What have you learned from this situation that you will take action on?

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tetractys
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Re: What have you learned from this situation that you will take action on?

Post by tetractys » Wed Mar 25, 2020 12:01 am

Well I’ve just learned that EF=Emergency Fund, right? And this thread has prompted me to check my toilet paper supply, which is at 1.3 rolls. Seriously though, what I have learned is that I’m not quite as secure financially as I had felt a few weeks ago. What one thinks they see can actually be quite unsubstantial. Now I’m a bit more humbly optimistic that the next year and a quarter of saving will provide for a secure retirement.

And I’ve learned to relax more on the investing front. I’m taking extra time before doing some tax loss harvesting. And I’ve waited until this week to do any rebalancing, which is slowly progressing one tax deferred account at a time.
Last edited by tetractys on Wed Mar 25, 2020 12:10 am, edited 1 time in total.

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dmcmahon
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Re: What have you learned from this situation that you will take action on?

Post by dmcmahon » Wed Mar 25, 2020 12:08 am

I learned that vodka does not go well with cookies.

On the serious side, I confirmed several things:
- bonds pay so little that there is no point in taking any risk
- the buckets approach ensures no worries about meeting cash needs for a good long time
- you may need to confront the possibility that your stock allocation could go down a lot
- being diversified helps
- having a paid-off house helps too
- having an allocation to cash helps
- having hard assets with real intrinsic value helps (though hard to invest)

And I learned:
- even munis have non-zero risk
- you can't substitute high yielding stock funds for bonds even if you're prepared to tolerate the price fluctuations
- you may need to confront the possibility that the stock position could go all the way to zero
- international stocks suck
- don't get caught with your pants down (in the middle of some portfolio changes or transfers) when TSHTF

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tetractys
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Re: What have you learned from this situation that you will take action on?

Post by tetractys » Wed Mar 25, 2020 12:19 am

dmcmahon,

Thanks, I’ll remember to always invest with my pants on far away from any fans.

palanzo
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Re: What have you learned from this situation that you will take action on?

Post by palanzo » Wed Mar 25, 2020 12:29 am

watchnerd wrote:
Mon Mar 23, 2020 8:40 pm
Absolutely most important thing I've learned that I will take action on:

Pancetta is in short supply under lockdown.

But you can still make spaghetti carbonara using:

SPAM
You absolutely cannot :oops:

index245
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Re: What have you learned from this situation that you will take action on?

Post by index245 » Wed Mar 25, 2020 12:35 am

I now prefer a taxable account for college saving over 529 plans. I like 529s, they are a great vehicle for education savings.

However, 529 plans feel like quite the luxury when your job is at risk. Taxable accounts are far more liquid and functional.

m@ver1ck
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Re: What have you learned from this situation that you will take action on?

Post by m@ver1ck » Wed Mar 25, 2020 12:42 am

index245 wrote:
Wed Mar 25, 2020 12:35 am
I now prefer a taxable account for college saving over 529 plans. I like 529s, they are a great vehicle for education savings.

However, 529 plans feel like quite the luxury when your job is at risk. Taxable accounts are far more liquid and functional.
There is the additional risk with 529s - that the market will crash badly in the year you need the money - and withdrawals are only taxfree if you make them in the year you spend the money / making them riskier
Still - I TLH’d from taxable into 529 - I’ve got a 3 and a 9 yr old...
I’ll probably put in 30K into both accounts this year / and not out anything else into it ever.

Dfree
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Re: What have you learned from this situation that you will take action on?

Post by Dfree » Wed Mar 25, 2020 2:45 am

I can tolerate a hard decline and getting laid off with 90/10 AA, as long as my 12-month EF is solid. I hope to work another 20 years, so a temporary drop in equities doesn't matter to me.

This opinion will be different if I'm still unemployed and social distancing after a year.

Sadly, this crisis is just getting started. My heart hurts for what is coming for NYC in the next few weeks.

Planner01
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Re: What have you learned from this situation that you will take action on?

Post by Planner01 » Wed Mar 25, 2020 3:22 am

I’ve learned that I need 2 years worth of expenses in an emergency fund.
That I need to shift to an 80/20 asset allocation.
That we need to focus and hurry up to payoff our house. That will make a huge difference in our quality of sleep. Hopefully in the next 4-5 years we will achieve that.

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market timer
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Re: What have you learned from this situation that you will take action on?

Post by market timer » Wed Mar 25, 2020 3:24 am

Staying home with my wife and kids all day, I'm realizing how much family time I have missed by working. I'm also starting to realize that I was burnt out and didn't very much like my colleagues. So now I am not sure if I will ever return to work again. A severance package may be just what the doctor ordered.

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Harry Livermore
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Re: What have you learned from this situation that you will take action on?

Post by Harry Livermore » Wed Mar 25, 2020 6:33 am

m@ver1ck wrote:
Wed Mar 25, 2020 12:42 am
index245 wrote:
Wed Mar 25, 2020 12:35 am
I now prefer a taxable account for college saving over 529 plans. I like 529s, they are a great vehicle for education savings.

However, 529 plans feel like quite the luxury when your job is at risk. Taxable accounts are far more liquid and functional.
There is the additional risk with 529s - that the market will crash badly in the year you need the money - and withdrawals are only taxfree if you make them in the year you spend the money / making them riskier
Still - I TLH’d from taxable into 529 - I’ve got a 3 and a 9 yr old...
I’ll probably put in 30K into both accounts this year / and not out anything else into it ever.
But this is exactly why you change the AA as your child starts closing in on the college years, yes? When my kids were infants/ toddlers/ little guys, their 529 and Coverdell funds were in the S&P 500. When they hit middle school, I rotated the funds into Balanced or whatever similar option the plan had. When they hit high school it all went into cash/MM or "Interest Accumulation" fund. Sometimes I would keep the new monthly contributions going into the previous, "riskier" product, figuring that the contributions during the high school years represented the senior year of college's expenditures (yes, the dreaded "bucketing") In fact I did that with my daughter (now a high school senior) but sometime during her junior year I transferred all the funds in the all stock fund into the Interest Accumulation fund, where the previous 17 years' worth of contributions were. Now: 1. I got lucky with timing but: 2. 3 years' worth of contributions was a small percentage of 17 years' contributions and earnings, so even if I had waited until this month to do that, it would not have hurt too much. In fact, at this point I probably would have left that money there and directed future contributions to the MM fund.
The share value of both older kids' 529s have gone UP a penny or two as this crisis has unfolded.
Cheers

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dmcmahon
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Re: What have you learned from this situation that you will take action on?

Post by dmcmahon » Wed Mar 25, 2020 10:15 am

On the non-financial side, which may be more important...

What I already knew/did:
- have at least a month of basic consumables on hand at all times
- keep the car full of gas, never below 1/2 tankful
- have recurring bills automatically paid
- stay on good terms with your immediate neighbors, you may need each other
- have some way to defend your home or neighborhood just in case things get ugly

And what I am now learning:
- don't count on your health club for your fitness, have a home gym if you can
- have an emergency solar/battery power option to keep small devices running
- what you can and cannot do when preparing and freezing food
- have a bug-out plan
- being alone sucks

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yangtui
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Re: What have you learned from this situation that you will take action on?

Post by yangtui » Wed Mar 25, 2020 10:19 am

That the best time to plan for the inevitable turbulence is when times are good. I learned this good and hard during the GFC. The steps that I have taken over the previous 11 years have really helped to put me in an excellent position today.

fasteddie911
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Re: What have you learned from this situation that you will take action on?

Post by fasteddie911 » Wed Mar 25, 2020 10:21 am

index245 wrote:
Wed Mar 25, 2020 12:35 am
I now prefer a taxable account for college saving over 529 plans. I like 529s, they are a great vehicle for education savings.

However, 529 plans feel like quite the luxury when your job is at risk. Taxable accounts are far more liquid and functional.
Feel the same, for awhile now. I am likely doing taxable/cashflow for college. You never know what life may throw you.
Last edited by fasteddie911 on Wed Mar 25, 2020 10:26 am, edited 1 time in total.

greenflamingo
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Re: What have you learned from this situation that you will take action on?

Post by greenflamingo » Wed Mar 25, 2020 10:23 am

1. When I approach retirement, if I've 'won the game' or 'reached the number', I'll be moving into FDIC insured assets. Maybe ~5 years of expenses in cash/CDs when approaching retirement. I can handle the drop now 20+ years out, but I'd be bothered by this if I wanted to retire soon.

2. I've made notes of 'what would I time' with this volatility. I wouldn't be winning, and the thought of making those decisions makes me anxious. So I'm not a market timer.

MindBogler
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Re: What have you learned from this situation that you will take action on?

Post by MindBogler » Wed Mar 25, 2020 10:44 am

I have had approximately 6 months of emergency funds available. I think I am going to build a CD ladder and keep at least 1 year of expenses.

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Elsebet
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Re: What have you learned from this situation that you will take action on?

Post by Elsebet » Wed Mar 25, 2020 11:08 am

I already had a pretty full pantry and I am pretty consistent about keeping it that way.

I did learn that my emergency fund, while fairly large, feels much smaller in this situation. I will probably increase it a bit going forward.
"...the man who adapts himself to his slender means and makes himself wealthy on a little sum, is the truly rich man..." ~Seneca

Stick5vw
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Re: What have you learned from this situation that you will take action on?

Post by Stick5vw » Wed Mar 25, 2020 4:04 pm

What comes to mind for me

1/ happy to have trimmed most of the fat from our budget over the last few years, so burn rate is low

2/emergency fund is 6 months but may need to take that up to 12. Because of 1&2 happy that I don’t need to be a forced seller - though I do wonder how long I’ll be in the red.

3/discovered a 85/15 portfolio may be a bit too risky for my tastes (feels great on the way up but the last few weeks have been tough!) - may dial back to 80/20 or 75/25

4/ similarly, I wish I had done some more DCA over the last several months. Put a healthy chunk into the market very shortly before it all crashed, and perhaps could have spaced it out a bit better.

5/ wonder if my FI allocation ought to be optimised better. Basically in cash + short duration/agg holdings. A big Treasury allocation would have paid off handsomely.

6/ used this down time to think a bit more “long term”. What will the world look like when the dust settles from this? Feels like a seminal event like 9/11 or GFC where big shifts happened in terms of our life and the economic/investment landscape. What opportunities will exist going forward? Really hard to do, something I’m not totally used to, but a worthy exercise

7/ life wise, all of this is a big reality check. Awful to see some of the news flow and now appreciate what I have. Take being able to go outside for granted, even walking in the park or grabbing a bite in a restaurant would be a welcome distraction now. And really tough to have my 3 year old stuck inside for so much of the day.

8/ May look to have more food stocked in the kitchen going forward. Going to the supermarket when it opens at 7am only to find that basics still haven’t arrived is distressing.

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BogleFanGal
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Re: What have you learned from this situation that you will take action on?

Post by BogleFanGal » Wed Mar 25, 2020 6:37 pm

anon3838 wrote:
Tue Mar 24, 2020 9:09 am
Sheepdog wrote:
Tue Mar 24, 2020 8:50 am
I learned 'that what I learned and took action on during the Great Recession of 2007-08 is working this time so that I don't need to do anything more.

I lived off of my investments then as I do now.. That was tough as I had to sell stocks and bonds when the market was dropping. I wrote then on this forum,
"When a person must take distributions to meet expenses, and I do monthly, an adequate "cash" account should be maintained so that they don't "have to" sell at market lows. Keep a sizeable cushion. I am doing what I said I would do.....I maintain the "cash" account from which I take distributions at a minimum of 3 years of normal distributions. When the next big downturn occurs, and it will, I will not have to sell any investments for at least 3 years. I won't get caught again. "

You know what? That IS working.
Sheepdog,

The thread you are referring to is pure gold on this forum, and IMO, every investor should read it in its entirety.

I read the thread in late 2019, and it was a game-changer for me. In January 2020 I went from 100% equities to 70/30; 30% bonds is equivalent to ~7 year's living expenses for me, and I'm still in the accumulating phase.

Thank you again, I hope you and your wife are doing well.
+1 - that thread gave me reassurance that it was ok not to go guns blazing into 70-80% equity despite what others my age did. I lived through the 2008-2009 mess, but those scary days dulled with the passing years - your thread was so valuable in revisiting that time and setting a more appropriate AA.
"Life would be infinitely happier if we could only be born at the age of eighty and gradually approach eighteen." Mark Twain

WL2034
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Re: What have you learned from this situation that you will take action on?

Post by WL2034 » Sat Mar 28, 2020 12:32 am

I learned about myself that I don't panic sell. I rebalanced after the market dropped 20% and felt fine after it dropped another 10-20%. Bought more in taxable closer to the bottom after another drop. It didn't (and still doesn't) feel good, but I've been able to stick to a plan. I feel some envy when I see the posts of others who had the foresight to sell at the top (whether by luck or wisdom), but I realize that I didn't have the ability to do so and it's not part of my IPS. I don't plan to be able to do it in the future.

In general, this reinforced the old adage, "When you've won the game, take your money off the table." This happened rather suddenly and not many people were predicting it 2-3 months ago. It seemed maintaining an aggressive AA was all the rage at the end of 2019. As the first sharp decline I've lived through as an investor, I have a new appreciation for increasing stable assets when nearing retirement.

Cat Herder
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Re: What have you learned from this situation that you will take action on?

Post by Cat Herder » Sat Mar 28, 2020 5:08 am

I'm going to increase my EF over time. I figured 3ish months would suffice given the perceived security of my job, but with all elective surgeries postponed I'm going to have to hustle and step way outside of my comfort zone to get enough work.

I intend to slightly decrease my bond allocation in my retirement accounts, though with the increased money in my savings account it'll be a bit of a wash. I think I could stomach the risk of 100% equity, at least for a few more years until I get some more grey hairs, but I think there's a benefit to having at least a little in bonds for smoothing things out.

Always have the stuff you need for your favorite drinks. When stuck home alone with your cat there's not much to do on days off (or while quarantined) other than day drink and mess around on the internet. Not being able to get outdoors and enjoy nature is really bad for me mentally.

dknightd
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Re: What have you learned from this situation that you will take action on?

Post by dknightd » Sat Mar 28, 2020 7:47 am

I learned I need to read thread titles more carefully. Or was "that you can take action on" added while I was reading? Action: read thread titles more carefully before reading whole thread and responding.
I'm learning lots of stuff, and will continue learning, I like learning. Action: continue.
I'm learning my plan is working so far. Action: continue following the plan.
I'm learning my kids have mostly learned to take care of themselves. Action: continue to help as needed, and help them learn.
I'm learning my wife trusts our retirement plan and is continuing to spend as normal. Action: keep an eye on it and let her know when we need to cut back.
I've learned the government can make $2 trillion appear at any time. Action: Not sure yet.

edit: I've learned we might get $2400 from the government. Action: Make sure we do not need it, then look for people who really need it. Or give it back to the government!
Last edited by dknightd on Sat Mar 28, 2020 8:06 am, edited 1 time in total.
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds (or none) from the market, invest the funds.

Olemiss540
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Re: What have you learned from this situation that you will take action on?

Post by Olemiss540 » Sat Mar 28, 2020 7:55 am

Most posts on here speaking of increasing their emergency funds as a "lesson" really should consider just revisiting their asset allocation as a lesson.

If you are 90/10 and now all of a sudden feel like having 6 more months in your emergency fund, you probably should have been at 75/25 to begin with. Bonds are meant to cushion portfolio values during downturns but also as a spending mechanism for 5 year or shorter purchases with stock investing only 7 years out.

If you have 5 years worth of expenses in bonds, there should never be a need to sell stock shares at a loss. There should also not be a need to worry about ones cash position.

Now this also needs to consider the riskiness of ones bond position (which is a different lesson entirely), but being diversified (just as one is with stocks) between treasuries and a mix of bond durations should insure enough security while also not watching your cash erode due to inflation.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

MnD
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Re: What have you learned from this situation that you will take action on?

Post by MnD » Sat Mar 28, 2020 10:18 am

Since this is in personal finance I'd have to say I learned nothing other than to note a lot of people clearly don't have a plan or can't stick to their plan. Having a 4 short sentences IPS that covers rebalancing and includes a retirement income plan has been a great help to me.
Had a little fun with TLH'ing which my plan is silent on and figuring out the most efficient way to rebalance so that gave me something to "do".
Our approach to cash flow management, banking, credit (charge everything but carry no debt) etc. is all working fine.

Not changing a thing other than to likely participate here quite a bit less going forward.
The people needing help get _plenty_ of help. Meanwhile on the flip side I didn't really take away anything useful in terms of investing or personal finance from here in even a very unusual downturn. That wasn't the case for me X years ago so that indicates to me I can apply my quota of screen time more usefully elsewhere. I'm running a lot again (almost 40 miles per week) and rejoined a running forum yesterday that includes off-topic threads and learned a lot of very useful things in less than 30 minutes.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.

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