I need support to stay the course!

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Topic Author
Fireishere
Posts: 19
Joined: Thu May 27, 2021 4:48 am

I need support to stay the course!

Post by Fireishere »

I have pretty simple portfolio: 75% VWCE, 15% VAGF and 5% cash. I find myself thinking should I start tilting to SCV or should I buy gold, bitcoin, silver, REIT or whatever. Or should I buy TIPS and dump my nominal bonds. Cash is trash, of course. I’m afraid that when I start to make small changes I cannot stop it. I have history of terrible “I will beat the index”-investing. I probably should stop reading financial news! Can you tell me are you staying the course with your simple portfolios?
smectym
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Re: I need support to stay the course!

Post by smectym »

Fireishere wrote: Fri Dec 17, 2021 2:15 am I have pretty simple portfolio: 75% VWCE, 15% VAGF and 5% cash. I find myself thinking should I start tilting to SCV or should I buy gold, bitcoin, silver, REIT or whatever. Or should I buy TIPS and dump my nominal bonds. Cash is trash, of course. I’m afraid that when I start to make small changes I cannot stop it. I have history of terrible “I will beat the index”-investing. I probably should stop reading financial news! Can you tell me are you staying the course with your simple portfolios?
An interesting post. One important point to keep in mind is that the current market environment is not that challenging for the "stay the course" imperative, with equities at or near all-time highs. We haven't yet seen the next serious bear market that may rattle even dedicated bogleheads. So if you're currently stressing, even in this relatively benign environment for investing, perhaps consider reducing the volatility of your portfolio.

While the assertion "cash is trash, of course" is commonplace, in point of fact cash is not trash. Unfortunately, today it has the disadvantage of yielding essentially nothing. True. However, it retains the advantage of not going down when the rest of the portfolio may be going down. Therefore, the cash component of the portfolio reduces volatility. That can be a stabilizer. That stability factor can have value, and helps us keep our heads when all about us are losing theirs.

Bonds too, despite their abysmal nominal rates, can aid the portfolio in a stress situation, because when equities plunge, bond prices tend to rise, offsetting the pain. I wouldn't be so quick to write off bonds, though there are those on this forum who do argue for jettisoning bonds.

I disagree that investors are better off not reading the financial news (though agree that staring at the CNBC screen for hours at a time is a horrible idea). More information is generally better than less information; the goal should be to screen out the garbage and click-bait, and access higher-level analysis.

We are "staying the course" with a (far too) conservative portfolio heavily weighted toward VWIAX. One of the features about that fund we like is that it's so d-mn BORING, and on many days barely moves at all. Moving to a lower-volatility portfolio may be part of the answer if you're experiencing investor angst.

While modest allocations to alternative investments such as gold or bitcoin shouldn't be ruled out, a massive lurch into such highly volatile themes can't be recommended and may lead to a subpar outcome.

Good luck and best success in investing.
sailaway
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Re: I need support to stay the course!

Post by sailaway »

Have you written out an IPS including your goals and rationale for your AA?
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Bernmaster
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Location: Germany

Re: I need support to stay the course!

Post by Bernmaster »

I find the Bogleheads forum quite helpful in staying the course. Not following the financial news also definitely helps.

Taylor Larimore's posts about topics like staying the course or simplicity are also very helpful.

viewtopic.php?t=164192

Finally, I wrote my IPS on a little card. On the back, I printed a picture of John Bogle that says "Stay the course".
"Our greatest freedom is the freedom to choose our attitude.” ― Victor Frankl | Global stocks (VWRL) and cash
Topic Author
Fireishere
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Re: I need support to stay the course!

Post by Fireishere »

Smectym, thank you for your response. You really gave me a lot of food for thoughts. I’m 37 years old, my portfolio is about 50X my expenses and my plan is to retire when I’m 55. I have no debt. New contributions depends how my business success so I’m assuming that I contribute only about 1%/year. I think I’m confused because on the other hand I have enough and on the other hand I have 15-20 years to retirement. My withdrawal rate will be quite small (1,5-2%/year). So I already have at least 12,5 years in safe investments. Every other day I want more bonds and every other day I want more stocks. Maybe that means I’m at the right AA?😄

Good luck and success for you too!
Topic Author
Fireishere
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Re: I need support to stay the course!

Post by Fireishere »

sailaway wrote: Fri Dec 17, 2021 3:17 am Have you written out an IPS including your goals and rationale for your AA?
Yes, I have. It says “follow the asset allocation of Vanguard Target Retirement 2040 Fund (VFORX) by using VWCE and VAGF. Have also some cash. When asset allocation hits 50-50, hold for life. Don’t tilt. Save. Don’t peek. Set and forget it.” I’ve given a lot of time to decide my IPS. Now I have a problem to deeply accept it. 😒
Topic Author
Fireishere
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Joined: Thu May 27, 2021 4:48 am

Re: I need support to stay the course!

Post by Fireishere »

Bernmaster wrote: Fri Dec 17, 2021 5:56 am I find the Bogleheads forum quite helpful in staying the course. Not following the financial news also definitely helps.

Taylor Larimore's posts about topics like staying the course or simplicity are also very helpful.

viewtopic.php?t=164192

Finally, I wrote my IPS on a little card. On the back, I printed a picture of John Bogle that says "Stay the course".
Yes, I’m so grateful that I found the Bogleheads. I just have to teach the boglehead inside me more 😂
invest4
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Re: I need support to stay the course!

Post by invest4 »

smectym wrote: Fri Dec 17, 2021 2:58 am An interesting post. One important point to keep in mind is that the current market environment is not that challenging for the "stay the course" imperative, with equities at or near all-time highs. We haven't yet seen the next serious bear market that may rattle even dedicated bogleheads. So if you're currently stressing, even in this relatively benign environment for investing, perhaps consider reducing the volatility of your portfolio.

While the assertion "cash is trash, of course" is commonplace, in point of fact cash is not trash. Unfortunately, today it has the disadvantage of yielding essentially nothing. True. However, it retains the advantage of not going down when the rest of the portfolio may be going down. Therefore, the cash component of the portfolio reduces volatility. That can be a stabilizer. That stability factor can have value, and helps us keep our heads when all about us are losing theirs.

Bonds too, despite their abysmal nominal rates, can aid the portfolio in a stress situation, because when equities plunge, bond prices tend to rise, offsetting the pain. I wouldn't be so quick to write off bonds, though there are those on this forum who do argue for jettisoning bonds.

I disagree that investors are better off not reading the financial news (though agree that staring at the CNBC screen for hours at a time is a horrible idea). More information is generally better than less information; the goal should be to screen out the garbage and click-bait, and access higher-level analysis.

We are "staying the course" with a (far too) conservative portfolio heavily weighted toward VWIAX. One of the features about that fund we like is that it's so d-mn BORING, and on many days barely moves at all. Moving to a lower-volatility portfolio may be part of the answer if you're experiencing investor angst.

While modest allocations to alternative investments such as gold or bitcoin shouldn't be ruled out, a massive lurch into such highly volatile themes can't be recommended and may lead to a subpar outcome.

Good luck and best success in investing.
+1
Fireishere wrote: Fri Dec 17, 2021 2:15 am I’m afraid that when I start to make small changes I cannot stop it. I have history of terrible “I will beat the index”-investing.
This is the most telling...you already know the answer. I also tinkered in my 30s with things like SCV, etc. I have personally found the additional complexity not to be worth it and am happier for it.

Best wishes.
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markjk
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Re: I need support to stay the course!

Post by markjk »

Fireishere wrote: Fri Dec 17, 2021 6:06 am Smectym, thank you for your response. You really gave me a lot of food for thoughts. I’m 37 years old, my portfolio is about 50X my expenses and my plan is to retire when I’m 55. I have no debt. New contributions depends how my business success so I’m assuming that I contribute only about 1%/year. I think I’m confused because on the other hand I have enough and on the other hand I have 15-20 years to retirement. My withdrawal rate will be quite small (1,5-2%/year). So I already have at least 12,5 years in safe investments. Every other day I want more bonds and every other day I want more stocks. Maybe that means I’m at the right AA?😄

Good luck and success for you too!
Just consider your success thus far. At 37 years old and 50X expenses, something is working. You are saving well and your investments must be holding up. Use the success as evidence the approach works. If something is working, why change it? That is one way to look at it.

This is the usual human mentality at work. We all think we should be "doing" something more because with most things in life, we do need to do more to be successful. With investing, it's the opposite. If you are good with market returns (which beat the vast majority of active management), you really don't have to do much. In fact, the less you do, the better. Don't let that "I should be doing more" thinking creep in and force you into bad decisions.

I would say (maybe I shouldn't, but I will) you sound like you are in a fantastic position for your age. If you wanted to start playing around a bit with different asset classes or individual stocks/options/etc., I think you've earned it. But, keep it only a portion and stay disciplined. Maybe 5% of your portfolio. Keep the vast majority invested in your core philosophy (remember, it's working!) and maybe scratch the "I can do better" itch with a fraction like 5%. Make them separate accounts even so one doesn't creep into the other.
Topic Author
Fireishere
Posts: 19
Joined: Thu May 27, 2021 4:48 am

Re: I need support to stay the course!

Post by Fireishere »

invest4 wrote: Fri Dec 17, 2021 6:20 am
smectym wrote: Fri Dec 17, 2021 2:58 am An interesting post. One important point to keep in mind is that the current market environment is not that challenging for the "stay the course" imperative, with equities at or near all-time highs. We haven't yet seen the next serious bear market that may rattle even dedicated bogleheads. So if you're currently stressing, even in this relatively benign environment for investing, perhaps consider reducing the volatility of your portfolio.

While the assertion "cash is trash, of course" is commonplace, in point of fact cash is not trash. Unfortunately, today it has the disadvantage of yielding essentially nothing. True. However, it retains the advantage of not going down when the rest of the portfolio may be going down. Therefore, the cash component of the portfolio reduces volatility. That can be a stabilizer. That stability factor can have value, and helps us keep our heads when all about us are losing theirs.

Bonds too, despite their abysmal nominal rates, can aid the portfolio in a stress situation, because when equities plunge, bond prices tend to rise, offsetting the pain. I wouldn't be so quick to write off bonds, though there are those on this forum who do argue for jettisoning bonds.

I disagree that investors are better off not reading the financial news (though agree that staring at the CNBC screen for hours at a time is a horrible idea). More information is generally better than less information; the goal should be to screen out the garbage and click-bait, and access higher-level analysis.

We are "staying the course" with a (far too) conservative portfolio heavily weighted toward VWIAX. One of the features about that fund we like is that it's so d-mn BORING, and on many days barely moves at all. Moving to a lower-volatility portfolio may be part of the answer if you're experiencing investor angst.

While modest allocations to alternative investments such as gold or bitcoin shouldn't be ruled out, a massive lurch into such highly volatile themes can't be recommended and may lead to a subpar outcome.

Good luck and best success in investing.
+1
Fireishere wrote: Fri Dec 17, 2021 2:15 am I’m afraid that when I start to make small changes I cannot stop it. I have history of terrible “I will beat the index”-investing.
This is the most telling...you already know the answer. I also tinkered in my 30s with things like SCV, etc. I have personally found the additional complexity not to be worth it and am happier for it.

Best wishes.
You’re right. Keep it simple, stupid. I think that’s my new slogan.
Topic Author
Fireishere
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Re: I need support to stay the course!

Post by Fireishere »

markjk wrote: Fri Dec 17, 2021 6:50 am
Fireishere wrote: Fri Dec 17, 2021 6:06 am Smectym, thank you for your response. You really gave me a lot of food for thoughts. I’m 37 years old, my portfolio is about 50X my expenses and my plan is to retire when I’m 55. I have no debt. New contributions depends how my business success so I’m assuming that I contribute only about 1%/year. I think I’m confused because on the other hand I have enough and on the other hand I have 15-20 years to retirement. My withdrawal rate will be quite small (1,5-2%/year). So I already have at least 12,5 years in safe investments. Every other day I want more bonds and every other day I want more stocks. Maybe that means I’m at the right AA?😄

Good luck and success for you too!
Just consider your success thus far. At 37 years old and 50X expenses, something is working. You are saving well and your investments must be holding up. Use the success as evidence the approach works. If something is working, why change it? That is one way to look at it.

This is the usual human mentality at work. We all think we should be "doing" something more because with most things in life, we do need to do more to be successful. With investing, it's the opposite. If you are good with market returns (which beat the vast majority of active management), you really don't have to do much. In fact, the less you do, the better. Don't let that "I should be doing more" thinking creep in and force you into bad decisions.

I would say (maybe I shouldn't, but I will) you sound like you are in a fantastic position for your age. If you wanted to start playing around a bit with different asset classes or individual stocks/options/etc., I think you've earned it. But, keep it only a portion and stay disciplined. Maybe 5% of your portfolio. Keep the vast majority invested in your core philosophy (remember, it's working!) and maybe scratch the "I can do better" itch with a fraction like 5%. Make them separate accounts even so one doesn't creep into the other.
Thank you for your kind words. I think I’m overthinking this whole thing. Sometimes it just feels too simple. I’m staying the course 😄
Topic Author
Fireishere
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Joined: Thu May 27, 2021 4:48 am

Re: I need support to stay the course!

Post by Fireishere »

I’ve been reading a lot this site and have learned a great deal about passive investing. Sometimes mind starts to over complicate things and then the best thing to do is to hear others opinions. So thanks everyone. I really appreciate it. Now I’m going to sauna. That’s a place where thinking is totally forbidden 😁
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arcticpineapplecorp.
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Re: I need support to stay the course!

Post by arcticpineapplecorp. »

you have my utmost support for you to stay the course!

you can lean on me anytime you need support to stay the course.

in answer to your question, i never have difficulty staying the course.

that's because I don't suffer from FOMO or YOLO, so I don't suffer from OH NO!

I also have read a lot of history of all sorts of bubbles, manias, etc., and I don't get swayed into things that might appear to be making my neighbors rich, because I know that unless they sell before these burst, they might not make money at all. Time will tell. It's hard to stay focused in moments of irrational exuberance, but that's what you must do. If you get swept up in the manias, it will end badly for you. Your post indicates it already has, so the question is why do you think this time (or asset) is different?

the other reason I know I can't know more than the market is because I can't find, but you still believe you:

Image
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
jg12345
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Re: I need support to stay the course!

Post by jg12345 »

I do not have any better answer other than the ones already noted.

I just want to say thanks for writing this and being open. I hope this post will encourage others (including me!) to seek help about trying to stay the course.
xxd091
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Re: I need support to stay the course!

Post by xxd091 »

Perhaps some more encouragement from a 75 year old -18 years into retirement -been and done it so far!
Used the same 3 funds for many years - global index trackers only
Asset Allocation has never changed cos made enough-like you though at a slightly later age
30/65/5- equities/bonds/cash
Allowed me to sleep at night/no stomach acid!
So many other exciting things to do if not having to constantly over think investing decisions
You could have a “play” portfolio of a few thousand to have fun with but leave the main body of your savings alone
Staying the course is so boring and counterintuitive but it is the more successful/lucrative option
Worked for me
xxd091
Fallible
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Re: I need support to stay the course!

Post by Fallible »

Fireishere wrote: Fri Dec 17, 2021 6:06 am ...
Every other day I want more bonds and every other day I want more stocks. Maybe that means I’m at the right AA?😄 ...
I think it's a good sign, except for that "every other DAY," when maybe every other YEAR would be safer for you. If you are unable to feel certain about your allocation, that does not necessarily reflect a wrong course, but the human tendency to want certainty, especially in investing where there is no such thing as certainty (or in life, either). Bill Bernstein, top Boglehead pro and prolific author of some great investing books, has said, "In finance, if you’re certain of anything, you’re out of your mind."

What you need is what we all need: an allocation based on ability, personal risk tolerance, and need to take risk. Having come as close to that as possible, we then need discipline, emotional control, patience, and common sense to stay the course. Kept it simple, because the hard part of investing is the "not easy" part of the Warren Buffett quote: "Investing is simple, but not easy."
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
Topic Author
Fireishere
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Re: I need support to stay the course!

Post by Fireishere »

Update! I switched to 60% stocks (VWCE), 35% bonds (EUNA) and 5% cash today. I thought about it for a few weeks and I realised that despite I’m 15-20 years from retirement (I’m 37 years old) I don’t have the need to take more risk because my portfolio is about 50X.
jg12345
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Re: I need support to stay the course!

Post by jg12345 »

:thumbsup :thumbsup :thumbsup
invest2bfree
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Re: I need support to stay the course!

Post by invest2bfree »

Fireishere wrote: Thu Jan 13, 2022 4:27 pm Update! I switched to 60% stocks (VWCE), 35% bonds (EUNA) and 5% cash today. I thought about it for a few weeks and I realised that despite I’m 15-20 years from retirement (I’m 37 years old) I don’t have the need to take more risk because my portfolio is about 50X.
Iam about 10 years older than you.

I have come to the same conclusion.

100% Equity is not going to affect me at all. I have 46x expenses saved up.

If we have another 2008, I have seen folks panic sell all the stocks right at the bottom.

Globally Diversified 60/40 is the way to go.

I would if you can do a 50 active and 50 passive.

Like 30% VT, 30% VHGEX and 40% bonds.
VT and Chill
Topic Author
Fireishere
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Re: I need support to stay the course!

Post by Fireishere »

I haven’t found any reasonable active funds equivalent to VHGEX or VWELX in Europe. Of course there are actively managed funds, but fees are astronomical so I will stay passive.
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tennisplyr
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Re: I need support to stay the course!

Post by tennisplyr »

Well, largely uninformed, about 30 years ago my AA was 50/50. Today it is still ~50/50…now retired 10 years. Don’t over complicated things.
Those who move forward with a happy spirit will find that things always work out.
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tvubpwcisla
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Re: I need support to stay the course!

Post by tvubpwcisla »

tennisplyr wrote: Sat Jan 15, 2022 9:26 am Well, largely uninformed, about 30 years ago my AA was 50/50. Today it is still ~50/50…now retired 10 years. Don’t over complicated things.
Your comment is motivating. Love how you stuck with things for so long.
er999
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Re: I need support to stay the course!

Post by er999 »

Fireishere wrote: Thu Jan 13, 2022 4:27 pm Update! I switched to 60% stocks (VWCE), 35% bonds (EUNA) and 5% cash today. I thought about it for a few weeks and I realised that despite I’m 15-20 years from retirement (I’m 37 years old) I don’t have the need to take more risk because my portfolio is about 50X.
If you a truly 50x expenses you should be set. If your portfolio just keeps up with inflation until you start withdrawing at 57 years old 50x expenses with 0 real return would last you 50 years and I doubt you’ll live to 107. I think it depends on how much your expenses are. If $120k, no problems as you already have a big buffer. If $40k maybe not so much (who knows if health insurance at 57 will cost $15k or $20k). 60% stocks should still give a good return regardless and isn’t too conservative.
Topic Author
Fireishere
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Re: I need support to stay the course!

Post by Fireishere »

I have calculated 50x expenses with 40k expenses. I live in Finland where we have a free healthcare so that shouldn’t be a problem. And I’m still accumulating my portfolio at least 50-100k/year so I came to the conclusion that 60/40 is the right AA considering my need, willingness and ability to take risk.
Marseille07
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Re: I need support to stay the course!

Post by Marseille07 »

Fireishere wrote: Sat Jan 15, 2022 1:57 pm I have calculated 50x expenses with 40k expenses. I live in Finland where we have a free healthcare so that shouldn’t be a problem. And I’m still accumulating my portfolio at least 50-100k/year so I came to the conclusion that 60/40 is the right AA considering my need, willingness and ability to take risk.
Sounds fine. It's probably OK to be more aggressive but you gotta do what you feel comfortable.
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Fireishere
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Re: I need support to stay the course!

Post by Fireishere »

tennisplyr wrote: Sat Jan 15, 2022 9:26 am Well, largely uninformed, about 30 years ago my AA was 50/50. Today it is still ~50/50…now retired 10 years. Don’t over complicated things.
Thanks for posting. It’s truly motivating to hear that you’ve stayed the course for so long. Just curious, at what age did you move to that AA? 50/50 asset allocation, or 60/40, seems to be minority for accumulators nowadays. I’ve been thinking is it because of long bull market, low yields from bonds or something else?
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calmaniac
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Re: I need support to stay the course!

Post by calmaniac »

sailaway wrote: Fri Dec 17, 2021 3:17 am Have you written out an IPS including your goals and rationale for your AA?
+1000 Investment policy statement

For me, taking the time to put my thoughts on paper and commit to a plan has been huge. Not that I was jumping in and out of strategies beforehand, but putting real thought into an IPS makes the noise recede.

Maybe write out an IPS and share with the group?
≈63yo. AA 70/30: 30% TSM, 16% value (VIOV/VFVA/AVUV), 16% foreign LC, 8%emerging, 30% GFund/VBTIX. Fed pensions now ≈60% of expenses. Taking SS @age 70--> pension+SS ≈100% of expenses. What me worry?
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tennisplyr
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Re: I need support to stay the course!

Post by tennisplyr »

Fireishere wrote: Sat Jan 15, 2022 3:37 pm
tennisplyr wrote: Sat Jan 15, 2022 9:26 am Well, largely uninformed, about 30 years ago my AA was 50/50. Today it is still ~50/50…now retired 10 years. Don’t over complicated things.
Thanks for posting. It’s truly motivating to hear that you’ve stayed the course for so long. Just curious, at what age did you move to that AA? 50/50 asset allocation, or 60/40, seems to be minority for accumulators nowadays. I’ve been thinking is it because of long bull market, low yields from bonds or something else?
I was in my late 30s, had just started investing and it seemed like a logical place to start.
Those who move forward with a happy spirit will find that things always work out.
Brit_Abroad
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Re: I need support to stay the course!

Post by Brit_Abroad »

Very interesting thread.

Sorry for the newbie question: What is IPS and AA?
TedSwippet
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Re: I need support to stay the course!

Post by TedSwippet »

Brit_Abroad wrote: Wed Jan 19, 2022 9:14 am Sorry for the newbie question: What is IPS and AA?
Investment policy statement, and Asset Allocation. There a list of the most commonly used abbreviations here:

Abbreviations and Acronyms - Bogleheads
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