Retirement portfolio has dropped dramatically - seeking help

[rozeb]

Appreciate some sage advice from this brain trust -



My retirement portfolio has dropped dramatically.

For my 403B (pre and post-tax), I was using the following split:

25% Target Fund - I will retire in about 25-30 years (-14.06% YTD)
10% Large-cap Vanguard Index fund (-12.44% YTD)
50% Mid-cap Vanguard Index fund (-17.97% YTD)
15% Blue chip (-24.5% YTD)

I am thinking for future investments to move majority into target retirement fund (70%) and pull out of the others or reduce investment to 10% in the remaining 3.

What would you all do?

[PhysicianOnFIRE]

It depends on what you own elsewhere, but I'd probably keep it simple and be 100% Vanguard Large Cap in this account. Maybe add bonds if the volatility of stocks is giving you heartburn.

And recall the fact that the stock market will drop by more than 10% at some point in most calendar years. It's not different this time.

[Tim]

The “right” answer is to rebalance according to your IPS target. But I have no clue when or if you have a rebalancing criteria base on time or triggers.
Changing allocations, in your case all equities base on performance in say 1 quarter is a fools game.

25-30 years I would stick with it. Do some homework on your risk tolerance and capacity and appropriate AA. Make any changes when the market recovers.

[CordMcNally]

What would you all do?

Invest more.

But seriously, if you’re 25-30 years from retirement I’d probably just put it all in a US Total Market fund and call it a day. In 30 years, you’ll wish you’d have bought even more at today’s prices.

[bovie]

I’d move it all to the large-cap fund and quit checking it for a while.

[Larry Ragman]

I would definitely simplify. The Target Fund may be the right choice. Can’t say because you didn’t tell us which one. But if it is an age appropriate Vanguard Target Date Fund, then sure, drop it all in there. That is what I do. You will get risk balance over time along with your growth. But bear in mind that you are likely giving up a bit of growth. That is, if you understand the risk, an all stock index fund will likely return more over time. And the TDF likely has a slightly higher expense ratio, though this is negligible.

[Larry Ragman]

By the way, no need to obsess about the market being down this year. The market cycles, but over time the trend is up. No one can time the ups and downs, so best to dollar cost average into a low cost index fund and hold it for the long term. Easiest way in the world to buy low and sell high (when you eventually retire).

[JBME]

stocks are on sale. buy more. not joking

[Tangler]

By the way, no need to obsess about the market being down this year. The market cycles, but over time the trend is up. No one can time the ups and downs, so best to dollar cost average into a low cost index fund and hold it for the long term. Easiest way in the world to buy low and sell high (when you eventually retire).

If you retire in > 5 years (longish time horizon), do two very simple things:

1. keep buying (probably the best thing to buy is a combination of the entire US market and the entire international market. ex: 75% VTI + 25% VXUS)

2. Turn off news. (ignore noise)

1 and 2 only work if you are >3 years from retirement. If you are less than 3 years from retirement then you need to do the following:
1. Turn off the news.

2. Build up a large bucket of cash (2-5 years worth of living expenses) with new income

3. After you have the cash bucket you can keep buying stocks. (Stock index funds / ETFs )

Notice in neither scenario did I say sell. Nor did I say worry. Nor did I say the worst of both: Panic sell.

As long as you don't panic sell you will be fine.

Even a knucklehead can win if he just turns off the news. Year to date returns are irrelevant.

Buy.

Have a good morning.

[Random1]

Do one of the following

1 - invest more , I personally like betting against the house, buy the one that went down the most.

2 - turn off you computer, read a basic investment book, and don't make any transactions

[CordMcNally]

1 - invest more , I personally like betting against the house, buy the one that went down the most.

I assume you're talking about the index funds you hold. I don't think there is anything about being an indexer that is betting against the house. I mean, you're buying an index.

[Random1]

I mean buying when everyone thinks the sky is falling. The whole idea of worrying that your investments are going down, when you have several broad index funds and thinking about rearranging your investments now, usually turns into a self defeating issue. All of the funds listed by the OP are 'good" standard funds. Selling some now because they are going down usually is not the right move, especially with a time horizon of 30 years. Either double down or sit it out for a while. Trying to rearrange your portfolio in a negative market tends not to be productive unless you are substituting with TLH.

[zlandar]

VG lists the US market cap as 77/14/9 large/mid/small.

Putting 50% in mid cap seems like an odd tilt.

[Hatton]

The best advice that I can give you is what others have said. Turn off the news. Continue investing. You will be fine in 25-30 years.

[Kennyt7]

From 45yrs of being a DIY investor, the less you do the better off you will be long term
Have at least 80% of funds in US Total Stock Mkt Index Fund