Retirement [what moves to make to reduce risk]

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WSJ1955
Posts: 2
Joined: Wed Nov 07, 2018 3:34 pm

Retirement [what moves to make to reduce risk]

Post by WSJ1955 » Wed Nov 07, 2018 3:45 pm

Moving into retirement with intention to shift to a more conservative allocation in my portfolio between stocks, bonds and cash. Would also like to reduce significantly individual stock exposure. Looking for ideas on how to fill out the stock and bond exposure elements. Mutual funds? Individual bonds or bond funds?
Appreciate the help

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ruralavalon
Posts: 14080
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Retirement [what moves to make to reduce risk]

Post by ruralavalon » Wed Nov 07, 2018 5:10 pm

Welcome to the forum :) .

WSJ1955 wrote:
Wed Nov 07, 2018 3:45 pm
Moving into retirement with intention to shift to a more conservative allocation in my portfolio between stocks, bonds and cash. Would also like to reduce significantly individual stock exposure. Looking for ideas on how to fill out the stock and bond exposure elements. Mutual funds? Individual bonds or bond funds?
Appreciate the help
In general I favor mutual funds.

In general strive for a combination of broad diversification (to reduce risk) and low expense ratios (to increase your net gain). To simply and easily achieve those two goals I suggest choosing funds to simulate the very well diversified, low expense ratio "three-fund portfolio". Wiki article "Three-fund portfolio". Forum discussion, "The Three-Fund Portfolio".

For some general principles, please see the wiki article, "Bogleheads® investment philosophy".

A lot depends on what types of accounts you use, and what the available choices are. If you want specific ideas on what you might do, then its necessary to have specifics from you. Please see this for information needed and format: "Asking Portfolio Questions". You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

WSJ1955
Posts: 2
Joined: Wed Nov 07, 2018 3:34 pm

Re: Retirement [what moves to make to reduce risk]

Post by WSJ1955 » Wed Nov 07, 2018 8:07 pm

Thank you. I will get it organized and come back. Appreciate the help.

delamer
Posts: 6272
Joined: Tue Feb 08, 2011 6:13 pm

Re: Retirement [what moves to make to reduce risk]

Post by delamer » Wed Nov 07, 2018 9:52 pm

Here are some other portfolio ideas: https://www.bogleheads.org/wiki/Lazy_portfolios

Grt2bOutdoors
Posts: 19322
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Retirement [what moves to make to reduce risk]

Post by Grt2bOutdoors » Wed Nov 07, 2018 10:35 pm

Put enough in fixed income such that you can sleep at night if the stock market were to take a 5-10 year holiday beginning next month before reopening.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

GmanJeff
Posts: 168
Joined: Sun Jun 11, 2017 7:12 am

Re: Retirement [what moves to make to reduce risk]

Post by GmanJeff » Thu Nov 08, 2018 8:46 am

I just retired a few weeks ago, and in preparation not only ensured my portfolio was constructed properly for my needs and risk tolerance going forward, but also took action to be prepared for a potential future decline in my level of interest or ability with respect to managing it. That is, I have observed that increasing age can have subtle and insidious effects on one's ability to remain consistently attentive to one's investments.

To that end, I updated estate planning and associated documents like powers of attorney, simplified and mostly consolidated my various investments by moving those which could be moved to Vanguard, and considered how best to be prepared for a time when I might not even be aware that I am not paying the attention I should to my investments and/or am no longer making optimal decisions with respect to them.

More directly to your question, you'll likely find that well-chosen mutual funds will provide you with the best balance of return and volatility as compared to the risks inherent in individual equities or bonds. Of course, a necessary first step will be to articulate your objectives and timelines, as it's not possible to know what investment vehicles will be most suitable without knowing what you're trying to accomplish, with how much risk, over what time lines.

billfromct
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Joined: Tue Dec 03, 2013 9:05 am

Re: Retirement [what moves to make to reduce risk]

Post by billfromct » Thu Nov 08, 2018 9:17 am

I will start RMDs next year & set up my IRA fixed income allocation at about 10 years of my last year's working salary. This fixed income allocation equals 11 or 12 years of RMDs.

My total IRA allocation is about 62%/38% stocks/fixed income.

My IRA fixed income allocation is:
*Money Market:. 40%
*ST Bond:. 35% (about 2.5 year duration)
*Intermediate Bond:. 25% (about 5 or 6 year duration)

The bond funds are corporate bonds.

Once interest rates stabilize, probably in 2020, I will probably move to a 40% ST/60% Intermediate fixed income allocation in my IRA.

My RMD will be taken out of my ST Bond fund every January, to get it out of the way, put in my Vanguard MM fund then transfer to my checking account every month or as needed.

bill

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