(How) Have you changed your portfolio

[Lsbcal]

I'm for picking an AA that you can live with in an absolutely awful economic environment -- like the early 70's. You know, when the market goes down 1 year and you have to rebalance into equities .... and then it goes down another year and you have to again rebalance into equities. Could you do that? Or would you be selling equities at the bottom (hopefully) when pundits who were bearishly right before are telling you disaster looms ever larger?

 

[SecondCor521]

No change. I'm still 100% VFINX/VTSMX/SWPIX in my retirement accounts.

38.5 years old, single, FIRE date is bouncing around age 52.

2Cor521

 

[Achiever51]

No change here. 60% equities/40%bonds & cash. Age 56, have non-COLA'd pension (& health care partially underwritten by MegaCorp) supplemented by DH's income. Don't expect to draw down from IRA until 60 - 61 at the earliest and am forecasting 3.0% to 3.5% withdrawal rate.

 

[W2R]

... in the wake of the subprime mortgage mess, in addition to other factors in the economy?

The hubby wants to take a more conservative position at the moment, fearing the worst. I'm still in "ride it out" mode, though I will admit that being about 90% in stocks (a mix of foreign and domestic, as well as small, mid and large cap) is probably not the safest place to be. (I'll be 40 in January; he's 46; our target ER date at the moment is 2011.)

Any thoughts or musings?

I haven't changed anything either. I am really pretty much committed to the long term, and 60/40 lets me sleep at night two years before ER. The only thing is that I had previously been musing and thinking about going to maybe 8% VGSIX (REIT) just for diversification purposes. (That was a year or two ago.) But now I am thinking that with all the real estate problems, maybe I should consider doing something else with that 8%, instead.

I agree with those who say that 90% equities when ER is only 3-4 years away is probably too aggressive. I would think that 60-75% would be better. I don't know if now is the right time to make that move, though. It's usually best to sell high when that is feasible. My crystal ball isn't working very well.

 

[Goonie]

Allocations have remained about the same at about 80% equity, and 20% bonds/cash. It's all in there for the long haul, since I receive a decent cola'd DB pension. Also, part of the pension gets rat-holed away each month.....saving for a rainy day....and some really nice trips!

 

[RetireeRobert]

Haven't changed much. Did use some cash during the recent market sell-off to pick up a position in beaten down stock--Labor Ready---LRW---selling at ten year low PE range, no debt, good ROE's, good earnings growth. Strong "keeps chugging away" company for the long haul at a bargain price. Was thinking about Lowes just under $22, then the market bounced back up and LOW now up $24.72 so I missed on that one.

 

[jIMOh]

I think anything from 50/50 to 70/30 should provide at least a safe 3.5%.

I'd think a 50-50 portfolio would have long term returns approach 6%- a guess, but that is my guess.

I'd think a 70-30 portfolio would have long term returns approach 7%-another guess.

If 3.5% is what you want, then look to CDs or money markets. Much close to a guaranteed return using those vehicles.

 

[jIMOh]

I agree with 2B, 90% stocks is pretty strong. With retirement just a few years away for you, I would have a more balanced portfolio.

I do think 90% bonds with 4 years to retire is way too high. My formula for bonds is 20-years to retire=% bonds

In your case this is 20-4=16. So 16% bonds would be the minimum I would consider for bonds. If you are more risk averse, this amount would be higher (26% suggested based on age).

I think 70-30 for you makes sense based on age when you retire.

To get to 16% bonds from here, consider selling 1% of all holdings every month. Pick a day and make the trade the same day each month. in a year and a half you will have around 18% bonds.

By selling 1% on occasion you are also locking in profits and you could use the selling as a way to rebalance.

 

[PreBB]

I revised my AA in July: twas 70/30; now 63/37. Also severely revised my domestic/international mix to 54/46; was formerly 75/25. I have long thought that a declining dollar plus other US increasing debt issues plus emerging market boom should be reflected in a greater ex-US exposure. I retired in 2005.

 

[chinaco]

No Adjustments because of Subprime

I have not made any adjustments due to the subprime mortgage debacle.

60/40 that's my story. I am sticking with my general allocation plan. I am well diversified. My only adjustment to my allocation (which will happen over a few years) will be to allocate a bit more of the portfolio to international markets... for the obvious reason, the US is not the only growth engine in town. But the USD is so weak right now, I am reluctant to buy anymore at this time when the USD is probably at a low... especially with Europe. Since I cannot predict the future, I am more likely to make slow adjustments over time. The downside (to my approach), is that a lump-sum decision is more efficient in terms of earnings... but of course those extra earnings are contingent on me being able to make the best time-based decision. Instead, I will average the moves in over time (a few years).

I have target allocations and a timeline for getting there.

The only financial decision where the subprime situation (plus the general economy) might cause me to make an adjustment would be in the sale of real estate (our home). And even with that I would probably continue to look, plot, and plan.

 

[Callie]

We rebalanced a little early, and 4 years away from retirement we are 55/45. We sleep better this way.

 

[Milton]

I haven't made any adjustments. Am I doing something wrong?

 

[Milton]

If I were married and my wife wanted a much more agressive or conservative portfolio than what I wanted, I would push for a post-nup, and let each person do what they wanted to do. There is no such thing as a "combined risk tolerance".

Marriage is all about compromise.

 

[emilylynn]

Totally changed. I'm on the sidelines till at least next spring.

 

[peggy]

I'd think a 50-50 portfolio would have long term returns approach 6%- a guess, but that is my guess.

I'd think a 70-30 portfolio would have long term returns approach 7%-another guess.

If 3.5% is what you want, then look to CDs or money markets. Much close to a guaranteed return using those vehicles.

Am I missing something, because I thought the 3.5% was the withdrawal rate, not the expected return (which should, of course, be higher than the withdrawal rate)?

And as a follow-up, we switched over to 60-40 yesterday afternoon. (Well, technically, we set things in motion to do so; the actual sales in our taxable accounts will occur on 12/28 and 1/2, to split the capital gains taxes between two years.)

 

[jIMOh]

Am I missing something, because I thought the 3.5% was the withdrawal rate, not the expected return (which should, of course, be higher than the withdrawal rate)?

And as a follow-up, we switched over to 60-40 yesterday afternoon. (Well, technically, we set things in motion to do so; the actual sales in our taxable accounts will occur on 12/28 and 1/2, to split the capital gains taxes between two years.)

My response was to someone which wanted to only spend the return of a CD type investment.

In my post the 3.5% was the expected return from the CD long term, and the withdraw rate. I was suggesting this was not a good idea, IMO.

 

[peggy]

My response was to someone which wanted to only spend the return of a CD type investment.

In my post the 3.5% was the expected return from the CD long term, and the withdraw rate. I was suggesting this was not a good idea, IMO.

Ah! I did, in fact, miss something. Thanks for clarifying.

 

[Ed_The_Gypsy]

What sub-prime crisis?

I have not made any changes based on any news.

What I have been doing is sending dividends to a money market fund and waiting to rebalance. I am still dragging my feet on rebalancing, but I moved the cash to a bond fund in the meantime. I may or may not rebalance. Another poster asked how to begin setting up to begin programmed withdrawals. Frank Armstrong recommended funneling 7 to 10 years of distributions into a short-term bond fund, from which one would eventually withdraw. So, I figured, maybe I should just let the dividends keep going into the now-bond fund? (I figure to stop working in maybe 5 years, more or less.) Meanwhile, I can always rebalance later. The idea is to gradually fund the bond fund buffer with dividends.

Normally, I am 100% invested in equities. My portfolio has been screaming along at 20% a year for the last 5 years (at least) and trees don't grow to the sky, so why not start priming the pump a little? If I were younger, I would still be 100% in equities.

Ah, well.

Cheers,

Gypsy

 

[mathjak107]

as i said a hundred times. its no longer about growing richer, its about not getting poorer. after so many good years you know a bad year is almost a given at some point. im usually not a dirty lil market timer but i got to admit i have been hunkering down over the last year and probley am at the lowest amount of equities ever since the eighties. i think im under 40% at this point.