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Old 06-20-2013, 04:21 AM   #121
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That is the paradox - if you are eligible for a good COLAd pension then you can take more risk because an investment loss would not affect your lifestyle as much, but on the other hand, you could be more conservative because you don't need to take more risk to have your income keep up with inflation.

Same thing occurs if you have a very low withdrawal rate.

To me, at that point it becomes a matter of personal preference (and my preference would be more risk).
+1

I have pensions (non-COLA) and SS due from both UK and US. This means a nice low WR from savings so I don't feel we need a lot of risk so keep the mix at ~40/50/10 and over the last 4 years have found that the dividends have been sufficient so far.

Long may it continue.
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Old 06-20-2013, 05:42 AM   #122
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Old 06-20-2013, 07:50 AM   #123
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I apologize as I did not mean that I am hiding money. What I meant was that I hide from others - except from this website - the fact that I am wealthy, whatever "wealthy" means. I drive a Subaru, own a small condo, always wear cheap clothes, etc. I do not want to attract attention. However, all my income here and in the EU is declared to the IRS.
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To you second point of hiding money, pretty much impossible for a law abiding resident of any large advanced nation. Unless you have underworld connections, If your wife wants to find your money, she will- and the government is a lot better at this than most wives.

Ha
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Old 06-20-2013, 08:33 AM   #124
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I apologize as I did not mean that I am hiding money. What I meant was that I hide from others - except from this website - the fact that I am wealthy, whatever "wealthy" means. I drive a Subaru, own a small condo, always wear cheap clothes, etc. I do not want to attract attention. However, all my income here and in the EU is declared to the IRS.


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Old 06-20-2013, 09:35 AM   #125
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Your GPs would hardly have been better off with cash, unless it was USD or CHF. In fact, taking a real 1-2 punch Germans went through the ruinous Weimar inflation, then unconditionally surrendered after years of a costly losing war. If a German or Austrian could not get money to America or Switzerland, they would have been much better served by investing in equities than in bonds or cash. Better yet rare stamps or rubies or who knows what all. Much of German industry was eventually destroyed, but never was it worth less than hoarded Reichsmarks.

To you second point of hiding money, pretty much impossible for a law abiding resident of any large advanced nation. Unless you have underworld connections, If your wife wants to find your money, she will- and the government is a lot better at this than most wives.

Short term, cash best, short duration high class notes 2nd- but over the long term, in our modern world, for most people owning productive, efficient, well managed assets will always dominate.

Ha
I think there is a misconception that one could have done well holding on to equity from WWI in Germany even through to WWII and been better off. In 1948 virtually every company in Germany was dismantled and the stock market fell to 0.76 pts, down 98% as the United States implemented the policy to close all large industry in Germany to prevent any rebuild of war works.
If you were born in 1890 in Germany and survived your 20's by singing Christmas carols to the Brithish across the trenches and made it to 1948 somehow by to that point at age 58 you would have seen 2 occasions where all stock value was literally wiped out. To take money you earned from that point forward and put it into the new companies formed after WWII was very hard for most Germans who as a country are now very risk adverse. Anyone who would have had 20 years of salary saved in the stock market would have a couple months worth of salary in 1948 when the German economic recovery began. If you lived in East Germany, the Soviet Union took possession of all equity so you were wiped out on there as well. Gold and bonds denominated in goldmark repayments were the only instruments that made it through that period with any value. So I do not think there are many actual succesful German stock investors holding stocks from 1914 to 1948 in Germany.

Incidentally, you can open a gold depository account in several institutions in Australia and there is no need for reporting to the United States government or anyone else for that matter so long as the gold remains on deposit as there is no income earned on that holding. Nothing illegal about that at all.
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Old 06-20-2013, 12:49 PM   #126
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I think there is a misconception that one could have done well holding on to equity from WWI in Germany even through to WWII and been better off. In 1948 virtually every company in Germany was dismantled and the stock market fell to 0.76 pts, down 98% as the United States implemented the policy to close all large industry in Germany to prevent any rebuild of war works.
If you were born in 1890 in Germany and survived your 20's by singing Christmas carols to the Brithish across the trenches and made it to 1948 somehow by to that point at age 58 you would have seen 2 occasions where all stock value was literally wiped out. To take money you earned from that point forward and put it into the new companies formed after WWII was very hard for most Germans who as a country are now very risk adverse. Anyone who would have had 20 years of salary saved in the stock market would have a couple months worth of salary in 1948 when the German economic recovery began. If you lived in East Germany, the Soviet Union took possession of all equity so you were wiped out on there as well. Gold and bonds denominated in goldmark repayments were the only instruments that made it through that period with any value. So I do not think there are many actual succesful German stock investors holding stocks from 1914 to 1948 in Germany.

Incidentally, you can open a gold depository account in several institutions in Australia and there is no need for reporting to the United States government or anyone else for that matter so long as the gold remains on deposit as there is no income earned on that holding. Nothing illegal about that at all.
I completely agree with this. What I intended to say, is that over much of this time equities were certainly the equal of cash or DM bonds, not that they were a safe haven through the period. Until Germany turned its attention to the East, it must have seemed that the Axis was winning the war, in a walkover in fact The Berlin Exchange rose from 6.43 in 1932, to 27.75 in 1943. My memory is that the US market made an important low in early 1942. Certainly during the Weimar inflation of the early '20s, German equities trumped DM. When you are going to lose a war, there is no domestic safe haven. Except of course in recent US wars, where the most bullish thing that can happen to a nation, given a little time, is for the US to invade and "defeat " it.

@ObGyn-I did not intend to suggest that you were hiding money in any illegal maneuver. Just that your occupation alone tells anyone who wants to know that you have money. Similarly I would imagine with your address.

Ha
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Old 07-07-2013, 09:30 PM   #127
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Though mainstream guides seem to (prudently) limit equity exposure to 80:20, 90:10 isn't unheard of at your age, I never owned any bonds until I was almost 50 (not a recommendation). With today's current low yields on bonds (IMO the bond fund NAV hit is years away) and cash, at your age I can fully understand why you'd focus on equities. As long as the volatility doesn't keep you up at night it's fine. Corrections will try your mettle, but I've lost (on paper) six figures in a month, never sold anything, and slept fine. Once you've studied market history/behavior, you know to be patient, it's all about the long run. Carry on...

I kept either a 100% stock or close or no less than 85-15 until I was in my mid40s, but part of that was the 90s conundrum in which I went into intermediates and then high yield, then sold the latter when yields rapidly decreased after the elder Bush recession eased. I understood the basic concept but was very lucky to get my timing right on high yields--returns made the false impression I knew what I was doing more than I did. Intermediates served me very well and was pretty much my only bond allocation, back then. I ignored volatility in it and in stocks, pretty much, which was ideal.

That said, diversify first within stock areas, including foreign. Then you might add 10% cash if 90-10 or 10% bonds isn't enough. You can always put the cash to work when the market slumps 20% or more.
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Old 07-08-2013, 12:35 AM   #128
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I hadn't read this thread the first time, so I am chiming in a little late. Obgyn65 isn't the only one here without an emphasis on equities. We have some equities, but not a high percent. For inflation protection we invest in TIPS, I bonds, and will have one pension and two SS benefits checks indexed to inflation. For now we have a low fixed rate mortgage that won't go up with inflation. But I think in the future we will either pay cash for a downsized house or maybe get a fixed rate mortgage with payments that can be paid off with the monthly pension checks that do not have COLAs.

I have run the numbers in our spreadsheets and baring any unforeseen catastrophic events I think we should be fine with either high, low or no inflation.
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