sethco

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Thought this would be a good time to look back at the various market sectors performance for 2020. You can make any judgements you want, but personally, my biggest takeaway is that market timing and individual stock picking is a very difficult task that is not worth my time or effort. I am sure there are some people that perfectly timed just before the market tanked and got back in at close to the market low, but I also know some people that are still sitting on the sidelines waiting for the next market correction or bear market. Another takeaway for me was that the high market returns were not just attributed to the largest cap companies like Tesla, Amazon, Microsoft, Apple, etc. Sure, if you bought individual stocks in these companies you did very well, but you also didn't need to own just these companies to do very good for the year. You never know when one of these juggernauts are going to be the next Sears, JC Penney, Toys R Us and so on
Some may call this cherry picking numbers, but my time frame is 1/1/20-12/31/20. So, if you went into a coma and awoke today unaware of what the market did intrayear, these are your returns. I'll use Vanguard funds as my proxy for the different sectors

Total US Stock (VTSAX) +20.99%
S+P 500 (VFINX) +18.25%
Emerging Markets (VEMAX) +15.24%
Total International (VGTSX) +11.16%
Small Cap (VEMAX) +19.11%
REIT (VGSLX) -4.65%
Total US Bond (VBTLX) +7.72%
Total International Bond (VTABX) +4.54%
Mid Cap (VIMSX) +18.10%
Small Cap Value (VISVX) +5.72%

These are the sectors that I invest in, so feel free to add others. I would love to hear others takeaways for this year in investing
 
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linkin06

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I am a recent graduate, so i am 100% equities with cash on the side. I am doing 60% VTI/40% VXUS. I feel that America may struggle more with covid and lag the world due to our ineptitude and lack of strong public health efforts. I also think the internet has really transformed the world even more globally, and I think that helps more emerging world.
 
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sethco

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I am a recent graduate, so i am 100% equities with cash on the side. I am doing 60% VTI/40% VXUS. I feel that America may struggle more with covid and lag the world due to our ineptitude and lack of strong public health efforts. I also think the internet has really transformed the world even more globally, and I think that helps more emerging world.

Were you able to withstand not selling during the downturn? With your above thoughts, are you thinking of adding more fixed income (I.e. Bonds, CDs, etc.) or Emerging Markets?
 
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okayplayer

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This year more than any other (caveat I've only been an attending 6.5 years) affirmed my belief that timing the market is impossible and not worth the calories burned to attempt. I know of multiple partners in my group who pulled everything out of the market during the huge dip this spring and are still waiting to reenter the market. This is a terrible strategy long term. Be humble and understand that there are factors we cannot predict as individuals that will drive the market in ways we cannot predict (massive economic stimulus during recession, etc).

I encourage every young attending out there to write an Investor Policy Statement with their spouse which includes asset allocation and to maintain that throughout good and bad market performance. The point of that document is that it is something for you to reference at times of extreme market turmoil.

As reference, here is mine (the specific allocation/drawdown plan is not what is important - having one and following it through all market conditions is what is important):


Investor Policy Statement for Mr. Okayplayer and Mrs. Okayplayer

Objective:

• Retire at ages 52/kids out of house
• Acquire a large cushion, with 33x annual expenses (3% withdrawal rate)

Philosophy:
• Invest in a diverse portfolio of index funds, keeping expenses low.

  • Buy and hold for the long-term. Engage in dollar cost averaging, investing monthly automatically.
  • Accept market returns, rebalancing annually in January.
• Anticipate withdrawal rate 3%.
  • Maintain >$20,000 in cash in emergency fund during working years
  • At retirement, 5 years of expenses in cash/CDs, remainder in equities
Asset Allocation:
• 70% US Stocks, 25% International (10% Emerging Markets), 5% REIT. At retirement age, ensure 5 years of expenses in cash/CDs.

Other Considerations:
• Maximize tax deductions via 401(k), HSA, 529.
• Annual backdoor Roth contributions of $5500 each in January.
• Fund 529 accounts $500/mo/child, to reach a goal of $200,000/child at age 18.
• Once student loans paid off, invest amount equivalent to prior monthly payments into brokerage account monthly. Forego monthly investment to taxable account to cover large expenses (vehicles, home improvement).
Tax loss harvest when possible.

  • Once student loans paid off, start Donor Advised Fund for charitable contributions.
Pre-retirement Considerations:
• Research health insurance options.
• Consider part time work as an option to transition to retirement.

Drawdown Plan:
• Receive dividends and capital gains as cash transfers to bank account.
• Overall goal of maximal tax efficiency during drawdown phase. When cash is needed, sell taxable assets and minimize/optimize capital gains.
• Donate appreciated securities to Donor Advised Fund when needed to maintain low tax bracket.
• At 59.5, evaluate 401(k)/IRA and estimate RMD’s, which kick in age 70.5.
• Anticipate delaying Social Security to age 70 to get the maximum benefit of 8% guaranteed return per year, assuming good health.
• Pay for college/graduate school for children with 529s; any surplus to grandchildren.

Retirement Asset Allocation:
• 5 years of expenses in cash/CDs. Use this money during market downturns to avoid selling equities. Replenish once market improved.
• Remainder in equities, maintaining US/International ratio.
 
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dr doze

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This year more than any other (caveat I've only been an attending 6.5 years) affirmed my belief that timing the market is impossible and not worth the calories burned to attempt. I know of multiple partners in my group who pulled everything out of the market during the huge dip this spring and are still waiting to reenter the market. This is a terrible strategy long term. Be humble and understand that there are factors we cannot predict as individuals that will drive the market in ways we cannot predict (massive economic stimulus during recession, etc).

I encourage every young attending out there to write an Investor Policy Statement with their spouse which includes asset allocation and to maintain that throughout good and bad market performance. The point of that document is that it is something for you to reference at times of extreme market turmoil.

As reference, here is mine (the specific allocation/drawdown plan is not what is important - having one and following it through all market conditions is what is important):


Investor Policy Statement for Mr. Okayplayer and Mrs. Okayplayer

Objective:

• Retire at ages 52/kids out of house
• Acquire a large cushion, with 33x annual expenses (3% withdrawal rate)

Philosophy:
• Invest in a diverse portfolio of index funds, keeping expenses low.

  • Buy and hold for the long-term. Engage in dollar cost averaging, investing monthly automatically.
  • Accept market returns, rebalancing annually in January.
• Anticipate withdrawal rate 3%.
  • Maintain >$20,000 in cash in emergency fund during working years
  • At retirement, 5 years of expenses in cash/CDs, remainder in equities
Asset Allocation:
• 70% US Stocks, 25% International (10% Emerging Markets), 5% REIT. At retirement age, ensure 5 years of expenses in cash/CDs.

Other Considerations:
• Maximize tax deductions via 401(k), HSA, 529.
• Annual backdoor Roth contributions of $5500 each in January.
• Fund 529 accounts $500/mo/child, to reach a goal of $200,000/child at age 18.
• Once student loans paid off, invest amount equivalent to prior monthly payments into brokerage account monthly. Forego monthly investment to taxable account to cover large expenses (vehicles, home improvement).
Tax loss harvest when possible.

  • Once student loans paid off, start Donor Advised Fund for charitable contributions.
Pre-retirement Considerations:
• Research health insurance options.
• Consider part time work as an option to transition to retirement.

Drawdown Plan:
• Receive dividends and capital gains as cash transfers to bank account.
• Overall goal of maximal tax efficiency during drawdown phase. When cash is needed, sell taxable assets and minimize/optimize capital gains.
• Donate appreciated securities to Donor Advised Fund when needed to maintain low tax bracket.
• At 59.5, evaluate 401(k)/IRA and estimate RMD’s, which kick in age 70.5.
• Anticipate delaying Social Security to age 70 to get the maximum benefit of 8% guaranteed return per year, assuming good health.
• Pay for college/graduate school for children with 529s; any surplus to grandchildren.

Retirement Asset Allocation:
• 5 years of expenses in cash/CDs. Use this money during market downturns to avoid selling equities. Replenish once market improved.
• Remainder in equities, maintaining US/International ratio.

Excellent. Should meet your goals provided you maintain your income, maintain a good savings rate, Stick to your IPS.
 
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sethco

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Interesting. Good to see someone else posting about the market.
The DOW has been up only 5.5% for the year.
I ended up beating that quite handedly this year.
Looking at the VTSAX, I am coming up with a 18.6% increase y/y. ($79.80 to $94.74)
I run a fairly small group of investors and have posted all my trades in real time.
One stock that I currently hold and haven't sold yet based on tax purposes, but have done fairly well on thus far, it may be one of my few long term holds is LCA.
Well thanks for the post, quite interesting.



This is where I got my data looking at the one year performance. The difference between you are me, investing wise, is I am perfectly content in achieving average market returns. While it may be good to beat the market in a single year, there has been exceedingly few investors or fund managers that have consistently done this over a longer time period. John Bogle demonstrated this very well in a couple of his books.

I would suggest you take a look at the amount of risk you are taking in your portfolio

 
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I am 100% in VTSAX. I will buy some bonds and maybe international as I get older. Zero desire to sell at market lows in the spring and I actually bought in April which worked well. Not a market timer though.
 
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FFP

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As always, I am less than 60-70% in stocks, and that affects my returns (but radically improves my sleep). I am beginning to rebalance into developed non-US markets (maybe with a touch of emergent markets as in VXUS), and risk giving up even more returns, for multiple reasons:
- The US stock market bubble, especially for technology companies. For history buffs, this looks eerily like 1999-2000.
- The more and more worthless dollar. Our moment of reckoning is coming. One can't have a lot of money in circulation without inflation (the latter is one reason why the stock market is so overpriced).
- The coming US socialism. One can't outperform other countries if one makes the same mistakes as other countries. Our unique brand of capitalism is the main reason for our historic success.

There is a reason big and wise money (e.g. the Yale endowment) has diversified away from US stocks, or even foreign stocks. Now it's the time to learn to invest in alternatives (e.g. private REITs, which don't have to distribute 90% of their profits at the end of the year, like public ones).

Remember Japan. Past performance (even of a big developed market) is not a predictor of future performance. Being 100% in stocks may be OK with 30-50 years to go, but it can be a killer for shorter terms (1930s, WW2, Japan etc.). Things have a tendency to revert to the mean; stocks cannot grow faster long-term than the underlying businesses and economies, and losing 50% of the market value in a recession requires a 200% upturn just to get back to zero (if ignoring inflation). Rule #1 should be "never lose money".

Because of "quantitative easing" (i.e. delirious cheap money printing), the 60/40 stocks/bonds engine has been broken. Cash is truly becoming trash, but anything else is also risky. There is almost nothing that can guarantee even preservation of capital long-term (at current buying value). We can just hope we can outpace the coming inflation and economic downturn.
 
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BLADEMDA

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I still think there is plenty of upside in international stocks, emerging markets and the asian markets. Like it or not China is going to become the number one economy in the world over the next 8 years. This presents a lot of growth investment opportunities. Hunter Biden (and Big Daddy) aren't the only ones looking to ride the Chinese gravy train.


 
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BLADEMDA

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For those of you facing less earning potential and reduced income over the next decade there is still hope.

Here is what $60,000 invested annually is worth after 25 years. That should be the MINIMUM goal per year for any attending IMHO.

After 25 years you could have $3,655,416.41.​

Your original investment of $60,000.00 plus your annual investments of $60,000.00 could be worth $3,655,416.41 after 25 years. This assumes an annual rate of return of 6% and all of your annual investments happen at the beginning of the year. All values are shown before inflation is taken into account.

Annual Investment Returns​


 
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sethco

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How do you guys explain the fact that the market jumped 20% in 2020 with the US suffering the hardest from Covid?

That's kind of the point though isn't it? 9+ months into the pandemic, is there any economy firing on all cylinders? Yet, here we are with double digit returns for not just the US markets, but also International and Emerging Markets. I think that's one my biggest lessons for the year. Economic health does not always correlate with the markets. Why bother trying to guess how markets should behave?
 
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The market will keep going up as long as it is kept propped up by the government. As soon as it becomes politically untenable to continue printing money the house of cards will fall.
 
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Shimmy8

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3 years out. Sticking with my plan.

Income: mid-high 300s. Work contributes $30kish each year to 401k. Max HSA/backdoor roth/401k.

Debt: 170k left on student loans. To be paid off by end of 2022, if not sooner.

AA: 70/30 US/international. Rebalance every 6 months.

Getting married later this year, will be sitting down soon with SO to develop a specific IPS. Thanks @okayplayer that is a great template.
 
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dr doze

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I still think there is plenty of upside in international stocks, emerging markets and the asian markets. Like it or not China is going to become the number one economy in the world over the next 8 years. This presents a lot of growth investment opportunities. Hunter Biden (and Big Daddy) aren't the only ones looking to ride the Chinese gravy train.



A country that has trouble providing clean food, air, and water to its populace can't be relied on to be overly concerned with the rights of foreign shareholders.

China has had massive economic growth rate for decades. Not a secret. Its stock market has almost always traded at lower multiples than US markets. Returns have trailed US markets. The Reason is share dilution.

that said, I do have a tilt to emerging markets value due to extreme valuation differences.
DGS, SFENX, DFEVX
 
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nimbus

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As always, I am less than 60-70% in stocks, and that affects my returns (but radically improves my sleep). I am beginning to rebalance into developed non-US markets (maybe with a touch of emergent markets as in VXUS), and risk giving up even more returns, for multiple reasons:
- The US stock market bubble, especially for technology companies. For history buffs, this looks eerily like 1999-2000.
- The more and more worthless dollar. Our moment of reckoning is coming. One can't have a lot of money in circulation without inflation (the latter is one reason why the stock market is so overpriced).
- The coming US socialism. One can't outperform other countries if one makes the same mistakes as other countries. Our unique brand of capitalism is the main reason for our historic success.

There is a reason big and wise money (e.g. the Yale endowment) has diversified away from US stocks, or even foreign stocks. Now it's the time to learn to invest in alternatives (e.g. private REITs, which don't have to distribute 90% of their profits at the end of the year, like public ones).

Remember Japan. Past performance (even of a big developed market) is not a predictor of future performance. Being 100% in stocks may be OK with 30-50 years to go, but it can be a killer for shorter terms (1930s, WW2, Japan etc.). Things have a tendency to revert to the mean; stocks cannot grow faster long-term than the underlying businesses and economies, and losing 50% of the market value in a recession requires a 200% upturn just to get back to zero (if ignoring inflation). Rule #1 should be "never lose money".

Because of "quantitative easing" (i.e. delirious cheap money printing), the 60/40 stocks/bonds engine has been broken. Cash is truly becoming trash, but anything else is also risky. There is almost nothing that can guarantee even preservation of capital long-term (at current buying value). We can just hope we can outpace the coming inflation and economic downturn.

Heard on the radio a couple days ago that QQQ was up 40% in 2020 after being up 37% in 2019.
 

anonperson

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W2 position (not anes)
Been in practice for 3 years

This is my yearly contribution:
19500/year in 401k
11000/ year match from employer
12000/ year backdoor Roth
~36000 to 48000/ year in taxable account
12000/ year in 529

100% equities ( S and P fund in my 401k) and VTI/VTSAX in my IRA and taxable account.

Have $100k in CDs and savings to use for emergencies.

Live in a HCOL area (CA) and bought a house after fellowship. Was a risk and I know it's not recommended but was tired of renting.

Current mortgage is for $700k. Initial interest rate was 4% but have refinanced twice in the last 6 months (no cost) down to 2.75%. Decreased monthly payments by $700/ month.

Live a reasonably comfortable life and feel like I can save and enjoy life as well.

You can't have everything on a physicians salary but you can have a lot of things.

I don't think I am smart enough or driven to individually pick stocks so I am looking for slow and steady gains. Not looking for a home run.
 
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BLADEMDA

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A country that has trouble providing clean food, air, and water to its populace can't be relied on to be overly concerned with the rights of foreign shareholders.

China has had massive economic growth rate for decades. Not a secret. Its stock market has almost always traded at lower multiples than US markets. Returns have trailed US markets. The Reason is share dilution.

that said, I do have a tilt to emerging markets value due to extreme valuation differences.
DGS, SFENX, DFEVX

The Asian markets and emerging markets have underperformed the past few years. If you believe in a return to the norm, as you do, the odds heavily favor international and emerging markets vs the USA. That said, I have 28% of my equity exposure in those categories and I am hoping that next year the % increases to 35% as those equities begin to catch up.
 
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BLADEMDA

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The market will keep going up as long as it is kept propped up by the government. As soon as it becomes politically untenable to continue printing money the house of cards will fall.

I think you are misunderstanding the dollar. As we print more money stocks become more valuable as the dollar depreciates. Hard Assets also become more valuable as the dollar falls. Investors want to own real assets vs a depreciating currency like the U.S. Dollar. By keeping your wealth in dollars you are actually losing wealth as the currency buys less and less. This forces investors such as myself to take a hard look at our 60/40 plan and decide whether 80/20 is the new 60/40.

 
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anonperson

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Speaking of printing more dollars and devalued currency.

I did start to buy some physical gold (bullion coins) a few months ago. Not a crazy amount but will slowly acquire a few oz each year.

If it goes down in value, no big deal since it means the world is stable. If it increases significantly in value, probably means the world is turning to $h!t.

It doesn't hurt that holding and looking at gold is pretty cool .
 
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BLADEMDA

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Doze may disagree with me but I prefer investing in low volatility value stocks which pay dividends vs cash/bonds. I also think the international/emerging markets are due for a very nice rally in 2021 or 2022 as we recover from Covid 19.
 

dr doze

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The Asian markets and emerging markets have underperformed the past few years. If you believe in a return to the norm, as you do, the odds heavily favor international and emerging markets vs the USA. That said, I have 28% of my equity exposure in those categories and I am hoping that next year the % increases to 35% as those equities begin to catch up.
I do expect it. But I also know that what is expected is not necessarily what you get. I do tilt. But I also diversify widely. If I was certain on mean reversion I would massively overweight emerging markets, international developed markets and US Small Value.

I do tilt but not overwhelmingly so.
 
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BLADEMDA

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Speaking of printing more dollars and devalued currency.

I did start to buy some physical gold (bullion coins) a few months ago. Not a crazy amount but will slowly acquire a few oz each year.

If it goes down in value, no big deal since it means the world is stable. If it increases significantly in value, probably means the world is turning to $h!t.

It doesn't hurt that holding and looking at gold is pretty cool .

I have been buying gold since 2010 with paltry returns vs bitcoin or U.S. equities (especially tech stocks). That said, I like the security of gold even though my bitcoin has been a much better investment.
 

anonperson

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I have been buying gold since 2010 with paltry returns vs bitcoin or U.S. equities (especially tech stocks). That said, I like the security of gold even though my bitcoin has been a much better investment.
Agreed. It's not going to make anyone rich but in my eyes, it has withstood the test of time by being universally considered valuable.

If things destabilize and I need to bribe people to get my family to safety, having a couple oz of physical gold is the way to go in my eyes. (I know this is fairly remote, but might as well prepare for all issues).
 

SaltyDog

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If things destabilize and I need to bribe people

Personally, if things ever got that bad, I’d rather be the guy with the guns & ammo that other people are bribing for safety.
 
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BLADEMDA

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The $1,200 checks to most American households that were included in that legislation contributed a further $276 billion to personal income — much of which accrued to families that did not experience a drop in earnings.

And the law’s signature program to encourage businesses to keep people on their payrolls, the Paycheck Protection Program, prevented a collapse in “proprietor’s income” — profits that accrued to owners of businesses and farms. This income rose narrowly, by $29 billion, but would have fallen by $143 billion if not for the P.P.P. and a coronavirus food assistance program.

These are remarkable numbers. When it’s all tallied up, Americans’ cumulative after-tax personal income was $1.03 trillion higher from March to November of 2020 than in 2019, an increase of more than 8 percent. Some of the pessimism among economic forecasters (and journalists) in the spring reflected a failure to understand just how large and influential those stimulus payments would turn out to be.
 

vector2

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. When it’s all tallied up, Americans’ cumulative after-tax personal income was $1.03 trillion higher from March to November of 2020

Billionares’ wealth grew by $845b in the first 6 months of 2020 and grew cumulatively $1.9T by the end of the year. It’s disingenuous to refer to “Americans’ cumulative after-tax personal income” without discussing the median and distribution of that income.
 
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vector2

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DC193729-578D-422B-A80B-B9E9574225EE.jpeg


Dollar index shown over the last 30 yrs. Interesting to note how relatively flat it is given all the fear mongering about fed printing and trillions worth of debt issuance
 

dr doze

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Billionares’ wealth grew by $845b in the first 6 months of 2020 and grew cumulatively $1.9T by the end of the year. It’s disingenuous to refer to “Americans’ cumulative after-tax personal income” without discussing the median and distribution of that income.

written 15 years ago.

 
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abolt18

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As a resident, my only investments are in mine and my wife's Roth IRAs, which we maxed out for 2019 and will be maxing out the 2020 contributions before our April deadline. Everything is in VTSAX. This accounts are looking pretty good right now for the end of the year.

When things dropped in March, we were able to make big (for us) contributions. A very good year indeed. Plan to switch to a 3-fund approach with no more than 10% bonds this summer as my income goes up dramatically.
 
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okayplayer

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Really interesting graph. Any attending reading this should be 99th %ile for age on this chart.

I post this to illustrate that you don't have to be novel with your investments (ie. chasing returns that outpace the index funds) to obtain 99th %ile results. You need a good income and a reasonable savings rate (20%+) and time. We can all achieve this.
 

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vector2

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Interesting read. As the author says, today we still have liberals who are eager to spend and regulate, however what do we have on the other side? It’s not folks who simply ignore the variance- they are flat-out lying about it existing and being a problem.

See:

 
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pgg

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We topped off some 2019 retirement account contributions when we filed our taxes in April, which was fortuitous "timing" but a small amount as a % of the whole portfolio. Beyond that, steady monthly savings. Backdoor Roths for me and my wife every January. Rebalanced as usual per the plan. Excess funds into taxable.

It's been fun to watch the market gyrations and circus sideshows like bitcoin and Tesla, but I'm a spectator. I have no need to play that game, so I don't.
 
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anesthesiadoc

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Most of your strategy is pretty sound. Agree no point in trying to time the market ("time in" >>> "timing"). i think your 529 contribution is a little low. Look at average yearly cost of tuition. Not saying I have all the answers, but would adjust accordingly. I work for a place that would give my kids 90% tuition if they go to our affiliate school (but I'm not banking on them wanting to go there, just hoping maybe one of them does).

Agree strongly with maxing out the HSA. If you can afford it, don't spend any of the money you put in there, and invest aggressively. (triple tax advantaged as long as you when you do cash it out you do so on health care/ insurance premiums, etc). I'm going to max it out over the next 20 years (you are allowed to put in 6k a year. bought Apple with a big chunk of what I had in there after the first 3 years ( I think of that company like a fund given its size and small dividend)).

Keep on rocking! looks like you've got a good head on your shoulders. hope you can stick to your plan!
 
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okayplayer

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Most of your strategy is pretty sound. Agree no point in trying to time the market ("time in" >>> "timing"). i think your 529 contribution is a little low. Look at average yearly cost of tuition. Not saying I have all the answers, but would adjust accordingly. I work for a place that would give my kids 90% tuition if they go to our affiliate school (but I'm not banking on them wanting to go there, just hoping maybe one of them does).

Agree strongly with maxing out the HSA. If you can afford it, don't spend any of the money you put in there, and invest aggressively. (triple tax advantaged as long as you when you do cash it out you do so on health care/ insurance premiums, etc). I'm going to max it out over the next 20 years (you are allowed to put in 6k a year. bought Apple with a big chunk of what I had in there after the first 3 years ( I think of that company like a fund given its size and small dividend)).

Keep on rocking! looks like you've got a good head on your shoulders. hope you can stick to your plan!

If this was a reply to me, we front loaded each kids’ 529 so they have about $100k each (toddler age kids) currently. Now we just put a small amount to get the max state tax deduction for our household.
 
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If this was a reply to me, we front loaded each kids’ 529 so they have about $100k each (toddler age kids) currently. Now we just put a small amount to get the max state tax deduction for our household.

Did you keep it below 30k a year for gift tax purposes? I'm thinking about opening one.
 

sethco

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Did you keep it below 30k a year for gift tax purposes? I'm thinking about opening one.

You can use 5 years of exemption all at once between you and your spouse, and then between kids. So, say your married with 2 kids. You can give 75k and your spouse can give 75k to kid A and you can do the same with Kid B. Total gift of 300k. Furthermore, if you go over the gift tax exemption, then it only counts towards your lifetime exemption for estate tax purposes

 
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pjl

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Fund your 529 based on your goals. Mine was to keep the end amount under their college cost, but have enough covered I didn’t have to worry about the cost if I retired early. For me, I feel that 150k per kid at the start of their lives would be too much.

As someone benefiting from a long bull market, I have likely overshot my goal starting at a far lower amount.

You can use it for private school while they are home, so maybe that should be factored in, depending on your situation.

Note that spreading your gift over 5 years gives you the average per year if you aren’t maxed. If you want to continue gifting for other purposes either do the max or do 30/year until you hit your goal. You could split 15 to 529, 15 to a trust too I guess, but just doing the max to one spot a year is easier.
 
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okayplayer

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I think excess in 529s (should any of us be lucky enough to be in that situation) is a fantastic intergenerational wealth transfer tool. As I am the owner of the 529 account (not any individual beneficiary), I can change the beneficiary to a grandchild at any time. That is a lot of years of compounding/growth.
 

BLADEMDA

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If you start early with a 529 plan, like age 3-4, then funding it with $50,000 is likely more than enough for most people. My hunch is that most on here can't or won't put $150K per child upfront into a 529. Rather, how about $10k per child then monthly or annual contributions? Over 2 decades my 529 plans have been a success for my children and were enough to cover college and grad schools. I see no reason to overfund a 529 plan until your own finances are completely set like minimal debt and solid retirement accounts in place.
 

gcc322

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Since we are on the topic of 529 - does anyone do a combination of 529 and Roth IRA for their kids? I have 529’s for both of my kids but once they are older I’m considering putting their 529 money into a Roth as they will be “mowing” and “dog walking.” Etc. I’m a novice but it seems like a small safeguard for them and tax protection in case they aren’t interested in higher education or perhaps get scholarships.
 

okayplayer

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If you start early with a 529 plan, like age 3-4, then funding it with $50,000 is likely more than enough for most people. My hunch is that most on here can't or won't put $150K per child upfront into a 529. Rather, how about $10k per child then monthly or annual contributions? Over 2 decades my 529 plans have been a success for my children and were enough to cover college and grad schools. I see no reason to overfund a 529 plan until your own finances are completely set like minimal debt and solid retirement accounts in place.
It is a tough thing to estimate, but we are trying to hit $200k per kid when each is 18. We have three children and odds are at least one of them will go to some kind of professional school, which we would like to help with. If the $600k or so doesn't take care of all three kids' education, I will cash flow the balance. Hard to estimate cost of tuition, whether the kids will get merit based scholarships, etc but as I said above, it's not like the money will go to waste if we overfund it.

As someone who finished residency with $400k in med school loans to repay, it is important to me that my kids don't have that experience of digging themselves out of that hole to start their professional careers.
 
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abolt18

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It is a tough thing to estimate, but we are trying to hit $200k per kid when each is 18. We have three children and odds are at least one of them will go to some kind of professional school, which we would like to help with. If the $600k or so doesn't take care of all three kids' education, I will cash flow the balance. Hard to estimate cost of tuition, whether the kids will get merit based scholarships, etc but as I said above, it's not like the money will go to waste if we overfund it.

As someone who finished residency with $400k in med school loans to repay, it is important to me that my kids don't have that experience of digging themselves out of that hole to start their professional careers.
See, and I am personally totally okay with my kids having to figure some of it out on their own. I don't mind if they have to take out some loans and work hard to get scholarships etc. I feel the experience has been very formative for me in my self-eduction about personal finance and my desires to be debt-free. I intend to save SOME for them in 529s but not feeling all that crazy about ensuring it's hundreds of thousands per kid.

Who knows, maybe I'll change my mind, but that's how I feel about it now.
 
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vector2

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See, and I am personally totally okay with my kids having to figure some of it out on their own. I don't mind if they have to take out some loans and work hard to get scholarships etc. I feel the experience has been very formative for me in my self-eduction about personal finance and my desires to be debt-free. I intend to save SOME for them in 529s but not feeling all that crazy about ensuring it's hundreds of thousands per kid.

Who knows, maybe I'll change my mind, but that's how I feel about it now.

My take is they have to do the “work hard” part and they have to do undergrad at a state school (where tuition is mostly free at a certain GPA/SAT cutoff) unless they get a full ride to some expensive private school. If they do well there and have some expensive graduate school aspirations (in a field like law or business where name and prestige really matter, not medicine) then that’s where I’ll help.

Putting them into a $250,000 debt hole just to teach them a lesson or because other people have had to do it seems counterproductive to me.
 
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