There was a time when I would make a futile effort to convince folks who post something like this that their "gut feeling" investment moves were almost always bad decisions. Thankfully I'm past that now...
[emoji23] I just did that
There was a time when I would make a futile effort to convince folks who post something like this that their "gut feeling" investment moves were almost always bad decisions. Thankfully I'm past that now...
I'm sure we all looked like geniuses in 2017 with our 10,15,20,25% ROIs but do you have any plans for 2018 as to changing things ?
I had to rebalance a number of times in 2017 to maintain a 60/40 (equites/fixed) split and finally just went to a 50/50 in December and I'm going to ride that pony till the cows come home in 2018. Yes, I know mixing metaphors is like killing two birds with a dog that don't hunt.
So what's your plan for 18, if you have any ?
Oh and by the way Merry Christmas to all.
Replying to all who commented on my post, my FIRE plan starts one year from now. So, I look at it like I need my money only one year from now.
By going to 0% stocks, I am trying to lock in on no loses until then. Perhaps my allocation should be 0/0/100, in order to achieve that.
A big part of investing is risk tolerance. My risk tolerance is real low right now, since loses would mess up my plan. I am willing to forgo a potential 15% gain, for a 1.5% highly probable gain. This will allow me to sleep at night.
A year from now, of course, I will have a normal 60/40 or something like that split.
But surely, the probability of a correction grows every year the bull gets older.
We listened to a "professional" many years ago after a long bull run, who said to keep in the market despite the obvious signs to us amateurs to get more defensive. We listened, and lost a bunch.
I figure I can do as well as them now.
Replying to all who commented on my post, my FIRE plan starts one year from now. So, I look at it like I need my money only one year from now. By going to 0% stocks, I am trying to lock in on no loses until then. Perhaps my allocation should be 0/0/100, in order to achieve that.
A big part of investing is risk tolerance. My risk tolerance is real low right now, since loses would mess up my plan. I am willing to forgo a potential 15% gain, for a 1.5% highly probable gain. This will allow me to sleep at night.
A year from now, of course, I will have a normal 60/40 or something like that split.
So, I guess y'all think this is a wrong approach?
As for knowing something about the future, I don't. But surely, the probability of a correction grows every year the bull gets older. We listened to a "professional" many years ago after a long bull run, who said to keep in the market despite the obvious signs to us amateurs to get more defensive. We listened, and lost a bunch. I figure I can do as well as them now.
IME, it is fairly easy to decide when to get out but the difficult trick is deciding when to get back in.... I know some people who bailed in 2008/2009 and never got back in and missed out on the rally entirely.
When I retired my portfolio allocation was at 65/35. My plan at the time was to drop the equity part of the allocation by 1% a year and also re-balance (both at the beginning of the year). I intend stick to that plan. 62/38 in 2018.
The drop in early 2016 and the rise in 2017 has not caused huge drifts for my allocation, and they have not made me do anything in the middle of the year. There was a post some time ago by Audrey which sticks in my mind, something about changing allocation in the middle of 2008 and a reference to catching a falling knife.
Based on my circumstances, what percentages would you recommend for 2018? Thanks guys.
Back in January, I rebalanced in my IRA the first of 3 times in 2017 to stay near my 46/54 AA. But I also did a rare rebalancing in my taxable account to boost my slightly lagging monthly bond income by more than I reduced my stock fund quarterly dividend income.
In a few days, I will be receiving a huge cap gains distribution from that taxable account's stock fund and it will push me over the ACA subsidy cliff. If I try to reduce my shares in that fund, I will pay more in cap gains taxes than I will cost myself with the ACA subsidy. I hope I don't go over the ACA cliff next year but I don't see a real way to better safeguard against it.
I didn’t change allocation in 2008. I kept rebalancing back to my target allocation but stocks kept dropping farther so a few months later I had to rebalance again. That’s what I meant by catching a falling knife.
After that experience I decided that my 5% rebalancing band triggers were too tight, and I set them to 8-10% so that I would rebalance less often, even in volatile times.