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Stock Market vs. Security - 6/26/2008 11:13:50 AM
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rwe2156
Posts: 2071
Status: offline
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We currently have all of our investments in
index mutual funds.
With the economy going south, etc., I thought
its time to take stock  and maybe
convert some of it to cash in the form of CD's
to minimize risk.
Of course, this is based on an assumption that the
market will fall, which I have no evidence to support.
Any thoughts?
We are debt-free, have a decent income, and
have no mortgage. In addition, my business
has no debt except for 14 months left on mortgage,
We do not need to be liquid.
This money is strictly for retirement.
_____________________________
The Truth is between the tensions. The "contradictions"only reflect our lack of understanding.
So we choose sides. God help us.
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RE: Stock Market vs. Security - 6/26/2008 11:17:31 AM
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Ps103
Posts: 11537
Joined: 4/16/2005
From: Here, now
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How long before you retire?
_____________________________
Fasten your seatbelts...it's going to be a bumpy night.
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RE: Stock Market vs. Security - 6/26/2008 11:42:26 AM
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NoShow
Posts: 436
Joined: 5/10/2005
Status: offline
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What were your reasons for buying the Index funds?
Have those reasons changed? Have your circumstances changed?
What you are basically asking is, should I time the market(s)? And you yourself said it is with "no evidence to support".
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RE: Stock Market vs. Security - 6/26/2008 11:54:51 AM
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GroupW
Posts: 2807
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
Status: offline
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No evidence to support it and much evidence to say it's a bad idea. At this point, I think you have to recognize that with the Dow having declined some thousand or so points, much of the damage has already been done.
Markets go up, and markets go down.
An answer to your question would have to be based on many things:
1) Your own risk tolerance - can you stand seeing a 10-20% decline in your equity holdings without feeling ill. If not, maybe you had too much there to begin with.
2) Your total wealth amount - the more wealth you have, the more risk you can withstand.
3) Your total liabilities - the more debt you have relative to the amount of wealth you have the LESS you can afford to take risk. (This doesn't appear to be much of an issue)
4) Your liquidity needs - do you have a floating rate mortgage, for example. Potential health or job loss/business failure issues. Do you have a rainy day fund that's adequate? Is it legally separated from your business obligations and bankruptcy remote?
5) Very importantly, what proportion of your wealth is currently in fixed income, cash, or alternative investments (real estate, etc) that are potentially more stable in nature?
6) As Ps103 says, your age. There is a fair amount of research though that says age is not a primary determinant of proper asset allocation. (We can talk about that sometime if you like, but it's mostly boring statistical stuff regarding the long term application of asset price volatilities.)
With the information you gave us, it would appear that you have the ability to take a fair amount of risk. Offsetting that, as a business owner, you already have a large concentrated equity risk.
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RE: Stock Market vs. Security - 6/29/2008 9:05:09 PM
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rwe2156
Posts: 2071
Status: offline
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Hopefully in the next 6-8 years I will be in a
position to work when I want and spend most
of my time serving the Lord wherever he leads me.
_____________________________
The Truth is between the tensions. The "contradictions"only reflect our lack of understanding.
So we choose sides. God help us.
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RE: Stock Market vs. Security - 6/29/2008 9:10:54 PM
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rwe2156
Posts: 2071
Status: offline
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quote:
1) Your own risk tolerance - can you stand seeing a 10-20% decline in your equity holdings without feeling ill. If not, maybe you had too much there to begin with.
Yes
[quoe]2) Your total wealth amount - the more wealth you have, the more risk you can withstand. I am not wealthy. We are talking less than 150K total in the market.
quote:
3) Your total liabilities - the more debt you have relative to the amount of wealth you have the LESS you can afford to take risk. (This doesn't appear to be much of an issue)
I am debt free.
quote:
4) Your liquidity needs - do you have a floating rate mortgage, for example. Potential health or job loss/business failure issues. Do you have a rainy day fund that's adequate? Is it legally separated from your business obligations and bankruptcy remote?
No. I am self employed, no mortgage except for business (14 mos left)
quote:
5) Very importantly, what proportion of your wealth is currently in fixed income, cash, or alternative investments (real estate, etc) that are potentially more stable in nature?
An equal amount as I have invested.
quote:
6) As Ps103 says, your age. There is a fair amount of research though that says age is not a primary determinant of proper asset allocation. (We can talk about that sometime if you like, but it's mostly boring statistical stuff regarding the long term application of asset price volatilities.)
I am 52 years old and in excellent health.
With the information you gave us, it would appear that you have the ability to take a fair amount of risk. Offsetting that, as a business owner, you already have a large concentrated equity risk.
_____________________________
The Truth is between the tensions. The "contradictions"only reflect our lack of understanding.
So we choose sides. God help us.
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