Terry, I am retiring effective 10/01/2015 and obviously concerned by the market conditions now. I have a mix of 43% in stock, 25% bonds, 11% cash, and the rest in an annuity and a Hedge Fund managed futures. I am nervous should I retreat to cash?
Terry Says: Whew — that’s a tough question to answer, without knowing how old you are, what cash you will need to withdraw every year, whether this is mostly inside a retirement plan, etc. I think what you are asking for is reassurance about the stock market. If you’re in your mid-sixties, I don’t think that’s too great a percentage, as long as you’re well diversified.
But what really concerns me is going into retirement with a hedge fund and/in (?) managed futures. Those markets are notoriously volatile even in good economic times. You’ve probably lost a lot of money already in this fund — because the commodity index of all raw materials has sunk like a stone in the midst of a global recession, led by China. Yes, you could hang on and hope for growth and inflation to return — but that could take several years. And I don’t know the costs of carrying this investment or the limits on your ability to get out. But 20% in this area would keep me from sleeping at night!