Stuck in limbo

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Topic Author
garyandnanette
Posts: 3
Joined: Sat Jul 29, 2017 1:33 pm

Stuck in limbo

Post by garyandnanette »

Hello,
New to the Bogleheads. Need advice. Went to a all cash position after the election, was scared of what would happen to the market and our retirement accounts. Everything sitting in Vanguard money market account for now. My question is what would be the best way to re-enter the market and restore order to our accounts.

Thank you
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BolderBoy
Posts: 5185
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: Stuck in limbo

Post by BolderBoy »

garyandnanette wrote:Hello,
New to the Bogleheads. Need advice. Went to a all cash position after the election, was scared of what would happen to the market and our retirement accounts. Everything sitting in Vanguard money market account for now. My question is what would be the best way to re-enter the market and restore order to our accounts.
Assuming you've done your diligence overall (have an EF, adequate insurances, etc) then you can return to your desired AA by simply exchanging your cash for the chosen funds you want. Lump sum, do it all at once.

Can you tell that I'm saying this in a complete vacuum? We know nothing about your financial situation overall so the advice could be better tailored to you if you'll use the "Asking Portfolio Questions" outline which you'll find as the second posting in this subforum.

Welcome!
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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bligh
Posts: 1344
Joined: Wed Jul 27, 2016 9:13 pm

Re: Stuck in limbo

Post by bligh »

Now that you know you are a skittish investor. Invest at an asset allocation you feel you will be able to hold even if the market were to take a nosedive tomorrow, otherwise you risk selling when you shouldn't be.

Even if your asset allocation is a very conservative 40/60 or a 30/70 it is better than cash.

As Bolderboy mentioned, this opinion is given in a complete vacuum as well. Your age, risk tolerance, portfolio size, employment situation and income stability, debt, etc. all affect your risk tolerance as well.
PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Stuck in limbo

Post by PFInterest »

viewtopic.php?t=6212

clearly you need a very conservative AA
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OZAR
Posts: 118
Joined: Sat Aug 21, 2010 4:06 pm
Location: Las Vegas

Re: Stuck in limbo

Post by OZAR »

Have a plan and stick with it no matter what the market is doing or what you think the market will do - then turn off the news and stop listening to the financial porn.

"Don't just stand there - DO NOTHING!"

Rip the bandaid off and get back in
Topic Author
garyandnanette
Posts: 3
Joined: Sat Jul 29, 2017 1:33 pm

Re: Stuck in limbo

Post by garyandnanette »

Thanks to all for the quick reply.

My age is 63 and my wife is 54. Total account is around $500,000 with around $250,000 in Roth IRAs and the rest in cash.
Retired last year, working part time and living off SS and former income from investment accounts.

Thanks
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arcticpineapplecorp.
Posts: 7018
Joined: Tue Mar 06, 2012 9:22 pm

Re: Stuck in limbo

Post by arcticpineapplecorp. »

welcome to the forum.

Are you saying the $250,000 in the Roth was entirely invested in the stock market and now it's all in cash (along with the other $250,000 in cash)?

If so, you had a 50/50 portfolio (half in stock and half in cash) but are now 0/100.

If this is correct, you're wondering if you should go back to 50/50?

have you looked at the following to see how different allocations have performed in the past?:

https://personal.vanguard.com/us/insigh ... llocations

Past returns are no guarantee of future results, but sometimes looking at the percentage gains/losses of actual portfolios (different allocations) can give you some idea of how much risk/return different allocations had in the past and can help you figure out how conservative/moderate/agressive to be now. You might want to reduce the generous returns past allocations have provided considering bond yields are lower than average in the past and stock valuations are higher than average in the past.

By the way, every day presents situations/news you can choose to respond to, or preferably not to respond to. Hopefully you've learned a couple of valuable lessons from this experience:

1. nobody knows nuthin (lots of talking heads out there, most of which are not adding value and you should not act on news or opinions)
2. you can't always tell how the market will move based on news so it's best to stay the course. Failure to do so maximizes the odds of you underperforming the market. It's time in the market, not timing the market that matters.

Does that help?
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Topic Author
garyandnanette
Posts: 3
Joined: Sat Jul 29, 2017 1:33 pm

Re: Stuck in limbo

Post by garyandnanette »

Yes that does help. Was worried that as the market is at a all time high is it prudent to invest at this time.
Thank you
retiredjg
Posts: 42769
Joined: Thu Jan 10, 2008 12:56 pm

Re: Stuck in limbo

Post by retiredjg »

An asset allocation (stock to bond ratio) needs to be like a spouse - something you can live with in both the good times and the bad times. You apparently did not have that.

Now that you know that what you had last year was too aggressive for you to tolerate what you thought would be bad times, do you have a new number in mind? If not, you need to come up with something and it should probably be less aggressive than what you had.

When you find your number, it is better most of the time to just go all in. Some people cannot do that. So get it all back in within 6 months by making a plan to invest a certain amount each week and do not deviate from that plan one bit....except to put more in if the market takes a dip or if you just get a notion to speed it up.

You've seen what predicting the market can do - it's gone up a noticeable amount while you've been sitting on the sidelines. And there is absolutely no logic to it. Considering the turmoil that the government has been in this year, one would have thought the market would be timid not bold. It's a complete mystery.

Quit trying to figure it out and invest in a way you can live with no matter what happens.
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