Retiring in 3 years and sitting on 85% cash since 2008

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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby kwan2 » Sun Sep 01, 2013 6:42 pm

http://www.obliviousinvestor.com/waiting-to-invest-doesnt-make-things-any-easier/
http://www.cbsnews.com/8301-505123_162-57598659/harry-dent-and-the-chamber-of-poor-returns/

slipp1229 wrote:Wow! ... What a great bunch of responses/people.
Thanks!. I will carefully review each of your situations and decide which works best for me.
My only reservation now is "timing". I feel waiting until the next equities correction takes place
might be wise before jumping in with 50% ... but when will that be? Being a follower of
demographic trends ala Harry Dent, I cannot help believe a mini crash will happen in the not
so distant future. ??

Slipp
The best lack all conviction, while the worst
Are full of passionate intensity-Yeats 1919;Out of every fruition of success,no matter what, comes forth something to make a new effort necessary -Whitman
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby Kielke » Sun Sep 01, 2013 6:52 pm

This may seem like an outlandish thing to say on this board. But given the OP's self admitted tendencies and very short time frame to retirement, perhaps staying in cash might be the best choice for him in the long run. I mean yes the lack of return might hurt, but it will hurt far less than having the market pull back significantly again either just before or shortly after retirement and have him pull everything into cash again.

At the very least the OP should definitely consider being very very bond heavy, but still needs to learn to not panic in a down turn. I think what worries me most is why is the OP asking all these questions not in 2010, 2011, or heck even 2012, but only decides to ask the question about getting back in the market several months after most US markets were hitting new Highs every day. I mean it honestly smacks of being the least disciplined investor ever, trading only based on the headlines every day, rather than for any sort of long term strategy.


Sorry if this post was a little inflammatory. But honestly we all need to learn ourselves, and based on the blurb you posted, what we *can tell* about you is that you should keep your money as safe from risk as possible, and just learn to live with the consequences of reduced gains over the long run, as when you try to go for larger gains you will likely get negative returns due to your own personal trading habits.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby birdy » Sun Sep 01, 2013 7:47 pm

I am 58 yrs old and hubby is 59. Our portfolio is:
62%--stock mutual funds (20% international)
14.2%--bond Funds
16%---5 year CD ladder (1 CD comes due every 6 months), we also have always included our EE Savings bonds in this catagory
7%----old variable annuity & old 401b account

We haven't decided when we will retire, but I have already reduced my work to about 20 hrs/week. No debt, own home outright, never carry balance on credit cards, buy cars with cash and drive till cost too much to repair (1 a 2003, 1 a 2005)
We have talked about retiring around age 60 and using our CD ladder to get to S.S. age. We intend to spend our money down to the last penny (we have no kids). We have no pensions but do anticipate a small income stream from some farmland we have in Iowa. So this is our plan---hopes it helps you with yours! P.S.--we will ALWAYS keep some of our money in stock mutual funds!

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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby pkcrafter » Sun Sep 01, 2013 8:48 pm

Hi Slipp,

Wow is right. You have done something rarely done on this site--you have generated a lot of replies without disclosing one thing about your situation, and not one poster asking about it. You asked what others are doing, and you should be asking what you should be doing considering your own situation, which up to now we know nothing about, except you're all cash.

Most important is you age and rough estimate of total assets. We also need the initial % of assets you plan to withdraw the first year. Are asset in tax-deferred accounts?

I have been researching the Indexed (Hybrid) annuities and thought laddering 3 or 4 $100K Hybrids might provide a cash stream into my 60's. I just don't like the 7-10 year holding period before you can exercise this rider profitably. Sorry, I know the insurance co. terminology is all wrong, but I hope you know what I mean. Also, annuities were regarded as bad investments just 10 years ago... now they seem to be all the craze because of the lousy equities market and unstable economy.

Indexed annuities are not favored around here. If you are going to consider an annuity, look at single payment immediate annuities (SPIAs) , but probably not worth it until late 60s at today's rates.



Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby ghostdog1108 » Mon Sep 02, 2013 12:09 am

At 64.5 years old and retiring in six months, I have 58% in TIAA traditional at a 'guaranteed' minimum of 3%( could and does pay more at times) and 42% in Vanguard total stock market thru my employer.
My advantage is TIAA is transferrable at any time but at a .5% lower rate than an actual annuity.
I therefore have two buckets; one to let grow over time and one from which I will withdraw funds to supplement my SS.
A key to any successful retirement planning is to cut expenses like in 'NO DEBT' .

Works for me!
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby WendyW » Mon Sep 02, 2013 12:27 am

Kielke wrote:why is the OP asking all these questions not in 2010, 2011, or heck even 2012, but only decides to ask the question about getting back in the market several months after most US markets were hitting new Highs every day. I mean it honestly smacks of being the least disciplined investor ever, trading only based on the headlines every day, rather than for any sort of long term strategy.

It seems that OP has had made just about the worst possible asset allocation choices every year since 2008.

His smartest move would be to admit that he shouldn't be managing his own investments, and turn his portfolio over to a professional money manager.

Will OP do this? Based on his history, I'm certain that he will not.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby sperry8 » Mon Sep 02, 2013 3:18 am

Sbashore wrote:
slipp1229 wrote:Wow! ... What a great bunch of responses/people.
Thanks!. I will carefully review each of your situations and decide which works best for me.
My only reservation now is "timing". I feel waiting until the next equities correction takes place
might be wise before jumping in with 50% ... but when will that be? Being a follower of
demographic trends ala Harry Dent, I cannot help believe a mini crash will happen in the not
so distant future. ??

Slipp


Well, you've just articulated another problem with market timing.


It's not a problem. He gets back in when the Shiller 10 yr P/E comes down significantly. If you wait to get in when Shiller PE is 14 or below (perhaps starting to invest when it gets to 18 and continuing all the way down to 14), you have a better chance (historically speaking) of making good long term returns. http://granitehillcapital.com/blog/shil ... in-strong/ I realize Shiller 10 isn't perfect - and it's not meant to be. But it can be used as a guideline. If you buy in now, you should likely expect very low returns over the next 5-20 years: http://greenbackd.com/2013/04/15/the-ph ... al-models/
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby Sbashore » Mon Sep 02, 2013 11:39 am

sperry8 wrote:
Sbashore wrote:
slipp1229 wrote:Wow! ... What a great bunch of responses/people.
Thanks!. I will carefully review each of your situations and decide which works best for me.
My only reservation now is "timing". I feel waiting until the next equities correction takes place
might be wise before jumping in with 50% ... but when will that be? Being a follower of
demographic trends ala Harry Dent, I cannot help believe a mini crash will happen in the not
so distant future. ??

Slipp


Well, you've just articulated another problem with market timing.


It's not a problem. He gets back in when the Shiller 10 yr P/E comes down significantly. If you wait to get in when Shiller PE is 14 or below (perhaps starting to invest when it gets to 18 and continuing all the way down to 14), you have a better chance (historically speaking) of making good long term returns. http://granitehillcapital.com/blog/shil ... in-strong/ I realize Shiller 10 isn't perfect - and it's not meant to be. But it can be used as a guideline. If you buy in now, you should likely expect very low returns over the next 5-20 years: http://greenbackd.com/2013/04/15/the-ph ... al-models/


Nice, a guideline for predicting the future. If I had only known. Well actually, it doesn't matter, I don't use predictions of future performance in my plan.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby sperry8 » Mon Sep 02, 2013 2:19 pm

Sbashore wrote:
sperry8 wrote:
Sbashore wrote:
slipp1229 wrote:Wow! ... What a great bunch of responses/people.
Thanks!. I will carefully review each of your situations and decide which works best for me.
My only reservation now is "timing". I feel waiting until the next equities correction takes place
might be wise before jumping in with 50% ... but when will that be? Being a follower of
demographic trends ala Harry Dent, I cannot help believe a mini crash will happen in the not
so distant future. ??

Slipp


Well, you've just articulated another problem with market timing.


It's not a problem. He gets back in when the Shiller 10 yr P/E comes down significantly. If you wait to get in when Shiller PE is 14 or below (perhaps starting to invest when it gets to 18 and continuing all the way down to 14), you have a better chance (historically speaking) of making good long term returns. http://granitehillcapital.com/blog/shil ... in-strong/ I realize Shiller 10 isn't perfect - and it's not meant to be. But it can be used as a guideline. If you buy in now, you should likely expect very low returns over the next 5-20 years: http://greenbackd.com/2013/04/15/the-ph ... al-models/


Nice, a guideline for predicting the future. If I had only known. Well actually, it doesn't matter, I don't use predictions of future performance in my plan.


The reality is he has to get back into the market. The question is when. Now? In 5 years? I realize all the Bogleheads think it doesn't matter - just DCA in, cause you don't know whether the market is going up, down or sideways. But I disagree. You can't time the market perfectly, but going back in now would be foolish. The market is high based on the Shiller PE10. It's been higher and it's been lower. And it will be higher and it will be lower again. So better to wait until its lower before he gets back in to give the OP the best chance at decent returns. Of course when he goes in, it could go even lower still. So no, it doesn't predict the future. But pretending that price doesn't matter makes no sense to me. We are all buying the future earnings of companies today. Today we have a higher multiple than we did in 2008/09 and lower than we did in 1999/2000. With his obvious hesitancy to go back in since 08/09, I'd wait til it comes down. Might take a few years, but so what? The Shiller PE 100% will come down to 15 again. When, not sure - but it will. And thus, it is not a prediction that has time in it - but rather a certainty and he can wait for it to occur (as will I before I put any more money into the market). Bernstein & Buffett both agree price is a relevant factor re future returns. You have to ask 'at what price' (do I want to buy)?
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby Sbashore » Mon Sep 02, 2013 3:13 pm

sperry8 wrote:
Sbashore wrote:
sperry8 wrote:
Sbashore wrote:
slipp1229 wrote:Wow! ... What a great bunch of responses/people.
Thanks!. I will carefully review each of your situations and decide which works best for me.
My only reservation now is "timing". I feel waiting until the next equities correction takes place
might be wise before jumping in with 50% ... but when will that be? Being a follower of
demographic trends ala Harry Dent, I cannot help believe a mini crash will happen in the not
so distant future. ??

Slipp


Well, you've just articulated another problem with market timing.


It's not a problem. He gets back in when the Shiller 10 yr P/E comes down significantly. If you wait to get in when Shiller PE is 14 or below (perhaps starting to invest when it gets to 18 and continuing all the way down to 14), you have a better chance (historically speaking) of making good long term returns. http://granitehillcapital.com/blog/shil ... in-strong/ I realize Shiller 10 isn't perfect - and it's not meant to be. But it can be used as a guideline. If you buy in now, you should likely expect very low returns over the next 5-20 years: http://greenbackd.com/2013/04/15/the-ph ... al-models/


Nice, a guideline for predicting the future. If I had only known. Well actually, it doesn't matter, I don't use predictions of future performance in my plan.


".......You can't time the market perfectly, but going back in now would be foolish."


In my opinion this kind of advice is not helpful to the OP. You may be right, you may be wrong, but whatever you are it will be the result of chance. In real terms the market is not at an all time high. The reality is that no one knows, what is to come. What I do think is that the OP should not be in a hurry to jump into anything until he understands the ramifications of his actions. For someone who has been out of the market for this amount of time, jumping to giving advice on "market timing" is not good advice. I'm not going to say more in this thread since I think it flirts with hijacking the original post and would just further obfuscate the issue for the OP.
Steve
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby pkcrafter » Mon Sep 02, 2013 3:35 pm

Sperry, can we assume you are now out of the market? Following your advice, you would have gotten out of the market in ~1995 and stayed out until 2009.


Image

I think Sbashore is right, we are now getting off topic, so I'll wait for Slipp to return.


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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby EternalOptimist » Mon Sep 02, 2013 4:15 pm

I'm retired 2 years and am at 50% equities. It doesn't matter what we are doing. If you feel that you can sleep at night and are confident with what you have/are doing then go with it. Non of these people have guarantees or have walked in your shoes.
"When nothing goes right....go left"
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby Beagler » Mon Sep 02, 2013 10:01 pm

slipp1229 wrote:First post, great site!
I am going to leave the grindstone in 3 years max. Liquidated 90% of my equities assets after recovering most of my 2007-09 losses.
Back in 2007-08, I was 90% equities. Ouch... Learned my lesson the hard way. Even had 75% of that sizeable money with high paid "professionals" that
I realize now, do not have a clue.... TRUTH. Anyway (wounds licked and moving on), even though my cash is all in MM or various worthless bank accounts not making squat (actually losing due to inflation), I am ok with that. My question: What are other Bogleheads in my similar position doing? Mostly cash and wondering what to do next and when???
Thanks
Slipp


1. At the very top of this forum there is post titled Asking Portfolio Questions. Why haven't your followed the format? http://tinyurl.com/k6jfm33

2. What investing philosophy has informed your investment behavior for the past couple of decades? Why are you considering changing? What do you think they odds are you'll stick to a plan?
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby sperry8 » Tue Sep 03, 2013 3:15 am

pkcrafter wrote:Sperry, can we assume you are now out of the market? Following your advice, you would have gotten out of the market in ~1995 and stayed out until 2009.


Image

I think Sbashore is right, we are now getting off topic, so I'll wait for Slipp to return.


Paul


Where in my comment to read that? I did not say my advice was to sell stocks now. What I said was that I am not a new buyer of stocks at these prices. And I wouldn't recommend to the OP, who clearly was scared enough during the last recession and dumped it all - to make his first purchase at these prices. I think he should wait until the Shiller PE10 comes down before he starts to DCA in. I also said to start buying in at Shiller PE10 18. Which means he would've started to buy in around late 2008 - and gotten all in by Spring 2009.

Sbashore wrote:In my opinion this kind of advice is not helpful to the OP. You may be right, you may be wrong, but whatever you are it will be the result of chance. In real terms the market is not at an all time high. The reality is that no one knows, what is to come. What I do think is that the OP should not be in a hurry to jump into anything until he understands the ramifications of his actions. For someone who has been out of the market for this amount of time, jumping to giving advice on "market timing" is not good advice. I'm not going to say more in this thread since I think it flirts with hijacking the original post and would just further obfuscate the issue for the OP.


I agree with you. The OP should not be in a hurry to jump in. And I didn't offer any such advice to do so. I agree he currently does not have a handle on his risk tolerance and must figure that out before he gets back into the market. However, I disagree on this point; We do know what is to come. The market will be higher than it is now. And it will be lower. Both will occur. What we don't know is when. But it will be higher and it will be lower. Better to wait til it's lower before buying (and yes, as you say, he must get a handle on the "ramifications of his actions" before he does. Which to me means, get a handle on his risk tolerance and his perspective so that whenever he does buy back in, he will not jump out at the first sign of "lower".

I love bogleheads. You've taught me a lot. You helped keep me in the market through the 08/09 years. It was very hard to do. Without your help and a few others, I might have sold and been very unhappy today. I even bought some stocks near the lows. Not a lot, but some. And it was in no small part to all the wonderful advice I received on this forum. However, I think some Bogleheads do a disservice to newbies when they say "we have no idea what stocks will do", therefore just buy in whenever. For someone who sold out at the bottom, only to buy in after it's up 5 years later without any significant correction is a disservice. This is exactly market timing on the opposite scale! He sold low. And based on their advice, he should just buy now (high) because we don't know where the market is going. I think that sort of advice is unhelpful to the OP and others who seek advice here.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby grayfox » Tue Sep 03, 2013 3:52 am

slipp1229 wrote:First post, great site!
I am going to leave the grindstone in 3 years max. Liquidated 90% of my equities assets after recovering most of my 2007-09 losses.
Back in 2007-08, I was 90% equities. Ouch... Learned my lesson the hard way. Even had 75% of that sizeable money with high paid "professionals" that
I realize now, do not have a clue.... TRUTH. Anyway (wounds licked and moving on), even though my cash is all in MM or various worthless bank accounts not making squat (actually losing due to inflation), I am ok with that. My question: What are other Bogleheads in my similar position doing? Mostly cash and wondering what to do next and when???
Thanks
Slipp


If you are sitting in cash, then by definition you are not investing. You need to take the cash and buy some income producers to fund your retirement living.

I found these articles by Steve Vernon that talk about how to generate a retirement paycheck.

3 ways to turn your IRA and 401(k) into a lifetime retirement paycheck

http://www.cbsnews.com/8301-505146_162- ... dividends/
http://www.cbsnews.com/8301-505146_162- ... thdrawals/
http://www.cbsnews.com/8301-505146_162- ... annuities/

To quickly summarize what he says:
1. If you need to withdraw 2% to 3.5%, you can get it all from interest and dividends.
2. If you need 3.5% to 5%, you will need to make systematic withdrawals, spending down your savings.
3. If you need 4 to 6.5%, you will need some kind of annuity.
Тише едешь, дальше будешь. (Quieter you-go, further you-will-be.)
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby livesoft » Tue Sep 03, 2013 6:27 am

Perhaps the OP has slipped away, but this previously posted link of Barry Ritholtz's blog from June 2013 on what to do if one missed the big market rally since March 2009 may be of help to folks who have sat in cash:

http://www.ritholtz.com/blog/2013/06/mi ... to-do-now/
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby YDNAL » Tue Sep 03, 2013 7:17 am

slipp1229 wrote:First post, great site!
I am going to leave the grindstone in 3 years max. Liquidated 90% of my equities assets after recovering most of my 2007-09 losses....
My question: What are other Bogleheads in my similar position doing? Mostly cash and wondering what to do next and when???
Thanks
Slipp

Welcome to the Forum, slipp !!

You now have 6 posts (including the original post above), since you first posted late Saturday, and I can't tell whether you are purposely holding back information or you are playing with the good folks who responded....

Regardless, you have it backwards.

At this juncture, "investing" what you have been able to accumulate is the last (not first) step.
    1. You must determine/know future income streams after the paychecks stop ("leave the grindstone in 3 years max"). What expenses would be covered by such income.
    2. After that, what expenses remain to be paid from savings and for what approx. length of time.
    3. Are there other goals/wishes for the savings besides paying for stuff.
    4. Determine the level of risk needed to take with the savings. Guess what?.. numbers 1-3 are HUGELY important and vary from person to person.
    5. Invest savings accordingly.
Asking Bogleheads what they do (or don't do) may prove irrelevant to YOUR personal circumstances.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby longview » Tue Sep 03, 2013 8:36 am

sperry8 wrote: The remaining 90% of my cash is split with half of it in US banks earning about 1% (so losing to inflation as you say). I have the other half in foreign banks earning about 2.5% interest. So staying even with inflation (but with currency risk). Although personally I don't call it currency risk, I call it diversification. When one currency is up, another is down. I live off the one's that are up. They all don't move together.


I'd be interested in more info on this -- are you doing this from the US as a US citizen? Is it on-line? I'd like to have some money abroad as well, for diversification.
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby longview » Tue Sep 03, 2013 8:50 am

slipp1229 wrote:Wow! ... What a great bunch of responses/people.
Thanks!. I will carefully review each of your situations and decide which works best for me.
My only reservation now is "timing". I feel waiting until the next equities correction takes place
might be wise before jumping in with 50% ... but when will that be? Being a follower of
demographic trends ala Harry Dent, I cannot help believe a mini crash will happen in the not
so distant future. ??
Slipp


I'll just throw into the mix a way I've been thinking of Asset Allocation. People will say it should be according to your "risk tolerance" -- what that really means is this: What is the percentage at which you'll be happy to rebalance into equities when they go down. :greedy

That's why I'm considering going down to 40% equities... that's about the max loss where I'd be excited to see equities drop by 50% or more -- I'd be down 20-25% overall, but I'd be getting in very cheaply for some terrific upside in the future (future generations kind of opportunity). If I were 60% equities, and the market plunged 70%, I don't think I'd be willing to rebalance from bonds back to equities. I'd feel my retirement was threatened, and I'd be thinking about how to adjust my lifestyle and put all my money in safety. ie, it's above my "risk tolerance."

So, my little insight, don't think in the abstract of how "risk tolerant" you are -- think in the real world case of not just being "able to handle the loss" but being "excited to put more money on the table." It's an important distinction. If you're AA was appropriate for you in 2007 then you would have been excited to get more money in during 2008 -- you wouldn't have pulled it out.
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby YDNAL » Tue Sep 03, 2013 11:13 am

longview wrote:I'll just throw into the mix a way I've been thinking of Asset Allocation. People will say it should be according to your "risk tolerance" -- what that really means is this: What is the percentage at which you'll be happy to rebalance into equities when they go down. :greedy

You describe "Willingness (psychological)" to take risk.
  • Not really the "driver" in AA decisions.
  • AA decisions should be based, primarily, on Ability & Need for risk to meet goals and wishes.
Landy
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby bru » Tue Sep 03, 2013 11:36 am

How did you recover your 2007-2009 losses if you've been 85% cash since 2008? The (I assume) 15% in equities or other investmenst doesn't seem like it could have been enough to recover from your losses, especially when you say you were 90% equities in '07-09.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby Dutch » Tue Sep 03, 2013 11:59 am

You should be 0% in equities. Not to sound too harsh, but you have clearly demonstrated you don't have the stomach for investing.

You're not alone in that. Many people buy high ("the stock market is reaching for new highs, let's buy stocks") and sell low ("the stock market has crashed, let's get rid of my stocks") and they repeat that cycle over and over again.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby sperry8 » Tue Sep 03, 2013 5:28 pm

longview wrote:
sperry8 wrote: The remaining 90% of my cash is split with half of it in US banks earning about 1% (so losing to inflation as you say). I have the other half in foreign banks earning about 2.5% interest. So staying even with inflation (but with currency risk). Although personally I don't call it currency risk, I call it diversification. When one currency is up, another is down. I live off the one's that are up. They all don't move together.


I'd be interested in more info on this -- are you doing this from the US as a US citizen? Is it on-line? I'd like to have some money abroad as well, for diversification.


Yes, I am a US Citizen and I live in the US. All the accounts have online access and I can wire transfer money in/out. Two of the accounts required an initial in-person visit to the bank (in a foreign country) to open the account, but once opened, I was able to wire transfer money from my US bank to fund the account and have not been back since. For the remaining accounts, all were opened from the US, although one required a visit to to their consulate in the US to show notarized paperwork that I was me.

However, it should be noted that all the foreign banks I've found that allow US Citizens to open accounts (without a local address in their country) require minimums from $100,000USD up to $130,000USD. Generally this is because the US requires significant paperwork to be filled out by the bank annually, and as such the bank only wants high net worth individuals.

One other thing of note, if you open any accounts you also must fill out the required IRS FBAR paperwork or significant fines could be levied. A little lengthy, but easy enough to fill out.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby WendyW » Tue Sep 03, 2013 5:38 pm

longview wrote:
sperry8 wrote: The remaining 90% of my cash is split with half of it in US banks earning about 1% (so losing to inflation as you say). I have the other half in foreign banks earning about 2.5% interest. ...

I'd be interested in more info on this -- are you doing this from the US as a US citizen? Is it on-line? I'd like to have some money abroad as well, for diversification.

To get a proper answer, you'd probably be best to start a new topic.
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby longview » Wed Sep 04, 2013 8:59 am

YDNAL wrote:
longview wrote:I'll just throw into the mix a way I've been thinking of Asset Allocation. People will say it should be according to your "risk tolerance" -- what that really means is this: What is the percentage at which you'll be happy to rebalance into equities when they go down. :greedy

You describe "Willingness (psychological)" to take risk.
  • Not really the "driver" in AA decisions.
  • AA decisions should be based, primarily, on Ability & Need for risk to meet goals and wishes.


I agree -- but I think what you're saying gets a lot of people (especially newbs) in trouble. You may "financially need" and be "financial able" to take certain risks -- but if you don't have the "willingness" you are going to go down in flames. Better to remove that need instead to the degree you are able -- if you need to drastically reduce lifestyle that is better than signing up for an AA that you will fail to implement. :sharebeer
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
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Re: Retiring in 3 years and sitting on 85% cash since 2008

Postby YDNAL » Wed Sep 04, 2013 10:01 am

longview wrote:
YDNAL wrote:
longview wrote:I'll just throw into the mix a way I've been thinking of Asset Allocation. People will say it should be according to your "risk tolerance" -- what that really means is this: What is the percentage at which you'll be happy to rebalance into equities when they go down. :greedy

You describe "Willingness (psychological)" to take risk.
  • Not really the "driver" in AA decisions.
  • AA decisions should be based, primarily, on Ability & Need for risk to meet goals and wishes.

I agree -- but I think what you're saying gets a lot of people (especially newbs) in trouble.

Disagree totally. What I said holds true for EVERYONE.

longview wrote:You may "financially need" and be "financial able" to take certain risks -- but if you don't have the "willingness" you are going to go down in flames. Better to remove that need instead to the degree you are able -- if you need to drastically reduce lifestyle that is better than signing up for an AA that you will fail to implement. :sharebeer

If you are not "willing" to take risk, guess what ?... you are not willing to take risk.

A perception that taking risk in the Stock market comes with any type of guarantee, even when we don't save sufficiently or don't want to work sufficiently, IS what "gets a lot of people in trouble."
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