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Rethinking VG strategy/re-allocation?
Old 10-08-2008, 08:25 PM   #1
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Rethinking VG strategy/re-allocation?

I am invested in the Vanguard total stock market index fund and the Vanguard total international index fund at 30% each and the remaining 40% of my portfolio in the Pimco bond fund. Thinking of selling both of the Vanguard funds (60% of portfolio) and investing in one of the Vanguard "life strategy funds" either growth or moderate and still keep my remaining 40% in Pimco bond fund.

Questions - Would you keep or sell the above two mentioned funds? Is now a good or bad time to sell if I reinvest into one of the two life strategy funds, which would give me 10-20% more exposure to bonds.

Any other advice appreciated, wondering if I should just sell it all of and put it in a money market (safer until the mkt settles down), this is all through my company's 401k plan, so my choices are somewhat limited, a lot of Vanguard funds, dodge & cox, heartland value, s&p 500 etf, russell 2000 etf, etc. I am 49 and plan on working at least 10 more years.

Thank you!
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Old 10-08-2008, 09:10 PM   #2
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Unless you need the tax loss I'd leave it in Total and International.
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Old 10-08-2008, 09:31 PM   #3
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Now is not a good time to sell your equities IMO. you are 60/40 with 10 years to go, plenty of time. If you want lower volatility and wish to change your allocations, do it with new investments. May be sell some shares to harvest cap losses to offset cap gains (there are always some distributed gains within the funds even when the share price is falling).
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Old 10-08-2008, 10:31 PM   #4
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Quote:
Originally Posted by tsturbo View Post
I am invested in the Vanguard total stock market index fund and the Vanguard total international index fund at 30% each and the remaining 40% of my portfolio in the Pimco bond fund. Thinking of selling both of the Vanguard funds (60% of portfolio) and investing in one of the Vanguard "life strategy funds" either growth or moderate and still keep my remaining 40% in Pimco bond fund.

Questions - Would you keep or sell the above two mentioned funds? Is now a good or bad time to sell if I reinvest into one of the two life strategy funds, which would give me 10-20% more exposure to bonds.
I have not read the prospectus for your "Pimco bond fund." but your 30/30/40 split seems like a nice conservative allocation to me, and I definitely like those Vanguard index fund choices. I have not been sold on the life strategy funds yet. So personally, I would be more likely to use your current 30/30/40 split.

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Originally Posted by tsturbo View Post
Any other advice appreciated, wondering if I should just sell it all of and put it in a money market (safer until the mkt settles down),
I sure hope that does not prove to be the best investment choice. Though I'll grant I spent much of yesterday thinking how miserable I would be if we matched the great depression's 89% drop in equities.

Before you capitulate, (though I would like everyone who does not read this board to hurry up and capitulate ) perhaps you should try less drastic changes. For example maybe a 25/25/50 allocation would let you sleep better?

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Originally Posted by tsturbo View Post
this is all through my company's 401k plan
So tax harvesting is not an issue.
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Old 10-08-2008, 10:36 PM   #5
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Provided that you keep 40% in Pimco Bond fund:

You would in effect be exchanging 60% of your stock portfolio for a balanced fund. Vanguard Life Strategy Growth is currently 10% bonds while Vanguard Life Strategy Moderate-Growth is 30% bonds.

If you elect to go with Vanguard Life Strategy Growth Fund, you'll now have 54% stocks and 46% Bonds.

If you elect to got with Vanguard Life Strategy Moderate-Growth Fund, you will now have
42% stocks and 58% bonds.

The bottom line is that with Life Strategy Growth, you'd be selling 6% of your stock portfolio in what may turn out to be near the bottom of a bear market. If you go with Life-Strategy Moderate Growth, you be selling 18% of your stock portfolio at or near the bottom of a bear market.

My advice would be to do nothing now. There is no sense in selling low.
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Old 10-09-2008, 12:05 AM   #6
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Quote:
Originally Posted by Retire Soon View Post
Provided that you keep 40% in Pimco Bond fund:

You would in effect be exchanging 60% of your stock portfolio for a balanced fund. Vanguard Life Strategy Growth is currently 10% bonds while Vanguard Life Strategy Moderate-Growth is 30% bonds.

If you elect to go with Vanguard Life Strategy Growth Fund, you'll now have 54% stocks and 46% Bonds.

If you elect to got with Vanguard Life Strategy Moderate-Growth Fund, you will now have
42% stocks and 58% bonds.

The bottom line is that with Life Strategy Growth, you'd be selling 6% of your stock portfolio in what may turn out to be near the bottom of a bear market. If you go with Life-Strategy Moderate Growth, you be selling 18% of your stock portfolio at or near the bottom of a bear market.

My advice would be to do nothing now. There is no sense in selling low.
Ditto. This is not the time to make asset allocation changes that decrease stock holdings.
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Old 10-09-2008, 12:49 PM   #7
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Going to Lifestrategy Growth you would also be going down to only 15% international. Good idea, bad idea I don't know but it is a very significant shift when international has just tanked so badly (even worse than US total market).
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