Financial Stuff
 

Some of the vets on the board may remember I had posted that I was stepping gingerly into the water of mutual funds with my 401(k) about 15 months back.

I got a statement of what's gone on this last quarter, and I need some information and advice.

My asset allocation is:

Short-term Reserves: 20%
Bonds: 34%
Stocks: 46%

I have the following contributions and gains/losses over the quarter:

Vangaurd Federal Money Market Fund: 10% Gain: $2.13
Dodge and Cox Income Fund: 20% Loss: $3.02
Vanguard Wellington Fund: 30% Loss: $2.51
Vanguard Total Stock Market Index Fund: 20% Loss: $6.40
Vanguard Morgan Growth Fund: 10% Loss: $8.40
Vanguard International Growth Fund: 10% Loss: $0.21


I don't like those losses.

From what I've put here, can you tell me how I'm investing (conservative or high-risk) and if I should be switching out what I have for something else or in different percentages?

I'm lost with all this stuff....

Your portfolio is very conservative (based on your combo of stocks & bonds), which generally means you're looking for very small fluctuations in your account at the expense of generating modest growth (say, 5-8%, as opposed to 10-25% growth from an aggressive portfolio).

And these funds are designed to grow in the long term. Looking at a single quarter's performance won't tell you much, especially given how the stock markets have been on a roller-coaster ride over the past year. I think my Fidelity funds also showed a net loss for this quarter, but are still up 10-12% compared with this time last year.

If you want high risk/high growth, your mix should look more like 80-90% stocks, 10-15% bonds, <5% short-term reserves. That will depend on how much of your portfolio you allocate to each fund.

Look at vanguard's Web site for an update on their fund options. You are currently in pretty modest/conservative funds. Unfortunately I haven't paid enough attention to Vanguard products (I just started my Vanguard account - 401(k) benefits just kicked in last month) to advise you on whether or not these funds are good/bad. I can look and see when I get home.

wow News - got your 7? or just read a lot?

*blink*

lol I keep thinking about Jeff Foxworthy's version of an investment guy in the south..

[hick]
Now whatcha gotta go is diversiFY witchyer MONey!
[/hick]

So l123, when you're in this groove, you're unstoppable. You really (sound like you) know your stuff.

question--I like that part about not driving while only looking in the rearview mirror. Nice illustration. Your point is (I think) is that recent history isn't an indicator of near future. Then why is it that you suggest that the 3/5/10 year and beyond numbers do have value? They're in the rearview mirror, but even farther back.

Would you mind elucidating? I reckon you will only need to dip into your deep well of "personal opinion" and "observe".... or whatever fig leaf you want to wear...

Thanks.

when picking a mutual fund (or any investment for that matter) you don't really want to make your decisions based on past performance. you can't buy history - the conditions that created those returns are unlikely to ever occur again. what you can buy is a management philosophy and system.

if you know the stated philosophy of a money manager (from the prospectus), then you can look back at the 3/5/10/20 year numbers and see if that philosophy and investment style have returned fairly consistant positive numbers.

often people are mislead by strictly looking at recent history. it is very easy to have great historical numbers over a less than 3 year number - it only takes one really hot (lucky) year to do it. you want to look for consistancy and stability.

Uh, no 7 here. I cover business for a large news organization, and took some portfolio management as part of my undergrad biz degree.

But lookout does this stuff for a living. I'd go with what he says.

l123, thank you.