Safe investments for a declining market

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
stultus
Posts: 6
Joined: Wed Nov 08, 2017 1:44 pm

Safe investments for a declining market

Post by stultus » Wed Nov 08, 2017 4:27 pm

I know you are not supposed to try and "time" the market, but what is a good place to put your money if you think the market is going to go on a decline?
If you thought there was going to be a decline, but didn't want to pull all your investments out into cash funds what would you do? Re allocate into more bonds?

I am 37 years old and put 6% into a standard 401k and 4% into a Roth with a 5% company match. This goes into a mass mutual account the company uses. I plan to move a large chunk of the money from my mass mutual account into my vanguard account soon.
I put ~1500$ a year into an HSA account for future medical needs.
I have small investments in cryptos and very small investments in Betterment taxable accounts.

My Vanguard account has the majority of my retirement money in it and its spread out over:

VMGMX Vanguard Mid-Cap Growth Index Fund Admiral Shares ~13.5%

VSMAX Vanguard Small-Cap Index Fund Admiral Shares ~ 13%

VBTLX Vanguard Total Bond Market Index Fund Admiral Shares ~9.5%

VTABX Vanguard Total International Bond Index Fund Admiral Shares ~6%

VTIAX Vanguard Total International Stock Index Fund Admiral Shares ~25%

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares ~33%

Its roughly 85% stocks and 15.5% bonds.

If I am also trying to put some money aside to build up a rainy day fund, pay off some debt, and possibly invest in a rental property. Is it worthwhile to slow my investments for a couple months as long as its being redirected toward another investment or debt pay down? I would not drop it very much, but if we are at the top of a market it doesn't make much sense to keep dumping money in.

thoughts/suggestions/gentle constructive criticism?

User avatar
jotun
Posts: 55
Joined: Wed Sep 25, 2013 12:30 pm

Re: Safe investments for a declining market

Post by jotun » Wed Nov 08, 2017 5:19 pm

Hi stultus, and welcome!

Could you please provide a little more info about your accounts, using Asking Porfolio Questions as a template? It's not clear what Vanguard account you're referring to. Is it your 401k, Roth IRA, or taxable?

It sounds like you don't yet have an emergency fund, and you also have debt. These should be the first action areas. Would you mind sharing more info about your debt?

The basis for your question about market timing indicates that you need to spend some time thinking about your true risk tolerance. Have you considered creating an Investment Policy Statement (IPS)? You should determine what allocation will let you sleep well at night, and stick to the plan.

I would argue that once you've determined a realistic risk tolerance, your question about market timing will become less relevant. Why? Because no one can predict the future. How would you feel if tomorrow you exchanged a sizable chunk of your stocks into bonds or cash, and the market continues to go up for the next 5 years? Would you regret missing out on those gains? Unless you're a prophet, it's very difficult (read: impossible) to successfully time the market.

dbr
Posts: 24196
Joined: Sun Mar 04, 2007 9:50 am

Re: Safe investments for a declining market

Post by dbr » Wed Nov 08, 2017 5:25 pm

The first answer to what is a safe place if you think the stock market is going to decline is to not be invested in stocks. That solves that problem as all investments that are not stocks are safe from declines in the stock market. If you have also decided that you don't want to be in cash, then you can invest in bonds, gold, apartment houses, timberland, etc. A stock answer is that you should rethink cash as CDs are probably just as good as bonds right now. The other stuff is just a risky as stocks more or less.

A second answer is you should rethink why you should even be thinking the stock market is going to decline. It is a certainty the market is going to decline but your ability to know when is pretty much zero. A better approach is to set an asset allocation that balances your need for return with your ability and willingess to take risk and then stick to that allocation.

Otherwise, I am not sure I understand what you are asking.

JBTX
Posts: 1723
Joined: Wed Jul 26, 2017 12:46 pm

Re: Safe investments for a declining market

Post by JBTX » Wed Nov 08, 2017 5:49 pm

What is safe if market is declining? Depends on the reason for decline. Maybe bonds but definitely not in a “stagflation” scenario.

Most here will tell you not to market time and I whole heartedly agree. However you are correct to be at least concerned with high market valuations.

Will the market “crash” soon? No idea. I don’t know. You don’t know. Will market returns the next 10-20 years be below normal? Again don’t know but pretty likely.

So what to do? Maybe change your allocations to the low end of generally accepted “reasonable”
Allocations for your age. Instead of 85% stocks, maybe 60-65% stocks. For a 35 year old 85-% is an aggressive allocation. 65% is a conservative allocation.

However if you are going to invest you have to convince yourself that

1. For the long term I should have stocks or else my portfolio returns won’t beat inflation.
2. Most fund managers have no special ability to predict the future. That means you nor I certainly don’t.
3. In the future my portfolio can and will go down, maybe a lot, from time to time. I can live with that and look at it as an opportunity to buy cheap.

Evidence supports 1,2 and 3 but if you can’t embrace it you are destined to buy high and sell low, which is what most stock market investors do.

User avatar
Sandtrap
Posts: 2788
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳

Re: Safe investments for a declining market

Post by Sandtrap » Wed Nov 08, 2017 6:57 pm

stultus wrote:
Wed Nov 08, 2017 4:27 pm
I know you are not supposed to try and "time" the market, but what is a good place to put your money if you think the market is going to go on a decline?
If you thought there was going to be a decline, but didn't want to pull all your investments out into cash funds what would you do? Re allocate into more bonds?
. . . . .
Its roughly 85% stocks and 15.5% bonds.
. . . .
If I am also trying to put some money aside to build up a rainy day fund, pay off some debt, and possibly invest in a rental property. Is it worthwhile to slow my investments for a couple months as long as its being redirected toward another investment or debt pay down? I would not drop it very much, but if we are at the top of a market it doesn't make much sense to keep dumping money in.

thoughts/suggestions/gentle constructive criticism?
RE: market timing and allocation
The simple elegance of "Bogleheadedness" is an approach toward investment finance that does well when the market is "up" and endures when it is down -- providing one has established a solid IPS and the resultant portfolio allocation that "fits you". Folks can suggest based on the quantifiables, but not the temperament (sleep factor).

One of the tests to see if your chosen allocation "fits you" is if you are confident in your portfolio in all market conditions. This is where "age in bonds" becomes a gray area starting point. The fact that you are considering making changes in the face of potential (who knows) market decline means you should perhaps take a comprehensive look at your financial setup. And, perhaps adjust for "sleep factor".

I would re-evaluate my IPS and chosen allocation and distribution of funds. Then, simplify and solidify all of my positions to weather any storm and also to take advantage of favorable market conditions.
As per "Boglehead basics", minimize debt, have adequate emergency funds, and so forth.'

I hope this is actionable information that is helpful to you, and gives you pause for thought.
J. :D
Last edited by Sandtrap on Thu Nov 09, 2017 9:28 am, edited 1 time in total.

pkcrafter
Posts: 12172
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Safe investments for a declining market

Post by pkcrafter » Wed Nov 08, 2017 8:09 pm

Welcome stultus,


stultus wrote:
Wed Nov 08, 2017 4:27 pm
I know you are not supposed to try and "time" the market, but what is a good place to put your money if you think the market is going to go on a decline?
We don't advocate market timing because it actually ends up reducing your long term returns. Having said that, your asset allocation is pretty aggressive. Many here would suggest no more than 80% in stocks, and in your case even that is aggressive because you are overweight in mid and small.
If you thought there was going to be a decline, but didn't want to pull all your investments out into cash funds what would you do? Re allocate into more bonds?

In your case, maybe reducing your AA to 70-75% stock will reduce your jitters. So, yes, more bonds, but not just for current market conditions.
I am 37 years old and put 6% into a standard 401k and 4% into a Roth with a 5% company match. This goes into a mass mutual account the company uses.
What funds are you holding in the 401k?
I plan to move a large chunk of the money from my mass mutual account into my vanguard account soon.
Are you sure your company allows this?
I put ~1500$ a year into an HSA account for future medical needs.

What is in the HSA?
My Vanguard account has the majority of my retirement money in it and its spread out over:

VMGMX Vanguard Mid-Cap Growth Index Fund Admiral Shares ~13.5%

VSMAX Vanguard Small-Cap Index Fund Admiral Shares ~ 13%

VBTLX Vanguard Total Bond Market Index Fund Admiral Shares ~9.5%

VTABX Vanguard Total International Bond Index Fund Admiral Shares ~6%

VTIAX Vanguard Total International Stock Index Fund Admiral Shares ~25%

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares ~33%
This looks good, but as I mentioned, the overweight in mid and small adds some additional risk. You might keep the 'tilt' but reduce equity to a more comfortable level.
If I am also trying to put some money aside to build up a rainy day fund, pay off some debt, and possibly invest in a rental property. Is it worthwhile to slow my investments for a couple months as long as its being redirected toward another investment or debt pay down? I would not drop it very much, but if we are at the top of a market it doesn't make much sense to keep dumping money in.

Having an emergency fund is important, so you should work on that. Debt?

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

User avatar
Alexa9
Posts: 469
Joined: Tue Aug 30, 2016 9:41 am

Re: Safe investments for a declining market

Post by Alexa9 » Wed Nov 08, 2017 8:12 pm

I like Ally Savings Accounts and CD's.
I wouldn't time the market with your allocation but you can certainly increase your bonds if it helps you sleep at night.

stultus
Posts: 6
Joined: Wed Nov 08, 2017 1:44 pm

Re: Safe investments for a declining market

Post by stultus » Thu Nov 09, 2017 9:42 am

I have been lurking for a while now, but never posted anything. This is such an incredible forum. Thank you all for the responses and shared wisdom.
stultus wrote:
Wed Nov 08, 2017 4:27 pm
I know you are not supposed to try and "time" the market, but what is a good place to put your money if you think the market is going to go on a decline?
We don't advocate market timing because it actually ends up reducing your long term returns. Having said that, your asset allocation is pretty aggressive. Many here would suggest no more than 80% in stocks, and in your case even that is aggressive because you are overweight in mid and small.
I need to get a better understanding of how to balance out and get to a position where as sandtrap said "does well when the market is "up" and endures when it is down". I wouldn't have a problem with seeing the value decline significantly if I thought I was in a good position to minimize loss, but not completely limit gains when the market recovers.
If you thought there was going to be a decline, but didn't want to pull all your investments out into cash funds what would you do? Re allocate into more bonds?

In your case, maybe reducing your AA to 70-75% stock will reduce your jitters. So, yes, more bonds, but not just for current market conditions.
I am 37 years old and put 6% into a standard 401k and 4% into a Roth with a 5% company match. This goes into a mass mutual account the company uses.
What funds are you holding in the 401k?
I will follow what jotun asked and try to repost a more complete picture.
I plan to move a large chunk of the money from my mass mutual account into my vanguard account soon.
Are you sure your company allows this?
I have done this with past employers, but I have not tried with this employer. I will have to look into that. Its a mass mutual account 401k. I was going to leave what they consider the minimal amount to maintain and account and keep adding to it to get the match.
I put ~1500$ a year into an HSA account for future medical needs.
What is in the HSA?

Tax free savings that can be spent on medical tax free and kept year to year.
Cut and past from healthcare.org -->A type of savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. A Health Savings Account can be used only if you have a High Deductible Health Plan (HDHP).
High-deductible plans usually have lower monthly premiums than plans with lower deductibles. By using the untaxed funds in an HSA to pay for expenses before you reach your deductible and other out-of-pocket costs like copayments, you reduce your overall health care costs.
HSA funds roll over year to year if you don't spend them. An HSA may earn interest.d
My Vanguard account has the majority of my retirement money in it and its spread out over:

VMGMX Vanguard Mid-Cap Growth Index Fund Admiral Shares ~13.5%

VSMAX Vanguard Small-Cap Index Fund Admiral Shares ~ 13%

VBTLX Vanguard Total Bond Market Index Fund Admiral Shares ~9.5%

VTABX Vanguard Total International Bond Index Fund Admiral Shares ~6%

VTIAX Vanguard Total International Stock Index Fund Admiral Shares ~25%

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares ~33%
This looks good, but as I mentioned, the overweight in mid and small adds some additional risk. You might keep the 'tilt' but reduce equity to a more comfortable level.
I agree with this and was thinking about this. I also need to really get an idea of how to diversify this and my mass mutual 401k as a whole.
If I am also trying to put some money aside to build up a rainy day fund, pay off some debt, and possibly invest in a rental property. Is it worthwhile to slow my investments for a couple months as long as its being redirected toward another investment or debt pay down? I would not drop it very much, but if we are at the top of a market it doesn't make much sense to keep dumping money in.
Having an emergency fund is important, so you should work on that. Debt?
I have my "emergency fund" to about half where it needs to be for 6 months of coverage. That is a big focus right now. We have some debt from school loans that are minimal monthly payments at low interest rates. I have a used car payment that I am working on ( I sold my newer car and bought an older used car and have no payment on the wifes car). We have what I would consider a small of amount of "junk" debt that will be paid off within the next 3-4 months. That will leave us with house payments, student loan payments, and the minimal car payment.

Paul
[/quote]

stultus
Posts: 6
Joined: Wed Nov 08, 2017 1:44 pm

Re: Safe investments for a declining market

Post by stultus » Thu Nov 09, 2017 11:15 am

Emergency funds: roughly 3 -4 months.

Debt: mortgage 3.65% interest remaining at about 77% of home value
student loans varied interest but pretty low. Still a few years to pay them off.
car loan - 11k$ new loan that allowed me to sell my newer car for a used car. 3% interest - Plan to pay this down with about a 50% more payment
credit card debt - roughly 3k$ that in December will change from 0% to 13.5% - This should be paid off by Jan-Feb time frame

Tax Filing Status: Married filing jointly
Tax Rate: xx% Federal, xx% State
State of Residence:VA

Age: 37

Desired Asset allocation: unsure. I had previously gone for very aggressive. I would like to remain somewhat aggressive, but limit my risk in what I feel is a market that may take a large and extended dip.
Desired International allocation: unsure.

--IRA account with Vanguard ~mid 100s$. I do not currently put money into this. These are all admiral shares so the fees are all less than 0.12%
My Vanguard account has the majority of my retirement money in it and its spread out over:
VMGMX Vanguard Mid-Cap Growth Index Fund Admiral Shares ~13.5%
VSMAX Vanguard Small-Cap Index Fund Admiral Shares ~ 13%
VBTLX Vanguard Total Bond Market Index Fund Admiral Shares ~9.5%
VTABX Vanguard Total International Bond Index Fund Admiral Shares ~6%
VTIAX Vanguard Total International Stock Index Fund Admiral Shares ~25%
VTSAX Vanguard Total Stock Market Index Fund Admiral Shares ~33%
Its roughly 85% stocks and 15.5% bonds.

--My Mass Mutual account for my company 401k ~mid 50s$. I put 6% into 401k and 4% in Roth. Company match is 4%. I only have about ~5k$ in the roth so far. I just started this year. I have been looking into other ways to invest using this $. For example as down payments on real estate through a self directed IRA. I have been ultra busy at work lately so I haven't made it very far with that.
Guaranteed Stable Value 4.50 %
JP Morgan Small Cap Value Fund Small Cap Value 17.92 % expense =Net 1.00%
MassMutual Select Mid Cap Growth Fund Mid Cap Growth 5.13 % expense = Net .73%
Select T. Rowe Price Loomis Sayles Blue Chip Growth Fund Large Cap Growth 5.51 % expense=Net .66%
MFS International New Discovery Fund Intl/Global Small/Mid Cap 10.69 % expense=Net .96%
MFS Value Fund Large Cap Value 4.86 % expense=Net .86%
Oppenheimer Discovery Fund Small Cap Growth 5.32 % expense=Net .87%
Oppenheimer Global Fund Intl/Global Large Growth 22.03 % expense=Net .90%
Vanguard 500 Index Fund Large Cap Core 10.09 % expense= Net .04%
Wells Fargo Special Mid Cap Value Fund Mid Cap Value 13.95 % expense=Net .77%

I have roughly ~2k in crypto currencies right now.
I have less than 1k$ in a betterment taxable account.

My wife has a very small annuity ~25k$ with northwestern mutual but that is it. We just started a betterment account for her.

stultus
Posts: 6
Joined: Wed Nov 08, 2017 1:44 pm

Re: Safe investments for a declining market

Post by stultus » Wed Nov 22, 2017 12:43 pm

bump! I also found out that my company will not allow me to move my money out of mass mutual into vanguard without a 10% fee so its not going anywhere.

User avatar
Hawaiishrimp
Posts: 322
Joined: Tue Apr 14, 2015 4:13 am

Re: Safe investments for a declining market

Post by Hawaiishrimp » Wed Nov 22, 2017 1:28 pm

I suggest to keep buying index fund rain or shine. It's the consistence that gets us there to the finish line. If you insist, do it with your fun money, CostCo was doing really great during the last 2008 meltdown. Food for thoughts. Nobody knows what the future holds.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

TomCat96
Posts: 446
Joined: Sun Oct 18, 2015 12:18 pm

Re: Safe investments for a declining market

Post by TomCat96 » Wed Nov 22, 2017 1:54 pm

stultus wrote:
Wed Nov 08, 2017 4:27 pm
I know you are not supposed to try and "time" the market, but what is a good place to put your money if you think the market is going to go on a decline?
If you thought there was going to be a decline, but didn't want to pull all your investments out into cash funds what would you do? Re allocate into more bonds?

I am 37 years old and put 6% into a standard 401k and 4% into a Roth with a 5% company match. This goes into a mass mutual account the company uses. I plan to move a large chunk of the money from my mass mutual account into my vanguard account soon.
I put ~1500$ a year into an HSA account for future medical needs.
I have small investments in cryptos and very small investments in Betterment taxable accounts.

My Vanguard account has the majority of my retirement money in it and its spread out over:

VMGMX Vanguard Mid-Cap Growth Index Fund Admiral Shares ~13.5%

VSMAX Vanguard Small-Cap Index Fund Admiral Shares ~ 13%

VBTLX Vanguard Total Bond Market Index Fund Admiral Shares ~9.5%

VTABX Vanguard Total International Bond Index Fund Admiral Shares ~6%

VTIAX Vanguard Total International Stock Index Fund Admiral Shares ~25%

VTSAX Vanguard Total Stock Market Index Fund Admiral Shares ~33%

Its roughly 85% stocks and 15.5% bonds.

If I am also trying to put some money aside to build up a rainy day fund, pay off some debt, and possibly invest in a rental property. Is it worthwhile to slow my investments for a couple months as long as its being redirected toward another investment or debt pay down? I would not drop it very much, but if we are at the top of a market it doesn't make much sense to keep dumping money in.

thoughts/suggestions/gentle constructive criticism?
The problem with your question is that you are making a bet whose parameters are ambiguous. If you want to re-adjust your portfolio to protect yourself in a declining market, the type of readjustment you make depends on the kind of decline we're talking about. How big of a decline? When will the decline occur? Will it be global assets, or just the stock market?

If I were to adjust my portfolio to protect again a stock market crash next year, I would probably put it into cash.
If I were to adjust my portfolio to protect against a prolonged period of stagnation (say 5 years), I'd probably put my money into bonds.

Ambiguities aside, it sounds like building a rainy day fund would be perfect for you. It's something you want to do anyway, it would free up capital for potential property purchases, and it would lower your overall portfolio risk from downturns in the stock market. Short term bond funds would be suitable for your rainy day fund/de-risking in the market.

User avatar
Earl Lemongrab
Posts: 3131
Joined: Tue Jun 10, 2014 1:14 am

Re: Safe investments for a declining market

Post by Earl Lemongrab » Wed Nov 22, 2017 3:34 pm

stultus wrote:
Wed Nov 22, 2017 12:43 pm
bump! I also found out that my company will not allow me to move my money out of mass mutual into vanguard without a 10% fee so its not going anywhere.
From what you described, that is an active 401(k) and you are 37. So the law prohibits taking that money out unless it's for a hardship, so you couldn't roll it over even if you wanted to. The 10% would be the tax penalty, not a fee from the plan.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

User avatar
TheTimeLord
Posts: 4897
Joined: Fri Jul 26, 2013 2:05 pm

Re: Safe investments for a declining market

Post by TheTimeLord » Wed Nov 22, 2017 4:45 pm

stultus wrote:
Wed Nov 08, 2017 4:27 pm
I know you are not supposed to try and "time" the market, but what is a good place to put your money if you think the market is going to go on a decline?
If you thought there was going to be a decline, but didn't want to pull all your investments out into cash funds what would you do? Re allocate into more bonds?
So you think stocks are going to be loser so you want little losers instead of big losers? If "I" was sure or at least convinced that the market was going to broadly decline I would want to reduce my exposure to the market, not play games with that exposure. This kind of thinking can really eat at you. My suggestion is you focus on managing risk, use the appropriate risk tolerance for your personality, and not focus on maximizing return because that rarely works.
Run, You Clever Boy! 8723

stultus
Posts: 6
Joined: Wed Nov 08, 2017 1:44 pm

Re: Safe investments for a declining market

Post by stultus » Wed Nov 22, 2017 11:06 pm

Earl Lemongrab wrote:
Wed Nov 22, 2017 3:34 pm
stultus wrote:
Wed Nov 22, 2017 12:43 pm
bump! I also found out that my company will not allow me to move my money out of mass mutual into vanguard without a 10% fee so its not going anywhere.
From what you described, that is an active 401(k) and you are 37. So the law prohibits taking that money out unless it's for a hardship, so you couldn't roll it over even if you wanted to. The 10% would be the tax penalty, not a fee from the plan.
I was going to roll it into another 401k or Ira account. You can always do that if meet the criteria apparently.. 59.5 years of age, moving to a different company or take the 10 percent penalty.


I have rolled several other employee 401ks into this vanguard account,but I did it after leaving

User avatar
CyclingDuo
Posts: 931
Joined: Fri Jan 06, 2017 9:07 am

Re: Safe investments for a declining market

Post by CyclingDuo » Wed Nov 22, 2017 11:52 pm

stultus wrote:
Wed Nov 08, 2017 4:27 pm
I know you are not supposed to try and "time" the market, but what is a good place to put your money if you think the market is going to go on a decline?
If you thought there was going to be a decline, but didn't want to pull all your investments out into cash funds what would you do? Re allocate into more bonds?
Hmmmm......let's see:

Image

User avatar
Earl Lemongrab
Posts: 3131
Joined: Tue Jun 10, 2014 1:14 am

Re: Safe investments for a declining market

Post by Earl Lemongrab » Thu Nov 23, 2017 1:29 am

stultus wrote:
Wed Nov 22, 2017 11:06 pm
Earl Lemongrab wrote:
Wed Nov 22, 2017 3:34 pm
From what you described, that is an active 401(k) and you are 37. So the law prohibits taking that money out unless it's for a hardship, so you couldn't roll it over even if you wanted to. The 10% would be the tax penalty, not a fee from the plan.
I was going to roll it into another 401k or Ira account. You can always do that if meet the criteria apparently.. 59.5 years of age, moving to a different company or take the 10 percent penalty.
Yes, yes, and no. You can distribute when you are 59-1/2 (if the plan allows), but you are not. You can distribute if you leave service, but you are still employed. But you can't just take it out with a 10% penalty, unless it's for an approved hardship and that is not an eligible rollover distribution.
I have rolled several other employee 401ks into this vanguard account,but I did it after leaving
Which is fine. But different situations that this.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

stultus
Posts: 6
Joined: Wed Nov 08, 2017 1:44 pm

Re: Safe investments for a declining market

Post by stultus » Thu Nov 23, 2017 7:35 am

Earl Lemongrab wrote:
Thu Nov 23, 2017 1:29 am
stultus wrote:
Wed Nov 22, 2017 11:06 pm
Earl Lemongrab wrote:
Wed Nov 22, 2017 3:34 pm
From what you described, that is an active 401(k) and you are 37. So the law prohibits taking that money out unless it's for a hardship, so you couldn't roll it over even if you wanted to. The 10% would be the tax penalty, not a fee from the plan.
I was going to roll it into another 401k or Ira account. You can always do that if meet the criteria apparently.. 59.5 years of age, moving to a different company or take the 10 percent penalty.
Yes, yes, and no. You can distribute when you are 59-1/2 (if the plan allows), but you are not. You can distribute if you leave service, but you are still employed. But you can't just take it out with a 10% penalty, unless it's for an approved hardship and that is not an eligible rollover distribution.
I have rolled several other employee 401ks into this vanguard account,but I did it after leaving
Which is fine. But different situations that this.
You can "roll it over" to another 401k if you take that 10 percent hit.. I wasn't trying to pull it out of a tax deferred account. Just move it to another one with vanguard... But it doesn't matter it's not worth the hit anyway. Thanks for all the replies. This is a great forum and I have lots to learn.

User avatar
ruralavalon
Posts: 11907
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Safe investments for a declining market

Post by ruralavalon » Thu Nov 23, 2017 7:59 am

Welcome to the forum :) .

stultus wrote:
Wed Nov 08, 2017 4:27 pm
I know you are not supposed to try and "time" the market, but what is a good place to put your money if you think the market is going to go on a decline?
If you thought there was going to be a decline, but didn't want to pull all your investments out into cash funds what would you do? Re allocate into more bonds?

I am 37 years old and put 6% into a standard 401k and 4% into a Roth with a 5% company match. This goes into a mass mutual account the company uses. I plan to move a large chunk of the money from my mass mutual account into my vanguard account soon.
I put ~1500$ a year into an HSA account for future medical needs.
I have small investments in cryptos and very small investments in Betterment taxable accounts.

My Vanguard account has the majority of my retirement money in it and its spread out over:

. . . . .

Its roughly 85% stocks and 15.5% bonds.

If I am also trying to put some money aside to build up a rainy day fund, pay off some debt, and possibly invest in a rental property. Is it worthwhile to slow my investments for a couple months as long as its being redirected toward another investment or debt pay down? I would not drop it very much, but if we are at the top of a market it doesn't make much sense to keep dumping money in.

thoughts/suggestions/gentle constructive criticism?
Of course the stock market will decline, someday. The question is when.

Market timing is a fool's errand. No one can successfully do that consistently. Besides guessing when the stock market top has occurred, you have to guess again when the bottom has occurred in order to reenter the stock market. Otherwise you miss the bargain prices at the market bottom, and miss the benefit of the recovery.

If you wait for a good day to buy, you will never know if the next day, next week or next month might be better to buy.

It was always my policy to invest whenever I had extra money available to invest.

Please read this: "What if you only invested at market peaks?"

. . . . .

Just choose a reasonable asset allocation that you can use in any market conditions, and then stick with it.

At age 37 I suggest about 20 - 25% in bonds. This is expected to substantially reduce volatility (risk), with only a relatively slight decrease in return. Graph, "An Efficient Frontier: the power of diversification". Please see the wiki articles Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk", and "Asset allocation".

Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

User avatar
Earl Lemongrab
Posts: 3131
Joined: Tue Jun 10, 2014 1:14 am

Re: Safe investments for a declining market

Post by Earl Lemongrab » Thu Nov 23, 2017 11:14 am

stultus wrote:
Thu Nov 23, 2017 7:35 am
You can "roll it over" to another 401k if you take that 10 percent hit.. I wasn't trying to pull it out of a tax deferred account. Just move it to another one with vanguard... But it doesn't matter it's not worth the hit anyway. Thanks for all the replies. This is a great forum and I have lots to learn.
No. For employee deferrals or Roth contributions you are prohibited by law from taking a distribution that you can roll over. Seriously, the LAW does not permit it.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

Post Reply