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What has this drastic financial situation tought you?
Old 04-08-2020, 09:49 AM   #1
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What has this drastic financial situation tought you?

So far I have not been tempted to sell equities. I am secure in my RPS/IPS. Once again, staying the course seems to be a simple and effective philosophy to follow. As my plan suggests, I will rebalance in December, if necessary. Bottom line, follow the plan that you developed in simpler times.

I feel good about our financial future, especially now that RMD will not be required in 2020.
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Old 04-08-2020, 09:56 AM   #2
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I believe it teaches everyone how truly comfortable they are with their AA,well beyond what various tests/assessments tell you how much risk you can tolerate. It is the "practice" that validates if your "theory" is correct.

I used to mentally debate if I had too much cash and should invest a higher percentage, which is easy to do when the market is generally headed up. I am glad I stuck to my plans.
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Old 04-08-2020, 09:56 AM   #3
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It's taught me to be humble and grateful we're retired and comfortably FI, almost no matter what happens (AA below). So it hasn't led me to lose any sleep, or change my AA at all - just like '87, '00 & '09. If anything I'll up my equity and bond allocations as I have way more dry powder than ever before, but I'm not in any hurry.

And I believe our investments will recover nicely, just don't know if it will take months or years, though the latter seems more likely in my uneducated view.

I am genuinely concerned about the millions of people just beginning their careers or finding their way in the job market, at least the many who've made the right choices but will be badly hurt financially if not otherwise.
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Old 04-08-2020, 09:59 AM   #4
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Drastic? Huh? Please wake me in December when it's time to do the annual review of our portfolio.

People talk about Black Swans. The virus was not a black swan to the public health community; they have been preparing and warning for years. The dip in stock values was not a black swan to anyone who is familiar with the market. The only black swan here was the arrival of the virus and its timing. "Drastic" for its victims, to be sure.

Alongside getting dead, the kerfluffle in the markets is a don't-care.
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Old 04-08-2020, 10:04 AM   #5
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Maybe not taught me anything specific (except for stuff we can't discuss here) but has reiterated a couple of points for me.

1) Plan for the worst and hope for the best. Yes, easier said than done...but still need to try and live this.

2) I hear a lot of "We didn't see this coming." Yes, some did...some didn't. I think the more salient point is that there will ALWAYS be *something* coming down the pike. What will the next something be? Well, hard to really tell and I would like to say point 1 would help out, but when I don't know what the next something is going to be...well, I just don't know.
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Old 04-08-2020, 10:32 AM   #6
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Not a lot of new teachings, but I certainly remembered the very hard lessons I learned (along with many others) in 1987, 2000, and 2008/2009. I always worked with big pension funds, so I followed the course they set. IPS in place, allocation in place, withdrawal plan in place, and follow your plan. Like many others here, we have low expenses and could go even lower if needed, I find that to be a comfort in challenging times. And it does not seem to change our happiness level.
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Old 04-08-2020, 10:40 AM   #7
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Taught me to be greedy in the market when blood flow on the streets so I went 60/40 to 96/4 and have compassion for less unfortunate people so be generous to them.
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Old 04-08-2020, 10:46 AM   #8
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We are grateful that we have enough income coming in that we aren’t stressed financially like so many.
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Old 04-08-2020, 10:57 AM   #9
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It has really taught me how little I need and what I truly miss. I’m in a “lockdown” place (London) and have been for three weeks. So what I miss is freedom. I hate the idea of being told not to leave my house. I miss the feeling of being in control of my life. And you know what? That’s it! Yeah I think fondly of our life of eating out in restaurants, but we eat perfectly well at home. Yeah I miss travel, but not much. Social stuff? Don’t miss it at all. Stores? Not a bit.
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Old 04-08-2020, 11:05 AM   #10
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Grateful that my mega-corp low-balled me on a pension buyout lump sum (40% of value). We have my modest pension and DW's SS payment to give us a steady income stream. I certainly wasn't happy about it at the time, but I do appreciate it and some of the other side benefits, like being able to keep retiree medical with the pension (would have lost it with the buyout).

From an investment standpoint, it has taught us we're getting irritated with DODIX's performance during rough times. It is just like 2008-09 all over again with that fund. I have also noted that many of the ratings given this fund aren't as high as they were in the past. At one time it was a highly recommended managed income fund. Now, not as much.

We have been leaving DW's funds with her old 401(k) firm because DODIX is available along with several Vanguard funds. But this may be the time to finally roll over her 401(k) into an IRA and move away from DODIX.
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Old 04-08-2020, 11:32 AM   #11
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It just reaffirmed the lesson I learned in '87, and that was reaffirmed in '00, and '09: don't panic-sell equities! Truth be told, I couldn't have done much anyway on that Black Monday in 1987: there was really no way to get hold of your broker to trade for a small retail investor like me.
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Old 04-08-2020, 11:44 AM   #12
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I'm just wondering if this event would cause people to change their answers to a question I posed 5 years ago. If you can cover your expenses with pensions and social security, should you take the yearly portfolio withdrawal FIRECalc says you can take anyway and keep it in cash, or leave it invested?

https://www.early-retirement.org/for...ses-80100.html
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Old 04-08-2020, 12:09 PM   #13
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It reaffirmed that when others are filling their pants, you should be filling your equity basket.
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Old 04-08-2020, 12:10 PM   #14
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Originally Posted by Gumby View Post
I'm just wondering if this event would cause people to change their answers to a question I posed 5 years ago. If you can cover your expenses with pensions and social security, should you take the yearly portfolio withdrawal FIRECalc says you can take anyway and keep it in cash, or leave it invested?

https://www.early-retirement.org/for...ses-80100.html

Interesting question and as I get older I think my feeling towards it may change. I’ve always left any “surplus” of “allowed spend”-“required spend” invested. In the past year I’ve gone to an 18-month actual expenses cash cushion. I may slowly grow that to two years rather than taking all “surplus” annually to cash.
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Old 04-08-2020, 12:22 PM   #15
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Nothing really new as it pertains to investing in stocks and bonds. I will say the quickness of the move down was a bit unsettling to put it mildly. I believe it was Peter Lynch who said "know what you own and why you own it". In the recent pod cast with Bill Bernstein something that resonated with me.... "the only Black Swan is the history you haven't read".
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Old 04-08-2020, 12:36 PM   #16
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Mainly that there are still always people that don't think like me at all. They are controlled by fear and react impulsively. It's always pleasant to be reminded of that.
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Old 04-08-2020, 12:51 PM   #17
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I learned that my brother has a high tolerance for risk. He is 64, has a paid off house and no debt. He will begin drawing SS in November but it won't cover his expenses. He has no pension and is 100% invested in stocks. I asked him if he has considered skimming a couple of years living expenses from his stocks while the market is back up, but he is full speed ahead.

Well, who knows.
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Old 04-08-2020, 01:58 PM   #18
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I'd say it's reinforced what I've already learned over the years.

Periodically weed out the under-performers. The good stuff will recover.

Don't panic and sell when everything is down. See above.

Don't put yourself into a position where you need to withdraw an unsustainable % of your assets to meet basic expenses.

I had too much in equities for my age (70%, 67) but was working to reduce it in an orderly manner. Well, the market took care of that for me. I am definitely not buying up equities at this point. The last recession was before I retired and my recovery was helped greatly by putting new money into equities, but that's not a good idea unless my % of equities sinks considerably more. I hope that doesn't happen.
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Old 04-08-2020, 02:27 PM   #19
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Drastic? Huh? Please wake me in December when it's time to do the annual review of our portfolio.

People talk about Black Swans. The virus was not a black swan to the public health community; they have been preparing and warning for years. The dip in stock values was not a black swan to anyone who is familiar with the market. The only black swan here was the arrival of the virus and its timing. "Drastic" for its victims, to be sure.

Alongside getting dead, the kerfluffle in the markets is a don't-care.
+1

I learned nothing, same as the last few market declines. No sales, a few buys with excess dividends April 1st, a good deal of entertainment watching the market and reading the various analyses of such.
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Old 04-08-2020, 03:01 PM   #20
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I learned that our AA (55/45 before the COVID hit the fan) is right for us. While I was a little nervous for a few days, I quickly remembered that the AA was based on the premise that we could tolerate a PERMANENT 50% drop in equities, and not change our lifestyle.

Maybe that means we saved too much, or maybe it means we saved the right amount to not panic.
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