I can't believe I am thinking this [Panic and Survival 2008-09]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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abuss368
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by abuss368 » Thu Sep 26, 2019 7:12 pm

No one knows what the future holds or what the crystal balls says!

The best investors can do is to buy lost cost and diversified funds and stay the course.

Tune out the noise!
John C. Bogle: "Simplicity is the master key to financial success."

Independent George
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Independent George » Thu Sep 26, 2019 7:55 pm

I really wish I kept better records of my finances back then, but really, it's much easier to keep detailed notes when your finances are in good shape. Having purchased my condo in June 2007, I was deep underwater by the end of 2008. At the trough, I remember going from a net worth of around 100k to -15k. Partly out of luck, and partly out of foresight, my situation was not nearly as bad as many experienced.

First, and most importantly, I stayed employed throughout the crash. I did take a major pay cut in 2010 or 2011 (I can't remember exactly which year it was - again, I wish I kept better records) which I only recently surpassed in nominal dollars (and am still slightly below according to CPI), but I stayed employed the entire time. I was extremely lucky in this.

Second, though I clearly overpaid for my condo (even now, it's worth about 25% less than what I paid for it), I didn't overbuy. I put down 20% and didn't overextend myself. I never missed a payment, and managed to stay in the black with only modest cuts to my monthly spending. I will chalk this one up to foresight - buying was a bad decision, but knowing how much I could afford to borrow was a good one.

Third, I never stopped saving or contributing to my retirement funds, even after I was down 50%. I had to cut my 401k contribution when my salary dipped, but even at my lowest point, I still contributed enough for my company match, and I still maximized my Roth IRA every year. It was also around then that I learned about the Bogleheads, and switched to a 4-fund Portfolio (3-fund plus REIT index). I went from 100% stocks to 90/10, as per my brand new IPS.

Twelve years later, my net worth stands at approximately $475k. I have both a 6-month emergency fund and some additional money set aside for some long-overdue renovations to the condo I bought at peak bubble 2007. The only change I made to my IPS was to revise my financial goals upwards; so far, it looks like I'm on track to reach my first financial milestone at age 45.

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Kevin M
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Re: Re:

Post by Kevin M » Thu Sep 26, 2019 8:21 pm

X528 wrote:
Thu Sep 26, 2019 6:03 pm
Even with low bond yields, bond funds can still give decent returns.

The TSP F fund (total bond fund) is up +7.96% YTD.
In the short term, sure. Longer term, you're not going to make much more than the initial yield. All that 8% return did is "front load" the returns for the next 10 years, so the return over the next 10 years will be that much lower--unless you believe yields can go deeply negative, but that would just further front load the returns, and lower the expected returns going forward from there.

It cracks me up. Yields go down, and people post about all the money they've made recently in bonds (ignoring the lower expected returns going forward). Yields go up, and they post about all the money they'll make in the future in bonds due to the higher yields (ignoring the recent losses).

Kevin
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spammagnet
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by spammagnet » Fri Sep 27, 2019 7:39 pm

Independent George wrote:
Thu Sep 26, 2019 7:55 pm
... I did take a major pay cut in 2010 or 2011 (I can't remember exactly which year it was - again, I wish I kept better records) which I only recently surpassed in nominal dollars (and am still slightly below according to CPI) ...
Your earnings history at My Social Security (SSA.gov) should provide some information on that topic, if interested.

NearlyRetired
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by NearlyRetired » Sun Sep 29, 2019 7:16 am

xxd091 wrote:
Thu May 16, 2019 11:56 am
I am starting to keep more than a years expenses now in Cash-Brexit plus another Crash?
Sheepdog taught us a lot-so glad he made it
xxd091
I have recently done something similar - well currently dis-invested a years worth of expenses, and kept in cash within the pension pot. Out of interest where did you place your expenses - is it in cash, or some other vehicle. I would be interested to know if there is somewhere better to place this money.
To err is to be human, to really mess up, use a computer

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BlueEars
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by BlueEars » Sun Sep 29, 2019 7:48 am

NearlyRetired wrote:
Sun Sep 29, 2019 7:16 am
xxd091 wrote:
Thu May 16, 2019 11:56 am
I am starting to keep more than a years expenses now in Cash-Brexit plus another Crash?
Sheepdog taught us a lot-so glad he made it
xxd091
I have recently done something similar - well currently dis-invested a years worth of expenses, and kept in cash within the pension pot. Out of interest where did you place your expenses - is it in cash, or some other vehicle. I would be interested to know if there is somewhere better to place this money.
You might try short term bond funds like VFSUX. It is true that VFSUX went down somewhat in 2008 but over the years it nicely outperforms money market funds like VMMXX. Or you could opt for somewhat less volatility with short term bond index fund VBIRX.

xxd091
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by xxd091 » Sun Sep 29, 2019 11:28 am

This is cash for day to day expenses so Bonds not much use
I just bite the bullet and keep in a Bank Cash Savings Scheme-instant access-currently 1.4% tax free
I used to have I years expenses only for a long time but in current situation gone to 2 years expenses Brexit etc
Do I need this much? -very personal decision-this amount lets me sleep at night-about 5% of Portfolio
xxd09

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