I Took All My Money Out of the Stock Market and It Feels Amazing

3

34rlsa

Recycles dryer sheets
Joined
Nov 19, 2013
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I found this article on Yahoo today and thought I'd share it with the forum.

The recent thread: What Fixed Rate Would Get You Out of Stocks?
inspired me to share the authors view.

Below is a quote from the article:

"Now all my money is stashed in U.S. Treasuries, Treasury Inflation-Protected Securities (or TIPS bonds), and laddered CDs, which, in the years to come, I can count on to earn me essentially nada."

Our own circumstances are not identical to the authors but very similar. Enough so that we have very little left in the stock market.

If you could maintain the retirement lifestyle you have planned for without the sequence of return risks... would you be comfortable "earning essentially nada"?

EDIT to add... Include factoring in historical inflation rates... If you could maintain the retirement lifestyle you have planned for without the sequence of return risks... would you be comfortable "earning essentially nada"?

https://finance.yahoo.com/news/took-money-stock-market-feels-100041903.html
 
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I think investing based on how you feel is a death wish strategy. BWDIK
 
20% fixed rate would not thrill me if inflation were 30%.

I think I'd need to always have something in equities to hopefully hedge me against inflation.

Hopefully.
 
34rlsa said:
If you could maintain the retirement lifestyle you have planned for without the sequence of return risks... would you be comfortable "earning essentially nada"?
Click to expand...

Yes, we do that. I plan on .5% real yield. I bought a fair bit of ~2% TIPS early on so I don't think it will be hard to get that as a blended real yield combined with stable value, I-bonds, CD ladders, etc. SS, pensions and a little side income will cover most of our basic expenses and a few frills so once SS kicks in our withdrawal rate should be under .5% most years. We don't have zero stocks but a low allocation and none of the money we need for retirement in stocks.

We use a matching strategy for inflation. This article has TIPS as the best inflation investment:
Top 9 Asset for Inflation Protection
http://www.investopedia.com/articles/investing/081315/9-top-assets-protection-against-inflation.asp
 
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Yes. But, I would have to be able to predict the future. Alas, in my wretched condition I am not psychic, my crystal ball is cracked, and my time machine is broken.
 
No, I would not be happy earning nada.
 
Bonds are not risk free when rates are rising. Look at the 1970s. It is actually more risky not the diversify into various asset classes.
 
Our money needs to at least keep up with inflation for our plan to work. So a real return of 0% would see us through. But I would not be comfortable having all of my money in a single asset class, no matter how "safe".
 
From 1966 how long did it take for the stock market to actually reach "payback" levels for all that inflation?

Back in the late 90's early 2000 when everybody was having the best sex anyone could ever have, with the stock market, someone on CNBC/Rukeyser/related assemblage, mentioned that bonds, I believe specifically 30 yr bonds, had actually outpaced stocks until 1995 and that it was only the last gasp, runaway stock bubble that gave stocks their mystical magical "long term" mojo. Bet your future on an anomaly. Or because the stock market is prone to do these things then I guess it's not really an anomaly...?

I would love to give some attribution here but we're talking 18 yrs ago. Don't know what data they were looking at and not sure I can find it to verify but it has the stench of truth to it.

Just owning stocks will not protect you against inflation until after a, possibly long, period of catch-up. In the mean time you could go broke unless you had that money in bonds throwing off at least some inflation-related interest. Stocks suffer from inflation just like everything else except hard-assets.
 
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I'm a "don't put all your eggs in the same basket" type person. So we have equities, we have bonds, we have cd's and cash, we have rental income, we have some very small pensions coming in, plus DH is on SS....

Equities are definitely part of my plan... and I'd feel it's too risky to not have some equities - since they have a better growth potential than the other assets.
 
In a way, yes I would be comfortable earning nada if my desired lifestyle in retirement was secure. But I wouldn't do that. I would keep something in equities just to catch the long term climb of the markets for the sake of my heirs and perhaps charity.

I can understand her feeling of relief now that rises and falls of markets don't impact her.
 
I took all my money out of the stock market in 2001, the day the markets reopened after the sept 11 halt. The 5% cd interest rates kept my money on the sideline for 7 years until that dissipated, I just got back into the market last month
 
This is just another one of those....'why play if you have already won the game?' threads. But they are always interesting. For me, I'm somewhat similar to her but no plans to get completely out of the market. Just no where near as much in stocks as most here.
 
34rlsa said:
If you could maintain the retirement lifestyle you have planned for without the sequence of return risks... would you be comfortable "earning essentially nada"?

EDIT to add... Include factoring in historical inflation rates... If you could maintain the retirement lifestyle you have planned for without the sequence of return risks... would you be comfortable "earning essentially nada"?

https://finance.yahoo.com/news/took-money-stock-market-feels-100041903.html
Click to expand...

No, because sequence of return risk and inflation risk are not the only types of financial risk.
 
34rlsa said:
I found this article on Yahoo today and thought I'd share it with the forum.

The recent thread: What Fixed Rate Would Get You Out of Stocks?
inspired me to share the authors view.

Below is a quote from the article:

"Now all my money is stashed in U.S. Treasuries, Treasury Inflation-Protected Securities (or TIPS bonds), and laddered CDs, which, in the years to come, I can count on to earn me essentially nada."

Our own circumstances are not identical to the authors but very similar. Enough so that we have very little left in the stock market.

If you could maintain the retirement lifestyle you have planned for without the sequence of return risks... would you be comfortable "earning essentially nada"?

EDIT to add... Include factoring in historical inflation rates... If you could maintain the retirement lifestyle you have planned for without the sequence of return risks... would you be comfortable "earning essentially nada"?

https://finance.yahoo.com/news/took-money-stock-market-feels-100041903.html
Click to expand...

Do you really think it is prudent to take financial advice from a 62 year old divorcee librarian who is still working and has less than $1 million to her name? Even if it is free? No chance.

But wait... she wrote "Our Bodies, Our Shelves: A Collection of Library Humor" so she must be qualified to dispense financial advice.

Plus, she is conveniently ignoring inflation risk.

If her ex-husband is wealthy as she states, perhaps she should consider claiming spousal benefits at her FRA rather than waiting until 70 to claim on her own record.
 
I have market-timed this year to go from 0% bonds to almost 10% bonds. Feels pretty good so far in spite of the fact that I missed out on a great year in the market on 5-10% of my portfolio (the other 90% if doing F-ing fantabulous thank you very much!). I'm 37 so I need a lot of equities exposure to fight off inflation long term.

Kids' college, new(er) car for kids, maybe braces, random teen kid expenses etc all coming up soon so there's that lumpy spending potential I'm also thinking about over the next 3-10 years.
 
pb4uski said:
Do you really think it is prudent to take financial advice from a 62 year old divorcee librarian who is still working and has less than $1 million to her name? Even if it is free? No chance.

But wait... she wrote "Our Bodies, Our Shelves: A Collection of Library Humor" so she must be qualified to dispense financial advice.

Plus, she is conveniently ignoring inflation risk.

If her ex-husband is wealthy as she states, perhaps she should consider claiming spousal benefits at her FRA rather than waiting until 70 to claim on her own record.
Click to expand...

I wasn't referencing the article as "advice".

I dont know if the author ignored inflation risks or not... but I didn't ignore inflation in my question.

Dawg52 nailed it: "This is just another one of those....'why play if you have already won the game?' threads. "
 
If I had "won the game", then yes, I would be fine with nada. However, I'm quite certain that I will not win. To me, winning would be about $5M, maybe more. Basically, it would have to be enough to live at about $100K in today's dollars (spendable money - net of taxes . . .) for what I hope is about 40+ years. Whatever that amount is, it's a lot more than I'll ever have. Therefore, I'll be diversified but more conservative in my AA as I get older.
 
pb4uski said:
Do you really think it is prudent to take financial advice from a 62 year old divorcee librarian who is still working and has less than $1 million to her name? Even if it is free? No chance.

But wait... she wrote "Our Bodies, Our Shelves: A Collection of Library Humor" so she must be qualified to dispense financial advice.

Plus, she is conveniently ignoring inflation risk.

If her ex-husband is wealthy as she states, perhaps she should consider claiming spousal benefits at her FRA rather than waiting until 70 to claim on her own record.
Click to expand...

I don't know about the woman in the article but matching strategies are made up of investment approaches that do not use stocks or any type of mutual fund and are designed to take inflation into account.
 
I think it's good to have a predictable income stream .. to pay for your expenses .. that gives you a peace of mind.

I think it's also important to have CASH money for emergencies.. that's very valuable.

But I also think it's good to have some money put away in something like the stock market with a higher potential return .. but it's important to havev the other 2 when there is a drawdown, You need to have them in order to ride out the down years .. if you're pulling money out during the down years, that's a recipe for disaster and that's when sequence of returns can really hurt you.
 
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