Your Unbiased Advisor: “A balanced portfolio still offers the best chance of success”

Vanguard: “A balanced portfolio still offers the best chance of success”

Tradition offers the balanced advice. History says EMM and Small Cap follows decline for large stocks. But any smart market watcher must admit it is difficult if not impossible to time the market. The balanced portfolio with some tilting provides fair returns over time. Some older readers overweight the more stable Vanguard funds like Wellesley Income since it has proven a 9% plus return for a long time. Most notable for my readers’ favorite funds is the fact that costs are much less than a Wall Street firm portfolio.

2022 Total Return Vanguard Fund Long-term Return Longevity

-19.8% 500 Index 10.8% since 1976

24.0% Energy 9.4% since 1984

-26.4% Extended Market 10.0% since 1987

-0.8% Health 15.7% since 1984

-30.1% International Growth 10.2% since 1981

-14.9% PRIMECAP 13.4% since 1984

-9.5% Small Cap Index 10.6% since 1960

-8.8% Wellesley Income 9.3% since 1970

-2.9% Windsor 11.3% since 1958

-12.9% Windsor II 10.7% since 1985

-10.2% Average 11.1% * *Average Annual Returns as of 12/30/22

Invest like billionaire Warren Buffett. Invest your tax refund for a $1,000,000 retirement fund in 35 years.

https://www.amazon.com/Vanguards-Top-Ten-mutual-funds/dp/150073909X/

Don’t waste your money on these expenses

Advisors don’t know what will happen in 2023 and beyond so don’t waste that 1-2% on quarterly fees, market timing schemes, or firm’s “special circumstance” stocks. If these folks were consistently picking winners, timing or lowering fees, we would all know about it. Big banks fire investment strategists. Financial writers recommend gold as a hedge, home/car warranties as protection, and consolidating debt as 2023 money moves. These are money wasters. My readers have found that cost of financial services is the best predictor of success: pay less; keep more. This is why Warren Buffett recommends buy and hold a low-cost market index fund for everyone who does not have his investing prowess. He is wealthy. His advice is FREE.

https://www.amazon.com/Warren-Buffetts-Investment-Strategy-Forget/dp/1484822900

New Years Resolutions: avoid financial mistakes

It is easy to get into trouble financially. Once you have a credit card you will use it and may run up debt. We have all done it but at 29% interest, it would take 5 years and $317 per month to pay the $9,045 interest and original $10,000. You pay double only IF you cut the card. If you are also paying off a student debt, you might lose your credit score. If you buy a car/house that requires continuous care, you might be over your head. Same if you quit a job before you have another or stayed at an old one too long. Raises don’t keep up with cost increases. Adequate car and term life insurance is all you need for protection. Phone service deals may help you. As Consumer Reports repeatedly warns, many extended auto-warranty policies are a bad deal. A review by Consumers’ Checkbook of home warranty plans found they rarely are worth the price or hassle. Better to invest for a rainy day: $317 a month for 5 years in a low-cost market index will provide about $25,000.

https://www.amazon.com/Simple-Financial-Life-stop-paycheck-paycheck/dp/1441499326/

Investment strategies to fund long-term retirement expenses

There are 4 styles of investment during the long retirement spending period according to the research of Murguia and Pfau. Four of the broad strategies identified include a total return preference, in which a person spends systematically from a diversified investment portfolio focused on total returns; an income protection preference that involves building a lifetime income floor with fixed annuities; a risk wrap approach, which builds a lifetime income floor with variable annuities offering lifetime withdrawal benefits wrapped around a risk-based portfolio; and a time segmentation preference that resembles a bucketing strategy that uses less volatile assets for shorter-term expenses and riskier assets offering higher growth potential for longer-term expenses. According to Murguia and Pfau, approximately 35% of individuals between ages 50 and 80 identified most closely with the income protection approach. This is followed by 33% who preferred a total return approach, 17% who preferred time segmentation and 15% who favored a risk wrap strategy. “With this distribution of preferences, it is misguided to narrowly promote one type of retirement strategy as above others,” Murguia and Pfau conclude. Warren Buffett has specified in his will how his heirs should follow a strategy that resembles the bucketing strategy: One will provide cash for the coming year and the other will provide a sound future. Most of us have annuity-type income floors in SS and RMDs funding.

https://www.amazon.com/Warren-Buffetts-Vanguard-Funds-Retirement/dp/1496148592

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