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Investing/Strategies / Retirement Investing
|Subject: Re: Asset Allocation||Date: 4/19/2013 12:38 AM|
|Author: dozer183e||Number: 72068 of 76891|
You might be confusing retirement investing with cash management. Overall, the point is valid, any money you definitely plan on spending in the next 5 years needs to be in something safe (money market or CDs).
Now I'm going off topic from retirement investing, but this is a concept I am starting to struggle with as I am getting older. I'm 44 and kids will be off to college in 3, 5, and 7 years.
I've been putting money away in a mutual fund for "Down the Road" (college and other stuff) over the last decade. Now "Down the Road" is approaching. So as I approach those "Life Goals" I am guessing I should sell mutual funds and switch the money to Money Market or CD. Is this the right concept?
My work around has been when saving monthly, instead of contributing to Mutual Fund, just put it in the MM, and use those funds for the goal that once was far away but is closer now. The funds in the Mutual Funds then "Transfer" accordingly to another goal that is "Down the Road".
As the life events that are coming are bigger, I need to figure another way, hate to sell the Mutual Funds, but i guess that is why I've been saving them. The Asset Allocation stated here on the Fool site says:
Rule 1: If you need the money in the next year, it should be in cash.
Rule 2: If you need the money in the next one to five years, choose safe, income-producing investments such as Treasuries, certificates of deposit (CDs), or bonds.
Rule 3: Any money you don't need within the next five is a candidate for the stock market.
According to this, in a hypothetical situation one should put funds into stocks for a goal that is 7-10 years away. Then as that goal gets closer, say 4-5 years away, sell those equities, pay the taxes(assuming in taxable account) and purchase bonds or treasuries, or CDs. Then as the goal is within one year, sell, pay the taxes(assuming in taxable account) and put into MM.
Does this all sound about right? Also, my funds are with Vanguard, so will be looking for something in the Vanguard family that meets the criteria of #2.
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