[Marin]

I understand the “set it and forget it” strategy, but when do you actually take profits? Some of my accounts are back to being up 20% but I’m about 5 years out from retirement, if I can average 7% gains for the next 5 years.

I feel like every book etc talks about how to invest, to leave it alone, don’t try to time the market etc but not really what to do next.

[Keith]

Having cash on hand helps during market drops so you can draw less during those times.

I have started saving some more cash and less in the market for these reasons.

[Bill]

If you are 5 years from retirement you need to move enough for 3 to 5 years expenses out of the market.

Nobody knows when an event like this will happen.

I am within 5 years too and my advisor has already started it.

[Ali]

Good question. Maybe another way to pose this is when do you start to change your investments to protect them as you get closer to retirement?

Unless you’ve got more than enough, I’d probably not pull anything out, but maybe shift to more conservative investments to protect your nest egg since you’re hopefully five years from retirement.

[Bill]

The book Quit like a Millionaire it goes into this a bit more than the rest and talks about tax strategies around withdrawals as well.

[Angie]

If you are 5 years away from retirement, you should have a portion of your portfolio in bond funds.

That way, you can live off of the dividends of those, even if the market crashes.

Seems a little late now, though.

[Bill]

If that’s the case, set GTC trailing stop losses at a comfortable percentage specific to the tickers beta and make sure to update them every 180 days.

But you should be moving more into low beta tickers, too.

Of course, nothing but cash is safe in a recession… even gold will fall in a recession, but cash holds as deflation crushes everything else and allowing you to use your cash position to buy stocks at lower prices for the next Bull market.

[Julie]

Depends on what you are holding. I’ve dumped some stocks for others.

If you are in EFTs, I would leave it.

[Darien]

Take profits my trimming your position. Usually, it’s after a run. I take profits or trims when the 5 days cross over the 10 days in a decline.

That way I don’t leave any opportunity.

[David]

Advice I’ve gotten…when looking to transition portfolio from accumulation to retirement you want to sell when markets are at or near all time highs.

5 year window is a good time to start thinking about doing that.

When taking distributions, sell what’s doing good which will help rebalance as you go.

When rebalancing sell high buy low usually. Anyone feel free to poke holes in that

[Zach]

Doesn’t it all depend on how you intend to fund your retirement with your nest egg? Do you plan to live on dividends and never sell shares?

Do you intend to be able to sell shares and live off those funds until you check out?

Do you already have 2-3 years sitting in an HSA or MMA to weather a storm like this?

[Lauren]

You dollar cost average out in retirement. It’s never a matter of taking money out just to move money out of the investments.

Exit looks the same as the entrance – automated and consistent.

[Elizabeth]

Times when you might want to “take profits”:
– Rebalancing your portfolio

– Adjusting asset allocation based on time horizon (NOT based on recent performance/market timing)

– you need to withdraw to cover your expenses in retirement or refill a “cash bucket” if using a bucket strategy

[Daniel]

figure out a percentage you want to live off of and dollar cost average out the same way you went in

[David]

If it’s in a 401k or Roth….
Trim or sell when it hits a 52 week high or within 1% of one and then set an order to buy again when it drops 5-10% from that point.

Might need to keep more of an eye on it then the set it and forget it strategy but it may be worth it

[Clark]

I’m thinking to rebalance. Sell where you are up and put it in safer investments like money market, CD, or cash.

You could spend that first when you retire.

[Allen]

It really depends on how you want to fund yourself. You could use dividends, so you never have to remove money, or you can use the 4% rule, which is The 4% withdrawing 4% of your retirement portfolio in the first year and adjusting that amount for inflation in subsequent years, aiming to make your savings last for approximately 30 years.

[John]

IDK what books you are reading but any good investment book should start with choosing an asset allocation.

If you stick the the allocation you will be buying and selling asset classes to stay on target.

[George]

Look at any target date fund family, each of them offers a glide path to switch asset allocation from stock heavy to bond heavy towards retirement date

[Elie]

Five years from retirement may not be enough time to make big changes in your allocations but I would recommend checking out the book called Power of Zero which may provide some insights into the withdrawal strategies

[Author]

Posts