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Old 01-29-2016, 11:01 AM   #1
Dryer sheet wannabe
Join Date: Nov 2015
Location: Edmond
Posts: 15

Hello fellow FIRE RETIRE community,

I have been following the Blog site for the past few months. You all offer fantastic insight into the investment world. Much better than the blow hard Cramer. He reminds me of a P T Barnum huckster!

I recently FIRE-RETIRED (Sept 2015). Up until then I had been in an accumulation phase planning for my retirement. Now I would like to go into a transition phase to preserve capital yet generate additional income to live on. I have a substantial cash position that I can draw from but I want to get something better than 0% yield. I currently have an AA of 47% Equity (35% Domestic, 12% International), 18% bonds and 35% Cash. I hope to move to something like 55% Equity, 40% Bonds and 5% Cash position in a timely fashion and use that going forward till I formally retire in about seven years.

I have a two part question,

a. I plan to move about 2% of my cash position each month to the AGG Bond ETF for the next 10 months. This should get my Bond position headed towards my target of 40%. It is currently yielding about 2.4% and has a duration of about 4.6. I know the FED has boxed itself in with the recent turmoil in the markets, economy and oil. They raised the rates 0.25 bp but this past months turmoil held them off from doing again. I understand that if the FED raises interest rates the price will go down but yield will go up. I think the short duration should help alleviate any issues of drastic price change issues. In addition since I am doing some dollar cost averaging, if the FED raises rates then I should be able to benefit from that over the next year or so. Should I start the process now or wait to see what the FED does to start purchasing my units?

b. I also plan to move some money into equity and take up to 8% out of cash and put that into selected sectors of the stock market. Should I do that now or wait to see if we have a drop off of 10-15%? My plan was to wait for a 15-20% drop off then execute my plan. Of course the market is not co-operating on that notion.

What do you battle hardened FIRE RETIRE warriors think?


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Old 01-29-2016, 12:27 PM   #2
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Join Date: Jun 2005
Posts: 4,371
My Magic 8_ball says that it is out of it's psychic coverage range !

There aren't too many time-the-market traders on this forum. So advice on what the markets will do and how to game them isn't a specialty of this forum. This forum is more about building a (stable) asset allocation to support their retirement and letting the markets do what they always do.

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Old 01-29-2016, 12:34 PM   #3
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Join Date: Feb 2006
Posts: 4,859
Hold your nose and dollar cost average into high quality bonds if that will get you to your target AA. If your time scale is long term ie greater than 10 years an intermediate bond fund should be ok. If you will want to take money out of it before 10 years I'd look at CDs and short term bonds.
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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