I am 85 and my wife is 76. We live comfortably on Social Security and two rather meager pensions. Our very conservative investment portfolio is down almost 15 percent in recent months. I was in favor of turning at least half of it into cash so as to not take on additional losses at least in part of the portfolio. I would get back onto the market when things turn around. Our financial advisor says to hold our positions because you don’t want to sell at the bottom of the market and make our losses permanent. Our asset allocation is approximately 50/50 in very conservative stock and bond funds and nothing is in cash. I usually save my retirement distributions and we generally do not depend on the portfolio for income. If I was younger I might think differently. — Concerned
What do you say?
I think the advisor is correct, especially given this couple does not rely on their portfolio for income. Why lock in losses?
50/50 in stocks and bonds with a loss overall of 15% is pretty average for 2022 so I’m thinking that their investments are not “very conservative.” My 401k is down 22% with 30% in bonds and money market funds.
In any case, I hope they, and you, don’t fall into the panic trap and lock in losses. When the time is right – like when you break even again, think about reallocating to a truly more conservative investment mix that is more conducive to sweet dreams.