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Have You Hugged Your Asset Allocation Today?
Old 01-02-2010, 01:38 AM   #1
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Have You Hugged Your Asset Allocation Today?

Well, it's a new year. That means reallocation time for me.

I reallocated via Vanguard online. Didn't schedule to DCA, but to have the reallocation done on Jan 4th.
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Old 01-02-2010, 04:07 AM   #2
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Well actually, I just did!

1.) I determined how much my SWR for 2010 would be, figured out how much of that needed to come from Vanguard, and withdrew that much from to keep it in my local bank. (I am hoping that this will be simpler for me, until I get more skillful with these computations).

2.) Then I rebalanced. I was surprised at how easy these first two steps were.

3.) Tomorrow, I will finish filling out the form for regular monthly payments from my TSP.

4.) Today, my first pension check appeared in my checking account.

FINALLY - - money is starting to come in! It has only been 52 days but it seemed a lot longer.
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Old 01-02-2010, 05:52 AM   #3
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Checked it the other day. Still within spec...

Still accumulating and may be redirecting my monthly DCA at end of 1Q10, as I am very close to my target stake for VHDYX.
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Old 01-02-2010, 09:13 AM   #4
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I wait until the 15th. By then I have my estimated taxes for 2009 pretty much figured out. I still haven't had all my fund distributions reported - should have those by the 5th this year.

When I get the income needs set aside and taxes set aside, I'll then look at my current allocation. This year, unless the portfolio is getting close to my rebalance limits, I may choose to pass on the rebalancing, or I may just rebalance the asset class or two that is most off. We'll see!

I like Jan 15th. It give me time to do all my figuring (most important). And it gets past the first week of fund inflows that sometimes cause a short-term market run up.

But this year the whole month of Jan may be a rally month as Dec was kind of weak. Also it seems the retail investor has finally woken up and decided that it is finally OK to buy stocks again. But, you never know!

Nevertheless I stick to 1/15 each year so that I don't get into any year-to-year timing game. I hate that! Just best to pick a date and stick to it.

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Old 01-02-2010, 11:01 AM   #5
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I picked the beginning of the year as my reallocation date. I think it's a holdover from when I used to w*rk and bunch all vacation days towards the end of the year and first week of Jan. That was when I had the time to concentrate on my finances before the hustle and bustle of the new w*rk year.

I thought about holding off until Feb to reallocate in case if there is the January effect this year, but felt like my mind was in market timing mode so just went with the begining of Jan -- old habits die hard, I guess
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Old 01-02-2010, 11:50 AM   #6
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I am in no hurry to rebalance even though the equity allocation is 33% while the target should be in 50 - 60% range.
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Old 01-02-2010, 12:15 PM   #7
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Quote:
Originally Posted by W2R View Post
Well actually, I just did!
) Tomorrow, I will finish filling out the form for regular monthly payments from my TSP.

4.) Today, my first pension check appeared in my checking account.

FINALLY - - money is starting to come in! It has only been 52 days but it seemed a lot longer.
I started TSP monthly withdrawals 6 months ago, DW begins her VG IRA monthly withdrawals this month. DW retired June 06 and I did in March 08 good thing we have not had to draw down until now. 2009 was a hell of a lot better than 2008, our overall financial assets declined 18% in 2008 but recovered 18% in 2009 which means we have not quite caught up.

These withdrawals tend to keep our AA the same, maybe increasing cash a little, only one calendar year of retirement so there is a lot to figure out, have not looked at how accurately I have estimated the taxes for 09. But if you has the TSP or like DW an IRA in a balanced fund (VG Wellesley) then rebalancing the AA would not be a frequent occurrence.
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Old 01-02-2010, 12:28 PM   #8
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After making a big exchange of over 10% from FI to equities last year (2008), I am well within my 5% variance with my AA so I'm standing pat this year.

Glad that I was able to buy so much cheap stock last year (2008).
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Old 01-02-2010, 12:40 PM   #9
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I do not use a date to rebalance, but use ranges for the asset classes. That way, I can take advantage of big drops like in March of last year or big gains like later in the year.
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Old 01-02-2010, 12:46 PM   #10
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No, I never hug my Asset Allocation. It was never optimal!

Bad, bad, naughty AA...
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Old 01-02-2010, 12:56 PM   #11
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Currently at 63% equities per Vanguard 57% per FIDO Still within the 55-65 range. Will take another look as it gets closer to either extreme. If not, will continue to overexert by doing nothing.
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Old 01-02-2010, 03:16 PM   #12
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I did a modest rebalancing at the end of the year. My AA is 50-50-50. That is, $50K in readily available cash and the remainder split 50%-50% between FI and equities. About 22% of equities are international. A good chunk of my FI is in I-Bonds and a few TIPS and a 5 year CD ladder. The remainder in VG Total Bond Market. I check the balance frequently but don't do anything about it very often. Earlier in the year I did some tax-loss harvesting, but more to clean up/simplify the number of funds I had than anything else. Everything is pretty much on automatic now and it's pretty low maintenance.
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