Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
60/40 buy and hold - too conservative @ 50?
Old 11-28-2008, 09:03 PM   #1
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 63
60/40 buy and hold - too conservative @ 50?

So we have been doing the 60% equities and 40% bonds for the last few years, I am 49 and my wife is 51, plan to work 10 more years or so, is the ratio too conservative for our age? The 60% equities is split 50-50 US & International, large & small cap, all vanguard index funds. Your thoughts/comments welcome please.
__________________

__________________
tsturbo is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-28-2008, 09:13 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,036
I guess it depends on a few factors . Can you sleep at night with that split. How risk adverse are you ? and considering we just had our portfolios tested how did you feel ? I've always had a higher stock ratio usually 70 - 75% which was fine while I was working but now that I've retired I've gone more conservative.
__________________

__________________
Moemg is offline   Reply With Quote
Old 11-28-2008, 09:13 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Quote:
Originally Posted by tsturbo View Post
So we have been doing the 60% equities and 40% bonds for the last few years, I am 49 and my wife is 51, plan to work 10 more years or so, is the ratio too conservative for our age? The 60% equities is split 50-50 US & International, large & small cap, all vanguard index funds. Your thoughts/comments welcome please.
What kind of risk are you comfortable with? Do you have enough money to live on without taking any risk? There are many questions to ask yourself. Im sure others will chime in with more.
__________________
Notmuchlonger is offline   Reply With Quote
Old 11-28-2008, 09:28 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
Reality Check: all you need to do is look at your portfolio "in the worst of times". right now is some darn good data out there for that. you can use Morningstar for free to model your actual portfolio. then ask yourself if you are sleeping well now at 60/40 AA.

"What If" Exercise: make two copies of your portfolio. in one of them, change your stock stake in your AA higher to see your YTD loss. in the other copy, change your bond stake to a higher number. look very closely at 10 yr return data at both extremes.

Horror Scenario:
then imagine if the market took even more of a loss .
see what your gut feelings are. what numbers make you queasy?
then imagine if your job(s) went away. rinse and repeat - redo the Reality Check and What If and Horror. write down your queasy points.

once you find your queasy and comfort datum for AA, the answer will come.

FYI - i am FIREd. I am also a moderately risky investor, mutual funds only. i believe in Bogle's rule of age = bonds in your AA, whether w*rking or not. a lot of articles will tell me that sitting on a 50/50 AA at age 50 is just plain nutz. My YTD loss of only 26% in a ferocious bear at 50/50 AA tells me i'm not nutz for listening to Mr. Bogle.
You just can't argue with data.
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 11-28-2008, 10:51 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 1,905
Look at your YTD RR - if its a loss are you comfortable with it? if so, ratchet up stocks until no longer comfortable and back up a bit. Or maybe you are one of those sturdy souls that can deal with 100% stocks. Most studies show that will give you the highest return if your time span is long enough.

60/40 has served me well for several years now (ER'd since 2002) Down 21% so far this year. It's really not all warm and fuzzy to me but since my bond ratio has gone up am starting to rebalance. If you have a YTD gain, it would be nice to share what you have in your portfolio
__________________
ejman is offline   Reply With Quote
Old 11-29-2008, 12:42 AM   #6
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
60/40 is most likely 47/53 by now.
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Old 11-29-2008, 08:50 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by tsturbo View Post
So we have been doing the 60% equities and 40% bonds for the last few years, I am 49 and my wife is 51, plan to work 10 more years or so, is the ratio too conservative for our age? The 60% equities is split 50-50 US & International, large & small cap, all vanguard index funds. Your thoughts/comments welcome please.
Too conservative? Not in my view.

My split is 65/35. I came to that AA by going through a bunch of simulations with historic data. What I found is that upping the stock allocation beyond 65% starts yielding diminishing returns in terms of portfolio survivability but adds substantially to portfolio volatility.

As others have said, it's a personal decision. But I don't think you're sacrificing much by going with a 60/40 split.
__________________
Gone4Good is offline   Reply With Quote
Old 11-29-2008, 08:57 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 7,441
Quote:
Originally Posted by tsturbo View Post
So we have been doing the 60% equities and 40% bonds for the last few years, I am 49 and my wife is 51, plan to work 10 more years or so, is the ratio too conservative for our age? The 60% equities is split 50-50 US & International, large & small cap, all vanguard index funds. Your thoughts/comments welcome please.
If you can afford a 30% haircut, no. If you can't, yes.
__________________
Retired 3/31/2007@52
Full time wuss.......
Dawg52 is offline   Reply With Quote
Old 11-29-2008, 03:01 PM   #9
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
I was 60/40 and I'm now about 45/55. I'm 57.

I came up with my split because the 40% fixed (all CDs and govt MM) amounts the the cash needed to fund a decent retirement with SS and a small pension.

Since I'm expecting to have retirement thrust upon me in a few months or weeks, I'm not going to rebalance cash into equities. I'll maintain the cash level where it is. Mr. Market will have to rebalance me back to 60/40.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 12-01-2008, 01:39 PM   #10
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
I would look at the 60/40 at age 50 situation this way:

1) Know your annual expenses
2) does the dividends+interest of the 60-40 exceed the expense needs?
3) how much cash do you have (1 years expenses, 2 years, 3 years...)

You can modify all 3 variables to make sure you can sleep at night
1) you can always cut expenses
2) you can shift to more dividend paying stocks and higher yielding bonds
3) increase the cash if #1 or #2 was not comfortable. If you have 5 years expenses in cash and inflation bonds, then is #2 does not happen (dividends and interest from 60-40 do not meet expenses), you have the ability to live until the market returns help make #2 true again.
__________________

__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Will you still Buy & Hold ? Moemg FIRE and Money 58 11-27-2008 03:37 PM
SBUX: Buy,hold,sell gwix98 Stock Picking and Market Strategy 5 12-21-2007 10:29 PM
A serious question (for once), about the theory of buy and hold and down markets AirJordan FIRE and Money 60 03-12-2007 10:29 AM
Real Estate in Boston. Buy and hold? Sam Other topics 32 08-25-2006 09:41 PM
Buy and hold or market time? Dawg52 FIRE and Money 40 04-25-2006 03:37 AM

 

 
All times are GMT -6. The time now is 08:09 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.