Anyone else a little frustrated with things right now?

[MrLoco]

I am referring to "income streams" specifically from investments. This eliminates things like rental income, income from a side business, annuity income, pensions and /or social security.

Where are you looking or better yet "generating" income from your investment portfolio. Stocks were essentially flat last year ( not including some random esoteric etf ) and YTD flat again; bonds in the 2-3% yield range unless you want to venture out on the yield curve and take on a lot of interest rate risk or junk bonds with their inherent problems. Cash and MM accounts are pathetic right now. What if stocks are flat throughout this year and again next year?

In light of this have you perhaps decreased your withdrawal rate if you use a total return approach or supplemented dividend income with cash to cover expenses? Curious to know what others think and if anyone is thinking "outside the box."

 

[travelover]

The 4% withdrawal rate accounts for flat and down years. You shouldn't have to do anything.

 

[FANOFJESUS]

The 4% withdrawal rate accounts for flat and down years. You shouldn't have to do anything.

I guess that cover 30 years on average?

 

[bclover]

The 4% withdrawal rate accounts for flat and down years. You shouldn't have to do anything.

+1

 

[scrabbler1]

I have had a slow but steady decline in my 7 years of ER in the dividends per share in the main bond fund which supplies me with the monthly cash to cover my expenses. I have done a few things to counteract that, though. One is to add shares to the bond fund so I earn pretty close to the same monthly dividends as I have had before. I do this in 2 main ways: (1) from reinvesting the cap gain distributions in the fund, and (2) from investing any excess bond fund dividends over my expenses back into the fund.


Another thing I have done in the last few years was to start taking as cash the quarterly stock fund dividend instead of reinvesting it automatically. These quarterly dividends happen to coincide with the occasional spikes in my expenses such as estimated income tax payments and semi-annual car insurance premiums. Of course, this means the stock fund isn't increasing as much from those reinvestments being diverted. I had always considered this option when I first ERed, like a Plan B.

 

[AboutThere]

Inflation was 1.1% last year, so also flat in a sense

 

[Danmar]

My divs (biggest source of cash flow) have been growing at about 7% per year. Not frustrated at all?

 

[MrLoco]

in

My divs (biggest source of cash flow) have been growing at about 7% per year. Not frustrated at all?

Interesting. Mind if I ask do you pick individual stocks looking for those companies with a history of increasing dividends or a dividend growth/appreciation mutual fund?

 

[Whisper66]

....In light of this have you perhaps decreased your withdrawal rate if you use a total return approach or supplemented dividend income with cash to cover expenses? Curious to know what others think and if anyone is thinking "outside the box."

(1) No decrease in allowable withdrawal rate of 4% + cost of living adjustments each year.
(2) In 2014/2015, shifted part of portfolio to allow for more dividend collections (VDIGX, CVX, XOM, T, EMR). Where individual stocks picked, focused on Dividend Aristocrats with P/E ratios I felt were reasonable
(3) Have a couple years of expenses covered by available cash and intermediate term bonds (VWIUX).
(4) Keeping good track of expenses so if we need to cut after awhile, know where that can be done easily and what impact it will have.

 

[marko]

I view the current stall as a temporary thing. (temporary: a few years or hopefully less)
Dividends, SS and occasional CGs pays the bills.

Not making any changes but have been quietly thinking about other options with a low-ish entry point (under $100K) like perhaps some sort of restaurant startup or property syndicate.

 

[Fedup]

I'm frustrated it has not gone down fast enough. Let's get it over with, the downturn, so other people can come in.

 

[Senator]

Interesting. Mind if I ask do you pick individual stocks looking for those companies with a history of increasing dividends or a dividend growth/appreciation mutual fund?

The S&P can do that without trouble. There is no need for stock picking. Even DVY will do that.

S&P 500 dividend growth is slowest since 2009 - MarketWatch

 

[MasterBlaster]

What if stocks are flat throughout this year and again next year?

What if stocks are flat for the next ten years or more ?

 

[W2R]

I am referring to "income streams" specifically from investments. This eliminates things like rental income, income from a side business, annuity income, pensions and /or social security.

Where are you looking or better yet "generating" income from your investment portfolio. Stocks were essentially flat last year ( not including some random esoteric etf ) and YTD flat again; bonds in the 2-3% yield range unless you want to venture out on the yield curve and take on a lot of interest rate risk or junk bonds with their inherent problems. Cash and MM accounts are pathetic right now. What if stocks are flat throughout this year and again next year?

My attitude is, so what if they are? The stock market is going to go up and down or stay flat or whatever, always has and always will. My strategy is to just hang on and wait when things are not to my liking. I'm not selling or buying, but I am still collecting dividends. As the saying goes, "pigs get fat, hogs get slaughtered"; in other words, excessive greed is a good way to lose money. For me, this means that absolutely no market timing is on my horizon.

In light of this have you perhaps decreased your withdrawal rate if you use a total return approach or supplemented dividend income with cash to cover expenses? Curious to know what others think and if anyone is thinking "outside the box."

Well, I have dividends (which I receive in cash), pension, and social security, thank heavens, plus I have had a conservative approach to planning my retirement finances so I have a lot of "wiggle room" in my portfolio. Thank goodness for that. I had to withdraw more than usual last year and this year, due to buying my Dream House in cash, fixing it up the way I want it, the costs of selling my previous home, and unexpected high medical/dental expenses. Lately I have relied solely on my cash reserves for withdrawal money, and haven't had to sell for about a year.

My instincts are to kick up the LBYM to help, not in dealing with the market but in dealing with so many unusual expenses in the past year or so. Right now I am cutting back on my discretionary spending a little for the rest of the year, as a form of "damage control".

 

[NW-Bound]

The 4% withdrawal rate accounts for flat and down years. You shouldn't have to do anything.

+1

What if stocks are flat for the next ten years or more ?

Ugh! I guess I may have to draw SS early.

Oh wait. After 10 years, I will be at the end of SS delay period anyway, so will have to draw no matter what.

That also coincides with RMD on IRA. The question is how much will be left there for RMD anyway.

PS. If I can manage to stay even with inflation, my WR times 10 years should still leave me with roughly 2/3 of the stash in 10 years.

So, flat market is good. Down market, now that's a whole 'nother story.

 

[Fedup]

I wonder why I'm too chicken. I don't plan to use my retirement money until 15 more years or RMDs. And only then do I need to withdraw 2.5 %. Right now I have other income to cover my expense, all COLA except my pension. And my liquid asset is a lot less than my non liquid asset.

 

[NW-Bound]

You can always move from SoCal, and convert that non-liquid asset into cash.

 

[Fedup]

You can always move from SoCal, and convert that non-liquid asset into cash.

I don't have to move. I just need to sell one of my houses. But I think it's deeper than that. More pain when it goes down for some people.

 

[Options]

Quite frankly, I'm surprised this discussion is even taking place (perhaps I shouldn't be??). If you've constructed a well thought out investment policy statement it would have accounted for the very worst of outcomes (least of all the current one) and you should still be able to sleep well at night. In other words, if you've done your homework well and well in advance the market's gyrations of the day should be of little interest.

There is just too much literature out there for this concept to be new news at all (e.g., why people continually mention Buffet and other "gurus" and then proceed to ignore the very advice they so liberally give to ordinary investors is beyond me; Buffet has stated in a myriad of ways that he has no idea what the market is doing or where it's going nor does he care. He invests for value, never speculation. Regarding portfolio balances, there's John Bogle's consistent warning of "Don't Peek!"). Larry Swedroe just posted regarding investor overconfidence. and it goes on and on and on...

"Cheating" off another's "test" and hoping for the best has always been easy. Doing the hard homework of thinking this stuff through before it's needed is the hallmark of investment wisdom.

Here are Dirk Cotton's most excellent recent and timely (as well as sequential) posts on this very topic:

The Retirement Café: A Model of Retirement Planning, Part 1

The Retirement Café: Adding Risk to the Model, Part 2

The Retirement Café: A Random Walk, A Sequential Game, Part 3

The Retirement Café: What Would A Good Retirement Plan Look Like?, Part 4

The Retirement Café

Reading these posts caused me to review my ISP, question my assumptions (once again), review literature on risk, bear market history, etc., and it was time well spent.

 

[dvalley]

I for one am in the accumulation phase and the last 5-8yrs before ER or ESR so a critical accumulation phase. So I want the market to be either up or down, flat market is a waste of time for me.

 

[GravitySucks]

I am referring to "income streams" specifically from investments. This eliminates things like rental income, income from a side business, annuity income, pensions and /or social security.

Where are you looking or better yet "generating" income from your investment portfolio. Stocks were essentially flat last year ( not including some random esoteric etf ) and YTD flat again; bonds in the 2-3% yield range unless you want to venture out on the yield curve and take on a lot of interest rate risk or junk bonds with their inherent problems. Cash and MM accounts are pathetic right now. What if stocks are flat throughout this year and again next year?

In light of this have you perhaps decreased your withdrawal rate if you use a total return approach or supplemented dividend income with cash to cover expenses? Curious to know what others think and if anyone is thinking "outside the box."

Nope. I expect a few flat years or even a down year after the nice run up we had. The cash yields do stink, but the bond fund yields have beaten inflation.

I'm not going start thinking outside the box, as that leads to thinking I'm smarter than the market. Just holding steady.

 

[Mulligan]

I have been one who has been pleased with my income. My frustration occurred a couple years ago as I never was a big stock guy, but needed to get all my money out of CDs and IBonds. But I knew putting all my money in the common stock market wasn't the answer so I researched and found utility preferred stocks that yield me 6-7%. Investment grade and my major ones produce regulated monopoly profits that cover the preferreds by 50-70 times. Works great for me. The ironic part is I invest for income, but don't use it as my pension takes care of my lifestyle.


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[ejman]

I have been one who has been pleased with my income. My frustration occurred a couple years ago as I never was a big stock guy, but needed to get all my money out of CDs and IBonds. But I knew putting all my money in the common stock market wasn't the answer so I researched and found utility preferred stocks that yield me 6-7%. Investment grade and my major ones produce regulated monopoly profits that cover the preferreds by 50-70 times. Works great for me. The ironic part is I invest for income, but don't use it as my pension takes care of my lifestyle.


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So, if your pension takes care of your life style why invest at all? Put it all on red (or whatever I'm not a gambling man) and have fun!

 

[pb4uski]

I'm not frustrated at all. For the last two years:

Beginning portfolio...............................100.0%
Dividends and interest..............................4.7%
Realized gains.........................................7.4%
Withdrawals...........................................(5.4%)
Unrealized losses...................................(10.1%)
Ending portfolio.......................................96.6%

I expect that there will be times where I eat into principal... and the last couple years has borne that out... that is what sequence of returns risk is all about. However, my portfolio is still 23% higher than when I retired at the end of 2011... and I have had over 4 1/3 years of freedom....so what is there to complain about?

 

[Mulligan]

So, if your pension takes care of your life style why invest at all? Put it all on red (or whatever I'm not a gambling man) and have fun!

I keep a separate budgeted gambling account so that is covered. Just like I generally don't trust common stocks....I don't trust my pension system either. Need to have that "just in case stash". I plan on being around another 30-40 years! And besides as Kevin O'Leary says every other sentence... "I like dividends, I like to see companies give me cash."