio of the Vanguard 2025 fund: https://investor.vanguard.com/investment-products/mutual-funds/profile/vttvx#portfolio-composition https://investor.vanguard.com/investment-products/mutual-fun...

kqr 2y ago

This is one of those things where again, one will have to weigh the costs of both alternatives. A rebalancing ETF usually has higher costs (management fees, but possibly also internal trading costs that show up as performance beneath benchmark index), but of course, manually rebalancing also has a cost – the cost of one's time and effort!

agos 2y ago
Vanguard's ETFs are really cheap. The retirement funds in question are like 0.24%, which is in the cheaper range for ETFs

youngtaff 2y ago

You still need to be invested in equities at retirement otherwise inflation just eats away at the value of the cash

sgerenser 2y ago
That’s why these target funds go down to ~50% stocks [edit: at the target date] not 0.
- ac29 2y ago
  At least at Vanguard the final stage of target date funds is ~30% stocks: https://investor.vanguard.com/investment-products/mutual-funds/profile/vttvx#portfolio-composition https://investor.vanguard.com/investment-products/mutual-fun...
  - sgerenser 2y ago
    That fund is currently at 50% stocks. It does get more conservative as you get past the target date, but I was mainly referring to the stock percentage at target date, which the parent poster implied was almost zero.

arpinum 2y ago

There are scenarios where these target date funds are not good. Rebalancing into bonds and mmmfs is a form of insurance against catastrophic losses equities. But if you have a sufficiently large account then catastrophic losses that affect your life are extremely rare, if they do occur they will likely affect your bond portfolio as well, and the expected loss vs 100% equities over 15-20 years is significant, something like 10x the value of the insurance you are buying. If you want insurance for a large account then long-dated put options 20% of the money are much cheaper.

wil421 2y ago

My target date 2050 funds have performed 50% less than my S&P 500 and like 30/40% less than my total stock market fund.

jart 2y ago
You mean VFIFX? What a disaster. My retirement plan put me in that until I realized investment advice for young people is a tax on the inexperienced and vulnerable. VFFSX (S&P 500) does 2x better returns every time. I feel guilty saying it on Hacker News. Like pension funds I bet Vanguard is one of these so-called LPs who give money to VCs like Y Combinator to help ivy league kids follow their dreams. Without these heroes I'm not sure there'd be a startup economy. I just don't want to be the one who pays for it. I think the future Wall-E predicted with Buy N' Large is probably closer to the truth.
- ac29 2y ago
  > VFFSX (S&P 500) does 2x better returns every time US large cap has certainly recently outperformed the other parts of the target date fund (international stocks, bonds). But there is certainly no guarantee that it will happen "every time". In the last 10 years, US equity has been the best overall performing asset class for the past decade but 7 out of those 10 years at least one other category outperformed it: https://www.blackrock.com/corporate/insights/blackrock-investment-institute/interactive-charts/return-map https://www.blackrock.com/corporate/insights/blackrock-inves... > Like pension funds I bet Vanguard is one of these so-called LPs who give money to VCs like Y Combinator to help ivy league kids follow their dreams. You can look up the holdings of VFIFX or any other Vanguard fund. There is no private equity or private credit.
  - jart 2y ago
    And now GLD with its 1 year return at 40% is outperforming them both, which is a really scary thought. How bad do things have to be, that all our blood sweat and tears scurrying off to work each mourning earns less than a piece of metal dug out of the ground that sits around doing nothing? I thought inflation was supposed to be a tax on poors, but even rich private equity which gets ahead by sucking the blood out of Americans digging themselves out the grave can't save itself.

sgerenser 2y ago

Nope not all cash, it goes down to around 50% stocks at the target date (and actually continues to get slightly more conservative after). Just look at the current portfolio of the Vanguard 2025 fund: https://investor.vanguard.com/investment-products/mutual-funds/profile/vttvx#portfolio-composition https://investor.vanguard.com/investment-products/mutual-fun...