Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
it does not matter where you put the money. the other time frames are going to mimic whatever you do.
the sequence risk over the different time frames will leave them with balances that are anywhere from 3x to 27x their income by rretirement doing exactly what you do.
Yes, it does. A 7% dip in the US market doesn't hurt you if you aren't in that market.
If you merely mean that birth year matters, sure. But it's not the end all and be all, either. Asset choices also matter.
a hit at the end of that accumulation stage is a hit. what you may do to mitigate it from happening and whether or not you could is something else .
all the study assumes is the same standard portfolios 60/40 50/50 etc were utilized by the same folks , investing the same amounts for the same periods of time with only their 30 year time frames changing.
take it for what its worth.
there is no study once you throw in all the what ifs and have everyone doing their own thing randomly.,.
A 7% drop in the US stock market doesn't hurt you if you are invested overseas. Since the correlation among global markets isn't crazy close to 1, there is still room to "overcome" a bad birth year.
Correlations approach 1 in times of crisis.. unless you're diversified among radically distinct asset classes (i.e. stocks and bonds), most diversification fails just when you need it the most.
a hit at the end of that accumulation stage is a hit. what you may do to mitigate it from happening and whether or not you could is something else .
all the study assumes is the same standard portfolios 60/40 50/50 etc were utilized by the same folks , investing the same amounts for the same periods of time with only their 30 year time frames changing.
take it for what its worth.
there is no study once you throw in all the what ifs and have everyone doing their own thing randomly.,.
You're insisting I am missing the point when I am simply asking how you get from the results of that Monte-Carlo study to the conclusion that "birth year matters more than asset choices".
because if you use the same asset choices as a constant then the birth years matter or lets call it the working years until your retirement plan.
wouldn't the trinity study be as off base if we assumed everyone was going to invest in the best possible assets in any given time frame since 1926 ?
they would bail out of stocks and into bonds at the best point in some years , or go international in the time frames that would have done better,.
that all involves human choices and emotions . there could never have been a study since you have no constants to compare. that is why the trinity study and others like it keep human reactions and spending patterns out of the lab. you can't do a comparison of anything letting everyone do whatever they wanted randomly.
there is nooooooooooo study that holds true once human parameters are included.
because if you use the same asset choices as a constant then the birth years matter or lets call it the working years until your retirement plan.
wouldn't the trinity study be as off base if we assumed everyone was going to invest in the best possible assets in any given time frame since 1926 ?
they would bail out of stocks and into bonds at the best point in some years , or go international in the time frames that would have done better,.
that all involves human choices and emotions . there could never have been a study since you have no constants to compare. that is why the trinity study and others like it keep human reactions and spending patterns out of the lab. you can't do a comparison of anything letting everyone do whatever they wanted randomly.
there is nooooooooooo study that holds true once human parameters are included.
I thought you said the study assumed a stock/bond mix that was based on some standard percentages rather than what is optimal. Which is it?
it assumes a standardized constant portfolio is used. for this purpose it can be anything you want to make it ,just keep it constant across all times and see the results.
you can't assume folks are going to pick some different optimal portfolio for each 30 year time frame as you couldn't have a meaningful study and it would not be something that would actually play out as no one has that magic ability to allocate perfectly for a 30 year period or in fact get it right over even a month.
that is why studies use easily done stanardized models that are widely done.and try to eliminate all human decisions from switching in and out of what assets and when.
in the real world doing that can make things better or make them worse but in any case you can never build a study around things that are not constant. .
trying to assume folks would have switched to othere assets to avoid dips would not be anything one would want to count on in any study as studies show most do not..
Last edited by mathjak107; 12-19-2014 at 10:02 AM..
Great post and great point, mathjack! But it is in fact even worse! You have to be born right not only for the risk of bearmarkets in later life but also for median salary growth vs. stagnation. As I stated a few times a person born before 1950 saw there real median wages grow and grow throughout their life and always getting higher compared to people born earlier. The reverse is the case for people born after 1950. So your ability to save for retirement and raise a family are much much diminished, in fact for most people it is an either / or decision now. To top the malaise off for those post 1950-born Social Security is diminishing for them as well. Talk about being screwed from multiple sides. To sum it up: when you are born matters most about your retirement perspectives and trumps BIG TIME your own efforts.
The retirement lifestyle of an 80 year old today is WORLDS AWAY from the prospective retirement of an 50 or 60 year old average Joe. From affluence to poverty in a few decades, that's what retirement will be in America soon.
Correlations approach 1 in times of crisis.. unless you're diversified among radically distinct asset classes (i.e. stocks and bonds), most diversification fails just when you need it the most.
2008-2009 SAW VERY FEW ASSET CLASSES REACT OPPOOSITE WHEN THE TIME COMES.
as we know from the permanent portfolio and all the back testing using other asset classes there are very few that in times of big hits actually zig when the other zags.
long term treasures usually go opposite stocks and at times gold but only in times of a weak dollar.
whether europe ,here or asia the big hits are felt by all. even corporate bonds act more like stocks more often than they don't because credit rating is a factor.
You're insisting I am missing the point when I am simply asking how you get from the results of that Monte-Carlo study to the conclusion that "birth year matters more than asset choices".
there is no way to measure human choices and success as far as picking the right asset class to avoid a dip.
most humans can't so to assume humans are going to time things to avoid a bad time for a certain asset is useless in a study.
but take a diversified portfolio that covers whatever you think should be covered and use that as a constant to all time frames. that is how studies are done. they do not assume humans are going to know what to buy and when. so while owning the right asset at the right time can do alot the odds of you timing that are quite low unless it is just a diversified mix that covers all the bases.
usually just stocks and bonds are used as it is an easy mix to see effects on and quite common. generally other assets act in concert with one of those 2. sometimes reits act like stocks and other times they follow bonds but usually they are close enough to get a basic picture of things with just stocks and bonds.,
Last edited by mathjak107; 12-19-2014 at 10:46 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
