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A healthy 50 even 60 year old most likely has a 20-30 year investment time horizon. Stocks, historically ,are the best liquid asset class for that time frame, by far.
well for most retirees that portion that has 2 to 3 decades to grow should be in high equity levels but if one is going to be drawing a pensionized income from that portfolio then they will likely want short term and intermediate term money too , so that is where the more traditional 40-60% equity portfolios fit in.
they contain a balanced mix of short to long term investments.
surveys show most retirees with invested assets tend to fall out in the 40-60% range
well for most retirees that portion that has 2 to 3 decades to grow should be in high equity levels but if one is going to be drawing a pensionized income from that portfolio then they will likely want short term and intermediate term money too , so that is where the more traditional 40-60% equity portfolios fit in.
they contain a balanced mix of short to long term investments
But in reality, isn't the key word cash flow not income?
If one is selling off 3-4% of the portfolio to meet their "income" needs the hit to the portfolio, even in down markets , is minimal and having the growth from the high equity exposure allows the account to grow and effectively offset the down years,over time. I base that on my personal experience.
But in reality, isn't the key word cash flow not income?
If one is selling off 3-4% of the portfolio to meet their "income" needs the hit to the portfolio, even in down markets , is minimal and having the growth from the high equity exposure allows the account to grow and effectively offset the down years,over time. I base that on my personal experience.
100% equities has tested about the same as 50/50 as far as success rate . so sure no cash and 100% equities can provide a safe withdrawal rate .
however that is only true providing the big hits are not up front…then it is like a trader having a string of losing trades day one . that can be a set back entering retirement since your draw rate is initially set by balance .
if things got better you can take a raise but those raises may not be until 3 years later, so it can hurt up front
so that is the idea of the red zone theory .
so cash flow isn’t a problem , volatility can be an issue for many .
no way do i want more then 60% equities at this stage and i was 100% equities my entire accumulation stage
There are much worse strategies IMO. We are about 26% in an S&P ETF.
i use vti the total market fund instead but results are very close to an s&p fund .
my 100% equity long term growth portfolio is 50% vti and 50% berkshire
but as a view from 35,000 ft , vti is 7% of total liquid assets , and 14% of investable assets are in the 100% equity portfolio as we are retired .
pretty much everything else is managed fidelity funds or cash except for a small experimental portfolio i am trying out .
so i do prefer my managed funds over simply indexing for a number of reasons , but one can’t go wrong with just an s&p fund or total market fund for simplifying things
i use vti the total market fund instead but results are very close to an s&p fund .
my 100% equity long term growth portfolio is 50% vti and 50% berkshire
but as a view from 35,000 ft , vti is 7% of total liquid assets , and 14% of investable assets are in the 100% equity portfolio as we are retired .
pretty much everything else is managed fidelity funds or cash except for a small experimental portfolio i am trying out .
so i do prefer my managed funds over simply indexing for a number of reasons , but one can’t go wrong with just an s&p fund or total market fund for simplifying things
I've hired a fund manager on 4 occasions to manage a portion of our portfolio and continued managing a portion myself and when I compared the fund managers performance to my own investing, I totally wiped the floor with the fund managers every time so despite my efforts to find a better manager than me of our portfolio, I've decided to trust my own investing and that has worked out quite well.
My goal is to maximize growth without being too risky and now that I'm retired, have some dividends.
I've hired a fund manager on 4 occasions to manage a portion of our portfolio and continued managing a portion myself and when I compared the fund managers performance to my own investing, I totally wiped the floor with the fund managers every time so despite my efforts to find a better manager than me of our portfolio, I've decided to trust my own investing and that has worked out quite well.
My goal is to maximize growth without being too risky and now that I'm retired, have some dividends.
aren’t we all. ha ha ha.
when i say managed funds i don’t mean a financial advisor, i use fidelity funds which are actively managed rather then indexing .
we use different funds depending on the bigger picture so for the most part, the portfolio changes slightly over time trying to extract the best of some of the funds.
the actual models come from a newsletter i have used since 1987
.
one could get similar results using voo and qqq and some bond funds . but you need to get the ratios right and maintain them ..some funds used have no etf equals
far easier just to subscribe and follow their recommendations and i can out portfolios together in my sleep.
i am the type that left to my own devices , is always thinking about the next move and second guessing the last ones
Last edited by mathjak107; 02-18-2024 at 05:29 AM..
The only issue is if you need to withdraw a significant amount and the market drops more than you bargained for. In such times an alternative to an sp500 would be prudent to have.
No plans for withdrawing in the foreseeable future? Yeah- SP500.
The only issue is if you need to withdraw a significant amount and the market drops more than you bargained for. In such times an alternative to an sp500 would be prudent to have.
No plans for withdrawing in the foreseeable future? Yeah- SP500.
generally spending from high equity levels directly is irrelevant as the higher highs of no cash or bonds has presented a cushion that actually beats the weight of cash and bonds over time if spending some down is needed
only exception , which never happened is a prolong drop early on . any prolong drop bad enough to effect things would be more then the proverbial 2 year cash pile you hear toughted .
like 2022 no guarantee about bonds holding up either.
long term bonds were down pretty bad…
so it’s like what would be bad for spending from high equity levels is equally bad spending from the lower balances of balanced vs equity portfolios for the most part.
which is why based on the 123 rolling retirement periods spanning 3 decades the success rate of 100% equities and 50/50/are pretty much the same spending down
actually higher equity levels have really not been a problem.. going to low in equities has been the real problem for retirees as success rates fall off unless one takes a pay cut
Last edited by mathjak107; 02-18-2024 at 06:17 AM..
when i say managed funds i don’t mean a financial advisor, i use fidelity funds which are actively managed rather then indexing .
we use different funds depending on the bigger picture so for the most part, the portfolio changes slightly over time trying to extract the best of some of the funds.
the actual models come from a newsletter i have used since 1987
.
one could get similar results using voo and qqq and some bond funds . but you need to get the ratios right and maintain them ..some funds used have no etf equals
far easier just to subscribe and follow their recommendations and i can out portfolios together in my sleep.
i am the type that left to my own devices , is always thinking about the next move and second guessing the last ones
My brother says the best investors are those that don't even know they are invested and so do nothing but leave their investments alone.
My Father never made more than $36K/yr working but died a multi millionaire by making good move after good move investing and being frugal.
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