2018 Strategy

[HI Bill]

So, really 95/0/5; with concentration of 24% of your portfolio in a single stock. At 2 yrs from FIRE & today’s market valuations, that’s pretty [-]ballsey[/-] confident in my book.

- maybe 'risky' is a better term than confident. If the market tanks in the next couple of years, I may delay the FIRE date. My ESOP is only valued annually, so I'll need to wait until March to see how it did last year...it almost never keeps up with the market. Thanks!

 

[HI Bill]

One thought that I would like to throw out especially for newbies to investing who might not realize there is something called Sequence of Return Risk.

Yes, the 10% failure rate that FIRECALC is giving me is all about the sequence of return risk! I'm not exactly a newbie to investing...I've been in the markets since 1993, and have looked at historic returns and sequences going back to the 1920s. There are three main assumptions that I've been making, which may or may not turn out to be accurate:

1) The FED will continue to do a decent job of regulating the $. We should never again see a great depression (this assumes that at some point, Congress actually controls spending, before we become another Greece - if that happens, all bets are off).
2) Bond returns will never return to more than 5%.
3) WWIII doesn't happen in my lifetime (or hopefully, anybodies).

One thing left out of my post is that for the first couple of years, I plant to sell my home, and rent in a foreign country...without touching my equity investments.

 

[shortstop14]

I'm planning to rebalance in January to get back to my planned 60/33/7 allocation, which gives me two years of living expenses in cash - holding the course for now. The tax bill doesn't affect us much at this point, since we're keeping income low for ACA subsidy purposes, so federal tax is minimal. It is getting harder to generate cash without taking capital gains, which could eventually make it harder to keep income at the subsidy sweet spot. Still have 4-5 years to bridge to Medicare.

If the ACA or subsidies disappear after next year, I'll retrench and start doing Roth conversions to the top of the new 12% tax bracket.

I ended up with a mixture of taxable and tax-deferred accounts, mostly because I didn't like the investment choices in my company 401(k), so I only funded that up the match percentage and saved the rest in taxable accounts. This had provided some useful flexibility.

 

[imoldernu]

Keep all 2000 to 2003 IBonds. Different rules on limits in the early years.

 

[Huston55]

Will remain 60/40 for 2018; same AA as the past few years since FIRE.

Have also had to rebalance a few times this year to maintain 60/40 (actually 60/35/5ish). Only significant move is selling equities in Dec 2017 in our taxable account to capture zero tax LTCG, then using the proceeds for 2018 expenses + CD ladder rungs.

PS: Do have to admit though that I’ve considered moving to 50/50 several times this Fall/Winter. But, decided to hang in @ 60/40.

Done.

Spilled over the edge of the ZERO LTCG Bucket a little bit but, no worries.

 

[VanWinkle]

I'm planning to rebalance in January to get back to my planned 60/33/7 allocation, which gives me two years of living expenses in cash - holding the course for now. The tax bill doesn't affect us much at this point, since we're keeping income low for ACA subsidy purposes, so federal tax is minimal. It is getting harder to generate cash without taking capital gains, which could eventually make it harder to keep income at the subsidy sweet spot. Still have 4-5 years to bridge to Medicare.

If the ACA or subsidies disappear after next year, I'll retrench and start doing Roth conversions to the top of the new 12% tax bracket.

I ended up with a mixture of taxable and tax-deferred accounts, mostly because I didn't like the investment choices in my company 401(k), so I only funded that up the match percentage and saved the rest in taxable accounts. This had provided some useful flexibility.

I feel for you, I'm 22 months from Medicare and DW is 28 months. No one knows what will come next year, but I know we need Medical Insurance and will pay what is needed to get it. Flexibility has also proven valuable for me.