Forget Balancing - sold all my 401k equities funds and put it in the safe short term

[bobandsherry]

Company funded ‘cash’ Retirement account (not 401k) that I suspect is invested in GICs...

Yep, I've got one of them. And if (when?) 1 year treasury ever gets above 3.5% the fund will pay more than 4.5%. With market hindsight I'm kicking myself for not having it invested in a quality index fund. But with sticking to a disciplined portfolio strategy I'm OK with it.

 

[CRLLS]

This advisor recommends 30/70 for just before & retirement:

Ferri: Wisdom Of 60/40 Portfolios Timeless | ETF.com

Looks like the standard 4% withdrawal is "safe" with the above approach.

He says 30/70 is a starting point for discussion. I feel that target numbers given in a short article are simple generalization. They seldom differentiate for other income sources such as pensions or annuities whether COLA'ed or not, Roth vs traditional IRA's and 401K's (or equivalents) and numerous other very important considerations. He even says:

Of course, I’m speaking about the average investor and everyone is different. Some people will decide 30/70 is too conservative and move up the risk scale. Others may decide to move a bit lower in stocks. These adjustments are fully understandable and acceptable after a thorough assessment of safety needs, income, longevity and estate planning considerations in retirement.

Personally, I've never met this fictional "average investor". I wonder if there is one in this forum.

 

[youbet]

Ok let me add some details..
What I sold was roughly 25% of my portfolio..
Roughly 12% was already in cash like instruments..
Another 12% is locked in to company stock until February.
Another 12% will be sold on Monday

OP, maybe I missed it since this has become a long thread and I'm a late joiner, but what was the AA of your total investable assets before and after your change? I realize you said you went to 100% cash in your 401k and that the 401k is about 25% of your total. But, what is the before and after AA of your total package of investable assets?

I'm guessing many of the respondents are thinking you're now 100% cash and I'm thinking you're not.

 

[rayinpenn]

I'm guessing many of the respondents are thinking you're now 100% cash and I'm thinking you're not.

Before After
401k. 37% equities. 12% employer stock
25% short term fund
Retirement. 12% Cash acct. 12% Cash acct
Self directed Ira 12% equities. 12% equities
Other taxable. 39% equities 39% equities

I cant sell the company stock until feb.
The self direct Ira is going to short term Monday... ill be 51% equities until feb then ill drop to 39%. Can’t mess with the taxable it would trigger all kinds of gains...

 

[LOL!]

See? rayinpenn was 88% equities before this move. I think very few of the readers over age 60 are above 75% equities at this time. And many of them have less than 50% equities, so rayinpenn is just joining the crowd.

Already mentioned here: http://www.early-retirement.org/for...-the-safe-short-term-90149-3.html#post1991761

 

[ncbill]

He says 30/70 is a starting point for discussion. I feel that target numbers given in a short article are a simple generalization. They seldom differentiate from other income sources such as pensions or annuities whether COLA'ed or not, Roth vs traditional IRA's and 401K's (or equivalents) and numerous other very important considerations. He even says:

Sure, the analysis is just for portfolio survival.

Still, 4% SWR with much less downside risk than a 60/40 portfolio is worth considering.

Also the recommended starting place for the "rising equity glide-path" approach:

https://www.onefpa.org/journal/Pages/Reducing Retirement Risk with a Rising Equity Glide Path.aspx

 

[Texas Proud]

See? rayinpenn was 88% equities before this move. I think very few of the readers over age 60 are above 75% equities at this time. And many of them have less than 50% equities, so rayinpenn is just joining the crowd.

Already mentioned here: http://www.early-retirement.org/for...-the-safe-short-term-90149-3.html#post1991761

Hmmm, maybe do a poll... I am in that 'very few people'....

I just checked and am 85% equities and 15% 'bonds'.... but about 1/3 of those bonds are actually pref shares that I treat as bonds...

 

[youbet]

Before After
401k. 37% equities. 12% employer stock
25% short term fund
Retirement. 12% Cash acct. 12% Cash acct
Self directed Ira 12% equities. 12% equities
Other taxable. 39% equities 39% equities

I cant sell the company stock until feb.
The self direct Ira is going to short term Monday... ill be 51% equities until feb then ill drop to 39%. Can’t mess with the taxable it would trigger all kinds of gains...

We still can’t determine the AA of your total investable assets from this Ray. But to all who responded thinking Ray went to an all cash position, please understand that’s not the case. He appears to still be significantly in equities.

Ray, what is your new AA goal for your total portfolio?

 

[target2019]

Before After
401k. 37% equities. 12% employer stock
25% short term fund
Retirement. 12% Cash acct. 12% Cash acct
Self directed Ira 12% equities. 12% equities
Other taxable. 39% equities 39% equities

I cant sell the company stock until feb.
The self direct Ira is going to short term Monday... ill be 51% equities until feb then ill drop to 39%. Can’t mess with the taxable it would trigger all kinds of gains...

When you eventually wind down to 40/60, being very close to pulling the work plug, it makes a tremendous amount of sense. That is a tactical move that has been mentioned by Bogle and B-heads. Can't find exact quotes right now, but moving to 50/50 is normal, I'd venture. You've gone 10% past that, but it is not an extreme move IMO.

The buzzer is also something genuine. Some are more knowledgeable, and sensitive to the economic signals. You're like a canary in a coal mine, but have no cage, and are fleeing to the mine elevator.

 

[rayinpenn]

I’ve a bit of a confession to make ... My SIL retired a few days ago. God help her I am her unofficial unpaid investment manger. I let her know what I was doing and She followed my move. She has done very well following me into steady Eddie low cost dividend payers. Shes still more exposed to equities in her taxable accounts then us...

 

[dixonge]

I don’t believe in trying to time the Market and I’ll probably miss gains but the unfounded ‘Market Exuberance’ got hold of me; Yesterday I sold all my 401k equity funds (S&P, Large Cap, International). I’ve been investing so long it is more money then this guy from very humble beginnings could have every imagined. It makes me nervous just transferring it.

I have a spreadsheet that used yahoos free stock quotes to get updated prices. Click a button and bam I know where I stand. Yahoo decided to no longer offer the service. Two days ago I manually imputed prices and took a look where the Mrs and I stand. Crazy number and with all the crazy ness in the world ..well fear set in.

Hope I’m wrong...

After reading this whole thread, I came back and re-read your original post here. You sound a lot more rational this time. LOL

I have a couple of thoughts:

1 - taking 'drastic' measures because you are shocked by how much money you've accumulated - not so unreasonable. Kinda like walking away from the table to cash in your chips before some bad hand wipes it all out.

2 - You mention market exuberance and craziness in the world - maybe spend less time watching the 'news'?

 

[MrEd]

My Thoughts

1. Paper wealth is not real wealth. Unless you sell you've made nothing.

2. Profit is fact the rest is commentary.

MrEd

 

[easysurfer]

We still can’t determine the AA of your total investable assets from this Ray. But to all who responded thinking Ray went to an all cash position, please understand that’s not the case. He appears to still be significantly in equities.

Ray, what is your new AA goal for your total portfolio?

Maybe the thread title should be changed to "Ray Gives Us a Head Fake and We Jumped"?

 

[robls]

FYI, from NorthmanTrader https://northmantrader.com/2018/01/03/yearly-charts/

 

[sengsational]

So you were 12% cash and 88% equities before selling 25% of portfolio? If so, I would say you were market timing before selling the assets in your 401(k). Good on you!

The headline "I dropped to 63% equities" wouldn't generate a thread with 7 pages. But a lot of great thoughts posted.

 

[harley]

Maybe the thread title should be changed to "Ray Gives Us a Head Fake and We Jumped"?

Or "Ray Gives Us Another Head Fake and We Jumped Again".

 

[jim584672]

..why are you still in a 401k if you are retired or over 59.5 ?

I didn't know your could roll a 401k while still in the company at =>59.5, is that something new? Always thought you had to be outside the company to do a rollover.

 

[harley]

I didn't know your could roll a 401k while still in the company at =>59.5, is that something new? Always thought you had to be outside the company to do a rollover.

That seems to depend on the company. I heard about it when I was still working and looked into it, but my Megacorp didn't allow it.

 

[splitwdw]

I didn't know your could roll a 401k while still in the company at =>59.5, is that something new? Always thought you had to be outside the company to do a rollover.

It's called "in-service, non-hardship withdrawal" at 59.5 and not all 401k's have this option.

Wondering what happened to Ray because in earlier posts he said he didn't care what the market was doing due to having dividend paying stock. Dividends would help him ride out the dips in the market.

 

[Texas Proud]

1. Paper wealth is not real wealth. Unless you sell you've made nothing.

2. Profit is fact the rest is commentary.

MrEd

#1 is just wrong... in your version Bill Gates and Warren Buffet are not nearly as rich as they are... most of their wealth is 'paper' in your view...

To extend it further, nobody has wealth unless they are all in cash.... why? Because it is ALL paper... once I invest in some stock I have converted my cash to paper and hope it goes up or down...

BTW, today it is digital unless I print it out, so not even paper....

 

[calmloki]

#1 is just wrong... in your version Bill Gates and Warren Buffet are not nearly as rich as they are... most of their wealth is 'paper' in your view...

To extend it further, nobody has wealth unless they are all in cash.... why? Because it is ALL paper... once I invest in some stock I have converted my cash to paper and hope it goes up or down...

BTW, today it is digital unless I print it out, so not even paper....

Wealth. What is it? Digital markers? printed paper? shiny rocks or metals? While we have digital markers I have to admit to feeling like they could go Poof! in an EMP. Or perhaps like GM or BofA or Enron or Rath Packing the values just disappear. Maybe hackers attack a la the Mt. Gox bitcoin theft. Big reason we have paid off rentals we can touch and control to some extent. Of course war or governmental action could evaporate our physical wealth, but I sure understand the idea of realized tangible wealth.

 

[gayl]

1st buy of the year: CANN

Please panic sell so I can buy cheap

 

[audreyh1]

We still can’t determine the AA of your total investable assets from this Ray. But to all who responded thinking Ray went to an all cash position, please understand that’s not the case. He appears to still be significantly in equities.

Ray, what is your new AA goal for your total portfolio?

Thanks for clarifying because it was a very confusing thread otherwise in terms of whether any equities were left. A lot more dramatic to make it sound like one has moved completely out.

Much more sensible to drop to 40% shortly before retiring and then one has the option of using the rising glide path if they like to manage adverse near term market conditions.

 

[youbet]

Maybe the thread title should be changed to "Ray Gives Us a Head Fake and We Jumped"?

Excellent!

Yep, Ray did title and word his original post so it would be easy to assume he'd bailed out of equities altogether when in fact he simply reduced the percentage of equities in his AA.

In fact, we still don't know what Ray's AA is after his rebalancing move.

Kudos to Ray for finding a way to bring up the discussion of jumping to 100% cash in response to the long bull market. But, Ray hasn't done this himself, not even close.

 

[43210]

Kudos for trolling?
This thread has been spinning its wheels in confusion. What's the point?