I have read this thread several times and forgive me but the very concept of asset allocation must be re-examined during these times. Many readers probably believe the Bogle of general index investing into a few groups and generally i do not agree. But that is where we are in a different world today.
Here a a few thought for retired or near retired persons, and I am not offering any investment advice but I am sharing my process of investing during these difficult times. Don't jump into any funds if you haven't already done so.DO NOT TAKE ANY RISK AT THIS TIME UNLESS YOU NEED TO IN ORDER TO SURVIVE. Afew thoughts that are guiding me at this time and for the next several months:
1. Don't do anything until after the election unless you have need to rebalance your portfolio for other reasons and have failed to do so.
2. If you can afford it, keep as much money in cash , especially if you do not need income at this time. Even 1% CD's.
3. Consider the possibility that inflation will be present over the next 1 to 3 years, and rates may go up.
4. Consider your cash as a great buying opportunity to lock into good rates for the remainder of your life.
5. Don't rush into the market simply because you read what supposed experts tell you. They are still working, and as I recall Mr. Ferri has an investment management firm that will take your money for a fee and mange it for you.In this respect he and others including your broker make a profit on your money while you take the risk.
6. I do like certain index mutual funds such as Vanguard because they are inexpensive and and in many instances do better than the brokers and mangers.I currently do not own any.
7. Read as much as you can and for now do nothing unless you have a pending problem that must be adjusted.
8.The folks that give advice won't be there to pick you up when you falter, but you will be there and be responsible for your own decisions.
9.Use different service providers and don't rely on one broker or advisor,I talk with about 4 brokers, banks, and others in order to determine the type of FIXED income opportunities available and often disregard all advice or select one Contact these people every few months to see what is available. the election it may be necessary to move into more highly rated corporate bonds but select a return that fits into you required projections. In other words if you need 4% on your total portfolio to live adequately do not be frightened to invest for a longer term bond.But invest only a small portion of your cash into such instruments one at a time, and very slowly so you will have buying opportunities to increase your return when they present themselves.Be careful of bonds that have LIBOR rate or anything else you do not understand and read the prospectus before buying. I often have made this mistake and the broker has given me incorrect advice.
10.GO very slow, and remember how many people in your life time have given you advice and yes you have figured it out by yourself.
11. If you feel you are completely lost and can not mange without competent help, get it. There are some vey large reputable banks that have high fees but at least they can give you guidance.
12. I am opposed to using money mangers as I have almost no voice in what they are doing with my money and I have worked to hard to give it to someone and hope for the best.
13. I am not opposed to listening or seeking help from a senior staff member of a reputable financial institution just as long as I make the final decision on each investment and I meet with them at least quarterly.
14. I visited an office of a national brokerage firm and I was introduced to a young man about 30 years of age. I asked for his educational credentials and his experience and I was impressed except for the fact he was too young and did not have enough years under his belt.Then as I was sitting there I realized that I had worked for 40 years to secure funds for retirement, and why would I seek the advice of a person with almost no experience other than what his brokerage house provides to him.I listened and left and learned.
15. A few weeks ago my wife and I visited a large bank. They of course were interested in managing our money. That will not happen, but I did meet a senior investment advisor and I do plan to listen to him periodically.
16. I guess by this time you understand that I am too conservative to rely on the Bogle theory, but do fully agree with asset allocation. As far as indexing I may use a small portion of my funds for that purpose, but like investment advisors I am not going to rely on it.
17. Stop and think about our economy. The US prints money and uses it to purchase and buy back our own investments. Foreign countries are in deep trouble and even China is looking less interested in our bonds.We have extraordinarily high unemployment,and we are in such debt that most of us will see no significant change in our lifetime.A high percentage of our population is reliant on government funds and our business environment is struggling.A very bleak outlook that we must understand and deal with.
Hope I haven't insulted anyone, but it is not business as usual, and we must view the stock market differently that we did a decade ago. Yes it is true the market recovered from some very dire circumstances, but the past is a not a predictor of the future, Ever hear this before.
Hope I haven'y insulted anyone but this is what I am doing at least for now.