Thinking out loud

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stemikger
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Thinking out loud

Post by stemikger » Sun Jul 16, 2017 8:42 am

Hi folks,

I have never questioned my investment choices. I am happy with a two fund portfolio and not holding international. I have held this for over 20 years now. As many already know, upon retirement I plan to put it all in the balanced index fund.

I am 100% confident that these two funds and one day one fund is all I would need.

However, I do think about changing my asset allocation quite often. Mainly since Warren Buffett's 90/10 suggestion came to fore.

When this topic comes up (which it does quite often), many folks say, the market can go down 50% or more. I know anything can happen, but if you look at history, those types of downturns usually happen once in a lifetime and the chances of a recession or depression like that is very unlikely to happen again in my lifetime. I am 53.

Having said that, I am currently 60/40 in my 401K, but the only thing that nags me is I still have 11 years ahead of me to work (God willing) and maybe I should be more like 70/40 until retirement. Again, I'm not being flakey again, it's just that, this is the only thing I question about my plan. I am very happy with everything else I'm doing.

Would love to hear some feedback.

Thanks!
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pkcrafter
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Re: Thinking out loud

Post by pkcrafter » Sun Jul 16, 2017 9:13 am

Warren Buffett's 90/10 AA was for his wife. I don't think it's a general recommendation for everyone. In Buffett's case, his wife could conceivably lose 90% of her holding and still have a comfortable retirement.
When this topic comes up (which it does quite often), many folks say, the market can go down 50% or more. I know anything can happen, but...


Whoops, stop right there.

if you look at history, those types of downturns usually happen once in a lifetime and the chances of a recession or depression like that is very unlikely to happen again in my lifetime. I am 53.
usually, unlikely? Aren't they always a surprise?

My question is, how are your retirement assets doing now? Are you on target to reach your goal? With 11 years to go, you have some room to go somewhat higher, but is there a real need? If you do go higher, I would suggest you drop back down in 4 or 5 years to guard against a bad sequence of returns messing up your plans.

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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stemikger
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Re: Thinking out loud

Post by stemikger » Sun Jul 16, 2017 10:13 am

pkcrafter wrote:Warren Buffett's 90/10 AA was for his wife. I don't think it's a general recommendation for everyone. In Buffett's case, his wife could conceivably lose 90% of her holding and still have a comfortable retirement.
When this topic comes up (which it does quite often), many folks say, the market can go down 50% or more. I know anything can happen, but...


Whoops, stop right there.

if you look at history, those types of downturns usually happen once in a lifetime and the chances of a recession or depression like that is very unlikely to happen again in my lifetime. I am 53.
usually, unlikely? Aren't they always a surprise?

My question is, how are your retirement assets doing now? Are you on target to reach your goal? With 11 years to go, you have some room to go somewhat higher, but is there a real need? If you do go higher, I would suggest you drop back down in 4 or 5 years to guard against a bad sequence of returns messing up your plans.

Paul
Can't argue with that logic. Thanks for weighing in.
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Re: Thinking out loud

Post by bayview » Sun Jul 16, 2017 11:58 am

stemikger wrote:Hi folks,

I have never questioned my investment choices. I am happy with a two fund portfolio and not holding international. I have held this for over 20 years now...

< snipped >

Having said that, I am currently 60/40 in my 401K, but the only thing that nags me is I still have 11 years ahead of me to work (God willing) and maybe I should be more like 70/40 until retirement. Again, I'm not being flakey again, it's just that, this is the only thing I question about my plan. I am very happy with everything else I'm doing.

Would love to hear some feedback.

Thanks!
Getting a bit greedy, are we? :P :twisted: :wink:

Since you already received Paul's excellent feedback on your first two points, I'll just comment on the third:

There's a reason that you have kept this AA for over 20 years: it works for you. It might not work for others, but that's irrelevant.

My guess is that if you ramped it up, you'd become far more familiar with your bedroom ceiling that you really want to be, because you would have moved away from what is obviously your SWAN portfolio.

If you're on track for these final 11 years, my advice is to let it be. If we have a significant slump or outright crash, and you're still feeling frisky, you could go 100% stocks with new contributions for a while (one of the huge benefits of still being an accumulator!), without changing the AA of your existing savings. Then you could indulge in some private gloating at catching a nice sale. But that's just if your existing savings provide you enough to live on for 5-10 years while markets recover. JMO

:beer
Last edited by bayview on Sun Jul 16, 2017 1:00 pm, edited 1 time in total.
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selftalk
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Re: Thinking out loud

Post by selftalk » Sun Jul 16, 2017 12:31 pm

stemikger, will you be receiving social security and a pension when you retire ? If so you may be fine just on that. That`s the way I govern my allocation. I`m retired and between my govt. pension and social security I`m able to still invest if I so desire which I have been doing. I`m 100% in VTI/VTSAX and still plan to stay that way even if the international market starts out performing the S&P 500. I just keep buying and reinvesting the dividends when they get issued and enjoy the compounding. I believe that I am trying to protect the purchasing power of my funds. That`s the way I see it for myself knowing full well that we all think and feel differently. Sticking with your present allocation and plan is fine. Ask yourself if you are being tempted toward performance chasing and/or greed. Would you be sorry if the big bear market started after you changed your allocation to more equities ?

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Re: Thinking out loud

Post by Christine_NM » Sun Jul 16, 2017 12:59 pm

Don't do this. Simple is hard.

You sound like you think you are missing out on something. So if you forget to rebalance a couple of times, and creep up to 65% stock, that's not so bad :) .

You can always downshift back to 60% later, or the market will do it for you. :shock:
10% cash 45% stock 45% bond. Retired, w/d rate 1.5%

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stemikger
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Re: Thinking out loud

Post by stemikger » Sun Jul 16, 2017 1:10 pm

Thanks!

It's always good to use smart people as a sounding board. :beer
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jebmke
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Re: Thinking out loud

Post by jebmke » Sun Jul 16, 2017 2:38 pm

The difference between 60/40 and 70/30 is not large. I'd be inclined to not make the change just to avoid a small nagging regret when the market eventually turns down. I am assuming "70/40" was a typo and you were not intending to leverage 10% of your holdings.
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Re: Thinking out loud

Post by epictetus » Sun Jul 16, 2017 2:42 pm

When I have thoughts similar to the ones you are having they always and only seem to occur when the market has been going up and up for the last several years :-)

and i have been having those thoughts lately re: maybe age in bonds is too conservative.

If I had these thoughts after the market had dropped 50% i might think i was on to something.

How stressed/depressed/disappointed/regretful would you feel if you upped your stock allocation and then over the next year the stock market dropped by 50% and stayed down for a few years? And the news at that time will be bleak. That is a key question that helps me not increase stock allocation after a long stock market run up.

i think the allocation you have had fits you very well. like my 2 fund approach with age in bonds fits me. and your one fund approach in retirement is fine also.

in reality if you are going from 60/40 to 70/30 that is not a radical move. going 60/40 to 90/10 would be a radical move.

if you are on target to achieve what you need/want to with an allocation you have been comfortable with for a long time i would be cautious on moving to a more aggressive allocation. especially after a many year stock market increase.

hope this is helpful. i always enjoy your posts!!
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Re: Thinking out loud

Post by Thesaints » Sun Jul 16, 2017 2:45 pm

Yes, they happen once in a lifetime, if your life expectancy is less than 8 years.

lostdog
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Re: Thinking out loud

Post by lostdog » Sun Jul 16, 2017 5:03 pm

Stay the course. :)

60/40 for life. You're all set.
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Re: Thinking out loud

Post by staythecourse » Sun Jul 16, 2017 5:33 pm

There are a few things one has to accept.

1. The less stocks one owns over a long time horizon the less money one will earn from those investments. Folks on here think they can have their cake and eat it too. You can't decrease risk and think you can get the same return as a high equity investor when you hold more bonds. That is asking for a free lunch. It happens at times, but is not the EXPECTED return.

2. The more stocks you hold the more risk of principle you incur. You want to work another 10 year, but what would happen if you get fired tomorrow? That 10 year time horizon is what YOU would like it doesn't make it a gaurantee.

3. Everything else is pure talk and debate with no clear answer without a crystal ball.

IF I was to give an answer to your query I would throw a few questions back to you... How close are you on your current plan to meet your needs in retirement? If you did go heavier on stocks and a bear market started AND you lost your job would you still be okay? How flexible are you extending the time line to retirement? How easy is it to get part time work if needed?

The more I read the more I think if you have thought thoroughly on the question of Mr. Swedroe's, "Ability, need, and willingness to take risk" AND nothing in your life has changed then DON'T do anything else. That means you would be increasing principle risk for NO reason outside of greed. That never will turn out well.

Usual, "Enemy of a good plan is a great plan" enters into the conversation here.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Thinking out loud

Post by dwickenh » Sun Jul 16, 2017 8:17 pm

staythecourse wrote:There are a few things one has to accept.

1. The less stocks one owns over a long time horizon the less money one will earn from those investments. Folks on here think they can have their cake and eat it too. You can't decrease risk and think you can get the same return as a high equity investor when you hold more bonds. That is asking for a free lunch. It happens at times, but is not the EXPECTED return.

2. The more stocks you hold the more risk of principle you incur. You want to work another 10 year, but what would happen if you get fired tomorrow? That 10 year time horizon is what YOU would like it doesn't make it a gaurantee.

3. Everything else is pure talk and debate with no clear answer without a crystal ball.

IF I was to give an answer to your query I would throw a few questions back to you... How close are you on your current plan to meet your needs in retirement? If you did go heavier on stocks and a bear market started AND you lost your job would you still be okay? How flexible are you extending the time line to retirement? How easy is it to get part time work if needed?

The more I read the more I think if you have thought thoroughly on the question of Mr. Swedroe's, "Ability, need, and willingness to take risk" AND nothing in your life has changed then DON'T do anything else. That means you would be increasing principle risk for NO reason outside of greed. That never will turn out well.

Usual, "Enemy of a good plan is a great plan" enters into the conversation here.

Good luck.
+1 I agree with staythecourse on this one.

Staying with what has worked is not always easy...
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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Re: Thinking out loud

Post by gwrvmd » Sun Jul 16, 2017 9:40 pm

Its interesting you have those doubts, this is a very conservative group
When you invest in bonds you are increasing the risk of losing your long term purchasing power, bond don't pay well nor respond to inflation.

The recent book 'Investing at Level 3" by Dr James Cloonan, founder of AAII (American Association of Individual Investors) is based upon the concept that 40% bonds is too high a price to pay to "protect or insure" against volatility which actually isn't that bad when it occurs.
In essence, he advocates an 80% stock/20% cash portfolio. The 20% cash will get you through any volatility that has occurred since the 1930s. There have been none lasting more than 3 years since WWII.
Even 2008 only lasted 3 years, by 2010 the market was back
People crash, the market only has volatility
Running out of money is risk, volatility is good, if there was no volatility the market would never go up
I am 80 and have a 85% stock/15% cash asset allocation. I have lived through 1974, 1987, 2002 and 2008.
They all came back. Have faith in America. They were lessons learned.

I believe the market is due to drop at least 30%. It won't bother me, I've seen it before, it always comes back.
Google or search this forum for Jim Cloonans book. If you have doubts about how much you are putting in bonds in this low interest rate environment, you will probably like the book. If you are as conservative as most Bogleheads, you will say he's nuts. Chapters 6 and 7 are the essence of the book.........Gordon
Disciple of John Neff

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stemikger
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Re: Thinking out loud

Post by stemikger » Mon Jul 17, 2017 8:04 am

dwickenh wrote:
staythecourse wrote:There are a few things one has to accept.

1. The less stocks one owns over a long time horizon the less money one will earn from those investments. Folks on here think they can have their cake and eat it too. You can't decrease risk and think you can get the same return as a high equity investor when you hold more bonds. That is asking for a free lunch. It happens at times, but is not the EXPECTED return.

2. The more stocks you hold the more risk of principle you incur. You want to work another 10 year, but what would happen if you get fired tomorrow? That 10 year time horizon is what YOU would like it doesn't make it a gaurantee.

3. Everything else is pure talk and debate with no clear answer without a crystal ball.

IF I was to give an answer to your query I would throw a few questions back to you... How close are you on your current plan to meet your needs in retirement? If you did go heavier on stocks and a bear market started AND you lost your job would you still be okay? How flexible are you extending the time line to retirement? How easy is it to get part time work if needed?

The more I read the more I think if you have thought thoroughly on the question of Mr. Swedroe's, "Ability, need, and willingness to take risk" AND nothing in your life has changed then DON'T do anything else. That means you would be increasing principle risk for NO reason outside of greed. That never will turn out well.

Usual, "Enemy of a good plan is a great plan" enters into the conversation here.

Good luck.
+1 I agree with staythecourse on this one.

Staying with what has worked is not always easy...

Thanks again!! I will stay the course. 60/40 for life has always been my plan, no need to change now.
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stemikger
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Re: Thinking out loud

Post by stemikger » Mon Jul 17, 2017 8:06 am

lostdog wrote:Stay the course. :)

60/40 for life. You're all set.
+1

:beer
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Re: Thinking out loud

Post by tainted-meat » Mon Jul 17, 2017 8:09 am

stemikger - I like to take more risk but really that 60/40 at your age and what appears to be your risk profile fits well.

Keep in mind that bonds (and US Stocks) have done very well over the last 20 years so I don't think you've missed out on returns either.

Another vote to stick with your plan. It works for you.

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stemikger
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Re: Thinking out loud

Post by stemikger » Mon Jul 17, 2017 8:11 am

gwrvmd wrote:Its interesting you have those doubts, this is a very conservative group
When you invest in bonds you are increasing the risk of losing your long term purchasing power, bond don't pay well nor respond to inflation.

The recent book 'Investing at Level 3" by Dr James Cloonan, founder of AAII (American Association of Individual Investors) is based upon the concept that 40% bonds is too high a price to pay to "protect or insure" against volatility which actually isn't that bad when it occurs.
In essence, he advocates an 80% stock/20% cash portfolio. The 20% cash will get you through any volatility that has occurred since the 1930s. There have been none lasting more than 3 years since WWII.
Even 2008 only lasted 3 years, by 2010 the market was back
People crash, the market only has volatility
Running out of money is risk, volatility is good, if there was no volatility the market would never go up
I am 80 and have a 85% stock/15% cash asset allocation. I have lived through 1974, 1987, 2002 and 2008.
They all came back. Have faith in America. They were lessons learned.

I believe the market is due to drop at least 30%. It won't bother me, I've seen it before, it always comes back.
Google or search this forum for Jim Cloonans book. If you have doubts about how much you are putting in bonds in this low interest rate environment, you will probably like the book. If you are as conservative as most Bogleheads, you will say he's nuts. Chapters 6 and 7 are the essence of the book.........Gordon
Wow. Gordon you are the man! I can't disagree with what you said, but I guess I'm not built the same way. The most I can ever see myself going is 70/30. I certainly will not call what you do crazy, but sleeping at night is just as important. 60/40 for life has always been my plan, so I will continue on that path. I commend you for being able to stick with your plan through thick and thin. Thanks for weighing in with your real life example.

Steve
Last edited by stemikger on Mon Jul 17, 2017 8:17 am, edited 1 time in total.
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stemikger
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Re: Thinking out loud

Post by stemikger » Mon Jul 17, 2017 8:12 am

tainted-meat wrote:stemikger - I like to take more risk but really that 60/40 at your age and what appears to be your risk profile fits well.

Keep in mind that bonds (and US Stocks) have done very well over the last 20 years so I don't think you've missed out on returns either.

Another vote to stick with your plan. It works for you.
Thanks!

Your username made me laugh. Mind if I ask you what's behind it.
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Re: Thinking out loud

Post by friar1610 » Mon Jul 17, 2017 10:11 am

gwrvmd wrote:Its interesting you have those doubts, this is a very conservative group
When you invest in bonds you are increasing the risk of losing your long term purchasing power, bond don't pay well nor respond to inflation.

The recent book 'Investing at Level 3" by Dr James Cloonan, founder of AAII (American Association of Individual Investors) is based upon the concept that 40% bonds is too high a price to pay to "protect or insure" against volatility which actually isn't that bad when it occurs.
In essence, he advocates an 80% stock/20% cash portfolio. The 20% cash will get you through any volatility that has occurred since the 1930s. There have been none lasting more than 3 years since WWII.
Even 2008 only lasted 3 years, by 2010 the market was back
People crash, the market only has volatility
Running out of money is risk, volatility is good, if there was no volatility the market would never go up
I am 80 and have a 85% stock/15% cash asset allocation. I have lived through 1974, 1987, 2002 and 2008.
They all came back. Have faith in America. They were lessons learned.

I believe the market is due to drop at least 30%. It won't bother me, I've seen it before, it always comes back.
Google or search this forum for Jim Cloonans book. If you have doubts about how much you are putting in bonds in this low interest rate environment, you will probably like the book. If you are as conservative as most Bogleheads, you will say he's nuts. Chapters 6 and 7 are the essence of the book.........Gordon
I am going to look for the book at the library. But I am curious about one thing: does his recommendation stand whether or not one has a pension? SS? Other income streams? Or is it a one-size-fits-all regardless of those factors?
Friar1610

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Re: Thinking out loud

Post by tennisplyr » Mon Jul 17, 2017 10:14 am

Retired in my mid sixties. In the absence of anything else about your life, IMHO I would go for 70/30. You have some time to recover in the event of a downturn. The way I look at it, when you do retire you likely won't need all of your money at one time, so you could nibble away with withdrawals in case of a catastrophe, biding some time. But then again, I'm not a worrier.
Those who move forward with a happy spirit will find that things always work out.

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Re: Thinking out loud

Post by noco-hawkeye » Mon Jul 17, 2017 10:23 am

I think it helps to try to view both the possible upside of more equities, and also the possible risk. Below is a chart I am stealing from fidelity:

Image

You really need to look at both sides of the equation. Right now 90% equities seems like a no brainer, and it will remain the obvious choice - until it isn't the right choice and everything gets turned around.

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stemikger
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Re: Thinking out loud

Post by stemikger » Mon Jul 17, 2017 10:47 am

tennisplyr wrote:Retired in my mid sixties. In the absence of anything else about your life, IMHO I would go for 70/30. You have some time to recover in the event of a downturn. The way I look at it, when you do retire you likely won't need all of your money at one time, so you could nibble away with withdrawals in case of a catastrophe, biding some time. But then again, I'm not a worrier.
Thanks, I always enjoy your replies. In your opinion, do you think the difference is that much?

It can be, but i'm 53 and my wife is 57, not sure if I should be upping my equity allocation, but then again, if everything goes according to plan, I would like to work at least another 10 years. Unfortunately, I am a worrier. I wish I weren't but I was born this way. lol

60/40 seems to have the psychological that works for me. Even though I know 70/30 probably is not that much of a difference either way, I am sure my regret will be magnified when the market goes down again.
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SimplicityNow
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Re: Thinking out loud

Post by SimplicityNow » Mon Jul 17, 2017 3:14 pm

From reading prior posts of yours I think you'd sleep better at night at 60/40. If you want to try a change you can do it in small increments. Change to 61/39 leave it for a few months, re-evaluate how you feel, If you still fell good go up to 62/38. Maybe split the difference and go to 65/35% and call it a day.

Of course the issue with any of that is you can't use the balanced fund at 60/40.

If you have that much of an issue deciding between one option and the next, it probably doesn't make much
difference which you choose.

And remember these sage words:

"The enemy of a good plan is the search for a perfect plan".

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Re: Thinking out loud

Post by gwrvmd » Mon Jul 17, 2017 6:37 pm

Friar1610
You asked if "Investing at Level 3" was the same if you had guaranteed sources of income such as pension, SS, etc
I'll answer it this way:
Another way to look at Investing at level 3 is never touching the stock portion of your portfolio when the market is down
If you feel you need $60,000 a year to live and have $20,000 guaranteed (SS, pension) then you need $40,000 from your portfolio/year.
If you have $120,000 of cash in your portfolio you can go for 3 years w/o taking anything from your portfolio except cash which would take you through every downturn of the market since before WWII. Even 2008 was only 3 years.
The goal is...Never have to sell a stock when the market is down, give them a chance to recover and grow.

If you have $120,000 in cash in your portfolio, it replaces 40% bonds.
The $120,000 cash is insurance that you will never have to sell stocks in a down market, you only rely on the stock portion of the portfolio the years that the market is up.

As long as you have the $120,000 in cash, the stock portion can keep growing. You never need to waste money on bonds

I have never owned a bond. I have never understood why anybody would buy anything that doesn't move with inflation. The older you get, the more you realize how important inflation is in field of personal finance.........The Enemy is Inflation not Volatility............... Gordon
Disciple of John Neff

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Re: Thinking out loud

Post by selftalk » Mon Jul 17, 2017 7:38 pm

gwrvmd, this book sounds like the way W. Buffett thinks and acts. Buffett`s father was very concerned about the purchasing power of the dollar.

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Re: Thinking out loud

Post by Dottie57 » Mon Jul 17, 2017 7:57 pm

Stay the course.

I am now at 50/50 because it is just as important to me to preserve what I have as to keep growing my financial assets. I definitely have the same thoughts of changing my allocation to be more aggressive. But I really want to retire within 5 years. Letting greed take over common sense would not be to my benefit.

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Re: Thinking out loud

Post by tennisplyr » Mon Jul 17, 2017 8:11 pm

stemikger wrote:
tennisplyr wrote:Retired in my mid sixties. In the absence of anything else about your life, IMHO I would go for 70/30. You have some time to recover in the event of a downturn. The way I look at it, when you do retire you likely won't need all of your money at one time, so you could nibble away with withdrawals in case of a catastrophe, biding some time. But then again, I'm not a worrier.
Thanks, I always enjoy your replies. In your opinion, do you think the difference is that much?

It can be, but i'm 53 and my wife is 57, not sure if I should be upping my equity allocation, but then again, if everything goes according to plan, I would like to work at least another 10 years. Unfortunately, I am a worrier. I wish I weren't but I was born this way. lol

60/40 seems to have the psychological that works for me. Even though I know 70/30 probably is not that much of a difference either way, I am sure my regret will be magnified when the market goes down again.
Thanks. I don't think the difference is that much. If you feel you have kind of reached your number, you may want to shift to a preservation mode. Personally, I'm at roughly 50/50 because what i have is way more important right now than what I could have. If you're a worrier you may just want to go for a base hit rather than swing for the fences. I don't regret trying to go big in the past, I'm grateful for what I have.
Those who move forward with a happy spirit will find that things always work out.

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Re: Thinking out loud

Post by friar1610 » Tue Jul 18, 2017 8:27 am

gwrvmd wrote:Friar1610
You asked if "Investing at Level 3" was the same if you had guaranteed sources of income such as pension, SS, etc
I'll answer it this way:
Another way to look at Investing at level 3 is never touching the stock portion of your portfolio when the market is down
If you feel you need $60,000 a year to live and have $20,000 guaranteed (SS, pension) then you need $40,000 from your portfolio/year.
If you have $120,000 of cash in your portfolio you can go for 3 years w/o taking anything from your portfolio except cash which would take you through every downturn of the market since before WWII. Even 2008 was only 3 years.
The goal is...Never have to sell a stock when the market is down, give them a chance to recover and grow.

If you have $120,000 in cash in your portfolio, it replaces 40% bonds.
The $120,000 cash is insurance that you will never have to sell stocks in a down market, you only rely on the stock portion of the portfolio the years that the market is up.

As long as you have the $120,000 in cash, the stock portion can keep growing. You never need to waste money on bonds

I have never owned a bond. I have never understood why anybody would buy anything that doesn't move with inflation. The older you get, the more you realize how important inflation is in field of personal finance.........The Enemy is Inflation not Volatility............... Gordon
Thank you for the explanation. Not sure this is an approach that I could live with but more power to you if you can. I still want to read the book.
Friar1610

indexonlyplease
Posts: 769
Joined: Thu Apr 30, 2015 12:30 pm
Location: Pembroke Pines, FL

Re: Thinking out loud

Post by indexonlyplease » Tue Jul 18, 2017 11:03 am

stemikger wrote:Hi folks,

I have never questioned my investment choices. I am happy with a two fund portfolio and not holding international. I have held this for over 20 years now. As many already know, upon retirement I plan to put it all in the balanced index fund.
Most of us would be that more successful if we did the same.

I am 100% confident that these two funds and one day one fund is all I would need.

[*]Me to with the 3 fund I have.

However, I do think about changing my asset allocation quite often. Mainly since Warren Buffett's 90/10 suggestion came to fore.

[*]I am the same when I read something I think maybe I should change. Lately its been about the small value tilt. I can only imagine the 90/10 for someone that retired in around 2006 and witnessed the drop in the portfolio. It could be to scary and they bail.

When this topic comes up (which it does quite often), many folks say, the market can go down 50% or more. I know anything can happen, but if you look at history, those types of downturns usually happen once in a lifetime and the chances of a recession or depression like that is very unlikely to happen again in my lifetime. I am 53.

[*]I am also 53. I have enough between pension and investments. I could risk more because of the pension. But I am thinking why. I keep just making sure I have enough and that is all the risk you should take. We all want more but at what cost.

Having said that, I am currently 60/40 in my 401K, but the only thing that nags me is I still have 11 years ahead of me to work (God willing) and maybe I should be more like 70/40 until retirement. Again, I'm not being flakey again, it's just that, this is the only thing I question about my plan. I am very happy with everything else I'm doing.

[*]I am 60/40 could be higher but I am wondering why. I may lower when I turn 60. Maybe sooner. I like that you stick with a long term plan. If that is working and enough money than why change. Maybe wait until the next crash and we will see who bails and changes. I think you won't since you stay the course.

Between the information and books I have read this year I am learning and not doing anything more than the simple, stay the course. All the pros do agree on this one. I hope this makes sense.

Would love to hear some feedback.

Thanks!

User avatar
Will do good
Posts: 545
Joined: Fri Feb 24, 2012 8:23 pm

Re: Thinking out loud

Post by Will do good » Tue Jul 18, 2017 11:28 am

stemikger wrote:Hi folks,

I have never questioned my investment choices. I am happy with a two fund portfolio and not holding international. I have held this for over 20 years now. As many already know, upon retirement I plan to put it all in the balanced index fund.

I am 100% confident that these two funds and one day one fund is all I would need.

However, I do think about changing my asset allocation quite often. Mainly since Warren Buffett's 90/10 suggestion came to fore.

When this topic comes up (which it does quite often), many folks say, the market can go down 50% or more. I know anything can happen, but if you look at history, those types of downturns usually happen once in a lifetime and the chances of a recession or depression like that is very unlikely to happen again in my lifetime. I am 53.

Having said that, I am currently 60/40 in my 401K, but the only thing that nags me is I still have 11 years ahead of me to work (God willing) and maybe I should be more like 70/40 until retirement. Again, I'm not being flakey again, it's just that, this is the only thing I question about my plan. I am very happy with everything else I'm doing.

Would love to hear some feedback.

Thanks!
I'm at 55/45 for now, but once I hit 70yo with SS and RMD, I plan to be 75/25 because my SS alone would cover over 50% of my expenses, than my goal will change from preservation to growth for future generations.

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