Very Conservative 'Chicken' Portfolio

[njhowie]

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Originally Posted by Blue_Bird Hi, I am new here. I retired a few years ago @58. I have a very conservative portfolio with about 75% in 3.25% brokered CDs good for 3 more years, 10% in total stock, and 15% cash. NW minus Real Estate is 43X annual spend. I can't get used to not having 'for-sure' income. I guess when my pension and SS kick in... I will be less nervous going back to ~40% equities. Are there people here doing like me? FOMO is building. I want to be told to shut up and just be happy.

I don't see that you have any issue at this time - there's nothing to do for another 3 years unless you are going to reallocate the remaining 25% to equities. Even if you did that, you wouldn't push the whole thing to equities or very aggressive equities, and so the additional income generated above what you're getting from the 10% total stock will likely not make that much of a difference, though you will certainly take on more risk.

Sit back, stick with what you have, and begin thinking about it again in 2.5 years. Who knows what CDs will be paying when yours are maturing and looking for reinvestment.

I'm at 1/99 (that's 99% in CDs and bonds) and I'm happy as a clam.

If you're comfortable with your AA and the numbers continue working out for your lifestyle, why rock the boat? FOMO is not a good state of mind - try to move away from that.

Bottom line, shut up and just be happy.

[24601NoMore]

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Originally Posted by Sunset (IMHO): Chasing nice high dividend stocks, often leads to disappointment as the company cuts the div or cancels it. As soon as either one happens the price drops because people ditch the stock like a hot potato. This compounds the problem for the div chaser, as selling will often mean a loss. I've done this now and then myself. My recent one is T, for the 7% div. I have zero expectation that stock will go up, I just want it to stay the same and continue to pay 7%. Currently, for some money that I am mostly interested in dividend generating, one thing I invest in is an ETF (big collection of stocks) SCHD. The div is ~3% which is better than a CD, and there is some safety in that should a couple of companies stop paying the div or even go bankrupt, the div will still continue only slightly affected, and the price will go down only a few percent.

Agreed. I also own T for the same reason and have the same expectations with regard to share price. Let's hope they continue to have the FCF to pay the dividend at current rates (or ideally if not as realistically, higher).

I also like SCHD and own it as well. Albeit, I bought a VERY small quantity of it just to dip my toe into the water. Got it at $54 and pennies back in Sept, and see it's trading at roughly $67 as of Friday. That's a heck of a return in < 6 months at 24+%..just wish I had more at prices below where it's currently trading..

[HI Bill]

At a 43X savings rate, the OP can afford to be happy. Until inflation rears its head, and exceeds the 3% CD rate....in this case, I see perceived safety along with actual risk.

[NW-Bound]

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Originally Posted by aja8888 The nice feature with T is one can sell call and put options on it forever as it bounces between $27 and $34. That's what I have been doing for a year now.

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Originally Posted by Sunset I didn't mention it in my previous post as it would just confuse the point I was trying to say. I've sold covered calls on my T (just recently bought it). While the option is not really much, I consider it just a bonus extra and if it goes, I might have to sell a Put.

Eh, ya'll are doing what I have been doing for a few years. You are going to depress the premium on these options. I don't want more option sellers. I need more buyers. Buy, buy, buy...

Just kidding.

I used to sell covered calls and puts on just highly volatile stocks. Then, I started to look at my stalwart positions, and said to myself I could make some extra money even on these sleepers because they still fluctuated quite a bit. I don't have to collect several hundred dollars or a few $K for every contract that I sell. Even something less than $100, actually down to $50, I do not pass up. Heh heh heh...

When I do more than a dozen contracts a week on these boring stocks, these little gains add up. Heh heh heh...

[Blue_Bird]

OP here. Thanks for all the great insight everyone! It is nice to know I am not alone in my sentiments. I think I will just enjoy the lightness of being FI for now. In a few years things may be very different.

[P.S.]

We subscribe to the Conservative Chicken philosophy and are not even retired yet. When I was a kid, my mom counseled me- before spending any money, save twice as much, and set the extra aside -> in case you run over someone’s chicken on the road.

[audreyh1]

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Originally Posted by cyber888 You can afford to be conservative because you have 43X annual spending, so you should be fine.

Yeah, that’s basically the whole point.

[JJpop]

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Originally Posted by njhowie I don't see that you have any issue at this time - there's nothing to do for another 3 years unless you are going to reallocate the remaining 25% to equities. Even if you did that, you wouldn't push the whole thing to equities or very aggressive equities, and so the additional income generated above what you're getting from the 10% total stock will likely not make that much of a difference, though you will certainly take on more risk. Sit back, stick with what you have, and begin thinking about it again in 2.5 years. Who knows what CDs will be paying when yours are maturing and looking for reinvestment. I'm at 1/99 (that's 99% in CDs and bonds) and I'm happy as a clam. If you're comfortable with your AA and the numbers continue working out for your lifestyle, why rock the boat? FOMO is not a good state of mind - try to move away from that. Bottom line, shut up and just be happy.

We have 0 stocks age 69 and 71. The problem is what to do with all the cd’s and bonds when they mature the next 2 to 4 years if interest rates are like now. We also have a couple GO muni’s that will probably be called early which will hurt,paying about 5 %.
The fed does a great job of saving all the stock holders but they never consider the retired people holding a ton of CD type investments.

[foxfirev5]

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Originally Posted by JJpop We have 0 stocks age 69 and 71. The problem is what to do with all the cd’s and bonds when they mature the next 2 to 4 years if interest rates are like now. We also have a couple GO muni’s that will probably be called early which will hurt,paying about 5 %. The fed does a great job of saving all the stock holders but they never consider the retired people holding a ton of CD type investments.

Sorry to say but there is no such thing as a risk free investment. I would love to have a simple retirement living on CD interest like my DM thought she could. After all retirement is the finish line. And she worked for a stock broker. Now it's all unravelling.

Meanwhile my 45/55 at age 65 portfolio is keeping up. For now. We'll see how it works out. Funny thing is that my risk taking may be necessary to subsidize DM's risk free approach. I feel your pain. DW and I thought we had 30 years spending in 5 year CD ladders. Now it's at 25 years and falling as we gradually have transitioned into dividend stocks. Now that even looks too rich for further investment. There is no free lunch.

[GoodLife59]

If you’re financially secure and happy then no worries. I’m 60 and retired. My 65/35 stock/bonds mutual fund portfolio has averaged 9% annually for the past 10 years. That works for me.

[FLD3C]

I am going to challenge the premise of your post (and most of the replies).
Your "conservative chicken portfolio" is a low volitility, low market risk portfolio. It is a very high inflation risk portfolio.
Historically portfolios with at least 30-35% equities have survived better over long periods of time.

[PussInBoots]

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Originally Posted by FLD3C I am going to challenge the premise of your post (and most of the replies). Your "conservative chicken portfolio" is a low volitility, low market risk portfolio. It is a very high inflation risk portfolio.

+1
Even at modest 2% inflation this is a portfolio bound to be eroded by inflation unless OP has withdrawal rate of 1% or less.


Simple S&P 500 would pay more than that in dividends (With feds tax of 0 USD and 120+ plus years of history.)

[UnrealizedPotential]

Quote:

Originally Posted by FLD3C I am going to challenge the premise of your post (and most of the replies). Your "conservative chicken portfolio" is a low volitility, low market risk portfolio. It is a very high inflation risk portfolio. Historically portfolios with at least 30-35% equities have survived better over long periods of time.

Well, the OP did suggest he/she would invest up to 40% equities when SS is collected. The OP is 58 now so... The situation of OP may not be as dire as you are suggesting. But yes, inflation bites.