Anyone selling stocks to buy CDs, treasuries?

[Rianne]

We’re thinking of selling some our stock index funds to buy safe long-term bonds.
We’ll be 66 next year.

 

[Car-Guy]

Did that last year starting in the summer time. Zero stocks now.

 

[copyright1997reloaded]

We’re thinking of selling some our stock index funds to buy safe long-term bonds.
We’ll be 66 next year.

Sold a lot of equities in early 22, bought short term bonds (T-bills). But not enough given what happened in 2022.

Still sitting at about 40% equities, collecting my 5%+ and working that short term ladder. I'm at about 7% under my net worth peak from December 21.

Not enough real return premium for me to go long term, especially on non-inflation adjusted bonds. 10-year TIPS real return is now at 2.115% (as I type this), which is "better" but still not enough to go big time.

 

[dmpi]

I'm happy with my 66% allocation in stocks however for my fixed income I would think it's still too early to jump into long-term bonds. I'm going to sit on my money market and wait for some more of my CDs to mature. Maybe next June or around then.

 

[Surewhitey]

Sold a chunk of VTI & VTSAX on ~ 7/25. Just riding with the settlement account with 5.28% for now. Seemed like the thing to do @ the moment...

 

[COcheesehead]

I have been at 30% or less equities since retiring 3 years ago.
I sold a significant amount of equities yesterday. I bought some shorter duration 6.5% - 7.2% yielders today.
My equity position sits at about 25% right now.
If I factor in withdrawals, we are sitting at less than 1% below our all time net worth high.

Just make sure the numbers - the yield from CDs - work for you.

 

[Alex The Great]

I try to maintain 50% equities allocation and do not sell anything. In fact, I will buy some stock if equities position drop below 45%.
But I will make sure CD/cash part is sufficient to take me to FRA.

 

[disneysteve]

I’m not a market timer so no, I wouldn’t sell stocks to buy CDs or bonds. Interest rates are great today but that won’t last long term. I just stick with our 60/40 asset allocation.

 

[Midpack]

I’m not a market timer so no, I wouldn’t sell stocks to buy CDs or bonds. Interest rates are great today but that won’t last long term. I just stick with our 60/40 asset allocation.

+1. Evidently the OP is confident he/she can time the market.

 

[Rianne]

I’m not a market timer so no, I wouldn’t sell stocks to buy CDs or bonds. Interest rates are great today but that won’t last long term. I just stick with our 60/40 asset allocation.

I’m thinking that way but not so sure. If we can get 4+ coupons that provide income, I’m thinking all tIRA remains CDs and treasuries. Then leave the taxed index funds alone. We have approximately 40% in taxable index funds and so far the returns have been good. 3 yr 7.1% 1 yr 11.2%, but where does it go from here? Powell seems to think interest rates will remain high for at least 2 years. Will the market panic? Or settle down and accept it?

There are a few ways to look at this. If we maintain 5% ROI, stay in the 12% tax bracket, 3% inflation with our SS we have 100% success with some left over after 30 years. That gives us $140k safe spending constant every year. We do not spend that much, but I’m thinking nursing home or independent living for one of us at some point. Even if one of us dies, the SS reduces, we’re ok. Or we get the 25% haircut, still ok. This stuff gets complicated and I’m using every calculator I can get my hands on

 

[MichaelB]

Our core equity allocation remains unchanged at 40% and we have no plans to change that. We did recently sell one stock which was purchased during the low of early ‘20 and increased quite a lot (6x). It was too volatile and reached 15% of the total portfolio, too high for us. and was never intended as a long term hold. The proceeds will go into fixed income and money market. It will also fund some BTD remodeling we’re planning.

 

[audreyh1]

We stay ~50% equities. The fixed income portion is short to intermediate duration.

Not touching long bonds.

We don’t pay attention to income generated either. Total return baby!

 

[pb4uski]

+1. Evidently the OP is confident he/she can time the market.

Or they just want to change their AA and want to time it opportunistically.

 

[Dash man]

We’re happy floating between 70-75% equities. Our fixed income is increasing as treasuries and CDs mature and we purchase more at higher interest rates. We’re going out as far as three years in new purchases, but have no intention of increasing our allocation.
We did recently sell some stocks to pay for a new roof and siding, plus a new bay window for our Jersey Shore home, and solar for our primary residence in PA.

 

[Rianne]

Or they just want to change their AA and want to time it opportunistically.

If we were to change our AA, this is the time to do it. Still on the fence. It’s a different story if we were 40 yrs. old, there’s plenty of time to recover. We were 50 in 2008 and remained strong in the market. Thoughts of preservation dancing in my head.

 

[MichaelB]

We stay ~50% equities. The fixed income portion is short to intermediate duration.

Not touching long bonds.

We don’t pay attention to income generated either. Total return baby!

Are long bonds >10 years for you?

 

[OldShooter]

We’re thinking of selling some our stock index funds to buy safe long-term bonds.
We’ll be 66 next year.

Almost all of our equities will end up in our estate. That's long term money, so no reason to sell. Market timing is impossible, so again there's no reason to sell. Watching the market's short term behavior is nothing more than entertainment; it tells us nothing substantive. So no reason to sell there either.

Make your decisions. Check back in five years to see whether your guesses were right. Some will be. Some won't. But inductive reasoning tells us that equities will probably be up and not by a tiny amount.

 

[Rocky mtn high]

For the most part, no, but I did sale some Toll Brothers a couple of weeks ago and purchased a 5 1/2% cd instead. I think these interest rates are really going to cause problems soon. How many people want an 8% mortgage or over 8% for car loans.

 

[Montecfo]

I am poised to do so if yields tick up more like 6%+

 

[Trooper]

I'm sticking to my 60/40 AA +/- 5%. However if I could be guaranteed that switching to 100% CDs and/or Treasuries could generate enough real return to sustain us for life...well...[emoji4]

 

[COcheesehead]

If we were to change our AA, this is the time to do it. Still on the fence. It’s a different story if we were 40 yrs. old, there’s plenty of time to recover. We were 50 in 2008 and remained strong in the market. Thoughts of preservation dancing in my head.

Agreed. High likelihood we see multiple bears in equities going forward, maybe even in 2024.
I can buy non callable bonds taking us to 70 in SS. It’s not timing, it’s life planning.

 

[copyright1997reloaded]

For those thinking we are near the top in terms of LT yields, you can pick up the US Treasury 30 year bond 1.25% coupon maturing 5/15/2050, issued 5/15/2020 for less than 50 cents on the dollar. (It reached a low today of 48 and 23/32nds and had a high over 101 in Aug 2020.) YTM is over 4.6%.

So much for a "risk free" investment (that is trading for less than half its original value, and for all those "well it will be redeemed at par" folks well I just lol.)

If one really thinks rates have peaked, long duration is your friend. Even better than the bond above would be zero coupon (STRIPS), assuming held in a tax-free account (e.g. IRA) we re phantom income isn't a concern.

 

[COcheesehead]

For those thinking we are near the top in terms of LT yields, you can pick up the US Treasury 30 year bond 1.25% coupon maturing 5/15/2050, issued 5/15/2020 for less than 50 cents on the dollar. (It reached a low today of 48 and 23/32nds and had a high over 101 in Aug 2020.) YTM is over 4.6%.

So much for a "risk free" investment (that is trading for less than half its original value, and for all those "well it will be redeemed at par" folks well I just lol.)

If one really thinks rates have peaked, long duration is your friend. Even better than the bond above would be zero coupon (STRIPS), assuming held in a tax-free account (e.g. IRA) we re phantom income isn't a concern.

Duration kills. There are thousands of better bonds out there right now. Why would anyone buy this.

 

[audreyh1]

Are long bonds >10 years for you?

> 5 or so years really. I keep my fixed income overall duration to 5 years.

 

[disneysteve]

> 5 or so years really. I keep my fixed income overall duration to 5 years.

Looks like 5 yr treasuries are at 4.72% and 10 yr are at 4.51%. Those rates will probably look pretty sweet a couple of years from now. I may nibble a bit on those.