@AttorneyMother If this is truly an emergency fund, then it has to be available in an emergency.That means money market or short term treasuries. Even short term CDs might come with a penalty for early withdrawl. If it’s not strictly an emergency fund, I see no reason for 20-somethings to own bond funds.
That has always been my thought also
Interesting article in NYT by Kotlikoff and Pozen.
http://www.nytimes.com/2015/08/15/opinion/let-older-americans-keep-working.html?_r=0
My 33 year old son in law asked me about bond funds. He has an emergency fund. He doesn’t need the income so I asked why? Bond funds aren’t paying much and there is still interest rate risk. Might as well give yourself a chance to make something. He is not going to touch the money for 30 years. I would think over the next 30 years, stocks are going to do better than bonds with these interest rates.
Somebody aged 60 who is living off the interest… Different answer.
He must know that you are good at this kind of stuff. (Is he the one who has relatives still living in the south you mentioned before? If yes, when he consulted with you about where he should live and own the house, you should tell him the best place is in the bay area. LOL.)
Son called recently and told us he does not like to live in an expensive area - it will eat up too much of the income (not that he has any income yet.) We recently plan to mail something (a gift from us that should have been given months ago) to his GF’s place in a big city. It is in a very tall building (actually a twin building) in the downtown area. A studio costs $2400 a month and a 1-bedroom costs $3000. (We have never been there. Actually we have never been in that city.)
@mcat2, same guy. I did tell him I prefer the bay area to Texas. 
He works in the tech field so the bay area is a great place… For him.
Is there any fund managing company that allows us to prevent mutual fund loss? For example: automatically exchange to a pre-set bond fund when the fund value drops below a certain percentage?
Yea…I also told my younger coworkers that they should try to stay in the bay area, at least when they are young. This is where the job opportunities are. I used to live and work in Texas. Many younger coworkers that I know at my previous company eventually move to California (esp. SV) after a few years.
@coolweather, do you mean switching from equities to bonds when the equities fall by a set percentage? There’s probably some mechanism to do that, but it goes against everything most people recommend. You are locking in a loss rather than avoiding it. You should be buying equities on sale, or at least staying the course.
If a decline in equities makes you run for the exits, it means your allocation is too high in equities.
^ Yes. That’s what I meant. My allocation is heavily in equities now. I want to get rich quick.
Should I once in while exchange my high performance funds to some lower performance funds (that used to perform a lot better 1 or 2 years ago) with the hope that the later ones will perform better in the near term - sell high buy low idea?
My 401K for my current company is with Fidelity. When I leave the company, if I do not take any action, what will they do? Change it to an IRA account at Fidelity automatically for you? It is hard to believe they will do this to you without your authorization.
I am aware that when the amount of money is not large, the company may just cut you a check with a certain percentage withheld for Uncle Sam’s share (I.e., tax.) But I do not know what happens if it is not a very small amount.
If your amount is above some limit (usually not a high number in my experience) then it will stay with the current 401k plan. You don’t have to do anything if the fund is doing well and the company gives good choices to re-allocate you fund. I was forced to rollover only once. The amount was about 5K. If you are required to make a rollover then you have to initiate the paper work and you can open an IRA account with any company, not necessarily with Fidelity. I don’t think Fidelity will automatically do it for you.
@coolweather, In practice people wind up selling low and buying high when they jump around a lot.
Our financial guy has risk triggers/portfolio safety net. In our last update, one slide was “Tune out the noise”. 1 stay patient 2 stay flexible 3 focus on goals 4 don’t obsess over performance.
Will move more money over from 401k when H is 59.5 (he can move all or part from his company sponsored plan; he will still be working 6 more years. Until then I am doing the best I can - shifted accounts again based on performance and history of funds (and after talking to our financial guy Don).
We are sitting fine for now.
S1’s 401k is in a targeted fund for retiring in 2055. It has an international bond index fund as part of the mix.
The Wellington and Wellesley bond funds he went into constitute less than 5% of his assets. He’s about 65% in stocks; some mutual funds and some employer stock. Also has a decent chunk of cash for emergency funds.
At the rate he’s saving, he will soon be able to support us in our old age. 
A couple of weeks ago, I said my wife had no interest in the details on where our assets are.
I should have waited before I said that. My wife cut her hours of working to 15 hours a week and she is a changed woman. My wife now knows every account. What’s in every account.
She has a spreadsheet going now. The spreadsheet is going to be in the cloud. My wife updates the spreadsheet all the time.
I told her these accounts fluctuate in value. I don’t like to know the exact values. In my mind, I discount the values anyway. If the stock market drops or interest rates rise, the values are going to drop. We aren’t selling.
My wife doesn’t care. Everything needs to be accurate. I guess… It’s a good thing my wife is taking over.
I noticed with my parents, inlaws, grandparents, the women eventually take over. I am only 59. I thought I had 21 more years to run the show.
My kids are starting to give me advice. My wife is taking over.
I am the oldest. I am supposed to be the boss.
“I am supposed to be the boss”
good luck with that !
You know the opinion most underlings have about their boss …
You perhaps need to shift the emphasis from “that” family to this (cc) family, where I believe your advice and opinions are sought.
dstark when I got married my wife and I decided I would make all the major decisions and she would make all the minor decisions. I get to decide US tax Policy, US foreign policy, how to keep inflation under control and how to keep SS solvent. She decides what we will have for dinner, go on vacation. purchase furniture or do home repairs, what we will have for dinner, purchase gifts, invest our money and all the other minor decisions that are beneath my expertise.