Any regret for being conservative about investing

[Spanky]

Our allocation has been about 50/50 (equity/Fixed-income) since 2009. In retrospect, if we had invested 100% in the S&P 500, our portfolio would have been 50% larger. Obviously, hindsight is 20/20. Nevertheless, I am satisfied with the return of the 50/50 AA. Shifting to a higher equity level, e.g., 70%, may cause many sleepless nights.

The question is: Do you have any regret for being so conservative?

 

[audreyh1]

Hmmm - considering that I retired in 1999, I’m very glad that I never let my stock allocation go above 60% and also glad that I let it drift down gradually over the past 20 years. I think it was about 55/45 after rebalancing in 2009. I’m very comfortable sticking to 50/50 now and would only increase it slightly after a huge market sell off.

IMO 50/50 is not particularly conservative for a retiree living mostly off their investments.

Not looking for a big rollercoaster ride even if I could die with a much bigger portfolio.

BTW - I took tremendous investment risks while I was young and working, so up until 1999. Happened to correspond to an amazing bull market. I got lucky and it paid off. I don't consider those kinds of risks (~100% stocks and very high concentration in company stock) appropriate now that I am living off my investments.

 

[REWahoo]

Nope.

 

[Canoesmith]

I ask myself “what gets a larger emotional response...winning $100,000 or losing $100,000. For me, the losing is a much larger emotion than the winning. For some, winning is a much bigger “high” than losing is a low.

I’d rather get some of the upside rather than all of the downside.

 

[Spanky]

I ask myself “what gets a larger emotional response...winning $100,000 or losing $100,000. For me, the losing is a much larger emotion than the winning. For some, winning is a much bigger “high” than losing is a low.

I’d rather get some of the upside rather than all of the downside.

+1 -- losing is painful & long lasting while the feeling of joy of winning is temporary.

 

[robnplunder]

I have plenty of regrets. I was too conservative in my 30s, and 40s. I had more money on bond funds than stock funds. When stock market was up for a while, I kept moving money from stock funds to bond funds/cash. Had I not done that, I could have retired in my late 40s instead of at age 53. It's the single most expensive mistake I've ever made in my investment career. Sigh.

 

[ERD50]

I'm personally more aggressive (~ 75/25), but I can't make any argument against 50/50. I think it's a perfectly reasonable choice. If it suits you, it suits you. Obviously, you must expect to trade off the chance of a big payoff for that lower volatility. But it's a choice, not right/wrong.

I might caution going much below ~ 40/60, IIRC, the historical success rates start to drop off below that point. So I think it is best to stay a bit closer to the middle of the range than to venture out near the edge. On the high end, it drops off only a bit at 95%.

-ERD50

 

[Sunset]

I'm the opposite, we are about 90 percent in stocks... and while the ride up was great, I'd like to get off the train before it jumps the tracks.

So we are slowly working our % down to a more respectable 70%

 

[rk911]

i'm not certain we've been conservative. started out 60/40 and now it's closer to 75/25. i went really aggressive on my 457 and it's more than doubled in 15-yrs. periodically have thought about tapping the brakes overall especially on that account but haven't so far.

 

[daylatedollarshort]

No regrets. We're still into the 100 / 40 retirement years = ~3.5% safe withdrawal rate if we can just keep up with inflation with a bit of real return thrown in. We're more interested in maintaining a low overhead lifestyle and avoiding big losses than going for growth with our retirement portfolio.

 

[NW-Bound]

I have plenty of regrets. I was too conservative in my 30s, and 40s. I had more money on bond funds than stock funds. When stock market was up for a while, I kept moving money from stock funds to bond funds/cash. Had I not done that, I could have retired in my late 40s instead of at age 53. It's the single most expensive mistake I've ever made in my investment career. Sigh.

While working, for my 401k contribution I put too much into fixed income. Told myself I needed to learn more about stock investing, but never found the time to do that, even though I bought and read a few books.

Since 1998, I have been a more active investor, and run an AA with 60% to 80% stock. And yes, I time the market to change my AA.

 

[audreyh1]

Our allocation has been about 50/50 (equity/Fixed-income) since 2009. In retrospect, if we had invested 100% in the S&P 500, our portfolio would have been 50% larger. Obviously, hindsight is 20/20. Nevertheless, I am satisfied with the return of the 50/50 AA. Shifting to a higher equity level, e.g., 70%, may cause many sleepless nights.

The question is: Do you have any regret for being so conservative?

Are you talking about during accumulation phase?

It’s a good idea to be more aggressive during accumulation phase and then gradually transition to something less aggressive starting say about 5 years before retiring.

 

[VungTau]

I am actually thinking of being more aggressive now. At 59 I guess I have about 30 years left (based on family longevity) and my approx 65% in stocks seems a bit conservative. I don't worry about ups and downs but more about low returns not getting me through to the finish line...

 

[GR111]

Regrets? Yes, Selling Apple at $24. My shares probably made some of you guys rich! But your AA sounds reasonable to me. Markets go up, and they go down, and I wish everyone all the best and prosperity through many cycles.

 

[PoorOldCountryBoy]

The initial question is asking for an emotional justification for a choice of investment strategy. That's where the trouble starts!


Get a long-range safe plan in place and stick to it. Usually that means somewhere near 60/40 or some sort of target date fund, YMMV.

 

[Col. Klink]

Your AA should be one at which you sleep soundly at night and not make the focus of your waking hours watching CNBC.

 

[RunningBum]

Don't chase returns. Adjusting your equity portion up after a long bull market is likely to see it take a loss. Then you lament taking that chance, and sell at a low. Then you watch it recover and regret being out of the market so much. It's a recipe for buy-high, sell-low. 50/50 is a very reasonable AA. With 50% equities you are probably a lot better off than you were 10 years ago.

 

[flybynight]

Your AA should be one at which you sleep soundly at night and not make the focus of your waking hours watching CNBC.

Totally agree Col. I have always been 95% equitites with the 5% in cash as a reasonable emergency fund. Now I'm 80/20 as I've put all savings the last few years into cash/ST bonds to prepare for retirement. Planning to pull the plug next month...I'm still considering going as low as 75/25 (after reading many posts here) but I could never stomach less than 75% stocks. Even during December I slept like a log.

 

[Dawg52]

I'm a helluva lot more conservative than most here and I have zero regrets.

 

[VanWinkle]

no regets, 70/30 during accumulation, 50/50 now with some creep in equities between re-balancing.

 

[LuckyDog]

We have been at 50/50 for a long time and have no regrets. Steady as she goes got us here and steady as she goes will take us forward...

 

[steelyman]

My only regret about investing is only that I didn’t start contributing to my employer tax-favored plan sooner. Mostly because I didn’t understand what they were offering (I too-quickly scanned some papers that landed on my desk and thought TIAA-CREF was an insurance policy).

It wasn’t until 7 years later, when they added Fidelity and a couple of others to the mix, that the bell rang. Till then, my retirement AA was 0/0. That’s not conservative, it’s DOA.

 

[scrabbler1]

My target AA was 55/45 for most of my working years. The stock side rose during the late 1990s boom years. I did some minor rebalancing in 2001-2002 when the markets tanked, and in early 2003 when the bond fund prices spiked.


But there was one area where I sometimes regretted being too conservative. The company stock in my retirement portfolio (basically "found" money) exploded in value from 2002-2007. However, once we were allowed to divest a portion of it (the company had not yet gone public, so we had to hold most of the shares if we remained employed), I chose to do that. This was in the wake of Enron and other company failures which wiped out company-stock-heavy portfolios, so I was a little jittery about having so much money tied up with my company stock.


When I was doing this divesting, I hadn't yet put together my ER plan which included a magic number for the stock value. Once I created a magic number, I stopped divesting any more of the company stock.


But there was an upside to delaying my reaching the magic number for the company stock. By late 2008, when I finally reached it, the markets had been tanking for much of the year. The big bond fund's NAV tumbled, so I was able to buy ~25% more shares than I expected. So, I had less money from the cashed-out stock but bought cheaper shares with it.


The proceeds from the divested shares now reside in my rollover IRA, growing tax-deferred for now. And the tax bite on the cashed-out stock, despite using NUA, was still about 25%. So, it is hard to tell if I would have come out ahead, behind, or about even had I not done the divesting and retired 6-12 months earlier.


In any event, I don't regret how things turned out.

 

[dtbach]

I've always been fairly aggressive and have no regrets over that. Gradually shifted to a less aggressive 70/30, but doubt I'll go much lower than that.

 

[imoldernu]

Have never "invested" the way it's generally understood here. Just in Government bonds.. never in the market. Just a few tiny 'leftover stocks from retirement 30 years ago, that I haven't looked at in many years.

Guess you might call me conservative.