So, is this a sign that I've "made it"?

[Andre1969]

So, I'm adding up my figures this morning, and completely non-plussed about the recent market turmoil. I figure hey, it goes down; eventually it'll go up again. The Dow Jones is off around 11% from its peak, so...correction territory. Well, we've been over-due for one.

Anyway, I get my totals added up, and initially, it looks like I'm down about 4.6% for the year. Eh, no biggie. But then, I started looking at some previous numbers, and noticed the ones I just entered, while lower, didn't seem *that* much lower. Not enough to account for as big of a drop as it was. Then I saw the glitch. One number that I should have entered as $55,XXX was only $5,XXX. Oops.

So, it turns out, I'm really only down around 1.3% for the year. Inconsequential. But, it got me worried a bit, about my own attitude. Here, I just "misplaced" $50,000, yet it seemed like nothing. Now, if I physically lost the money, and couldn't get it back, I'm sure I'd feel sick to my stomach. But I guess I've gotten used to the ups and downs of the market that a momentary loss like that, which I can get back over time, just doesn't seem like a big deal.

So maybe, this is a sign that I really am financially independent, and I'm getting comfortable with that fact? Hopefully it's not a sign that I'm going to get fast and loose with money in my old age!

 

[Dtail]

So, I'm adding up my figures this morning, and completely non-plussed about the recent market turmoil. I figure hey, it goes down; eventually it'll go up again. The Dow Jones is off around 11% from its peak, so...correction territory. Well, we've been over-due for one.

Anyway, I get my totals added up, and initially, it looks like I'm down about 4.6% for the year. Eh, no biggie. But then, I started looking at some previous numbers, and noticed the ones I just entered, while lower, didn't seem *that* much lower. Not enough to account for as big of a drop as it was. Then I saw the glitch. One number that I should have entered as $55,XXX was only $5,XXX. Oops.

So, it turns out, I'm really only down around 1.3% for the year. Inconsequential. But, it got me worried a bit, about my own attitude. Here, I just "misplaced" $50,000, yet it seemed like nothing. Now, if I physically lost the money, and couldn't get it back, I'm sure I'd feel sick to my stomach. But I guess I've gotten used to the ups and downs of the market that a momentary loss like that, which I can get back over time, just doesn't seem like a big deal.

So maybe, this is a sign that I really am financially independent, and I'm getting comfortable with that fact? Hopefully it's not a sign that I'm going to get fast and loose with money in my old age!

This. Definitely different than "losing" 50k.
This is my first correction experience in retirement and overall okay with the ups and downs.

 

[gauss]

At some point, when you have 'enough', money is just the configuration of a bunch of bits in a computer somewhere with your name attached to it.

It only matters when you don't have enough for what you want/need.

-gauss

 

[Meadbh]

Congratulations on having reached a state of equanimity.

 

[kcowan]

I think that market turmoil is only important is it makes you rethink your assumptions AND you financial plan no longer provides the buffer you need. Given the real market growth beyond inflation in the 15 years of our retirement, our buffer provides us with plenty of sleep at night peace.

In fact, we are stepping up our discretionary expense and those could easily to ratcheted back if needed.

 

[38Chevy454]

It also is an emotional difference between a paper loss that is not realized, vs a real loss of money. There are many people that can't separate those two, they feel as if they lost real money in their account, even though no shares were actually sold.

I do agree it is a sign of financial independence that you are not worried about the current correction.

 

[YVRRocketSurgery]

There's so much psychology and emotions at play.
On the surface, corrections/swings of around $50k don't freak me out, particularly since I'm still in accumulation mode. It does make me kind of "sad" but I try to remind myself that these are accumulation opportunities. What I'm concerned about is the whole sequence of return thing and taking a large six-digit hit early in retirement. For me not to sweat it, I'd like to build up a portfolio yielding close to our annual spend. That may not be the most optimal strategy but it'd probably be better in some ways for my mental health.

 

[97guns]

There's so much psychology and emotions at play.
On the surface, corrections/swings of around $50k don't freak me out, particularly since I'm still in accumulation mode.

That’s the key thing to consider, what mode are you in?

 

[OldShooter]

There's so much psychology and emotions at play. ...

Yes. I find myself "rooting" for down days, wanting to see the 20-30% (or more) drop that history would say is inevitable. I think this is because I'd like to see it over and done with instead of feeling that it is hanging over our heads. We're completely able to ride out a drop and a 3-5 year recovery without having to sell anything and we'll probably even buy some equities on sale. So I guess that kind of says we've "made it."

 

[gauss]

When I was still working I was much more emotionally vested in the value of the stock market. I was afraid that a major correction could have a major impact on my life by forcing out my retirement date.

Now that I have retired, there is a certain peace that goes along with it.

-gauss

 

[marko]

Yes. I find myself "rooting" for down days, wanting to see the 20-30% (or more) drop that history would say is inevitable. I think this is because I'd like to see it over and done with instead of feeling that it is hanging over our heads.

And here I was thinking I was the only one with this 'hope'!
(Plus a buying opportunity)

 

[Lawrencewendall]

According to PC, I could take a 75% hit and still be in excellent shape. Bring it on!

 

[marko]

Our NW is good to know and necessary to be aware of but we're at the point where the income from our portfolio is what matters.

Dividends more than cover our living expenses and have been pretty stable over the past decade.

As I noted on another thread, I think this downdraft is a headline issue; let's see what earnings announcements over the next few weeks bring. Fidelity's Timmer noted: "If you overlay earnings & the SP500 over the last 100+ years there is basically a perfect correlation."

 

[W2R]

When I was still working I was much more emotionally vested in the value of the stock market. I was afraid that a major correction could have a major impact on my life by forcing out my retirement date.

Now that I have retired, there is a certain peace that goes along with it.

-gauss

+1 Exactly! For me, anyway, now that I am retired it does seem a lot easier to feel peaceful when checking on what the market is doing.

 

[24601NoMore]

Dividends more than cover our living expenses and have been pretty stable over the past decade.

Would love to hear more about your strategy (including what funds/stocks/bonds/cash investments you're using for Dividends) as we've been working on a similar plan..

I assume you pull the dividends even if there's a net loss on the fund for the year? I've thought about that, but pulling dividends out when the NAV has taken a hit still worries me a bit..

What investments do you like for constant, reliable dividends?

 

[marko]

Would love to hear more about your strategy (including what funds/stocks/bonds/cash investments you're using for Dividends) as we've been working on a similar plan..

I assume you pull the dividends even if there's a net loss on the fund for the year? I've thought about that, but pulling dividends out when the NAV has taken a hit still worries me a bit..

What investments do you like for constant, reliable dividends?

It's not very complicated. We have a bunch of MFs which pay typical dividends. Instead of re-investing them, I have them deposited into a short term bond fund. When my checking gets low, I transfer about six month's worth to checking.

I don't see any connection between the fund's NAV and 'pulling dividends out' or not. The dividends are typically unconnected to the NAV other than the adjustment to cover the dividend on that day. A bad/good month of NAV will generally yield the same dividend.

As far as what funds I have, there's no secret sauce. In general, my dividends pay just a little over 2% which many funds do ( a moderate stake in a High Yield fund helps push us over from an average of 1.7%); some years we'll also use our Cap Gains which can bring the whole payout to 5% but generally we'll reinvest the CGs.

That and our SS pretty much covers our expenses.

To be fair, we have a fairly high NW portfolio (where the 2% comes from) and moderate W/D rate so living off the dividends is not so hard. Living off of 2% dividends on a $500K portfolio would be another story.

You might check M*'s "Discuss" forum where they have a Dividend Investor group.

There's also discussion ad-nauseum here and elsewhere as to whether dividends or total return is a better strategy. It's what works for us...YMMV

 

[NW-Bound]

... it got me worried a bit, about my own attitude. Here, I just "misplaced" $50,000, yet it seemed like nothing. Now, if I physically lost the money, and couldn't get it back, I'm sure I'd feel sick to my stomach. But I guess I've gotten used to the ups and downs of the market that a momentary loss like that, which I can get back over time, just doesn't seem like a big deal...

In the market routs of 2002-2003 and 2008-2009, I "lost" more than $500K each time. The 2nd time, it was a smaller percentage than the 1st (I was getting to be a better trader).

If it happens again, even if it's a smaller percentage yet, I won't like it, though I will not feel sick.

 

[marko]

In the market routs of 2002-2003 and 2008-2009, I "lost" more than $500K each time. The 2nd time, it was a smaller percentage than the 1st (I was getting to be a better trader).

If it happens again, even if it's a smaller percentage yet, I won't like it, though I will not feel sick.

This sort of reflects my OP last month asking if the 2008 Recession made one complacent.

 

[UnrealizedPotential]

As my portfolio rises I become accustomed to the amounts fluctuating on a daily basis. So as the amounts get bigger I become used to them and it's no big deal becomes it becomes the norm.

 

[kcowan]

+1 Exactly! For me, anyway, now that I am retired it does seem a lot easier to feel peaceful when checking on what the market is doing.

+2
I am completely at peace. Worst case is I have to die early. By not worrying, I am improving the odds of running out!

When friends talk about the latest stock tip, I ask them why they are still trying to make a big win? Leave that to my kids.

 

[Totoro]

I had the exact same thing happening to me roughly two years ago, I suddenly 'found' 30k extra.

It really upset me in the sense that I made an error in my accounting. It could just have easily been the other way (less than recorded). The fluctuations bother me much less, I just like to know where I am so I can make decisions grounded in fact.

I think the indifference is also a sign of getting used to the fluctuations, numbers and the diminishing importance of 50k in a total portfolio.

Even stranger, I fret about the expense of me ordering an extra coffee (cost: 3 EUR) more than dropping 5k in the stock market.

 

[ponyboy]

The idea of "making it" is an illusion. Its a term that gets thrown around a lot but has no meaning.

 

[YVRRocketSurgery]

Well, call it "making it" or call it being more comfortable in your financial situation. I think there's merit to getting to a state where you're less stressed about external uncontrollable influences on your financial situation.