Ask Terry Questions Sell bond fund move to my money market

Sell bond fund move to my money market

By Terry Savage on October 25, 2023 | Investments

Should i hold my bond fund (40% of my 401k) or transfer the value to my money market?
I’m retired using the rule of 55 and have my investments in my 401k 50% equities 40% bonds 10% money market (3 years worth of my distribution). My hope is a recession will result in lowering interest rates boosting the value of the bond fund. Ill rebalance then to maintain my diversity. Do you think 50/50 is too conservative? Sorry 2 questions. Thank you for your expertise.

Terry Says

I wish I had a crystal ball for interest rates. I personally suspect rates could go higher.
If you’re retired, you’ll have to start taking RMDs at age 73. So I think it would be wise to have about 20% of your money in a money market account, depending on your current age. That way you’ll always have liquidity for RMDs.

We have just gone through an unusual period in which both bond AND stock prices have declined. Remember, when interest rates rise, bond prices fall. ALL bond prices. And bonds with the longest maturities fall the most in price.
Yes, if rates come down, the prices will go back up. Can you sleep at night with all this risk exposure? If not, put some in the money market fund. And don’t look back!



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