Retirement fund suggestions needed

[stephenpeterson]

Assalamu alaikum brothers/sisters,

I am about 40 and I have only saved about 100k in cash. Now wondering what would be the best option:

1. Amanah doesn't offer custom portfolio unless the initial deposit is 1m. There are income ETF and growth ETF. So if we are choosing growth option (which is more aggressive) at the beginning and want to convert it to more conservative close to the retirement time, then we have to sell all of the growth fund and buy income fund. It looks like we have to pay a lot of taxes. Fund expense ratio is about 1%.
2. Sharia portfolio offers custom portfolio. The fund manager does frequent rebalancing. The fund fee is 1.5%. The annual ROI is 9-13% on average after deducting the fund management fee. The benefit is that we can make it aggressive at the beginning and close to the retirement time, make it more conservative. The benefit IMO is that as we are not converting all the holdings of the portfolio at once, so are not paying as much tax when converting from aggressive to conservative. If we choose SPUS instead of custom portfolio, then we fall back to the similar situation as Amanah. The expense ratio is about 0.5% but the ROI is less compared to Amanah I think.
3. Azzad invest has offering of similar custom portfolio which is managed by third party fund managers. They follow the guidelines of Azzad invest. The fund management fee is quite high (1.75%). The person told me that last year their mid cap fund had a return of 45%. He told me it is possible to save up to 1.5m at the time of retirement.
4. Some brothers in this forum suggested to buy the same individual stocks as holdings in the funds like Amagx, etc. However, in my understanding, the fund managers are constantly rebalancing. So we can know the current position, say, every quarter or something like. But whatever happened in between we will not know to or can follow. To do rebalancing like the fund managers we have to constantly research and analyze themselves. That is like would take a substantial amount of time.

My goal is to live off the dividends after retirement without reducing the value of the total fund.

Please suggest what would be the best strategy.

Thanks

 

[shadowgun1105]

@stephenpeterson

1. Open up a Roth IRA with Saturna and max it out. Plan to be able to put aside $6k to be able to do it again every year.
2. Put aside enough money to cover 6 months of bills and utilities, don’t touch this ever. If you can find an easily accessible way to grow this without using interest, even better. But you want to be able to withdraw it at a moments notice without suffering penalties.
3. Put 1/2 of the rest in a managed portfolio with low fees like Saturna or the ones you mentioned above.
4. The other half, use it to invest in stocks you like. Get Zoya, at least the free version, and pick stocks you like to put a bit of money into. If you haven’t done this before, don’t rush! Buy a few shares here and there, and spread out your investment. Personally I’d say only invest about half of this money, and save the rest for when the market eventually crashes, so you can quickly invest it while the market it depressed.

(4.5) - don’t sell the stocks you gathered for at least 2 years, so you can avoid capital gains tax. Just consider them a long term investment and don’t touch them until retirement.

1. Set up auto investing if you have money above and beyond what you need for your normal bills and purchases, and for your Roth IRA, and for your savings.
   

Don’t worry about which stocks have dividends too much, you can rebalance later insha’Allah

 

[stephenpeterson]

@shadowgun1105 Thanks for your efforts in explaining bro. I will put serious thoughts into it.

 

[christianresurrection]

@stephenpeterson m1 finance lets you build your own portfolio etf. check out https://muslim.finance/

 

[sangotunhienst]

@christianresurrection Do you have a sharia pie to share on M1?

 

[christianresurrection]

@sangotunhienst The link has an etf that is custom made by Safeer M.

 

[sangotunhienst]

@christianresurrection Jak