Happy New Year- Resolutions

[unclemick]

Happy New Year

My one serious resolution - to bring 'doing nothing in paticular' to a new and higher level of whimsical.

Under consideration- not watch the market everyday, get balanced index back toward 80% of my portfolio, spend more money(now over 59 1/2), start going fishing again, volunteer for something, etc.

Quote:

get balanced index back toward 80% of my portfolio

Unclemick,

I think it was you that was recommending Swedroe's Book. In it he recommended the 4 or 5 assest classes rather than a Total Market Index fund. Are you avoiding having 4 or 5 funds for simplicity sake or do you doubt Swedroe's conclusions?

I am currently setting up an investment plan and have looked at Vanguards Index Funds in these 4 areas. Large Cap Growth Index, Large Cap Value Index, Small Cap Growth Index, Small Cap Value Index - as well as an Intl. Index Fund.

[frugal]

Hi cutthroat,
just something to consider re: small cap investing. I think Vanguards funds are very good, but I have been very happy with the results of my small cap etf (IJR). At this point it has outperformed the vanguard funds for the last year and if you are not dollar cost averaging it may be worth considering.

[cute fuzzy bunny]

New years resolutions:

- Lose about 30lbs. In my old "work life" I was always running around and missed a lot of meals, while in my new "fart around life" I've become a very good cook and heavily sample my own wares. I'm currently in the 10th trimester with a "food baby". Fortunately I love to rollerblade and my new digs are a few blocks from a paved bike path. My old house was in a VERY hilly area and I like my bones unbroken. Now to get back into it. I'll also have to break out my kayak and try out the local (slow moving) river. If anyone hasnt tried kayaking and you have a lake, pond or slow moving river nearby, do it. A cheapo model with a good paddle costs under $200. If you find those too heavy, I've seen people in their 70's and 80's paddling around in the extra heavy duty inflatable ones. Dont worry about tipping, i've tipped over once and I was fiddling around when I did it, so it was self induced. Great upper body exercise.

- Walk my dogs more. I used to do this a lot, but in my new neighborhood many of the neighbors have decided that the leash laws dont apply to them and leave their fido's to run loose. While its certainly an adrenaline rush, having two huge dogs run at you and your two leashed dogs full tilt and not knowing their intentions isnt my idea of a good time. I'll need to find a good place to take them. Its good exercise for both of us.

- Get my big fat lump of cash fully invested.

- Simplify my life further. I bought a fun little book called...guess what..."simplify your life". Highly recommended for us ER folks. Some of it is over the top, but its a good little read. I need to lose one of my two cars. I still have way too much junk I use once or twice a year. I dont need two sets of golf clubs.

- Watch TV less. I bought a damn Tivo a couple of years ago and it turned me into a tv watcher. Before I couldnt be bothered to structure my life to get in front of a tv at the time the network started a show, and when a commecial came on I sometimes wandered off and never returned. Tivo changed that, it now dutifully records dozens of tv shows for me every day. The good side of it is that I used to have Directv with every channel at about $80 a month, just so that when I sat down there'd be "something on". With the tivo all I need is just basic cable, and if I could get good antenna reception, that'd be enough "source material" for the tivo to fill up with stuff thats worth watching. But where I used to be a "movie a night" and weekend sports watcher, I now watch way too many regular tv shows. I need to substitute more reading, more dog walks, and more kayaking and rollerblading.

- My girlfriend on looking over my shoulder at this just told me I need to kiss her more often. No problem with that. I didnt even wait until new years.

Thats probably enough for this year.

[unclemick]

Cut-Throat

Sorry-I'm the Boglehead with the Lifestragety funds(70+ percent). Also dibs and dabs of REIT index, High yield corporate and a super tiny drop of sm cap value index.

Leaning toward even simpler - ? target retirement - 2015 or the plain old 60/40 balanced index - Although Ted's posts are giving me second thoughts about selling REITs and high yield corp.

Haven't read Swedrow but I'm sure there is more than one way to skin a cat.

Hello cut-throat and unclemick. I agree that Ted is
very thoughtful and persuasive. However, I have to go my own way regardless. (stubborn??). While I have
been blindsided a lot in my personal life, I have rarely
had any big surprises in my investments. In spite of
visiting this site almost every day, I have no better
understanding of why so many ERs load up on stocks.
It's a complete mystery to me.

John Galt

[Billy]

John,
The reason I have "loaded up" on stocks, and continue to hold them is because of my ER lifestyle...the liquidity makes it so I can run around the world, without dealing with tenants, repairs, etc. Some of these I have owned for 25 years. Also, I think there's more risk in not owning them.

But hey, if we were all the same, it would be a dull world..right?

Happy New Year.

Billy
Web-site http://www.geocities.com/ba264

[unclemick]

I think us stock owners are just long winded in adition to the usual reasons cited for stock ownership.

Bonds are 'boring' to talk about?

Real estate and fixed income instruments are perfectly good ways to make it in ER. I read a lot of RE books in the 60's and 70's while stocks were out of favor.

Hello Billy and unclemick. Bonds "boring"??
Nonsense! Try telling a bond fund manager that.
And even if they are, for this ER eliminating
all common stocks makes it sooooooo much easier
to allocate and make investment decisions.
Always easier if you reduce your options. Too many
choices can result in paralysis, or worse.

Re. my preference for long term bonds and real estate,
I currently have no tenants to bother with and may never again. Also, I keep plenty of liquidity to insure
I can take off on my "adventures" whenever I wish.
This is why I mentioned before that I will be buying no
more long term bonds for a while. Baring disasters,
I have plenty of available cash to indulge my ER dreams, without
liquidating any bonds, nor currently held real estate.
It's a nice position to be in.

John Galt

And another thing .

I asked this question before. I have a great aunt
(widowed) in her 80s. Not wealthy. Last I heard she was still heavily into common stocks. I know this because she took a big hit during the most recent
"unpleasantness". Question................Why would someone of that age and in those circumstances still
be in stocks? Bad advice? Can someone explain this to
me? If I no longer have a "long term" to work with,
she certainly does not. What's the deal there?

John Galt

[unclemick]

? She didn't buy - she got sold?

I put my widowed mother at age 77 into Lifestragety income. Now at age 87 - I'm leaning toward 100% fixed income and eliminating even the small equity component in that fund.

John Galt,

The reason that I have stocks in my portfolio is very simple. It provides the only 'safe' means of achieving real growth over 20 year horizon. I need real growth to keep up with inflation and sustain my 'desired' standard of living.

When and if I hit 80, I'll still own stocks, but I use the 110 - age percentage. In other words by then I'll pare my holdings down to 30% stocks.

Stocks are not risky if you use passive index funds among different asset classes and have a long term horizon. Most investors get burned by selling in bear markets and buying in Bull Markets. If you sell stocks to maintain your correct asset allocation, it reverses this process. Discipline and Patience is all it takes.

Of course if I had $10 Million, I might just put it in T-Bills and relax. I'm sure I could scrape by on $300K a year

Hello cut-throat! I do not agree with your statement that stocks provide "the ONLY safe growth over a 20 year horizon." You're a smart guy. I'm sure if you
think about your statement you can see the flaws.
How about real estate? How do you define "safe"?
Anyway, I agree with the rest of it. Having a big pile of cash to work with sure would make things easier.

BTW, yesterday my broker and I were discussing
IRA withdrawal options. He says, "Of course, when
you are 70 and 1/2 you have to start taking it."
There was a pause. Then he says, "But you don't
plan to be here then do you?" Guy knows me pretty
well .

John Galt

[wabmester]

If you believe that the stock market is efficient, and that stock prices actually reflect some underlying value based on future dividend payouts (or future earnings if you believe that a company's management can make smarter investment decisions than you can), then stocks make sense. Unfortunately, stocks have become a speculative circus and the prices are driven by clowns and crooks, so I try to stick with investments that behave rationally and somewhat predictably.

Hi John Galt,

I put Real Estate in the same category as Stocks, providing that you own a REIT Index Fund. And your portfolio is not 100% into REITs, just like any other asset class. And I do own a REIT Index Fund.

Owning an Individual Property is considered more risky than owning an Individual Stock because the Stock is more liquid - The Real Estate - well; you have to find a buyer.

And I do not recommend owning Individual Stocks for a retirement portfolio,(Although I have some play money here as Unclemick does) nor would I recommend owning individual properties(I have some play money here also - 40 acres of woods close to the Twin Cities) for a retirment portfoilo. Too much Risk - more so with the real estate!

These are not my opinions, but are 'facts' based on the last 100 years of history.

[Jarhead*]

John Galt & Cutthroat:

I enjoy your exchanges (cats & dogs).

John: Regarding your statement that you do not understand why the posters seem to be overloaded on stocks, it is my impression that most of the posters on this board seem to be pretty conservative, and are merely using stocks as an asset class to achieve better long term results, than going to a strictly fixed income approach to their long term plans.

[Jarhead*]

John Galt & Cutthroat:

I enjoy your exchanges (cats & dogs).

John: Regarding your statement that you do not understand why the posters seem to be overloaded on stocks, it is my impression that most of the posters on this board seem to be pretty conservative, and are merely using stocks as an asset class to achieve better long term results, than going to a strictly fixed income approach.
Cutthroat: I enjoy most of your posts, but I also find your comments regarding other peoples preferences to be a little smug. (A little more time and experience will take care of that). Your remark about stocks being the only safe investment over a period of time sticks out.
Our world is a much different place now than it was for the last 100 years, and while I agree that one should have some exposure to equities, it is not the only safe bet.(What is, I certainly dont know)
Have a good day, and go to your nuetral corners.

[Bob_Smith]

John Galt,

I find your posts very interesting. Hearing another viewpoint keeps me thinking. Would you be willing to share your current allocation? If I could figure out a way to avoid the stock market and survive for 30-40 years, I'd jump out of stocks in a heartbeat. I just can't figure out how to do it. Thanks.

Bob_Smith,

I think it was Ted that once said

Quote:

If you go to FIRECalc, you find that a portfolio of 100%TIPS yielding 2.4% (with no expense charge) would have sustained a 4% withdrawal, inflation-adjusted, for 30 years in 100% of the trials.

If I get to this position in the next 10-20 years, through sale of my property at a bigger profit than I expect or another windfall. - I would consider this route especially after age 65-70. And at that age you could probably sustain a 6% withdrawel rate.

I'll run those numbers evey 5 years or so. The more money that you have the easier the planning gets. (As long as you don't increase your standard of living)

We don't plan on changing our standard of living
in the future, unless forced to by circumstances.
Sooooooo, we could cut back, but we have certain
limits beyond which we don't intend to go. I confess
this is partly the result of "livin' large" for many years.
My wife is more adaptable. I have to maintain a
certain lifestyle, only limited by my determination
never to work again. I have long believed you could live with style, even if you no longer had a six figure income.

John Galt