What you do in good times to prep for the bad?

[Lsbcal]

What tactical moves are others doing as their money grows in these good times?

As an example, here is what I've done:
A) Continued to stick with my current AA
B) In the fixed income part I moved some intermediate bond money to a short term investment grade bond fund. This should see us through the worst of the bad sequence years (like those starting in 1966, 1929, and 1906).

Regard (B), this is enough to cover:
(1) a Reserve account to boost normal portfolio spending should we have a very bad sequence of returns going forward
(2) the next 12 months of spending

So I think I've insured that even in a very bad sequence of return years we should be able to spend at levels that will please even DW. Now I can relax ... I think .

 

[RobbieB]

Nothing.

I let my FA worry about that stuff.

 

[DrRoy]

I have just RE'd this year and am slowly reducing my equity AA as the market rises. At 61% going to 60 shortly.

 

[Lsbcal]

I have just RE'd this year and am slowly reducing my equity AA as the market rises. At 61% going to 60 shortly.

Ours is at 60% too. If it gets above 61% I push it back down to 60%.

 

[Lsbcal]

Nothing.

I let my FA worry about that stuff.

Nice. What is your FA doing to your account if anything as the good times roll on?

 

[RobbieB]

He's buying and selling all sorts of stuff. I get trade confirmations more often than statements. I was a little nervous at first with all the activity but I don't pay trade fees and I'm making lotsa dough.

Going to meet with "the team" week after next and review the plan.

 

[REWahoo]

He's buying and selling all sorts of stuff. I get trade confirmations more often than statements. I was a little nervous at first with all the activity but I don't pay trade fees and I'm making lotsa dough.

That's exactly what BLM's clients said...

 

[Ready]

He's buying and selling all sorts of stuff. I get trade confirmations more often than statements. I was a little nervous at first with all the activity but I don't pay trade fees and I'm making lotsa dough.

Going to meet with "the team" week after next and review the plan.

Hmmm...

 

[RobbieB]

The Bureau of Land Management is in financial services now?

 

[RetireAge50]

Nope. I think the referenced blm is in prison.

 

[hesperus]

What tactical moves are others doing as their money grows in these good times?

Staying the course with AA, but I've been putting some gains into physical real estate. Not paper assets, but physical property. Closing on a piece of land next week in one of the ski resort areas near us.

 

[RobbieB]

Oh Bernie -

Nah, I'm with BofA / Merrill Lynch and I'm up 6% (including fees) YTD. So yeah, I'm making a lotta dough just like everyone in the market. No *****-pocus, no funny business, just a managed account.

 

[Ready]

Oh Bernie -

Nah, I'm with BofA / Merrill Lynch and I'm up 6% (including fees) YTD. So yeah, I'm making a lotta dough just like everyone in the market. No *****-pocus, no funny business, just a managed account.

OK, but the S&P 500 is up 8.81% YTD, so why are you only up 6%? You're underperforming the index by almost 3%!

 

[RobbieB]

Maybe I am up 8%, May statement hasn't arrived yet. I don't go online and look everyday. I don't even go online and look at all. Once a month in the mailbox is good enough.

 

[Corporateburnout]

Sticking to an AA of approx 50/42/8 established 5 years ago with 3 years of spending in cash and short term bonds.

In case of an extended market downturn we will consider collecting SS earlier than originally planned to reduce the WR.

 

[W2R]

Love this topic!

INVESTING:

I am sticking to the same investment AA as always (45:55, including index funds, TSP "G Fund", and VWIAX Wellesley). I have about 6 years in cash. This AA did well by me in 2008-2009 so I feel it has been well tested.

Right now I am pretty well set with income from pension, SS, and dividends, as things presently stand. I base my yearly WR on my investment portfolio total on 12/31 each year. So, it is variable and spending flexibility is tremendously important.


SPENDING:

I am working on my spending patterns, trying to position myself so that my monthly required spending is lower, allowing enough flexibility for overall spending to be drastically cut back ASAP if need be.

For example:

$110/month savings from cancelling my cable TV and only using OTA reception
..$39/month savings from cancelling my land line
..$31/month savings from switching from Verizon to Cricket
$105/month savings on generic prescriptions that recently became available, just good luck

$285/month total savings for the above (= $3420/year)

Right now I am spending this saved money on discretionary stuff, but I can cut that off instantly whenever necessary.

No loans of any kind to pay. Enough clothing to last me until doomsday if need be. A nice paid off house with low utility bills and upkeep expenses.

Also trying to get some major dental work done and out of the way. Making sure my house and car are in good repair.

I guess that about covers it.

 

[Major Tom]

My target AA is 60/40 and, so far, I have managed to keep it within bounds with a couple of my regular stock sales that were executed in order to generate income. Have not had to purposely rebalance so far. My equity portion is currently at about 67%. If the market starts to go down soon, I may not have to rebalance. However if it goes above 70%, in theory, I should probably rebalance. In practice, I will probably hang on "just a bit longer" to see what happens.

I think I'm reasonably comfortable with volatility, so if the equities portion gets a little too high just as the market is taking a dive, I think I can live with that.

In other words, I'm starting to come to terms with the possible fact that my rebalancing strategy might well be very casual.

 

[RobbieB]

Another reason I don't worry is I have a very low fixed overhead. All my "core" expenses;

Health insurance
Property taxes
Utilities
Motor vehicle license and insurance
HO insurance, earthquake and umbrella
Internet, cell and top tier TV

are all covered by my SS survivor income which is much less than what I'll get when I file. All I have to support is food, drink and fun -

 

[daylatedollarshort]

Love this topic!......


SPENDING:

I am working on my spending patterns, trying to position myself so that my monthly required spending is lower, allowing enough flexibility for overall spending to be drastically cut back ASAP if need be.

For example:

$110/month savings from cancelling my cable TV and only using OTA reception
..$39/month savings from cancelling my land line
..$31/month savings from switching from Verizon to Cricket
$105/month savings on generic prescriptions that recently became available, just good luck

$285/month total savings for the above (= $3420/year)

Right now I am spending this saved money on discretionary stuff, but I can cut that off instantly whenever necessary.

My favorite topic, too. We've been going through the bills the same way and there seems to be no end to ways to lower expenses fairly painlessly. I think because we weren't too careful before we still have many opportunities for expense optimization. We just keep tackling a few expenses every month and over time it has really helped lower our annual withdrawal rate.

 

[Dancfo]

OK, but the S&P 500 is up 8.81% YTD, so why are you only up 6%? You're underperforming the index by almost 3%!

That would be assuming 100% investment in the S&P 500 - correct?

 

[Ready]

That would be assuming 100% investment in the S&P 500 - correct?

Yes, good point. If a large portion is in fixed income that would bring down the overall return.

But the comment about "He's buying and selling all sorts of stuff. I get trade confirmations more often than statements" is typically what we see when companies like Merrill Lynch, Edward Jones, or Ameriprise get involved with managing an account and generate excessive fees for themselves by constantly trading stocks.

It may all be fine, but it would be a huge warning sign if someone brought it to me to look at. I know of no good strategy that involves buying and selling all sorts of stuff. And if it's the advisor doing it, that is highly suspicious.

 

[Fedup]

I've been moving cash to short term bond. In fact I'm glad I made that decision when it was down. I hate to buy anything when it's up. I set my AA at 60/40, but I will take my time getting there. I checked and Vanguard shows something like up 7-8% YTD, I don't know whether to believe it or not. Low risk, decent return, that's how I like it.
But I trade less often on my Scottrade account than previous years. But it's up much higher than my Vanguard account. But it's all paper gain. A Whee from W2R would bring it down.

 

[RobbieB]

I don't pay any trading fees, just percent of AUM.

 

[brewer12345]

Stockpile food and ammunition. Learn fun hobbies that are useful if tshtf.

 

[Rustward]

Yes, good point. If a large portion is in fixed income that would bring down the overall return.

But the comment about "He's buying and selling all sorts of stuff. I get trade confirmations more often than statements" is typically what we see when companies like Merrill Lynch, Edward Jones, or Ameriprise get involved with managing an account and generate excessive fees for themselves by constantly trading stocks.

It may all be fine, but it would be a huge warning sign if someone brought it to me to look at. I know of no good strategy that involves buying and selling all sorts of stuff. And if it's the advisor doing it, that is highly suspicious.

. . . but nobody brought it to you to look at, or did they?

If the poster is satisfied with what he is doing, isn't that what matters -- to him?

I don't see him criticizing what you do.

. . . and we see lots of comments comparing the S&P 500 to a balanced portfolio. There is very little objectivity or validity in such comparisons, but it is what happens here so very often. It is just a poor attempt to show the poster that what he is doing is wrong, but it is his assets, his portfolio, his life.