Post By: Dana Sunderlin
NEW YORK (Money) -- Question: I'm 57 and planning to retire at 66. Before this year's stock market turmoil my 401(k) was balanced at 70% stock mutual funds and 30% bond funds. Now it's 59% stock and 41% bonds. To take advantage of very low stock prices I was thinking about re-balancing to 75% stocks and 25% bonds. Does this sound like a good plan or should I just re-balance to 70% and 30%?
The Mole's Answer: Well, you're doing two things right already:
1)You are not in a panic mode, as many are, and haven't sold your remaining stock.
2)You are going against the herd and considering buying when others are selling.
There is still the current problem to deal with, however: As the value of your stocks dropped and your bonds increased, your portfolio became more heavily weighted in bonds. Now you are wondering if you should go back to your original allocation target or even go beyond that target and increase your stocks from the original 70% target to 75%.
My advice is to stick with your target and I'll tell you why.
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