http://www.nytimes.com/2009/06/20/your- ... nted=print
The article from the "Your Money" section of the NY Times June 20 issue discusses the varying advice from different planners and finance gurus, including Jack Bogle, to retirees and those near retirement. No new ground is broken for readers of this forum but it's interesting to see what different advisers are recommending after last year's debacle
NY Times Article: New Rules For Retirees & Near Retireme
Me too. Three years ago, I complained to my employer for having the TRP target retirement funds that started (are you sitting down) with the TRP 2010 fund with a 60% equity 40% bond allocation! I got the standard CRAPPY "old rules" that "you need equity exposure to combat inflation because you are living longer...BLAH, BLAH, BLAH, BLAH."preserve wrote:I hate rules.
Thank god, some of us near or in retirement learned our lessons from the 2000-2002 debacle and Adrian's formula, learned a more accurate risk tolerance of 70% bonds-30% equities three years.
We are happy campers because we did not listen to the standard rules of retirement allocation of stocks to bonds of the time.
"We have seen much more money made and kept by “ordinary people” who were temperamentally well suited for the investment process than by those who lacked this quality." Ben Graham
The article, in my opinion, does not do the justice to TIPS. The first time they are mentioned as follows:
1. If he worried only about inflation he'd consider TIPS, but his today's concerns are low fixed income returns and volatility of markets.
2. As he eats, entertains and gets health care, TIPS are not adequate anyway.
3. A better alternative is 40-50% in equities.
My response is that:
1. Food prices do not normally outpace inflation.
2. Web and computer-based entertainment is becoming ever cheaper.
3. While medical costs are rising, it is impossible to find an investment strategy that would reliably protect one's health related costs. These should be considered in terms of insurance, healthy lifestyle, and a large savings margin for emergencies.
4. For a retiree keeping 50% of assets in stocks is dangerous.
The second reference to TIPS is just this:
Victoria
From this a typical retiree learns that:NY Times wrote:If inflation was their only concern, he might invest their money across a ladder of Treasury Inflation-Protected Securities, or TIPS, which are backed by the government and keep pace with inflation.
But since retirees generally spend money on entertainment, health care and food — whose costs often exceed the general rate of inflation — he said he might invest 40 to 50 percent of their money in a portfolio of diversified stock funds (with at least 30 percent of that in international stock funds).
1. If he worried only about inflation he'd consider TIPS, but his today's concerns are low fixed income returns and volatility of markets.
2. As he eats, entertains and gets health care, TIPS are not adequate anyway.
3. A better alternative is 40-50% in equities.
My response is that:
1. Food prices do not normally outpace inflation.
2. Web and computer-based entertainment is becoming ever cheaper.
3. While medical costs are rising, it is impossible to find an investment strategy that would reliably protect one's health related costs. These should be considered in terms of insurance, healthy lifestyle, and a large savings margin for emergencies.
4. For a retiree keeping 50% of assets in stocks is dangerous.
The second reference to TIPS is just this:
If this is all you learned about TIPS, would you ever even consider them?NY Times wrote:And if you are just worried about inflation protection, you can do TIPS.
Victoria
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duplicated post deleted
Last edited by sschullo on Sat Jun 20, 2009 4:58 pm, edited 2 times in total.
"We have seen much more money made and kept by “ordinary people” who were temperamentally well suited for the investment process than by those who lacked this quality." Ben Graham
Bogle Quotes
Bogle quotes from the article:
"“If another decline in the market is going to bankrupt you or put you out of business or destroy your retirement account, you should not go back into the stock market,” said John C. Bogle, the founder of Vanguard and viewed by many as the father of index investing. “It’s not complicated. The stock market can go up and down a lot and nobody really knows how much and when.”
What’s worked for Mr. Bogle may not work for you, but his method isn’t a bad place to start. “I have this threadbare rule that has worked very well for me,” he said in an interview this week. “Your bond position should equal your age.” Mr. Bogle, by the way, is 80 years old."
As to those investors who got out of stocks, Mr. Bogle said it might be time for some of them to get back in. “But I would take two years to do it,” he said. “Maybe average in over eight quarters, and do an eighth each quarter. I am just not in favor of doing things in a hurry or emotionally.”
And then? “Don’t touch it,” he said, emphatically. “One of my rules is don’t do something. Just stand there.”
"“If another decline in the market is going to bankrupt you or put you out of business or destroy your retirement account, you should not go back into the stock market,” said John C. Bogle, the founder of Vanguard and viewed by many as the father of index investing. “It’s not complicated. The stock market can go up and down a lot and nobody really knows how much and when.”
What’s worked for Mr. Bogle may not work for you, but his method isn’t a bad place to start. “I have this threadbare rule that has worked very well for me,” he said in an interview this week. “Your bond position should equal your age.” Mr. Bogle, by the way, is 80 years old."
As to those investors who got out of stocks, Mr. Bogle said it might be time for some of them to get back in. “But I would take two years to do it,” he said. “Maybe average in over eight quarters, and do an eighth each quarter. I am just not in favor of doing things in a hurry or emotionally.”
And then? “Don’t touch it,” he said, emphatically. “One of my rules is don’t do something. Just stand there.”