With the Dow hitting 21,000, it has made me happy and nervous. We look at our portfolio, which is all stock, and wonder what it’s going to correct. We have never pulled out of the market and have always been aggressive, which has served us well. Everything I’ve read or have been told says if you are years away from needing to use it…which we are, provably 10 years, then leave it be.
But of course we all saw what happened 8-9 years ago and how long it took to crawl back to that same amount. Part of me wants to pull 50% and put it in something more secure, the other part thinks that’s a big mistake.
We are about 65% stocks as I’m pretty risk adverse. Our financial adviser tells us we will “have enough” for retirement. and has encouraged us to stay the course.
Even corrections end eventually. The question is whether you can hold on to retirement for that correction to belly out. That may take 5+ years to occur.
If you have a big project or expense that you need money for looming in the next 5 years (paying for a house, retiring, paying for college ed . . . ) you should probably move some of those earnings into something safer.
People who were able to stay the course through 1929 and every market disaster since have on average done better than those who sold or were forced to sell.
This is not the time to buy IMHO because the market seems inflated, giddy even, and the first whiff of bad news will take the air out of it. Just my opinion.
But when that happens, I would treat that as a buy opportunity.
We have an inherited trust that is managed by a financial guy who has been handling it for many years, starting long before we inherited it. That particular portfolio has, recently and rather quickly, gone up 15%. Out manager called a day ago to suggest we move some money from stocks to cash fairly soon. We gave him the go ahead.
We have done well over the long term, despite the significant drop of almost a decade ago. But we did not sell anything then, and things worked out fine. We are now 66, transitioning to full retirement, and fortunate to have exceeded our retirement goals re assets. The current split of our retirement investments is 65% stocks and 35% bonds – long considered too aggressive considering our ages. But it has worked well for us to this point (with the exception of the '08 drop, but we are not market timers, stayed the course which worked out well.)
Now thinking of moving to a 50%/50% split. We will be fine if our assets do not grow as much as in the past; the priority for us at this point is to protect the down side. Plus, as we age, don’t want to have to tend the investments too actively.
Shortly after the election I switched all my retirement assets and nonretirement assets into cash. I’ve missed the Trump rally. That is okay with me. Even more painful, I sold covered call options against my main position in my nonretirement assets and lost my shares at the strike value after holding that position alllllllllllll through the economic crisis that started in Oct 2008. I was patient. I bought that position aggressive, literally backed up the truck multiple times, and held waiting for that stock to correct. And it did. And I didn’t get most of the appreciation.
Even a few of my co-workers followed my lead and jumped in, at a much lower cost basis, and now think I am a stock guru because they enjoyed the ride up. Oh well. Easy come easy go. I broke even on that trade but the amount of money I left on the table is obscene.
IMO always be conservative, you may end up with less…but you know what you have.(if things tank you can wind up with zero) we are going to have tremendous growth and prosperity, but that does not translate into continued massive growth in the stock market.
We sold a mutual fund that was earmarked to help us finish paying for DS’s last year of college. It had done well and we couldn’t bear the thought of a stupid political decision possibly wiping out our gains, especially when we knew we didn’t have time to recoup the losses, so we sold just after the new year. Obviously we missed the recent skyrocketing, but because we knew we would need the money shortly I still feel it was the right decision. All of our retirement accounts we kept where they are, for the longer haul.
Retirement in maybe 2 years - unless cut in government workforce takes my husband out sooner. Have one more semester of college to pay for and that $ is sitting getting 1% interest lol but it’s safe. Trying to decide how much to pull back as we can’t afford a big setback at this point, we’re around 60% stocks. We’ve saved enough for a comfortable but not lavish (for lack of a better word) retirement but how much we will need for health care is the big variable.
You can also think in terms of letting the winners ride - take your profits and invest them in something safer, but let your initial investment continue the ride up (or down).
We have some in the stock market, but are definitely more into nest egg preservation. Hence, we are in some conservative investments that will miss out on skyrocketing gains, but will still be there after the correction. In my opinion, it’s all in what helps you sleep at night.
A former Fidelity manager once told us, when talking about investment risk, “If you’ve already won the game, why are you still in the casino?”
Determine your risk tolerance, invest accordingly, and stay the course. Don’t buy or sell based on what the market has done in the recent week or two. If the market does well, then your % of equities goes up, and once a quarter you should rebalance to make sure your allocation remains consistent. That insures that you’re selling high and buying low.
We are 50/50 equities and bonds/cash. We are 68 and 66 right now and don’t have time to make up a big crash in the market. We get some of the upside when the market goes up – no complaints there – and some of the downside when it goes down – but nothing terrible, nothing we can’t live with. I sleep very well.
I took my D’s second semester tuition out of a mutual fund just before the election because people were saying that the markets would go down or crazy after the election. Since there would have been less than two months to recoup any losses I decided it was a reasonable decision. But I was wrong. You just never know.
I feel like investing is a kind of legalized gambling, only with very, very high stakes for those of us counting on gains to help keep our retirements afloat. But with 10+ years till I can retire, I can’t afford to convert my IRAs to money market funds. I’m at about 65% stocks, 25% bonds and 10% money market funds/cash.
“I took my D’s second semester tuition out of a mutual fund just before the election because people were saying that the markets would go down or crazy after the election. Since there would have been less than two months to recoup any losses I decided it was a reasonable decision. But I was wrong. You just never know.”
No, you were right. The rule of thumb is that if the expense horizon is 6 months or less, money for that expense needs to be in cash.
People chasing the upswing. I am on the last end of the baby boomers who are reaching, or maybe even at, retirement age and who should be converting their portfolios to more conservative allocations. Combine that with the fact that younger folks hardly bother with the stock market because they live paycheck to paycheck and because everything else cost so much money especially in the urban areas. Oh yeah, throw in the fact that incomes are uncertain.
Putting it all together the correction is coming. Position yourself for it and buy in on the dips. We also have a certain leader who is uncertain, unpredictable and capable of causing major damage economically or militarily. In my opinion, there is a lot of dry timber out there and a lightening storm on the horizon.
You’re reading my mind. I’ve been giving lots of thought for a few months to lightening my stock load but thankfully didn’t. I am way overexposed in stocks, but I don’t need the money so have let it sit there. I am at more than 90% stocks, when for my age the expected allocation would be more like 65%. After reading this thread, I decided to go on the company website and take its “risk assessment” questionnaire. Even that said I should be at 80% so I’m not feeling so bad about where I am. Still, I think I’ll move some money around. I think the little rally we’re enjoying now won’t last.
I like sleeping well at night so we are not so heavily weighted in stocks as many others in this thread. Yes, we could make more if we had more there but we could also lose more.
Yeah, I don’t feel l like I am a risk-taker, but the house is paid off and college bills are over and we live frugally. I hope to not touch that money for 15 years so I’ve been letting it ride. The downturn in 2008 made me wince, but I didn’t lose sleep.
Like @GoNoles85 , DH sold some stocks and we have a lot in cash at the moment. I am much more risk averse that’s DH is, and he likes to manage our investments. He does a good job. He has us in a mix of stocks, bonds, mutual funds, and I think some international stocks and precious metals (he might have sold that). The latest run has certainly been fun to ride, but it will likely correct.
I am way overexposed in stocks, but I don’t need the money so have let it sit there. I am at more than 90% stocks, when for my age the expected allocation would be more like 65%. After reading this thread, I decided to go on the company website and take its “risk assessment” questionnaire. Even that said I should be at 80% so I’m not feeling so bad about where I am. Still, I think I’ll move some money around. I think the little rally we’re enjoying now won’t last.