Tatortodd / Fly-Sig - thanks!! I'll need to copy and read your info more slowly as it's quite a bit to digest in one sitting. And the charts. But I get the gist.

I made a mistake above referring to T-Bills (partially ignorant mistake). I've got allocation in a bond fund made of US treasury bonds. I don't need to think about things like bond maturity, thankfully. The only thing I consider is how much to put into the SP500 index fund or the bond fund; at least that's the level of sophistication I have. There are probably other aspects I should consider but I don't have the knowledge.

I think the basis for the casual recommendation I've received is that I am living off other funds for now and can leave my 401k alone for the next few years. So, I'm generally thinking long term and hands-off. But in shifting from 60/40 to 50/50, I am thinking that some dollar cost averaging may be possible if the bear hits; the cost is minimal 4% gains on the 10% shifted if the bull continues instead (assuming the projections are right that the sp500 will only gain another 4% for the next year).

That being said, I should probably not try to game the market. Just keep to a split as long as I have sufficient amounts in the bond fund to weather equity downturns / recovery (say at least 5 years worth?).

quote:

Originally posted by konata88:

That being said, I should probably not try to game the market. Just keep to a split as long as I have sufficient amounts in the bond fund to weather equity downturns / recovery (say at least 5 years worth?).

For me, transitioning from pre-retirement financial mode to retirement financial mode was not easy. I still struggle with trying to outsmart the market sometimes. Someone described retirement as having reached financial independence, where you don't need to work for a paycheck. Your job now is to not destroy that financial independence! Very different than earlier years trying to maximize returns to get to independence.

I've done a lot of reading and studied a lot of research on different approaches to retirement finances. There are a lot of different ways to configure retirement portfolios, most of which are good. None are perfect nor even good for everyone.

Being able to sleep at night when the market takes a dump is, for me, really important. Some people love the thrill of volatility, but I want volatility to be irrelevant so that I can sleep.

That said, having some portion of your portfolio as higher risk is just fine. That 10% you're switching to bonds probably represents your risk tolerance at play. You're consciously choosing the risk of lost opportunity if stock jump up instead of doing what you expect, which is stocks going down. A very rational choice.

If we look at the remaining 90% of your portfolio that you're not changing, imho that is where you should be thinking about if you will sleep well during different market conditions. That's where your gut decides if you sleep well or not. (You've already decided what to do with the 10%, so it shouldn't affect your sleep whatever happens).

The reason to leave that 90% where it is over time regardless of what the markets do is because you've already determined it is a good strategy for your situation. History shows that people who make many changes while trying to guess the future markets are the ones who do very poorly in the long run. When the market dumps, you're ok because you know it should be up by the time you need that money. When the market rallies you're happy. When one of your investment underperforms, you're ok because you know it will do much better when the market changes. Even when your portfolio goes down for some months, you know it is a good plan for the longer term, and chances are you'd sabotage the upside if you made big changes.

As long as you believe the 90% is configured well for you, leaving it alone is the least risk path over time.

But that 10%, that's maybe for you where making changes improves your happiness without keeping you awake.

Speaking of sleeping well at night. I have said a few time here. For me in my youth I used to Listen to Bob Brinker, His radio show was "money talk".
He was great and was one of the early guys who understood the value of $ and how to obtain it, how to grow it and manage it.
As I recall he talked about ones financial security as a four legged stool. A portfolio, cash, other investments and probably insurance although I cannot remember the four one exactly.

But basically its just not your portfolio that maters. It is a much the other things as it is your portfolio.

Lack of debt is a huge one as well.

quote:

Originally posted by Fly-Sig:
Being able to sleep at night when the market takes a dump is, for me, really important.

That said, having some portion of your portfolio as higher risk is just fine. That 10% you're switching to bonds probably represents your risk tolerance at play. You're consciously choosing the risk of lost opportunity if stock jump up instead of doing what you expect, which is stocks going down. A very rational choice.

If we look at the remaining 90% of your portfolio that you're not changing, imho that is where you should be thinking about if you will sleep well during different market conditions. That's where your gut decides if you sleep well or not. (You've already decided what to do with the 10%, so it shouldn't affect your sleep whatever happens).

The reason to leave that 90% where it is over time regardless of what the markets do is because you've already determined it is a good strategy for your situation. History shows that people who make many changes while trying to guess the future markets are the ones who do very poorly in the long run. When the market dumps, you're ok because you know it should be up by the time you need that money. When the market rallies you're happy. When one of your investment underperforms, you're ok because you know it will do much better when the market changes. Even when your portfolio goes down for some months, you know it is a good plan for the longer term, and chances are you'd sabotage the upside if you made big changes.

As long as you believe the 90% is configured well for you, leaving it alone is the least risk path over time.

But that 10%, that's maybe for you where making changes improves your happiness without keeping you awake.

Thanks! I'm of the sentiment that I just want to sleep easy. I don't aspire to be wealthy, just want to maintain the lifestyle level we currently have.

I appreciate the affirmation of the 10% decision - I been struggling with it for months now, uncertain what to do.

The 90% is still uncertain to me. I have some assurance from an FA that the allocations are reasonable and as long as the market performs at average for the lifetime duration, I should be okay indefinitely. I'm not 100% confident but it's good to have an "expert" opinion; I know it's not foolproof but at least it doesn't seem like I'm doing something grossly wrong.

I'm trying to apply general rules of thumb like 60/40 but will consider exceptions. For example, I can let the 40 reduce as long as the amount in the 40 is sufficient to weather a downturn in equity that lasts 5-10 years. With that as minimum, I can let the 60 grow over time and know it will recover from downturns and maintain an overall upward trend. This is the plan anyway; the FA says it's reasonable but I'm just paranoid.

So, discomfort persists until I better settle into retirement phase and understand how medicare and ssa will impact me.