What to do? Sitting on the bench since October

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Disciple58
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What to do? Sitting on the bench since October

Post by Disciple58 » Wed Apr 24, 2019 3:02 pm

Hello Bogleheads,
I have been passionately saving for retirement for almost 20 years now. I have read the books recommended here and followed "most" of the investing advice including eventually moving all my Vanguard assets into a target retirement 2025 account with a "set and forget" mentality.
However, in October 2018 i decided to move everything into a Vanguard Money Market account as i let my emotions get the best of me. Dow was at 25K at the time.
Now i am faced with the decision of how and when to transfer back in. After yesterday's high, again emotions in high gear and I am wondering what do i do?
I don't want to buy high, but i don't think i should just sit on the sidelines forever waiting for the "right" time to jump back in.
I was considering going back into the 2025 TR fund, but a giant leap of almost 7 figures keeps me up at night.
Would it be best to ease back in at $50K or $100K increments, sort of a dollar cost averaging strategy?
Any direction or insight would be most appreciated. :confused

Thank you,
Mike Mc

retiredjg
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Re: What to do? Sitting on the bench since October

Post by retiredjg » Wed Apr 24, 2019 3:26 pm

No, it is not better to ease back in, but investing it all at once is more than some can tolerate. It sounds like you may be among them.

I suggest you invest about 1/3rd now and get the other 2/3rds back in within 6 months. Make a schedule and stick to it no matter what the market does. This means to invest according to your plan, not make a decision every Friday whether you are going to invest that week or not.

The only acceptable exception to your plan is to invest MORE on a day when you feel like it (like maybe a dip in the market). Investing less than your plan is not an option.

If you were not comfortable with Target 2025 back in October, why do you think that is the place to be now? If you put it in TR 2025 now, what will you do when the market gets frisky again?

Getting out was clearly a poor decision and I'm sure you can see that today. Your challenge now is to invest your money in a way that you can be comfortable with in the good times and in the bad times.

You cannot pick a stock to bond allocation that you are comfortable with in the good times but which you find scary in the bad times. Or you'll make the same bad decision again.

Pulling out of the market was a market timing move. In order for it to work, you also have to know when to get back into the market. As you can see, it is not possible to know when to get out and when to get in until long after those times have passed.

barnaclebob
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Re: What to do? Sitting on the bench since October

Post by barnaclebob » Wed Apr 24, 2019 3:29 pm

You've already outsmarted yourself once. Consider it tuition and put the money back where it was except if you legitimately need to change your asset allocation to sleep at night.

The market may drop 10% on Friday but that's out of your control. Accept that you are terrible at market timing the only control you have is your asset allocation. I'm terrible at market timing too, so is just about everyone else. Its ok. Wanting safety + FOMO is dangerous.

Thesaints
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Re: What to do? Sitting on the bench since October

Post by Thesaints » Wed Apr 24, 2019 3:45 pm

I bet the OP was really happy on Christmas Day...

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Re: What to do? Sitting on the bench since October

Post by Jack FFR1846 » Wed Apr 24, 2019 3:50 pm

All in tomorrow.

On average, we see new market highs every 18 days. Get in now or wait for it to be even higher.

Once you're in, create a new password from random letters and numbers. Write it on a paper. Make the change. Then eat the paper.
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chicagoan23
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Re: What to do? Sitting on the bench since October

Post by chicagoan23 » Wed Apr 24, 2019 3:56 pm

Thesaints wrote:
Wed Apr 24, 2019 3:45 pm
I bet the OP was really happy on Christmas Day...
Indeed. OP, I'm sure you thought that you had made a brilliant call by selling in October and that you would just wait for the end of the crash and put everything back in equities once we were down 50%. As noted repeatedly here, though, it's really hard to guess right once, let alone twice.

I recall in mid-December posters who were bragging that they were 100% in cash or Treasuries and that all of us bag holder buy-and-holds would take decades to recover. Turns out, they were wrong, even more wrong than anyone could have guessed. Conditions changed very fast, and guaranteed interest rate increases turned into likely rate cuts.

You need to learn how to forget what the market is doing. If you are not comfortable putting, say, $1 million into equities, figure out what number you would be comfortable with and then put the rest in bonds. Take money out of the equities market when it makes sense for your personal situation, not because a trend line told you to or because you have a special insight that a recession is coming that the rest of the market is missing.

The sooner you do it, the better. Otherwise you will wait until your pain is too much and miss out on something like another 20% run up from here, and when you finally capitulate you will do it at the worst possible time.

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Re: What to do? Sitting on the bench since October

Post by basspond » Wed Apr 24, 2019 4:12 pm

You didn't have any apprehension of pulling almost 7 figures out at one time? I have talked to several people who kicked themselves for selling during the 2000 and 2008 downturns and not getting back in. Get in soon but not at one time. Stagger in 10% monthly increments. Hopefully the lesson has been learned.

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Re: What to do? Sitting on the bench since October

Post by BarbBrooklyn » Wed Apr 24, 2019 4:12 pm

I'm going to add that if you are not comfortable with the "glide path" of the 2025 TDF, perhaps you should work on what your comfort level is at the current time (50/50? 70/30?) and buying Total Stock and Total Bond funds in those amounts.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."

megabad
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Re: What to do? Sitting on the bench since October

Post by megabad » Wed Apr 24, 2019 4:16 pm

Though it appears you were very lucky and likely came out ahead with this move so far, I would not necessarily count on this luck continuing. If you have more than enough to retire comfortably and you are uncomfortable with the equity exposure in Target Retirement 2025, I might consider investing the funds into Vanguard Target Retirement Income instead. It is quite a bit more conservative and even has a big chunk in TIPS. If such a move would allow you to not panic and stay the course, I think it would be a wise one. I would lump the money in all at once or as fast as you can stomach as soon as you decide on a permanent place for it.

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Toons
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Re: What to do? Sitting on the bench since October

Post by Toons » Wed Apr 24, 2019 4:17 pm

All In.
Time(We all have a limited amount)
Not Timing.



:happy :happy
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JoeRetire
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Re: What to do? Sitting on the bench since October

Post by JoeRetire » Wed Apr 24, 2019 4:20 pm

Disciple58 wrote:
Wed Apr 24, 2019 3:02 pm
in October 2018 i decided to move everything into a Vanguard Money Market account as i let my emotions get the best of me. Dow was at 25K at the time.
Now i am faced with the decision of how and when to transfer back in.
Why? What's different for you emotionally now than it was in October?
After yesterday's high, again emotions in high gear and I am wondering what do i do?
Sounds like nothing has changed emotionally.
Maybe you are better off sitting on cash until you actually figure out your emotions.

You'll lose out on any market gains, just like you did since October. But maybe you'll sleep better at night.
I was considering going back into the 2025 TR fund, but a giant leap of almost 7 figures keeps me up at night.
Would it be best to ease back in at $50K or $100K increments, sort of a dollar cost averaging strategy?
Best for sleeping? Or best financially?
Don't be a lemming.

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LilyFleur
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Re: What to do? Sitting on the bench since October

Post by LilyFleur » Wed Apr 24, 2019 4:23 pm

OMG.
Next time you freak out, check in here first before you take any action.
Or, hire an advisor to invest for you. 1% a year to pay an advisor is better than losing a chunk of change when you get stressed out by the market.

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goingup
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Re: What to do? Sitting on the bench since October

Post by goingup » Wed Apr 24, 2019 4:38 pm

The TR 2025 fund you were in is a 65/35 asset allocation. For 2018 it lost only 7.5% (and only 5% including dividends). In October when you sold, the bad decline hadn't even happened.

If you've been an investor for 20 years you have seen much worse declines. What overtook you this time that made you panic? I think you should think about that and then decide what AA you can stick with. Maybe 50/50 with a big slug of either short-term bonds or MM fund would help.

Orville Tootenbacher
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Re: What to do? Sitting on the bench since October

Post by Orville Tootenbacher » Wed Apr 24, 2019 4:50 pm

so you sold low and are buying high? I do think that you should just find a low fee to have someone manage your money. I would recommend watching The Money Guy show on Youtube. I think if you can find someone with their mindset to help, it will definitely benefit you.

OR

Take you total amount on money & divide it by 26 and just make that investment amount every two weeks. So as the market moves you will buy in highs & lows. Also maybe go with a higher bond allocation, so when the market corrects or crashes you feel it less.

Good luck!
Wait are you actually actually listening to me? I'm just a random person online.

Explorer
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Re: What to do? Sitting on the bench since October

Post by Explorer » Wed Apr 24, 2019 5:06 pm

Disciple58 wrote:
Wed Apr 24, 2019 3:02 pm
Hello Bogleheads,
......
I don't want to buy high, but i don't think i should just sit on the sidelines forever waiting for the "right" time to jump back in.....

Thank you,
Mike Mc
The crux of the matter revolves around your emotional stamina to stay invested in the market, and how close you are to needing the money.

We are talking 7 figure numbers here... tread carefully.. and talk to a credible financial planner to truly assess your risk tolerance and MORE IMPORTANTLY the need to take market risk.

These forums offer educational enrichment - nothing more - PLEASE DO NOT ACT based on what strangers say about how to invest.

Best wishes

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Earl Lemongrab
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Re: What to do? Sitting on the bench since October

Post by Earl Lemongrab » Wed Apr 24, 2019 5:53 pm

megabad wrote:
Wed Apr 24, 2019 4:16 pm
Though it appears you were very lucky and likely came out ahead with this move so far
Umm, no. Even if the OP sold on 10/1, the US market is still slightly up from there. If anywhere else in that month, sigificantly higher.

RCL
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Re: What to do? Sitting on the bench since October

Post by RCL » Wed Apr 24, 2019 6:51 pm

At least the OP has made some pretty good interest in the MM since then
It Is Best To Consult Others Before Taking Unusual Actions

megabad
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Re: What to do? Sitting on the bench since October

Post by megabad » Wed Apr 24, 2019 10:48 pm

Earl Lemongrab wrote:
Wed Apr 24, 2019 5:53 pm
megabad wrote:
Wed Apr 24, 2019 4:16 pm
Though it appears you were very lucky and likely came out ahead with this move so far
Umm, no. Even if the OP sold on 10/1, the US market is still slightly up from there. If anywhere else in that month, sigificantly higher.

Respectfully, remember that Target Retirement 2025 has a large component of bonds. A low cost money market mutual fund would likely have had favorable performance when compared to this fund over this time frame. Luck is not a good reason to pursue this approach though.

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rh00p
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Re: What to do? Sitting on the bench since October

Post by rh00p » Wed Apr 24, 2019 11:34 pm

RCL wrote:
Wed Apr 24, 2019 6:51 pm
At least the OP has made some pretty good interest in the MM since then
Minus taxes, minus inflation? I don't think so.
Preparing for the worst. Hoping for the best.

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rh00p
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Re: What to do? Sitting on the bench since October

Post by rh00p » Wed Apr 24, 2019 11:40 pm

Orville Tootenbacher wrote:
Wed Apr 24, 2019 4:50 pm
Take you total amount on money & divide it by 26 and just make that investment amount every two weeks. So as the market moves you will buy in highs & lows. Also maybe go with a higher bond allocation, so when the market corrects or crashes you feel it less.
This. Though I would do weekly investments via auto pay over the course of 12 months. This will address OP's behavior, right now his biggest detriment.
Preparing for the worst. Hoping for the best.

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Earl Lemongrab
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Re: What to do? Sitting on the bench since October

Post by Earl Lemongrab » Wed Apr 24, 2019 11:51 pm

megabad wrote:
Wed Apr 24, 2019 10:48 pm
Respectfully, remember that Target Retirement 2025 has a large component of bonds. A low cost money market mutual fund would likely have had favorable performance when compared to this fund over this time frame. Luck is not a good reason to pursue this approach though.
It certainly returned less than either the broad market or the target fund you mentioned. Again, the least bad was if you pulled out at the start of October.

Chart 1

If you waited until October 31, it was significantly worse.

Chart 2

I'm still trying to see the luck.

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LiveSimple
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Re: What to do? Sitting on the bench since October

Post by LiveSimple » Thu Apr 25, 2019 2:14 am

Had your lesson, just go all in tomorrow and go have a hobby.
If you want to wait or go in chunks, and the market keeps going up, you are worse of.

You pulled all out, now go all in, set it and forget it.

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Re: What to do? Sitting on the bench since October

Post by NotYourAverageJones » Thu Apr 25, 2019 8:15 am

OP, you did say "almost 7 figures" so I assume we are not talking about millions here. Either way, the amount is irrelevant because its more about your reaction to market fluctuations. What I do agree with is that you need to use this forum as a resource for information. Nobody can tell you how NOT to be an emotional investor. Well they can try, but...good luck! Bottom line: You have to figure out what risk level will help you sleep at night, regardless of the market ups and downs. That said, we sorta know your tolerance to risk...Cut and run when stuff gets scary! Not the most effective strategy, but it's a common emotion for many investors when the market does scary things, just not for the successful ones. :wink:

I agree you need to look into something like TD 2025 Funds or Vanguard Life Strategy Moderate or Conservative Growth Fund? Set it and forget it sounds right up your ally. Because if you are still looking for the right time to get back in, that day was Dec 26, 2018. So the next best day is tomorrow. Just my thoughts... :beer

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Re: What to do? Sitting on the bench since October

Post by Flyer24 » Thu Apr 25, 2019 8:32 am

I think you are in a tough spot. You are still emotional about investing. You hate that you missed out on gains yet you still think it is time to pull out of the market. I imagine the minute that you get back in, then you will be worried about being invested.

Gufomel
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Re: What to do? Sitting on the bench since October

Post by Gufomel » Thu Apr 25, 2019 9:00 am

If you were fully invested today (like in October), would you be selling today?

I know that’s a difficult question to answer honestly and unemotionally, but it’s the question you need to be able to answer.

If the answer is “no, I would not be selling today” then you should invest 100% today at your desired asset allocation.

If the answer is “yes, I would be selling everything today and going to cash” then you should remain in cash. But I don’t think this is what you really want based on your post.

If the answer is “I would sell some today”, then the asset allocation that you had in October is probably not one that you’re comfortable with. But you’re also not comfortable with 100% cash. So you need to determine your actual desired asset allocation and move to that today (or as soon as you determine your desired asset allocation).

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Re: What to do? Sitting on the bench since October

Post by finfire » Thu Apr 25, 2019 9:10 am

Keep it in a high yield savings account? You may be too emotional for investing.

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Re: What to do? Sitting on the bench since October

Post by Beehave » Thu Apr 25, 2019 9:12 am

You dumped 6 months ago when Dow was at 25K and now, a half a year later the Dow is up 4% at 26K. The "average" annual gain o the S&P is about 7%, so what you've experienced is nothing special.

The real issue here is that you were not comfortable with your asset allocation 6 months ago. You need to think about why that was so. The Vanguard 2025 Fund is 62% stock and 38% bond. It self-re-balances which should have removed the anxiety about you having to make rebalancing decisions. So the suspicion becomes that a 62-38 allocation is simply more aggressive than you really want.

One suggestion would be to move to a less aggressive Target Retirement fund, or maybe the Life Strategy Conservative (with its 40-60 allocation) and see if that works for you by convincing yourself that the shifts in stock and bond prices mean that you are auto-rebalancing by buying low and selling high.

Alternatively, if you can deal with the complexity, see if it is emotionally easier on you to bucketize a bit and maybe hold some Target Retirement Income (which adds some TIPS-based inflation protection) plus some cash plus the 2025 fund. Just don't mess with the allocations too much once you've set them - - maybe rebalance among them once annually to a pre-set proportion.

Best wishes.

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Re: What to do? Sitting on the bench since October

Post by bloom2708 » Thu Apr 25, 2019 9:18 am

Op, are you "in cash" in all accounts? 401k/Traditional IRA/Roth/Taxable?

I would get back in, but at 50/50. Stay 50/50

40% Total US (VTSAX)
10% Total International (VTIAX)
50% Int-Term Treasury Index (VSIGX)

If your accounts are in different places, that will affect what funds you have available and where to place items.

If lump sum is scary, then do 1/6th over the next 6 months. Good luck!
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Re: What to do? Sitting on the bench since October

Post by Stinky » Thu Apr 25, 2019 9:23 am

Disciple58 wrote:
Wed Apr 24, 2019 3:02 pm

I was considering going back into the 2025 TR fund, but a giant leap of almost 7 figures keeps me up at night.
Would it be best to ease back in at $50K or $100K increments, sort of a dollar cost averaging strategy?
Any direction or insight would be most appreciated. :confused

Thank you,
Mike Mc
OP, you’ve answered your own question. You want to be back in the market, but don’t have the stomach for “all in, all at one time”.

So follow your gut. Put $100k in the 2025 fund TODAY. Repeat on the 25th of each month going forward. You should be fully invested by early next year.

If it were me, I would go all in today. But OP needs to feel comfortable.
Last edited by Stinky on Thu Apr 25, 2019 9:32 am, edited 1 time in total.
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megabad
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Re: What to do? Sitting on the bench since October

Post by megabad » Thu Apr 25, 2019 9:29 am

Earl Lemongrab wrote:
Wed Apr 24, 2019 11:51 pm
It certainly returned less than either the broad market or the target fund you mentioned.
Your charts indicate the opposite. The return on the Target Fund was very low. My money market (not Vanguard albeit) was running about 2.30-2.4% CAGR during this time period. I guess it is close though.

TaxingAccount
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Re: What to do? Sitting on the bench since October

Post by TaxingAccount » Thu Apr 25, 2019 9:30 am

.....
Last edited by TaxingAccount on Tue Aug 13, 2019 3:08 pm, edited 1 time in total.

-ryan-
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Re: What to do? Sitting on the bench since October

Post by -ryan- » Thu Apr 25, 2019 9:49 am

As others have said, this is a tough one (psychologically, not mathematically). It is a great example of how emotional investing has robbed the average investor of their potential returns, but that doesn't help you right now.

Perhaps it is a good opportunity to step back and ask yourself some serious questions about your level of commitment to investing in equities. There are plenty of retirees who accepted the reality of a necessarily higher savings rate and lower withdrawal amounts for the peace of mind of holding cash, CDs, TIPS, and other 'safe' assets. Or perhaps using a 3 fund approach will be better than an all in one fund in your case because rebalancing might satisfy your desire to do something, rather than selling completely out. I know of some people who even choose to set dollar amount allocations to specific assets rather than using percentages. For example, you might decide 'I always want to keep $X in cash and $X in equities' and the rest swims around in fixed income. It's not a recipe for optimal returns, but neither is trying to let emotions and popular sentiment make your investing decisions for you.

I'm making a lot of assumptions and throwing some simple ideas out here, but unless you truly have learned your lesson from this experience going back all-in on the 2025 fund might not be the right answer. Only you can be the judge in that case.

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Re: What to do? Sitting on the bench since October

Post by grettman » Thu Apr 25, 2019 9:54 am

It is unfortunate that you let your emotions get to you.

If I were in your shoes, I would jump right back in. I wouldn't ease into it at all. I would jump in using an AA that was comfortable with.

But I wouldn't do that until I "solved" the emotional part of this because that will make you fail.

physiorol
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Re: What to do? Sitting on the bench since October

Post by physiorol » Thu Apr 25, 2019 9:58 am

basspond wrote:
Wed Apr 24, 2019 4:12 pm
You didn't have any apprehension of pulling almost 7 figures out at one time? I have talked to several people who kicked themselves for selling during the 2000 and 2008 downturns and not getting back in. Get in soon but not at one time. Stagger in 10% monthly increments. Hopefully the lesson has been learned.
I was guilty of this in 2008 and waited too long to get back in. Eventually i realized the stress of deciding when to come back in was more harmful than any potential lose of value if the market tanked after I made the switch. Easing back in as described above worked for me. I think I moved about 40% back in as a lump and then did the remainder over about 6-9 months.

physiorol
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Re: What to do? Sitting on the bench since October

Post by physiorol » Thu Apr 25, 2019 9:59 am

grettman wrote:
Thu Apr 25, 2019 9:54 am
It is unfortunate that you let your emotions get to you.
Funny, I tell myself this every other day.

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BL
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Re: What to do? Sitting on the bench since October

Post by BL » Thu Apr 25, 2019 10:04 am

This might be a time to use Vanguard PAS to get a conservative AA and keep hands off.
Otherwise Target date income if you can leave it alone.

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Re: What to do? Sitting on the bench since October

Post by Flyer24 » Thu Apr 25, 2019 10:05 am

TaxingAccount wrote:
Thu Apr 25, 2019 9:30 am
Beehave wrote:
Thu Apr 25, 2019 9:12 am
You dumped 6 months ago when Dow was at 25K and now, a half a year later the Dow is up 4% at 26K. The "average" annual gain o the S&P is about 7%, so what you've experienced is nothing special.

The real issue here is that you were not comfortable with your asset allocation 6 months ago. You need to think about why that was so. The Vanguard 2025 Fund is 62% stock and 38% bond. It self-re-balances which should have removed the anxiety about you having to make rebalancing decisions. So the suspicion becomes that a 62-38 allocation is simply more aggressive than you really want.

One suggestion would be to move to a less aggressive Target Retirement fund, or maybe the Life Strategy Conservative (with its 40-60 allocation) and see if that works for you by convincing yourself that the shifts in stock and bond prices mean that you are auto-rebalancing by buying low and selling high.

Alternatively, if you can deal with the complexity, see if it is emotionally easier on you to bucketize a bit and maybe hold some Target Retirement Income (which adds some TIPS-based inflation protection) plus some cash plus the 2025 fund. Just don't mess with the allocations too much once you've set them - - maybe rebalance among them once annually to a pre-set proportion.

Best wishes.
lol what you left out is the fact that the dow is still below where it was in January 2018. I'd keep it in the money market fund and wait for the 2300 retest on the s&p.
Dow is almost identical to where it was in January 2018. Yesterday was only a couple of hundred points near the all time high.
Last edited by Flyer24 on Thu Apr 25, 2019 10:13 am, edited 1 time in total.

cal91
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Re: What to do? Sitting on the bench since October

Post by cal91 » Thu Apr 25, 2019 10:11 am

Your emotions tell you that if there was a sudden drop, to sell (sell low). If there were steady rises in the last couple months, you need to get back in (buy high).

That is a good way to lose money fast! Set it to your appropriate AA considering your risk toleration, and forget it.

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Re: What to do? Sitting on the bench since October

Post by pkcrafter » Thu Apr 25, 2019 10:35 am

Welcome, Mike.
Disciple58 wrote:
Wed Apr 24, 2019 3:02 pm
Hello Bogleheads,
I have been passionately saving for retirement for almost 20 years now. I have read the books recommended here and followed "most" of the investing advice

Most?

including eventually moving all my Vanguard assets into a target retirement 2025 account with a "set and forget" mentality.

Mike, we don't know anything about your situation, so consider posting in this recommended format--

viewtopic.php?f=1&t=6212

I'm suggesting this because it would be helpful in determining if TR 2025 (60% stock) is appropriate/necessary.


However, in October 2018 i decided to move everything into a Vanguard Money Market account as i let my emotions get the best of me. Dow was at 25K at the time.
Now i am faced with the decision of how and when to transfer back in. After yesterday's high, again emotions in high gear and I am wondering what do i do?
I don't want to buy high, but i don't think i should just sit on the sidelines forever waiting for the "right" time to jump back in.
I was considering going back into the 2025 TR fund, but a giant leap of almost 7 figures keeps me up at night.
Would it be best to ease back in at $50K or $100K increments, sort of a dollar cost averaging strategy?
Any direction or insight would be most appreciated. :confused

Additional information might help with planning and strategy.

Paul


Thank you,
Mike Mc
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.

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Re: What to do? Sitting on the bench since October

Post by aristotelian » Thu Apr 25, 2019 10:46 am

OP,
You discovered in October that you have a lower risk tolerance than you thought. You are prone to panic when the market is dropping. You are also discovering now that you have Fear of Missing Out when the market is going up. Those are the two most powerful emotions in investing, and together they can cause you to lose a lot of money. Apparently you were OK with investing for 20 years but something has changed. That is OK. Yes, the psychology of investing can change after 20 years of accumulation.

You haven't told us much about your overall situation. What is your need, ability, and willingness to take risk? You say you have 7 figures accumulated. Do you actually need to take the risk inherent in investing in stocks? Would your retirement be secure if the market were to drop 50%? Maybe you can do just fine in capital preservation mode with a 30% stock portfolio.

Once you figure out your true risk tolerance, pick an allocation and stick to it.

Rus In Urbe
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Re: What to do? Sitting on the bench since October

Post by Rus In Urbe » Thu Apr 25, 2019 10:53 am

grettman wrote:
But I wouldn't do that until I "solved" the emotional part of this because that will make you fail.
+1 Agreed!
The test really comes in a downturn. Happily, we STC'd in 2000 and 2008 (except a $5,000 stock--Motorola--that we unwisely dumped). All these year, deposits were on auto-pilot buying shares, buying shares, buying shares (mostly in the form of index funds); we have made out like bandits.

How did we keep greed/fear at bay?

By remembering that when the market goes down you still have just as many stock shares as you had before.
You have not "lost" anything at all. Grasp this essential concept about investing, and it cures your fear & greed.

Most indexers don't like to talk about shares. I understand. The reluctance may be because of the stupidity around things like "penny stocks," and the (wise) realization of one's inability to assess the true value of a share in an individual company (few of us are Warren Buffetts!)---all good reasoning. Yet, the undeniable fact is that you still are dealing with shares in a company, and your hard-earned dollars buy a fixed number of shares at any one moment. The value of each share is what fluctuates. This, of course, is elementary stuff.

Whether in an index fund or company, whether the market is up or down, you still own as many stock shares as you had before.
(caveat: 2008, Bear Strearns, AIG, some shares totally snuffed, but in an index fund, they are a small portion).

I have found that thinking about shares helps mitigate emotional behavior.
In a downturn, you only lose if you sell your devalued shares--and why the hell would you do that? No, you buy more.
Repeat.
Repeat as needed.

Great advice upthread to OP. If you can't control emotions, as an investor, you are almost guaranteed to lose.
I'd like to live as a poor man with lots of money. ~Pablo Picasso

ponyboy
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Re: What to do? Sitting on the bench since October

Post by ponyboy » Thu Apr 25, 2019 10:58 am

Hate to say this but you should get a financial advisor. It seems that you are too emotional when it comes to investing. Pay the fee and let someone do it for you.

TaxingAccount
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Re: What to do? Sitting on the bench since October

Post by TaxingAccount » Thu Apr 25, 2019 11:11 am

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Last edited by TaxingAccount on Tue Aug 13, 2019 3:08 pm, edited 1 time in total.

URSnshn
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Re: What to do? Sitting on the bench since October

Post by URSnshn » Thu Apr 25, 2019 11:48 am

OP - It happens, we're human. But what to do now? I wonder if you'd have a bit more confidence if you wrote an Investment Policy Statement (IPS) see https://www.bogleheads.org/wiki/Investm ... _statement

Or, if you have one revisit it. What does it tell you to do or does it need some spiffing up? The IPS is a very handy statement to have when you feel emotional about your investments (and for other reasons). It could :

1) help you think through an asset allocation you are comfortable with. What are really comfortable with? And this can change over time.

2) help you decide what to do if you have changed your mind on this or that.

3) help you decide when to rebalance

4) etc.

What is so great about writing an IPS up is that you are given the opportunity to think through your needs, your goals and make decisions that will help you sleep at night. It gives you a place to go back to and re-evaluate.

So you pulled out of the market. Okay.

If it was me, I might take 3 to 6 months and read back over some of those Boglehead books, make - or rewrite you own IPS. And then choose where and when to put your money back.
Last edited by URSnshn on Thu Apr 25, 2019 3:55 pm, edited 1 time in total.

ohai
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Re: What to do? Sitting on the bench since October

Post by ohai » Thu Apr 25, 2019 12:02 pm

Seems like a lot of guys are saying things like this now, where they regret not owning stocks now that market is high. I'm not sure if that's a bullish or bearish sign.

mikemikemike
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Re: What to do? Sitting on the bench since October

Post by mikemikemike » Thu Apr 25, 2019 12:08 pm

ohai wrote:
Thu Apr 25, 2019 12:02 pm
Seems like a lot of guys are saying things like this now, where they regret not owning stocks now that market is high. I'm not sure if that's a bullish or bearish sign.
My guess -- and it's just that, a guess -- is that it means that stocks are going to go up a bit more in the near-ish future. There's been some speculation of a melt-up, but of course that's as unreliable as any other speculation:

https://www.cnbc.com/2019/04/16/stocks- ... -says.html

My plan is to stick with my plan.

That being said, if stocks surge even more, I'll probably to keep my asset allocation in line with my plan.

stocknoob4111
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Re: What to do? Sitting on the bench since October

Post by stocknoob4111 » Thu Apr 25, 2019 12:12 pm

this is why exiting the market is so dangerous, it becomes psychologically very very difficult to get back in.

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gmaynardkrebs
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Re: What to do? Sitting on the bench since October

Post by gmaynardkrebs » Thu Apr 25, 2019 1:13 pm

Get back in now, but use a more conservative allocation to stocks than you had before. It should be the amount you are willing to lose without affecting your future. For some people that 10%, for others 90%. No one can answer the allocation but you, but you should own some equities for diversification. Personally, I'm comfortable with 30%, even though I think the market is going to go way down when and if the Fed tightens. But I don't know that for sure, and that's why I'm OK with 30%

rich126
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Re: What to do? Sitting on the bench since October

Post by rich126 » Thu Apr 25, 2019 1:16 pm

I'm not the typical person here who just sits with an allocation and sticks with it. If, for example, I wanted to be 50/50 bonds/stocks, I'd have no problem sliding from 40/60 to 60/40 depending on the market. I doubt I would ever go all in (or all out) since you never know. I've been going to more cash this year as the market rises but I'm getting closer to retirement and had near zero in bonds so I'm building up some bonds and cash in case of a severe drop.

Its kind of like interest rates. For many years now we've heard rates have to go up but they haven't really done much of anything for a long time now. And with inflation not really a factor, and the debt so high, I doubt rates will go up significantly. Of course they can't go down a whole lot :)

It won't make much difference, but maybe you'd feel better easing in on down days to whatever level you want to get to.

ohai
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Re: What to do? Sitting on the bench since October

Post by ohai » Thu Apr 25, 2019 1:43 pm

mikemikemike wrote:
Thu Apr 25, 2019 12:08 pm
ohai wrote:
Thu Apr 25, 2019 12:02 pm
Seems like a lot of guys are saying things like this now, where they regret not owning stocks now that market is high. I'm not sure if that's a bullish or bearish sign.
My guess -- and it's just that, a guess -- is that it means that stocks are going to go up a bit more in the near-ish future. There's been some speculation of a melt-up, but of course that's as unreliable as any other speculation:

https://www.cnbc.com/2019/04/16/stocks- ... -says.html

My plan is to stick with my plan.

That being said, if stocks surge even more, I'll probably to keep my asset allocation in line with my plan.
Funny thing is this guy was "sitting on the bench" since October. "I will buy in the crash", said everyone. But when the market actually crashed in December, everyone is too scared to actually invest. I mean, 20% down is about as crashy as you can hope for.

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