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Old 08-11-2016, 06:53 AM   #101
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Cash also represents dry powder, very nice to have if there is a big downturn.
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Old 08-11-2016, 06:57 AM   #102
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Total cash =8%. Cash plus bonds= 10 years of expenses


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Old 08-11-2016, 07:16 AM   #103
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Horrible right now. I am at 20% cash and the market is not cooperating (crashing). We sold our house this year and I was mostly out of internet range during Brexit, not that I would have gone all in if I had been in range. The minute I put this 20% to work, the market is going to drop 30%.

I don't even have 15% of the cash doing anything. 0.02% in checking account.
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Old 08-11-2016, 09:27 AM   #104
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I just retired two months ago. Due to some payouts and such I have 67% cash. That's crazy I know but the market is 122% of GDP and PE is through the roof. I really don't know what to do. I suppose wait for a pull back? Any suggestions? I suppose I could DCA into something or just wait a bit.


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Old 08-11-2016, 09:34 AM   #105
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I just retired two months ago. Due to some payouts and such I have 67% cash. That's crazy I know but the market is 122% of GDP and PE is through the roof. I really don't know what to do. I suppose wait for a pull back? Any suggestions? I suppose I could DCA into something or just wait a bit.


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Create the AA that fits your needs and start working the plan. DCA into equities, ladder into bonds and buy some alternatives like GLD or REITs. Bonds just as easily right now can go to 1% or less providing a nice TOTAL return even from these levels.
Every time I get cash I rebalance to my original plan. I thought the market was high 2 years ago. It has served me well to just hold my nose and keep sticking to the plan.
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Old 08-11-2016, 09:43 AM   #106
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When I rebalanced recently I bought Vfsux, short term investment grade. Not cash but not too far off. SEC yield is 1.6%. Not sexy.

FWIW Bill Gross recently mentioned short term IG as a decent alternative.
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Old 08-11-2016, 10:11 AM   #107
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Create the AA that fits your needs and start working the plan.
+1

Stop trying to time the market.
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Old 08-11-2016, 10:13 AM   #108
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I think I'm way up to ~3% cash now. Mostly looking for opportunities, not hedging against a crash or anything. Usually at 1% or less.
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Old 08-11-2016, 10:57 AM   #109
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Cash is an extremely useful diversifier. There is also the psychological benefit of having short term expenses covered while you leave most of your invested funds exposed to market ups and downs, making it possible to stay invested in the face of events like 2008.
+1 Exactly!

We hold 10-12% cash plus another 40% in bonds. Helps us sleep better. We've been retired over a year now. During the accumulation phase, I held almost no cash and was 80-90% equities for decades.
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Old 08-11-2016, 11:07 AM   #110
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If I categorize the 401k guaranteed income fund as "bonds", then I'm rocking between 2% and 4%. If I say the GI is cash, then I look foolish, but it's had at least a 3.6% yield for the last 7 years. And I kind of hate bonds right now...2008 taught me they're too correlated to equities if "everybody" flees to cash.
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Old 08-11-2016, 11:39 AM   #111
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Here's some reading that's related to this thread...kind of: Where Should I Invest Money Which I Will Need in a Year or Two? | Marotta On Money
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Old 08-11-2016, 03:06 PM   #112
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I just retired two months ago. Due to some payouts and such I have 67% cash. That's crazy I know but the market is 122% of GDP and PE is through the roof. I really don't know what to do. I suppose wait for a pull back? Any suggestions? I suppose I could DCA into something or just wait a bit.


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I suggest since you just retired you read Money Magazine April 2016 - What steps are you taking to protect your portfolio? article. I still hold a copy and have access to it. Just part of the article suggests AA 0f 30/70 to start and shows what would have happened during the '07-'09 Bear, '87 Crash, '73-'74 Bear and losses of low single digits. Reverse the allocation to 70/30 during those time periods and losses of 20% occur.
I am going to sit on 41% cash right now because I would never be able to recover once we quit our jobs.
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Old 08-11-2016, 03:16 PM   #113
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I suggest since you just retired you read Money Magazine April 2016 - What steps are you taking to protect your portfolio? article. I still hold a copy and have access to it. Just part of the article suggests AA 0f 30/70 to start and shows what would have happened during the '07-'09 Bear, '87 Crash, '73-'74 Bear and losses of low single digits. Reverse the allocation to 70/30 during those time periods and losses of 20% occur.
I am going to sit on 41% cash right now because I would never be able to recover once we quit our jobs.
30/70? What happens if they raise rates a couple times? Just as possible, even more likely than a bear market.
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Old 08-11-2016, 04:15 PM   #114
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Would you guys pull $30k out of market for 90 days to earn $400 on new checking deal?
Another bank is offering $15K for 30 days and bonus is also $400. PM me for name of promotion.
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Old 08-11-2016, 04:17 PM   #115
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30/70? What happens if they raise rates a couple times? Just as possible, even more likely than a bear market.
The article was written and based on past performance of market with 3 different allocations. Investing has risk factors and does not represent future returns.
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Old 08-11-2016, 04:27 PM   #116
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I do not take investing "advice" from Money magazine. I probably know as much or more than most of their contributors, and I'm no expert.

70 percent bonds will kill you if/when interest rates rise.

Citi is pushing that $400 bonus to the Costco customers. It pops up every time I sign in.

I do not necessarily think you are wrong in holding cash, given you are planning a large house purchase as part of your move. Any money you need in the next couple of years should be in cash, CD's or something similar.
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Old 08-11-2016, 05:06 PM   #117
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If I categorize the 401k guaranteed income fund as "bonds", then I'm rocking between 2% and 4%. If I say the GI is cash, then I look foolish, but it's had at least a 3.6% yield for the last 7 years. And I kind of hate bonds right now...2008 taught me they're too correlated to equities if "everybody" flees to cash.
How do I categorize my 401K guaranteed 5% defined plan? It is guaranteed 5% annual forever plus dividends possible. I don't mind calling it cash @ 5+ %.
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Old 08-11-2016, 05:22 PM   #118
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.....70 percent bonds will kill you if/when interest rates rise. ....
Not if you hold until maturity or hold low duration bonds. I have a couple 2020 target maturity bond ETFs that have duration in the 3.5-4.3 range... if rates go up they may decline in value but will recover by 2020. No sweat.

Thanks to a generous amount of PenFed 3% CDs (hope they renew later this year) my weighted average duration is 2.9 and weighted average yield is 2.65% so Dr. Yellen, bring it on!
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Old 08-11-2016, 05:33 PM   #119
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30/70? What happens if they raise rates a couple times? Just as possible, even more likely than a bear market.
Bonds would work out OK if rate rise is gradual, like 2 increases of 0.25 points per year. Over a few years or duration of bonds.

Happened in 2004 to 2006. On the other hand in 1994 rates went up a lot faster and it was a year of pain. Turn the other way in1995.
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Old 08-11-2016, 05:48 PM   #120
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30/70? What happens if they raise rates a couple times? Just as possible, even more likely than a bear market.
The stock market isn't a real fan of raising rates either, especially if it a rapid rise.
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