I think what I want to do is sleep soundly, not maximize returns. Hardly about "See You in September" or "Come September" or "August Moon". Everyone only talks about how being out of the market can cost you because of compounding. This is because stock market goes up in the long term.
Well, long term is relative and that statement was made in an era where people had two choices. Be able to have food to eat in retirement or Live in Vegas in retirement. This made it easy to shoot from the hip because the first alternative was a bad one when Social Security was guaranteed to be avalaible.
The "long term" has now been redefined. Experiency two 50% drops in the market in today's times make it difficult to listen and heed to recommendations whether they come from Cramer or Ted. That's why I stay invested in summer in PVFIX and not UAPIX. I either accept an argument or I don't. Either way I should lever myself as much as possible one way or the other. Then why not make the call to invest in 3x bull and 3x bear funds instead of "see market will go up" or "sell in may or go away"?
So IMHO we are debating the wrong point. When you buy will always be more important than What you buy. However that will only be known in hindsight NOT today. I need to be able to sleep TODAY. And I cannot do that by selling in May and going away or staying in the market come what may because one person or another is telling me to do one or the other. I need to find an investment I can stick with. I think that's what MFO is about. It is not about making predictions and then one telling the other "I told you so". That's for CNBC.

Nobody can predict the future. Bonds were supposed to be toast 3 years back, but then they weren't. Now again bonds are facing impending doom, and this time likely bonds will go down as interest rates eventually rise.
The only thing I can say especially for someone nearing retirement who is not going to be able to keep DCA'ing monthly in a 401k is to make sure the bonds you are holding are short-term bonds.
Another thing I would say is whatever you are comfortable putting in equities, but it in index funds so you at least know what you'll be getting instead of investing with an active manager who may have a Washington Mutual or AIG lurking round the corner. You may not't have the time or luxury to stick around waiting for these managers to be proven right in the "long term" when your "long term" is lurking round the corner.
Just my 2 cents.

Everyone's advice is reasonable. I like Scott's FPA Crescent, and health care stock picks are pretty safe with a dividend. Agree with selling a large percentage of bond funds. Market seems pretty frothy, so might want to wait until fall for equity funds to see if there is a recognizable market pattern and average in if there are no significant purchase fees. Even target funds drop if the Fed reduces or stops bond purchases,and I would expect some negative market reaction at that time. It just seems that this is the wrong time to go heavily into equities, although being heavily into equities has been good recently.
If you aren't forced to retire and have good health, delay retirement as long as you can stand it, unless you hate what you are doing. (This does require looking at your parents' age of death and habits that contributed to it. If they lived into their 80's with good habits, and you have similar habits, hang in at the workplace. This is really relevant if you have good insurance thru work.)
With a partially supported 26 yo, I favor enforced frugality for your son; but I'm a wimp and this really is a different world for young job seekers than it was 30 to 40 years ago.

Hi Daves,
Congratulations on your upcoming retirement, and an especial congratulations for embarking on this early planning exercise. The planning will make you a happier and more confident warrior when that critical date ultimately arrives.
The advice already offered by other MFO participants is uniformly excellent. Allow me to add a few not so random elements that I addressed when making my retirement decision about 20 years ago. These are proffered in no special order of importance.
Carefully monitor and record you cost outlays until retirement. This will establish a reliable cost baseline. Some conventional wisdom suggests that you will do fine with about 80% of that baseline. Forgetabout it; that’s overly optimistic. Some expenses will definitely decrease, but others will take up the slack. You seem frugal so there is little room for further economy. Overall, assume your spending will be consistent with the last 5 year period.
Continue your commendable saving plan and increase it if possible. Your projected retirement nest-egg (like 300 K dollars) is nice, but not particularly healthy given that either you or your wife is likely to live for 30 more years. Stretching your portfolio to survive that extended timeframe will demand attention to detail and a flexible withdrawal commitment.
You will definitely need a mix of equity and fixed income holdings in your portfolio. Equities to boost the projected annual returns, and fixed income holdings to reduce portfolio volatility. The higher your anticipated drawdown schedule, the higher will be your need to commit to equity positions. But that does NOT equate into becoming a reckless gambler using highly leveraged products that often lead to financial ruin.
Given current economic conditions, it is unwise to expect a 100 % equity position to deliver returns north of 8 %. Consequently, even a portfolio that is 80 % committed to stocks is likely not to generate returns in excess of a 6.5 % maximum. If you decide that your anticipated withdrawals are north of 5 %, a delay in retirement should be seriously considered.
Historically, Monte Carlo computer simulations suggest annual drawdown rates in the 3 % to 5 % range are likely to result in high portfolio survival probabilities for a 30 year period. The 5 % level is recommended only if the retiree can momentarily downsize his withdrawal rate if the market delivers negative outcomes. For example, a retiree could elect to forgo a cost of living adjustment immediately in the period following a down year.
Over time, I have been a constant advocate for doing Monte Carlo parametric studies to support any investment and retirement decision. I particularly like the Firecalc.com website. I recently documented my assessment of this matter in a MFO posting on retirement planning. Here is the internal MFO link to my submittal:
http://www.mutualfundobserver.com/discussions-3/#/discussion/7029/a-better-retirement-planner
Please examine and deploy the analysis available on Firecalu. Do a few tradeoff studies to explore the portfolio survival probabilities for various scenarios that you get to postulate. It’s a great learning experience.
Costs matter greatly. Use passive Index funds whenever possible. You might benefit from the Lazy portfolios described by Paul Farrell in his MarketWatch column. Here is a Link to the Lazy portfolio options:
http://www.marketwatch.com/lazyportfolio
If you prefer active management, and are still cost containment conscious, you might consider a mix of Vanguard’s Wellington (VWELX) and Wellesley (VWINX) balanced funds, as well as the balanced mutual fund offered by Dodge and Cox (DODBX). These funds have served their clients well over long timeframes.
I hope this truncated summary helps, and I wish you success.
Best Regards.

I think things continue to be difficult for a lot of people young and old.
The best thing to do is to try not to be depressed - while things may be difficult, try to keep your spirits up. Easier said than done, but it's something I've had to try to learn to do at times.
In terms of investments, I actually like health care in a number of ways, from - unfortunately - an increasing amount of illness (obesity, etc) to increasing amounts of people reaching retirement age. You can play this in any number of good HC funds, but some of the duller names are fine and provide a nice income (Abbott/Abbvie, Merck, BMY, Sanofi, Pfizer, etc.)
In terms of l/s, I'd recommend Marketfield, but unfortunately the original shares are long closed (MFLDX). Pimco's L/S fund (PMHDX) has done quite strongly this year after an off first year.
I continue to like FPA Crescent (FPACX) as a balanced US fund and First Eagle Overseas (SGOVX) as a lower-key foreign offering.

Hi Daves,
I am glad that you phrased it "What would you do?".
In addition to David Snowball's suggestions, I would:
1) Let the 27 year old fend for himself immediately. Let him man up.
2) Boost the retirement savings rate above 7%, to at least 10%.

Reply to @Charles:
In retirement plans typically you will see R class of American Funds. R6 is the best. Others are progressively more expensive depending on how much the company paying or not paying for that plan.
I think A shares are either load waived in a retirement plan but it is not common to see this share class there.
A class is really for advisor (or broker sales) channel. American funds have been so successful in the past as they has resasonably well performing funds among other load families and they left money to the advisors via those front loads. Now people are moving to low cost investments and advisors are moving to AUM percentage model that old scheme has become a liability. They lost so much assets even if their funds actually performed reasonably well.

David's advice is right-on though for myself, I'm not sure about the L/S part.
I don't consider myself one of the qualified, but I'll give my 2-cents. I don't think getting into a conservative or moderate mutual fund is a gamble, as you called it, at all. In fact being all in bonds is a bigger gamble if you want to stretch your nest egg over the years. If you need to withdraw 3-4% of you nestegg to live on, you will have to have some percentage in equities to have that principle last another 20, 25 or 30 years.
There are some very good conservative or moderate balanced funds. Retirement Target Date funds are an option too. Regarding TRP target funds, you don't have to use the specified retirement date, for example 2020 or 2015. Those may have higher percentages of equities then you are comfortable with. You could use the 2005 fund for example and be 50:50 stocks/bonds - again whatever is in your risk tolerance or comfort zone.
Good luck to you.

Hi, Daves.
There are others far better qualified on this topic than I am, so I'll be brief:
1. Get an idea of what your retirement income will look like. The official Social Security benefits estimator is http://www.socialsecurity.gov/estimator/. I'd look at the likely payout you'll receive by working to 65, 67 and 70. I'd then check T. Rowe Price's Retirement Income Calculator, which will not only give you a decent sense of whether you'll have enough income to meet reasonable needs but will also list alternatives for you.
2. Consider the judgment of the asset allocation professionals. I checked asset allocations for the target-date 2020 funds from Fidelity, T. Rowe Price, TIAA-CREF and Vanguard. Their bond allocations ranged from 23% (Price) to 36% (CREF).
3. Consider the possibility of using a long/short equity fund as a core position. Several offer a decent prospect of achieving the traditional profile of a 60/40 hybrid fund without dependence on bonds. Wrote a bit about them in July with a bit more coming in August.
For what it's worth,
David

Hi prinx,
I continue to like and own WEIMX, which has the most attractive risk/reward profile by my analysis. This fund is available in Scottrade retirement accounts for a low minimum of $250 with a transaction fee. If you want a high-octane fund, you may want to consider AUMIX, which is available in TDA retirement accounts with no minimum plus a transaction fee. BRSIX and BUFOX are also solid choices.
Kevin

Howdy folks,
Where muni bond funds have taken a hit is to the principal thereby increasing their yield but quite a blow nevertheless. Besides the obvious bankruptcy of Detroit you had the negotiations leading up to it by Off, the Emergency Mgr appt by the Gov. He had already talked about creditors getting 10% and major changes to the existing union contracts AND as an aside had equated GO muni bonds with plain vanilla creditors. From the top, the bond holders puked, the unions gave him the finger and the the muni bond market took a severe hit. Hell, I'm sitting on NUM and it's off 17% YTD albeit the yield's up to 5.6%.
As for Detroit, think of is like the real estate mortgage debacle - lots and lots of people to blame and not a whole lot of folks in line to pay. You had an industrial age city shrink from 2M to 700K and they did nothing to shrink the legacy costs. Pensions and health care benefits? Not that juicy.
http://money.cnn.com/2013/07/23/retirement/detroit-pensions/index.html
That said, they're still using final salary * 2.5 * years service. State employees use 1.5 as the multiplier. Some municipalities around the country use 3 or 3.5 Some also allow spiking which if you're only using the final salary and not an average of 3 highest years like the state, you can backload the last year with unused leave, max overtime and everything else. Again, Detroit wasn't this bad.
But how do you shrink a city by 2/3? How do you turn off 2/3 of the streetlights and pull up 2/3 of the sidewalks and sewers and water mains? Kildee started in Flint with the Land Bank Authority process that seizes tax deliquint properties and either razes them or flips them. It potentially allows you to raze a square mile that in turn could be reverted to Ma Natures - woods, fields, farms, etc. Yeah, but the Widow Smith doesn't want to move and so you have a couple of holdouts preventing the shrinkage.
Oh, and Detroit is only the first kids. We all know Illinois has the poorest funded state pension system and Chicago is broke. I guess Minneapolis and Cinci are tapped too.
And what about those state constitutional guarantees on some of these pensions?
and so it goes,
peace,
rono

Hi scott,
As noted to Ted:
About 40% equity via VIIIX, VSCPX, DODGX, PRHSX and some equity exposure from FRIFX, FAGIX and LSBDX.
But, we have about 16% cash from earlier bond sales. This is the head scratcher right now and the temptation to add more equity. We've not held this high percentage of cash for 5 years prior. Probably just go equity gambling.
Sadly, the construction project here has shifted time allowances away from the investment arena.
A complex time, this beginning retirement period. I/we are as busy as ever than during the employment period. This is okay with us; as we know too many folks who "don't know what to do". Duh ? I'll have more than enough to occupy my time until I leave this 3rd rock from the sun.
Other unscheduled events also have their place here; as my mother is 88 and m-i-l is 96. Nothing medically serious at the time; but more attention is required to all daily activities.
The original post finds us inclinced to more equity exposure; perhaps via managed balanced funds or perhaps just grab more indexes and just spread the money around.
The temptation to use a dart board passes in my thoughts; as the correlation among too many sectors remains very tight, in my opinion. We surely won't catch all of the top movers and winners, so be it.
As to individual stocks, those days are gone for this fella.
We have a 7.25% annualized return since 2006; and this is in line with our returns since the early 1980's. If our portfolio gets thumped this year, the return will just become another number for the averages. We did well for the past 5 years with a bond oriented mix; but that area will likely be more subdued going forward. Not that I really like all of the equity area either. Looking at some of the core and other etf's available via Fido and I-Shares.
Added note: Several retirement accts will likely be consolidated into existing accts. at Fido. This will require a rework of holdings. Lots of fun to be had with this adventure.
A tough road ahead, I do believe.
Thank you for your thoughts.
Regards,
Catch

I'm more than a little understanding about people in/at/near retirement age wanting to be more conservative, but - aside from the discussion of what is risk and what is not going forward (which is a lengthy debate), I guess I just don't see how some equity can't fit in even a conservative portfolio. I like Abbott Labs (ABT). Offers a nice dividend, is a good way to play EM (they have a significant EM exposure) and has slowly-but-surely offered singles and doubles over time. It also barely went down in 2008. Wal-Mart is another possibility. Maybe a little bit of something like Pimco Dividend and Income (PQIDX)?
" Japan will maintain their cheap money policy. Sure don't know the outcome of this to the positive side of life."
They voted for more of it. Will there be an eventual bill for it? Probably, but people are so short-term.
" I am not so certain that they will return to equity areas."
There have been major inflows over the last couple of months or more off/and/on - whether or not that's a good thing or bad can be debated, certainly.
"A short and quick summary would continue to suggest that economies are still too anemic in the eyes of the largest central banks, many fear deflation and find the only current path; although perhaps dangerous to the future, is too keep the money gates open. "
Yep. So, given that I would be concerned regarding a fair amount of fixed income or would at least try to have at least a minor allocation to equities.

Start here.....please place game token on the start square, then draw a card for your next move.
A few preface points:
--- Our house is in retirement mode; meaning no more years to "offset" investment losses via cash flow from employment income. So, yes; what another investor wants or needs in a portfolio will not correlate in full.
--- No conviction to the full premise of one's age in income/bond funds and the remainer in equities. One needs to find capital appreciation with capital preservation wherever it may reside. Is this not always the ultimate goal of an investor?
--- The recent system wide test of possible rising interest rates is now complete. Mr. Bernanke and other Fed. members have performed the "recovery word dance" mantra; at least for now. Deflation is still a major consideration in the ongoing economic war(s). Treasury Sec't. Lew is pushing the Euro area....grow, grow, grow. Japan will maintain their cheap money policy. Sure don't know the outcome of this to the positive side of life. China? Only the recent charts tell the story; but I sure can't guess what is next for any policy there.
So, for equity sectors; is the U.S. currently the best of the global bunch? We know EM/BRIC's and China have had a good thumping for some months now. Recent price movements suggest that the "hot money" may consider these areas as oversold.
'Course, a tough choice is the consideration of anything fundamental towards current investing sectors; versus just the plain fact of money traveling to wherever it may have the happiest return on captial invested.
Many bond sectors recently became short term trapped in the O.D. mode; being Over-Done/oversold in the currrent environment. Equity investments were also tested during the Fed. "tapering" test period.
As to the "Et tu, Brute?", You, too Brutus?; being many of the individual investor folks who supposedly have their cash parked; I am not so certain that they will return to equity areas. Perhaps the amount of money they control really doesn't matter to the market place and the big houses will continue to trade among themselves.
A short and quick summary would continue to suggest that economies are still too anemic in the eyes of the largest central banks, many fear deflation and find the only current path; although perhaps dangerous to the future, is too keep the money gates open.
Just a few thinking outloud thoughts from this house.
Take care,
Catch

Perhaps an important note from the below linked article: The 2012 Census of Governments counted 38,917 general-purpose governments throughout the country, 21,683 of which were located in states with laws permitting Chapter 9 filings.
Cities and Chapter 9
Detroit in particular, has been a monetary train wreck for a long time. Michigan is allowed to install emergency managers for failing cities and has several in place at this time. The emergency manager powers include many items. A few more prominent features allow for restructuring of local government and union worker contracts and related. Elected officials are removed from their "official/legal" functions and salaries may be reduced or eliminated, to the best of my understanding.
Michigan has constitutional restrictions in place that cap real estate taxes; which, of course provide monies for a variety of functions. This also restricts cash flow to communities for all of the normal functions.
The combination of real estate tax caps, a weak economy that was especially hit hard by the collaspe of the auto industry (which had already been leaving MI for many years) and the costly obligations towards pension funds has and is a heavy burden. Detroit's political turmoil and the usual corruption adds to the load.
Two last items of note and/or example. A local school district budget from last year (2012) must spend 87% of the budget for all areas related to the teachers...wages and benefits. One other community with a large population spends 46% of its budget towards just the police and fire retirement and benefits programs.
I am only offering information and not a viewpoint as to the above; but obviously a few things are badly broken. These conditions will not allow for properly functioning going forward. If not for special grants from the Fed. gov't (all taxpayers), many more police and firefighters would be gone as of June 30.
The above is not a direct reply to your concern for muni bonds; but it is not hard for me to imagine other cities closely watching what becomes of the legal status of Detroit's Chapter 9 filing. Bond holders are going to be included in the writedown of city(s) debt, in my opinion. I find no other way to relieve the debt burden. EXCEPT, whether the Federal gov't. intervenes to Detroit's monetary problem. I doubt this will happen; as such a move would be too dangerous and the Chapter 9 filings would likely increase the very next week.
I do believe the managers of your muni funds will maintain a proper holding benchmark.
Regards,
Catch

Reply to @MikeM: Thanks Mike for your good and thoughtful suggestions.
My 4 (2 now) taxable portfolio is beating my retirement portfolio for the few years. Of course, there are no bond funds in taxable. It may not be as conservative relatively though it consists of balanced funds predominantly with a dose of ARTKX as diversifier.
As some of you mentioned, I am bit conservative with my allocation considering more than 20 years time that I have.
In addition, these funds are spread across 4 accounts. Two Roth IRAs and two IRAs of mine and my wife's. Since, I use fund super market at TDA, I have 6 months restriction period too imposed by
TDA.
85% of the portfolio is invested in 15 funds (Core) in our portfolio across 4 accounts.
Rest of them (Satellite) are there as a result of my urge to do something. Again spread across 4 accounts.
In spite of all that I mentioned, I understand the benefits of small and simple portfolio. Have to see what I can do to simplify.

FYI:
Regards,
Ted
http://www.usatoday.com/story/money/columnist/waggoner/2013/07/18/retirement-savings-withdrawals/2552669/

Hi All,
I have the following portfolio.
Too many funds due to various accounts of mine and my wife's.
I am 43 and have at least 20 years to retirement.
Please provider your invaluable critique
VWELX Bal 4.87%
FPACX Bal 4.98%
VFSTX Bnd 3.25%
VTIPX Bnd 3.25%
PRSNX Bnd 3.25%
PONDX Bnd 1.08%
Money from Rollover Cash 10.83%
PCRIX Comm 0.97%
PSPFX Comm 1.41%
WAFMX EM 1.41%
SFGIX EM 2.17%
MAPIX EM 3.03%
AEMGX EM 1.08%
MAINX Em Bnd 1.62%
HSFNX Fin 1.89%
PAUDX Flex 7.90%
VHGEX Glo 8.66%
ARTGX Glo 3.68%
MFCFX Glo 2.71%
GPGOX Glo 3.90%
PQIDX Glo 4.44%
PRHSX Hlth 3.47%
VDIGX LCB 10.83%
VHCOX LCG 3.25%
AKREX MCG 4.98%
ARIVX Scv 1.08%
Thanks,
Mrc

Hi Heathbob,
According to M*, both SEMFX managers were prior analysts with no fund management experience. That is a huge red flag for me. I would watch but not buy this fund.
In the multi-cap EM equity space, I continue to like THDIX which has performed consistently well since inception. This fund is available NL in Fidelity retirement accounts for a reasonable minimum and a $75 TF. I bought my shares at Fidelity and then moved them to Wellstrade where I purchased more shares with NTF and no brokerage-specific early redemption fee. This is an excellent fund with a reasonable expense ratio, so I had no indigestion about paying the $75 TF.
Kevin

I agree with a good deal of what Arnott has had to say (especially on things like demographics - I don't believe he has ever said that the US is facing an "imminent demise" - only that there are a number of structural issues that aren't being addressed and will cause problems if not; if he ever said that the "US was "imminently going to fall apart", I missed that), but I think one can be concerned with a lot of underlying issues in the world and still find themes of interest. (Unconventional energy production, health care with a lot of people reaching retirement age, mobile, digital transactions, yadda yadda yadda.) If one agreed with Arnott's view of an increasing amount of retirees, health care/health care REITs are options. Unfortunately for him, there's no Pimco Health Care fund (and things like that are why I'd like to see Arnott do an All Asset/All Authority style fund that could use the whole universe of ETFs/funds rather than just Pimco funds...)
I think the issue with Arnott's recent issues is, to some degree, similar to Hussman (although certainly not to the same degree.) Hussman has spent the last few years more or less thinking too much. All manner of fundamental analysis, history, statistics, etc (and Hussman goes over such in every investor letter, all of which indicate XYZ) doesn't really matter when it comes to the easiest monetary policy in history (Bernanke yesterday when responding to the question of whether he's printing money: "Not literally." (It depends on what your definition of is is.) Additionally from Bernanke yesterday, "If the Fed were to tighten policy, the economy "would tank"; oddly, that comment was largely ignored by much of the financial media.
Positioning investments with the idea that issues or fundamentals will cause problems is timing and even if these managers are right about their concerns/views, that - especially in the case of Hussman - can take a lot longer than they expect. The issue that I have with Hussman in particular is that it's not as if he's making some sort of giant asymmetric bet (like betting against subprime or something) where shareholders take some down years in the hopes that a bet will eventually pay off significantly.
If Hussman is finally right, then what? They'll probably gradually gain back what has occurred over the last few years over a similarly long period of time. Arnott has - I think - a greater degree of flexibility and not exactly a high goal. Who knows, but I think that's more likely to be an instance of an off year (although I don't agree with his instance to be that short, given continued monetary policy; interesting to see the supposedly more conservative All Authority lose more than All Asset...)
I think emerging markets are still a growth story for the long-term, but it really has become a multi-speed story; look at EM's not do well for the year, but a number of EM consumer names have done very well (or at least noticeably better then EM's as a whole.)
Additionally, isn't All Asset/All Authority's goal CPI + 5 or 6%? It's had an off year this year (occasionally managers have an off year), but anyone expecting it to hit home runs on "good years" for the fund is going to be disappointed. It's a low-key, conservative balanced offering that kicks out a nice yield. It's not going to hit home runs, but consistent singles or doubles (maybe a triple on a really good year) are what one should expect.
I don't own the fund, but I have in the past and would consider it both if a space opened up and I had an interest in adding some fixed income exposure.