Asset Allocation Change - 4 Years from Retirement

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bgyt
Posts: 15
Joined: Sat Jun 16, 2018 8:20 am

Asset Allocation Change - 4 Years from Retirement

Post by bgyt » Thu Jun 21, 2018 11:46 am

Any comments/thoughts on my Asset Allocation move below:

Retirement Date: 4 years out
From: 100% U.S. and International Stocks
To: 60% Bond Fund, 40$ U.S. Stocks

Main concern with new allocation is Interest Rate increases over the next year. I am exposed to that in Bonds, but I need a conservative hedge against market volatility/downturn killing my early retirement plan. What to do?

As a note, my Early Retirement Plan requires me to draw heavy from 401K early and utilizing mainly Pension/SS later, so Risk Aversion can't be traded off.

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Asset Allocation Change - 4 Years from Retirement

Post by delamer » Thu Jun 21, 2018 2:08 pm

Why not more cash, more stocks, less bonds?

MnD
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Re: Asset Allocation Change - 4 Years from Retirement

Post by MnD » Thu Jun 21, 2018 2:13 pm

Do you have a stable value option in your 401-K? Would seem ideal in this situation.
Going from 100% stocks to 40% is a big jump. What's up wit that? I notice a lot of bull market is over news articles lately.
Are those getting to you?

Housedoc
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Re: Asset Allocation Change - 4 Years from Retirement

Post by Housedoc » Thu Jun 21, 2018 3:38 pm

Do you have a pension or taking social security at retirement? My IRA is 85 pct equity funds and 15 pct cash.
I have a pension and am meeting my expenses with it. Also have 600K in taxable brokerage acct as well as emergency cash for a few years. I plan to leave most to kids and government once RMD starts....
You may want to stay a bit more in equities. I am liking VTI for a universal fund to cover me.

bgyt
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Joined: Sat Jun 16, 2018 8:20 am

Re: Asset Allocation Change - 4 Years from Retirement

Post by bgyt » Thu Jun 21, 2018 4:03 pm

OP here: I am Government so my non-equity options are G Fund (Treasuries) or F Fund (Bond Fund), that's really it. I would like to understand which one is better return for preservation and best growth in today's environment (Interest Rates rising over the next 12 months).

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David Jay
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Location: Michigan

Re: Asset Allocation Change - 4 Years from Retirement

Post by David Jay » Thu Jun 21, 2018 5:36 pm

Right now a Short Term Bond fund is paying almost as much as an intermediate term bond fund.

I just put 2 years living expenses (I expect to retire in 2019) into Short Term bonds from the proceeds of a rollover.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

delamer
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Re: Asset Allocation Change - 4 Years from Retirement

Post by delamer » Thu Jun 21, 2018 5:39 pm

bgyt wrote:
Thu Jun 21, 2018 4:03 pm
OP here: I am Government so my non-equity options are G Fund (Treasuries) or F Fund (Bond Fund), that's really it. I would like to understand which one is better return for preservation and best growth in today's environment (Interest Rates rising over the next 12 months).
So you are receiving a deferred annuity?

Put the money you need for the next few years in the G fund. No risk and unusually high return.

bgyt
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Joined: Sat Jun 16, 2018 8:20 am

Re: Asset Allocation Change - 4 Years from Retirement

Post by bgyt » Thu Jun 21, 2018 6:41 pm

Thanks, but I've noticed that the F fund is averaging a couple % more than G Fund. I'm just not sure if that will continue in an raising interest rate environment.

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Asset Allocation Change - 4 Years from Retirement

Post by delamer » Thu Jun 21, 2018 7:48 pm

bgyt wrote:
Thu Jun 21, 2018 6:41 pm
Thanks, but I've noticed that the F fund is averaging a couple % more than G Fund. I'm just not sure if that will continue in an raising interest rate environment.
Well, you said you want a conservative hedge so I am suggesting the G Fund.

Nobody know what is going to happen with interest rates or the F Fund.

Only you can decide if the pain of a theoretical drop in the F Fund is worth investing it in.

Obviously, you can split your allocation between G and F.

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