Q: Thank you so much for your MarketWatch article about “The Ultimate Buy & Hold Strategy“. I was wondering: Should I wait for a pull-back in the market before switching our retirement funds to your strategy?
A: This is a question that needs a lot more information before being answered. If the investments are already in the market and you simply intend to sell your present holdings and reinvest, I would see no reason not to move from one set of equities to what I hope will be better returns and less risk. If you are moving from cash into the new portfolio, I am concerned that you could be taking more risk than you expect. “The Ultimate Buy & Hold Strategy” article should not be the only basis of your move. The buy and hold article uses a 60% equity and 40% fixed income asset allocation. That may be too risky. I strongly recommend that you review the podcast, article and table that compare many different balances of equity and fixed income. Here are three links so you can use all three presentations.
After you are sure you have the right balance of equity and fixed income funds or ETFs, you have to figure out how to get invested. My experience is that conservative investors rarely feel comfortable investing all at one time. If you are in cash, I suggest you spread the investment out over a period of months. For very large amounts of money it might be over 24 months. The dollar cost averaging approach does not protect you from getting burned after all the money is committed but it does keep you from putting it all in at the top of the market. This may be a case to hire professional guidance to help you get the money invested, and then you can take over from there. Before you hire a professional, I suggest you read “Get Smart or Get Screwed: How To Select The Best and Get The Most From Your Financial Advisor“.
Investing is quite simple. It’s just not easy!