I’m starting to get anxious. The market keeps climbing and it appears to be overvalued. Anyone else? I don’t want to do anything rash but I have cash in my Roth and I’m considering moving it away from my regular stocks and getting into ‘safer’ funds (still trying to figure it out.)
You know why you can’t figure out where else to put your money? Because there are no other places to put your money to overcome inflation besides the market. This is also the very reason the stock market has overheated, and will continue until safer avenues open up(meaning interest rate hikes).
I say keep doing what you are doing since everyone else is doing the same. The market will correct itself as interest rate raises.
Do you have an asset allocation? In other words, do you have a plan for what % of assets you have in stocks vs. bonds, and how that is broken down – domestic stocks, foreign stocks, domestic bonds, etc? If not, you need to establish an allocation that you are comfortable with and then stick to it.
How old are you? How many years until retirement?
I’m not sure what you mean when you say you have cash that you want to move away from your “regular stocks”. If it’s cash, it isn’t in stocks.
The conventional wisdom from the financial services industry — who admittedly has a lot to gain from having your money under their management — is 1, invest to your own risk tolerance.
If you’re afraid of the market tanking and losing everything, pull back and keep a specific amount in cash — like a low-interest bearing account or something else with minimal risk.
I just spoke to someone today from TIAA (which mostly handles huge amounts of retirement money) who said their research showed the best thing to do with a lump sum of money — say a bonus — is to put it all in the market at one time. Over a 90-year period, that showed a higher return than investing slowly over a 3-, 6- or 12-month period. This is based on a 60/40 allocation, by the way.
Another thing to remember: if you move out of stocks, that is two decisions. When to go out, and when to go back in.
I’m personally irritated with myself for NOT putting money into an IRA a few weeks ago. I’m still going to do it, and I know the market’s climbing higher and higher, but I honestly think it’s just going to keep on going up.
The Dow is at 20,600. Last week it was just over 20,000.