Draw down from savings vs portfolio
Draw down from savings vs portfolio
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.
Re: Draw down from savings vs portfolio
I think so but to be clear you will eventually consume the savings leaving just the portfolio.
What does your Fidelity advisor think?
What does your Fidelity advisor think?
Re: Draw down from savings vs portfolio
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?
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, ...
Re: Draw down from savings vs portfolio
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 ;)
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Re: Draw down from savings vs portfolio
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
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
Re: Draw down from savings vs portfolio
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."
Re: Draw down from savings vs portfolio
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.
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.
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Re: Draw down from savings vs portfolio
'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 --
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how you apply the percentages / math is us to you based on your comfort level / desired asset allocation
good luck --
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Re: Draw down from savings vs portfolio
Isn't your question should you increase your equity and bond allocation when the market is down?
Re: Draw down from savings vs portfolio
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.
Re: Draw down from savings vs portfolio
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.
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Re: Draw down from savings vs portfolio
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.
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.