Down to 46% Stock. Keep Going?

[TromboneAl]

We've been dropping our stock allocation by 2% on each of the last few years, and I just rebalanced us to 46%.

Anything to know as we move into this uncharted (for us) territory?

 

[Meadbh]

We've been dropping our stock allocation by 2% on each of the last few years, and I just rebalanced us to 46%.

Anything to know as we move into this uncharted (for us) territory?

After the last few weeks, I'm surprised you needed to rebalance!

 

[NW-Bound]

After the last few weeks, I'm surprised you needed to rebalance!

40% stock AA, here we come! Yes, it keeps going.

 

[foxfirev5]

Going into ER this year at 40%. With the wild start to the year I'm comfortable with my plan.

 

[Senator]

It depends on your age and where else your money is coming from.

Warren Buffet recommends a 90% S&P allocation.

 

[hnzw_rui]

It depends on your age and where else your money is coming from.

Warren Buffet recommends a 90% S&P allocation.

Actually, I believe his generic recommendation was to have enough in cash/treasuries to sleep well at night and then put everything else in a low-cost S&P 500 index fund.

The 90/10 AA, I believe, is advice for his wife and is likely contingent on having a multi-million dollar portfolio (perhaps high-7 or low-8 figures) that she will be unlikely to spend in her lifetime.

 

[REWahoo]

Al, ~45% equities is where I settled in 2009 and I plan on keeping our equity allocation there, maybe until our heirs make a change.

 

[OrcasIslandBound]

45% stocks is my target as well.

Sent from my Nexus 4 using Early Retirement Forum mobile app

 

[Fermion]

40% or 45% seems too low. If the market stays low so long that this allocation actually made sense, all of the US states, local governments, pensions are going to be beyond bankrupt.

Unless you are just planning to do some market timing and jump back to 60% on a temporary drop. I can get behind that idea.

 

[braumeister]

I used to be firmly in the 60% equities camp, but as I got older I gradually settled on 50% as my "forever" equity allocation. I'm fine with it anywhere between 45% and 55%, but I will annually rebalance to somewhere right around 50%.

I truly believe that lower is unwise, because I plan to live a long time.

 

[ejman]

Been at 50/50 since ER 13 years ago at 52. I feel comfortable there and my intention is to stay at that split for the duration. Ask me again when (if) I make it to my 80's.

 

[Corporateburnout]

50/50 AA and no plans to reduce stocks allocation......

 

[Fermion]

I just feel as if we are way too young (mid 40s) to be at something like 50/50. One of the 50s is a guaranteed loser to inflation. Seems like you are setting up for failure if you start the race with a lame horse.

Maybe in our mid 50s when bonds are paying 6% and inflation is 3% then I would be willing to go 50/50 or even 40/60.

 

[REWahoo]

I just feel as if we are way too young (mid 40s) to be at something like 50/50. One of the 50s is a guaranteed loser to inflation. Seems like you are setting up for failure if you start the race with a lame horse.

Some of us are closer to the finish line and don't need to run as hard as those who have farther to go.

 

[NW-Bound]

If the finish line is the entrance to the cemetery, I don't think I am that far away, unlike some people who plan to live till 100. But I am still at 60% equity, down from 70% last year. Life is boring and stock movements bring some excitement.

 

[braumeister]

Some of us are closer to the finish line and don't need to run as hard as those who have farther to go.

Yes, that's such an important point.
It really doesn't help knowing someone's AA without some idea of their age.

In my case, the 50% is because I'll be 70 in a few months and also because I have a good pension that covers a lot of my expenses. Some would say that pension should mean I ought to have a higher equity allocation, but that would depend on my risk tolerance. Mine is only moderate.

 

[foxfirev5]

Some of us are closer to the finish line and don't need to run as hard as those who have farther to go.

Yes indeed. When you've won the game, take your winnings and live a little. Everybody's situation is different so it's probably a moot point.

 

[Hamlet]

Bonds? We don't need no stinking bonds.

 

[Souschef]

Bonds? We don't need no stinking bonds.

I agree! We have enough income from SS and our pensions that we do not have to touch our principal other than gifts to our children.
Let it roll!
As Einstein once said, There is no more powerful force than that of compounding. Or something like that

 

[Running_Man]

We've been dropping our stock allocation by 2% on each of the last few years, and I just rebalanced us to 46%.

Anything to know as we move into this uncharted (for us) territory?

The only thing needed to be certain is why you are doing it? As long as you believe in it and stick to it I think you will be ok, if there is a major reason causing you to doubt your plan then you could run into more issues. Ideally you would like to be selling stock every year for the remainder of your life.

 

[donheff]

I am quite a bit higher but if I didn't have a solid COLA'd pension I would be down to at least 50% equities.

 

[Chuckanut]

Some of us are closer to the finish line and don't need to run as hard as those who have farther to go.

Well, you could stop hanging out at that Wahoo Saloon. It might help.

 

[Chuckanut]

FWIW, I have run FireCalc with varying stock/bond ratios.

Interestingly, the best survival rate was in the 60/40 to 50/50 area with no big difference between the two ratios. I might end up with more $$'s to spend (or for my heirs) if I had 70/30, but at the risk of a few more years where my plan fails and I run out of money.

Going below 50/50 had no benefit in my situation. YMMV.

 

[REWahoo]

Well, you could stop hanging out at that Wahoo Saloon. It might help.

What? How do you think I made it this far?