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Old 02-03-2013, 05:33 AM   #21
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you mean 48 years in retirement? phew that is a long time. at what withdrawal rate.? if it is 4% or higher then you will need equities or risk pushing a cart under the bridge.
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Old 02-03-2013, 05:40 AM   #22
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Less than 4%, although I guess it varies between 2 and 3.5% with or without the use of annuities. I will continue to do some hours part time or locum tenens positions, therefore an exact SWR over 48 years in my case does not really apply.

To come back to the OP's question, what is your AA and what do you plan for your SWR and for how long ?
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you mean 48 years in retirement? phew that is a long time. at what withdrawal rate.? if it is 4% or higher then you will need equities or risk pushing a cart under the bridge.
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Old 02-03-2013, 05:45 AM   #23
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well 3.5% without equities is alot for that long with no equities.

you really have to weight your success of doing that against the risk level you can stand.

you may find your success rate is so low without a decent equity position that the real risk is in not owning a decent amount of equities.
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Old 02-03-2013, 07:10 AM   #24
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We are all free to post our opinions. It is also ok to challenge some of the assumptions implied in the recommendations. Lets try to keep the thread on topic and friendly. Whenever we post an opinion we should be prepared to support it.

Rkser, FIREcalc has been mentioned by REW, ERD50 and Gypsy Ed for good reason. It will let you enter your data and see how different allocations to equities and fixed income survive over time. I agree with their suggestions that you spend some time doing that, so you can have a better understanding of how that increase of 5% to equities affects your portfolio over the next 30 years. It may help the sleep test.
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Old 02-03-2013, 08:35 AM   #25
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Age 64. Bds(Short-Med)/Eq(US & global)/Alt(GLD + REstate): 40/45/15. About 75% is in funds.
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Old 02-03-2013, 08:38 AM   #26
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Thanks every one for your opinions, I will go back to Firecalc and play out the different stock % and see the projections.

I always learn from the different insights of the board members.

Thanks and regards
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Old 02-03-2013, 08:45 AM   #27
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The OP's question is : what would be your AA ? I answered the question honestly from my viewpoint, knowing that my investment decisions have always been very conservative. The question is not asking us to explain what equities are, AA history, or superiority of any AA approach, to which I admit I have little knowledge.

The fact that I may know less about AA than you should not prevent me, as a forum participant - same as you - from answering the OP's simple question about "what would I do". My NW at age 47 is greater than 5 m, even if I have used very conservative investing patterns all my life. No lottery won, worked about 10 years in lower paying countries than the US, and no inheritance. Therefore, I got something right somewhere, didn't I ? Non financial experts should be able give their opinion in these open ER forums the same way as everyone else without the fear of being criticized in public or ridiculed.

Do I criticize you for posting your opinion in healthcare-related forums on this website, even when you openly question well-established and generally accepted medical protocols? I read posts when time permits, and respect everyone's views on these topics, even when I disagree with them. Can you please do the same with mine, or put me on your 'ignore list' and be done with this. Thank you.
While it is fine for you to share with the OP (and us) your AA in response to his question, at the same time you should realize that your AA is an outlier and is not typical.

You have done well and with your high NW and low living costs/WR you can be very conservative in your investments. However, with all due respect, your situation is an outlier and most people in these forums are of more modest means and such a conservative AA would result in significant inflation risk.
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Old 02-03-2013, 08:55 AM   #28
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This point is perfectly valid and well taken, thank you. We all come from different horizons- it does not mean that any participant should tell any other to refrain from posting his or her views. Especially when it is not the first time.
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However, with all due respect, your situation is an outlier and most people in these forums are of more modest means and such a conservative AA would result in significant inflation risk.
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Old 02-03-2013, 09:14 AM   #29
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The OP's question is : what would be your AA ? I answered the question honestly from my viewpoint, knowing that my investment decisions have always been very conservative. The question is not asking us to explain what equities are, AA history, or superiority of any AA approach, to which I admit I have little knowledge.
True, the title didn't ask for explanation, but those are typically shorthand.

I do think the OP would benefit from the information behind any decision (like that FIRECALC graph). As others have stated, more background on your WR would be more helpful.

I try to be helpful when I respond to posts like the OP, and I truly believe that background is needed to be helpful. For example, when someone says they will get a pension of $X, to give useful a useful response, we need to know when they can take it, COLA'd/not, spousal benefits, etc. An answer w/o taking those into consideration may be steering the OP in the wrong direction.

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The fact that I may know less about AA than you should not prevent me, as a forum participant - same as you - from answering the OP's simple question ...

Do I criticize you for posting your opinion in healthcare-related forums on this website, even when you openly question well-established and generally accepted medical protocols? ...
Of course you are free to reply. I was just trying to point out that maybe you want to consider if that answer, with limited info, was helpful. If I post something, and forget to take xyz into consideration, I welcome corrections from others. I don't want to give the OP the wrong idea. Or maybe I have it wrong, and it's learning time for me.

And it certainly was not meant as criticism, sorry you took it that way. It was just meant to make the points I listed above.

I see pb4uski responded, and said it well, the background info really is important to any answer/opinion - w/o that context, does the answer/opinion really apply to the OP? They need to know that to take anything away (or avoid taking the wrong thing away).

I have no one on ignore, it's not my thing.

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Old 02-03-2013, 09:21 AM   #30
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....I have no one on ignore, it's not my thing.

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+1 though over the years there have been a few characters that have made me think of it.
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Old 02-03-2013, 09:41 AM   #31
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I have no one on ignore, it's not my thing.

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+2 and I have never once considered it. (But then censorship has never been my strong suit.)
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Old 02-03-2013, 09:41 AM   #32
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Point well taken, ERD50. As mentioned before, my posts tend to be short and concise, as I tend to be more a listener than a talker. Also mainly because of the lack of time... sometimes I even post between patients at the free clinics. I never mean to be rude - only trying to participate in discussions, hoping that my views or input might be helpful to some participants or guests. Yes, it is possible to FIRE at 45 or 50, and yes with CDs and munis mainly when LBYM.

If any participant would like to ask me for some background info, then a nice way to put it in the forum could be "Please can you elaborate ? " or "Could you please share more details about why you have chosen such an approach - i.e. high NW, etc.". The sentence "why offer your opinion on something where you have admitted that you have no knowledge?" sounds like "shut up" to me.

No one is on my ignore list either.

At least it's Sunday. Peace.

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Of course you are free to reply. I was just trying to point out that maybe you want to consider if that answer, with limited info, was helpful.
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Old 02-03-2013, 10:19 AM   #33
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for 3% and under withdrawals i like bill bernsteins risk free concept of short term bonds,tips and annuities.
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So do I. Although I worry about inflation, I am comfortable with my plan and my WR overall.
Same here. If you are able to live comfortably on a low w/d, no need to take on a lot of extra volatility that comes with equities. I know some here doesn't see it that way, but so be it.
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Old 02-03-2013, 10:52 AM   #34
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Of course the follow-up question is if you walk away from the investing table, where do you put your money for the next 40+ years? How do you stay ahead of inflation?

FIRECalc says you need to have ~40% as a minimum in equities to have a 95% or better chance of your money lasting 30 years (see graph below). For 40 years something like 50% would probably be better. You might want to run your numbers through FIRECalc using various stock allocations and see for yourself how history says you would have fared.
I think you forgot to include SS ?
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Old 02-03-2013, 11:03 AM   #35
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I think you forgot to include SS ?
Yes, deliberately.

That chart shows the survival rate of a portfolio over 30 years with a 4% initial w/drawal rate adjusted annually for inflation at various equity/bond asset allocations. No SS or other income sources are included.

Including SS would definitely improve the survivability but everyone doesn't get SS and the amounts vary for those that do.
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Old 02-03-2013, 11:32 AM   #36
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Same here. If you are able to live comfortably on a low w/d, no need to take on a lot of extra volatility that comes with equities. I know some here doesn't see it that way, but so be it.
I don't think there is any disagreement over the positive FIRECALC results of a low stock AA combined with a low WD. The results are the results.

Of course, FIRECALC also shows positive results with a high stock AA and low WD. A low WD is the key element - and if you can manage on a low WD, I see the AA as a personal decision. Though historically, a 40% or higher stock AA has provided more buffer. But you ought to be in good shape either way, so whatever floats your boat.

I'm just trying to point out that describing a low stock AA as 'safe' w/o also mentioning that it is combined with a low WD, rather than the general/common 4% number, could (and I think has) given some readers the wrong idea. Since we are here to learn and share, I think that's important. Each person will make their own decision, and we aren't all the same, I just feel better when it is clear it is an informed decision.


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I think you forgot to include SS ?
Yes, deliberately.

That chart shows the survival rate of a portfolio over 30 years with a 4% initial w/drawal rate adjusted annually for inflation at various equity/bond asset allocations. No SS or other income sources are included.

Including SS would definitely improve the survivability but everyone doesn't get SS and the amounts vary for those that do.
I think FIRECALC needlessly muddles this with their 'spending %" number.

Because actually, the 4% number refers to what you can draw (inflation adjusted) from the portfolio. SS does not affect this directly. If SS represents 90% of your spending needs, or 10%, that just tells you how big a portfolio you need. But for either size, the WR will be the same for the same AA, years, and success %.

But IIRC, FIRECALC output indicates 'spending' as total spending, not the amount you wd from the portfolio. Gets confusing.

-ERD50
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Old 02-03-2013, 12:50 PM   #37
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To answer your question I would reduce my allocation to stocks. However, I tend to be conservative with my investments.
Having read the subsequent reply/exchanges, how would the OP know from your initial answer (above) that your approach requires a 40-60% (if not more, presumably you know how much) larger nest egg than the mainstream of investors who hold 30-70% equities?

Like others have said, we're all entitled to our views, but it would seem more helpful if we were all disclosing a little about our investing philosophy before making recommendations to others - especially if your approach is markedly different than most. The audience here is made up of sophisticated investors, novices, and everything in between with a variety of risk tolerances, marital status, life span expectations, FIRE vs SIRE, $ legacy targets, ages, etc. It would be very easy to misinterpret some answers here...that's of no help to anyone.

YMMV
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Old 02-03-2013, 04:19 PM   #38
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It would be very easy to misinterpret some answers here...that's of no help to anyone.
I agree. This thread has been in somewhat of a fog for me. I have struggled with understanding where it is going... or even why. It may have been that it started as a "Do you like Chevys or Fords Better" type of inquiry and didn't really get beyond that, I don't know, but it has been non-enlightening, for sure.
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Old 02-03-2013, 04:32 PM   #39
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I think these "what would you do?" threads would be more useful if they began with a qualification, such as "please provide the rationale for your answer" or "please share the data to support your recommendation". Otherwise it is a confusing mix of advice and anecdote, often based on circumstances, preferences and concerns that the OP may not share.

Since the OP is often a new member, I wonder if it would be helpful to include some guidelines and a disclaimer in the FAQ section. What do the mods think?

As always, free advice on the Internet is worth what you pay for it and should be aken with an educated grain of salt.
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Old 02-03-2013, 07:23 PM   #40
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Agreed. I will try to expand a bit on my answers in the future, providing some additional context since I may be an outlier in this forum.
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Like others have said, we're all entitled to our views, but it would seem more helpful if we were all disclosing a little about our investing philosophy before making recommendations to others - especially if your approach is markedly different than most.
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