I'm relatively new to the investing world but hold a sincere interest in keeping up with my finances and trying to get a retirement together (I'm 20 so I have a ways to go until then but no time to start like the present!).
My problem is I have very little stomach for market fluctuation. As one would expect, I'm loving it when the markets are up and I see my money growing. However, when they go down I hate it.
Currently I'm invested in the following:
$17,000 in a T.RowePrice Personal Strategy "Balanced". Ticker symbol is TRPBX. The fund objective is to strike a balance between riskier growth and straight income via bonds.
I also have $3,500 in a ROTH IRA which is invested in Vanguard's STAR fun (VGSTX). That fund is widely diversified and has returned 10% for the last 10 years.
However, I hate seeing the money fluctuate as much as it does. While it is very minor by comparison (I'm only seeing a swing of $100 a day up or so, and not a total monetary wipe out) I still don't like it.
Would I be better off putting the vast majority of my money into purely bonds? Vanguard's Total Bond Market Index covers the market widely (as the name suggests) and has very little fluctuation. In the past 52-weeks the high and low are about 50 cents apart.
I realize that I am potentially giving up a ton of profit in the long run. Assuming an 8% a year return I should be getting now, my total investment of $20,500 in 45 years (assuming no additional investment whatsoever) would become $654,000 (roughly). If I go for bonds and the Vanguard fund which has been averaging 4.5% a year return, my $20,500 becomes only $149,000 (assuming no additional investment).
I feel like I'm answering my own question by posing the question to myself:
"Is the risk and fluctuation bad enough that you're willing to forgo a potential $500,000+ in earnings?"
What are your thoughts?
Bear in mind I'm not considering at all the very real possibility that the market could just go down and not earn any kind of a positive return.
I'm trying to keep it simple I suppose.