At what point would you stop investing in stocks altogether?
At what point would you stop investing in stocks altogether?
We all know to “stay the course”, that the “market always recovers”, and long-term equity investors are rewarded. I am personally bought into that because I don’t see a lot of other alternatives to VTSAX that allow for truly passive and tax efficient returns. I have well over $1 million in VTSAX, and I keep contributing. Some really crazy and catastrophic things can happen, and those end up being some great times to buy the market. I am betting on the US market and economy over the long term. I wish I was more creative and had some cool business that could generate income for me (and my children’s children) through thick and thin so that I didn’t have to really think about investing in corporations that I have no interest or stake in, other than to give me market returns. So for me, I’m staying invested, and there really isn’t much that would deviate me from that plan.
But I’m trying to be honest with myself, at what point is it not a good strategy? What would it take for me to stop? I hate being locked into a strategy (if it’s not going to work), even if it has been very successful over the last 100+ years over the long term. I have every hoping expectation real returns will continue. This is even despite my disdain for many of these companies, falling birth rates, lack of participation in the workforce, growing international and domestic tensions, banking and money system uncertainty, rising debt, etc, etc. I guess my trigger would be if, for some reason, I could not access my money or sell my investments. If I felt like the brokers weren’t giving me control, and my money was locked in, it would make me lose trust in the institution, and probably the system as a whole. At that point, tbh, I would wish I had other means of investment income.
Questions for you:
Be honest: Is there ever a point when you would stop investing in equities completely (ie hold no more stocks)? Are you committed pretty much no matter what? Some people can’t stomach the market, that’s why they aren’t in it, and that’s a pretty reasonable and understandable position. Some don’t need to take the risk. But unless you are a business owner, or have other means of income, the alternatives to equities don’t look that great either (cash, bonds, PMs). Diversification becomes key, but what do you diversify to?
What would you invest in if you could not invest in VTSAX or the like? For me probably real estate and some gold (95/5?) if I couldn’t invest in equities, or starting a business, but those options aren’t really passive.
Here’s to many more years of returns for the US market (and the global economy).
But I’m trying to be honest with myself, at what point is it not a good strategy? What would it take for me to stop? I hate being locked into a strategy (if it’s not going to work), even if it has been very successful over the last 100+ years over the long term. I have every hoping expectation real returns will continue. This is even despite my disdain for many of these companies, falling birth rates, lack of participation in the workforce, growing international and domestic tensions, banking and money system uncertainty, rising debt, etc, etc. I guess my trigger would be if, for some reason, I could not access my money or sell my investments. If I felt like the brokers weren’t giving me control, and my money was locked in, it would make me lose trust in the institution, and probably the system as a whole. At that point, tbh, I would wish I had other means of investment income.
Questions for you:
Be honest: Is there ever a point when you would stop investing in equities completely (ie hold no more stocks)? Are you committed pretty much no matter what? Some people can’t stomach the market, that’s why they aren’t in it, and that’s a pretty reasonable and understandable position. Some don’t need to take the risk. But unless you are a business owner, or have other means of income, the alternatives to equities don’t look that great either (cash, bonds, PMs). Diversification becomes key, but what do you diversify to?
What would you invest in if you could not invest in VTSAX or the like? For me probably real estate and some gold (95/5?) if I couldn’t invest in equities, or starting a business, but those options aren’t really passive.
Here’s to many more years of returns for the US market (and the global economy).
Last edited by TinyHouse on Sun Apr 02, 2023 9:59 pm, edited 2 times in total.
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Re: At what point would you stop investing in stocks?
I have said on BH that my plan is to keep my fixed income investments and just add to equities (VTSAX and VXUS) with all new money. Recently, I got tired of the market being down (in addition to our mutual funds, we have unvested shares in my wife’s employer) most days, and I put her most recent vested company shares into a Massachusetts Municipal Fund.
There! I confessed! I feel better now. I will start investing in equities again shortly.
There! I confessed! I feel better now. I will start investing in equities again shortly.
I get the FI part but not the RE part of FIRE.
Re: At what point would you stop investing in stocks?
Poor performance would NOT be a reason for me to stop investing in equities. Whether the market drops 50%, 90%, or 99%, those are sunk costs, and the market will price itself such that forward looking expected returns are positive.
Demographic or technological gloom on the horizon is also no reason. The market prices in gloom and tries to price itself such that forward looking returns are positive.
I feel like the only two reasons I'd stop investing in the stock market is if:
1. A better alternative appears (that is, the whole nature of our economy and finance changes such that "stocks" are no longer the best vehicle to capture human productivity)
2. The stock market is corrupted somehow (controlled by factors such that it no longer prices itself according to expected future returns, but according to some other metric)
Demographic or technological gloom on the horizon is also no reason. The market prices in gloom and tries to price itself such that forward looking returns are positive.
I feel like the only two reasons I'd stop investing in the stock market is if:
1. A better alternative appears (that is, the whole nature of our economy and finance changes such that "stocks" are no longer the best vehicle to capture human productivity)
2. The stock market is corrupted somehow (controlled by factors such that it no longer prices itself according to expected future returns, but according to some other metric)
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Re: At what point would you stop investing in stocks?
If I had more than $10 million in today's dollars I wouldn't stop investing in stocks, but would probably make things like gold and real estate a sizable part of the portfolio. Because I wouldn't need the high return anymore as much as I'd need the non-correlation.
That will never happen. I don't see any other game in town better for me than stocks.
What you said about not being able to access/control your portfolio was interesting. If that were the case I too would not want the investment. Same would apply to bank accounts that started limiting my abilities, I'd find some other way to store the value. There are thousands of things that hold their value with time. To give an random example, plant a bunch of black walnut trees and you'll stand to make a lot of money when they mature and you sell them for their wood.
That will never happen. I don't see any other game in town better for me than stocks.
What you said about not being able to access/control your portfolio was interesting. If that were the case I too would not want the investment. Same would apply to bank accounts that started limiting my abilities, I'd find some other way to store the value. There are thousands of things that hold their value with time. To give an random example, plant a bunch of black walnut trees and you'll stand to make a lot of money when they mature and you sell them for their wood.
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Re: At what point would you stop investing in stocks?
This is a good point.. the richer you get, the more sense it makes to branch out. If I had 10 million I'd probably start oozing into things like gold, or even things like bullets and fallout shelters. Not because I expect a collapse, but because a collapse would be the only thing that could stop me, so why not plan for it?homebuyer6426 wrote: ↑Thu Mar 23, 2023 11:03 am If I had more than $10 million in today's dollars I wouldn't stop investing in stocks, but would probably make things like gold and real estate a sizable part of the portfolio. Because I wouldn't need the high return anymore as much as I'd need the non-correlation.
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Re: At what point would you stop investing in stocks?
I would never stop investing in stocks, but I will and have changed the percentage of stocks in my portfolio
When I retire if I make my goal for instance, I plan on drastically cutting my equity investments. I will take out probably around 30% for a social security ladder (fixed income) and buy an annuity with probably around 40% of my portfolio.
But the remaining 30% will be heavily tilted to equity
When I retire if I make my goal for instance, I plan on drastically cutting my equity investments. I will take out probably around 30% for a social security ladder (fixed income) and buy an annuity with probably around 40% of my portfolio.
But the remaining 30% will be heavily tilted to equity
Re: At what point would you stop investing in stocks?
If I had about 100x expenses I'd bottom out my stock allocation to 20% stocks/80% bonds or maybe 30/70. Maybe I'd get there sooner than 100x. I'm not close to that now!
Re: At what point would you stop investing in stocks?
There have been several threads that discussed a maximum in Fixed income then rest in equities. I personally don't subscribe to that school of thought.
Instead, I have a somewhat arbitrary maximum that I am willing to lose (but I definitely wouldn't be happy about it). Although I haven't written it down in my IPS yet, mentally I've taken that number and doubled it (representing a 50% loss in value) and it has become my arbitrary maximum allowed in Equities. I may never get there, but if I do, it will act as a barrier to force me to increase my FI allocation to a more, age-appropriate level. This is not stopping investments in equities, but an upper barrier on equity risk I'm willing to take.
Instead, I have a somewhat arbitrary maximum that I am willing to lose (but I definitely wouldn't be happy about it). Although I haven't written it down in my IPS yet, mentally I've taken that number and doubled it (representing a 50% loss in value) and it has become my arbitrary maximum allowed in Equities. I may never get there, but if I do, it will act as a barrier to force me to increase my FI allocation to a more, age-appropriate level. This is not stopping investments in equities, but an upper barrier on equity risk I'm willing to take.
"Better is the enemy of good." Good is good.
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Re: At what point would you stop investing in stocks?
If a better alternative appeared, I would invest in that. Right now, something better coming would be a black swan.
Otherwise, I just invest in a three fund portfolio according to my asset allocation.
It probably helps that I waited to retire until I had enough money to deal with contingencies. Having money in the bank makes it easier to deal with her market noise.
Otherwise, I just invest in a three fund portfolio according to my asset allocation.
It probably helps that I waited to retire until I had enough money to deal with contingencies. Having money in the bank makes it easier to deal with her market noise.
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Re: At what point would you stop investing in stocks?
Not buying gold or fallout shelters, but have invested in solar/batteries/generators to the extent that I think I could survive for months without much sunshine or propane deliveries. Does that count?Tamalak wrote: ↑Thu Mar 23, 2023 11:04 amThis is a good point.. the richer you get, the more sense it makes to branch out. If I had 10 million I'd probably start oozing into things like gold, or even things like bullets and fallout shelters. Not because I expect a collapse, but because a collapse would be the only thing that could stop me, so why not plan for it?homebuyer6426 wrote: ↑Thu Mar 23, 2023 11:03 am If I had more than $10 million in today's dollars I wouldn't stop investing in stocks, but would probably make things like gold and real estate a sizable part of the portfolio. Because I wouldn't need the high return anymore as much as I'd need the non-correlation.
I get the FI part but not the RE part of FIRE.
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Re: At what point would you stop investing in stocks?
There is little reason why a person would be recommended to have no equities if there is a considerable investment timeframe. If the goal is to reduce long-term risks, then some amount of equities is required.TinyHouse wrote: ↑Thu Mar 23, 2023 10:44 am Be honest: Is there ever a point when you would stop investing in equities? Are you committed pretty much no matter what? Some people can’t stomach the market, that’s why they aren’t in it, and that’s a pretty reasonable and understandable position. Some don’t need to take the risk. But unless you are a business owner, or have other means of income, the alternatives to equities don’t look that great either (cash, bonds, PMs). Diversification becomes key, but what do you diversify to?
Not to mention, owning a business is equity; running a rental is a business. Just because it is not marketable does not change the facts.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Re: At what point would you stop investing in stocks?
If I accept that TIPS will do a reasonably good job mirroring the inflation over the remainder of my life, believe that I have done a fairly good job estimating future expenses and assume I won't turn out to be an immortal I no longer need to invest in stocks yet I still invest in stocks. So I guess currently I don't ever foresee that being the case for me.
More and more I think so much of what people are doing comes down to their personal Need, Willingness and Ability equation. You sound as though you either are or see it as superior to be Unwilling so you are looking for alternatives to participating in the markets. Good hunting.
More and more I think so much of what people are doing comes down to their personal Need, Willingness and Ability equation. You sound as though you either are or see it as superior to be Unwilling so you are looking for alternatives to participating in the markets. Good hunting.
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Re: At what point would you stop investing in stocks?
Ill be investing as long as i have a job. The odds of staying employed to the point of the economy completely collapsing are pretty low.
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Re: At what point would you stop investing in stocks?
Not to derail the thread (since it's about equities), I've basically settled on a combo. That is, fixed income of the lesser of my age - 13% or 10 years of expenses without discounting for anticipated dividends, but no less than 25% of my total net worth.
MAX(MIN(age - 13%, 10x spend),25%)
At the moment, the 25% minimum is the limiter, barely. I don't really have a rational basis for the 25% minimum, other than I think the Trinity study assumed equities of 25%-75%. But, these days, I oscillate between "I wish I had more stock" and "thank god I don't have more stock" multiple times throughout the day, so it's probably about right. Also, I'd like to retire soon.
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Re: At what point would you stop investing in stocks?
Take all money out of equities? I suppose if the stock market went away entirely due to social collapse or some superseding technology.
Re: At what point would you stop investing in stocks?
I would not stop investing in equities under any circumstance.TinyHouse wrote: ↑Thu Mar 23, 2023 10:44 am
Questions for you:
Be honest: Is there ever a point when you would stop investing in equities? Are you committed pretty much no matter what? Some people can’t stomach the market, that’s why they aren’t in it, and that’s a pretty reasonable and understandable position. Some don’t need to take the risk. But unless you are a business owner, or have other means of income, the alternatives to equities don’t look that great either (cash, bonds, PMs). Diversification becomes key, but what do you diversify to?
If I had 25x expenses saved, I'd want my portfolio to grow more because my "number" is higher
If I had >= 50x expenses, I could probably go to 100% TIPs and be completely "safe", but I'd want to keep some equities then to just accumulate more and potentially donate more upon death, or fund some initiative
Crom laughs at your Four Winds
Re: At what point would you stop investing in stocks?
I'll stop having stocks when they pry my cold dead fingers from the share certificates. Seriously, I agree with other posts a stock allocation might reasonably get pretty small where there are sufficient assets and time horizon gets quite short. But, time horizon doesn't necessarily ever get short if you want to dual maximize own welfare and that of heirs: they're likely to have significant time left as long as you're around. I also agree that above certain asset levels alternatives become more practical (eg. there's some level where investing in small real estate and/or land around the world using 'your people' to do it a reasonable cost may become an attractive way to diversify further) but those things wouldn't cause you to abandon publicly traded stock.
The reality BTW is no guarantee whatsoever of good returns for stocks over any time horizon. I accept that reality but still have a lot of stocks.
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Re: At what point would you stop investing in stocks?
Assuming some of the equities are in taxable, converting to 100% TIPS would probably be very expensive via LTCG.
I get the FI part but not the RE part of FIRE.
Re: At what point would you stop investing in stocks?
Sure -- this is just a hypothetical scenario. I would not actually sell and move to TIPsTomatoTomahto wrote: ↑Thu Mar 23, 2023 12:15 pmAssuming some of the equities are in taxable, converting to 100% TIPS would probably be very expensive via LTCG.
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Re: At what point would you stop investing in stocks?
I didn't have 2 nickels to rub together when I was 40, I got my first job with a 401k plan about 30 years ago. I put 15% of my salary into the only stock fund available, the $6,000 I put in the first year (still in the stock market, now in an s&p 500 index fund) has grown to about 112,000 dollars. I felt I needed to be more aggressive back then to catch up, I am still more aggressive than most. I have ridden out all the drops in the market (dot com crash, 2008-2009 crash, March of 2020, …). I believe in America and I believe the stock market here will continue to do well, but no guarantees.
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Re: At what point would you stop investing in stocks?
There is no point in which I would not have some percentage in stocks. I’m retired so I don’t have any new money other than from dividends, capital gain distributions, and RMD’s (what's left after taxes & charitable gifting). I move those monies into bonds or a cash account (such as a money market). I’m 78 and I’m in the 24% marginal tax bracket, which means those monies would be taxed at the lower 15% tax rate. In most instances I'd avoid paying any taxes on those gains by passing them onto my heirs who will get the stepped-up cost basis. I do however do tax loss harvesting to offset some of those LTCG's in stocks.TinyHouse wrote: ↑Thu Mar 23, 2023 10:44 am
]Questions for you:[/b]
Be honest[/b]: Is there ever a point when you would stop investing in equities? Are you committed pretty much no matter what? Some people can’t stomach the market, that’s why they aren’t in it, and that’s a pretty reasonable and understandable position. Some don’t need to take the risk. But unless you are a business owner, or have other means of income, the alternatives to equities don’t look that great either (cash, bonds, PMs). Diversification becomes key, but what do you diversify to?
What would you invest in if you could not invest in VTSAX or the like? For me probably real estate and some gold (95/5?) if I couldn’t invest in equities, or starting a business, but those options aren’t really passive.
Here’s to many more years of returns for the US market (and the global economy).
P.S. I never invested in gold or real estate. At one time I invested in a REIT index fund but no more.
Last edited by minesweep on Thu Mar 23, 2023 12:45 pm, edited 2 times in total.
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Re: At what point would you stop investing in stocks?
Same as it ever was
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Re: At what point would you stop investing in stocks?
TinyHouse:
When I started investing in 1950 the S&P stocks were priced at 20. Today the S&P stock index is 3,985.
History tells us that those of us who stay invested in the stock market through thick and thin will prevail. Currently, stocks are on-sale.
Stay the course.
Taylor
When I started investing in 1950 the S&P stocks were priced at 20. Today the S&P stock index is 3,985.
History tells us that those of us who stay invested in the stock market through thick and thin will prevail. Currently, stocks are on-sale.
Stay the course.
Taylor
Jack Bogle's Words of Wisdom: "Put money in a stock market index fund and you balance it out with some bonds, depending on age and so on, and don’t look at it for 50 years. But when you retire, open the envelope. Be sure a doctor is nearby to revive you. You’ll go into a dead faint; you won’t believe there’s that much money in the world.”
"Simplicity is the master key to financial success." -- Jack Bogle
Re: At what point would you stop investing in stocks?
The Shiller PE ratio is twice the historic average and guaranteed investments like CDs are paying over 5%. I am not saying to get out of stocks, but reducing the amount of holdings as the risk-free rates rise makes sense. In the late 1970s and early 1980s the best play was to be fully in bonds. They far outperformed stocks right up to the GFC.Taylor Larimore wrote: ↑Thu Mar 23, 2023 12:53 pm TinyHouse:
When I started investing in 1950 the S&P stocks were priced at 20. Today the S&P stock index is 3,985.
History tells us that those of us who stay invested in the stock market through thick and thin will prevail. Currently, stocks are on-sale.
Stay the course.
TaylorJack Bogle's Words of Wisdom: "Put money in a stock market index fund and you balance it out with some bonds, depending on age and so on, and don’t look at it for 50 years. But when you retire, open the envelope. Be sure a doctor is nearby to revive you. You’ll go into a dead faint; you won’t believe there’s that much money in the world.”
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Re: At what point would you stop investing in stocks?
TinyHouse, you're nowhere near the point of stopping investing in stocks. In fact, it sounds as if you're relatively young so this is the very best time to be investing in equities. Make a plan you can live with and stick with it.
Those of us living through the 2008-2009 meltdown and varying levels of comfort and missteps. The best course of action was to continue buying equities as they slid to keep your asset allocation where you wanted it to be--the plunge was severe enough that many of us sold fixed income to do that because new money was not sufficient to keep the AA at goal. The second best action was to contribute new money to equities but not sell fixed income as your asset allocation became significant out of whack. The third best action was to do nothing and just watch. The fourth, and worst, action was to sell equities altogether.
Those of us living through the 2008-2009 meltdown and varying levels of comfort and missteps. The best course of action was to continue buying equities as they slid to keep your asset allocation where you wanted it to be--the plunge was severe enough that many of us sold fixed income to do that because new money was not sufficient to keep the AA at goal. The second best action was to contribute new money to equities but not sell fixed income as your asset allocation became significant out of whack. The third best action was to do nothing and just watch. The fourth, and worst, action was to sell equities altogether.
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Re: At what point would you stop investing in stocks?
the question you ask is of an either/or, all/nothing, black/white type of question. It's a "when to get (all) out of equities".TinyHouse wrote: ↑Thu Mar 23, 2023 10:44 am Questions for you:
Be honest: Is there ever a point when you would stop investing in equities? Are you committed pretty much no matter what? Some people can’t stomach the market, that’s why they aren’t in it, and that’s a pretty reasonable and understandable position. Some don’t need to take the risk. But unless you are a business owner, or have other means of income, the alternatives to equities don’t look that great either (cash, bonds, PMs). Diversification becomes key, but what do you diversify to?
What would you invest in if you could not invest in VTSAX or the like? For me probably real estate and some gold (95/5?) if I couldn’t invest in equities, or starting a business, but those options aren’t really passive.
Here’s to many more years of returns for the US market (and the global economy).
You're posing the question that people might not want to be in equities if they're down, but I don't see you asking the opposite: is there some price (really really really high, like Japan 1990) where it doesn't make sense to own stocks.
Thing is, if you have an allocation (read: plan) you have a mix of risky (stock) assets and safe (fixed income) assets.
When markets go deep down (your example), yes you'd be buying stocks on the cheap (with the fixed income money that's become a larger part of your portfolio than desired)...to rebalance back to your predetermined AA.
Similarly, when markets go to the moon (my example), you'd be selling stocks (and buying fixed income since they've become a smaller part of your portfolio than desired)...to rebalance back to your predetermined AA.
Everything else is market timing.
Do you have a plan?
Are you following it: Investment Policy Statement
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Re: At what point would you stop investing in stocks?
When the long term TIPS real rate hits 3%
Re: At what point would you stop investing in stocks?
When you hit a certain age and have enough money that you don’t need stocks and are tired of the ups and downs.
K.I.S.S........so easy to say so difficult to do.
Re: At what point would you stop investing in stocks?
Totally agree, and thank you for answering the questions in the OPTamalak wrote: ↑Thu Mar 23, 2023 10:55 am Poor performance would NOT be a reason for me to stop investing in equities. Whether the market drops 50%, 90%, or 99%, those are sunk costs, and the market will price itself such that forward looking expected returns are positive.
Demographic or technological gloom on the horizon is also no reason. The market prices in gloom and tries to price itself such that forward looking returns are positive.
I feel like the only two reasons I'd stop investing in the stock market is if:
1. A better alternative appears (that is, the whole nature of our economy and finance changes such that "stocks" are no longer the best vehicle to capture human productivity)
2. The stock market is corrupted somehow (controlled by factors such that it no longer prices itself according to expected future returns, but according to some other metric)
Re: At what point would you stop investing in stocks?
Right, that makes sense, and I respect people who don’t need or want to be in the market anymore. Very valid for many reasons. My parents are in a similar place to what you describe above, but they have decided to stay at least somewhat invested in equities
Re: At what point would you stop investing in stocks?
The question "At what point would you stop investing in stocks?" can be interpreted in two ways:
(1) When you would stop buying (new) stocks and stock funds?
(2) When you would you sell all your (existing) stocks and stock funds?
The answer to interpretation-1 depends on one's glide path and the distinction one makes between the assets one holds for himself and the assets one holds for his heirs and charities.
The answer to interpreation-2 is usually "never." A notable exception is when you are in such dare circumstances that you need to sell all your remaining assets to buy food.
Victoria
(1) When you would stop buying (new) stocks and stock funds?
(2) When you would you sell all your (existing) stocks and stock funds?
The answer to interpretation-1 depends on one's glide path and the distinction one makes between the assets one holds for himself and the assets one holds for his heirs and charities.
The answer to interpreation-2 is usually "never." A notable exception is when you are in such dare circumstances that you need to sell all your remaining assets to buy food.
Victoria
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Re: At what point would you stop investing in stocks?
If at some point it became clear that there was in fact no possible future worth having, I would stop.
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Re: At what point would you stop investing in stocks?
I stop when my IPS determines I need to rebalance.
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Re: At what point would you stop investing in stocks?
I think we're all committed today, but we could change mind when we reach 10M or whatever the number might be that's deemed "enough" to slow things down a bit. It's natural for anyone to do so.TinyHouse wrote: ↑Thu Mar 23, 2023 10:44 am Questions for you:
Be honest: Is there ever a point when you would stop investing in equities? Are you committed pretty much no matter what? Some people can’t stomach the market, that’s why they aren’t in it, and that’s a pretty reasonable and understandable position. Some don’t need to take the risk. But unless you are a business owner, or have other means of income, the alternatives to equities don’t look that great either (cash, bonds, PMs). Diversification becomes key, but what do you diversify to?
What would you invest in if you could not invest in VTSAX or the like? For me probably real estate and some gold (95/5?) if I couldn’t invest in equities, or starting a business, but those options aren’t really passive.
Here’s to many more years of returns for the US market (and the global economy).
Re: At what point would you stop investing in stocks?
I've been investing for 46 years in equities. It's been a 'stay the course' journey which has worked. So, I intend to stay invested in equities forever and keep dancing with the one that brought me.
Re: At what point would you stop investing in stocks?
I worked with someone (who earned a great deal more money than I did) who had taken the fourth option and sold everything in 2008-2009. She said she and her husband would never be able to afford to retire. I took the third action as I was no longer working and was not contributing new money. It worked out quite well and I was able to retire early, with a modest lifestyle.Artsdoctor wrote: ↑Thu Mar 23, 2023 1:05 pm TinyHouse, you're nowhere near the point of stopping investing in stocks. In fact, it sounds as if you're relatively young so this is the very best time to be investing in equities. Make a plan you can live with and stick with it.
Those of us living through the 2008-2009 meltdown and varying levels of comfort and missteps. The best course of action was to continue buying equities as they slid to keep your asset allocation where you wanted it to be--the plunge was severe enough that many of us sold fixed income to do that because new money was not sufficient to keep the AA at goal. The second best action was to contribute new money to equities but not sell fixed income as your asset allocation became significant out of whack. The third best action was to do nothing and just watch. The fourth, and worst, action was to sell equities altogether.
So I am not investing with new money since I am retired. I don't anticipate being out of stocks/stock index funds in my lifetime. I especially want to not sell my SCHB and SCHD in my brokerage account as under current tax law my heirs will receive it at the stepped-up cost basis upon my death.
Re: At what point would you stop investing in stocks?
OP,
Do not put all your eggs in one basket! 100% stock and 100% US stock is simply a bad idea. That has nothing to do with whether someone should stop investing in stock.
To answer your question, at no point, I will be 100% stock or 0% stock.
KlangFool
Do not put all your eggs in one basket! 100% stock and 100% US stock is simply a bad idea. That has nothing to do with whether someone should stop investing in stock.
To answer your question, at no point, I will be 100% stock or 0% stock.
KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
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Re: At what point would you stop investing in stocks?
Right after we learn the asteroid is about to hit.
- FreddieFIRE
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Re: At what point would you stop investing in stocks?
Mic drop!!
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
Re: At what point would you stop investing in stocks?
I break it down into 4 main income/asset structures:
equities
fixed income
property (inclusive of home ownership)
human capital / annuities / social security / pensions
I consider it risky when any one of the income/asset structures exceeds 40%. I could theoretically drop equities to 0% if the remaining three add up to 100% without any exceeding 40%. In reality, though, I'll probably never drop equities below 20%.
equities
fixed income
property (inclusive of home ownership)
human capital / annuities / social security / pensions
I consider it risky when any one of the income/asset structures exceeds 40%. I could theoretically drop equities to 0% if the remaining three add up to 100% without any exceeding 40%. In reality, though, I'll probably never drop equities below 20%.
- Random Musings
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Re: At what point would you stop investing in stocks?
If it became illegal to do so.
Otherwise, the lowest I would ever consider would be 20% in equities.
RM
Otherwise, the lowest I would ever consider would be 20% in equities.
RM
I figure the odds be fifty-fifty I just might have something to say. FZ
Re: At what point would you stop investing in stocks?
I have no need to take stock risk.
I have the ability to take stock risk.
I still have the willingness to take some stock risk.
When I lose the willingness I will stop.
I have the ability to take stock risk.
I still have the willingness to take some stock risk.
When I lose the willingness I will stop.
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Re: At what point would you stop investing in stocks?
If the stuff I hold quadrupled overnight, and by some magic there wasn't any related inflation, I might stop investing in stocks.
This time is the same
Re: At what point would you stop investing in stocks?
+1secondopinion wrote: ↑Thu Mar 23, 2023 11:18 amThere is little reason why a person would be recommended to have no equities if there is a considerable investment timeframe. If the goal is to reduce long-term risks, then some amount of equities is required.TinyHouse wrote: ↑Thu Mar 23, 2023 10:44 am Be honest: Is there ever a point when you would stop investing in equities? Are you committed pretty much no matter what? Some people can’t stomach the market, that’s why they aren’t in it, and that’s a pretty reasonable and understandable position. Some don’t need to take the risk. But unless you are a business owner, or have other means of income, the alternatives to equities don’t look that great either (cash, bonds, PMs). Diversification becomes key, but what do you diversify to?
Not to mention, owning a business is equity; running a rental is a business. Just because it is not marketable does not change the facts.
Global stocks, US bonds, and time.
Re: At what point would you stop investing in stocks?
Barring some kind of prolonged societal/economic calamity I can't see a point where I would ever give up on stocks completely.
The fool, with all his other faults, has this also - he is always getting ready to live. - Seneca Epistles < c. 65AD
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Re: At what point would you stop investing in stocks?
The only 3 situations where I would no longer consider holding a stock index fund would be a drastic change in the current system:
1. If The market cap of publicly held stocks fell below that held by private equity, since I can no longer be assured that I am diversified enough.
2. If expense ratios would be exorbitant, e.g. 2% and above for a passive index.
3. A change in economic system away from capitalism, where companies are being nationalized having nothing to do with their economic performance.
1. If The market cap of publicly held stocks fell below that held by private equity, since I can no longer be assured that I am diversified enough.
2. If expense ratios would be exorbitant, e.g. 2% and above for a passive index.
3. A change in economic system away from capitalism, where companies are being nationalized having nothing to do with their economic performance.
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Re: At what point would you stop investing in stocks?
I was thinking the same thing. When stocks go up too much I sell some and move the money into bonds. Other than that, I just let it ride.VictoriaF wrote: ↑Thu Mar 23, 2023 1:44 pm The question "At what point would you stop investing in stocks?" can be interpreted in two ways:
(1) When you would stop buying (new) stocks and stock funds?
(2) When you would you sell all your (existing) stocks and stock funds?
The answer to interpretation-1 depends on one's glide path and the distinction one makes between the assets one holds for himself and the assets one holds for his heirs and charities.
The answer to interpreation-2 is usually "never." A notable exception is when you are in such dare circumstances that you need to sell all your remaining assets to buy food.
Victoria
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Re: At what point would you stop investing in stocks?
Would require a complete collapse of the global financial system.
While I would never have every asset in stocks, they represent the best risk-reward for us. A bit of bonds, pensions, cash and home equity round out the portfolio.. That said, the most important item is self sufficiency and efficient spending. It doesnt take much to eat healthy, home cooked food. Everything else is just life's luxuries.
While I would never have every asset in stocks, they represent the best risk-reward for us. A bit of bonds, pensions, cash and home equity round out the portfolio.. That said, the most important item is self sufficiency and efficient spending. It doesnt take much to eat healthy, home cooked food. Everything else is just life's luxuries.
Last edited by BogleFan510 on Thu Mar 23, 2023 5:11 pm, edited 1 time in total.
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Re: At what point would you stop investing in stocks?
I did the same. A modest lifestyle has many advantages.LilyFleur wrote: ↑Thu Mar 23, 2023 3:14 pm I worked with someone (who earned a great deal more money than I did) who had taken the fourth option and sold everything in 2008-2009. She said she and her husband would never be able to afford to retire. I took the third action as I was no longer working and was not contributing new money. It worked out quite well and I was able to retire early, with a modest lifestyle.
So I am not investing with new money since I am retired. I don't anticipate being out of stocks/stock index funds in my lifetime. I especially want to not sell my SCHB and SCHD in my brokerage account as under current tax law my heirs will receive it at the stepped-up cost basis upon my death.
Re: At what point would you stop investing in stocks?
Same, well over a million in VTSAX and half a million in VXUS and other international indexes. To be honest with you , never had any doubts in my investing approach , keep and keep buying all the time .
Good luck , Ed .
Good luck , Ed .
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel