Preserve recoved gains

[Evanspa]

have a rollover IRA. The fund has seen a good recovery of late. I also have an active 401K from my employer.
With the recent run-up in equities, I just don't see the fundamentals supporting the highs. Even Warren B. is selling domestic stocks.
I would like to preserve my principle. I am looking for a conservative investment to shift out of high growth/risk. What would be a good vehicle? Bond market does not look too stable.
I'm not looking to "time the market" maybe just get more money out of it.
I am 50, own rental properties, no consumer debt, maxing current 401K.

Thanks
Patrick

[disneysteve]

I would like to preserve my principle. I am looking for a conservative investment to shift out of high growth/risk.

I'm not looking to "time the market" maybe just get more money out of it.

If you feel there is a reason to change your asset allocation going forward then do so and rebalance your portfolio accordingly. Reasons to change allocation could include a change in your situation, the realization that you misjudged your risk tolerance, or simply getting older and closer to retirement.

From what you've said, it sounds like you misjudged your risk tolerance and want to shift to a more conservative allocation. If you're doing that as a permanent change, that's okay. If you are just doing it because of market timing, that's not okay. You need to pick an allocation that fits your situation and risk tolerance and stick with it.

If you want to go more conservative, decrease your stock allocation and increase your bond allocation but make sure you are doing it for the right reasons. You are only 50 so you still have 10-15 years before retirement, enough time to ride out the normal ups and downs of the market between now and then.

[Evanspa]

Thanks for the reply,
I'm not sure I misjudged my Risk tolerance as much as the risk seems to hightend lately, if that makes sense(?)
My gut just keeps telling me that the current Fed policies and Gov't. spending will end badly. (Although my crystal ball has been broken for years. lol)

This WILL be a permanent change. I am currently in a targeted fund which is ~80% stocks. That's fine for my current 401K, but I would like to take my IRA out of the high risk category.

I'm really not sure what investment allocation is considered "safer". What would be a conservative allocation, while still keeping up with inflation? Say 30-40% Stocks? As I said before, not real comfortable with the outlook of Bonds either.

Thanks in advance.
Patrick

[disneysteve]

My gut just keeps telling me that the current Fed policies and Gov't. spending will end badly. (Although my crystal ball has been broken for years. lol)

Investing based on gut feelings is not following an asset allocation. It is market timing.

This WILL be a permanent change. I am currently in a targeted fund which is ~80% stocks. That's fine for my current 401K, but I would like to take my IRA out of the high risk category.

I think this is perfectly fine. If you want to permanently dial back the overall risk of your portfolio, move money out of stocks and into bonds and cash instruments.

As I said before, not real comfortable with the outlook of Bonds either.

When most people talk about bonds, what they are typically talking about is bond mutual funds. In that case, what happens to interest rates is extremely important. If you want to avoid that element of risk, consider buying individual bonds instead. As long as they are held until maturity (and the issuer doesn't default of course), you know exactly what your return will be over time. What happens to interest rates won't matter.

[Petunia 100]

Another way to dial back risk is to lean towards large and mega cap dividend payers, as opposed to growth and small/mid caps. For bonds, stick with shorter term and high quality. Those should hold their own or close to it as rates rise. (While they lose principal as rates rise, they also re-invest in securities with higher rates which helps).

You might consider a conservative balanced fund with an excellent long-term record, such as Vanguard's Wellesley Income. If you prefer index funds, you might consider Vanguard's LifeStrategy Conservative Growth.