allocation mix

With 2-4 years before retirement, approximately $1million in investments, I am being told my asset mix should be 65% stocks/35% bonds with only my emergency fund in cash. That seems to be too aggressive when we are soon to be going into retirement and talk of a market correction again. Currently, I have about 18% in money markets, 11% bonds, and 71% stocks. What do you recommend as an asset mix?

Terry Says:  Ugh — that’s a tough question.  If you’re that close to retirement, and with that size account, I would definitely recommend some counseling regarding not only your investment mix, but your planned retirement withdrawals. Fidelity and Vanguard offer those services free if you have an account with them.  And I particularly recommend the retirement income planning service at T. Rowe Price  800-638-5660.  This will deal with the real issue of helping you decide how much risk to take now — and how to invest once you are no longer contributing, but start withdrawing.

Now, I know I didn’t answer your question directly.  If it were me, at this stage, I would reduce the stock/equity allocation to about 55 percent.  But that’s only a reflection of my own risk tolerance — not yours!  And if I assume you’ve held this allocation for a while, and have profits to protect, I should tell you that I would have told you a year ago (when the market lower than today) that you should have taken some equity money off the table.  And, obviously, I would have been wrong — so far.  But I would have slept better if it were me!!