Why is this portfolio wrong?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
GoldenGoose
Posts: 322
Joined: Tue Jan 30, 2018 2:08 pm

Re: Why is this portfolio wrong?

Post by GoldenGoose »

Here is my thinking, right or wrong. In retirement, one should have 5 years worth of stable source of liquid assets. The rest can go to sensible high risk/high income investments, i.e. mutual funds/stocks whatever. For that 5 years-worth liquid asset, 1 year worth in cash, 1 year worth for emergency, 1 year worth in 1-year CDs and 2 years worth in bonds. At the end of the year, move 1 year worth of cash out of high risk investments to replenish your coffer.

The reason I'm thinking this way is that even if we have a market crash, stocks roar back eventually and 5 years timespan should cover the cycle. Not sure why one should be extremely risk adverse in their retirement. Is it not a good practice to continuing growing your wealth once you're retired?
MotoTrojan
Posts: 10661
Joined: Wed Feb 01, 2017 8:39 pm

Re: Why is this portfolio wrong?

Post by MotoTrojan »

GoldenGoose wrote: Wed Sep 23, 2020 11:43 am The reason I'm thinking this way is that even if we have a market crash, stocks roar back eventually and 5 years timespan should cover the cycle. Not sure why one should be extremely risk adverse in their retirement. Is it not a good practice to continuing growing your wealth once you're retired?
US equities have given you a false sense of security in this regard for some time now. Maybe we won't have a full-blown Japan episode, but European equities never came rocketing back from 2000 or 2008.
GoldenGoose
Posts: 322
Joined: Tue Jan 30, 2018 2:08 pm

Re: Why is this portfolio wrong?

Post by GoldenGoose »

MotoTrojan wrote: Wed Sep 23, 2020 11:45 am
GoldenGoose wrote: Wed Sep 23, 2020 11:43 am The reason I'm thinking this way is that even if we have a market crash, stocks roar back eventually and 5 years timespan should cover the cycle. Not sure why one should be extremely risk adverse in their retirement. Is it not a good practice to continuing growing your wealth once you're retired?
US equities have given you a false sense of security in this regard for some time now. Maybe we won't have a full-blown Japan episode, but European equities never came rocketing back from 2000 or 2008.
I agree. Investing involves risks. If years ago you were afraid of the US market mirroring Japan's, you would have missed out on a lot of wealth growth. If you are scared, then keep your wealth in cash or CD. If not, then invest. Pick your path.
User avatar
LiveSimple
Posts: 1775
Joined: Thu Jan 03, 2013 7:55 am

Re: Why is this portfolio wrong?

Post by LiveSimple »

gf30269 wrote: Tue Sep 22, 2020 9:42 am 2 1/2 years from retirement. Basically am where I want to be in terms of investments right now...future contributions are gravy.

I've had the same portfolio for years. 50% SPY, 50% QQQ. May occasionally go 10% cash.

No international, no emerging markets, no bonds.

Should I change and why???

Thanks,
George

Can I suggest the following, if you want a suggestion.

50% SPY, 25% VGT and 25% Intermediate treasuries.

Did you Win already by investing inn QQQ for a long time ?, can you take off some of the growth to more safer assets like treasuries.

Why QQQ to VGT, at least VGT is technology sector, QQQ is based on where the equities are listed... what that has to the investing theory or knowledge.
rich126
Posts: 2011
Joined: Thu Mar 01, 2018 4:56 pm

Re: Why is this portfolio wrong?

Post by rich126 »

Without knowing more you can't say really whether it is right or wrong. I think most would say it is risky. A max drawdown of 66% fits risky in my book.

If you have a lot of other income (rental properties, pension, etc.) maybe you can afford losing that much in your stocks. Most people couldn't.

If you are 20s,30s that is one thing but nearly retirement I couldn't do that and I'm someone who rarely had bonds until recently.
User avatar
LadyGeek
Site Admin
Posts: 66464
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Why is this portfolio wrong?

Post by LadyGeek »

I removed a contentious post and reply. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

...At all times we must conduct ourselves in a respectful manner to other posters.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Post Reply