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Is 10-12% YTD loss in line with typical Moderate PF?
Old 05-20-2022, 01:27 PM   #1
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Is 10-12% YTD loss in line with typical Moderate PF?

Could use some reassurance or consolation tho i presume many share my pain.. As a freelance sole proprietor Having 'semi-retired' more or less (scaled back a lot on work) in the last year or so I watched 50/50 moderate PF reach its all -time high valuation in late 2020 in the realm of 2.4M. Subsequently YTD the slow tedious daily grind downward is testing my tolerance. With zero debt a modest annual spending level in the realm of 45-50 My investment assets as of today are approaching a loss of 260k YTD., i.e., nearing -11%. On a positive note dividends do generate about 50-55k/year. FWIW, SS will likely be 22k/year-ish, if I wait til 66-67. Firecalc seems to suggest I shouldn't worry much using several different variations of portfolio composition.

I made the error of going too conservative too early for my age and never fully getting back into equities after jumping out of the chaos of 2008-09. My chief question is realistically just how much further this sell-off is likely to go...and for planning purposes, what kind of timeframe folks similarly allocated are anticipating for a reversal and how many years I may be looking at to 'get back to even.' An FA friend suggests if I don't need the $$ in the next five years, i should be okay...it's just the ultimate in s*tty timing when a bear market forms right at the outset of ones traditional retirement age.

Thanks!

Mike
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Old 05-20-2022, 01:41 PM   #2
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Reassurance? Sounds like you are good if your dividends are covering your spend. Just turn off the noise.

Yes, it sucks to watch the market tank when you retire. In my case, this is year 1 of basically full retirement. I did plan for some level of the SHTF, but it still sucks to watch. I WISH I only lost $260K on paper as opposed to $260K x __. None the less, its only on paper and I have 10 years of safety in my plan with many levers to pull as needed.

Hang tough with the rest of us!
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Old 05-20-2022, 01:41 PM   #3
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The short answer is that no one knows.

Since you never fully got back into equities, presumably some of that cash is sitting around still, maybe in a bond fund... I'd be thinking about how much of that you want to put back into stocks for long term growth, and start that slowly over the next 2-3 years. My guess is that it will take a while for inflation to slow to the point that stock markets will reverse their downward trend.
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Old 05-20-2022, 02:12 PM   #4
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Originally Posted by mikes425 View Post
Could use some reassurance or consolation tho i presume many share my pain.. As a freelance sole proprietor Having 'semi-retired' more or less (scaled back a lot on work) in the last year or so I watched 50/50 moderate PF reach its all -time high valuation in late 2020 in the realm of 2.4M. Subsequently YTD the slow tedious daily grind downward is testing my tolerance. With zero debt a modest annual spending level in the realm of 45-50 My investment assets as of today are approaching a loss of 260k YTD., i.e., nearing -11%. On a positive note dividends do generate about 50-55k/year. FWIW, SS will likely be 22k/year-ish, if I wait til 66-67. Firecalc seems to suggest I shouldn't worry much using several different variations of portfolio composition.

I made the error of going too conservative too early for my age and never fully getting back into equities after jumping out of the chaos of 2008-09. My chief question is realistically just how much further this sell-off is likely to go...and for planning purposes, what kind of timeframe folks similarly allocated are anticipating for a reversal and how many years I may be looking at to 'get back to even.' An FA friend suggests if I don't need the $$ in the next five years, i should be okay...it's just the ultimate in s*tty timing when a bear market forms right at the outset of ones traditional retirement age.

Thanks!

Mike
Nobody knows how much further it's going to go down, and nobody knows how long it'll take or even whether it'll ever "get back to even".

Since your income is more than enough to cover your expenses, plus you'll have SS coming on-line later, you're safe.

At times like this, having x number of years' worth of expense in cash is prudent, whatever the inflation rate. You can ride out market downturns without being forced to sell. It may be a performance drag during good times, but it's a great tonic for a good night's sleep during bad times.
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Old 05-20-2022, 02:47 PM   #5
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Sounds about what our shrinkage has been. Rarely look any more, just wince. SS and pension more than enough for us unless we're traveling, gifting to kids, or donating to charity large. Only thing I'm going to do is move my last year of Roth conversion to up my equity position. Several months ago I sold almost all my bond funds in the tiRA because I couldn't see any way they wouldn't be a loss, so lotsa cash there. In spite of conversions for many years at about what my MRD's would have been (and not triggered too much tax or Medicare increase) I still have about 2/3 in the tIRA and 1/3 in the Roths. Roths would be last out so they're all equity. Likely for grandkid's college and kids.
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Old 05-20-2022, 02:50 PM   #6
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Is 10-12% YTD loss in line with typical Moderate PF?

Yes, that should be about the norm. You have lots of company.
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Old 05-20-2022, 03:21 PM   #7
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I'm down right around 12% YTD so that seems about right. Remember that it's only a loss if you sell. Most of your savings you will not be selling for many years. Ideally you would have had a few years saved in cash to ride out a big fall in equities but you should be fine anyway. Keep the withdrawals to a minimum during this downturn if needed.
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Old 05-20-2022, 04:37 PM   #8
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I'm down right around 12% YTD so that seems about right. Remember that it's only a loss if you sell. Most of your savings you will not be selling for many years. Ideally you would have had a few years saved in cash to ride out a big fall in equities but you should be fine anyway. Keep the withdrawals to a minimum during this downturn if needed.
Thanks to you and other responders too. Pretty much fully invested except for a short term cash reserve of 6-8 months expenses-- tho have a fair amount in short term and ultra ST bond positions which i have traditionally thought of as Cash. I think the fact that losses are all 'on paper' until one sells- as you point out, is always good to keep in mind. As for expenses/withdrawals, I'm pretty frugal. I think i need to stop watching the daily -or even weekly - fluctuations and chill.
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Old 05-20-2022, 07:52 PM   #9
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Remember that you need less than 2.4% of your current portfolio for this year's expenses. The other 97.6% of your portfolio still has time to recover.
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Old 05-20-2022, 07:55 PM   #10
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I think your losses are in line with a typical moderate port this year.
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Old 05-20-2022, 08:14 PM   #11
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Originally Posted by mikes425 View Post
Could use some reassurance or consolation tho i presume many share my pain.. As a freelance sole proprietor Having 'semi-retired' more or less (scaled back a lot on work) in the last year or so I watched 50/50 moderate PF reach its all -time high valuation in late 2020 in the realm of 2.4M. Subsequently YTD the slow tedious daily grind downward is testing my tolerance. With zero debt a modest annual spending level in the realm of 45-50 My investment assets as of today are approaching a loss of 260k YTD., i.e., nearing -11%. On a positive note dividends do generate about 50-55k/year. FWIW, SS will likely be 22k/year-ish, if I wait til 66-67. Firecalc seems to suggest I shouldn't worry much using several different variations of portfolio composition.

I made the error of going too conservative too early for my age and never fully getting back into equities after jumping out of the chaos of 2008-09. My chief question is realistically just how much further this sell-off is likely to go...and for planning purposes, what kind of timeframe folks similarly allocated are anticipating for a reversal and how many years I may be looking at to 'get back to even.' An FA friend suggests if I don't need the $$ in the next five years, i should be okay...it's just the ultimate in s*tty timing when a bear market forms right at the outset of ones traditional retirement age.

Thanks!

Mike
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Old 05-20-2022, 08:21 PM   #12
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10 to 12 percent lose would be good news. I'm sure mine is way more than that now. I hear the noise of a long time to recover and going to drop a lot more before it ends, but no one knows for sure.

Cash is paramount in these times to weather the storm.
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Old 05-20-2022, 08:45 PM   #13
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My total net worth (not including real-estate property) is down 12.5% from the beginning of the year. I thought I was hedged but I was also hurt by the bond market. How bad you got hurt depends a lot on what you got. Generally the stuff that went up the most got hit the hardest.
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Old 05-21-2022, 05:41 AM   #14
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I've used this fund in a 401(k) - but that is all converted now. American Funds American Balanced Fund Class R-6 (RLBGX) - is -11.20% YTD according to Yahoo Finance. https://finance.yahoo.com/quote/RLBGX/

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Fund summary: The investment seeks conservation of capital, current income and long-term growth of capital and income. The fund uses a balanced approach to invest in a broad range of securities, including common stocks and investment-grade bonds. It also invests in securities issued and guaranteed by the U.S. government and by federal agencies and instrumentalities. In addition, the fund may invest a portion of its assets in common stocks, most of which have a history of paying dividends, bonds and other securities of issuers domiciled outside the United States.
It's an active fund, with a lower expense ratio. There are other ways to compute average return of a 50/50 portfolio, but I'm too lazy to do that. You could average out a 50/50 mix of VWELX and VWIAX (Wellington managed funds), or choose a multitude of other benchmarks.

Your investment company should have an exact performance number for you. Not that you'd want to look at it each day.
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Old 05-21-2022, 05:59 AM   #15
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...There are other ways to compute average return of a 50/50 portfolio, but I'm too lazy to do that. You could average out a 50/50 mix of VWELX and VWIAX (Wellington managed funds),..

Your investment company should have an exact performance number for you. Not that you'd want to look at it each day.
This is what we have done with our tIRAs. One of us Wellsley and the other Wellington. In taxable accounts we have a few individual stocks and cash. Our total net worth is down by 11-12%. It is disappointing about the amount of loss but I will be watching our investments and if it gets low enough I will start buying or maybe just leave it alone. There is no way to know when or how the market will behave in the future. But most of our stash will be more for inheritance than for us.

Cheers!
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Old 05-21-2022, 06:10 AM   #16
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About the same for us, YTD. All I have to do is switch to a 3 year view of PF size and see I am still way up from when I retired, despite modest withdrawals for living. It does make it look more like noise that way.
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Old 05-22-2022, 09:49 AM   #17
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Our YTD is about -10% for a 40/60 (FI/equity) mix.
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Old 05-22-2022, 10:42 AM   #18
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Down 13% ytd. It's not fun, but just have to ride it out like all the other times.
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Old 05-22-2022, 11:06 AM   #19
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I normally wouldn't even have looked until year-end, but this thread prompted me. Our equity tranche is basically VTWAX. Sticker price is down 8.67% through end of April but there was a dividend in March that I am too lazy to figure for total return. So I'll say "less than" 8.67%. Our fixed income tranche is basically TIPS, the 2s of 26. Sticker price is down 2.5% but there was a semiannual interest payment in January so we are down "less than" 2.5%
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Old 05-22-2022, 11:11 AM   #20
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Only down <1% YTD but I've been in cash "most of the time" in my IRA speculation account. I got lucky on a few bigger swing trades (XOM and CVX) that helped but still down a little.

In my 401K investment account, I'm up almost 2% YTD but it's all in fixed income.
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