2021 retirement portfolio ?

[shuresm7b1]

What is your portfolio asset allocation and diversification for 2021 and what kind of returns are you expecting?

I know stay the course is a big mantra with Vanguard but with such low expected future returns I don't know how anybody can do it successfully. Thanks for sharing and best of luck.


Interesting bond video

https://youtu.be/s9U8b3pz28s

[pkcrafter]

What is your portfolio asset allocation and diversification for 2021 and what kind of returns are you expecting?

Market returns?

I know stay the course is a big mantra with Vanguard but with such low expected future returns I don't know how anybody can do it successfully. Thanks for sharing and best of luck.

Stay the course is a big mantra of Bogleheads, and it's what I have done, and will continue to do. If you want to market time then cut back on equities. If your sure the near future is negative returns, then go to zero equity. You can go back to high equity when your sure the market is going to go up.

Ok, a bit of playing around, but timing just isn't going to work every time you try it. The result after many years is a portfolio that underperforms the buy/hold strategy,

Paul


Interesting bond video

https://youtu.be/s9U8b3pz28s

[rkhusky]

What is your portfolio asset allocation and diversification for 2021 and what kind of returns are you expecting?

I know stay the course is a big mantra with Vanguard but with such low expected future returns I don't know how anybody can do it successfully. Thanks for sharing and best of luck.

I don't base investing decisions on expected returns, because expected returns rarely show up. I stick to my plan, which is 40/60 for the next 5 years.

[arcticpineapplecorp.]

Does this question imply I need a different allocation each year?

I don't.

I have an IPS

You should too.

An IPS doesn't change with market conditions. It may change due to changes in your life circumstances.

See my signature below.

[Marseille07]

100/0 in 401K and 80/20 in taxable where I am DCAing cash into. No plans to change anything.

[sailaway]

My 70/30 allocation always already acknowledges that the market goes up and down.

[shuresm7b1]

It just seemed to me that "stay the coarse" implied that you would get consistent returns over decades but it seems in the last few years that the environment has changed to "expect low returns" for the next decade. What am I missing please ?

[tj]

I've been 100/0 in my retirement accounts for the past half decade -ish. I wish i could say I stuck to the same fund all that time. My TSP is the C Fund. My HSA is split between two brokers, one in FZROX, the other in a 500 index. My Roth IRA is nearly all Vanguard Dividend Growth ever since that fund re-opened. Some of it is in VXUS, I did temporarily use Vanguard Digital Advisor and never got around to selling that fund. In retrospect, Vanguard Dividend Growth has underperformed this year, but I don't see a reason to get rid of it...the market in generally seems very highly valued.

To me, it made logical sense that for the accounts that I am not going to touch for multiple decades, there is no reason for fixed income to be in there. I know, tax wise, it can be better to have the bonds in the retirement account, but ot me it just seems odd to voluntarily take a lower expected return on the asset, I'm pumping in the annual max, so if shares get cheaper, I am getting new shares at the low prices.

I've been pretty cash heavy in my taxable account, but I chase new accounts bonuses so the cash has yielded well over 4% the past couple years.

Last year, I was trying to keep taxable income down to qualify for the Saver's Credit, so I put my taxable equities in Berkshire Hathaway stock, I had an initial amount in summer 2019 that I sold for 0% LTCG this summer as my available cash buffer was lower than I would have liked because i had money in various savings accounts that needed to stay a required length of time to trigger a bonus. I did buy some more BRKB in May as it was solidly below my buy price from last summer. That lot is up 38%.

This year, I decided to do a Roth Conversion to use up the low marginal tax brackets rather than target the Savers Credit.

I don't know that I want to go 100% BRK.B in my taxable account going forward, I may keep the shares I have, or I may realize them at 0% should I get another opportunity for that.


I find it rather difficult to just pick a strategy and stick with it, for that reason, I do often consider outsourcing, whether that's to some sort of global balanced/target date fund, or, some sort of robo advisor.

Lately, I just have an assortment of mostly large cap domestic. I suppose it's worked out, but I don't know if I really should be omitting the other segments of the market.

[Ragman]

Retired for 18 months. 50% Stocks/50% Bonds, with 20% of stocks in international. All in Vanguard admiral index funds. Plan to stick with this allocation.

[rkhusky]

It just seemed to me that "stay the coarse" implied that you would get consistent returns over decades but it seems in the last few years that the environment has changed to "expect low returns" for the next decade. What am I missing please ?

Stay the course means that you don’t know what will happen next year in terms of bonds or stocks. The stock market does not smoothly rise, it has many local peaks and valleys.

The market could drop in half or increase by 50% next year.

[arcticpineapplecorp.]

It just seemed to me that "stay the coarse" implied that you would get consistent returns over decades but it seems in the last few years that the environment has changed to "expect low returns" for the next decade. What am I missing please ?

stay the course means you get the return of the market over time (minus costs).

if you get out of the market, you won't get the return of the market. you can't if you're not in it to win it. you'll get some other return. Most who get in and out imagine they'll do better than the return of the market because they're trying to profit from the market when they're in and get out of the market when it's down.

no one rings a bell, unfortunately.

so you don't know when the market will go up or down.

many think the market will go down and they get out.

then the market goes up.

whoops.

if you look at how the market did since 1926 the CAGR was 10.1%: https://personal.vanguard.com/us/insigh ... llocations

think about that for a minute.

if you had bought AND HELD from 1926 through 2018 you'd have grown your money at 10.1% CAGR.

You didn't have to avoid the great depression, WWII, stagflation, great recession, 1987 crash, and so on to get good returns.

all you had to do was buy AND HOLD.

as in, not sell along the way.

as in, stay the course.

see my signature.

[SnowBog]

all you had to do was buy AND HOLD.

as in, not sell along the way.

as in, stay the course.

For me, this was my "ah ha" moment. It took a lot of reading of BH recommended books, forum posts, and lots of soul searching.

Search for "the world's worst market timer". The one I'm thinking of showed a scenario where someone invests just before major market crashes, each one "loosing" massive amounts of money. But they stay invested, and still end up a millionaire...

Instinctively, we think we can "do better".

But statically, we don't...

That's why people recommend setting an AA based on your risk tolerance. Not because they think 60/40 will necessarily out preform 100/0, but because they can tolerate seeing their balances go down 30% but not 50%, letting them "stay the course."

[shuresm7b1]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course? Even such fundamental differences as Vanguard recommending International stock funds and Jack Bogle recommended zero of them shows inconsistent guidance.

At what point does a stay the course investor say his boat is not actually moving forward but is sinking? I'm all about measuring things so what metric would a boglehead need to no longer believe in staying the course? If we can't measure things and have rules, boundaries and limitations then the decisions become irrational. At what point is stay the course no longer a valid strategy?

[Skeeter1]

That's why people recommend setting an AA based on your risk tolerance. Not because they think 60/40 will necessarily out preform 100/0, but because they can tolerate seeing their balances go down 30% but not 50%, letting them "stay the course."

+1

[WoodSpinner]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course? Even such fundamental differences as Vanguard recommending International stock funds and Jack Bogle recommended zero of them shows inconsistent guidance.

At what point does a stay the course investor say his boat is not actually moving forward but is sinking? I'm all about measuring things so what metric would a boglehead need to no longer believe in staying the course? If we can't measure things and have rules, boundaries and limitations then the decisions become irrational. At what point is stay the course no longer a valid strategy?

That is a really tough question and will depend on each of our personal outlooks and goals.

• Are you meeting your investment goals?

• Are you investing using your stated investment philosophy?

• Are you investing using your stated investment strategy?

• Are you sleeping well at night? Or perpetually freaked out?

• Are you invested in broadly diversified low cost index funds? Or are you trying to beat the Market returns?

• Are you contemplating your results using the right timeframe? Or are you focusing on short term? Or the latest and greatest hot fund or stock?

• Do you have an edge that can help you invest better than the rest of the market?

• Do you have a well thought out plan and reasoning for what you want you change? How will you know if you need to re-examine?

WoodSpinner

[RyeBourbon]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course? Even such fundamental differences as Vanguard recommending International stock funds and Jack Bogle recommended zero of them shows inconsistent guidance.

At what point does a stay the course investor say his boat is not actually moving forward but is sinking? I'm all about measuring things so what metric would a boglehead need to no longer believe in staying the course? If we can't measure things and have rules, boundaries and limitations then the decisions become irrational. At what point is stay the course no longer a valid strategy?

You can't get higher returns without higher risk. So how much risk can you stand?

You can't force the market to give you the return you want.

[protagonist]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

[shuresm7b1]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course? Even such fundamental differences as Vanguard recommending International stock funds and Jack Bogle recommended zero of them shows inconsistent guidance.

At what point does a stay the course investor say his boat is not actually moving forward but is sinking? I'm all about measuring things so what metric would a boglehead need to no longer believe in staying the course? If we can't measure things and have rules, boundaries and limitations then the decisions become irrational. At what point is stay the course no longer a valid strategy?

That is a really tough question and will depend on each of our personal outlooks and goals.

• Are you meeting your investment goals?

• Are you investing using your stated investment philosophy?

• Are you investing using your stated investment strategy?

• Are you sleeping well at night? Or perpetually freaked out?

• Are you invested in broadly diversified low cost index funds? Or are you trying to beat the Market returns?

• Are you contemplating your results using the right timeframe? Or are you focusing on short term? Or the latest and greatest hot fund or stock?

• Do you have an edge that can help you invest better than the rest of the market?

• Do you have a well thought out plan and reasoning for what you want you change? How will you know if you need to re-examine?

WoodSpinner

But I'm talking about the next 10 years or the next 30 Years. Please re-read my question because all of the predictions seem to point to much much lower returns over the next decade or longer so an investor who is 50/50 and has gotten say 7% returns over the last 10 20 or 30 years is very possibly looking at only 3% over the next 10 20 or 30 years. That's my question. Haven't things fundamentally changed?

[shuresm7b1]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course? Even such fundamental differences as Vanguard recommending International stock funds and Jack Bogle recommended zero of them shows inconsistent guidance.

At what point does a stay the course investor say his boat is not actually moving forward but is sinking? I'm all about measuring things so what metric would a boglehead need to no longer believe in staying the course? If we can't measure things and have rules, boundaries and limitations then the decisions become irrational. At what point is stay the course no longer a valid strategy?

You can't get higher returns without higher risk. So how much risk can you stand?

You can't force the market to give you the return you want.

it appears that in the future you won't even be able to get the same returns without taking much higher risk. It seems to me that things have fundamentally changed

[shuresm7b1]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

[McDougal]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

OP, you hope to get predictable returns? Who is predicting these unknowable returns? The "experts", magic 8-ball, darts from across the room? Hope for the best, but plan for the worst. We have had 2 major corrections in the last 2 years alone. How did you fare then? If you are really that concerned, perhaps your AA is not conservation enough.

[RyeBourbon]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

There has never been hope of getting predictable returns in the stock market. On average, over a long enough term, one can expect a certain return, but it's in no way predictable.

There's no reason to assume that equities will not continue to outperform bonds in the long term. If your horizon is long enough, weight your portfolio towards equities. If you need the money in the short term, you will be weighted more towards fixed income.

[RyeBourbon]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course? Even such fundamental differences as Vanguard recommending International stock funds and Jack Bogle recommended zero of them shows inconsistent guidance.

At what point does a stay the course investor say his boat is not actually moving forward but is sinking? I'm all about measuring things so what metric would a boglehead need to no longer believe in staying the course? If we can't measure things and have rules, boundaries and limitations then the decisions become irrational. At what point is stay the course no longer a valid strategy?

That is a really tough question and will depend on each of our personal outlooks and goals.

• Are you meeting your investment goals?

• Are you investing using your stated investment philosophy?

• Are you investing using your stated investment strategy?

• Are you sleeping well at night? Or perpetually freaked out?

• Are you invested in broadly diversified low cost index funds? Or are you trying to beat the Market returns?

• Are you contemplating your results using the right timeframe? Or are you focusing on short term? Or the latest and greatest hot fund or stock?

• Do you have an edge that can help you invest better than the rest of the market?

• Do you have a well thought out plan and reasoning for what you want you change? How will you know if you need to re-examine?

WoodSpinner

But I'm talking about the next 10 years or the next 30 Years. Please re-read my question because all of the predictions seem to point to much much lower returns over the next decade or longer so an investor who is 50/50 and has gotten say 7% returns over the last 10 20 or 30 years is very possibly looking at only 3% over the next 10 20 or 30 years. That's my question. Haven't things fundamentally changed?

What do you think has fundamentally changed?

[shuresm7b1]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

OP, you hope to get predictable returns? Who is predicting these unknowable returns? The "experts", magic 8-ball, darts from across the room? Hope for the best, but plan for the worst. We have had 2 major corrections in the last 2 years alone. How did you fare then? If you are really that concerned, perhaps your AA is not conservation enough.

I made a couple hundred grand because I sold all my bonds and bought stocks at the bottom in March.

[shuresm7b1]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course? Even such fundamental differences as Vanguard recommending International stock funds and Jack Bogle recommended zero of them shows inconsistent guidance.

At what point does a stay the course investor say his boat is not actually moving forward but is sinking? I'm all about measuring things so what metric would a boglehead need to no longer believe in staying the course? If we can't measure things and have rules, boundaries and limitations then the decisions become irrational. At what point is stay the course no longer a valid strategy?

That is a really tough question and will depend on each of our personal outlooks and goals.

• Are you meeting your investment goals?

• Are you investing using your stated investment philosophy?

• Are you investing using your stated investment strategy?

• Are you sleeping well at night? Or perpetually freaked out?

• Are you invested in broadly diversified low cost index funds? Or are you trying to beat the Market returns?

• Are you contemplating your results using the right timeframe? Or are you focusing on short term? Or the latest and greatest hot fund or stock?

• Do you have an edge that can help you invest better than the rest of the market?

• Do you have a well thought out plan and reasoning for what you want you change? How will you know if you need to re-examine?

WoodSpinner

But I'm talking about the next 10 years or the next 30 Years. Please re-read my question because all of the predictions seem to point to much much lower returns over the next decade or longer so an investor who is 50/50 and has gotten say 7% returns over the last 10 20 or 30 years is very possibly looking at only 3% over the next 10 20 or 30 years. That's my question. Haven't things fundamentally changed?

What do you think has fundamentally changed?

predicted expected returns from all the experts

[shuresm7b1]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

There has never been hope of getting predictable returns in the stock market. On average, over a long enough term, one can expect a certain return, but it's in no way predictable.

There's no reason to assume that equities will not continue to outperform bonds in the long term. If your horizon is long enough, weight your portfolio towards equities. If you need the money in the short term, you will be weighted more towards fixed income.

So what is long-term certain return? 8% over the next 10 years, 20, 30, 40? Would you agree outperforming bonds is not impressive it bonds make nothing

[McDougal]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

OP, you hope to get predictable returns? Who is predicting these unknowable returns? The "experts", magic 8-ball, darts from across the room? Hope for the best, but plan for the worst. We have had 2 major corrections in the last 2 years alone. How did you fare then? If you are really that concerned, perhaps your AA is not conservation enough.

I made a couple hundred grand because I sold all my bonds and bought stocks at the bottom in March.

That's fantastic! You should actually look forward to the market going down in the future and do the exact same thing. Assuming your investing horizon is long enough. I would not do it if you have less than 10 years to retirement.

[shuresm7b1]

Two weeks ago I sold my total stock position and I'm now 50/50 total stock and Total Bond. I have no idea where anything is going in the future. But I am really good at knowing what down 30% looks like. With a JPMorgan report mentioning three hundred and something billion moving into Bonds in December and others talking about stock market going to 36,000 I have no idea where anything is going but 50/50 lets me sleep great at night so that's where I'll sit for now.

[shuresm7b1]

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.



Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

OP, you hope to get predictable returns? Who is predicting these unknowable returns? The "experts", magic 8-ball, darts from across the room? Hope for the best, but plan for the worst. We have had 2 major corrections in the last 2 years alone. How did you fare then? If you are really that concerned, perhaps your AA is not conservation enough.

I made a couple hundred grand because I sold all my bonds and bought stocks at the bottom in March.

That's fantastic! You should actually look forward to the market going down in the future and do the exact same thing. Assuming your investing horizon is long enough. I would not do it if you have less than 10 years to retirement.

Thanks. I retired three years ago at age 58 but keep five years of cash so that equities can jump around a bit

[Escapevelocity]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course? Even such fundamental differences as Vanguard recommending International stock funds and Jack Bogle recommended zero of them shows inconsistent guidance.

At what point does a stay the course investor say his boat is not actually moving forward but is sinking? I'm all about measuring things so what metric would a boglehead need to no longer believe in staying the course? If we can't measure things and have rules, boundaries and limitations then the decisions become irrational. At what point is stay the course no longer a valid strategy?

That is a really tough question and will depend on each of our personal outlooks and goals.

• Are you meeting your investment goals?

• Are you investing using your stated investment philosophy?

• Are you investing using your stated investment strategy?

• Are you sleeping well at night? Or perpetually freaked out?

• Are you invested in broadly diversified low cost index funds? Or are you trying to beat the Market returns?

• Are you contemplating your results using the right timeframe? Or are you focusing on short term? Or the latest and greatest hot fund or stock?

• Do you have an edge that can help you invest better than the rest of the market?

• Do you have a well thought out plan and reasoning for what you want you change? How will you know if you need to re-examine?

WoodSpinner

But I'm talking about the next 10 years or the next 30 Years. Please re-read my question because all of the predictions seem to point to much much lower returns over the next decade or longer so an investor who is 50/50 and has gotten say 7% returns over the last 10 20 or 30 years is very possibly looking at only 3% over the next 10 20 or 30 years. That's my question. Haven't things fundamentally changed?

What do you think has fundamentally changed?

predicted expected returns from all the experts

Nobody knows nothing

[Elysium]

What is your portfolio asset allocation and diversification for 2021 and what kind of returns are you expecting?

I know stay the course is a big mantra with Vanguard but with such low expected future returns I don't know how anybody can do it successfully. Thanks for sharing and best of luck.


Interesting bond video

https://youtu.be/s9U8b3pz28s

I am staying the course for 2021, as I did for 2020, and I am expecting my portfolio to return about 80% of broad market index returns (market up 10% then 8%, market down -10% then -8%, so on..), within error of margin.

[HomerJ]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course?

10 years is not 30 years.

It absolutely is indeed possible that the next 10 years will be terrible. But, so far, terrible years are usually followed by good years, and all of them average out to decent returns over the long run.

But it's also possible that the next 10 years will be the good years, and the 10 years after that will be the bad years... No one knows.

All the large investment firms predicted lower than average 10-year returns in 2011 based on valuations, etc.

And instead we've gotten like 13% a year, far above average.

So they're not that good at predicting 10 years out. They are DEFINITELY no good at predicting the next 30 years. Even they know that, so they don't even try.

Money you might need in the next 5-10 years should be in bonds/CDs/cash... Stinks that the yields are so low, but it is what it is. Rest of your money you can put in stocks, stay the course, and wait for the long run.

if you are close to retirement, maybe 50/50 is the right allocation for you. 50% of your money in stocks, that you won't need to touch for 10-15 years, and the other 50% in fixed income investments that you can spend if the market crashes.

If you are far away from retirement, maybe 90/10 is the right allocation for you. 10% just in case you lose your job or something, and 90% can sit there and grow over the next 20 years, and you don't have to worry about returns for next year or the next 5 years or even the next 10 years. You'll be adding to the pile the whole time anyway.

[RyeBourbon]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

There has never been hope of getting predictable returns in the stock market. On average, over a long enough term, one can expect a certain return, but it's in no way predictable.

There's no reason to assume that equities will not continue to outperform bonds in the long term. If your horizon is long enough, weight your portfolio towards equities. If you need the money in the short term, you will be weighted more towards fixed income.

So what is long-term certain return? 8% over the next 10 years, 20, 30, 40? Would you agree outperforming bonds is not impressive it bonds make nothing

Bonds make nothing today. They may not make anything for 10 years. But they will be less volatile than stocks.

Why do you need to know your future returns? They will be what they will be. How much risk and volatility do you want to endure? Will you constantly change your AA in response to the latest expert you listen to? Or will you look at your situation, needs, and risk tolerance to set your AA appropriately?

I wouldn't listen to anyone with a crown on his head that says "Bond King"

[HomerJ]

Two weeks ago I sold my total stock position and I'm now 50/50 total stock and Total Bond. I have no idea where anything is going in the future. But I am really good at knowing what down 30% looks like. With a JPMorgan report mentioning three hundred and something billion moving into Bonds in December and others talking about stock market going to 36,000 I have no idea where anything is going but 50/50 lets me sleep great at night so that's where I'll sit for now.

Sounds perfect. It's my plan as well.

[shuresm7b1]

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.



Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

There has never been hope of getting predictable returns in the stock market. On average, over a long enough term, one can expect a certain return, but it's in no way predictable.

There's no reason to assume that equities will not continue to outperform bonds in the long term. If your horizon is long enough, weight your portfolio towards equities. If you need the money in the short term, you will be weighted more towards fixed income.

So what is long-term certain return? 8% over the next 10 years, 20, 30, 40? Would you agree outperforming bonds is not impressive it bonds make nothing

Bonds make nothing today. They may not make anything for 10 years. But they will be less volatile than stocks.

Why do you need to know your future returns? They will be what they will be. How much risk and volatility do you want to endure? Will you constantly change your AA in response to the latest expert you listen to? Or will you look at your situation, needs, and risk tolerance to set your AA appropriately?

I wouldn't listen to anyone with a crown on his head that says "Bond King"

Why do I need to know my future returns? Well I need to know that they are going to keep up with inflation. I also need to know what to expect for planning purposes. If my portfolio is going to double I will have a very different lifestyle than if my portfolio is going to be in half. Planning ahead is just a sensible thing to do and I should have real expectations and not just Pie in the Sky ideas about the future. That's why I listen to all experts including bogleheads and try to understand what the reality is.

[shuresm7b1]

Two weeks ago I sold my total stock position and I'm now 50/50 total stock and Total Bond. I have no idea where anything is going in the future. But I am really good at knowing what down 30% looks like. With a JPMorgan report mentioning three hundred and something billion moving into Bonds in December and others talking about stock market going to 36,000 I have no idea where anything is going but 50/50 lets me sleep great at night so that's where I'll sit for now.

Sounds perfect. It's my plan as well.

[RyeBourbon]

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

There has never been hope of getting predictable returns in the stock market. On average, over a long enough term, one can expect a certain return, but it's in no way predictable.

There's no reason to assume that equities will not continue to outperform bonds in the long term. If your horizon is long enough, weight your portfolio towards equities. If you need the money in the short term, you will be weighted more towards fixed income.

So what is long-term certain return? 8% over the next 10 years, 20, 30, 40? Would you agree outperforming bonds is not impressive it bonds make nothing

Bonds make nothing today. They may not make anything for 10 years. But they will be less volatile than stocks.

Why do you need to know your future returns? They will be what they will be. How much risk and volatility do you want to endure? Will you constantly change your AA in response to the latest expert you listen to? Or will you look at your situation, needs, and risk tolerance to set your AA appropriately?

I wouldn't listen to anyone with a crown on his head that says "Bond King"

Why do I need to know my future returns? Well I need to know that they are going to keep up with inflation. I also need to know what to expect for planning purposes. If my portfolio is going to double I will have a very different lifestyle than if my portfolio is going to be in half. Planning ahead is just a sensible thing to do and I should have real expectations and not just Pie in the Sky ideas about the future. That's why I listen to all experts including bogleheads and try to understand what the reality is.

You don't set your AA to achieve a particular return, you set it to your level of risk tolerance. We can't tell you that 50/50 is going to give you x% real return. No one can tell you that. You can hope for a number, but you can't keep going in and out of stocks to try to get more return. That's trying to time the market.

Anyway it's pretty easy to make a portfolio that will keep pace with inflation, so if you already have 25x expenses, you're in good shape.

[WoodSpinner]

Aren't things different now with the current expectations for the next 10 years being so low ?

If the majority of large investment firms like Vanguard, fidelity, T Rowe Price, Black Rock all said that we should expect -40% returns for the next 30 Years would you still be saying stay the course? Even such fundamental differences as Vanguard recommending International stock funds and Jack Bogle recommended zero of them shows inconsistent guidance.

At what point does a stay the course investor say his boat is not actually moving forward but is sinking? I'm all about measuring things so what metric would a boglehead need to no longer believe in staying the course? If we can't measure things and have rules, boundaries and limitations then the decisions become irrational. At what point is stay the course no longer a valid strategy?

That is a really tough question and will depend on each of our personal outlooks and goals.

• Are you meeting your investment goals?

• Are you investing using your stated investment philosophy?

• Are you investing using your stated investment strategy?

• Are you sleeping well at night? Or perpetually freaked out?

• Are you invested in broadly diversified low cost index funds? Or are you trying to beat the Market returns?

• Are you contemplating your results using the right timeframe? Or are you focusing on short term? Or the latest and greatest hot fund or stock?

• Do you have an edge that can help you invest better than the rest of the market?

• Do you have a well thought out plan and reasoning for what you want you change? How will you know if you need to re-examine?

WoodSpinner

But I'm talking about the next 10 years or the next 30 Years. Please re-read my question because all of the predictions seem to point to much much lower returns over the next decade or longer so an investor who is 50/50 and has gotten say 7% returns over the last 10 20 or 30 years is very possibly looking at only 3% over the next 10 20 or 30 years. That's my question. Haven't things fundamentally changed?

First, I woul think about expected returns in a 10 year timeframe.

So the question is, will a 3% expected return affect your investment goals? If so, perhaps you need to change your savings rate or investment goals rather than your assets. What assets would you switch to? Simply chasing the current high flying sectors or stocks is very unlikely to perform better than a buy and hold of low cost diversified assets. Is there an actual alternative you are considering?

Fit us, lower expected returns it won’t affect our main goals but it does mean we have to be ready to ratchet down our spending.

WoodSpinner

[WoodSpinner]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

There has NEVER been a probability of getting predictable returns in the stock market, never! That is why the SD for the expected returns is so high (e.g. 20%).

WoodSpinner

[WoodSpinner]

What is your portfolio asset allocation and diversification for 2021

Like always, as a retiree I keep all the money I think I will ever need in very conservative fixed income and gamble the rest in the stock market. I ignore asset allocation percentages.

and what kind of returns are you expecting?

Whatever returns I get. Returns are unpredictable, and expectations just lead to anxiety when they are unmet.

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

OP, you hope to get predictable returns? Who is predicting these unknowable returns? The "experts", magic 8-ball, darts from across the room? Hope for the best, but plan for the worst. We have had 2 major corrections in the last 2 years alone. How did you fare then? If you are really that concerned, perhaps your AA is not conservation enough.

I made a couple hundred grand because I sold all my bonds and bought stocks at the bottom in March.

So, you got lucky this time. You have also significantly increased your investing risk. That may be fine, just recognize what happened and don’t be over confident in your abilities.

WoodSpinner

[WoodSpinner]

Two weeks ago I sold my total stock position and I'm now 50/50 total stock and Total Bond. I have no idea where anything is going in the future. But I am really good at knowing what down 30% looks like. With a JPMorgan report mentioning three hundred and something billion moving into Bonds in December and others talking about stock market going to 36,000 I have no idea where anything is going but 50/50 lets me sleep great at night so that's where I'll sit for now.

Seems reasonable, do you plan to stay there? If not, what will cause you to shift?

WoodSpinner

[h82goslw]

Sadly this seems to be the correct answer with no hope of getting predictable returns in the stock market. Do you have some favorite conservative fixed-income financial instruments? Tips?

There has never been hope of getting predictable returns in the stock market. On average, over a long enough term, one can expect a certain return, but it's in no way predictable.

There's no reason to assume that equities will not continue to outperform bonds in the long term. If your horizon is long enough, weight your portfolio towards equities. If you need the money in the short term, you will be weighted more towards fixed income.

So what is long-term certain return? 8% over the next 10 years, 20, 30, 40? Would you agree outperforming bonds is not impressive it bonds make nothing

Bonds make nothing today. They may not make anything for 10 years. But they will be less volatile than stocks.

Why do you need to know your future returns? They will be what they will be. How much risk and volatility do you want to endure? Will you constantly change your AA in response to the latest expert you listen to? Or will you look at your situation, needs, and risk tolerance to set your AA appropriately?

I wouldn't listen to anyone with a crown on his head that says "Bond King"

Why do I need to know my future returns? Well I need to know that they are going to keep up with inflation. I also need to know what to expect for planning purposes. If my portfolio is going to double I will have a very different lifestyle than if my portfolio is going to be in half. Planning ahead is just a sensible thing to do and I should have real expectations and not just Pie in the Sky ideas about the future. That's why I listen to all experts including bogleheads and try to understand what the reality is.

Don’t you think that if all these so called “experts” were really “experts” at predictions they’d stop working and be living on an island in the Caribbean driving Ferrari’s? That’s why Bogleheads just sock away as much as possible and reap the rewards over the long term.
Example: How many economists were predicting high interest rates two years ago and where were those same interest rates last summer? All of them.
Absolutely no one can predict future returns, NO ONE. The only thing you can do to hedge uncertainty is to save more. It’s that simple.

[Escapevelocity]

There has never been hope of getting predictable returns in the stock market. On average, over a long enough term, one can expect a certain return, but it's in no way predictable.

There's no reason to assume that equities will not continue to outperform bonds in the long term. If your horizon is long enough, weight your portfolio towards equities. If you need the money in the short term, you will be weighted more towards fixed income.

So what is long-term certain return? 8% over the next 10 years, 20, 30, 40? Would you agree outperforming bonds is not impressive it bonds make nothing

Bonds make nothing today. They may not make anything for 10 years. But they will be less volatile than stocks.

Why do you need to know your future returns? They will be what they will be. How much risk and volatility do you want to endure? Will you constantly change your AA in response to the latest expert you listen to? Or will you look at your situation, needs, and risk tolerance to set your AA appropriately?

I wouldn't listen to anyone with a crown on his head that says "Bond King"

Why do I need to know my future returns? Well I need to know that they are going to keep up with inflation. I also need to know what to expect for planning purposes. If my portfolio is going to double I will have a very different lifestyle than if my portfolio is going to be in half. Planning ahead is just a sensible thing to do and I should have real expectations and not just Pie in the Sky ideas about the future. That's why I listen to all experts including bogleheads and try to understand what the reality is.

Don’t you think that if all these so called “experts” were really “experts” at predictions they’d stop working and be living on an island in the Caribbean driving Ferrari’s? That’s why Bogleheads just sock away as much as possible and reap the rewards over the long term.
Example: How many economists were predicting high interest rates two years ago and where were those same interest rates last summer? All of them.
Absolutely no one can predict future returns, NO ONE. The only thing you can do to hedge uncertainty is to save more. It’s that simple.

Well said. I would just add another tool in the toolbelt that shouldn't be overlooked is to spend less and/or create more flexibility in the level of spending. Minimize financial obligations and toys that cannot easily be liquidated.

[shuresm7b1]

There has never been hope of getting predictable returns in the stock market. On average, over a long enough term, one can expect a certain return, but it's in no way predictable.

There's no reason to assume that equities will not continue to outperform bonds in the long term. If your horizon is long enough, weight your portfolio towards equities. If you need the money in the short term, you will be weighted more towards fixed income.

So what is long-term certain return? 8% over the next 10 years, 20, 30, 40? Would you agree outperforming bonds is not impressive it bonds make nothing

Bonds make nothing today. They may not make anything for 10 years. But they will be less volatile than stocks.

Why do you need to know your future returns? They will be what they will be. How much risk and volatility do you want to endure? Will you constantly change your AA in response to the latest expert you listen to? Or will you look at your situation, needs, and risk tolerance to set your AA appropriately?

I wouldn't listen to anyone with a crown on his head that says "Bond King"

Why do I need to know my future returns? Well I need to know that they are going to keep up with inflation. I also need to know what to expect for planning purposes. If my portfolio is going to double I will have a very different lifestyle than if my portfolio is going to be in half. Planning ahead is just a sensible thing to do and I should have real expectations and not just Pie in the Sky ideas about the future. That's why I listen to all experts including bogleheads and try to understand what the reality is.

Don’t you think that if all these so called “experts” were really “experts” at predictions they’d stop working and be living on an island in the Caribbean driving Ferrari’s? That’s why Bogleheads just sock away as much as possible and reap the rewards over the long term.
Example: How many economists were predicting high interest rates two years ago and where were those same interest rates last summer? All of them.
Absolutely no one can predict future returns, NO ONE. The only thing you can do to hedge uncertainty is to save more. It’s that simple.

Good points

[shuresm7b1]

So what is long-term certain return? 8% over the next 10 years, 20, 30, 40? Would you agree outperforming bonds is not impressive it bonds make nothing

Bonds make nothing today. They may not make anything for 10 years. But they will be less volatile than stocks.

Why do you need to know your future returns? They will be what they will be. How much risk and volatility do you want to endure? Will you constantly change your AA in response to the latest expert you listen to? Or will you look at your situation, needs, and risk tolerance to set your AA appropriately?

I wouldn't listen to anyone with a crown on his head that says "Bond King"

Why do I need to know my future returns? Well I need to know that they are going to keep up with inflation. I also need to know what to expect for planning purposes. If my portfolio is going to double I will have a very different lifestyle than if my portfolio is going to be in half. Planning ahead is just a sensible thing to do and I should have real expectations and not just Pie in the Sky ideas about the future. That's why I listen to all experts including bogleheads and try to understand what the reality is.

Don’t you think that if all these so called “experts” were really “experts” at predictions they’d stop working and be living on an island in the Caribbean driving Ferrari’s? That’s why Bogleheads just sock away as much as possible and reap the rewards over the long term.
Example: How many economists were predicting high interest rates two years ago and where were those same interest rates last summer? All of them.
Absolutely no one can predict future returns, NO ONE. The only thing you can do to hedge uncertainty is to save more. It’s that simple.

Well said. I would just add another tool in the toolbelt that shouldn't be overlooked is to spend less and/or create more flexibility in the level of spending. Minimize financial obligations and toys that cannot easily be liquidated.

My spending has always been pretty minimal but it is all relative of course. Like I just spent eight hundred bucks on new computer hard drives that I could have done without but I sure am glad I have them. We make our choices for sure

[mistermojorizin]

Two weeks ago I sold my total stock position and I'm now 50/50 total stock and Total Bond. I have no idea where anything is going in the future. But I am really good at knowing what down 30% looks like. With a JPMorgan report mentioning three hundred and something billion moving into Bonds in December and others talking about stock market going to 36,000 I have no idea where anything is going but 50/50 lets me sleep great at night so that's where I'll sit for now.

I'm kind of doing similar things, but less aggressively. In March, all my bonds were in long term treasuries fund, which spiked more than a core bond fund would. Before crash, I was 80/20, after crash, I was 75/25. I rebalance to 85/15 at the bottom (bought more stock) and switched from ltt to a core bond fund for the bonds portion. Around late August, I started building up a little more bonds. More recently, ive started adding more ltt and a little gold. Thinking about adding international stocks. Good video, runs against everything else I've heard about coming inflation making bonds useless. Check out the permanent portfolio as a way to hedge against all possible outcomes.

[shuresm7b1]

Two weeks ago I sold my total stock position and I'm now 50/50 total stock and Total Bond. I have no idea where anything is going in the future. But I am really good at knowing what down 30% looks like. With a JPMorgan report mentioning three hundred and something billion moving into Bonds in December and others talking about stock market going to 36,000 I have no idea where anything is going but 50/50 lets me sleep great at night so that's where I'll sit for now.

I'm kind of doing similar things, but less aggressively. In March, all my bonds were in long term treasuries fund, which spiked more than a core bond fund would. Before crash, I was 80/20, after crash, I was 75/25. I rebalance to 85/15 at the bottom (bought more stock) and switched from ltt to a core bond fund for the bonds portion. Around late August, I started building up a little more bonds. More recently, ive started adding more ltt and a little gold. Thinking about adding international stocks. Good video, runs against everything else I've heard about coming inflation making bonds useless. Check out the permanent portfolio as a way to hedge against all possible outcomes.

Link to permanent portfolio?

[SnowBog]

Two weeks ago I sold my total stock position and I'm now 50/50 total stock and Total Bond. I have no idea where anything is going in the future. But I am really good at knowing what down 30% looks like. With a JPMorgan report mentioning three hundred and something billion moving into Bonds in December and others talking about stock market going to 36,000 I have no idea where anything is going but 50/50 lets me sleep great at night so that's where I'll sit for now.

Sounds perfect. It's my plan as well.

Wasn't it Bogle who had an AA of 50/50 and said something like, half the time I think I own too much stock, half the time I think I own too little...

Personally, my AA was 100/0 a few years back solely out of ignorance (other than maxing out my tax advantaged savings, I was otherwise financially illiterate).

I'm currently at 60/40 with several years to go before we [hopefully] retire. Expect I'll join the 50/50 club some day too...

[Candor]

I've been hearing about these low expected returns for the last 10 years. So far so good. I intend to retire within the next couple of years and very possibly next year and I'm currently at 62/38 equities/cd's & ibonds.

[Monster99]

https://www.permanentportfoliofunds.com/
stocks, bonds, gold.

I have been hearing "the experts predict this time is different" since 1983.... The market gives what the market gives and your AA sets your risk level. If you need/want more money in your retirement account you need to save more or spend less or work longer....