Feeling Some Regret Over Conservative Approach to Finances

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Topic Author
dcw213
Posts: 261
Joined: Sun Dec 16, 2012 2:04 pm

Feeling Some Regret Over Conservative Approach to Finances

Post by dcw213 »

I began my career in 2006 and was emotionally impacted by the events of 2008. I followed the advice of family and conventional wisdom at the time and invested 100% equities once I started accumulating money. While not much money in hindsight, the 50% haircut was devestating for me and I promised at the time to find my real AA. I landed on 60/40 plus an EF of 1.5 years expenses and have maintained since.

While this has certainly helped me sleep well at night I am now seeing friends and acquaintances come into wealth by doing things that are acceptable from a societal view on risk but not my own. I have to admit I am feeling some regret and a pull to loosen up on my conservative views.

I got off to a very fast start to my career and was way out ahead of the pack for a while in terms of wealth accumulation. Lately I have caught up with friends who have shared shocking stories about how much they have made on real estate and their 100% equity portfolio. I'm talking folks that made a few million in 5 years by acquiring properties and going all in on stocks in their 30s.

I think it is really the real estate that bugs me. These folks over extended themselves for homes they could barely afford and then moved on and up and accumulated rentals along the way. I thought they were crazy and they are now cashing in. I always rented cheap places and it is tough seeing those that lived it up now being rewarded for it to such an extent.

I know these things are cyclical and I am not getting too caught up in FOMO but I am feeling feelings like "why not lever up/borrow and live it up like they have been doing". COVID and the fragility of life and the system may be contributing to these feelings.

Just sharing some of my personal finance thoughts. Probably a sign of a top that I am feeling this way as I have been very set in my views over the last decade plus.
mhalley
Posts: 10432
Joined: Tue Nov 20, 2007 5:02 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by mhalley »

Personal finance is personal. You do what feels right to you, and let’s you sleep at night. There is always someone who made mad bucks on Bitcoin, bet it all on Tesla, took a huge risk on investing in a startup. They will be very quick to brag about their expertise. You won’t find many that talk about their failed Enron investment, or mistiming gamestonk. Don’t let fomo affect how you invest. Real estate is a second job, and many don’t want that.
Topic Author
dcw213
Posts: 261
Joined: Sun Dec 16, 2012 2:04 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by dcw213 »

Agree on the above, and it has never bothered me. I guess I am seeing more of my peers (and people I know and trust) so it hits home more. Not just that one guy who got lucky, more widespread. I acknowledge that this collective mindset was a contributing factor to the last real estate bubble so it is concerning I am feeling this way as I always thought I never would.
MishkaWorries
Posts: 1363
Joined: Wed Aug 14, 2019 4:39 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by MishkaWorries »

It sounds like FOMO to me.

But maybe you're like l am. When I was younger any little drop drove me crazy. 2009 scared me totally out of the market. I just hated seeing the money we worked so hard to save just evaporate.

Now I'm older and should be getting less risk adverse but I find myself weathering downturns in the market much better. The money we lose is just prior gains and we're at our top earning years so we're saving more money easily.

If you up your risk, be sure to write it down and save it. The next downturn, if you start to panic, pull out your written plan and read it to remind yourself why you did what you did.
We plan. G-d laughs.
MiddleOfTheRoad
Posts: 393
Joined: Fri Jul 21, 2017 11:19 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by MiddleOfTheRoad »

Do realize everyone runs his/her own race in this life. Applies to finance and personal life all the same. The sooner you realize this the happier you will be. :happy
Topic Author
dcw213
Posts: 261
Joined: Sun Dec 16, 2012 2:04 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by dcw213 »

I guess it is a bit of FOMO but not so much I want to get rich quick with a moonshot investment vs. I should just borrow for a nice house and nice things while society lets me instead of worrying. Seems more and more like asset price growth or at least stability is a global priority so protecting against the downside seems more and more foolish.
Somethingwitty92912
Posts: 490
Joined: Mon Sep 14, 2020 9:43 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Somethingwitty92912 »

Did you see the results, or did they just tell you about it? Because, people talk smack. In reality wealth is what is not seen. People lie.

If you did see it okay….

They took on huge risk what would have happened if things had gone the other way? You’d have a small nest egg of wealth, and they’d be bankrupt.

There’s a lot of paths to wealth, some have peaks an valleys; others have potholes, an there’s enough variety in life for everything in between.
Last edited by Somethingwitty92912 on Sat May 08, 2021 5:51 pm, edited 1 time in total.
sambb
Posts: 3257
Joined: Sun Mar 10, 2013 3:31 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by sambb »

Yes some people invested very well and did very well. I know several tesla and crypto multimillionaires. Same with real estate. There are many ways to make money outside of boglehead ways. Even starting a business, etc. Have to learn to accept that people can do well.
User avatar
mrspock
Posts: 2158
Joined: Tue Feb 13, 2018 1:49 am
Location: Vulcan

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by mrspock »

Simple: They took more risk, didn't make fatal behavioral mistakes along the way and as a result they got more reward. I also suspect the real estate folks had to do a bunch more work than you or I who just sit here, click a few times and watch the money roll in while we are sipping our lattes.

Even investing in equities, it's a fact that you *will* end up with more money in the long run if you just dump bonds and go 100% equities. A major reason people don't do this, is the fact they aren't able to "stay the course" due to behavioral mistakes, and thus settle for returns somewhat lower than 100% equities.

If your friends haven't made behavioral mistakes, and they took more risk, it's a pretty natural outcome they will wind up with more money than you. Some people are wired to take & handle risk, others can't. Indexers ideally make portfolios which work for our psychological make-up/tendencies & financial situation, thus the huge variety of AAs.

I square this circle like so: first I wish my friends nothing but the best, right now I'm ahead of the game, but it's honestly a bit lonely, so the more company I have the better. Second, I keep score by happiness not money. Money is just one of many factors which contribute to my happiness, among health, friends, having new experiences, learning new skills etc
NotWhoYouThink
Posts: 3595
Joined: Fri Dec 26, 2014 3:19 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by NotWhoYouThink »

People lie. Even your friends.

They also exaggerate, and they tell you about their wins and not their losses.

Smile and nod.
ballons
Posts: 782
Joined: Sun Aug 18, 2019 3:05 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by ballons »

dcw213 wrote: Sat May 08, 2021 4:13 pm...
Lately I have caught up with friends who have shared shocking stories about how much they have made...
Get new friends. Unless they own boats; then stay boat friends.
stan1
Posts: 14246
Joined: Mon Oct 08, 2007 4:35 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by stan1 »

There's a term for this (broad definition -- not just social):

FOMO
https://en.wikipedia.org/wiki/Fear_of_missing_out
Pikel
Posts: 228
Joined: Sat Jan 04, 2020 8:55 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Pikel »

I can't believe 60/40 is conservative now.

We are in some crazy times.

A lot of people are set up to lose their pants, but who knows what the future will bring. Don't take more risk than you need to achieve your goals.
whereskyle
Posts: 1911
Joined: Wed Jan 29, 2020 9:29 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by whereskyle »

dcw213 wrote: Sat May 08, 2021 4:41 pm I guess it is a bit of FOMO but not so much I want to get rich quick with a moonshot investment vs. I should just borrow for a nice house and nice things while society lets me instead of worrying. Seems more and more like asset price growth or at least stability is a global priority so protecting against the downside seems more and more foolish.
These were "priorities" before 2008, and a global financial disaster happened anyway.

Have you identified your number yet? That is, the number at which you will declare yourself financially independent because you will have more than enough to enjoy life for the rest of your life without ever having to worry. If you haven't yet done that, chances are you will be more susceptible to keeping up with the Joneses and FOMO.

Do the work to determine your own path by setting the goal you intend to reach and seeing how you'll reach it, so you can feel good about sticking to your plan. Money can be poison. Make sure it's serving your purposes. Otherwise, you'll serve its.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by JoeRetire »

dcw213 wrote: Sat May 08, 2021 4:13 pmI am now seeing friends and acquaintances come into wealth by doing things that are acceptable from a societal view on risk but not my own. I have to admit I am feeling some regret and a pull to loosen up on my conservative views.

I got off to a very fast start to my career and was way out ahead of the pack for a while in terms of wealth accumulation. Lately I have caught up with friends who have shared shocking stories about how much they have made on real estate and their 100% equity portfolio.

I think it is really the real estate that bugs me. These folks over extended themselves for homes they could barely afford and then moved on and up and accumulated rentals along the way. I thought they were crazy and they are now cashing in. I always rented cheap places and it is tough seeing those that lived it up now being rewarded for it to such an extent.

I know these things are cyclical and I am not getting too caught up in FOMO but I am feeling feelings like "why not lever up/borrow and live it up like they have been doing". COVID and the fragility of life and the system may be contributing to these feelings.

Just sharing some of my personal finance thoughts. Probably a sign of a top that I am feeling this way as I have been very set in my views over the last decade plus.
Wanting to keep up with the Joneses is a lot like FOMO. Avoid both. Do what is right for you. Let others take risks that you wouldn't. Maybe they will do well, maybe they won't.

Stop using phrases like "I was way out ahead of the pack". Life isn't a race.
This isn't just my wallet. It's an organizer, a memory and an old friend.
User avatar
RickBoglehead
Posts: 7877
Joined: Wed Feb 14, 2018 8:10 am
Location: In a house

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by RickBoglehead »

I sold Amazon after years of holding it, and it going DOWN quite a bit, at $20 to pay for a semester of my son's college. Today Amazon is $3,291.

Oh well.
Avid user of forums on variety of interests-financial, home brewing, F-150, EV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by JoeRetire »

dcw213 wrote: Sat May 08, 2021 4:41 pmSeems more and more like asset price growth or at least stability is a global priority so protecting against the downside seems more and more foolish.
Uhm, that's not something I'd bet my house on.
This isn't just my wallet. It's an organizer, a memory and an old friend.
User avatar
FOGU
Posts: 502
Joined: Tue Apr 24, 2018 9:41 pm
Location: Behind the kit.

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by FOGU »

Sounds like what you are feeling is envy. Hopefully just a passing phase.
Covet not.
If your old acquaintances are truly raking it in, be happy for them. If they are full of shite, pity them and stay away.
There will always be someone richer, stronger and better looking than you.
Nobody ever found true happiness by comparing himself to others.
Californiastate
Posts: 1516
Joined: Thu Feb 04, 2021 10:52 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Californiastate »

Pikel wrote: Sat May 08, 2021 5:22 pm I can't believe 60/40 is conservative now.

We are in some crazy times.

A lot of people are set up to lose their pants, but who knows what the future will bring. Don't take more risk than you need to achieve your goals.
Jim Grant has been saying the same thing for decades. I remember Louis Rukeyser getting mad at him on WSW for being pessimestic all of the time. He was right every time the market dropped. Unfortunately for him the market kept climbing the wall of worry after each drop. I know plenty of people who went uber conservative when they saw their 401 statements in '09. It chased them right off of the pitch.
lazynovice
Posts: 3370
Joined: Mon Apr 16, 2012 10:48 pm
Location: Denver area. Former Texan.

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by lazynovice »

There are always going to be people with more than you and people with less than you. All you need is “enough” for you. Having more than someone else doesn’t change your situation at all. If you didn’t talk about it, then you wouldn’t even know. Find other things to talk about.
Topic Author
dcw213
Posts: 261
Joined: Sun Dec 16, 2012 2:04 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by dcw213 »

Thanks for the replies and I agree with a lot of the sentiment being expressed which is why I felt compelled to post. I don't think it is as much envy as it is doubt in my own convictions validated by seeing other close acquaintances and friends do well (and I am happy for them).
User avatar
JaneyLH
Posts: 632
Joined: Wed Oct 16, 2013 7:16 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by JaneyLH »

I personally think 60/40 is too conservative for someone in their 30s, unless you have a plan to retire in your early 50s. If you read the research, the higher percentages of equities most often ride out the ups and downs of the market and end up ahead as long as your investing horizon is long enough. That's what I did and looking at returns over the past 100+ years my analytical self forgot fear and did what was logical in having a more aggressive asset allocation. I rode out two major market downturns without paying attention and the market ended up roaring back. I had time then to wait.

I'm at 60/40 now (just rebalanced from 70/30 last November) at age 67 with enough money to live on just my husband's pension and my social security (he's got a Federal pension and will not be eligible for SS) at age 70. On top of that, we have a mid-7-figure investment portfolio. If I had to tap into my investments to pay normal expenses, I would be much more conservative.
TropikThunder
Posts: 3918
Joined: Sun Apr 03, 2016 5:41 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by TropikThunder »

Pikel wrote: Sat May 08, 2021 5:22 pm I can't believe 60/40 is conservative now.
What would be a more appropriate term for 60/40? And what is an allocation that you would consider conservative?
User avatar
warner25
Posts: 934
Joined: Wed Oct 29, 2014 4:38 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by warner25 »

My own story and feelings are similar. I would say it's like this: We knew what we were doing, we played by the rules, and we did prudent things to get here. Now we're seeing people who don't know what they're doing, taking wild risks, and ending up in the same place. It feels unfair. Fortunately, I don't face this much in my real life; I mostly get it by reading this forum, and I take breaks from reading when it's too much.
mrspock wrote: Sat May 08, 2021 5:05 pm ...They took more risk, didn't make fatal behavioral mistakes along the way and as a result they got more reward...
The thing is, outside of the Bogleheads community, I don't believe that most people are aware of the risk they are taking. It's not some calculated thing that they are doing consciously. I don't believe that most people know what "100% equity" or "60/40" means, nor do they know their own asset allocation. They are convinced that speculating in XYZ is a sure thing. So, yeah, it's frustrating to see people winning despite their ignorance. Also, the issue with taking risk is not just "behavioral mistakes." If you take enough risk, and markets crash, you're wiped out regardless of how you handle it.

I think our time has just not yet come. Trees don't grow to the sky.
Pikel
Posts: 228
Joined: Sat Jan 04, 2020 8:55 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Pikel »

TropikThunder wrote: Sat May 08, 2021 6:30 pm
Pikel wrote: Sat May 08, 2021 5:22 pm I can't believe 60/40 is conservative now.
What would be a more appropriate term for 60/40? And what is an allocation that you would consider conservative?
Jack considered it neutral.

There is a lot of survivorship bias on bogleheads dot org.
ballons
Posts: 782
Joined: Sun Aug 18, 2019 3:05 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by ballons »

Pikel wrote: Sat May 08, 2021 5:22 pm I can't believe 60/40 is conservative now.

We are in some crazy times.

A lot of people are set up to lose their pants, but who knows what the future will bring. Don't take more risk than you need to achieve your goals.
A 60/40 dogcoins/meme "stonks" is their conservative portfolio.
User avatar
dratkinson
Posts: 6116
Joined: Thu Jul 26, 2007 6:23 pm
Location: Centennial CO

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by dratkinson »

Envy. Try to avoid comparing yourself to others. Why? Because you will be dissatisfied with the comparison. Because someone will always be seen to be doing better than you. Because you already know that you can not tolerate the 50% haircut they are setting themselves up for.

"And I saw that all toil and all achievement spring from one person's envy of another. This too is meaningless, a chasing after the wind." --Ecclesiastes 4:4
See: https://biblehub.com/ecclesiastes/4-4.htm

Compare "ostentatious display of wealth" to "stealth wealth".
Search "stealth wealth": https://www.google.com/search?q=stealth+wealth

"Wealth" is what we had... before we use it to buy things to display the wealth we had.


Your only true benchmark is against yourself.
--Are you better today than yesterday?
--Are you on track to be better tomorrow than today?
--Excluding your envy of others, do you sleep well at night?
Then you are doing fine.

Your game plan. Remain conservative as is your true nature. Then the next time the market corrects, and it will, your 40% bonds will allow you to "buy low". If you can stand to do it then.
d.r.a., not dr.a. | I'm a novice investor; you are forewarned.
RetiredAL
Posts: 3537
Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by RetiredAL »

dcw213 wrote: Sat May 08, 2021 5:49 pm
Do understand that very commonly people will skip over any financial failures (embarrassments) but brag up their successes as if successes were all they have ever had.
Wannaretireearly
Posts: 4881
Joined: Wed Mar 31, 2010 4:39 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Wannaretireearly »

Pikel wrote: Sat May 08, 2021 5:22 pm I can't believe 60/40 is conservative now.

We are in some crazy times.

A lot of people are set up to lose their pants, but who knows what the future will bring. Don't take more risk than you need to achieve your goals.
+1. So much weird, one time in a 100 year things going on.
Market basics gone out of the window. Companies that should be bankrupt are alive and kicking.
Debt is the new fad. Consumer and company?
Main street is really hurting. Outside of tech world and the coasts, actual small biz is struggling imo.
Fed printing money like we are 'money heists will have an impact.

I keep having to remind myself that the higher/crazier things go, the more 'likely' we will get a correction. Which is exactly the reason to hold 60/40 or 70/30. Basic macro economics...stay the course. The tortoise wins most races
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
User avatar
mrspock
Posts: 2158
Joined: Tue Feb 13, 2018 1:49 am
Location: Vulcan

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by mrspock »

ballons wrote: Sat May 08, 2021 5:14 pm
dcw213 wrote: Sat May 08, 2021 4:13 pm...
Lately I have caught up with friends who have shared shocking stories about how much they have made...
Get new friends. Unless they own boats; then stay boat friends.
Or beach houses. Those you can keep too.

As for “our time” as indexers… I feel like the last 12 months have been pretty good us. I saw my portfolio soar to heights I never dreamed — at least not this soon. I haven’t the faintest idea how I will spend all the money in retirement. And the thing is…. I’m probably not ready to retire just yet.

Feeling great about being a Boglehead, compounding is definitely kicking in after 7 years of this. 1% days used to be maybe 10k and that made me damn happy… now it’s a good deal more. I feel like my portfolio has achieved “escape velocity”. Cheers!

:sharebeer
Last edited by mrspock on Sat May 08, 2021 7:26 pm, edited 2 times in total.
ivgrivchuck
Posts: 1672
Joined: Sun Sep 27, 2020 6:20 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by ivgrivchuck »

dcw213 wrote: Sat May 08, 2021 4:13 pm I think it is really the real estate that bugs me. These folks over extended themselves for homes they could barely afford and then moved on and up and accumulated rentals along the way. I thought they were crazy and they are now cashing in. I always rented cheap places and it is tough seeing those that lived it up now being rewarded for it to such an extent.
It's classic risk/reward. They took big risks, this time it paid off. They could have lost *everything* with that gambling (money, house, job, family, health).

If you now adjust your risk upwards, you are going to do the classic mistake: selling low (2008), buying high (2021).

You determined that 60/40 is your true risk tolerance. The fact that people are carrying money of Casino shouldn't really impact your true risk tolerance...
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
chw
Posts: 1316
Joined: Thu May 24, 2012 4:22 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by chw »

Stick to your plan, and be happy in your skin. Hindsight is 20/20, and no one can predict the future. You arrived at your AA based on how you felt during 2008-9, and I think that is a good thing- so long as you stick to the plan. You can’t time the market, and you could take on more risk just in time to see a correction.

Try not to compare your wealth to others- there will always be someone else with more money (or appear to be)- but they may not have a plan, and not be well diversified to minimize risk during a market downturn.
fsrph
Posts: 1610
Joined: Sun Jul 26, 2009 7:54 pm
Location: Pa.

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by fsrph »

When the markets are at ATH's it's easy to have regrets about not having a greater percentage of stocks. But, that doesn't mean you invested the wrong way. What if the market didn't recover so quickly? You should set an asset allocation that meets your needs. If you've won the game and don't want to have a high percentage in stocks, that's fine.

Francis
"Success is getting what you want. Happiness is wanting what you get." | Dale Carnegie
Marseille07
Posts: 16054
Joined: Fri Nov 06, 2020 12:41 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Marseille07 »

This is not a competition. It doesn't matter they made money through Real Estate. Make your money doing other things. I'm doing so myself.
Tingting1013
Posts: 1594
Joined: Mon Aug 24, 2020 5:44 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Tingting1013 »

Your issue is that you felt superior to them. You were not superior, and you still are not superior.
Olemiss540
Posts: 2140
Joined: Fri Aug 18, 2017 8:46 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Olemiss540 »

Hindisghts amazing. Should have bought real estate and stayed 1000% stock a decade ago.

But does that mean it was a mistake? Does that mean it's a great idea looking FORWARD?

I would say you used logic to make a sound decision based on logic and not feelings. Continue to make sound and logical decisions moving forward and I am sure you will hit your goals. Dont regret the things made under sound logic, heck dont regret anything at all. Stay in the present and enjoy the wonders in your life.
Last edited by Olemiss540 on Sat May 08, 2021 7:42 pm, edited 1 time in total.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
dknightd
Posts: 3727
Joined: Wed Mar 07, 2018 10:57 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by dknightd »

Life is not a race. That said slow and steady will not win the race. But it will get you to the finish line. Smile and be happy!
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 ;)
MarkRoulo
Posts: 1198
Joined: Mon Jun 22, 2015 10:25 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by MarkRoulo »

dcw213 wrote: Sat May 08, 2021 4:13 pm I began my career in 2006 and was emotionally impacted by the events of 2008. I followed the advice of family and conventional wisdom at the time and invested 100% equities once I started accumulating money. While not much money in hindsight, the 50% haircut was devestating for me and I promised at the time to find my real AA. I landed on 60/40 plus an EF of 1.5 years expenses and have maintained since.

While this has certainly helped me sleep well at night I am now seeing friends and acquaintances come into wealth by doing things that are acceptable from a societal view on risk but not my own. I have to admit I am feeling some regret and a pull to loosen up on my conservative views.

I got off to a very fast start to my career and was way out ahead of the pack for a while in terms of wealth accumulation. Lately I have caught up with friends who have shared shocking stories about how much they have made on real estate and their 100% equity portfolio. I'm talking folks that made a few million in 5 years by acquiring properties and going all in on stocks in their 30s.

I think it is really the real estate that bugs me. These folks over extended themselves for homes they could barely afford and then moved on and up and accumulated rentals along the way. I thought they were crazy and they are now cashing in. I always rented cheap places and it is tough seeing those that lived it up now being rewarded for it to such an extent.

I know these things are cyclical and I am not getting too caught up in FOMO but I am feeling feelings like "why not lever up/borrow and live it up like they have been doing". COVID and the fragility of life and the system may be contributing to these feelings.

Just sharing some of my personal finance thoughts. Probably a sign of a top that I am feeling this way as I have been very set in my views over the last decade plus.
If your friends had been playing Russian Roulette and were bragging about their successes you would be less impressed because the risk they had taken would be obvious.

The risk here isn't 1-in-6 that they would have died, but they clearly took more risk than you did AND IT WORKED OUT. It didn't have to work out.

Two personal anecdotes:

1) At the end of the 2008 real estate crash, a cousin of mine returned his house to the bank via a short-sale. He had put most of his savings into the house and now that savings was all gone. He did still have his pension, so he is not looking at poverty or having to work until he is 80, but losing his life's savings outside of his pension was not the plan. Things looked very good ... right up until the part where his balloon payment came due and he couldn't make it (or sell the house).

2) A neighbor down the street from us rode the 2008 real-estate bubble up. But he was leveraged and when the prices dropped he was in trouble. Then he was laid off from his regular job. His solution to this was to go to his place of employment and kill people. He still lost all the houses, though.

Bogleheads tend to post as if reward MUST follow risk. But that isn't the way it works. Sometimes the risk is that you DON'T GET THE REWARD. OR EVEN LOSE.

You took a more conservative route than your friends, but even a 60:40 portfolio must have done quite well over the past decade. Be happy that it did. You might even try being happy that your friends' gambles paid off. They didn't cost you any money, right?
invest4
Posts: 1905
Joined: Wed Apr 24, 2019 2:19 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by invest4 »

Meh. As always, a number of those same people will simply melt if the tides turn the other way. Look at March for our most recent example...or the brilliant folks who were all-in on the can’t miss real-estate in 2008 or tech stocks in 2000.

Bravo to those who take significant risk or simply take a shot in the dark and reap the rewards. I recognize I am not that person and plod along accordingly with my boring index investing.

I may not win big, but will finish the journey with “enough”.
Topic Author
dcw213
Posts: 261
Joined: Sun Dec 16, 2012 2:04 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by dcw213 »

invest4 wrote: Sat May 08, 2021 7:47 pm Meh. As always, a number of those same people will simply melt if the tides turn the other way. Look at March for our most recent example...or the brilliant folks who were all-in on the can’t miss real-estate in 2008 or tech stocks in 2000.

Bravo to those who take significant risk or simply take a shot in the dark and reap the rewards. I recognize I am not that person and plod along accordingly with my boring index investing.

I may not win big, but will finish the journey with “enough”.
This is where I always land. I will not change anything based on these feelings but it does make it more difficult with a wife and kids and doubting decisions. Thank you all!
User avatar
ApeAttack
Posts: 915
Joined: Wed Dec 23, 2020 7:28 pm
Location: Gorillatown, USA

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by ApeAttack »

Pikel wrote: Sat May 08, 2021 6:41 pm
TropikThunder wrote: Sat May 08, 2021 6:30 pm
Pikel wrote: Sat May 08, 2021 5:22 pm I can't believe 60/40 is conservative now.
What would be a more appropriate term for 60/40? And what is an allocation that you would consider conservative?
Jack considered it neutral.

There is a lot of survivorship bias on bogleheads dot org.
Yup. Survivorship bias was the exact phrase I was thinking of as I scrolled down this thread. In 10 years OP may be way ahead if the markets crash badly.

Also, with so many people existing in the world, I will never be the richest, smartest, fastest, etc. So I have to be content with doing well by my own standards. I have a couple friends who got into crypto and made a little extra money, but I have no FOMO because I don't want the added risk. I am in the fortunate position of not having to place risky bets to (probably) retire by age 60, so I don't. It's a wonderful situation to be in.

OP, if your friends end up making way more money through speculative ventures, that only benefits you as you will get to enjoy their fancy beach homes, boats, etc.
May all your index funds gain +0.5% today.
malabargold
Posts: 689
Joined: Fri Aug 08, 2014 8:16 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by malabargold »

We all experience the losses on paper when things drop, but so what? They typically come back over a varied period of time.
Don’t have money you need to use in the next 5 years+ in equities,
The rest?
Let it ride.
stuper1
Posts: 508
Joined: Tue Apr 03, 2018 9:30 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by stuper1 »

Another thing to remember is that if you are living below your means and saving a good chunk of money for retirement each month, you are already doing better than 90% of the people out there. A lot of people with high-flying lifestyles are saving barely anything, basically living paycheck to paycheck. I haven't read this whole thread, so I apologize if this point has already been made.
A 10-20% allocation to gold has helped with the sequence of returns problem. Some gold held physically is also good insurance against the all-digital-assets problem.
Topic Author
dcw213
Posts: 261
Joined: Sun Dec 16, 2012 2:04 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by dcw213 »

Tingting1013 wrote: Sat May 08, 2021 7:36 pm Your issue is that you felt superior to them. You were not superior, and you still are not superior.
I have never felt superior at all. I have questioned their decisions and actions over a decade long period based on what seemed to be consensus that was reached post crisis (don't over extend and live within means). Now I am seeing that such actions taken in the immediate wake of a global financial crisis have paid off well. I am questioning whether I should join them and take more risk that be partially (if not largely) shared by "the system" (referring primarily to mortgage or home equity debt).
Last edited by dcw213 on Sat May 08, 2021 8:07 pm, edited 1 time in total.
Triple digit golfer
Posts: 10433
Joined: Mon May 18, 2009 5:57 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Triple digit golfer »

In addition to the great feedback you've received, realize that the game is not over. A 50% market crash absolutely could happen. It has twice in the last two decades and we had another 34% crash in there as well.

A large market crash and you may "pull ahead." Not that it should be a competition at all.

Think of your portfolio as a pile of cash. You were dropped here today with this pile of cash. How would you like to invest it? No thinking about what could have been. That is not relevant because you were just dropped on the planet today.

You are likely doing better than 95% of the population. Keep at it and you'll end up in a great place.
GP813
Posts: 1246
Joined: Wed Dec 11, 2019 9:11 am

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by GP813 »

Slow and steady wins the race, you should have no regrets.
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by abuss368 »

dcw213 wrote: Sat May 08, 2021 4:13 pm I began my career in 2006 and was emotionally impacted by the events of 2008. I followed the advice of family and conventional wisdom at the time and invested 100% equities once I started accumulating money. While not much money in hindsight, the 50% haircut was devestating for me and I promised at the time to find my real AA. I landed on 60/40 plus an EF of 1.5 years expenses and have maintained since.

While this has certainly helped me sleep well at night I am now seeing friends and acquaintances come into wealth by doing things that are acceptable from a societal view on risk but not my own. I have to admit I am feeling some regret and a pull to loosen up on my conservative views.

I got off to a very fast start to my career and was way out ahead of the pack for a while in terms of wealth accumulation. Lately I have caught up with friends who have shared shocking stories about how much they have made on real estate and their 100% equity portfolio. I'm talking folks that made a few million in 5 years by acquiring properties and going all in on stocks in their 30s.

I think it is really the real estate that bugs me. These folks over extended themselves for homes they could barely afford and then moved on and up and accumulated rentals along the way. I thought they were crazy and they are now cashing in. I always rented cheap places and it is tough seeing those that lived it up now being rewarded for it to such an extent.

I know these things are cyclical and I am not getting too caught up in FOMO but I am feeling feelings like "why not lever up/borrow and live it up like they have been doing". COVID and the fragility of life and the system may be contributing to these feelings.

Just sharing some of my personal finance thoughts. Probably a sign of a top that I am feeling this way as I have been very set in my views over the last decade plus.
2008 was incredible. US pulled back. International pulled back even worse.

Stay the course with the asset allocation that is best for you. Hold enough in Total Bond and place the rest in Total Stock. Years from now you will be pleased.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by abuss368 »

dcw213 wrote: Sat May 08, 2021 4:13 pm I began my career in 2006 and was emotionally impacted by the events of 2008. I followed the advice of family and conventional wisdom at the time and invested 100% equities once I started accumulating money. While not much money in hindsight, the 50% haircut was devestating for me and I promised at the time to find my real AA. I landed on 60/40 plus an EF of 1.5 years expenses and have maintained since.

While this has certainly helped me sleep well at night I am now seeing friends and acquaintances come into wealth by doing things that are acceptable from a societal view on risk but not my own. I have to admit I am feeling some regret and a pull to loosen up on my conservative views.

I got off to a very fast start to my career and was way out ahead of the pack for a while in terms of wealth accumulation. Lately I have caught up with friends who have shared shocking stories about how much they have made on real estate and their 100% equity portfolio. I'm talking folks that made a few million in 5 years by acquiring properties and going all in on stocks in their 30s.

I think it is really the real estate that bugs me. These folks over extended themselves for homes they could barely afford and then moved on and up and accumulated rentals along the way. I thought they were crazy and they are now cashing in. I always rented cheap places and it is tough seeing those that lived it up now being rewarded for it to such an extent.

I know these things are cyclical and I am not getting too caught up in FOMO but I am feeling feelings like "why not lever up/borrow and live it up like they have been doing". COVID and the fragility of life and the system may be contributing to these feelings.

Just sharing some of my personal finance thoughts. Probably a sign of a top that I am feeling this way as I have been very set in my views over the last decade plus.
Real estate is riding a wave for sure. I would own REITs before buying direct right now. I have a buddy who has made a killing with REITs (and have mentioned him on the forum over the years).

Hold enough in bonds.

Tony
John C. Bogle: “Simplicity is the master key to financial success."
Tingting1013
Posts: 1594
Joined: Mon Aug 24, 2020 5:44 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by Tingting1013 »

dcw213 wrote: Sat May 08, 2021 8:00 pm
Tingting1013 wrote: Sat May 08, 2021 7:36 pm Your issue is that you felt superior to them. You were not superior, and you still are not superior.
I have never felt superior at all. I have questioned their decisions and actions over a decade long period based on what seemed to be consensus that was reached post crisis (don't over extend and live within means). Now I am seeing that such actions taken in the immediate wake of a global financial crisis have paid off well. I am questioning whether I should join them and take more risk that be partially (if not largely) shared by "the system" (referring primarily to mortgage or home equity debt).
It is too late for you. The time to take risks is at the bottom of an economic cycle (I.e. exactly the time that you turned conservative), not at the top of one.
quadog
Posts: 100
Joined: Fri Jan 04, 2019 3:25 pm

Re: Feeling Some Regret Over Conservative Approach to Finances

Post by quadog »

OP, I’m not positive if I see a question in there but I’ll give it a go. You might be a candidate for a barbell strategy. For example, I know of someone who holds both TIPS and *gasp* bitcoin. They also hold 5% of their net worth in cash and *gasp* 20% in a single stock that is up over 3000% the past decade. The point is that a person can be both conservative and loco. People are complex. It’s OK to color outside of the lines of 60/40.
Post Reply