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[Dawg52]

Re: Are you afraid of Money?

Dog and Bob Smith --
What % does that work out to be for fixed income in your portfolios? It may be that a lot of us are doing it without actually thinking of it in the way you do -- just through having a 40% or so fixed income component in our portfolios.

In my case 40% fixed income spent for the next 20 years (while earning 5% interest) would cover our living expenses and still leave a good amount of fixed income left over even after inflation.

Likewise annual rebalancing and pulling cash out then for next year's living expenses would have much the same effect as your practice -- if equities were down that year relative to fixed income, you'd be selling the fixed income or other "up" asset classes for spending cash, and to buy more equities.

Cd's/treasuries account for roughly 20% of my portfolio. I follow the 100 rule. My age is my fixed income % and the balance is invested in equities. Bond funds account for the rest of my fixed income investments.

So yes, there is really not much difference in what we are doing. It's just the way I look at it. Cd's/treasuries bring me a certain amount of comfort for money I will need over the next few years.

 

[donheff]

Re: Are you afraid of Money?

I follow the 100 rule.

If your portfolio is still holding plenty of assets when you are 90 I can't see any reason to go 90% fixed. You are just reducing the pot for your heirs. Better to leave them a "foundation" portfolio, all set up to last them forever.

 

[Dawg52]

Re: Are you afraid of Money?

If your portfolio is still holding plenty of assets when you are 90 I can't see any reason to go 90% fixed. You are just reducing the pot for your heirs. Better to leave them a "foundation" portfolio, all set up to last them forever.

It's just a general rule of thumb, but one that fits my personality. If I make it to 90, I probably won't be entirely in control of my assets anyway. One of my nephews will probably be calling the shots.