GravitySucks
Thinks s/he gets paid by the post
So I reviewed my retirement investment plan this week and am wondering if it still valid as a few actions should be made now.
Plan says stay 60/40 and rebalance at 55 or 65. Bonds are to transition to 5 year treasuries or an intermediate treasury fund (FUAMX).
I'm now at 66/34 and a rung of the bond ladder maturing next week. The plan says I should rebalance and reinvest the bond proceeds both to FUAMX. That brings my bond ladder down to the 5 years my revised plan calls for and increases FUAMX to about 5 years of living expenses. However FUAMX has a 30 day yield of 0.58% and the 7 year duration is not ideal if rates rise. (Of course I've been wrong on rate directions consistantly.) I have over 6 months of preCovid level spending in MM funds and don't want to increase that.
So the options as I see them:
1. Stick to the plan. Hold my nose and rebalance and reinvest the bonds into the low yield FUAMX fund.
2. Change the plan. Move AA to 65/35 and let it ride to 70/30 and extend the bond ladder another year. This still leaves enough bonds to make it to SS at 70 which covers all essential expenses.
3. Punt. Rebalance and put the funds in a very short term bond fund and reinvest the bond in a one or two year CD.
I'm sure others here are looking at options in this current environment. Are you changing plans?
Plan says stay 60/40 and rebalance at 55 or 65. Bonds are to transition to 5 year treasuries or an intermediate treasury fund (FUAMX).
I'm now at 66/34 and a rung of the bond ladder maturing next week. The plan says I should rebalance and reinvest the bond proceeds both to FUAMX. That brings my bond ladder down to the 5 years my revised plan calls for and increases FUAMX to about 5 years of living expenses. However FUAMX has a 30 day yield of 0.58% and the 7 year duration is not ideal if rates rise. (Of course I've been wrong on rate directions consistantly.) I have over 6 months of preCovid level spending in MM funds and don't want to increase that.
So the options as I see them:
1. Stick to the plan. Hold my nose and rebalance and reinvest the bonds into the low yield FUAMX fund.
2. Change the plan. Move AA to 65/35 and let it ride to 70/30 and extend the bond ladder another year. This still leaves enough bonds to make it to SS at 70 which covers all essential expenses.
3. Punt. Rebalance and put the funds in a very short term bond fund and reinvest the bond in a one or two year CD.
I'm sure others here are looking at options in this current environment. Are you changing plans?