Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 08-14-2013, 02:55 PM   #41
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,201
Quote:
Originally Posted by Major Tom View Post
To be perfectly honest, if you don't have the time, or are not willing to spend the time that is required for all this stuff to sink in and take root, you should not be in anything other than the fixed income investments that currently make up the overwhelming majority of your portfolio. If you're truly comfortable with the fact that they will lose purchasing power over time to inflation (as you have indicated), then continue on the course you are already on, and don't give equities a second thought. If, however, you are interested in learning how to put together a portfolio from which you can draw an income which will keep pace with inflation and, just as importantly, want to learn a bit about risk assessment so that you feel comfortable with that portfolio, then there's plenty of good reading right here on this forum as well as on Bogleheads and the many great books that have been recommended and talked about right here on this forum.

Best of luck!
It seems to me that fixed income investments take time as well. CDs come due and need to be replaced, annuities need to be researched and understood (hopefully!), and likewise with muni bonds. Whereas some people just go heavy into Wellesley, or target funds, or a simple mix of Total (US) Stock/Total International Stock/Total Bond). In the latter, take a look once a year and rebalance. No need to even do that in the other two since they are self-balancing. It really is that basic and shouldn't require the hand-holding of an adviser, though I think the OP may be using one anyway.
__________________

__________________
RunningBum is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-14-2013, 02:57 PM   #42
Thinks s/he gets paid by the post
Major Tom's Avatar
 
Join Date: Nov 2009
Location: SF East Bay
Posts: 3,130
Good grief Moemg, the thought of Obgyn with a classic 60/40 portfolio during the last market meltdown almost doesn't bear thinking about.

Now those would have been some long threads......
__________________

__________________
ER, for all intents and purposes. Part-time income <5% of annual expenditure.
Major Tom is offline  
Old 08-14-2013, 06:21 PM   #43
Dryer sheet aficionado
 
Join Date: Nov 2009
Posts: 26
Quote:
Originally Posted by steelyman View Post
Be patient. I have a fund I bought in '94 and it's just fine.
I have a couple stocks I bought in '93 and they are just fine too.
__________________
jasg is offline  
Old 08-14-2013, 06:53 PM   #44
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,483
The earliest entry in my investments in Quicken is a 1/18/93 purchase of Vanguard Total Stock Market Index Investor shares for $10.93. They later converted to Admiral shares which trade today at $42.57.

So that would be a 6.83% annual return only based on the price increase, ignoring dividends and capital gains distributions.

The bad news is that it is in my IRA so when i receive it it will be ordinary income, but if I play my cards right the tax rate on that ordinary income will be 15% or less.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now  
Old 08-14-2013, 11:03 PM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,298
Where to start?

A) I don't recall any poster being 'critical of your conservative stance'. It was pointed out (time and time again) that a 100% fixed income portfolio historically has a low success rate with a 30 year time frame at a 3.5% WR - only 79.3%. An AA of anywhere from 30% to 85% equities however, provided a 100% success rate. That's not 'critical' - that's information. And it gets worse at 40 years - 27% success with all fixed, and 98% success with higher equities (~ 50/50 to 65/35).


B) You are able to track the daily 'sell' prices of these funds. Have you tried that with your other holdings? They may be down also - but you may not be aware of it.

C) Where are you getting your numbers from? According to daily prices at finance.yahoo, Wellesley is up since 3/5/2013. NAV is up, and up even higher when you include dividends (which you must).

D) I have no idea on the bond fund you mention. Those are bonds - it doesn't change your AA.

E) Irony. It is the fixed income side that is holding Wellesley back. If you look at equities separately, you'd see that a broad index of equities (VTSAX) is up over 10% in that time frame . Equities RULE!!!!

Here's a link to a chart that includes DIVS. I couldn't hit 3/5/2013 with their slider - is 3/7/2103 close enough?

PerfCharts - StockCharts.com - Free Charts

F) As others have said - this is a long term deal. Even if you had a 1% paper loss in 5 months, ignore it. If that is going to scare you and make you sell low - than stick to 100% fixed, but run it through FIRECalc to see if you can get by with a < 2% WR. Because that's all history says you can take over 40 years.

-ERD50
__________________
ERD50 is online now  
Old 08-15-2013, 12:20 AM   #46
Full time employment: Posting here.
dtbach's Avatar
 
Join Date: Apr 2011
Location: Madison
Posts: 753
Why does anyone care about what OBGYN does?? He/She makes a ton of money as a Dr. and can afford to buy nothing but CD's. The rest of us must make do with equities. Let's see, a $1 in 1980's $1 is still a dollar. A $1 in the 1980's S&P is about $15. Take a pick.
__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
dtbach is offline  
Old 08-15-2013, 12:27 AM   #47
Full time employment: Posting here.
 
Join Date: Aug 2007
Posts: 894
Quote:
Originally Posted by dtbach View Post
Why does anyone care about what OBGYN does?? He/She makes a ton of money as a Dr. and can afford to buy nothing but CD's. The rest of us must make do with equities. Let's see, a $1 in 1980's $1 is still a dollar. A $1 in the 1980's S&P is about $15. Take a pick.
Not so much. What is bothersome is the idea that equities don't work. Sure, you have to accept volatility, but that's part of the deal. As you say, unless you have a lot of cash, then you can't afford the CD route. But honesty, even if you did have the cash a new better, why would you go with CD's (and deferred annuities).

Myself, I'll call it quits with a lot less than Obgyn and I believe our our success rates won't be much different. To each their own.
__________________
Eat, Drink and Be Merry.
tulak is offline  
Old 08-15-2013, 12:28 AM   #48
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,218
Quote:
Originally Posted by dtbach View Post
Why does anyone care about what OBGYN does?? He/She makes a ton of money as a Dr. and can afford to buy nothing but CD's. The rest of us must make do with equities. Let's see, a $1 in 1980's $1 is still a dollar. A $1 in the 1980's S&P is about $15. Take a pick.
Personally, I don't. But he keeps posting.
__________________

steelyman is offline  
Old 08-15-2013, 12:38 AM   #49
Full time employment: Posting here.
 
Join Date: Aug 2007
Posts: 894
Quote:
Originally Posted by LOL! View Post
@kiki, deep background: obgyn is extremely risk averse and was invested 100% in CDs and perhaps fixed annuities, so has not experienced any loss of capital. For someone like that, no amount of equities may be a good asset allocation. These investments that obgyn made are their first baby steps into the big bad world of possible losses and investing in general. Before this, it has all been about savings in can't-lose CDs.
I'm a long time lurker, so I've had the benefit of reading Obgyn's posts without commenting. What I find puzzling with this latest post is, what's his goal?

If you're going to build a portfolio, figure out your goal and then build the appropriate portfolio (AA). What he's done is pick two funds to build a 20/80 mix, using two assets that aren't good (using nicer language).

Nobody would recommend this. Based on this, I could only assume he's done this to deliberately prove that equities are a bad investment (all 20% of them - heck, he probably lost more in bonds than equities). But he's selected a short time-frame with an inappropriate allocation. More power to him if he feels this proves a point, but I'd suggest he read the responses to this thread and ponder what he's trying to accomplish.

In the end, each their own!
__________________
Eat, Drink and Be Merry.
tulak is offline  
Old 08-15-2013, 12:54 AM   #50
Full time employment: Posting here.
dtbach's Avatar
 
Join Date: Apr 2011
Location: Madison
Posts: 753
Quote:
Originally Posted by kiki View Post
I'm a long time lurker, so I've had the benefit of reading Obgyn's posts without commenting. What I find puzzling with this latest post is, what's his goal?

If you're going to build a portfolio, figure out your goal and then build the appropriate portfolio (AA). What he's done is pick two funds to build a 20/80 mix, using two assets that aren't good (using nicer language).

Nobody would recommend this. Based on this, I could only assume he's done this to deliberately prove that equities are a bad investment (all 20% of them - heck, he probably lost more in bonds than equities). But he's selected a short time-frame with an inappropriate allocation. More power to him if he feels this proves a point, but I'd suggest he read the responses to this thread and ponder what he's trying to accomplish.

In the end, each their own!
The OP is trying to prove that equities can go down in +/- 3 months vs go up eternally. Like none of us know that. I think the OP should just stick with Cash/Short Term CD's and go on their way.
__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
dtbach is offline  
Old 08-15-2013, 03:03 AM   #51
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Thank you everyone for posting. I will need a day or two to digest the advice provided and will answer then.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline  
Old 08-15-2013, 06:39 AM   #52
Full time employment: Posting here.
 
Join Date: Jan 2006
Posts: 686
If you don't have time or knowledge, then maybe you are better off paying 1% or 2% to a Financial Advisor that you trust. I know that is contrary to most people here, but may work for you. good luck
__________________
48Fire is online now  
Old 08-15-2013, 07:32 AM   #53
Full time employment: Posting here.
 
Join Date: May 2011
Location: Marco island
Posts: 813
Another approach for those not willing to risk principal is to invest the interest from CDs or treasuries in equities. To me, it's a great way to invest, especially for those with higher incomes or those with large lump sums.
__________________
Gatordoc50 is offline  
Old 08-15-2013, 08:34 AM   #54
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,627
Quote:
Originally Posted by 48Fire View Post
If you don't have time or knowledge, then maybe you are better off paying 1% or 2% to a Financial Advisor that you trust. I know that is contrary to most people here, but may work for you. good luck
Uh, no. Perhaps 0.1% to 0.4% would be reasonable.
__________________
LOL! is offline  
Old 08-15-2013, 08:38 AM   #55
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 1,829
Quote:
Originally Posted by LOL! View Post
Uh, no. Perhaps 0.1% to 0.4% would be reasonable.
There is nothing a FA is going to tell the OP that he doesn't already know from spending time in this forum. And if after reading all of our posts over the years he is still risk averse, an FA is not going to do anything magical to change that. The OP clearly has an aversion to equities. He needs to do what he is comfortable with. Spending any amount of money on an FA will only reduce his returns further because he won't be any more comfortable investing in equities with an FA than he is now and he will just be paying someone money to confirm that.
__________________
Ready is offline  
Old 08-15-2013, 09:14 AM   #56
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
obgny65 should look at total return over the duration of the bonds his funds hold rather than short term price fluctuations. I hold both funds and plan to keep them for the long term as I think they will be good income producers
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline  
Old 08-15-2013, 12:27 PM   #57
Thinks s/he gets paid by the post
Major Tom's Avatar
 
Join Date: Nov 2009
Location: SF East Bay
Posts: 3,130
Quote:
Originally Posted by RunningBum View Post
It seems to me that fixed income investments take time as well. CDs come due and need to be replaced, annuities need to be researched and understood (hopefully!), and likewise with muni bonds. Whereas some people just go heavy into Wellesley, or target funds, or a simple mix of Total (US) Stock/Total International Stock/Total Bond). In the latter, take a look once a year and rebalance. No need to even do that in the other two since they are self-balancing. It really is that basic and shouldn't require the hand-holding of an adviser, though I think the OP may be using one anyway.
I think it's very possible that buying CD's, munis etc the way that Obgyn does, involves more time and effort than maintaining a simple index fund portfolio. However, if you're very risk-averse, you'll be willing to take that time and effort in order to buy investments that are guaranteed to go up in value. We all need to do whatever allows us to sleep at night.

I'm not 100% keen on the phrase "risk-averse" though, thinking that it should be a more literal description. "Perceived risk-averse" might be a better moniker, because what many fixed income only investors perceive as risk in equities is just the short-term volatility which means little to someone who is in it for the long haul.

On a related issue, some of us talk about the relatively long periods over which various indexes were flat. However, in real life, none of us put all our money into the market at one time and withdraw it all at one time. We dollar-cost average into the market over our working lives, and slowly dollar-cost average out of it while we are retired. A person who begins saving at the age of 25 and finally goes to meet his/her maker at 85 is in the market for 60 years. That is a long time to be invested. I'll take that bet. Everything in life is a gamble anyway. We all, in one way or another, play the game of risk-assessment every single day in our lives.
__________________
ER, for all intents and purposes. Part-time income <5% of annual expenditure.
Major Tom is offline  
Old 08-15-2013, 12:55 PM   #58
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
Quote:
Originally Posted by Major Tom View Post
Everything in life is a gamble anyway. We all, in one way or another, play the game of risk-assessment every single day in our lives.
+1

Even posting here you run the risk of having someone take you to task because they disagree with your wrong-headed, stupid opinion. Not me, of course...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 08-15-2013, 01:00 PM   #59
Thinks s/he gets paid by the post
Major Tom's Avatar
 
Join Date: Nov 2009
Location: SF East Bay
Posts: 3,130
Hehehehehe. I'm staying well away from that one
__________________
ER, for all intents and purposes. Part-time income <5% of annual expenditure.
Major Tom is offline  
Old 08-15-2013, 04:27 PM   #60
Full time employment: Posting here.
 
Join Date: Aug 2005
Posts: 942
I'm no expert of course, but to me it depends on how much the OP currently has saved and how close he is to retirement. If he has sufficient funds, even if they are in CD's and muni's, and the addition of some funds like Wellesley or Wellington, of which both pay out dividends of between 2 to 2.5%, and usually as the stock price goes down the dividend % goes up, thereby maintaining the same income from it (depending on how low it goes). So if a certain portion of his portfolio is in a fund like this that pays a decent % income (though less than he might like right now) it gives him exposure to equity with the likely hood over the long run to grow and help offset inflation.

In other words it is a balanced fund with dividends to go towards your income, while still having growth potential from the equities.

The only other thing that I can think of him doing to try and give him additional income if that is his objective, is to purchase maybe ten very solid stocks like Coke, Proctor & Gamble, Johnson & Johnson etc. that have a long history of paying dividends as well as increasing them. At least with that, he might garner about 3% income from them, and still have some capital growth to help with the inflation portion. But if he only has 20% in such a fund or stocks, I don't think there would be enough to carry the whole inflation risk factor. He would need to bump it up to at least 40% I would think.

And if he is in any type of balanced funds, he doesn't need an adviser, as the fund all ready has advisors managing the funds. Why pay twice. If your going to purchase several funds and want to be sure your not overlapping and you don't have proper diversification, then either a trip to a paid adviser to examine the mix, might be advisable.

I know I'm going to be shot for saying this, but equity evaluations are very high right now. Not saying that they couldn't still go higher, but they are in the historical all time high arena. So, it might be more prudent for OP to go slow right now anyway. Have money ready to buy on the dips. Listen for bad news. Market always reacts to bad news. But most times it quickly passes and stocks regain their original value.
__________________

__________________
modhatter is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 09:39 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.