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Nonsense. A balanced portfolio provides plenty of short term income from the bond side if stocks are down . That has no logic to it. Retirees have been rebalancing balanced portfolios yearly for the years spending cash forever. The only time i would not do it is if it is not money to live on.
You are buying a house , a car , a wedding , etc. That is outside the scope of your income generating portfolio.
That money is not allocated in the traditional fashion since it has a specific use other than being used for
Income
But if you are trying to tell us that the money you live on over next year or,3 or 4 years should not be in a balanced portfolio because it has part of it in equities i say nonsense . Big cash buckets are not needed for that
Why do you put your short-term money in the income model and not in the growth & income model? As I recall, the income model has very little to no equity exposure.
They say the stock market precedes the real economy by 12 to 18 months. IF there is a recession likely to occur in 2019, then this could very well be a bear market. And by the same token, bull markets are born before recessions wrap up. This has a bear market feel to it, up and down and up and down. The economy is doing well right now, sure, but is it forecast to do better in 2019? If it doesn't do better than now or at least stay the same, that's a recession.
Mental accounting and the ability to optomize the beta , but taken together they work out to a plain ole 50/50 allocation. Don't forget different funds lend themselves better for certain purposes espacially when beta is a factor in the portfolio.
An income portfolio with a growth fund in it vs a dividend equity fund as an example will give that income model a hiher beta then you want.so the types of funds used can be optimized better
Mental accounting but taken together they work out to a plain ole 50/50 allocation.
You have said you withdraw from your money that's in the income model. You're advocating the same thing I am - investing more conservatively if you need the money in the short-term.
We should also mention CDs aren’t risk free, they can be low risk but labeling them risk free is a bit flippant
CDs are protected by the FDIC up to a certain amount. Only if the U.S. government goes under, do you lose money. And if that happens, we're all in trouble.
we are having some small rallies here and there but there seems to be an overall downward trend, we are repeatedly making lower lows not the other way around...
CDs are protected by the FDIC up to a certain amount. Only if the U.S. government goes under, do you lose money. And if that happens, we're all in trouble.
And yet you are still exposed to inflation/interest rate risk so as I said nothing is risk free.
You have said you withdraw from your money that's in the income model. You're advocating the same thing I am - investing more conservatively if you need the money in the short-term.
But what i keep saying is the bond portion of a balanced portfolio does that automatically . You don't need years of cash . You keep saying you won't use a balanced portfolio for money you need in 3 to 5 years . But that is nonsense because in a balanced portfolio, in a down market it is the bonds you would be creating income with anyway.
I could just lump all the funds together and have one growth and income portfolio that is 50/50 and it is no different because it is put in 2 compartments
But what i keep saying is the bond portinvof a balqnced portfolio does that automatically . You don't years of cash . You keep saying you won't use a balanced portfolio for money you in 3 to 5 years . But that is nonsense because in a balanced portfolio in a down market it is the bonds you would be creating income with anyway.
If interest rates head up dramatically, as many are predicting, bonds are not going to provide protection.
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