I'm relatively young and in the accumulation phase. I'm 100% in a low cost S&P 500 index fund in my 401k (VINIX) and VTSAX in my Roth IRA. Equities have historically yielded higher returns than fixed income over the long term, and low fee index funds outperform actively managed funds over the long term. Continued contributions during accumulation offset the volatility risk of equities. I have an emergency fund (in VUSXX in a taxable brokerage) to offset other risks and am working to increase it. That's the plan right now. I will add more and other types of fixed income as I get closer to retirement.blortchplop,
If you don't know enough, then how do you know that total bond index fund is a good choice? How do you know that the Wellington fund managers have made good choices?
A) Total bond market index fund is the default choice for people that knows nothing.
"How do you know that the Wellington fund managers have made good choices?"
B) I don't. But, they are paid millions to do this every year. And, their bonuses/compensation are tied to how well they beat their benchmark.
C) Back to you. Why do you think you can do better than the Wellington Fund management at 0.28% per year?
KlangFool
I've tried to answer what you've asked in good faith. I will note that you have not answered whether you have read the linked article (https://www.whitecoatinvestor.com/total ... ent-712482) or not, despite me asking three times. Have you read it? I think you'd find it interesting. And I honestly would like to know your thoughts on it.
Here's what I think is really going on: I think you picked Wellington and total bond market index some time ago based on solid advice. From everything I've read here, those are reasonable choices, and they have enjoyed a large consensus. I think suggestions that total bond index might not be the best fixed income choice or that the inflation protection provided by TIPS is valuable cause you to feel threatened or insecure in these decisions. Hence the response about personal inflation rates, which I don't think addresses the benefits of TIPS on the merits, nor would it be likely to convince someone else. Similarly, saying that total bond market is the default for people that know nothing: This is the repetition of a platitude linked to the (I concede) solid advice that you used to pick this fund some time ago.
I think it's more constructive to address arguments on their merits. One of the arguments against total bond in the article is that it doesn't include a broad enough swath of the bond market. "Buying the whole basket" should appeal to "nobody knows nothing" sensibilities.
I really, honestly, truly would like to know your thoughts on the article and its argument. Please read it and address it on the merits.
Statistics: Posted by blortchplop — Mon Oct 14, 2024 10:39 pm