No stock market investments in your retirement plan?

[Camping]

How long has it been in these low yield investments ?
How much longer until retirement ?
How long are you planning to live ?

I've been pretty much the opposite, now I'm moving some over to low yield bonds and treasury bonds, so I'll have something left after the big drop.

To answer your questions:

Since 1987, 401k always in US T Bonds, after taxed cash savings always in CDs.
2.5-3 years.
10-30 years. (Will also have a pension/annuity, 40% of current salary).

 

[Camping]

I need some equities to make my withdrawal plan work. Otherwise I have to work another 5 years.

If it works for you, then more power to ya. If I had enough to live off CD and Bond interest, I would be happy as a lark.

Not living off just that. There is a modest pension (40% of current pay) we will use to live off. The savings in CDs will be spent on a nice house and cars when we need them etc. so it's not considered part of our retirement income.

 

[Dawg52]

Not living off just that. There is a modest pension (40% of current pay) we will use to live off. The savings in CDs will be spent on a nice house and cars when we need them etc. so it's not considered part of our retirement income.

If you have enough stash to do the job, go for it. I'm more conservative than most here but I do own some stocks as a hedge against inflation. You have to find what balance can make you sleep well and also take to you to the finishing line.

 

[Stonewalker]

Didn't we just have a thread or poll on this?

Oh, yeah, but it comes back around all the time. Just enjoy the ride.

 

[Offgrid Organic Farmer]

No stock market investments in your retirement plan?

I have a military pension, my wife has a tiny federal pension.

We own our farm and we recently bought a mixed commercial/residential building that we are remodeling.

We do not have any assets in the stock market.

 

[Mdlerth]

After all, I'm always right

...there will be people screaming... you're an idiot for thinking differently than they do

That's pretty much always the case on every subject, isn't it?

 

[RenoJay]

I’ve certainly done well with equities but it’s nice to hear from other camps that it’s not the ONLY way to go.

 

[racy]

No, I've always invested in equities.
Long ago (early '70s) in business college I was assigned to write a COBOL program. So, I created one on compound interest. An eye opener for me! I was anxious to graduate, make a salary and start investing. I've been investing in the stock market, at various levels and never leaving, since 1976. Very happy I did.

 

[Stormy Kromer]

I know many people who have retired comfortably (some extremely comfortably) with just real estate and a large bank account.


I'm talking about farmers and small business owners. Lots of retired multi-millionaires walking around in overalls who never owed any stock, other than livestock.

 

[street]

I can't imagine life without being engaged in stocks. What I have in stock market is money that I don't depend on each day to live, so I'm heavy into equity funds. I want my portfolio to grow and I'm still into stocks for the long haul.

I see nothing wrong with not being in the markets, and what works, works and there is a lot of ways to be FIRE.

 

[Dtail]

I can't imagine life without being engaged in stocks. What I have in stock market is money that I don't depend on each day to live, so I'm heavy into equity funds. I want my portfolio to grow and I'm still into stocks for the long haul.

I see nothing wrong with not being in the markets, and what works, works and there is a lot of ways to be FIRE.

We seem to have many examples of either being fully covered by SS/Pensions or other means, so then either going one way with "won the game", or adding to the portfolio for heirs or other reasons.

Wonder how many have a reasonable allocation to equities who also depend on this allocation to equities for theoretical portfolio survival.

 

[HI Bill]

Not investing in diversified mutual funds would have meant that I'd have to work until 70 to retire only after collecting SS....no real gains versus inflation on the investments. More than 26% of my investments represent long term gains...some of my investments have doubled. The cost of not investing in equities, in terms of years of one's life, is simply too great. Just look at the average market returns and compare that to bonds!

 

[2177V]

I am 67 and I have multiple pensions (Fed pension, state pension SS) and multiple investments. My pensions are sufficient to maintain my standard of living so my investments tend to be aggressive. i also have been successful during the last 30 years by investing aggressively. My point: Make sure you have a safety net before taking any risk in the stock market. No safety net=conservative. Safety net=aggressive.

 

[Stonewalker]

As of this morning, I have to say I'm pretty much out of the stock market arena. Just too much...

CD ladders are probably the way I'll go and thanks to everyone here for their insights.

 

[sengsational]

No, I've always invested in equities.
Long ago (early '70s) in business college I was assigned to write a COBOL program. So, I created one on compound interest. An eye opener for me! I was anxious to graduate, make a salary and start investing. I've been investing in the stock market, at various levels and never leaving, since 1976. Very happy I did.

It is amazing how much difference 1/2 percent return makes over 30 years.


What I told my kids about compound interest and saving: the first 100 years are the hardest


But I walked it like I talked it and put the equivalent of their college assistanceship earnings in a Roth for them: all index funds. Confident in equities and the power of compounding.

 

[Live Large]

Now that’s a Goal! Don’t think $$

One share Allstate stock left over from leaving the Sears in 1964. The rest in IBonds and guaranteed annuities. Don't even think about money any more.

I’ll admit, I’m a bit greedy so compound interest was definitely an interest of mine. 70/30 AA or more at times but also keep some cash under a mattress

Can’t save the big $ save the little $ but don’t spend more than you have. Savings still matters no matter what form of interest it takes, so good for you.

But ‘Camping’ outside the equity markets is not bad if your lifestyle is managed w/o it. It would seem your lifestyle is just fine, nice car and all. Plus, I know the value of my California RealEstate would go further elsewhere also but can’t seem to desire a relocation.
Live near some of the farmers that may not invest in the markets mentioned in a post.


Common theme is can you sleep at night? Perhaps after a nice dinner and glass of wine? Staying within your budget or within your financial means...

I sleep well knowing as long as the dollar has some value, I have a few dollars...lol.

Inflation? Grandma was born in 1925 - 2018 She never mentioned it - we still ate turkey on Thanksgiving and ham at Christmas...

 

[MultiEventer]

That's a subjective call everyone has to make for themselves. I retired in my early 50's with no expectation of pension or inheritance. If I get SS, I get it. But I don't plan for it. So I'm active in my investment planning every day. It's like a hobby to some extent, spending at least 1 hour, sometimes a little more, pouring over investment articles and buying stocks about 5 times per month. I do this in the early morning and am usually done by 7am, before the wife and I go out and play all day. I enjoy it. It's a thrill I get, similar to when I worked and planned software projects during my career. If I lost everything, I can still rely on my ability to go back to my profession and earn money if I have to but that is highly unlikely as I do take precautions, diversify, use stop losses etc.. After a 10 year bull market that has made me a substantial amount of money, I've decided to play it safe and get out of most stocks except a few precious metal miners, which will explode higher when the next recession comes. I can just sit back and wait, earning nothing for 10 years if I have to. Then after the S&P 500 index funds lose 50-75% of it's value, I will start buying back in when the bottom appears to have set. So yes, I'm perfectly happy with playing the stock market when the market cycles say it makes sense. As far as fixed income and CD's go, until rates are normalized again, I won't invest in them except for places to park $ while waiting for something worth investing in. I don't expect income from 1 or 2% returns. Ridiculous, outrageous and a sad testimony to our gov't/fed that values debt more than savings/retirement. But it is what it is and there is always ways to make money and thrive. Some people don't like it. I have a brother-in-law that absolutely hates how I do things. Says it would drive him crazy nervous. To each his own and I respect that. We have to do things how we are individually built and made according to our interests, abilities and comfort level.

 

[mickeyd]

I am retired and my AA is 50/50. I can not imagine ever being less than 30% stocks. Without some growth opportunities, I would have a hard time getting to sleep at night, or at nap time.

 

[stephenson]

Everything is dependent on everything ...and, I don't many of your specifics.

However, depending on your age and circumstances, the lack of equities may have cost you millions of dollars.

 

[2177V]

Everyone should have some equities and some bonds and a 50/50 portfolio is a start.

However, if there is a market correction, I would reallocate to 75% stock /25% bonds to take advantage of the recovery.

I also make sure my 25% bonds will hold me over if the correction or recovery time is a long one. I am retired so liquidity is important to me but i still play the stock market because I still like the thrill of victory when the recovery do happen.

If you are afraid to fall down while skiing, you will never be a good skier. Similarly, if you are afraid to lose money in the stock market, then you will never be a good investor since the stock market is a balance between an investor's greed and fear. Greed is part of my DNA. However, I do understand other people are not as aggressive and for those people, a "buy and hold" strategy works best for them.

 

[statsman]

If I had enough to live off CD and Bond interest, I would be happy as a lark.

If you're very conservative as an investor and have a sizeable balance to draw from, I can see that. That pretty much describes myself (60) and my DW (66). Between my modest Megacorp pension and her SS, we have enough income to meet our upcoming monthly costs which includes medical insurance (my under 65 policy is the big hit) and our new house. Our house, once the build is completed soon, will be owned outright.

That said, despite a good amount in taxable and in tax-deferred, I think once it all settles down with the new house that we'll end up investing some in the stock market. Not a lot, because we really don't need to. But even 20% stock is better than nothing as a bit of a hedge against inflation.

Now just need to get the courage up to do so. For those who invest in the stock market and sleep well at night, I don't think they really understand the stress some go through having part of their money invested in stocks.

 

[nun]

For the first 3 years of saving/investing life I had money in a bank saving account and all my retirement money in TIAA Traditional. Thirty years later and I still have that TIAA Traditional account, but I've added a few mutual funds as well.

 

[2177V]

That said, despite a good amount in taxable and in tax-deferred, I think once it all settles down with the new house that we'll end up investing some in the stock market. Not a lot, because we really don't need to. But even 20% stock is better than nothing as a bit of a hedge against inflation.

Now just need to get the courage up to do so. For those who invest in the stock market and sleep well at night, I don't think they really understand the stress some go through having part of their money invested in stocks.

My comment: Here is a link to all of the stock market bear markets and recovery time since WW2...

https://www.cnbc.com/2018/12/24/whats-a-bear-market-and-how-long-do-they-usually-last-.html

The chart indicates the longest bear market is 21 months and recovery time is 69 months. This implies you need a rainy day fund of 90 months or 7.5 years in order for your stock investment to recover. I disregarded data prior to WW2 because there was no SS, no government intervention, no balanced portfolios and people back then were reckless in my opinion.

As long as I have a rainy day fund of 7.5 years of income, I sleep well at night. I suggest short term corporate bonds such as VFSTX or government bonds or CD as some of the good rainy day funds. As long as you have a good safety net or a good rainy day fund, you should be in a position to take some risks which will give you some decent returns.

However, if you still can't sleep well with 7.5 years of income in a rainy day fund, then increase your rainy day fund to 10 or 15 years. The number of years that you feel comfortable with is based on an investor's risk tolerance.

 

[stephenson]

Camping,

Was thinking the only way you can determine how much money you have avoided making in a reasonable AA portfolio, would be to do a year by year model ... compare and contrast your no equities portfolio staring with first year, with a simple 60/40 portfolio ...don’t try each deposit, just lock to an annual date and add fixed to you non equities portfolio, and then beside it add to a 60/40 portfolio.

Run it out every year until today ... see what the difference is.

It sounds like it could be hundreds of thousands or perhaps even millions of dollars.

 

[pb4uski]

Camping,

Was thinking the only way you can determine how much money you have avoided making in a reasonable AA portfolio, would be to do a year by year model ... compare and contrast your no equities portfolio staring with first year, with a simple 60/40 portfolio ...don’t try each deposit, just lock to an annual date and add fixed to you non equities portfolio, and then beside it add to a 60/40 portfolio.

Run it out every year until today ... see what the difference is.

It sounds like it could be hundreds of thousands or perhaps even millions of dollars.

Here's one example... $10k a year invested annually... 60/40 vs Short-term Bond Fund as a proxy for CDs... since Jan 1995... 60/40 has 86% more.

https://www.portfoliovisualizer.com...ocation3_2=100&total1=100&total2=100&total3=0