Anyone else taking less risk
Anyone else taking less risk
I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.
I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.
I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!
Re: Anyone else taking less risk
I reduced my allocation to stocks some years prior to retirement. My current allocation is sufficiently conservative that I just do not worry about the market any more, except to rebalance when necessary.
Re: Anyone else taking less risk
I did the same - reduced as I approached retirement. Before that I was 80/20 thru thick and thin my whole accumulating life.
If I am stupid I will pay.
Re: Anyone else taking less risk
I have not changed my asset allocation in a few years. People tell me that momentum is a factor, so what is going up, keeps going up, until it goes down. (That's a good and true statement! Ha!)
But I'm rebalancing whenever I exceed my equities high trigger point. I seem to buy equities before they ever go below my low trigger point.
But I'm rebalancing whenever I exceed my equities high trigger point. I seem to buy equities before they ever go below my low trigger point.
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Re: Anyone else taking less risk
Not in 50 years, because I've never seen a big market
pull back that wasn't a great buying opportunity in retrospect.
My dividends do a lot of buying these days.
pull back that wasn't a great buying opportunity in retrospect.
My dividends do a lot of buying these days.
Re: Anyone else taking less risk
I'm keeping my AA steady at 100% VTSAX... not looking to adjust it until about 20 years time. Hopefully, by then I won't need to adjust it.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius
- pennstater2005
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Re: Anyone else taking less risk
Nope. 80/20. There at least for another 1.5 years until I re-evaluate per IPS. Although, I suspect I won't be changing anything.
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson
Re: Anyone else taking less risk
I went from 85/15 to 50/50.
I agree with pennstater2005 tho. There's something some time before the bubble bursts. [OT comment removed by moderator prudent]
I agree with pennstater2005 tho. There's something some time before the bubble bursts. [OT comment removed by moderator prudent]
Re: Anyone else taking less risk
I have started selling an increased proportion of equities as the supplement to my pension income.
- willthrill81
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Re: Anyone else taking less risk
I'm very close to 100% equities (tiny bit in REITs and part of my EF is in bonds). I have no intention of moving from that until (1) my portfolio reaches the point at which it is 25 times larger than my 'necessary' pre-tax expenses or (2) I'm within 10 years of my anticipated retirement, whichever comes first. At that point, I'll back down to around 70/30.
The Sensible Steward
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Re: Anyone else taking less risk
I've cooled off some. I'm currently 54, not sure when retirement might be forced upon me. Was 80/20 until about two years ago. Now I'm down to about 49% equities. My current target is 47% equities (50/50 US/Int), 35% bonds, 18% alternatives with low, no, negative correlation to both stocks and bonds.
It's painful paying the taxes to take risk off the table, but would be more painful not having a tax to pay.
Dave
It's painful paying the taxes to take risk off the table, but would be more painful not having a tax to pay.
Dave
Re: Anyone else taking less risk
It's hard to say. I went from 65/35 to 60/35/5 but that 5% is cash that is earmarked for something. Once it is spent, that will leave me at 63/37, so I guess I changed my AA.
But there is another axis here and that is the allocation between US and ex-US equities. I shifted about 3% to ex-US a few days ago. I might shift more.
But there is another axis here and that is the allocation between US and ex-US equities. I shifted about 3% to ex-US a few days ago. I might shift more.
Kolea (pron. ko-lay-uh). Golden plover.
- InvestorNewb
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Re: Anyone else taking less risk
I'm still 100% equities. I hope the bull continues raging.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)
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Re: Anyone else taking less risk
Yes I went from US/Int 60/40 to 50/50.
Dave
Dave
Re: Anyone else taking less risk
Stay the courseknpstr wrote:I'm keeping my AA steady at 100% VTSAX... not looking to adjust it until about 20 years time. Hopefully, by then I won't need to adjust it.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page
Re: Anyone else taking less risk
The Same as it has been the last several years....
70/30.
I just let it ride,and
compound
70/30.
I just let it ride,and
compound
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Re: Anyone else taking less risk
I'm just staying the course like a good sailor would try to do.
(Hoping for a red sky at night and not in the morning.)
(Hoping for a red sky at night and not in the morning.)
Re: Anyone else taking less risk
How many different ways can this question be asked on this forum?
Gordon
- pennstater2005
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Re: Anyone else taking less risk
Lots. And it will never endgkaplan wrote:How many different ways can this question be asked on this forum?
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson
Re: Anyone else taking less risk
For the fifteen year period prior to retirement in 2002 I had a 60/40 stock/bond ratio, then I dropped it to 50/50, and now just two years ago I dropped it to (and will most likely stay there) a 40/60 ratio. Main reason for the last move; I have what I feel I need for another fifteen to twenty years (95 to 100) and, although I feel I have the ability and willingness to take the risk, I no longer have the need to take the risk.
Tom D.
Re: Anyone else taking less risk
was 75/25, but just got laid off, a few years short of planned retirement. Since future income is unknown, and can't risk a significant downturn, have quickly developed a revised Plan and will be reducing equities on a monthly basis over the next 12 months. (Kinda like dollar cost averaging down.)
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Re: Anyone else taking less risk
Master IPS, dictates to "Don't get Greedy"
Annual IPS, says to protect assets for that retirement home we want buy.
It's Discretionary funds anyway.
We have enough.
Annual IPS, says to protect assets for that retirement home we want buy.
It's Discretionary funds anyway.
We have enough.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
Re: Anyone else taking less risk
I agree with the OP and have recently moved from 80/20 to 60/40. I've been 80/20 most of my accumulation years.
I have a meeting setup with a Vanguard Financial Adviser to assess where we are.
I'm trying to decide if we are going to stick with 60/40 or move to 70/30. I'd like to have a little more exposure in international but undecided at this point.
I have a meeting setup with a Vanguard Financial Adviser to assess where we are.
I'm trying to decide if we are going to stick with 60/40 or move to 70/30. I'd like to have a little more exposure in international but undecided at this point.
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Re: Anyone else taking less risk
A bit, but not because of current conditions, more because of a spot of luck.
I was at 70/30 some years back, then went to 65/35 after getting an inheritance that accelerated my FI timetable. I real8zed that I wanted to be a bit more cautious as I approach my number, so we have a 60/40 AA, plus 4 years of state college expenses in the Colorado stable value fund.
Our current goal is 33x, plus 4 years at a top school covered starting in 6 years. A flat market and a good job make that possible, but life happens. A bull run might get us there early, and a commensurate de-risk. A bear run would mean rebalancing back, and accepting that you do not hit all goals.
I was at 70/30 some years back, then went to 65/35 after getting an inheritance that accelerated my FI timetable. I real8zed that I wanted to be a bit more cautious as I approach my number, so we have a 60/40 AA, plus 4 years of state college expenses in the Colorado stable value fund.
Our current goal is 33x, plus 4 years at a top school covered starting in 6 years. A flat market and a good job make that possible, but life happens. A bull run might get us there early, and a commensurate de-risk. A bear run would mean rebalancing back, and accepting that you do not hit all goals.
Re: Anyone else taking less risk
Respectfully, you may be letting market valuations affect your good judgment.stemikger wrote:I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.
I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.
Are you prepared to stick with your new AA if the market continues on an upward trend for the next two years? What is your investment plan? If the market declines 30% or 40% over the next several months or succumbs into a extended multi-year bear market do you plan to rebalance back to your present asset allocation?
Connect with Bogleheads in Northern California! Click the link under my user info/avatar.
Re: Anyone else taking less risk
I've been 60/40 for some time, but I made one tiny change earlier this week: I put my IRAs on autopilot. My Roth and SEP-IRAs are now 100% LifeStrategy Moderate Growth. This should remove the risk of human emotions from the IRA portion of my portfolio.
I'm still responsible for rebalancing my 401(k), though.
I'm still responsible for rebalancing my 401(k), though.
Re: Anyone else taking less risk
Yes, very much so! I've been selling equities for quite some time now. This long bull market has been awesome, and I've benefited from having a relatively high equity allocation throughout. Now I'm ahead of my retirement savings goals, so why take excessive risk?
Re: Anyone else taking less risk
My plan is already more conservative than I would like. I feel no need to take less risk based on stock prices. I am sticking with my plan (was relatively well thought out & talked out with DW) regardless of what my current feelings of stock prices are.
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Re: Anyone else taking less risk
My asset allocation is already a bit conservative for my age (although not overly so).
As I invest globally and in different funds than most BH's, my equity benchmark is a combination of MSCI World + MSCI Emerging Markets. By using a weighted PE, we come up around 22 times earnings for the past 12 months, which is on the high side, but far from extreme.
It's going to take significantly higher valuations before I'll do anything. Figure a PE of 30+ times.
EDIT: Forgot to mention that bond yields would have to increase as well. At any rate, I don't see myself making any changes, barring an extreme case like the late 90's were valuations were astronomical, dividends were very low, and bonds were yielding a bit more than the historical average.
As I invest globally and in different funds than most BH's, my equity benchmark is a combination of MSCI World + MSCI Emerging Markets. By using a weighted PE, we come up around 22 times earnings for the past 12 months, which is on the high side, but far from extreme.
It's going to take significantly higher valuations before I'll do anything. Figure a PE of 30+ times.
EDIT: Forgot to mention that bond yields would have to increase as well. At any rate, I don't see myself making any changes, barring an extreme case like the late 90's were valuations were astronomical, dividends were very low, and bonds were yielding a bit more than the historical average.
Last edited by herpfinance on Fri Mar 17, 2017 11:48 am, edited 1 time in total.
"The intelligent investor is a realist who sells to optimists and buys from pessimists" - Benjamin Graham
Re: Anyone else taking less risk
If you already wanted to reduce risk, then I think this is a great time to do it because of low expected returns today.
If you're only doing it because markets are expensive, then I would ask if you're ok keeping your new allocation forever, if there is never an opportunity to buy back cheaper than today. If so, then I think it's fine.
If you're only doing it because markets are expensive, then I would ask if you're ok keeping your new allocation forever, if there is never an opportunity to buy back cheaper than today. If so, then I think it's fine.
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Re: Anyone else taking less risk
If we are in a secular bull market (obviously I don't know for sure but it feels like it) it started in 2013 when it broke above both 2000 and 2007. Therefore, pretty young and not a good reason to change things in and of itself.
Re: Anyone else taking less risk
I've been at 60/40 the last few years, but want to slowly drift closer to 50/50 over the next decade. Very recently I decided to direct all new money to bonds.
Re: Anyone else taking less risk
MMM sounds like market timing to me.
Actually we have been slowly increasing our % in stocks as per our IPS. We should be there within a few months.
Then we will maintain it based on what we have determined is the correct AA for us, balancing every year when out portfolio deviates beyond a certain percentage.
Our "guess" at whether the markets are undervalued or overvalued won't won't make us change our AA.
We can't predict the future and our crystal ball still remains cloudy
Actually we have been slowly increasing our % in stocks as per our IPS. We should be there within a few months.
Then we will maintain it based on what we have determined is the correct AA for us, balancing every year when out portfolio deviates beyond a certain percentage.
Our "guess" at whether the markets are undervalued or overvalued won't won't make us change our AA.
We can't predict the future and our crystal ball still remains cloudy
Re: Anyone else taking less risk
At 46 we are essentially at "age in bonds" 55/45. 50/50 is where we will stay. Depending on what the market does, we may go there over the next 5 years or very quickly if a correction occurs. New money going in is directed to stay at the intended allocation. We are definitely not looking to go to 60/40 or 70/30.keystone wrote:I've been at 60/40 the last few years, but want to slowly drift closer to 50/50 over the next decade. Very recently I decided to direct all new money to bonds.
Re: Anyone else taking less risk
I changed my allocations in my 401k. Buying more Total Bond Market, Stable (3.10%) & Total International. Buying less Total Stock and selling it off when it exceeds a certain amount and directing that to Stable Fund. Trying to shore up my fixed and put myself in a position to buy low when the time comes. I'm down to about 60/40, but my allocations now are more 30/60/10 (Int). I'm 58 and really appreciate the market the last 7 years. Trying to hold on to what I've got and get ready for the sale, whenever that is.
Having two future pensions will allow me to be a buyer if it feels right.
But not shying away from investing. Any loose change I get goes into my taxable (Total Stock Market) because I have no idea where this ceiling is.
Having two future pensions will allow me to be a buyer if it feels right.
But not shying away from investing. Any loose change I get goes into my taxable (Total Stock Market) because I have no idea where this ceiling is.
I'm just sitting here watching the wheels go round and round. |
Nobody told me there'd be days like these.
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Re: Anyone else taking less risk
Daryl above said it well. It's not really about market timing. It's about where the market has taken us compared to our individual financial goals. If the market has us way ahead on our plan, then very rational to take risk off the table.
Dave
Dave
Re: Anyone else taking less risk
Since I have been retired my AA has been lowered to 70/30 stocks to bonds. I last checked my AA in October and won't be checking it again until this coming October. If I had to guess maybe I am 75/25 now or 80/20. If I were still accumulating I would be 100% stock market.
Now I am much more focused on income rather than total portfolio value as I am a retiree. However, I do enjoy reading prognosticators. It seems like there is a wall of worry out there.
Now I am much more focused on income rather than total portfolio value as I am a retiree. However, I do enjoy reading prognosticators. It seems like there is a wall of worry out there.
Re: Anyone else taking less risk
I'm 5 years out to retirement. The ratio is now 50/50 which I still think will cause the portfolio togrow.
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Re: Anyone else taking less risk
We are 5 years from "early" retirement, maybe less. ( At least the real possibility of only working part-time.)
60/40 AA. Directing dividends from taxable to our money market account. Okay, now we are at 59/41...
60/40 AA. Directing dividends from taxable to our money market account. Okay, now we are at 59/41...
Re: Anyone else taking less risk
He referred to taking "excessive risk".Random Walker wrote:Daryl above said it well. It's not really about market timing. It's about where the market has taken us compared to our individual financial goals. If the market has us way ahead on our plan, then very rational to take risk off the table.
Dave
If you consider it excessive because you have determined based on your financial goals and expenses that you have met your needs than I agree it is not market timing.
If you consider it excessive because "hogs get slaughtered" or you "feel" the bull market is over and you are changing your AA based on external factors of which you really cannot predict and have no control over then, in my mind, this is market timing.
Re: Anyone else taking less risk
I have gone from nearly 100/0 as of last November to about 85/15 and am now moving to 80/20 with things arranged to slowly move us to 70/30 over the next couple of years. This is largely a result of realizing how well we have done over the past decade, and that optional retirement may come within 10 years or so. No need to take as much risk.
Re: Anyone else taking less risk
I'm good at 70/30 for life.
20-year CAGR on Total Stock Market (VTSMX) is 7.87% nominal (maybe 5.5% real?)
Not exactly bull market of the millennium.
If you put up a long chart and squint your eyes really hard so you can see the trend but not the intermediate big dips and peaks, the market hasn't returned anything special or unusual that would warrant any action.
20-year CAGR on Total Stock Market (VTSMX) is 7.87% nominal (maybe 5.5% real?)
Not exactly bull market of the millennium.
If you put up a long chart and squint your eyes really hard so you can see the trend but not the intermediate big dips and peaks, the market hasn't returned anything special or unusual that would warrant any action.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
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Re: Anyone else taking less risk
Coming from someone with a mortgage Yes,
I am aggressively paying off my mortgage while contributing up to the company match in the 401k and fully funding my Roth IRA. Would like to fully fund the IRA but am taking the guaranteed return to minimize risk.
Once the debts are taken care of I'm all in, and feeling pretty good about a 70/30 allocation. (31 years old)
I am aggressively paying off my mortgage while contributing up to the company match in the 401k and fully funding my Roth IRA. Would like to fully fund the IRA but am taking the guaranteed return to minimize risk.
Once the debts are taken care of I'm all in, and feeling pretty good about a 70/30 allocation. (31 years old)
Re: Anyone else taking less risk
Adjusting the AA due to the market, or what you think the market might do.....stemikger wrote:I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.
I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.
Sounds a lot like market timing to me.
How is/was 65/35 greedy? If the market were to do a big correction would you switch back to 65/35?
Re: Anyone else taking less risk
DW and I both have pensions when we retire (I'm 37, she's 30), so we are a little more aggressive than a couple without that security, but I am starting to shift a little more towards bonds and cash. Going from 85/15 to closer to 70/30.
Re: Anyone else taking less risk
I have been increasing the amount of short-term savings I keep, primarily because my job is looking less stable and if I change jobs I expect to have some big expenses related to moving and buying a car.
I'm still maxing out retirement contributions to equities, but outside of that my cash/bond amount has been creeping up (almost 5% now, which is a lot for me in terms of dollar amount sitting around) ... as I get older I think I'll continue to go that direction. I wouldn't mind having a 90/10 allocation, especially while still working, for me that would give me several years of living expenses in safe cash/bonds.
I'm still maxing out retirement contributions to equities, but outside of that my cash/bond amount has been creeping up (almost 5% now, which is a lot for me in terms of dollar amount sitting around) ... as I get older I think I'll continue to go that direction. I wouldn't mind having a 90/10 allocation, especially while still working, for me that would give me several years of living expenses in safe cash/bonds.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: Anyone else taking less risk
It's tempting to reduce my stock allocation, but I'm sticking with the 70/30 plan for now.
Re: Anyone else taking less risk
Back from my LUng Distance Workout and ready to add my daily contribution or my two Reales. I have not made any changes to The Lowest Rated Fund [my aggressive growth portfolio]. It makes no difference what Miss Market is doing today. The Lowest Rated Fund is not closing today, tomorrow, next week, next month, or next year. The Lowest Rated Fund remains BULLISH on America. And now we return to your normal programming with "Anyone else taking less risk." Thanks for reading ~cfs~
~ Member of the Active Retired Force since 2014 ~
Re: Anyone else taking less risk
Moves to lessen risk can have less to do with market predictions than how one reacts emotionally to those predictions, meaning one's risk tolerance and how much money one can afford to lose in a downturn before it's needed. In that case, an IPS can help to remind why an allocation was set and why it should now be changed - or not - and by how much.stemikger wrote:I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.
I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Anyone else taking less risk
Yes. I'm in this fund and I like it.stemikger wrote:I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.
I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.
https://www.tsp.gov/InvestmentFunds/Fun ... ncome.html
It rebalances daily and gives me peace of mind. Plus the G component is currently throwing off 2.35% with no downside risk.
I wish I had been able to get into the federal government sooner than I did, but I consider the investment options in the TSP, and particularly the G fund, to have been worth the abbreviated ride.