FUEGO
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Nov 13, 2007
- Messages
- 7,746
Is anyone spending more money now during the current economic downturn than previously?
I know our family is. We have taken two ridiculously cheap vacations in the last few months, and just booked a week at the beach this summer. These were mainly due to the price being so low, but they are also places and vacations we have wanted to take for a while but haven't due to the expense.
Our cars are getting near the end of their useful lives for our purposes (9 years old), and as a result we may pick up some new cars if the prices get stupid cheap.
My thinking had always been to spend more during a bad economy since deals should be more available. But now I am stuck with the dilemma of what I regard as very cheap investments screaming for my available cash versus less expensive goods and services to consume.
Has anyone given this much thought from an asset allocation/spending perspective? In other words, does anyone save cash in a rainy day fund waiting for an economic downturn to buy large capital goods and services?
This would tend to go against a withdrawal plan such as "spend 4% of the balance of your portfolio each year", since you would be spending more when your overall portfolio was down, and less when your portfolio was up. Has anyone seen any research on this? I am aware of Milevsky et al's work on combining asset allocation decisions with other aspects of one's financial life to better manage various risks throughout life. But I haven't seen anything specific to managing spending to take advantage of lower prices and balancing this with portfolio management and asset allocation decisions.
I know our family is. We have taken two ridiculously cheap vacations in the last few months, and just booked a week at the beach this summer. These were mainly due to the price being so low, but they are also places and vacations we have wanted to take for a while but haven't due to the expense.
Our cars are getting near the end of their useful lives for our purposes (9 years old), and as a result we may pick up some new cars if the prices get stupid cheap.
My thinking had always been to spend more during a bad economy since deals should be more available. But now I am stuck with the dilemma of what I regard as very cheap investments screaming for my available cash versus less expensive goods and services to consume.
Has anyone given this much thought from an asset allocation/spending perspective? In other words, does anyone save cash in a rainy day fund waiting for an economic downturn to buy large capital goods and services?
This would tend to go against a withdrawal plan such as "spend 4% of the balance of your portfolio each year", since you would be spending more when your overall portfolio was down, and less when your portfolio was up. Has anyone seen any research on this? I am aware of Milevsky et al's work on combining asset allocation decisions with other aspects of one's financial life to better manage various risks throughout life. But I haven't seen anything specific to managing spending to take advantage of lower prices and balancing this with portfolio management and asset allocation decisions.