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Selling Funds and moving to Money Market Funds

By Terry Savage on January 22, 2016 | Investments

I am 61 don’t plan on retiring until age 66. I have approximately $300,000 in a variety of American Funds.
I am concerned with the downturn right now. Should I sell these stock and move to Money Market Funds.
I hear I can expect to lose 30% of their value with this current downturn and there will be more trouble ahead.

I am not savvy cnough to know what to do with my money. I will need this money to live on when I retire.

Terry Says:  As I write the answer to this question at midday Friday, the market is up nearly 300 points from the minute you posted this question two days ago.  Does that make you feel better?  Of course, not!  Your entire future should not depend on the ups and downs of the stock market.  Only part of your future should be invested in the market.  It’s deciding the “part” amount, the percentage, that takes the most angst!

At age 61, you have a life expectancy of more than 25 years.  Over that period of time you will need to withdraw from your IRA, and will be required to do so at age 70-1/2 — about 10 years from now.  I could see having about 40 percent of your retirement fund — assuming this is ALL you have to live on — in something far more conservative, perhaps a money market fund.  Or you could switch some money into more conservative dividend-paying funds, and keep 30 percent in cash.

You say you have a “variety” of American funds — but you don’t say which funds?  Did you know that you paid a broker a big commission to buy each of these funds.  And that if you switch into anything but a money market fund you will pay another big commission?  Where is that broker now that you need advice???  Just asking.   Or is the money still in your company retirement plan.  If so, you should be able to switch easily — and they should offer free advice on asset allocation.   If it’s in an IRA,   I suggest you might want to make a call to Fidelity or Vanguard and ask for their advice.

Or to get a bigger picture of your retirement plans, and other issues, contact a fee-only financial planner in your area — Go to www.FeeOnly.org.



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