Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
My wake up call - last night
Old 11-09-2016, 03:29 PM   #1
Recycles dryer sheets
 
Join Date: Aug 2013
Posts: 206
My wake up call - last night

Our AA is 70/30. DH is 59 & I am 55. Our plan is to retire 4/1/18.
I have been meaning to move our AA to 60/40 due to retirement date that is 16.7 mos away. But I have procrastinated because I have enjoyed the returns on the 70%. Currently:
$2.1 mil in 401k's & IRAs (70/30)
+$150k cash
I have a fixed fund that offers a flat 3.5%. So today I shifted stock funds to this fixed fund (aka my "bond"). So now we are 60/40.
Thankfully, the stock market did not take a dive like I thought when the futures took a big dip last night. But I do feel like I was given a hall pass. IF the stock market had tumbled, I would have been kicking myself for my procrastination.

I feel that at our age and our retirement date in 16.7 months, the 60/40 is a more realistic AA. Last night was a big wake up call that my risk tolerance has decreased.

In addition, DH will have a pension of $45k, SS @ 62 of 20k, Me SS @ 67 of 30k.

In summary, I don't think I am market timing but adjusting my AA to what I think is appropriate in our circumstance. I am open to comments and thanks for listening.
__________________

whatnot is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-09-2016, 03:33 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 24,795
I wish I had a fixed fund that paid 3.5% (no interest rate risk I assume). That's pretty sweet.

FWIW, IMO you are now 56/37/7 rather than 60/40.
__________________

__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA
pb4uski is offline   Reply With Quote
My wake up call - last night
Old 11-09-2016, 03:34 PM   #3
Full time employment: Posting here.
Al in Ohio's Avatar
 
Join Date: Jun 2013
Location: Columbus
Posts: 771
My wake up call - last night

Expect up to 10 months of volatility after an election. You should have made your change 3-5 months ago. I went from 65/35 to 50/50 at that time because of this. We are all human, thats why we would be very lucky to only average 1-2 pts below the market throughout our lifetime. But: If you are really 56 equites now as stated above , I'd say you are set as you are.
__________________
Ohio INTJ ENG ER as of 2016
Al in Ohio is offline   Reply With Quote
Old 11-09-2016, 03:43 PM   #4
Full time employment: Posting here.
 
Join Date: Jan 2014
Location: Austin
Posts: 562
My AA is also 70/30 but I'm going to stick with it. I have a feeling a lot of money will be moving out of bonds and into equities.

Or not.
__________________
ER'd 6/1/2014 @ age 53. AA=70/30, initial WR was 3.5% but now 5% until SS and lower expenses kick in.
Looking4Ward is offline   Reply With Quote
Old 11-09-2016, 03:49 PM   #5
Recycles dryer sheets
 
Join Date: Aug 2013
Posts: 206
pb4uski - yes thanks for the clarification on total portfolio - i was just looking at retirement funds. Looks even more conservative!
Cash
$25k @ 3.5% at CU
$25k CD @ 1.74% (3 yr)
$100k @ 1% at Ally (need to look at CD's !)

The fixed fund is a flat guaranteed 3.5% - no risk.
whatnot is offline   Reply With Quote
Old 11-09-2016, 04:07 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 9,845
I think your shift was a great idea. I don't think you give up much by going from 70/30 to 60/40. Here are the average annual returns of three Vanguard target retirement funds with allocations close to those numbers:
1-yr 3-yr Ticker (date through 10/31/2016, so be careful about the numbers)
3.86 4.72 VTWNX 2020 (now 57/43)
3.79 4.84 VTTVX 2025 (now 65/35)
3.65 4.89 VTHRX 2030 (now 73/27)
LOL! is offline   Reply With Quote
Old 11-09-2016, 04:34 PM   #7
Recycles dryer sheets
Earl E Retyre's Avatar
 
Join Date: Jan 2010
Posts: 335
If your CU 3.5% fixed fund is available to others, please let me know what credit union it is.

I think that last night was a good mental exercise of risk tolerance for lots of people. When I saw futures go down 750 points and -5% I imagined some scenarios where the market continued to quickly drop -10%, -20% even -30%. And I quickly did the math to see how much of my NW I would lose. My stomach did not churn at all. In the past, my stomach would have dropped like I was on a roller coaster. I did not even think of selling. And, if anything, I started contemplating if I had the guts to buy into the market if it fell 10-30%. Point is that I recognized that I am perfectly comfortable with my current level of equity risk (which is a relatively low % compared to most on this forum but still a lot of $$ to me).

I am pleasantly surprised and shocked that the market is up > 250 points on day 1 after the surprising election results.
Earl E Retyre is offline   Reply With Quote
Old 11-09-2016, 05:42 PM   #8
gone traveling
 
Join Date: Sep 2013
Posts: 1,248
I disregard who gets elected just as I disregard Brexit or North Korea Nukes tests.

It has 0 effect on long term planing. Stay the course.
eta2020 is offline   Reply With Quote
Old 11-09-2016, 08:17 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 26,806
If the market goes down a lot, I look at it as an opportunity to buy.

Woke up a bit earlier than normal, made my morning tea while waiting for the market to open. It didn't do a whole lot at first, so after an hour, I got up and did something else. Checked back later and found I had a nice gain for today. Will it last? Who knows?

If the market goes down, I try to buy. If it goes up, I look to sell. When it just flips/flops, I do nothing.

One thing about holding individual equities and sectored funds is that there's always something going up or down more than the market, which you do not see when owning an index. It's interesting to watch, and to try to understand it. And occasionally, I make some good money.

I cannot fight market volatility, so I try to make use of it. Gotta conquer greed and fear.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Wait or jump in
Old 11-09-2016, 11:13 PM   #10
Dryer sheet aficionado
 
Join Date: Nov 2012
Posts: 37
Wait or jump in

Hi all,

Was asked this question by my daughter last night.
She had a small amount of cash sitting idle..to invest (not money she needs, as she already has other savings set aside).
She wanted to put some more money into VDIGX and VGHCX
(Vanguard Dividend and Vanguard Healthcare) and was anticpating investing after the market dropped, which we thought was going to occur this week, after Trump's announcement.

To our surprise, it only dropped in the after hours on Tuesday, but market was up today, overall. In fact, healthcare climbed significantly today.

Should I tell her to wait until we see a market drop of at least 5% (who knows when that will happen ?)...or just jump in and be done with it.
I know the market is expected to be extremely volatile over the next few weeks, if not months.

She's not trying to make quick bucks, so it'll be long term investment.
Would just feel better buying on the dip.

Thanks
Russman is offline   Reply With Quote
Old 11-10-2016, 04:35 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 9,845
I suggest that she not play with her money and not be emoitional about it.

Thus, I recommend that she not buy either of those funds, but instead come up with a long-term plan centered around the typical "own-the-entire-market" in the form of broad market index funds. This is especially true in a taxable account.

Invest some now, say half, and invest the rest on a monthly schedule over the next 5-10 months.


BTW, we just saw a market drop of 5% before the election, so this speaks to waiting. People get too fearful about drops when the market drops. Thus, they can't seem to follow a "invest when it drops" plan.
LOL! is offline   Reply With Quote
Old 11-10-2016, 06:50 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 9,626
I am comfortable at 70/30 and will stay put but I think you made a good decision. You felt the regret as you watched the futures tumble - that confirmed what you had already intuited about your risk tolerance. At 60/40 you will probably lose sleep during a correction but you will at least be reassured that you are where you consciously chose to be.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 11-10-2016, 09:02 AM   #13
Recycles dryer sheets
 
Join Date: Aug 2013
Posts: 206
To Earl E Retyre - It is Navy Army CCU - earn 3.5% on the 1st $25k, then .50 > $25k. Must be a resident of 1 of 8 South Texas Counties. 1 account per HH.
To donheff - your comments express exactly my thought process.
Thanks for the comments, I just needed to vent!
whatnot is offline   Reply With Quote
Old 11-10-2016, 09:30 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 24,000
That's right - I forgot about the Navy Army CCU. We have branches in our county.

A friend invested with them. But with the 25K limit (pays 3.5% up to $25,000 and 0.5% above that), and some other hoops -
  • Make 10 NavyArmy debit card purchases each month
  • Set up one monthly Direct Deposit or authorize one monthly ACH payment from your account
  • Enroll and receive Electronic Statements (valid e-mail address is required).
  • One Liberty Checking account per household
Checking Accounts « Navy Army CCU

I wasn't willing to go through the trouble of doing 10 debit card purchases each month. You really have to pay attention!

Basically - are you willing to make sure you make 10 debit card purchases a month to each $875 over a year time frame? I use rewards credit cards to make my purchases, so forgoing those would reduce that amount. I don't think I could keep it up and it sure would be a hassle to track.

Deposit Rates « Navy Army CCU
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 11-10-2016, 01:47 PM   #15
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Location: North
Posts: 2,580
Quote:
Originally Posted by audreyh1 View Post
Basically - are you willing to make sure you make 10 debit card purchases a month to each $875 over a year time frame? I use rewards credit cards to make my purchases, so forgoing those would reduce that amount. I don't think I could keep it up and it sure would be a hassle to track.

Deposit Rates « Navy Army CCU
Put your bills on auto-pay or Buy 10 gift cards at 10 separate registers.

Trash
Phone
Internet
Netflix
Gas
Entertainment
Grocery store
Costco
Movie out once a month, spend once on the ticket, once at the concession and bam you got 10 purchases a month. Won't mingle as well with rewards cards though.

as I type this out I'm thinking, yeah that would be a hassle...but for that's how they reward people by putting in the effort.
__________________
AA (Stock/Bond/Cash ): 97.5/0/2.5% MIX (Small/Mid/Large): 25/25/50% BLEND(US/Foreign): 100/0%, REIT (Real Estate Equity): ~50% of Assets

FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
kgtest is offline   Reply With Quote
Old 11-10-2016, 01:53 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 24,000
Quote:
Originally Posted by kgtest View Post
Put your bills on auto-pay or Buy 10 gift cards at 10 separate registers.

Trash
Phone
Internet
Netflix
Gas
Entertainment
Grocery store
Costco
Movie out once a month, spend once on the ticket, once at the concession and bam you got 10 purchases a month. Won't mingle as well with rewards cards though.

as I type this out I'm thinking, yeah that would be a hassle...but for that's how they reward people by putting in the effort.
Too much trouble - I'll keep using my rewards credit cards.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 11-11-2016, 09:32 AM   #17
Thinks s/he gets paid by the post
 
Join Date: Apr 2010
Posts: 3,112
We have moved to about 55 percent equities. Real rates of returns over the last four years have been good.

Sequence of returns over the past four years has had a very positive impact on our longer term financial goals and our exposure to risk. We might feel differently next year but this is where we have landed at present.
brett is offline   Reply With Quote
Old 11-12-2016, 10:39 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 6,877
Quote:
Originally Posted by audreyh1 View Post
Too much trouble - I'll keep using my rewards credit cards.
For 3.5% on 25k, I'd do it. But I just dropped our similar Credit Union card because they only pay 1.6% on up to 10k. Also agree with Audrey to keep it simple.

To get debits one can go to the grocery store and make a few transactions through the auto-checkout machine. Maybe 2 per trip. Then one can go the gas station and pump 2 separate transactions for modest amounts. Then set up an automatic transfer from one institution to the other for your ACH requirement.

Anyway, I'm happy with my CC rewards cards. I keep cash way low at present rates and draw from our short term bonds, maybe 5k at a time. Over the years I think this works out. At least until better guaranteed short term rates return to the banks.
Lsbcal is offline   Reply With Quote
Old 11-12-2016, 02:39 PM   #19
Recycles dryer sheets
 
Join Date: Aug 2015
Posts: 374
We can only guess what the Feds action in December or next year would be. Yet if they act like they talk and raise in December, stocks and bonds may go down. Bill Gross warns about bond market tanking for the past year. I agree with pb4uski that 3.5% fixed income is very good as of now. My 401K SV gives about 1.8% currently.
VFK57 is offline   Reply With Quote
Old 11-12-2016, 07:51 PM   #20
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 2,948
Quote:
Originally Posted by Russman View Post
Should I tell her to wait until we see a market drop of at least 5% (who knows when that will happen ?)...or just jump in and be done with it.
I know the market is expected to be extremely volatile over the next few weeks, if not months.

She's not trying to make quick bucks, so it'll be long term investment.
Would just feel better buying on the dip.

Thanks
This is just another version of market timing, which I would suggest does not work. If you don't feel comfortable just going all at once, then break up the amount and buy in allotments over a period of weeks or months.
__________________

__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
35 yr old wake up call Bert Cooper Hi, I am... 27 01-14-2014 12:34 PM
A wake-up call for ER...34 in California phase2 Hi, I am... 9 02-15-2013 12:40 PM
Sometimes you just need a wake up call Nuiloa Other topics 9 08-15-2011 07:19 PM
Wake up call - I've got 10 years to go! boilerman Hi, I am... 18 10-11-2007 08:33 PM
See @ Last, See @ Last, Thank God I Can See @ Last Beachbumz Other topics 24 02-18-2005 08:16 PM

» Quick Links

 
All times are GMT -6. The time now is 03:21 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×