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the answer is why dont we buy fire insurance on our house only during the dry season? afterall do you know what the chances of a fire is ? about 1%
we insure things against the un-known even though there is a remote chance something may happen because we always believe that small chance will be us..
but take something like our income in retirement from our nest egg which by the way has a 15 to 20x greater chance of failing then a fire and we dont insure that.
Apples vs. Oranges.
A fire is an instant tragedy that happens in minutes, very little chance to react/change, and the insurance for it is relatively inexpensive.
A poorly performing retirement portfolio happens over time and like I said I'm comfortable in my ability to take measures as needed like reduce expenses, go back to work, move to cheaper area, etc. Also note that moving to the level of safety you propose requires a 60% increase in net worth, which for most people is quite a few years of additional work. Very expensive.
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up to now we got away lucky as the sequences up to year 2000 were pretty good for portfolio survival.
Again, I take no stock in "up to now" talk, that statement is predicated on knowing the future and you have no idea what the economy will be like in 20 years, and whether timeframes like Great Depression and other recessions will be considered lucky in comparison.
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if you could buy a pension at work would you? would you feel more comfortable knowing no matter what the markets or rates do you get a check every month?
Of course, assuming the price and benefit seemed to work in my favor. I'm planning on retiring in my 40s, quotes for annuities might not look so friendly.
the s&p500 is not a diversified mix at all or a recommended investment portfolio by itself .
its only a group of large cap stocks.. by the same token managed large cap stock funds did pretty okay over the same time frame.
my own diversified mix was up over 60% over that time frame with plain ole fidelity funds.
they werent forced to hold the big loosers like the index funds were until finally voted out.
every other index except the s&p and dow which are large caps broke new highs long ago . the broader indexs like the wilshire which include all of the markets broke new highs a while ago too.
as of today the markets returned once again a little over 9% for the last 10,15,20 ,25 years
Last edited by mathjak107; 07-08-2011 at 09:03 AM..
A fire is an instant tragedy that happens in minutes, very little chance to react/change, and the insurance for it is relatively inexpensive.
A poorly performing retirement portfolio happens over time and like I said I'm comfortable in my ability to take measures as needed like reduce expenses, go back to work, move to cheaper area, etc. Also note that moving to the level of safety you propose requires a 60% increase in net worth, which for most people is quite a few years of additional work. Very expensive.
Again, I take no stock in "up to now" talk, that statement is predicated on knowing the future and you have no idea what the economy will be like in 20 years, and whether timeframes like Great Depression and other recessions will be considered lucky in comparison.
Of course, assuming the price and benefit seemed to work in my favor. I'm planning on retiring in my 40s, quotes for annuities might not look so friendly.
wow age 40..... your my idol if you can pull that off..... thats great.
i thought i would do early 50's, then came kids, school and health insurance for us... i was going to do it last month at 58 but it looks like ill do another 2-3 years .
at age 40 an annuity will give you about 6 bucks a month ha ha ha
2 major tops, 2000 and 2006-2007 but if you did not sell, and were a holder since 1997, zilch.
Yup! Plenty of long stretches with little gains for stocks in the past. Of course a diversified portfolio, rebalanced regularly, often has a very different result.
My best performing fund over the recovery has been my small cap index, that thing was going nuts. I've rebalanced it into submission and it seems content to just sit quietly now.
wow age 40..... your my idol if you can pull that off..... thats great.
More like mid-40s, and we'll see whether it happens or not. The x-factor is healthcare costs for two decades before medicare, it is changing so much so fast I just have no idea what to budget for it in future expenses and that frightens me. I hate having a budget line item that has a huge range of reasonable possibilities.
A fire is an instant tragedy that happens in minutes, very little chance to react/change, and the insurance for it is relatively inexpensive.
A poorly performing retirement portfolio happens over time and like I said I'm comfortable in my ability to take measures as needed like reduce expenses, go back to work, move to cheaper area, etc. Also note that moving to the level of safety you propose requires a 60% increase in net worth, which for most people is quite a few years of additional work. Very expensive.
Again, I take no stock in "up to now" talk, that statement is predicated on knowing the future and you have no idea what the economy will be like in 20 years, and whether timeframes like Great Depression and other recessions will be considered lucky in comparison.
Of course, assuming the price and benefit seemed to work in my favor. I'm planning on retiring in my 40s, quotes for annuities might not look so friendly.
in theory you think you have time to react to drops and respond.,.. as we all saw in 2008 no one knows how long or steep a down turn will be . usually your blindsided by the drop and speed it happens and at that point its to late to raise cash if your low with out selling at a loss.
as we all saw in 2008 no one knows how long or steep a down turn will be
Nah I'd have already sold all my American funds and have been in 100% bonds.
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