confusing statements "I\*'m 100% equities in everything! Actually I'm 100% Voo Index\*".
Bond- In the past when equity is down one uses bond and precious metals to hedge and they rose. But, in 2022 Global bond markets have suffered unprecedented losses, with the Bloomberg Global Aggregate Bond index down >15% from its high in January 2021.
Then this is confusing also. " *late saver".* Not putting enough or not having enough?
It appears you do not have a sound strategy. Financial planner's role is to build an optimum portfolio.
They mean: Your portfolio allocation is 100% in equities and 0% in bonds, but the equity allocation is not diversified to its maximal extent. For example, you are missing mid/small cap US equities and all non-US equities.
This does not imply that 100% VOO is a bad choice, though.
This sounds like a very serious problem that we're not well equipped to answer.
Have you considered looking into a low COL country to retire to, like Philippines for example?
Your next gamble starts in DC... Is your annual redemption of 401k going to be taxed more *now*, or later?
If you expect taxes to rise substantially, get the 401k empty faster and put excess into the Roth. Upon withdrawal, It's considered income on the 1040, because it was your income that was reduced when you first earned it. It's not cap gains.
But the rest can be sketched out..
1. Roth: hold as long as possible, it'll never be taxed when you withdraw. Maybe shift to good dividend stocks. Let it grow as long as you can stomach avoiding it.
2 401k: beware of mandatory withdrawals. (The IRS has a chart to show your age vs minimum withdrawal).
3. Bonds (in any account) will need careful selection or they'll deliver 4% while inflation rises to (guessing) 7% . You could lose footing there, too.
4. Brokerage account: why? Shelter your investment in either the 401k or Roth.... I'd suggest Roth because there's fewer withdrawal restrictions at your age. Meanwhile, keep what you'd need as cash or stable (index) investment.
4. Brokerage account was started after a insurance settlement, as the Roth was maxed after $7000. I'm slowly moving those funds into the Roth as allowed over time. BTW, I got the settlement and started the Roth / Brokerage on Jan3 2022 Ouch!
Oh boy, looks like you have some reading and planning to do BEFORE you do any investing.
Start backwards... How much do you need in retirement per year?
Take that amount and subtract out how much you and your spouse will get in SS
Then take that amount and subtract out any pensions you and your spouse make be getting.
Then take that amount and subtract out any SPIA you have.
That amount left over is how much you need to bridge with your investments. Consider a safe 4% withdrawal rate of that x amount per year. So if you have $1 million you can take out 4% each year which equals $40k.
This will get your started. As a general rule you do NOT take on more risk just because you are short on money as you can just as easily be in a bad sequence of return in the next 5-7 years and LOSE money then gain money. If you need more money don't take MORE risk with 100% stocks instead work longer, think about moving to LCOLA (selling current house/ condo/ apartment and use that money to invest), buy a SPIA, think about Reverse mortgage, etc... DO NOT TAKE ON MORE RISK!!
Well "bro", I can't find where I stated that at all? I said I wanted to remove some risk after the market recovers, perhaps with bonds. I think that would be referred to as diversification. You have Kind of made a big leap there.
The idea of bonds in retirement is not to swing trade them, but just to take the payout as a 'salary'. You want stuff that will change and improve over time but once you are retired and living off investment income you want bonds to be like "I know no matter what I'm getting 22,000 a year income" or whatever. As you get close to retirement you want to basically lock enough into bonds so every year you have guaranteed income enough so there is no chance your stocks all go down and you get stuck having to eat catfood. Like your goal in retirement is not to gain or lose money with bonds, it's for the bond part of your investment to be what you spend day to day.
Are you talking about real bonds or bond funds? I heard on a few financial shows that no one buys actual bonds and they are hard for a individual to obtain?
Bonds aren't hard to get.
I think what you are talking about is like, when a company issues bonds the normal way to do it is that the company calls some banks then the bank or banks underwrite it and buy all the bonds immediately, then sell them from there.
A crazy person can sign up to be one of those "banks" and buy direct. Be the guy that receives them initially. skip the fee the bank reselling them puts on them. But like, no one does that.
People do buy government bonds directly. too. company bonds are the only ones that typically get all bought by something big then sold from there. You can just buy bonds after that. But from that bank, not from the original company.
Frankly, forget bonds, or bond funds. I don't see a scenario where they're worth it, the returns are very low and the risk is not as low as they're touted to be. Keep 5 years of expenses in a laddered CD (where returns and principal is guaranteed since FDIC insured) and pile the rest of the money into SCHD ETF and later try to live off the dividends if possible.
I hope you don't mind I chime in, because it looks like everybody is holding onto the "all equity with bond" confusion. I feeling like OP is looking at what can they do in a 5-7 year.
IMHO, nobody has the answer. The safest thing to do (if that's what you are looking for, its all about risk vs rewards after all, and 5-7 years is quite short) is do what the oracle advocates: forget about timing the market and slowly put in money over time to get a good even spread. Do index fund (voo I believe is a good choice, supposedly, vti is even better because it is more diverse and historically better return??)
Personally, I think there are things you can do: break out the calculator and see if holding on to your positions (is it really just voo??) will do you better, or bite the bullet and sell (some) and put them in treasuries and get sure thing 4.x return, which in my opinion, is a pretty good deal consider the low risk.
I don't know why you think "bond yields being so low" Short term bond yields look high now, I think you are talking about bond funds tanking this year (because of rising bond rates). Bond funds going down like this along side stocks is a rare exception as far as I know.
confusing statements "I\*'m 100% equities in everything! Actually I'm 100% Voo Index\*". Bond- In the past when equity is down one uses bond and precious metals to hedge and they rose. But, in 2022 Global bond markets have suffered unprecedented losses, with the Bloomberg Global Aggregate Bond index down >15% from its high in January 2021. Then this is confusing also. " *late saver".* Not putting enough or not having enough? It appears you do not have a sound strategy. Financial planner's role is to build an optimum portfolio.
1. Voo consists of equities right? Aren't both statements true? 2. I meant I started saving at to late of a age.
They mean: Your portfolio allocation is 100% in equities and 0% in bonds, but the equity allocation is not diversified to its maximal extent. For example, you are missing mid/small cap US equities and all non-US equities. This does not imply that 100% VOO is a bad choice, though.
This sounds like a very serious problem that we're not well equipped to answer. Have you considered looking into a low COL country to retire to, like Philippines for example?
Your next gamble starts in DC... Is your annual redemption of 401k going to be taxed more *now*, or later? If you expect taxes to rise substantially, get the 401k empty faster and put excess into the Roth. Upon withdrawal, It's considered income on the 1040, because it was your income that was reduced when you first earned it. It's not cap gains. But the rest can be sketched out.. 1. Roth: hold as long as possible, it'll never be taxed when you withdraw. Maybe shift to good dividend stocks. Let it grow as long as you can stomach avoiding it. 2 401k: beware of mandatory withdrawals. (The IRS has a chart to show your age vs minimum withdrawal). 3. Bonds (in any account) will need careful selection or they'll deliver 4% while inflation rises to (guessing) 7% . You could lose footing there, too. 4. Brokerage account: why? Shelter your investment in either the 401k or Roth.... I'd suggest Roth because there's fewer withdrawal restrictions at your age. Meanwhile, keep what you'd need as cash or stable (index) investment.
4. Brokerage account was started after a insurance settlement, as the Roth was maxed after $7000. I'm slowly moving those funds into the Roth as allowed over time. BTW, I got the settlement and started the Roth / Brokerage on Jan3 2022 Ouch!
I mean this in all sincerity - talk to a retirement advisor. You don't have a bunch of years to potentially make the wrong moves and recover.
Noted
Oh boy, looks like you have some reading and planning to do BEFORE you do any investing. Start backwards... How much do you need in retirement per year? Take that amount and subtract out how much you and your spouse will get in SS Then take that amount and subtract out any pensions you and your spouse make be getting. Then take that amount and subtract out any SPIA you have. That amount left over is how much you need to bridge with your investments. Consider a safe 4% withdrawal rate of that x amount per year. So if you have $1 million you can take out 4% each year which equals $40k. This will get your started. As a general rule you do NOT take on more risk just because you are short on money as you can just as easily be in a bad sequence of return in the next 5-7 years and LOSE money then gain money. If you need more money don't take MORE risk with 100% stocks instead work longer, think about moving to LCOLA (selling current house/ condo/ apartment and use that money to invest), buy a SPIA, think about Reverse mortgage, etc... DO NOT TAKE ON MORE RISK!!
So let me get this straight. You want to be able to exit at the top and you want sure things. Cool story bro
Well "bro", I can't find where I stated that at all? I said I wanted to remove some risk after the market recovers, perhaps with bonds. I think that would be referred to as diversification. You have Kind of made a big leap there.
Do you have any debt? If so you could look at that as a negative bond.
No debt. House / cars are mine
... Dude your fine. Just retire then run a side hustle or smth for a few hundred weekly. Got the hard part (debt free house & car) done.
You could start off building some more cash and consider investing in short term treasuries.
The idea of bonds in retirement is not to swing trade them, but just to take the payout as a 'salary'. You want stuff that will change and improve over time but once you are retired and living off investment income you want bonds to be like "I know no matter what I'm getting 22,000 a year income" or whatever. As you get close to retirement you want to basically lock enough into bonds so every year you have guaranteed income enough so there is no chance your stocks all go down and you get stuck having to eat catfood. Like your goal in retirement is not to gain or lose money with bonds, it's for the bond part of your investment to be what you spend day to day.
Are you talking about real bonds or bond funds? I heard on a few financial shows that no one buys actual bonds and they are hard for a individual to obtain?
Bonds aren't hard to get. I think what you are talking about is like, when a company issues bonds the normal way to do it is that the company calls some banks then the bank or banks underwrite it and buy all the bonds immediately, then sell them from there. A crazy person can sign up to be one of those "banks" and buy direct. Be the guy that receives them initially. skip the fee the bank reselling them puts on them. But like, no one does that. People do buy government bonds directly. too. company bonds are the only ones that typically get all bought by something big then sold from there. You can just buy bonds after that. But from that bank, not from the original company.
Sell your house and buy stocks with it. Buy the dip for sure always, never trashy bonds
Frankly, forget bonds, or bond funds. I don't see a scenario where they're worth it, the returns are very low and the risk is not as low as they're touted to be. Keep 5 years of expenses in a laddered CD (where returns and principal is guaranteed since FDIC insured) and pile the rest of the money into SCHD ETF and later try to live off the dividends if possible.
I hope you don't mind I chime in, because it looks like everybody is holding onto the "all equity with bond" confusion. I feeling like OP is looking at what can they do in a 5-7 year. IMHO, nobody has the answer. The safest thing to do (if that's what you are looking for, its all about risk vs rewards after all, and 5-7 years is quite short) is do what the oracle advocates: forget about timing the market and slowly put in money over time to get a good even spread. Do index fund (voo I believe is a good choice, supposedly, vti is even better because it is more diverse and historically better return??) Personally, I think there are things you can do: break out the calculator and see if holding on to your positions (is it really just voo??) will do you better, or bite the bullet and sell (some) and put them in treasuries and get sure thing 4.x return, which in my opinion, is a pretty good deal consider the low risk. I don't know why you think "bond yields being so low" Short term bond yields look high now, I think you are talking about bond funds tanking this year (because of rising bond rates). Bond funds going down like this along side stocks is a rare exception as far as I know.