anyone see light at the end of the tunnel
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Re: anyone see light at the end of the tunnel
I am 56 1/2 and thought about getting out of the market altogether at the beginning of the year but then I chickened out. Now my accounts are showing huge paper loss and I'm conservative!! Now I have decided that I cannot be emotional and just have to let it ride. I am not going to do anything with any of my investments and I am re-investing. I plan to retire fully at age 62. But I just read that it's going to take 3 years to recover t je "paper losses" that we are showing now. That's basically earning nothing for 3 years! But wont all the shares I got a low prices make up the difference when the market comes back? And does anyone know or think the market is going to come back as high as it has been at any time ever?
What should we expect in the next 3 years?
What should we expect in the next 3 years?
Re: anyone see light at the end of the tunnel
Then you have billion-dollar inside information and should never worry about money again.
70% Global Stocks / 30% Bonds
Re: anyone see light at the end of the tunnel
I assume by tunnel you are referring to the Pandemic whose affects are felt on numerous areas of life to include financial. Caveat; I am an over planner!
I'm not 70 yet but I agree with sticking with a plan on the financial area. A plan should be based on facts and assumptions, yes a plan can change if you find your assumptions were wrong. I retired 5 years ago with a plan that started with $X spending a year and increased by 10% per year in 5 year bands. My plan was created on facts: Retirement Year(RY) (1 Pension with COLA), RY+2 (spouse pension starts) RY+5 (copious senior welfare kicks in saving us 3-4% a year, spouse starts SS), RY+10 (SS and Spouse benefits) RY+12 (large RMD's). Assumptions: I live to 75 spouse to 90, Rents increase 5-8% a year (they are up avg 18% a year), INFLATION avg 4% (first 5 year avg is 3.8%), when I retired we were historically way overdue for a recession. I assumed it would happen at least twice for me and 4 times for spouse.
I'm not 70 yet but I agree with sticking with a plan on the financial area. A plan should be based on facts and assumptions, yes a plan can change if you find your assumptions were wrong. I retired 5 years ago with a plan that started with $X spending a year and increased by 10% per year in 5 year bands. My plan was created on facts: Retirement Year(RY) (1 Pension with COLA), RY+2 (spouse pension starts) RY+5 (copious senior welfare kicks in saving us 3-4% a year, spouse starts SS), RY+10 (SS and Spouse benefits) RY+12 (large RMD's). Assumptions: I live to 75 spouse to 90, Rents increase 5-8% a year (they are up avg 18% a year), INFLATION avg 4% (first 5 year avg is 3.8%), when I retired we were historically way overdue for a recession. I assumed it would happen at least twice for me and 4 times for spouse.
Re: anyone see light at the end of the tunnel
If someone tells you the answer to this question I would suggest walking away. Nobody knows.tennesseerunner wrote: ↑Mon May 09, 2022 12:43 pm I am 56 1/2 and thought about getting out of the market altogether at the beginning of the year but then I chickened out. Now my accounts are showing huge paper loss and I'm conservative!! Now I have decided that I cannot be emotional and just have to let it ride. I am not going to do anything with any of my investments and I am re-investing. I plan to retire fully at age 62. But I just read that it's going to take 3 years to recover t je "paper losses" that we are showing now. That's basically earning nothing for 3 years! But wont all the shares I got a low prices make up the difference when the market comes back? And does anyone know or think the market is going to come back as high as it has been at any time ever?
What should we expect in the next 3 years?
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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Re: anyone see light at the end of the tunnel
Yes, it feels difficult right now. For me there is no end, as I plan to buy low cost index funds and never sell them, other than a 3% withdrawal rate during retirement. It's a great question though.
Re: anyone see light at the end of the tunnel
I think we're at the point of panic selling. While there are certainly valid concerns, a drop this precipitous seems like an overreaction. A convincing argument can be made that the US market was probably over-valued early in the year. Now it seems like everything is under-valued. The US market seems slightly under-valued while ex-US markets and bonds seem ridiculously under-valued now.
Of course I don't have any special insight, but even with the Russia-Ukraine situation and recent inflation the recent sell-off seems like an overreaction.
Of course I don't have any special insight, but even with the Russia-Ukraine situation and recent inflation the recent sell-off seems like an overreaction.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
Re: anyone see light at the end of the tunnel
Right now the SP500 PE ratio is 20.33. The historical average PE ratio is around 15-16 so we have a ways to go before reaching those levels of valuation. Until MSFT and APPL finally crater and capitulation finally happens, we're just going to be on a slow bleed like 2000-2002. In addition, the high-inflationary environment is putting a double whammy on prices. The parabolic movement of the 10yr yields has annihilated bonds and that was supposed to be a safe haven from this madness.Apathizer wrote: ↑Mon May 09, 2022 1:54 pm I think we're at the point of panic selling. While there are certainly valid concerns, a drop this precipitous seems like an overreaction. A convincing argument can be made that the US market was probably over-valued early in the year. Now it seems like everything is under-valued. The US market seems slightly under-valued while ex-US markets and bonds seem ridiculously under-valued now.
Of course I don't have any special insight, but even with the Russia-Ukraine situation and recent inflation the recent sell-off seems like an overreaction.
If bond yields go up to about 5%, i may actually sell off stocks to get into long-term treasuries honestly as that may overperform the market for the next 18-24 months.
Last edited by GeoFX on Mon May 09, 2022 2:10 pm, edited 1 time in total.
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Re: anyone see light at the end of the tunnel
I just DCA. Down market is just so good.
Re: anyone see light at the end of the tunnel
A lot of people, especially retirees, don't have the option of DCA'ing and may be trapped a little. I'm one of them and my 50/50 allocation is taking a huge hit from both the equity and bonds side. I can't imagine what's happening to normal 60/40 and 70/30 portfolios where no contributions are being made into them.
Re: anyone see light at the end of the tunnel
Fortunately I have a factor-tilted portfolio which has mitigated my recent losses. My overall P:E is about 12. I'm not confident in my ability to predict markets, but earlier this year I sold most of my taxable investments and paid off most of my mortgage. Had I known all this would happen I'd have sold off everything and paid off my mortgage entirely, but still the total interest I have left is pretty minimal.GeoFX wrote: ↑Mon May 09, 2022 2:08 pmRight now the SP500 PE ratio is 20.33. The historical average PE ratio is around 15-16 so we have a ways to go before reaching those levels of valuation. Until MSFT and APPL finally crater and capitulation finally happens, we're just going to be on a slow bleed like 2000-2002. In addition, the high-inflationary environment is putting a double whammy on prices. The parabolic movement of the 10yr yields has annihilated bonds and that was supposed to be a safe haven from this madness.Apathizer wrote: ↑Mon May 09, 2022 1:54 pm I think we're at the point of panic selling. While there are certainly valid concerns, a drop this precipitous seems like an overreaction. A convincing argument can be made that the US market was probably over-valued early in the year. Now it seems like everything is under-valued. The US market seems slightly under-valued while ex-US markets and bonds seem ridiculously under-valued now.
Of course I don't have any special insight, but even with the Russia-Ukraine situation and recent inflation the recent sell-off seems like an overreaction.
If bond yields go up to about 5%, i may actually sell off stocks to get into long-term treasuries honestly as that may overperform the market for the next 18-24 months.
Now I'm slowly rebuilding with a more conservative taxable portfolio. I'm glad I opted for 50% bonds. They've been whacked too, but yields are moving up which is a good sign. It's really hard not to panic now, but so far I'm resisting the urge. I have enough in bonds to ride the current volatility. I don't expect equity markets to fully recover until sometime next year.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
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Re: anyone see light at the end of the tunnel
you missed the commodity and tip investment.GeoFX wrote: ↑Mon May 09, 2022 2:13 pmA lot of people, especially retirees, don't have the option of DCA'ing and may be trapped a little. I'm one of them and my 50/50 allocation is taking a huge hit from both the equity and bonds side. I can't imagine what's happening to normal 60/40 and 70/30 portfolios where no contributions are being made into them.
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Re: anyone see light at the end of the tunnel
Not that differently. Pretty much all allocations are taking a hit, 0/100 to 100/0. Equities & bonds mix doesn't do well here no matter the ratio. This is just a limitation of only carrying 2 asset classes and they both go down at the same time.GeoFX wrote: ↑Mon May 09, 2022 2:13 pm A lot of people, especially retirees, don't have the option of DCA'ing and may be trapped a little. I'm one of them and my 50/50 allocation is taking a huge hit from both the equity and bonds side. I can't imagine what's happening to normal 60/40 and 70/30 portfolios where no contributions are being made into them.
Re: anyone see light at the end of the tunnel
That's the unfortunate part of most corporate 401Ks, you're limited to only cash, bonds, or stocks. At least they are institutional funds so you don't get slammed by expense fees but it's nothing like right now lolMarseille07 wrote: ↑Mon May 09, 2022 2:34 pmNot that differently. Pretty much all allocations are taking a hit, 0/100 to 100/0. Equities & bonds mix doesn't do well here no matter the ratio. This is just a limitation of only carrying 2 asset classes and they both go down at the same time.GeoFX wrote: ↑Mon May 09, 2022 2:13 pm A lot of people, especially retirees, don't have the option of DCA'ing and may be trapped a little. I'm one of them and my 50/50 allocation is taking a huge hit from both the equity and bonds side. I can't imagine what's happening to normal 60/40 and 70/30 portfolios where no contributions are being made into them.
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Re: anyone see light at the end of the tunnel
Cash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
Last edited by Marseille07 on Mon May 09, 2022 3:01 pm, edited 1 time in total.
Re: anyone see light at the end of the tunnel
Be skeptical of anyone professing such clairvoyance. I think the markets will recover sometime next year, but what do I know? Complex future events are unpredictable, but yeah it's disconcerting that global stocks and bonds have all plummeted so much this year when historically bonds have usually served as a nice buffer for equity market volatility.tennesseerunner wrote: ↑Mon May 09, 2022 12:43 pm I am 56 1/2 and thought about getting out of the market altogether at the beginning of the year but then I chickened out. Now my accounts are showing huge paper loss and I'm conservative!! Now I have decided that I cannot be emotional and just have to let it ride. I am not going to do anything with any of my investments and I am re-investing. I plan to retire fully at age 62. But I just read that it's going to take 3 years to recover t je "paper losses" that we are showing now. That's basically earning nothing for 3 years! But wont all the shares I got a low prices make up the difference when the market comes back? And does anyone know or think the market is going to come back as high as it has been at any time ever?
What should we expect in the next 3 years?
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
Re: anyone see light at the end of the tunnel
Yes, I do see the light at the end of the tunnel, and the exact date when I will emerge from the darkness. It will be the 2nd Wednesday of August, the 10th. That is when my first age 70 max SS will arrive at the bank. Finally some justification for not claiming early and investing that relative pittance after taxes.
Fixed income meets all needs now, but after August I'll have to start keeping some of those promises I made to my spouse concerning a housekeeper and those trips to the caribbean and Alaska.
Not that I have a claim to any personal wisdom, but rather glean what I can from others here who are far wiser than I am. That wisdom was sometimes ignored however, particularly when I went to all cash on March 20, 2020, somehow believing that a drop of 33% in GDP meant anything. Not many here would admit doing such a non-BH thing, and I only bring it up as a cautionary tale to the OP and any others who may feel the panic rising. Then again, I told myself it wasn't panic but merely prudence. At least the use of word made me feel better, even if spelling was the only difference.
Withdrawals from savings were non-existent during the ensuing 9 months out of the market, during which time I kept telling myself that sooner or later my strategy would pay off. I eventually had to admit that I had fallen victim to recency bias. We had been retired 4 years at that point already, and other than that lapse of judgement we had stuck to the plan of buy and hold. When reason finally returned we got back in at 60/40, just like we were before.
The thing that helps me now, and during the entire journey, has been to compare what my long term expectations were at the beginning of retirement with various points in time. There's no way I could have predicted the raging bull we've enjoyed for so long which resulted in a much greater portfolio balance than I had imagined over 6 years into retirement. I am no longer in any danger of cashing in during a downturn. I allowed dividends to accumulate enough to build a 5% cushion of cash to draw on when needed, then began reinvesting them again. I haven't sold anything since March of 2020, and have no need to until RMD's kick in two years hence. Sometimes it's better to be lucky than smart.
My advice: When in doubt, do nothing.
Fixed income meets all needs now, but after August I'll have to start keeping some of those promises I made to my spouse concerning a housekeeper and those trips to the caribbean and Alaska.
Not that I have a claim to any personal wisdom, but rather glean what I can from others here who are far wiser than I am. That wisdom was sometimes ignored however, particularly when I went to all cash on March 20, 2020, somehow believing that a drop of 33% in GDP meant anything. Not many here would admit doing such a non-BH thing, and I only bring it up as a cautionary tale to the OP and any others who may feel the panic rising. Then again, I told myself it wasn't panic but merely prudence. At least the use of word made me feel better, even if spelling was the only difference.
Withdrawals from savings were non-existent during the ensuing 9 months out of the market, during which time I kept telling myself that sooner or later my strategy would pay off. I eventually had to admit that I had fallen victim to recency bias. We had been retired 4 years at that point already, and other than that lapse of judgement we had stuck to the plan of buy and hold. When reason finally returned we got back in at 60/40, just like we were before.
The thing that helps me now, and during the entire journey, has been to compare what my long term expectations were at the beginning of retirement with various points in time. There's no way I could have predicted the raging bull we've enjoyed for so long which resulted in a much greater portfolio balance than I had imagined over 6 years into retirement. I am no longer in any danger of cashing in during a downturn. I allowed dividends to accumulate enough to build a 5% cushion of cash to draw on when needed, then began reinvesting them again. I haven't sold anything since March of 2020, and have no need to until RMD's kick in two years hence. Sometimes it's better to be lucky than smart.
My advice: When in doubt, do nothing.
Last edited by vested1 on Mon May 09, 2022 3:27 pm, edited 1 time in total.
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Re: anyone see light at the end of the tunnel
I was 65/35 at the start of the year, but have steadily moved money into stocks as they've fallen. I'm now at 80/20. If we see full capitulation (which I'd define as 35% down) I'll be closer to 100/0.
I'd love to be able to guess as to how long this trend will last, but I can't do that with any degree of certainty. So I'm not trying to do that and instead I will think that I'm getting in at pretty good prices now, compared to last year.
"The Basic Choices for Investors and the One We Strongly Prefer" |
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https://www.berkshirehathaway.com/letters/2011ltr.pdf
Re: anyone see light at the end of the tunnel
OP, your response above implies that you didn't agree with what the advisor put you in. But you always have a choice whether to follow an advisor's advice. Always.UNI4MER wrote: ↑Sun May 08, 2022 7:29 pmThat was what my VG FP put me.marcopolo wrote: ↑Sun May 08, 2022 4:45 pmHow did you end up back at 60/40 allocation?
In March 2020, you panic sold even though you were working with PAS. You apparently opted out of PAS and sold near the bottom, and were wondering in May whether to get back in and whether to do so on you own or go back to PAS. Several posters suggested that perhaps 60/40 wss too aggressive for you. Seems they might have been right.
What did you do, and how did you end up back at 60/40?
If you sell now, will you end up back at 60/40 again later after selling low, then buying high again? That is usually nit a recipe for investing success.
So...did you agree with the advisor?
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
Re: anyone see light at the end of the tunnel
as expected my advisor said stay the course and use these 2 documents to support that:
https://investor.vanguard.com/investor- ... ssessments
https://corporate.vanguard.com/content/ ... -2022.html
https://investor.vanguard.com/investor- ... ssessments
https://corporate.vanguard.com/content/ ... -2022.html
Last edited by UNI4MER on Mon May 09, 2022 3:33 pm, edited 1 time in total.
Re: anyone see light at the end of the tunnel
So, what are you going to do?UNI4MER wrote: ↑Mon May 09, 2022 3:22 pm as expected my advisor said stay the course and use these 2 documents to support that:
https://investor.vanguard.com/investor- ... ssessments
chrome-extension://oemmndcbldboiebfnladdacbdfmadadm/https://personal.vanguard.com/us/ViewMe ... o,-150,498
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: anyone see light at the end of the tunnel
stay the course for now and hope for the best
Re: anyone see light at the end of the tunnel
Yes. All of the alternatives, which are basically attempting to time the market, have worse outcomes.
"Pretired", working 20 h/wk. AA 75/25: 30% TSM, 19% value (VFVA/AVUV), 18% Int'l LC, 8% emerging, 25% GFund/VBTLX. Military pension ≈60% of expenses. Pension+SS@age 70 ≈100% of expenses.
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Re: anyone see light at the end of the tunnel
This is a great point ^^
Re: anyone see light at the end of the tunnel
tennesseerunner,tennesseerunner wrote: ↑Mon May 09, 2022 12:43 pm I am 56 1/2 and thought about getting out of the market altogether at the beginning of the year but then I chickened out. Now my accounts are showing huge paper loss and I'm conservative!! Now I have decided that I cannot be emotional and just have to let it ride. I am not going to do anything with any of my investments and I am re-investing. I plan to retire fully at age 62. But I just read that it's going to take 3 years to recover t je "paper losses" that we are showing now. That's basically earning nothing for 3 years! But wont all the shares I got a low prices make up the difference when the market comes back? And does anyone know or think the market is going to come back as high as it has been at any time ever?
What should we expect in the next 3 years?
Do you have an Investment Policy Statement (IPS)?
Do you have an asset allocation that matches your need, ability, and willingness to take risk?
If not, working on these in the coming months will help you plan for the future and may increase your comfort level.
"Pretired", working 20 h/wk. AA 75/25: 30% TSM, 19% value (VFVA/AVUV), 18% Int'l LC, 8% emerging, 25% GFund/VBTLX. Military pension ≈60% of expenses. Pension+SS@age 70 ≈100% of expenses.
Re: anyone see light at the end of the tunnel
The present drubbing of both stocks and bonds made me appreciate my real estate investments more .Marseille07 wrote: ↑Mon May 09, 2022 2:49 pmCash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
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Re: anyone see light at the end of the tunnel
RE is certainly fine for diversification purposes, although we might be approaching the top there as well.Jimsad wrote: ↑Mon May 09, 2022 4:07 pm The present drubbing of both stocks and bonds made me appreciate my real estate investments more .
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
If we're talking about the same poster, iirc that poster spends 70K/year; the current downturn (or any downturns) is unlikely to materially impact their bottom line.
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Re: anyone see light at the end of the tunnel
Have you ever lived through a real estate crash while holding a large (or leveraged) real estate portfolio? It gets very ugly. A former neighbor of mine went from being up big in a New York apartment to losing 30% and being forced to sell in a matter of months.Jimsad wrote: ↑Mon May 09, 2022 4:07 pmThe present drubbing of both stocks and bonds made me appreciate my real estate investments more .Marseille07 wrote: ↑Mon May 09, 2022 2:49 pmCash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
"The Basic Choices for Investors and the One We Strongly Prefer" |
|
https://www.berkshirehathaway.com/letters/2011ltr.pdf
Re: anyone see light at the end of the tunnel
This is a "No politics" forum. I removed an off-topic post. As a reminder, see: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
- Common religious expressions such as sending your prayers to an ailing member.
- Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
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- Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
Re: anyone see light at the end of the tunnel
I am only taking about Increasing my income producing real estate . Presently it is about 8% of my overall portfolio/assets (investments and real estate combined )chicagoan23 wrote: ↑Mon May 09, 2022 4:36 pmHave you ever lived through a real estate crash while holding a large (or leveraged) real estate portfolio? It gets very ugly. A former neighbor of mine went from being up big in a New York apartment to losing 30% and being forced to sell in a matter of months.Jimsad wrote: ↑Mon May 09, 2022 4:07 pmThe present drubbing of both stocks and bonds made me appreciate my real estate investments more .Marseille07 wrote: ↑Mon May 09, 2022 2:49 pmCash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
I plan or increase it to 15 % of my overall assets
Re: anyone see light at the end of the tunnel
I feel bogleheads as a whole do not appreciate the value of real estate as a good diversifier to have as part of the portfolio.Jimsad wrote: ↑Mon May 09, 2022 4:46 pmI am only taking about Increasing my income producing real estate . Presently it is about 8% of my overall portfolio/assets (investments and real estate combined )chicagoan23 wrote: ↑Mon May 09, 2022 4:36 pmHave you ever lived through a real estate crash while holding a large (or leveraged) real estate portfolio? It gets very ugly. A former neighbor of mine went from being up big in a New York apartment to losing 30% and being forced to sell in a matter of months.Jimsad wrote: ↑Mon May 09, 2022 4:07 pmThe present drubbing of both stocks and bonds made me appreciate my real estate investments more .Marseille07 wrote: ↑Mon May 09, 2022 2:49 pmCash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
I plan or increase it to 15 % of my overall assets
Times like these , should make everyone realize the value of it
Re: anyone see light at the end of the tunnel
Probably a couple of factors at play. One, some prefer to keep all their investments in liquid assets and two, many do not want the hassle of being a landlord.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: anyone see light at the end of the tunnel
It's only a diversifier if you enough such that your real estate is ... diversified. Otherwise you'll get into an argument over whether good or bad results are more luck or skill.
Re: anyone see light at the end of the tunnel
There is no free lunch . It may worth having ‘some ‘hassle to avoid being completely at the mercy of the markets and as inflation hedge
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Re: anyone see light at the end of the tunnel
I am all equity portfolio. Are 44. Natural DCA. I am in it for a good treat later right?
Re: anyone see light at the end of the tunnel
Me too. I read Ferri's article a few years back https://www.forbes.com/sites/rickferri/ ... r-retirees as I approached retirement and it recommends a 30/70 portfolio (although many are able and willing to take more risk). I'm not sure if it has been better than a 60/40 in hindsight since it missed the market runup over the past few years, but it definitely let me sleep better without worrying about what a big market drop would do
Re: anyone see light at the end of the tunnel
I wonder if any other Bogleheads experienced the same pitfall I did:
In planning for worst-case scenarios prior to retirement (3 years ago), I assumed my bond allocation would remain relatively stable in the event of a sharp downturn in stocks. So I thought my expectations were reasonable and something I could live with in a period of sharply falling stocks. Guess what. Bonds can fall sharply when stocks fall sharply. Surprise (to me)! I'm still okay at age 71 with an allocation of 26/57/17 (stocks/bonds/cash) and about 40x annual expenses (as of yesterday). But boy-oh-boy was it nice when I was sitting pretty at 50x expenses!
While I'm inclined to do something, I'm reassured by all the reminders that nothing is the thing to do.
In planning for worst-case scenarios prior to retirement (3 years ago), I assumed my bond allocation would remain relatively stable in the event of a sharp downturn in stocks. So I thought my expectations were reasonable and something I could live with in a period of sharply falling stocks. Guess what. Bonds can fall sharply when stocks fall sharply. Surprise (to me)! I'm still okay at age 71 with an allocation of 26/57/17 (stocks/bonds/cash) and about 40x annual expenses (as of yesterday). But boy-oh-boy was it nice when I was sitting pretty at 50x expenses!
While I'm inclined to do something, I'm reassured by all the reminders that nothing is the thing to do.
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Re: anyone see light at the end of the tunnel
The only light is seen by staying the course.
Make sure you check out my list of certifications. The list is short, and there aren't any. - Eric 0. from SMA
Re: anyone see light at the end of the tunnel
Heck, I’ll take that trade. An 8 figure dude at -50% if we saw that…but we won’t!Jimsad wrote: ↑Mon May 09, 2022 4:07 pmThe present drubbing of both stocks and bonds made me appreciate my real estate investments more .Marseille07 wrote: ↑Mon May 09, 2022 2:49 pmCash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
I’ll take that 8 figure math over property in this market any day!
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Re: anyone see light at the end of the tunnel
Do you have enough at 3% WR? This is my plan too, but 3% could be tight on my end if we continue to see a downturn. I admit sometimes 4% WR looks really tempting.tvubpwcisla wrote: ↑Mon May 09, 2022 1:47 pm Yes, it feels difficult right now. For me there is no end, as I plan to buy low cost index funds and never sell them, other than a 3% withdrawal rate during retirement. It's a great question though.
Re: anyone see light at the end of the tunnel
Two of the happiest days of my financial life were the closing on the sale of rental property.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: anyone see light at the end of the tunnel
I had two properties as well, and similar happy days. Plus the bonus of a much simpler tax return.
Re: anyone see light at the end of the tunnel
Correct.
This is why you hold 60/40 (for example... or 70/30 or 50/50) and not just 100% growth stocks... The "40" in bonds/fixed income/cash is there to limit your downside and help you float though market retreats like this so that you dont have to heavily draw down the "60" stock. If you are nervous it just means that you should be even more conservative , even in good markets,.... maybe 50/50.
Re: anyone see light at the end of the tunnel
I am 70 also and with Vanguard PAS about a year. My advice: take a chill pill and “STAY the COURSE”. You are with PAS and your likely CFP advisor in part to talk you out of stepping off the “Go to cash” cliff. And behemoth Vanguard has your back with their 10,000 model scenarios. Stay the course.
Re: anyone see light at the end of the tunnel
There is a lot of dogma here about "stay the course" and I think it is essentially good advice because making extreme changes during times of volatility and stress usually leads to bad decisions. This is why we create an IPS, so we can understand our strategy during rough water.JoeRetire wrote: ↑Sun May 08, 2022 4:36 pmOr not.Silk McCue wrote: ↑Sun May 08, 2022 3:34 pm Your history of posts here reflects repeated market timing. At some point you need to establish and stick with a plan you can live with, and then live with it.
While it might be advisable, nobody needs to stick with a plan. Many don't.
That being said, learning from the current environment and making changes around the edges can be a good idea (assuming ones original plan is reasonable to begin with).
What has become apparent to me during this volatility is that it can be a good idea to have a shorter term duration fixed income allocation piece in your fixed income. If your bond funds are 5-6 year duration, some meaningful amount of cash and 1-4 year duration instruments might make sense. Maybe 1 year of expenses (essential or total, up to you) for each "rung" on that ladder. This could be done at your brokerage with money market funds, brokered CDs, shorter term funds, individual tips, etc, or with I bonds (difficult with purchase limits), CD ladders, or whatever you find comfortable to work with.
This is especially relevant if you are spending out of your portfolio. No epiphany, just what people here have been saying forever, which is to match duration with your spending needs.
Re: anyone see light at the end of the tunnel
"It will fluctuate" was the answer given a hundred years ago, when a similar question about prospective action/market direction was asked.
Now, I'm doing nothing since that is my level of knowledge about what might occur next. We are having some type of correction from the previous status, very likely not "the end of the world." My expectation is that I will muddle through with some level of portfolio losses, typical of the long term history of investing in the stock and bond markets.
It is comforting to have a withdrawal plan that adjusts my withdrawals to each recent annual portfolio value, because those spending adjustments do boost my portfolio longevity. My action is to continuously live with the expectation of adequate but imprecise annual retirement income. My RMD spending method uses my rising, age-based RMD % on each recent annual, entire portfolio value, plus spending dividends and interest.
Now, I'm doing nothing since that is my level of knowledge about what might occur next. We are having some type of correction from the previous status, very likely not "the end of the world." My expectation is that I will muddle through with some level of portfolio losses, typical of the long term history of investing in the stock and bond markets.
It is comforting to have a withdrawal plan that adjusts my withdrawals to each recent annual portfolio value, because those spending adjustments do boost my portfolio longevity. My action is to continuously live with the expectation of adequate but imprecise annual retirement income. My RMD spending method uses my rising, age-based RMD % on each recent annual, entire portfolio value, plus spending dividends and interest.
- AerialWombat
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Re: anyone see light at the end of the tunnel
deleted
Last edited by AerialWombat on Mon May 23, 2022 2:39 am, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
Re: anyone see light at the end of the tunnel
There are an astonishing number of market timers on this board. It really is confusing. I don't get why every gyration in the market is an occasion for either glee or gloom.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
- burritoLover
- Posts: 4097
- Joined: Sun Jul 05, 2020 12:13 pm
Re: anyone see light at the end of the tunnel
Agree - it is incredible that despite all the evidence against market timing, a number of people here think they are improving the performance of their portfolio by making changes in response to market conditions when the opposite is the case in the vast majority of cases.
Re: anyone see light at the end of the tunnel
burritoLover,burritoLover wrote: ↑Wed May 18, 2022 10:07 amAgree - it is incredible that despite all the evidence against market timing, a number of people here think they are improving the performance of their portfolio by making changes in response to market conditions when the opposite is the case in the vast majority of cases.
A) How dare you telling folks that they are not smarter than average folks?
B) And, they cannot manage their stock and bond, "market time" to beat the average return?
I know that I am not smart enough. But, many others do not accept that.
KlangFool
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