I know this subject matter has been discussed before, but I do think many of us who are close to ER have to be thinking and rethinking our plans as to how we will navigate the treacherous waters of what the market givith and taketh away!
Soooo, plans are made, RE budget set (discretionary filled/ideal budget & SHTF budget), debt paid off, AA set, your RE too stuff identified. Here is my general questions...
- Are you now holding a separate cash bucket as part of your previous AA bond bucket which is ear marked for spending X years in case the SHTF or are you staying with your AA and filling 1 years expenses at some point(s) by rebalancing? Is your cash bucket outside of your AA effectively?
- If you hold the 3rd bucket of $ for expenses, are you tapping it in a market like 2017 to cover next years expenses or rebalancing first?
- Alternatively, in a market like 2018, are you paying expenses first out of your cash bucket and then rebalancing (assuming your cash is part of the AA equation)?
I am trying to challenge my self and how I want to/should manage the market swings. Psychologically, I can envision the how having a cash bucket for multiple yrs may help you sleep at night when the market tanks. OTOH, are you not just watering down your AA and weighting it on the bond/cash side? I would like to think I will set my AA (60/40) and perhaps have some of my 40 in cash from time to time, but let rebalancing every year fill my annual expense budget. Just wondering how the multiple year cash bucket folks reconcile their true AA strategies... and if they even care! Food for thought for us scaredies who are close.
Soooo, plans are made, RE budget set (discretionary filled/ideal budget & SHTF budget), debt paid off, AA set, your RE too stuff identified. Here is my general questions...
- Are you now holding a separate cash bucket as part of your previous AA bond bucket which is ear marked for spending X years in case the SHTF or are you staying with your AA and filling 1 years expenses at some point(s) by rebalancing? Is your cash bucket outside of your AA effectively?
- If you hold the 3rd bucket of $ for expenses, are you tapping it in a market like 2017 to cover next years expenses or rebalancing first?
- Alternatively, in a market like 2018, are you paying expenses first out of your cash bucket and then rebalancing (assuming your cash is part of the AA equation)?
I am trying to challenge my self and how I want to/should manage the market swings. Psychologically, I can envision the how having a cash bucket for multiple yrs may help you sleep at night when the market tanks. OTOH, are you not just watering down your AA and weighting it on the bond/cash side? I would like to think I will set my AA (60/40) and perhaps have some of my 40 in cash from time to time, but let rebalancing every year fill my annual expense budget. Just wondering how the multiple year cash bucket folks reconcile their true AA strategies... and if they even care! Food for thought for us scaredies who are close.