Future contribution direction?

[tsturbo]

I do not plan to sell anything I have bought over the last several years in my 401 & Roth. Just wondering what everyone is buying right now with contributions to your roth and/or 401k. Also what is everyone staying away from? I'd be intreseted mainly to hear from those with Vanguard mutual funds, but also from others and what sectors you are staying out of or getting into.

My AA is 40% bond, with the remaining 60% in equities, 1/2 of the equity portion is in international and emerging markets, is this too much exposure to international? My equity mix is split between small & large cap and international and domestic. Most of the funds are predominately index funds, but do have exposure to some active managed funds such as Dodge & Cox stock fund, Vanguards Wellington and STAR funds.

Age = 49 & 51, plan to work full time for atleast 10 years. Looking for feedback on current direction of investments and suggestions/reccomendations where you feel would be wise in this market. Thanks

[Meadbh]

YMMV, but currently I am putting 25% of my savings into a dividend stock fund and 75% into cash or cash equivalents. I expect to RE before you do and want to build a 5 year liquidity reserve.

[2B]

I'm putting 100% of my 401k and SERP into S&P 500 Index funds. However, I have a substantial cash/CD amount that will cover many, many years of retirement which may begin any time now the way my employer's business is collapsing as I type.

I agree with having a substantial emergency fund at all times (~1 year) but increasing it dramatically as one approaches retirement time.

[LOL!]

For the last 18 months, I have all my 401(k) contributions go into an intermediate term bond fund. But in the last 10 days, I have moved 30% of that fund into an S&P500 index fund in an act of market timing rebalancing. But my 401(k) is just about 15% of our total assets which were 50% equities, 50% fixed income coming into 2009 due to the proportionally bigger drop in equities in 2008.

[Hamlet]

I am 100% equities.

My contributions are 40% international, 25% S&P500 index, 20% midcap, 15% smallcap.

I'm 36 years old. If the companies of the world all fail, I doubt very much that any of the bonds people are buying are going to save them, even the government bonds.

[FIREd]

Adding to US/International equities and corporate bonds: VWELX, VWINX, NAESX, VGTSX

Right now not adding anymore to REITs, cash, treasuries / agencies.

I am focusing on dividends, trying to keep my portfolio's yield north of 4%. Cash and treasuries are killing my yield, so for fixed income I prefer corporates. REITs still have some juicy dividends but the leveraging thing scares me now.

[Alan]

Last 12 months before retiring. Making all contributions to cash this year to increase the cash cushion to avoid me needing to cash in equities for many years to come. There is also a stark possibility of being laid off which would mean I wouldn't have access to my pension for 8 years

On Friday my megacorp announced 9% layoffs and the closure of one of its sites, plus no bonuses, no raises no capital spending etc. My site has 1/3 of its production units idling and many contract staff being replaced by employees from the idled units.

Hopefully it won't come to being laid off, but worrying times.

[2B]

Quote:

Originally Posted by Alan Hopefully it won't come to being laid off, but worrying times.

That's where I'm at. I'm seeing our projects thinning out but no cuts announced so far.

I'm FI with enough to retire but DW may not be thrilled with the lifestyle. She can always get a j*b.

The plan was to hope FIL passes at the same time the economy tanks so I could get that 6 month severence from the State of Texas (~$400/wk). My FIL won't be ready for awhile it seems. I don't want to "retire" and be trapped in the Houston area.

[Alan]

Quote:

Originally Posted by 2B That's where I'm at. I'm seeing our projects thinning out but no cuts announced so far. I'm FI with enough to retire but DW may not be thrilled with the lifestyle. She can always get a j*b.

We are in the same position, financially. Pension plus health insurance = continue on with all our lavish travel plans. No pension = living a much more frugal lifestyle - might even consider looking for another job to get health benefits.

I am working a big project that is due to go live end of April, then I'll become another expense on the site overheads.

[samclem]

Quote:

Originally Posted by 2B The plan was to hope FIL passes at the same time the economy tanks so I could get that 6 month severence from the State of Texas (~$400/wk).

Wow. One big happy family, eh?

[2B]

Quote:

Originally Posted by Alan I am working a big project that is due to go live end of April, then I'll become another expense on the site overheads.

Health insurance is the real killer. I'm estimating $20K/yr for both of us until Medicare kicks in between 2016-2018. Even Medicare will be pushing $10K/yr in current dollars.

I'm currently on loan to another division within the company but only until mid-February. They want me to stay with the project until it's scheduled August completion but it's up to my boss. I don't see anything back at my own division but I'm not in the loop. I'm sure my boss would leave me where I'm at if he doesn't have anything.

Being on an active project doesn't mean too much now. I had one project shutdown in December and the one I was moved to for two weeks was put on hold in early January. That has the people that weren't as lucky as me (who got moved) facing a probably limited lifespan on the dreaded overhead account.

[2B]

Quote:

Originally Posted by samclem Wow. One big happy family, eh?

My FIL is in a memory care unit with Alzheimer's. He is a retired VP of a decent sized company and an Air Force Brig. Gen. He was used to going, doing and being involved. Now he's befuddled or worse most of the time. He has no quality of life and, if he knew how he was living, no dignity. I don't know anyone who wouldn't rather have had "the big one" and gone quickly before the Alzheimer's symptoms kicked in.

I know I sound ghoulish when I bring it up but I'm too far down the Alzheimer's caregiver's spouse road to have any sentimentality left.

[brewer12345]

401k contributions are going to a balanced fund that is about 60:40, with the 40% fixed income consisting of a stable value fund. Elsewhere I have been buying heavily beaten down equities, investment grade corporates that yield 10% or more, and recently some junk.

[2B]

Quote:

Originally Posted by brewer12345 Elsewhere I have been buying heavily beaten down equities, investment grade corporates that yield 10% or more, and recently some junk.

guts!

[brewer12345]

Quote:

Originally Posted by 2B guts!

Maybe. Much of it is issuer specific: I am quite certain that a given issuer will not default on its bonds or is drastically undervalued (equities selling for less than liquidation value, etc.), so I am willing to buy. In the bonds, I also try to buy stuff that I would be thrilled to see default (since the equity stake I would get in the post BK organization would be worth far in excess of what I paid for the bonds). I also note that corporates and junk have started rallying, so I do not especially wish to miss out on the eventual recovery. Historically, bonds and junk rally before the equity market.

Hey, earlier this week 3 junk deals (new issue) got done for better than $1 billion total. That is a real positive sign.

[2B]

Quote:

Originally Posted by brewer12345 Maybe. Much of it is issuer specific: I am quite certain that a given issuer will not default on its bonds or is drastically undervalued (equities selling for less than liquidation value, etc.), so I am willing to buy. In the bonds, I also try to buy stuff that I would be thrilled to see default (since the equity stake I would get in the post BK organization would be worth far in excess of what I paid for the bonds). I also note that corporates and junk have started rallying, so I do not especially wish to miss out on the eventual recovery. Historically, bonds and junk rally before the equity market. Hey, earlier this week 3 junk deals (new issue) got done for better than $1 billion total. That is a real positive sign.

Any tips? I have a very small amount of cash over my safe-reserve cash/CD stash that I was looking for some higher yielding corporates.

[JPatrick]

Recently added to the dividend growth fund at Vangard, bought more junk, and sniffing around the oil patch.

Most of my misery/fun has been on the nonretirement side where I harvested mucho tax losses last month.

[brewer12345]

Quote:

Originally Posted by 2B Any tips? I have a very small amount of cash over my safe-reserve cash/CD stash that I was looking for some higher yielding corporates.

I am not eager to get too far out on the curve, since I ultimately think we will be in for a nasty bout of inflation down the road. So I am buying stuff with 5 or 6 year maturities most of the time, and will not go beyond 10 year maturities. As far as funds go, I happen to like FTF and FAX (trade at solid discounts to value, have reasonable expense levels, and not too much duration, but are leveraged), but there are bags and bags of closed end funds holding any flavor of credit risky bonds that trade at a discount to NAV. I like PPT too, but it is trading pretty close to NAV and there are other (cheaper) fish in the sea.

You can also play with individual issues (as I have done), but you are dependent on what your broker offers and you need to be willing to do credit work on an individual name. I have bought bonds issued by companies I have done the work on and have some confidence in, but ittakes sometime to do the work.

I am avoiding the bond ETFs because all of the iShare ones appear to consistently trade at a premium to NAV.

[2B]

Quote:

Originally Posted by JPatrick Most of my misery/fun has been on the nonretirement side where I harvested mucho tax losses last month.

I have two decades of capital loss deductions to work off.

[audreyh1]

Quote:

Originally Posted by 2B I know I sound ghoulish when I bring it up but I'm too far down the Alzheimer's caregiver's spouse road to have any sentimentality left.

I value your frank postings about your family experience caring for your FIL. I extend that to everyone here posting about caring for aging parents.

Audrey