Is anyone brave enough to retire in Jan 2019 in this volatile market?

[Mhoepfin]

Seems so many people are in US only portfolios, which introduces a high level of home bias. I’ve got decent allocations in Foreign, Emerging Markets, and Risk Parity. Hoping these help off-set any US corrections I see coming.

 

[COcheesehead]

Seems so many people are in US only portfolios, which introduces a high level of home bias. I’ve got decent allocations in Foreign, Emerging Markets, and Risk Parity. Hoping these help off-set any US corrections I see coming.

How did those work for you in the last two corrections this year?

I see foreign down significantly more this year. Maybe a good buy, but also a hard ride down that will take time to recover from.

 

[jazz4cash]

How did those work for you in the last two corrections this year?

I see foreign down significantly more this year. Maybe a good buy, but also a hard ride down that will take time to recover from.

I have tried to go by the curve that shows risk reduction due to overseas diversification peaks at around 30% of equities. E.G. if you choose 60% equity allocation, approximately 18% would be foreign stocks. In reality, I only have about 20% and it hasn't worked out too well so far. Large cap US stocks derive a significant portion of earnings from foreign activity anyway.

 

[copyright1997reloaded]

I have tried to go by the curve that shows risk reduction due to overseas diversification peaks at around 30% of equities. E.G. if you choose 60% equity allocation, approximately 18% would be foreign stocks. In reality, I only have about 20% and it hasn't worked out too well so far. Large cap US stocks derive a significant portion of earnings from foreign activity anyway.

I have about 25% of my equity holdings ex-USA. It has hurt me in my YTD performance, and it seems like (in general) the markets have become more correlated in the last 20-30 years. So perhaps all I've done is to introduce additional volatility.

I am sticking with it, in the sense I moved some $ recently to VWO and Japan...

 

[TwoByFour]

How did those work for you in the last two corrections this year?

I see foreign down significantly more this year. Maybe a good buy, but also a hard ride down that will take time to recover from.

That is how diversification works - you take the good with the bad. At some point US equities will be down and ex-US will be up, but you don't know when so you just stay diversified.

 

[W2R]

Is anyone ready to FIRE in Jan. 2019 with less than $1 mil or $900k with no pension in this volatile market. thought it will be scary in this market, but there maybe some brave souls out there ready to FIRE at the beginning of next year with barebone funds.

I think that January 2019 would be an utterly DELIGHTFUL time to retire, for those who feel they are financially prepared for retirement.

Who would assume ideal market conditions upon retirement? I can't imagine. No matter when you plan to retire, it would probably be wise to plan that the market won't cooperate. If all turns out to be ideal, then so much the better.

I retired in 2009, which looks like a brilliant choice in hindsight. But at that time, so many articles were being written saying 2008-2009 was just the prelude for an even bigger crash. So, I prepared for that in advance. At some point, you've got to find a way to follow through on your plans if you ever want to retire.

 

[COcheesehead]

That is how diversification works - you take the good with the bad. At some point US equities will be down and ex-US will be up, but you don't know when so you just stay diversified.

I personally don't think US vs International is really diversifying.

 

[Dtail]

That is how diversification works - you take the good with the bad. At some point US equities will be down and ex-US will be up, but you don't know when so you just stay diversified.

I am about 20% international stocks. This plus previous bond fund allocations (since moved to CD's) has hurt me this year.
First full year of retirement so bothers me a little, but staying the course in Intl.

 

[TwoByFour]

I personally don't think US vs International is really diversifying.

Single-country investing is a well recognized risk. Japan and its lost decade is the poster child for not putting all your eggs in one country (or region) basket.

I have gone back and forth on this and was 100% US invested until about 3 years ago when I decided I should be more diversified. My belief was that most large US companies do a lot of overseas business so what's the difference? But a company that is domiciled in another country and primarily does business there is not the same as a US company doing business in that country.

I am still only about 12% ex-US but many analysts recommend around 40%. The Vanguard All World Fund (VT) is about 45% ex-US.

 

[HI Bill]

That is how diversification works - you take the good with the bad. At some point US equities will be down and ex-US will be up, but you don't know when so you just stay diversified.

Problem is, the world markets are so connected, that the foreign market often times seem to mirror the US markets. Ever watch the foreign markets after US markets close? I'm not so sure that foreign markets still offer much diversification projection from US economics. If the US economy tanks, the rest of the world will be impacted, either directly or indirectly. JMHO.

 

[jazz4cash]

I personally don't think US vs International is really diversifying.

I’ve come around to the same opinion but haven’t done anything about it except holding at 20% instead of going to the recommended 30%. My thinking has evolved to believe the emerging markets subset of international is a better source of diversification. I need to research this theory.

 

[frankbrenowitz]

Who would assume ideal market conditions upon retirement? I can't imagine. No matter when you plan to retire, it would probably be wise to plan that the market won't cooperate. If all turns out to be ideal, then so much the better...At some point, you've got to find a way to follow through on your plans if you ever want to retire.

Exactly this. I ratcheted down the asset allocation from 100% equities to 50:50 over the last few years (long story). In hindsight l left gains on the table relative to my prior AA but I sleep better than I have in decades and I now have sufficient funds in fixed income to carry DW and me to 70 and maximum social security benefits. 2019 is an excellent time to retire!

 

[COcheesehead]

Problem is, the world markets are so connected, that the foreign market often times seem to mirror the US markets. Ever watch the foreign markets after US markets close? I'm not so sure that foreign markets still offer much diversification projection from US economics. If the US economy tanks, the rest of the world will be impacted, either directly or indirectly. JMHO.

^^this^^

To me true diversification is things that may not always correlate: real estate, cash, individual bonds (not funds), a second or third income stream, equites, etc. Not slim subsets within an asset class.

 

[MarieIG]

No, I'm not retiring in January of 2019 as my target is sometime in 2020.