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04-04-2013, 08:10 AM
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#21
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Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,301
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I guess it's possible to have all of your cash in i-bonds or tips. Or does that not count as cash?
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04-04-2013, 08:11 AM
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#22
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,305
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Quote:
Originally Posted by photoguy
I guess it's possible to have all of your cash in i-bonds or tips. Or does that not count as cash?
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How would you move all your cash to iBonds with the $10K (plus tax refund) annual limit per Soc Sec #? I often see iBonds mentioned as a great alternative, but the limits are so severe they're not much help. We bought $20K last year (me & DW) and will probably continue while this investing environment exists, but $20K/year is relatively small for most people's retirement personal assets...
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No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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04-04-2013, 08:14 AM
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#23
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Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,301
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Well not just i-bonds. Presumably he/she could buy TIPS too.
The 20k per year limit for a couple in i-bonds is lower than I would like too. But If I had started buying them earlier I think the limit wouldn't be problem..
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04-04-2013, 08:17 AM
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#24
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,305
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Quote:
Originally Posted by photoguy
Well not just i-bonds. Presumably he/she could buy TIPS too.
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I understand, but the OP asked about what to do with a portfolio that was large enough for cash only (@ zero real return) to support an inflation adjusted, long (30 years +/-) retirement, most likely a 7 figure nest egg. $10-20K/yr would be trivial in that circumstance.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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04-04-2013, 08:56 AM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
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If I ever find myself going 100% to cash (or equivalents), I think it would be a fine time to have myself tested for dementia.
I recently received a pretty large heap of cash that I've decided to dollar-cost average monthly over a period of 2 years into a target-date retirement fund that currently has assets allocated 60/40 stocks/bonds.
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04-04-2013, 09:08 AM
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#26
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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I guess if you don't mind inflation killing your purchasing power, do it. I personalyl would enver do it, I have very little in FDIC covered deposits and will have very little upon retirement.........YMMV...........
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Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
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04-04-2013, 09:51 AM
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#27
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Full time employment: Posting here.
Join Date: Apr 2006
Posts: 969
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This is almost exactly what my mother (now over 80) has done since retiring on mostly SS income. (She still puts in a few hours every week for a small additional paycheck.)
Almost everything (which is quite a very small amount by the standards here but significant to her) has been in FDIC backed products (passbook accounts, CD's, etc.) as long as I can remember. She does not understand or trust the markets and would not be able to sleep at night if her money was at risk.
Since she can easily subsist on her SS income, the savings are just for peace of mind (an emergency fund of sorts) in any case.
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04-04-2013, 10:17 AM
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#28
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Thinks s/he gets paid by the post
Join Date: Jul 2012
Location: Mississippi
Posts: 1,894
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Quote:
Originally Posted by ziggy29
That's the problem here. We can't "know" future inflation any more than we can "know" future equity returns. We can no more assume inflation will remain (mostly) below 3% (officially, don't get me started) than we can assume equities will continue to return 10-11% over the long run.
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Exactly. If the conditions were met in the OP, that we had enough to last our lifetime, taking to account inflation, then cash would be no-brainer.
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04-04-2013, 11:10 AM
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#29
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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I guess I will add a caveat to this hypothetical: Are you interested in building a greater estate for your beneficiaries or charities or not? FDIC insured investments have never been known to build wealth. And a diversified investment over time will smoke FDIC returns. So, again, it goes back to the OP's intent........because its THEIR money..........
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Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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04-04-2013, 02:00 PM
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#30
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,930
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I diversify, not so much because I don't feel I have enough to survive, but because I fear inflation more than I fear losses (and it's a close fear!) So, if reasonable inflation could be "guaranteed", I would consider all cash. Since it can not be guaranteed, I diversify. Though as someone pointed out, precious metals also lose value, they have never lost all value as all past currencies have eventually done. Yeah, I know, there are some (currently) surviving currencies, but they too will fail - even the dollar. Just hope it's not in my lifetime, though that looks more possible than 5 years ago. So one point of diversity, even if no other, would be PM if it were me (and for me, it is. ) YMMV
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04-04-2013, 02:20 PM
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#31
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Dryer sheet wannabe
Join Date: Dec 2011
Location: Fairfax
Posts: 22
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As for me, I agree with others who have said that the inability to predict inflation over time is reason enough to maintain a balanced portfolio, which grows more-conservative as one ages. When I hit 80, depending upon my portfolio's worth, I will certainly re-think the "all cash" (or SPIA) option.
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04-04-2013, 02:28 PM
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#32
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,376
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The more I think about it, I could never go 100% cash (or cash equivalents) even if if I had an obscene nestegg and a very low withdrawal rate as I have spent a life-time trying to optimize my nestegg and to do an about face and IMO suboptimize my nestegg would be very uncomfortable for me.
Besides, I have heirs and charities who will benefit from whatever is left so in such a situation I would view myself as managing the investments for their benefit (just like I currently manage my mother's investments for my and my siblings benefit since between SS and a commercial real property she owns it provides more than what she needs).
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If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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04-04-2013, 02:35 PM
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#33
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Posts: 1,901
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Well depending upon how long I have to live I may be able to go 100% cash now however, I would never drop below 25% equities.
As Henny Youngman said; "I have all the money I'll ever need if I die before 4:30."
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“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
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04-04-2013, 03:16 PM
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#34
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,526
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Quote:
Originally Posted by Bikerdude
Well depending upon how long I have to live I may be able to go 100% cash now however, I would never drop below 25% equities.
As Henny Youngman said; "I have all the money I'll ever need if I die before 4:30."
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I think Benjamin Graham said regarding asset allocation something like never go below 25% equities or conversely never go below 25% bonds. Sounds like good advice to me.
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04-04-2013, 04:08 PM
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#35
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Posts: 1,901
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Quote:
Originally Posted by ejman
I think Benjamin Graham said regarding asset allocation something like never go below 25% equities or conversely never go below 25% bonds. Sounds like good advice to me.
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Yes that and I believe Bernstein's risk/return chart in his asset allocation book.
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“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
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04-04-2013, 06:37 PM
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#36
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Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,301
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Quote:
Originally Posted by Midpack
I understand, but the OP asked about what to do with a portfolio that was large enough for cash only (@ zero real return) to support an inflation adjusted, long (30 years +/-) retirement, most likely a 7 figure nest egg. $10-20K/yr would be trivial in that circumstance.
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There's no limit on TIPS so anything that doesn't fit in the i-bonds portion could go there.
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04-04-2013, 08:35 PM
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#37
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gone traveling
Join Date: Jul 2007
Posts: 333
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Quote:
Originally Posted by David1961
Hypothetical question. If you were certain that you had enough in your portfolio to cover all of your expenses for the rest of your life (after factoring inflation) without making any more money from your investments, would you ever consider taking all of your money out of the market and bonds and just put it in federally insured investments?
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Yes - but only if I were certain I could live comfortably for the rest of my life. (what I consider comfortable)
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04-05-2013, 02:55 PM
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#38
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Moderator Emeritus
Join Date: Oct 2007
Location: Portland
Posts: 4,946
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Not me. I'm a dirty asset allocator, and have been known to *shudder* rebalance every once in a while!
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04-05-2013, 03:02 PM
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#39
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: Bernalillo, NM
Posts: 2,717
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Quote:
Originally Posted by bondi688
FDIC covers to $100000 per account when the temporary increase to $250000 expires. You earn next to nothing for interest for the last 5 or 6 years and for at least a couple of more years to come. You pay tax at ordinary income level on whatever small amount of interest generated and the cash will lose value just as fast if there is significant inflation. Do not really see cash as any better hiding place.
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Apparently the temporary increase was made permanent in Dodd-Frank North American State Bank Online
If one did go all in for 100% FDIC coverage, I would have several different institutions, so if one goes belly-up, you still would have some immediate assets available.
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"We live the lives we lead because of the thoughts we think" ...Michael O’Neill
"We can cannot compel others to do our will" ....Norman Goldman
"There never is shortage of the gullible to accept the illogical"...Anonymous
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04-05-2013, 03:12 PM
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#40
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: Bernalillo, NM
Posts: 2,717
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Quote:
Originally Posted by David1961
Hypothetical question. If you were certain that you had enough in your portfolio to cover all of your expenses for the rest of your life (after factoring inflation) without making any more money from your investments, would you ever consider taking all of your money out of the market and bonds and just put it in federally insured investments?
Personally, I don't think I would unless I were in my 90s.
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What would bother me about having all that cash laying around is a fear that my financial intelligence will diminish with age, leading me to squander my remaining funds or be swindled. Annuities can protect against that, but some of them have such high fees.
__________________
"We live the lives we lead because of the thoughts we think" ...Michael O’Neill
"We can cannot compel others to do our will" ....Norman Goldman
"There never is shortage of the gullible to accept the illogical"...Anonymous
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