*NO* Individual Stocks

[MichealKnight]

Greetings everybody....

I have early-retired, I am 46 and retired about a month ago. I'm a bit worried about writing my whole plan here....because my SWR is over the magical 4% and I don't want to be taken to the woodshed

My question for the group is regarding equities.

Does anybody here use SOLELY mutual funds and ETFs....wit no individual stocks and what are people's thoughts about that.

My hopefully realistic goals are to *average* a 5% annualized return meaning some years might be +20%, some years might be down 20%....but overall, if I can average 5%, things should be ok. Any more than 5% is gravy - much welcomed gravy.

Thanks!

 

[stepford]

No woodshedding here, but 5% WR coupled with a long retirement starting at a relatively young 46 does seem a bit on the risky/aggressive side (unless there are mitigating circumstances like pensions or other future funding sources).

Regardless, after some dabbling in my youth I have almost no individual stock holdings - about 2% of my NW is in the stock of my old MegaCorp for sentimental/inertia reasons, but it doesn't impact my strategy in any significant way. I think a lot of folks here invest strictly in mutual funds and ETFs - similar returns to a basket of equities and a lot less work.

 

[Mr. Tightwad]

I'm the opposite, no mutual funds, all individual stocks.

 

[Aerides]

Does anybody here use SOLELY mutual funds and ETFs....wit no individual stocks and what are people's thoughts about that.

While there are definitely some stock pickers here, I think you'd find they don't make up the majority of forum members - at least not to where their individual stocks are a significant amount of their AA.

I have what I call a play account. It has actually far beaten the S&P, but that's because I'm gambling. On a cost basis of ~9k it's currently over 38k, with various stocks, most held 5-7 years, several small bets. But I wouldn't take those sorts of risks with larger dollars. And I like being able to sell anything in it without much concern for cap gains/income tax hit.

 

[Jerry1]

I don’t see any issues with not owning individual stocks. I own some because they are very strong companies and pay a good dividend. I feel better about them to be bit of a buffer than the market as a whole.

 

[twaddle]

My spreadsheet tells me that 25% of my stock allocation is in individual stocks.

It was supposed to be the "hobby" portion of my portfolio, but it's gotten a little out of whack.

 

[youbet]

My hopefully realistic goals are to *average* a 5% annualized return meaning some years might be +20%, some years might be down 20%....but overall, if I can average 5%, things should be ok. Any more than 5% is gravy - much welcomed gravy.

Thanks!

When thinking like this, it is critical to remember that sequence of returns is key. Two portfolios, both "averaging" a 5% average return, will have very different ending balances if one has the returns front end loaded and the other back end loaded.

 

[youbet]

I have what I call a play account. It has actually far beaten the S&P

One of the key things I've learned from participating in Internet forums is that gamblers always win.

1. Folks who like to visit the track and bet on the ponies always win.
2. Folks who like to go to Vegas always win.
3. Folks who wager on sports games or play parlay cards always win.
4. Folks who speculate on risky investments always win.

It's a great world for gamblers, isn't it?

 

[JoeWras]

It isn't for me anymore, but that doesn't make it wrong or not for you.

I hit it good with Lowes and Starbucks decades ago during some good bumps.

Then I got gamed by online forum people and lost a bunch on XM. It felt like echoes of Gamestop.

Got out, called it even, and quit. Been sleeping fine with a boring, broadbased fund and ETF allocation since.

 

[marko]

We've been 100% MFs for 15 years, running a little over 7% during that period.

Having said that, I'm looking into bettering my dividend returns with a small (less than 5% of portfolio) excursion into individual stocks. But I have 20+ years on you so my needs are surely different than yours.

Whatever works for you though; good luck!

 

[jimbee]

I own no individual stocks. Nothing wrong with individual stocks, just no point to it for me. The only individual stock share I ever owned were from my company's ESOP and restricted stock plans. My investments are purely mutual funds.

 

[MRG]

I'm 75% funds and ETFs. My equity holdings are really sidebets, some are long-term holdings.


There's nothing wrong with 100% funds or 0, depending on your comfort and knowledge. I'll echo another poster if you have a lengthy retirement carefully manage your assets.

 

[copyright1997reloaded]

I own a lot of individual stocks, but there is absolutely nothing wrong with just owning mutual funds or ETFS. In fact, if you are not willing to do a lot of hours of research into individual stocks, I would suggest that it is much better to just own funds.

Some would argue that it is still better to own low cost, passive funds regardless of the amount of time you have to research.

 

[prudent_one]

I'm 100% index funds/ETFs because I don't think I can pick winning stocks and don't want to invest the time and energy to try. Also I know if I tried stock-picking, I would be furious with myself if I did badly, and would not get equivalent pleasure out of being right (loss aversion). I am content with taking market returns.

 

[Out-to-Lunch]

I have no individual stocks, and never have. No plans to do so, but am not religiously opposed to doing so.

 

[Fielding]

I have a standard 3-fund boglehead portfolio, 98% Vanguard mutual funds and the rest Fidelity. No individual stocks at all.

I am sure I would be constantly tempted to meddle and second guess if I was playing around with individual stocks. The worry wouldn't be worth the price, even if I did happen to beat the indexes, which it's likely I wouldn't. I know myself well enough to keep it simple.

 

[RE2Boys]

About 22% of net worth invested in individual stocks.

 

[RetiredAt55.5]

I only own 1 individual stock - my water company.

I got tired of the periodic rate increases, so I thought I should become a shareholder and pay myself.

My money is fungible, but I have the illusion that my quarterly dividend from this stock is covering the water bills.

 

[REWahoo]

Doing the necessary research to know what individual stocks to own, and when not to own them, is work. As a retired person I try to avoid as much of that as I can, so no individual stocks for me.

 

[FREE866]

I'm 100% index funds/ETFs because I don't think I can pick winning stocks and don't want to invest the time and energy to try. Also I know if I tried stock-picking, I would be furious with myself if I did badly, and would not get equivalent pleasure out of being right (loss aversion). I am content with taking market returns.

+1


keeps it very simple

 

[pb4uski]

It is not at all uncommon for early retirees to have a WR that exceeds 4% early in retirement... I did.... reinforcements of a small pension came along and SS is a short time way. We were at 5.8% our first few years of retirement... it dropped to 3.5-4.5% once my pension came on line and was only 1.8% last year because we paid off our car loan and mortgage at the end of 2019 and spent a lot less due to covid constraints on traveling and fun. 2021 looks like ~2% too and it will decline even more once DW starts collecting SS and to probably 1% or so once my SS is online. It is really that "ultimate" WR that is most important and you can estimate that with a little modeling.

I dabbled in individual stocks as a young adult but have been an avowed indexer since ~1982.... I do currently have a portfolio of 36 individual preferred stocks that is about 20-25% of our portfolio but no individual common stocks. I see nothing wrong with individual stocks as long as you are well diversified.

 

[pb4uski]

Doing the necessary research to know what individual stocks to own, and when not to own them, is work. As a retired person I try to avoid as much of that as I can, so no individual stocks for me.

+1 Plus, I frequently wrote, read and edited 10ks and 10qs during my career and have had enough of that.

 

[iloveyoga]

I'm 100% index funds/ETFs because I don't think I can pick winning stocks and don't want to invest the time and energy to try. Also I know if I tried stock-picking, I would be furious with myself if I did badly, and would not get equivalent pleasure out of being right (loss aversion). I am content with taking market returns.

Same here. I had company stock but I sold it when I retired.

 

[jollystomper]

Back in the 1990s, when one could create a stock portfolio by putting the newspaper stocking listing on a wall and throwing darts to select stocks and still get a 30% annual return, I had a lot of individual stocks. Fortunately I realized, for the long run, I did not have the knowledge or time to pick stocks and went to mutual funds. I still own 10 stocks (3 of which are the result of spinoffs), primarily because of the dividends and not yet wanting to cash in the capital gains built up for close to 30 years. They will likely be passed on to our heirs, they are a relatively small part of our assets.

 

[Filetmerlot]

One of the key things I've learned from participating in Internet forums is that gamblers always win.

1. Folks who like to visit the track and bet on the ponies always win.
2. Folks who like to go to Vegas always win.
3. Folks who wager on sports games or play parlay cards always win.
4. Folks who speculate on risky investments always win.

It's a great world for gamblers, isn't it?

And they are all good looking and their children are above average.