AGoodLifeMDParticipantStatus: PhysicianPosts: 9Joined: 09/28/2017
We currently have 88:12 ratio stocks to bonds. I would like to be 80:20 at some point in the next 3-5 years. We have a very large next egg compared to our annual investement purchases so I can’t get there in one year or maybe even 5 years (we were supersavers with a much larger paycheck when younger). I buy 1-2 times per year when the money in savings gets large enough.
My question is: Should I buy only bonds each purchase until the 20% bonds is reached OR should I continue stock and bond buying at something like 50:50 and just rebalance by selling stock next time the market rises OR do something different than these 2 choices?
I think this will be an ongoing issue as my next egg grows with the market and my paycheck gets smaller as I work less. Seems like I may have to get used to rebalancing every few years to keep risk in line with tolerance.
AGoodLifeMDJanuary 6, 2019 at 2:11 pm MST #179107ENT DocParticipantStatus: PhysicianPosts: 2718Joined: 01/14/2017
Buy into it if at all possible.jacoavluModeratorStatus: Physician, Small Business OwnerPosts: 1687Joined: 03/01/2018
Usually one would shift things around in a deferred account such as 401k or IRA to bring their portfolio in line with target. You could do that right now assuming you have deferred money and decent investment choices.
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVAHankModeratorStatus: AttorneyPosts: 1116Joined: 03/27/2017
If you’re in the accumulation phase, buy to rebalance towards your desired asset allocation. If you’re living off your assets in retirement, sell to get back in balance.January 9, 2019 at 7:26 am MST #179840ZaphodParticipantStatus: Physician, Small Business OwnerPosts: 5415Joined: 01/12/2016
Best to try to keep buying if it looks like that will get you to the desired allocation by the time you no longer will be contributing. If it doesnt, I’d rebalance at that time after your last contribution to get there.January 9, 2019 at 7:44 am MST #179843BmacParticipantStatus: PhysicianPosts: 280Joined: 10/21/2017
As alluded to above, I think a lot depends on whether you are able to rebalance within tax-deferred accounts or would need to generate significant taxable gains within taxable accounts. If the latter, then preferably move toward your goal with new purchases only (100% into fixed income until end desired asset allocation reached).January 9, 2019 at 8:00 am MST #179846TanglerParticipantStatus: PhysicianPosts: 81Joined: 08/23/2018
Like others suggested, If in taxable accounts then reballance by buying bonds, if in an IRA then either buy or exchange to more bonds.
Also, you mentioned saving in a bank account and then when buying when you have a certain amount.
Why would you wait with $ in savings prior to buying? Would it not be better to invest as soon as you have the $ so as to max out time in the market to compound?January 11, 2019 at 6:19 pm MST #180632