There's an excellent new post on the Portfolio Charts site that was originally written in response to a younger investor on the Bogleheads forums asking why they shouldn't just go 100% stocks in the accumulation phase:
https://portfoliocharts.com/2016/07/25/thinking-beyond-stocks-can-fortify-your-accumulation-plan/
Elsewhere, in response to the obvious related question of whether the percentage of equities should be reduced over time (i.e. the well-known equity glide path), the author says:
"I personally believe the time to start developing good investing habits is when you first start investing, and one's strategy should not involve taking unnecessary risks before FI or changing portfolios after. For the most part I think the best advice is to pick an enduring financial strategy from the start and focus on maximizing savings rather than returns. If it's too risky to retire on, it's probably also too risky to guarantee with any amount of certainty the retirement date you want so badly. And if the volatility causes you to sell low every few years, it's most likely hurting you more than it helps anyway.
I also believe that much of the equity glide path advice comes from the over-simplified perspective that total stock and total bond funds are the only investing options available and that good returns (important for accumulation) and low volatility (equally important for retirement) are mutually exclusive. Too many people tackle the exclusivity problem for those two assets by adjusting the percentages over time rather than challenging the two-option assumption. Following modern portfolio theory, there are good portfolio options with solid returns AND low volatility with no adjustments required. That's a common theme of the site and the reason that there's an entire section dedicated to portfolio examples."
Among those examples, William Bernstein's Coward's Portfolio, the Golden Butterfly and Larry Swedroe's Larry Portfolio seemed to offer smooth rides and excellent returns. The contrast between any of these and the Three Fund or classic 60:40 in terms of volatility, drawdowns and long-term SWRs is striking to say the least.
https://portfoliocharts.com/2016/07/25/thinking-beyond-stocks-can-fortify-your-accumulation-plan/
Elsewhere, in response to the obvious related question of whether the percentage of equities should be reduced over time (i.e. the well-known equity glide path), the author says:
"I personally believe the time to start developing good investing habits is when you first start investing, and one's strategy should not involve taking unnecessary risks before FI or changing portfolios after. For the most part I think the best advice is to pick an enduring financial strategy from the start and focus on maximizing savings rather than returns. If it's too risky to retire on, it's probably also too risky to guarantee with any amount of certainty the retirement date you want so badly. And if the volatility causes you to sell low every few years, it's most likely hurting you more than it helps anyway.
I also believe that much of the equity glide path advice comes from the over-simplified perspective that total stock and total bond funds are the only investing options available and that good returns (important for accumulation) and low volatility (equally important for retirement) are mutually exclusive. Too many people tackle the exclusivity problem for those two assets by adjusting the percentages over time rather than challenging the two-option assumption. Following modern portfolio theory, there are good portfolio options with solid returns AND low volatility with no adjustments required. That's a common theme of the site and the reason that there's an entire section dedicated to portfolio examples."
Among those examples, William Bernstein's Coward's Portfolio, the Golden Butterfly and Larry Swedroe's Larry Portfolio seemed to offer smooth rides and excellent returns. The contrast between any of these and the Three Fund or classic 60:40 in terms of volatility, drawdowns and long-term SWRs is striking to say the least.
