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Staying Invested

January 12th, 2018 at 11:04 am

I'm curious who on this site is not investing. Or cashing in their chips now to take some of the risk off the table. I've been thinking a lot about it. We're dumping quite a bit into the market right now and I do worry it's high. This is a big topic if you can imagine in a tax office. We're all discussing whether we think the market has another year of gains. So it's on my mind.

Well I decided the other day that we're staying invested. We are sticking with the plan. I am going to put more in and hold it. I'm not going to sit in cash or buy more bonds. I will put rebalance being the beginning of the year, but I'm not going to hold back or change our aggressive stance.

What made me decide this? PS wrote that. Well as I perused our previous net worth and years of record keeping. I know we kept investing in 2007/2008 when we had less than we saved. But then it paid off gangbusters afterwards.

So now yes we have a more invested. And yes we are 10 years older. But talking with DH, he's in it for 10-15 more years. He's not planning on retiring until 15 years when our youngest should be done with college. If they lay him off that's a different story but as of right now it's in our heads he's going to work 15 more years.

That being said I think with a 15-20 year time frame of investing we risk it now. We stay in an aggressive investment strategy of 85% stocks/10% bonds and 5% cash. I don't think we cash in and take some of the returns off the table because we could miss out on more gains. My thoughts are until we are 5 years out we keep on investing aggressively. At 5 years out we switch more to preservation. And perhaps because at 5 years we can make a year to year decision to retire if the market is down maybe work 1 more year.

Do you think you'll keep on investing? Or is it better to take gains off the table?

12 Responses to “Staying Invested”

  1. MonkeyMama Says:

    It's wise to stay invested.

    In my experience, people tend to pull out way too early. Given these talks, I'd say we could easily have another 2-3 years of gains. (I believe MyMoneyBlog had a post about this recently ~ I will look for it. He said what I was thinking).

    & then there is age and time in market. If we had crazy gains in taxable accounts, I would personally maybe consider cashing out to pay off mortgage (or other debts if we had them). But as is, we started out with really volatile stock market years, which completely offsets recent gains. So I don't feel I am extraordinarily ahead, and most my money is tied up in retirement funds anyway. So it's moot.

    For the most part, my investing horizon is 20+ years. So we have no other plans but to stay invested through thick and thin. The only thing I do is rebalance periodically so that we stick with our investment plan. (I could see being very heavy in stocks if we didn't manage investments and rebalance during this long bull run).

  2. MonkeyMama Says:

    http://www.mymoneyblog.com/stock-market-boom-bust-cycle.html
    I agree with MMB. It's moot because I won't be changing my asset allocation no matter where we are in the cycle. But this is what I think about when I hear (young) people seriously discussing pulling money out of the stock market.

    I guess the question is (to everyone), are you trying to time the market? Or are you adjusting because you haven't adjusted appropriately for your risk tolerance? I am guessing a lot of younger people (who have only experienced stock market gains) may be in the latter category.

  3. ceejay74 Says:

    I agree with MM. Trying to time the market seems much riskier than just riding it down (when it inevitably goes down) and eventually up again. I've read plenty of articles about people who tried to withdraw and reinvest and ended up worse off than if they had just let it ride. I'm sure a few people luck out and do it just right; I limit my reliance on luck to buying a lottery ticket once or twice a year. Wink

    If I were about to retire I might think differently, but I too see myself working another 20+ years.

  4. Sallyr70 Says:

    I'm still putting funds away like usual. The only thing I'm doing differently is in my Roth account, which is Sharebuilder. I'm depositing the same amount each week, but not buying as much on my monthly stock purchases. Like if I was investing $500 a month before, I might only do $150. I can buy up to 12 stocks in a month but am putting smaller $$ into each. I have $8000 available to invest in case I decide to take advantage of a temporary dip. It's a very small percentage of my entire portfolio. I'm in 90% stocks/EFTs.

    Most of my investments are at record highs, so it's tempting to not buy anything right now, in case there is a 'crash'. On the other hand, if I had thought that way over the past few years, I wouldn't have been able to achieve a 27% return last year!

  5. bennyhoff Says:

    This is on my mind a lot. Not so much for me as I have 5 years to go and I'll be able to come back if need be, and I have a pension in any case. But my girlfriend has only a year until retirement and she is heavy in stocks right now. I discussed having her cut back on exposure over the past year or two but we decided to hold steady (thankfully). But now.... we should probably have her get some of her winnings into treasuries and such. But since she has a pension too, it need not be much, maybe 25% at most. Decisions, decisions.

  6. creditcardfree Says:

    We are staying all in. Never have pulled out of the market. Even at retirement you don't pull ALL your money out of stocks at one time, at least that would not be our plan.

  7. FrugalTexan75 Says:

    We're 100 % stocks ... mostly index funds.

  8. PatientSaver Says:

    I am a little older (maybe a lot) than many of you, and could be as little as 2 years away from leaving full-time work. (I want to work p/t though.)

    So my asset allocation is only about 30% US stock and and 15% international stock.

    I have 32% in domestic bonds and 13% in int'l bonds and 10% in cash (money market accounts and CDs)

  9. rob62521 Says:

    Both of us are retired but we are continuing to keep our stuff invested. At this point, we don't need any of the money; we are doing fine with our pensions and the money we have in money markets. But we aren't at 100% stocks either. The majority of our investments are tied to stocks, but not all.

  10. LivingAlmostLarge Says:

    I'm going to stay invested. Take the risk.

  11. Dido Says:

    It doesn't need to be an "either/or" question. It shouldn't be "in the market" or "out of the market," it should be how much of my total portfolio do I want allocated to cash, fixed income, equities, and other investments?

    It is helpful to think of things in buckets, so that you think of any cash that you have in investing accounts as funds to get you through lean times once you are in the distribution phase of retirement.

    Rebalance your portfolio once a year--that way if your equity portion got high, you will reduce it to the appropriate percentage and move the money into cash or fixed income and that rebalancing will "take some gains off the table" while not harming your overall strategy.

    Once you get close to retirement, you want to build a cash reserve so that you have the freedom to stay out of the market during declines. For me, right now I am paying down my mortgage and some other debt, but I am on target to have that paid down in about 6-7 years and once I do, for the last few years of my working life, I'll be putting that money into increasing my cash buffer.

    Even conservative investors and retirees should have a substantial chunk of money (at least 40%) in the market to provide a hedge against inflation.

  12. Milly Says:

    I really don't think we have 5 years before a major crisis, I wouldn't be surprised if it happened in 2018 either. I do, however think you need to keep a balanced portfolio, which means something in the stocks.

    This is the portfolio I think I'd build, but I'm not the only manager of my family's affairs: 25% domestic stocks, 25% foreign stocks (not in dollar denominations), 25% cash/high quality bonds/T-Bills, 25% hard assets (precious metals, undeveloped land, etc).

    It is fairly skewed towards inflation hedge, but that is where we are headed eventually.
    For my inflation thoughts see: Inflation - a Tax on your Savings
    question: is it bad form to post links to my blog if it is a SA blog with no affiliated links?

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