Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 06-13-2010, 05:17 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,733
Quote:
Originally Posted by DblDoc View Post
RC you would be surprised how much your new contributions will be able to rebalance your portfolio. I have seen no convincing evidence that rebalancing adds significantly to your returns, it is a risk management tool. If you are comfortable with a slight increase in your risk level when one asset is slightly out of balance it is fine to leave it there until you catch up with new contributions. As LOL stated you will be able to TLH and offset gains if you have to. In addition you will likely have equities in your tax deferred space given you are starting at 80:20. Rebalancing within those accounts is tax free.

I know it sounds complicated but once you start doing it it is rather easy.

One other consideration to increase your tax deferred space is to find a locums job as an independant contractor. This will allow you to set up another tax deferred IRA such as a SEP IRA and save up to ~20% of your income from that job.

DD
I agree with DD you can use your future contributions can be used as pain free way of rebalancing and move toward a lower equity allocation.

Let's say that in next 10 years the returns of stocks and bonds reverse and you have $1 million in stocks and $200K in bonds. If you make future contributions in the neighborhood of 80-100% bonds in 5 years your AA should be in the 65-70% range. If even after large fixed income contributions your stock allocation is still too high. Then Mr. Market is sending you a signal if stocks outperform bonds for 15 years by a significant margin it is time to move money from stocks into bonds.

Now a bit of warning. The hardest thing for most people to do is shift money from hot asset classes (be it stocks, real estate, gold,) to under-performing asset classes. Academic studies on re-balancing often forget the psychological factors of investing which is why they show that re-balancing every 2 or 3 years is as good as annual re-balancing . If you think that is going to be hard for you then do annual re-balancing and don't pay to much attention to the tax consequences. On a couple of doctors salaries you'll pay a boatload of taxes what is another few thousands.

Oh as a retiree thank you for your contribution
clifp is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-13-2010, 05:34 PM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,252
I think the hardest thing for most people is to buy the things that have dropped in value. How many of us are now buying Eurozone equities either directly or via foreign developed market funds?
LOL! is offline   Reply With Quote
Old 06-13-2010, 05:36 PM   #23
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,003
Quote:
Originally Posted by LOL! View Post
How many of us are now buying Eurozone equities either directly or via foreign developed market funds?
Me.
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Old 06-13-2010, 09:56 PM   #24
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,856
Quote:
Originally Posted by REWahoo View Post
Me.
I maxed out our AA to those too. Last month.

In another couple months we may have a chance to do more...
__________________
*

Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."

I don't spend much time here— please send a PM.
Nords is offline   Reply With Quote
Old 06-14-2010, 07:36 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
Quote:
Originally Posted by LOL! View Post
I think the hardest thing for most people is to buy the things that have dropped in value. How many of us are now buying Eurozone equities either directly or via foreign developed market funds?
Since late 2008, my rebalance bands have been 25%. VGK sank to around 20%, then improved some (currently around 14%). If I'd left them at 10%, I'd have been catching a falling knife rebalancing my assets off...

Not sure if I'll ever be comfortable enough to go back to ten, unless things return to "normal"...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 06-15-2010, 03:12 PM   #26
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
Quote:
Originally Posted by LOL! View Post
I think the hardest thing for most people is to buy the things that have dropped in value. How many of us are now buying Eurozone equities either directly or via foreign developed market funds?
VEU last month and this...

DD
__________________
At 54% of FIRE target
DblDoc is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Confused landover Young Dreamers 5 01-20-2010 11:38 PM
Voluntary simplicity Boxkicker FIRE and Money 23 11-14-2008 07:17 PM
I'm so confused..... txdakini FIRECalc support 4 03-04-2007 08:40 PM
any one else read this... (Radical Simplicity) mickj Other topics 6 09-25-2006 10:53 AM

» Quick Links

 
All times are GMT -6. The time now is 06:14 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.