Would you choose bond or "real 3%" investment if you were me?

[Anonymous]

Not reading through this whole thing but you should max out the 3% real deal. If it's tax sheltered then this is even more obvious.

There are so many what ifs, like maybe the market will do better etc, but getting this payout for certain is the absolute deal of the century and you would have to be extremely close to risk neutral not to jump on it.

I cannot believe you're getting offered this. At the risk of making me feel bad, do let us know what the tax treatment is.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Another WB colleague here same age. I find this discussion very helpful and wanted to bump up the thread now in the light of the declining inflation. My portfolio is currently 50% sp500, 5% Russell 2k and the rest in real 3%. I have been wanting to increase my SP500 to rebalance the portfolio to at least 70% sp500. Any thoughts on this from those of you with more experience and also is this is a good time to increase allocation in sp500? Also, i see many here hold Russell 2k but it hasn't been doing well for a long time. Any thoughts on that? Thanks a lot.

Engaging in market timing is usually a bad idea, and your case qualifies as a bad idea. By the way, the russel 2000 is one of the worst small cap funds. Do you have any other small cap funds available to you? And what about international developed and emerging markets?

But you first need to decide how much risk (bonds) you want to take and stick with the plan unless you have a very good reason to change it.

you're correct that market timing is a terrible idea. but here is some recent data in terms of performance/returns this year (YTD) -

S&P - 16.9%
EAFE - 12.13%
R2K - 8.1%
all other options (including bonds, emerging markets, etc.) for cash allocations are 5% or below (except for the real 3%, which is based on the US CPI + 3%)

so R2K isn't terrible - it's the only option we have for small cap funds though

YTD is irrelevant. Even 10 yr returns are irrelevant. You need to look at historical data when determining asset allocation.

And Russell 2000 sucks compared to other small cap funds like S&P 600 because traders are able to game the Russell 2000 and there also isn't a quality screen to get rid of small cap growth junk.

[Anonymous]

bumping this thread in the hopes that OP is still around - curious to see how you've made out over the past several months.

[Anonymous]

Bumping the thread to see how is everyone doing now and what your strategy is with the stock market so significantly overvalued. Is this changing your strategy at all with equities vs the cpi+3% for those in 40s? Also a different question for WBers, when changing asset allocations in the retirement plan, are there fees involved for those transactions?

[Anonymous]

The problem is they officially undercount inflation by a lot so +3% on top of that might not be enough

[Anonymous]

Anonymous wrote:Yes, I would use that in place of bond fund. 3% real is fabulous. Bond fund is not as safe. At 40, 20% in that fund is a good idea.

Agree.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes, I would use that in place of bond fund. 3% real is fabulous. Bond fund is not as safe. At 40, 20% in that fund is a good idea.

Agree.

At today’s valuations i would do 40 percent in the 3 percent real. You can invest back after the crash.