Hi, Getting within a year of retirement, have been converting a set of Mutual Funds into a portfolio containing: 20% Money Market Cash (for the 3 - 5 Year down market); 70% Rule Maker Portfolio; and 10% Rule Breaker Portfolio over the past year and am wondering how I manage the sale of stocks within the portfolio for living expences. Should it be purely mechanical where a small percentage of all stock holdings within the Rule Maker Portfolio are sold to equal the necessary yearly living draw OR should the stocks growing the fastest be sold last (selling the slower performers first)? If this has been a subject of current posts can you point me to some of them.Thanks in advance.Tom
mcandret,The usual Foolish retirement plan is to keep your liquid assets for the 3-5 year famine in laddered CDs or bonds where you control the maturity, not the mutual fund company.You set things up so they mature 1 yr, 1.5 yr, 2 yr, 2.5 yr, etc. out to 5 years (you can vary the intervals, amounts, and duration as necessary). You live off the interest from all the CD/bond and from the principal of the one that matures. If your stocks are doing well, you sell some and then buy a new bond or CD with appropriate maturities. If your stocks are doing poorly, wait it out and hope for a recovery within 5 years.
jrr7,Thanks for the reply. I've got about 4 yrs of living expences in Money Marker Funds. About 2 months ago I took this first step so that when the market is not performing, I have funds to use for living expences.The next step I need to take is to determine a better place for this money, hopefully something better than the Money Market but with about the same risk. I've been spending lot's of time learning how to handle stocks. Now I need to spend some time with the non-stock portion of my portfolio. At approximately 5% per year I'm not sure it really makes any sense to go to the trouble of going to CDs, laddered CDs or Bonds.Thanks again,Tom
Tom,Bank CDs are now paying over 7% a year -- check out www.bankrate.com . That might be worth the trouble of going to a CD ladder.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |