I Took All My Money Out of the Stock Market and It Feels Amazing

[jimbee]

You don't know you've won the game for sure until you're dead.

 

[Dawg52]

You don't know you've won the game for sure until you're dead.

True but Firecalc says so....so it must be true.

 

[GTFan]

I just got back into the market last month

LOL, market-(mis)timing quote of the year.

 

[38Chevy454]

Even if you have no desire to leave any inheritance or other money behind once you are gone, it’s not logical to leave easy money with reasonable risk out of your investment allocation.

Only way it makes sense is with the “won the game” level of savings.

It’s also hard to accurately predict your date of death, short of planned suicide

 

[NW-Bound]

If I take what I have now and divide it into 30 years, that's more than what I spend in the last 12 months. And then, I will get SS on top of that.

So, if I can just match inflation with a conservative investment, I should be OK, right?

No, I am staying in the market. The up-and-down makes life more interesting.

 

[audreyh1]

I expect I'll always have at least 20% in equities once I reach 80.

Before that, can't see dropping below 35% even at 70.

 

[PatrickA5]

If I were 75 or 80 and had plenty of money, I wouldn't mind making nada. Right now (age 59), I need equities to have any hope of making my money last to 95.

Having said that, my 96 year old father hasn't been in the stock market since he retired 35 years ago and has done ok. He obviously hasn't been making much money, but his personal inflation rate is pretty low.

 

[enjoyinglife102]

Here's a person who has become financially independent, stress free and living her life the way she wants. To me, that's success! "Just another won the game article" - I wouldn't dismiss somebody who shares how she became a winner, I like winners. The generalization about inflation always comes up, yet the only number that counts is your personal inflation rate. Even on this forum, many have shown their rate is much lower than the government's number. The only definite about that government number is it is very unlikely to match your individual experience. Yet again and again it's referenced as a hard number. How condescending to reference her as a "divorced librarian" so why listen to her? Her strategy of investing in a 60/40 index fund and leave it alone for many years is a lot more Warren Buffet like than the many strategies and approaches (most of which the overwhelming real life evidence shows will underperform her approach) that are discussed on this forum. Thanks for sharing!

 

[REWahoo]

If I were 75 or 80 and had plenty of money, I wouldn't mind making nada.

Depends on how you define having "plenty of money."

I'm 70 and have more money than when I retired 12 years ago, yet I'm 42% equities and have no plans to change at 75 or 80 - assuming I get there.

 

[Totoro]

Grandma has a pension covering all her expenses and then some, and only needs some cash as spare for emergencies that will likely never arrive. So she is 100% in fixed rate, and will remain that way.

It allows her to sleep well, know exactly where the money is, no surprises.

DM has some 30% equities, to dampen long term inflation and balance risks. She has no SS to speak of, so it needs to last her lifetime.

And I'm higher still, being not 40 yet and relying mostly on returns on capital if I want to make it to the end in reasonable comfort.

 

[UnrealizedPotential]

My strategy was to find out what my risk tolerance was. Once I knew that I could plan around it. So I have 36% in a relatively stable bond fund. Sure it will lose money in a bear market, but not anything to lose sleep over. I also hold 10% in cash. The rest is in equities.
My income I get partly from bonds and partly from equities. So I still have enough in stocks to get growth and at the same time some protection on the downside.

 

[flintnational]

My crystal ball is working particularly well this morning! I see the following:

1) The market will continue on a tear for 3 more years.
2) The article author will begin to compute how much money she would have made had she stayed in.
3) She will "feel" remorseful since her friends and family (all ne'er-do-wells) are getting rich in the market and she has to listen to it everyday.
4) She will think its different this time and get back in after loosing 3 years of gains.
5) The market will drop 37% (I mentioned the crystal ball was working well).
6) The author writes a new article titled "See, I was right after all".

If you need proof of the above, see her quote.

"But if the market totally tanks tomorrow, you ask, and stocks become such a crazy bargain that I’d be a fool not to put at least some of my money back into that mutual fund that served me so well, wouldn’t I?

Of course I would! I’m no fool." Yep, she is a DMT.

So no, I will not follow her lead. I will continue to dance with the one that brought me, my well thought out AA.

FN

 

[Nightcap]

You don't know you've won the game for sure until you're dead.

In my case, it's only after both me and the Unindicted Co-Conspirator are dead that the game can be considered won. Neither of us will be celebrating.

 

[Ed B]

Do you really think it is prudent to take financial advice from a 62 year old divorcee librarian who is still working and has less than $1 million to her name? Even if it is free? No chance.

But wait... she wrote "Our Bodies, Our Shelves: A Collection of Library Humor" so she must be qualified to dispense financial advice.

Plus, she is conveniently ignoring inflation risk.

If her ex-husband is wealthy as she states, perhaps she should consider claiming spousal benefits at her FRA rather than waiting until 70 to claim on her own record.

I hope no one takes her article as sound financial advice. It is simply her story about how she thinks she has won the game.

She points out that she put money in a vanguard index fund, that sounded a lot like a vangaurd balanced fund, and added to it regularly.

Her story has some helpful elements especially to people who don't know "come here from sic'em" about investing in equities. If you pick a good low cost fund from a quality firm like Vaguard, contribute regularly and let it grow for three plus decades, it will grow.

So her story is interesting but I would not seek her out for financial advice.

 

[pn3069]

I think the mindset of people will change if and when a meaningful stock market correction sets in...

In general, now is a time of caution in the markets since they are priced for perfection.

 

[daylatedollarshort]

If someone had a $10B portfolio and lives off their SS, is the only way they will find out if they won the game and were okay not investing in stocks is after they are dead? I'm pretty sure from other discussions there are many posters here who are not even going to come close to draining their portfolios by their time they are dead, whether they invest in stocks, TIPS or passbook savings accounts.

The librarian has a job she likes and is into simple living. I don't understand the animus towards her because she chooses not to invest in stocks. She isn't giving advice for others. It is just a human interest story on the path she has chosen and feels goods about.

We had pressure from our mutual fund rep to invest in stocks for growth - his growth because they don't make ongoing fees from TIPS, I-bonds and CDs. We pointed out his own retirement program showed us being fine even if we had a 100% short term fixed income portfolio because we aren't big spenders.

 

[alaska55]

Do you really think it is prudent to take financial advice from a 62 year old divorcee librarian who is still working and has less than $1 million to her name? Even if it is free? No chance.

But wait... she wrote "Our Bodies, Our Shelves: A Collection of Library Humor" so she must be qualified to dispense financial advice.

Plus, she is conveniently ignoring inflation risk.

If her ex-husband is wealthy as she states, perhaps she should consider claiming spousal benefits at her FRA rather than waiting until 70 to claim on her own record.

Talk about condescending, 1st of all maybe she wasn't married for 10 years. 2nd I would say a librarian and writer aren't the highest paid jobs around so to save high 6 figures to go along with a paid off house and no debt is pretty dang good. 3rd What do you call Treasury Inflation-Protected bonds.

 

[Car-Guy]

"Now all my money is stashed in U.S. Treasuries, Treasury Inflation-Protected Securities (or TIPS bonds), and laddered CDs, which, in the years to come, I can count on to earn me essentially nada."

If you could maintain the retirement lifestyle you have planned for without the sequence of return risks... would you be comfortable "earning essentially nada"?

Yes, absolutely since I am doing that now. Others on this board are doing it too but seldom will admit it since it's not part of the mainstream thinking here and often draws a lot of fire. However, I don't consider fixed income investments "nada". Low returns yes, but not nada.

 

[NanoSour]

Since starting ER over 4 years ago I've been in the 3-Fund lazy portfolio and that has been the best financial decision I've made in over 30+ years of investing. I've kept a 60/40 overall AA as follows:

40% - VTSAX (Total Market)
40% - VBTLX (Total Bond)
20% - VTIAX (Total Intl Market)

To date this has returned an XIRR of 7.77% (now there's a good number) while letting me sleep very well and not obsessing about market direction.

I based a large part of my ER decision on ESPlanner output, which includes 3 spending plans:

1. Aggressive Spending (100% of planned Real Returns)
2. Cautious Spending (50% of planned RR)
3. Conservative Spending (0% RR)

I pulled the plug when I was comfortable with "Cautious" spending numbers. BTW, the Monte Carlo projection for the 3-Fund portfolio was appx. 6%, which is about what we have achieved over the last 4 years.

Bottom line is we're off to a great start and sequence of return risks should be behind us if we continue with planned spending over the long term. No need to go down to 0% return numbers and just gonna stick we the 3-Fund 60/40 AA knowing there will be bumps and bruises in the market along the way.

 

[Sunset]

Yes, we do that. I plan on .5% real yield. I bought a fair bit of ~2% TIPS early on so I don't think it will be hard to get that as a blended real yield combined with stable value, I-bonds, CD ladders, etc. SS, pensions and a little side income will cover most of our basic expenses and a few frills so once SS kicks in our withdrawal rate should be under .5% most years. We don't have zero stocks but a low allocation and none of the money we need for retirement in stocks.

We use a matching strategy for inflation. This article has TIPS as the best inflation investment:
Top 9 Asset for Inflation Protection
9 Top Assets for Protection Against Inflation | Investopedia

The librarian is also working, and planning to continue working. It seems like a theme or necessity for folks who invest 100% in interest bearing things.

I suppose once you get a few million dollars, you could do this as $1.5 Million would be $50,000 per year for 30 years. But I'd rather just keep my stocks and withdraw at 3.3333 % in case I lived for 31 years.

 

[daylatedollarshort]

The librarian is also working, and planning to continue working. It seems like a theme or necessity for folks who invest 100% in interest bearing things.

I suppose once you get a few million dollars, you could do this as $1.5 Million would be $50,000 per year for 30 years. But I'd rather just keep my stocks and withdraw at 3.3333 % in case I lived for 31 years.

I'm counting little odds and ends income like bank and credit card sign up bonuses and passive Adsense income from existing sites, not an actual job. It is not a big part of our plan and not many hours of work a year.

At zero percent real interest, one could withdraw 3.33% for 30 years, 100 / 30 = 3.33, a bit more with a TIPS ladder averaging .5% real return - and no sequence of return risk.

 

[flintnational]

I think some may have missed this. While she says she won the game and just wants to get out, she is putting varnish on her market timing. See her quote below. She is not swearing off stock risk, she is just swearing it off at current prices.

"But if the market totally tanks tomorrow, you ask, and stocks become such a crazy bargain that I’d be a fool not to put at least some of my money back into that mutual fund that served me so well, wouldn’t I?

Of course I would! I’m no fool."

FN

 

[bobandsherry]

Since starting ER over 4 years ago I've been in the 3-Fund lazy portfolio and that has been the best financial decision I've made in over 30+ years of investing. I've kept a 60/40 overall AA as follows:

40% - VTSAX (Total Market)
40% - VBTLX (Total Bond)
20% - VTIAX (Total Intl Market)

To date this has returned an XIRR of 7.77% (now there's a good number) while letting me sleep very well and not obsessing about market direction.

I based a large part of my ER decision on ESPlanner output, which includes 3 spending plans:

1. Aggressive Spending (100% of planned Real Returns)
2. Cautious Spending (50% of planned RR)
3. Conservative Spending (0% RR)

I pulled the plug when I was comfortable with "Cautious" spending numbers. BTW, the Monte Carlo projection for the 3-Fund portfolio was appx. 6%, which is about what we have achieved over the last 4 years.

Bottom line is we're off to a great start and sequence of return risks should be behind us if we continue with planned spending over the long term. No need to go down to 0% return numbers and just gonna stick we the 3-Fund 60/40 AA knowing there will be bumps and bruises in the market along the way.

Not to bring you down, but over the past 4 years you could have had any AA and be in the money. Your AA hasn't experienced downside with the market, but based on my returns over that period you've left money on the table.

 

[pb4uski]

Yeah.... she clearly sees bulls and bears but inflation risk is much more stealthy.

 

[Car-Guy]

I think some may have missed this. While she says she won the game and just wants to get out, she is putting varnish on her market timing. See her quote below. She is not swearing off stock risk, she is just swearing it off at current prices.

FN

Or, even if you have "won the game" you "might want to consider doing both, if you have enough extra money. Bucket #1 is your "won the game" money and is just invested in fixed income instruments. Which is enough to live the rest of your life in your chosen lifestyle. (maybe even with some cushion) Bucket #2 is the extra money above and beyond what you realistically will ever need. Basically fu money. Invest, speculate, or gamble with it.