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Old 11-04-2017, 09:47 AM   #41
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If someone had a $10B portfolio and lives off their SS, is the only way they will find out if they won the game and were okay not investing in stocks is after they are dead? I'm pretty sure from other discussions there are many posters here who are not even going to come close to draining their portfolios by their time they are dead, whether they invest in stocks, TIPS or passbook savings accounts.

The librarian has a job she likes and is into simple living. I don't understand the animus towards her because she chooses not to invest in stocks. She isn't giving advice for others. It is just a human interest story on the path she has chosen and feels goods about.

We had pressure from our mutual fund rep to invest in stocks for growth - his growth because they don't make ongoing fees from TIPS, I-bonds and CDs. We pointed out his own retirement program showed us being fine even if we had a 100% short term fixed income portfolio because we aren't big spenders.
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Old 11-04-2017, 10:14 AM   #42
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Originally Posted by pb4uski View Post
Do you really think it is prudent to take financial advice from a 62 year old divorcee librarian who is still working and has less than $1 million to her name? Even if it is free? No chance.

But wait... she wrote "Our Bodies, Our Shelves: A Collection of Library Humor" so she must be qualified to dispense financial advice.

Plus, she is conveniently ignoring inflation risk.

If her ex-husband is wealthy as she states, perhaps she should consider claiming spousal benefits at her FRA rather than waiting until 70 to claim on her own record.
Talk about condescending, 1st of all maybe she wasn't married for 10 years. 2nd I would say a librarian and writer aren't the highest paid jobs around so to save high 6 figures to go along with a paid off house and no debt is pretty dang good. 3rd What do you call Treasury Inflation-Protected bonds.
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Old 11-04-2017, 10:19 AM   #43
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Originally Posted by 34rlsa View Post
"Now all my money is stashed in U.S. Treasuries, Treasury Inflation-Protected Securities (or TIPS bonds), and laddered CDs, which, in the years to come, I can count on to earn me essentially nada."

If you could maintain the retirement lifestyle you have planned for without the sequence of return risks... would you be comfortable "earning essentially nada"?
Yes, absolutely since I am doing that now. Others on this board are doing it too but seldom will admit it since it's not part of the mainstream thinking here and often draws a lot of fire. However, I don't consider fixed income investments "nada". Low returns yes, but not nada.
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Old 11-04-2017, 10:26 AM   #44
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Since starting ER over 4 years ago I've been in the 3-Fund lazy portfolio and that has been the best financial decision I've made in over 30+ years of investing. I've kept a 60/40 overall AA as follows:

40% - VTSAX (Total Market)
40% - VBTLX (Total Bond)
20% - VTIAX (Total Intl Market)

To date this has returned an XIRR of 7.77% (now there's a good number) while letting me sleep very well and not obsessing about market direction.

I based a large part of my ER decision on ESPlanner output, which includes 3 spending plans:

1. Aggressive Spending (100% of planned Real Returns)
2. Cautious Spending (50% of planned RR)
3. Conservative Spending (0% RR)

I pulled the plug when I was comfortable with "Cautious" spending numbers. BTW, the Monte Carlo projection for the 3-Fund portfolio was appx. 6%, which is about what we have achieved over the last 4 years.

Bottom line is we're off to a great start and sequence of return risks should be behind us if we continue with planned spending over the long term. No need to go down to 0% return numbers and just gonna stick we the 3-Fund 60/40 AA knowing there will be bumps and bruises in the market along the way.
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Old 11-04-2017, 10:46 AM   #45
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Originally Posted by daylatedollarshort View Post
Yes, we do that. I plan on .5% real yield. I bought a fair bit of ~2% TIPS early on so I don't think it will be hard to get that as a blended real yield combined with stable value, I-bonds, CD ladders, etc. SS, pensions and a little side income will cover most of our basic expenses and a few frills so once SS kicks in our withdrawal rate should be under .5% most years. We don't have zero stocks but a low allocation and none of the money we need for retirement in stocks.

We use a matching strategy for inflation. This article has TIPS as the best inflation investment:
Top 9 Asset for Inflation Protection
9 Top Assets for Protection Against Inflation | Investopedia
The librarian is also working, and planning to continue working. It seems like a theme or necessity for folks who invest 100% in interest bearing things.

I suppose once you get a few million dollars, you could do this as $1.5 Million would be $50,000 per year for 30 years. But I'd rather just keep my stocks and withdraw at 3.3333 % in case I lived for 31 years.
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Old 11-04-2017, 10:58 AM   #46
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Originally Posted by Sunset View Post
The librarian is also working, and planning to continue working. It seems like a theme or necessity for folks who invest 100% in interest bearing things.

I suppose once you get a few million dollars, you could do this as $1.5 Million would be $50,000 per year for 30 years. But I'd rather just keep my stocks and withdraw at 3.3333 % in case I lived for 31 years.
I'm counting little odds and ends income like bank and credit card sign up bonuses and passive Adsense income from existing sites, not an actual job. It is not a big part of our plan and not many hours of work a year.

At zero percent real interest, one could withdraw 3.33% for 30 years, 100 / 30 = 3.33, a bit more with a TIPS ladder averaging .5% real return - and no sequence of return risk.
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Old 11-04-2017, 12:07 PM   #47
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I think some may have missed this. While she says she won the game and just wants to get out, she is putting varnish on her market timing. See her quote below. She is not swearing off stock risk, she is just swearing it off at current prices.

"But if the market totally tanks tomorrow, you ask, and stocks become such a crazy bargain that Id be a fool not to put at least some of my money back into that mutual fund that served me so well, wouldnt I?

Of course I would! Im no fool."

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Old 11-04-2017, 12:14 PM   #48
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Originally Posted by NanoSour View Post
Since starting ER over 4 years ago I've been in the 3-Fund lazy portfolio and that has been the best financial decision I've made in over 30+ years of investing. I've kept a 60/40 overall AA as follows:

40% - VTSAX (Total Market)
40% - VBTLX (Total Bond)
20% - VTIAX (Total Intl Market)

To date this has returned an XIRR of 7.77% (now there's a good number) while letting me sleep very well and not obsessing about market direction.

I based a large part of my ER decision on ESPlanner output, which includes 3 spending plans:

1. Aggressive Spending (100% of planned Real Returns)
2. Cautious Spending (50% of planned RR)
3. Conservative Spending (0% RR)

I pulled the plug when I was comfortable with "Cautious" spending numbers. BTW, the Monte Carlo projection for the 3-Fund portfolio was appx. 6%, which is about what we have achieved over the last 4 years.

Bottom line is we're off to a great start and sequence of return risks should be behind us if we continue with planned spending over the long term. No need to go down to 0% return numbers and just gonna stick we the 3-Fund 60/40 AA knowing there will be bumps and bruises in the market along the way.
Not to bring you down, but over the past 4 years you could have had any AA and be in the money. Your AA hasn't experienced downside with the market, but based on my returns over that period you've left money on the table.
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Old 11-04-2017, 12:15 PM   #49
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Yeah.... she clearly sees bulls and bears but inflation risk is much more stealthy.
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Old 11-04-2017, 12:26 PM   #50
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Originally Posted by flintnational View Post
I think some may have missed this. While she says she won the game and just wants to get out, she is putting varnish on her market timing. See her quote below. She is not swearing off stock risk, she is just swearing it off at current prices.

FN
Or, even if you have "won the game" you "might want to consider doing both, if you have enough extra money. Bucket #1 is your "won the game" money and is just invested in fixed income instruments. Which is enough to live the rest of your life in your chosen lifestyle. (maybe even with some cushion) Bucket #2 is the extra money above and beyond what you realistically will ever need. Basically fu money. Invest, speculate, or gamble with it.
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Old 11-04-2017, 12:46 PM   #51
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Bucket #1 is your "won the game" money and is just invested in fixed income instruments. Which is enough to live the rest of your life in your chosen lifestyle. (maybe even with some cushion) Bucket #2 is the extra money above and beyond what you realistically will ever need
Yes, of course. So easy. That's what everybody here did. Saved up twice as much money as we'd ever possibly need. The old 2% Withdrawal Solution
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Old 11-04-2017, 01:35 PM   #52
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Agree, not as easy to do as it is to write it, but some (even here) have done it...
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Old 11-04-2017, 01:37 PM   #53
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Some did....
We know. So what? Back on topic
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Old 11-04-2017, 01:48 PM   #54
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I thought it was on topic but I'll yield to your wisdom.
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Old 11-04-2017, 02:06 PM   #55
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You don't know you've won the game for sure until you're dead.


This is the only site in the world where dying = Winning.
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Old 11-04-2017, 02:17 PM   #56
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What is inflation? It certainly isn't CPI
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Old 11-04-2017, 04:19 PM   #57
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"Back in 2012, Fidelity back-tested nine assets against inflation on a year-to-year basis between 1973 and 2012. No asset beat inflation 100% of the time, but there was a big difference in regards to which assets performed better at beating inflation."

9. Gold - 54%

8. Commodities - 66%
7. 60/40 Stock / Bond Portfolio - 69%
6. REITS / Real Estate Equity - 69%
5. S&P 500 - 70%
4. Real Estate Income - 71%
3. Barclays Aggregate Bond Index - 75%
2. Leveraged loans - 79%
1. TIPS - 80%


Source:
9 Top Assets for Protection Against Inflation
http://www.investopedia.com/articles...-inflation.asp
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Old 11-04-2017, 04:33 PM   #58
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"Back in 2012, Fidelity back-tested nine assets against inflation on a year-to-year basis between 1973 and 2012. No asset beat inflation 100% of the time, but there was a big difference in regards to which assets performed better at beating inflation."
That's a strange way to think about "beating" inflation. Year to year? I'm more worried about which asset classes will beat inflation for 10 or 20 or 30 year periods.
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Old 11-05-2017, 07:28 AM   #59
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+1

No-one here has a time horizon of 1 year. 5 years at a minimum, but more 20 or even 30 years.

Which in the end comes back to absolute returns of asset classes. As far as I know, only equities shine there. Well, as long as the world earnings keep growing at any rate.
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Old 11-05-2017, 07:40 AM   #60
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If you have already won the war, no need to take on extra risk if doesn't allow you to sleep well at night, however, I have also heard it is never wise to let equity drop below 20%.
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