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Portfolio changes for retirement

Art
edited October 2019 in Fund Discussions
I am retiring at end of March, 2020. Fund choices in workplace 401 are few. I am slowly exiting existing positions in order to preserve principal. Once I retire I will move monies somewhere where my options are more suitable for a someone in retirement. My question is, Which funds of my 401 choices would you leave money in the next 6 months.

AMRMX, VFINX, VIGRX, OAKBX, OAKIX, FSCCX, VMVAX, PTTRX, ODMAX and a preservation trust fund.

Comments

  • More info would be appreciated. Age, will you have enough income from SS & pension, plus other income that you wouldn't need to drawn on 401-k at this time?
    Derf
  • Derf

    Just looking for an opinion on funds for the short term. Once I retire the money will not be at my workplace anymore. After I rollover I can pick which funds I want.
  • I would ask myself how would I feel if the date you moved the funds coincided with a 20% bear market and you had lost a chunk? There is an increasing awareness that people who loose large amounts in early retirement bear markets sometime don't have the confidence to stay in the market for the comeback. The next time it may not snap back like it did in 2009

    Consequently I would lighten up on the developing markets and stocks
  • X-ray is 68% cash/bonds, 25% large caps and 7% Int. No emerging markets, small caps, mid caps or allocation fund.
  • jeez, the next half-year, leave half-half in the vang500 and the pimco, or all in the pimco

    or, indeed, if there is a ~2% mmf, put all in that

    I mean, you already have something of a conservative bent (principal preservation)
  • @Art; thanks for the x-ray. I'd leave it alone.
    Derf
  • Art, you said no small caps. What is FSSCX if not that? In name only?
  • the x-ray is what I am invested in not what options I have in my 401. A small cap is an option which I was invested in until recently.
  • My apologies if necessary. I thought you were still holding it.
  • No apologies needed. I do far better with investments at Fidelity and Vanguard where I can pick my MF's vs. the few choices in my 401. Looking forward to that rollover.
  • edited October 2019
    Hi @Art, (FWIW) I'd say you are conservatively invested at about 70% (cash & bonds) /30% (equity) more so than me being at about 60% (cash & bonds) /40% (equity). With this, you know your risk tolerance better than me. I'd would stay invested along the lines of the long term asset allocation you plan to use going forward in retirement. I'm also thinking the asset allocation is more important, in the near term, over fund selection since you will be reconfiguring your portfolio in six months or so. For me, though, I'd add some small/mid caps along with some emerging markets and follow a global mix of about 70% domestic and 30% foreign. I'm thinking there is presently better value to be had in foreign equity over domestic; but, I would not venture to far towards foreign.

    However, some say, you really don't need foreign holdings since about 40% of the revenue found in the S&P 500 Index now comes form abroad. Perhaps so.

    I sincerely wish you the very best in the years ahead.

    Skeet
  • Skeet, I am afraid of a downturn in the market and having to sell once I retire and not be able to recoup my losses. Typically I would hold till things came back up. I suppose I could rebuy the same funds, only problem is they most likely would not be my first choice.
  • Say that you like fund A more than fund B in all market environments. If you were starting with $5K, it seems pretty clear that you'd invest that money in A rather than B.

    Now say you started with $6K in fund B, and because of market declines it's worth $5K. "Typically I would hold till things came back up."

    What's the difference? Whether you have $5K in cash or $5K in fund B, you've got $5K to invest - either put it/leave it in fund B, or invest it/move it to fund A. Many people have a mindset that they don't want to "lock in" a loss. But that $1K loss above is a sunk cost. It's not a question of "recouping" the loss, but where that current $5K would be put to best use.

    I agree with Skeet that you would be well off thinking about your long term asset allocation, setting up your portfolio that way, and when you roll over your account, to maintain your target allocation. Though you might use different and possibly better funds.

  • Art
    edited October 2019
    I had my 401 set up as you suggest until recently.

    The question I asked was:
    ''Which funds of my 401 choices would you leave money in the next 6 months.''
  • @Art, you may not want to take much risk with your nest egg just before you retire, so I would be inclined to go conservative the next 6 months until you are able to rollover and set up the portfolio the way you want it for long term retirement. Yeah, you may miss a little upside but you may be more unhappy to lose what you thought you planned to start your retirement with. Just my 2 cents.

    For less risk, I would just keep OAKBX and get rid of the other funds. Not sure what a preservation fund is, but if it is similar to a GIC I would split between that and the balanced fund OAKBX at whatever percentages you're comfortable with.

    Good luck.
  • Mike,You are correct the preservation fund is a GIC, earning around 1.7% for the year so far.
  • Art said:

    I had my 401 set up as you suggest until recently.

    The question I asked was:
    ''Which funds of my 401 choices would you leave money in the next 6 months.''

    Got it. You're not asking about portfolio allocation, just fund selection. There's no apparent reason to have significantly different asset allocations five months from now (pre-retirement) and seven months from now (post-retirement).

    But the specific funds you have available will change in six months, when you roll over your 401k. So you're asking about funds to use now for the next six months given your target allocation.

    (If it helps you feel better, you might check to see whether your plan allows in-service distributions after age 59½, assuming you're that old. Then you could just move the money now; end of problem.)

    Frankly it won't matter which 401k funds you pick. They are all respectable.

    Whether you get your chosen large cap domestic equity exposure by using VFINX or a combo of AMRMX and VIGRX won't make a big difference. Whether you take one of these options and add PTTRX for your bond exposure, or use OAKBX for both stocks and bonds won't make a big difference either.

    Building on @MikeM's comment - if you have a stable value fund that is paying as much as an intermediate term bond fund, that might actually be a better choice than PTTRX or OAKBX for bond exposure. Long term (the past year was an anomaly for bonds) that could give you similar returns with less volatility. You could roll over your other assets while leaving money in the stable value fund (if that's what you've got) when you leave.
  • The combo of AMRMX, VIGRX, OARIX and PTTRX are my current choices. Monthly contributions have been going into the GIC for a few years now. OARIX is showing sign of life of late. Not been kind to me the last few years but I didn't have another option.
  • History may make me look foolish but I don't think the market will be in serious trouble unless and until its clear that Trump will leave office which seems unlikely in the next 6 months. Since you are conservative I would go with 25% oakbx 60% the capital preservation fund and 15% the PIMCO fund or other fund you think looks best.

    You will surely be following Buffett's advice
    Rule 1 Don't lose money
    Rule 2 Don't forget rule 1
    remember that even when conservative your retirement account should provide a real return (i.e beat inflation)
    I think my suggestion will meet that goal and I hope your desired future investments will do that.
  • I look forward to being able to choose my investing options myself. I help my parents with their Vanguard account and they do better than I do at times. 401 fund choices are good for accumulation phase and the trustees are going with more index funds lately,Recently replaced CHTTX with VMVAX.
  • When I left my long time 401k and rolled over to Schwab I felt better about consolidation, choices and professional help. I'm sure you will have the same good experience. I believe less funds makes for better organization, but we are all different. Good luck @Art.
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