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Old 10-03-2012, 01:00 AM   #61
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But I do not recall anyone with teeth like these, if that's what you meant.
I thought he meant the one whose eyes bug out like she's just been hit in the back of the head...
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Old 10-03-2012, 01:53 AM   #62
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First teeth, now eyes. What else is scary about this woman?

OK, just kidding. I knew who Telly was talking about, and I was just fooling around. It's just that I do not get scared that easily.
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Old 10-03-2012, 07:19 AM   #63
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OK. So if one has amassed 30 - 35 years of expenses should we just lay back, put our feet up, and tap the matress every month?
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Old 10-03-2012, 07:24 AM   #64
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OK. So if one has amassed 30 - 35 years of expenses should we just lay back, put our feet up, and tap the matress every month?
Well you still need to earn some interest on your money to keep up with inflation. So maybe CDs?
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Old 10-03-2012, 07:45 AM   #65
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No one has mentioned the "scary teeth woman" yet. IIRC, she has all of her millions in bonds, and gives out financial advice left and right on TV. I cannot remember her name, her show is on CNBC on Saturday nights. I'm having a mental block... I think it was those scary teeth... maybe best that I don't remember... keep my sanity... not have nightmares...
Perhaps Suzi Orman?
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Old 10-03-2012, 07:45 AM   #66
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Can someone steer me toward anything on the "20/25 year expenses" concept?

Despite reading this forum every day for a few years, for some reason I've missed this. Or is this just another way of restating the ~4% SWR?
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Old 10-03-2012, 08:33 AM   #67
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Can someone steer me toward anything on the "20/25 year expenses" concept?
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Old 10-03-2012, 08:58 AM   #68
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Perhaps Suzi Orman?
Shhh...do not speak its name or it will appear!
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Old 10-03-2012, 09:53 AM   #69
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Things worked out just the opposite for me. I was able to retire very early because I put some [not all] of my savings into company stock options that then grew over many years to dominate my net worth and ultimately grow large enough to retire early.
That's good! But it could so easily have gone in another direction. I have a friend who worked for Polaroid and had all his retirement money in company stock. When they went bankrupt he lost a lot of it. My starting point for retirement saving was to guarantee (as much as is possible) a base of retirement income, so an annuity product had a place in my portfolio from the start. I just don't want to put all my money on one horse and hope that things work out well. If the DOW tumbles I'll be annoyed, but it won't be catastrophic for me.
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Old 10-03-2012, 09:58 AM   #70
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Can someone steer me toward anything on the "20/25 year expenses" concept?

Despite reading this forum every day for a few years, for some reason I've missed this. Or is this just another way of restating the ~4% SWR?
Not really, although this probably does assume a 4% withdrawal. But according to the Safe Withdrawal Rate studies, such an allocation would not survive 30 years.

I finally decided that the number of years might be more of a "panic threshold" for Bernstein's scarred clients.

It's very confusing, because Bernstein never states where the 20 to 25 years number comes from. Or what withdrawal rate his clients are using. It's all a bunch of hand waving.
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Old 10-03-2012, 10:12 AM   #71
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That's good! But it could so easily have gone in another direction. I have a friend who worked for Polaroid and had all his retirement money in company stock. When they went bankrupt he lost a lot of it. My starting point for retirement saving was to guarantee (as much as is possible) a base of retirement income, so an annuity product had a place in my portfolio from the start. I just don't want to put all my money on one horse and hope that things work out well. If the DOW tumbles I'll be annoyed, but it won't be catastrophic for me.
Sure, I made my bets, and I took my chances. It was a once in a lifetime opportunity. Otherwise I would have been just like any other engineer working in the high tech business - a much longer career and saving and investing like mad [but not in company stock] while the salary was good.

My approach might have "seemed" risky on the surface, but it wasn't. Because the initial investment in buying company options didn't take all my savings - it was a small portion, in no way were ALL my savings tied up in company stock. The fact is that the investment grew to dwarf all my other investments. It's not like I didn't have other investments growing as well, and I continued to aggressively add to them. What holding onto the stock I initially bought accomplished, was moving my retirement date up 1.5 to 2 decades! Otherwise, I would have simply had a normal career, and maybe with luck and care retired by 55 instead of 39.
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Old 10-03-2012, 11:13 AM   #72
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So, what you are saying is that you never rebalanced and your options did very well.

What I took from the article was that people can't time the market since they panic, get out at the bottom and then procrastinate and get back in at the top.

I had a friend, who after the dot.com bust kept telling me that he was going to wait for another pullback to get back in.
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Old 10-03-2012, 11:17 AM   #73
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So, what you are saying is that you never rebalanced and your options did very well.
I didn't rebalance or have an AA anyway while I was working (i.e. in the accumulation phase). Since I was only in my 20s and 30s, I was focused on maximizing the long-term growth, so I was 100% equities. Since additional savings were invested elsewhere, I was diversifying as best I could from company stock without touching "the mother lode", but I was still 100% equities overall.

Hey, it was the 80s and 90s!!!! But really, my young age had the most to do with it.

I did make one prudent diversification a few years before I retired (as the real possibility came into view). I sold a wee bit of the company stock to pay off our house. We didn't owe a whole lot on it anymore and we no longer had a high mortgage interest deduction - so no tax benefit. Paying off the house was a way to mitigate any "sudden unemployment" risk, and I did have the standard emergency fund set aside as well.
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Old 10-03-2012, 11:19 AM   #74
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What I took from the article was that people can't time the market since they panic, get out at the bottom and then procrastinate and get back in at the top.

I had a friend, who after the dot.com bust kept telling me that he was going to wait for another pullback to get back in.
I think that's the gist of it. And it seems to me for the folks that really panic and bail, getting back in is even harder. So they are really stuck.
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Old 10-03-2012, 11:44 AM   #75
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My approach might have "seemed" risky on the surface, but it wasn't. Because the initial investment in buying company options didn't take all my savings - it was a small portion, in no way were ALL my savings tied up in company stock. The fact is that the investment grew to dwarf all my other investments. It's not like I didn't have other investments growing as well, and I continued to aggressively add to them. What holding onto the stock I initially bought accomplished, was moving my retirement date up 1.5 to 2 decades! Otherwise, I would have simply had a normal career, and maybe with luck and care retired by 55 instead of 39.
Similar story here. A concentrated bet in company stock allowed us to reach FI in our 30s*. Without it, we would still have reached FI in our 40s I think because we were saving over half of our regular income. Despite some divestment in 2010, DW's company stock once again represents a sizable portion of our portfolio due to tremendous growth this year. Because we are FI and don't need to shoot for the moon anymore, we will continue to divest as the stock price goes up. But we may keep a small amount for the hormones...

* Yes, we understood the risks as company stocks blew up in our face several times in the past.
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Old 10-03-2012, 12:03 PM   #76
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I didn't rebalance or have an AA anyway while I was working (i.e. in the accumulation phase). Since I was only in my 20s and 30s, I was focused on maximizing the long-term growth, so I was 100% equities. Since additional savings were invested elsewhere, I was diversifying as best I could from company stock without touching "the mother lode", but I was still 100% equities overall.

Hey, it was the 80s and 90s!!!! But really, my young age had the most to do with it.

I did make one prudent diversification a few years before I retired (as the real possibility came into view). I sold a wee bit of the company stock to pay off our house. We didn't owe a whole lot on it anymore and we no longer had a high mortgage interest deduction - so no tax benefit. Paying off the house was a way to mitigate any "sudden unemployment" risk, and I did have the standard emergency fund set aside as well.
This was obviously successful for you, but the number of people with the opportunity for such gains and the even smaller number that realize them convince me that it is not a practical strategy for most people. I believe that going 100% equities is not a sensible approach to retirement savings and that there should be more emphasis on the protection of principal and guaranteed returns rather than riding the ups and downs of the market right form the start. Maybe put 50% into equities and 50% into an annuity.
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Old 10-03-2012, 12:11 PM   #77
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Similar story here. A concentrated bet in company stock allowed us to reach FI in our 30s*.
Most people who became wealthy did so by a concentrated bet of one kind or another. Not many get there by peanut buttering stuff around and avoiding risk.
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Old 10-03-2012, 12:16 PM   #78
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Aw, you people are so mean! I don't think the investment personality that was mentioned was that bad, though I am no fan.

She does serve a needed role; there must be somebody to slap the silly spend-thrifts around, so they can see the light. After watching her show for a few times, I do not think I can get much from her show, and when the entertainment value wore off, I stopped watching it. It's just the same with anything else you find on TV, and on the internet for that matter.
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Old 10-03-2012, 12:23 PM   #79
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This was obviously successful for you, but the number of people with the opportunity for such gains and the even smaller number that realize them convince me that it is not a practical strategy for most people. I believe that going 100% equities is not a sensible approach to retirement savings and that there should be more emphasis on the protection of principal and guaranteed returns rather than riding the ups and downs of the market right form the start. Maybe put 50% into equities and 50% into an annuity.
No, stock options approach is not a practical approach for most people. You have to be in a position to get options on company stock way early in the game, and for that you really have to be an early employee in a startup or one of the founders. Few people are in that position. Once a company has already grown, stock options aren't nearly as lucrative.

But I simply don't agree that young investors should worry about protecting principal and guaranteed returns. I think they should take advantage of their long investment window and take the most risks. As they get older they can start adding asset classes to reduce volatility. I think I did absolutely the right thing by being 100% equities in my 20s and 30s - it was a perfectly sensible thing to do. A well-diversified group equity funds may get cut in half occasionally, but it won't go to zero, and it will eventually recover.
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Old 10-03-2012, 12:24 PM   #80
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Most people who became wealthy did so by a concentrated bet of one kind or another.
True. And a large percentage of folks who busted their nestegg used the same technique.
For most folks, building an adequate retirement portfolio isn't a matter of hitting the ball out of the park, it's a matter of getting on base consistently.
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