Reached 4M target. Taking money off table. Advice?

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JSnyder
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Reached 4M target. Taking money off table. Advice?

Post by JSnyder » Fri Dec 01, 2017 8:18 am

I am reluctant to share my financial information. But without letting you know my situation I do not think I can receive good advice.

Please let me know your thoughts and any or all of what I write below. Thanks in advance.

Today I met my first threshold. 4 million. I celebrated this by changing all dividends and cap gains of my vanguard funds to Vanguard's short term corporate bond index (VTCLX)

I have two thresholds. 4 million of 5 million. At 4 million with a 4% withdrawal rate that is 160K a year. Even if the stock market goes down 50% to 2 million, with a 4% withdrawal rate that is 80K.

Actually I am probably at the 5 million. I expect to inherit $1 million. My parents are mid 80s. But I do not like to think about this as I do not want them to die and counting on inheritance seems a little morbid to me.

At 5 million with a 4% withdrawal rate we are at 200K and if the market tanked by 50% at 2.5 million we are at 100K.

I figure I need 100K a year to live the type of lifestyle I want to live.

I am 49 years old. My wife is 54. One kid is 19 and at the local jr college. The other is 16. They will also go to the local jr college. I figure I will need 50K a year for their jr and senior years of college. Basically I am budgeting 200K for their education.

My other costs, I live in a house that I consider to large. It is 3,400 square feet. Once my kids go to college, my wife has already agreed to live in a smaller place. I also want to move at that time because I live in a high tax area where the economy is not so good. My monthly mortgage, insurance, taxes is $4,250. Real estate taxes alone are over 16K.

I drive a toyota with 160K plus miles and my wife drive's a honda with 100K plus miles. I am not really into cars. I hope to keep my vehicle until my youngest goes to college (2.5-4.5 years from now).

I guess I am getting to the point where I could retire but I have no interest in this. Nor would I want my wife to retire. I l have a corporate job and I like it well enough. I have decided that I am not very good at not being busy. I tell myself I plan to work until I am 70 unless I am disabled. I have read studies that show those who work live longer.

I volunteer at my church which is important to me, but I have no interest in spending my time volunteering all day. I guess I feel that at work, what I do matters.

I do not have much interest in traveling. Flying scares me. I have visited 42 of the 50 states in the U.S. I plan to see them all over time. But in terms of flying to some exotic location as an early retiree, I am not really interested.

I am pretty boring. I am not into cars, I eat simple, outside of U.S. travel I don't like flying. I joke that my hobby is fixing things around the house. I am pretty handy. But that is about it.

I have about 100K in cash. 150K in vanguard short-term bond. 300K in vanguard total bond index. The rest is in U.S. stocks.

I have 84.3% in stocks, 11% in bonds, and 2.5% in short term reserves. Over time I want to change this mix to 80% stocks, 15% bond, 5% shot term reserves.

I am pretty 86% in U.S. stocks, 71% of which are large cap. I am not really interested in international stocks. I figure I get international exposure through my large caps. Over time I would like to increase my mid cap %. I am not really interested in small cap.

I am overweight on health care. it is 30.1% of my portfolio. I have a large holding of vanguard healthcare index. Yet I am comfortable with this. I think the advances in healthcare over the next 20 years will be impressive.

I guess I am literally the millionaire next door. I never really set out for this. I always lived below my means and saved. It is the stock market which has made me rich. I thank God and I feel blessed every day.

As I said above I am not really interested in spending a lot or having a lavish lifestyle. In face I want to work. I am in a field that is at risk of being outsource. I may end up doing something else. But I would like to work.

One upcoming expense I might have is that my son is interested in being an entrepreneur. He is a sophomore in college so this may change. But if it does not I would like to provide him with 100K in seed money to start a company. I would just write this amount off. If he makes it great. If he doesn't it would be a good learning experience. I am close to my son and I would actually like to start a business with him. Though families and business do not necessarily mix well.

If you read this far, I want to thank you! Sorry if I have been wandering all over the place on my topic.

One of the biggest risks we have as humans is not knowing what we don't know. We have a bias based on our existing knowledge. So, what I am missing? Thank you in advance.

Bacchus01
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Re: Reached 4M target. Taking money off table. Advice?

Post by Bacchus01 » Fri Dec 01, 2017 11:15 am

What is the question?

WhiteMaxima
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Re: Reached 4M target. Taking money off table. Advice?

Post by WhiteMaxima » Fri Dec 01, 2017 11:26 am

W Buffet has 30 billion, he is 80s and still haw money on the table.

randomguy
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Re: Reached 4M target. Taking money off table. Advice?

Post by randomguy » Fri Dec 01, 2017 11:36 am

JSnyder wrote:
Fri Dec 01, 2017 8:18 am


I have about 100K in cash. 150K in vanguard short-term bond. 300K in vanguard total bond index. The rest is in U.S. stocks.

I have 84.3% in stocks, 11% in bonds, and 2.5% in short term reserves. Over time I want to change this mix to 80% stocks, 15% bond, 5% shot term reserves.

I am pretty 86% in U.S. stocks, 71% of which are large cap. I am not really interested in international stocks. I figure I get international exposure through my large caps. Over time I would like to increase my mid cap %. I am not really interested in small cap.

I am overweight on health care. it is 30.1% of my portfolio. I have a large holding of vanguard healthcare index. Yet I am comfortable with this. I think the advances in healthcare over the next 20 years will be impressive.

One of the biggest risks we have as humans is not knowing what we don't know. We have a bias based on our existing knowledge. So, what I am missing? Thank you in advance.
You are missing that you are taking on a lot of undiversified risk. Health care has a bright future. You are betting it is brighter than what everyone else thinks. Same thing with the huge overweight in US stocks.

It sounds like you could meet your goals by reducing risk. Say 60/40 with 30% of stock in international. It also sounds like you don't want to do that. Odds are you will be fine either way. Odds are holding 80/20 will result in you having more money in 30 years. You just need to decide if those gains are worth the risks or not.

Dottie57
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Re: Reached 4M target. Taking money off table. Advice?

Post by Dottie57 » Fri Dec 01, 2017 11:41 am

If I were in Your position, I would take money off the table. Maybe a 50/50 allocation. Keep saving and investing.

sport
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Re: Reached 4M target. Taking money off table. Advice?

Post by sport » Fri Dec 01, 2017 11:42 am

At some point, you may want to shift your investment goal from capital appreciation to capital preservation. The timing and extent of this are personal decisions.

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Re: Reached 4M target. Taking money off table. Advice?

Post by bloom2708 » Fri Dec 01, 2017 11:44 am

Move to 60/40 or 50/50 and keep working if that is your desire. Or do nothing. Adding 20% Total International would allow you to diversify and participate in that large section of stocks. Not required, but I like having a little skin in the game.

Most with your assets would at least consider going part time. If your job is low stress, your health is good and you have time for your (few) hobbies, then keep it going. If you are failing at one of those, consider what changes you can make. Assuming you can work until 65 or 70 is probably not a good assumption.

Maybe start small and upgrade your cars. I know you aren't car people, but you use them daily. You have to spend your money or your kids will. They will have to spend it or their kids will spend it.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

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birdog
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Re: Reached 4M target. Taking money off table. Advice?

Post by birdog » Fri Dec 01, 2017 11:45 am

It sounds like you’re posting this because you’re a bit unsure of your set up. Would going to 70/30 lessen your concerns? Have you considered paying off your mortgage? (More so questions than recommendations.)
The height of cultivation always runs to simplicity -Bruce Lee

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Sandtrap
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Re: Reached 4M target. Taking money off table. Advice?

Post by Sandtrap » Fri Dec 01, 2017 11:48 am

Welcome :D
And, congratulations on your successes and good fortune :sharebeer
And, thank you for sharing your inspiring story.
That said, what is your question?
Do you seek actionable personal financial or investment finance or business advice?
Would you need recommendations on estate planning which is what one would do in your position?
And so forth.

At this point in the game you have more to lose than to gain and are mostly past the accumulation phase. Regardless of age and distance to retirement, one's financial position and portfolio size, and risk tolerance, ascertains one's portfolio structure, goals, and actionable direction going forward.
You have shared where you are with some thoughts going forward, IE: 4 then 5 mil. IE: desire to remain working, etc.
Here are some links and info that can help you get a better visualization of what the Bogleheads concepts are and how it applies to you. If you have not already (excuse the presumption) I encourage you to go through it. It will help you get a "feel" for where you are and what options and goals you might want going forward. Growth? Security of principal? Recession protection to some degree? and so forth.

Some helpful links:
Bogle Philosophy
https://www.bogleheads.org/wiki/Bogleh ... hilosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Bogleh ... rt-up_kit

Read This:

Define General Investment Goals and Objectives
https://www.bogleheads.org/wiki/Invest ... statement

Outline of Investing
https://www.bogleheads.org/wiki/Outline_of_investing
Suggested Reading List
https://www.bogleheads.org/RecommendedReading.php
What the experts say about investing
https://www.bogleheads.org/wiki/What_ ... investing

Then, once you feel more comfortable with listing your financials, etc, and have at least a vague idea of how conservative you want your assets to be.
Do this: (you will get better and more actionable and comprehensive advice)

Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212

A worthy goal is to establish an IPS Statement.
https://www.bogleheads.org/wiki/Investm ... _statement

Thanks,
j :D

livesoft
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Re: Reached 4M target. Taking money off table. Advice?

Post by livesoft » Fri Dec 01, 2017 12:00 pm

JSnyder wrote:
Fri Dec 01, 2017 8:18 am
Today I met my first threshold. 4 million. I celebrated this by changing all dividends and cap gains of my vanguard funds to Vanguard's short term corporate bond index (VTCLX)
Is that a typo because VTCLX is not the short-term corporate bond index fund.
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livesoft
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Re: Reached 4M target. Taking money off table. Advice?

Post by livesoft » Fri Dec 01, 2017 12:02 pm

Tax threads for you:
$200,000 income and low taxes: viewtopic.php?t=79510
$100,000+ income and no taxes: viewtopic.php?t=87471
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DrGoogle2017
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Re: Reached 4M target. Taking money off table. Advice?

Post by DrGoogle2017 » Fri Dec 01, 2017 12:37 pm

I would reduce a little bit in equity.

jrbdmb
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Re: Reached 4M target. Taking money off table. Advice?

Post by jrbdmb » Fri Dec 01, 2017 1:01 pm

Some good suggestions above. I would agree that if you feel you have already "won the game" your allocations seem rather aggressive.

I would also humbly suggest that if you have not done so already you have an honest discussion with your wife about about want you *both* want to do. You want to move to a smaller home, perhaps she does not. You want to work until 70, and expect her to as well; perhaps she has other ideas of what would be fulfilling considering that money is not the overriding objective anymore.

JSnyder
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Re: Reached 4M target. Taking money off table. Advice?

Post by JSnyder » Fri Dec 01, 2017 1:12 pm

birdog wrote:
Fri Dec 01, 2017 11:45 am
It sounds like you’re posting this because you’re a bit unsure of your set up. Would going to 70/30 lessen your concerns? Have you considered paying off your mortgage? (More so questions than recommendations.)
First off, thank you for everyone's replies. I have been thinking about them.

I purchased my house for 800K a few years ago. I put 20% down. I think I owe around 600K. My mortgage is a 3.25%. With the mortgage deduction I figure I am paying 2.75 on my mortgage. Now this might all change under the new tax plans being thrown around :(

Ironically in other areas of the country I could purchase a very nice empty nest home for 200K.

Unfortunately it is doubtful I will be able to sell my house for what I paid for it. After tax transfer costs, commissions, lawyer fees etc I figure I would need to sell for 850K. And that is not even taking into consideration inflation or what I put into this house. I digress on this a little but I guess I can afford it and my wife really wanted this house.

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HomerJ
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Re: Reached 4M target. Taking money off table. Advice?

Post by HomerJ » Fri Dec 01, 2017 1:13 pm

First off, congratulations!
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
At 4 million with a 4% withdrawal rate that is 160K a year. Even if the stock market goes down 50% to 2 million, with a 4% withdrawal rate that is 80K.
Several points to this:

(1) 4% is a tiny bit aggressive for a 49-year old. The studies about 4% withdrawals were done for 30-year retirements (assuming people retired around 60). But it sounds like you're not planning on retiring anytime soon, so 4% is a good number to plan around after your kids get out of college.
(2) You're not supposed to be 100% in stocks in retirement. 50% drop in the market should NOT equal 50% drop in your retirement money. The 4% studies assumed a 60/40 allocation I think, so a 50% drop in the market is only a 30% drop in your portfolio.
(3) Technically, the 4% studies didn't assume you would take 4% every year of your portfolio. If you retire with $4 million, the study assumed you'd take $160k a year out every year, even if the market dropped. And still, that withdrawal plan worked 95% of the time. If you actually did cut back a little (not the full 30%, but say 10%-15%) during a crash, I'm sure the success percentage would get much closer to 100%.

I also want to move at that time because I live in a high tax area where the economy is not so good. My monthly mortgage, insurance, taxes is $4,250. Real estate taxes alone are over 16K.
Moving to LCOL area will save you a ton. You can buy a house for cash, end up with much lower property taxes, much lower state taxes, and suddenly you'll find yourself only needing to withdraw 2%-3% of your stash, effectively guaranteeing you'll never have to cut back, and never run out of money.
I guess I am getting to the point where I could retire but I have no interest in this. Nor would I want my wife to retire. I l have a corporate job and I like it well enough. I have decided that I am not very good at not being busy. I tell myself I plan to work until I am 70 unless I am disabled. I have read studies that show those who work live longer.
This is a personal choice, but I find it very hard to believe those studies. Are you fit and eating well now? Retirement removes work stress, and allows one to easily exercise and eat and sleep better. Some people may die of boredom, I suppose, but in general, every one I know who retired in their 50s and early 60s are far healthier and happier.

Good luck to you. You have the freedom to retire anytime you want. You've won the game; I think you should start moving your investments to be more conservative. I think you should work on preserving what you've built up, instead of trying to grow it even more. But that's just my advice. If your job is stable even in a recession, and you have no interest in retiring soon, then I suppose you can stay aggressive in your investing.
Last edited by HomerJ on Fri Dec 01, 2017 1:19 pm, edited 2 times in total.

retireearly
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Re: Reached 4M target. Taking money off table. Advice?

Post by retireearly » Fri Dec 01, 2017 1:14 pm

That is a lot to digest and I'm not sure the exact goal or question but I'll add a few things!

Don't be reluctant, we are all anonymous posters. I wish more posters would be transparent (I think many, like you, are concerned about not sounding humble) because ages, portfolio size, net worth, goals, family situation, etc, are a huge part of any decision or planning.

One common theme I keep reading about is winning the game. The older I get (mid-40s now), the more I'm aware of moving from accumulation to preservation; esp. since the huge run up the last decade or so. You have won the game, no doubt. You really could retire now and be fine for life. An SPIA for "only" 2M would give you your 100K a year for life.

So, with your future income needs just about met, why have 80-85% stocks,esp now? Up until this year, I was all stock and after the great run up, I'm much closer to where I need to be than before, so I decide to move to about 33% Fixed Income. My point is that you can essentially secure your future self/family's future my doing something like 50/50. The 50% fixed income can take care of the annual stuff and the 50% equity can help guard against inflation with "hopefully" gains a decent amount beyond inflation. Even better, in a case of huge crash, you would then be in a position to dabble back and buy on sale since to you, going from 50% fixed income to 40, or even 30%, would not be a big deal.

Also, I would strongly recommend revisiting US-only position. You are making a bet that on markets by doing so. At a minimum, there is data that shows 20% international provides more reward and less risk than 100% US.

Congrats on doing well.
Age: 44, Married kids 8/12. Over the last six months, moved from 100% stock to 67/33. Desired AA 50/50 Us/INT, with tilt to US SCV, Int SCV and EM.

alfaspider
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Re: Reached 4M target. Taking money off table. Advice?

Post by alfaspider » Fri Dec 01, 2017 1:21 pm

HomerJ wrote:
Fri Dec 01, 2017 1:13 pm


This is a personal choice, but I find it very hard to believe those studies. Are you fit and eating well now? Retirement removes work stress, and allows one to easily exercise and eat better. Some people may die of boredom, I suppose, but in general, every one I know who retired in their 50s and early 60s are far healthier and happier.

There could be a correlation vs causation issue here. It could be that many people with health problems are forced to retire early, leading to early retirees having shorter lives on average. Or, it could be that many people retiring early face financial difficulties (perhaps they retired early due to job loss), which could lead to increased stress or depression- which are both factors in poor health. If the studies/statistics aren't taking that into account, it says little about the prospects for a healthy person retiring early who is not under financial duress.

aristotelian
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Re: Reached 4M target. Taking money off table. Advice?

Post by aristotelian » Fri Dec 01, 2017 2:48 pm

Since you have hit your goals plus stand to benefit from an inheritance and continue working, what seems to be missing from your post is a sense of purpose for your money. You are not into cars, don't wish to travel, and want a smaller house. Do you have any interest in charitable causes? Perhaps it is time to start thinking about your legacy.

deltaneutral83
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Re: Reached 4M target. Taking money off table. Advice?

Post by deltaneutral83 » Fri Dec 01, 2017 3:19 pm

I don't think its psychologically going to happen for the OP to move to 60/40 all in ten minutes of re balancing (tax issues as well). But move closer to 60/40 with each passing year for the next three years, and go 80/20 US/Intl for the 60 portion. Get rid of the health care tilt and any notions of any other sector tilts. You've won the game. The risk that comes from an 85/15 portfolio vs 60/40 with your scenario just isn't worth it. Getting to $7-8M will not feel nearly as good as feeling bad would down to $2M. 60/40 gives you more than enough equity exposure. I think 60/40 portfolios were down 32% peak to trough for the housing crisis. Could go down to 70/30 for a year and see if that feels ok.

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Re: Reached 4M target. Taking money off table. Advice?

Post by Meg77 » Fri Dec 01, 2017 3:54 pm

You're financially independent. Congratulations! You could spend $100K a year and never run out of money in the vast majority of situations, especially since you haven't factored in social security and have another $1M or so coming your way in an inheritance. Financially, you don't have much to do. However, here are my recommendations:

1. You say you want to shift your asset allocation from 84/11/3 (which BTW doesn't equal 100) to 80/15/5 "over time." It appears that taking action toward this goal is warranted, and with the market having hit records in each of the last 8 months now is probably a better time than many to take some gains. Why not sell 4% of your stocks and move them to bonds?

2. I think you're wasting time tilting toward mid cap and healthcare, and I think you could probably use a bit of international exposure (maybe even just some emerging markets). But what you're doing is fine too; it's not going to materially change too much in all likelihood.

3. Initiate an ongoing conversation with your wife about your dreams, hopes, and fantasies over the next 20 years. You may be "boring" (though I'm not sure that's true!), but she may like the idea of a round the world cruise or a second home in the mountains or taking up a crazy hobby. Think and talk and dream about what you're going to do with this money. Odds are you'll die with MORE in the bank than you have now unless you dramatically change your lifestyle. Where will it go? What good will it do? Are your kids prepared for this windfall?

4. Be sure you are giving generously. Doing so - and in a direct personal way especially - has a way of shifting your focus away from mundane details like ERs and AAs and SWRs. You may not get a lot of joy from spending, but most people do get a lot of joy - and spread joy as well - from giving in a meaningful way.
"An investment in knowledge pays the best interest." - Benjamin Franklin

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Re: Reached 4M target. Taking money off table. Advice?

Post by TomCat96 » Fri Dec 01, 2017 4:12 pm

JSnyder wrote:
Fri Dec 01, 2017 8:18 am
I am reluctant to share my financial information. But without letting you know my situation I do not think I can receive good advice.

Please let me know your thoughts and any or all of what I write below. Thanks in advance.

Today I met my first threshold. 4 million. I celebrated this by changing all dividends and cap gains of my vanguard funds to Vanguard's short term corporate bond index (VTCLX)

I have two thresholds. 4 million of 5 million. At 4 million with a 4% withdrawal rate that is 160K a year. Even if the stock market goes down 50% to 2 million, with a 4% withdrawal rate that is 80K.

Actually I am probably at the 5 million. I expect to inherit $1 million. My parents are mid 80s. But I do not like to think about this as I do not want them to die and counting on inheritance seems a little morbid to me.

At 5 million with a 4% withdrawal rate we are at 200K and if the market tanked by 50% at 2.5 million we are at 100K.

I figure I need 100K a year to live the type of lifestyle I want to live.

I am 49 years old. My wife is 54. One kid is 19 and at the local jr college. The other is 16. They will also go to the local jr college. I figure I will need 50K a year for their jr and senior years of college. Basically I am budgeting 200K for their education.

My other costs, I live in a house that I consider to large. It is 3,400 square feet. Once my kids go to college, my wife has already agreed to live in a smaller place. I also want to move at that time because I live in a high tax area where the economy is not so good. My monthly mortgage, insurance, taxes is $4,250. Real estate taxes alone are over 16K.

I drive a toyota with 160K plus miles and my wife drive's a honda with 100K plus miles. I am not really into cars. I hope to keep my vehicle until my youngest goes to college (2.5-4.5 years from now).

I guess I am getting to the point where I could retire but I have no interest in this. Nor would I want my wife to retire. I l have a corporate job and I like it well enough. I have decided that I am not very good at not being busy. I tell myself I plan to work until I am 70 unless I am disabled. I have read studies that show those who work live longer.

I volunteer at my church which is important to me, but I have no interest in spending my time volunteering all day. I guess I feel that at work, what I do matters.

I do not have much interest in traveling. Flying scares me. I have visited 42 of the 50 states in the U.S. I plan to see them all over time. But in terms of flying to some exotic location as an early retiree, I am not really interested.

I am pretty boring. I am not into cars, I eat simple, outside of U.S. travel I don't like flying. I joke that my hobby is fixing things around the house. I am pretty handy. But that is about it.

I have about 100K in cash. 150K in vanguard short-term bond. 300K in vanguard total bond index. The rest is in U.S. stocks.

I have 84.3% in stocks, 11% in bonds, and 2.5% in short term reserves. Over time I want to change this mix to 80% stocks, 15% bond, 5% shot term reserves.

I am pretty 86% in U.S. stocks, 71% of which are large cap. I am not really interested in international stocks. I figure I get international exposure through my large caps. Over time I would like to increase my mid cap %. I am not really interested in small cap.

I am overweight on health care. it is 30.1% of my portfolio. I have a large holding of vanguard healthcare index. Yet I am comfortable with this. I think the advances in healthcare over the next 20 years will be impressive.

I guess I am literally the millionaire next door. I never really set out for this. I always lived below my means and saved. It is the stock market which has made me rich. I thank God and I feel blessed every day.

As I said above I am not really interested in spending a lot or having a lavish lifestyle. In face I want to work. I am in a field that is at risk of being outsource. I may end up doing something else. But I would like to work.

One upcoming expense I might have is that my son is interested in being an entrepreneur. He is a sophomore in college so this may change. But if it does not I would like to provide him with 100K in seed money to start a company. I would just write this amount off. If he makes it great. If he doesn't it would be a good learning experience. I am close to my son and I would actually like to start a business with him. Though families and business do not necessarily mix well.

If you read this far, I want to thank you! Sorry if I have been wandering all over the place on my topic.

One of the biggest risks we have as humans is not knowing what we don't know. We have a bias based on our existing knowledge. So, what I am missing? Thank you in advance.

I agree with the posters who say take money off the table. I take on considerably more risk than the average boglehead because I have financial goals to meet, high risk tolerance, and time. Taking on more risk for pleasure is not one of those reasons. If you won the game, stop playing.

WhiteMaxima
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Re: Reached 4M target. Taking money off table. Advice?

Post by WhiteMaxima » Fri Dec 01, 2017 4:20 pm

In casino, stop playing when you win. Because the odds is always against you.

In equity market, keep invested will always win because the odds is on your side. For smooth ride, just add more fix income (like Bond, CD).

dbr
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Re: Reached 4M target. Taking money off table. Advice?

Post by dbr » Fri Dec 01, 2017 4:29 pm

WhiteMaxima wrote:
Fri Dec 01, 2017 4:20 pm
In casino, stop playing when you win. Because the odds is always against you.

In equity market, keep invested will always win because the odds is on your side. For smooth ride, just add more fix income (like Bond, CD).
Yes, exactly. The metaphor that you can take money "off the table" is false and misleading. If you have to have a table, the truth is that everything is on the table all the time. It can't be taken off. That whole image created by Bernstein is in my opinion an unfortunate metaphor related to the wisdom of not continuing to hold high allocations to stocks if you don't need to. It would have been simple enough to have said that if you don't need to continue to take risk in stocks, then don't. But I guess authors don't sell or bloggers don't get attention if they don't have a flashy and emotionally appealing maxim to catch attention.

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HomerJ
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Re: Reached 4M target. Taking money off table. Advice?

Post by HomerJ » Fri Dec 01, 2017 4:57 pm

WhiteMaxima wrote:
Fri Dec 01, 2017 4:20 pm
In equity market, keep invested will always win because the odds is on your side.
This is not true if you are withdrawing money (retirement). A bad sequence of returns can leave you broke.

GibsonL6s
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Re: Reached 4M target. Taking money off table. Advice?

Post by GibsonL6s » Fri Dec 01, 2017 4:59 pm

You did not say where the money was, taxable or tax deferred. If you have a tax bill from changing your AA, you may have less than you think. You should take this into account.

WhiteMaxima
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Re: Reached 4M target. Taking money off table. Advice?

Post by WhiteMaxima » Fri Dec 01, 2017 5:03 pm

HomerJ wrote:
Fri Dec 01, 2017 4:57 pm
WhiteMaxima wrote:
Fri Dec 01, 2017 4:20 pm
In equity market, keep invested will always win because the odds is on your side.
This is not true if you are withdrawing money (retirement). A bad sequence of returns can leave you broke.
Assume you have large enough saved so 2 to 4% withdraw rate wont force you to sell depressed asset at big loss. Assume you can ride out the lengthy bear market like Japan and 1929 type of crash.

dbr
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Re: Reached 4M target. Taking money off table. Advice?

Post by dbr » Fri Dec 01, 2017 5:05 pm

HomerJ wrote:
Fri Dec 01, 2017 4:57 pm
WhiteMaxima wrote:
Fri Dec 01, 2017 4:20 pm
In equity market, keep invested will always win because the odds is on your side.
This is not true if you are withdrawing money (retirement). A bad sequence of returns can leave you broke.
Inadequate average return for the withdrawal rate will more certainly leave you broke than a bad sequence of returns will. This is not as simple as you seem to imagine. I suppose I also don't really care for the use of terms such as "win" but that poster does have a valid point.

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Watty
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Re: Reached 4M target. Taking money off table. Advice?

Post by Watty » Fri Dec 01, 2017 5:29 pm

Two things that jump out at me;
JSnyder wrote:
Fri Dec 01, 2017 1:12 pm
I purchased my house for 800K a few years ago. I put 20% down. I think I owe around 600K. My mortgage is a 3.25%. With the mortgage deduction I figure I am paying 2.75 on my mortgage. Now this might all change under the new tax plans being thrown around
Paying it off would be a great way to take some money off the table. If you had a paid off house I doubt that you would get a new loan just to invest the money. It could also greatly lower your income needs. Even though you have a low interest rate you have a huge sequence of returns risk. Here is an example I have posted before about this.
 If you do not pay it off then you will have more sequence of returns risk. For example in rough numbers if you just kept a $100K mortgage and also put $100K into a separate investing account which you also pay a $500 a month mortgage out of then;

a) If you get unlucky and get a modest 10% decline in the portfolio the first year then it would be down to $90K
b) You would also need to pay the $500 a month mortgage($6,000) so your portfolio would be down to $84K
c) To break even the next year you would need to gain back the $16K and another $6,000 for the next years mortgage payments which is $22K. That would take a 25.6% return on the remaining $84K just to break even.
------------------------------
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
I drive a toyota with 160K plus miles and my wife drive's a honda with 100K plus miles. I am not really into cars. I hope to keep my vehicle until my youngest goes to college (2.5-4.5 years from now).
I would take a hard look at getting cars with better safety features, especially with teenage drivers.

Your cars may not even have ESC or good side airbags depending on how old they are. As I recall ESC became standard in 2012 and the the side airbags improved a lot a few years before that. You don't need to buy an expensive high end model with all the latest safety bells and whistles, I was just looking the other day and it looks like Toyota has make automatic brakes standard on most(all?) models so along with ESC you may be able to get a much safer car at a reasonable cost, which you can afford.
Last edited by Watty on Fri Dec 01, 2017 5:30 pm, edited 1 time in total.

snowox
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Re: Reached 4M target. Taking money off table. Advice?

Post by snowox » Fri Dec 01, 2017 5:30 pm

Congratulations on your success!

I hate to beat the horse but I agree , give yourself a haircut to 60/40 or 50/50 is even better.

While you can afford to wait to move if the economy there is bad then move now. No way I'm paying those taxes

Does your son have a business plan is or is this just something he said? Be interested in hearing more about that.

The thing I took the most from your post is you really like your job and thats great but I dont buy the bs the longer you work the longer you live. Like you, I have no desire to Travel abroad as I to have my fears BUT I do travel a ton around the 48 and have been slowly getting a taste going to further places like Canada, Hawaii and Mexico. I also think , at least based on your write up you need more interests that you like as much as your work. Just my observation.

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HomerJ
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Re: Reached 4M target. Taking money off table. Advice?

Post by HomerJ » Fri Dec 01, 2017 5:51 pm

WhiteMaxima wrote:
Fri Dec 01, 2017 5:03 pm
HomerJ wrote:
Fri Dec 01, 2017 4:57 pm
WhiteMaxima wrote:
Fri Dec 01, 2017 4:20 pm
In equity market, keep invested will always win because the odds is on your side.
This is not true if you are withdrawing money (retirement). A bad sequence of returns can leave you broke.
Assume you have large enough saved so 2 to 4% withdraw rate wont force you to sell depressed asset at big loss. Assume you can ride out the lengthy bear market like Japan and 1929 type of crash.
Big assumptions. Can I assume I have a pony too? :)

2% sure, 4% no. 4% withdrawal has indeed failed at 100% stocks if you get a bad sequence of returns.

1929 Great Depression, one would have been broke fairly quickly with 100% stocks while withdrawing money to eat. If it has happened once, by definition it's possible.

100% stocks is not risk-free as you get close to and enter retirement. Just like a casino can "break the bank" if a gambler gets lucky. The odds are on the casino's side, just like the odds are on investing in the market, but nothing is for sure, and you need to take precautions to cover obvious contingencies.

(The analogy is flawed anyway. Casino games have fixed rules. The stock market does not)
Last edited by HomerJ on Fri Dec 01, 2017 5:56 pm, edited 1 time in total.

WhiteMaxima
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Re: Reached 4M target. Taking money off table. Advice?

Post by WhiteMaxima » Fri Dec 01, 2017 5:55 pm

HomerJ wrote:
Fri Dec 01, 2017 5:51 pm
WhiteMaxima wrote:
Fri Dec 01, 2017 5:03 pm
HomerJ wrote:
Fri Dec 01, 2017 4:57 pm
WhiteMaxima wrote:
Fri Dec 01, 2017 4:20 pm
In equity market, keep invested will always win because the odds is on your side.
This is not true if you are withdrawing money (retirement). A bad sequence of returns can leave you broke.
Assume you have large enough saved so 2 to 4% withdraw rate wont force you to sell depressed asset at big loss. Assume you can ride out the lengthy bear market like Japan and 1929 type of crash.
Big assumptions. Can I assume I have a pony too? :)

2% sure, 4% no. 4% withdrawal has indeed failed at 100% stocks if you get a bad sequence of returns.
4mil at 2% is 80k. OP can live very well at this rate. With that asset, Op should worry about false lawsuit and fraud not the withdraw rate for sustain daily living expense.

animule
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Re: Reached 4M target. Taking money off table. Advice?

Post by animule » Fri Dec 01, 2017 6:08 pm

Interesting thread. What the original poster does is up to him, but what I did after I "won the game" in my mid-50s was bring my stock allocation way down. It currently stands between 35% and 40%. I am just looking for enough in stocks to beat inflation. The remainder is in bonds, municipal bonds, I-bonds and EE bonds to the extent you can invest in those.

We are nearly a full decade removed from the financial crisis in 2008. Memories of that event are fading, and many people may not remember what that felt like. I had a family member commit suicide during this period after losing a job in the financial industry in the midst of dealing with a divorce and a substance abuse problem. It is a reminder that nobody really knows how they would react when the walls start caving in.

I think you would be very wise to take money off the table. Ask yourself is earning another $1 million would give you as much or more pleasure than losing half of your net worth in a couple of months.

JBTX
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Re: Reached 4M target. Taking money off table. Advice?

Post by JBTX » Fri Dec 01, 2017 6:11 pm

WhiteMaxima wrote:
Fri Dec 01, 2017 4:20 pm
In casino, stop playing when you win. Because the odds is always against you.

In equity market, keep invested will always win ecause the odds is on your side. For smooth ride, just add more fix income (like Bond, CD).
No, you won't always win. Unlike casino gambling, the odds may be in your favor, especially over the long term, but you still could lose, thus the reason for taking money of the table.

WhiteMaxima
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Re: Reached 4M target. Taking money off table. Advice?

Post by WhiteMaxima » Fri Dec 01, 2017 6:22 pm

JBTX wrote:
Fri Dec 01, 2017 6:11 pm
WhiteMaxima wrote:
Fri Dec 01, 2017 4:20 pm
In casino, stop playing when you win. Because the odds is always against you.

In equity market, keep invested will always win ecause the odds is on your side. For smooth ride, just add more fix income (like Bond, CD).
No, you won't always win. Unlike casino gambling, the odds may be in your favor, especially over the long term, but you still could lose, thus the reason for taking money of the table.
Take a ruler and any 20 year curve of VT and draw a line. No Kodark, Enron or Worldcom or any individual company.

123
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Re: Reached 4M target. Taking money off table. Advice?

Post by 123 » Fri Dec 01, 2017 6:25 pm

You don't indicate a particular direct interest in investing or picking stocks but over 80% of your portfolio is individual stocks. How many different individual stock holdings do you have to monitor? How did you get them? Are you/have you been involved with a financial adviser? Do you pay an AUM fee? How much of your current portfolio is embedded taxable gains in taxable accounts? How much of your portfolio is in tax-deferred IRA or 401k accounts? (I would suspect not much unless your employer has a 401K that has a brokerage link). How much time do you want to spend with your investments, are you interested ion transferring to a multi-fund portfolio instead of individual stocks? Would you be content with market level returns? Do you feel your present investment returns are at least equal to the market average?

Edited to add:
If you pass away before your spouse will she be able to manage the portfolio and how would she handle it?
The closest helping hand is at the end of your own arm.

GibsonL6s
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Re: Reached 4M target. Taking money off table. Advice?

Post by GibsonL6s » Fri Dec 01, 2017 6:46 pm

The other thing you can look at is the income from dividends. My quick math tells me that $4 mil in stock in 07 paid about $74k in dividends. Even if the portfolio fell over 30% and with dividend cuts, the same number of share in SPY paid $60k. So if you can get by on 14k less a year, you did not need to sell anything

JBTX
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Re: Reached 4M target. Taking money off table. Advice?

Post by JBTX » Fri Dec 01, 2017 6:51 pm

WhiteMaxima wrote:
Fri Dec 01, 2017 6:22 pm
JBTX wrote:
Fri Dec 01, 2017 6:11 pm
WhiteMaxima wrote:
Fri Dec 01, 2017 4:20 pm
In casino, stop playing when you win. Because the odds is always against you.

In equity market, keep invested will always win ecause the odds is on your side. For smooth ride, just add more fix income (like Bond, CD).
No, you won't always win. Unlike casino gambling, the odds may be in your favor, especially over the long term, but you still could lose, thus the reason for taking money of the table.
Take a ruler and any 20 year curve of VT and draw a line. No Kodark, Enron or Worldcom or any individual company.
So what? Are you looking at real inflation adjusted returns? I understand historically over the long term stocks have always been positive. But that doesn't mean they will always be positive going forward over a intermediate duration. Look at what has happened in Japan over the last 30 years.

By your logic an investor should be invested in stocks 100% until approaching retirement.

mikefixac
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Re: Reached 4M target. Taking money off table. Advice?

Post by mikefixac » Fri Dec 01, 2017 7:04 pm

Congratulations. I understand your distaste for feeling like you're bragging, but aren't.

Looks to me, short and simple, that you plan to keep on working. If that's the case, how can you not help but just keep adding to the pile?

To give you a different perspective: my home is as expensive as your's, but I usually live quite well on my SS check, which is just under $1K/mo.

WhiteMaxima
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Re: Reached 4M target. Taking money off table. Advice?

Post by WhiteMaxima » Fri Dec 01, 2017 7:18 pm

mikefixac wrote:
Fri Dec 01, 2017 7:04 pm
Congratulations. I understand your distaste for feeling like you're bragging, but aren't.

Looks to me, short and simple, that you plan to keep on working. If that's the case, how can you not help but just keep adding to the pile?

To give you a different perspective: my home is as expensive as your's, but I usually live quite well on my SS check, which is just under $1K/mo.
I am more envy you live on SS check than 4 mile OP. Tell us how does it work work out? To tell you the truth, I am going to Portugal for a couple of weeks and rented ocean view AirB&B for $40/night and feel so excited. Life can be happier without a lot of money.

randomguy
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Re: Reached 4M target. Taking money off table. Advice?

Post by randomguy » Fri Dec 01, 2017 7:28 pm

alfaspider wrote:
Fri Dec 01, 2017 1:21 pm
HomerJ wrote:
Fri Dec 01, 2017 1:13 pm


This is a personal choice, but I find it very hard to believe those studies. Are you fit and eating well now? Retirement removes work stress, and allows one to easily exercise and eat better. Some people may die of boredom, I suppose, but in general, every one I know who retired in their 50s and early 60s are far healthier and happier.

There could be a correlation vs causation issue here. It could be that many people with health problems are forced to retire early, leading to early retirees having shorter lives on average. Or, it could be that many people retiring early face financial difficulties (perhaps they retired early due to job loss), which could lead to increased stress or depression- which are both factors in poor health. If the studies/statistics aren't taking that into account, it says little about the prospects for a healthy person retiring early who is not under financial duress.

Here is one of many studies: https://www.huffingtonpost.com/entry/ea ... 5ebde49eff were even after adjusting for health, working still makes you live longer. You would have to look into the behavior after retirement. Maybe you have people that are healthy and living active lives who then retire, move away from their social network and become couch potatoes. And those people outnumber the unhealthy people who improve their diet and start exercising. Or we could be talking about random noise in the study.

mad_pear
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Re: Reached 4M target. Taking money off table. Advice?

Post by mad_pear » Fri Dec 01, 2017 8:30 pm

I don't understand all these recommendations to get much more conservative with your asset allocation. If you were to have "just enough" for your retirement or a little more, then, yes, I might agree. However, the OP is far above what he would need. For example, using FireCalc (commonly recommended on this site), with a $4M portfolio invested 100% in stocks, a withdrawal rate of $125k/annum over 45 years has been successful 100% of the time (i.e. in 102 45 year cycles). With a $5.1M portfolio, a $160k/annum withdrawal over 45 years has never failed. And that doesn't include the likely continued savings and negligible withdrawal rates the OP would have while he continues to work until 70.

The only thing I don't like is the tilt toward healthcare (but I don't like tilts in general) because of potential for "black swan" type risk due to potential government intervention in drug pricing and single-payer health care. OP, you might also want to read this:

http://blogs.sciencemag.org/pipeline/ar ... he-numbers

which has some rather unpleasant numbers, and as a scientist in the industry, I can't say I disagree. I'm not saying there isn't the possibility for continued growth and success, but tilting into an industry with "black swan" type risks pushes your portfolio into unchartered terrain, and historical S&P 500 index data no longer applies.

Cheers.

randomguy
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Re: Reached 4M target. Taking money off table. Advice?

Post by randomguy » Fri Dec 01, 2017 8:52 pm

mad_pear wrote:
Fri Dec 01, 2017 8:30 pm
I don't understand all these recommendations to get much more conservative with your asset allocation. If you were to have "just enough" for your retirement or a little more, then, yes, I might agree. However, the OP is far above what he would need. For example, using FireCalc (commonly recommended on this site), with a $4M portfolio invested 100% in stocks, a withdrawal rate of $125k/annum over 45 years has been successful 100% of the time (i.e. in 102 45 year cycles). With a $5.1M portfolio, a $160k/annum withdrawal over 45 years has never failed. And that doesn't include the likely continued savings and negligible withdrawal rates the OP would have while you continue to work until 70.

The only thing I don't like is the tilt toward healthcare (but I don't like tilts in general) because of potential for "black swan" type risk due to potential government intervention in drug pricing and single-payer health care. OP, you might also want to read this:

http://blogs.sciencemag.org/pipeline/ar ... he-numbers

which has some rather unpleasant numbers, and as a scientist in the industry, I can't say I disagree. I'm not saying there isn't the possibility for continued growth and success, but tilting into an industry with "black swan" type risks pushes your portfolio into unchartered terrain, and historical S&P 500 index data no longer applies.

Cheers.
OP doesn't have 5 million dollars. He has 4 million. Thats a 82% success rate over 45 years. The OP is at the point where if thngs go south (markets drop 50%, gets laid off), he could be in for a stressfull time. The past does not dictate the future. Trying to spend 100k/year when you have 2 million (not sure if that includes the 200k for college or not) is emotional stressfull even if things work out. Be 50/50, and having 3 million when crap happens leaves you in a much more stable place. Over time the OP can afford to take on more risk if he wants. If the OP had 10 million and the need for 120k or so floor, 2 million in bonds and 8 million in stocks would work fine. Obviously it isn't a free lunch to go conservative. You need to decide how far to go to meet your needs.

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sergeant
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Re: Reached 4M target. Taking money off table. Advice?

Post by sergeant » Fri Dec 01, 2017 9:20 pm

I'm not sure what information the OP is seeking. I do find it odd that his "first threshold" was 4 million dollars. Mine was a thousand dollars. When I hit a hundred thousand that was another... First time posters with huge portfolios always make me wonder if were being trolled especially when their writing skills are lacking.
Lincoln 3 EOW!

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Re: Reached 4M target. Taking money off table. Advice?

Post by GoldenFinch » Fri Dec 01, 2017 9:28 pm

Dottie57 wrote:
Fri Dec 01, 2017 11:41 am
If I were in Your position, I would take money off the table. Maybe a 50/50 allocation. Keep saving and investing.
I agree with Dottie57.

OP you’re life is great. Just keep enjoying doing what your doing knowing your family is financially secure.

mad_pear
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Re: Reached 4M target. Taking money off table. Advice?

Post by mad_pear » Fri Dec 01, 2017 9:33 pm

He has 4 million. Thats a 82% success rate over 45 years.
At a $160k annual withdrawal rate, just to clarify.

moghopper
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Re: Reached 4M target. Taking money off table. Advice?

Post by moghopper » Fri Dec 01, 2017 9:46 pm

mad_pear wrote:
Fri Dec 01, 2017 9:33 pm
He has 4 million. Thats a 82% success rate over 45 years.
At a $160k annual withdrawal rate, just to clarify.
Its threads like these that make me wonder why I'm here.

Why retire? Retiring actually makes you die sooner, and then if I'm not retired, I won't have to worry about an "only" 82% success rate at $160K. Based on what I hear sometimes, I may as well stay working - then I never have to spend principal. I want to thank all the posters who consistently attempt to prove to me, that it isn't worth it because I should only spend 1% of my nest egg.

chuppi
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Re: Reached 4M target. Taking money off table. Advice?

Post by chuppi » Fri Dec 01, 2017 9:55 pm

You did well. Congratulations.
If I were you, I would pay attention to downside risk and maybe go 50/50 stock/bond or even keep some 2-3 years worth of minimum yearly expense in cash/cd.
Like someone said, 4million going to 8million does not make any difference to you and your lifestyle. You don't want to see it fall to 2million.

Dottie57
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Re: Reached 4M target. Taking money off table. Advice?

Post by Dottie57 » Fri Dec 01, 2017 10:38 pm

moghopper wrote:
Fri Dec 01, 2017 9:46 pm
mad_pear wrote:
Fri Dec 01, 2017 9:33 pm
He has 4 million. Thats a 82% success rate over 45 years.
At a $160k annual withdrawal rate, just to clarify.
Its threads like these that make me wonder why I'm here.

Why retire? Retiring actually makes you die sooner, and then if I'm not retired, I won't have to worry about an "only" 82% success rate at $160K. Based on what I hear sometimes, I may as well stay working - then I never have to spend principal. I want to thank all the posters who consistently attempt to prove to me, that it isn't worth it because I should only spend 1% of my nest egg.

I don't consider 82% success rate as very good. 4% Was the rate for 30'year retirement. It might work for 45 years or it might not. It depends on what the future brings.

In retirement you have to mind borh expenses and wirhdrawls. If your stash goes down too much you need to cut expenses. It is simply math.

ryman554
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Re: Reached 4M target. Taking money off table. Advice?

Post by ryman554 » Sat Dec 02, 2017 1:20 am

If the OP is as frugal as indicated, 100k a year is way overkill. I can only assume it includes mortgage payments too.

It's also alarming that the OP does not know the remaining balance on the mortgage.

The OP does not have 4M. The OP should pay off (not down) the loan and keep on trucking. This takes money off the table, as the OP wanted while simultaneously reducing future expenses when and if retirement happens.

This might also be a good time to simplify the investments into a total market fund, total international fund, total bond fund at whatever percentage the OP wants. I suggest 40/40/20, but that's just me

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Re: Reached 4M target. Taking money off table. Advice?

Post by CyclingDuo » Sat Dec 02, 2017 10:19 am

JSnyder wrote:
Fri Dec 01, 2017 8:18 am
Please let me know your thoughts and any or all of what I write below.

Today I met my first threshold. 4 million. I celebrated this by changing all dividends and cap gains of my vanguard funds to Vanguard's short term corporate bond index (VTCLX)
Are these held in taxable or tax deferred?
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
I have two thresholds. 4 million of 5 million. At 4 million with a 4% withdrawal rate that is 160K a year. Even if the stock market goes down 50% to 2 million, with a 4% withdrawal rate that is 80K. Actually I am probably at the 5 million. I expect to inherit $1 million. My parents are mid 80s. But I do not like to think about this as I do not want them to die and counting on inheritance seems a little morbid to me.

At 5 million with a 4% withdrawal rate we are at 200K and if the market tanked by 50% at 2.5 million we are at 100K.

I figure I need 100K a year to live the type of lifestyle I want to live.
There is nothing morbid in thinking about inheritance as it is a part of many of our financial journeys. Whether one focuses building their nest egg without it - or with it - it is what it is. One way to lessen any of the morbid thoughts you might feel about it, is to consider setting up your financial picture to do the same for your children by passing on something to them when your days are over.

At any rate, with your age only being 49, you have plenty of human capital remaining to continue earning income over the next 15 to 18 years making the achievement of hitting your second threshold a likely to occur event - even without the inheritance.
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
I am 49 years old. My wife is 54. One kid is 19 and at the local jr college. The other is 16. They will also go to the local jr college. I figure I will need 50K a year for their jr and senior years of college. Basically I am budgeting 200K for their education.
This is one, as parents, we would suggest you stick to as an important goal. Funding your kids' education so they can graduate debt free is a wonderful gift. I know others feel differently about that, but we are in your camp on this one as we funded our two children's education.
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
My other costs, I live in a house that I consider to large. It is 3,400 square feet. Once my kids go to college, my wife has already agreed to live in a smaller place. I also want to move at that time because I live in a high tax area where the economy is not so good. My monthly mortgage, insurance, taxes is $4,250. Real estate taxes alone are over 16K.
What's the state income tax rate? How much of a deduction do you get on your mortgage interest as it currently stands? You've got a few years to think about the downsizing, so no rush. They may, or may not totally be out of the house at age 22-24. No need to jump too soon if you end up housing one of them for an additional year or two beyond what you thought.
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
I drive a toyota with 160K plus miles and my wife drive's a honda with 100K plus miles. I am not really into cars. I hope to keep my vehicle until my youngest goes to college (2.5-4.5 years from now).
Nothing wrong with this plan. Then again, we drive a Honda with 215K on it, but we also sprung for a new one this year to pair with the older one as we celebrate our first empty nester 1/2 year. Are you going to turn over the old car to your youngest to take to college?
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
I guess I am getting to the point where I could retire but I have no interest in this. Nor would I want my wife to retire. I l have a corporate job and I like it well enough. I have decided that I am not very good at not being busy. I tell myself I plan to work until I am 70 unless I am disabled. I have read studies that show those who work live longer.
No need to retire if you have no interest in doing so at this point. In the meantime, it keeps you feeling young, and if you really enjoy your work, it keeps you from having to tap any savings as it continues to build your nest egg.
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
I am pretty boring. I am not into cars, I eat simple, outside of U.S. travel I don't like flying. I joke that my hobby is fixing things around the house. I am pretty handy. But that is about it.
Home ownership, in and of itself, can be a rather full time hobby for those who enjoy DIY'ing things. There's always plenty of maintenance, repairs, lawn care, and cleaning to make it a full time hobby until you can no longer physically do all of that. So consider your hobby as legit and well shared by many others who also do the same. There are two retired couples who live next to us in our neighborhood, and both of them work more hours on their homes and lawns than I do at my full time job (or so it seems). They really enjoy it, and I love visiting with them about all of the DIY stuff.
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
I have about 100K in cash. 150K in vanguard short-term bond. 300K in vanguard total bond index. The rest is in U.S. stocks.

I have 84.3% in stocks, 11% in bonds, and 2.5% in short term reserves. Over time I want to change this mix to 80% stocks, 15% bond, 5% shot term reserves.

I am pretty 86% in U.S. stocks, 71% of which are large cap. I am not really interested in international stocks. I figure I get international exposure through my large caps. Over time I would like to increase my mid cap %. I am not really interested in small cap.

I am overweight on health care. it is 30.1% of my portfolio. I have a large holding of vanguard healthcare index. Yet I am comfortable with this. I think the advances in healthcare over the next 20 years will be impressive.


This is probably the meat of your post that is garnering the most actionable attention from all of us. No doubt that healthcare, technology, and financials have been loved sectors this past year, but making sure your asset allocation is best positioned for your current portfolio, shorter term, and longer term goals looks like it could use some tweaks. You are domestic stock heavy, international stock, and bond light. Moving in the direction of either 70/30 or 65/35 or 60/40 or 55/45 or even 50/50 will help take some of the risk out of your portfolio, yet still provide plenty of growth to reach your second threshold and beyond as you continue to utilize your human capital by working and saving even more.
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
I guess I am literally the millionaire next door. I never really set out for this. I always lived below my means and saved. It is the stock market which has made me rich. I thank God and I feel blessed every day.

As I said above I am not really interested in spending a lot or having a lavish lifestyle. In face I want to work. I am in a field that is at risk of being outsource. I may end up doing something else. But I would like to work.
Yes, you are a classic case of what Thomas Stanley would describe as the millionaire next door - especially since a single million is no longer worth as much as it was 20 or 30 years ago. You want to work - so keep on working. You don't want to spend a lot or have a lavish lifestyle - so don't. Keep on being you and carry on with confidence.
JSnyder wrote:
Fri Dec 01, 2017 8:18 am
One upcoming expense I might have is that my son is interested in being an entrepreneur. He is a sophomore in college so this may change. But if it does not I would like to provide him with 100K in seed money to start a company. I would just write this amount off. If he makes it great. If he doesn't it would be a good learning experience. I am close to my son and I would actually like to start a business with him. Though families and business do not necessarily mix well.
I think this would be a wonderful learning experience for both of you. If it comes down to it after he finishes college, have him prepare a complete business plan, and make a pitch to you as an investor to help him focus and develop a sound plan. We know 80% make it one year, 66% make it two years, 50% make it 5 years, and only 30% make it ten years, so studying the small businesses and industries that have the highest success rates would be key to making a go of it. Bureau of Labor Statistics’ Business Employment Dynamics are published every now and then with all of that information as a place to start.

Kudos on reaching your first threshold! :sharebeer

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