Analysis of Submitted Portfolio

The following list of tickers and associated percentages were submitted for analysis.  I made a few changes that may have a small impact on the projected outcomes.  For the bond allocation I am using BND as the holding.  For cash I used TIP, not an exact, but reasonable replacement.  TIP actually gives the portfolio a return boost.

The analysis was cut to something under three years as a number of tickers have not been in existence for all that long.

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Rule #7: Don’t Dip Into Your Retirement Savings Until Necessary

Eventually you will be spending your retirement, but don’t withdraw funds before retiring.  This is a mistake all too many workers make without realizing the damage it does to their retirement fund.  When corporations moved from pension plans over to 401(k) plans, they shifted the savings burden from their companies over to their workers.  According to Hedrick Smith, Who Stole the American Dream, the 401 plans have been a failure.  The failure is due in large part to the ignorance and lack of investment knowledge by the average worker.

I know of a family that pulled approximately $50,000 out of their 401(k) plan when both husband and wife switched jobs.  That money was never paid back into another savings plan.  That type of move is all too frequent and it blows a hole in a retirement fund from which many families will never recover.  In this market it is difficult enough to properly prepare for retirement without doing something absolutely stupid.  The bull market that ran from 1982 through 2000 covered up a lot of my mistakes.  I doubt the next 20 years will be as forgiving and that is why I am committed to helping readers of ITA (particularly Platinum members) avoid all the mistakes I made.

Rule #7 is a corollary of Rule #1.  Save, save, and save some more.  Be patient and let the market do its work of compounding.  As we work toward a portfolio, review the first six rules for retirement preparation.  At this point one can assume that every reader has opened up either a taxable savings account or a tax deferred savings account.  I highly recommend both, if at all possible.  Begin by using an index ETF such as VTI.  If you have no other investment, at the very least, use VTI as your very first investment and continue to plow money into that total U.S. Equities index Exchange Traded Fund (ETF).

If you are getting a little impatient as to what a potential portfolio may look like, check out this example found over on Seeking Alpha.  There are a few individual stocks that will keep you on your toes, but that is what this blog is for.  Just check in at a minimum of once a week, if not daily.

Review:  Follow The Golden Rule of Investing.  Know your retirement requirements, educate yourself so you do not need to pay professional management fees, maximize contributions to a matching program, use index vehicles if possible, understand the employer retirement program, and develop your own Strategic Asset Allocation plan.