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It’s been a topsy-turvy year in the financial markets. Has that prompted you to make any changes to your portfolio’s asset allocation? I’m thinking about four key dimensions:
If you’ve tweaked your asset allocation, I’d love to know what changes you’ve made—and why.
Yesterday I discussed one aspect of our finances with my spouse and it may result in an allocation change. G has had a very interesting career which means she has a public pension and a work record in the private sector. She has sufficient credits to get social security on her own work record. In the past the rough numbers indicated that because of SS rules she would not receive most of that benefit because of her public pension, so we ignored it in our retirement calculations.
Changes in law now indicate she will get that stipend. I consider it to be a bond. She is scheduling a visit to the social security office to finalize this.
If in fact she does get her full benefit that will be a significant change in retirement income. We’ll either gift more each year or increase our stock allocation, or both.
A little late to the party on this post but, for whatever it’s worth…
We closed, transferred or zeroed out a rarely used checking account, an account at Betterment, an account at Treasury Direct, and two of my recently retired spouse’s 403(b)s. All basically in furtherance of simplification.
Within our VG holdings, we consolidated a 6 fund portfolio to a Bogleheads 3 Fund portfolio eliminating small positions in a REIT, small cap value, and large cap value. Again further simplification after a realization that these relatively small slices were not going to move the needle in any meaningful way regardless of performance.
Did a reallocation within retirement accounts resulting in Roths being 100% equity and bond holdings (along w equities) maintained in tax-deferred. Assumption is Roths are likely last to be used and probably legacy accounts for the kids so hoping for better performance over time w equities.
Changed overall AA from roughly 72/28 to 65/35 and did same for US vs Int’l on equity side which was previously 76/24. Took some winnings off the table after last few years and find it hard to believe that US overperformance will continue into next decade. Also, at this point, more motivated by benefits of diversification than picking the right horse. Also, easy to remember. It’s 65/35 and 65/35.
Tax deferred vs Roth is 2:1.
Although we are 65/35, we are comfortable letting the AA float up going forward should equities outperform fixed income. Reason being is we still have 1 large untapped SS benefit coming down the pike. The way I see it, the closer we get to SS, the less we will need to rely on the security of our fixed income piece.
We continue to do yearly Roth conversions as tax brackets permit as well as buy small amounts of Total US and Total Int’l index funds in an after tax account if there are $$$ leftover each month.
Started a 529 for a new grandchild w recurring monthly deposits going forward.
I do wish we had more in non-qualified investments as this would make gifting or writing a mortgage for a child (a la Mr. Clements) more feasible. Digging into the tax deferred accounts has obvious adverse tax consequences and I’m reluctant to tap the Roths and sacrifice their long-term growth potential.
Anyway, that’s my story and I’m sticking to it. 🙂 Feel free to critique as need be. Always impressed by the extent of knowledge and diverse opinions here.
We are now one and a half years into retirement. Last year I realized that we had no need for excessive risk in our portfolio, and slowly moved from an asset allocation of over 80% equities to just under 75%. We mostly maintain our AA through the past few months by redeeming from specific asset classes. However, I did a second rebalance when markets were skewed. Overall, I took advantage of the dip and did my annual Roth conversion earlier than expected, buying more equities to bring my AA back to the desired level. Moved from money market fund to a low expense ratio Vanguard fund tilted towards large cap companies.
I didn’t change our asset allocation this year although I did adjust in the middle of last year from 50/50 to 60/40 after buying some deferred annuities when interest rates were going to get cut and stocks were humming along. In fact, I am planning to raise it further to 70/30 when my wife and I claim delayed SS, small pensions and conservatively invested deferred compensation next year. We are generally going with the rising equity glidepath plan in retirement as more income is from guaranteed and low risk sources. This year all we have done is rebalance and half of our planned annual partial Roth conversion near the lows in April. Sleeping well.
I’m much more bullish on America after the last election. I’m bullish either way, but now I think there’s reason to believe that ex-US equities outshining the US has been put on hold.
Without violating my 5-years min. cash rule, I used VOO to go from ≈ 60/40 to ≈ 80/20 (stk/cash) during the recent bandwagon downturn. I wasn’t aiming at a new long-term asset allocation target, I was just having a 1974 Buffett episode. I’ll start selling next year to the threshold that long-term capital gains remain untaxed.
“..during an interview in Forbes magazine, when he made a very stark public
prediction, calling the bottom of the bear market. Asked how he felt, Mr Buffett famously then replied: “Like an oversexed guy in a whorehouse. Now is the time to invest and get rich.”
(WSJ 2008, James Quinn)
For the record, I’m most impressed with the folks that did nothing. : )
We are young and have some time until our intended retirement around 58-62 years old (we are both 41 now).
But yes…this whole wild ride of 2025 made me consider a little more diversification.
We WERE:
40% Large Cap Blend (my wifes Roth 401k portfolio), she has horrible fees on just about every other investment available to her in this 401k.
60% The mix below:
Roth IRA Mix:
75% Large Cap Growth
8% Speculative ETFs and a couple stocks. Mostly sector ETF’s in nuclear power, Chinese tech, Chinese clean energy, data security, and (2) 1% of my networth positions in 2 companies I research and believe in, Reddit and Oklo.
10% Mid Cap Value
5% Small Cap Value.
2% Gold.
It was a pretty aggressive portfolio, but it was comfortable for us, seeing that when you zoom out…its basically a large cap fund with a strong growth tilt and a few smaller side bets.
BUT then 2025 lol. I made the mistake of market timing (and I KNOW better) and sold off my individual ETFs and a third of my large cap growth etf in my Roth. Bought 1/2 gold and kept cash. Worked out really well for a month….shouldnt have been so greedy or better yet….should have left it ALONE lol. Still sitting on a big chunk of cash and gold. The gold is still up so at least there is that….but not nearly as up as the market over the last month. Egg on my face.
The reason I have not bought back in….. have been contemplating a SLIGHTLY more diverse and my overly excessive analysis and HOPE that markets pull back a hair has kept me on the side line the last week to week and a half.
The new mix
40% Large Cap Blend in wife’s Roth 401k at her active employer
60% Rother IRAs
Roth Blend:
55% Large Cap Growth
12% Large Cap Value / Dividend ETFs
8% Mid Cap Value
4% Small Cap Value
6% International USD Hedged ETF
4% Other International ETFs
3% Gold
1% Long Term US Gov Bond ETF
3% Global USD Hedged Bond ETF
4% Sector funds and small bets.
Rebalance yearly in July.
Still aggressive lol….but we are young….and a little more spread out.
In follow up on my earlier post, I have been looking for comments and insight regarding the current investment environment. Finally Barron’s has posted something. (As I posted earlier, I made a shift to international markets and a small position in gold after polls indicated there would be a change in administration last September.)
From Barron’s: How Fund Managers Are Grappling With ‘Autocracy Risk’
https://www.barrons.com/articles/fund-managers-grapple-autocracy-risk-846a0621?st=Zpze4K
Also, I did a Roth conversion near the bottom in April. As Jonathan noted recently it is really a matter of market timing and therefore a little stress inducing. But worth it in retrospect. If there is another greater downturn I’ll do another conversion.
A portion of my retirement savings is in TIAA-CREF, where I had a large part in the CREF Growth fund – QCGRIX is the symbol. I have shifted most of it to the CREF Global fund – QCGLIX. Despite the name the latter is 67% in US stocks, but it is far less volatile than the Growth fund which turns out to have close to 10% of the portfolio in Nvidia!
In retirement accounts, we’re a little more allocated in treasuries and bonds. In one IRA account I cashed out of an index fund, but bought back in at $2 a share lower, so same allocation but with a slight advantage of owning more shares. Some people here will disapprove of market timing.
Oh, and bought IAU because I bet it will provide a quick return, probably enough to buy a new car which I’ll need in a few years.
My asset allocation is 90% cash as of May 1. Reason: A 04/05/2013 Mark Hulbert article in which he presented statistics. Over the previous “50 years, the Dow on average has produced a gain of 7.5% during the winter months and lost 0.1% during the summer months”. Granted that it hasn’t always worked out that way, but I like the long term odds….and I hate losses. I sleep better during the summer with 6 month treasuries.
Nevermind the wisdom of the advice, I can’t imagine going to 90% cash on the basis of one article from anyone. Glad you’re sleeping better though.
This is wild
Okay, I looked this up, and apparently it’s called “Sell in May and Go Away,” or the “Halloween Strategy.” I wasn’t seeing a lot of support for this, it’s just straight up market timing. This old Rick Ferri article on Forbes called “Busting the Sell in May and Go Away Myth” (April 2013) shows the research from CXO Advisory Group that demonstrates the inferiority of this strategy to buy and hold strategies over a 142 year period in America. Apparently the trading costs really add up, and the dividends from the buy and hold stocks account for a very significant amount of growth in the portfolio. Interesting stuff, and +1 for buy and hold.
This strategy was referred to as seasonality. It would have earned people massive extra returns (from about 1900 to 1990) as there were reasons why market dips often happened during the summer (very few people remember how different NYC and businesses operated before AC became widespread. After Memorial Day until Labor Day you were in the part time season, vacation season.) It also included things like The Santa Claus rally.
Whenever something like seasonality is discovered and millions start using it in some fashion, it changes the original dynamics such that it’s not useful any longer.
Still hewing close to 50:50, equities to fixed. Have, however, been building the proportion of international equity. And, in what may seem counter intuitive, am increasingly using the tax deferred accounts for fixed income. That helps reduce my taxable interest, affords more freedom in selecting taxable fixed income, and will, I hope, minimize future RMDs while making them more predictable. Being mostly buy and hold on the equity side, and with no heirs save for charities, this strategy feels appropriate.
I finally went to all cash and equivalents. I NEVER thought I would do this. At age 70 (with wife 69), we have been through plenty of harrowing markets and just kept investing vigorously. But I am mindful of something Bill Bernstein said, or I am at least paraphrasing: “When you have won the game, stop playing.” If you trust Social Security to pay people my age what they have promised to pay (or even if benefits are cut 20% or so), between that and a pension and a ten-year annuity that expires in 2033, and two QLACS that kick in the year after that, and LTC insurance, what we had invested in stocks was basically “leave our daughters well off beyond their wildest dreams” (we have not exactly ignored them, even if you don’t count paying pretty much every cent of three college degrees and funding 529 plans for grandkids https://humbledollar.com/2025/05/do-it-for-the-kids/#comment-2066667) or “rent a 10 bedroom villa on the Mediterranean and fly twenty people over for a week”. That would all be lovely, but not really necessary. We’re pretty happy as it is. The Geometry of Wealth by Brian Portnoy was very influential in getting us to this point.
I checked our combined investment accounts for the first time yesterday since selling all. This is the weekly ledger: -$9.24 (0.00%). OK, fine.
I second The Geometry of Wealth, it’s a good book!
Nope. No changes. Set up portfolio with the asset allocation I want, and let it ride
Yes. I raised two years + of cash to meet our MRD payments and have increased both my international exposure and holdings of US high yield bonds.
Just curious. Can’t you pay your MRD taxes from the money you take out?
After the polls suggested in late September that Trump would likely win the election I purchased a 5% position in a gold ETF. I also invested in Berkshire Hathaway with their large cash position and US holdings. My concern is/was what effect a change in the rule of law would have on the stock and bond markets. So far the portfolio is ahead of the US total stock market about 10% (down from 20% prior to the recent market improvement). The question is whether to take the profit on the gold or to keep it as insurance against further market turmoil after seeing the effects of the tariffs as they kick in later in the year (or years) ahead.
Also gold may have a longer term value as Barron’s 7-15-2024 noted:
Abolish the Federal Reserve? Here’s What Conservatives’ Project 2025 Would Do.
The conservative Heritage Foundation think tank’s so-called Project 2025’s primary recommendations for the Fed include a unitary focus on controlling inflation, winding down its balance sheet, and ending its lender-of-last-resort function. Further proposals would return the U.S. to a gold standard or abolish the Fed entirely.
Well, I think we can all agree that abolishing the fed and returning to free banking, or worse, to the gold standard, would be perfectly impossible, so no worries there.
No change in allocation, but I’ve shortened the duration of our bond exposure. Long rates are incredibly low, and vulnerable to gyrations up or down. I have no idea what the Federal Reserve will do in our current environment. So, new bond money goes into either a 1-5 year duration bond ETF, a TIPS fund (inflation hedge), or Series I bonds.
We haven’t made any significant changes. We just went with our trailing stops where appropriate. We’ve acquired a definite, “been there, done that” attitude. Sorry, Jonathan, I know you hate quotation marks.
I have no problem with quotation marks. It’s the excessive use of exclamation marks that bugs me.
https://humbledollar.com/about/blogging-for-humbledollar/style-guide/
My portfolio mirrors Vanguards life strategy growth fund VASGX. It’s asset allocation is 80% equities, 20% fixed income. The stock portion is 60% US and 40% international. I figure Vanguard is smarter than me so my default position is to follow Vanguard. I can’t use the same VG funds because of embedded capital gains in a taxable account.
However, I did make one “market timing” trade. A few months ago, I bought an SPX put spread that extended for two years. This protected me for a 20% drop in the market. I got lucky and doubled my money and rolled down my spread. I still have a spread on but at this point at no cost.
I calculate that the spread costs me about 2% per year. I would rather trim my upside by 2% than risk a 20% loss. If the market rallies 10%, I will roll up the spread gambling that sometime in the next two there could be a signficant loss. If I hit the 20% downturn, I plan to close out the spread and use the profits to add to my asset allocation in the proportions adopted by VASGX.
Part of the reason for my strategy is loss aversion. I am 72 and want to avoid the risk of adverse sequence of returns.
Since early 2020, we have been 50% income stocks(85% US, 15% Intl), 10% growth, and 40% in a mostly bond ladder. I retired in 2021. We still have not sold a single “share” for living expenses and continue to live off the income our portfolio generates at an increasing rate.
I had a wedding to pay for in March, along with 3 older cars–the youngest of which is a 2012 Camry. Rather than dip into my Vanguard MMF, which I consider my savings, I was fortunate to have an individual stock that had done well. I trimmed some of that and sold a few other items to pay for the wedding and buy a slightly used Subaru. Fortunately, this selling was all done before “Liberation Day” and all the associated volatility. A recent WSJ article spoke of the increased costs, resulting from tariffs, now affecting the wedding plans of many brides (and I’m sure the finances of their parents!). Again, I was lucky to have every thing wrapped up before those costs flowed through. Otherwise, it’s auto-pilot for me. Because I fee there is so much uncertainty right now, making few changes may be the best course of action for me.
My wife and I are in our seventies and I have been taking RMDs for several years. Most of our money is in my Roth and my IRA. My kids are the beneficiaries for the Roth and it is invested entirely in one world stock fund. The IRA was invested in the Vanguard Target Retirement fund which gave us a 60/40 asset allocation. In January of this year, I changed my IRA investment to an intermediate bond fund. This does two things; changes our asset allocation to about 50/50, and allows me to generate RMDs entirely from dividends generated by the bond fund. I don’t like to have to sell stock funds.
Small tweaks toward foreign equity and bond etfs. Later, part of getting older and expecting (maybe very wrongly) rates to drop.
31 year old here, but I just didn’t like the valuations on US stocks last year so I shifted more and more to international to about 90%, mostly emerging. Obviously this is not standard advice but it’s played out pretty well with the falling dollar boosting the portfolio now.
My main goal is just to be on a separate wave from US equities and they have been pretty uncorrelated with the S&P.
Wow – quite a shift. Glad it’s worked so well but I’d be inclined to rebalance that out.
Everyone’s circumstances are different. Here’s some data on our allocations. There are rounding errors.
1. If combined, my and G’s accounts would be about 50% equities. A few years ago, prior to full retirement mine was 70/30.
2. Here’s the equity allocation for my accounts:
Large Cap Value 38.16%
Large Cap Growth 22.84%
Mid/Small Value 15.15%
Mid/Small Growth 23.79%
3. Growth is distributed as follows:
Slow Growth 13.89%
Classic Growth 17.69%
Aggressive Growth 6.46%
Speculative Growth 1.83%
4. Other info.
Region: Equities, North America is about 75%, foreign 25%. Percentage of foreign has been pretty consistent.
Bonds and cash are about 7% and 44%.
I do own a gold and specialty minerals fund, it is about 1.6% of my portfolio. I don’t own crypto.
There have been no changes to G’s accounts. My accounts include individual stocks and ETFs, funds/sector funds. I don’t own a Total Stock Market ETF. My last change of any significance was 2021. I re-allocated, reducing growth and bond funds. I decided I was not being adequately compensated for the risk I was taking with bond funds. As interest rates rose, I found cash and I-Bonds to be more attractive. I’ll monitor cash returns and may switch to bonds.
We are starting from scratch, not because of recent turbulence though. We’ve been in the process of transferring accounts to Fidelity. On 4/1 we moved investments at the old company into money market accounts. I wasn’t trying to time the market, but I was aware that 4/2 might be ugly.
Now we are in the process of dollar cost averaging back into the market. I’m using ETFs to achieve a slightly aggressive 70/30 mix. I did reserve a little money for side bets on a few managed funds that I like; I submit that they are better bets than blackjack.
I’ve been at a 60/40 allocation since retiring 8 years ago. I shifted to a 50/50 allocation earlier this year due in part to: 1) large portfolio gains over the previous 2 years, and 2) reducing risk in the portfolio until starting SS at age 70 in 4 years. Though “we won the game” before retiring, I feel the current AA better reduces risk for us with fixed income investments in safe treasuries in that would easily cover our expense needs for 15 years.
As part of reducing risk, I also shrunk an allocation to high yield corporate bonds within my fixed income allocation. Was holding about 20% if FI, but reduced that to 5%. I know holding HY bonds is against conventional wisdom, but our holdings in this space have performed as expected for us.
I’ve always held 20% of equities in international, and am comfortable holding at that %. That holding has helped blunt some of the recent losses in US stocks recently, but no one knows if that will continue.
We have made no recent changes.
6 years ago, after my wife fully retired, we started taking money out of our largest (by value) stock mutual fund and putting it into a 5 year CD.
Now we have a CD ladder.
When one matures we take some additional funds (varies by how we feel) from whichever is our largest by value mutual fund, add that amount to the amount in the CD that is rolling over and buy another 5 year term CD.
As I have posted before, we are fortunate enough that our Social Security and Pensions are more than sufficient to pay our typical expenses. We haven’t needed to touch our IRAs.
Good for you Winston. You probably have low fixed costs as well.
Two years to retirement. Haven’t changed a thing.👍
I’ve made changes but they aren’t about the current environment. We’re approaching retirement and have been implementing a glide path towards a simplified portfolio, slightly increased fixed income/cash positions (mainly to defray the biggest part of sequence of returns risk, which are higher in the first 5 years of retirement). I have another glide path planned from retirement to 5-10 years in.
I changed my asset allocation (AA) in January from approximately 70/30 to 50/50. I exclude cash accounts that I consider emergency / unusual occurrence reserves from my AA. I also have a self escrow cash account that I exclude from my AA. I fund our self escrow monthly so that I have cash funds available to cover large lumpy reoccurring annual expenses such as property taxes, homeowner insurance and year end gifts. I make income tax payments via withholding and/or quarterly estimated tax payments with a goal to be fully paid, without underpayment penalty, when we file our annual 1040. We have a large available HELOC (home equity line of credit) with a relatively small balance due. When I rebalance if I owe a balance on the HELOC I consider it a negative bond/cash for AA purposes.
I consider bonds and cash to be the same for our AA purposes. Currently about half of our bonds/cash are in 5 and 10 year TIPS bought at auction. I plan for our TIPS to be held to maturity and I like the idea of of locking in a real yield vs. a nominal yield. Buying TIPS at auction with 0% expense ratio is a plus for me and currently worth the little extra work compared with a TIPS bond fund.
I expect we will switch to a short term TIPS fund instead of holding individual TIPS beginning in approximately 5 and 10 years as I and my wife reach age 80. A nominal amount of our cash/bonds are in I-Bonds with most I bonds held over 1 year.
My age (75 in 2025) and the national debt were major factors in changing my AA when I rebalanced this year. I have long been concerned that the national debt will result in permanently higher inflation. I do not see this problem being addressed at the federal level. I still work on a part time seasonal basis. I expect my paid work to end in the next few years at most and that expectation also encouraged my thinking to lower our AA to 50/50. Further influences to change our AA include a lot of reading and Dr. Bernstein’s second edition of his Four Pillars book (2023) in particular. You wrote the forward and your second point, we get just one shot at making the financial journey from here to retirement – and we can’t afford to fail resonates with me.
I focus a lot on controlling our tax rates and tax dollars we pay. Income tax seems to me to be the largest investment expense we incur that I have the most control of. I am currently willing to carry a small balance in our HELOC vs. pulling additional taxable funds above RMDs from our traditional IRAs at our current marginal tax rate.
Thanks for asking. Writing this comments helps me in thinking the why of my decisions and allows me to change my decisions as circumstances change.
When the market was really low in early April it seemed a good time to buy. I bought three ETFs: Vanguard Information Technology (VGT); Vanguard FTSE (VGK) and T. Rowe Price Blue Chip (TCHP). They’ve done well as the market has risen a bit. More recently, I sold some equity funds that I’ve held for years. Nothing big — a few shares here and there. I skim the top. I sold because with all the uncertainty these days, I want plenty of cash on hand.
The net result is that the equity share of my portfolio rose a couple of points. It’s now equities 64%, cash 26%, and bonds 10%. I also hold some cash in high yield savings accounts and CDs. I plan to increase my equities to about 70% when valuations are lower.
The gyrations taught me that I don’t like the gyrations. And I don’t need to suffer them. So backing equities to ~50%, cash/treasuries to about 30%. Rest is a ladder of invesco bullet shares (corp). And I am sleeping better. This allocation will work for us. Retiring this year, certainly could increase equity once we get some of our time horizon gets smaller.
I rebalanced when I took my RMD back in October. I wasn’t planning to do so again until October this year. However, I am reading the current edition of Bernstein’s “The Four Pillars of Investing” and am wondering whether I should move some money from corporate bonds to Treasuries. I am also considering supplementing my CD ladder with a TIPS ladder…. Nothing to do with the market gyrations.
My process involves waiting for a bear market measured at market close. Almost happened. So I have done nothing.
No Changes but my “portfolio” isn’t the “norm.)
Before retiring 16 months ago, I purchase annuities with income riders. These annuities, which at the time were @45% of our portfolio, represent our “Bonds” or fixed income.
In addition, we are taking 4% of our portfolio monthly. Our non-annuity portfolio is 100% Equities, in VTI (90%) and VXUS (10%.) In addition we have 13-15 months in retirement expenses in cash.
The 4% dollars are earmarked as” lifestyle dollars,” and are coming from our VTI holding, in order to get to 80/20 VTI/VXUS.
Once retired, our Social Security, Annuities and 4% dollars became our income. Our RMDs are taken as QCDs. With no mortgage and no debt, Life Is Good!
Happy Retirement.
Don’t pile on, but I’m 80 and have never rebalanced (other than recently taking more dividends and LTCG out to build up a better cash position just in case). When it comes to distribution time, if the fund(s) are lower than the previous time, I reinvest; if higher, I take the distribution.
I have been investing apx 60 years and it has served me well. Here’s the current mix (thanks to Quicken):
Large Cap Stocks 44%
Cash 21%
Domestic Bonds 16%
Small Cap Stocks 13%
International Stocks 6%
Other <0.5%
Haven’t really changed my overall allocation, but moved some money that was in a short-term Treasury ETF to short-term CDs. Hopefully I’m overreacting, but I’m not as confident in the “full faith and credit” of the US government as I used to be.
I haven’t done a thing. Most of my “soon” and “later” buckets have remained in index funds and I have no plans to tap these for quite some time.
I have started a gradual to move from a VTI + VXUS + BND (Vanguard total market, total international & total bond) combination to Fidelity target 2035 & 2040 in my IRA. I still have value ETF’s (both small & large cap value). And move to iShares Balanced Allocation (AOR) in my taxable.
Rebalanced from 55/37/8(cash) back to 50/42/8. Since then, my stocks have crept back to 51%.
I’m still working, so the only big thing I’ve done is max out my 403b ahead of time this year. Should basically be there by the end of this month. Other than that, I think I’m like 90-95% stocks, and the rest is cash, including a healthy emergency fund, and a trivial amount (<1%) of bonds. Needless to say the old net worth has been on a wild ride the last several months!
A bit of rebalancing & tax loss harvesting 32 days ago.
I took advantage of the drop in the markets to alter our asset location a bit. When my wife’s target 2030 fund declined 10% I moved forward three months of her conversions taking advantage of transferring more shares per dollar. These shares were then changed to 100% Vanguard total world, but this did not appreciably change our allocation. At this time our accounts have essentially recovered to the balance prior to the drop due to our 45/45/10 allocation.
I accidentally did something similar. Because I’m retiring July 1, I doubled my 403B/457 contributions for the first six months of the year so that I could get the benefit of the tax break for one last year. This had nothing to do with You-Know-Who taking office in January.
I was pretty distressed that I’m now putting in double the contributions as the stock market dropped precipitously, but then I realized this could actually work out well for me, as I’m buying double the shares at a reduced price. This assumes, of course, that the stock market ever bounces back…
I did the same thing in 2023 and 2024. I maxed out my 403b during the first 6 months of the year in 2023 and in 2024, since I retired in January, I took almost 100% of my final pay check plus pay out for banked PTO as a Roth contribution.
Regarding your last paragraph:
First sentence-absolutely, in a down market is exactly when you should be increasing your contributions.
Second sentence- look at a graph of any LONG TERM period in the stock market and it always goes up to the right. If that is not the case in the future that we have left on this planet, then we as a nation have a much larger problem on or hands.
About any LONG TERM periods in the stock market.For some though, they’re up in their years, they’re taking sequence of risk return into consideration. They might not have the long-term that you have to recover from the way the markets have been recently. I recently went from 65/35 to 20/80. I held tight in ’08-09 and during the pandemic. This time around to me is much more challenging, so being in my ladder 60s, you want to sleep well at night. Try to remember what Bill Bernstein says. When you’ve won the game, why keep playing. I have enough.
I have rebalanced once but have maintained my 50/50 mix. I did add some foreign stock exposure with the rebalancing as I had tax loss harvested foreign in 2020 and never added it back into the mix.
My tweaking is driven more by a resolve to sell out of multiple funds down to just two or three, and I’ll admit that I’ve been dragging my feet. But I think that’s just inertia, rather than a reaction to volatility. I could be wrong.
I’m okay with my general allocation and mix of diversity, however. Stocks are currently about 78% of the total, and 40% of them international (last time I looked). Bonds are mostly short-term. We keep enough cash to handle any large emergency. This general portfolio make-up helped me “face the strain”. as the ch-ch-changes came. No credit to me. Thanks for faithfully serving up great advice.
I just rebalanced our portfolio from a 60/40 to a 50/50 mix. I’ve had international funds and added a small amount of small-cap value funds (at the wrong time -oh well) I am 75 and husband is 81. We have a 41 year old disabled daughter so our situation is a little unique. The big thing that happened to me at the beginning of this year though was that my social security was suspended for 3 months due to a glitch in the system! The threat of losing that guaranteed income at a time of market turmoil caused me to tap the brakes a little harder than usual. We have a large emergency fund of cash and CDs that got us through the SS nightmare. We are very frugal and don’t pull from our retirement funds yet. But my biggest accomplishment is that I’m learning to listen to the news in much smaller doses and not before bed.
If you are 75 and 81 years old and not drawing from your retirement funds yet I assume they are all in Roth accounts, as at your age you are required to take RMDs from any traditional accounts.
They have been converted to Roth’s over the course of the past 15 years or so.
That is what I am in the process of doing with my wife’s traditional account. Plan is to convert her entire account, which has a significantly smaller balance than mine, before we start taking Social Security at 70. That way I will only have to take RMDs from my account at 73. My traditional balance is too large to convert before 70 and still stay in the 12% tax bracket. Converting after 70 doesn’t make much sense to me tax wise. The Roth is 100% Vanguard Total World and will be the last funds to be touched, if ever, and any inherited amount will be tax free. Any withdrawals for living expenses/RMDs will be taken from my account only.
Or they could be taking the RMD, paying the tax and reinvesting it outside the tax deferred accounts.
I haven’t been paying much attention to my asset allocation for the past few years and it drifted from my target of ~75/25 to ~85/15. My Investment Policy Statement (IPS) says I’m supposed to check my AA quarterly and adjust as necessary, but when I checked a few weeks ago the market was dropping and it seemed like a bad time to make the exchange. But yesterday I started thinking about when the right time would be – when the market returned to its previous high? What if it didn’t?
And then I realized that I was engaging in classic anchoring bias and that the whole point of having an IPS is to take the emotion (and dithering) out of decision making. So, yesterday I moved money in my tIRA from VTSAX (Vanguard Total Stock Market) to VAIPX (Vanguard Inflation-Protected Securities Fund), bringing my AA to ~77/23.
I have no idea where the market is heading, but that’s the beauty of having (and following!) an IPS.