Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 05-08-2013, 05:10 AM   #21
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
We have very different risk profiles, ERD50. But I won't be shut up because you happen to disagree with me.

The "system" went bankrupt in 2008, remember ? And it has only been kept afloat after massive, coordinated, global interventions from central banks and governments. At taxpayers' expense. There is no evidence whatsoever that similar coordinated worldwide interventions will take place next time things go south. Is it propaganda to say that?

You can be as blunt as you want. Be as fed up as you wish.
[mod edit] Just check your BP once in a while :-) However, I will continue to express my opinion - which is as valid as any other forum participant's, including yours.


Quote:
Originally Posted by ERD50 View Post
I will be blunt - most of us are here to try to share/learn from good information with/from others on this forum. Why do you insist on repeating these unfounded, non-factual, misleading and dangerous assertions that equities are 'risky' to people who come to this forum looking for insights? What's the point?

If you personally are 'afraid' of equities, so be it, act as you see fit. But what use is that to others? And why tell others that they are 'too risky'?

I don't get it, but I'm fed up with this ongoing propaganda from you. Can you provide some useful information/data to the OP regarding AA?
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 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 05-08-2013, 05:18 AM   #22
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,580
Like holiday meals and family get togethers, we can learn to disagree without being disagreeable, and we should challenge each other in a way that is respectful, on topic, and appropriately impersonal.
MichaelB is offline   Reply With Quote
Old 05-08-2013, 05:29 AM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
steelyman's Avatar
 
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
In some other thread, I mentioned I've been selling lately, and that's true. That's just been to shift things from one pile to another since there seems to be the opportunity.

But in the original pile, I am firmly in stocks. I emerged from the womb a while ago.
__________________

steelyman is offline   Reply With Quote
Old 05-08-2013, 06:02 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
jollystomper's Avatar
 
Join Date: Apr 2012
Posts: 6,129
To the OP, the real issue is how much risk can you take. If 90% equities allows you to sleep at night fine, go for it. Personally I was 80-90% in equities in my 401K on "Black Monday" in 1987 (age 29) when I lost about 25% in one day. A lot of my co-workers my age panicked at their losses. I almost panicked but remembered that this was money I wasn't planning on touching for another 30 years so didn't change. Starting at age 40 I gradually shifted my equity allocation down as my risk comfort and age changed. But really only you can decide how much risk you are willing to take on. As you can see from this thread, as Sly sang, "different strokes for different folks".
__________________
FIREd date: June 26, 2018 - "This Happy Feeling, Going Round and Round!" (GQ)
jollystomper is offline   Reply With Quote
Old 05-08-2013, 06:07 AM   #25
Full time employment: Posting here.
cardude's Avatar
 
Join Date: Feb 2006
Posts: 599
I was usually 90-100 % equities at that age. I pretty much just blindly DCAd money into my chosen stocks at first not really knowing if they were "on sale" or not, then later when I thought I was smarter only put money in when I thought they were "cheap". Luckily I chose some decent stocks and didn't blow myself up.

In hindsight it may have been less risky to DCA into index funds and the return would have been similar. The key is dont stop plowing money in when everything falls and gets cheap. Easy to say but hard to do.

I would recommend your reserve 10% in cash and not bonds.
__________________
ER'ed from the new car business Feb 2008. I'm 47, she's 45. Two boys ages 15 and 13. DW is SAHM. I've got a part-time used car lot I w*ork at 3 hours a day that keeps me in beer money.....
cardude is offline   Reply With Quote
Old 05-08-2013, 06:11 AM   #26
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
A few people have emailed me in the past advising not to answer a specific individual. The main reason ? They don't want to get into arguments with him (or her). However, I believe I still have the right to express my opinion also without this same individual calling my conservative, low risk views as 'misleading' or 'dangerous' while millions of people have been financially devastated in the last few years by taking so-called 'risks'.
Quote:
Originally Posted by MichaelB View Post
Like holiday meals and family get togethers, we can learn to disagree without being disagreeable, and we should challenge each other in a way that is respectful, on topic, and appropriately impersonal.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 05-08-2013, 06:17 AM   #27
Full time employment: Posting here.
cardude's Avatar
 
Join Date: Feb 2006
Posts: 599
Quote:
Originally Posted by ERD50 View Post

So let's put some actual numbers to this - here are four FIRECALC runs. Two show a $100 portfolio, 26 years, zero spending to show portfolio growth during the accumulation phase that the OP is asking about. Two more show an inflation adjusted 5% contribution (typical of someone in the accumulation phase).

Worst case scenarios w/o contributions:

Zero equities does not even keep up with inflation over 26 years. OP would lose buying power w/o equities.

90/10 EQ/Fixed mix would ~ DOUBLE in buying power - worst case.

In what world is a worst case scenario of doubling your buying power, 'more risky' than losing buying power?

And the zero equities AA maxed out at about double, while the 90% EQ AA had lots of results moving into the $700 range.

Worst case scenarios with contributions:

Zero equities with 5% contributions only 'grows' to ~ $170 - which a loss in buying power from the starting portfolio plus contributions ($100 + $5*26 = $230), using a simple calc assuming no inflation on the contributions.

Worst case 90/10 EQ/Fixed mix with contributions would provide ~ DOUBLE the buying power of the zero equities portfolio.

And the more typical outcomes also favor the 90/10 mix by ~ 2x.

Now, what evidence do you have that a 90/10 mix is 'too much risk' for someone in the accumulation phase?

I will be blunt - most of us are here to try to share/learn from good information with/from others on this forum. [mod edit]

If you personally are 'afraid' of equities, so be it, act as you see fit. But what use is that to others? And why tell others that they are 'too risky'?

[mod edit]

Here's the first two charts (can only add 3/post, two to follow), Zero no contribs, 90/10 no contribs:

-ERD50
+2. This is good info. You are young and making decent money I assume. You SHOULD be mostly equities. Many of us here are OLD and making no money, so we have to hedge our bets somewhat.
__________________
ER'ed from the new car business Feb 2008. I'm 47, she's 45. Two boys ages 15 and 13. DW is SAHM. I've got a part-time used car lot I w*ork at 3 hours a day that keeps me in beer money.....
cardude is offline   Reply With Quote
Old 05-08-2013, 06:25 AM   #28
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,580
Directing our advice to the OP, keeping it impersonal and using the ignore function is a good way to keep the thread relevant, assertive and useful.
MichaelB is offline   Reply With Quote
Old 05-08-2013, 06:39 AM   #29
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
It is fair to say that views are quite widespread. I am in the minority in this forum for being over conservative. I also recognize that many here have had to take more risks to become financially independent - and they have my respect for this.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 05-08-2013, 06:44 AM   #30
Recycles dryer sheets
 
Join Date: Mar 2012
Posts: 388
For me, it's all about having a plan and sticking with it. I'm 62% equities with my target at 60%.....sure I wish I had more equities now that the market is running strong. I can also tell you that I wish I was more conservative back in 2009. I do my best to avoid making decisions based on short term market conditions, this isn't easy, I know....I do believe that any decision based on the current conditions is a recipe for disaster. Slow and steady wins the race when you have a long horizon ahead.
tdv2 is offline   Reply With Quote
Old 05-08-2013, 07:24 AM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
target2019's Avatar
 
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,682
Quote:
Originally Posted by Enjoy the Ride View Post
Our portfolio is 90% equity and 10% bond. This is for 401k and roth IRA so will be withdrawing in 26 years when we're 60. Back in 09, our porfolio dropped 40% and we were ok. Bought more into the market.

Assuming we will keep it in there until we're 60, does it make sense to increase bond allocation? It seems that the main reason for equity/bond is to decrease risk but, if we're ok with fluctuation in porfolio, doesn't it make sense to keep more in equity for higher overall return?

Based on the books I've read, 90%/10% seems too high so that's why I'm having this dilemma.
Some recommend your age in bonds or fixed income. Keep in mind that the range around the target percentage can be wide. For example, an adviser may write that 10% is a target, but 0-20% could be worth considering. This pdf has a reasonable graphic that explains the risk, and also how a "normal" investor's attitude might change over time.
target2019 is online now   Reply With Quote
Old 05-08-2013, 08:06 AM   #32
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 134
Quote:
Originally Posted by ERD50 View Post
The next two (Note that all these have different scales due to the FIRECALC formatting):

-ERD50
ERD50,

Hope it is OK to respond to your previous posting eventhough it apparently got deleted.

I understand what you are saying regarding 90/10 in the accumulation phase. What is your take once you are retired (or early retired)? I know there is no right answer, ie we are all different in terms of risk etc. But I respect your take on this issue. So, I am curious, would you stick with 90% once accumulation is done and retirement is starting or would you at that point change it to something else 80/20, 75/25 or whatever?

My current plan is to have 80/20 when retired but I am not 100% sure. It lowers risk (compared to 90/10), but it also lowers return. It seems like it lowers risk more than it lowers return and thus 80/20 might be a good compromise for me.

What's your view?

George
george76 is offline   Reply With Quote
Old 05-08-2013, 08:14 AM   #33
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,003
George76, if you don't have a pension, annuity or another 'bulletproof' source of income and can stomach an 80/20 or higher allocation in retirement, you've got a huge set of huevos. FIRECalc (see chart below) shows once you get to an AA of 40% equities there is little "upside" for going higher, and the volatility a larger slug of equities can make for a very bumpy ride.
Attached Images
File Type: gif stock allocation graph.gif (2.0 KB, 261 views)
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Old 05-08-2013, 08:25 AM   #34
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 17,773
Quote:
Originally Posted by Enjoy the Ride View Post
Our portfolio is 90% equity and 10% bond. This is for 401k and roth IRA so will be withdrawing in 26 years when we're 60. Back in 09, our porfolio dropped 40% and we were ok. Bought more into the market.

Assuming we will keep it in there until we're 60, does it make sense to increase bond allocation? It seems that the main reason for equity/bond is to decrease risk but, if we're ok with fluctuation in porfolio, doesn't it make sense to keep more in equity for higher overall return?

Based on the books I've read, 90%/10% seems too high so that's why I'm having this dilemma.

Thanks
First, you are a mere 34? Kudos for your focus on the future!

I am certainly afraid to give you my opinion on your question but I wonder if you have other investments outside the IRA and 401k and what the breakdown would be for your total stash? That might change the perception of risk.

I am pretty sure that at your age we had 100 percent of our nest egg in one stock--company stock at that. Wonder if that was a good idea (as soon as the plan opened up to other options we moved it out).
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 05-08-2013, 08:27 AM   #35
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,580
Quote:
Originally Posted by REWahoo View Post
George76, if you don't have a pension, annuity or another 'bulletproof' source of income and can stomach an 80/20 or higher allocation in retirement, you've got a huge set of huevos. FIRECalc (see chart below) shows once you get to an AA of 40% equities there is little "upside" for going higher, and the volatility a larger slug of equities can make for a very bumpy ride.
Nice chart. I thought there was a bit more improvement between 40% and 70%, but apparently it is less than I remembered.
MichaelB is offline   Reply With Quote
Old 05-08-2013, 08:30 AM   #36
Recycles dryer sheets
keegs's Avatar
 
Join Date: Oct 2010
Location: In a van down by the river
Posts: 407
Quote:
Originally Posted by heeyy_joe View Post
With a 26 year investment horizon I like a high equity percentage (maybe 80%). But remember, if the market tanks you don't sell! Also, consider always having a cash position - you have to have money at the bottom to buy at the bottom. Consider a 10% cash position.
+1
keegs is offline   Reply With Quote
Old 05-08-2013, 08:41 AM   #37
Gone but not forgotten
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 11,447
Quote:
Originally Posted by REWahoo View Post
George76, if you don't have a pension, annuity or another 'bulletproof' source of income and can stomach an 80/20 or higher allocation in retirement, you've got a huge set of huevos. FIRECalc (see chart below) shows once you get to an AA of 40% equities there is little "upside" for going higher, and the volatility a larger slug of equities can make for a very bumpy ride.
I have to agree with Rewahoo . I went into retirement in 2008 with 72/28 and got severely burnt . Luckily I had a pension and SS survivor annuity to keep me sane. I am at 60/30/10 now and I sleep fine.
Moemg is offline   Reply With Quote
Old 05-08-2013, 10:43 AM   #38
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 4,366
As long as you can get through the dips without selling, and with rebalancing into stocks at the least, you should be fine with 90% equities.

In addition to the 26 years you have until 60, you have hopefully a 30+ year retirement. You won't be selling all your equities at 60. Most likely your portfolio will be growing throughout retirement. Although the SWR doesn't increase significantly towards 100% stocks, the average final balance does. So there is a benefit to be had, either in the ability to increase spending later in retirement or to leave an estate.

I'm retired (DW will be I hope at the end of this year). I'm nominally 100% equities, though I raise cash when the portfolio is running ahead of retirement planning expectations. I'm currently about 85% equities/15% cash and bonds. If the market keeps going up I'll have even more cash. The cash will be reinvested in a bear market, or used for expenses if there is no bear. I'll only need to sell equities once the cash runs out and I'm back to 100% equities.
Animorph is offline   Reply With Quote
Old 05-08-2013, 01:27 PM   #39
Recycles dryer sheets
Felix Mulier's Avatar
 
Join Date: Feb 2013
Posts: 99
Quote:
Originally Posted by Enjoy the Ride View Post
Our portfolio is 90% equity and 10% bond. This is for 401k and roth IRA so will be withdrawing in 26 years when we're 60. Based on the books I've read, 90%/10% seems too high so that's why I'm having this dilemma.
ETR - don't know what books you've read, but I'm reading William Bernstein's The Four Pillars of Investing and highly recommend it. Since you're so young I think you'll get an education from the author's analyses of historical "Bubbles and Busts". Best of luck to you on the ride!
__________________
I generally avoid temptation unless I can't resist it.

Felix

Felix Mulier is offline   Reply With Quote
Old 05-08-2013, 02:05 PM   #40
Thinks s/he gets paid by the post
martyb's Avatar
 
Join Date: Nov 2006
Location: Bossier City
Posts: 2,183
At the moment, I'm 100% equities. However, I have 2 pensions cooking (55, not retired yet). Also, I'm pretty sure I'm about to change that equity position soon...
martyb is offline   Reply With Quote
Reply


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


» Quick Links

 
All times are GMT -6. The time now is 02:49 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.