anybody else super conservative?

[DJRR]

I fundamentally don't trust the people running the country (or states or locals, for that matter), don't trust the Fed, etc. Maybe "don't trust" is not the best word, a better description is that I believe they are all incompetent, or the system is so entrenched that its impossible to make any real change. (This is not political, it seems to be the case no matter which party is in power.) [Mod Edit]

I fundamentally trust the people running the country to keep doing the things that keep the money and power concentrated in the "investment" class. The people who run this country have a lot of stocks and will bail their friends out as needed. Those of us without billions have to be able to weather the times before the rescue arrives.

Otherwise, an ownership % of a growing cash flow is always better than a fixed cash flow. Since most companies have growing cash flow equity investors have done better than bond investors overtime, which is borne out by the numbers. There can be too much of a good thing, but that is why the suggested allocation is not 100%.

 

[ERD50]

Latest US Average Life Expectancy At Birth Figures:

80.0 Years: Central Intelligence Agency (CIA).
78.6 Years: Centers for Disease Control and Prevention (CDC).
78.5 Years: Organization for Economic Co-operation and Development (OECD).

Both sexes: 76.4 years
Males: 73.5 years
Females: 79.3 years
Mortality in the United States, 2021 (Figure 1)

For men only it is much lower, however, depending what year you were born it can vary. Assuming average age at death is 76.1, someone 66 would have about 10 years, I am a bit older.
.....

For this purpose one should use life expectancy at attained ages, not at birth. And they are significantly different.

...
Using life expectancy from birth is way off base for talking about death rate for older/retired folks.

Yes, I almost can't believe people are still using "at birth" statistics for the life expectancy of someone who has reached 65. This has been addressed time and time again. All the people who died before age 65 are no longer part of the average, so the average Life Expectancy of the living moves up every year.

More like age 86 for average health, non-smoker male, so ~ 21 years, double your 10 year average estimate. And it keeps going up the longer you live:

/www.longevityillustrator.org/

-ERD50

 

[jollystomper]

I was more aggressive investing when I was working, as I figured a good income could cover a multitude of mistakes . Since retirement I have slid down to about 33% equities. As was pointed out earlier, this tends to have the least amount of risk.

 

[marko]

I fundamentally trust the people running the country to keep doing the things that keep the money and power concentrated in the "investment" class. The people who run this country have a lot of stocks and will bail their friends out as needed. Those of us without billions have to be able to weather the times before the rescue arrives.

I think that most people here, while not in the billionaires class get to benefit from the actions of the 'investment class' which, in a way, we are, if only at the edges.

I'd guess that most people here have benefited greatly from the actions of the market, while the greater population has absolutely no clue of how any of it works.

I've always found it more profitable for me to consider myself a part of the investment class than a victim of it. "Think like a rich man and you'll become a rich man, think like his victim and......"

 

[VanWinkle]

I over saved so that when bonds dropped 13% last year along with stocks dropping 20% I didn't panic and sell. I could take a 50% haircut and still have a very nice retirement. I could go 0% equities but I sleep fine with a 50/50 allocation to stocks and bonds. Everyone is different and I enjoy reading all of the opinions here.

VW

 

[GravitySucks]

The Lost Decade, Revisited - AMG Funds
The term “Lost Decade for Stocks” refers to the ten-year period from 12/31/1999 through 12/31/2009, when the S&P 500[emoji768] generated an annualized total return of -0.9% over the period. This was only the second time that the market actually had a negative total return over a decade period. Let see if a third time is coming?

2 out of 100+. I’m going with the odds.
I hope to have another 25 years and possibly 35 years to go.

 

[11522914]

I ignore politics and news. That certainly improves quality of life.

+1000

The negativity is everywhere. I've never seen it this bad. I gave up on politics and news and you're right, my quality of life definitely improved.

 

[Car-Guy]

I hope to have another 25 years and possibly 35 years to go.

Another youngster.

I hope to have another 10 years, possibly 15 to go. Sure changes my view of investment strategies and spend rates.

OMG, I've been a member here over 10 years and that seems like yesterday.

 

[Rianne]

We're financially conservative. I do believe our population should understand the history of interest rates. When we bought our first house in 1989, we paid 9% interest. We had student loans (not as bad as today) and were in debt. But, hey, LBYM. We made it. And yes, things are expensive. Always have been. We feel like we pay too much for everything unless a mother of a deal comes along. The stock market was on a sugar high for 10+ years we benefited from it.

The guy who bought a 30-year bond in 1981 is sitting pretty. But my family suffered from these rates. Sure we charge a lot but pay them off every month. I learned a good lesson from the 80s.

 

[GravitySucks]

Another youngster.

I hope to have another 10 years, possibly 15 to go. Sure changes my view of investment strategies and spend rates.

OMG, I've been a member here over 10 years and that seems like yesterday.

Youngster. LOL. Just turned 65. Buried mom at 89 and dad at 86 so gotta plan to at least 90 or 25 more years.

 

[W2R]

How do you hold 60% equities in this kind of world and sleep?

Simple! I don't. I have 47% equities and sleep like a baby.

 

[Car-Guy]

Youngster. LOL. Just turned 65. Buried mom at 89 and dad at 86 so gotta plan to at least 90 or 25 more years.

Yep, when I was 65 I thought I may have another 25 to 35 years too. Parents both passed in their early 90's and one great grandfather was over 100. Now I'm over 70 and boy have things changed including my estimates. It's possible I could still "make it" to ~90 but I don't think I'll be calling it living in another 10+ years. YMMV

 

[ShokWaveRider]

If I live to 80 I will have outlived most of my direct family by at least 6 years (Dad) and as long as 14 years (Mum and One sister) except my last remaining sister who is 82. But I have a pacemaker and she only has joint issues that are slowly being replaced.

 

[W2R]

Yep, when I was 65 I thought I may have 25 to 35 years too. Parents both passed in their early 90's and one great grandfather was over 100. Now I'm over 70 and boy have things changed including my estimates. It's possible I could still "make it" to ~90 but I don't think I'll be calling it living in another 10+ years. YMMV

I'm 75, and admit there there are some serious challenges to growing old that I have been encountering, especially in the past couple of years. However, remember all that our generation went through back in the day. We survived the 60's, remember? and so much more. After all that surely we can enjoy living in our 80's and 90's, I just know it. Never, ever give up.

 

[pacergal]

Over time, we have varied between 50/50 and 80/20. My sweet spot is about 70/30, about where we are now.
But we are SIRE, and have two govt pensions and two SS incomes.

 

[Car-Guy]

I'm 75, and admit there there are some serious challenges to growing old that I have been encountering, especially in the past couple of years. However, remember all that our generation went through back in the day. We survived the 60's, remember? and so much more. After all that surely we can enjoy living in our 80's and 90's, I just know it. Never, ever give up.

We survived the 60's, remember... Yeah sort of. Wish I go back there, "and" know what I know now.

Never give up? Don't plan to. I don't like the alternative.

 

[Toddtheformeraccountant]

There is certainly political risk to equities, where high taxes, deficits, or other poor policies could hamper profits, affect company liquidity, or basically destroy the economy and businesses.

Unfortunately those same risks apply to debt securities, real estate, cash (value of money), and preferred stocks. So I think you can run but you can't hide from that risk. You're kind of kidding yourself that you are protected from bad government by diversifying your asset base

I think all you can do is mitigate your risk...which I have done (I"m retired, 2% WR...low WR reduces risk too) by going about 55% equities, 37% debt, and 8% cash (all under FDIC limits) which is basically 5 years worth of expenses in cash. The cash is there really just to mitigate liquidity risk, where if the economy and markets seize up, as long as the FDIC is there I'll at least be able to function and pay expenses. The lower equity ratio is because I'm kind of reducing sequence of returns risk on equities in this part of my life.

Of course, in a complete black swan meltdown scenario, worse than Great Depression kind of event, nuclear war, asteroid, Yellowstone volcano pops off, EMP, there is NO hiding from that risk, EVERYONE is going to be destitute in that kind of situation and what we're doing is rearranging the chairs on the Titanic by playing around with asset allocations.

 

[Car-Guy]

^^^^^
Interesting using the Titanic for your analogy.

 

[W2R]

We survived the 60's, remember... Yeah sort of. Wish I go back there, "and" know what I know now.

That's for sure! I'd be sittin' pretty.

Never give up? Don't plan to. I don't like the alternative.

Me either! I'm planning to outlive Jeanne Calment for starters. I finally did get a will made last year, just in case, but I'll never give up.

My family's motto (when translated) is "fight to the death". Those old Scots were a pretty fierce bunch. Anyway, that is exactly what I plan to do.

 

[Major Tom]

How do you hold 60% equities in this kind of world and sleep?

My equity allocation varies between about 60% and 75%. It is currently at 67% and I sleep fine. I don't know how I do it. I think we are all hard-wired differently in regards to our tolerance for volatility (notice how I said volatility and not risk, as they are a little different from each other). When the market is going up, I check my balance most days, because it is fun to see it going up. When the market is heading downwards, I don't bother looking at my balance; I concentrate on my daily life activities instead. I find this very easy to do.

Once I set my initial AA, which I seem to remember was 60/40, all I had to do after that was almost nothing - an activity I find very easy to achieve!

 

[DJRR]

I think that most people here, while not in the billionaires class get to benefit from the actions of the 'investment class' which, in a way, we are, if only at the edges.

I'd guess that most people here have benefited greatly from the actions of the market, while the greater population has absolutely no clue of how any of it works.

I've always found it more profitable for me to consider myself a part of the investment class than a victim of it. "Think like a rich man and you'll become a rich man, think like his victim and......"

My point exactly. I can't really protect from black swans, but I have always greatly increased my wealth by being part of the investment class. If the system is rigged it is rigged in favor of those owning stocks over the long run.

 

[marko]

My point exactly. I can't really protect from black swans, but I have always greatly increased my wealth by being part of the investment class. If the system is rigged it is rigged in favor of those owning stocks over the long run.

I always cringe at those who call Wall St "a casino".

I always say: "Life isn't fair. Your job is to go where it isn't fair in your favor."

 

[Car-Guy]

I always cringe at those who call Wall St "a casino".

You are in pretty good company if you like what Warren Buffet has to say about Wall St/Casinos.


https://www.cnbc.com/2022/04/30/warren-buffett-rips-wall-street-for-turning-the-stock-market-into-a-gambling-parlor.html#:~:text=Sometimes%20the%20market%E2%80%99s%20investment%20oriented%20and%20other%20times%2C,market%2C%20effectively%20turning%20it%20into%20a%20%E2%80%9Cgambling%20parlor.%E2%80%9D

 

[VanWinkle]

I always cringe at those who call Wall St "a casino".

I always say: "Life isn't fair. Your job is to go where it isn't fair in your favor."

I have to say I love that quote of yours as it is the answer to all the pessimism out there.

Best to you,

VW

 

[11522914]

I always say: "Life isn't fair. Your job is to go where it isn't fair in your favor."

+100