I just retired two months ago. Due to some payouts and such I have 67% cash. That's crazy I know but the market is 122% of GDP and PE is through the roof. I really don't know what to do. I suppose wait for a pull back? Any suggestions? I suppose I could DCA into something or just wait a bit.
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Create the AA that fits your needs and start working the plan.
Cash is an extremely useful diversifier. There is also the psychological benefit of having short term expenses covered while you leave most of your invested funds exposed to market ups and downs, making it possible to stay invested in the face of events like 2008.
I just retired two months ago. Due to some payouts and such I have 67% cash. That's crazy I know but the market is 122% of GDP and PE is through the roof. I really don't know what to do. I suppose wait for a pull back? Any suggestions? I suppose I could DCA into something or just wait a bit.
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I suggest since you just retired you read Money Magazine April 2016 - What steps are you taking to protect your portfolio? article. I still hold a copy and have access to it. Just part of the article suggests AA 0f 30/70 to start and shows what would have happened during the '07-'09 Bear, '87 Crash, '73-'74 Bear and losses of low single digits. Reverse the allocation to 70/30 during those time periods and losses of 20% occur.
I am going to sit on 41% cash right now because I would never be able to recover once we quit our jobs.
Would you guys pull $30k out of market for 90 days to earn $400 on new checking deal?
30/70? What happens if they raise rates a couple times? Just as possible, even more likely than a bear market.
If I categorize the 401k guaranteed income fund as "bonds", then I'm rocking between 2% and 4%. If I say the GI is cash, then I look foolish, but it's had at least a 3.6% yield for the last 7 years. And I kind of hate bonds right now...2008 taught me they're too correlated to equities if "everybody" flees to cash.
.....70 percent bonds will kill you if/when interest rates rise. ....
Bonds would work out OK if rate rise is gradual, like 2 increases of 0.25 points per year. Over a few years or duration of bonds.30/70? What happens if they raise rates a couple times? Just as possible, even more likely than a bear market.
30/70? What happens if they raise rates a couple times? Just as possible, even more likely than a bear market.
Bonds would work out OK if rate rise is gradual, like 2 increases of 0.25 points per year. Over a few years or duration of bonds.
Happened in 2004 to 2006. On the other hand in 1994 rates went up a lot faster and it was a year of pain. Turn the other way in1995.
Well, I have slowly been accumulating cash for the past few years - I am sitting on about 70% cash/bonds/stable value funds - I retired in 2013, but I took a contract job overseas.
What I am worrying about is how the world has become mad/crazy. Look around the world, China expansion, ( I currently live in SE Asia) bombing/Killing everywhere. Shooting in the US, bombings in Europe, Mid-East, heck Bombs in Thailand yesterday.
The Market is going UP, while Corp revenues are down, lots of employment if you can live on $10 a hour job that's being created. Government regulation is killing us, more Business are shutting down than being created. How am I suppose to look at Investing rationally in a Irrational and Mad world.