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Old 08-15-2021, 12:37 PM   #141
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The only thing left to decide is when I should hop into Bonds. I have always been an aggressive investor and plan to be. No I would not want to delay my retirement. I want to RE by ages 55-60. Anything more would defeat the purpose of RE.
OK...as I stated previously you need to balance that risk and cost of under performance of bonds yourself...and you should do some research before you make that decision.

For the benefit of anyone who is curious about investing in commodities, as a hedge against inflation, here are two links worth reading:

https://www.investopedia.com/article.../05/021605.asp

https://investor.vanguard.com/mutual...overview/vcmdx

VCMDX is part of my 25% cash/commodity portfolio. I do a little bit of future trading in commodities mostly because it is closer to a "real time" indicator of inflation. inflationdata.com and VCMDX are "lagging" indicators of inflation.
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Old 08-15-2021, 12:42 PM   #142
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OK...as I stated previously you need to balance that risk and cost of under performance of bonds yourself...and you should do some research before you make that decision.

For the benefit of anyone who is curious about investing in commodities, as a hedge against inflation, here are two links worth reading:

https://www.investopedia.com/article.../05/021605.asp

https://investor.vanguard.com/mutual...overview/vcmdx

VCMDX is part of my 25% cash/commodity portfolio. I do a little bit of future trading in commodities mostly because it is closer to a "real time" indicator of inflation. inflationdata.com and VCMDX are "lagging" indicators of inflation.
Thank you.
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Old 08-15-2021, 02:43 PM   #143
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Thank you.
One final note: I have a prejudice against investment grade corporate bonds because of that recent Morgan Stanley Report about the bond ratings which should be downgraded. That may change later. If it has changed, you should consider corporate bonds as part your safety net. The reason: Investment Grade Corporate bonds out-perform treasuries in the bull market by about 2 to 3%. If you buy only treasuries, your safety net will be expensive. If you buy Investment grade Corporate bonds, your safety net will be less expensive but the decline during a bear market is minor compared to equities. There is nothing wrong with some treasuries and some corporate bonds as part of your diversified bond portfolio. Keep each asset class separate. Reason: Cashing out a balanced fund means you are cashing both bonds and equities and it is better to cash out asset classes separately as part of your "sell high" withdrawal strategy. Cashing out a "total bond" fund does the same thing, you are cashing out both investment grade corporate bonds and treasuries at the same time.

You should do some calculations and look at the numbers and make some comparison. The numbers are important. When a CEO of a Fortune 500 company makes a risk decision, he usually ask his staff to give him the numbers. The CEO uses those numbers as a basis for his decision. You should do something similar. I already provided the methodology on how to generate the numbers. Once you got the numbers in front of you (Treasuries versus Investment grade bonds), you should be able to make a better decision. A decision without numbers and based only on gut feeling usually does not work out well. When I make active investments, I have some numbers of my risk and reward in front of me...but there is also some judgement in my final decision.

That is about it. Good luck to you on your journey.
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Old 08-15-2021, 08:17 PM   #144
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One final note: I have a prejudice against investment grade corporate bonds because of that recent Morgan Stanley Report about the bond ratings which should be downgraded. That may change later. If it has changed, you should consider corporate bonds as part your safety net. The reason: Investment Grade Corporate bonds out-perform treasuries in the bull market by about 2 to 3%. If you buy only treasuries, your safety net will be expensive. If you buy Investment grade Corporate bonds, your safety net will be less expensive but the decline during a bear market is minor compared to equities. There is nothing wrong with some treasuries and some corporate bonds as part of your diversified bond portfolio. Keep each asset class separate. Reason: Cashing out a balanced fund means you are cashing both bonds and equities and it is better to cash out asset classes separately as part of your "sell high" withdrawal strategy. Cashing out a "total bond" fund does the same thing, you are cashing out both investment grade corporate bonds and treasuries at the same time.

You should do some calculations and look at the numbers and make some comparison. The numbers are important. When a CEO of a Fortune 500 company makes a risk decision, he usually ask his staff to give him the numbers. The CEO uses those numbers as a basis for his decision. You should do something similar. I already provided the methodology on how to generate the numbers. Once you got the numbers in front of you (Treasuries versus Investment grade bonds), you should be able to make a better decision. A decision without numbers and based only on gut feeling usually does not work out well. When I make active investments, I have some numbers of my risk and reward in front of me...but there is also some judgement in my final decision.

That is about it. Good luck to you on your journey.
Every FA says that I should be in 10% from 10 years retirement. Why is every FA conservative?
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Old 08-15-2021, 09:23 PM   #145
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Every FA says that I should be in 10% from 10 years retirement. Why is every FA conservative?
Liability reasons. By being conservative the chances of a capital loss is lower so there’s less likelihood of being sued. Very hard to sue if the investor made a profit even if that profit is underperformance money. Disclosure: My daughter is a FA at Charles Schrab. A FA do have a computer program that does a risk/reward analysis better than I can…but it is still biased toward being conservative. My disclosure to you about underperformance cost of bonds is not well known to very many investors. A typical investor reads about a 60/40 portfolio or has been advised by a FA to do a 60/40 portfolio and then call it a day. Since I am an aggressive investor I think outside the box. This is why you should learn as much as you can from both aggressive investors and conservative investors and then make your own decisions. Being aggressive means higher reward and higher risks. Being conservative means lower risk but lower reward.
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Old 08-15-2021, 09:27 PM   #146
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Liability reasons. By being conservative the chances of a capital loss is lower so thereís less likelihood of being sued. Very hard to sue if the investor made a profit even if that profit is underperformance money. Disclosure: My daughter is a FA at Charles Schrab. A FA do have a computer program that does a risk/reward analysis better than I canÖbut it is still biased toward being conservative. My disclosure to you about underperformance cost of bonds is not well known to very many investors. A typical investor reads about a 60/40 portfolio or has been advised by a FA to do a 60/40 portfolio and then call it a day. Since I am an aggressive investor I think outside the box. This is why you should learn as much as you can from both aggressive investors and conservative investors and then make your own decisions.
We have those computer program here too right like the FireCalc.
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Old 08-16-2021, 07:49 AM   #147
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Every FA says that I should be in 10% from 10 years retirement. Why is every FA conservative?
The great thing with 100% equities is that you get all the gains in a bull run. The bad thing with 100% equities is that you get all the losses in a bear market. By having fixed income in your portfolio, you are hedging against a bear market but it limits your gains in a bull market. Everything is paper gain/loss until you need to sell.
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Old 08-16-2021, 03:17 PM   #148
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The great thing with 100% equities is that you get all the gains in a bull run. The bad thing with 100% equities is that you get all the losses in a bear market. By having fixed income in your portfolio, you are hedging against a bear market but it limits your gains in a bull market. Everything is paper gain/loss until you need to sell.
The bear market is also beneficial since I am naturally DCA like I did in 2008 and 2020 as long as I have enough enough to recover before RE.
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Old 08-16-2021, 03:46 PM   #149
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The bear market is also beneficial since I am naturally DCA like I did in 2008 and 2020 as long as I have enough enough to recover before RE.
Yep, bear market is never an issue unless one needs to sell to raise funds.
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Old 08-16-2021, 05:06 PM   #150
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Yep, bear market is never an issue unless one needs to sell to raise funds.
I agree but 10% inflation is a totally different beast. Investors can get hurt in 2 ways: (1) Even a $1M portfolio does not drop from $1M, the buying power drops by 10% which can force a higher withdrawal rate. (2) If the inflation is severe enough, investors loses confidence and a lost of confidence can result in a bear market which can drops the $1M portfolio. Bonds do not provide a hedge against inflation but commodies do but most investors are not familiar with commodies and will likely do nothing.

The other point: inflation is a stealth tax increase for the government. If wages go up by 10% then the income taxes go up…without the political backlash of a real government tax increase. This means the government benefit by doing nothing.
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Old 08-16-2021, 05:58 PM   #151
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I agree but 10% inflation is a totally different beast. Investors can get hurt in 2 ways: (1) Even a $1M portfolio does not drop from $1M, the buying power drops by 10% which can force a higher withdrawal rate. (2) If the inflation is severe enough, investors loses confidence and a lost of confidence can result in a bear market which can drops the $1M portfolio. Bonds do not provide a hedge against inflation but commodies do but most investors are not familiar with commodies and will likely do nothing.

The other point: inflation is a stealth tax increase for the government. If wages go up by 10% then the income taxes go upÖwithout the political backlash of a real government tax increase. This means the government benefit by doing nothing.
We donít control inflation so no worries there. We do what we can do right?
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Old 08-16-2021, 06:40 PM   #152
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We donít control inflation so no worries there. We do what we can do right?
Most People donít do anything until we actually have 10% inflation. Only then they realize it is better to buy a car this year before the price of the car goes up 10% next year. Since you are young, you can adapt to inflation. However people who is retired and on fixed income are the ones who get hurt. This is why Social Security next COLA is the biggest in years. I never fear recession or bear markets because this is what bonds are designed for. It also explained why I decided to buy real estate properties recently to protect myself. However some people are not in a position to exchange their paper assets into real assets so their paper assets may be worth less in buying power in the future. The biggest problem is most retirement planning assume low inflation. High inflation can change their retirement plan such as forcing some retirees to move to a lower cost of living area to offset their lower buying power. I always believe in a backup or a contingency plan if the worst happens. If the worst does not happen it is fairly easy to scrap that plan. If there is no plan and the worst happen then their QOL decline or retired people are forced to get a job to make ends meet.
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Old 08-17-2021, 09:44 PM   #153
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Most People donít do anything until we actually have 10% inflation. Only then they realize it is better to buy a car this year before the price of the car goes up 10% next year. Since you are young, you can adapt to inflation. However people who is retired and on fixed income are the ones who get hurt. This is why Social Security next COLA is the biggest in years. I never fear recession or bear markets because this is what bonds are designed for. It also explained why I decided to buy real estate properties recently to protect myself. However some people are not in a position to exchange their paper assets into real assets so their paper assets may be worth less in buying power in the future. The biggest problem is most retirement planning assume low inflation. High inflation can change their retirement plan such as forcing some retirees to move to a lower cost of living area to offset their lower buying power. I always believe in a backup or a contingency plan if the worst happens. If the worst does not happen it is fairly easy to scrap that plan. If there is no plan and the worst happen then their QOL decline or retired people are forced to get a job to make ends meet.
Inflation doesnít effect everyone equally. I live in a LCOL and also do price compare with coupons.
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Old 08-17-2021, 11:27 PM   #154
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I don't think there's much point in asking this question, as it is 15 years out.

Just save/invest as much as you can without depriving yourself. When the day comes that you have "enough", you'll know.

Agreed, a lot can change such as getting married, health issues, losing employment for extended period, getting higher paying job, etc, etc.
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Old 08-17-2021, 11:33 PM   #155
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Agreed, a lot can change such as getting married, health issues, losing employment for extended period, getting higher paying job, etc, etc.
Yes it can but itís good to prepare ahead right?
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Old 08-18-2021, 06:15 AM   #156
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Yes it can but it’s good to prepare ahead right?

I agree. Planning ahead means that you become familiar with the issues. Not planning ahead means you may have to make quick decisions which may lead to bad decisions.

Yes you can get married, lose your job, etc, etc which may changes some of your earlier planning calculations and decisions. However, at least you know what the issues are and how to do the re-calculations when the time comes.

Knowledge is accumulative and rejecting knowledge even though you do not need it at the time....does not make sense to me. This is because we teach our children knowledge about 10 to 15 years before they actually need that knowledge.


When I started actively investing using only 10% of my portfolio, I did not make any money at the beginning. However, later I started making money and even later I started making a whole lot of money. This is because knowledge is accumulative. Warren Buffet will probably agree with this point. People who reject knowledge are usually not as successful.
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Old 08-18-2021, 01:30 PM   #157
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I agree. Planning ahead means that you become familiar with the issues. Not planning ahead means you may have to make quick decisions which may lead to bad decisions.

Yes you can get married, lose your job, etc, etc which may changes some of your earlier planning calculations and decisions. However, at least you know what the issues are and how to do the re-calculations when the time comes.

Knowledge is accumulative and rejecting knowledge even though you do not need it at the time....does not make sense to me. This is because we teach our children knowledge about 10 to 15 years before they actually need that knowledge.


When I started actively investing using only 10% of my portfolio, I did not make any money at the beginning. However, later I started making money and even later I started making a whole lot of money. This is because knowledge is accumulative. Warren Buffet will probably agree with this point. People who reject knowledge are usually not as successful.
Since you are 70. Wha age did you take SS?
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Old 08-18-2021, 02:33 PM   #158
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Since you are 70. Wha age did you take SS?

I retired for good at 65 but I started collecting at 66 which is my FRA. Age of collecting SS is a personal decision mostly based on the need for SS, your health and your financial situation. I could have collected at 62 with penalties or 70 with an extra 8% per year after my FRA. I decided to split the difference between the two extreme options which is my FRA. This is the "goldilocks" option. (not too early, not too late, just right...at least for me)
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Old 08-18-2021, 08:56 PM   #159
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I retired for good at 65 but I started collecting at 66 which is my FRA. Age of collecting SS is a personal decision mostly based on the need for SS, your health and your financial situation. I could have collected at 62 with penalties or 70 with an extra 8% per year after my FRA. I decided to split the difference between the two extreme options which is my FRA. This is the "goldilocks" option. (not too early, not too late, just right...at least for me)
I am leaning towards 70. I cannot regret something when I am dead.
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Old 08-23-2021, 03:33 PM   #160
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I had to tap into EF last week. One was for a dental procedure and my Aetna DMO doesn’t cover everything and found out my 12 year old Dryer would require half the cost that I paid for to repair it.
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