Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 03-07-2012, 05:31 AM   #81
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,445
Quote:
Originally Posted by Orchidflower View Post
Used Vanguard's free CFP department today for the first time to see what they say, and it is (for my age 67) a 60% bond/40% stock portfolio. Since I have 23% now in bonds and the rest in stocks she didn't like it, but did admit that Vanguard is a more risk management company, hence, she thought it was too risky.
I'm using just 2% of the portfolio a year, but the way the CFP acted was if there was another crash I wouldn't be eating. Interesting reaction from Vanguard--not that I enjoyed seeing my portfolio crash in 2008 at all.
Just throwing that in FYI.
Do you have pension income as well? How much of your total expense is covered by social security and pension? As has been discussed elsewhere, that annuity income is like having a large allocation to fixed income.
__________________

__________________
MichaelB 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 03-07-2012, 08:11 AM   #82
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,328
I have read several blog by very young people who retired early - some in the 30's and early 40's. Good for them! They seem to have two things in common:

1. No children

2. 100% or near 100% stock allocation of their investments.

IMHO, they are still young enough to go back to work in the event the 100% strategy falls apart. On the other hand, people like me do not have that option, or at least don't want it. ;-)
__________________

__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 03-07-2012, 08:42 AM   #83
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,373
Quote:
Originally Posted by Onward View Post
I never got the "set aside 10% for stock picking" idea. Either you believe you can beat the market, or you don't. If you truly believe it, you would want to dedicate much more than 10% to this superior strategy. If you don't believe you can beat the market, why would you risk any money on a lost cause?

I understand the testosterone thing, but why not find some other, cheaper, way to indulge it?
It's just asset allocation--you're allocating 10 percent into pick your own. How is this strategy any different than any other asset allocation that's not 100 percent of something?
__________________
“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 03-07-2012, 08:51 AM   #84
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,094
Quote:
Originally Posted by Onward View Post
I never got the "set aside 10% for stock picking" idea. Either you believe you can beat the market, or you don't. If you truly believe it, you would want to dedicate much more than 10% to this superior strategy.
I interpret it as the difference between cautious optimism and unnecessary risk. Beliefs are fine but they won't necessarily fund your expenses.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 03-07-2012, 10:10 AM   #85
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
Quote:
Originally Posted by Onward View Post
I never got the "set aside 10% for stock picking" idea. Either you believe you can beat the market, or you don't. If you truly believe it, you would want to dedicate much more than 10% to this superior strategy. If you don't believe you can beat the market, why would you risk any money on a lost cause?

I understand the testosterone thing, but why not find some other, cheaper, way to indulge it?
After 'Psst Wellesley" the 10% to play with to control hormones is the best offering from Unclemick, it is good psychology. Like knowing what AA you will actually hold when the market tanks. This may actually be the cheapest way to manage these hormones. I have about 15% of our portfolio that I invest myself.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Old 03-07-2012, 04:18 PM   #86
Thinks s/he gets paid by the post
packrat44's Avatar
 
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
Quote:
Originally Posted by easysurfer View Post
I use formula: 100 - my age = % in stocks.
.
I also use a formula: 150 - my age = % in equities.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
packrat44 is offline   Reply With Quote
Old 03-07-2012, 07:35 PM   #87
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by Chuckanut View Post
I have read several blog by very young people who retired early - some in the 30's and early 40's. Good for them! They seem to have two things in common:

1. No children

2. 100% or near 100% stock allocation of their investments.

IMHO, they are still young enough to go back to work in the event the 100% strategy falls apart. On the other hand, people like me do not have that option, or at least don't want it. ;-)
I hope to be one of those to ER in my 30's, and that is one reason I plan on a high equity ratio. I do have kids (2 now, and a third will be here soon), so I do have those extra expenses (at least for the next 22 years).

Yes, work is a definite back up plan for us if the $hit hit the fan. Our spending is low enough that even a low skilled job plus highly reduced portfolio withdrawals would get us through.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 03-07-2012, 08:51 PM   #88
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 3,422
Do you plan to send your kids to college and pay for their degrees?
__________________
explanade is offline   Reply With Quote
Old 03-07-2012, 09:00 PM   #89
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by explanade View Post
Do you plan to send your kids to college and pay for their degrees?
Yes. 4 years of tuition and fees at awesome in state schools. x3 kids.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline   Reply With Quote
Old 03-08-2012, 06:50 AM   #90
Full time employment: Posting here.
 
Join Date: Nov 2008
Posts: 728
Quote:
Originally Posted by Orchidflower View Post
Used Vanguard's free CFP department today for the first time to see what they say, and it is (for my age 67) a 60% bond/40% stock portfolio. Since I have 23% now in bonds and the rest in stocks she didn't like it, but did admit that Vanguard is a more risk management company, hence, she thought it was too risky.
I'm using just 2% of the portfolio a year, but the way the CFP acted was if there was another crash I wouldn't be eating. Interesting reaction from Vanguard--not that I enjoyed seeing my portfolio crash in 2008 at all.
Just throwing that in FYI.
Ijust saw in, I think, Money Magazine that Vanguard, as a fund company including every investment product, earned a greater return for their investors than any other fund company. I've got Vanguard and Fidelity and darn glad to have invested with Vanguard.

I'm fairly conservative and beat the averages the past 10 years. I've been heavy in Municipal bonds, long and shorter terms, along with 25% in stocks and now I have 11% in cash. Like others, I only lead a little less than 2% to live nicely each year.

Here is the challenge......the election! No one knows how to plan based on the unknown changes to the tax code. Now, I'm starting to invest in divident ETF products that I believe will grow over the years. But, if they are taxed as ordinary income, my spendable income will go down.

My point? If you look to the past, if the future is unknown, what's the solution for today? Diversify! I would never at my age, 66, be 100% stock, nor would I be all bonds. I try to minimize expenses, take advantage of the 15% dividend tax, spend from my bond interest and have cash when thex picture becomes clear.

I love all the comments on this post. And, I don't know who will be the winners a couple of years from now. All I know is that I probably will make a little, maybe lose a little but either way I'll have enough and will enjoy life.
__________________
jerome len is offline   Reply With Quote
Old 03-09-2012, 10:28 PM   #91
Recycles dryer sheets
 
Join Date: Aug 2011
Location: aberdeen
Posts: 267
I'm 62 yrs old, and will be relying solely from my savings, SEP-IRA, IRAs, and will get my SS.( I know waiting pays more but who cares). Can't will an SS check.

In my opinion being 100% in equity is preposterous,specially at my age.
What are you trying to do?-- this is not a game of chicken or dare!

When a correction of 20-30% comes, let's see how most can take it. To be frank, I can take a 30% pullback, but why? Why should I take the risk of quiet disrepair which may take a few years into my retirement.

In my case, I try to have enough cash that will take care of about 5-10 years of living expenses, and the rest I can decide where I want them.

Still ,following a very conservative % of asset allocation, I am probably about 40%(equities, mutual funds and stocks) with the rest distributed in
treasury securities and cash.

If stock market goes very high, I will take some profits and run with it.,
If the markets goes on with a 30% correction, I will quietly and patiently wait, and will use the cash and treasury to live on. Hopefully it is not going to take a long time!!

I'm trying to fine tune the art of rebalancing. I'm not as aggressive as I
become older.
__________________
Birchwood is offline   Reply With Quote
Old 03-11-2012, 03:04 PM   #92
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Birchwood View Post
In my opinion being 100% in equity is preposterous,specially at my age.
What are you trying to do?-- this is not a game of chicken or dare!
. . .
Still ,following a very conservative % of asset allocation, I am probably about 40%(equities, mutual funds and stocks) with the rest distributed in
treasury securities and cash.
.
So, it looks like you've got 60% of your portfolio in cash and Treasuries. Right now these are yielding approx 1-2.5% below real inflation. A person with this allocation in today's environment lost .6 to 1.5% of their portfolio's value last year, and they will be taking another loss in 2012. That can be made up by reducing the withdrawal rate by this amount or keeping the same withdrawal rate but understanding that the real effective "withdrawal" rate is up to 1.5% higher, with all the risk of portfolio failure that brings with it. And with just 40% in equities, the opportunity to regain this lost ground is reduced.

I'm sure this allocation makes sense for some, especially those who experience a market downturn and consider their money irretrievably "lost." But this strategy surely has a risk of its own.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 03-11-2012, 03:22 PM   #93
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by samclem View Post
I'm sure this allocation makes sense for some, especially those who experience a market downturn and consider their money irretrievably "lost." But this strategy surely has a risk of its own.
I agree. A three year period of double digit inflation like we saw in the 70s and early 80s is every bit as hazardous to my retirement as a 30% stock market crash. In many ways worse since odds are the market will recover, far less likely inflation will reverse itself.

I see nothing wrong with a 40% equity allocation at age 62, but I also think there is nothing wrong with an 80+% allocation at that age either. People tend to be more fearful of headline risks, dying in a plane crash, murder victim, or losing money in a stock market crash,than background risks, dying in automobile crash, heart disease, or losing purchasing power due to inflation.
__________________
clifp is offline   Reply With Quote
Old 03-11-2012, 09:11 PM   #94
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Quote:
Originally Posted by clifp View Post
I see nothing wrong with a 40% equity allocation at age 62, but I also think there is nothing wrong with an 80+% allocation at that age either. People tend to be more fearful of headline risks, dying in a plane crash, murder victim, or losing money in a stock market crash,than background risks, dying in automobile crash, heart disease, or losing purchasing power due to inflation.
Textbook loss aversion...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 03-12-2012, 10:18 AM   #95
Recycles dryer sheets
 
Join Date: Dec 2009
Posts: 214
Quote:
Originally Posted by Gumby View Post
Fortunately (or unfortunately) we have a recent real world test to determine one's own mindset. Just ask yourself the following question - "In the first three months of 2009, with respect to my equity holdings, did I: a) sell (including shifting new contributions to bonds for those still in the accumulation phase); b) stand pat; or c) buy more?" If you don't answer b or c, you shouldn't be all-in on equities. But that's just my opinion and worth what you paid for it.
Hard to do option C if you are already all-in.

I was 92% equities when I retired at 55. In the two years since then I have been very active in Bogleheads (forum, national meeting and local chapter meetings) and have learned a great deal and seen the error of my ways. Now at 60/40 stocks/bonds and am less stressed.

It is true that in a range of 25% equities to 75% equities the SWR is near constant, about 4.0%. BUT the higher equity portfolios give you a much better chance of dying rich. I find 60% to be a nice compromise and I am happy that if we have another meltdown I can do Option C and buy more equities with my "dry powder".
__________________
chemist is offline   Reply With Quote
Old 03-12-2012, 11:09 AM   #96
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
Quote:
Originally Posted by chemist View Post
Hard to do option C if you are already all-in.
Yeah, it's nice to have a plan for those dips. But if I was 60/40 in 2007, I'd be closer to 100/0 in 2009 than 60/40. Actually I was probably about 70/30 equities/cash in 2007 when I started retirement, just in case. I was about 98/2 in 2009 at the bottom, including cash from a HELOC used to invest at what turned out to be the bottom. Probably more like 105/2 with leverage. Just enough cash to feel comfortable for a few months. I stayed at roughly 98/2, selling some equities to fund retirement, until the recent peaks brought my portfolio back up to "normal" and I sold some equities for cash as the portfolio value exceeded my expectations. I'm about 87/13 now, and close to selling a bit more if the market continues up. If we get a severe market drop, I do have some cash to invest. In fact I did reinvest some in 2011 when my portfolio was again down more than 20% from its peak. If equities just stay at this level, I'll spend all my cash before selling equities again.

I agree that if you're drawing from your portfolio for retirement expenses, something should be done to minimize withdrawals during bear markets. So although I don't have a set cash or bond allocation, I might have some cash if my portfolio is doing well.
__________________
Animorph is offline   Reply With Quote
Old 03-12-2012, 11:30 AM   #97
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by chemist View Post
It is true that in a range of 25% equities to 75% equities the SWR is near constant, about 4.0%. BUT the higher equity portfolios give you a much better chance of dying rich. I find 60% to be a nice compromise and I am happy that if we have another meltdown I can do Option C and buy more equities with my "dry powder".
Yeah -- while I generally don't try to time the market and use a "gut feeling" to buy more (such as in early 2009 when stocks were priced for disaster), nevertheless having that "dry powder" allows you to take advantage of valuations when you rebalance your portfolio. When you have a 100/0 asset allocation, you lose the "sell high/buy low" advantage to rebalancing because, well, you never rebalance since you'll never have an AA out of whack unless you don't reinvest dividends...

Not retired, but I'm sitting on 60/40 and very comfortable with it. I was 70/30 in the crash of 2008-09, and kept that well into 2010, then went down to 60/40 (after recovering most of the losses) as I realized 70/30 was a little too heavy on equities for my comfort should the market do that again.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
1st 3 months of 2009 - everything went down
Old 03-12-2012, 12:09 PM   #98
Recycles dryer sheets
Sirka's Avatar
 
Join Date: Mar 2011
Location: Southern CA
Posts: 200
1st 3 months of 2009 - everything went down

Quote:
Originally Posted by easysurfer View Post
I use formula: 100 - my age = % in stocks.

100% in stocks? Too volitile for my blood...
+1
I use formula: 120 - my age = % in stocks.

This AA does not help during crashes, but it reduces daily volatility, so I can sleep.
1st 3 months of 2009 I was buying as it went down - then I was out of cash. It is tough for me to keep cash, there are always opportunity to invest it.
__________________
Hard to say what it was, when it isn't.
FIRED in 2005 @ 55
Sirka is offline   Reply With Quote
Old 03-12-2012, 01:04 PM   #99
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,384
I believe that the presence of this thread on this forum of mainly conservative people is a sign of the bear.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 03-12-2012, 01:13 PM   #100
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,445
Quote:
Originally Posted by haha View Post
I believe that the presence of this thread on this forum of mainly conservative people is a sign of the bear.

Ha
Starting to feel that way, isn't it?
__________________

__________________
MichaelB 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
Expats in Mexico: is this accurate? Onward Life after FIRE 88 03-24-2012 07:41 PM
Rear view monitor in new cars required by 2014? easysurfer Other topics 64 03-03-2012 12:40 PM
Things do even out in the end easysurfer Other topics 10 03-03-2012 01:26 AM
Polyp in Uterus???? Need some help with this one, please! Orchidflower Health and Early Retirement 18 03-02-2012 06:15 PM
Health Insurance Suggestion - self insure vs. HI, not in the US. landover Health and Early Retirement 0 03-02-2012 01:21 PM

 

 
All times are GMT -6. The time now is 04:31 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.