I can't believe I am thinking this [Panic and Survival 2008-09]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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abuss368
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by abuss368 »

No one knows what the future holds or what the crystal balls says!

The best investors can do is to buy lost cost and diversified funds and stay the course.

Tune out the noise!
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Independent George »

I really wish I kept better records of my finances back then, but really, it's much easier to keep detailed notes when your finances are in good shape. Having purchased my condo in June 2007, I was deep underwater by the end of 2008. At the trough, I remember going from a net worth of around 100k to -15k. Partly out of luck, and partly out of foresight, my situation was not nearly as bad as many experienced.

First, and most importantly, I stayed employed throughout the crash. I did take a major pay cut in 2010 or 2011 (I can't remember exactly which year it was - again, I wish I kept better records) which I only recently surpassed in nominal dollars (and am still slightly below according to CPI), but I stayed employed the entire time. I was extremely lucky in this.

Second, though I clearly overpaid for my condo (even now, it's worth about 25% less than what I paid for it), I didn't overbuy. I put down 20% and didn't overextend myself. I never missed a payment, and managed to stay in the black with only modest cuts to my monthly spending. I will chalk this one up to foresight - buying was a bad decision, but knowing how much I could afford to borrow was a good one.

Third, I never stopped saving or contributing to my retirement funds, even after I was down 50%. I had to cut my 401k contribution when my salary dipped, but even at my lowest point, I still contributed enough for my company match, and I still maximized my Roth IRA every year. It was also around then that I learned about the Bogleheads, and switched to a 4-fund Portfolio (3-fund plus REIT index). I went from 100% stocks to 90/10, as per my brand new IPS.

Twelve years later, my net worth stands at approximately $475k. I have both a 6-month emergency fund and some additional money set aside for some long-overdue renovations to the condo I bought at peak bubble 2007. The only change I made to my IPS was to revise my financial goals upwards; so far, it looks like I'm on track to reach my first financial milestone at age 45.
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Re: Re:

Post by Kevin M »

X528 wrote: Thu Sep 26, 2019 6:03 pm Even with low bond yields, bond funds can still give decent returns.

The TSP F fund (total bond fund) is up +7.96% YTD.
In the short term, sure. Longer term, you're not going to make much more than the initial yield. All that 8% return did is "front load" the returns for the next 10 years, so the return over the next 10 years will be that much lower--unless you believe yields can go deeply negative, but that would just further front load the returns, and lower the expected returns going forward from there.

It cracks me up. Yields go down, and people post about all the money they've made recently in bonds (ignoring the lower expected returns going forward). Yields go up, and they post about all the money they'll make in the future in bonds due to the higher yields (ignoring the recent losses).

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by spammagnet »

Independent George wrote: Thu Sep 26, 2019 7:55 pm... I did take a major pay cut in 2010 or 2011 (I can't remember exactly which year it was - again, I wish I kept better records) which I only recently surpassed in nominal dollars (and am still slightly below according to CPI) ...
Your earnings history at My Social Security (SSA.gov) should provide some information on that topic, if interested.
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NearlyRetired
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by NearlyRetired »

xxd091 wrote: Thu May 16, 2019 11:56 am I am starting to keep more than a years expenses now in Cash-Brexit plus another Crash?
Sheepdog taught us a lot-so glad he made it
xxd091
I have recently done something similar - well currently dis-invested a years worth of expenses, and kept in cash within the pension pot. Out of interest where did you place your expenses - is it in cash, or some other vehicle. I would be interested to know if there is somewhere better to place this money.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by BlueEars »

NearlyRetired wrote: Sun Sep 29, 2019 7:16 am
xxd091 wrote: Thu May 16, 2019 11:56 am I am starting to keep more than a years expenses now in Cash-Brexit plus another Crash?
Sheepdog taught us a lot-so glad he made it
xxd091
I have recently done something similar - well currently dis-invested a years worth of expenses, and kept in cash within the pension pot. Out of interest where did you place your expenses - is it in cash, or some other vehicle. I would be interested to know if there is somewhere better to place this money.
You might try short term bond funds like VFSUX. It is true that VFSUX went down somewhat in 2008 but over the years it nicely outperforms money market funds like VMMXX. Or you could opt for somewhat less volatility with short term bond index fund VBIRX.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by xxd091 »

This is cash for day to day expenses so Bonds not much use
I just bite the bullet and keep in a Bank Cash Savings Scheme-instant access-currently 1.4% tax free
I used to have I years expenses only for a long time but in current situation gone to 2 years expenses Brexit etc
Do I need this much? -very personal decision-this amount lets me sleep at night-about 5% of Portfolio
xxd09
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by anon3838 »

Whew...what a read.

Thank you, Sheepdog for starting this thread and being so honest, open, and humble. And especially, for the updates over the years...the more I read, the more I craved updates on your life, and how things are going. You'll never know the ripple of your generosity towards others.

I remember 2008 well. I stayed the course, but only because I had a major life event that required ALL of my attention.

I found this thread because I was thinking I should stash some cash to live on for 3-5 years instead of relying on drawing off my all-time-high portfolio. I was searching around to see how others plan for short-term living expenses in retirement, and stumbled upon this thread.

I'm planning to retire in the next year or two (I'm mid-40's)...this thread was all the confirmation bias I needed to take action on my cash savings plan before I will green-light my retirement.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by 1210sda »

What an incredible history lesson. This was sort of like in "Back to the Future". It's particularly pertinent now that we are experiencing record markets.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by carminered2019 »

wow, what an awesome thread and so many uplifting words from many wise people. All young and new investors should read this thread and learn to stay the course and mentally be prepared for it. Thanks God I did stay the course in the market at the time.
Last edited by carminered2019 on Sun Dec 22, 2019 4:02 pm, edited 1 time in total.
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Re: Staying the course

Post by hightower »

Jeremiah wrote: Thu Oct 09, 2008 6:43 pm I feel exactly like sheepdog does. I have stayed the course since 1987 and I don't know how much of my money other people have gotten by the shares I have bought, but I have been good for them. (Note: I just now joined this forum so I am sure all this has been discussed to death, but I still need to vent, sorry). Why didn't I cash out at DOW 14K? I guess I thought it would go higher....duh. Or why not in December? Or March? Or May? In May I bought the International Stock Index in my IRA from my pension money that I moved from Nationwide. I have now lost 1/2 of it. I also bought Inflation Protected Securities which have dropped in value. I thought bond funds should be safe. I am 65 and wonder if I will ever get my money back or will end up depending on SS for my retirement. If so, it will be a short one. I am about ready to follow the panic crowd and save what I can. I can always buy back in later. (When I sell, I always wonder who is buying?) I earned good money over my career, I wish now I would have just kept it in a money market, so much of it is gone. This unprecedented worldwide crises is scary beyond belief, and if anyone thinks a worldwide depression is impossible, consider that when the Fed runs out of money, the Treasury will have to start printing it, and the U.S. credit rating will drop. Then what? The DOW hit 8500 today, and tomorrow it should drop to 8,000 or less. I guess if you are willing to wait 5 years for a DOW of 10,000 this is the time to buy. We are a long ways from the market bottom. As a Boglehead newbie, prove to me my fears are groundless....make me feel better.
Wow, this post is really telling. Hearing him talk about the actual numbers that were making people so nervous. Dow at 14k was the high point then? It reached 8500 on this particular day. It's over 28,000 now! I bet no one then would have believed that to be possible just 11 years later. Stay the course and keep on buying, all the way down, and all the way up. This proves it.
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Re:

Post by hightower »

Raybo wrote: Thu Oct 09, 2008 8:05 pm I've been retired for 8 years and am only in my mid-50s. It is hard to watch years of expenses evaporate in one day, day after day. The only thing that makes this palatable is that I have several years expenses in cash or equivalents (Cash, CDs, or I-bonds). While I hate seeing my retirement pile ooze money, I know that I can hold on for several years before I have to even consider selling mutual funds.

I keep this much cash precisely for this reason.

Ray
This is also a good post to remember. This poster was hurting, but didn't feel the need to sell because he had held on to enough cash that he knew he didn't NEED to sell...yet. Wonder if he stayed the course. Still here Raybo?
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Re: Re:

Post by Raybo »

hightower wrote: Sun Dec 22, 2019 3:31 pm
Raybo wrote: Thu Oct 09, 2008 8:05 pm I've been retired for 8 years and am only in my mid-50s. It is hard to watch years of expenses evaporate in one day, day after day. The only thing that makes this palatable is that I have several years expenses in cash or equivalents (Cash, CDs, or I-bonds). While I hate seeing my retirement pile ooze money, I know that I can hold on for several years before I have to even consider selling mutual funds.

I keep this much cash precisely for this reason.

Ray
This is also a good post to remember. This poster was hurting, but didn't feel the need to sell because he had held on to enough cash that he knew he didn't NEED to sell...yet. Wonder if he stayed the course. Still here Raybo?
I am still here.

In fact, I am still tax gain harvesting from the profits I earned by buying on the way down. It was hard to do this, but the cash cushion allowed me to keep buying stocks without worrying about having to sell at a loss to fund my expenses. When the market turned around, I was in a good position to recapture my losses and then earn major gains.

This year, the gains I sold were about 70 cents on every dollar sold, or over triple of my lowest purchase price.

I should note that at the very bottom of the market, I could no longer rebalance and actually sold some stock to bolster my cash position. That bit of capitulation probably cost me $100K in profits!
No matter how long the hill, if you keep pedaling you'll eventually get up to the top.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by jebmke »

Raybo wrote: Sat Jan 04, 2020 9:58 pm In fact, I am still tax gain harvesting from the profits I earned by buying on the way down. It was hard to do this, but the cash cushion allowed me to keep buying stocks without worrying about having to sell at a loss to fund my expenses. When the market turned around, I was in a good position to recapture my losses and then earn major gains.
We were also in mid-50s, retired December, 2007 right before the bottom fell out. But had purposely glided our allocation to 40/60 - much lower equity than we needed to be -- for the express purpose of avoiding feeling nervous when the bottom eventually did fall out and failing to re-balance. I didn't want a down turn to become a distraction during early retirement. It worked. We actually increased our spending in 2009-10 on some home improvement and travel expense because the prices were do attractive.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by oken »

Thank you sheepdog and everyone who posted.
Great read for someone who has not experienced the real thing before...
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Horton »

jebmke wrote: Sat Jan 04, 2020 10:32 pm We were also in mid-50s, retired December, 2007 right before the bottom fell out. But had purposely glided our allocation to 40/60 - much lower equity than we needed to be -- for the express purpose of avoiding feeling nervous when the bottom eventually did fall out and failing to re-balance. I didn't want a down turn to become a distraction during early retirement. It worked. We actually increased our spending in 2009-10 on some home improvement and travel expense because the prices were do attractive.
Thanks for sharing. In a sense, it sounds like you developed your willingness to take risk in 2007 with a level of conservatism. That seems wise, and timely for us all.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Mactheriverrat »

Great thread!

Sounds like millions of other 401-k holders that didn't have a idea other than to stay the course through the thin days of the great recession. I was one of them. I have since pared my 401-k holdings down to two funds.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by NearlyRetired »

jebmke wrote: Sat Jan 04, 2020 10:32 pm But had purposely glided our allocation to 40/60 - much lower equity than we needed to be -- for the express purpose of avoiding feeling nervous when the bottom eventually did fall out and failing to re-balance.
This was something that wasn't immediately obvious to me when I first started on this journey of educating myself with BH help. I just thought my portfolio would drop by 50% rather than 50% of the % invested in equities! Just stating the obvious (for me now) if it helps anyone else
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Re: I can't believe I am thinking this

Post by anakinskywalker »

Sandtrap wrote: Mon Oct 23, 2017 4:37 pm
Sheepdog wrote: Mon Oct 23, 2017 12:27 pm
Sandtrap wrote: Mon Oct 23, 2017 10:14 am
Short Term Investment Grade Bond Fund . . as in Vanguard VFSUX ?
Do you consider Vanguards money market, VMFXX to fit the category of "safe accounts"?

I'm not as versed in the practicalities of "fixed term" SPIA vs (forever with "mortality credits") non-fixed SPIA's
but I think that's another thread to post.
thanks,
j
Sandtrap,
My short term bond fund is (are) VFSTX and VFSUX (Admiral)

I'll make my comment on fixed term SPIAs rather than necessarily a new thread. I was taking monthly fixed amount withdrawals (occasionally more for a large expenditure). I decided to go to fixed term SPIAs (5 and 10 year) about age 80 to take care of that. They are not high interest earning, but neither are my "safe" savings. Since I was taking automatic monthly withdrawals from the "safe" investments anyway, for me these eliminated that need and these are automatic and safe. (And will simplify things for my wife when I can't handle things.) Actually, they are giving me more than I normally need, but I am and will be using that extra for some higher, not everyday needs, such as small vacations and not everyday dental/hearing/medical expenses, or just send them back to the investment pile (but that hasn't happened.). When they reach their full maturity in a couple of years, I may replace them with new fixed term policies. Meanwhile, my low stock allocation investments are still growing more than I am spending and giving away. :D
Appreciate your insight.
I take it that VFSTX (investor) makes up for the uneven, less than 50k, for VFSUX (admiral).
Question on the fixed term SPIA's. DW and I were looking at laddering in long term (till death) SPIA's but did not consider fixed term. Are there advantages to the fixed term SPIA's? And by 5 and 10 year do you mean duration of the SPIA's or period of time when they are laddered in?
Reason for asking is I have a substantial amount in "safe savings" and have been exploring ways to diversify within it as you have.
You have my attention.
Thanks for your help.
j :D
Sheepdog and others who have shared your thoughts here:

Would you consider VUSXX (Treasury money market) a place suitable for "safe savings"?

I'm trying to understand the need for SPIAs, bank CDs, etc which seem to increase complexity. Also, wouldn't there be significant credit risk with SPIAs?

Is there some risk I'm not seeing, to just putting the safe savings into VUSXX in one's Vanguard mutual fund account (not brokerage) and being done with it? (With no brokerage risks, there should be no SIPC insurance limits to worry about)

Thanks for your insights.

Anakin
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Re: I can't believe I am thinking this

Post by Sandtrap »

ooops. :oops:
Last edited by Sandtrap on Sun Jan 12, 2020 3:57 pm, edited 1 time in total.
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Re: I can't believe I am thinking this

Post by Sandtrap »

anakinskywalker wrote: Sun Jan 12, 2020 1:12 pm
Sandtrap wrote: Mon Oct 23, 2017 4:37 pm
Sheepdog wrote: Mon Oct 23, 2017 12:27 pm
Sandtrap wrote: Mon Oct 23, 2017 10:14 am
Short Term Investment Grade Bond Fund . . as in Vanguard VFSUX ?
Do you consider Vanguards money market, VMFXX to fit the category of "safe accounts"?

I'm not as versed in the practicalities of "fixed term" SPIA vs (forever with "mortality credits") non-fixed SPIA's
but I think that's another thread to post.
thanks,
j
Sandtrap,
My short term bond fund is (are) VFSTX and VFSUX (Admiral)

I'll make my comment on fixed term SPIAs rather than necessarily a new thread. I was taking monthly fixed amount withdrawals (occasionally more for a large expenditure). I decided to go to fixed term SPIAs (5 and 10 year) about age 80 to take care of that. They are not high interest earning, but neither are my "safe" savings. Since I was taking automatic monthly withdrawals from the "safe" investments anyway, for me these eliminated that need and these are automatic and safe. (And will simplify things for my wife when I can't handle things.) Actually, they are giving me more than I normally need, but I am and will be using that extra for some higher, not everyday needs, such as small vacations and not everyday dental/hearing/medical expenses, or just send them back to the investment pile (but that hasn't happened.). When they reach their full maturity in a couple of years, I may replace them with new fixed term policies. Meanwhile, my low stock allocation investments are still growing more than I am spending and giving away. :D
Appreciate your insight.
I take it that VFSTX (investor) makes up for the uneven, less than 50k, for VFSUX (admiral).
Question on the fixed term SPIA's. DW and I were looking at laddering in long term (till death) SPIA's but did not consider fixed term. Are there advantages to the fixed term SPIA's? And by 5 and 10 year do you mean duration of the SPIA's or period of time when they are laddered in?
Reason for asking is I have a substantial amount in "safe savings" and have been exploring ways to diversify within it as you have.
You have my attention.
Thanks for your help.
j :D
Sheepdog and others who have shared your thoughts here:

Would you consider VUSXX (Treasury money market) a place suitable for "safe savings"?

I'm trying to understand the need for SPIAs, bank CDs, etc which seem to increase complexity. Also, wouldn't there be significant credit risk with SPIAs?

Is there some risk I'm not seeing, to just putting the safe savings into VUSXX in one's Vanguard mutual fund account (not brokerage) and being done with it? (With no brokerage risks, there should be no SIPC insurance limits to worry about)

Thanks for your insights.

Anakin
Think of the various financial instruments as a toolbox with something in it for each need that arises.
And, that's different for everyone.
The variables being; age, size of assets, size and diversity of income streams, debt level, etc.
So, "complexity" is a relative term. What is complex to one person is not really if it addresses all his financial needs.
On the other hand, there's a point where things are made more complex than they need to be.

That said, there's a role for SPIA's, Treasury Money Market (I use for short term), CD's and CD ladders.

"Safe Savings" are emergency funds, short term funds (3-5 years), etc.
They can be put where there is:
1. Security of Principal
2. Liquidity
3. Accessibility.

I think, at present, FDIC insurance is $250,000 per account and per beneficiary. So, for example, if one had a trust account with 4 beneficiaries, that's 1 million. Also, if a brokered CD ladder, then $250k per institution/per CD. So, one can easily have $5 million over several brokerage accounts and have things FDIC insured. Depends on the setup.

You mentioned, why not put all of your "safe savings" in a treasury money market. Yes. Why not. If it is "safe savings" as defined above.

j :happy :happy
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by sport »

Sandtrap wrote: Sun Jan 12, 2020 3:57 pm Also, if a brokered CD ladder, then $250k per institution/per CD.
Are you sure about this? My understanding is that all the CDs at a given bank would be combined for FDIC insurance purposes, even if some of the CDs are at another broker or are direct CDs.
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Re: I can't believe I am thinking this

Post by smectym »

Appreciate your insight.
I take it that VFSTX (investor) makes up for the uneven, less than 50k, for VFSUX (admiral).
>>>>>Question on the fixed term SPIA's. DW and I were looking at laddering in long term (till death) SPIA's but did not consider fixed term. Are there >>>>>advantages to the fixed term SPIA's? And by 5 and 10 year do you mean duration of the SPIA's or period of time when they are laddered in?
Reason for asking is I have a substantial amount in "safe savings" and have been exploring ways to diversify within it as you have.
You have my attention.
Thanks for your help.

Just pitching in on fixed term SPIA vs. life: fixed term can be appropriate if the annuitant needs more money per month than a life SPIA would provide, but only for a fixed term of years.

A classic example would be, Joe retires at 60. Joe plans to start SS at 70. Joe funds a 10-year SPIA to bridge the gap. For the same capital outlay, the monthly income for the 10-year product of course will be much higher than if a 60-year-old takes a life SPIA.

You can always argue against the SPIA by suggesting the investor instead just leave the money in taxable to let it grow as the market grows, and take withdrawals as needed. Maybe. But the SPIA is a risk-shifting mechanism. Some investors want to off-load some of the risk. These same investors may have additional assets exposed to the risk markets.

It's a tool we have used successfully. We still are taking plenty of risk with other assets, but the predictable monthly checks coming does reduce overall market-related stress. In fact, derisking in some aspects of the portfolio can make the investor more comfortable with taking more risk elsewhere in the portfolio.

As the annuitant gets older, taking the fixed term makes less and less sense. Eventually, the insurance company will pay you more per month on a life SPIA than 10-year guaranteed. Can you guess why?
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by MadHungarian »

Don't scare me like this! For some reason i hadn't seen this thread before -- saw it & clicked on it for the first time today and read the OP's first post there without noticing the date. Then had to go check the market, saw everything was fine, and eventually noticed the OP date. Got my heart rate up for a minute there though...

Let's see, back in 2008-9, i was doing the same investment plan as today -- Vanguard total market index funds, auto investments, auto rebalancing.
Yes, my portfolio dropped by 40% for awhile, but I just ignored things for a couple years, didn't make any changes, and when i looked at it again a couple years later, everything had recovered fine, and the auto investing/balancing had even give me a nice little cherry on the cake as well.

Of course i'm a little older now and much closer to retirement, so i can't be so cavalier now as i was back when retirement was some distant undefined future event. So i've been slowly & gradually increasing my bond percentage. Despite the pain of the low bond rates. Sometimes i'm tempted to just drop everything into Vanguard Balanced Index and call it a day. Probably should've just done that 20+ years ago actually, but i don't think i could've handled the boredom.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Kevin M »

sport wrote: Sun Jan 12, 2020 4:00 pm
Sandtrap wrote: Sun Jan 12, 2020 3:57 pm Also, if a brokered CD ladder, then $250k per institution/per CD.
Are you sure about this? My understanding is that all the CDs at a given bank would be combined for FDIC insurance purposes, even if some of the CDs are at another broker or are direct CDs.
You are correct. What broker you hold a CD at has nothing to do with FDIC insurance coverage.

However, I believe that the ownership category of the brokerage account applies to the FDIC coverage for the owner(s) and the bank that issued the CD. So for a single owner of a trust or TOD brokerage account with four beneficiaries, for example, the owner's brokered CDs for a particular bank would be combined with any trust or POD accounts that owner might hold directly at the bank, for a total of up to $1M coverage in the revocable trust ownership category at that bank for that owner.

Kevin
If I make a calculation error, #Cruncher probably will let me know.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by anakinskywalker »

Thanks for the insights. Any pointers on how to buy SPIAs (can one buy them in a regular brokerage account) and some good recommended issuers, and any pointers on what financial health metrics to look for and where, would be much appreciated.

For example: for bank CDs all one needs to do is verify the bank's insurance on the FDIC website. What's the analogous set of checks to verify safety of SPIAs?

Many thanks,
Anakin
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Json »

I've been holding a 15% cash equivalent position for a long while. Lately I've been thinking about putting it to 'work' and have been looking at potential alternatives. Out of pure coincidence I stumbled upon this post.

All I can say is: Thank You Jim and everyone else who shared their struggles during such a difficult time. I'm sure that back in 2008 you could not have imagined that your post will end up being such a source of strength and inspiration all these years later.

As for my current cash position: it's fine the way it is.

PS: I hope this post never dies.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by manatee2005 »

Json wrote: Sun Jan 19, 2020 11:33 pm I've been holding a 15% cash equivalent position for a long while. Lately I've been thinking about putting it to 'work' and have been looking at potential alternatives. Out of pure coincidence I stumbled upon this post.

All I can say is: Thank You Jim and everyone else who shared their struggles during such a difficult time. I'm sure that back in 2008 you could not have imagined that your post will end up being such a source of strength and inspiration all these years later.

As for my current cash position: it's fine the way it is.

PS: I hope this post never dies.
They'll be reading this post after the great depression of 2237 and subsequent recovery.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Sheepdog »

Json wrote: Sun Jan 19, 2020 11:33 pm I've been holding a 15% cash equivalent position for a long while. Lately I've been thinking about putting it to 'work' and have been looking at potential alternatives. Out of pure coincidence I stumbled upon this post.

All I can say is: Thank You Jim and everyone else who shared their struggles during such a difficult time. I'm sure that back in 2008 you could not have imagined that your post will end up being such a source of strength and inspiration all these years later.

As for my current cash position: it's fine the way it is.

PS: I hope this post never dies.
Json, thank you for the Thank You.
So many people have contributed their knowledge and advice to this conversation over the years, not just me. I thank them all in making this thread continue to assist retirement investors, and especially in-retirement ones, in meeting their safe withdrawal needs during the next recession.
Good night.
Jim
Unless you try to do something beyond what you have already mastered you will never grow. (Ralph Waldo Emerson)
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Stef »

Did you keep track of your net worth?

Would be great to see how it progressed from 2007-2020.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Portfolio7 »

Stef wrote: Tue Jan 21, 2020 2:46 am Did you keep track of your net worth?

Would be great to see how it progressed from 2007-2020.
I'm sure you'll get many different perspectives, and divergence between accumulators and decumulators. As an accumulater, my retirement savings balance at the end of 2019 was 2.94 times what it was Dec 31 2007. From Dec 31 2008, it's up 3.16 times. Down years were 2008 and 2018.

NW is going to have wider dispersal for people depending on how they include homes and businesses. I include both, and our NW numbers more than tripled (3.17 and 3.54).

I too am interested about retirees who made it through the crash... are you recovered? Did your balances bounce back?
"An investment in knowledge pays the best interest" - Benjamin Franklin
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by retiredjg »

Portfolio7 wrote: Tue Jan 21, 2020 4:13 am I too am interested about retirees who made it through the crash... are you recovered? Did your balances bounce back?
Recovered? Yes.

Bounce back? Not even close. :shock:

I happened to retire just a few months before the mess started so I was in withdrawal throughout the whole thing. My withdrawal rate was pretty low, but it took my portfolio years to get back to where it had been. This was frustrating because people who were in accumulatioin phase were talking about recovery much much sooner than I was.

I didn't sell (other than for expenses) but I also didn't rebalance all the way down because I didn't really know the importance of doing that at the time. Some (a lot?) of my slow recovery was probably due to having a lowered percentage of stocks when the market started regaining value. Next time, I will know better and maintain my stock percentage all the way down.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Sheepdog »

Stef wrote: Tue Jan 21, 2020 2:46 am Did you keep track of your net worth?

Would be great to see how it progressed from 2007-2020.
Yes, I have kept track of my net worth.
I retired in 1998 (age 65) and when retired I began to reduce my stock allocation gradually from 56% using the "age in bonds" formula (the 2000-02 market drop helped). By 12/31/2007 (age 74) I had reduced my stock allocation to 26% where it basically remained. (Today. it is 27%.)

Since 12/31/2007 to 12/31/2019, my average annual investment withdrawal percentage was 4.49%.
Compared to the end of 2007 my investment balance is up 10.1%. Compared to the end of 2008, though, (after the market drop had finished), my investment balance is up 12.5%.

Jim

(corrected a gross inventory error calculation)
Last edited by Sheepdog on Tue Jan 21, 2020 7:15 am, edited 1 time in total.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by tibbitts »

retiredjg wrote: Tue Jan 21, 2020 6:33 am
Portfolio7 wrote: Tue Jan 21, 2020 4:13 am I too am interested about retirees who made it through the crash... are you recovered? Did your balances bounce back?
Recovered? Yes.

Bounce back? Not even close. :shock:

I happened to retire just a few months before the mess started so I was in withdrawal throughout the whole thing. My withdrawal rate was pretty low, but it took my portfolio years to get back to where it had been. This was frustrating because people who were in accumulatioin phase were talking about recovery much much sooner than I was.

I didn't sell (other than for expenses) but I also didn't rebalance all the way down because I didn't really know the importance of doing that at the time. Some (a lot?) of my slow recovery was probably due to having a lowered percentage of stocks when the market started regaining value. Next time, I will know better and maintain my stock percentage all the way down.
Many if not most reasonable rebalancing strategies would have run out of money before what turned out to be the bottom. Plus you would have been dealing with that Plan B threshold that nobody talks about any more. I don't think you can say you would "know better" or certainly behave differently next time, unless you have accumulated so much wealth that it truly doesn't matter to your lifestyle now. There would be no guarantee of a recovery, certainly during your lifetime.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by retiredjg »

tibbitts wrote: Tue Jan 21, 2020 6:51 am Many if not most reasonable rebalancing strategies would have run out of money before what turned out to be the bottom.
Hmmm. I had a pretty good chunk of bonds at the time. Doesn't seem like I would have run out but maybe I'm not really understanding how things really work way down there still approaching the bottom. At that point, the only thing I knew was "don't sell out in a crash" and I didn't.

I don't think you can say you would "know better" or certainly behave differently next time, unless you have accumulated so much wealth that it truly doesn't matter to your lifestyle now. There would be no guarantee of a recovery, certainly during your lifetime.
Well, that part made me laugh! No chance of that kind of accumulation. And you may be right. Maybe I won't behave differently next time, but at least I'll know to consider rebalancing next time.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by rascott »

tibbitts wrote: Tue Jan 21, 2020 6:51 am
retiredjg wrote: Tue Jan 21, 2020 6:33 am
Portfolio7 wrote: Tue Jan 21, 2020 4:13 am I too am interested about retirees who made it through the crash... are you recovered? Did your balances bounce back?
Recovered? Yes.

Bounce back? Not even close. :shock:

I happened to retire just a few months before the mess started so I was in withdrawal throughout the whole thing. My withdrawal rate was pretty low, but it took my portfolio years to get back to where it had been. This was frustrating because people who were in accumulatioin phase were talking about recovery much much sooner than I was.

I didn't sell (other than for expenses) but I also didn't rebalance all the way down because I didn't really know the importance of doing that at the time. Some (a lot?) of my slow recovery was probably due to having a lowered percentage of stocks when the market started regaining value. Next time, I will know better and maintain my stock percentage all the way down.
Many if not most reasonable rebalancing strategies would have run out of money before what turned out to be the bottom. Plus you would have been dealing with that Plan B threshold that nobody talks about any more. I don't think you can say you would "know better" or certainly behave differently next time, unless you have accumulated so much wealth that it truly doesn't matter to your lifestyle now. There would be no guarantee of a recovery, certainly during your lifetime.


How does a rebalancing strategy run out of money?

Even if you were down to the last $100 in your portfolio.... you could still rebalance to 60/40 (or whatever). Maybe I'm not following what you mean.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by jeffyscott »

rascott wrote: Tue Jan 21, 2020 8:44 am
tibbitts wrote: Tue Jan 21, 2020 6:51 am
retiredjg wrote: Tue Jan 21, 2020 6:33 am
Portfolio7 wrote: Tue Jan 21, 2020 4:13 am I too am interested about retirees who made it through the crash... are you recovered? Did your balances bounce back?
Recovered? Yes.

Bounce back? Not even close. :shock:

I happened to retire just a few months before the mess started so I was in withdrawal throughout the whole thing. My withdrawal rate was pretty low, but it took my portfolio years to get back to where it had been. This was frustrating because people who were in accumulatioin phase were talking about recovery much much sooner than I was.

I didn't sell (other than for expenses) but I also didn't rebalance all the way down because I didn't really know the importance of doing that at the time. Some (a lot?) of my slow recovery was probably due to having a lowered percentage of stocks when the market started regaining value. Next time, I will know better and maintain my stock percentage all the way down.
Many if not most reasonable rebalancing strategies would have run out of money before what turned out to be the bottom. Plus you would have been dealing with that Plan B threshold that nobody talks about any more. I don't think you can say you would "know better" or certainly behave differently next time, unless you have accumulated so much wealth that it truly doesn't matter to your lifestyle now. There would be no guarantee of a recovery, certainly during your lifetime.


How does a rebalancing strategy run out of money?

Even if you were down to the last $100 in your portfolio.... you could still rebalance to 60/40 (or whatever). Maybe I'm not following what you mean.
I guess the question would be what is a "reasonable rebalancing strategy", given that there is no guarantee that the stock market will always recover within the time frame that you would need it to recover.

I maintained ~50% stock throughout 2008-09, but did have a limit. Because I was 6-8 years from retirement, I would not have risked the money needed to ensure that early retirement plan. I was able to include future savings and pension in determining that, my job was safe and pension was funded. So I had determined a minimum amount needed/desired to bridge the gap from retirement age to at least age 62.

Now retired and at 40% stock, I currently have a semi-arbitrary limit that I will not go below $X in cash/bonds. As of now, this would only allow about 13% of assets to be moved into stock and that amount is about 1/3 of the current stock allocation.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by zwzhang »

I would not have risked the money needed to ensure that early retirement plan. I was able to include future savings and pension in determining that, my job was safe and pension was funded. So I had determined a minimum amount needed/desired to bridge the gap from retirement age to at least age 62.
We have a similar strategy. We will keep 30 year's amount we will need to withdraw for live expenses, after counting pension and SS(CPP & OAS in Canada), in safer money like bond, CD and cash. And invest the money beyond in a 80/20 portfolio (20% fixed income is dry powder to buy more stock in a deep market downturn.)

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Portfolio7 »

retiredjg wrote: Tue Jan 21, 2020 7:18 am
tibbitts wrote: Tue Jan 21, 2020 6:51 am Many if not most reasonable rebalancing strategies would have run out of money before what turned out to be the bottom.
Hmmm. I had a pretty good chunk of bonds at the time. Doesn't seem like I would have run out but maybe I'm not really understanding how things really work way down there still approaching the bottom. At that point, the only thing I knew was "don't sell out in a crash" and I didn't.

I don't think you can say you would "know better" or certainly behave differently next time, unless you have accumulated so much wealth that it truly doesn't matter to your lifestyle now. There would be no guarantee of a recovery, certainly during your lifetime.
Well, that part made me laugh! No chance of that kind of accumulation. And you may be right. Maybe I won't behave differently next time, but at least I'll know to consider rebalancing next time.
The problem with investing is the number of one time events(!) About the time you figure out how to respond to a situation, something completely different comes along... anyways, I'm glad you seem to be doing well, despite the 2008. Thanks for sharing your story.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by retiredjg »

rascott wrote: Tue Jan 21, 2020 8:44 am How does a rebalancing strategy run out of money?

Even if you were down to the last $100 in your portfolio.... you could still rebalance to 60/40 (or whatever). Maybe I'm not following what you mean.
I think that was tibbitts' point - rebalancing all the way down may have resulted in losing money that I could not have afforded to lose and might never get back or may not get back soon enough.

I suppose if one is going to rebalance on the way down, there needs to be a limit - "I will maintain ___ in bonds no matter what". It was awhile ago and maybe that was in my sub-conscious, but I'm pretty sure it was not in my conscious thinking. I just concentrated on not selling stocks.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Sheepdog »

Perhaps it is time to reintroduce this 2008 post and the continued contributions from this group over the last decade plus. It hurt then, but it is nice to be cool today because of what was learned since.
Unless you try to do something beyond what you have already mastered you will never grow. (Ralph Waldo Emerson)
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by NearlyRetired »

Sheepdog wrote: Wed Feb 26, 2020 6:57 am Perhaps it is time to reintroduce this 2008 post and the continued contributions from this group over the last decade plus. It hurt then, but it is nice to be cool today because of what was learned since.
Funnily enough Sheepdog I was thinking about this thread when the others around current market movements popped up. I wonder what the BH's who went through the 07-09 crisis are thinking about the current market volatility - although this is (currently) no where near as severe
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Call_Me_Op »

NearlyRetired wrote: Wed Feb 26, 2020 7:01 am
Sheepdog wrote: Wed Feb 26, 2020 6:57 am Perhaps it is time to reintroduce this 2008 post and the continued contributions from this group over the last decade plus. It hurt then, but it is nice to be cool today because of what was learned since.
Funnily enough Sheepdog I was thinking about this thread when the others around current market movements popped up. I wonder what the BH's who went through the 07-09 crisis are thinking about the current market volatility - although this is (currently) no where near as severe
One thing I learned from 2008 is you should expect that a major market downturn could happen at any time, and your portfolio should be constructed accordingly.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Call_Me_Op »

NearlyRetired wrote: Wed Feb 26, 2020 7:01 am
Sheepdog wrote: Wed Feb 26, 2020 6:57 am Perhaps it is time to reintroduce this 2008 post and the continued contributions from this group over the last decade plus. It hurt then, but it is nice to be cool today because of what was learned since.
Funnily enough Sheepdog I was thinking about this thread when the others around current market movements popped up. I wonder what the BH's who went through the 07-09 crisis are thinking about the current market volatility - although this is (currently) no where near as severe
One thing I learned from 2008 is you should expect that a major market downturn could happen at any time, and your portfolio should be constructed accordingly.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by retiredjg »

NearlyRetired wrote: Wed Feb 26, 2020 7:01 am Funnily enough Sheepdog I was thinking about this thread when the others around current market movements popped up. I wonder what the BH's who went through the 07-09 crisis are thinking about the current market volatility - although this is (currently) no where near as severe
I suspect that most are not thinking much of anything.

This kind of thing happens all the time. It might be the beginning of something. It might not. We'll have to check back in a year or so and see.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by jeffyscott »

retiredjg wrote: Wed Feb 26, 2020 7:25 am
NearlyRetired wrote: Wed Feb 26, 2020 7:01 am Funnily enough Sheepdog I was thinking about this thread when the others around current market movements popped up. I wonder what the BH's who went through the 07-09 crisis are thinking about the current market volatility - although this is (currently) no where near as severe
I suspect that most are not thinking much of anything.

This kind of thing happens all the time. It might be the beginning of something. It might not. We'll have to check back in a year or so and see.
Yep, not much, other than deciding when to do some more Roth conversions and maybe selling some taxable investments a little earlier than I otherwise would.

I'm a lot more concerned about the expectation that something like 70% of people will get this new disease and the current death rate is 1-2%, than I am about anything financial.
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by NearlyRetired »

jeffyscott wrote: Wed Feb 26, 2020 7:50 am
retiredjg wrote: Wed Feb 26, 2020 7:25 am
NearlyRetired wrote: Wed Feb 26, 2020 7:01 am Funnily enough Sheepdog I was thinking about this thread when the others around current market movements popped up. I wonder what the BH's who went through the 07-09 crisis are thinking about the current market volatility - although this is (currently) no where near as severe
I suspect that most are not thinking much of anything.

This kind of thing happens all the time. It might be the beginning of something. It might not. We'll have to check back in a year or so and see.
Yep, not much, other than deciding when to do some more Roth conversions and maybe selling some taxable investments a little earlier than I otherwise would.

I'm a lot more concerned about the expectation that something like 70% of people will get this new disease and the current death rate is 1-2%, than I am about anything financial.
My emphasis, but I agree, that is the more troubling aspect - the markets will rebound at some point. Besides which, if things take a dive, then I am expecting expenses to be less as well ....
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Johnsson »

Sheepdog wrote: Wed Feb 26, 2020 6:57 am Perhaps it is time to reintroduce this 2008 post and the continued contributions from this group over the last decade plus. It hurt then, but it is nice to be cool today because of what was learned since.
I've read through maybe a third of this thread and have a question...

While DW and I have been through several downturns since starting out in the mid-80s (with an AA of 100/0), we've never been so close to retiring (hopefully in 10ish months)... If you don't mind me asking, what multiple of expenses did you have before the 2008-9 plunge? It's probably in the thread but I didn't see it. I believe we're in a safe place with our current AA (55/45), but would like to consider what you went through in context.

Thank you for sharing your situation and thoughts!!
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by fredflinstone »

Best Boglehead thread ever?
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by alpine_boglehead »

fredflinstone wrote: Thu Feb 27, 2020 4:31 pm Best Boglehead thread ever?
One of the best at least (Market Timer's thread also comes to mind). It's an honor to post here. :D

It really helps to have been reading threads like this when the going gets a bit rough. Thanks to all who contributed to it.
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