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And as you get closer to retirement start moving them into more fixed income. I don't know if the same options are available in the states, but in Canada Vangu
by SketchySeaBeast 2y ago
And as you get closer to retirement start moving them into more fixed income. I don't know if the same options are available in the states, but in Canada Vanguard, Blackrock and others offer broad market index funds that have risk profiles that you can move through as you get close to retirement, allowing you to slowly pull out of equities and move into bonds. You shouldn't be 2 years from retirement and still 100% into equities.
- loco5niner 2y agoI've usually seen those called 'Target Date' retirement funds in the US, and they automatically rebalance your investments.
- SketchySeaBeast 2y agoYeah, that's another level of that, totally hands off.
- ryandrake 2y agoThe Target Date funds often charge high fees. You pay for automation that you could do yourself.
- ghaff 2y agoYeah. Although there is some percentage of people who don’t or just don’t want the mental overhead relative to dealing with stuff they actually care about.
- plorkyeran 2y agoVanguard's target date funds have high fees compared to their other funds, but 0.08% instead of 0.03% doesn't actually matter.
- ghaff 2y agoI’m not sure the target date funds are worth the management fees but I know people who use them because they are theoretically fire and forget. If you’re more active you can and should absolutely slowly move out of equities into more bonds and money market. (And can have managed IRAs based on age and risk profile as well.)
- SketchySeaBeast 2y agoAren't the management fees still very small, especially when compared to other retirement vehicles?
- ghaff 2y agoIt depends on the vehicle. My financial advisor is relatively high but provides other services. My self-managed stuff is lower. And a couple of things that pay out as annuities that can’t really compare.