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Now thatís a Goal! Donít think $$
Old 05-11-2019, 03:50 AM   #41
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Now thatís a Goal! Donít think $$

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Originally Posted by imoldernu View Post
One share Allstate stock left over from leaving the Sears in 1964. The rest in IBonds and guaranteed annuities. Don't even think about money any more.
I’ll admit, I’m a bit greedy so compound interest was definitely an interest of mine. 70/30 AA or more at times but also keep some cash under a mattress ��

Can’t save the big $ save the little $ but don’t spend more than you have. Savings still matters no matter what form of interest it takes, so good for you.

But ‘Camping’ outside the equity markets is not bad if your lifestyle is managed w/o it. It would seem your lifestyle is just fine, nice car and all. Plus, I know the value of my California RealEstate would go further elsewhere also but can’t seem to desire a relocation.
Live near some of the farmers that may not invest in the markets mentioned in a post.


Common theme is can you sleep at night? Perhaps after a nice dinner and glass of wine? Staying within your budget or within your financial means...

I sleep well knowing as long as the dollar has some value, I have a few dollars...lol.

Inflation? Grandma was born in 1925 - 2018 She never mentioned it - we still ate turkey on Thanksgiving and ham at Christmas...
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Old 05-11-2019, 07:50 AM   #42
Dryer sheet wannabe
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That's a subjective call everyone has to make for themselves. I retired in my early 50's with no expectation of pension or inheritance. If I get SS, I get it. But I don't plan for it. So I'm active in my investment planning every day. It's like a hobby to some extent, spending at least 1 hour, sometimes a little more, pouring over investment articles and buying stocks about 5 times per month. I do this in the early morning and am usually done by 7am, before the wife and I go out and play all day. I enjoy it. It's a thrill I get, similar to when I worked and planned software projects during my career. If I lost everything, I can still rely on my ability to go back to my profession and earn money if I have to but that is highly unlikely as I do take precautions, diversify, use stop losses etc.. After a 10 year bull market that has made me a substantial amount of money, I've decided to play it safe and get out of most stocks except a few precious metal miners, which will explode higher when the next recession comes. I can just sit back and wait, earning nothing for 10 years if I have to. Then after the S&P 500 index funds lose 50-75% of it's value, I will start buying back in when the bottom appears to have set. So yes, I'm perfectly happy with playing the stock market when the market cycles say it makes sense. As far as fixed income and CD's go, until rates are normalized again, I won't invest in them except for places to park $ while waiting for something worth investing in. I don't expect income from 1 or 2% returns. Ridiculous, outrageous and a sad testimony to our gov't/fed that values debt more than savings/retirement. But it is what it is and there is always ways to make money and thrive. Some people don't like it. I have a brother-in-law that absolutely hates how I do things. Says it would drive him crazy nervous. To each his own and I respect that. We have to do things how we are individually built and made according to our interests, abilities and comfort level.
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Old 05-11-2019, 02:38 PM   #43
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I am retired and my AA is 50/50. I can not imagine ever being less than 30% stocks. Without some growth opportunities, I would have a hard time getting to sleep at night, or at nap time.
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Old 05-12-2019, 10:23 AM   #44
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Everything is dependent on everything ...and, I don't many of your specifics.

However, depending on your age and circumstances, the lack of equities may have cost you millions of dollars.
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Old 05-14-2019, 08:44 PM   #45
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Everyone should have some equities and some bonds and a 50/50 portfolio is a start.

However, if there is a market correction, I would reallocate to 75% stock /25% bonds to take advantage of the recovery.

I also make sure my 25% bonds will hold me over if the correction or recovery time is a long one. I am retired so liquidity is important to me but i still play the stock market because I still like the thrill of victory when the recovery do happen.

If you are afraid to fall down while skiing, you will never be a good skier. Similarly, if you are afraid to lose money in the stock market, then you will never be a good investor since the stock market is a balance between an investor's greed and fear. Greed is part of my DNA. However, I do understand other people are not as aggressive and for those people, a "buy and hold" strategy works best for them.
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Old 05-14-2019, 09:46 PM   #46
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If I had enough to live off CD and Bond interest, I would be happy as a lark.
If you're very conservative as an investor and have a sizeable balance to draw from, I can see that. That pretty much describes myself (60) and my DW (66). Between my modest Megacorp pension and her SS, we have enough income to meet our upcoming monthly costs which includes medical insurance (my under 65 policy is the big hit) and our new house. Our house, once the build is completed soon, will be owned outright.

That said, despite a good amount in taxable and in tax-deferred, I think once it all settles down with the new house that we'll end up investing some in the stock market. Not a lot, because we really don't need to. But even 20% stock is better than nothing as a bit of a hedge against inflation.

Now just need to get the courage up to do so. For those who invest in the stock market and sleep well at night, I don't think they really understand the stress some go through having part of their money invested in stocks.
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Old 05-14-2019, 10:02 PM   #47
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For the first 3 years of saving/investing life I had money in a bank saving account and all my retirement money in TIAA Traditional. Thirty years later and I still have that TIAA Traditional account, but I've added a few mutual funds as well.
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Old 05-15-2019, 12:29 PM   #48
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That said, despite a good amount in taxable and in tax-deferred, I think once it all settles down with the new house that we'll end up investing some in the stock market. Not a lot, because we really don't need to. But even 20% stock is better than nothing as a bit of a hedge against inflation.

Now just need to get the courage up to do so. For those who invest in the stock market and sleep well at night, I don't think they really understand the stress some go through having part of their money invested in stocks.
My comment: Here is a link to all of the stock market bear markets and recovery time since WW2...

https://www.cnbc.com/2018/12/24/what...lly-last-.html

The chart indicates the longest bear market is 21 months and recovery time is 69 months. This implies you need a rainy day fund of 90 months or 7.5 years in order for your stock investment to recover. I disregarded data prior to WW2 because there was no SS, no government intervention, no balanced portfolios and people back then were reckless in my opinion.

As long as I have a rainy day fund of 7.5 years of income, I sleep well at night. I suggest short term corporate bonds such as VFSTX or government bonds or CD as some of the good rainy day funds. As long as you have a good safety net or a good rainy day fund, you should be in a position to take some risks which will give you some decent returns.

However, if you still can't sleep well with 7.5 years of income in a rainy day fund, then increase your rainy day fund to 10 or 15 years. The number of years that you feel comfortable with is based on an investor's risk tolerance.
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Old 05-15-2019, 02:14 PM   #49
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Camping,

Was thinking the only way you can determine how much money you have avoided making in a reasonable AA portfolio, would be to do a year by year model ... compare and contrast your no equities portfolio staring with first year, with a simple 60/40 portfolio ...don’t try each deposit, just lock to an annual date and add fixed to you non equities portfolio, and then beside it add to a 60/40 portfolio.

Run it out every year until today ... see what the difference is.

It sounds like it could be hundreds of thousands or perhaps even millions of dollars.
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Old 05-15-2019, 02:37 PM   #50
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Quote:
Originally Posted by stephenson View Post
Camping,

Was thinking the only way you can determine how much money you have avoided making in a reasonable AA portfolio, would be to do a year by year model ... compare and contrast your no equities portfolio staring with first year, with a simple 60/40 portfolio ...donít try each deposit, just lock to an annual date and add fixed to you non equities portfolio, and then beside it add to a 60/40 portfolio.

Run it out every year until today ... see what the difference is.

It sounds like it could be hundreds of thousands or perhaps even millions of dollars.
Here's one example... $10k a year invested annually... 60/40 vs Short-term Bond Fund as a proxy for CDs... since Jan 1995... 60/40 has 86% more.

https://www.portfoliovisualizer.com/...2=100&total3=0
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Old 05-15-2019, 08:18 PM   #51
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Quote:
Originally Posted by pb4uski View Post
Here's one example... $10k a year invested annually... 60/40 vs Short-term Bond Fund as a proxy for CDs... since Jan 1995... 60/40 has 86% more.

https://www.portfoliovisualizer.com/...2=100&total3=0
But you can see in that graph several times that the higher equities run higher for a while, and then come down close to or even below the no equities line before starting to outpace again. So you never know..... it depends when you measure it.
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Old 05-16-2019, 05:42 AM   #52
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It doesn't matter. In this case it was to compare for someone near to retirement, like the OP. If I had data back to 1978 available then I would have used it and the CDs only would look even worse. But I agree that you can see the "lost decade" quite clearly given the starting point of available data.

For just about any 40 year period, stocks will thump CDs, and often by a wide margin.
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Old 05-16-2019, 08:55 AM   #53
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I'm very conservatively invested and extremely risk averse. I like the Wellesley fund a lot because it matches my risk tolerance very well, but I can understand why some people will stay away from stocks and the associated risks.

People who have an aversion to stocks but have a high savings rate and are comfortable with low returns will often get called out on the "losing purchasing power due to inflation" argument. Depending on their living expenses and the size of their nest egg, this may not mean much.. Let's say someone has a $4M nest egg returning 3% in CDs ($120k/yr) and their current spending is $50k/yr. The inflation effects on $50k/year over time is small potatoes in the grand scheme of things when compared to the annual dollars (not %) thrown off by the CDs and the remaining balance of their savings. Yes, the nest egg will eventually get smaller over time, but they are still set for life. If you set aside the greed and FOMO argument, why would they take the added risk if they are happy, feel financially secure and sleep well.
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Old 05-16-2019, 09:22 AM   #54
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People who have an aversion to stocks but have a high savings rate and are comfortable with low returns will often get called out on the "losing purchasing power due to inflation" argument. Depending on their living expenses and the size of their nest egg, this may not mean much.. Let's say someone has a $4M nest egg returning 3% in CDs ($120k/yr) and their current spending is $50k/yr. The inflation effects on $50k/year over time is small potatoes in the grand scheme of things when compared to the annual dollars (not %) thrown off by the CDs. Yes, the nest egg will eventually get smaller over time, but they are still set for life. If you set aside the greed argument, why would they take the added risk if they are happy, feel financially secure and sleep well.
With different numbers, we share some similarities with your assessment. I have no quarrel with those who are primarily stock investors. I wish I had been a good one, but I made a lot of poor decisions and switched gears to fixed income investing. I've only recently started investing in some preferred stock/high dividend yield stock ETFs, again with a focus on income rather than growth. I do continue to try to learn from the stock investors here.

With your numbers, the nest egg won't necessarily get smaller over time. I know that ours doesn't. My husband still works, but he could retire at any time, and we'd still be fine, with investment income/net worth that continues to grow.
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Old 05-16-2019, 09:22 AM   #55
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If you set aside the greed and FOMO argument, why would they take the added risk if they are happy, feel financially secure and sleep well.
Um, plenty of reasons other than greed and FOMO, and if you've really paid attention to some of the posts in the various threads, you'd know that. SHTF situation, especially medical, for me or my family. Leaving behind something for heirs. Leaving behind a legacy with charitable donations. Just to name a few.

A 50/50 AA is not really risky. You can spend from your non-equity investments if a stock crash does happen, and hold through the almost certain recovery. Besides, in your scenario:
Quote:
Let's say someone has a $4M nest egg returning 3% in CDs ($120k/yr) and their current spending is $50k/yr.
I could lose every penny of my equities and still make it without cutback. See what I mean by "not really risky"?
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Old 05-16-2019, 09:54 AM   #56
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Um, plenty of reasons other than greed and FOMO, and if you've really paid attention to some of the posts in the various threads, you'd know that. SHTF situation, especially medical, for me or my family. Leaving behind something for heirs. Leaving behind a legacy with charitable donations. Just to name a few.

A 50/50 AA is not really risky. You can spend from your non-equity investments if a stock crash does happen, and hold through the almost certain recovery. Besides, in your scenario:

I could lose every penny of my equities and still make it without cutback. See what I mean by "not really risky"?
Yep...understood. Some people (myself included) would probably feel physically ill if all their stocks went to zero. Investing (or not) can be a very individualized endeavor. Potentially losing half of your life savings...yikes, potentially losing some gains...yawn.
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Old 05-16-2019, 10:01 AM   #57
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Yep...understood. Some people (myself included) would probably feel physically ill if all their stocks went to zero. Investing (or not) can be a very individualized endeavor. Potentially losing half of your life savings...yikes, potentially losing some gains...yawn.
On a 50/50 AA, one would probably lose at most 25% of their portfolio in a bad bear market. Not chump change, but not 50% either.
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Old 05-16-2019, 10:15 AM   #58
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I think the likelihood of another Great Depression is very slim, but I believe stocks were down greater than 90% at that time. With all of the financial engineering, HF trading and global debt load these days, who knows what could happen?
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Old 05-16-2019, 10:27 AM   #59
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Yep. It's possible. And as I said, in your scenario I'd still be fine. And it'd probably recover anyway.

I think a more likely scenario than another horrific crash is that I'd find I'd run into some situation where I'd need much, much more money than I imagined. Then I wouldn't be yawning over lost opportunity to grow my money, with caution.
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Old 05-16-2019, 10:30 AM   #60
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Here's one example... $10k a year invested annually... 60/40 vs Short-term Bond Fund as a proxy for CDs... since Jan 1995... 60/40 has 86% more.

https://www.portfoliovisualizer.com/...2=100&total3=0
Look at where the line bifurcates... right where the world central banks started propping up markets by directly buying assets and artificially suppressing interest rates.
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