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Old 09-16-2008, 05:13 PM   #21
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Sure, it's still not fun to watch your portfolio wither like this. (I've lost nearly $100K on paper since the day I almost talked myself into bailing out of the market last Halloween.) But I do think that knowing that even 50% of your retirement is secure takes at least some of the queasiness out of the equation compared to folks who expect to have no other sources of secure retirement income at all.

That's true and with a little belt tightening if necessary my pension and SS would meet all my expenses but I still do not like these drops . I feel sorry for today's generation that has to meet all of their retirement expenses including health care . Hopefully a lot of them will get big inheritances from all our LBYM ers .
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Old 09-16-2008, 05:15 PM   #22
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I'm down about 18% from my portfolio high water mark. I'm about 70/30 equities/bonds and FIREd.

I notice that most of the people who have posted so far seem to have losses that are exactly the amount the market lost, but I haven't seen anyone post yet whose portfolios have gone down signicantly more than the market. This suggests to me that many of the people posting are not living off their portfolios.

I'd like to see more posts from people who are living off their portfolios.
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Old 09-16-2008, 05:18 PM   #23
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... I have set a mental fail safe point that if the equity portion of my portfolio falls an additional 25% from where I am at now I will cash out and have complete security until age 66 where I can take the max social security. ...

How are you doing and what are your thoughts?
First, our AA target is 55/45 and is currently at about 51/49. We're down around 8.8% YTD at the end of yesterday. If we get to 50% equities I'll probably rebalance to 55%. But that won't be easy psychologically. When we were up a reasonable amount last year I sold some equities and rebalanced some out of international to maintain our 2:1 US:international.

Second, I think your "fail safe" idea is not a good one. Generally one should be buying low and selling high. Conservatively that means rebalancing at relatively high levels and buying equities at low levels. Why are you choosing a strategy that has you out of the market after very severe losses? Perhaps you should consider (1) selling some now or if we have a decent bounce back up, (2) rethinking your AA to lower equity exposure or lower risk levels in the bond portion.

Basically I think the easiest way to balance risk is to wisely select your AA such that you never have to sell unless rebalancing in an up market. Just some thoughts.

Also for Free4Now, we are living off our portfolios and with living expenses are about 14% below the high water mark set in Oct '07. Decided not to buy that new car for now.
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Old 09-16-2008, 05:22 PM   #24
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Basically I think the easiest way to balance risk is to wisely select your AA such that you never have to sell unless rebalancing in an up market. Just some thoughts.
Precisely. If it's keeping you up at night, you probably need to rethink your asset allocation. The problem is that now is a horrible time to sell more stocks, buy more bonds and/or keep more in cash. The time for that was a year ago, ideally. But the bottom line is that if you can't sleep with (say) an 80/20 asset mix, you may want to consider 60/40 or even 50/50.

I'm at about 70/30 which, while it isn't pleasant watching the carnage, is something I can still sleep with.
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Old 09-16-2008, 05:23 PM   #25
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I'd like to see more posts from people who are living off their portfolios.
OK, I fit that description. No pension, no SS (yet), living 100% on withdrawals from 45/55 portfolio - down 20% from last summer's high point.
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Old 09-16-2008, 05:25 PM   #26
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OK, I fit that description. No pension, no SS (yet), living 100% on withdrawals from 45/55 portfolio - down 20% from last summer's high point.
What's your drawdown/withdrawal rate? Just curious, because just as I think it would be easier to take the recent drubbing if one gets a generous pension and SS, I also think it would be easier to take if you were living off of 2% a year instead of 4%.

Even though 4% is pretty well tested for a portfolio in the 50-70% equities range, it still takes quite a bit of fortitude to be withdrawing 4% in this market without nervous tics.
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Old 09-16-2008, 05:26 PM   #27
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. But it won't keep me from sleeping at night.


Thanks but money never keeps me from sleeping at night and though a tad aggressive I've had my assest mix a long time and it has weathered some incredible drops . I think time in the market is the true test of your allocation and with me I like things slightly spicy even when it gives me heartburn.
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Old 09-16-2008, 05:28 PM   #28
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I notice that most of the people who have posted so far seem to have losses that are exactly the amount the market lost, but I haven't seen anyone post yet whose portfolios have gone down signicantly more than the market.
As an example, if someone has an asset allocation of 50% equities, 50% CD's, their losses could be expected to be less than half the equity market loss.

If their losses are exactly the amount that the market lost, then I would expect that might already include expenses after some belt-tightening.
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Old 09-16-2008, 05:32 PM   #29
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I
I'd like to see more posts from people who are living off their portfolios.
I'm doing that.
As of today - Net worth - excluding house - Down 8.0% from 12/31/07 - I don't track it from the high.
I'm down 2.8% from 12/31/06.

As I said earlier I think people are making a psychological mistake comparing it to the high.
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Old 09-16-2008, 05:34 PM   #30
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Thanks but money never keeps me from sleeping at night and though a tad aggressive I've had my assest mix a long time and it has weathered some incredible drops . I think time in the market is the true test of your allocation and with me I like things slightly spicy even when it gives me heartburn.
Good! I am glad to hear that you are not losing any sleep over the market. Neither am I. In fact, this morning I overslept again.
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Old 09-16-2008, 05:41 PM   #31
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As I said earlier I think people are making a psychological mistake comparing it to the high.
That is so true. They are beating themselves up (psychologically), needlessly. On the other hand, I guess we have a need to do this.
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Old 09-16-2008, 05:41 PM   #32
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...As I said earlier I think people are making a psychological mistake comparing it to the high.
Good point. The main reason I track the high water mark of our portfolio is to use it as a trigger to rebalance out of equities.
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Old 09-16-2008, 05:46 PM   #33
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I'm down 3.3% YTD. I worked to mid-year and have been living off my portfolio since then. AA is 39/7/39/15 (equities, international equities, bond, cash). It's a little out of whack, but I won't rebalance until January (when the non-cola pension kicks in).

Social Security is many years away.

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Old 09-16-2008, 05:48 PM   #34
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What's your drawdown/withdrawal rate?

Even though 4% is pretty well tested for a portfolio in the 50-70% equities range, it still takes quite a bit of fortitude to be withdrawing 4% in this market without nervous tics.
Our first year (2005) w/d rate was ~4.5%. With the decline over the past few months this years drawdown will be ~6.5% of our now leaner portfolio.

No nervous tics yet - perhaps I'm suffering from nerve damage. The fact DW and I are only a year or so from SS eligibility is nice and certainly helps my outlook.
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Old 09-16-2008, 05:48 PM   #35
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I'm doing that.
As of today - Net worth - excluding house - Down 8.0% from 12/31/07 - I don't track it from the high.
I'm down 2.8% from 12/31/06.

As I said earlier I think people are making a psychological mistake comparing it to the high.
Thanks for the numbers. I'm down 15% since 12/31/07, or 5% from 12/31/06. 70/30 and FIREd.
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Old 09-16-2008, 06:04 PM   #36
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Forgot to mention in addition to tracking the portfolio high water mark I also track the portfolio low water mark. Should be a reminder to rebalance into equities -- hard as that may be.
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Old 09-16-2008, 06:16 PM   #37
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I was tracking against my highwater mark because of natural tendency and to see how it correlated to the highwater mark of the S&P 500 which was well into Bear territory as of yesterday.

I am six months in to Semi-FIRE. I presently working part-time which as reduced my draw to about 2% annually. If I did not work at all my draw would be about 3.5 to 3.8%. So about 1% of my dip this year is due to drawdown.

Using YTD performance my portfolio is doen about 10.3% as of yesterday with 6 months draw.

I am 51 1/2, been investing since I was 25. I have seen market corrections but this is the first time when not fully employed and accumulating. Sort of like being thrust into combat for the first time. It feels WAY different.
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Old 09-16-2008, 06:33 PM   #38
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Not looking. Too painful. Glad to be in the accumulation phase. DCAing. Have decided to change asset allocation at the next market peak. Hoping the next market peak will occur before planned ER date! If no sign of peak, ER might wait a bit.
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Old 09-16-2008, 07:04 PM   #39
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I'm down about 3% with bonds counted (20/80). Retired and living completely off my portfolio.
However, my income flow from the dividends has increased in the last year, so I really don't care if the market takes a hit as long as my dividend increases keep up with, or surpass (as they have) any dividend cuts.
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Old 09-16-2008, 07:17 PM   #40
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Still in the accumulation phase, 65% stock/35% bonds & cash, portfolio down 10.6% YTD (as of 9/15). I added plenty of new money to my investment accounts this year (higher income and lower spending). Still throwing as much as I can to the market even if it feels like speeding towards a wall. But... I am keeping the faith.

P.S. Despite the market turmoil my passive income is actually up 10% compared to last year, so at least something is working.
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