Opinions on IRA Mix Please

[mikex]

I have Zero debt now and plan on keeping it that way. I have $330k in IRA/401k accounts. I am 49 and plan on doing an SEPP plan in 4 or five years. I have used Fidelity's SEPP calculator and the results look good, in fact the funds will be bigger than when I started the SEPP when I turn 59.5 even with the SEPP withdrawls.

The real thing I want opinions on is, what mix of bonds/equities/cash would you all recommend I have at this time given my plan in about 4 years? I don't want to take too much risk and end up ruining my goal of using that money for early retirement. Currently I have about 30% in bond mutual funds and the rest in stock mutual funds.

 

[2B]

Unfortunately, there isn't any magic formula or correct answer IMHO.

Most of the calculators and books that talk about retirement accounts push either a 60/40 or 50/50 split between equities and bonds. Then there is the random advice on how to split up the equities. I'm a rather "black/white type" when it comes to things so I'm also wrestling with the "right" mix.

I'm probably a little closer than you to RE. I've recently declared myself FI but personal issues make the RE part better to be delayed. I'm under no stress in what I do and it's sometimes even fun. Three day weekends are normal but I digress....

Right now I'm 85/15. I have just sold some SPY to get there from 90/10. That is still too high and my plan would be to get to 70/30 by August -- my official rebalance date. As an equity junky, I have to sell off my equities in little chunks so I can take the pain.

That will put me at the following:

• 30% cash/laddered CDs (less than 2 yr maturity - I'm market timing interest rates but there also isn't any incentive for going longer)
• 25% foreign (DODFX - 15% and VEIEX - 10%)
• 10% small cap (VSMAX)
• 35% large cap (SPY, IWD, VTSMX and BAC)

Theoretically, I still need to move a bit more into fixed income. That 30% does represent 5 years of living expenses (high lifestyle budget) so I'm wondering why I should increase it beyond that.

There's my stuff for what it's worth.

2B

 

[JohnDoe]

IMO, with only 4 years left I would be at 60/40. And at the moment, the 40% would be mainly CD's and MM's which are doing better then most short term bond funds.

It might seem hard to reduce stock fund holdings when things are doing so well, but think about how you would feel if we had a repeat of 2000-2002.

 

[2B]

It might seem hard to reduce stock fund holdings when things are doing so well, but think about how you would feel if we had a repeat of 2000-2002.

Been there, done that and got the T shirt. I'm still an equity junky but I agree with your sentiment.

 

[Salaryman]

May want to look at convertible bond funds if available in your retirement accounts. It'll give some upside while still offering steadier interest.