(PUB) Investing 2016

The Independent Adviser for Vanguard Investors

•

January 2016

•

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funds. It will be much better to con-

tinue relying on the teams running

International Growth

rather than

buying the whole market as offered

Total International Stock Index

World ex-U.S. Index

. I do think

Vanguard has a winner in its

Global

Minimum Volatility

option, and if

markets remain volatile and don’t veer

to the upside, this fund should do well.

However, as I have cautioned (and

Vanguard has confirmed), strong for-

eign markets will see Global Minimum

Volatility lag.

On the bond side, you can pretty

much ignore

Total International Bond

Index

. I’d wager it’s seen the best of

its days for a while now, relative to the

U.S. market. And even with the tailwind

of higher yields, the fund, up 1.0%,

couldn’t keep up with

Intermediate-

Term Investment-Grade

, one of my

favorites in the intermediate-maturity

category. Just because foreign bond

funds are available doesn’t mean you

need to own them.

Keeping It Long

For more than 25 years now, I’ve

taken the long view, and recommended

that you do the same. “Time in the

market,” rather than trying to time the

market, has been my watchword. Still,

there may be times when you ask your-

self, “Just how long is ‘long-term’”?

Well, as I was thinking about this, I

came upon an article by Teresa Hassara,

who runs the institutional retirement

RETIREMENT

Contribute the Max for Retirement

YOU MAY THINK

it’s 2016, but for

retirement savers, you can still invest

like it’s 2015 if you haven’t reached the

contribution limits on your retirement

savings accounts.

I bring this up each newyear because it

bears repeating: Tax-deferred accounts

such as 401(k)s, 403(b)s and IRAs are

unmatched when it comes to saving

for retirement, particularly for those

who regularly add to their accounts

through the markets’ ups and downs.

While there’s no definitive retirement

spending strategy, I don’t think there’s

much to argue about when it comes to

saving. One of the best ways to ensure

you can live the lifestyle you desire in

retirement is to save long and hard, well

before you get there.

How much is enough? Well, that’s

going to depend on your individual situa-

tion. Fidelity offers a guideline for retire-

ment savings that suggests you need to

have put away eight times your annual

income by the time you hit age 67 to

have a shot at 85% of your pre-retirement

annual income available to you after you

retire. While I can’t vouch for Fidelity’s

math, I do agree with the underlying

message: When it comes to your retire-

ment, the more you can save, the better.

Saving is the one thing that is really

under your control. Neither you nor I, nor

anyone I know, can control the market

or the Fed or the economy. And while

we’d all like to get a performance boost

out of our portfolios, if you are banking

on higher market returns to bail your

retirement plan out, well, that’s not

operations for TIAA-CREF, originally

founded by Andrew Carnegie to pro-

vide investment options for teachers.

Hassara’s article was about lifetime

income, but it began with a vignette.

She wrote that TIAA-CREF’s CEO

sends a bouquet of flowers to every

retirement plan participant when he or

she turns 100.

My initial thought was, “Big deal.

What could that be, a dozen a year or

so?” Wrong. Hassara says the company

sends out 30 to 40 every month! Think

about that for a moment, and then con-

sider what long really means. To me, it

means there’s a distinct possibility that

you and I, with a little luck and attention

to our health, could easily make it to the

triple-digits, something our parents and

their parents probably never considered

to be anything other than a novelty.

It’s no novelty now. So think long-

term, and don’t let the market’s machi-

nations, and the scare tactics of pundits

with pulpits, knock you off your invest-

ment course. And Happy NewYear.

Contribution Limits for Retirement Savings Accounts

2015

2016

Notes

IRA

$5,500

Indexed to inflation

SIMPLE IRA

$12,500

Indexed to inflation

SEP IRA*

$53,000

$53,000 Up to 25% of comp.

401(k), 403(b) & 457 Plans

$18,000

Indexed to inflation

*Contribution is the lesser of the percentage allowed or the limits as stated. Check with your accountant for the specifics of your individual

situation.

Are the “Teens” a

Golden Decade?

5/10

11/10

5/11

11/11

5/12

11/12

5/13

11/13

5/14

11/14

5/15

11/15

Monthly High

Monthly Low

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

Note: Chart shows price per ounce of gold.

▼

Predicted price

Catch-Up Limits

2015

2016

Notes

IRA

$1,000

Indexed to inflation

SIMPLE IRA

$3,000

Indexed to inflation

401(k), 403(b) & 457 Plans

$6,000

Indexed to inflation