Liquidate Small % of Funds While Market Is High

[Golden sunsets]

Like gravity sucks, sold some equities last week and bought a couple of bonds on my and DH's IRA bond ladder, looked at it as rebalancing.

 

[nun]

I'm curious if anyone has contemplated or carried out a small liquidation of their portfolio (not talking huge amounts, maybe 5% or 10% max) because the market is high to "lock in" some gains? With the intent to use the funds to pay down a mortgage a bit, for large capital expenditures, to increase their rainy day fund, etc?

Well I would rebalance if my AA ever deviated by +/-5% from 60/40, so any liquidation would preserve my 60/40 AA.....I'm not big on market timing.

 

[target2019]

Thanks everybody.

No specific reason. I am just referring to the "general good run" the market has had over the past year.

This all goes back to my personal theory that - it is mentally challenging to watch your assets grow and take no action! Which, I believe, is one of the reasons why a lot of people aren't able to accumulate sizable nest eggs.

I probably won't take any action....One thing that I have contemplated is buying a bigger (more expensive) condo. I live in a large city in a fairly small 950 sq foot 1 bedroom condo. It is fine for now but long term, it would be nice to have 2 bedrooms. I don't need it, so everytime I look online, I always have to tell myself no. I can certainly afford one. Part of me wonders if I will get a bigger place eventually, and if so, why not just do it now? Maybe this is what I am itching at deep down inside...

If you were renting, I'd say we should talk more about it. How long have you been in the condo you have now?

 

[braumeister]

To paraphrase others, the smarter course of action is to look at what the market is actually doing, not what you think it should be doing.

 

[GoodWishes]

Advise to my own kids just a little younger than OP.
- Save as much as you can without depriving yourself too much. Find a good balance between saving and enjoying life.
- All in at your age, 100% equity.
- Don't look at it. Reevaluate your holdings/asset allocation once or twice a year..
- If it is up, be happy. If it is down, buying on sale.

 

[pb4uski]

^^^^ good advice

 

[RobLJ]

My stock allocation ranges from 60-66%, but I took advantage of the 6 month move up to reduce from 63% to 60%. If stocks continue to run, I'll let them run.
At your age, I was 95% stocks and 5% junk bonds.

 

[gcgang]

I assume you're talking about selling in a Taxable account, as you mention using $ for condo. Don't forget about the slice of your gains you will owe in taxes.

Nothing wrong with doing that.

To think you'll sell, reinvest after a correction, smacks of delusional market timing. Don't.

 

[Chuckanut]

Well I would rebalance if my AA ever deviated by +/-5% from 60/40, so any liquidation would preserve my 60/40 AA.....I'm not big on market timing.

+1

What nun said.

 

[FiveDriver]

"use the funds to pay down a mortgage a bit"

I'd like to discuss this particular aspect of the OP's idea. I've always felt that sending the Bank a little extra money doesn't really provide us with a big benefit. Yes, it will lower the Principal. Yes, it may increase your Equity, but if you can't tap that Equity thru a HELOC, what's it worth ? I recall back in 2008 those HELOCs were all cancelled, just when some folks needed them.

I guess the payoff is your next monthly payment will be a bit more Principal than Interest.

I know cases where borrowers made one Extra Full Payment each year, all towards Principal. They did reduce the Term of the Mortgage by several years, but I don't think you'd get the real benefit to that until the Loan is Paid Off.

IMO, it might be better to retain the "utility" of that money, put it to work, you could get into some longer-term investment rather than just an Emergency Fund. When you have enough to pay off the Mortgage.....write 'em a check.

 

[Hermit]

I left my investments 100% in stocks until I was in my late 30s.

You had investments in your 30s?? That's impressive. I didn't start actively investing until my 40s. (I think I had some matching funds prior.)

 

[misshathaway]

I had let things skew to stocks. I rebalanced this month back to 50/50, because Bogle said to

 

[audreyh1]

You had investments in your 30s?? That's impressive. I didn't start actively investing until my 40s. (I think I had some matching funds prior.)

I guess you'll be really impressed to know that I retired in my 30s too - 39.

I was investing in my 20s too. Had a 401K, some savings, and company stock options. In my 30s I saved and invested a lot more, exercised my company stock options, and my investments grew a lot, especially the company stock.

Pretty much went 100% equities (most of it company stock) until about a year before I retired. Rode that tiger.