Thanks to the long-running bull market, our asset allocation had gotten more stock-heavy than I wanted it to be. At the end of 2017, we were 81% stock, 14% bond, 5% cash. Although I am by no means a market timer, I'm also a realist and understand that the bull market is going to end one of these days, probably sooner rather than later. I've always been very aggressive with our portfolio but we're now both in our early to mid 50s and have fewer years ahead of us to recover from any major drop. It was time to start dialing back the risk level to help protect our assets and buffer the impact of a future bear market whenever it may happen.
I decided to work towards getting the stock allocation down around 70%. I made a couple of moves early in the year, shifting 20K from stocks to bonds. Then there was that quick correction where the Dow dropped a couple thousand points. I was concerned that I may have missed my opportunity but fortunately the recovery was just as quick as the correction. Before the market had a chance to tank again, I moved the rest of the money needed to get to that new target allocation, about 100K.
So as of now, we are at 70% stock, 26% bond, 4% cash. I think that will give better downside protection when the bear shows up while still giving plenty of exposure to the upside as do still have many years ahead of us hopefully and need to have continued growth in our portfolio.
What is your asset allocation? How often do you rebalance?
Rebalanced our portfolio - what's your AA?
March 10th, 2018 at 12:50 am
March 10th, 2018 at 01:20 am 1520644800
March 10th, 2018 at 12:54 pm 1520686486
I'm about 5 years older than you and am only working p/t now, so I've reduced my stock weighting more. Currently I'm at 45% stock, 45% bonds and 10% cash.
March 10th, 2018 at 06:26 pm 1520706371
When I hit 60, I'll dial the risk back more, but I've 2.5 years until then.
May 17th, 2018 at 09:11 am 1526548264