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Old 03-05-2021, 11:04 AM   #1
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*NO* Individual Stocks

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!
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Old 03-05-2021, 11:17 AM   #2
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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.
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Old 03-05-2021, 11:17 AM   #3
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I'm the opposite, no mutual funds, all individual stocks.
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Old 03-05-2021, 11:19 AM   #4
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Quote:
Originally Posted by MichealKnight View Post
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.
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Old 03-05-2021, 11:22 AM   #5
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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.
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Old 03-05-2021, 11:27 AM   #6
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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.
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Old 03-05-2021, 11:31 AM   #7
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Quote:
Originally Posted by MichealKnight View Post
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.
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Old 03-05-2021, 11:36 AM   #8
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Quote:
Originally Posted by Aerides View Post

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?
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Old 03-05-2021, 11:36 AM   #9
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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.
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Old 03-05-2021, 11:47 AM   #10
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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!
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Old 03-05-2021, 11:48 AM   #11
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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.
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Old 03-05-2021, 12:03 PM   #12
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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.
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Old 03-05-2021, 12:05 PM   #13
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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.
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Old 03-05-2021, 12:09 PM   #14
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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.
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Old 03-05-2021, 12:33 PM   #15
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I have no individual stocks, and never have. No plans to do so, but am not religiously opposed to doing so.
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Old 03-05-2021, 12:35 PM   #16
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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.
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Old 03-05-2021, 12:38 PM   #17
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About 22% of net worth invested in individual stocks.
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Old 03-05-2021, 12:44 PM   #18
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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.
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Old 03-05-2021, 01:31 PM   #19
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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.
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Old 03-05-2021, 01:36 PM   #20
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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
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