So if we assume that the market is going to be volatile and returns will be low for the next 10 years or at least the near term (5-7 years).

Retirement is on the horizon. Say 3 years, maybe 5. But even if you were younger. Say in your forties. Would now be a good time to adjust the mix on your portfolio to a more conservative mix to keep more of what you have. I realize this is at the expense of making more when it rise's. But to me it always seems like you loose more when it goes down than you make when it goes up .

I have already done this and feel it is going to serve me well (fingers crossed).

Are you on the fence? Is this a bad strategy (mistake by me)?

I really do not consider this type of thing a "timing the market" strategy. I consider timing the market fooling with it regularly.

My new(er) stock purchases have been all income stocks and more blue chip type companies. I still have some pretty aggressive stocks, but plan to keep most of them for the long haul unless things drastically change. I have five years to retirement, but something many of us forget is how long we will live in retirement. For that reason, I don't want to get rid of all my growth. I'm looking to live another 25-30 years, barring any tragedies.

A crap shoot either way.
Also factor in inflation eating away at your assets if the economy stays strong and wages and interest rates continue to rise.
There are lots of moving parts to factor into the next ten years and beyond. Many trendy things could also develop.
Just remember, the guys that did consistently well during the gold rush were the guys selling the shovels.

Retirement in 3-4 years is a vastly different scenario than someone in their 40's.

Retiring in <5 years, you might want to move your portfolio into something more conservative. The standard plan is subtract your age from 100, and that's the amount you should have in equities.

If you follow that rule, in your sixties you be in mostly fixed income, in your forties, mostly equity.

But here's the kicker. The government is mostly crushed the fixed income market. You can't really get good returns on fixed income at this point, unless you go into risky stuff.

quote:

Originally posted by old rugged cross:
So if we assume that the market is going to be volatile and returns will be low for the next 10 years or at least the near term (5-7 years).

Retirement is on the horizon. Say 3 years, maybe 5. But even if you were younger. Say in your forties. Would now be a good time to adjust the mix on your portfolio to a more conservative mix to keep more of what you have. I realize this is at the expense of making more when it rise's. But to me it always seems like you loose more when it goes down than you make when it goes up .

I have already done this and feel it is going to serve me well (fingers crossed).

Are you on the fence? Is this a bad strategy (mistake by me)?

I really do not consider this type of thing a "timing the market" strategy. I consider timing the market fooling with it regularly.

I am 67 and we are about 38 percent stocks. I have no idea what the returns will be on stocks in my lifetime but I would bet we experience another major bear market, maybe a couple, in my lifetime that I might not live long enough to recover the losses from. If I was my 40s I would have a higher exposure to stocks but not 100 percent. I always kept some dry powder for buying opportunities.

If retiring in 3 to 4, I would go conservative. CDs can be bought at 2+%.

I’m four years to retirement. I switched my stuff to less risky last year. Thankfully I didn’t take a hit last quarter like all my coworkers. I don’t plan on working a shift after I’m eligible to retire. I’ve had it with my department. Too old to leave so I will finish my last four years and do something else after.

I haven't retired but about 10 years ago we got conservative, I was 65. We're doing fine, probably could have made more in the market.

Ally Bank has good, for the times, CD rates, we've got a couple going and the interest pays things like our property taxes and car insurance.

I think we have spoken about this before, right? Maybe it was someone else, but the answer is the same. It depends on a multitude of information, and age is just one part. I work with teachers that have a pension (that is in a state that fully funds it), and their take is different from teachers in Pennsylvania.

Some depends on ability, some depends on willingness to take on risk, and personal management. If you want a set it and forget it, a long term investment in S&P 500 is not a bad approach. If you want to limit risk to a certain sector, that can be accomplished too. Sector specific investment heated up in the fall (high dividend utilities), but then fizzled out with PG&E's bankruptcy, and SCANA's nuclear error in SC.

There is no magic bullet, but there are waves to ride. Like most waves, it is hard to get in a ride them when they are fully developed.

quote:

Originally posted by wxl:
If retiring in 3 to 4, I would go conservative. CDs can be bought at 2+%.

Y'all say this stuff like it's all or nothing. I'm not sure for someone who's not in hospice it makes sense to move 100% of their portfolio to CDs in their early 60's, with an average life expectancy of 83 year.

If they can live on that 2% plus SS then great. Otherwise they need to be taking into account their burn rate and necessary return on portfolio to get to their twilight years with any measure of certainty. That may mean leaving greater than 0% in equities......

so many variables make it tough to even generalize

in the end - only YOU can answer where you are on the risk spectrum ... staying heavily invested in stocks only to watch you portfolio shrink hundreds of thousands of dollars right as you retire would be traumatic.

Sure - you would likely make it up EVENTUALLY - but that is a lot of stress on a persons soul.

I have about 10 years to go + / - and am very interested in this strategy:

https://www.kiplinger.com/arti...m-in-retirement.html

also factor in - are you interested in working part-time in retirement? for a lot of people - even making $1,000 to $1,500 a month in part time work would help ease the need for a large nest egg - and help keep your days busy and not 'getting old watching the paint dry...'

and of course you have SS I assume at some point... whatever that number ends up being...

also - do you own your home? -- not having a mortgage would be a big stress reducer.

good luck-

---------------------------------------------

The S&P 500, in 2017, lost 6.2% between Jan 1 and Dec 31. So far in 2019, it's up 10%.

Loss (%)....... Req'd Gain
5%................. 5.2%
10%................. 11%
15%................. 18%
20%................. 25%
25%................. 33%
30%................. 43%
35%................. 54%
40%................. 67%
45%................. 82%
50%................ 100%

I look at my portfolio in tranches. If you are 5 years from needing income, how much will you need? And the years of retirement will require different levels of income. 65 to 75 will be your fun money spending. 75 to 80ish is a maintaining lifestyle spending period. 80ish to the end will require more money for things like healthcare but less money on adventures. How much is enough? And the money you have at age 60 to support the 80 to death years still has a 20 year time frame until needed.

Proper planning takes into account the spending needs and how they change. I would not look at it as one pot of money for 30 years of income.

quote:

Originally posted by Georgeair:

quote:

Originally posted by wxl:
If retiring in 3 to 4, I would go conservative. CDs can be bought at 2+%.

Y'all say this stuff like it's all or nothing. I'm not sure for someone who's not in hospice it makes sense to move 100% of their portfolio to CDs in their early 60's, with an average life expectancy of 83 year.

If they can live on that 2% plus SS then great. Otherwise they need to be taking into account their burn rate and necessary return on portfolio to get to their twilight years with any measure of certainty. That may mean leaving greater than 0% in equities......

There are CD's out there now at 3.5 - 3.75%. A big stretch from where rates were a year or two ago.

Get with a Vanguard or Fidelity adviser. Both firms offer free advice if you invest a specified amount of money. If you don't want to go that direction, look at target date funds. They are by no means foolproof, but they follow common wisdom as to what you should be invested in (stock vs income) at a give date and end date.

A couple of article worth reading:
https://money.usnews.com/money...retirement-portfolio

http://money.com/money/5481891...stocks-at-every-age/

Also, you may want to run some numbers, based on how much you estimate you will have at the start of your retirement, how much you will need to withdraw each month, estimates of inflation and return on investments.

Here is a calculator that will let you do just that:
https://www.calcxml.com/calcul...g-will-my-money-last

For example, if you estimate you will retire with $1M in assets, will start withdrawing $3400/month after retirement, estimate inflation will be 2.5%, and your investments will continue to earn 4.5% in retirement, and have a marginal tax rate of 22%.

With those numbers, if you increase your withdrawals to keep up with inflation, you run out of money in 28.4 years.

Many variables can be changed there to look at scenarios that are more likely for you.

Some will see, after running the numbers, they might need to accept more risk, in hopes of getting higher returns, so their accounts will last longer, or will find they can accept lower returns due, to less need for higher returns. Obviously, the more you have set aside when you retire, the easier it is be "conservative" in how you balance your portfolio.

Other factors to consider are, how much you will get in pensions, social security, and other sources of income, that might reduce your need to withdraw funds from your "nest egg."

Also, your tax rate will be impacted by whether you are withdrawing funds from accounts that are not tax sheltered (capital gains taxes on earnings), or traditional IRA, 401(k), etc, accounts (all withdrawals taxed as income), or Roth IRA, 401(k), etc accounts (of the withdrawals are taxed). For me, my retirement account withdrawals will come from a combination of all three.

It will also be impacted by whether you have other sources of income, such as a pension, income from rental properties, etc.

quote:

Originally posted by old rugged cross:
But to me it always seems like you loose more when it goes down than you make when it goes up

That's the issue at the heart of loss-aversion Wikimedia - Loss aversion

But don't feel bad, almost everyone does this to some extent. People tend to regret the loss of $100 more than they enjoy the gain of $100.

Math tells you one is the same as the other in its effects - a purely rational investor would have equal intensity of emotion for equal changes in account value.