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Staying the course?
Old 09-25-2008, 08:07 AM   #1
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Staying the course?

Curious.....for those of us still in the accumulation phase of our FIRE journey, how has everyone been handling the market rollercoaster over the past few months and the more recent bailout news?

DW and I are 10-13yrs away from FI and have a pretty simple savings plan of DCA into the market in both taxable and tax-deferred accounts. We haven't changed any of our habits even with the latest crisis.

Has anyone pulled back or decided to put any/all of their new contributions into cash instead? (assuming you already have a emergency fund set aside).

Obviously this is when DCA can be the most powerful but just curious what changes, if any, the younger folks still accumulating are doing here.

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Old 09-25-2008, 08:18 AM   #2
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We've stayed the course and have actually used this as a buying opportunity to purchase certain stocks that have been beaten down.

I'm 36 and DH is 38 so we have time on our side.

I can only be nice to one person today! Today is not your day...tomorrow doesn't look good either.
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Old 09-25-2008, 08:22 AM   #3
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The only change I'm making is putting this year's Roth contribution into Vanguard's MM fund. The only reason I'm doing this is some unforseen expenses came up, and I have to choose either to fund my emergency fund or fund my Roth. This way I get to do both. If this were any other year (i.e., not one of the biggest financial crises in decades), I probably would have just put it into the Roth in my normal allocation (Target Fund). However, I'm not sure of the short-term viability of the company I work for, so I have to balance retirement savings with the not-so-outlandish possibility of losing my job within the next year.

Other than that, however, staying the course. I won't need the money for a long time, and I'm not going to miss what will probably be the biggest sale in a long time.
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Old 09-25-2008, 08:32 AM   #4
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No change to my asset allocation or contribution %s. Target retirement is in 14 years.
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Old 09-25-2008, 09:10 AM   #5
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I have about 22 years left until RE; I sold off all mutual funds in tax sheltered accounts near the start of 2008.

I'm slowly moving from cash back to stock at this point.

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Old 09-25-2008, 09:14 AM   #6
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I haven't even looked at my accounts. I did change my TSP a little at the beginning of the year and changed my allocation so I had 10% in the bond fund but that's it. I hope in the next 12 to 15 years there’s another big run-up and all of us accumulators look back on this time and think how great it was to get all this stock cheap.
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Old 09-25-2008, 09:18 AM   #7
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DCA as per usual. Wish I had the free money to increase that but that will have to wait until the cash crunch is over (just the next couple of months).
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Old 09-25-2008, 09:33 AM   #8
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I did make a change in response to the recent market turmoil: I switched our automated retirement investment contributions (401K and IRAs) to 100% equities (i.e., the new money that I'm throwing at the market is going 100% into equities).

And I'm trying not to look.

Edited to add: I made one other change. The short-term funds that I have in my money market account have been left untouched, but I am not adding any new money to money market funds for the time being - any short term funds are going into my FDIC insured bank accounts.

I don't expect my long-term equity holdings to have any sort of security, but I do expect my short-term funds to be there when/if I want them.
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Old 09-25-2008, 10:37 AM   #9
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I moved $10k from cash into equities last week. I'll DCA more into the same fund on a regular schedule, and am trying not to look at how it's doing on a daily basis.

EDIT - In other words, I'm doing the opposite: instead of stockpiling more cash (I have roughly a years worth of expenses as an emergency fund) I'm plowing it into the market. Hopefully that will turn out to be a wise decision. Given enough time, I'm sure it will it be.
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Old 09-25-2008, 10:44 AM   #10
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I don't really watch the news. I'm aware of what's going on, but I doubt the ability of my local newspaper to more accurately distill news about the market than what I can get from the VP of our investment arm.

Major changes so far... we sold our house in May. We live with friends right now, I picked up a second job and we live like we always have (we're not big on spending). I guess if things got bad we'd have to do something crazy, like live with friends and pick up a second job and not spend a lot... oh, wait.
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Old 09-25-2008, 10:59 AM   #11
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Once the S&P500 crosses its 200 day MA I think I'll slide the last of my cash into equities.

If that happens with the S&P 500 below 700, I might even get a mortgage!
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Old 09-25-2008, 11:00 AM   #12
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Keeping the same aa and contributions. Hoping to put some extra money into funds in October. (3 paycheck month!)

I'm still very far away from FIRE (I'm only 24, almost 25!), so I figure that whatever I buy now will perform even better for me in the long run.
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Old 09-25-2008, 11:03 AM   #13
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I am taking some opportunity to select investments where the dividend payout approaches or exceeds 5%, but only in cases where I consider the dividends secure. My portfolio asset allocation is staying the course though.

Other than that I am increasing my mortgage pay down. Next year I will be taking advantage of a new tax free account and using more fixed income strategies since I don't have to pay taxes on future gains.

I should say I have a decent pension and am working on another so I use a steady eddy approach to investing. Never swing for the home run.

Currently I am up about half a percent for the year with dividends and some short term trades.

11 years until I can retire at 55...not sure if I will though...time will tell

Edit: The tax free account is also partly for a new Harley and a 3 month trip through the states in 3 years, which is why I am focusing on fixed income
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Old 09-25-2008, 11:18 AM   #14
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I haven't changed anything.....

Still trying to max out my TSP before 12/31/08 (My transfer to Fleet Reserve Date). Currently putting 53% of my base pay into it for the next 3 months. That will put me right at $15,500 for the year. Already put $5K into Roth.

Currently have L2030 Fund, and leaving it in for the ride! I watch it fall, but just for the fun of watching. Not worried about the ebb and flow of the money, knowing I won't touch it at least for another 20 more years!
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Old 09-26-2008, 01:46 PM   #15
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I move all BOND into VTI and VUE, and keep buying more as ship is sinking.
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Old 09-26-2008, 07:16 PM   #16
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I made no changes in my financial plan and have followed it. I am sliding into my final year of work prior to retirement. Since I am this close to ER, my asset allocation is pretty conservative. Believe me, that really helps a lot.

Yes, I have stayed the course.
"You can never cross the ocean until you have the courage to lose sight of the shore." - - - C. Columbus
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Old 09-26-2008, 10:01 PM   #17
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Increased the wife's 457 contribution another percentage point (WOOOO! big saver!).

...that, and watch the old guys around the office squirm, and stay away from contact with the brother-in-law.

"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
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Old 09-27-2008, 10:18 AM   #18
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Staying the course. Continue to DCA, but have shifted more towards buying undervalued dividend stocks. Course changes over the past year have included increasing international diversification and building a real estate portfolio. Next: build cash reserve. The car's getting old.....
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Old 09-27-2008, 11:25 AM   #19
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This week is an excellent test of our asset allocation. If we can sleep each night without any problem then you are probably right in your selection of your AA. If you find yourself checking the value of your accounts several times a day, maybe you should eventually reassess your AA.

I have been sleeping so well that may Lab has to lick my face several times to wake me up in the AM, so I guess my AA is okay!
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Old 09-27-2008, 05:48 PM   #20
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I broke one of the fundamental rules of this forum. I have been glued to the TV watching the news in the past week... Still sleeping fine, but if I start thinking about it, I am getting worried about the economy and I find myself second guessing the size of our EF. I am not worried about fluctuations in our retirement portfolio, I am worried about putting food on the table if things go horribly wrong...

Until recently I was defiantly positive about the future of the US economy. But I have to say that the events of the past week have put a damper on my enthusiasm. Talks about financial collapse, great depression, unemployment going to 20%, DOW plunging another 50%, and seeing fear in the faces of our "leaders" in Washington are really making me feel financially vulnerable. I went from the "let's make money" mode to "let's survive this s**t" mode". My pantry is starting to look like my grandmother's pantry (she lived through the great depression and one world war) and I find myself assessing our financial situation to make sure we have enough cash reserves to survive this downturn.

We have, at our current burn rate, 6-7 months worth of living expenses in pure cash, we have 4-5 months worth of living expenses in relatively stable bond funds and the rest of our taxable investments is invested in the stock market (Not part of our EF, but available as a last resort - right now about 2 years at current burn rate, but of course subject to fluctuations). In case both of us lost our jobs, we would undoubtedly reduce our burn rate, but including Cobra, I think our cash+bond stash would last us at least 1 year. I have a very good handle on our spending so I think that number is actually on the conservative side.

If my wife loses her job she should also get 6 month pay as severance which would cover a whole year worth of expenses at full burn rate. I would get almost no severance if I lost my job, but we don't need my income to pay the bills. Right now, no immediate indications that layoffs are imminent, but of course who knows...

While I felt like it was a perfectly adequate plan under normal economic circumstances, I am worried it might not be enough if we go through a multi-year, nasty recession. So while I am not considering any changes to our retirement savings plan (401K, IRA), I was wondering if we should be beefing up our cash reserves by directing new taxable savings to cash. Of course it seems to be the wrong time to be doing that (when stocks are getting cheaper), but it might ease my worries in the short term. I also reason with myself that, if stocks get even cheaper in the next few years and the "imminent collapse of the financial system" is not looming over our heads anymore, then we'll have a big stash of cash to invest in the stock market.

My wife says, don't change anything. She feels that her job is secure (pharma) and that "everything's gonna be alright" . But of course she doesn't watch the news!!!! Why can't I be more like her?

42 y/o, married, retirement portfolio = 43 x annual expenses
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