Burned more than once by the market

[TJFogelberg]

I am surprised at the group think on this board that seems to have most fully invested in stocks. This is my question...if one has enough resources to fund retirement using a 'safe return' rate, why gamble with the bulk of one's assets in the stock market? (Doesn't anyone else remember '08?) We're planning to spend down. At 85 we can age in place and live comfortably on SS if we're still kickin. We're not planning on catastrophic LTC costs etc, hoping to be dust in the wind before that happens.

 

[Fedup]

Not true. Some of us are in a lot of cash.

 

[Blue Collar Guy]

you counting on social security?

I am surprised at the group think on this board that seems to have most fully invested in stocks. This is my question...if one has enough resources to fund retirement using a 'safe return' rate, why gamble with the bulk of one's assets in the stock market? (Doesn't anyone else remember '08?) We're planning to spend down. At 85 we can age in place and live comfortably on SS if we're still kickin. We're not planning on catastrophic LTC costs etc, hoping to be dust in the wind before that happens.

i hope ur 65 now, any further out and ur taking a gamble.

 

[Midpack]

I am surprised at the group think on this board that seems to have most fully invested in stocks. This is my question...if one has enough resources to fund retirement using a 'safe return' rate, why gamble with the bulk of one's assets in the stock market? (Doesn't anyone else remember '08?) We're planning to spend down. At 85 we can age in place and live comfortably on SS if we're still kickin. We're not planning on catastrophic LTC costs etc, hoping to be dust in the wind before that happens.

I don't think many here are "fully invested in stocks" and there is no "group think" WRT to asset allocation. http://www.early-retirement.org/forums/f28/poll-how-much-currently-in-equities-78584.html

There have been many threads about 'once you've won the (investing) game, why keep playing?' Many here have taken that idea into account for their investment plan.

 

[Johanson]

I've been 100% in equities for over 25 years and I do remember 2008. I never got burned because I didn't sell. My 401K is now worth 6 times more than what it was worth at the end of 2008. And, I don't have enough for a "safe return" rate. In 5 or 6 years, I hope I do have enough. But even then, I can't see me going below 80% equities.

 

[brucethebroker]

i hope ur 65 now, any further out and ur taking a gamble.

I realize that is the popular opinion about SS. However, having been in the "retirement planning business" in a prior career, I have been hearing the same thing since the early 1980's. It is a good thing not to base your whole retirement plan on SS, but it will most likely continue for the next generation, perhaps changing somewhat for those under 50.

Why? Because of the voting power of senior Boomers, congress will have a hard time getting the votes to change it.

 

[brucethebroker]

OP, there are a number of real estate investors out here. Just not always as vocal as the securities crowd.

 

[Totoro]

I am surprised at the surprise with the apparent groupthink

There is no such thing here .. have you not seen the landlord, SS timing, pension, CD, preferred, cash etc .. threads around here?

Also, don't confuse chatter about equities with a high allocation in equities. Mulligan as a prime example.

 

[REWahoo]

^ What he said.

Investments are all over the board on this board. My perception after reading posts here for quite a while is that "fully invested in stocks" is a minority investment choice.

 

[marko]

I am surprised at the group think on this board that seems to have most fully invested in stocks. This is my question...if one has enough resources to fund retirement using a 'safe return' rate, why gamble with the bulk of one's assets in the stock market? (Doesn't anyone else remember '08?)

Well, for most here, the 'safe return rate' is predicated on investment in stocks. If you put all your money in CD's, there's this nasty little thing called inflation which will eat it all away well before you're 'dust in the wind'.

Yes, I remember '08...for me it was the biggest buying opportunity of my life and, by '11 it was "like it never even happened".

 

[NW-Bound]

The market giveth, and the market taketh away. Then, it giveth again.

Greed, then fear, and greed again. One must resist the temptation to buy high and sell low.

 

[Dash man]

I realize there are many here diversified into real estate and other opportunities, but regarding equities there is a groupthink among many members. The asset allocation crowd unwilling to budge from their particular asset allocation had always puzzled me. Things do change in the financial world that I believe requires readjusting financial assets periodically, but I'm labeled a market timer by the AA folks. Personally, after a 35 plus years bond bull market with rates near zero, why would anyone have a large allocation in bonds? Bond funds are particularly risky if there is a sharp rise in rates. But the AA crowd sticks to their allocation when bonds have no where to go but down.
Stock equities I maintain in selected individual stocks rather than funds that will follow the wild swings in a turbulent market should significant events happen. I do keep a large sum in cash to live on for several years if there is a severe market downturn. I also have real estate, insured CDs and some physical gold and silver.
Worldwide sovereign, corporate and personal debt is skyrocketing and printing more and more dollars will eventually take its toll. All it will take is loss of faith in these fiat currencies to cause a worldwide financial crisis worse than 2008. None of the causes of the 2008 crisis has really been fixed. But I guess we'll see in time.

 

[joeea]

I am surprised at the group think on this board that seems to have most fully invested in stocks.

Are you saying that you think most people here are 100% in stock?
If so, you are wrong.

This is my question...if one has enough resources to fund retirement using a 'safe return' rate, why gamble with the bulk of one's assets in the stock market? (Doesn't anyone else remember '08?)

There's a saying that goes "If you have won the game, stop playing." If you have enough resources, you can choose to withdraw completely from the market and avoid market risk. There are other risks that you may not be able to avoid (such as inflation), depending on the size of your resources.

If you need to include the phrase "safe return rate", then perhaps you haven't actually "won" yet?

For you, what is that rate? What assumptions are behind that rate?

We're planning to spend down. At 85 we can age in place and live comfortably on SS if we're still kickin. We're not planning on catastrophic LTC costs etc, hoping to be dust in the wind before that happens.

Choosing to spend down is a plan. Hope isn't much of a plan.

What is your assumption regarding inflation?

 

[donheff]

I am surprised at the group think on this board that seems to have most fully invested in stocks.

As others have pointed out AAs here are all over the place.

This is my question...if one has enough resources to fund retirement using a 'safe return' rate, why gamble with the bulk of one's assets in the stock market? (Doesn't anyone else remember '08?)

If you have really won the game I say go for it if that makes you comfortable, but make sure you are really there.

But, for me, We're planning to spend down. At 85 we can age in place and live comfortably on SS if we're still kickin.

OK, as long as a modestly reduced SS will allow this you are probably good.

We're not planning on catastrophic LTC costs etc, hoping to be dust in the wind before that happens.

Man plans, God laughs (or in this case man chooses not to plan, God still laughs). But, you do face a very real risk that you will be unable to care for yourselves (age in place) and thus must enter Medicaid nursing facilities. Isn't this at least as risky as the risk you assume for people who maintain a modest equity allocation hoping to preserve a buffer for just the risk you ignore?

 

[Dawg52]

Sometimes it does seem that way with some of the AA's I see, but there are a lot of people on the conservative side. Me being one. A higher than normal % of my portfolio is in CD's. I do own stocks, bonds, real estate and other to reach for a little more return. But all those items are below 50% of entire portfolio. So not everyone is in the 60% stocks or more camp.

 

[eytonxav]

I'm on the conservative side, but I often think if I had been less conservative over the years, I'd now have a safe in my basement surrounded by a moat.

 

[RockyMtn]

We're not planning on catastrophic LTC costs etc, hoping to be dust in the wind before that happens.

I have never subscribed to the theory that "hope" is a very well thought out strategy!

 

[clobber]

I've been 100% in equities for over 25 years and I do remember 2008. I never got burned because I didn't sell. My 401K is now worth 6 times more than what it was worth at the end of 2008. And, I don't have enough for a "safe return" rate. In 5 or 6 years, I hope I do have enough. But even then, I can't see me going below 80% equities.

This.

You only REALLY remember 2008 if you sold. Otherwise it was a blip.

 

[TJFogelberg]

The recovery from DOW 5000 in 2008 happened because of QE, zero interest rates, and other artificial interventions. Savers have been crushed and often persuaded to invest in "higher yielding" securities and annuities that often pay 6-8% commission to the agent who talks them into it. I'm not against stocks, just disagree with conventional wisdom that one should be heavily invested. I'm using a fixed rate of return of 2% with inflation the same. We pay no income taxes upon full retirement. Everything is paid for. Our big purchases are behind us. Health is generally above average despite problems causing desire to retire early. We definitely won't be investing aggressively to try to fully fund LTC costs. (Few spend any length of time in a LTC facility). Currently 70% CD, zeroes, ST Vang bond. 30% index stock funds, a few ind securities, and high yield and longer duration bond funds. 2 low cost annuities. We have very low fixed costs now and in retirement. A significant portion of our budget is discretionary, which is a wonderful thing. If you have 3X the money you need to fund actual cash needs, I see no harm in ramping up risk and playing the market. (You're playing with money you will never touch anyway. )

 

[audreyh1]

Not 100% stock here either, but already retired I managed to survive both 2000-2002 and 2008-2009 with >50% in equities. Our net worth is much higher now. Ready for that next crash? Maybe. So far there have been recoveries from crashes, even if slow. We have lots of non-equity assets to see us through a long period.

I think you are incorrect to think retired folks here are "heavily" invested in equities. Moderately invested would be more apropos, and many are quite conservatively invested.

 

[Lawrencewendall]

Guilty as charged. 90/10 but I'm young, have a 10 year horizon and other sources of guaranteed income.

 

[easysurfer]

I'm more in fixed income than stocks.

Use the 100 - age rule to keep my allocation honest and my emotions out of the picture .

 

[euro]

The recovery from DOW 5000 in 2008 happened because of QE, zero interest rates, and other artificial interventions. Savers have been crushed and often persuaded to invest in "higher yielding" securities and annuities that often pay 6-8% commission to the agent who talks them into it. I'm not against stocks, just disagree with conventional wisdom that one should be heavily invested. I'm using a fixed rate of return of 2% with inflation the same. We pay no income taxes upon full retirement. Everything is paid for. Our big purchases are behind us. Health is generally above average despite problems causing desire to retire early. We definitely won't be investing aggressively to try to fully fund LTC costs. (Few spend any length of time in a LTC facility). Currently 70% CD, zeroes, ST Vang bond. 30% index stock funds, a few ind securities, and high yield and longer duration bond funds. 2 low cost annuities. We have very low fixed costs now and in retirement. A significant portion of our budget is discretionary, which is a wonderful thing. If you have 3X the money you need to fund actual cash needs, I see no harm in ramping up risk and playing the market. (You're playing with money you will never touch anyway. )

Sounds like a perfectly reasonable portfolio if that's what it takes to make you sleep at night! I seriously doubt that yours is the most conservative portfolio on this board.

 

[travelover]

The recovery from DOW 5000 in 2008 happened because of QE, zero interest rates, and other artificial interventions. Savers have been crushed and often persuaded to invest in "higher yielding" securities and annuities that often pay 6-8% commission to the agent who talks them into it. I'm not against stocks, just disagree with conventional wisdom that one should be heavily invested. I'm using a fixed rate of return of 2% with inflation the same. We pay no income taxes upon full retirement. Everything is paid for. Our big purchases are behind us. Health is generally above average despite problems causing desire to retire early. We definitely won't be investing aggressively to try to fully fund LTC costs. (Few spend any length of time in a LTC facility). Currently 70% CD, zeroes, ST Vang bond. 30% index stock funds, a few ind securities, and high yield and longer duration bond funds. 2 low cost annuities. We have very low fixed costs now and in retirement. A significant portion of our budget is discretionary, which is a wonderful thing. If you have 3X the money you need to fund actual cash needs, I see no harm in ramping up risk and playing the market. (You're playing with money you will never touch anyway. )

I don't understand what you are trying to accomplish, but showing up on a forum with minimal introduction and basically accusing the members of being naive rubes, smacks more of trolling than any real desire to become a respected participant.

 

[Carol1862]

Conservative here. If we had a guaranteed pension we'd possibly be more aggressive. Our portfolio is at a comfortable place for us. Others would scoff at it. We do not panic, just stay the course. Keep educating myself.