Index funds

[Frwinkley]

Looking to invest in an index fund, but admittedly, I know very little about them...just that they should be part of a diversified portfolio.

We are about 4 years from retirement and are in good shape financially. Pension, 401k, IRAs, 403b, taxable brokerage account.

We have a fair amount of cash just sitting (in addition to an emergency fund). Between pension and cash, we will not need to without any monies from retirement accounts (prior to RMDs) and we can delay social security.

Is an index fund something we should consider or should we just let the cash sit?

 

[Carol_]

Can I interest you in a timeshare with DVC?

 

[Frwinkley]

Well that was helpful....

 

[Sweettears]

I suggest that you do some research. There are several funds that are managed to specific retirement dates that ratchet down the risk the closer you are to retirement. However keep in mind all funds have elements based on equities and are exposed to market fluctuations

 

[cvjw]

We are also a few years from retirement and have money in many different index funds. My husband does not want cash lying around not invested right now when the price of stocks are so low.

Maybe get a subscription to Morningstar and research an index fund that best fits your needs. There are so many to chose from!

 

[dclpluto]

Can I interest you in a timeshare with DVC?

lol the way dvc is treating their members right now. They haven’t even said if they are going to do the right thing. Maybe they will but don’t count on it.

 

[craigkerstiens]

There are a lot of options in index funds the easiest choice is to go with something that has very low management fees or essentially none and follows one of the major indexes. Two easy options would be to follow a total market fund or an S&P index fund. Over a long period of time people typically estimate the S&P to return about 10% yearly, any year can be up and down.

Depending on where you typically use for a brokerage they likely have a low fee fund that just follows the index. Fidelity has one, Vanguard does. Either would be good choices.

 

[BridgetBordeaux]

Index funds are great tools.
The challenge for you is to figure out how to diversify in such a way as to meet your needs.

Example (not necessarily matched to your situation):

35 percent S&P 500 index fund
15 percent Extended market index fund
5 percent Int'l index fund
The remaining 45 percent---a few Bond index funds with varying durations.

If you can read up on this subject via reputable sites (like Kiplingers, etc), you should be able to assemble a nice collection of holdings.

Vanguard and Fidelity are both good companies to deal with and see if they offer free guidance. I think one or both of them do.

There are also low cost (very low fee) funds that already have a good mix (70/30...60/40....50/50) of stocks/bonds.

They pretty much operate on auto pilot and are easy to research.

Finally.............there are target date funds that ramp up/down the holdings based upon the date in which you think you might want to start pulling funds out.

Just make sure anything you tie up is not earmarked for use in the next 3 years.

Letting cash sit in a CD or cash account is not going to make anything for the next few years, but it will be 100 percent safe.

 

[mikehn]

Your pension, 401k, IRA may already have some of your money invested in index funds. These are just shelters. The money inside them are invested in some securities. So before you do anything. Find out what your existing retirement accounts are invested in.

 

[wishuponastar1984]

I would first look at whether your retirement accounts are appropriately allocated. Secondly, you say "a fair amount of cash" which can vary widely by people's opinion. I would put a year's worth of income in a savings account or CD and then take the rest and invest. S&P Index funds are pretty easy to set up and forget. If you are risk averse and can't stomach market volatility then don't do it. I am staying the course with my investments. It hurts to look at the losses for the last few months but if I look at my overall capital gains inception to date it makes it much more tolerable.

 

[scard192]

I suggest that you do some research. There are several funds that are managed to specific retirement dates that ratchet down the risk the closer you are to retirement. However keep in mind all funds have elements based on equities and are exposed to market fluctuations

I have money in a 2020 fund with Fidelity and one with Transamerica. I have a call with my advisor from Fidelity soon, should be interesting to see what he suggests.

 

[lfracas1]

Looking to invest in an index fund, but admittedly, I know very little about them...just that they should be part of a diversified portfolio.

We are about 4 years from retirement and are in good shape financially. Pension, 401k, IRAs, 403b, taxable brokerage account.

We have a fair amount of cash just sitting (in addition to an emergency fund). Between pension and cash, we will not need to without any monies from retirement accounts (prior to RMDs) and we can delay social security.

Is an index fund something we should consider or should we just let the cash sit?

 

[lfracas1]

I would hire a fiduciary financial advisor to take a look at your whole portfolio and determine your risk tolerance. They will put together a portfolio for you and have a vested interest in your success.

 

[Hieraxx]

I would recommend what everyone above has said. 4 Years from Retirement is a short time frame, thus based on your risk tolerance, you and your advisor will need to discuss how
much your Stock/Bond/Cash/[other] ratios will need to be .

I would recommend Fidelity and Vanguard w/o fail, I have both mine and my wife's company plans managed thru Fidelity. I own Vanguard, Fidelity and Company Sponsored Index funds for 90% of our pot of gold.

I have a 10% position in some Active Vanguard older funds - but it's up to you and your advisor to determine what's best.

Coronavirus events are a good litmus test of folks tolerance.

Good luck

 

[Hieraxx]

I would recommend what everyone above has said. 4 Years from Retirement is a short time frame, thus based on your risk tolerance, you and your advisor will need to discuss how
much your Stock/Bond/Cash/[other] ratios will need to be .

I would recommend Fidelity and Vanguard w/o fail, I have both mine and my wife's company plans managed thru Fidelity. I own Vanguard, Fidelity and Company Sponsored Index funds for 90% of our pot of gold.

I have a 10% position in some Active Vanguard older funds - but it's up to you and your advisor to determine what's best.

Coronavirus events are a good litmus test of folks tolerance.

Good luck

Research wise - you might, in addition to finding an advisor, google some things with Index Funds / Bogleheads (Vanguard Centric - but good information to absorb)

 

[Nebraska_Disney]

Look for low cost funds. I would also google "bogleheads investing advice" and there are a lot of good discussions there about where to go. I am a Vanguard guy due to the low cost of investing with them and the ease at which I can invest with them. Are you able to do a ROTH IRA or are you looking to have this be a taxable/non-retirement type of account? If you can or want to do a ROTH, there are no required distributions at any time, which could be helpful since you have a pension and a 401K/403(b) already. Vanguard 500 fund is a good starting point.

 

[Val56]

Suggest checking out QQQ and/or SPDRs. Easy in easy out, and now they're pretty affordable. My husband has had good luck with them in his IRA over the years.

 

[Frwinkley]

Thank you all got the great advice. I will do my research.

 

[Etonduf]

Lots of good suggestions here. I second the recommendation of Vanguard or Fidelity. Both have "target date" funds which allocate holdings based on how close you are to retirement. Something like that may be useful for simplifying the right mix of stocks, bonds, etc.