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Should I consider reallocating retirement funds from aggressive?

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I'm in my early 30s and have a 80% equity and 20% bond exposure. It's on the aggressive side as I have a significant allocation tracking S&P 500 index and similar stock indexes. I'm not trying to time the market but the market levels seem high. Reallocate to less aggressive?

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indebted said:   I'm not trying to time the market but the market levels seem high. 
No, that's exactly what you are thinking about doing. 

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Early 30's I would probably leave it as it is. Can you pick one of those funds that adjusts based on your age? I'm not a financial planner, nor play one on TV. But I recently stayed at a Holiday Inn Express...

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I would actually just reallocate to 100% equities when the market drops. Bonds aren't a good investment.

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I honestly don't know why anyone in their early 30s would have ANY bond exposure.  Let it ride.

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If one has a low tolerance or appetite for extended market downturns of month after month of steadily dropping stock prices, bonds will soften the blow. We haven't had an extended market downturn for quite a while and people tend to downplay that it will happen again. Good bond funds, over time, still make money in rising rate environments.

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The classic reason is because the risk-adjusted returns of a mix of stocks and bonds is higher than that of stocks alone. But that logic falls apart because the absolute return is lower and you're supposed to lever up or down to hit your desired return level, and most people can't do that since their portfolio is in a retirement account, so they just go for the highest expected return and pile into stocks.

And scale matters too. Easy to take a 50% drawdown on the SP500 when you're young and have a small account. Not so easy later on when you watch a million turn into 500k.

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mapen said:   If one has a low tolerance or appetite for extended market downturns of month after month of steadily dropping stock prices, bonds will soften the blow. We haven't had an extended market downturn for quite a while and people tend to downplay that it will happen again. Good bond funds, over time, still make money in rising rate environments.
  And we probably have a crop of younger people who have never seen or invested during a high or rising-rate regime. I barely have and I'm 50.

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indebted said:   I'm in my early 30s and have a 80% equity and 20% bond exposure. It's on the aggressive side as I have a significant allocation tracking S&P 500 index and similar stock indexes. I'm not trying to time the market but the market levels seem high. Reallocate to less aggressive?
  
It wont be any less aggressive ... but perhaps take 5%  and for a period of time put it on a sector fund you like - maybe energy sector - that has been hammered lately.  There are other sector/asset class like REIT, Gold/precious metal that might further diversify (if you think equity is too aggressive).  There are loads of sector mutual fund.


 

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There will be many times over your investing lifetime when you feel like doing something because market levels seem high, low or whatever. Don't. Actively managing your portfolio in that manner is a fool's game. Pick an asset allocation and stick with it.

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1. You really shouldn't be in any bonds

2. S&P 500 is not "Aggressive". It's made up of the 500 largest companies. Hardly any risk long term.

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