Vanguard SIPP - Multiple Target Retirement funds

[Deleted User]

zagfles said:

Deleted_User said:

Target retirement funds are very good at providing what consumers actually need.  For younger people stocks provide the lowest risk.  As we approach retirement, we become far more sensitive to volatility and now bonds provide lower risk. 

The concept of “risk tolerance” used by advisers is really a folly.  Peoples’ responses to volatility tolerance questions change based on how the question is asked, how sunny it is or what the market is doing on a given day and what is in the newspapers/blogs on this day.  In practice, people who dump retirement savings into a TR pension fund and forget about it do just fine.  There has been no evidence of young people in TR funds withdrawing in March 2020.  

Of course, anyone with more knowledge wanting more control and flexibility can pick something else but TR funds are a great and popular product for a hands off consumer which is based on solid theory that does the job. 

Yes, people who use TR funds are likely to be more hands off than those who regularly rebalance, so they probably wouldn't even notice a dip in their fund value and go into panic mode and sell everything, as the stereotypical inexperienced investor does at the slightest hint of a downturn.

It seems "risk tolerance" is just a backside covering exercise by the financial services industry - and a way to blame the customer if their investments underperform. Advisors should really be saying to customers "the appropriate risk to take to achieve your objectives is..." rather than "what risk are you happy to take?". But the former would mean the advisor is fully responsible for the strategy. Some would say that's their job.

Yep.  Mind you, the concept of “risk tolerance” is a real thing.  Used to be that retail investors would panic during a crash and all rush for the exist.  That hasn’t been happening lately. Momentum funds do, but thats something else.  Perhaps people are better educated.  People who have money in pension funds and 401Ks tend to be more hands off anyway.  Still, I have no doubt that some do get burnt. Its just that I don’t think there is a good way to predict future behaviour in a crash by talking to a person - or having him fill in a form.  Past behaviour of “hands on” investors during a crash is a much better predictor. Absent that, age is the only meaningful factor. 

Thrugelmir

zagfles said:

Deleted_User said:

Target retirement funds are very good at providing what consumers actually need.  For younger people stocks provide the lowest risk.  As we approach retirement, we become far more sensitive to volatility and now bonds provide lower risk. 

The concept of “risk tolerance” used by advisers is really a folly.  Peoples’ responses to volatility tolerance questions change based on how the question is asked, how sunny it is or what the market is doing on a given day and what is in the newspapers/blogs on this day.  In practice, people who dump retirement savings into a TR pension fund and forget about it do just fine.  There has been no evidence of young people in TR funds withdrawing in March 2020.  

Of course, anyone with more knowledge wanting more control and flexibility can pick something else but TR funds are a great and popular product for a hands off consumer which is based on solid theory that does the job. 

It seems "risk tolerance" is just a backside covering exercise by the financial services industry - and a way to blame the customer if their investments underperform. 

Why wouldn't investments underperform?  Companies are living breathing entities that exist. Not just numbers on a computer screen. 

zagfles

Thrugelmir said:

zagfles said:

Deleted_User said:

Target retirement funds are very good at providing what consumers actually need.  For younger people stocks provide the lowest risk.  As we approach retirement, we become far more sensitive to volatility and now bonds provide lower risk. 

The concept of “risk tolerance” used by advisers is really a folly.  Peoples’ responses to volatility tolerance questions change based on how the question is asked, how sunny it is or what the market is doing on a given day and what is in the newspapers/blogs on this day.  In practice, people who dump retirement savings into a TR pension fund and forget about it do just fine.  There has been no evidence of young people in TR funds withdrawing in March 2020.  

Of course, anyone with more knowledge wanting more control and flexibility can pick something else but TR funds are a great and popular product for a hands off consumer which is based on solid theory that does the job. 

It seems "risk tolerance" is just a backside covering exercise by the financial services industry - and a way to blame the customer if their investments underperform. 

Why wouldn't investments underperform?  Companies are living breathing entities that exist. Not just numbers on a computer screen. 

You seem to have been whooshed

Thrugelmir

zagfles said:

Thrugelmir said:

zagfles said:

Deleted_User said:

Target retirement funds are very good at providing what consumers actually need.  For younger people stocks provide the lowest risk.  As we approach retirement, we become far more sensitive to volatility and now bonds provide lower risk. 

The concept of “risk tolerance” used by advisers is really a folly.  Peoples’ responses to volatility tolerance questions change based on how the question is asked, how sunny it is or what the market is doing on a given day and what is in the newspapers/blogs on this day.  In practice, people who dump retirement savings into a TR pension fund and forget about it do just fine.  There has been no evidence of young people in TR funds withdrawing in March 2020.  

Of course, anyone with more knowledge wanting more control and flexibility can pick something else but TR funds are a great and popular product for a hands off consumer which is based on solid theory that does the job. 

It seems "risk tolerance" is just a backside covering exercise by the financial services industry - and a way to blame the customer if their investments underperform. 

Why wouldn't investments underperform?  Companies are living breathing entities that exist. Not just numbers on a computer screen. 

You seem to have been whooshed

There's a new generation of know better investors born every decade or so...............

zagfles

Thrugelmir said:

zagfles said:

Thrugelmir said:

zagfles said:

Deleted_User said:

Target retirement funds are very good at providing what consumers actually need.  For younger people stocks provide the lowest risk.  As we approach retirement, we become far more sensitive to volatility and now bonds provide lower risk. 

The concept of “risk tolerance” used by advisers is really a folly.  Peoples’ responses to volatility tolerance questions change based on how the question is asked, how sunny it is or what the market is doing on a given day and what is in the newspapers/blogs on this day.  In practice, people who dump retirement savings into a TR pension fund and forget about it do just fine.  There has been no evidence of young people in TR funds withdrawing in March 2020.  

Of course, anyone with more knowledge wanting more control and flexibility can pick something else but TR funds are a great and popular product for a hands off consumer which is based on solid theory that does the job. 

It seems "risk tolerance" is just a backside covering exercise by the financial services industry - and a way to blame the customer if their investments underperform. 

Why wouldn't investments underperform?  Companies are living breathing entities that exist. Not just numbers on a computer screen. 

You seem to have been whooshed

There's a new generation of know better investors born every decade or so...............

Like those who reject well established low cost packaged solutions and are persuaded into something more expensive by 5 year performance history...........