Rebalancing 2021 2


Hey everyone, it’s Wednesday again. This marks the 4th week in a row that I’ve writing an article. I think I’m slowly getting back into the swing of things. Today we’re going to talk about Rebalancing 2021.

A quick aside…

So, before I continue on with the post, I wanted to briefly talk about my hiatus from posting. It’s kind of weird, but I’ve become very accustomed to typing my posts on my desktop computer over the past few years on this blog. However, now with coronavirus and working from home, my office at home is now stuffed with a bunch of different computers. As such, my “normal” desktop computer is just not that comfortable to use anymore. My normal desktop chair is now primarily used for my work computer. My desktop computer is now relegated to using an old folding chair, which as you can imagine, isn’t very comfortable.

I see…

Additionally, my desktop computer (2013) is kind of getting old and to be perfectly honest my more new laptop (2019) is actually just better. As such, I’ve been using my laptop a lot more. This has had an effect on my writing that I didn’t realize until now. Typing on my desktop keyboard is significantly easier for me than typing on my laptop. Part of this is because conventional keyboards are just better and part of this is because my laptop is on a laptop stand. Laptop stands aren’t really made for typing on. For any period of long typing, you should really use a real keyboard. For this reason, my daughter’s laptop has a laptop stand, but I make her use a regular keyboard.

Looking back on things, I think the layout of my office and how cumbersome it was to type on my desktop made me not want to write my blog posts anymore. Obviously, coronavirus and the disruption it caused didn’t help… but I was quite surprised at how something as small as a keyboard and a chair had such an adverse effect on wanting to write.

Ergonomics and comfort are more important than we think.

So what are you going to do?

Since it seems like I’ll be working from home for the foreseeable future, I’m going to try to create a better office environment for myself. This would include things like buying a standing desk for my work computer, a decent side table for my laptop, and another office chair.

I still have plans to eventually upgrade my old desktop to a better computer as well and then repurpose my old computer for my daughter. She is getting more facile with computers and typing and has expressed an interest in Minecraft recently.

Can someone buy me a computer like this maybe?

Enthusiast Intel Gaming/Streaming Build

Uhhhh, so rebalancing then?

Ah yes. Back to rebalancing.

I rebalance my retirement funds every year usually around January. My Backdoor Roth IRA goes through and then I rebalance.

Previous to this year I have been rebalancing to an 80/20 split for our Thrift Savings Plans (TSP). The brunt of our retirement is in these accounts. A smaller piece of the retirement pie is spread across various other accounts.

I will turn 40 this year in May, and I have long since decided to do approximately an “age – 15” or “age – 10” in bonds. Additionally, since the other accounts are a little more aggressive, I’ve decided that this year we are going to go 70/30 on our TSP.

Here’s the new 70/30 split:

56% US Stock
38% Large (C Fund)
18% Small (S Fund)

14% International Stock
14% International (I Fund)

30% Bonds
30% Bonds (F Fund)

This is different then my previous allocation which had more an international tilt and used G Funds instead of F Funds. These aren’t huge changes, but I just felt like I wanted less international exposure and wanted to more match this three fund portfolio:

80/20 Three Fund Portfolio split into 64/16/20

The 70/30 ratio for this would be the above of 56/14/20.

Why change now?

Well, it was always the plan to be somewhere in between the “age-10” and “age-15” in bonds. Our other retirement accounts have grown a bit and our Backdoor Roth IRAs are 100% VTSAX. Then, if you add that I turn 40 this year, that this was in line with our plans to drop from 80/20 to 70/30. Long story short, we’re not spring chickens anymore. We are staying the course and staying true to our investment plan.

What do you think about the stock market?

I feel like everyone is talking about how much money they are making in the stock market. When “everybody is talking about it” — that gives me pause. I am reminded of Warren Buffet saying:

“Only when the tide goes out do you discover who’s been swimming naked.” In a bull market, everybody’s a genius. But a bear market reveals who’s got what it takes to achieve long-term success — and who doesn’t.

I don’t play the stock market so it doesn’t really matter to me what it does on a day to day basis. However, like all things, this bull market won’t last forever. To me, it doesn’t make sense for all these companies to be this valuable during a pandemic.

When will this bull market end?

Tomorrow? March? Summer? 2022? 2025?

I don’t know.

All I know is that it can’t last forever.

When the bull turns to bear, it will happen quickly. There will be people who are overleveraged, in too deep, and unprepared — many will lose a lot, and some will lose everything.

If you want to play the stock market, just remember to play with “play money” — meaning money you can afford to lose. Otherwise if you “play the stock market” with your retirement money, the stock market will eventually play you.

Just think to yourself, if another dot com crash happened today — would I be ok? Or would I be caught with my pants down — swimming naked?

Stay the course.

TL;DR

Thoughts on how small things can trip you up sometimes, like how the change in office setup affected my ability to write articles.

Talking about rebalancing to 70/30 and this bull market.

If you’re going to “play the stock market”, just make sure it’s “play money”.

Finance Fridays Sensei

-Sensei

Agree? Disagree? Questions, Comments and Suggestions are welcome.

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2 thoughts on “Rebalancing 2021

  • Max @ Max Out of Pocket

    Agree – it can’t last forever, but know telling when it will run out. I am still a few years off 40, but find myself tilting a bit into bonds in accordance with my IPS.

    I am pretty comfortable typing on my laptop, but for my normal work (hospital finance), I tend to prefer the desktop with dual monitor. My new lap top does have the “ten-key” which is key to optimal productivity in the finance work should I ever need it.

    Have a good birthday when it hits!

    Max