I've been seriously thinking about moving my retirement account into cash as of late. I know the golden rule is to not try and time the market, but I can't not think a big correction/pull back is looming. Am I crazy? Appreciate input from all you fiance monkeys who are way smarter than me.
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Do it with your post-tax savings not your retirement savings.
Unless you're over the age of 55 this makes no sense
I've never moved it all to cash, but I've kept portions of retirement and nearly all savings in cash at times. There's nothing particularly scientific to it, mostly just my general sentiment.
My results is that I've missed out on gains and I'm going to deploy some more $ back into the market at some point soon.
I don't mean actually liquidate and pull out the cash I mean move into a saving account through my ML account. Essentially cash..
again - unless are planning to retire in the very, very near future or need liquidity - this makes no sense.
Your second sentence starts with, "I know the golden rule is to not try and time the market," but that's exactly what you're trying to do.....
There's no doubt a correction is coming... at some point. But it could be tomorrow or five years from now. When you try to time the market, you're likelier to miss out on gains than you are to protect against losses.
how badly do you need the money? Do you plan on using it soon? If not and its a rainy day fund for a house, car,etc in the next 10-15 years, just throw it in a fund that tracks the market. You'll be fine
you are about a month too late...now is the time to be buying dips. the current market selloff almost exactly matches the fall of 2015 (2015 was caused by chinese stocks going down). the market will recover...we probably don;t have much farther to go down before we bottom. 2300 on the S&P 500 would be a gift...if we get there (we prob won't)...buy with both bands
2015 was caused by the same thing as this correction. The Fed was talking 3-4 hikes
if your worried about a market correction and still want to be invested you can buy a put option on a broad based index (i.e. S&P).....am i on a finance website?
Doesn't feel like it
the posters above me are finance newbiesThat works with regard to broader exposure, but to be fair to the posters above, most people can't buy options within their 401ks.
100% cash portfolio for retirement? (Originally Posted: 08/13/2011)
My dad's retirement portfolio consists of 100% cash. He is ten years away from retirement, and he will get a pension from his company.
He claims that the market is too risky...what is the best way to convince him to invest?!? And is right now a good time to invest?
lol what do u mean "cash"?
like literally cash stuffed in a mattress or a just a normal savings account?
He's doing better than Paulson this year.
Made my day
Right now is a terrible time to invest. Way too much volatility especially for a retirement portfolio.
"Cash" meaning U.S. dollars in normal savings accounts and in money market funds in his 401k
Why not 10 year T bonds?
massive interest rate risk.
He might as well keep it in a savings account. Treasuries had a record rally. For retirement he needs something that yields more than 2.20%.
I'm dumb. I was thinking t-bills and that there is no reinvestment risk if held to maturity (even though...how much worse can it get to worry about reinvestment risk when rates are already low).
That whole think before I speak shit isn't working out for me lately.
Why does your dad need to invest? For some people being able to live life without fear of bankruptcy is greater than the chance of striking it rich. Your dad has most likely planned out exactly what he will do with the amount of money he will have saved by retirement.
He just wants to retire; what difference does it make if he invests and manages to afford that second house in Florida?
True. Worried about inflation though.
If he has pension income, why not? Arguing the market is too risky now makes sense!
If he has pension income, why not? Arguing the market is too risky now makes sense!
I'm not an investment adviser, but being 100% in cash is just not a great move. For retirement, I would not recommend moving money into bonds right now. Long term, interests rates will go down (the bond market should peak sometime in the next five years). Your dad should concentrate on building a portfolio of strong stocks, with good balance sheets, that pay dividends. When boomers begin to retire, they will no longer buy bonds, since they will be using interest from bonds as their source of income. It takes a lot of buying to bring a market up, but it takes a lack of it to bring it down. Demand for bonds will decrease over time, making them an unattractive long-term investment.
Don't let him put his money in gold either. Gold is currently in rally mode, and this too will top out in the next few years. Central banks are starting to move foreign reserves onto their balance sheets, but its really an unattractive investment since it doesn't pay any income and its value is based solely on the perception of future prices by speculators.
Stocks are a great long-term investment, and your father should really consider buying good stocks, with strong balance sheets, especially on dips lower in the upcoming years. Look at companies like JNJ or XOM. These companies are AAA rated for their debt, they pay dividends, and they actually have growth potential over the coming years. Again, the demographics of the baby boom provide the outlook for this. As boomers grow older, they will live off income from bonds/dividends/pensions. They will not really look to be buying financial securities, except to maybe purchase bonds when their previous bonds reach maturity. Instead, they most likely will be spending a considerable amount of their wealth on everything from healthcare to travel, and this of course needs energy. While I am massively suspicious of equities in the short-term, I think after we move past the current mess, we will see a very strong, sustained, equity rally built off long-term growth prospects. Your father should invest in these securities to take advantage of both the value and growth they offer over the next 30 years.
LIBOR, thanks a lot...I will show this to my dad and hopefully he will make some moves
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