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If you reckon a feller ought not buy into the market when it's down 12% from the high... pray tell when WOULD you have him buy into the market?
That's not exactly what he said. The guy already has money in the market. He's asking if he should move money from bonds into stocks now that stocks are cheaper. He probably shouldn't. Those who stick with their long term allocations almost always do better than those who move money in and out of different asset classes based on market gyrations. That's because the human brain is wired to buy high and sell low. It happens over and over and over again.
That's not exactly what he said. The guy already has money in the market. He's asking if he should move money from bonds into stocks now that stocks are cheaper. He probably shouldn't. Those who stick with their long term allocations almost always do better than those who move money in and out of different asset classes based on market gyrations. That's because the human brain is wired to buy high and sell low. It happens over and over and over again.
If your 70/30 allocation is now 60/40 because stocks are down, aren't you supposed to shift from bonds to stocks so that you're back to 70/30? Isn't that what rebalancing is about?
If your 70/30 allocation is now 60/40 because stocks are down, aren't you supposed to shift from bonds to stocks so that you're back to 70/30? Isn't that what rebalancing is about?
Yes. I was proposing to go a step further and get rid of all of my bonds and mov that portion all to s&p.
If your 70/30 allocation is now 60/40 because stocks are down, aren't you supposed to shift from bonds to stocks so that you're back to 70/30? Isn't that what rebalancing is about?
Yes, that would be true, but he didn't ask the question in terms of rebalancing.
Yes, that would be true, but he didn't ask the question in terms of rebalancing.
Got it.
My approach to investing for the long haul is pretty passive, but I can understand the OP's urge to 'do something'. What has helped us is setting aside another account separate from the "real investments" and using that account to try to find a little "extra" return. This year we even got to the point where we opened up a separate Vanguard brokerage account for the Boglehead/passive/"real" account and left the "play" funds in our Ameritrade account. We've kept our contribution targets the same on the Vanguard account so we're on track with our overall financial goals, but every now and then we'll add to the "play" account.
This probably only works if you're not too tight on budget. However, I seem to recall that the OP is fairly high income, so maybe this can help scratch that "itch".
My approach to investing for the long haul is pretty passive, but I can understand the OP's urge to 'do something'. What has helped us is setting aside another account separate from the "real investments" and using that account to try to find a little "extra" return. This year we even got to the point where we opened up a separate Vanguard brokerage account for the Boglehead/passive/"real" account and left the "play" funds in our Ameritrade account. We've kept our contribution targets the same on the Vanguard account so we're on track with our overall financial goals, but every now and then we'll add to the "play" account.
This probably only works if you're not too tight on budget. However, I seem to recall that the OP is fairly high income, so maybe this can help scratch that "itch".
I noticed the other day that my bonds have gone down only slightly after the 'correction'....and that S&P is down 8-10%. i guess i just figured since this is 401k money that i won't touch for 30 some years from now, i could afford to put it all in stocks (as opposed to bonds), and if that's the case, what better time to switch between bonds and stocks than now?
I opened an account at TradeKing. I don't know if I'll be investing in any single stocks but I wanted the option to do so if I ever get the urge. I'm planning on putting some monies towards something balanced. This is not 401K money, but I don't plan to take any kind of big risk with it. For me it's more about taking advantage of prices being lower so I can do my part in the "buy low, sell high(er)" equation.
My time horizon is probably 5 - 7 years with these funds, give or take. I wanted an account outside of Fidelity so I could keep things separate. Plus the first $1,000 of trades are free for 60 days, so it's a good time to play a bit.
I noticed the other day that bonds have gone down only slightly after the 'correction'....and that S&P is down 8-10%. i guess i just figured since this is 401k money that i won't touch for 30 some years from now, i could afford to put it all in stocks (as opposed to bonds), and if that's the case, what better time to switch between bonds and stocks than now?
How many different ways can the market move? What if stocks keep dropping for the next two years? Then you've bought in way higher than you could have. By maintaining your allocation and rebalancing, you could dollar cost average on the way down and potentially see better returns than if you were to just dump it all in now. That's one scenario where you could be worse off.
Good morning,
i have about 20k of my 401k (about 10% of total) in VBMFX. it has lost very little during the recent 'correction'. i was wondering if it would be wise to switch these into VFINX now that i'd be getting a 10% discount from the highs, or if at 34, i should have some exposure to bonds and safe investments?
(of course i'm not going to use this money until retirement, and as some of you already know, i'm a bit of a risk taker... )
thoughts?
My advice: wait until the market drops a lot further. And it will. It's all very much overpriced right now.
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It's all very much overpriced right now.
