Reevaluating your AA?

[ncbill]

Selling everything I can, going to cash.

Not a permanent AA change, I just wanted to consolidate everything in one location (Fidelity) and to reset basis (I will still have significant long-term capital losses to carry forward)

 

[GravitySucks]

^^ 60 years old and retired over 5 years.
When I was working I was 95/5.

 

[target2019]

We've been ratcheting down equities, about 1% per year. At November's end, we were on the nose at 50%.

With the market as it is, and additional 10-15% coming in due to windfall, my work is cut out. Once I integrate the accounts to my spreadsheet, simplify and consolidate new investments, things will be much clearer.

So we do evaluate and change, but it is minor, and according to plan.

 

[48Fire]

Yes, I am looking hard at reallocating to more stocks. I was very conservative when I retired, and have been easing back into the market at dips. I am currently at 40%, and I am thinking of going to 50%. That leaves me some head room for higher stock allocation if 2019 continues down, and we hit a recession some have said is inevitable. Eventually, I hope to get to around 70%, and then leave it alone.

 

[HadEnuff]

^^ 60 years old and retired over 5 years.
When I was working I was 95/5.

if we had a 40% drop in your equities portion, and a decade to recover, would you be alright?

That was the question I asked myself, which prompted me to change it a touch.

 

[pb4uski]

if we had a 40% drop in your equities portion, and a decade to recover ....

When was the last time that happened?

 

[ER Eddie]

I'm about 75/25 or 80/20. I wish I was less in stocks, but it's too late at this point, I'll just ride it out.

 

[W2R]

I go with the 100-age for my AA.

I'm keeping with 120-age.

I probably should have built age into my AA from the beginning, but did not. Instead, I went from a 100:0 (equities:fixed) AA during accumulation phase, to a 45:55 AA during my entire retirement. I slowly switched over from 100:0 to 45:55 during last few years before I retired and had it in place before the 2008-2009 recession hit.

I have found this 45:55 AA was something I could stick with like glue throughout the terrifying days of that recession. Consequently I feel that AA was very well tested during those times and worked for me. So, I think I will just hang on to it throughout whatever is to come.

Actually I was unusually lucky, in that the economy provided a test of my "stick-to-it-iveness" or lack of same during 2008-2009, just before I retired in late 2009. I think I was more of a seasoned investor coming out of the recession than I was going into it.

Anyway, the answer to the question "Reevaluating your AA?" is pretty much no, although I have thought of going to 110-age and thus tying it to my age, but probably will not do that.

 

[gcgang]

I'm retired, slowly selling stocks the last couple years. Have at least 7-10 years expenses in laddered "cash". Will stop selling now market is down.

 

[gayl]

Single, DBP = 100% of expenses
Slowly moving from 95% equity to 72% stocks / 28% fixed income since retiring for good (?) 1/30/18
Don't count cash / home equity / slush fund / not drawing SSA

 

[bobandsherry]

if we had a 40% drop in your equities portion, and a decade to recover, would you be alright?

Hard to answer a question that isn't a likely scenario or what the return is for the next decade. But if we are playing fantasy land, if following 10 years are up 10%+ then the answer is unequivocally yes.

 

[CardsFan]

I'm about 75/25 or 80/20. I wish I was less in stocks, but it's too late at this point, I'll just ride it out.

Well, after the last week, you ARE less in stocks.

But seriously, if you can handle the ride, you will probably do just fine. At 3 years into RE, we are closer to 55/45. We all have a tolerance level. There is no RIGHT answer.

 

[CyclingInvestor]

60, retired 12 years, still 99% in individual stocks.

The next four months are my favorite time of year - dividend increase season has just kicked off for me (ENB +10%). Earnings solid and increasing, none of my companies making stupid acquisitions or going off track, I see nothing for me to worry about.

 

[HadEnuff]

if we had a 40% drop in your equities portion, and a decade to recover, would you be alright?

That was the question I asked myself, which prompted me to change it a touch.

When was the last time that happened?

Hard to answer a question that isn't a likely scenario or what the return is for the next decade. But if we are playing fantasy land, if following 10 years are up 10%+ then the answer is unequivocally yes.

5-31-2000 the S&P 500 was at 1420, 12-31-2002 it hit 879, a 38% drop,

9-28-2007 it hit 1526, and on 2-27-09 it was at 735, a 52% drop.

From that 5-31-2000 level of 1420, it took roughly 12 years to regain that level without having since dropped back below.

 

[HadEnuff]

Hard to answer a question that isn't a likely scenario or what the return is for the next decade. But if we are playing fantasy land, if following 10 years are up 10%+ then the answer is unequivocally yes.

See previous post. It took 12 years to regain the numbers from May, 2000.
So by the time we had the big run up of which you speak, you have to have money to fund your lifestyle. Which one can do, but your AA has to allow for that.

There is a common mindset that you need 1 or 2 or 3 years of cash so you don't have to sell your equities before the rebound, but what if it takes 12 years to rebound?

 

[pb4uski]

Are you intentionally choosing to ignore dividends? With dividends your 5/31/2000 balance would have recovered in 6 years and the 2007 decline recovered in ~4 1/2 years ... in both cases on a nominal basis and just a little longer on a real basis. Nowhere near a decade.

 

[audreyh1]

Don’t forget inflation.

I wish I had written down some numbers from the calcs I did, but 2000 high VTSAX had not quite recovered in Oct 2007, then got hit hard again. Took several more years to recover.

 

[pb4uski]

Ok, so ONCE in the history of the S&P 500 it double-cratered and took a decade to recover on a real basis. I'm not sure what to make of that... anomaly?

 

[jazz4cash]

I am reevaluating my international equity position. My target was 20% but I only got to approx 15. Now I’m thinking about resetting to 10%. Target for all equities is 70%. I’m 62, retired 3 yrs.

 

[audreyh1]

International has underperformed for a while. Seems like it should get its turn. Why reduce exposure now?

 

[Chuckanut]

International has underperformed for a while. Seems like it should get its turn. Why reduce exposure now?

Buy high, sell low?

 

[jazz4cash]

International has underperformed for a while. Seems like it should get its turn. Why reduce exposure now?

I've been thinking that for awhile. I think I get enough international exposure within the S&P 500.

 

[jjflyman]

Ask yourself:
How will it feel to have a AA of 80/20 when the dow drops to 18,000 next summer?
If somebody is not sleeping now, you haven't seen the worst of it yet by far

 

[foxfirev5]

I've kept the same AA for the last few years into retirement. I only actively rebalance when it gets too high. If it were to drop too low I'd shift to reinvesting dividends. 40 % +/- equities is my personal sweet spot.

 

[DEC-1982]

Has this recent correction have you reconsidering your asset allocation?
I went into 2015 at 80/20 and found the first minor dip made it difficult to get a good night's sleep. I readjusted to 70/30 but the next drop was still to deep. Ive been 60/40 since and have barely paid attention to this ride down so far. Now I'm wondering if 60/40 is too conservative, but I doubt 65/35 would make any major difference so I guess it's time to sit here and do nothing.

No.

These are long term allocations. While changes are not out of the question, they need to be thought through in a calm way and not rushed into.