Author Topic: Pulling back into cash from SP500 Index funds?  (Read 4247 times)

david123

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Pulling back into cash from SP500 Index funds?
« on: April 01, 2019, 07:47:36 AM »
I'm generally a buy and hold investor and am probably over invested in stock funds (ie. higher return/higher risk/longer timeline).  I'm to the point in my life where I'd like to retire in 5 years or so.  For the last 30 years, I've made no attempts to time the market, and have weathered all the bad markets and came out on top afterwards.  Now I'm starting to get cold feet with all the talk of an upcoming recession.  I'm tempted to pull out at least 30% and hold it in cash, or bond funds until the market adjusts.  I probably should be keeping 30% in safer investments anyway.

Thoughts?

Sam

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Re: Pulling back into cash from SP500 Index funds?
« Reply #1 on: April 01, 2019, 10:38:14 AM »
Not a bad idea IMO. If you’re so close to the finish line, why take extra risks?

Fair value of 2,850 on the S&P seems reasonable. But the Fed has done an about face and helped investors out surprisingly.

Within 3 years of retiring, I’d go 50/50 at most.

All depends on your entire financial situation.
Regards,

Sam

BruceV

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Re: Pulling back into cash from SP500 Index funds?
« Reply #2 on: April 11, 2019, 06:36:42 AM »
Like david 123 I've pretty much have held on and weathered the storms and have done all right.  I am very close to retiring (as soon as right now) I would say I have a 60/40 mix.  I have way too much pre tax money but feel it's too late to really fix that now.

I also feel the long bull run is coming to an end.

Where to put some of this money - how much to leave in the market - trying to be realistic and keep my greed factor to a minimum.


Sam

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Re: Pulling back into cash from SP500 Index funds?
« Reply #3 on: April 11, 2019, 07:29:44 AM »
Like david 123 I've pretty much have held on and weathered the storms and have done all right.  I am very close to retiring (as soon as right now) I would say I have a 60/40 mix.  I have way too much pre tax money but feel it's too late to really fix that now.

I also feel the long bull run is coming to an end.

Where to put some of this money - how much to leave in the market - trying to be realistic and keep my greed factor to a minimum.

The funny thing is, w/ rates collapsing this year, real estate is catching a bid again. Lots of interesting comments and info about REITs in this post: https://www.financialsamurai.com/annualized-returns-by-asset-class-from-1999-2018/
Regards,

Sam

Cheezus

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Re: Pulling back into cash from SP500 Index funds?
« Reply #4 on: April 25, 2019, 11:13:55 AM »
If you are retiring and only drawing 3% - 4% off the account, then there is no reason to try and time the market.  Leave it in the fund.  Take your distributions and don't worry about it.

dmk395

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Re: Pulling back into cash from SP500 Index funds?
« Reply #5 on: August 24, 2019, 05:02:52 AM »
I recently sold a bunch after the newest high.  Used it to pay off a mortgage.  Its great having a bunch of money in a brokerage account, but you don't really feel it until you have something tangible in hand.  I'd def sell a good portion.

david123

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Re: Pulling back into cash from SP500 Index funds?
« Reply #6 on: August 26, 2019, 06:04:55 AM »
Like david 123 I've pretty much have held on and weathered the storms and have done all right.  I am very close to retiring (as soon as right now) I would say I have a 60/40 mix.  I have way too much pre tax money but feel it's too late to really fix that now.

I also feel the long bull run is coming to an end.

Where to put some of this money - how much to leave in the market - trying to be realistic and keep my greed factor to a minimum.

BruceV - I also have too much pre-tax (compared to post-tax) - are you going to do some ROTH conversions once you retire and your income drops?  That is my plan, but i'm still a few years away from that.

Money Ronin

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Re: Pulling back into cash from SP500 Index funds?
« Reply #7 on: September 11, 2019, 02:55:10 PM »
I've advised two people regarding retirement who actually retired--everyone else is too young or too poor.  They are my mother-in-law who retired at 65 and my police officer friend who retired at 55.

I disagree with the "rules of thumbs" of 50/50 or 60/40 provided by others.  The answer depends entirely on your personal situation financial and otherwise.

My mother-in-law retired with a solid school administrator's pension and lifetime healthcare.  She also had some rental income.  Her daily expenses and needs including leisure activity were completely covered.  She was widowed.  Her kids were grown and independent.

My friend has two young kids and a stay at home spouse.  He also has a solid pension and lifetime healthcare insurance.  He moved to a lower cost of living state and his expenses are very comfortably covered.  The kids are about 10 years away from college.

In both cases, they had other after tax and pre tax funds to invest.  Since they both have steady income streams that more than covered their expenses, I advised them to invest the rest of their money aggressively without regard to their age.  Treat it like an endowment fund and let it grow in perpetuity.  Who says there is no money in government work; none of my private sector friends including myself will have it as easy.

You need to assess your sources of retirement income (e.g., social security, pensions, IRA RMD, etc.) and then decide how aggressively you should be invest.

Good luck!