Draw down from savings vs portfolio

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Ineed$
Posts: 51
Joined: Wed Jun 26, 2013 4:31 pm

Draw down from savings vs portfolio

Post by Ineed$ »

I draw down from a Fidelity managed account presently. With the drop in the market doesn’t it make sense to paused the draw down from Fidelity. I would just take it from the cash bucket.
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: Draw down from savings vs portfolio

Post by 000 »

I think so but to be clear you will eventually consume the savings leaving just the portfolio.

What does your Fidelity advisor think?
User avatar
22twain
Posts: 4032
Joined: Thu May 10, 2012 5:42 pm

Re: Draw down from savings vs portfolio

Post by 22twain »

INSUFFICIENT DATA FOR MEANINGFUL ANSWER.

What percentage of your total portfolio (including your cash bucket) is your annual drawdown?

What fraction of your total portfolio is your cash bucket?

Are you drawing annually, or quarterly, or monthly, or what?
Meet my pet, Peeve, who loves to convert non-acronyms into acronyms: FED, ROTH, CASH, IVY, ...
dknightd
Posts: 3727
Joined: Wed Mar 07, 2018 10:57 am

Re: Draw down from savings vs portfolio

Post by dknightd »

Probably better than selling stocks when they are going down.
Retired 2019. So far, so good. I want to wake up every morning. But I want to die in my sleep. Just another conundrum. I think the solution might be afternoon naps ;)
User avatar
Sandtrap
Posts: 19591
Joined: Sat Nov 26, 2016 5:32 pm
Location: Hawaii No Ka Oi - white sandy beaches, N. Arizona 1 mile high.

Re: Draw down from savings vs portfolio

Post by Sandtrap »

More comprehensive suggestions might be had if you please reformat you original post (use pencil icon) to include more data as well. Otherwise a lot of assumptions have to be made for substantive actionable input.
Like this:
Portfolio Review Request
https://www.bogleheads.org/forum/viewt ... =1&t=6212

You mention "bucket". . . . are you using a "bucket strategy"?

Thanks!
j :D
Wiki Bogleheads Wiki: Everything You Need to Know
User avatar
Wiggums
Posts: 7051
Joined: Thu Jan 31, 2019 7:02 am

Re: Draw down from savings vs portfolio

Post by Wiggums »

Ineed$ wrote: Fri Jan 21, 2022 8:52 pm I draw down from a Fidelity managed account presently. With the drop in the market doesn’t it make sense to paused the draw down from Fidelity. I would just take it from the cash bucket.
The market goes up and down. Please post your portfolio as already recommended. Its good to have a drawdown plan that takes into consideration your cash flow, short and long term future needs.

We sold some stock in December for 2022. We have a mixture of stocks, bonds and cash. If you AA is aggressive, using the cash is less painful. On the other hand, you need to consider why you’re holding that cash.
"I started with nothing and I still have most of it left."
sailaway
Posts: 8219
Joined: Fri May 12, 2017 1:11 pm

Re: Draw down from savings vs portfolio

Post by sailaway »

What was the purpose of having cash? If that is meant as an emergency fund, this may not be the time to draw down.

How often do you rebalance? If it has been a few months, you may still.be stock heavy at the moment.


This needs to be part of the IPS for anyone in drawdown stage. Our plan is to sell the stocks in taxable, and, if necessary, rebalance in tax deferred.
mr_brightside
Posts: 897
Joined: Sat Oct 17, 2020 3:23 pm

Re: Draw down from savings vs portfolio

Post by mr_brightside »

'bucket strategy' would suggest drawing down from 'cash / fixed income' during a significant market downturn

how you apply the percentages / math is us to you based on your comfort level / desired asset allocation

good luck --

------------------------------------------
Raycpact
Posts: 430
Joined: Thu Jun 24, 2021 9:00 pm

Re: Draw down from savings vs portfolio

Post by Raycpact »

Isn't your question should you increase your equity and bond allocation when the market is down?
Topic Author
Ineed$
Posts: 51
Joined: Wed Jun 26, 2013 4:31 pm

Re: Draw down from savings vs portfolio

Post by Ineed$ »

Thanks for the comments. I didn’t provide more info because I was really thinking out loud. Presently my draw down is only 3k from a 1.2 million Fidelity account. What got me thinking is in two years, I will be drawing RMD’s. I had my eyes away from my finances since the market was moving up for so long. My thinking cap is back on now.
jebmke
Posts: 25476
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Draw down from savings vs portfolio

Post by jebmke »

Everything I have that is liquid is part of my portfolio so this wouldn't work for me. If it can be converted to food in 3-4 business days, I count it. "Savings" is just another asset.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Topic Author
Ineed$
Posts: 51
Joined: Wed Jun 26, 2013 4:31 pm

Re: Draw down from savings vs portfolio

Post by Ineed$ »

Raycpact wrote: Sat Jan 22, 2022 8:50 am Isn't your question should you increase your equity and bond allocation when the market is down?
So true. I have to get my head back in the game.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Draw down from savings vs portfolio

Post by dbr »

Probably when stocks have gone down enough to matter you should be using fixed income to buy stocks.

But one of the problems with holding cash buckets is that you lose touch with the very concept of asset allocation and rebalancing.

In this case what actually is happening is that your allocation is shifting toward fixed income as stocks decline. It would be obvious that you would spend some of the fixed income in preference to selling stocks if you had no more and no less than you wanted in stocks. Nothing wrong with that until you run out of cash.

A good question is that as stocks had good returns over the last ten years, did you rebalance those gains into fixed income or did you just let your stock allocation drift upwards? It is quite possible you are way too high in stock allocation and should keep spending from stocks anyway.

I was almost at the top of my stock allocation limits this year, gave some of it away, have lost a bit in the recent couple of weeks, and we are still above target on stocks.
Post Reply