Stock market nerd moment.

[fenders53]

(12-10-2021, 03:10 PM)EricL Wrote:

(12-10-2021, 03:02 PM)Christinebitg Wrote:

(12-09-2021, 01:38 PM)fenders53 Wrote: In this instance is was a smart young man with the good sense to save for h9s future and just trying to understand what  his advisor was doing.  As I said he had about $22K.  I had a brief look but for sure he owned as amll amount of the following. 

SPY ETF
Russell 2000 ETF
Midcap ETF
A dividend ETF
Short term bond fund
Several mid term bond fund
Several Longterm bond fund
Some government bond funds.

The kid is a 6th generation Iowa farmer (it's kind of a big deal to survive that long).  He is also an ASST manager at a Tyson owned meat market so he can have benefits.  He actually understands AG commodities which isn't that simple.  How in the hell is he supposed to understand his 401K?  The above is a synopsis.  He owned 15 ETFs with much duplication.  I suspect somebody is getting paid to do that to him.  The more I think about it the more it annoys me.  You shouldn't have to be an investment nerd with ten years experience to have a reasonable understanding of your company 401K.  I told him to tell his advisor to move more of his of assets to SPY gradually.  It's the only rational thing I could think of since his 2021 return was 10%.  I bet he will still have 15 ETFs after that.

I know you don't know him well enough right now.  But if it were me, I'd tell him to get the h*ll out of most of those bond funds.  Particularly the long term ones.

Exactly what I was thinking. Why would a 23-year-old need four different bond funds in his IRA?

It's malpractice.  It's actually more like 7 or 8 bond funds which is way beyond ridiculous. He should be in something like this....  60% SPY, 20% Russell 2K and 20% ST bonds or total bond market fund, until he understands how a rough market feels.  He actually needs no bonds but it's not a terrible thing if you can buy low on your first dip, in case it's a bad one.  I twisted a lot of young soldiers arms and got them to fund their MIL 401K like this, then come see me if they get scared.  LT bond yields were much better then.