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Old 02-27-2020, 04:06 PM
 
19 posts, read 9,727 times
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When I retired I got rid of my target fund and balanced mutual funds. Why? I was afraid of the next stock market crash. I thought it was a better idea to divide my investments into two parts: Stock Funds (50%) and Cash and Bond Funds (50%).

Then when the stock market crashed I could sell my bond funds which likely went up. That way I did not have to sell an investment that had taken a huge hit. With 50% of my money in bond funds and cash equivalents, I can wait out a bear market and wait for my stock funds to go back up before selling them for retirement income.

If I had all my money in target funds and balanced funds I would be forced to sell an investment that contained 50-60% stocks that had fallen significantly from when I bought them which locked in my losses.
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Old 02-27-2020, 04:08 PM
 
Location: Kentucky
769 posts, read 443,263 times
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Quote:
Originally Posted by Just Wondering Why View Post
When I retired I got rid of my target fund and balanced mutual funds. Why? I was afraid of the next stock market crash. I thought it was a better idea to divide my investments into two parts: Stock Funds (50%) and Cash and Bond Funds (50%).

Then when the stock market crashed I could sell my bond funds which likely went up. That way I did not have to sell an investment that had taken a huge hit. With 50% of my money in bond funds and cash equivalents, I can wait out a bear market and wait for my stock funds to go back up before selling them for retirement income.

If I had all my money in target funds and balanced funds I would be forced to sell an investment that contained 50-60% stocks that had fallen significantly from when I bought them which locked in my losses.
You're a genius.
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Old 02-27-2020, 04:15 PM
 
86,246 posts, read 83,742,387 times
Reputation: 61979
Quote:
Originally Posted by Just Wondering Why View Post
When I retired I got rid of my target fund and balanced mutual funds. Why? I was afraid of the next stock market crash. I thought it was a better idea to divide my investments into two parts: Stock Funds (50%) and Cash and Bond Funds (50%).

Then when the stock market crashed I could sell my bond funds which likely went up. That way I did not have to sell an investment that had taken a huge hit. With 50% of my money in bond funds and cash equivalents, I can wait out a bear market and wait for my stock funds to go back up before selling them for retirement income.

If I had all my money in target funds and balanced funds I would be forced to sell an investment that contained 50-60% stocks that had fallen significantly from when I bought them which locked in my losses.
Not true

Last edited by mathjak107; 02-27-2020 at 04:36 PM..
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Old 02-27-2020, 04:19 PM
 
19 posts, read 9,727 times
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Originally Posted by mathjak107 View Post
Effectively when you sell a balanced fund the same thing is taking place ...if the fund is 60/40 the fund manager adjusts internally the same way ...you may sell at a price based on the fund ....but the fund manager has to replace what you drew by likely selling bonds to rebalance to the stocks since the stocks fell more than the bonds
Yes, it rebalances automatically which is a nice feature of target and balanced funds but the investor is still selling an investment that has a significant amount of stocks that have crashed.
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Old 02-27-2020, 04:35 PM
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
8,193 posts, read 3,547,736 times
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We went to Income-Longevity annuities (GLWB) 2008-2012 and again in 2018. Averaged 9% Real Acct gains.
In retirement, JMO, if your are very dependent on Income, with Liabilities<=Income, then you exposure to the Market should be minimal; Unless you can understand the Risks.
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Old 02-27-2020, 04:36 PM
 
86,246 posts, read 83,742,387 times
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Not true ,you are confused with what is happening .

Effectively when you sell a balanced fund the same thing is taking place ...the fund is like your portfolio total value made up of stock and bond funds .

Let’s pretend you were to divide your portfolio up in to shares like a balanced fund .

If you had 50k in an index fund and 50k in a bond fund you have a 100k . Your portfolio would sell 1000 shares of your portfolio at 100 a share .

If the stock side fell 10% you have 90k

If you hypothetically divided the 90k left into 1000 shares at 90 bucks and you sold 18k the 18k reflects the 10% loss in stocks ..you may have even sold off bonds to get the 18k but the share price still reflects the total nav

How your withdrawal is made up is the same as you pulling the money out of the total portfolio....

Last edited by mathjak107; 02-27-2020 at 04:45 PM..
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Old 02-27-2020, 04:40 PM
 
19 posts, read 9,727 times
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Quote:
Originally Posted by mathjak107 View Post
Not true ,you are confused with what is happening .

Effectively when you sell a balanced fund the same thing is taking place ...the fund is like your portfolio total value Of stock and bond funds .

if you were to divide your portfolio up in to shares like a balanced fund .

If you had 50k in an index fund and 50k in a bond fund you have a 100k . Your portfolio would sell 1000 shares of your portfolio at 100 a share .

If the stock side fell 10% you have 90k

If you hypothetically divided the 90k left into 1000 shares at 90 bucks and you sold 18k the total represents the loss on your own portfolio

How your withdrawal is made up is the same as you pulling the money out of the total portfolio....
I am not disagreeing with you about how it works. I just don't want to sell all at once an investment that STILL HAS a large portion of money in stocks. (Which is what I am doing by selling the balanced fund.) I want to only sell my bond funds- or use my cash- during a stock bear market to fund my retirement expenses.
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Old 02-27-2020, 04:47 PM
 
3,386 posts, read 4,363,062 times
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Is the sky falling? I haven't looked up in a while.
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Old 02-27-2020, 04:48 PM
 
86,246 posts, read 83,742,387 times
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Quote:
Originally Posted by Just Wondering Why View Post
I am not disagreeing with you about how it works. I just don't want to sell all at once an investment that STILL HAS a large portion of money in stocks. (Which is what I am doing by selling the balanced fund.) I want to only sell my bond funds- or use my cash- during a stock bear market to fund my retirement expenses.
You are not understanding .

pretend your two funds are your own mutual fund .. you have spy and agg ...it is the JWW BALANCED FUND.

Lets divide your portfolio up in to shares like a balanced fund .

If you had 50k in an index fund and 50k in a bond fund you have a 100k . Your portfolio would sell 1000 shares of your portfolio at 100 a share .

If the stock side fell 10% you have 90k.

1000 shares at 90 a share .....the total represents the loss on your own portfolio on the stock side

If you sold 100 shares , at 90 a share but paid 100 you have a loss ...you could sell the bond funds to raise that money , but the nav still reflects the loss on the stock value .

No stocks were sold , you sold bonds but the nav on JWW FELL to 90 a share from 100

Last edited by mathjak107; 02-27-2020 at 05:03 PM..
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Old 02-27-2020, 05:04 PM
 
12,253 posts, read 3,622,017 times
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Quote:
Originally Posted by Teak View Post
Is the sky falling? I haven't looked up in a while.
I would bet this NEW poster is just stoking the panic flames and is a paid poster for Bloomberg or the like.
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