Author Topic: Do ETFs make sense with 5 years left to RE?  (Read 962 times)

Focus_on_the_fire

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Do ETFs make sense with 5 years left to RE?
« on: March 28, 2021, 02:03:17 PM »
Hi everyone,

I'm hoping to get some advice. I'm 54 and I have 5 years and 6 months until I retire from the state (not that I'm counting).

I paid off the house last year and I have the money I had been putting toward the house available to invest. I'm thinking of an ETF (Schwab's no cost 1000 index ETF).

Does this make sense if you're only looking to contribute @5 years? Is there another approach you might suggest?

Thanks. 

Mustache ride

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Re: Do ETFs make sense with 5 years left to RE?
« Reply #1 on: March 28, 2021, 06:37:19 PM »
I'm a little confused by the question. You can invest in individual stocks, mutual funds/ETF's (stocks and bonds), cash, or real estate. Are you asking if you should be holding cash since you'll only be investing for 5 years and will need the money after? Are you asking if Schwab's 1000 ETF is too risky, and therefore questioning whether you should be in bonds?

nereo

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Re: Do ETFs make sense with 5 years left to RE?
« Reply #2 on: March 28, 2021, 06:56:32 PM »
Confused as well...

Presumably you plan on most of that money remaining invested beyond your retirement date?

What is your ideal asset allocation?  How does this money fit into that?

Focus_on_the_fire

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Re: Do ETFs make sense with 5 years left to RE?
« Reply #3 on: March 28, 2021, 07:30:56 PM »
Sorry for the confusion. Hopefully, this makes my question clearer.

Iím looking to invest probably 300,000 all totaled in the next five years. Iíd like to keep up with inflation, but Iím concerned an ETFs might be too risky and I should look to something safer.

Iím a novice here and Iím at a bit of a loss. I have a Roth that hasnít done terrifically well and I have a couple CDs that arenít generating much interest at all.

Iím not interested in being a landlord and Iím in a HCOL area, so real estate isnít of much interest.

Any thoughts/suggestions are appreciated.





Dicey

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Re: Do ETFs make sense with 5 years left to RE?
« Reply #4 on: March 28, 2021, 07:45:08 PM »
Hop on over to JLCollinsNH's site and begin at the beginning. You can do this!

https://jlcollinsnh.com/stock-series/

Focus_on_the_fire

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Re: Do ETFs make sense with 5 years left to RE?
« Reply #5 on: March 28, 2021, 07:55:04 PM »
Oh thank you, Dicey! Iíll do that

Malcat

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Re: Do ETFs make sense with 5 years left to RE?
« Reply #6 on: March 28, 2021, 08:07:57 PM »
Hop on over to JLCollinsNH's site and begin at the beginning. You can do this!

https://jlcollinsnh.com/stock-series/

I second this. It seems like you could really benefit from a crash course on the basics.

Once you feel comfortable with that, then you'll be equipped to ask all the right questions for your particular situation so that you can make the most prudent decisions.

But first, start with the basics. You will feel so much better.

Mustache ride

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Re: Do ETFs make sense with 5 years left to RE?
« Reply #7 on: March 28, 2021, 08:13:54 PM »
ETF's are an investment vehicle. You can buy an ETF that is practically risk free, you can buy one that leverages 3X the NASDAQ, or anything in between. The JLCollins link is a good read to start with to help understand the basics. I'm not sure anyone here will be able to tell you what your appetite for risk is. Bogleheads recommend a 60/40 stock bond allocation that might interest you. To learn more, google Bogleheads three fund portfolio. It's way too conservative for me, but the fact you only want to keep up with inflation tells me you probably are risk averse.

MustacheAndaHalf

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Re: Do ETFs make sense with 5 years left to RE?
« Reply #8 on: March 29, 2021, 08:29:36 AM »
Although you're at Schwab, take a look at "Vanguard Total Stock" in two different forms: as a mutual fund (VTSAX) and as an ETF (VTI).  They hold identical contents, and are run by the same company.

When you need to retire, you should not go from 100% stocks to 0% stocks.  You still need both portfolio growth and keeping up with inflation.  Historically, stocks have been good at that.  A conventional retirement portfolio is 60% stocks, 40% bonds.

Focus_on_the_fire

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Re: Do ETFs make sense with 5 years left to RE?
« Reply #9 on: April 02, 2021, 08:46:19 PM »
Thanks everyone! I appreciate the guidance and patience. :)