Why not 100% stocks all the way?

[ERD50]

Quote:

Originally Posted by Dennis Not sure if this will post right..

No, it didn't - try this:

1) Paste the info into a text editor or word processor.

2) Change all the fonts to Courier.

3) Adjust if needed so everything lines up as you want.

4) Paste into the forum reply box.

5) surround the pasted info with (remove the "*"):

[*code*] paste stuff here ... [/*code*] < or select text and use the "#" button in the toolbar.

That will tell the forum SW to keep the formatting at fixed courier font, and shouldn't mess with it.

vBulletin Community Forum - BB Code List

Quote:

The [code] tag switches to a fixed-width (monospace) font and preserves all spacing.

-ERD50

[Independent]

Quote:

Originally Posted by Leonardo I am convinced that buckets are nothing more than "mental accounting", but what if I use a different asset allocation for each year all the way to 15 years and after that 100% stocks? Than I would sum everthing and see the final asset allocation. For example, in year 1 let's assume I will use 40k during that time. I would make a graph and would try to get the allocation with the most return per volatility. I assume it would be something like 40% stocks 60% bonds. For year 2 I would use 41.2k (3% inflation) and look the historical expected returns and SD for 2 years. I would make a graph (already very different from the graph of year 1) and would try to get the allocation with the most return per volatility. Etc. Etc. Etc. Is that reasonable? Am I speaking non-sense?

I think I understand the approach here. I'd ask why you are using a fixed inflation rate while you are considering volatility on the assets. Shouldn't they both be random variables?

And then, how do you measure "return per volatility". What math are you doing?

Finally, shouldn't you really be concerned about the purchasing power that you get when you liquidate that segment of your portfolio? If so, you have to consider some sort of utility concept (e.g. if your "target" spending is $40k per year and your "can't live below" number is $25k, then a 5% chance of having more than $65k is not the same as a 5% chance of having less than $25k)

[Independent]

Quote:

Originally Posted by ERD50 No, it didn't - try this: 1) Paste the info into a text editor or word processor. 2) Change all the fonts to Courier. 3) Adjust if needed so everything lines up as you want. 4) Paste into the forum reply box. 5) surround the pasted info with (remove the "*"): [*code*] paste stuff here ... [/*code*] < or select text and use the "#" button in the toolbar.

Thanks, I've always wondered how to do that.

[Lawrence of Suburbia]

Quote:

Originally Posted by samclem It can certainly work, and many people have done it over the years. But, as you probably know, you're still taking a big risk. Stocks (price appreciation and dividends) have historically outperformed every other common investment in the US over long periods of time. By leaving them out of your portfolio, you're betting against this historical record and significantly increasing the likelihood (if the future resembles the past) that you'll have to work more years and/or save more every year to get to retirement. Less likely to ER, will probably just R or maybe LR. And, if inflation takes off, it could get ugly unless you've got a lot of TIPS. If TIPS continue to keep their promise over the years.

That's my plan...accumulate TIPS (I'm about 1/3 cash, that's enough as a %.) But I'm also leaving my stocks in there (in balanced funds VWINX and VGSTX - stocks currently account for about 1/4 of what I laughably call my portfolio.) I'm just talking about new money; if stocks revert to their mean performance, I'll be okay I suppose. However, I have no faith in stocks whatsoever, given the huge structural changes being wrought willy-nilly on our whole capitalist model/tax structure by the government. They're changing the rules in the middle of the game. That's just not cricket.

If I admit that I'm likely to "LR" rather than "ER", will I get kicked off the Forum?

My retirement formula: when the amount of money I have, divided by a years' living expenses equals the number of years I likely have left, I can retire.

[W2R]

Quote:

Originally Posted by Lawrence of Suburbia If I admit that I'm likely to "LR" rather than "ER", will I get kicked off the Forum?

Nah... there are a lot of us "more seasoned" retirees or retirees-to be here. I asked the same question when I first showed up, and our most prolific poster essentially told me to stay. My plans have always been to retire at 61.5 or 62, but there have been several members planning a later retirement than that. There really isn't any other retirement board that I like as well as this one.

Quote:

Originally Posted by Lawrence of Suburbia My retirement formula: when the amount of money I have, divided by a years' living expenses equals the number of years I likely have left, I can retire.

Don't forget to include taxes in your figures. Try the Firecalc link at the bottom of each page for an interesting, free retirement calculator.