Wednesday, March 08, 2006

Major Asset Reallocation, But Where?

So on May 1, I'm planning on relocating a large portion of my funds into my brokerage. I would like to invest more in stocks, but I'm not sure where. I have so many questions and hesitations...Maybe I should consider a fund? Is the stock market ready to crash? Will housing affect the stock market? How much should I invest? The reason I've selected May 1, is because the interest rate will most likely be re-adjusted down at HSBC. The feds will also adjust short term rates again by then, giving an indication of where Bernanke stands. Also, the market seems to be in a plateau right now, not moving up or down too much, so I'm not in a rush. I don't forsee any big news, but the expectations/outlook for this year scares me a little. Based on my net worth analysis from last month: Cash - $88,813.74 - 44.24% Stocks - $21,411.86 - 10.67% Retirement - $90,528.51 - 45.09% I have $88,813.74, or 44.24% of my net worth, locked up in cash. That's way too much. I'd like to reallocate to something like this: Cash - $30,000 - 15% Stocks - $80,300 - 40% Retirement - $90,528.51 - 45% There aren't any stocks that really appeal to me at this moment, the closest being JNJ. I should probably breakdown my retirement fund to see how that's allocated. I may need to re-adjust that...I'll do that when I update my net worth for March. AllThingsFinancial, just had a post on this topic...I really don't know what to do...I have a couple months to figure it out. What to do, what to do...


TADollar said...

Hi, congrats on being such a diligent saver! I think you should reallocate a chunk of that cash into some investments. You'll have to decide how much to keep in cash depending on what the it's for (emergency fund?). Also, do you consider your stock holdings to be reserved for retirement?

Definitely look at your portfolio in its entirety. Make sure you still want all of your holdings in the retirement fund before selecting any new stocks or additional funds.

I'm heavy on mutual funds, because I don't have the time to follow individual stock news closely enough to feel comfortable owning them. Of course, you still have plenty of time to decide. But the sooner you get that cash making money for you, the better!

freedumb said...

Thanks TADollar...I do want to keep an emergency fund, but I guess I need to determine how much that is. I will try to detail my retirement and non-retirement holds a little better my next net worth update. Right now, anything categorized as "stocks" is non-retirement. I've been stung by mutual funds in the past, which is why I have some hesitation...but I should look into those again.