So if I want to reduce my allocation from 100% stocks, what do you think if its the IRA portion that I take out of the market?

[engineernerd]

To OP, regarding what to choose for your fixed-income portfolio component:

Both Fidelity and Vanguard have money market funds that generate decent interest rates as default settlement funds, though Vanguard's VMFXX does seem to have a higher interest rate than Fidelity's SPAXX.

Both funds have very low volatility, and keeping money in the settlement fund has the advantage that you don't have to sell anything before placing a buy order.

Building and maintaining a collection of individual bonds is a fair amount of work, so that's the main reason to buy a diversified bond fund instead.

Bonds and bond funds are not exempt from the overarching law of the markets, that there is no free lunch. Everything is a tradeoff between volatility and (long-term average) rate of return.

The lowest returns and lowest volatility come from short-term government bonds/bond funds. Returns and volatility go up with the average maturity length of the bonds as well as and down with the credit rating of the bond issuer.

So if you are looking for stability and don't mind losing value to inflation in your fixed-income assets (because your stock assets are likely to outperform inflation), a short-term government bond fund like VGSH would be an OK choice. But you could also stick with money-market funds and CDs.

 

[pb4uski]

As each rung matures, are you reinvesting in another rung?

Yes, that is the plan. Until I'm rid of the individual bonds I periodically do a maturity distribution analysis and compare actual to target for each rung and then buy whatever ETFs I need to to fill out the ladder with calls and maturity proceeds.

When I'm done I'll have two 7-rung rolling bond ladders, one for investment grade corporate bonds and another, smaller one, for high-yield corporate bonds.

If I were to get towards the end of the runway of life, I could just bite-the-bullet and sell all the individual bonds and fill out the ladder in about 1/2 hour. I'm currently 102.04% of cost for my individual bond holdings and they are all in my tIRA so no loss or tax implications, but I'm willing to be patient and let the calls and maturities set the pace of the transition.

 

[mrfeh]

100/0 to 57/43 is a huge change. Just a suggestion - but you may want to spread that out over a year or 3.

+1

I haven't read every post, but why such a massive change?

 

[pb4uski]

I'm not the OP but he has been thinking about this for some time, is now retired and no longer has guaranteed sources of cash inflows from work and wants to de-risk some, especially given lofty equity valuations. Besides, IMO 57/43 is a lot more prudent for a 60 yo retiree than 100/0.

 

[mrfeh]

I'm not the OP but he has been thinking about this for some time, is now retired and no longer has guaranteed sources of cash inflows from work and wants to de-risk some, especially given lofty equity valuations. Besides, IMO 57/43 is a lot more prudent for a 60 yo retiree than 100/0.

I agree 60/40 is more prudent.

De-risking like this is usually done in steps, before retirement begins, so what the OP is considering is startling.

 

[NW-Bound]

I dabbled a bit in bond funds with a few % of portfolio, decided that it was not worth the hassle, and sold off most recently. What's not in equities, besides I-bond, I kept most in TSTXX, a short-term T-Bill fund paying around 3.5% now. Is it enough to catch up with inflation, I don't now, but supplement the yield by using it to secure some OTM puts (only when it feels right) to pick up a few more %. One does not get rich with that, but makes enough for spending a bit of effort.

 

[Lorenzo]

De-risking like this is usually done in steps, before retirement begins, so what the OP is considering is startling.

It is startling and also an interesting case for all to consider. I would like to hear from more people who have been on unconventional paths.

Over in one of the dividend investing threads, I offered my belief that virtually nobody relies on 100 percent growth stocks for 100 percent of their retirement income. I'm glad I included the "virtually," because every now and then we are reminded there are a few who have done exactly that. With the OP's low spend rate and the long bull market, it has apparently worked out so far.

 

[mrfeh]

It is startling and also an interesting case for all to consider. I would like to hear from more people who have been on unconventional paths.

I was 100% equities until 5 years before pulling the plug. Spent those 5 years getting down to 60/40.

 

[Out of Steam]

Over in one of the dividend investing threads, I offered my belief that virtually nobody relies on 100 percent growth stocks for 100 percent of their retirement income. I'm glad I included the "virtually," because every now and then we are reminded there are a few who have done exactly that. With the OP's low spend rate and the long bull market, it has apparently worked out so far.

It worked well for my sister, too. As she is working at a lower paying job than she did earlier in her career, she expects to start drawing from the accounts, so she decided it was time to change that allocation. The target funds for 2030 are about 60/40 stock.

 

[Lorenzo]

I was 100% equities until 5 years before pulling the plug. Spent those 5 years getting down to 60/40.

It worked well for my sister, too. As she is working at a lower paying job than she did earlier in her career, she expects to start drawing from the accounts, so she decided it was time to change that allocation. The target funds for 2030 are about 60/40 stock.

The OP has been retired for 9 years. That’s a lot more unusual, I think.

 

[richardsok]

Is 60/40 really more prudent? More likely 60/40 is what has worked before and millions are used to it so it "seems" normal/reasonable choice.

Have you checked your charts recently? EVERYTHING is getting slammed, just like in grand daddy's 1979 stagflation early nightmares which ended up with 15% interest rates.

I prefer 0 stocks/0 bonds/ 80 MM+/- with a little something in commodities & in inverse like HDGE or DOG.

Only a couple of days ago I posted with $38trillion in debt and at present spend rates, Treasury debts would be at $40 Trillion before Labor Day. And this morning I awake to read we're already at $39 Trillion! Banks will soon be paying 4.5% on the 10-years with 5% a reasonable projection. If so, it's "Katie, bar the door!"

When chart trends change, I will too. Would be delighted to be wrong.

 

[DEC-1982]

Is 60/40 really more prudent? More likely 60/40 is what has worked before and millions are used to it so it "seems" normal/reasonable choice.

I prefer 0 stocks/0 bonds/ 80 MM+/- with a little something in commodities & in inverse like HDGE or DOG.

To each his own, as long as one sticks to their long-term written plan.

For us only ...
We need some growth and some stability in our portfolio. For us, the 60/40 portfolio (now 67/33) seemed like a good choice 10+ years ago and it still seems like a good one. I won't say our choices are necessarily right for other people.

 

[pb4uski]

Is 60/40 really more prudent? More likely 60/40 is what has worked before and millions are used to it so it "seems" normal/reasonable choice. ...

My crystal ball is on the fritz, but what I do know is that historically that if you have a ~4% WR that AA has little impact on success. But... the highest success ratios range between 55/45 and 70/30 AA.

 

[richardsok]

pb--- You're absolutely correct, of course! The second sentence of my post read: ".... 60/40 is what has worked before and millions are used to it so it "seems" a normal/reasonable choice."

But "NOW WHAT?" is the question. It's ALWAYS the question! -- if you're not the most rock-ribbed Bogleshead in the cheap seats. There's a war afoot now, energy terminals are ablaze and those folksy chaps down at YOUR Treasury Dept are flirting with $40 Trillion in debt for the kiddies to pay -- or avoid with inflation.

Nevertheless I don't expect you to be persuaded by any argument of mine. I'm just another nobody from Nowheres. But you might say "hello!" to my four little friends: US equities, bonds, commodities & global securities.

Just follow those little ol' moving averages. When they change, so will I.

 

[Digger1000]

So I asked this in my OP.

Both my roth and tIRA are at Fidelity. I did a rollover from my TIAA 403b to my Fidelity tIRA about 8 months ago. Can I rollover that money to a vanguard tIRA now or do I have to wait a certain time period?

Whenever I look in the last 8 months, vanguard MM funds returns are higher than Fidelity. Is that always the case? Also the management fee (or whatever its called) is lower I believe at vanguard than fidelity, opposite of what is for their s&p 500 index funds at each place.

 

[Al18]

Fidelity created a series of mutual funds in 2018 that has 0.0% expense fees. FZROX is an example. I don't believe Vanguard has any funds with a 0.0% expense fee.

 

[Digger1000]

Fidelity created a series of mutual funds in 2018 that has 0.0% expense fees. FZROX is an example. I don't believe Vanguard has any funds with a 0.0% expense fee.

I am aware of those. For s&p 500 its .015 at fidelity and .04 at vanguard.

I believe vanguard's mm expense ratios are lower than fidelity.

 

[mrfeh]

I am aware of those. For s&p 500 its .015 at fidelity and .04 at vanguard.

I believe vanguard's mm expense ratios are lower than fidelity.

When it comes to MM funds today, I'm under the impression Vanguard offers the best choices. Don't know offhand just how much difference there is between them and Fido.

 

[pb4uski]

So I asked this in my OP.

Both my roth and tIRA are at Fidelity. I did a rollover from my TIAA 403b to my Fidelity tIRA about 8 months ago. Can I rollover that money to a vanguard tIRA now or do I have to wait a certain time period?

Whenever I look in the last 8 months, vanguard MM funds returns are higher than Fidelity. Is that always the case? Also the management fee (or whatever its called) is lower I believe at vanguard than fidelity, opposite of what is for their s&p 500 index funds at each place.

Yes, the restriction is on indirect IRA-to-IRA rollovers so your 403b-to-IRA rollover doesn't count, and even if it did you can do multiple trustee-to-trustee rollovers a year.

But I would not move from Fidelity to Vanguard. In my experience Vanguard is inferior to Fidelity, especially their customer service and website that in my opinion offsets their lower money market fund yields.

If you have a money market fund balance (e.g., $100,000+), Fidelity offers "Premium" share classes like FZDXX which currently yields approximately 3.47%.