sschullo wrote: ↑
Sat May 26, 2018 4:39 pm
Look, I like Buffett and what he has done. When any guru says that bonds are horrible for everybody, well, that's just plain nonsense, wrong and anti-boglehead. But even Buffett has a right to his opinion.
Rainier wrote: ↑
Sat May 19, 2018 12:40 pm
sschullo wrote: ↑
Sat May 19, 2018 11:37 am
I invest 70% of my portfolio in bonds, not because of returns, but because of balance. Buffett doesn't have to worry about balancing his portfolio (are you kidding?!). He is in a different universe. And what he says is great for him, and he is correct for him.
As a mere mortal and a nobody, I have a balanced portfolio because if I put too much equity risk in my portfolio as a 70-year old, I could be in deep trouble--losing 50% of my equity position would be very damaging for the rest of my short life. I had already lost 70% during the 2000 tech crash with a 95% equity exposure, and I will never want to make that mistake again. As a 55-year-old at the time, I was extremely lucky to have just enough time to recover and that I had real estate investments.
Buffett isn't saying bonds are a horrible investment for himself with his billions of dollars, he is saying they are a horrible investment for everybody.
EVERYBODY! Wow, that's quite a statement.
How did you lose 70% in the 2000 crash? Were you 100% in the NASDAQ? Did you invest at the very top and sell out at the very bottom? Buffett has never advocated for being 100% in the NASDAQ.
Yes in the technology sector, but folks in 2008 lost up to 50% of equities. That's why I wrote 50%, if I had all of my portfolio in equities.
He loves the capitalistic system and he made his money from it and not bonds. I get it, but not for little old me! I have a few bucks saved for my retirement, and its because of 70% bonds and 30% equities fully diversified and extremely low costs, since 2006. I survived the greatest stock market crash since the Great Depression in 2008. Lost 11.8% because of my 70% bond allocation.
Curious to touch base with your experiences, Steve.
We, too, were rather equity exposed in 2000-2002 which meant we suffered tremendous declines in the technology sector portion of our portfolio compared to the rest of the portfolio. It took a long time for that portion to bounce back. Time was on our side as we were ages 39 & 43 at the time of the dot.com bust. DCA'd every month into retirement plans and college funds continued through it all and beyond. Once again, the same steep decline in the financial crisis while still being rather equity exposed (80/20 in our portfolio, 100% equity in the college funds for the kids) in 2008-09 where declines were worse than the dot.com bust for us. Again, we DCA'd every 2 weeks and month through employer sponsored retirement plans and college funds for the kids and probably were numb to it all this time around due to raising children, coaching sports, attending everything children were involved in, and pretty much did nothing as time was still on our side. It was after 2009, based on our ages, we began slowly changing asset allocation to include a higher percentage in bonds as we altered our monthly contributions in our retirement plans. Ages 47 & 52 during the financial crisis meant we still had time, but nothing like a second whammy of 50%+ declines to rattle one's investing psyche. Slowly moved to 70/30 in years following 2009, picked up quite a few fire sale prices in the college funds with new funds for the kids and trudged on with our routine. Now, I've reached the age you were in 2000 at the time of that crash. Spouse has moved her AA to 60/40, and I'm slowly following the glide path moving from 70/30 in the direction of 1% more bonds per year.
So, now that you are in retirement at age 70 with a 30/70 allocation, what are your thoughts on the glide path?
https://www.kitces.com/blog/managing-po ... -red-zone/
Is your asset allocation not following along the path of rising equity portion as the V shaped equity glidepath demonstrates above as you move from age 65 to 81? In other words, with the move in equities from 2009 to 2018, are you purposely rebalancing to keep your AA to 30/70? Curious for those that are currently in retirement how they handle the asset allocation from age 65 - 81 (the period you are in right now) through the red zone to see if they are allowing the equity portion to rise or not.
Bond Tent through the red zone...
Obviously, we all need to include other streams of income when choosing asset allocation in the red zone (pension, Social Security, rental income, royalty income, annuity income, gig economy income, etc...). Anyway, just curious if your plan was to remain at 30/70, or will the glidepath as you move through the red zone end up with your equity portion rising as the right side of the bond tent defense dissipates.