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Okay I see, so you both say it's about the individual person's risk tolerance? But isn't that what I have been saying for a couple of pages now lol? To me, being 60 and still in Stocks is too risky.
Thinking-man you said if you have $1 million you would go straight into CDs or something similar, as that will last you until you are dead, right? Okay, with me, all I need is $350,000 at age 65 to be honest with you as if I draw that out for 30 years until I'm freaking 95, in combination with my SS that will hit my $30k a year goal. So how is my strategy "young and dumb" as you guys have been claiming for pages now?
Capital markets aren't just black and white(high and low risk). It's more like shades of gray
There are equities that are less risky than some bonds and vice versa. Bonds at large carry an inherent interest rate risk which could absolutely demolish a 60+ year old in the next 15 years. The same applies to CDs.
Okay I see, so you both say it's about the individual person's risk tolerance? But isn't that what I have been saying for a couple of pages now lol? To me, being 60 and still in Stocks is too risky.
Thinking-man you said if you have $1 million you would go straight into CDs or something similar, as that will last you until you are dead, right? Okay, with me, all I need is $350,000 at age 65 to be honest with you as if I draw that out for 30 years until I'm freaking 95, in combination with my SS that will hit my $30k a year goal. So how is my strategy "young and dumb" as you guys have been claiming for pages now?
This post was not about your personal situation but rather your recommendation to someone else
Quote:
Originally Posted by jotucker99
AT this point, don't invest in ANY fund. Put your money in a CD or an Annuity, something that's guaranteed with FDIC or State Insurance Association protection. You are too old to weather any ups and downs of a fund. A good fund over 10 years might average 6% but that's with years of losing money and years of having positive gains.
This recommendation leads to the greatest chance of failure for investors over any other mix of assets and what improves your chances of success is exposure to equities. You might not like it or do it but it doesn't mean it's not a horrible recommendation
You guys are proposing an investment strategy that always seems to tie in a higher risk investment diversification in some capacity, while I'm proposing that once you hit a certain age you go all into conservative investments. You guys propose that you need to continue to do the diversification into higher risk investments for inflation.
So here's my question, at what point does a person settle in on what they have and stop trying to beat inflation? In other words, I get to age 64 with $500k in retirement on top of my Social Security, my plan is to only use conservative investments going forward that guarantee the principal with "some small" rate of growth on the side without focusing on beating inflation.
So when does a person just settle in on what they have and exit the market? Or, should they EVER do that in your opinion? I'm curious to know your responses, judging by your prior responses, it seems as though you guys propose someone remaining in the market in some capacity FOREVER.
it isn't about beating inflation . it is about beating sequence of risk damage while spending down.
the order of your gains and losses coming in while spending down can make or break a retirement.
spending down in poor sequencing whether from down markets or negative real returns on bonds and cash are like a trader having a string of losses.
in order to deal with the down years even in cash instruments when returns are negative you need more cushioning and growth in the up markets and need equities to sustain an income much over 2-3% tops inflation adjusted .
between sequence of risk damage and inflation adjusting the two have left hypothetical retirees out of money well before they were out of time.
in order to get through the worst of times today it took a minimum of 40% equities up to 70/30 as a max
Okay I see, so you both say it's about the individual person's risk tolerance? But isn't that what I have been saying for a couple of pages now lol? To me, being 60 and still in Stocks is too risky.
Thinking-man you said if you have $1 million you would go straight into CDs or something similar, as that will last you until you are dead, right? Okay, with me, all I need is $350,000 at age 65 to be honest with you as if I draw that out for 30 years until I'm freaking 95, in combination with my SS that will hit my $30k a year goal. So how is my strategy "young and dumb" as you guys have been claiming for pages now?
What if you don't die till you're 96? or 100? or 116 like the old geezer who just died a couple of weeks ago? what then? your money's gone. option 1. kill yourself by holding your breath. or 2. hold out your hand to relatives or the government
If you have a sure way to make your strategy work for you, then go for it. what people here are saying is that having a 'balanced' portfolio, and 're-balancing' more towards bonds than stocks as you age, is a reliable way to 1. ensure growth and 2. ensure you won't run out of money as you age
Capital markets aren't just black and white(high and low risk). It's more like shades of gray
There are equities that are less risky than some bonds and vice versa. Bonds at large carry an inherent interest rate risk which could absolutely demolish a 60+ year old in the next 15 years. The same applies to CDs.
But a CD can't wipe a guy out? You guys keep talking about this boogeyman called Inflation:
A 10 Year CD is going for about 2.5% right now which is higher than the Inflation averages over the last couple of years. Also in combination with this, learning how to reduce your expenses through buying in bulk, using loyalty point discounts, etc. is another way to combat the rising cost of everything. I just don't see how you need to take risks in Stocks at age 60 to combat this little boogeyman called Inflation when the sucker isn't even that significant.
So here's my question, at what point does a person settle in on what they have and stop trying to beat inflation? In other words, I get to age 64 with $500k in retirement on top of my Social Security, my plan is to only use conservative investments going forward that guarantee the principal with "some small" rate of growth on the side without focusing on beating inflation.
So when does a person just settle in on what they have and exit the market?
Mid-to-late-70s + mid-millions = OK to go 100% cash, as long as you don't care about leaving anything to your heirs.
you need to talk in terms of withdrawal rates . how much inflation adjusted income are they planning ON drawing ? WITH WHAT SUCCESS RATE AND WHAT LEEWAY FOR THE AWE CRAPS.
talking investments without withdrawal rate and success of holding that rate is ridiculous .
A 10 Year CD is going for about 2.5% right now which is higher than the Inflation averages over the last couple of years. Also in combination with this, learning how to reduce your expenses through buying in bulk, using loyalty point discounts, etc. is another way to combat the rising cost of everything. I just don't see how you need to take risks in Stocks at age 60 to combat this little boogeyman called Inflation when the sucker isn't even that significant.
Standard inflation isn't your only risk to increased expenses. As you get older medical expenses can escalate and other unexpected expenses can come up. Long term equity investing offsets this and if you ignore it your assets should greatly exceed your annual need
Okay I see, so you both say it's about the individual person's risk tolerance? But isn't that what I have been saying for a couple of pages now lol? To me, being 60 and still in Stocks is too risky.
And that's the problem. Too conservative is just as bad a long-term investment strategy as too aggressive. And for most people (who will not have saved up several million by retirement), going 100% cash and bonds winds up being too conservative.
FIRECalc doesn't lie. Or maybe it does; these days there are a lot of analysts who think 2-3% (adjusted for inflation) is a more realistic annual safe withdrawal amount than the 4% FIRECalc uses by default.
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