I am going to about a 60/40 mix VOO/Cash for my first time. I have always been a buy and hold investor, but after yesterday, my Fidelity MM (SPAXX) should be paying around 4.5%. That's the most it has been since prior to 2008. I know I cannot time the market, and I will eventually go back to stocks with this portion, but I feel my risk is no longer being rewarded by the S&P vs 4.5% interest. Maybe I'm late to the game on this, being a resilient buy and hold investor.

I may go about an 80/20 in my Roth as well. I own a lot of QQQ and other ETFs in my Roth allocation. Why not add a cash allocation also?

Anyone else doing this?

I haven't although I'm holding the most cash I've ever held which is still only about 3-5% of my total investment portfolio. I do have about 30% in RE but it's not income producing (yet) so that's a net worth look and not a liquid look unless we sell....which we do plan to do.

I'm not going cash, but I'm also not really taking on any new investments at the moment. I have monthly transfers into my IRA and kid's UTMA. That cash is going to sit in the account for a little while and earn interest.

I don't know about "timing the market" sounds like broker talking points. But I know that you can save your money, buy quality companies when it's scary to do so, and sell when they are all anyone can talk about. Use overbought / oversold indicator on a weekly chart, check it once a week.

Right, but how is it not just an income producing sleeve? My total portfolio across all accounts would still be 70% S&P.

I may be timing the market somewhat on moving the allocation around (I.e. increasing income producing cash), and moving back to 100% stocks someday. But I do change up my allocation to some degree each year. I over emphasized energy last year and it really paid off. How is that foolish?

Anyway, just was curious if anyone else was taking advantage of the higher interest rates and taking less risk on shorter term investments, and utilizing cash as a FI % allocation in IRAs.

I'll stay on my island.

FWIW, I've never kept "cash" in cash, I've always kept it in VOO because of my understanding and acceptance of that risk profile. It really paid off over the last 10 years. Now I'm just parking some of my "cash" into cash, now that it pays something. Probably should have clarified that.

Im continuing to buy.

Tip of cap old man

Asset allocation analysis can't really be done without knowing your age, retirement time horizon, account balance and the amount you plan to draw each year in retirement.

I.e. 60/40 might be great for someone about to retire but terrible for someone who is 30 years away. Also 100% equities might be okay for someone who is retired if their withdraw rate is under 3%, they would likely have plenty in the account to survive any wild swings.

P.H. Dexippus said:

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TriAg2010 said:

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The Chicken Ranch said:

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I am going to about a 60/40 mix VOO/Cash for my first time. I have always been a buy and hold investor, but after yesterday, my Fidelity MM (SPAXX) should be paying around 4.5%. That's the most it has been since prior to 2008. I know I cannot time the market, and I will eventually go back to stocks with this portion, but I feel my risk is no longer being rewarded by the S&P vs 4.5% interest. Maybe I'm late to the game on this, being a resilient buy and hold investor.

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What you're trying to do is time the market, which you acknowledge you cannot do.

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Is it not diversification?

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The premise of the trade is to move some portion of the portfolio from equities to cash and then back. OP specifically said "I will eventually go back to stocks with this portion." How is this trade successful without correctly timing your exit and entry?

Reading between the lines, OP is saying "my gut says a dip coming and I'd like to avoid that."

I think most people can look at a strategy of dollar cost averaging given uncertainty while keep spare cash in a 5% MM account.

YouBet said:

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OldArmyCT said:

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I'm 100% equities and I graduated in '73. That makes me (1) older than most of you, and (2) more equity invested than most of you, %-wise. Well, I do have 3% cash.

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That's ballsy old man. Respect.

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Not really. He probably understands that he can draw his retirement income from the dividends of America's finest businesses and let his principal continue to grow for his heirs. Not to mention that income is growing each year by over twice the rate of cost of living increases.

Seems much more logical than bonds.

TriAg2010 said:

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P.H. Dexippus said:

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TriAg2010 said:

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The Chicken Ranch said:

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I am going to about a 60/40 mix VOO/Cash for my first time. I have always been a buy and hold investor, but after yesterday, my Fidelity MM (SPAXX) should be paying around 4.5%. That's the most it has been since prior to 2008. I know I cannot time the market, and I will eventually go back to stocks with this portion, but I feel my risk is no longer being rewarded by the S&P vs 4.5% interest. Maybe I'm late to the game on this, being a resilient buy and hold investor.

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What you're trying to do is time the market, which you acknowledge you cannot do.

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Is it not diversification?

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The premise of the trade is to move some portion of the portfolio from equities to cash and then back. OP specifically said "I will eventually go back to stocks with this portion." How is this trade successful without correctly timing your exit and entry?

Reading between the lines, OP is saying "my gut says a dip coming and I'd like to avoid that."

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That's really kind of how I look at it. Worst case scenario is the market goes up a lot in the short term with 40% in cash clipping just south of 4.5%. I know I won't time it perfectly, but I do think there is more downside than upside risk right now.

Only time will tell, but interest rates are the highest they've been in 15 years.

Bizarro Jerry said:

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YouBet said:

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OldArmyCT said:

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I'm 100% equities and I graduated in '73. That makes me (1) older than most of you, and (2) more equity invested than most of you, %-wise. Well, I do have 3% cash.

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That's ballsy old man. Respect.

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Not really. He probably understands that he can draw his retirement income from the dividends of America's finest businesses and let his principal continue to grow for his heirs. Not to mention that income is growing each year by over twice the rate of cost of living increases.

Seems much more logical than bonds.

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Logic.

Soon to be 70, and if asked and I answered without giving it much thought, I would say that I am pretty much 100% in equities. I guess my answer would have been that because I consciously make investments in purchasing equities and because I own no bonds, no crypto, do own some silver but not enough to get excited about. Always been a buy and hold type of guy, probably too much so. Just never paid a great deal of attention to where things stood by category, available funds generally went into the purchase of equities.

So, this discussion caused me to look at where I stood at 12/31/22. Leaving our home out of the mix, I am 34% in equities, 17% in non-income producing real estate, 33% in income producing commercial real estate, 13% in cash and notes receivable, and 3% other. Cash is almost never that high, but it is being parked pending building a new home. I am happy with the returns we have gotten on the equities, but there is way more cash flow and appreciation on the commercial real estate and more appreciation on the non-income producing real estate.

Sure wish I was turning 30 and got to do this all over again, lol.

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Sure wish I was turning 30 and got to do this all over again, lol.

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Ain't that the truth.

Just a few years behind you & if I had it all to do over, I would have started with a duplex in my 20's, lived in one side & had the other side make the payments and continued with real estate investments from there. Real estate has been our best place for cash for years & all have appreciated, paid for themselves + the monthly income is sweet. We've never made the jump into commercial, but have several residential properties of various sizes & some Ag Exempt land - all have appreciated way more than the percentage of our stock portfolio - but we've done well there, too, just not as well....

Right now we are under contract on a couple more & eyeballing another to reduce cash on hand & some 4% cd's where we parked cash from a property sale.

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They now live off the proceeds of that sale all the while not having touched any of their retirement nest egg. They are now 80.

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My life goal! Cheers to your smart people parents!

schwack schwack said:

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Sure wish I was turning 30 and got to do this all over again, lol.

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Ain't that the truth.

Just a few years behind you & if I had it all to do over, I would have started with a duplex in my 20's, lived in one side & had the other side make the payments and continued with real estate investments from there. Real estate has been our best place for cash for years & all have appreciated, paid for themselves + the monthly income is sweet. We've never made the jump into commercial, but have several residential properties of various sizes & some Ag Exempt land - all have appreciated way more than the percentage of our stock portfolio - but we've done well there, too, just not as well....

Right now we are under contract on a couple more & eyeballing another to reduce cash on hand & some 4% cd's where we parked cash from a property sale.

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I have always been a stock market guy, at least up until my 50s. I also wish I had done exactly what you suggest regarding the duplex. My issue was not wanting to borrow money. My dad quit school at 11 years old and ran away from home, so his income, throughout life, was somewhat limited. I had nobody to help me if things turned south. Nobody I could count on to back me financially.

But as a CPA in my hometown, I had numerous clients with a lot of funds to invest and I should have put together a group of 4 or 8 people, each kicked in $10,000 and then borrowed enough to build a four-plex or two. Once those were rented up, do it again. At some point, decrease the size of the group to 2 or 4 investors. Wash, rinse, repeat. Talked about it a time or two, but was so busy building the CPA practice, just never pulled the trigger. Probably my biggest mistake.

Bit late in the game for me now, but I am working on encouraging my son and my two son-in-laws to venture in that direction. Something like the strip centers you find on two sides of every Walmart. While that would be beyond their reach initially, they could still put in a small strip center on way less expensive dirt. My son bought his home from an old friend of mine who owns a duplex right behind my son's house. Right now it is empty, so we are about to investigate as to whether he might want to turn it loose.

We've never gotten into commercial real estate but have some friends that have done well with it. I like your long term strategy for partnership building. We've never been comfortable with it, assuming it would ruin friendships & that we'd get stuck with maintenance since we're handy.

We had a bit of luck getting started - a lump (not a ton) of cash that bought a run-down 4plex in a great, historic neighborhood. We recouped 100% of the purchase & renovations in 4 years & kept rolling that rental income forward into more. That one property now covers all of our tax, insurance & maintenance on all 14 properties.

Your son should go for that duplex for sure.

Good stuff!

We keep our liquidity in the BlackRock fund TMCXX. I think it's paying 4.6 or so.

BlitzBrother said:

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No right answer for everyone at any single moment - I am a 40 year money manager , just retired from $1,2 billion under management firm I help found - Always been a long term investor , but in retirement and focused on my money only , I have learned to be agile , trade more - Currently just went 100% hedge , still conservative , think bottom not end - Will see , could begin to change as quick as tomorrow - Allows a process , a life long pursuit !

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To this point I thought we had a new whale on here. Alas....

Danwell Home said:

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I don't really see a guaranteed 4.5% return as a bad investment for a year or so when a lot of modelling uses 6% return for equities.

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Strongest argument against this is missing the equity rebound and buying back in at a higher price.

Agreed! That's why I am just adding it to the mix.

LMCane said:

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RightWingConspirator said:

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We keep our liquidity in the BlackRock fund TMCXX. I think it's paying 4.6 or so.

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so you are giving advice on a public sports message board to use a product that has a:

Minimum Initial Investment of $3,000,000

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That's only a minimum, shouldn't be a problem for most Ags