I started out investing with 10% fixed, 90% equities (using the 115-age rule). As a result of the continued revolt in the equity markets, however, my asset allocation changed to 21% fixed, 79% equities. That’s a tad too conservative for me and my 35-year time horizon, so I’ve decided to re-balance.
But, being the chicken that I am, I only rebalanced to 17% fixed, 83% equities. Not a huge difference, but still a first step. After New Year’s, I’ll start thinking about rebalancing more aggressively.
And, my retirement balance has dropped in value by more than 1/3 from my contributions. This is the first bear market that I’ve had money in, and I’m proud to say that I haven’t made any drastic changes based on my emotions.
I’ve read over and over again how a down market is one of the greatest gifts to a young investor, because you are purchasing cheap assets that will have decades to recover and appreciate in value. I know I’m in it for the long haul, but this hurts. I wouldn’t be surprised to see the Dow down to 7,000, with potential to fall another 500+. I can only take comfort in the fact that in 20 years, stocks will look cheap now.
Note: I am not a financial expert and I am doing only what is best for me. Please don’t make financial decisions based on anything I say in this blog.
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Good for you and I agree.
I am currently 100% equities (in my 401k & Roth IRA, which isn’t saying much since the amounts are very small) – and I do have about $5K in liquid savings.