50/50 to 45/55

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HomerJ
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50/50 to 45/55

Post by HomerJ » Fri Nov 15, 2019 8:14 pm

4 years from retirement (maybe 3... technically I could maybe retire today, but last kid is going to college next year... should probably cash flow that)

Wife is retiring in January...

Decided it's a good time to switch from 50/50 to 45/55

We're selling two houses over the next year, moving to new location and buying our retirement house there... Market doing well, good time to make the switch...

Permanent change, not a market timing move where I will change back if the market crashes, but feels good to lock in some of the gains of the past year.

Probably will go 40/60 when I finally retire.

3 fund portfolio, age-in-bonds, really isn't a bad way to go. I know it's simple and trite, but simple works. You don't have to follow all these experts with their special sauce and alternative investments, etc.
The J stands for Jay

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nedsaid
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Re: 50/50 to 45/55

Post by nedsaid » Fri Nov 15, 2019 8:24 pm

Sounds to me like this is a good plan. With the US Stock Market hitting new highs and you getting closer to retirement, this is a good time to execute your move. Congratulations.
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Re: 50/50 to 45/55

Post by averagedude » Fri Nov 15, 2019 8:33 pm

Better to increase your bond allocation when markets are at all time highs, then to do it after markets crash. Investors should not reassess their risk appetite when markets crash and they shouldn't get greedy and sell their bonds to purchase stocks when markets are at all time highs.

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Re: 50/50 to 45/55

Post by RickBoglehead » Fri Nov 15, 2019 8:43 pm

All sounds good, but moving 5 points isn't a big change.
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Re: 50/50 to 45/55

Post by dandinsac » Fri Nov 15, 2019 8:51 pm

If you’re only 3-4 years away from retirement, why don’t you go to 40/60 right away? I’m assuming the funds are in a tax-advantaged IRA or 401K. I don’t think it will make too much difference from doing 45/55 and then doing 40/60 later.

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Re: 50/50 to 45/55

Post by RogerR » Fri Nov 15, 2019 9:03 pm

HomerJ wrote:
Fri Nov 15, 2019 8:14 pm
4 years from retirement (maybe 3... technically I could maybe retire today, but last kid is going to college next year... should probably cash flow that)

Wife is retiring in January...

Decided it's a good time to switch from 50/50 to 45/55

We're selling two houses over the next year, moving to new location and buying our retirement house there... Market doing well, good time to make the switch...

Permanent change, not a market timing move where I will change back if the market crashes, but feels good to lock in some of the gains of the past year.

Probably will go 40/60 when I finally retire.

3 fund portfolio, age-in-bonds, really isn't a bad way to go. I know it's simple and trite, but simple works. You don't have to follow all these experts with their special sauce and alternative investments, etc.
This is a very sound approach to retirement planning. Congratulations.
I am a very similar stage being in my late 50‘s and retired since 2016. Both kids are off to college next year and my wife and I will adventure travel a lot while moving back to the US (currently living in Singapore). We currently don’t own property but intend to buy a nice retirement home that the kids and their future partners, etc. will like to visit. Our preferred location is the mountains in Colorado. My portfolio (see signature line) is geared towards non-US investor requirements but will move this to classic 3 fund after relocation. I am very happy about “trite” and boring. Investing the BH way brings me peace of mind after spending years trying beat the market and paying fees for little return.
Enjoy the transition to this exciting new phase of your life.

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Re: 50/50 to 45/55

Post by pkcrafter » Fri Nov 15, 2019 9:05 pm

Homer, you might consider going to 40/60 now and holding that AA from now on.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Re: 50/50 to 45/55

Post by HomerJ » Fri Nov 15, 2019 11:08 pm

pkcrafter wrote:
Fri Nov 15, 2019 9:05 pm
Homer, you might consider going to 40/60 now and holding that AA from now on.

Paul
I thought about it as a smart move to lock in a lot of gains, and also thought about sticking with 50/50 in case the market kept going up, but went with 45/55 as a compromise since I couldn't decide :)

I've never right and never wrong... That's why I've been 50/50 for the past 8 years...

Even moving to 40/60, I couldn't make a real decision about moving the full 10%, so I did it halfway.... :)
The J stands for Jay

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Re: 50/50 to 45/55

Post by HomerJ » Fri Nov 15, 2019 11:10 pm

RickBoglehead wrote:
Fri Nov 15, 2019 8:43 pm
All sounds good, but moving 5 points isn't a big change.
Absolutely correct, but it was equal to 4 years of college tuition (my youngest is a senior in high school), so it wasn't nothing... :)
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Re: 50/50 to 45/55

Post by pkcrafter » Sat Nov 16, 2019 12:05 am

HomerJ wrote:
Fri Nov 15, 2019 11:08 pm
pkcrafter wrote:
Fri Nov 15, 2019 9:05 pm
Homer, you might consider going to 40/60 now and holding that AA from now on.

Paul
I thought about it as a smart move to lock in a lot of gains, and also thought about sticking with 50/50 in case the market kept going up, but went with 45/55 as a compromise since I couldn't decide :)

I've never right and never wrong... That's why I've been 50/50 for the past 8 years...

Even moving to 40/60, I couldn't make a real decision about moving the full 10%, so I did it halfway.... :)
I understand. :sharebeer

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Re: 50/50 to 45/55

Post by flyingaway » Sat Nov 16, 2019 12:12 am

HomerJ wrote:
Fri Nov 15, 2019 8:14 pm
4 years from retirement (maybe 3... technically I could maybe retire today, but last kid is going to college next year... should probably cash flow that)

Wife is retiring in January...

Decided it's a good time to switch from 50/50 to 45/55

We're selling two houses over the next year, moving to new location and buying our retirement house there... Market doing well, good time to make the switch...

Permanent change, not a market timing move where I will change back if the market crashes, but feels good to lock in some of the gains of the past year.

Probably will go 40/60 when I finally retire.

3 fund portfolio, age-in-bonds, really isn't a bad way to go. I know it's simple and trite, but simple works. You don't have to follow all these experts with their special sauce and alternative investments, etc.
You are one of the BH veterans, so you are certainly not asking for opinions.

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Re: 50/50 to 45/55

Post by Dude2 » Sat Nov 16, 2019 12:57 am

I have been 50/50 since the 2008 crash, and I plan to stay 50/50 even into retirement because I like the symmetry of it and being agnostic toward which is best.

Using Firecalc Monte Carlo aft-casts, I don't see any difference in outcome (using my chosen parameters) between 50/50 and 40/60. Maybe all the lines group differently, but the overall upside and downside seem very similar. On the other hand, 60/40 has better upside potential with similar downside.

At 30/70 and 70/30 on the downside I potentially run out of money a few years early, and 70/30 has better upside potential.

So, perhaps the range 40/60 through 60/40 is about the same.

In the end, I stay with 50/50 because who knows? Why not?

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Re: 50/50 to 45/55

Post by willthrill81 » Sat Nov 16, 2019 1:05 am

Waaaaiiiit a minute....

HomerJ is changing from 50/50?!?! :shock:
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Re: 50/50 to 45/55

Post by tennisplyr » Sat Nov 16, 2019 7:42 am

Retired 8 years and have generally been around 50/50. Drifting toward 45/55 though I don't think it's going to make any appreciable difference. Been very lucky that I retired into a market expansion, just turned 70 this week 😀
Those who move forward with a happy spirit will find that things always work out.

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Re: 50/50 to 45/55

Post by 3-20Characters » Sat Nov 16, 2019 7:45 am

I’m 50/50. Going to 45/55 is not appreciably different but it can serve as a “gateway AA” to getting to 40% equities or less—if that's your goal. I’ve considered it myself but I have talked myself out of it every time.

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Re: 50/50 to 45/55

Post by JoeRetire » Sat Nov 16, 2019 8:35 am

HomerJ wrote:
Fri Nov 15, 2019 8:14 pm
Decided it's a good time to switch from 50/50 to 45/55

Probably will go 40/60 when I finally retire.
Unlikely to be any noticeable difference. But if it makes you feel better...
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.

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Re: 50/50 to 45/55

Post by midareff » Sat Nov 16, 2019 8:42 am

HomerJ wrote:
Fri Nov 15, 2019 11:08 pm
pkcrafter wrote:
Fri Nov 15, 2019 9:05 pm
Homer, you might consider going to 40/60 now and holding that AA from now on.

Paul
I thought about it as a smart move to lock in a lot of gains, and also thought about sticking with 50/50 in case the market kept going up, but went with 45/55 as a compromise since I couldn't decide :)

I've never right and never wrong... That's why I've been 50/50 for the past 8 years...

Even moving to 40/60, I couldn't make a real decision about moving the full 10%, so I did it halfway.... :)
I've never right and never wrong... That's why I've been 50/50 for the past 12 - 14 years... @ 8 years retired it would have to get way out of whack for me to do much of anything.

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Re: 50/50 to 45/55

Post by tibbitts » Sat Nov 16, 2019 9:25 am

I don't think most people can differentiate between five or even ten points in an allocation, because it all comes down to judgement. How you count things like TIAA RE, emerging market bonds, high yield bonds, etc. will determine what number you end up with, and it's not going to be very precise.

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Re: 50/50 to 45/55

Post by bertilak » Sat Nov 16, 2019 11:28 am

An insight:

50/50 contains 45/55 as a subset so, with 50/50, you already have a 45/55 (or any other finely-tuned) AA.

The 45/55 subset by itself is 95% of the whole. Is that big enough for you? If so, those extra bonds can't hurt. They are just a bit of a bonus income.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

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Re: 50/50 to 45/55

Post by willthrill81 » Sat Nov 16, 2019 11:42 am

I'm still reeling from the shock that HomerJ is changing his AA...but here's my take on it.

It seems very unlikely to create a material difference. Take a look at the chart below. Portfolio 1 is 25% U.S. stock, 25% ex-U.S. stock, and 50% TBM. Portfolio 2 is 22.5% U.S. stock, 22.5% ex-U.S. stock, and 55% TBM.

Image

Until 2014, both lines were almost identical (notwithstanding the small divergence in the late 1990s due to stocks zooming), although TBM did have a very good run from 1987-2014, so I wouldn't expect to see similar performance going forward.

The maximum drawdown of portfolio 1 was 3% greater than portfolio 2. The standard deviation of portfolio 1 was .66% higher. Those seem like rounding errors to me. And the difference in volatility of going from 45/55 to 40/60 was about the same as going from 50/50 to 45/55. I'd say that it makes more sense to go right to 40/60 now. But that's just my take.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: 50/50 to 45/55

Post by tibbitts » Sat Nov 16, 2019 1:25 pm

bertilak wrote:
Sat Nov 16, 2019 11:28 am
An insight:

50/50 contains 45/55 as a subset so, with 50/50, you already have a 45/55 (or any other finely-tuned) AA.

The 45/55 subset by itself is 95% of the whole. Is that big enough for you? If so, those extra bonds can't hurt. They are just a bit of a bonus income.
I don't understand this - please clarify.

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Re: 50/50 to 45/55

Post by JaneyLH » Sat Nov 16, 2019 2:19 pm

And here I was at 65 years of age and 10 years into retirement moving from 70/30 to 55/45 yesterday and feeling it was the right choice for us. But my husband has a decent Federal pension with low-cost lifelong health insurance and at 70 years a good Social Security check that will kick in, so I'm feeling better with this asset allocation.

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Re: 50/50 to 45/55

Post by nestorius » Sat Nov 16, 2019 2:35 pm

JaneyLH wrote:
Sat Nov 16, 2019 2:19 pm
And here I was at 65 years of age and 10 years into retirement moving from 70/30 to 55/45 yesterday and feeling it was the right choice for us. But my husband has a decent Federal pension with low-cost lifelong health insurance and at 70 years a good Social Security check that will kick in, so I'm feeling better with this asset allocation.
You feel better about which allocation? The 70/30 or 55/45? Sorry, it wasn't clear to me.

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Re: 50/50 to 45/55

Post by friar1610 » Sat Nov 16, 2019 4:05 pm

74/73 and retired with one good inflation-adjusted pension and 2 SS checks taken at 62. I've been 45-ish/50-ish/5-ish for some time now. In a recent portfolio review my hourly fee-only Boglehead-type investment advisor recommended going to 50-50 and then never worrying about rebalancing. He recommended using the 50% fixed for any withdrawals we may need to take (including the RMDs we must take) and for my spouse's living expenses if I die first. (SBP will only leave her with only 1/3 of my pension). Would use QCDs from IRAs to fund donations while living. 50% equities (all taxable) would never be touched and go to my kids after we're both gone. Any left in tax-advantaged accounts (all fixed income) would fund charitable bequests with remainder to kids. He suggested being in no hurry to increase the equities - wait for a downturn. If it never comes, the difference between 45 and 50 is negligible. I could probably safely go to 60/40 but don't feel the need to and think that anything in 40/60 - 50/50 range is right for us.
Friar1610

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Re: 50/50 to 45/55

Post by HomerJ » Sat Nov 16, 2019 6:17 pm

Heck, I might INCREASE my stock allocation once we're both getting Social Security, but that's about 14-15 years from now.

I agree with all of you that it's a very small change, no real difference. We're just going through a lot of changes this year, with my wife retiring, kid entering college next year, and we're selling houses, and moving next year.

Pure emotion play to pick this time to cut back a little to 45/55. Felt good to lock in gains at a market high. We've basically hit our goals... I just need to keep working for 4 more years, and as long as we stay basically even with inflation, we'll be good to go.
The J stands for Jay

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Re: 50/50 to 45/55

Post by bertilak » Sat Nov 16, 2019 6:19 pm

tibbitts wrote:
Sat Nov 16, 2019 1:25 pm
bertilak wrote:
Sat Nov 16, 2019 11:28 am
An insight:

50/50 contains 45/55 as a subset so, with 50/50, you already have a 45/55 (or any other finely-tuned) AA.

The 45/55 subset by itself is 95% of the whole. Is that big enough for you? If so, those extra bonds can't hurt. They are just a bit of a bonus income.
I don't understand this - please clarify.
The clarification needed is that the base portfolio's stock allocation would need to be reduced by about 9%, not 5%. So that should say "The 45/55 subset by itself is about 91% of the whole." My mistake.

You would then end up with a 45/55 allocation over $909,000 with about $91,000 left over to invest however you wish.

My point was not to recommend doing that but to show that 90% (95% was my mistake) of your 50/50 portfolio is already at 45/55. I was trying to emphasize that if someone with a 50/50 portfolio wanted a 45/55 they already have it (and some extra stuff, too).
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

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Re: 50/50 to 45/55

Post by GAAP » Sat Nov 16, 2019 6:41 pm

HomerJ wrote:
Sat Nov 16, 2019 6:17 pm
Heck, I might INCREASE my stock allocation once we're both getting Social Security, but that's about 14-15 years from now.

I agree with all of you that it's a very small change, no real difference. We're just going through a lot of changes this year, with my wife retiring, kid entering college next year, and we're selling houses, and moving next year.

Pure emotion play to pick this time to cut back a little to 45/55. Felt good to lock in gains at a market high. We've basically hit our goals... I just need to keep working for 4 more years, and as long as we stay basically even with inflation, we'll be good to go.
Never underestimate the value of being comfortable with your choices. You'll have enough excitement with kid in college and moving -- toning down market excitement is perfectly reasonable.
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee

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Re: 50/50 to 45/55

Post by willthrill81 » Sat Nov 16, 2019 6:54 pm

GAAP wrote:
Sat Nov 16, 2019 6:41 pm
HomerJ wrote:
Sat Nov 16, 2019 6:17 pm
Heck, I might INCREASE my stock allocation once we're both getting Social Security, but that's about 14-15 years from now.

I agree with all of you that it's a very small change, no real difference. We're just going through a lot of changes this year, with my wife retiring, kid entering college next year, and we're selling houses, and moving next year.

Pure emotion play to pick this time to cut back a little to 45/55. Felt good to lock in gains at a market high. We've basically hit our goals... I just need to keep working for 4 more years, and as long as we stay basically even with inflation, we'll be good to go.
Never underestimate the value of being comfortable with your choices. You'll have enough excitement with kid in college and moving -- toning down market excitement is perfectly reasonable.
It's called personal finance for good reason.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: 50/50 to 45/55

Post by Trader Joe » Sat Nov 16, 2019 6:58 pm

HomerJ wrote:
Fri Nov 15, 2019 8:14 pm
4 years from retirement (maybe 3... technically I could maybe retire today, but last kid is going to college next year... should probably cash flow that)

Wife is retiring in January...

Decided it's a good time to switch from 50/50 to 45/55

We're selling two houses over the next year, moving to new location and buying our retirement house there... Market doing well, good time to make the switch...

Permanent change, not a market timing move where I will change back if the market crashes, but feels good to lock in some of the gains of the past year.

Probably will go 40/60 when I finally retire.

3 fund portfolio, age-in-bonds, really isn't a bad way to go. I know it's simple and trite, but simple works. You don't have to follow all these experts with their special sauce and alternative investments, etc.
Do you have a question for the forum?

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Re: 50/50 to 45/55

Post by Copernicus » Sat Nov 16, 2019 7:21 pm

HomerJ wrote:
Fri Nov 15, 2019 11:10 pm
RickBoglehead wrote:
Fri Nov 15, 2019 8:43 pm
All sounds good, but moving 5 points isn't a big change.
Absolutely correct, but it was equal to 4 years of college tuition (my youngest is a senior in high school), so it wasn't nothing... :)
If you are thinking about long term performance, 5% changes in allocation does not make big enough difference in annual returns and volatility -- not significant enough to impact the quality of life. See Vanguard portfolio allocation models here:
https://personal.vanguard.com/us/insigh ... ns?lang=en

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Re: 50/50 to 45/55

Post by JaneyLH » Sat Nov 16, 2019 11:11 pm

nestorius wrote:
Sat Nov 16, 2019 2:35 pm
JaneyLH wrote:
Sat Nov 16, 2019 2:19 pm
And here I was at 65 years of age and 10 years into retirement moving from 70/30 to 55/45 yesterday and feeling it was the right choice for us. But my husband has a decent Federal pension with low-cost lifelong health insurance and at 70 years a good Social Security check that will kick in, so I'm feeling better with this asset allocation.
You feel better about which allocation? The 70/30 or 55/45? Sorry, it wasn't clear to me.
We moved TO 55/45. Maybe 45/55 would be a better choice. 70/30 could bite us in the butt for a good 10 years or so, so I'm happy we got out of that territory!

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Re: 50/50 to 45/55

Post by anon_investor » Sat Nov 16, 2019 11:23 pm

HomerJ wrote:
Fri Nov 15, 2019 11:10 pm
RickBoglehead wrote:
Fri Nov 15, 2019 8:43 pm
All sounds good, but moving 5 points isn't a big change.
Absolutely correct, but it was equal to 4 years of college tuition (my youngest is a senior in high school), so it wasn't nothing... :)
That makes absolute sense! Let's hope that you will as you said be able cash flow your youngest's college and not need to withdraw that 5%. But locking in that 5% today at all time market highs must make you sleep better at night! :beer

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Re: 50/50 to 45/55

Post by marcopolo » Sat Nov 16, 2019 11:43 pm

HomerJ wrote:
Fri Nov 15, 2019 8:14 pm
4 years from retirement (maybe 3... technically I could maybe retire today, but last kid is going to college next year... should probably cash flow that)

Wife is retiring in January...

Decided it's a good time to switch from 50/50 to 45/55

We're selling two houses over the next year, moving to new location and buying our retirement house there... Market doing well, good time to make the switch...

Permanent change, not a market timing move where I will change back if the market crashes, but feels good to lock in some of the gains of the past year.

Probably will go 40/60 when I finally retire.

3 fund portfolio, age-in-bonds, really isn't a bad way to go. I know it's simple and trite, but simple works. You don't have to follow all these experts with their special sauce and alternative investments, etc.
Congratulations!

We made a similar move to reduce risk as we neared retirement, going from 70/30 to 60/40 over a few years in our case.
We also sold our house to move to a new locale.

Curious that you are able to do that while still working the last few years. Are you able to work remotely, or is your move fairly local?

In any case, best of luck to you.
Always enjoy seeing your perspective here.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: 50/50 to 45/55

Post by software » Sat Nov 16, 2019 11:47 pm

bertilak wrote:
Sat Nov 16, 2019 6:19 pm
tibbitts wrote:
Sat Nov 16, 2019 1:25 pm
bertilak wrote:
Sat Nov 16, 2019 11:28 am
An insight:

50/50 contains 45/55 as a subset so, with 50/50, you already have a 45/55 (or any other finely-tuned) AA.

The 45/55 subset by itself is 95% of the whole. Is that big enough for you? If so, those extra bonds can't hurt. They are just a bit of a bonus income.
I don't understand this - please clarify.
The clarification needed is that the base portfolio's stock allocation would need to be reduced by about 9%, not 5%. So that should say "The 45/55 subset by itself is about 91% of the whole." My mistake.

You would then end up with a 45/55 allocation over $909,000 with about $91,000 left over to invest however you wish.

My point was not to recommend doing that but to show that 90% (95% was my mistake) of your 50/50 portfolio is already at 45/55. I was trying to emphasize that if someone with a 50/50 portfolio wanted a 45/55 they already have it (and some extra stuff, too).
Your point makes no sense. I mean you could also say that you have a 500k portfolio of 100% bonds with 500k of “extra stuff”, so everyone with some bonds already has an all bonds portfolio. Obviously this realization makes your portfolio no different, so not sure what it proves besides some mental accounting.

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Re: 50/50 to 45/55

Post by skjoldur » Sun Nov 17, 2019 1:34 am

software wrote:
Sat Nov 16, 2019 11:47 pm
bertilak wrote:
Sat Nov 16, 2019 6:19 pm
tibbitts wrote:
Sat Nov 16, 2019 1:25 pm
bertilak wrote:
Sat Nov 16, 2019 11:28 am
An insight:

50/50 contains 45/55 as a subset so, with 50/50, you already have a 45/55 (or any other finely-tuned) AA.

The 45/55 subset by itself is 95% of the whole. Is that big enough for you? If so, those extra bonds can't hurt. They are just a bit of a bonus income.
I don't understand this - please clarify.
The clarification needed is that the base portfolio's stock allocation would need to be reduced by about 9%, not 5%. So that should say "The 45/55 subset by itself is about 91% of the whole." My mistake.

You would then end up with a 45/55 allocation over $909,000 with about $91,000 left over to invest however you wish.

My point was not to recommend doing that but to show that 90% (95% was my mistake) of your 50/50 portfolio is already at 45/55. I was trying to emphasize that if someone with a 50/50 portfolio wanted a 45/55 they already have it (and some extra stuff, too).
Your point makes no sense. I mean you could also say that you have a 500k portfolio of 100% bonds with 500k of “extra stuff”, so everyone with some bonds already has an all bonds portfolio. Obviously this realization makes your portfolio no different, so not sure what it proves besides some mental accounting.
I think his point makes perfect sense. Often perceptions of mathematical realities can be oddly inconsistent, with different representations of the same underlying facts leading to different impressions. This is a well known result, with many examples. Often, reframing or restating the case is helpful for people to get a clearer picture. In this case, Bertilak's comment points out another way of observing how small the difference is between 50/50 to 45/55.

Your point shows the limits of usefulness of this reframing for more extreme values, but that doesn't make the first example senseless.

rossington
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Re: 50/50 to 45/55

Post by rossington » Sun Nov 17, 2019 3:19 am

HomerJ wrote:
Fri Nov 15, 2019 8:14 pm
4 years from retirement (maybe 3... technically I could maybe retire today, but last kid is going to college next year... should probably cash flow that)

Wife is retiring in January...

Decided it's a good time to switch from 50/50 to 45/55

We're selling two houses over the next year, moving to new location and buying our retirement house there... Market doing well, good time to make the switch...

Permanent change, not a market timing move where I will change back if the market crashes, but feels good to lock in some of the gains of the past year.

Probably will go 40/60 when I finally retire.

3 fund portfolio, age-in-bonds, really isn't a bad way to go. I know it's simple and trite, but simple works. You don't have to follow all these experts with their special sauce and alternative investments, etc.
Looking forward to the 4-5 year update.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

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bertilak
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Re: 50/50 to 45/55

Post by bertilak » Sun Nov 17, 2019 7:27 am

software wrote:
Sat Nov 16, 2019 11:47 pm

Your point makes no sense. I mean you could also say that you have a 500k portfolio of 100% bonds with 500k of “extra stuff”, so everyone with some bonds already has an all bonds portfolio. Obviously this realization makes your portfolio no different, so not sure what it proves besides some mental accounting.
Re: Mental accounting. I agree!

Another way of saying it is that you are right: 91% of the proposed change makes no difference: it is mental accounting and that was my point.

I see now it wasn't an obvious visualization. It just seemed obvious to me.

If you are going to make a small change, the major portion of your portfolio already meets your proposed criteria. Perhaps, that is enough for you. If so, whatever is outside the part meeting your criteria is more than enough and you can therefore do whatever you want with that leftover, extra, stuff. Soybeans? Lottery Tickets? Or leave it alone and be happy you have met your new criteria (for the most part) without doing anything! No buying, no selling no cap gains, no cap losses, no taxable events, but you have still met your criteria with a bit left over.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

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nedsaid
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Re: 50/50 to 45/55

Post by nedsaid » Sun Nov 17, 2019 9:46 am

HomerJ wrote:
Fri Nov 15, 2019 11:08 pm
pkcrafter wrote:
Fri Nov 15, 2019 9:05 pm
Homer, you might consider going to 40/60 now and holding that AA from now on.

Paul
I thought about it as a smart move to lock in a lot of gains, and also thought about sticking with 50/50 in case the market kept going up, but went with 45/55 as a compromise since I couldn't decide :)

I've never right and never wrong... That's why I've been 50/50 for the past 8 years...

Even moving to 40/60, I couldn't make a real decision about moving the full 10%, so I did it halfway.... :)
I have found that in my own personal investments, a lot of my choices were made by making compromises with myself. For example, I have a cautious side and I also have a taste for aggressive investments. So splitting the difference between 50/50 and 40/60 sounds about right.
A fool and his money are good for business.

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Re: 50/50 to 45/55

Post by Outer Marker » Sun Nov 17, 2019 10:03 am

Going below 50/50 seems unnecessarily conservative. Since you joined bogleheads in 2008, you''ve probably been through the near-worst case scenario and presumably did not panic sell. Vanguard's target retirement 2020 is north of 50/50 and for someone still 5 years out, 2025 fund is north of 60/40. I do understand that if you've already "won the game" why keep playing, but you're lowering your long term returns and have less protection against inflation if you're going to be in retirement a long time. If you're really having trouble sleeping at 50/50, I'd consider moving a chunk of it to an inflation protected single premium annuity.

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