Volatile Q1 expected?

[kork13]

I have no idea where the market will go over the next month or for the remainder of the year. Interested if the poor start to 2022 has made anyone question their asset allocation?

If anything, I've become more secure in the asset allocation I've had for the past few years -- 10% domestic bonds (rising interest rates will be "fun"), 10% international stocks (....just....ugh.....), 20% REITs, 20% each in large/mid/small cap US stocks. I feel like that mix has served me well, and I'm happy to stick with it. Rising interest rates will hurt across the board, and instability exists everywhere... But I'm 35 & very comfortable with accepting volatility risk over the long term.

[LivingAlmostLarge]

haven't had time again to look carefully. Always happens to us around this time of year I have to ignore it as I get busy. Works in our favor usually.

[QuarterMillionMan]

With all this volatility in the markets, I'm changing my investment strategies. Instead of buy and holding ETFs & mutual funds, I dumped most of it and buying individual stocks that have been hammered such as Moderna at $141 a share which I just bought. Also, I'm looking at short selling some individual stocks such as Peloton. If I see weakness I'm pouncing on it and short selling it.

[parafly]

No changes in asset allocation or strategy. My time horizon is measured in decades. Continuing to dollar cost average.

[Smilinggirl]

I looked at my numbers this morning. I knew it would be bad, but ouch. I don't have millions like many people here so a dip is perhaps more noticeable since I tend to see it in years I might have to keep working. I pulled my excess EF out months ago since I really don't/can't lose that, so that's safe. I use target funds for retirement, and I'll admit, I'm wondering if I should move some of the further out dates to closer ones so it's more conservative, which would ideally be safer.

[disneysteve]

I'm wondering if I should move some of the further out dates to closer ones so it's more conservative, which would ideally be safer.

is this money you will need in the next 2-3 years? If not, then no, you shouldn't lock in your losses by trying to time the markets. What purpose would that serve? The idea is to buy low and sell high. If you have a long time horizon, like many years or decades, the time to BUY is when the market pulls back. That's the worst possible time to sell. If you sell now, you'll miss out on the gains when the market recovers, and it always recovers. Might it fall more before that? Sure. But every single correction has been followed by a recovery. Every time.

[Smilinggirl]

is this money you will need in the next 2-3 years? If not, then no, you shouldn't lock in your losses by trying to time the markets. What purpose would that serve? The idea is to buy low and sell high. If you have a long time horizon, like many years or decades, the time to BUY is when the market pulls back. That's the worst possible time to sell. If you sell now, you'll miss out on the gains when the market recovers, and it always recovers. Might it fall more before that? Sure. But every single correction has been followed by a recovery. Every time.

I have it broken up into a few target dates. 2030, 2035 and 2040 since that’s when I anticipate needing it. I’ve also got a mix of traditional and Roth. Thank you for the advice. This stuff doesn’t come easily to me.

[disneysteve]

I have it broken up into a few target dates. 2030, 2035 and 2040 since that’s when I anticipate needing it. I’ve also got a mix of traditional and Roth. Thank you for the advice. This stuff doesn’t come easily to me.

That's a somewhat unusual way to approach it. If you look at the "glide path" of how each of those funds adjusts the asset allocation, you will likely find that they aren't much different from one another. The whole point of target date funds is for them to be a simple one-stop investment. Pick the year you anticipate retiring and you're all set. Nothing wrong with the way you have it, but you probably aren't really accomplishing that much and you're just giving yourself 3 funds to keep track of rather than one.

[disneysteve]

That's a somewhat unusual way to approach it. If you look at the "glide path" of how each of those funds adjusts the asset allocation, you will likely find that they aren't much different from one another. The whole point of target date funds is for them to be a simple one-stop investment. Pick the year you anticipate retiring and you're all set. Nothing wrong with the way you have it, but you probably aren't really accomplishing that much and you're just giving yourself 3 funds to keep track of rather than one.

So I checked on this and They are more different than I expected. I looked at Vanguard, so if you are with a different company, the answer will vary somewhat.

2030: 64.6% stock, 33.87% bond, 1.53% short term reserves
2035: 72.06% S, 26.41% B, 1.53$ STR
2040: 79.65% S, 18.83% B, 1.52% STR

What your actual overall portfolio asset allocation is will depend on how much you have in each of those, but 2030 is 15% lighter on stocks. I didn't delve into the schedule by which they will adjust the allocations. Just remember they will automatically make the funds more conservative (less stock, more bond) as the target date approaches. For 2030, you're still 8 years out which is plenty of time to recover from the current situation, and 2040 is 18 years.

[srblanco7]

So I checked on this and They are more different than I expected. I looked at Vanguard, so if you are with a different company, the answer will vary somewhat.

2030: 64.6% stock, 33.87% bond, 1.53% short term reserves
2035: 72.06% S, 26.41% B, 1.53$ STR
2040: 79.65% S, 18.83% B, 1.52% STR

What your actual overall portfolio asset allocation is will depend on how much you have in each of those, but 2030 is 15% lighter on stocks. I didn't delve into the schedule by which they will adjust the allocations. Just remember they will automatically make the funds more conservative (less stock, more bond) as the target date approaches. For 2030, you're still 8 years out which is plenty of time to recover from the current situation, and 2040 is 18 years.

Appears that the combined asset allocation of the 2030 and 2040 funds effectively equals the 2035 fund - which intuitively makes sense to me.

I gather if you're planning to extract the $$ on five year intervals from the most current target date fund, each fund would likely be at the same AA when the withdrawals are made in each of the five year periods.