Anybody else 100% stocks, no bonds?

[BeFrank]

Our living expenses are completely covered by my wife's pension. I expect the ride to be bumpy at some point on our investments (VTSAX), but we're retired debt free at age 60 with a six month emergency fund, full medical benefits and expecting to collect social security at 62. Just looking for other perspectives. Bonds in our case seem to likely be a drag on our investments when we can ride out any serious dip in the market.

 

[F.I.R.E User]

Yes at 43.

 

[Dtail]

Not me, but if I was in your situation, I would certainly consider it.

 

[bloom2708]

You both can do it and you don't have to.

So it is a personal choice. At 60, I wouldn't go below 20% Treasury Index or something similar.

At 50 we are 70-30.

Nobody knows if/when the next big dip is coming or how long it will last. Many roads to Dublin.

 

[38Chevy454]

In your case 100% equities is a reasonable choice. I target 70/30 AA, but with the great stock market results and poor fixed income side thanks to such low interest rates (and now higher inflation adding to fixed income woes), I'm letting my AA ride the wave. Currently at 83% equities.

Yes I understand that fixed income is more for stability and not returns. I can make adjustments as I feel are needed.

 

[homestead]

We are 50/50. I've looked at VTSAX but noticed our Wellington and VSIAX holdings have beaten VTSAX from 2000 - Present.

 

[Steeler75]

We are 50/50 at the moment. In a similar situation as you, as our pensions pay for our living expenses (not splurges), ages 57 and 55. Given the current status of fixed rates, as individual bonds mature, will be reinvesting in equities. Been retired for 3 years now so feeling more confident in our ability to ride through a downturn (like March 2020), so AA in equities will steadily rise over time. Plan on taking SS at 62 as well.

 

[Out_the_Door]

I'm still five/seven years away from pension/SS, respectively. And although both streams of income will cover 125% of my current expenses I don't think I will every go above 75% equities

 

[RetiredHappy]

I think it is fine for your situation.

When we had our investments managed by ML, they insisted that we should stay with 65-35 even though we had protested that we did not need to draw on taxable accounts. Our investments are in equal amounts for taxable to IRA accounts.

Now that we have taken back management of our accounts, we are having
- 60-40 equities to fixed income in the IRA account because it needs to meet RMD each year.
For our taxable accounts:
- My son who is 35 yo, I am managing it to 83-17 equiites to fixed income.
- My husband and my taxable accounts are at 80-20.

My IRA account has been turned into annuities, which go towards fixed income.

 

[FREE866]

I'm 55 and have been retired almost 5years and although it is against conventional wisdom I'm at almost 100% stock. I always have been. I keep ~1-2 years in cash and draw on my account a few times a year to cover expenses. When I ran numbers paring my AA down to 70/30 it just didn't make sense to me.

 

[qwerty3656]

I'm 100% stocks and mostly dividend stocks (I don't want to get into a big debate about the evils of dividend investing - I know the consensus here is that it is foolish)

 

[ERD50]

I'd say it's fine, [-]but remember that[/-]...

Hah, I was going to give my stock answer that FIRECalc shows that a 95/5 AA has a better survival rate than a 100/0 (the bonds are probably helping avoid selling stocks in the downturn), but then I realize you have zero withdrawals, so I guess any portfolio should survive!

So yes, historically 100% stocks is the ticket (and FIRECALC agrees, with a higher min/max end for 100%), as long as you never get scared of the volatility and sell when they are down (doesn't sound like you would).

Carry on! Enjoy!

-ERD50

 

[youbet]

I'd say it's fine, [-]but remember that[/-]...

Hah, I was going to give my stock answer that FIRECalc shows that a 95/5 AA has a better survival rate than a 100/0 (the bonds are probably helping avoid selling stocks in the downturn), but then I realize you have zero withdrawals, so I guess any portfolio should survive!

So yes, historically 100% stocks is the ticket (and FIRECALC agrees, with a higher min/max end for 100%), as long as you never get scared of the volatility and sell when they are down (doesn't sound like you would).

Carry on! Enjoy!

-ERD50

Wouldn't it depend on the exact years involved? Historically, especially for relatively short time periods, portfolios with less than 100% equities outperformed portfolios at 100% equities, even with no withdrawals.

I think about this more and more as I crash through my 70's! Investment time frames just might not be 30 years.

 

[OldShooter]

I think it's fine. You can think of pensions as your fixed income tranche. Because they are. You could even play present-value-of-money games and try to come up with a dollar value for the pensions, then calculate a sort of synthetic AA.

 

[RunningBum]

If I had all of my expenses covered, I might be 100% stocks too, like I was when I was working. I'd have that emergency fund the OP mentioned, for a major purchase or repair. I'd want all of my expenses covered, not just essentials.

As I got older, and thought I might be headed for assisted living, memory care, or a situation like that where my expenses would increase, I'd rethink this. At 60, the OP is probably safely years from that.

A side question to this is, if you were close to having it all covered, would you get an SPIA to cover the gap, and then leave the rest in stock?

 

[ERD50]

Wouldn't it depend on the exact years involved? Historically, especially for relatively short time periods, portfolios with less than 100% equities outperformed portfolios at 100% equities, even with no withdrawals.

I think about this more and more as I crash through my 70's! Investment time frames just might not be 30 years.

Oh yes. For that post I just did a long term look, 40 year portfolio. Just now did a few quick runs, 20 years still favors 100%, 10 years favors 75% by a bit.

I'll leave further analysis to the more motivated (and less hungry - dinner calls!)!

-ERD50

 

[Montecfo]

Well, your pension represents a bond portfolio. So in my opinion you are fine with no other bonds. In fact it sounds like your are heavily into "bonds".

 

[NW-Bound]

Wouldn't it depend on the exact years involved? Historically, especially for relatively short time periods, portfolios with less than 100% equities outperformed portfolios at 100% equities, even with no withdrawals.

I think about this more and more as I crash through my 70's! Investment time frames just might not be 30 years.

If you are not going to die broke and intend to leave money to your heir, the investment timeframe is then perpetual. It is not tied to your lifespan.

I don't do 100% stock because I practice tactical AA.

 

[chassis]

100% stocks plus cash. Bonds=nein, danke.

 

[CyclingInvestor]

63, retired 15 years, 100% stocks since the 90s. No pension, but the dividend flow covers expenses by a wide margin, making me a buyer of stocks each quarter (so I enjoy watching big market drops).

 

[youbet]

If you are not going to die broke and intend to leave money to your heir, the investment timeframe is then perpetual. It is not tied to your lifespan.

I don't do 100% stock because I practice tactical AA.

Hmmmmm………. I was referring to the years not the number of years.

 

[SecondCor521]

52, single, <$4K of debt, 0.82% net WR. 38 year planning horizon, three kids. Target AA is 98/2, actual AA is just a smidge off at the moment but within tolerances.

Basic idea for me is to start with planning horizon, then plug in my FIRE stash plus my expected SS, then investigate to see whatever spending level is 95% safe (to stress it a bit across AA variations). Then see what AA has maximum survivability, with ties going to more stocks - currently with my data that works out to be 90/10. Then allocate a portion of my portfolio based on actual spending x 25 at that 90/10 AA. The rest is the unused portion that will go to the kids and that goes at 100% stocks.

 

[Koolau]

I got to 85% back when my megacorp stock (held in my 401(k)) exploded in value. I finally realized how vulnerable I was and ended up closer to 30% during retirement. Oddly, had I held onto that level of megacorp stock, I'd be a lot richer now. Still, I have enough and sleep well. That works for me though YMMV.

 

[pacergal]

It depends on your personal risk tolerance.

We have double pensions and SS now that totally cover our expense budget. We could be 100% stocks to boost our kids inheritance if we wanted.
We are at approx 60/40. I could tolerate volatility more when I worked, it really bothers me now. So even though we can survive a prolonged downturn, I play it a bit safer with less stocks. I sleep well and our kids will do fine also in the future.

 

[GTFan]

Yes at 43.

Yeah me too at 43, but then I ER'd at 51. No way was I 100% then.

OP you're fine, you answered your own question with the pension.