I'm young - why not 100% equities now???

[bosco]

Quote:

Originally Posted by runchman Oh no, you mentioned paying off a mortgage , let the firestorm of mortgage payoff debate begin !!!!

in a-sucks case, the debate is much more straightforward. IIRC, he is in Canada, and there is no deduction for mortgage interest (at least not without some very fancy financial footwork). So the temptation to keep the mortgage and invest the loan is much lessened. But we can still debate whether his house equity should be considered a bond...

[Hamlet]

Yup. I'm smack dab in the middle of my accumulation faze. I'm saving pretty close to a third of my income at this point.

Quote:

Originally Posted by youbet Of course, if you are truly 100% equity, the only money you would have to buy in would be new money from current earnings.......

[Leonardo]

Quote:

Originally Posted by Cute Fuzzy Bunny Which means downturns are good...you're buying stuff on sale! Downturns are only bad if you're forced to sell during them. A nice emergency cash buffer in 6.25% cd's is proof against that.

Unless the downturn continues... just remember the Nikkei 225 and the decline of 1989 to 2003. Anyone who is with a buy-and-hold strategy from 1989 still hasn´t recovered from that. A multi-year (10+) bear market is always a possibility.

[free4now]

When I was in my 20's I was basically 100% in equities. It worked well for me and I would suggest it to anyone who knows they are a buy and hold investor. However if you might be tempted to sell on a market downturn, then it makes sense to buy some "sleep at night" by lowering your equity percentage.

Frankly my main reason for being 100% in equities was that I didn't really understand the way that an 80/20 ratio can actually perform almost as well with rebalancing. The rebalancing tends to make you "sell high and buy low" which boosts the returns almost up to what you would get with 100% equities.

The other advantage of 100% equities is the simplicity... when you have a relatively small stash (say less than 100k) the extra work of say an 80/20 split might just not be worth the benefits.

Yet another advantage of being in equities early on is that you can make all the "beginner mistakes" early on before your balances are too big. It seems like everyone has to go through the stage of thinking they can pick the stock that's going to the moon before you realize that diversification is a better approach.