Back in the beginning of 2008, my wife and I decided we were risk averse and didn't like being the stock market. Looking back, it was more about not enjoying the volatility of the stock market and watching our accumulated "net worth" change so much on a daily basis.
So, with the Dow sitting at 13,000 in early May 2008, we pulled the trigger and transferred all of $550K sitting in our 401(k)s into bond funds. More specifically, the split was 60/40 total bond market fund/TIPs fund in my 401(k), and 60/40 Dodge & Cox Income/VG GMNA fund in my wife's 401(k). Balances at the start were pretty close.
Initially, this looked like a wise decision given what the stock market ended up doing late 2008 into mid 2010. Believe me, none of this had to do with market timing. It was mainly to be able to get to sleep at night. By the end of 2012, we made at least 7% annualized on the original $550K. We were still far ahead of where we would have been had we stuck with our original AA (~70/30).
As with most people not liking the volatility of the stock market, there was never a time to get back in. And with my layoff in late 2012 from a company I had worked for over 30 years, we didn't have much confidence in the economy (still don't to this day - the markets are being propped up, and it's not to the advantage of the small investor, in our opinions).
So, we are now (hopefully!) less than a year away from retirement (current date is Labor Day next year). I will be 57.5 and my wife will be approaching 64. Our tax deferred accounts totaled $1.23M coming into November. Given the past week, drop that to around $1.22M.
I feel we saved well, and honestly, the move out of stocks in May 2008 was probably really good for our health. Between my company being on perpetual layoff notice from late 2007 thru 2012 (and still to the present) and the passing of my mom during that time, it was great to not have to worry about losing our "net worth" in the stock market.
That isn't the case any more. My funds have performed poorly the past three years. My wife's have at least produced a positive return after inflation. I am in the process of transferring my 401(k) to my VG tIRA, as the last opportunity to rejoin the company dissipated last month. I need to rethink how I will invest my funds and whether to adjust my wife's.
Oh yeah, there's almost $1.1M cash sitting in a money market earning very little. We aren't hurting, but our plans from May 2008 have been blown out of the water by the way bond funds have performed so poorly in recent years. Where is the flight to safety now?!
Sorry about the rant.
