Am I crazy to keep 100% stocks when I FIRE?

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mrnice404
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Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

Right up front: I am not from the US! I am posting here, because there is much response in this forum, and because I am not sure if it makes a difference.

I am in my late 40’s and during the accumulation phase, have kept a 100% global stocks portfolio (MSCI ACWI). Recently I have reached the point of FI. So, technically I could retire, but probably I will continue working for at least 2 till 3 years. Maybe even longer (but decreasing my hours as I go). Mainly because I (still) like my job. Secondary, it gives me a bit of extra safety.

I am thinking of keeping my portfolio 100% stocks, even when I retire. I know. Most advice against it. There are all kinds of rule of thumb, like your age in bonds, or somewhere in the range of 60/40 to 75/25. Most of recommendations are geared to US investors. I wonder what makes sense in my situation:
  • The 100% global stocks is only my taxable account. My pension/SS is not included in this indication. Also not the money in my house (roughly the mortgage is about 50% of the value).
  • If I retire today, my pension and SS will start after 17 to 18 years. This income is life long and sufficient for me. Probably within that timeframe I will receive an inheritance. Also, I can take pension benefits earlier, from 60 onwards if things go south (obviously, it will be lower). But more realistically, I have 10 to max 15 years to bridge (depending when I actually decide to quit, inheritance, etc).
  • Healthcare is not an issue in my country. Insurance is about 150 euro a month, regardless if you have a job or not. Actually, when you don’t have a (pension) income, you will get subsidized and will have hardly to pay anything! Maybe 20 a month. If you fall sick, at most you have to pay the first 350 euro a year. Peanuts (compared to the US).
So, generally I get advice like, “it depends on your goals, horizon and risk tolerance”.

Goal & horizon: to bridge 10 to 15 years until pension kicks in :-)

Risk tolerance: I find this the hard part to answer. If I run my numbers in a FIRE calculator, with 100% stocks it gives me a success change of 97% with my current portfolio value to spending ratio (if I quit right today. Which I am not planning). If I do a 60/40% portfolio, it’s about 99%. This difference is very minor. If I slowly transition into retirement and quit after 2 till 3 years, the success chance with all stocks portfolio is 99%, and with a balanced portfolio 99,6%. So, the difference is even less. Is there still any point of keeping bonds?

The paper The Retirement Glidepath: An International Perspective argues not. According to his data, the failure rate of a World portfolio with 100% stocks has over a 30 year period 6,2% failure rate, and a 60/40% portfolio 16% (Table 3). The constant 100% stocks performs also better than a dynamic allocation some people propose (like EARN, starting with 100%, building up bonds around retirement age, and then going back to 100% stocks after a few years).

Besides a rational comparison of failure rates, psychological stress may be another issue. But how much difference a 60/40% portfolio makes? During a severe crash the all stocks portfolio can drop 50% and the 60/40% portfolio….40%? In either case, it will be very stressful. But will the ‘balanced’ portfolio be noticeable less stressful in such an event?

So, after reading all this, shoot! Am I crazy to keep 100% stocks or is it a sound plan in my case? How much less draw dawn would 10%, 20%... 40% bonds portfolio deliver? Does this make a difference if the failure rate is close to 0%? Are there other aspects I am overlooking?

BTW, of course I will keep a emergency cash fund next to the stocks. I do not count this as part of my portfolio though (will keep it stable to X months of spending. It will not increase, as my portfolio grows). If I need more psychological reassurance, I believe a bigger EF will give me peace of mind (even when this is a 'suboptimal strategy' if you look at it purely from a financial perspective)
Topic Author
mrnice404
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Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

[Thread merged into here --admin LadyGeek]

Cross posting here (am not sure if that is OK).

I live in Europe and am in my late 40’s and during the accumulation phase, have kept a 100% global stocks portfolio (MSCI ACWI). Recently I have reached the point of FI. So, technically I could retire, but probably I will continue working for at least 2 till 3 years. Maybe even longer (but decreasing my hours as I go). Mainly because I (still) like my job. Secondary, it gives me a bit of extra safety.

I am thinking of keeping my portfolio 100% stocks, even when I retire. I know. Most advice against it. There are all kinds of rule of thumb, like your age in bonds, or somewhere in the range of 60/40 to 75/25. Most of recommendations are geared to US investors. I wonder what makes sense in my situation:
  • The 100% global stocks is only my taxable account. My pension/SS is not included in this indication. Also not the money in my house (roughly the mortgage is about 50% of the value).
  • If I retire today, my pension and SS will start after 17 to 18 years. This income is life long and sufficient for me. Probably within that timeframe I will receive an inheritance. Also, I can take pension benefits earlier, from 60 onwards if things go south (obviously, it will be lower). But more realistically, I have 10 to max 15 years to bridge (depending when I actually decide to quit, inheritance, etc).
  • Healthcare is not an issue in my country. Insurance is about 150 euro a month, regardless if you have a job or not. Actually, when you don’t have a (pension) income, you will get subsidized and will have hardly to pay anything! Maybe 20 a month. If you fall sick, at most you have to pay the first 350 euro a year. Peanuts.
So, generally I get advice like, “it depends on your goals, horizon and risk tolerance”.

Goal & horizon: to bridge 10 to 15 years until pension kicks in :-)

Risk tolerance: I find this the hard part to answer. If I run my numbers in a FIRE calculator, with 100% stocks it gives me a success change of 97% with my current portfolio value to spending ratio (if I quit right today. Which I am not planning). If I do a 60/40% portfolio, it’s about 99%. This difference is very minor. If I slowly transition into retirement and quit after 2 till 3 years, the success chance with all stocks portfolio is 99%, and with a balanced portfolio 99,6%. So, the difference is even less. Is there still any point of keeping bonds?

The paper The Retirement Glidepath: An International Perspective argues not. According to his data, the failure rate of a World portfolio with 100% stocks has over a 30 year period 6,2% failure rate, and a 60/40% portfolio 16% (Table 3). The constant 100% stocks performs also better than a dynamic allocation some people propose (like EARN, starting with 100%, building up bonds around retirement age, and then going back to 100% stocks after a few years).

Besides a rational comparison of failure rates, psychological stress may be another issue. But how much difference a 60/40% portfolio makes? During a severe crash the all stocks portfolio can drop 50% and the 60/40% portfolio….40%? In either case, it will be very stressful. But will the ‘balanced’ portfolio be noticeable less stressful in such an event?

So, after reading all this, shoot! Am I crazy to keep 100% stocks or is it a sound plan in my case? How much less draw dawn would 10%, 20%... 40% bonds portfolio deliver? Does this make a difference if the failure rate is close to 0%? Are there other aspects I am overlooking?

BTW, of course I will keep a emergency cash fund next to the stocks. I do not count this as part of my portfolio though (will keep it stable to X months of spending. It will not increase, as my portfolio grows). If I need more psychological reassurance, I believe a bigger EF will give me peace of mind (even when this is a 'suboptimal strategy' if you look at it purely from a financial perspective)
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dogagility
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by dogagility »

mrnice404 wrote: Mon Jul 08, 2024 5:01 am Recently I have reached the point of FI.
It sound like you have already done the calculations showing you have a sufficient portfolio size to retire. Yet... you're asking about an appropriate asset allocation.

Unless your portfolio is very substantial relative to your spending, the ability of your portfolio to provide sufficient money during all of you retirement depends upon your asset allocation.
Goal & horizon: to bridge 10 to 15 years until pension kicks in :-)
I would suggest you use these tools to model if your retirement portfolio is sufficient and how different asset allocations can potentially affect the money available for spending.
https://www.portfoliovisualizer.com/mon ... simulation
https://tpawplanner.com/
viewtopic.php?t=120430
Is there still any point of keeping bonds?
In the models you ran, there is no point in investing in bonds.
Besides a rational comparison of failure rates, psychological stress may be another issue. But how much difference a 60/40% portfolio makes? During a severe crash the all stocks portfolio can drop 50% and the 60/40% portfolio….40%? In either case, it will be very stressful. But will the ‘balanced’ portfolio be noticeable less stressful in such an event?
This depends upon your emotions which only you know.

The 60/40 portfolio is typically viewed to decrease in value by 30% when stocks have decreased by 50%. Is this a psychologically significant difference? Only you can answer that question.
Am I crazy to keep 100% stocks or is it a sound plan in my case?
No, it's not crazy. Keep in mind that your psychological view of large portfolio declines may change when your portfolio is actively supporting your living expenses (i.e. retirement).

One irrational sell decision during a deep stock market decline could severely impact the ability of your portfolio to support your lifestyle.

It appears you are thinking through all of this correctly. Having knowledge and an understanding of the spectrum of financial possibilities is a good way to have conviction when faced with the reality of a deep stock market decline.
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markus75
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by markus75 »

mrnice404 wrote: Mon Jul 08, 2024 5:49 am Goal & horizon: to bridge 10 to 15 years until pension kicks in :-)
...
BTW, of course I will keep a emergency cash fund next to the stocks. I do not count this as part of my portfolio though (will keep it stable to X months of spending. It will not increase, as my portfolio grows). If I need more psychological reassurance, I believe a bigger EF will give me peace of mind (even when this is a 'suboptimal strategy' if you look at it purely from a financial perspective)
How many X years of living expenses is your stock portfolio and how many X years of living expenses is your EF?
bombcar
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by bombcar »

The biggest real risk is not that the market drops 50% (because you could just start working again perhaps) but that it drops 50% and you panic and switch to safer investments when everyone else is doing the same, overpay for bonds, and never recover.

However this is complicated by the standard “best bonds” not necessarily being easily available to you.

You probably will be OK but you really really really have to ignore your current valuation. A detailed mechanical plan to sell X each year to rebuild the emergency fund or however you draw will help.

One thing that the “bonds” let you do is “buy stocks when they’re on sale” which can mentally help deal with a large downturn.

It may be instructive to find posts here from the pandemic downturn and read ALL of them to see some 💯ers reacting in realtime.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by LadyGeek »

mrnice404 wrote: Mon Jul 08, 2024 5:49 am Cross posting here (am not sure if that is OK).
To avoid confusion, it's best to keep all the information in one spot. I merged your update back into the original thread. The combined thread is in the
Non-US Investing forum which attracts the attention of members with non-US investing experience.

(Thanks to the member who reported the post and provided a link to this thread.)
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mrnice404
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

dogagility wrote: Mon Jul 08, 2024 5:55 am
mrnice404 wrote: Mon Jul 08, 2024 5:01 am

The 60/40 portfolio is typically viewed to decrease in value by 30% when stocks have decreased by 50%.
Ah, thanks. This was the kind of rule of thumb I was looking for

Am I crazy to keep 100% stocks or is it a sound plan in my case?
your psychological view of large portfolio declines may change when your portfolio is actively supporting your living expenses (i.e. retirement).
This is an excellent point! In the beginning I swore when I bought a bitcoin, I would never sell (in a panic). But I did ;-). Over the last few years, I have become very good in ignoring fluctuations. I only look to my portfolio 1 or 2x a year. But this might be different when I am forced to look at it every month, when I need to sell stocks for living expenses. Up to now the portfolio worth was kind of fictive. But in RE not...

That is my dilemma. Will I be rational enough to wait it out? I might switch to a broker that allows for automatic selling of stocks, each month. This will give me some emotional distance. Only the TER is then about 0,5% in stead of 0,1% ...
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mrnice404
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

bombcar wrote: Mon Jul 08, 2024 5:58 am .... you panic and switch to safer investments when everyone else is doing the same, overpay for bonds, and never recover.
The chance of that is very small, because I don't really like/understand bonds (that is the reason I am also now hesitant to buy). But in case of a panic, I might switch to cash (which is probably also not the smart thing to do!)

. A detailed mechanical plan to sell X each year to rebuild the emergency fund or however you draw will help.
Yeah, this was exactly my plan. I simulate that I am RE now, sell each month stocks, but in stead of spending it (no need, because I didn't quit my job yet), I put the money in a cash deposit which will be my EF when I do decide to retire. In this way, I can get into the habit of selling stocks in stead of buying (which I find quite scary. never sold a buy-and-hold stock yet!)

...the pandemic downturn
I found my own reaction also informative. I didn't panic at all! Ever more importantly, I hardly noticed the stocks crashed. I have forced my self a new habit to only look 1 or 2x a year to my stocks :-)

If I will be able to keep this up during RE, is a different thing...
bombcar
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by bombcar »

I think you can probably do this.

But I also think it behooves you to spend the time to understand bonds, even if you never buy any at all.

Because a year or two after FIRE you’ll have a very good idea of yearly expenses, and your portfolio, and you can start considering “what are guaranteed options to purchase future income now” which can be done with bonds (at least partially).

Cash (in a money market fund and not 0% savings account) is usually a form of very short term bondage, for example.

One thing is bonds are often weak to inflation, even when you use TIPS or similar, and 💯 stocks may (but not guaranteed) counter inflation decently well.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by KlangFool »

OP,

1) How many years of current annual expense in stocks?

2) How many years of current annual expense in the emergency fund?

If the answer for (1) is 40 or above, you can do it.

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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by markus75 »

mrnice404 wrote: Mon Jul 08, 2024 6:28 am I found my own reaction also informative. I didn't panic at all! Ever more importantly, I hardly noticed the stocks crashed. I have forced my self a new habit to only look 1 or 2x a year to my stocks :-)

If I will be able to keep this up during RE, is a different thing...
Pandemic downturn was very short.
Did you experience the financial crisis of 2008/2009 with invested money?
There is a nice thread from this time: viewtopic.php?t=25126

I asked you above how many X of living expenses is your stock portfolio.
Imaging your stock portfolio will decrease by 60% in value and will stay at this level for 10 years. Will it be enough to last till your pension?

Perhaps interesting thread for you here: "Maximum Tolerable Loss" -- Not just a fear factor
er999
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by er999 »

What is your withdrawal rate? If it’s 1%, sure. If it’s a more conventional 4% maybe think more deeply and read more about it first.
grahamite
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by grahamite »

In the accumulation phase it is easy to ride out bear markets (especially the last few which were mercifully short). But in the withdrawal phase being forced to sell stocks when they are well below all time highs isn't going to feel good. And is easily avoidable if you keep about 3-5 years living expenses in short term bonds. Assuming a 3-4% withdrawal rate that amounts to around 10-20% bonds which won't dilute your portfolio returns that much and may well improve them if it allows you to avoid selling at low market levels in prolonged bear markets and also give you a smoother ride.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by Watty »

mrnice404 wrote: Mon Jul 08, 2024 5:49 am Goal & horizon: to bridge 10 to 15 years until pension kicks in
.....
(roughly the mortgage is about 50% of the value).
.....
Am I crazy to keep 100% stocks or is it a sound plan in my case?
I would have phrased it more politely but yes you would be crazy to be 100% stock for money that will be needed in less than 15 years.

It is not exact but in many ways a mortgage is like having a negative bond so if you included the mortgage in your bond asset allocation your would have a negative bond asset allocation and an asset allocation of over 100% stocks.

You did not say what the interest rates and terms were on your mortgage but since you are outside the US I would assume that it is some sort of variable rate mortgage that could go up a lot at the same time your stocks are down. Depending on the details of your mortgage you might want to consider paying it off before you retire especially if you will have a high stock asset allocation.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

Watty wrote: Mon Jul 08, 2024 9:29 am
You did not say what the interest rates and terms were on your mortgage
Before going FIRE, I will fix my mortgage rate for 15 years or 20 years, so there is no risk of it going up (after that period I will be eliminating the mortgage all together with inheritance).

The mortgage is about 4%. The yearly interest rate I pay, will be deducted from the wealth taxes I have to pay. So that is not too bad
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

grahamite wrote: Mon Jul 08, 2024 9:03 am IAssuming a 3-4% withdrawal rate that amounts to around 10-20% bonds
How does this work out? So how to you decide which % of bonds you need if X is your withdrawal rate?
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by KlangFool »

mrnice404 wrote: Mon Jul 08, 2024 9:42 am
grahamite wrote: Mon Jul 08, 2024 9:03 am IAssuming a 3-4% withdrawal rate that amounts to around 10-20% bonds
How does this work out? So how to you decide which % of bonds you need if X is your withdrawal rate?
The usual rule of thumb for retirement is 10 years of expense in fixed income and/or cash.

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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by xxd091 »

Very unusual to find any retirees with a 100% equities asset allocation-even Warren Buffet advised his wife with her massive inheritance coming after his death (she was uninterested in investing) to have a portfolio of 90% S&P 500 and 10% bonds
You might be the exception but it’s unlikely
Work out your living expenses
With a large portfolio and only taking less than 1% withdrawals ………..might be possible
Can you cope with a 50% drop in your equities portfolio-not uncommon -could be fatal if drop occurs at start of retirement -recovery of portfolio would be unlikely
Safety cushion is usually bonds which even if you don’t understand them do not drop (usually) as precipitously as equities (see 2022)
A global bond index tracker hedged to your local currency is all you need
It’s very personal where you set your asset allocation but riding out market drops in retirement is very different to those occurring while working-in retirement there is no way back -you need a 100% success rate!
70/30 right through to 30/70 asset allocations do the job and let you sleep at night -you choose your own bond allocation based on your amount saved,withdrawal rate required and your personal ability to cope with volatility and risk
It is also usual as a further safe guard for retirees to have 2+ years living expenses in cash
Doing retirement differently from the above might work but ……….
xxd091 (aged 78-21 years rtd)
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by Fireishere »

Straight answer to straight question: yes, you would be crazy to hold 100% stocks when you FIRE. Unless you have more than 50X or your X contains a lot of expenses you can easily cut like travelling. Or you’re willing to go back to work if things go wrong. Life is full of surprises so make sure your X is ready for them. I love the Yiddish proverb “man plans, god laughs”. I think it was much appreciated forum member Klangfool and his message where I read it first. It serves me as a reminder that many things in life are not in our hands and the best we can financially do is to prepare different kinds of outcomes. That has brought our portfolio from 100/0 to 60-70% stocks/30-40% bonds/cash. We’re 40 yo and our portfolio is about 33X but that contains 50% of expenses we could cut easily (travelling). So we have a little need to take more risk.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by Watty »

mrnice404 wrote: Mon Jul 08, 2024 9:40 am Before going FIRE, I will fix my mortgage rate for 15 years or 20 years, so there is no risk of it going up (after that period I will be eliminating the mortgage all together with inheritance).
I have seen several situation where people did not receive an expected inheritance when someone remarries late in life or lives a lot longer than expected. There is a reasonable chance that whoever this is will live well into their 90s and them even living to be over 100 is not unrealistic. They may even outlive you.

If this is a couple like your parents then the joint life expectancy math for two people makes it much more likely than for an individual that one of them will live a very long time.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by daviddem »

May depend on your situation, for example if you have 100x your yearly retirement expenses then you should be OK.

However, there is one thing you need to understand, called sequence of return risk, which can badly affect you. If there is a bad crash shortly before or after you retire, this could derail your plans. Ask yourself if your portfolio would survive the dotcom crash followed by the great recession less than 10 years later, with the withdrawal rate you are planning to use. No, do not ask yourself: calculate it.

The best work I know of on safe withdrawal rates and sequence of returns risk is at earlyretirementnow.com. The guy has studied this extensively in excruciating details and has an excellent spreadsheet to simulate your case. One of his techniques to alleviate sequence of returns risk is to use a bigger bond allocation shortly before and after retirement, then once well into retirement, start decreasing the bond allocation again.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by jg12345 »

mrnice404 wrote: Mon Jul 08, 2024 5:01 am Right up front: I am not from the US! I am posting here, because there is much response in this forum, and because I am not sure if it makes a difference.

I am in my late 40’s and during the accumulation phase, have kept a 100% global stocks portfolio (MSCI ACWI). Recently I have reached the point of FI. So, technically I could retire, but probably I will continue working for at least 2 till 3 years. Maybe even longer (but decreasing my hours as I go). Mainly because I (still) like my job. Secondary, it gives me a bit of extra safety.

I am thinking of keeping my portfolio 100% stocks, even when I retire. I know. Most advice against it. There are all kinds of rule of thumb, like your age in bonds, or somewhere in the range of 60/40 to 75/25. Most of recommendations are geared to US investors. I wonder what makes sense in my situation:
  • The 100% global stocks is only my taxable account. My pension/SS is not included in this indication. Also not the money in my house (roughly the mortgage is about 50% of the value).
  • If I retire today, my pension and SS will start after 17 to 18 years. This income is life long and sufficient for me. Probably within that timeframe I will receive an inheritance. Also, I can take pension benefits earlier, from 60 onwards if things go south (obviously, it will be lower). But more realistically, I have 10 to max 15 years to bridge (depending when I actually decide to quit, inheritance, etc).
  • Healthcare is not an issue in my country. Insurance is about 150 euro a month, regardless if you have a job or not. Actually, when you don’t have a (pension) income, you will get subsidized and will have hardly to pay anything! Maybe 20 a month. If you fall sick, at most you have to pay the first 350 euro a year. Peanuts (compared to the US).
So, generally I get advice like, “it depends on your goals, horizon and risk tolerance”.

Goal & horizon: to bridge 10 to 15 years until pension kicks in :-)

Risk tolerance: I find this the hard part to answer. If I run my numbers in a FIRE calculator, with 100% stocks it gives me a success change of 97% with my current portfolio value to spending ratio (if I quit right today. Which I am not planning). If I do a 60/40% portfolio, it’s about 99%. This difference is very minor. If I slowly transition into retirement and quit after 2 till 3 years, the success chance with all stocks portfolio is 99%, and with a balanced portfolio 99,6%. So, the difference is even less. Is there still any point of keeping bonds?

The paper The Retirement Glidepath: An International Perspective argues not. According to his data, the failure rate of a World portfolio with 100% stocks has over a 30 year period 6,2% failure rate, and a 60/40% portfolio 16% (Table 3). The constant 100% stocks performs also better than a dynamic allocation some people propose (like EARN, starting with 100%, building up bonds around retirement age, and then going back to 100% stocks after a few years).

Besides a rational comparison of failure rates, psychological stress may be another issue. But how much difference a 60/40% portfolio makes? During a severe crash the all stocks portfolio can drop 50% and the 60/40% portfolio….40%? In either case, it will be very stressful. But will the ‘balanced’ portfolio be noticeable less stressful in such an event?

So, after reading all this, shoot! Am I crazy to keep 100% stocks or is it a sound plan in my case? How much less draw dawn would 10%, 20%... 40% bonds portfolio deliver? Does this make a difference if the failure rate is close to 0%? Are there other aspects I am overlooking?

BTW, of course I will keep a emergency cash fund next to the stocks. I do not count this as part of my portfolio though (will keep it stable to X months of spending. It will not increase, as my portfolio grows). If I need more psychological reassurance, I believe a bigger EF will give me peace of mind (even when this is a 'suboptimal strategy' if you look at it purely from a financial perspective)
Hi OP
With this information / post you can probably only get rule of thumbs, and 'it depends'.

You could probably get better answer with some more details: portfolio size invested, expenses per year, value and rate of mortgage, salary per year (right now and after 3 years when you decide to decrease hours), value of SS pension (although from your post it seems we can assume is at least equal to expenses per year)

A short feedback is that it seems you want to retire very soon (2-3 years), and so retiring with 100% stocks, and mortgage/house not fully paid, seems very risky, or almost illogical
Trying to stay the course
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mrnice404
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

daviddem wrote: Tue Jul 09, 2024 8:57 am ... sequence of return risk ...the dotcom crash followed by the great recession less than 10 years later, with the withdrawal rate you are planning to use. No, do not ask yourself: calculate it.
This is exactly what I did. The calculator I used, uses a dataset which includes all those crisis. And calculates 20.000 simulations to estimate sequence risk. It came up with 97% succes, and if only start withdrawing after a year of two or three, it is >99%.
The best work I know of on safe withdrawal rates and sequence of returns risk is at earlyretirementnow.com.
I have used his Excel. When I will out all the details, it indicates I can withdraw >7% a year
Last edited by mrnice404 on Tue Jul 09, 2024 1:07 pm, edited 1 time in total.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

KlangFool wrote: Mon Jul 08, 2024 11:13 am
The usual rule of thumb for retirement is 10 years of expense in fixed income and/or cash.
This surely also depends on the duration? At least, I think a 30 to 40 years retirement differs from a 10 years retirement. Or is this irrelevant in your opinion?

Since my retirement duration is 10 to 15 years, it would mean I should have 0% stocks?
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

xxd091 wrote: Tue Jul 09, 2024 3:14 am Safety cushion is usually bonds which even if you don’t understand them do not drop (usually) as precipitously as equities (see 2022)
This exactly is what I don't understand. If I look to a mixed fund of Goldman Sachs that has 90/10 stocks/bonds in 2022 it dropped 14%. The same fund but with a 30/70 allocation, dropped 16%! So, adding bonds made it worse.

I don't know if this is a fair comparison. As mentioned, I don't know much about bonds (but of course can learn ;-)). But I did hear bonds did behave differently last crash. This makes me doubt the use.

I can easily get BND in my country, hedged to EUR, if I decide I should need it. However, because my 'retirement' is only 10 to max 15 years, should I only look the bond ETFs with short duration? I am not sure how it works
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

jg12345 wrote: Tue Jul 09, 2024 9:35 am
A short feedback is that it seems you want to retire very soon (2-3 years), and so retiring with 100% stocks, and mortgage/house not fully paid, seems very risky, or almost illogical
I hear you. Indeed, I don't often see/hear people choosing for this risky strategy. But then again, if the succes rate according to calculations is 99% (where I entered all those details you asked), how "illogical" is such a decision? Or do you only plan for 100,0% succes rate?

This is what I cannot explain, the common wisdom and the calculation results. They do not match.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by KlangFool »

mrnice404 wrote: Tue Jul 09, 2024 1:05 pm
KlangFool wrote: Mon Jul 08, 2024 11:13 am
The usual rule of thumb for retirement is 10 years of expense in fixed income and/or cash.
This surely also depends on the duration? At least, I think a 30 to 40 years retirement differs from a 10 years retirement. Or is this irrelevant in your opinion?

Since my retirement duration is 10 to 15 years, it would mean I should have 0% stocks?
mrnice404,

1) It is irrelevant from this discussion. The 10 years rule comes from historically the stock market can stay down for 10 years.

"Since my retirement duration is 10 to 15 years, it would mean I should have 0% stocks?"
"If I retire today, my pension and SS will start after 17 to 18 years. This income is life long and sufficient for me."

2) This statement is false. Your pension and SS start after 10 to 15 years. But, your retirement continues.

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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

KlangFool wrote: Tue Jul 09, 2024 1:29 pm 2) This statement is false. Your pension and SS start after 10 to 15 years. But, your retirement continues.
I should have put retirement in quotes. I meant, I will have to withdraw money 10 to 15 years from my portfolio. After that I don't have to withdraw anything, since my SS/pension is sufficient. And probably in late age "too" much, when aspirations to travel decrease.

In my country SS/pension are (more or less) guaranteed. Some people choose not to rely on it. I choose to do so.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by jg12345 »

mrnice404 wrote: Tue Jul 09, 2024 1:23 pm
jg12345 wrote: Tue Jul 09, 2024 9:35 am
A short feedback is that it seems you want to retire very soon (2-3 years), and so retiring with 100% stocks, and mortgage/house not fully paid, seems very risky, or almost illogical
I hear you. Indeed, I don't often see/hear people choosing for this risky strategy. But then again, if the succes rate according to calculations is 99% (where I entered all those details you asked), how "illogical" is such a decision? Or do you only plan for 100,0% succes rate?

This is what I cannot explain, the common wisdom and the calculation results. They do not match.
the answer is in the first part of my message which you are not quoting: the information you have not provided. if your stock investments are 100x your expenses, then yes, it would work.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by KlangFool »

mrnice404 wrote: Tue Jul 09, 2024 1:39 pm
KlangFool wrote: Tue Jul 09, 2024 1:29 pm 2) This statement is false. Your pension and SS start after 10 to 15 years. But, your retirement continues.
I should have put retirement in quotes. I meant, I will have to withdraw money 10 to 15 years from my portfolio. After that I don't have to withdraw anything, since my SS/pension is sufficient. And probably in late age "too" much, when aspirations to travel decrease.

In my country SS/pension are (more or less) guaranteed. Some people choose not to rely on it. I choose to do so.
OP,

In summary, you need 10 years of expense in fixed income/cash. Then, the rest of your portfolio can be stock.

What is the size of your portfolio in terms of yeas of expense?

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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by jg12345 »

jg12345 wrote: Tue Jul 09, 2024 1:40 pm
mrnice404 wrote: Tue Jul 09, 2024 1:23 pm
jg12345 wrote: Tue Jul 09, 2024 9:35 am
A short feedback is that it seems you want to retire very soon (2-3 years), and so retiring with 100% stocks, and mortgage/house not fully paid, seems very risky, or almost illogical
I hear you. Indeed, I don't often see/hear people choosing for this risky strategy. But then again, if the succes rate according to calculations is 99% (where I entered all those details you asked), how "illogical" is such a decision? Or do you only plan for 100,0% succes rate?

This is what I cannot explain, the common wisdom and the calculation results. They do not match.
the answer is in the first part of my message which you are not quoting: the information you have not provided. if your stock investments are 100x your expenses, then yes, it would work.
and of course, 100x is not a minimum, just an example. but as you can see from KlangFool last post asking you more information, you probably need to provide more information to get better answers.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by KlangFool »

mrnice404 wrote: Tue Jul 09, 2024 1:23 pm
jg12345 wrote: Tue Jul 09, 2024 9:35 am
A short feedback is that it seems you want to retire very soon (2-3 years), and so retiring with 100% stocks, and mortgage/house not fully paid, seems very risky, or almost illogical
I hear you. Indeed, I don't often see/hear people choosing for this risky strategy. But then again, if the succes rate according to calculations is 99% (where I entered all those details you asked), how "illogical" is such a decision? Or do you only plan for 100,0% succes rate?

This is what I cannot explain, the common wisdom and the calculation results. They do not match.
mrnice404,

You only live once. Not 20 times. Statistic only works when you live more than once. It only works on minimum 20 iterations.

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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by pennywiser »

mrnice404 wrote: Tue Jul 09, 2024 1:23 pm Indeed, I don't often see/hear people choosing for this risky strategy. But then again, if the succes rate according to calculations is 99% (where I entered all those details you asked), how "illogical" is such a decision? Or do you only plan for 100,0% succes rate?

This is what I cannot explain, the common wisdom and the calculation results. They do not match.
They don't match because people are not computers, humans have emotions that take best out of them - fear and greed.
Mathematical answer is one thing, acting 100% rationally when scared is another. Somebody already linked Sheepdog's thread above, good example of what fear looks like.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

jg12345 wrote: Tue Jul 09, 2024 1:40 pm the answer is in the first part of my message which you are not quoting: the information you have not provided. if your stock investments are 100x your expenses, then yes, it would work.
It's nowhere near that. But nonetheless various calculators (not 1) and Excels (EARN, VPW) give a near 100% succes chance. I entered all my personal details there (bit hesitant to share it here due to privacy), so the results are tailored to my personal situation.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

pennywiser wrote: Tue Jul 09, 2024 1:45 pm They don't match because people are not computers, humans have emotions that take best out of them - fear and greed.
Mathematical answer is one thing, acting 100% rationally when scared is another. Somebody already linked Sheepdog's thread above, good example of what fear looks like.
Good point. Indeed, a near 100% succes rate in theory, is not the same as practice. I will read the thread to see if I can recognize/imagine me reacting in a similar way
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by KlangFool »

mrnice404 wrote: Tue Jul 09, 2024 1:46 pm
jg12345 wrote: Tue Jul 09, 2024 1:40 pm the answer is in the first part of my message which you are not quoting: the information you have not provided. if your stock investments are 100x your expenses, then yes, it would work.
It's nowhere near that. But nonetheless various calculators (not 1) and Excels (EARN, VPW) give a near 100% succes chance. I entered all my personal details there (bit hesitant to share it here due to privacy), so the results are tailored to my personal situation.
A) The calculator does not pay your bills when you are in trouble.

B) We are asking your portfolio size in terms of annual expense. Not the actual amount. 5 Years? 10 Years? 20 years?

C) With answer to (B), we can tell whether the calculator's answer makes any sense.

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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

KlangFool wrote: Tue Jul 09, 2024 1:44 pm You only live once. Not 20 times. Statistic only works when you live more than once. It only works on minimum 20 iterations.
I don't understand. Is your point, do not rely on any simulation because you live only once? So there is no use of such a simulation at all? If so, on what should you base your decisions then? Basing it on emperical evidence seems a sound plan to me. Of course, no any model can predict the future with 100%

Or is your point that you should do the simulations right? With at least 20 iterations. The simulation I have done does 20.000 iterations! I have done historical backtesting, as well as Monte Carlo simulations. With various indexes. With inflation and bond results from my country. I have tested several different calculators, to gather converging evidence (all give almost identical results). Also have used sheets from Earn and VPW.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

KlangFool wrote: Tue Jul 09, 2024 1:52 pm B) We are asking your portfolio size in terms of annual expense. Not the actual amount. 5 Years? 10 Years? 20 years?
Current portfolio is about 15 years of expenses (if I quit working right now).

Small detail, it is 15 years of my part of the collective expenses. My partner and I both share 50%-50%. So in worst case scenario, there would be a bit leeway, if in dramatic years I contribute a bit less (within reasonable way, not unlimited of course).
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by HomerJ »

mrnice404 wrote: Mon Jul 08, 2024 5:01 am Goal & horizon: to bridge 10 to 15 years until pension kicks in :-)

the failure rate of a World portfolio with 100% stocks has over a 30 year period 6,2% failure rate, and a 60/40% portfolio 16%
What are the 10-15 year failure rates?
Besides a rational comparison of failure rates, psychological stress may be another issue. But how much difference a 60/40% portfolio makes? During a severe crash the all stocks portfolio can drop 50% and the 60/40% portfolio….40%? In either case, it will be very stressful. But will the ‘balanced’ portfolio be noticeable less stressful in such an event?
Yes, the balanced portfolio will absolutely be noticeably less stressful in such an event.

$1 million, you are pulling $40,000 a year, and the market crashes 50%... Now you are pulling $40,000 a year from $500,000, and that's a big percentage.

If the market bounces back in a year, probably no big deal. But what if it takes 5 years? Now, you've pulled $200,000 from your $500,000, and you are down to $300,000, and yes you are starting to get nervous. And even the market does come roaring back, the gains will be on a much smaller portfolio that you are still withdrawing from. 100% gain over the next 2 years while you are still pulling $40,000 a year, might only get you back to $500,000.

A 60/40 portfolio would only drop to $700,000 ($300,000/$400,000), AND you could pull the $40,000 from the bond side while waiting for stocks to recover. 5 years in, you'd be at $500,000 ($300,000/$200,000), and when the market came back and went up 100%, you would fully recover on the stock side, and be back at $800,000.

And all of the above ignores interest and dividends.

The main reason I'd want SOME cash/bonds is because they are paying 5% a year. That's a good rate.

A $1 million 60/40 portfolio would be throwing off $20,000 a year just in interest from the bonds, and $9,000 a year from stock dividends. That's nearly $30,000 a year without even touching the principal.

A $1 million 100% stock portfolio only throws off $15,000 a year in dividends.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by abc132 »

mrnice404 wrote: Tue Jul 09, 2024 1:17 pm
xxd091 wrote: Tue Jul 09, 2024 3:14 am Safety cushion is usually bonds which even if you don’t understand them do not drop (usually) as precipitously as equities (see 2022)
This exactly is what I don't understand. If I look to a mixed fund of Goldman Sachs that has 90/10 stocks/bonds in 2022 it dropped 14%. The same fund but with a 30/70 allocation, dropped 16%! So, adding bonds made it worse.

I don't know if this is a fair comparison. As mentioned, I don't know much about bonds (but of course can learn ;-)). But I did hear bonds did behave differently last crash. This makes me doubt the use.

I can easily get BND in my country, hedged to EUR, if I decide I should need it. However, because my 'retirement' is only 10 to max 15 years, should I only look the bond ETFs with short duration? I am not sure how it works
You don't want to invest solely based on what worked in the last downturn. We have had downturns where real estate helped and downturns where it hurt. The bonds that did the worst in 2022 helped the most in 2008 (or maybe it was 2000?). Bonds are the best diversifier so if you want any diversification you should start with a bit of bonds. At your level of dislike whatever amount of fixed income you add will be helpful to your goals. Bonds may be the very best thing again in the next downturn.

I use I-bonds because they never go down. More specifically they don't have interest rate or term risk. I have 3 years of expenses in I-bonds and I can save these for an emergency or use them for spending. These types of bonds helped in 2022. I also hold bond funds that helped in 2008 but didn't help in 2022. I should have something that helps in the next downturn - that is called diversification.

I think the 10 years of expenses is a reasonable starting suggestion for bonds but you could also spend these as you approach your pension date. It is possible to diversify in a way where you can actually spend more than with the 100% stock portfolio.
Last edited by abc132 on Tue Jul 09, 2024 2:07 pm, edited 2 times in total.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

HomerJ wrote: Tue Jul 09, 2024 1:59 pm
If the market bounces back in a year, probably no big deal. But what if it takes 5 years? Now, you've pulled $200,000 from your $500,000, and you are down to $300,000, and yes you are starting to get nervous. And even the market does come roaring back, the gains will be on a much smaller portfolio that you are still withdrawing from. 100% gain over the next 2 years while you are still pulling $40,000 a year, might only get you back to $500,000.

A 60/40 portfolio would only drop to $700,000 ($300,000/$400,000), AND you could pull the $40,000 from the bond side while waiting for stocks to recover. 5 years in, you'd be at $500,000 ($300,000/$200,000), and when the market came back and went up 100%, you would fully recover on the stock side, and be back at $800,000.
Thanks for spelling this out for me. This helps a lot! Up to now I am looking at the problem from statistical point of view (what % of failure do I have). This is another approach, where I also could look better into individual outcome/scenario's. I have to let this one sink in.
A $1 million 60/40 portfolio would be throwing off $20,000 a year just in interest from the bonds, and $9,000 a year from stock dividends. That's nearly $30,000 a year without even touching the principal.
Does this only happen if you own bonds directly yourself, or also if you have a bond ETF? Are the dividends more or less stable, even during a crash?
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

abc132 wrote: Tue Jul 09, 2024 2:01 pm ... At your level of dislike whatever amount of fixed income you add will be helpful to your goals. Bonds may be the very best thing again in the next downturn.
Hahaha. True. Indeed, there is quite some resistance to bonds. Biggest problem is overcoming this. Once I have done that, then I am sure going for 10% or 20% will not make much difference .
I use I-bonds because they never go down
Never have heard of that. Are you from the US? Would you say this is something for US people, or is it also available and makes sense for Europeans? I have to figure out what the term is in my country. I never came across it (but then again, I never looked)

If I do include bonds, I was thinking just to use BND hedged to EUR, or only EUR goverment something. Am not sure though, if I should focus on short term bonds because my withdrawing duration is at most 15 years?
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by jg12345 »

mrnice404 wrote: Tue Jul 09, 2024 1:57 pm
KlangFool wrote: Tue Jul 09, 2024 1:52 pm B) We are asking your portfolio size in terms of annual expense. Not the actual amount. 5 Years? 10 Years? 20 years?
Current portfolio is about 15 years of expenses (if I quit working right now).

Small detail, it is 15 years of my part of the collective expenses. My partner and I both share 50%-50%. So in worst case scenario, there would be a bit leeway, if in dramatic years I contribute a bit less (within reasonable way, not unlimited of course).
1) if portfolio is 15 year of expenses, and
2) your mortgage expenses are included in your expenses,
3) you need your portfolio to last 10-15 years, which I take as 15
then
you can put everything in inflation linked bonds, portfolio will be depleted to 0 or somewhere there, and you bridged the gap with barely any risk.

You could also do 100 stocks, but a downturn in early years would almost certainly mean that you will need to return to work, which might be quite unpleasant.

Adding bonds would certainly give a few percentage points more chances of success. In Firecalc, it adds about 3% to the success rate (1/33, not trivial). And yes, the average value at the end is indeed 0 or close to 0.

I would either keep working, or decrease hours and keep working. I would not feel comfortable with only SS and no savings of my own, to be honest. Even if insurance is 150EUR / month, you don't know what it will cover 15 years from now (dementia, care homes, etc.). Sorry to say this: divorce is another risk (I hope for you it will not happen, but it is in the realm of what is possible).

So yeah, in your situation, I would certainly not FIRE with 100% stocks. I would probably not FIRE at all in 2-3 years but try go a bit longer so that you don't reach SS pension age with no assets (except for half the home, that is)
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by jg12345 »

mrnice404 wrote: Tue Jul 09, 2024 2:12 pm
abc132 wrote: Tue Jul 09, 2024 2:01 pm ... At your level of dislike whatever amount of fixed income you add will be helpful to your goals. Bonds may be the very best thing again in the next downturn.
Hahaha. True. Indeed, there is quite some resistance to bonds. Biggest problem is overcoming this. Once I have done that, then I am sure going for 10% or 20% will not make much difference .
I use I-bonds because they never go down
Never have heard of that. Are you from the US? Would you say this is something for US people, or is it also available and makes sense for Europeans? I have to figure out what the term is in my country. I never came across it (but then again, I never looked)

If I do include bonds, I was thinking just to use BND hedged to EUR, or only EUR goverment something. Am not sure though, if I should focus on short term bonds because my withdrawing duration is at most 15 years?
I bonds are for American citizens. The poster might not have noticed you are in the Eurozone. In your case, global aggregate hedged to EUR is ok, or you could also have a ladder of individual bonds
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by abc132 »

mrnice404 wrote: Tue Jul 09, 2024 2:12 pm Hahaha. True. Indeed, there is quite some resistance to bonds. Biggest problem is overcoming this. Once I have done that, then I am sure going for 10% or 20% will not make much difference .
An 80/20 portfolio can safely spend more than a 100/0 portfolio so it depends if your goal is to spend your money or die and give it to someone else.
mrnice404 wrote: Tue Jul 09, 2024 2:12 pm Am not sure though, if I should focus on short term bonds because my withdrawing duration is at most 15 years?
If you know why you hold the bonds you could have any kind of bond. I hold intermediate bonds and they are used to rebalance into stocks in a downturn. If you are unsure then shorter duration is probably better. I don't need short duration because of those I-Bonds (yes, US-only).
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

jg12345 wrote: Tue Jul 09, 2024 2:17 pm
you can put everything in inflation linked bonds, portfolio will be depleted to 0 or somewhere there, and you bridged the gap with barely any risk.
Yeah, indeed. That could be another approach.
Sorry to say this: divorce is another risk (I hope for you it will not happen, but it is in the realm of what is possible).
You are right. That is a risk I have not taken into account. Actually, in general I have entertained the possibility, but not regards to FIRE.

With or without FIRE, both of use cannot afford this house on our own. Divorce = shifting. If I shift to something of about 50% of the current (combined) expenses, it should not have much impact on FIRE plans. If my living expenses will increase, it will.
I would probably not FIRE at all in 2-3 years but try go a bit longer so that you don't reach SS pension age with no assets (except for half the home, that is)
The latter part I don't understand. You are referring to a situation where I go broke AND get a divorce? Because I should not reach SS with no money. According to the simulations, the median represents quite a large sum (which I will never finish)

To be honest, I am going to work for another 2 till 3 years definitely (due to various reasons). But in reality, there is a big chance I will continue longer. If I quit putting in new investments every month, I could work only 2,5 days to cover my current expenses. Working presumably would feel more like a hobby, then real (hard) work. Unless I really would come to dislike my (current) job, but as of yet that is not the case (in contrary).
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by KlangFool »

mrnice404 wrote: Tue Jul 09, 2024 1:53 pm
KlangFool wrote: Tue Jul 09, 2024 1:44 pm You only live once. Not 20 times. Statistic only works when you live more than once. It only works on minimum 20 iterations.
I don't understand. Is your point, do not rely on any simulation because you live only once? So there is no use of such a simulation at all?
mrnice404,

Before you use a statistic and/or average, you need to understand the limitation of the model/system.

For example, 99% success rate has zero meaning. In terms of your retirement, you either have enough money or don't. There is no 99%.

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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

jg12345 wrote: Tue Jul 09, 2024 2:20 pm In your case, global aggregate hedged to EUR is ok, or you could also have a ladder of individual bonds
I have heard many times about BND. I believe it is also available hedged to EUR. Or a similair ETF.

If I would only withdraw money from my portfolio for about 15 years (and will hold it after that for say 25 years), would you say a short term bond ETF, intermediate, or long term bonds would be best? Or a mix (which BND is?).

I am aware there must be all kinds of smart choices, combinations, etc. But for a complete newbie (with some psychological resitance to bonds ;-), I am looking for a simple one-fund solution.
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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by KlangFool »

mrnice404 wrote: Tue Jul 09, 2024 1:57 pm
KlangFool wrote: Tue Jul 09, 2024 1:52 pm B) We are asking your portfolio size in terms of annual expense. Not the actual amount. 5 Years? 10 Years? 20 years?
Current portfolio is about 15 years of expenses (if I quit working right now).

Small detail, it is 15 years of my part of the collective expenses. My partner and I both share 50%-50%. So in worst case scenario, there would be a bit leeway, if in dramatic years I contribute a bit less (within reasonable way, not unlimited of course).
mrnice404,

Then, you should not be 100% stock. That means you should have 10 years in fixed income/cash. You should be 67% stock and 33% bond. My recommendation is for 60:40.

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Re: Am I crazy to keep 100% stocks when I FIRE?

Post by mrnice404 »

HomerJ wrote: Tue Jul 09, 2024 1:59 pm
mrnice404 wrote: Mon Jul 08, 2024 5:01 am Goal & horizon: to bridge 10 to 15 years until pension kicks in :-)

the failure rate of a World portfolio with 100% stocks has over a 30 year period 6,2% failure rate, and a 60/40% portfolio 16%
What are the 10-15 year failure rates?
Haha. You are the only one who refers to the paper I posted. Nice.

Indeed. The paper discusses the typical 30 years retirement. Not the 15 years retirement (or actually withdrawal period) I am looking at.

What would your educated guess be? Would this decrease or increase the failure rates? I am guessing increase, because the impact of SOR is bigger? At the other hand, if I continue to work 3 years more, this has a bigger (positive) impact on a 15 year period than on a 30 year period (the cushion is relative bigger)
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