Asset Allocation

[Rukh O'Rorke]

Jul 27, 2023 11:51:49 GMT -5 minnesotapaintlady said:

Jul 27, 2023 10:53:20 GMT -5 Rukh O'Rorke said:

bogleheads are sooooo conservative with the stock/bond AA - which might sway me if bonds acted like they used to.Maybe they will again with the interest rates non 0? I just don't know that I'm willing to put money into something that has been returning less than fixed with the potential loss of principal.

I think it's because that's not always been the case.  A lot of Boglehead's consider this past decade to be an anomaly and not a reason to change the long-term investment plans.  The site I had only had data going back to 2008, but it wasn't too shabby not that long ago.

2014    5.68%
2013   -1.86%
2012    5.87%
2011    6.21%
2010    7.43%
2009    8.28%
2008    4.24%

culd be time to go back into bonds? idk, knd of been considering it, but not sure if the risk is worth a tiny potential reward. can get over 4% on treasury notes, over 5% on bills. so if 8% is a potential on bonds, but you could also see -10% - is it worth it?

[minnesotapaintlady]

Jul 27, 2023 20:59:48 GMT -5 Rukh O'Rorke said:

Jul 27, 2023 11:51:49 GMT -5 minnesotapaintlady said:

I think it's because that's not always been the case.  A lot of Boglehead's consider this past decade to be an anomaly and not a reason to change the long-term investment plans.  The site I had only had data going back to 2008, but it wasn't too shabby not that long ago.

2014    5.68%
2013   -1.86%
2012    5.87%
2011    6.21%
2010    7.43%
2009    8.28%
2008    4.24%

culd be time to go back into bonds? idk, knd of been considering it, but not sure if the risk is worth a tiny potential reward. can get over 4% on treasury notes, over 5% on bills. so if 8% is a potential on bonds, but you could also see -10% - is it worth it?

Are the t-bill and note rates long-term or short?

As for bonds being risky, I think that's where the "recency effect" is clouding things.  In the past 20 years bonds have only been down 4 times with last year being particularly nasty (worst for bonds in history).

2022  -13.16%

2021  -1.67%

2018  -0.03%

2013  -2.15%

The other 16 years range from 2.5 to 8.5%

I don't know what to do either.  This is my every two years AA freakout session. 

[minnesotapaintlady]

Back to 76.  1982 was a good year!

YEAR--INFLATION--BOND INDEX--S&P 500 INDEX------MSCI EAFE INDEX

1976-------4.9%--------15.6%------------23.8%--------------------3.6%
1977-------6.7-----------3.0-------------(-7.2)-------------------17.5
1978-------9.0-----------1.4---------------6.6--------------------33.1
1979------13.3-----------1.9--------------18.4-------------------10.9 (Highest Annual Inflation Rate)
1980------12.5-----------2.7--------------32.4-------------------25.4
1981-------8.9-----------6.3-------------(-4.9)------------------(-2.5)
1982-------3.8----------32.6--------------21.6------------------(-0.3) (Highest Bond Index Return)
1983-------3.8-----------8.4--------------22.6-------------------24.8
1984-------3.9----------15.2---------------6.3--------------------3.5
1985-------3.8----------22.1--------------31.7-------------------51.4
1986-------1.1----------15.2--------------18.7-------------------65.8 (Highest Stock Return)
1987-------4.4-----------2.8----------------5.2-------------------24.6
1988-------4.4-----------7.9---------------16.6-------------------27.8
1989-------4.6----------14.5---------------31.7------------------11.4
1990-------6.1-----------8.9---------------(-3.1)---------------(-22.8)
1991-------3.1----------16.0---------------30.5------------------12.4
1992-------2.9-----------7.4-----------------7.6----------------(-11.9)
1993-------2.7-----------9.7----------------10.1------------------32.6
1994-------2.7---------(-2.9)----------------1.3--------------------7.6
1995-------2.5----------18.5---------------37.6-------------------11.8 (Highest S&P Index Return)
1996-------3.3-----------3.6----------------23.0--------------------7.2
1997-------1.7-----------9.7----------------33.4--------------------2.6
1998-------1.6-----------8.7----------------28.6-------------------19.1
1999-------2.7---------(-0.8)---------------21.0-------------------28.3
2000-------3.4----------11.6---------------(-9.1)----------------(-15.8)
2001-------1.6-----------8.4--------------(-11.9)----------------(-19.8)
2002-------2.4----------10.3-------------(-22.1)----------------(-15.3)
2003-------1.9-----------4.1----------------28.7-------------------40.4
2004-------3.3-----------4.3----------------10.9-------------------20.9
2005-------3.4-----------2.4-----------------4.9-------------------15.8
2006-------2.5-----------4.3----------------15.8------------------26.8
2007-------4.1-----------7.0-----------------5.5------------------11.6
2008-------0.1-----------5.2--------------(-37.0)---------------(-43.1) (Lowest U.S. and International Stock Returns)
2009-------2.7-----------5.9----------------26.5------------------32.5
2010-------1.5-----------6.5----------------15.1-------------------8.2
2011-------3.0-----------7.7-----------------2.1----------------(-11.7)
2012-------1.7-----------4.3----------------16.0------------------17.9
2013-------1.5---------(-2.0)---------------32.4------------------23.3
2014-------1.6-----------6.0----------------13.7-----------------(-4.5)
2015-------0.7-----------0.5-----------------1.4-----------------(-0.4)
2016-------2.1-----------2.6----------------12.0-------------------1.5
2017-------2.1-----------3.5----------------21.8------------------25.6
2018-------2.5---------(-0.1)--------------(-4.4)---------------(-13.4)
2019-------2.3-----------8.7----------------31.5------------------22.7
2020-------1.4-----------7.7----------------18.4------------------11.3
2021-------7.0---------(-1.7)---------------25.7-------------------8.6
2022-------6.5--------(-13.2)-------------(-19.4)--------------(-16.0) (Lowest Bond Index Return)

[souldoubt]

There's no shortage of banks or money market accounts that are paying 4%+ (some around 5%) and those rates are likely to go up with the fed just raising rates another 25bps.  As of last week Vanguard cash plus account was at 4.5% and Capital One 360 is at 4.3%.  If you bought CD's last week when this thread was started you'd be out money as CD rates should rise with the fed raising rates.  I realize there's tax implications for certain bond investments (ibonds, muni's) and it all depends on risk appetite but locking your money up long term or going bond heavy could be risky as the fed could raise rates again.  We've seen a lot of movement in our 401K plan into the money market account options that are now paying 5% or close to it and I don't fault anyone for that as it's tempting if you're closer to retirement or worried about a correction.

[minnesotapaintlady]

Jul 28, 2023 17:22:10 GMT -5 souldoubt said:

  If you bought CD's last week when this thread was started you'd be out money as CD rates should rise with the fed raising rates. 

I get that you could maybe get a better rate, but why would you be "out" money?  If I bought 5% CDs last week for 2 years I'm still getting that rate for 2 years.  Money market rates can change daily.  So whatever the rate is now could be completely different just weeks from now. 

[souldoubt]

Jul 28, 2023 17:37:43 GMT -5 minnesotapaintlady said:

Jul 28, 2023 17:22:10 GMT -5 souldoubt said:

  If you bought CD's last week when this thread was started you'd be out money as CD rates should rise with the fed raising rates. 

I get that you could maybe get a better rate, but why would you be "out" money?  If I bought 5% CDs last week for 2 years I'm still getting that rate for 2 years.  Money market rates can change daily.  So whatever the rate is now could be completely different just weeks from now. 

You'd be out money because you'd be locked in at 5% when new CD's out this week or next start paying 5.25% or whatever adjusting for the fed raising rates.  You don't lose anything with what you bought but you locked into something that's now at a rate below market.  Same thing if you bought bonds paying a fixed percentage.  Existing bond and CD rates are inversely related to interest rates so when the fed raises rates the value those existing bonds and CD's decline especially if you had to sell on a secondary market.  Savings and  money market rates might not pay quite as much but the rates adjust and you generally aren't locked in to keeping your money there.  On the other hand though if they lower rates then the value of existing bonds and CD's increase.  I don't think anyone really expects them to lower rates any time soon.  

It's really just a matter of preference and splitting hairs if you're talking 25 or even 50 bps over a year or two.  Personally I'd rather keep my money more liquid in a savings or money market account right now but plenty of people would prefer CD's or bonds. 

[Rukh O'Rorke]

I have reviewed your thread MPL.

I was an original contributor too! Some updates on my situation:

Since then I sold a lot of stocks in one of my rollover 401k. Have about 140k plus and getting 600+ interest per month…I think…on train so can’t check. I find that acceptable.

Also have 25k in current work 401k to the admittedly subpar cash account, with all new money directed there and 37k ibonds. I have also reached the illustrious age of 59.5.

So worst case lose my job, market tanks, I got a few years to figure it out. If only the house was fixed up I might quit and give it a whirl!

I’m just not gonna do bonds, outside us treasuries. I’m ok with losing a percent or two but everyone takes the risk they feel more comfortable.

Have not dialed back my Individual stocks in the other accounts, but have 225k in current 401k in large small and international funds.

But unless your job is ultra secure and you have good disability coverage, I think having enough for 2-3 years without selling stocks is prudent.

I could likely string my cash to 62 to take early ss if things got particularly dire. That also makes me feel more secure, although ss won’t even pay my mortgage payment! So not a whole lot of security!

[bean29]

May 9, 2024 11:05:17 GMT -5 Rukh O'Rorke said:

I have reviewed your thread MPL.

I was an original contributor too! Some updates on my situation:

Since then I sold a lot of stocks in one of my rollover 401k. Have about 140k plus and getting 600+ interest per month…I think…on train so can’t check. I find that acceptable.

Also have 25k in current work 401k to the admittedly subpar cash account, with all new money directed there and 37k ibonds. I have also reached the illustrious age of 59.5.

So worst case lose my job, market tanks, I got a few years to figure it out. If only the house was fixed up I might quit and give it a whirl!

I’m just not gonna do bonds, outside us treasuries. I’m ok with losing a percent or two but everyone takes the risk they feel more comfortable.

Have not dialed back my Individual stocks in the other accounts, but have 225k in current 401k in large small and international funds.

But unless your job is ultra secure and you have good disability coverage, I think having enough for 2-3 years without selling stocks is prudent.

I could likely string my cash to 62 to take early ss if things got particularly dire. That also makes me feel more secure, although ss won’t even pay my mortgage payment! So not a whole lot of security!

I owe about 91,000 on my house.  Interest rate is 2.7% and paying $1850/month 53 months left.  I owe about 21,000 on my car at 2.29 (about 31 months left) and about $23,500 on DH's car at 5.68%.  DH's car will be paid off soon. I wanted to pay it off a while a go and he told me to wait.  If I lose my job, I think we would be fine, and I can pay more attention to the things I should stay on top of for DH's business.  You do have a point about keeping more cash available in case the stock market tanks.

I looked at my asset allocation yesterday and dumped my stable value fund for Conservative Growth Lifestage fund which has a better earnings history and still is a safer investment I have about 8.5% of my allocation from my current employer to this fund.  I have 71% in S&P 500 fund and about 5% each in Small and Mid-cap funds and the rest is Vanguard Total International Stock index.  I also have $$ at Vanguard and Fidelity. I have $30,000 in an HSA too.

[Rukh O'Rorke]

I have a good chunk is HSA too, bean29 but would like to keep that in a separate bucket.

I should invest it now that I transferred a good chunk to fidelity. Will transfer another HSA account there soon too then will have only 1 plus the current employer one.

[bean29]

Yeah, I transferred my HSA to Fidelity about a year ago.  I have about $30,000 -about 60% in FXAIX (S&P 500) and the rest is just parked in a money market account.  I don't know how to direct my weekly deposit to be invested without doing it manually.  I guess I will have to talk to someone there, right now it just goes in the money market fund.  I have a Visa Debit Card I can use to pay for Medical Expenses.

[jerseygirl]

Suggest to buy individual bonds instead of a bond fund. I don’t like funds since the prices can go down. Prefer good corporate bonds in an IRA or municipal tax free in brokerage fund
I’ve had apple and Amazon bonds paying 5% even in the past low interest environment. Original bond cost is guaranteed at maturity and you get interest . I buy bonds about 5 to 10 years duration

[lurkyloo]

I was just thinking about starting a thread on asset allocation 

I‘m receiving a distribution shortly from grandparents trusts.  It will be after-tax and is heavily weighted toward bonds. Currently I have about 700K in a beneficiary IRA (needs to be emptied by 2031 I think?) that is about 45% bonds or gold, the rest of my holdings (taxable, 401k) are maybe 5% bonds and nice fat 5%ish MM funds. No bonds in Roth IRA.

Distribution: I’ll keep the tax exempt bond funds probably, and there are several out of state individual munis.  I’ll probably keep any that are 4% or more and sell about 28K worth at 3.13%, in favor of buying in-state munis.  Marginal rate is 35-37%, state and local is I think 8.95%, capital gains rate is 23.8% with NIIT. Dad’s advisor said they can get 4.5% or more in my state within a few percent of face value (aaa or better rating).  That’d be about 6.5% return on a pre-tax equivalent.

My thought was basically that about 20% bonds or low risk is appropriate.  But I don’t much want regular bonds in taxable; any of those I receive are getting sold.

What do people think of FBALX?  I will get about 130K of that and was planning to sell it right off (before it winds up with a lot of capital gains) bc I don’t want the tax drag, or the taxable bond concentration.

DH considerations: at some time in the next 5-10 years he would like to take a different job that would involve a large pay cut and us back into a more normal tax bracket.  State likely to stay the same marginal rate until retirement.  He sucks at taxable investing and has an enormous reserve in basically checking (mid-high six figures), so I can be pretty much as aggressive as I want    We are late forties/early fifties and I expect he will want to work as long as possible (definitely longer than I want him to).

I know the Boglehead way is to sell everything and it into VTI, VXUS, BND etc. Would love to hear counterpoints.

[CCL]

FBALX was my second mutual fund and still one of my favorites! I've held it for many years. A good percentage of the income is either long-term gains or qualified dividends.

My situation is much different than yours. I don't have nearly as much income, so we are in the 0% dividend/capital gains bracket and 12% for income. It's great for me since I don't pay much taxes on the shares in my taxable account.

I've held it in the 401k for 25+ years. I loved the quarterly dividends since it kept paying out when the market dipped and reinvested them at the lower price.

[lurkyloo]

May 9, 2024 16:44:32 GMT -5 CCL said:

FBALX was my second mutual fund and still one of my favorites! I've held it for many years. A good percentage of the income is either long-term gains or qualified dividends.

My situation is much different than yours. I don't have nearly as much income, so we are in the 0% dividend/capital gains bracket and 12% for income. It's great for me since I don't pay much taxes on the shares in my taxable account.

I've held it in the 401k for 25+ years. I loved the quarterly dividends since it kept paying out when the market dipped and reinvested them at the lower price.

Interesting…I’d have no objection to holding it in my 401k, I just don’t want the drag in taxable.  I probably need to wait 30 days between selling it in taxable and buying in 401k to avoid potential wash sale-will take a look to see if it’s offered in my fidelity 401k.  Thanks!

[Rukh O'Rorke]

May 9, 2024 14:50:48 GMT -5 jerseygirl said:

Suggest to buy individual bonds instead of a bond fund. I don’t like funds since the prices can go down. Prefer good corporate bonds in an IRA or municipal tax free in brokerage fund
I’ve had apple and Amazon bonds paying 5% even in the past low interest environment. Original bond cost is guaranteed at maturity and you get interest . I buy bonds about 5 to 10 years duration

how do you find them, research, etc.?

[jerseygirl]

May 9, 2024 17:45:22 GMT -5 Rukh O'Rorke said:

May 9, 2024 14:50:48 GMT -5 jerseygirl said:

Suggest to buy individual bonds instead of a bond fund. I don’t like funds since the prices can go down. Prefer good corporate bonds in an IRA or municipal tax free in brokerage fund
I’ve had apple and Amazon bonds paying 5% even in the past low interest environment. Original bond cost is guaranteed at maturity and you get interest . I buy bonds about 5 to 10 years duration

how do you find them, research, etc.?

Get a bond sales person in the investment company. I used someone in Morgan Stanley who specializes in bonds

[lurkyloo]

May 9, 2024 17:45:22 GMT -5 Rukh O'Rorke said:

May 9, 2024 14:50:48 GMT -5 jerseygirl said:

Suggest to buy individual bonds instead of a bond fund. I don’t like funds since the prices can go down. Prefer good corporate bonds in an IRA or municipal tax free in brokerage fund
I’ve had apple and Amazon bonds paying 5% even in the past low interest environment. Original bond cost is guaranteed at maturity and you get interest . I buy bonds about 5 to 10 years duration

how do you find them, research, etc.?

I poked around on the fidelity website and you can buy them there (at least munis, didn’t explore the corporate options although they were a search option) but I’ll probably use the person at the brokerage that currently holds the inherited assets, for handholding purposes.

If you hold them to maturity they are very predictable and you will get full face value back (assuming no default), but if you sell them before they mature you may get an increased or decreased price back compared to face value.  It’s worth thinking carefully about your time horizon.

I think the buying process is more complicated than it seems, it’s not like going to a store bc you’re typically buying/bidding on a secondary market.  I get the impression you’re likely to pay slightly above or below face value.

There’s also something called de minimis that can affect tax treatment if you buy at a significant discount relative to the time held-ordinary income rates instead of cap gains?  Not sure if that’s only a muni thing.

[minnesotapaintlady]

May 9, 2024 16:52:34 GMT -5 lurkyloo said:

May 9, 2024 16:44:32 GMT -5 CCL said:

FBALX was my second mutual fund and still one of my favorites! I've held it for many years. A good percentage of the income is either long-term gains or qualified dividends.

My situation is much different than yours. I don't have nearly as much income, so we are in the 0% dividend/capital gains bracket and 12% for income. It's great for me since I don't pay much taxes on the shares in my taxable account.

I've held it in the 401k for 25+ years. I loved the quarterly dividends since it kept paying out when the market dipped and reinvested them at the lower price.

Interesting…I’d have no objection to holding it in my 401k, I just don’t want the drag in taxable.  I probably need to wait 30 days between selling it in taxable and buying in 401k to avoid potential wash sale-will take a look to see if it’s offered in my fidelity 401k.  Thanks!

I'd avoid it in a taxable account, but I often think I'll just put my entire 401K and Rollover IRA in FBALX when I retire and be done with trying to figure out all this AA crap.  I would keep my Roth and IRA 100% in stock.

[minnesotapaintlady]

It's been about a year since I posted this and I still haven't done anything. 

I'm still at about 8% in VBTLX.  And I still hate VBTLX.  I still don't want to sell my FLPSX in my Rollover IRA and have no decent fixed income options in my 401K for new contributions, so here I sit.

I've learned a lot about Tips ladders the past couple days though.  They sound interesting.  Buying individual bonds seems daunting to me, but I suppose I should educate myself on that as well. 

[lurkyloo]

May 10, 2024 9:10:49 GMT -5 minnesotapaintlady said:

May 9, 2024 16:52:34 GMT -5 lurkyloo said:

Interesting…I’d have no objection to holding it in my 401k, I just don’t want the drag in taxable.  I probably need to wait 30 days between selling it in taxable and buying in 401k to avoid potential wash sale-will take a look to see if it’s offered in my fidelity 401k.  Thanks!

I'd avoid it in a taxable account, but I often think I'll just put my entire 401K and Rollover IRA in FBALX when I retire and be done with trying to figure out all this AA crap.  I would keep my Roth and IRA 100% in stock.

My asset allocation is almost entirely down to inertia 

401ks are mostly target date funds plus some SP500.  Roths are SP500 plus some REIT and growth, HSA is fidelity  zero fund. The taxable I manage is mostly VTI (thanks all for the feedback) with about 8% Md muni bond fund and 16% MM.  Still have a bunch in TIAA with high LTCG, gradually unwinding that is a long term goal.  They’re decent funds, just high tax drag.

The beneficiary IRA is mostly the same mix I inherited, although I exchanged a few higher-fee funds for Vanguard et al equivalents. Way too many individual stocks and I’m scared to sell at the wrong time…I’ve sold some down to take the distributions.

I’m hesitant to exchange the excess of bonds in the pending distribution, because I’d be selling at a slight loss and buying in when I think the market is a little high.  I guess I can always use the capital losses.

I’m also scattered over three brokerages and multiple holdings for each so it’s harder than it ought to be to calculate % of  “safe” holdings. (Yes, I know there are tools for this but I’m too lazy to vet them properly.)

[lurkyloo]

May 10, 2024 9:16:34 GMT -5 minnesotapaintlady said:

It's been about a year since I posted this and I still haven't done anything. 

I'm still at about 8% in VBTLX.  And I still hate VBTLX.  I still don't want to sell my FLPSX in my Rollover IRA and have no decent fixed income options in my 401K for new contributions, so here I sit.

I've learned a lot about Tips ladders the past couple days though.  They sound interesting.  Buying individual bonds seems daunting to me, but I suppose I should educate myself on that as well. 

Not sure how much this helps: but can you do an in-service rollover of part of your 401k to an IRA?  You’d have your choice of funds/bonds in that scenario and I don’t think it would have negative repercussions e.g. loss of backdoor Roth ability in your case.

[Rukh O'Rorke]

May 10, 2024 9:10:49 GMT -5 minnesotapaintlady said:

May 9, 2024 16:52:34 GMT -5 lurkyloo said:

Interesting…I’d have no objection to holding it in my 401k, I just don’t want the drag in taxable.  I probably need to wait 30 days between selling it in taxable and buying in 401k to avoid potential wash sale-will take a look to see if it’s offered in my fidelity 401k.  Thanks!

I'd avoid it in a taxable account, but I often think I'll just put my entire 401K and Rollover IRA in FBALX when I retire and be done with trying to figure out all this AA crap.  I would keep my Roth and IRA 100% in stock.

I'm sure that would be *fine*, but digging into that fund a little it just looks like a mix of sp500 stocks and us treasuries.....so kind of like what my goals is. FBALX is 60% stocks, so I would likely not be that conservative. I would love to have a spare odd million that I could just put into 20/30 year treasuries and then get the 40-45k interest/year and what I already have leave as is and call it a day. Once I get social security, then that interest plus social would be my "goal" to live on with the stocks for funsies/extras, etc. (This would be on top of all the money I have now, not a - oh just reallocate and you are there situation.....it isn't anything that will ever happen as getting a million outside the pretax is just not in the cards at this point....just a pipe dream of super security)

The issue with FBALX would be that when it is down, and you sell, you are selling balanced mix of stocks and securities. and the securities purchase price can also fluctuate and be sold when worth less on the market. Unless the 1.73% yeild would work for you on the regular and you wouldn't need to sell in a crash - that would likely be good. So I feel like you are being unserious here.....

[CCL]

May 10, 2024 9:10:49 GMT -5 minnesotapaintlady said:

May 9, 2024 16:52:34 GMT -5 lurkyloo said:

Interesting…I’d have no objection to holding it in my 401k, I just don’t want the drag in taxable.  I probably need to wait 30 days between selling it in taxable and buying in 401k to avoid potential wash sale-will take a look to see if it’s offered in my fidelity 401k.  Thanks!

I'd avoid it in a taxable account, but I often think I'll just put my entire 401K and Rollover IRA in FBALX when I retire and be done with trying to figure out all this AA crap.  I would keep my Roth and IRA 100% in stock.

If you can keep your taxable income low, it's not much of a tax hit. For me, it costs less in taxable than it would in the 401k (since it's all taxed at 12%.)

I kinda did what you're thinking, but in reverse. Back in the mid '90s when I was trying to figure out what a 401k was, hubby couldn't get much info from his employer, so I figured signing up for a balanced fund would be a heck of a lot better than not signing up at all, so that's what I did. As time went by and I could educate myself via the Internet, I added additional funds.

[minnesotapaintlady]

May 10, 2024 10:43:44 GMT -5 Rukh O'Rorke said:

The issue with FBALX would be that when it is down, and you sell, you are selling balanced mix of stocks and securities. and the securities purchase price can also fluctuate and be sold when worth less on the market. Unless the 1.73% yeild would work for you on the regular and you wouldn't need to sell in a crash - that would likely be good. So I feel like you are being unserious here.....

But, it doesn't really matter since the re-balancing is happening automatically within the fund.  If you had a stock fund and a fixed income fund you would take your 4% from whichever side is up to get it back to the 60/40 AA which might mean selling more stocks than bonds or vice versa. I haven't researched how often FBALX rebalances, but I'm guessing it's more than the once a year or so that I would. 

I would still want to keep a year or two's worth of expenses in something like cash or CD's just because psychologically it would suck to sell if the market is down 30%, but in reality, the whole point of a SWR (safe withdrawal rate) is it can weather pulling during the down years as well.

[movingforward]

Everything for me has been in stocks for the last 20 yrs. I don't want the market to dictate if I can stop working in 5 yrs though so I recently started to change things just a little bit. When the market crashed in 2009 there were several people that had been planning to retire that ended up working another 3-4 yrs. I don't want that to be me.

I have a large taxable account and sold around $40K recently and moved it into a 5 yr CD. I plan to gradually sell off enough over the next few yrs so that I have 3yrs worth of cash to live on when I decide to stop working. Everything else will be left in stocks. I am hoping to be able to keep at least 2-3yrs of cash always available to ride to the down times in the market. I am just not sure where to park that short term cash. Right now CD's are okay. Even my savings is getting 4.5%, but I am not sure what to do with the cash when interest rates go down. I have never been a bonds person, but maybe I should start looking. I guess I could move short term cash into a target fund with more bonds

Anyway, good discussion MPL...

[minnesotapaintlady]

May 10, 2024 10:41:28 GMT -5 lurkyloo said:

May 10, 2024 9:16:34 GMT -5 minnesotapaintlady said:

It's been about a year since I posted this and I still haven't done anything. 

I'm still at about 8% in VBTLX.  And I still hate VBTLX.  I still don't want to sell my FLPSX in my Rollover IRA and have no decent fixed income options in my 401K for new contributions, so here I sit.

I've learned a lot about Tips ladders the past couple days though.  They sound interesting.  Buying individual bonds seems daunting to me, but I suppose I should educate myself on that as well. 

Not sure how much this helps: but can you do an in-service rollover of part of your 401k to an IRA?  You’d have your choice of funds/bonds in that scenario and I don’t think it would have negative repercussions e.g. loss of backdoor Roth ability in your case.

Missed this comment.

Unfortunately, no, no in-service distributions allowed. 

[minnesotapaintlady]

May 15, 2024 11:14:53 GMT -5 movingforward said:

Everything for me has been in stocks for the last 20 yrs. I don't want the market to dictate if I can stop working in 5 yrs though so I recently started to change things just a little bit. When the market crashed in 2009 there were several people that had been planning to retire that ended up working another 3-4 yrs. I don't want that to be me.

This is where I'm at too.  If we get a repeat of 2000 or 2008 in 2028 I would be screwed...at least temporarily.  I was thinking this morning that it would STILL be scary to retire if the market was down 40% though, even if I had 2-3 years worth of cash.  I wonder if I could pull the trigger if my account went from 1.2 million to 700K overnight even if I had a couple years worth of cash?

I think if it happened AFTER I retired, I'd deal, but if I was still working I might stick around a while longer.  Who knows.

[haapai]

May 9, 2024 13:48:22 GMT -5 bean29 said:

Yeah, I transferred my HSA to Fidelity about a year ago.  I have about $30,000 -about 60% in FXAIX (S&P 500) and the rest is just parked in a money market account.  I don't know how to direct my weekly deposit to be invested without doing it manually.  I guess I will have to talk to someone there, right now it just goes in the money market fund.  I have a Visa Debit Card I can use to pay for Medical Expenses.

About a year ago, I finally pushed a big chunk of one of my HSA accounts into investments.  It landed up being a two-step process.  First I moved a big chunk of money into investments.  Three weeks later, I made the change to have anything over $3k automatically moved into investments.  I didn't really need to wait three weeks to make the second change.  I was only locked out of making additional changes for about three days.

I don't know if there was a way to make both changes at the same time.  I choose the option with "manual" in the name the first time and I can't remember what I used the second time.  

Making two changes weeks apart made me feel slightly incompetent.  I'd probably still be feeling badly about myself if the S&P hadn't gone on a tear in the last year.  There are times when you just have to remind yourself that "the perfect is frequently the enemy of the good" and "better late than never". 

I'm sure that there is a way to automatically push anything over a certain balance out of cash and into investments.  I don't know if there is a way to have x% put into a money market account and 1-x% put into investments. 

P.S.  I also choose to put 100% of the invested amount into an S&P fund.  Looking at expenses made that decision very, very easy.  Gak! There was some overpriced garbage in the array of investments that I had to choose from. 

[Rukh O'Rorke]

May 15, 2024 12:29:47 GMT -5 minnesotapaintlady said:

May 15, 2024 11:14:53 GMT -5 movingforward said:

Everything for me has been in stocks for the last 20 yrs. I don't want the market to dictate if I can stop working in 5 yrs though so I recently started to change things just a little bit. When the market crashed in 2009 there were several people that had been planning to retire that ended up working another 3-4 yrs. I don't want that to be me.

This is where I'm at too.  If we get a repeat of 2000 or 2008 in 2028 I would be screwed...at least temporarily.  I was thinking this morning that it would STILL be scary to retire if the market was down 40% though, even if I had 2-3 years worth of cash.  I wonder if I could pull the trigger if my account went from 1.2 million to 700K overnight even if I had a couple years worth of cash?

I think if it happened AFTER I retired, I'd deal, but if I was still working I might stick around a while longer.  Who knows.

This is a good point, and something to consider in my situation.

I am hoping to have maybe 3 years in cash so my plans are not derailed if the market tanks, but I might not feel ok pulling the plug when we don't know how bad/long the damage will be. Unfortunately - I don't know how things are going to play out with the new boss, there are a few red flags - maybe just pink at this point - but I am glad I have contingencies that don't involve sucking it up no matter what it is.

[movingforward]

May 15, 2024 12:29:47 GMT -5 minnesotapaintlady said:

May 15, 2024 11:14:53 GMT -5 movingforward said:

Everything for me has been in stocks for the last 20 yrs. I don't want the market to dictate if I can stop working in 5 yrs though so I recently started to change things just a little bit. When the market crashed in 2009 there were several people that had been planning to retire that ended up working another 3-4 yrs. I don't want that to be me.

This is where I'm at too.  If we get a repeat of 2000 or 2008 in 2028 I would be screwed...at least temporarily.  I was thinking this morning that it would STILL be scary to retire if the market was down 40% though, even if I had 2-3 years worth of cash.  I wonder if I could pull the trigger if my account went from 1.2 million to 700K overnight even if I had a couple years worth of cash?

I think if it happened AFTER I retired, I'd deal, but if I was still working I might stick around a while longer.  Who knows.

I go back and forth on moving 50% of my money out of the market before retirement. That's kind of tricky though...I feel like I could be missing out on a lot of gains. I also have to time it all so that I am moving it when the market is up, and it is so up and down... I don't really want to move it all at one time either and have to pay taxes on all those capital gains in one year. Ideally, maybe I move 250K to cash over the the next 5yrs, have $250K in a target fund (or something pretty stable) and keep $600K in stocks. Ugh...IDK!