Conscientious Financial Planning and Retirement Income Management | 201-741-9528
from Lonier Financial Advisory LLC, Osprey, FL

Getting Back in the ‘Vanguard’

Getting Back in the ‘Vanguard’

With the market within hailing distance of a new all-time high, on top of a 12% gain in the past three months, snake-bit investors and savers are beginning to think about equities again. The Atlantic recently posted “Smart Investing is Easier Than You Think,” making some good points about fund costs and asset allocations.

One point The Atlantic didn’t make that smart investors should heed is be cautious about getting carried away in a peaking market. If you’ve been parked in cash or no-yield bonds on the sidelines for sometime, you may be feeling the tingle of missed returns and tempted to jump all in. Market volume has been light in Q1, evidence there are many waiting on the sidelines, looking for even small pullbacks that have lingered at most two or three days before the buying resumes. Finding an entry point has been frustrating.

Patience is in order. Ideally, a pullback to the 50-day line (46 points on the S&P500, 271 on the DJIA) could be a support level to begin buying back in. There’s enough macro risk lingering in the Euro-mess and elsewhere that multiple entry points spread across the rest of the year after the usual retracements might make the most sense for those who have been out of the market for some time.

With that firmly in mind, what to make of this “Smart Investing?”

I’m a fan of Vanguard, have an account there, and for small accounts $100k-300k, it’s a great place to build out a portfolio at an exceptional low-cost. I’m less enamored with target date funds, as the Atlantic suggests, but if your account is still small, they are a sensible way to manage your savings without complexity while your focus should still be solidly on saving more instead of finely slicing the risk/return frontier.

So yes, set up a Roth IRA, if you have a 401k, and invest your non-matching funds in low-cost target or index funds. If you’ve been on the sidelines, spread your entry over the next three quarters—there may be better entry points not too far down the line that will allow you to get back in the game below the current run-up level.

If you’re further along the accumulation path then this, have sizable neglected accounts that are in tatters after the 2009 debacle, have enough complexity that a cookie-cutter asset allocation won’t meet your goals, or just want some professional guidance or money management, let me know!

I’ll help you set up camp at Vanguard (or Scottrade or wherever it makes best sense for you). Vanguard ETFs trade without commissions, and cover the asset spectrum. We can work out a personal plan-based risk-adjusted allocation that meets your needs, at a surprising low-cost compared to even typical no-load mutual funds. Your target date is…now!

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