88% Of Your Roth IRA Returns Depend On This
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- Опубліковано 8 тра 2023
- According to a report from Vanguard, 88% of your investment returns will be determined by how you have money spread among everything you invest in. Asset allocation is the process of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. It is a way to balance risk and return by choosing a mix of investments that aligns with an individual's financial goals, investment horizon, and risk tolerance. The goal of asset allocation is to diversify and manage risk while maximizing returns over the long term.
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Asset allocation is the process of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. The goal of asset allocation is to balance risk and return by choosing a mix of investments that aligns with an individual's financial goals, investment horizon, and risk tolerance.
Asset allocation is important for several reasons:
Diversification: By investing in a variety of assets, an investor can reduce their exposure to any one particular type of risk. For example, if all of an investor's money is invested in one stock and that stock performs poorly, the investor could lose a significant portion of their portfolio. However, if the portfolio is diversified across multiple stocks, bonds, and other assets, the impact of any one asset's performance will be less significant.
Risk management: By choosing a mix of assets that aligns with an individual's risk tolerance, asset allocation can help manage risk. For example, a younger investor with a longer time horizon may be able to tolerate more risk in their portfolio because they have more time to recover from any potential losses.
Maximizing returns: By diversifying across different asset classes, an investor can potentially increase their overall returns while minimizing risk. Different asset classes have different levels of risk and return, so by investing in a mix of assets, an investor can take advantage of the strengths of each asset class while minimizing its weaknesses.
Overall, asset allocation is an important tool for investors to manage risk and maximize returns over the long term. It is important to note that asset allocation should be tailored to an individual's specific financial situation, goals, and risk tolerance, and should be regularly reviewed and adjusted as circumstances change.
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Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money.
Just got into my 30's and started paying more attention to my retirement thanks to your videos and others. Glad to have some validity in my portfolio moving forward.
All stocks until 45 YOLO
Large cap, mid cap, small cap, and International 🎉
Great content and video as always.
Thank you so much for your videos Jarrad! I am really in love with them. May I ask which day of the month usually has the lowest price to invest in index fund ETF ? Thanks a lot!!😆
I’ll probably never own any bonds or international stocks throughout my lifetime.
Home country bias
@@Steveo_00700 it helps the USA has the best returns.
@MrDarkBM There have been periods when the S&P had underperformed for a 10 year period. During those years, internationals blew US stocks out of the water. Just enlightening you.
@@MrDarkBMright now it does. Who knows how it ll be in the future
I'm in agreement, I don't see how any other country can do better than the USA. The era of emerging markets is over. There may be little pockets here and there, but it won't be in any already developed countries, especially because their populations are declining rapidly. .. I see no point in owning bonds either, since it's easy enough minimize risk with ultra conservative ETFs without 'the surprises' of 'the bond market', and all those 'junk bonds' that only reveal themselves AFTER the collapse.
Terrific content sir, thanks! For Molly.
Oh wow! Thank you so much! You're too kind!
Another very helpful video. Thanks Jarrad
No problem! Thanks for watching!
I have seen quite few of your videos
It's often asked at what percentage of loss would someone be willing to tolerate before panicking. But in most instances what is really the point would be when would they start selling because of such a drop. It's not really a loss unless the shares are sold! That's a big difference from what is usually inferred. If someone is at a point where their assets must be sold for living expenses, then that's a different matter!
Great content as always! Can't wait to receive your asset allocation tracker. It will help me tremendously and timing couldn't be better given a recent inheritance. Thanks!!
No problem. Let me know in the comments section of the private video (I email you the link) if you have questions.
@@JarradMorrow I sure will!
Great advice. Trim the flowers and water the weeds.
Great video. New subscriber
Thanks for the sub!
2022 was a wildly unusual outlier in the way both stocks and bonds dropped together.
This is a very representative presentation of how “investment people” think. As such it is worth your attention. However money is made by looking at what businesses do and paying attention to their future prospects. You can’t buy a stock from a technical chart (astrology) or based on past performance (Kodak). People will always need power (energy, utilities) and food, water, healthcare.
"trust the process. ignore the noise. continue investing" thank you for the effort and the sharing. as a near retiree, perhaps a future video about sequence of returns risk and how to mitigate. thumbs up.
It would take me many videos to cover SRR since it's a topic I think deserves to be explained in depth. I might make the series at some point in the future, but probably won't be for a while if I do. A resource I trust and recommend on SRR is this one right here: earlyretirementnow.com/safe-withdrawal-rate-series/
It's long (52 different parts), but it's well worth taking a couple weeks/months to read each one from start to finish.
Thanks for another great video. I had been cracking my head on how to rebalance my portfolio without selling, I’m looking very forward to getting your spreadsheet, thanks for sharing !
Every single YT ad I saw wail watching this video was for either for some form of day trading service or someones get rich quick system program they want you to buy.
Its funny how the YT ads for a video are very badly matched up to the video they are shown with.
Bonds are for cash positions
Risk/return has to take into account timeframe. High short-term risk is often low long-term risk. Low short-term risk is often high long-term risk.
I have VOO, VB, and VO. Why? I want more control over my allocation. VTI is good, but i like to manage myself 😊
Im 33 and really into etfs in the Ira
I'm a big fan of them as well!
Question can I replace the U.S Short Term Bonds, for my treasury inflation protected security index fund? Should I replaced it? O can keep both.
You can hold whichever bonds you feel fits your needs. Unfortunately I can't say one way or the other if you should keep both.
Do you have a recommended asset allocation in a Roth IRA in retirement. I was in 100% Total Stock Market index Fund but was thinking of adding some bonds. I’ve always heard better to maximize your returns if you don’t plan on touching your Roth in retirement.
Jarrad, when you say tax advantaged account(when you were talking about the target date or Life Strategy), are you referring to a 401k vs Roth IRA?
When I say tax advantaged account I'm referring to retirement accounts where you either pay the taxes up front to get tax free growth (Roth IRA/401k/etc. type accounts) or the ones where the taxes are deferred (like Traditional IRA/401k/etc). TDFs are fine in those accounts, but you probably want to avoid holding them in taxable brokerage accounts if possible due to how they sometimes have to sell off underlying assets which causes the investor to pay capital gains. Do a google search for "vanguard target date fund tax issue" so you can get a real life example of how holding a TDF in a taxable brokerage account could end up screwing you over.
I wonder if it would be okay to add a little bitcoin, gold and bonds, international stocks as a small percentage of my portfolio.
Jarrad how many years before retirement are you planning to convert into bonds and your stock to bond mix at retirement? Curious on your thoughts. 7 years prior to retirement, 60/40? Btw I use your videos to help teach my 14 year old son. Thanks again.
I'm going to start reviewing my situation 10 years out to determine if I want to begin adding bonds. I'll look at my overall financial situation and where my retirement savings are at to make a decision. Once I have a plan I'll probably meet with a fee-only fiduciary advisor to get another set of eyes on it to make sure I'm not accidentally overlooking something.
lost 60k in a real estate investment in Orlando,Florida just before the 2008 recession
Why Bonds? Money market has higher gains without the down side.
Great video! Quick question. I was unemployed in 2023 yet at the same time didn't qualify to contribute to IRA due to filing taxes jointly. So I am planning to open a backdoor Roth IRA, and keep my traditional IRA $0 when using an investment platform. Do I need to report this somewhere when filing my tax returns? Secondly, I mistakenly filed my tax returns already (without reporting my plans of opening a backdoor Roth IRA), does this mean I can open a backdoor Roth IRA only for 2024? Third, what do you think about also opening a HSA account and contributing towards the same? Appreciate your videos. Please keep them coming.
If your spouse worked in 2023 you could have contributed to 2023 IRA. If you contributed $6,500 to your 2023 IRA you can convert that to Roth IRA.
Molly got me ❤️
Woof
Why VXUS? Doesn’t even hit 5% over history.
Your link does not work for your copy of your asset allocation tracker. Where can I get that copy?
Sorry about that. It's fixed now. Thanks for letting me know.
How often do international funds outperform the S and P 500?
Here's a chart from one of my other videos where I show you that history: ua-cam.com/video/6vTtuVQtE6c/v-deo.html
What breed is your dog? 😍
Mix between a Whippet and I don't know what the second breed is.
A good ol fashioned American mutt
Messing with your investments is like a bar of soap. The more you handle it the smaller it gets!!
😂 good one!
There is no risk in investing in total market, its volatility.
👍🏻
Wrong. You can lose money, that's a risk.
Lost decades are a risk, especially for retirees
If the volatility exceeds your time horizon, it’s a loss. The Nikkei still hasn’t gotten back to 1990 levels, 30 plus years of poor performance keeps me up at night. But if total market means total global market, then I agree.
@@christopherkeller5263 Agreed
bro what if they all plummeted and loose all money ?
Then you're gonna need alot of alcohol. Cheers! 🍸
@@death.for.breakfast 😂😊
🍄🍄🍄
Never understood why younger individuals only have 2 funds in their portfolio. They should have at least a small company growth fund and a value stock fund. The rate of return is definitely higher over time with small company funds.
'Diversifying' is the opposite of what Warren Buffett does. ..That's because he Knows what he's doing. just sayin.
Sorry to break it to ya, but you’re not Warren Buffett and most people aren’t. He knows the odds of matching his success are very low which is why he says to just invest in the S&P 500.
@@JarradMorrow Ok so that's what I'll do.😂 .. How much do I owe you?
Buffet has around 275 analysts working for him in the US. All told Berkshire Hathaway has over 380,000 employees around the world.