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OK, All You Worry Warts !
Old 08-25-2015, 09:51 PM   #1
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OK, All You Worry Warts !

Listen to Jack.
http://finance.yahoo.com/news/bogle-...113629314.html
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Old 08-25-2015, 10:36 PM   #2
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Well we were overdue for a correction. Nothing has changed for me. I am buying . No matter what happens , I know prices will recover eventually.
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Old 08-26-2015, 12:25 AM   #3
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Bogle says do not sell, but he does not think buying is good either.
Some analysts suggest that investors see the decline as an opportunity to buy. That's not as bad an idea, but "nobody can tell you when the market is going back up," Bogle pointed out. "Maybe one guy, and he's up in a different world, heaven."

Bogle acknowledged a few years earlier that the investing environment was tough for both bonds and stocks. And he reiterates now with
"We live in an uncertain world," Bogle acknowledged. "Stocks are fully priced and interest rates are already low."

I think what he says is you should be worried, but selling is not going to help because there's no place to hide.

PS. No, I take it back. I think Bogle implied that if you are planning to live on 4% you should be worried. So, perhaps 2.5-3% in order to be worry free?
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Old 08-26-2015, 01:29 AM   #4
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So what type of withdrawl rate would that equate to for a 50 year retirement? 2%? Well, after I accumulate enough money for a 2% withdrawl rate, I guess it will only be a 40 year retirement.

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Old 08-26-2015, 05:33 AM   #5
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PS. No, I take it back. I think Bogle implied that if you are planning to live on 4% you should be worried. So, perhaps 2.5-3% in order to be worry free?
That is why I made sure long ago to have enough cash to last 5+ years after all my retirement investments were past enough and SS and small pensions could see us through by themselves while health insurance (Medicare and Tricare) takes care of any health issues and we don't have any loans or mortgage. We are still frugal out of habit yet spending more for fun activities than in the past and trying not to be as concerned about costs. I doubt we are drawing even 1%. I have to give credit to my parents and many of the folks here for guiding me to our present situation.

Cheers!
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Old 08-26-2015, 08:40 AM   #6
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So what type of withdrawl rate would that equate to for a 50 year retirement? 2%? Well, after I accumulate enough money for a 2% withdrawl rate, I guess it will only be a 40 year retirement.
The S&P is paying 2% dividend. Bonds have not paid 2% above inflation the last few years, and will not in the forseeable future. But if you allow yourself to spend down principal, and also take into account SS, and spending less in your later years, then perhaps you can still do 4%? The 4% rule does not consider many other factors in life.

But what it means is we should not get accustomed to see our stash keep on growing while we are spending it.

This thread talks about what is happening to a Y2K retiree: Allocation vs withdrawal rates.

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That is why I made sure long ago to have enough cash to last 5+ years after all my retirement investments were past enough and SS and small pensions could see us through by themselves while health insurance (Medicare and Tricare) takes care of any health issues and we don't have any loans or mortgage. We are still frugal out of habit yet spending more for fun activities than in the past and trying not to be as concerned about costs. I doubt we are drawing even 1%. I have to give credit to my parents and many of the folks here for guiding me to our present situation.

Cheers!
If I had to live on 1%, I would be living in my class C motorhome right now.

I am spending a lot more than that the last 3 years, which are the first years of my retirement. A lot of that is for what should be one-time expenses such as major home repairs and updates, and my daughter's wedding. I hope these will not be recurrent.

In future years, SS and Medicare will come on line, and my WR will drop. So, I should be OK, but darn it, I hate to see my stash shrink.
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Old 08-26-2015, 08:52 AM   #7
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well the good news is that my portfolio has automatically rebalanced itself over the last week
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Old 08-26-2015, 09:51 AM   #8
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well the good news is that my portfolio has automatically rebalanced itself over the last week
LOL! So has mine!
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Old 08-26-2015, 10:01 AM   #9
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Not for the first time, I am glad to have my real estate portfolio. In fact I am adding a new property. When the mortgages are paid off, the income should cover approximately 1/3 of my living expenses, reducing my WR from ~3% to ~2%. I also have a generous cash buffer. I am not looking at my accounts and I am sleeping soundly.
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Old 08-26-2015, 10:24 AM   #10
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So what type of withdrawl rate would that equate to for a 50 year retirement? 2%? Well, after I accumulate enough money for a 2% withdrawl rate, I guess it will only be a 40 year retirement.
I don't know, but I'm going with taking 3% of the value of the portfolio each year (ie. no adjustment for inflation). It might go down, or it might go up. I'll let you know in 50 years.
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Old 08-26-2015, 10:33 AM   #11
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I don't like self-rebalancing portfolios - I prefer to do it myself. But I don't unless it exceeds certain bounds.
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Old 08-26-2015, 10:35 AM   #12
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Originally Posted by Dreaming of Freedom View Post
So what type of withdrawl rate would that equate to for a 50 year retirement? 2%? Well, after I accumulate enough money for a 2% withdrawl rate, I guess it will only be a 40 year retirement.

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3% is probably a perpetual number. 2% is really low.
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Old 08-26-2015, 10:37 AM   #13
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Without volatility, there will be no need to rebalance anything because both stock and bond returns will be flat (actually near 0).

How can it be any simpler? Me worry?

See Bogle's earlier prediction: 2015 stock market.
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Old 08-26-2015, 10:51 AM   #14
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OK, I've found the interview in 2012 where Bogle said then that it was the "most difficult investment conditions he has ever seen".

The market proceeded to climb very well since, despite that consternation. So, is Bogle eventually proven right?

See: Bogle on future returns.

PS. When Bogle says not to panic and sell, he is not promising that buy-and-hold will get you the 4% WR nirvana. Far from it, he keeps trying to reduce people's expectation. He only means that you can make it even worse by buying and selling at the wrong time.

PPS. Talk about reducing expectation is common between several pundits like Bogle, Shiller, and Bill Gross, though they hardly agree on other things. There's still a chance they are all wrong.
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Old 08-26-2015, 09:44 PM   #15
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Heading into these more volatile times where portfolio is down 12-15 or as much as 20 percent one should remember the SP500 or similar total market broad basket of equities continues to pay approx 2 percent annual dividend yield and said dividend is usually increased over time to keep up with inflation. In that case, then l, 2 percent becomes pretty much a perpetual safe WD rate (presuming no eventual draw down of assets).

However in times of high inflation the dividend seldom keeps up - more often than not it significantly lags inflation for a long period of time. Anyone with a 50 year retirement horizon such as someone in mid 40s to early 50s should probably be well below 4... Arguably below 3 percent .. My comfort level is at no more than 2 percent (excluding SS / pensions) to ensure perpetually funded expenses...

Sequence of return risk + Inflation risk + longevity risk. A lot can go wrong in 50 years hence keeping the powder dry for the first 30 of those 50 becomes paramount.
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Old 08-27-2015, 05:31 AM   #16
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The question is are you an investor or are you a trader?
It occurs to me that my dividend stocks continue to chug along doing their dividend thing.. The daily price? Up down and around. But of course No one likes instability other then volatility traders... But to steal another's analogy corrections are like getting caught in the rain... Certainly not the worse that thing will happen. My answer buy a slicker and boots and enjoy nature.


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