"I took all my money out of the stock market and it feels amazing"

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CULater
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"I took all my money out of the stock market and it feels amazing"

Post by CULater » Tue Nov 07, 2017 4:56 pm

Now all my money is stashed in U.S. Treasuries, Treasury Inflation-Protected Securities (or TIPS bonds), and laddered CDs, which, in the years to come, I can count on to earn me essentially nada.

Why would I do this?

I once figured out exactly how much money I would need to live on — not lavishly, but comfortably — for the rest of my life. I promised myself that once I had that amount, I would actually do just that — take my money out of the market and live on it for the rest of my life.

Last week, I reached that goal.

Timing is everything. But you can’t time the market. I have no idea whether it’s about to go up or down. But I no longer care.
As Dr. Bernstein counsels: "when you've won the game, stop playing."

http://time.com/money/5003640/stock-mar ... ter_money
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

minimalistmarc
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Re: "I took all my money out of the stock market and it feels amazing"

Post by minimalistmarc » Tue Nov 07, 2017 5:00 pm

I read this as one very long excuse to be a market timer. She says she’ll get back in if the market crashes

CULater
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Re: "I took all my money out of the stock market and it feels amazing"

Post by CULater » Tue Nov 07, 2017 5:06 pm

It is very hard to quit playing the game, or to believe that anybody else would do it. What are you going to do to fill all those empty days in retirement?
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

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Re: "I took all my money out of the stock market and it feels amazing"

Post by TheTimeLord » Tue Nov 07, 2017 5:11 pm

CULater wrote:
Tue Nov 07, 2017 5:06 pm
It is very hard to quit playing the game, or to believe that anybody else would do it. What are you going to do to fill all those empty days in retirement?
Probably because people subconsciously set their assumed expenses too optimisticaly low just to justify getting out then realize "Hey, I don't have no money for fun".
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Re: "I took all my money out of the stock market and it feels amazing"

Post by sport » Tue Nov 07, 2017 5:20 pm

With most investing decisions, I have concluded that "all or nothing" is seldom the best approach. If your allocation is too risky for your taste, sure, cut back. However, this does not mean that you need to cut all the way back to zero! Sometimes life does not turn out the way one might project. Having a growth component on one's portfolio, even if a smaller percentage, is probably a good idea.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by thangngo » Tue Nov 07, 2017 5:23 pm

LOL at her excuses. best of luck to Roz Warren.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by RadAudit » Tue Nov 07, 2017 5:31 pm

Well, if she is happy, I'm happy for her.

She's got the money she figures she needs and she's still working part time (?) until 70 - eight years away (?). Sounds as if she did what she needed / wanted to do. In a way, it sounds better than to spend time in semi-retirement wondering whether or not you've got enough to allow you to meet your goals - no matter what the financial calculators say.
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Re: "I took all my money out of the stock market and it feels amazing"

Post by Globalviewer58 » Tue Nov 07, 2017 5:35 pm

So the author knows, "exactly how much money I need to live on", which implies that she knows her exact age at death, the annual change in CPI, her spending rate and interest rates for this exact time.

What a leap to believe she knows these factors.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by nisiprius » Tue Nov 07, 2017 5:40 pm

Globalviewer58 wrote:
Tue Nov 07, 2017 5:35 pm
So the author knows, "exactly how much money I need to live on", which implies that she knows her exact age at death, the annual change in CPI, her spending rate and interest rates for this exact time.

What a leap to believe she knows these factors.
If she uses the money to buy an inflation-indexed SPIA from the (one company left?) that offers them, she does not need to know her age at death, the annual change in CPI, or interest rates, so... three out of four are being managed effectively.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by dekecarver » Tue Nov 07, 2017 6:02 pm

Aren't Treasuries, TIPs and CDs part of the market only on a more conservative side, therefore not really out of the market?

To me out of the market is all cash under the mattress.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Levett » Tue Nov 07, 2017 6:13 pm

Some odd responses.

I am happy for her.

Lev

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Leesbro63 » Tue Nov 07, 2017 6:18 pm

nisiprius wrote:
Tue Nov 07, 2017 5:40 pm
Globalviewer58 wrote:
Tue Nov 07, 2017 5:35 pm
So the author knows, "exactly how much money I need to live on", which implies that she knows her exact age at death, the annual change in CPI, her spending rate and interest rates for this exact time.

What a leap to believe she knows these factors.
If she uses the money to buy an inflation-indexed SPIA from the (one company left?) that offers them, she does not need to know her age at death, the annual change in CPI, or interest rates, so... three out of four are being managed effectively.
What if we get 1970s style inflation or worse? She'll become a victim of taxflation. Where her annuity payments keep up with inflation, but the taxes will be greater and greater because the tax man doesn't recognize real gains from nominal gains. Currently tax brackets do go up with inflation, but I'm not sure that will be enough to offset taxflation of an inflation adjusted annuity in a large inflation situation.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by blueblock » Tue Nov 07, 2017 6:30 pm

Wow, that seems wildly imprudent to disclose so much about her finances using her real name when she is so easily located on social media.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Cycle » Tue Nov 07, 2017 6:32 pm

minimalistmarc wrote:
Tue Nov 07, 2017 5:00 pm
I read this as one very long excuse to be a market timer. She says she’ll get back in if the market crashes
Agree.

While it's possible she'll drop dead in a month, it's also possible advances in gene therapy could eliminate most natural deaths. I'm a long ways from retirement but would be worried by not keeping some money in the markets.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by arcticpineapplecorp. » Tue Nov 07, 2017 6:38 pm

blueblock wrote:
Tue Nov 07, 2017 6:30 pm
Wow, that seems wildly imprudent to disclose so much about her finances using her real name when she is so easily located on social media.
seems she's not the only one:

http://directory.rockstarfinance.com/bl ... th-tracker

while not all of those bloggers disclose their names, some of them do.
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Re: "I took all my money out of the stock market and it feels amazing"

Post by Fallible » Tue Nov 07, 2017 6:44 pm

She's done well with her money, seems to have enough, and has recognized an important need to get away from market risk. But the following comment does make me wonder if she might get back in for the wrong reasons:
But if the market totally tanks tomorrow, you ask, and stocks become such a crazy bargain that I’d be a fool not to put at least some of my money back into that mutual fund that served me so well, wouldn’t I?

Of course I would! I’m no fool. Plus, the one thing I’ve learned about the market over the past three decades is “what goes down, eventually comes back up.” But until that happens, I’m staying put. And if it never happens? I’m still set.
Bogleheads® wiki | Investing Advice Inspired by Jack Bogle

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arcticpineapplecorp.
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Re: "I took all my money out of the stock market and it feels amazing"

Post by arcticpineapplecorp. » Tue Nov 07, 2017 7:06 pm

Hmmm....I'm skeptical of something and wonder if someone can help me out. She says:
Back in the early 1980s, I inherited $50,000. At the time, that was so much more money than I’d ever had before that I decided I’d better educate myself about financial matters.

After much research, I put that money — and a percentage of the money I’ve made since as a writer and part-time librarian — into a low-cost index fund. Specifically, I invested in a Vanguard balanced fund that invests 60% of its assets in the stock market and 40% in bonds.

And I left it there.

This turned out to be a good strategy. Back then, the S&P 500 index of U.S. stocks was at 208. Now it’s closing in on 2,600.

Nevertheless, I cashed it all in last week.
The balanced index fund wasn't started until 11/9/1992 (source: https://personal.vanguard.com/us/funds/ ... IntExt=INT)

That being the case, if she invested the $50,000 from that date (unknown if she would have invested right when the fund opened?) she would have 7.3X the amount ($365,000):

Image

source: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So in order for her to have a portfolio in the high 6 figures, she obviously invested additional money along the way. I wonder why she didn't mention that? Seems like that's equally, if not more important. The inheritance got her a 1/3rd of the way home, but her DCA over the years got her over the other 2/3 home stretch. Seems a better lesson to teach readers is the power of compounding DCA rather than hope for an inheritance. Some could stop reading once they see that thinking, "Sure, congratulations. You're lucky (?) enough to retire thanks to an inheritance you received early in life". Which is not really the case here. Too bad the article left out the more important details. Though it did focus on the importance of staying the course, buying low cost index funds, being diversified, etc.

And unfortunately the article is using a gambling metaphor ("know when to hold 'em, know when to fold 'em"). That's just unfortunately reinforcing investing and the stock market as a giant casino, which I think is the wrong thing to be imparting, when you're clearly trying to teach others how to build wealth. Confuses the uninitiated.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Re: "I took all my money out of the stock market and it feels amazing"

Post by hudson » Tue Nov 07, 2017 7:07 pm

CULater wrote:
Tue Nov 07, 2017 4:56 pm
Now all my money is stashed in U.S. Treasuries, Treasury Inflation-Protected Securities (or TIPS bonds), and laddered CDs, which, in the years to come, I can count on to earn me essentially nada.

Why would I do this?

I once figured out exactly how much money I would need to live on — not lavishly, but comfortably — for the rest of my life. I promised myself that once I had that amount, I would actually do just that — take my money out of the market and live on it for the rest of my life.

Last week, I reached that goal.

Timing is everything. But you can’t time the market. I have no idea whether it’s about to go up or down. But I no longer care.
As Dr. Bernstein counsels: "when you've won the game, stop playing."

http://time.com/money/5003640/stock-mar ... ter_money

(I think CULater is quoting Roz Warren's article in Money...Retirement.)

I don't have any problem with 100% fixed income as long as the instruments are AAA/AA or better. The above portfolio fits that. I would watch rates and move the treasuries and TIPS to CDs if I could get a better deal. When I have money to invest, I start following Kevin M's contributions.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by finite_difference » Tue Nov 07, 2017 7:19 pm

arcticpineapplecorp. wrote:
Tue Nov 07, 2017 7:06 pm
Hmmm....I'm skeptical of something and wonder if someone can help me out. She says:
Back in the early 1980s, I inherited $50,000. At the time, that was so much more money than I’d ever had before that I decided I’d better educate myself about financial matters.

After much research, I put that money — and a percentage of the money I’ve made since as a writer and part-time librarian — into a low-cost index fund. Specifically, I invested in a Vanguard balanced fund that invests 60% of its assets in the stock market and 40% in bonds.

And I left it there.

This turned out to be a good strategy. Back then, the S&P 500 index of U.S. stocks was at 208. Now it’s closing in on 2,600.

Nevertheless, I cashed it all in last week.
The balanced index fund wasn't started until 11/9/1992 (source: https://personal.vanguard.com/us/funds/ ... IntExt=INT)

That being the case, if she invested the $50,000 from that date (unknown if she would have invested right when the fund opened?) she would have 7.3X the amount ($365,000):

Image

source: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So in order for her to have a portfolio in the high 6 figures, she obviously invested additional money along the way. I wonder why she didn't mention that? Seems like that's equally, if not more important. The inheritance got her a 1/3rd of the way home, but her DCA over the years got her over the other 2/3 home stretch. Seems a better lesson to teach readers is the power of compounding DCA rather than hope for an inheritance. Some could stop reading once they see that thinking, "Sure, congratulations. You're lucky (?) enough to retire thanks to an inheritance you received early in life". Which is not really the case here. Too bad the article left out the more important details. Though it did focus on the importance of staying the course, buying low cost index funds, being diversified, etc.

And unfortunately the article is using a gambling metaphor ("know when to hold 'em, know when to fold 'em"). That's just unfortunately reinforcing investing and the stock market as a giant casino, which I think is the wrong thing to be imparting, when you're clearly trying to teach others how to build wealth. Confuses the uninitiated.
It could’ve been Wellington? It’s called “the nation’s oldest balanced fund.”

Also she did mention she added monies, it’s in your quote ;)

Are dividends included in the Morningstar line? I’m assuming so.

As a librarian, she may be eligible for a pension but she didn’t mention it. And she’s 62, still working part time, including freelance writing, deferring SS to 70, etc. so I think she’s set. Don’t agree with the market timing though.
Last edited by finite_difference on Tue Nov 07, 2017 7:23 pm, edited 1 time in total.
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Re: "I took all my money out of the stock market and it feels amazing"

Post by rustymutt » Tue Nov 07, 2017 7:21 pm

The game is never won. Fine a new one when it does, but stuffing in a mattress isn't my cup of tea. I'd rather make it my slave and let it make me more. :greedy Worst that can happen is you lose some.
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Re: "I took all my money out of the stock market and it feels amazing"

Post by goingup » Tue Nov 07, 2017 7:26 pm

arcticpineapplecorp. wrote:
Tue Nov 07, 2017 7:06 pm
Hmmm....I'm skeptical of something and wonder if someone can help me out. She says:
Back in the early 1980s, I inherited $50,000. At the time, that was so much more money than I’d ever had before that I decided I’d better educate myself about financial matters.

After much research, I put that money — and a percentage of the money I’ve made since as a writer and part-time librarian — into a low-cost index fund. Specifically, I invested in a Vanguard balanced fund that invests 60% of its assets in the stock market and 40% in bonds.

And I left it there.

This turned out to be a good strategy. Back then, the S&P 500 index of U.S. stocks was at 208. Now it’s closing in on 2,600.

Nevertheless, I cashed it all in last week.
The balanced index fund wasn't started until 11/9/1992 (source: https://personal.vanguard.com/us/funds/ ... IntExt=INT)

That being the case, if she invested the $50,000 from that date (unknown if she would have invested right when the fund opened?) she would have 7.3X the amount ($365,000):

Image

source: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So in order for her to have a portfolio in the high 6 figures, she obviously invested additional money along the way. I wonder why she didn't mention that? Seems like that's equally, if not more important. The inheritance got her a 1/3rd of the way home, but her DCA over the years got her over the other 2/3 home stretch. Seems a better lesson to teach readers is the power of compounding DCA rather than hope for an inheritance. Some could stop reading once they see that thinking, "Sure, congratulations. You're lucky (?) enough to retire thanks to an inheritance you received early in life". Which is not really the case here. Too bad the article left out the more important details. Though it did focus on the importance of staying the course, buying low cost index funds, being diversified, etc.

And unfortunately the article is using a gambling metaphor ("know when to hold 'em, know when to fold 'em"). That's just unfortunately reinforcing investing and the stock market as a giant casino, which I think is the wrong thing to be imparting, when you're clearly trying to teach others how to build wealth. Confuses the uninitiated.
arcticpineapplecorp:
She states she put her inheritance and money she earned as a writer and part-time librarian in a Vanguard balanced (lower case b) fund. Could be Wellington, though it would be a misstatement to call it an index fund.

I congratulate an investor who decides she/he has enough and is satisfied with a plan. All the backlash she's getting is curious.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Ethelred » Tue Nov 07, 2017 7:33 pm

Ben Carlson has an interesting take on this today. Safety is good, but so is diversification.
http://awealthofcommonsense.com/2017/11 ... ck-market/

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Re: "I took all my money out of the stock market and it feels amazing"

Post by CULater » Tue Nov 07, 2017 7:34 pm

She gives her age as 62, so I wonder if she started SS early? That would enable her to have a core income stream. However, I'm one who believes a better plan is to wait until 70 to start SS payments and that would require more "safe" income to allow that.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

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Re: "I took all my money out of the stock market and it feels amazing"

Post by TravelforFun » Tue Nov 07, 2017 8:03 pm

Obviously she's not a Boglehead. She doesn't have a desired AA and when she saw market reached an all-time high, she sold. Someone should keep an eye on when she's getting back in.

TravelforFun
Last edited by TravelforFun on Tue Nov 07, 2017 8:15 pm, edited 1 time in total.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Artsdoctor » Tue Nov 07, 2017 8:03 pm

Wait a minute. Let's back up a minute here. Where's the money?

She inherited money in the early 1980's. You'd have to assume that it was placed in a taxable account and it wasn't an inherited 401k (she didn't mention taking any out--no RMD's from an inherited 401k were described). She has continued to add to the account. It's now 30 years later.

There's no doubt that with continuous contributions, she's done well. But has she been contributing to a taxable account? If so, what kind of capital gains tax bill are we talking about this year? Did she sell "it all" in one year? Was it all really in a taxable account? That it hard to imagine.

I have to assume that perhaps some money was in a taxable account and some was in a tax-deferred account. Otherwise, she would be an idiot to sell everything in one year and incur a gigantic tax bill in the process. I also have to assume that she's holding TIPS in a tax-deferred account? Or is she talking about a TIPS fund?

It's an emotional article, clearly, and she did a very poor job of describing tax implications of selling out.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by MEA » Tue Nov 07, 2017 8:38 pm

It will most likely only feel "amazing" for a short period of time. If you worry so much that you can't tolerate a 40/60 or a 30/70 portfolio your mind will most likely find something else to worry about. Perhaps your health. I agree, it sounds like market timing. Market timing to ease the mind. I guess that would be different than market timing out of greed.
Last edited by MEA on Tue Nov 07, 2017 8:50 pm, edited 1 time in total.
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Re: "I took all my money out of the stock market and it feels amazing"

Post by rkhusky » Tue Nov 07, 2017 8:47 pm

I thought Vanguard showed that 10/90 was less risky than 0/100.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by joe8d » Tue Nov 07, 2017 8:53 pm

CULater wrote:
Tue Nov 07, 2017 5:06 pm
It is very hard to quit playing the game, or to believe that anybody else would do it. What are you going to do to fill all those empty days in retirement?
Right. 75 and still play the game.
All the Best, | Joe

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Re: "I took all my money out of the stock market and it feels amazing"

Post by rr2 » Tue Nov 07, 2017 8:55 pm

arcticpineapplecorp. wrote:
Tue Nov 07, 2017 7:06 pm
Hmmm....I'm skeptical of something and wonder if someone can help me out. She says:
Back in the early 1980s, I inherited $50,000. At the time, that was so much more money than I’d ever had before that I decided I’d better educate myself about financial matters.

After much research, I put that money — and a percentage of the money I’ve made since as a writer and part-time librarian — into a low-cost index fund. Specifically, I invested in a Vanguard balanced fund that invests 60% of its assets in the stock market and 40% in bonds.

And I left it there.

This turned out to be a good strategy. Back then, the S&P 500 index of U.S. stocks was at 208. Now it’s closing in on 2,600.

Nevertheless, I cashed it all in last week.
The balanced index fund wasn't started until 11/9/1992 (source: https://personal.vanguard.com/us/funds/ ... IntExt=INT)

...
Maybe Vanguard Star. It is a balanced fund, even though technically not an Index Fund? It is 60/40 and inception date is 03/29/1985. Assuming no tax drag effects, compounding the $50K since inception at at 9.55% annual would end up in 2017 with around $925K.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Random Walker » Tue Nov 07, 2017 9:19 pm

You can’t Time the market, but you can evaluate where you are relative to your goals, where the market is, and take rational action. With someone who has made great gains in the last decade, is very close to retirement goals, seeing modest forward looking equity returns with wide dispersion of possible outcomes, makes great sense to take risk out of the AA. I’m 55 and over last two years have gone from 80% Equity to 42% Equity.

Dave

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Re: "I took all my money out of the stock market and it feels amazing"

Post by rr2 » Tue Nov 07, 2017 9:21 pm

Random Walker wrote:
Tue Nov 07, 2017 9:19 pm
You can’t Time the market, but you can evaluate where you are relative to your goals, where the market is, and take rational action. With someone who has made great gains in the last decade, is very close to retirement goals, seeing modest forward looking equity returns with wide dispersion of possible outcomes, makes great sense to take risk out of the AA. I’m 55 and over last two years have gone from 80% Equity to 42% Equity.

Dave
Even Jack Bogle himself admits to having Market Timed back at the end of the 1990s tech boom. If you have "enough", then no need to play anymore.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by azanon » Tue Nov 07, 2017 9:35 pm

Wasn't one of the few truths or take-aways from Modern Portfolio Theory is that the only portfolios that we know are mathematically illogical are those with less than ~ 20-25% equities, because below that level, two things happen; your expected return drops, and your expected risk (relative to inflation) rises.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by arcticpineapplecorp. » Tue Nov 07, 2017 10:00 pm

thank you all. I see now it was not The Balanced Index Fund, but rather a balanced fund which could have been wellington or star as mentioned. And yes, I missed that she said she was contributing a percentage of what she made as a writer and part time librarian. Thanks for pointing that out.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Re: "I took all my money out of the stock market and it feels amazing"

Post by mike512usa » Tue Nov 07, 2017 10:07 pm

sport wrote:
Tue Nov 07, 2017 5:20 pm
With most investing decisions, I have concluded that "all or nothing" is seldom the best approach. If your allocation is too risky for your taste, sure, cut back. However, this does not mean that you need to cut all the way back to zero! Sometimes life does not turn out the way one might project. Having a growth component on one's portfolio, even if a smaller percentage, is probably a good idea.

Well said and I advice I would recommend.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by prettybogle » Tue Nov 07, 2017 11:01 pm

sport wrote:
Tue Nov 07, 2017 5:20 pm
With most investing decisions, I have concluded that "all or nothing" is seldom the best approach. If your allocation is too risky for your taste, sure, cut back. However, this does not mean that you need to cut all the way back to zero! Sometimes life does not turn out the way one might project. Having a growth component on one's portfolio, even if a smaller percentage, is probably a good idea.
Very true. We learnt the hard way that “all or nothing” is never a good approach. First several years of this on-going market, we were very skeptical and were 100% cash. Although late, we realized the mistake and now have a mix of indexes and cash (still conservative for our age group). Better late than never I guess.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by randomguy » Tue Nov 07, 2017 11:55 pm

rr2 wrote:
Tue Nov 07, 2017 9:21 pm
Random Walker wrote:
Tue Nov 07, 2017 9:19 pm
You can’t Time the market, but you can evaluate where you are relative to your goals, where the market is, and take rational action. With someone who has made great gains in the last decade, is very close to retirement goals, seeing modest forward looking equity returns with wide dispersion of possible outcomes, makes great sense to take risk out of the AA. I’m 55 and over last two years have gone from 80% Equity to 42% Equity.

Dave
Even Jack Bogle himself admits to having Market Timed back at the end of the 1990s tech boom. If you have "enough", then no need to play anymore.
Buying bonds is still playing the game. You are just using a different strategy which may or may not work out. Until you die having lived the way you want, you have not won the game. What happens when our librarian buys in when the market is down 50% and panic sells when it drops another 50%?:) Or if we have a medical breakthrough that ups the average lifespan by 10 years but it costs 50k/year. And a zillion other possible outcomes.

It really just sounds like a person holding too much stock (100/0?) and then overcorrecting by going the otherway.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by TinkerPDX » Wed Nov 08, 2017 12:14 am

Levett wrote:
Tue Nov 07, 2017 6:13 pm
Some odd responses.

I am happy for her.

Lev
+1

I wonder what her actual numbers are.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Noobvestor » Wed Nov 08, 2017 12:30 am

I would feel amazing too, until inevitably at some point stocks doubled while bonds remained flat (see: last 5 years) and then I'd feel less than amazing. But hey, if you have an annuity covering all your expenses, power to you and don't look back.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: "I took all my money out of the stock market and it feels amazing"

Post by naha66 » Wed Nov 08, 2017 12:35 am

Artsdoctor wrote:
Tue Nov 07, 2017 8:03 pm
Wait a minute. Let's back up a minute here. Where's the money?

She inherited money in the early 1980's. You'd have to assume that it was placed in a taxable account and it wasn't an inherited 401k (she didn't mention taking any out--no RMD's from an inherited 401k were described). She has continued to add to the account. It's now 30 years later.

There's no doubt that with continuous contributions, she's done well. But has she been contributing to a taxable account? If so, what kind of capital gains tax bill are we talking about this year? Did she sell "it all" in one year? Was it all really in a taxable account? That it hard to imagine.

I have to assume that perhaps some money was in a taxable account and some was in a tax-deferred account. Otherwise, she would be an idiot to sell everything in one year and incur a gigantic tax bill in the process. I also have to assume that she's holding TIPS in a tax-deferred account? Or is she talking about a TIPS fund?

It's an emotional article, clearly, and she did a very poor job of describing tax implications of selling out.
Did you read the post , her jobs were a writer and part time librarian very easy to put that inherited money in a ira over the years. Also don't forget above Roth conversions they have been around since the late 90's. Writers can have some lean years and part time librarian aren't getting rich. Not everybody is a Doctor, look at from someones point view that made between $30k and $100k

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Re: "I took all my money out of the stock market and it feels amazing"

Post by SGM » Wed Nov 08, 2017 5:24 am

She states she will wait until age 70 to take SS. She was never 100% in stocks as she invested in a balanced fund. Her expense ratios were on the low side because she was with Vanguard. TIPs are supposed to protect against inflation. She hasn't done badly so far although I feel it is foolish to be out of the stock market completely for a healthy 62 year old.

If she chooses a 4% withdrawal rate with an increase of 2% per year in withdrawals to cover inflation her portfolio may not last 30 years even with TIPs. Her personal inflation rate may differ from that of the consumer price index.

She might consider putting some of her portfolio into a SPIA, but with only one company offering a COLA she would be well advised to not go over her state's insurance guarantee limit which may be somewhere between $100k and $300k depending where she lives.

I have the impression she will continue to work as a librarian and a writer which should help delay her withdrawals and allow her to continue to save.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by staustin » Wed Nov 08, 2017 7:43 am

In my humble view, Dr. Bernstein's advice is spot on. And, good for her that she achieved her target, acted on it and is hopefully now just enjoying life.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Call_Me_Op » Wed Nov 08, 2017 7:54 am

Since she plans to work for another 8 years, I don't know why she wouldn't take new money and plow it into stocks. She claims she already has what she needs, so she wouldn't care if the stock portion tanks. But that extra in equities would be likely to make a nice cushion for her.
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Re: "I took all my money out of the stock market and it feels amazing"

Post by SpringMan » Wed Nov 08, 2017 8:30 am

I have a friend that sold all his taxable account stocks a couple years ago locking in his profits. Because of this one year income bump, he and his jointly filing spouse were hit with higher medicare payments. This came as a complete surprise to them though it should not have. He never got back in the market. I can't see us having less than an allocation of 30% equity, maybe more when it becomes clear we are investing for our heirs.
Best Wishes, SpringMan

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Re: "I took all my money out of the stock market and it feels amazing"

Post by z3r0c00l » Wed Nov 08, 2017 8:44 am

Some important details missing here, such as home ownership, life partner, family/dependents, health insurance and medical history, pensions, and actual value of investments at this time. Working part time as a librarian to me means no pension or insurance, which would require a hefty amount of cash at 62 to last the estimated 22 years life expectancy. Medical costs over the next 8 years could clean her out if something goes wrong and yes, let's be grim for a moment, this is the age where cancer and heart disease start to loom. I like the idea of quitting once you have won the game, but it is far from clear that she has actually done that. I would want a home paid off and more than a million in a low COLA to do this.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by jhfenton » Wed Nov 08, 2017 8:46 am

sport wrote:
Tue Nov 07, 2017 5:20 pm
With most investing decisions, I have concluded that "all or nothing" is seldom the best approach. If your allocation is too risky for your taste, sure, cut back. However, this does not mean that you need to cut all the way back to zero! Sometimes life does not turn out the way one might project. Having a growth component on one's portfolio, even if a smaller percentage, is probably a good idea.
Exactly. Few investment decisions should be all or nothing.

No one with substantial savings should be at 0% equities. 25-30% equities should be an absolute minimum.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by sunny_socal » Wed Nov 08, 2017 9:11 am

She has a "rich ex-husband":
- Was thus able to save her librarian income?
- Possibly got some kind of windfall through the divorce? The house?

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Dottie57 » Wed Nov 08, 2017 9:13 am

Globalviewer58 wrote:
Tue Nov 07, 2017 5:35 pm
So the author knows, "exactly how much money I need to live on", which implies that she knows her exact age at death, the annual change in CPI, her spending rate and interest rates for this exact time.

What a leap to believe she knows these factors.

+1

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Artsdoctor » Wed Nov 08, 2017 9:24 am

naha66 wrote:
Wed Nov 08, 2017 12:35 am
Artsdoctor wrote:
Tue Nov 07, 2017 8:03 pm
Wait a minute. Let's back up a minute here. Where's the money?

She inherited money in the early 1980's. You'd have to assume that it was placed in a taxable account and it wasn't an inherited 401k (she didn't mention taking any out--no RMD's from an inherited 401k were described). She has continued to add to the account. It's now 30 years later.

There's no doubt that with continuous contributions, she's done well. But has she been contributing to a taxable account? If so, what kind of capital gains tax bill are we talking about this year? Did she sell "it all" in one year? Was it all really in a taxable account? That it hard to imagine.

I have to assume that perhaps some money was in a taxable account and some was in a tax-deferred account. Otherwise, she would be an idiot to sell everything in one year and incur a gigantic tax bill in the process. I also have to assume that she's holding TIPS in a tax-deferred account? Or is she talking about a TIPS fund?

It's an emotional article, clearly, and she did a very poor job of describing tax implications of selling out.
Did you read the post , her jobs were a writer and part time librarian very easy to put that inherited money in a ira over the years. Also don't forget above Roth conversions they have been around since the late 90's. Writers can have some lean years and part time librarian aren't getting rich. Not everybody is a Doctor, look at from someones point view that made between $30k and $100k
I would very much like to know her details regarding tax ramifications BECAUSE of her modest income. She's obviously done a great job saving. If you're not used to tax surprises, you may wind up with an unanticipated capital gains tax which has unintended consequences. If her investments were in tax-advantaged accounts, then say it. You'd hate to think that someone unfamiliar with tax bites would read the article and sell all appreciated assets in a taxable account without understanding the tax consequences.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by beardsworth » Wed Nov 08, 2017 9:38 am

TinkerPDX wrote:
Wed Nov 08, 2017 12:14 am
Levett wrote:
Tue Nov 07, 2017 6:13 pm
Some odd responses.

I am happy for her.

Lev
+1
I agree. And it's threads like this one that remind me of the extent to which the Bogleheads forum sometimes seems like a kind of faith-based movement, a sort of Magic Markets/Always Invest belief system, and not very tolerant of differing views.

Ms. Warren's essay linked in the original post is quite clear about her withdrawal from market speculation: "Did I feel some regret? Of course I did! Had I waited just a day, my bank account would be fatter than it is now. But that’s not the point. The point is no longer amassing as much money as I can. It’s peace of mind. And that’s what I’ve got."

Ruling out situations in which subsistence itself is an issue, i.e., assuming a modestly affluent life situation, it seems to me that there are two main ways to be satisfied in one's financial life: (1) to have more or (2) to want less.

This forum is mostly about the former. Ms. Warren is mostly about the latter.

Both views are usually coupled with a goal of "enough" for a comfortable retirement, which will lead to a lifestyle with a flexible schedule, no more need to tolerate absurd bosses and work environments, time to do volunteer work, exploration of new hobbies, etc. But the former, in order to achieve "enough," needs first to buy that separate vacation home, stock the wine cellar, and have enough wealth to always afford the latest model of Tesla and a really expensive watch.

Ms. Warren has chosen a more modest path. I admire her conclusions and the thoughtfulness that led to them.

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Re: "I took all my money out of the stock market and it feels amazing"

Post by Slothmeister » Wed Nov 08, 2017 9:47 am

It looks like she may have made a wise decision. I just invested another nice chunk into some FSTVX and now I'm wondering, was that not too smart? Markets are getting a little testy the last couple of days.

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